CMA Final · Cost and Management Audit · Basics of Management Audit
In management audit, the term 'management' being audited primarily refers to which of the following?
Management audit examines the management process and the managers who plan, organise, direct and control resources. It looks at the effectiveness of decision making across the enterprise, not merely financial or cost records, and not the shareholders as owners.
- AOnly the statutory financial records maintained by the accounts department
- BThe process and the people responsible for planning, organising, directing and controlling the enterprise's resourcesCorrect
- COnly the cost records maintained under the Companies Act
- DOnly the shareholders who own the enterprise
Explanation
Management audit evaluates how effectively the management function is performed, covering planning, organising, directing and controlling. It is not limited to financial or cost records, which is why the options restricted to records are wrong. Shareholders are owners, not the object of the audit.
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