Organizational Development: A Manual for Managers and ... - FPDL

Part 1
Introductory theoretical framework
The very term audit comes from Latin audio, and refers to a hearing of oral evidence. Nowadays,
the term became common in modern English and many other languages in a sense of “inspection,
correction, and verification of business accounts by a qualified accountant” or, in a more general
interpretation, it means, “to inspect, correct, and certify (accounts, etc.)” (The New Collins
Dictionary and Thesaurus, 1991).
Allan J. Sayle, one of the leaders in the field, who has been acknowledged as a pioneer of “valueadded
auditing” gives the following explicit definition:
“A management audit is an independent examination of objective evidence, performed by
competent personnel, to determine:
a) Whether or not the auditee:
• Is assisting or is capable of assisting the company to achieve its policies and objectives.
• Is capable of or is assisting the company to fulfill its contractual and legal obligations.
• Has integrated management systems to do so.
• Is effectively implementing those systems.
• Could eliminate avoidable costs and continuously improve.
And b)
• The risk of continuing present practices in tomorrow’s world.
• The probable efficacy of planned strategies, practices, systems in preventing avoidable loss.
It is also:
• The true and fair presentation of the results of such examination.
… Audit is a fact gathering exercise and, when conducting audit, it is vital constantly to remember
that one’s aim is:
FACT FINDING, NOT FAULT FINDING.
… Everybody in organization has a product. Everybody in organization is responsible for the
quality of his or her product, as well as the costs they incur, and must, therefore, manage both their
own work and themselves properly. Effectively this means that everyone is a manager, regardless
of whether staff control comes under their delegated responsibilities. … The independent audit,
therefore, serves the needs of people at all levels since it provides them with information
concerning their management of their work.” (Allan J. Sayle, Management Audits, 1997, p. 11)
Although this definition was, probably, made having in mind business “for profit” organization, most
of the ideas are fully applicable to local governments.
Any local government has certain managerial capacity to govern, and, consequently, more or less
limited ability to ensure that declared policies and objectives are achieved, and all legal and
contractual obligations are fulfilled. Thus, the match of capacity with the scope of responsibilities is
a legible point for the audit. Are they able to do what they must do? Although in most cases local
officials complain about national legislation, budget deficiency and other external limitations, they
often fail to do, or do well enough, things that nobody and nothing prevent them from doing, or do
better – they just cannot manage this.
On the other hand, having considerable managerial capacity does not automatically means using
it. Local administration operates under the supervision of politicians and central governments. Any
managerial actions may have the impact to the services provided to the public, but not only.
Political and other administrative consequences may be also considerable. We have witnessed in
some local governments that management does much less then it is able to do, being paralyzed by
contradictory and risky political environment, or inappropriate control from central government
institutions. Although we do not consider political environment and government’s behavior as the
object for management audit, the audit itself can help to determine the difference between the
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