Which of the following is NOT part of the process of management audit?  1. Identification of responsibility center 2. Review of performance of each responsibility center 3. Review of organizational structure 4. Investigating the depreciation method and its application on fixed assets in the company 

Which of the following is NOT part of the process of management audit?  1. Identification of responsibility center 2. Review of performance of each responsibility center 3. Review of organizational structure 4. Investigating the depreciation method and its application on fixed assets in the company  Correct Answer 4

Management Audit is a process of examination and evaluation of the performance of managerial functions. It also covers the organizational structure of a company. It involves a critical review of policies, processes, procedures, and operations which form part of the internal control system. It analyses the effectiveness of the utilization of different resources. Management audit thus is an appraisal of both policies and actions. 

Management Audit, in effect, investigates the soundness of management and its efficiency of operations. It is an assessment of the systems which are being used in an organization. It identifies areas of weakness in internal control and suggests measures to improve performance. 

Objectives

The main objectives of the management audit are as follows:

1. to promote organizational efficiency;
2. to enhance operational profitability;
3. to encourage an effective involvement and participation of staff in attaining the goals of the management;
4. to discover deficiencies or irregularities in the system and suggest appropriate measures for best possible results; 
5. to assist the achievement of targets fixed by the management by ; 
6. to help the development of harmonious relationships both within and outside the organization; 
7. to facilitate performance evaluation of resource inputs; and
8. to segregate appropriate activities according to centers of responsibility (A responsibility center is a segment of an organization for which a particular executive is responsible. There are three types of responsibility centers—expense (or cost) centers, profit centers, and investment centers).

Investigating the depreciation method and its application on fixed assets in the company is the objective of Cost Audit.