ABSTRACT

Management audit is an auditing process that examines the efficiency and effectiveness of management at different levels of an organisation, with the aim of identifying weaknesses and recommending improvements where necessary. This study examined the use of management audit as a tool for achieving organisational objectives, using Ebonyi State Transport Corporation (EBOTRANS), Abakaliki, as a case study.

The study was based on 95 properly completed questionnaires obtained from management and staff members across various departments of Ebonyi State Transport Corporation within Abakaliki metropolis. Specifically, it examined the influence of management audit on the level of fraud and misuse of funds, the income level of the organisation, and the efficiency and transparency of accounting record-keeping.

The data collected were analysed using the chi-square statistical technique. The findings revealed that management audit has a significant effect on the level of fraud and misuse of funds, organisational income level, and efficiency and transparency in accounting records. This conclusion was supported by the calculated chi-square values of 81.1, 188.7 and 182.7, respectively, which were higher than the critical value of 9.488.

The study established that evaluating management performance requires the application of appropriate management tools and procedures. Therefore, assessing the effectiveness of management should not be limited to internal auditing alone. Statutory auditing should also incorporate management audit procedures as a means of improving managerial efficiency and supporting the achievement of corporate objectives.

Based on the findings, the study recommended that the organisation's management control functions should receive proper recognition and be reviewed regularly to identify and eliminate obstacles to organisational progress. It also recommended strengthening the authority and responsibilities of the internal audit department and external monitoring personnel to improve their effectiveness and contribution to organisational performance.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Management audit supports organisational management by providing useful information and analysis that assist in controlling and improving organisational activities. It involves a systematic and detailed examination of an organisation's management processes, policies and performance to determine how efficiently and effectively managerial responsibilities are carried out at different levels. The purpose is to identify weaknesses and recommend appropriate measures for improving areas where performance is below expectation (Eze, 2001; Al-Taee & Flayyih, 2023). Unlike financial auditing, which mainly focuses on the examination of financial statements, management auditing considers both financial and non-financial information to evaluate how effectively an organisation is being managed (Johnsen, 2022).

Over the years, shareholders, financial analysts, prospective investors and other stakeholders have shown considerable interest in the annual reports of major organisations. However, financial reports alone may not provide sufficient information for evaluating the overall performance of management. This has created the need for additional methods through which interested parties can assess how well organisational resources are being managed. The concept of management audit is closely related to financial auditing because both involve an independent examination of organisational activities and management representations. Auditing, in a broader sense, provides management with an overall understanding of how organisational resources are used and how effectively services are delivered (Al-Taee & Flayyih, 2023).

Financial statements enable shareholders and potential investors to assess an organisation's financial performance through indicators such as net profit, earnings per share and other financial measures. Similarly, management audit provides a means of evaluating managerial performance by examining the quality of decisions, the efficiency of operations and the extent to which organisational objectives are achieved. It therefore helps determine whether management is making proper use of available resources to accomplish the organisation's goals.

The effective operation of internal audit systems, including management audit, has been associated with improved organisational performance and sustainable business development (Alzeban & Gwilliam, 2014; Madawaki et al., 2022; Alqudah et al., 2023). The support and commitment of senior management are particularly important in ensuring that audit functions operate effectively and contribute to improved organisational performance (Madawaki et al., 2022). Furthermore, evidence from the Association of Certified Fraud Examiners (ACFE, 2022) indicates that organisations with an internal audit function experience median fraud losses that are up to 33% lower. This highlights the importance of auditing mechanisms, particularly management audit, in protecting organisational resources and reducing the risk of financial misconduct.

One of the major challenges associated with management auditing is the selection of qualified and competent audit personnel. Auditors are expected to possess appropriate educational backgrounds, professional experience and technical skills. They must also have good interpersonal abilities to manage the human relations issues that may arise during the audit process. Employees may naturally become defensive when their activities and performance are being examined. For this reason, competent auditors should establish a positive relationship with the relevant staff before commencing the audit. They should communicate their intentions and encourage discussions with affected employees before presenting their findings to senior management. Through this approach, employees may begin to understand that management audit is not intended to threaten their positions but to identify operational weaknesses and create opportunities for improved performance.

Most management decisions depend on financial, quantitative and qualitative information obtained from organisational records. For such decisions to be effective, the information used must be accurate, relevant and available at the appropriate time. A sound internal control system that combines human resources and information technology helps organisations achieve their objectives. It also assists in supervising and evaluating the use of resources while preventing and identifying irregularities (Sofyani et al., 2022). In addition, organisations need a clearly defined authority structure that establishes the duties and responsibilities of individual employees and departments. Specific responsibilities should be assigned to personnel with the necessary qualifications, skills and experience. These requirements demonstrate the importance of management audit in evaluating the effectiveness of organisational systems and managerial activities.

The introduction of management audit also strengthens the accountability of organisational management to external stakeholders and other interested parties. Accountability is increasingly regarded as an important measure for reducing corruption and improving administrative performance, particularly within the public sector. A lack of transparency and accountability can create serious risks for capital market efficiency, financial stability, long-term economic sustainability and economic growth (Appah et al., 2021). Public sector auditing, including management audit procedures, is therefore important for identifying corruption risks, promoting financial discipline and supporting policies based on reliable evidence (Ahmed, 2022).

Against this background, this study examines the application of management audit as a means of evaluating management performance and achieving organisational objectives in Nigeria. Particular attention is given to Ebonyi State Transport Corporation (EBOTRANS), Abakaliki, with emphasis on how manage