Management audit involves independently examining an organization's structure, operations, functions, goals, plans, policies, activities, weaknesses and evaluating management's ability to achieve objectives. It identifies defects in management, ensures objectives are achieved, and helps management administer operations efficiently. A management auditor must have technical accounting qualifications and personal qualities like an inquiring mind, integrity, and independence. Management audit provides suggestions to help attain goals and smooth operations, but can involve heavy costs and discourage manager initiative.

1. Presented by;
Neetu.P.S
Sandhya.S.P
Sanjana.R
Shumaila
Racheal Bosco

2. Meaning :-
The Examination review of various policies and
action of the Management on the basis of certain
specified objectives.
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.
2

3. To identify the level of achievement of the
main objectives of organisation .
To indentify the defects
management executives .
or irregularities of
To ensure that the management is going to
achieve the objectives.
To help the management to do
administration of the operations.
22/09/2012
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efficient

4. 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.
4

5. Scope of Management Audit
Management audit will depend upon the objective
and requirement it’s Scope of Management Audit
Briefly Explanation of Review :Objective , goals , plans and policies of Management.
The results of various operations department-wise.
The planning process and appraisal of planning and
utilization of finance and human resources.
Physical processes and activities of delegation of
authority.
5

6. Organistion structure and appraisal of result of such
management decisions.
Rules , regulations and methods fixing responsibility by
management executives.
i.e., systems and procedures of the
organisation.
Management office information operations systems
and appraisal of its effectiveness.
Management control Personnel policies system and
techniques followed by management.
Selling and distribution system and appraisal of its
effectiveness.
Operation its the purchasing and productions of there
effectiveness.
6

7.  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

8.  It
helps management in utilizing its resources
efficiently that is it helps to find out weather
the lone amount have been properly utilized
or not.

9.  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

10. QUALIFICATIONS OF
MANAGEMENT
AUDITOR


11. 
An auditor is an accountant
who officially examines the
accounts of organizations

12. Qualities of an auditor cover two
aspects namely;
 Technical qualifications
 Personal qualities

13. Professional qualification in accounting [CA]
 Standard of accounting & auditing practices
 Member of recognized professional body like
Institute Of Chartered Accountants Of India


14. He must have an enquiring mind & analytical
approach to his work
 He must be alert & should posses common sense in
abundance.
 He must not be influenced by others i:e must
posses a firm character
 He must have integrity. People should have faith in
his work
 He must be methodical in his work


15. He should not disclose client’s affairs to others
without necessary permission
 He should not be unnecessarily suspicious though
he has to be skeptical
 He should be tactful & pragmatic in approach in
dealing with the clients & their officers or staff
 He should be courteous with his own staff & should
be conscious of their capabilities & limitations
 He must be able to maintain poise, dignity &
courtesy in dealing with others
 He should be independent & must not compromise
his independence for any material or social gain.


16. 
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 providing
suggestions to attain goal of an organization.

17.  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.

18.  Due
to ineffectiveness and inefficiency of the
management auditor, in all cases,
management audit cannot provide resultoriented service.
 Management
auditors are sometimes engaged
in some activities detrimental to social objects
of auditing, for example, evasion of tax.