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Standards of Management Audit
• Standards are principles-focused, mandatory requirements for ensuring professional practice of examination of management.
• Standards prescribe the norms of principles and practices, which the top management and management auditors are expected to follow in the– Planning the audit– Selection of organization or function to be audited– Formation of management team– Guidelines and criteria for assessment and examination– Benchmark of ethics and morality– Professional accountability– Quality of audit results
Standardized Management Audit
Management Audit
Independent and Fair
Evidence-based
Transparent and
Accountable
Decentralized and
Delegated
Participative and
Collaborative
Continuous and Objective Improvements
Professionally competent
Legitimate
Purpose of Management Audit Standards
• Delineate basic principles that represent the practice of management audit
• Provide a framework for performing and promoting a broad range of value-addition
• Establish the basis for the evaluation of management audit performance
• Foster improved organizational processes and operations
Relevance and Application of Management Auditing Standards
• Provide framework for performing high quality audit and compliance to standards is expected to ensure that a high quality of audit is performed and communicated with results.
• Auditing standards apply to both the management auditor and audit institution as well as in the whole exercise of audit.
• Standards ensure legitimacy of management audit system.
Management Audit Standards
Attribute Standards• Purpose, authority and
responsibility• Independence and
objectivity• Proficiency and due
professional care• Quality assurance and
improvement
Performance Standards• Strategy and plan• Performance
capacity• Examination• Reporting• Accountability• Supervision and
monitoring
Ethical Standards• Code of ethics• Code of conduct• Management of
conflict of interest
• Management of relationships
Different Components of Management Audit Standards
Standards
Basic Principles
Field Standards
Reporting Standards
General Standards
Standards of Management Audit
Standards
Planning Standards
Institutional Standards
Standards of Auditor
Examination Standards
Reporting Standards
Basic Principles• Legality• Regularity• Economy• Efficiency• Effectiveness• Autonomy• Independenc
e
General Standards• Professional
competency of auditors
• Relationship of the auditor with the audit institution and audited organizations
• Ethical and moral standards
Field Standards• Framework for
the purposeful, systematic and balanced steps
• Rules of investigation to achieve a specific result
• Proper supervision of audit process and review of quality
• Reliability, adequacy and sufficiency of information
Values and Morals of Management Audit
• Values are the rules of management audit by which audit organizations and auditor/s make decisions about right and wrong, should and should not, good or bad, feasible or infeasible, and so on with respect to standardized management audit.
• Morals have a greater social element to values and tend to have a very broad acceptance of audit. These are the people’s fundamental beliefs and motivational basis for ethical judgment in social and professional conditions of management audit.
Value of Management Audit for Stakeholders
Value orientation
Political leadership -
Policy
Tax Paying Community –
Resource utilization
Market – Delivery and Satisfaction
Citizen as Clients -
Satisfaction
Ethical Framework of Management Audit
• Professional ethics: Utility, objectivity, fairness• Performance ethics: Delivery of standardized and
ethical performance• Political ethics: Political neutrality, impartiality and
fairness• Developmental ethics: Right approach, priority and
allocation of values for betterment• Innovation ethics: valuing innovation and creativity• Service ethics: Effective service delivery with public
service motivation• Relational ethics: Managing professional relationships
during management audit
Delivery of Public Value in Management Audit
Public Value
Quality Assurance of Outputs
Behavioural response for
Performance and Delivery
Objective/Rational use of power and
resources
Empowerment of Stakeholders for
Meaningful EngagementCompetent and
Professional Management
Services
Normative Framework of Management Audit
• Norms are for maintaining professional standards of intent, process and outputs of management audit
• Norms build legitimacy, validity and recognition of management audit system
Norms of Selection Management Audit
• Intensity of risks• Political and public concern• Materiality and significance• Visibility• Past audits and seriousness of concern• Estimated impacts• Stage of programme or project development
and implementation• Coverage of importance
Types of NormsNorms of Management Audit
Descriptive and Injunctive Prescriptive and Proscriptive Subjective
Norms of Assessment
Good Policy• Formulation of clear,
evidence-based, predictable and consistent policies
Good Management• Competent
organization and management
• Result-based management
• Performance management
Good Result• Sufficient services are
delivered• Services reach the
intended target group• Services are delivered
on time• Service results lead to
the achievement of policy
• Ensure value for money
Factors Determining Ethics in Management Audit
• Personal capability• Family influences• Religious values• Personal standards and
needs
• Policies and strategies• Performance systems• Codes of conduct• Accountability mechanism• Disciplinary measures• Participative management and
teamwork
• Global system and standards
• Governance capability• Norms and values of
society• Ethical climate of
profession
• Values and norms• Behaviour of leaders• Behaviour of peers and
subordinates• Group dynamics and
teamwork• Culture
Individual capacity and Willingness
Institutional capability
Socio-cultural environment
Organizational behaviour
Ethical Framework in Management Audit
Values• Rules for ‘right’ and ‘wrong’• ‘Should be’ or ‘should not be’• Emotion and belief
Morality • External exposure• Social description•Personal description•Response to society
Ethics • Internal exposure• Driving principles, values and norms• Drive and motivation
Ethics in Management Audit
Principled Ethics
•Values and intentions•Good principles lead to ethical behaviour and actions
Responsive Ethics
• Consequentialism• Result, impact and
outcome lead to ethical behaviour
• Accountability
Management Audit: Jurisdictional Norms
Jurisdictional Framework
Investigative
Jurisdiction Delegat
ive Jurisdic
tionAdministrative and
Punitive Jurisdicti
on
Developmental
Jurisdiction
Reformative and
Suggestive
Jurisdiction
Jurisdiction of Autonomy
Reporting Norms of Management Audit
Norms of Reporting Audit
Outcomes
Good Management Practices: Strategic
Planning, Performance Management,
Information System
Policy: Appropriateness, Evidence-based Predictability,
Implementability
Outputs and delivery:
Competitive and Efficient
Effectiveness: Results and Satisfaction
Accountability: Legal, Professional,
Market