Exam P3 Topic 1 Question 99 Discussion

Actual exam question for CIMA's P3 exam
Question #: 99
Topic #: 1
Company H operates a fleet of lorries. The Internal Auditor recently conducted an investigation into the transport needs of the company. Their report recommended that the lorries be disposed of, the drivers made redundant, and the distribution of the company's products be outsourced.
The type of investigation carried out by the Internal Auditor is best described as a:

Suggested Answer: A Vote an answer

by maryayani at May 26, 2025, 06:19 AM

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maryayani
2025-05-26 06:19:54
Selected Answer: C
An economy audit focuses on cost-effectiveness—evaluating whether resources are being acquired and used at the lowest possible cost without compromising quality. In this scenario, the auditor is recommending outsourcing distribution, disposing of lorries, and making drivers redundant, which suggests a drive toward cost reductions and financial efficiency.
Why the other options are incorrect:
- A: Effectiveness Audit – This type of audit examines whether objectives are being met, but it does not specifically focus on cost reductions.
- B: Compliance Audit – A compliance audit checks adherence to laws, policies, and regulations, rather than assessing financial efficiency.
- D: Efficiency Audit – While efficiency audits assess whether operations are running optimally, an economy audit is specifically concerned with minimizing costs.
Would you like further details on audit types? I’d be happy to expand on this!
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