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A management audit is an assessment and analysis of the competencies and capabilities of an organisation’s management in carrying out corporate objectives. The purpose of an audit is not only to support the individual executive performance but to evaluate the management team’s effectiveness in working in the interests of shareholders, maintaining good relations with employees, and upholding the organisation’s standards. It is a significant factor to note that the audit not only assesses the overall management of the company but only focuses on the performance of individual employees.
The main objectives of a management audit are :
The essential characteristics of management audits are as follows :
The principles of management audits are as follows :
To complete a management audit, the following procedure may be used:
Management auditors need the information to appraise various managerial aspects. Therefore, a questionnaire should be prepared to collect the necessary information at the outset of the process. The questions should cover information about objectives, planning processes, control systems, procedures, and functional areas. The questions are framed to gather complete information about every relevant aspect of the business.
The auditors should carefully examine the information to reach certain conclusions. The information is to study carefully to ascertain the absolute position of the organisation.
Information collected from various persons should be authenticated by those supplying it (e.g., through signatures).
The auditors may need to confirm the information from different sources (e.g., by asking follow-up questions to key stakeholders). It is essential for reaching reliable conclusions.
The auditors should observe whether certain activities have improved, preparing organisation charts, flow charts, and other valuable insights.
The information should be compared to objectives and standards set earlier (e.g., previous years). It reflects the actual performance of the enterprise, which can help assess the unit’s comparative performance.
The operational aspect of management audits are as follows :
Management Audits are an essential tool for companies to identify improvement opportunities, efficiency and functions within an organisation. These audits analyse the overall management team supports operations and provide detailed recommendations to improve the team’s effectiveness.
Thus, the audit is an independent and systematic analysis and evaluation of a company’s overall activities and performances.
Read our Article: All There To Know About Management Audit
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