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CMA Final · Cost and Management Audit · Basics of Management Audit

Which of the following best describes the primary focus of a management audit as distinct from a financial audit?

A management audit primarily evaluates the effectiveness and efficiency of management in achieving organisational objectives. Unlike a financial audit, which attests to a true and fair view of the accounts, it appraises planning, organising, directing and controlling and suggests improvements for future performance.

  1. AVerifying that the balance sheet shows a true and fair view of the financial position
  2. BEvaluating the effectiveness and efficiency of management's performance in achieving organisational objectivesCorrect
  3. CChecking arithmetical accuracy of ledger postings and trial balance
  4. DConfirming statutory compliance with tax filing deadlines

Explanation

A management audit is a forward-looking, evaluative review of how well management plans, organises, directs and controls to reach objectives. Financial audit focuses on true and fair presentation of statements, which is option A. Options C and D are narrow compliance or clerical checks and not the main focus of management audit.

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