CMA Final · Cost and Management Audit · Basics of Management Audit
A management auditor reviewing a manufacturing company finds that its long-term objectives are not translated into departmental targets, so managers act without common direction. Which element of management is chiefly deficient?
The deficiency lies in planning, specifically in cascading enterprise objectives into departmental targets. Without translated goals, managers lack common direction. Statutory compliance, inventory valuation and cost record keeping are separate matters and do not address the missing link between long-term objectives and departmental action.
- APlanning and goal cascadingCorrect
- BStatutory compliance
- CValuation of inventory
- DCost record maintenance
Explanation
Failure to convert enterprise objectives into departmental targets is a weakness in planning and the cascading of goals. Compliance, inventory valuation and cost records are different areas and do not explain the lack of common direction.
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