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

In a management audit of the human resource function, a company shows employee turnover of 18% in its R&D unit, versus 6% company-wide, while R&D training spend per head is the lowest in the company. Which audit conclusion is best supported?

The auditor should recommend investigating retention and development policies for R&D staff. Turnover of 18 percent is three times the company average and training spend is lowest, suggesting a possible link. The company-wide average hides the unit problem, and cutting training would likely worsen it.

  1. AThe turnover is acceptable because the company-wide average is low
  2. BThe auditor should recommend investigating retention and development policies for R&D staff, as the data suggest a link worth examiningCorrect
  3. CTraining spend should be cut further to reduce costs
  4. DNo conclusion is possible until the financial audit is complete

Explanation

A management audit evaluates effectiveness and recommends improvements. Turnover three times the average together with minimal training spend is a red flag warranting a review of retention and development policy. Averages hide unit problems, cutting training worsens the issue, and a management audit does not depend on financial audit completion.

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