Scope of Management Audit:
The scope of management audit is much wider than financial audit because management audit evaluates not only financial audit but also other aspects of the business. It is the method of evaluating the total efficiency of the management from the top level to the lowest level. Therefore, the main scope of management audit is:
There are several advantages of conducting management audit of an organization. When an organization grows in its volume and activities, there is a need for management audit for evaluating efficiency and effectiveness of the management at all levels of the organization. The advantages and importance of management audit are discussed below:
Evaluates Efficiency of the Management
Management audit is a method of independent and 'systematic evaluation of the management activities at all levels of management to ascertain the functions, efficiency and achievement of the management (i.e. policies) as compared to standards set by the company
Scrutiny of the Plans, Policies and Procedure
Management audit helps to determine how the management has implemented their plans, policies and procedure to reach the organizations goal.
Helps for Correction of Plans, Policies and Procedure
Through management audit, it is possible to change or revise the plans, policies and procedure as per needs of the company.
Aids for Decision Making
Management audit asses the ability of the managers to take important decisions and helps them to rectify the defects.
Helps to Get Loan
Financial institutions who gives huge loan to the organizations are interested to know the efficiency of the management and the profitability. Management audit certainly gives a guide to them.
Helps to Get Subsidy
Before granting subsidy by the government, to any entity they are interested to know the efficiency and functioning of the management. Management audit helps in this matter.
Helps to Increase Profitability
Management audit helps the management to increase profitability by giving remedies to maximize the organization's resources in an efficient way.
Limitations of Management Audit:
Need and Objectives of Management Audit:
Management audit is the total audit of the management i.e. reviews how the policies of the management have been implemented and its efficiency to execute the policy. Therefore, the scope is much greater than financial audit, as it examines the all aspects of the management. Management audit has some objectives. These are discussed below: