Managing Performance Audits—From Planning to Reporting
Performance audits are systematic and independent examinations of government activities. The three-phase process the Office of the Auditor General uses to conduct performance audits is guided by professional standards and methodology and generally takes up to 18 months. At each stage, a multidisciplinary audit team works closely with an advisory committee of experts that offers advice and reviews audit plans and results.
Performance audits are examinations of government activities that are planned, performed, and reported by qualified and independent practitioners, in accordance with professional standards and Office policies. These audits examine government activities against established criteria to see whether they are managed with due regard for economy, efficiency, and environmental impact, and with measures in place to determine their effectiveness.
A Three-Phase Process
In the planning phase, the audit team sets out to understand the organization being audited—to get “the big picture.” This includes finding out about applicable legislative authorities, the way the organization has structured itself to achieve its mandate, and the challenges it faces in the environment in which it operates.
Since audits focus on how well an entity is managing major risks, auditors take these into consideration when identifying areas that will be examined by an audit. They then develop the audit criteria, which are based on existing government policies, the organization’s own strategic plan and objectives, and laws and regulations. Essentially, the audit criteria identify what auditors would expect to find if all systems and processes were working properly.
In the examination phase, the audit team gathers evidence to determine whether the organization is operating as expected (according to the criteria). Evidence gathering can include holding interviews with program staff and stakeholders; reviewing documents such as legislation, program design documents, studies and evaluations, and program files; and testing key transactions, systems, and controls.
The audit team compares this evidence with its expectations or criteria. The team ensures that any resulting observations and conclusions are fair and well founded and that recommendations could lead to improvements.
In the reporting phase, the audit team drafts the document that will eventually be included in the Auditor General’s report to the House of Commons. At this point, the audit team reviews facts and the results of audit tests with the department or agency being audited. Organizations are given an opportunity to correct facts and provide comments.
Reports to Parliament on performance audits answer the following key questions:
- What did the audit look at?
- Why is it important?
- What would the audit team expect to find if everything were working properly?
- What did the audit team find—that is, what is working well and what needs improvement?
- What did the audit team recommend to improve operationsor performance?
The Office publishes responses to each recommendation from the organization being audited. These responses provide the Office and the Public Accounts Committee with a basis for following up on the audit. Any areas of substantial disagreement between the department or agency and the audit team are highlighted.