Question

Which of the following is not a correct statement regarding management audit?

• A. Management audit can be conducted effectively only by an expert in the area of financial audit
• B. Management audit cannot be effective unless it is fully supported by the top management
• C. The management auditor is primarily concerned with the appraisal of performances in the various areas of management
• D. The Government may order a management audit with a view to examining the efficiency of the management of particular industrial unit

Answer 1

The correct option is A Management audit can be conducted effectively only by an expert in the area of financial audit

A management audit is an analysis and assessment of capabilities and competencies of the management to carry out the objective of the organization. The purpose of management audit is not to appraise the individual performance of the executive but to evaluate the team of management.

Management Audit is actually an audit of processes and procedures prevailing in the organization, hence it does not necessary that this has to be performed by a finance expert.