Public managers should take care of the economy, efficiency, and effectiveness and should be accountable. Economy refers to resources at the lowest cost and efficiency means optimum utilization of resources and effectiveness is the achievement of objectives. Performance Audit takes a balanced view and it reports achievements rather than failures. It wants to see a ‘reasonable manager’ (Z. Ahmad, Introduction to Performance Audit 1993) that adopts reasonable policies and has a constructive approach, and takes resort to both internal and external evidence. It places a lot of stress on efficiency i.e. pupil teacher-ratio in a school and patient-bed ratio in a hospital.
Performance Audit also conducts a review of cost-benefit of all the issues including capital cost overruns, delays in implementing the project, higher operating costs, slow build-up to full production, lower than anticipated benefits. The sensitivity test is also used that evaluates a project on the assumption “what if” the cost of the projected increase or decreases or it is delayed by one year?
Audit of Projects
In the audit of the projects, there are many irregularities that have been observed that can be classified as substantive instances of incorrect data and where the presentation of data was unfair and misleading. (Z. Ahmad, Auditing of Projects 1993) Projects can be further evaluated on many other counts like management of manpower, the appointment of consultants, management of money, procurement and management of materials, review of contracts, and especially the turn-key projects. The performance audit can also review the whole process of a project and can establish areas of wastage and areas of improvement. It can also find out the proposed outputs and outcomes. The completed road is an output but the resulting increase in commerce, the flow of traffic; its economic impacts are all outcomes.
Audit Of Programmes
Audit of Programmes is another important feature of the Performance Audit. According to the Concise Oxford Dictionary is a “series of events”. “Programme evaluation, according to Dr. Rutman, “entails the use of research methods to retrospectively determine the manner and extent to which a program was effective in achieving the intended effects and impacts.” (Rutman n.d.) The concept of a program is based on two very simple assessments; i) Does the program makes sense and ii) can we expect the outcomes promised to a reasonable extent? (Z. Ahmad, Audit of Programmes 1993) Effectiveness is specifically applied to programs and not to the projects. In most of the developed countries, it is considered a very important segment of the evaluation of the programs and Canada is ahead of all that has declared that the effectiveness of a program is the responsibility of the management and it cannot absolve itself of this responsibility if the required and desired results and outcome has not been achieved.
Performance Audit: Tool for Improvement
Performance Audit has over the years improved many things in many different ways. It has helped improve the management practices of the organizations by providing them insight into their management deficiencies. It has contributed towards accountability, transparency, and service delivery in organizations. “Performance Audit evaluation of public sector industrial enterprises has proved so useful that it was decided to start wide-scope auditing in government departments and agencies as well”. (Z. Ahmad, Introduction to Performance Audit 1993) In order to know the practical aspect of the Performance Audit is a tool for improvement or not, can only be proved right or wrong if it is substantiated by the evidence. This section will be dealing with this feature and discuss in detail how it has worked in both the public and private sectors.