Management audit is an audit of the management. It analyses the different ways to overcome in efficiencies or weaknesses. It is generally conducted at the instance of the management. It is the method of evaluating the total efficiency of the management from the top level to the lowest level.
Advantages and Disadvantages of Management Audit:
Advantages of Management Audit
- Management audit provides information about strong and weak points of the management after reviewing policies and programs. It helps in decision-making areas such as make or buy, closing down of a unit, acquisition of a business, etc. So, it helps to the smooth operation of an organization.
- It examines the functions of management and identifies the strength and weakness in the management process.
- Management audit provides suggestions to the management which helps to maintain effective management. It suggests ways to utilize the resources of the organization effectively.
- After reviewing the defects and deficiencies, it provides appropriate suggestions which help to increase management efficiency.
- Management audit helps the management providing suggestions to attain the goal of an organization. It helps to improve the communication system by keeping the whole management team under constant review.
- It helps in proper utilization of organizational resources to achieve predetermined goals and objectives.
Disadvantages of Management Audit
- Management auditor cannot understand practical problems. So, the suggestions provided by them is theoretical but not practical.
- It is a costly method of auditing. It involves high cost and it is suitable only to big organizations. So, it is not suitable for small firms having limited resources.
- Scope of management audit is vague. It may create complexity in authority-responsibility relationships. So, it does not help to achieve a specific goal.
- It lacks fixed methods and techniques of auditing. The management auditor may lack independence and may simply take instructions from the top management. So, it is not well defined.
- Generally, the management gives more emphasis on maintaining books of accounts rather than concentrating on other factors. So, it consumes the time of farsighted management.
- It provides only theoretical suggestions to the management which are not suitable or applicable to solve practical problems.