Concept of Management Audit
Management audit is an emerging concept of auditing. It is an assessment of how well an organization’s management team is applying its strategies and resources. It helps management in setting sound and effective targets. It takes into account both financial and non-financial factors including economic environment, their effect on the administration and goals of the business organization. It was originally developed as a tool for investment appraisal. It is popularly known as operational management or efficiency Auditor. It has been originated from America.
Management audit is an act of evaluation of all the activities of all the departments with a view to provide appropriate suggestions to the management to help their work. It signifies a critical assessment of management of the enterprise from the broadest possible point of view. It now covers all aspects of the business economic, physical, tangible, quantitative or qualitative, financial and personnel. Rather, the goal is to compare an organization’s overall management quality to the rest of the industry and especially to competitors. All levels of management efficiency and effective evaluation are the Management Audit. It covers planning, organizing, coordination, and control, etc.
In other words, management auditing is a future-oriented task which evaluates timely in all the levels of management like production management, sales management, etc. It is an assessment of how an organization applies its resources and its strategies. The main objective of management audit is to improve the profit earning capacity, work of management, objectives of the program, social objectives and human resource development so that organizational goal can be easily attained. The concept puts particular emphasis as to suitability, practicability and present compliance or otherwise of the organization with its designated objects, its current standing in relation to the general public, etc. It refers to the existence of the control system, compliance of rules and regulations, the process of managerial decisions, etc. It is an audit of the overall performance of management.