What is an Administrative Audit?
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What Does Administrative Audit Mean
We explain what an administrative audit is, its principles and the types that exist. In addition, its different objectives and methodology.
What is an administrative audit?
An administrative audit is understood to be a complete review of the organizational structure of a company or organization of any type, as well as its control mechanisms, operation and its human and material resources . It is a procedure that evaluates the organization as a whole , comparing its performance with its objectives, both global and per unit, to get an idea about the effectiveness of its management model.
The term “administrative audit” was used for the first time in 1935 , when James O. McKinsey, belonging to the American Economic Association, proposed the rationale for a review of a company in all its aspects, “in light of its present and future environment. probable".
This concept would allow the subsequent emergence of ideas such as the 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 well as the managerial dynamics, that is, of the administrative commands responsible for coordinating the forces of the company internally.
- Importance of verification. An effective audit not only bases its conclusions on the information obtained, but offers scientific means to interpret it and to verify that it is a credible evaluation.
- Think in administrative terms. The focus of the auditors must always be on the administrative aspect of the company, and not on other areas subject to administrative management. It is an evaluation of processes and resources with a view to the mission of the company.
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 managerial positions and the dynamics proposed from them.
- Analytics. It focuses on understanding the very processes that are put in place within the structure of the company.
Objectives of an administrative audit
Any 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 management of resources by the company.
- Evaluate the service (or product ) provided by the company, with a view to customer satisfaction .
- Increase the levels of quality and competitiveness 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 the macro or micro business levels.
Methodology of an administrative audit
Every administrative audit is made up of four elementary 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 goes through a reading of "symptoms" orapparent conflicts .
- Instrumentation. You choose between different models for data collection and measurement, depending on the business nature and the type of conclusions you want to reach.
- Exam. Planning is applied and data and statistics are collected or any other type of information that responds to the pre-established guidelines.
- Report. The closing of the audit produces a report in which the entire process is detailed and explained, the results are reported and, finally, the pertinent recommendations are made.