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CS Professional · Compliance Management, Audit and Due Diligence · Concepts of Various Audits

Rohan, a company secretary, is asked by Meridian Pharma Ltd. to review the effectiveness of its overall management structure, policies, decision-making and the way top management achieves corporate objectives, covering all functions rather than one. Which audit does this describe?

This is a management audit. It is a wide evaluation of the effectiveness of management's structure, policies and decision-making across all functions in meeting corporate objectives, unlike an audit confined to one activity, cost records or tax particulars.

  1. AManagement auditCorrect
  2. BCost audit
  3. CTax audit
  4. DPropriety audit limited to one department

Explanation

A management audit is a comprehensive, forward-looking evaluation of management's performance, policies and decision-making across functions against objectives. Operational audit would focus on a particular activity. Cost audit examines cost records, and tax audit examines tax particulars, so neither fits an enterprise-wide review of management effectiveness.

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