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CMA Final · Cost and Management Audit · Management Audit in Different Functions

A management auditor reviews the marketing function of a consumer goods company. Sales rose 12% over the year, but the sales-force cost per rupee of sales rose 30%, and market share in the main region fell. What is the most appropriate audit conclusion?

Marketing effectiveness is doubtful, so the auditor should examine sales-force productivity, territory allocation and competitive position. Selling cost rising much faster than sales and a falling regional market share show inefficiency that headline sales growth hides.

  1. AMarketing is effective because absolute sales have risen
  2. BMarketing effectiveness is doubtful; the audit should examine sales-force productivity, territory allocation and competitive position despite the sales growthCorrect
  3. COnly the credit period given to customers needs to be reviewed
  4. DThe finding is outside management audit scope because sales are a financial matter

Explanation

Management audit assesses effectiveness and efficiency, not just absolute results. Selling cost growing much faster than sales, along with falling regional share, signals poor productivity and competitive position, which warrants a deeper review. Judging by sales growth alone ignores cost and market share.

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