Executive Summary

Management Audit

The issue of management compensation may not always depend on financial results attained by a management team especially in post-merger evaluations but on the assessment of competencies and capabilities of a company’s management to carry out corporate objectives. This task usually is reserved for Board Compensation Committee. A company’s Board of Directors does not have formal management audit committee to perform this function using qualitative intangible elements to assess efficiency, control and profitability, for example, measuring the effort required to integrate an acquisition. Domestic and International companies employ the services of independent professional consultants because they can help ascertain the capacity of the management team to align shareholder interest to their own compensation, maintain good relations with employees and uphold the firm’s reputation and standards.

This service is multi-departmental and depending on scope of the audit uses a unique stakeholder management approach, which effectively assess the performance of individual executives using quantitative information such as organic sales, EBIT margins, segment margins, operating cash flow, and intangible elements such as effort put into the integration following an acquisition.

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Service Methodology

The service involves the review of managerial aspects such as organizational objective, policies, procedures, structure, control and system in order to check efficiency or the performance of the management over the activities of the company segmented by their operating units such finance, marketing and IT. Unlike financial audit, management audit mainly examine non-financial data to provide a clue as to the efficiency of management. Depending on the scope of work, a management audit could take weeks and months to complete. The outcome of a completed management audit would resemble a report card, with high marks and low marks. The high marks would be assigned to areas where management have excelled in performance. Low marks would go to areas where there is need for improvement. Components graded can include managerial style, effectiveness and suitability of controls, procedures and methods. Answers provided through this audit would help the Board answer the following questions: Organizational structure? Are there clear lines of reporting or is there confusion?; Policies and procedures of the finance group, are they always in compliance?; Current risk management measures, how effective are they?; Management relations with employees, in what state are they?; The annual budget; how is put together?; The company’s IT System; what is the life cycle for updates?; Relationship to shareholders; is the management group responsive to shareholders?; Workforce recruitment and retention; are there training programs to keep skills current among employees?; Good corporate citizen; is management doing its job to maintain this corporate objective?; Strategic focus: is management guiding the company to meets quarterly and yearly financial targets.

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Service Options

Companies can elect whether they just require Appleton Greene for advice and support with the Bronze Client Service, for research and performance analysi