Merits Or Advantages Of Management Audit
The main advantages of management audit can be studied as follows:
1. Helps In Structural Improvement
Management audit examines the functions of management and identifies the strength and weakness in management process. So, it helps to improve organizational structure according to the plans and policies of the firm.
2. Provides Valuable Suggestions
After reviewing the defects and deficiencies, it provides appropriate suggestions which helps to increase management efficiency.
3. Utilization Of Resources
Management audit helps in proper utilization of organizational resources to achieve predetermined goals and objectives.
It helps the management to take various decisions such as make or buy, sell or process further, special order, drop or continue decision etc.
5. Increase Profitability
Management audit helps to increase profitability of the firm by minimizing wastage and by utilizing resources properly.
Demerits Or Disadvantages Of Management Audit
Some major disadvantages of management audit can be highlighted as follows:
1. Expensive System
Management audit is a costly method of auditing. So, it is not suitable for small firms having limited resources.
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2. Not Well-defined
Management audit lacks fixed methods and techniques of auditing. So, it is not well defined.
3. Not Suitable
Management audit provides only theoretical suggestions to the management which are not suitable or applicable to solve practical problems.
