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Performance Audits

form. Since the government has responsibility for Making the inspection program more efficient.
maintaining public accountability, all audit Focus the inspection program on the manage-
reports must be retrievable, and, therefore, avail- ment of key risks facing the performance audit
able to the citizens. practice. (Canada, Office of the Auditor General
of, 2005, p. 9)
Content. A report of a performance audit is expected
to include the objectives, scope, and methodol-
ogy, as well as the audit results, with details of THE VALUE OF PERFORMANCE
conclusions, recommendations, and acknowledg- AUDITS
ment of adherence to GAGAS. Since a draft of Performance audits are potentially valuable to both the
the report is to be shared with management of agencies for whom such audits are undertaken as well as
the agency under audit, the final report includes for the citizens of the governmental unit.
the responses of those who reviewed the draft
Value to agency audited. As noted earlier, a draft of an
and the outcome of the issues, if any, that needed audit team’s report is presented to officials responsible for
to be resolved. Views of the responsible persons
management. Such a draft is discussed with management
in the audited agency are to be reported. If there and revised accordingly before it is issued to the appropri-
is any privileged or confidential information that
ate parties. Auditors are expected to return to the agency
has been omitted, a disclosure of this matter is to after giving management sufficient time to implement any
be included in the report.
recommendations contained in the audit report. The pur-
pose of this follow-up visit is to assess the degree to which
PERFORMANCE AUDITS AT THE management has addressed the findings contained in the
FEDERAL LEVEL audit report.
The Office of the Auditor General of Canada reported in Value to citizens. Reports of governmental activity are
a peer review on the performance audit practice in the generally available to the citizens, except in infrequent
U.S. GAO office that in 2004 the GAO began work on instances where confidentiality is judged necessary
773 new performance audit engagements. The report because of security or other sensitive matters. Citizens
noted: “However, the total number of performance audit seek accountability for tax revenues. Objective results of
products issued in 2004 may be more than 1,000 since performance audits are reliable evidence for enlightening
some engagements can result in multiple products and citizens who are asked to vote on legislation related to
some products issued in 2004 were initiated in prior increasing taxes, for example.
years.” The performance audit practice of the GAO was
Performance audits are posted at states’ Web sites,
given a “clean opinion” on their quality control system.
and are accessible through state government offices (key-
The review team, however, made some suggestions, which
ing “state of” followed by a state’s name at a search engine
were summarized in these words:
is sufficient for reaching governmental offices). Georgia,
Distinguishing between audit and non-audit Oklahoma, and Washington are examples of states with
auditors who post performance audits that are clearly
services. Provide further guidance to staff on the
distinction between audit and non-audit services, identified as performance audits.
the evidentiary standards appropriate for each The U.S. GAO does not identify performance audits
form of product, and on the process for reconsid- in the title of such reports or make specific reference to the
ering a determination. term performance audit. Searching for examples of such
audits, therefore, at the GAO Web site is not direct; it is
Strengthening reporting. Provide additional details
necessary to read the titles and make a judgment. Accord-
on the sources of critical information and the
implications of scope and methodological ing to staff at GAO in September 2005, most GAO
reports are considered to be performance audits, even
choices.
though explicit identification as such is not included in
Reviewing the quality assurance system for fur- the report. There is generally a statement that the work
ther efficiencies. Review all the requirements to was done in accordance with the publication Government
identify those that may not contribute signifi- Auditing Standards. Inasmuch as Government Auditing
cantly to audit quality. Standards includes attestation engagements that are
Streamlining the documentation requirements. described as “an examination, review, or agreed-upon pro-
Expand the use of the streamlined documenta- cedures,” there is some uncertainty in determining if a
tion regime. report is a performance audit report.

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 589