Management audit

economic-dictionary

The performance audit is a methodology focused on evaluating the resources and structure of an organization, company or institution, and the way in which their use leads to a certain level of profitability.

The phenomenon of performance auditing has emerged in recent decades as a relevant resource for all types of commercial companies or public institutions.

Its execution helps all of them to achieve benefits efficiently taking into account the resources they have and the way they are used organizationally.

By concept, this modality has a certain similarity with another type of audit, the operational one. In both cases, the coexistence and efficient use of the different resources available to a company or institution are analyzed.

While the operational audit focuses on the objective of efficiency and the elimination of failures or anomalies in the development of an economic activity, the management audit takes the next step.

From a measured efficiency point of view, good organizational performance must translate into achieving an expected level of profitability or profit.

These same objectives must be set according to the forecasts of each company at the beginning of its journey.

In this sense, one of the main nuclei of study of this modality is the analysis of the structures of the companies and their cohesive operation.

Characteristics of the performance audit

This type of audit has some distinctive features that make it one of the most used by all types of organizations:

  • Through in-depth analysis of the resources and processes that are put in place, a logical relationship is sought. That is, what economic objectives should a company pursue taking into account its situation
  • It focuses on the strategic planning of the company, defining the profitability goals to be achieved
  • If, in the detailed study of the organization, anomalies are found that reduce the level of efficiency, they must be accurately detailed with the data.
  • At the same time, measures to be put in place to correct bad practices or inefficient use of resources must be established. This supposes the preparation of a new business strategy
  • It is managerial, so its main utility is to provide useful information for decision-making to owners or administrators
  • At all times the protagonist of any measure will be the granting of an economic result or benefit previously estimated by the company in its business plan. The right decision-making by the Management will be the step to follow

Organizations usually undergo this type of audits as a scanner of their situation in terms of management.

The image given in the audit report will be valuable in the face of possible company purchases or mergers with others.

This responds to the aforementioned that the structure of a company and the processes that its day-to-day life entails must be correctly measured.

Thus, it will be possible to study possible modifications or improvements from the outside as well.

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