Performance audit offers management invaluable insights into their organization's operations by assessing how successfully objectives are being met. These observations in turn enable management to refine systems and further improve performance.
A performance audit is an independent evaluation of the measures implemented by management to ensure the efficient, effective and economic use of resources. A performance audit differs from the other audit functions that public sector organizations must already perform each year:
- The external or statutory audit performed in accordance with relevant auditing and accounting standards
- The internal audit which is control and risk-focused
- The audit of performance information which is a statutory obligation of the Auditor-General, looking at performance against predetermined objectives.
Benefits of a performance audit
The performance audit is highly relevant at this time to public sector entities and government departments, which are increasingly mandated to achieve more efficient levels of service delivery. A performance audit creates a better understanding of the challenges that an entity is facing. It assesses the organization as it is presently and analyses how best to move forward in achieving its goals.
- Improving organizational performance
One of the key qualities of a performance audit is its flexibility. The audit scope can vary, focusing on financial and/or non-financial information and it is customized to suit the needs of that entity. It can review the whole organization; a particular division; a service line or function, such as human resources, that cuts across the entire operation; or a single issue that can involve several separate organizations.
- A tool to increase efficiency
Performance audits aim to improve accountability and support good governance. In its assessment of how resources are being used, a performance audit would highlight areas where improved service delivery is required; identify potential cost savings and services that can be reduced or eliminated and analyze inefficient gaps or overlaps in programs or services.
- Policy and performance
What performance auditing will not do is to question an organization's policy. The formulation of policy remains the mandate of government at all levels. Rather, a performance audit would examine policy-making measures, the effects of policy and how well policy objectives are being met. For example: have policy goals and objectives been set, are they clearly defined and approved at the appropriate level by the appropriate authority; are supporting policies and procedures aligned with higher level policy; and are policy assumptions based on appropriate motivations and relevant and reliable information?
- Legal imperative
Performance auditing is not a new concept in South Africa. With its origins in the Canadian public sector, it was first introduced into South African legislation in 1975. The Auditor-General first initiated performance audits in 1986.
- The right team for the job
Performance audit findings can have a profound impact on an organization and its employees. With such a great responsibility, the independent team conducting a performance audit must be equipped with high-level and diverse skills to ensure that it is properly planned and executed.
Mahmood Associates and Co. gives our valued clients unique performance audit service, the opportunity to refine systems and unlock greater value within their operations while enhancing the functionality of their performance management practices.
For more information please Contact us.