Module 4 - Introduction to Performance Audit_4B

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eview. A preliminary survey could be a valuable tool to help internal auditors achieve a sufficient understanding of the area or process to be audited. 50 The Performance Audit ISSAI Implementation Handbook provides more specific guidance with respect to information gathering for a performance audit. To determine whether conditions for a successful audit exist, you will need to build on work completed when you selected your audit topic; that is, by collecting additional information that enables you to understand: The organisational structures, roles and functions, stakeholders, activities and processes, resources, and trends. The organisational goals. Applicable internal controls. The internal and external environmental factors that affect the entities and programmes under review. The external constraints affecting the delivery of outputs and outcomes. What is working well and not working well within the entities and programmes under review. The criteria that exist or can be developed to assess performance. The extent to which the activities are inclusive of all affected parties. 51 While this information may be collected continuously during the execution of the engagement, much of the information is needed at an early stage. In particular, the need is to define objectives and select scope and methodology. Potential information sources include: Legislation, legislative speeches, ministerial statements and government decisions. Strategic and corporate plans, mission statements and annual reports. Discussions with audited entity management and staff and key stakeholders. Organisation charts, internal guidelines, and operating manuals. Interviews with experts, including non-governmental. Policies, directives and plans. Previous audit reports. Reviews, evaluations and studies. Performance and accountability reports. Media coverage. Management information systems. Websites. 52 4B.2: Reflection 50 The International Professional Practices Framework, The IIA, 2016. 51 Performance Audit ISSAI Implementation Handbook, IDI, 2021. 52 Performance Audit ISSAI Implementation Handbook, IDI, 2021. 31
How does the planning process for a performance differ from planning for other types of engagements? How does your audit function conduct a pre-study for a performance engagement? Which information needed for the pre-study is readily accessible? Which information is harder to acquire? 4B.3 Audit Objectives Audit objectives may be developed in conjunction with the subject matter or as a more detailed expansion of the outline topic. The objectives state what the audit is intended to accomplish. Internal audit standards for setting objectives focus on an assessment of risk as well as the potential for “significant errors, fraud, noncompliance, and other exposures.” 53 However, this does not address the specific requirements of a performance audit with the purpose of evaluating economy, effectiveness, and efficiency. Objectives serve as the basis for developing questions the audit is designed to answer. Objectives need to be clear, concise, objective, and measurable, and enable the auditor to reach an unambiguous conclusion. The objectives also serve to communicate the purpose of the audit to stakeholders. The care taken in developing objectives can make the difference between a successful and an unsuccessful audit. Each objective should be written in the form of a question (or as statements beginning “to determine…”) and contain the following key elements: Subject (i.e., the subject matter – e.g., organization, program, program component, function, or activity). Performance aspects (i.e., what management is responsible for, namely carrying out public functions efficiently, economically, effectively, ethically, and equitably, while achieving desired program objectives.) Finding elements to be addressed according to the needs of the intended user (i.e., one or more of condition, effect of the condition, significance of the effect, and potential solution). Criteria (to include agency goals, when available, even if such goals are found to be deficient and contributing to low performance). Audit focus/approach (how the objective may be investigated). 54 Objectives may be formulated in different ways. The following examples are taken from Performance Audit ISSAI Implementation Handbook: Problem-oriented approach: the objective is stated to include a short description of a known issue. For example, “to determine why the fisheries and environment department did not enforce key fisheries statutes and habitat policy.” 53 Standard 2210 – Engagement Objectives, The International Professional Practices Framework, The IIA, 2016. 54 Based on Rauum and Morgan, Performance Auditing: A Measurement Approach, The Internal Audit Research Foundation, 2009. 32
Page 1 and 2: 4B. Planning a Performance Audit En
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Page 11 and 12: 4B.4 Audit Scope It is necessary to
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Module 4 - Introduction to Performance Audit_4B

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