PART II – Management Audit: Basic Standards, Values and Norms Shared by Pratap Kumar Pathak 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 Independent and Fair Legitimate Professionally competent Management Audit Continuous and Objective Improvements Participative and Collaborative Evidencebased Transparent and Accountable Decentralized and Delegated 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 Basic Principles General Standards Standards Reporting Standards Field Standards Standards of Management Audit Planning Standards Institutional Standards Reporting Standards Standards Examination Standards Standards of Auditor Reporting Standards Basic Principles • • • • • • • Legality Regularity Economy Efficiency Effectiveness Autonomy Independence General Standards Field Standards • Professional competency of auditors • Relationship of the auditor with the audit institution and audited organizations • Ethical and moral 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 All pertinent information to satisfy meaning of audit. Accuracy and objectivity with factbased Convincing persuasive presentation with Rationally balanced and evidence-based Consistency Constructive reform-driven and Acknowledgement of cooperation and participation 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. Core Values of Management Audit Value of Management Audit for Stakeholders Political leadership - Policy Citizen as Clients Satisfaction Value orientation Market – Delivery and Satisfaction Tax Paying Community – Resource utilization Assurance Management Audit Insight Objectivity Governance Assurance Management of risks Objective control Catalyst Insight Assessments Analyses Integrity Accounta bility Objectivity Independence Compet ency 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 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 NormsTypes of Management of Norms Audit Descriptive Prescriptive and and Subjective Injunctive Proscriptive Norms of Assessment Good Policy Good Management Good Result • Formulation of clear, evidence-based, predictable and consistent policies • Competent organization and management • Result-based management • Performance management • 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 • Policies and strategies • • • • Personal capability Family influences Religious values Personal standards and needs • Values and norms • Behaviour of leaders • Behaviour of peers and subordinates • Group dynamics and teamwork • Performance systems • Codes of conduct • Accountability mechanism • Disciplinary measures • Participative management and teamwork Individual capacity and Willingness Institutional capability Organizational behaviour Socio-cultural environment • • • • Global system and standards Governance capability Norms and values of society Ethical climate of profession Ethical Framework in Management Audit Values Morality Ethics • Rules for ‘right’ and ‘wrong’ • ‘Should be’ or ‘should not be’ • Emotion and belief • • • • External exposure Social description Personal description Response to society • Internal exposure • Driving principles, values and norms • Drive and motivation Ethics in Management Audit Management Audit: Jurisdictional Norms Jurisdiction of Autonomy Investigative Jurisdiction Delegative Jurisdiction Jurisdictional Framework Reformative and Suggestive Jurisdiction Developmental Jurisdiction Administrative and Punitive Jurisdiction Reporting Norms of Management Audit Policy: Appropriateness, Evidence-based Predictability, Implementability Good Management Practices: Strategic Planning, Performance Management, Information System Outputs and delivery: Competitive and Efficient Effectiveness: Results and Satisfaction Norms of Reporting Audit Outcomes Accountability: Legal, Professional, Market Any queries….PLEASE Thank you for kind attention