Module 4 - Introduction to Performance Audit_4B

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