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 the auditor most directly treat as evidence of weak procurement effectiveness?
Heavy reliance on a single supplier without comparing quotations or market prices is the clearest sign of weak procurement effectiveness, because it risks higher prices, supply dependence and favouritism. Budget-matched requisitions, vendor rating and matching receipts with orders are good controls.
- APurchase orders are issued only after approved requisitions are matched with budgets
- BVendor performance ratings are reviewed periodically and used in sourcing decisions
- CA large share of purchases is placed with a single supplier without any comparison of quotations or market pricesCorrect
- DGoods received notes are compared with purchase orders before payment
Explanation
Placing a large share of purchases with one supplier without competitive quotations or price benchmarking exposes the firm to higher cost, supply dependence and possible favouritism. The other options describe sound controls: budget-matched requisitions, vendor rating and three-way matching of orders, receipts and payments.
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