A management audit is an independent and systematic analysis and evaluation of a company’s overall activities and performances. It is a valuable tool used to determine the efficiency, functions, accomplishments and achievements of the company.
The primary objective of the management audit is to identify errors in management activities and suggest possible changes. It guides the management to manage the operations most effectively and productively.
In other words, a management audit is involved in the evaluation and assessment of the management system and information in the various departments or the entire company. Its reach has been extended to review system and subsystem, authorisation, procedure, accountability, quality of data generated, quality of personnel, etc.,
The Scope of Management Audit:
A management audit is vast as compared to a financial review because it not only evaluates finance but also other features of a company. It has an efficiency for assessing management from top to lower level. Few main scopes of management audit are described below:
- Calculate the Effectiveness of the Management- It audits the entire level of management of a company.
- Execution of Principals and Policies- It reviews whether the policies and the principles deployed by the company is effective and successful.
- Locate and Examine the Differences-It helps to identify the differences in productivity and if the pattern set by the company is not fulfilled.
- Suggest for Improvement- The management audit suggests improvement in areas, e.g. purchase, sale, finance, administration, human resources, etc.,
Objectives Of Management Audit:
- Verify Efficiency- It aims at increasing productivity at all the levels of management and execution of policies.
- Give the Recommendation to Increase Efficiency- The management audit marks the incapabilities in various levels of management and provides suggestions to enhance the efficiencies.
- Evaluates the Potential of Policies and Planning- It audits and evaluates the policies and plannings structured by the management and judge if its appropriately implemented.
- Increase Profit- It helps to increase the profit margin by providing solutions to maximise the company’s resources in a valuable way.
The above mentioned is the concept, that is elucidated in detail about ‘What is Management Audit’ for the Commerce students. To know more, stay tuned to BYJU’S.