Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Management Audit from Auditing

1,971 views

Published on

Published in: Education, Business, Technology
  • Be the first to comment

  • Be the first to like this

Management Audit from Auditing

  1. 1. Green University of Bangladesh (GUB) Assignment On Auditing (ACC - 306) Topic: Management Audit. Semester: Summer – 2013 Prepared by: “YOUTH BOOMERS” NAME ID GL Md. Shahidul Islam SIGNATURE 110106050 Md. Moazzem Hossain 110106034 Md. Anqur Chowdhury 110106027 Prepared for: Ms. Shahreen Sonia. Lecturer in Accounting, Department of Business Administration (DBA), Green University of Bangladesh (GUB), Dhaka, Bangladesh. Date: 17th August 2013 Letter of Transmittal 1
  2. 2. August 17, 2013 Ms. Shahreen Sonia Lecturer, DBA, Green University of Bangladesh Subject: Submission of an assignment Dear Madam I gladly present to you my assignment titled “Audit Report”. I have made the assignment as you give us to do by help of books and internet. I believe the knowledge and experience I gathered during the assignment will be extremely helpful in my future professional life. I will be grateful to you if you accept the assignment. Your support in this regard will be highly appreciated. Thanking you. __________________ Md. Shahidul Islam ___________________ Md. Moazzem Hossain ___________________ Md. Anqur Chowdhury 2
  3. 3. Table of Contents SL. No. 01. 02. Topic Page No. DEFINITION MANAGEMENT AUDIT CONCEPT, FUNCTIONS AND OBJECTIVES 04 OF 04, 05 MANAGEMENT AUDIT  Concept of Management Audit  Functions of Management Audit 03.  Objectives of Management Audit SCOPE OF MANAGEMENT AUDIT 06 04. FUNCTIONAL AREAS 07 05. ESSENTIALS OF EFFECTIVE REPORTING 08 06. ADVANTAGES 07. MANAGEMENT AUDIT BIBLIOGRAPHY 10 08. CONCLUSION 10 AND DISADVANTAGES OF 09 3
  4. 4. 01. DEFINITION MANAGEMENT AUDIT A systematic assessment of methods and policies of an organization's management in the administration and the use of resources, tactical and strategic planning, and employee and organizational improvement. The objectives of a management audit are to: 1) Establish the current level of effectiveness, 2) Suggest improvements, and 3) Lay down standards for future performance. Management auditors (employees of the company or independent consultants) do not appraise individual performance, but may critically evaluate the senior executives as a management team. See also performance audit. 02. CONCEPT, FUNCTIONS AND OBJECTIVES OF MANAGEMENT AUDIT Concept of Management Audit Management audit is an emerging concept of auditing. 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. 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. The main objective of management audit is to improve the profit earning capacity, work of management, objectives of program, social objectives and human resource development so that organizational goal can be easily attained. It refers to the existence of control system, compliance of rules and regulations, process of managerial decisions etc. 4
  5. 5. Functions of Management Audit Management audit is a difficult and complex task. It performs the following functions: 1. Management audit identifies the objectives of an organization if such objectives are not set up. 2. Management audit allocates the overall objectives of an organization in small parts. 3. Management audit reviews the structure of organization and asset of the organization and decides whether goals can be obtained or not. 4. Management audit examines all the scope of work and liability centers. 5. Management audit provides valuable suggestions to the management after the evaluation of all above facts. Objectives of Management Audit Main objectives of management audit are as follows: 1. To formulate the goal of an organization. 2. To ensure the fulfillment of goals. 3. To help management to improve the activities and procedures. 4. To help all the members of management to make effective discharge of their duties. 5. To help in the improvement of profits. 5
  6. 6. 03. SCOPE OF MANAGEMENT AUDIT 1. The present organizational structure is reviewed in relation to current and prospective demand of business and study must relate to aims and objectives of enterprise. 2. It includes the study of present return on investor capital. Whether the return is adequate, fair of poor. 3. Management audit also requires the study of relationship of business with shareholders and investing public in general 4. The performance of the concern should be compared with that of the other firms in the same field. By comparing the different ratios we can get the comparative position of the business. 5. The aims, objectives, duties should also be kept in mind of the auditor. 6. Financial planning and control also is a part of the management audit. 6
  7. 7. 7. The reviews of the production and sales function are also an important part of the management audit. 7
  8. 8. 04. FUNCTIONAL AREAS 1. Purchase: Methods of purchase, quantities procured, problems on procurement and discount earned etc; 2. Production: Policy schedules of production, actual quantity produced at different levels, variances in production schedule, input-output ratios, ideal time etc; 3. Distribution: Organization of sales department, budgeted sales, actual performance, incentives offered for sales, promotional offers, effectiveness of distribution channels etc; 4. Personnel: Personnel policy, method of recruiting and training, cost of man power, promotion policy, appraisal policy, labor welfare activities. 5. Finance and accounting: Financial structure followed, sources of raising funds, effectiveness of raising finances, extent of working capital needs, financial controls followed, systems of accounting, effectiveness of cost control devices; 8
  9. 9. 05. ESSENTIALS OF EFFECTIVE REPORTING 1. Good form and content: The report should be given proper title, headings, subheadings and paragraph divisions. 2. Simplicity: The report should be presented in a simple, unambiguous and clear language. 3. Promptness: Promptness in submitting a report is an essential element of a good report. The reports should be sent at the earliest and should not be delayed. 4. Relevancy: The reports should be presented only to the persons who need them. Sometimes the reports are sent to various departments and the secrecy will not be maintained and expenditure will be more. 5. Consistency: There should be a consistency in the preparation of reports. The comparability of reports will be possible only if they are consistent. 6. Accuracy: The reports should be reasonably accurate. A report sometimes will be approximated but approximation should not be done up to the level where information loses its form and utility. 9
  10. 10. 7. Controllability: The report should be addressed to appropriate persons in respective responsibility centres and its variance should be mentioned. 10
  11. 11. 6. ADVANTAGES AND DISADVANTAGES OF MANAGEMENT AUDIT 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. Disadvantages of Management Audit 1. Management auditor cannot understand the practical problems. So, the suggestion 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. 07. BIBLIOGRAPHY 1. http://accountlearning.blogspot.com/2012/02/advantages-and-disadvantagesof.html 2. http://accountlearning.blogspot.com/2012/02/concept-functions-and-objectivesof.html 11
  12. 12. 3. http://www.businessdictionary.com/definition/management-audit.html 12

×