The most underrated yet most popular definition of the term money is “Money is what Money does.” Though it seems too simple crisp to core, the meaning it implies is of great importance. The definition gives one a fair understanding of the meaning, purpose and the power the word money holds in the world. If there is any other word or concept which can be described in such a way then that is Management. Without any second thought one can simply but elegantly define management as “Management is what management does.”
Management is one of the most common concepts known to mankind. Management is everywhere. The day in one’s life stars with management and ends with it. Though one person is not peculiar about the technical or in-depth meaning or working of management, it is found applied by all of us in our day-to-day life knowingly or unknowingly. That much management is entangled with the life of everyone. Management in common parlance can be described as the process of dealing with the day-to-day chores in one’s life. Whether it is getting up at a fixed time, going to bed at a fixed time, working for a fixed time, taking a bus, cooking or eating food, everything involves the process of management. Management is necessary in our day-to-day life or any task or venture we undertake.
However, Management in Business, though serves the same purpose, plays a different and more advanced role. Management is the process of planning and organizing the resources and activities of a business to achieve definite goals in the most effective and efficient manner possible. Management can be defined as the process of planning, organizing, staffing, directing and controlling such that the goals of the organization are achieved successfully with minimum cost and optimum resources. The Cambridge dictionary refers to Management as “the activity or job of being in charge of a company, organization, department, or team of employees.” But in a more accurate way, it is always better to say that, management is the activity done by a person in charge of a particular job or task to ensure the completion of it at a specified time, with the use of optimum resources at a reasonable cost, without diluting the quality of the work done.
The process of management relies mainly on the objective of the organization, the capabilities of the workforce and the environment it is implemented in. It is therefore essential to have a control/ supervision over the management as well. How effective the management of an organization is, defines the profitability, viability and sustainability of the organization and there by the economy as a whole. Even a small mistake from the part of the management will affect the organization seriously. It is where the concept of Management Audit comes in.
Management Audit in simple terms denotes the audit of the management. It is systematic review of decisions and actions of the management to analyse the performance of the organization as a whole. Management audit encompasses the evaluation of managerial aspects like organizational objective, policies, procedures, structure, control and system in place in order to check the proficiency or performance of the management over the happenings of the company. Unlike financial audits or cost audits, management audit mainly studies the non-financial data to review the efficacy of the management. Its efforts to search answer to the operational efficiency of the management by examining the process involved in it and the way how the management is performing the same.
The purpose of a management audit is to spot the areas of weaknesses of the management. Though it is most often carried out on an organizational level, it can also be carried out for certain business segments separately, considering the importance of the said segment in the organization. It helps one to find out how effective management is and where it need improvement. Human Resources, Marketing, Finance and Operations, Research and Development (R&D), Information Systems, and Corporate Structure, are some of the areas covered under management audit.
The process of management audit starts with data collection. However, it will consist of interviews with management and employees, examination of financial statements and performance, examining the company's policies and procedures and guidelines, evaluating the training programs in the organization, the hiring process, and many other areas within the organization. When the audit is complete, the auditor/ audit team will not only deliver its conclusions but will most often provide a complete strategy for the board of directors to implement so that the company can function at an optimum level.
When carried out effectively, the management audit provides valuable insight into how an organization can progress in its operations. It calls attention to areas where resources might be better allocated, where policies or procedures requires an updating, or a little training or support to the management in some areas. The product of such an audit is often improved transparency, responsibility and an inclusive performance within the management of the organization.
The audit of Management however requires certain commitments from the management as well as the auditor. The following aspects of management audit gives a good understanding of the need of the same in any organization.
Approach/ Applicability – The approach to management audit should begin from the top level. Management Audit serves as an opportunity to the top level to introspect the activities they were doing during the period under audit, how effective it was and whether any further changes/ corrections are required in the activities. Being said, the applicability of management audit does not end there. It should penetrate into the last level of organizational management to find out the problems, the constraints and the methods/ ways to solve them. The Nexus between the top level and bottom level of management need to be addressed during the audit.
Understanding – The function of management audit aims at understanding the process involved in the organization, the measures taken by the management, the mechanism in place to control the chances of risk persisting on the organization and so on. Apart from that, the management also should have a basic understanding with regards to why management audit is required. The two-way understanding in this process helps to build a trust between the management and the auditor there by ensuring better results. Understanding that management audit is not a shoulder surfing but a firewall to prevent the organization from various harms it may face in the future, will ensure a smooth and efficient audit which in turn helps in attaining the organizational goals.
Data – Data is the life blood of today's world. Without data no single work can be done effectively and efficiently. Data serves as the source of every decision being taken. Ensuring that sufficient, correct and complete data is being provided to the auditor is the responsibility of the Management, because any defect in the data will affect the decision made by the auditor which in turn will create difficulty for the management itself. Simultaneously, the auditor must ensure that the data provided is appropriately utilized when drawing conclusions. It is also the responsibility of the auditor to show utmost care to the data presented to them and to safeguard any data which is confidential.
Investment – The biggest mistake many organizations make is booking the management audit as an expense. Most of the organizations turn their back to implementing the management audit in the organization thinking about the cost/ expense it's going to incur in doing so. But it is necessary to understand that a management audit is not an expense to the organization but an investment. It is like health insurance. The chances of one being admitted in a hospital and having to bear a huge medical expense is very minimal, however it is always a good decision to make yourself insured. That way, one can feel relaxed hoping that though the risk still exists, there is a cushion to fall on to. Management audit helps one to understand the future risks, though to an extent only, and helps the organization to cushion up while facing the same.
Testament – Testament refers to something that serves as a sign or evidence of a specified fact, event, or quality. Management audit is the testament of the effectiveness of a management. It ensures that the management is not only performing well but also reaching a level, which guarantees the achievement of organizational goals. It evaluates and gives a clarity on how better the management is performing, whether there are any areas which need improvement and the ways in which the improvement can be brought in.
No organization is invincible, no organization is so powerful to foresee or to prevent the inevitable. Every organization at some point of time may have faced/ will face some kind of hurdles which they never imagined happening. The purpose of management is to ensure the organization a plan of action to tackle the same and to move forward. The management to do so requires constant support and supervision. Management audit is that tool which ensures the organization’s management is performing to their optimum capacity. Management audit helps the organization in meeting its objectives, by inspecting its overall performance and suggesting improvements, wherever required. Every organization, to attain its goals in the long run requires to introspect into its management and its objectives. Considering management audit an obligation creates an impression as it is not a necessity. Management audit is not just an obligation, it is a responsibility as well as a requirement. It gives more strength to the management. Ensuring the organization is equipped with a proper management audit programme is like securing one’s future with an insurance. Remember, precaution is better than cure.
No comments:
Post a Comment