Module 4 - Introduction to Performance Audit_4B
Determining scope is fundamental to audit design and much of the audit plan follows once this scope been established as illustrated below. Select strategy Select scope Select analytical methods and performance measurements (criteria) Select data to use Determine data sources and collection methods Select methods for validating data Test fieldwork plan Steps in Audit Design (based on Rauum and Morgan, 2009) 59 Audit methodology and audit criteria are part of this process and are considered below. The auditor is naturally guided and constrained by considerations such as time, cost, resources, expertise, professional standards, policies, and approved procedures. In general, the time, skill, and resources needed to complete the audit should be made available, but auditors must also operate efficiently. In some cases, it may be possible to test every potential element covered by the audit objectives exhaustively, but typically the frame of reference is selectively limited in terms of the timeframe (by ignoring events occurring earlier or later than a selected period) and the universe by defining a representative subset of people, activities, locations, and outputs on which to base the investigation. To help set the scope and determine what aspects of the universe to include, whether to sample or investigate the entire universe, the following questions can be used. Topic Questions What? What specific questions or hypotheses are being examined? What are the key processes relevant to your audit? 59 Rauum and Morgan, Performance Auditing: A Measurement Approach, The Internal Audit Research Foundation, 2009. 35
What is the subject matter that will be assessed and reported on? What resources are available to complete the audit? What questions, processes, and resources will not be covered? Who? Which agencies and organisations have responsibilities or perspectives relevant to the audit? Who within relevant agencies and organisations is best positioned to provide appropriate and sufficient evidence to answer the audit questions? Who is responsible for assuring the reliability of information and data that are relevant to your audit? Which organisations or persons will be excluded? Where? What are the locations to be covered? Where are the documents and records that need to be examined? What locations will be excluded? When? What is the timeframe to be covered? Scope Questions 60 The processes used for defining audit objectives, questions, and scope for performance audits are closely related. Clarifying one of these aspects for the audit helps to clarify the others. Often, they are developed together for this reason rather than as part of a distinct sequential process. 4B.4: Reflection What is the process used by your audit function for defining audit objectives, questions, and scope for performance audits? To what extent are inputs from parties other than the internal auditor involved in this process? Which aspects of defining audit objectives, questions, and scope for performance audits are the most difficult and the most important? Do experienced internal auditors require additional training when planning a performance audit for the first time? 4B.5 Methodology Consideration of methodology forms part of the planning process and will inform how the engagement is subsequently performed. Methodology includes the techniques to be chosen for collecting and processing information (comparison, measurement, data analytics, graphical representations, etc.). Evidence is needed to support the finding elements defined in the audit objectives. The typical approach comprises the following: Define and document the criteria. Determine the condition. Establish the effect. 60 Performance Audit ISSAI Implementation Handbook, IDI, 2021. 36
- Page 1 and 2: 4B. Planning a Performance Audit En
- Page 3 and 4: General overviews Consideration of
- Page 5 and 6: Understand interests and priorities
- Page 7 and 8: Internal auditors must develop and
- Page 9 and 10: How does the planning process for a
- Page 11: 4B.4 Audit Scope It is necessary to
- Page 15 and 16: eliability may include corroboratio
- Page 17 and 18: e) Objective audit criteria are fre
- Page 19: Establish current performance: •
What is the subject matter that will be assessed and reported on?<br />
What resources are available <strong>to</strong> complete the audit?<br />
What questions, processes, and resources will not be covered?<br />
Who? Which agencies and organisations have responsibilities or perspectives<br />
relevant <strong>to</strong> the audit?<br />
Who within relevant agencies and organisations is best positioned <strong>to</strong><br />
provide appropriate and sufficient evidence <strong>to</strong> answer the audit questions?<br />
Who is responsible for assuring the reliability of information and data that<br />
are relevant <strong>to</strong> your audit?<br />
Which organisations or persons will be excluded?<br />
Where? What are the locations <strong>to</strong> be covered?<br />
Where are the documents and records that need <strong>to</strong> be examined?<br />
What locations will be excluded?<br />
When? What is the timeframe <strong>to</strong> be covered?<br />
Scope Questions 60<br />
The processes used for defining audit objectives, questions, and scope for performance<br />
audits are closely related. Clarifying one of these aspects for the audit helps <strong>to</strong> clarify the<br />
others. Often, they are developed <strong>to</strong>gether for this reason rather than as part of a distinct<br />
sequential process.<br />
<strong>4B</strong>.4: Reflection<br />
What is the process used by your audit function for defining audit objectives, questions,<br />
and scope for performance audits?<br />
To what extent are inputs from parties other than the internal audi<strong>to</strong>r involved in this<br />
process?<br />
Which aspects of defining audit objectives, questions, and scope for performance audits<br />
are the most difficult and the most important?<br />
Do experienced internal audi<strong>to</strong>rs require additional training when planning a performance<br />
audit for the first time?<br />
<strong>4B</strong>.5 Methodology<br />
Consideration of methodology forms part of the planning process and will inform how the<br />
engagement is subsequently performed. Methodology includes the techniques <strong>to</strong> be chosen<br />
for collecting and processing information (comparison, measurement, data analytics,<br />
graphical representations, etc.). Evidence is needed <strong>to</strong> support the finding elements defined<br />
in the audit objectives. The typical approach comprises the following:<br />
<br />
<br />
<br />
Define and document the criteria.<br />
Determine the condition.<br />
Establish the effect.<br />
60<br />
<strong>Performance</strong> <strong>Audit</strong> ISSAI Implementation Handbook, IDI, 2021.<br />
36
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