The CAG’s Performance Auditing Guidelines 2014 & the Regulations on Audit and Accounts, 2007 define Performance audit as an independent assessment or examination of the extent to which an organization, Programme or scheme operates economically, efficientlyand effectively. Performance auditing carried out by the Department is an independent, objectiveand reliable examination of whether government undertakings, programs, systems, activities or organizations are performing in accordance with the principles of economy, efficiency & effectiveness and whether there is room for improvement.
Performance auditing seeks to provide new information, analysis or insights and,where appropriate, recommendations for improvement. Performance audits deliver new information, knowledge or value by:
- providing new analytical insights (broader or deeper analysis or newperspectives);
- making existing information more accessible to various stakeholders;
- providing an independent and authoritative view or conclusion based onaudit evidence;
- Providing recommendations based on an analysis of audit findings.
Typically, Performance Audits address the issues of economy, efficiency and effectiveness.
Elements of Performance Audit
Public Sector audits have certain basic elements
- Three parties in the audit i.e.the auditor, the responsible party, intended user,
- the subject matter information and
- Criteria to assess the subject matter.
The three parties
Public sector audit involves at least three separate parties: the auditor; theresponsible party and the intended user.
The auditor: In public sector auditing, the role of auditor is fulfilled by theDepartment and by the persons delegated with the task of conducting audits. However,clear-cut demarcation of roles and responsibilities of officers and staff for variousfunctions and processes is done through a hierarchical structure. Auditors in performanceaudits typically work in a team with different and complementing skills.
The responsible party: Responsible party would typically mean audited entityand those charged with governance. The role of responsible party may be shared by arange of individuals or entities, each with responsibility for a different aspect of thesubject matter in some cases at different points in time. Some parties may be responsiblefor actions that have caused problems. Others may be able to initiate changes to addressthe recommendations resulting from a performance audit. Still others may be responsiblefor providing the auditor with information or evidence.
Intended users: The intended users are the persons for whom the auditor prepares the performance audit report. The legislature, government agencies and the public can all be intended users. A responsible party is also an intended user.
Subject matter
The subject matter of a performance audit need not be limited to specificprogrammes, entities or funds but can include activities (with their outputs, outcomes and impacts) or existing situations (including causes and consequences). The subject matter is determined by the objective and formulated in the audit questions.
Audit Criteria
Audit criteria within the context of performance audit are audit specific, reasonable standards of performance against which the economy, efficiency and effectiveness of operations can be evaluated and assessed.