-
- Examination of managements operation
-
-
- Supervision of activities of the client
-
-
- Dynamism and flexibility of changing environment
Sako Mayrick - APT 2. MANAGEMENT AUDIT
-
- Policies and procedures in operation
-
- Discharge of fiduciary responsibility
-
- Responsiveness to stakeholders interests
-
- Furtherance of organizational objectives
-
- Efficiency, economy and effectiveness of operations
Sako Mayrick - APT 3. Management audit
-
- Appraisal of Plans and clients objectives
-
- Appraisal of clients organizational structure
-
- Evaluation and assessment of clients performance
-
- Appraisal of clients control of operations
Sako Mayrick - APT 4. Management Audit appraisal of objectives
and plans
-
- Sufficient and reasonable
-
-
- Reflects company responsibilities
Sako Mayrick - APT 5. Management Audit appraisal of objectives
and plans
-
- Compatible with objectives
-
- Anticipates trouble spots
-
- Permits delegation of responsibility
Sako Mayrick - APT 6. Management Audit appraisal of clients
Organisational Structure
- It is a means formanagement control of operations
- Includes assignment of duties and responsibilities together
with delegation
- Organisation structure in harmony with objectives
- Structure comensurate with responsibility
- Proper balance of functions
Sako Mayrick - APT 7. Objectives of MA Evaluation and Assessment
of clientsperformance
- Possibility of getting an expert support
- Issue is to measure efficiency, economy and effectiveness
-
- Personnel- staffing, turnover, qualification of employees,
working conditions, overtime
-
- Workload -volume of work,customers, payroll check, productivity
levels, backlog, critical maintenance
-
- Productivity - units expended/units produced, past performance,
mechanization , man-hour per customer,
-
- Quality expectation/performance,improvement, work methods
-
- Cost-labor costs, material costs, administrative costs,
equipment costs, trends, necessity of activities. Forecast,
variance, cost conscious,
Sako Mayrick - APT 8. Objectives of MA Appraisal of Control
- Administrative controls of operations to accomplish management
objectives or plans of operation
- Information and assurance to management on adequacy and
effectiveness of controls, not only at the time of audit but also
for the future
- The purpose is not cost control but procedural compliance
- For example, procurement system
Sako Mayrick - APT 9. MA Corporate Analysis
- Study of clients business in view of both competition and
changing business environment.
- Clients exploration of strategic core assets for competitive
edge e.g. brand name, technology, research and development,
financial and capital structure, product costing and pricing
policies, managerial skills, production systems and
communication
- Competitive edge over rivals
Sako Mayrick - APT 10. MA Corporate Analysis
- Value chain analysis how the policies giver value to the
customers e.g. marketing , logistics; cost and marketing
strategies
- Examine high input cost of marketing strategies to determine
grey areas
- Examine pricing policy for value adding to customers, margins
for covering operational costs
- Analysis of overall clients business strategy, SWOC analysis
and environmentalf analysis
Sako Mayrick - APT 11. MA Corporate Analysis Industry
Analysis
- Competition in the industry, bargaining power of clients
suppliers, buyers,
- Purpose is to determine level of competitiveness of rivalry and
competitors
Sako Mayrick - APT 12. MA Corporate Analysis Environmental
Analysis
-
- Business trends recession, boom and per capital incomes, market
demand and supply conditions
-
- Product taste, branding, relationship with local society
-
- Technological analysis modern technology and impact on current
business.
Sako Mayrick - APT 13. MA Corporate Analysis SWOT Analysis
- SW Internal operating capabilities
-
- Threats are killer missions therefore clients must have
strategies e.g. interpersonal skills to manage uncertainties
- SWOC and PEST Analysis results into new strategydevelopment
through financial modeling (NPV, IRR and cash flow)
- The new strategy must be able to change with changes of
environment.
Sako Mayrick - APT 14. MA - Approaches
-
- Administrative structures
-
- Framework of the organization staffing, reporting , personnel
evaluation, budgets
-
- Microcosm picture of company structure and study it from many
angles
-
- Concentration of administrative activities ratherthan
product
-
- Following up major activities from inception to
conclusion,
-
- Less concerned with adminstration
-
- It is more complex with long and devious trail
Sako Mayrick - APT 15. MA - Steps
-
-
- Discussions with knowledgeable people about the organization
activities, performance evaluation, reporting
-
-
- Walkthrough the departments or follow function
-
-
- Objectives and their implementation
-
-
- Examine organizational structure
-
-
- Review of policies and procedures
-
-
- Review of records generated
-
- Familiarization leads to development of workable audit
program
Sako Mayrick - APT 16. MA - Steps
-
-
- Controls functioning through sample transaction
-
-
-
- Documented vs Actual controls
-
- Evaluation and Recommendations
-
-
- Audit tests of initial survery
-
-
- Recommendations based on facts not feeling
-
-
- Consider all factors affecting operation
-
-
-
- Effectiveness of operation
-
-
-
- Deviations form procedures
-
-
-
- Structure of accounts, records and repors
Sako Mayrick - APT 17. MA - Steps
-
- Evaluation and Recommendations
-
-
- Technical issues to be recommended to management
-
-
- Minor matters should be cleared through discussion
-
-
- Lower matters to be discussed with the lowest cadre in mgt
-
-
- The auditor should note that the responsibility of correcting
defects ultimately rests with operating management.
Sako Mayrick - APT 18. Past Examination May 2010
- Management audits involve the investigation of the entire
management to ascertain the decision making process of the top
management and such it is kind of overhaul of the companys top
management to ascertain attitudes towards the internal control
system and also personal relations with employees and their ability
to manage an efficient and viable company.
- (a) Explain the conditions under which these audits are ideal(4
marks)
- (b) Explain the advantages of Management audits(8 marks)
- (c) Describe the disadvantages of Management audits (8 mark)
(Total =20 marks)
Sako Mayrick - APT