The management audit can be carried proficiently only with the management’s approval. Hence it is important to take the management in confidence with the management audit plan. The basic features of the management audit plan include statements on personnel requirements, staff training programs, the basis of control over time, and cost.
The other features of the management audit plan are discussed below:
- Devising the statement of policy
The policy statement should be specific about the scope and status of management audit, authority for conducting an audit, report issuance and recommendations, and also evaluation of corrective actions. The statement must categorically say that the management auditor is capable of reviewing administrative and management controls over any activity within the enterprise
- Location of the audit function
Many entities provide a separate department for management audits wherein the head of this department reports directly to the top executives. However, it is very important to set the location of the auditing department in such a manner that it can work efficiently and effectively independent of other departments
The personnel conducting audit should be thorough in the understanding of audit theory, fundamentals of organization, principles of control, requirements for conducting the scientific appraisal
An expert management auditor possesses the required technical and technological knowledge and commercial practices relevant to the entity. He also is updated with all other laws and subjects like commerce, taxation, law, cost accounting, quantitative methods, EDP systems, and economics. He would always have an analytical, pragmatic, and imaginative approach towards the management audit
Staff training programs stimulate additional responsibility and advancement for an entity. Such a program helps to pool capable people to the department and sustaining them
Time to be devoted and the estimated cost depends upon the factors like nature of the assignment, required number of personnel to conduct an audit, etc
The frequency for a management audit is decided by the nature of the entity. A fast-changing entity with a greater accent to technology would require a management audit more frequently than the others
However, it is suggested that normally the management audit should be conducted at an interval of three years at least.