Skip to content

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

Which statement best distinguishes a management audit from a financial audit?

A management audit appraises how effectively management plans, decides and controls, with a forward-looking, performance focus, while a financial audit gives an opinion on the historical financial statements. The other options reverse the objectives or wrongly claim a statutory or professional-exclusivity difference that does not exist.

  1. AManagement audit is mandatory for all companies under statute, whereas financial audit is voluntary
  2. BManagement audit looks at the truth and fairness of the balance sheet, whereas financial audit looks at efficiency
  3. CManagement audit appraises managerial effectiveness and future-oriented decision quality, whereas financial audit reports on historical financial statementsCorrect
  4. DManagement audit is performed only by chartered accountants, whereas financial audit is done by any person

Explanation

Financial audit expresses an opinion on historical financial statements, while management audit is a broader, forward-looking appraisal of managerial performance and decision effectiveness. Option A reverses the legal position, and option B swaps the objectives of the two audits.

Did you get it right without looking?

One question tells you little. A timed set on Basics of Management Audit shows your real accuracy, how long you take and where you lose marks.

Practise Basics of Management AuditFree diagnostic mock

More Basics of Management Audit questions