Is there any difference between the ‘management consultancy services’ and ‘the management audit’?

He has not to advise and suggest the management the ways and means through which the profits of the concern can be maximized and wastes avoided. Thus, he is not required to point out the changes and improvements in the system of running the business which may produce better results in future. He has no legal right to do all this.

It is very often argued that the internal auditor is bestowed with the task stated above. But in practice he is confined only to the financial aspect for the prevention and detection of errors and fraud or misappropriations and manipulations.

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Undoubtedly, all the activities and operations, major or minor in nature, of the business have financial implications. For this, the financial auditing cannot serve the purpose. It cannot cover the management auditing as the management audit can prevent financial loss before it occurs, whilst the financial audit can only establish the fact that a loss has been made.

Today, the business has become so large and complicated that most of the unhealthy situations are attributable to the basic defects of the organization. The firms of professional accountants are being called upon to render management consultancy services; the object of management consultancy services is to improve the operations of an organization. The presence of management service amounts to a practical guarantee that the work will be satisfactory. It has to offer recommendations and its job is over.

Thus, management audit is a new concept and goes beyond the conventional audit. It is actually a comprehensive and a critical review of all aspects of Management. It is concerned with the appraisal of the efficiency of Management. It can be said to be an expansion of internal audit and the idea has developed recently.

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