Performance Audits

AuthorMary Oliverio
Pages587-590

Page 587

Performance audits, the public version of operational audits, are conducted to determine if an entity's operations, programs, or projects are functioning effectively and efficiently to achieve goals established. All levels of public administration in the United States—from municipalities to the federal agencies—undergo performance audits. Since all levels of government in the United States have some federal funding, the professional standards for performance audits established by the U.S. Government Accountability Office (GAO) are required for auditors who perform such engagements. Government auditing standards include the following definition for a performance audit:

An objective and systematic examination of evidence to provide an independent assessment of the performance and management of a program against objective criteria as well as assessments that provide a prospective focus or that synthesize information on best practices or cost-cutting issues. (GAO, 2003, p. 21)

Accountability is the key motivation for performance audit engagements. The performance audit, therefore, is perceived to be a valuable means of determining if goals have been achieved, as well as valuable in identifying what is needed to improve program operations.

The specific objectives of such audits, as noted in the GAO standards, are varied. Among objectives are those relating to program effectiveness, economy and efficiency in the use of resources, internal control, extent of compliance with legal requirements and policies, and prospective analyses.

NATURE OF PROFESSIONAL GUIDANCE PROVIDED

The GAO professional standards for performance audits are categorized as general, field, and reporting. The general standards established by the GAO apply to not only performance audits, but also to financial and attestation engagements. There are field and reporting standards, however, specifically for performance audits. The authority of the standards is identified in a footnote that states:

Page 588

Requirements in generally accepted government auditing standards (GAGAS) are identified by statements that include the word "should." Auditors are expected to comply with these requirements if they apply to the type of work being performed. (GAO, p. 5)

General Standards

The general standards that guide government auditors, as well as other independent auditors, stated in summary style, are:

Independence: The auditor and his/her firm must be free, in both fact and appearance, from all types of impairments of independence.

Professional judgment: The auditor should use professional judgment in planning and performing all audits.

Competence: Those individuals assigned to the audit must possess adequate professional competence for the tasks required to complete the engagement.

Quality control and assurance: Audits must be performed by auditors whose organizations maintain an internal quality control system and have an external peer review on a regular basis.

As noted, these general standards are the same for all types of audits that are GAO engagements. These general standards impose responsibility on both the audit entity and the individual auditors to ensure that those who participate in such audits are independent in fact and appearance, able to make good judgments, and qualified for engagement tasks. Furthermore, it is expected that the entity that employs auditors for such audits maintains oversight...

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