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

Which of the following is generally considered a limitation of management audit?

A key limitation is that management audit depends heavily on the auditor's judgement, because assessing managerial quality and decisions is partly subjective. It is not confined to finance, can be performed by independent external professionals, and normally ends with recommendations to management.

  1. AIt can never be carried out by an independent external professional
  2. BIt relies heavily on judgement, and evaluating managerial quality is partly subjectiveCorrect
  3. CIt is restricted to the finance function only
  4. DIt prohibits making recommendations to management

Explanation

Management audit assesses qualitative aspects such as decision quality and leadership, so findings involve judgement and subjectivity. It can be done by external professionals, covers all functions, and its purpose includes making recommendations, so the other options are incorrect.

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