Magazine article The CPA Journal

Operational Profitability-Conducting Management Audits

Magazine article The CPA Journal

Operational Profitability-Conducting Management Audits

Article excerpt

BOOK REVIEW: OPERATIONAL PROFITABILITY - CONDUCTING MANAGEMENT AUDITS

By Robert M Torok, CPA, and Partick J Condon

Published by John Wiley & Sons, Inc 260 pages $95.00 Reciewed by Alexander AH Bobtling, CPA.

As this book points out, a management audit is an in-depth review of the individual parts of a business. In effect, it provides valuable data on operational efficiency and an additional service opportunity beyond the usual audit. The management audit goes to substantial depths in analyzing a client's efficiency, especially where inventories are a substantial factor. It brings up the strong and weak points and frequently provides the basis of helpful recommendations.

The functions of a management audit are covered in eleven chapters-the business approach; building the organization from the bottom up; financial ratio analysis; impact of the seven causal ratios on the nine secondary ratios that measure effect; cash flow and break-even analysis; inventory; operations: operational efficiency measures; reducing operating costs: inventor controls; and production, planning, and control. …

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