A financial audit is a thorough analysis of a firm's past and current financial position designed to verify and evaluate the effectiveness of its financial operations. It can help management detect circumstances that could lead to financial problems in the future.
Similarly, a management audit, although much broader in scope than a financial audit, aims at detecting potential managerial problems in the small company that threaten its existence. Frequently a small business manager is so closely involved in the firm's operation that she never recognizes its primary problem areas. The typical owner, working with the firm's problems daily, finds it difficult to view them objectively. As a result, she has difficulty assessing the need for changes in policies and procedures to meet fast-changing business conditions.
The following series of questions is designed to assist the small business manager in candidly and honestly evaluating strengths and weaknesses and defining opportunities and potential difficulties. It is a beginning point for the owner to create a plan to improve the company's performance. The material serves as a quick-glance checklist. (For more information, obtain a copy of the SBA booklet from which it was drawn.)
Students of small business management will find this audit useful in performing consulting services for small businesses. Properly used, the management audit offers pertinent suggestions for improving managerial and business performance.
- STRATEGIC PLANNING
- ORGANIZATIONAL STRUCTURE
- HUMAN RESOURCES MANAGEMENT
- ACCOUNTING SYSTEM
- BUDGETING AND EXPENSE CONTROL
- CASH MANAGEMENT
- TAXES AND LEGAL OBLIGATIONS
- RISK AND INSURANCE
- MARKETING AND SALES PROMOTION
- PLANNING FOR GROWTH
Source: U.S. Small Business Administration, Management Audit for Small Service Firms, Small Business Management Series No. 38, Washington, D.C., 1979; John B. Kline, U.S. Small Business Administration, Management Audit for Small Manufacturers, Small Business Management Series No. 29, Washington, D.C., 1979, Small Business Administration, Management for Small Retailers, Small Business Management Series No. 31, Washington, D.C., 1979.
Before You Start:
A Basic Checklist
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