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

In a management audit of the purchasing function, which of the following findings would most directly indicate a weakness in vendor selection policy?

Placing most orders with a single supplier without comparative quotations or vendor rating indicates a weak vendor selection policy. Sound purchasing needs competitive bids and supplier evaluation, whereas serial numbering, three-way matching and budget reviews are normal controls and do not show a selection weakness.

  1. APurchase orders are numbered serially and filed in sequence
  2. BMost orders are placed with a single supplier without any comparative quotations or vendor rating recordsCorrect
  3. CGoods received notes are matched with purchase invoices before payment
  4. DPurchase budgets are reviewed every quarter by the finance head

Explanation

Sound vendor selection relies on competitive quotations and periodic vendor rating. Dependence on one supplier with no comparison or rating records shows the policy is weak. The other options describe good documentation, matching and budgetary controls.

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