Management Audit

The Management Audit is total

examination of an organisation or a part of
it ,includes check on the effectiveness of
managers their compliance with co. or
professional standards,the realibility of
management data,the quality of
performance of duties and
recommendations for improvement.

 The management audit can plug the loopholes if

it is efficiently used and interpreted (i)directorial
weakness (ii)managerial weaknesses
(iii)Technological and administrative
weaknesses.
An objective and independent appraisal
Of the effectiveness of managers & the
effectiveness of corporate structure in the
achievement of companys objectiveness and
policies.Management audit is constructive in its
conception and objective in its analysis.

A preliminary investigation should include the following :

1 The organisation objectives are clearly identified and defined.
2 Awareness & understanding of individual mangersas regards the
organisation objectives & policies and of their own roles in achieving these
objectives.Are spans of authority and control clearly defined?
3 Recruitment and training policies & technical competence of individual
managers,provision for ensuring awareness of current technological
developments & enviornmental developments.
4 Adequacy & timeliness of the management information systems in
providing information to enable effective planning and control of operations.
5 Management styles willingness and ability to delegate,adequacy of
communication within the organisation and degree of cooperation between
managers.
6 Degree to which standard procedures have been laid down,whether
adequate checks are made to ensure compliance,adequacy of provisions
for managers to assess performance of their subordinates.
7 Result:which department or managers do not appear to be achieving their
prescribed objectives.

Questionnaires
1 Setting objectives:
a Does the organisation have clearly defined objectives in specific
quantitative terms like?(i) Maximisation of profit (ii)Cost Reduction
(iii)Public Image (iv) Caputring market(v)Production improvement
(vi)Return on Investments etc.EVA
2 Are the broad objectives broken into detailed targets?Are
functional policies supportive of the master strategy?
3 Are the objetives revised periodically in the light of changes in
internal & external environment?
4 Are the objectives/goals are adequately supported by data?
5 Are the objectives attainable?

 Planning
1 Is the planning related to the objectives of the
management?
2 Does the organisation have a system of long range
and short range planning?
3 What is the degree of involvement by various
managers?
4 How are the budget estimates developed ?
5 How they are reviewed in depth?
6 Are the budgets conveyed to various operational
managers in time?
7 Are they easily understandable?

Organising
It can assess fairly its:a) Manpower requirements b)Manpower
potential in the area of responsibility.
1 Whether the organisation structure is in harmony with the
objectives of the organisation?
2 What are the various levels in organisation hierarchy ?
3 Are the lines of authority & areas of responsibility clear?
4 Is their proper coordination & cross communication among
different organisational levels?
5 What is usual span of suspension?
6 Is the decision making centralised?
7 What is the nature of superior-subordinate relationship?
8 Is there any regular system of motivation?
9 Does the organisation structure provide unity of command?

 Communication
1 Is the communication clear & understandable
to the person to whom it is intended?
2 Does it indicate the procedure to be adopted to
achieve the corporate plan?
3 Does the communication reach the desired
person on time?
4 Are the methods of communication adopted by
the organisation are effective?

Controlling
1 Are the controls acceptable to various levels of management?
2 Is there a system of reward or punishment linked with control?
3 Have the standards established for the completion of work?
4 Are the standards developed after giving due weightage to all the
factors(quality,quantity,cost,etc.)
5 Are the standards reasonable & achievable ?
6 Does the system of control provide for good reporting system for
evaluation of standards and then achievement?
7 Are the causes of variances & exceptions accepted as normal or
effects are made to eliminate & reduce the variances?
8 How prompt is the determination of the action to correct deviation?