CMA Final · Cost and Management Audit · Management Audit in Different Functions
A management auditor reviewing the marketing function of a consumer goods company wants to evaluate the effectiveness of its distribution channel. Which approach is most appropriate?
The auditor should compare channel-wise sales, cost to serve, market coverage and delivery performance with targets and alternative channels. This tests whether the distribution system achieves objectives economically, whereas tax rate checks, fire safety and trial balance agreement do not assess channel effectiveness.
- ACompare channel-wise sales, cost to serve, market coverage and delivery performance against targets and alternativesCorrect
- BVerify only that sales invoices carry correct GST rates
- CCheck that the factory has adequate fire safety equipment
- DExamine whether the trial balance agrees
Explanation
Evaluating channel effectiveness needs analysis of sales, cost to serve, market coverage and service levels versus plans and alternative channels. GST rate checks are compliance, fire safety is a plant matter, and trial balance agreement is a financial accounting check.
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