To begin with, think about the definition of an audit. It is the review of something, usually financial records. In the case of a cost audit the financial records being reviewed relate to the cost of something, usually something manufactured.
The key objectives are:
1. To address internal controls over inventory and cost of goods sold.
2. Verify correct records and costs related to inventory.
3. To be certain the cost of goods produced is accurate.
4. To be certain that accounting procedures related to inventory and cost of goods sold follow correct accounting procedures.
5. To be certain that the inventory on hand actually belongs to the client.