A management audit pertains to an in-depth review of individual parts of a business to ascertain how they function and interrelate to produce overall results. When properly executed, such an audit provides the best overview available of the business dynamics as a single entity.
An audit may be used to evaluate specific functions within the organization to determine their performance efficiency. This review considers the unique characteristics of each organization, adjusts its standard of measurement accordingly and reflects the specific nature of their corporate culture.
In an era of hypercompetitive business environments, management audits could mean the difference between business success and failure. The benefits to be derived are hereunder set out:
- A systematic identification of areas that affect profitability with the attendant experience-based solutions for improving efficiency and effectiveness.
- The development of information to ensure a competitive advantage.
- The development of management information to provide guidance in establishing standards in defining goals and expectations.
- The utilization of analytical tools for evaluating operations, such as financial ratio, cash flow, break-even and capacity analyses and more.
- The establishment of procedures for the development of action plans to achieve improvements in numerous methods for reducing costs.