Skip to content

CMA Final · Cost and Management Audit · Management Reporting Issues and Analysis

In the context of management reporting, which characteristic best describes a report that follows the principle of 'management by exception'?

A management by exception report highlights only significant deviations from budgets or standards, so managers can focus attention on critical variances needing action instead of reviewing every transaction or routine figure in the period.

  1. AIt lists every transaction of the period in chronological order
  2. BIt highlights only significant deviations from budgets or standards for managerial actionCorrect
  3. CIt is prepared only once a year for shareholders
  4. DIt reproduces the statutory financial statements without comment

Explanation

Management by exception directs attention to items that deviate materially from plan so that limited managerial time is spent on the critical areas. Reports listing all transactions or repeating statutory statements do not filter information, and an annual shareholder report is not a control report for managers.

Did you get it right without looking?

One question tells you little. A timed set on Management Reporting Issues and Analysis shows your real accuracy, how long you take and where you lose marks.

Practise Management Reporting Issues and AnalysisFree diagnostic mock

More Management Reporting Issues and Analysis questions