CMA Final · Cost and Management Audit · Management Audit in Different Functions
A company's HR function shows annual attrition of 28% among skilled operators, with exit interviews citing uncompetitive pay and no career path. The company has a recruitment policy but no compensation benchmarking or succession plan. Which management audit conclusion is best supported?
The best supported conclusion is that retention policy is poorly designed, so the auditor should recommend pay benchmarking and structured career and succession planning. Exit interview evidence and missing policies point to root causes, unlike closing recruitment, calling it a statutory failure, or waiting for a payroll audit.
- AThe weakness lies in retention policy design, so the auditor should recommend benchmarking pay and structured career and succession planningCorrect
- BThe recruitment department should be closed since attrition is high
- CThe attrition is purely a statutory compliance failure under the Companies Act
- DNo recommendation is possible without a financial audit of payroll
Explanation
The evidence points to policy gaps in compensation and career planning, not recruitment itself. A management auditor recommends improving pay benchmarking, career paths and succession planning. Closing recruitment does not address causes, attrition is not a Companies Act breach, and payroll audit is unnecessary for this conclusion.
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