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Meaning And Definition

Definition :Management Audit is Independently Examination of

organisation structure, operation function, Analyzing goals plans,
Policies, Activities, weaknesses and Evaluation of earning
capacity of the Management.

IMPORTANCE OF MANAGEMENT AUDIT

Management audit set up policies and objectives in view of

changing environment, competitors strategies, change in
technology, consumers preferences etc.
It provides scope to business to interact openly with the
environment and maximize the benefit of environmental
opportunities
It helps management in improving its performance in
execution of policies

Scope of Management Audit

Management audit will depend upon the objectives and its

requirements
Briefly Explanation of Review :The results of various operations department-wise.
The planning process and appraisal of planning
Utilization of finance and human resources.
Physical processes and activities of delegation of authority.

Objectives of management audit

To identify the defects
executives .

or irregularities of management

To ensure that the management is going to achieve the

objectives.
To help the management to do efficient administration of the
operations.
Rules , regulations and methods fixing responsibility by
management executives i.e., systems and procedures of the
organization.

To help management executives in the effective discharge of

their responsibilities.
To suggest to the management the way and mean available to
achieve the objectives.
To improve the profitability of the organisation.
To obtain or utilize the full efficiency of the management.
To help the management executives in the effective discharge
of their duties.

Needs of management audit

Management audit periodically assess the performance of
various managers and link incentives with such assessment.
Government and foreign collaborators is interested in getting
management audit conducted to examine the efficiency of
management
Financial institute may like to get management audit
conducted before advancing lone

Advantages of Management Audit

Management audit provides information about strong and
weak points of the management after reviewing policies and
programs. So, it helps to the smooth operation of an
organization.
Management audit provides suggestions to the management
which helps to maintain effective management.

Management audit helps the management

suggestions to attain goal of an organization.

providing

Dis-advantages of Management
audit
The introduction of management audit technique involves heavy
expenditure.
Managers will hesitate to take initiative, as the management
auditor will always pinpoint some shortcomings in the action.
Managers will always try to keep the records up to date rather
than improving efficiency and reducing the costs.

Due to ineffectiveness and inefficiency of the

management auditor, in all cases, management audit
cannot provide result-oriented service.
Management auditors are sometimes engaged in some
activities detrimental to social objects of auditing, for
example, evasion of tax.