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

Which of the following is a characteristic that distinguishes a management audit from a statutory financial audit?

A management audit has no prescribed statutory format, and its scope depends on the areas management wants appraised. It is generally voluntary and forward-looking. Mandatory yearly coverage, historical accuracy checks and a true and fair opinion are features of the statutory financial audit instead.

  1. AIt is mandatory every year for all companies under company law
  2. BIt is concerned mainly with historical accuracy of recorded transactions
  3. CIt is not bound by a fixed statutory format and its scope is decided by what management wants appraisedCorrect
  4. DIt results in an opinion on true and fair view of the financial statements

Explanation

Management audit is generally voluntary and has no prescribed statutory format, so its scope and report are tailored to the areas management wants appraised. Options A, B and D describe features of a statutory financial audit, which is mandatory, historical in orientation and ends with a true and fair opinion.

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