Management audit is a systematic and impartial examination, analysis and appraisal of management’s overall performance.
It is basically a procedure of appraisal of management’s total performance by means of an objective and comprehensive examination of the organisation structure, its objectives, plans and policies, its operation and its use of physical and human resources, and methods of operation.
Thus ‘management audit’ signifies a critical assessment of management of the enterprise from the broadest point of view. It may be undertaken by the management itself or it may be carried on with the help of management consultants.
One very important feature of management audit it that instead of comprehensive audit, company may even apply it to a specific section of the organisation.
As regards its scope, ‘production efficiency’ or ‘investment appraisal’ may be the subject matter of ‘management audit’. It may even be used to provide guidance on critical assessment of capital budgeting or profit performance.