We explain what an administrative audit is, its principles and the types that exist. Also, its different objectives and methodology.
What is an administrative audit?
An administrative audit is understood as a complete review of the organizational structure of a company or organization of any type, as well as its control and operation mechanisms and its human and material resources. It is about a procedure that evaluates the organization as a whole comparing its performance with its global and unit objectives, to get an idea of the effectiveness of its management model.
The term “management audit” It was first used in 1935 when James O. McKinsey, belonging to the American Economic Association, proposed the foundations for a review of a company in all its aspects, “in light of its present environment and probable future.”
This concept would allow the subsequent emergence of ideas such as self-audit proposed in 1955, and the development of this figure as an important mechanism in the field of competitiveness between organizations and in administrative theory.
An administrative audit obeys the following principles:
- Sense of evaluation. With this type of audits, the potential or suitability of the professionals or workers within the organization is not measured, as much as the managerial dynamics, that is, of the administrative commanders responsible for coordinating the company's forces internally.
- Importance of verification An effective audit not only bases its conclusions on the information obtained, but also offers scientific means to interpret it and to verify that it is a reliable evaluation.
- Think in administrative terms The auditors' focus must always be on the administrative aspect of the company, and not on other areas subject to administrative management. This is an evaluation of processes and resources in light of the company's mission.
See also: Financial accounting
Types of administrative audit
There are two fundamental types of administrative audit:
- Functional It focuses on the performance and suitability of management positions and the dynamics proposed from them.
- Analytics. It focuses on understanding the very processes that are put in place within the company structure.
Objectives of an administrative audit
Every administrative audit seeks to find the deficiencies or weaknesses of the various regions of a company, to correct or solve them. This means the following:
- Optimize the administration of resources by the company.
- Evaluate the service (or product) provided by the company, with a view to customer satisfaction.
- Increase quality and competitiveness levels through various mechanisms and management plans.
- Identify administrative successes and replicate them in similar situations.
- Analyze the functions of each division of the company in relation to the others.
- Generate and propose new organizational schemes that solve problems at macro or micro business levels.
Methodology of an administrative audit
Every administrative audit is made up of four basic steps:
- Planning. The parameters and guidelines that will serve to focus the audit review are established, that is, you must first define what things to look for and what the specific search criteria will be. This involves a reading of “symptoms” or apparent conflicts.
- Instrumentation. You choose between various data collection and measurement models, depending on the business nature and the type of conclusions you want to reach.
- Exam. Planning is applied and data and statistics or any other type of information that responds to pre-established guidelines is collected.
- Report. The closing of the audit results in a report in which the entire process is detailed and explained, the results are reported and, finally, the pertinent recommendations are made.
