Management Audit

The goal of the management audit is the identification of the flaws and areas of improvement of the management team. Though the management audit is conducted all over the company, it is separate from the business-making segment.

What is a management audit?

A management audit is an independent analysis of a company's overall activities, which is a valuable tool for determining the company's functions, efficiency, achievements, and accomplishments.

The management audit is the evaluation and assessment of the management system involving all the departments of an organization that extends to review the system, authorize the process, accountability, and quality of data generation, etc.
The primary objective of a management audit is to distinguish between mismanagement and errors. It further suggests rectification guides the operations effectively and productively.

What is the scope of the management audit?

The purpose of the management audit is not to evaluate the performance of an individual employee or executive, but the evaluation of the whole team to analyse the effectiveness of its management working in the interest of the shareholders. This also evaluates the team's relationship with its team members, i.e., the employees, and raises the standard of the reputation.

The scope of the management audit is as follows:

• It is an assignment to analyze and report how effectively a company's management is utilizing its strategy and resource.
• Management audit analyzes capability of the management to work in interest of the shareholders, employees, and the development of the company altogether.
• The board of directors shall hire an independent auditor to conduct the audit.
• Upon completing the management audit, the external auditor shall provide a strategy or plan to the board of directors, suggesting the improvements as required.

What is the goal of a management audit?

The areas that a management audit covers are never limited to the budget, market development and research, human resource, operational management, financial strategy, information technology, and the company's working structure.

How does a management audit work?

There is no formal management audit committee in any company. Instead, the board hires an individual auditor from an external firm or an independent auditor. The scope of the management audit is well defined, including the following concerns:

• Management has set the efficiency of the structure of the organization.
• compliance with financial policies and procedures.
• The employee-employer relationship
• The appropriate disbursement of the annual budget
• The productivity of the technology used in the management work of the company.
• Whether the recruitment procedure used is appropriate in compliance with the company's employee's skill and requirements. In other words, if the right person has been given the right responsibility.
• If the company implements an appropriate strategy to achieve the financial goals.

The management auditor shall conduct interviews with the management and employees, analyze the financial statement and book, and study the hiring and training procedure. Upon completing the audit, the auditor provides feedback and suggests the areas and procedures be adopted to improve.