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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 weakness in the buying policy rather than in execution?

The absence of a documented policy on vendor selection, rate contracts and approval limits indicates a weakness in the buying policy itself. Management audit evaluates policy adequacy and effectiveness, whereas late deliveries, arithmetic slips and misfiled documents are execution or clerical lapses.

  1. APurchase orders were raised without a documented policy on vendor selection, rate contracts and approval limitsCorrect
  2. BA few purchase orders were delivered two days later than promised
  3. CA clerk made an arithmetic error in one purchase invoice
  4. DOne goods receipt note was filed in the wrong folder

Explanation

Management audit of purchasing examines whether policies, such as vendor selection, rate contracts and delegation of approval limits, exist and are sound. The absence of a documented policy is a policy-level weakness. The other options are isolated operational or clerical lapses, not policy gaps.

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