Introduction
The present business world is booming rapidly with the technology, and there is a challenge faced by business organizations day by day from scratch to end in order to meet the ultimate demand of consumers. To cruise this intricacy, an adequate system of internal control practices among the management structure is important. This is where management audit plays a very critical role, which identifies areas for improvement and improves the risk management process.
What is Management Audit?
Management Audit, unlike audit relating to financial Statements primarily focuses on analyzing efficiency and effectiveness of internal control and overall management process of an organization. Rather checking financial records, it focuses on how well an organization working towards achieving its strategic goal, utilizing its resources efficiently and complying with applicable laws and regulations.
Key Features of Management Audit
- System Approach: Review and in-depth analysis concerning the organization with regard to finance performance, efficiency in operation, human resource, information technology, and risk management.
- Strength and weakness identification: It aims to search for possible weaknesses; the key points in order so that could be done improvements before that might become significant trouble.
- Purpose: An inside or outside auditor does it, but with great concern to hold their independence and objectivity in completing a prudent independent evaluation
- Sustainable Improvement: Mostly look for improvement and indicates corrective actions toward organization objectives
- Value Added: Allowed the organization giving it great insight and suggestion, this way, organizations would be able to achieve efficiency while overall increasing profit, reduction in risk, as well as the saving cost.
Management Audit Objectives
- Management Efficiency: Review and analyze the quality of the management decision-making process, efficiency of the internal controls, and the general performance of management personnel.
- Risk Minimization: Identify most probable risk issues that will be a challenge to the operational running and financial viability.
- Effective Operation: Assist in identifying critical areas that ensure effective use of resources as well as an increase in the operational performance of a business.
- Compliances: It meets the legal requirements according to the industry compliance.
- Strategic Management Decision: It provides guidance that helps in the implementation of the strategy for achieving strategic goals that help in the attainment of the business of organization objectives.
- Internal Controls: Asset protection against fraud, and internal controls ensure integrity and accuracy of financial reporting.
Scope of Management Audit
The scope of management audit differs according to the objectives of management. However, some general areas are focused upon and those are:
Strategic Planning and Execution: Verifying the objectives, future plans, and strategic goal how they are in process.
- Operational Efficiency: Review of Main Process of Production, Procurement, Sales, Distribution, and other Activities that are influencing the operational cycle to achieve the aim and objective including Production, procurement, sales and distribution.
- Financial Performance: Review of financial health and essential performance indicators KPI.
- Human Resources Management: Recruitment cycle review involves recruitment, training, and development, and labor relations.
- Information Technology: IT systems review, data management practices, technology resources, and cybersecurity.
- Risk Management: The review of the organization's risk management framework which encompasses risk identification, analysis, and management controls.
- Compliance: Compliance with relevant laws, environmental regulations, data privacy laws, and anti-corruption laws, as appropriate.
How Management Audit is conducted?
Management audit mainly includes the following key activities:
- Planning and Scoping: First and the foremost is identification and planning of audit according to objective and scope
- Data Collection: Collection of relevant data through surveys, document reviews, interviews, and observations
- Data Analysis and Evaluation: Collected data are analyzed to spot problems, trends, and effectiveness evaluation of internal controls on management.
- Reporting: Detailed audit report is prepared showing findings, conclusion, and recommendations
- Follow-up and Implementation: Check on implementation of the recommended remedial actions as their implementation follows through.
Benefits of Management Audit
Improved Organizational Performance: Efficient cost reduction, profitability enhancement, and increased competitiveness.
- Risk Management: Minimize exposure to operational, financial and reputational risks.
- Better Decision Making: Provide a basis for strategic and operational decisions.
- Better Compliance: Reduces the risk arising from non-compliance with applicable laws and regulations.
- Improved Internal Controls: Strengthening the internal management controls to protect assets and thereby prevent fraud.
- Improved Stakeholder Confidence: Building confidence, confidentiality, and credibility among the investors, stakeholders, customers, and employees.
How SKMC Global can help you?
- Time and Resource Efficiency- SKMC Global saves your efforts, precious time as well as resources.
- Continuous Compliance: SKMC Global ensures minimum manual intervention with continuous applicable compliances.
- Streamline Audit Management: It streamline the process, time and reduces the chances of human error.
- Compliance Automation: SKMC Global has automated tools and policy templates and monitoring systems used for reporting and compliance.
- Technology-Based Solutions: SKMC Global has most advanced technology structure to manage day to day compliances relating to management audit.