The correct answer is: Both statements are false.
Management audit is a type of internal audit that focuses on the effectiveness of management’s performance in achieving the organization’s goals. It is not a part of financial audit, which is an independent examination of the financial statements of an organization to determine whether they are presented fairly in accordance with generally accepted accounting principles.
Management audit is not compulsory under any law, but it is often conducted by organizations to ensure that they are operating efficiently and effectively.
Here is a brief explanation of each statement:
- Statement I: Management audit is a part of financial audit.
This statement is false because management audit is a type of internal audit, while financial audit is an independent examination of the financial statements of an organization.
- Statement II: Management audit is not compulsory under any law.
This statement is also false because management audit is often conducted by organizations to ensure that they are operating efficiently and effectively. However, it is not compulsory under any law.