In 1930’s, James Mekinsey suggested management self audit and appraisal system. His aim was to discover and correct errors of management. Such self-appraisals have flow become recently quite common. General and specialized journals and magazines occasionally issue scientifically designed weighted and simple questionnaires to evaluate self. Self appraisal should include company policies, organizational, structure, personnel practice, managerial practice, control style, physical assets, and human relation strategy and philosophy. A self-audit is useful if conducted regularly and without any bias.
The American Management Institute has been conducting management audit. Its audit covers the following ten areas:
1. Economic Functions.
2. Corporate Structure
3. Earning Growth
4. Fairness to Stockholders
5. Research and Development
6. Composition of Board of Directions
7. Fiscal Policies
8. Production Quality
10. Executive Evaluation
Problems in Self-Audit
There are problems in self-audit:
I. People are reluctant to appraise themselves—-even though they will benefit in the lung run by gaining more excellence. Due to this reluctance there is a need for management audit by independent, outside expert.
2. There is a problem of quantifying talent and evaluating intangibles.
Need for Management Audit
During the past three decades world economy has declined considerably. Along with other reasons poor, quality management can he attributed to this decline. This inefficiency has called for effective management control which through management audit ensures the quality of managers and the quality of total managing system of a firm.
Management audit is profitably used for the following purposes:
1. It ensures to utilize human, physical, and financial resources of the firm most productively in order to get maximum output with a minimum input.
2. Management audit acts as an effective motivators. It motivates managers to increase their efficiency and skill. Managers keep developing themselves, and abreast of the modern changes in different environments.
3. Management audit includes verification of managers functions of planning, organizing, staffing, directing, leading, coordinating, and controlling.