Skip to content

CMA Final · Cost and Management Audit · Audit of Different Service Organisations

An auditor reviewing a road transport company's cost records finds that fuel cost per tonne-km has risen sharply, although the fuel price is unchanged. Which audit procedure is the most direct first step to investigate?

The most direct first step is to compare actual mileage per litre and load factor with standards for each vehicle. Since fuel price is unchanged, the increase in cost per tonne-km must arise from consumption or loading inefficiency, which this comparison identifies, unlike depreciation, directors' registration or GST checks.

  1. ACompare actual mileage per litre and load factor against standards for each vehicleCorrect
  2. BRe-compute depreciation on the vehicle fleet using the written down value method
  3. CVerify the statutory registration of the company's directors
  4. DCheck the rate of GST charged on freight invoices

Explanation

With fuel price constant, the rise must come from usage: lower mileage per litre, lower loading, empty running or pilferage. Comparing actual mileage and load factor with standards isolates the usage variance. The other options are unrelated to fuel consumption per tonne-km.

Did you get it right without looking?

One question tells you little. A timed set on Audit of Different Service Organisations shows your real accuracy, how long you take and where you lose marks.

Practise Audit of Different Service OrganisationsFree diagnostic mock

More Audit of Different Service Organisations questions