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CMA Final · Cost and Management Audit · Management Audit in Different Functions

Which activity would a management auditor typically review while evaluating the finance function's management of working capital?

A management auditor reviewing working capital would examine cash forecasting, receivables collection period, inventory levels and short-term financing policies, since these are the components of working capital. Branding, patents and board room arrangements have no bearing on it.

  1. AThe colour scheme of the company's brand logo
  2. BPolicies on cash forecasting, receivables collection period, inventory levels and use of short-term financingCorrect
  3. CThe number of patents registered by the R&D team
  4. DThe seating plan of the board room

Explanation

Working capital management covers cash, receivables, inventory and short-term funding. Reviewing forecasting and policies on these components tests the function's efficiency. The other options relate to branding, research or administration.

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