Management Auditing

INTRODUCTION

Management auditing is an analysis of management’s overall performance. It examines the effectiveness of managers’ work. It tests the management structure. Management auditing is the appraisal of the tasks done. The tasks help to meet the objectives and achieve goals.

Management auditing targets to find out the weak spots. It identifies the weaknesses of managers. It also points out the faults in the management structure. Then, management auditing brings in methods to avoid those mistakes.

Management auditing is like an examination. It checks the following components of an organization:

• Organization structure
• Departments of organization
• Plans and policies
• Human resource
• Methods of operation
• Use of physical facilities

Normally, auditing handles financial transactions. It is confined in accounting. But management auditing is beyond that. Management auditing looks after whole management. It checks the functions. Management auditing reviews policies. It suggests what an organization needs.

STEPS OF MANAGEMENT AUDITING

Management auditing is a systematic process. It involves the following steps:

• The objectives of an organization should be clear. It is important to define the objectives. Then, it will be easy to understand. If the objectives are clear, then managers can do the work accordingly. They can perform to meet those objectives.
• The objectives should be properly divided. There are many departments in an organization. So break the objectives with detailed plans. This way everyone can know their specific role.
• Managed organizational structure is important. Only a proper organizational structure can fulfill the objectives. It completes the tasks effectively.
• The performance of each department should be examined. The performance needs to be balanced in every sector. Also, focus on quality and not quantity. It helps in long-run profit.
• Find out the problems. No organization is perfect. So keep track of mistakes. Then come up with solutions.

OBJECTIVES OF MANAGEMENT AUDITING

Management auditing aims many things. Some of its objectives are:

1. To use the available resources to the optimum level
2. To make the most use of human resources
3. To point out the mistakes in policies
4. To suggest better business ideas
5. To analyze the organizational structure and improve it

FEATURES OF MANAGEMENT AUDITING

An effective management audit must possess the following key features:

• The management audit manages audit strategies, agendas, and field information collection. It checks the growth of audit reports and corrective and preventive action recommendations. This ensures the smooth functioning of the company.
• Management auditing regulates the audit scope by assessing the risk of the company’s audit domain.
• Management auditing provides configurable valuations that disclose the integral. It controls risk allied with every type of audit and object.
• Management auditing provides elastic data-gathering and accretion agenda. This allows consumers to set up any type and structure of the audit.
• Management auditing executes customer-specific processes as the result of an audit, study, gap review.
• Management auditing provides Integrated Requirements Knowledge Base (RKB).
• Management auditing takes counteractive and precautionary actions directly from the outcomes of an audit.
• Management auditing provides elastic reporting and analytics. This improves perceptibility, smarter, and quicker conclusion.

THE SCOPE OF MANAGEMENT AUDIT

A management audit is broader than the financial audit. It not only evaluates finance but also the rest of the different features of a business. It has a competence for evaluating different levels of management from top to bottom. 

Some of the main scopes of management audit are:

• Analyze the Efficiency of the Management

Management auditing audits different levels of the management. It checks from top to bottom for the overall betterment of the organization.

• Execution of Principles and Policies

Management auditing analyses whether the policies and the principles arrayed by the organization. It checks if it is effective and successful or not. If not, it moves forward to conclude how it can be made better than the present setting.

• Detect and Study the Differences

Management auditing helps to identify the differences in the output of the business. It checks if the pattern set by the company is fulfilled or not. In an absence of such, it will ponder on how it can be made efficient with optimal use of resources.

• Recommendations for Improvement

The management audit recommends improvement in areas that can be seen lagging behind in the audit. For example purchase, sale, finance, administration, human resources departments. In such cases, the recommendations can be a boon to the company. Improvements will help the company flourish.

ADVANTAGES OF MANAGEMENT AUDITING

• In decision making

Management auditing helps to make important decisions. Organizations should properly know about buying and selling. Also, sometimes a company might need to close down a department. So to decide such agendas, management auditing helps.

• Efficiency of work

Management auditing examines every task. It finds out the problems. It also suggests the alternatives. This increases the efficiency of work. It makes the work effective.

• Utilization of resources

Management auditing keeps records of physical resources. It also checks on human resources. Management auditing identifies the way of optimum utilization of resources. This has a lot of perks. It saves cost. The work becomes efficient too.

• Identification of problems

Management auditing finds out the problems. Problems can be in policies or structures. Then, management auditing suggests solutions. This way it saves an organization.