Performance Audit

6 June 2017

Performance auditing Is based on decisions made or goals established by the legislature, and It may be carried out throughout the whole public sector. 1 2 What is the special feature of performance auditing? As stated In the Audltlng standards, performance audltlng Is not overly subject to relatively fixed standards, performance auditing is more flexible in its choice of subjects, audit objects, methods, and opinions.

Performance auditing is not a regular audit with formalized opinions, and it does not have its roots in private auditing. It is an independent examination made on a non-recurring basis. It is by nature wide- ranging and open to Judgments and interpretations. It must have at its disposal a wide selection of investigative and evaluative methods and operate from a quite ifferent knowledge base to that of traditional auditing. It is not a checklist-based form of auditing. The special feature of performance auditing is due to the variety and complexity of questions relating to its work. Within its legal mandate, performance auditing must be free to examine all government activities from different perspectives (AS 4. 0. 4, 4. 0. 21-23 and 2. 2. 16).

Performance Audit Essay Example

The character of performance auditing must not, of course, be taken as an argument for undermining collaboration between the two types of auditing. 1. 3 What ideas form the basis of performance auditing? Public accountability means that those in charge of a government program or ministry are held responsible for the efficient and effective running of such. Accountability presupposes public insight into the activities of the program or ministry. Performance auditing is a way for taxpayers, financiers, legislatures, executives, ordinary citizens and the media to ‘execute control’ and to obtain insight into the running and outcome of different government activities.

Performance auditing also provides answers to questions such as: Do we get value for money or is it possible to spend the money better or more wisely? A criterion of good governance is that all public services (or all government programs) are subjected to auditing Legitimacy and trust are essential values in all government undertakings, and performance auditing may contribute to strengthening these values by producing public and reliable information on the economy, efficiency, and effectiveness of government programs. This is facilitated by the fact that performance auditing is independent of the government ministries whose activities are subject to the audit.

In this way, an independent and reliable view of the performance of the audited rogram or objects is obtained. The performance audit does not represent any vested interest and has no ties, financial or otherwise, to the audited objects. By producing independent assessments, performance auditing may also serve as a basis for decisions on future investments and activities. The basis for this instrument – providing incentives for change by conducting independent analyses and assessments of public sector performance – is the importance of learning and reliable information. In a rapidly changing, complex world with limited resources and many uncertainties, there is a need for performance auditing.

Certain ideas form the basis of performance auditing: One starting point is that it is important to assess the economy, efficiency, and effectiveness in all government activities and, for that purpose, an audit is needed, government spending, better public services and better public accountability and management. Secondly, it is important to have reliable and independent information. An examiner is needed who represents the public interest; who can think and act independently in order to show and question the current situation. Finally, an overview and insights into government activities and the ability to influence and mprove its performance are important. A competent examiner is needed who can fulfil this role, who will promote incentives for learning and change and improved conditions for decision-making. 1. 4.

What are the basic questions in performance auditing? All government programs or undertakings (and most processes they generate) can, at least in theory, be analyzed with the use of a formula that describes how to move from one position to another by certain means in order to achieve specific objectives. In performance auditing, this is often done by trying to answer two basic questions: Are things being done in the right way? Are the right things being done? The first question is primarily aimed at the ‘producer’ and is concerned with whether policy decisions are being carried out properly. This question is usually associated with a normative perspective, i. e. he auditor wants to know whether the executive has observed the rules or the requirements. In order to widen the analysis, the question may be extended to whether the activities carried out are also considered the most appropriate – provided that the right things are being done.

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