MANAGEMENT AUDIT ….

DEFINITION:

According To T. G. Rose Defined “Management Audit Is An Advice Of

Independent Specialists Who Have Made A Study Of How To Reach Maximum
Efficiency In A Certain Field Of Activity.”

CONCEPT:

Management audit is the periodic assessment of company’s managerial

planning, organizing, actuating & controlling compared to norms of successful
operations. Management audits are concerned with appraising--

a) Accomplishment of management objectives;

b) The management functions of planning, organizing, directing & controlling;

c) The adequacy of management’s decision’s & action’s in moving towards its

stated objectives.

NEED:

1. A modern mgmt. needs to conduct mgmt. audit to assess the performance of

its managers & improve efficiency.
2. Government may order management audit a sick unit taken over by it to
study the causes of sickness.
3. Banks, financial institutions or private equity funds intending to give loan or
finances to a unit may need to conduct mgmt. audit before taking any
decisions.
4. Foreign collaborators need to get periodical mgmt. audit reports to judge the
efficiency of there local associates.
ADVANTAGES OF MANAGEMENT AUDIT:

1. 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.

2. Management audit provides suggestions to the management which helps to

maintain effective management.

3. Management audit helps the management providing suggestions to attain

goal of an organization.

4. It ensures optimum utilization of available resources.

DISADVANTAGES OF MANAGEMENT AUDIT:

1. Management auditor cannot understand the practical problems. So, the

suggestions provided by them is theoretical but not practical.

2. Scope of management audit is vague. So, it does not help to achieve

specific goal.

3. Generally management gives more emphasis on maintaining books of

accounts rather than concentrating on other factors. So, it consumes time of
farsighted management.