Performance audit
Performance audit can be termed as the process by which the accuracy of the performance of any firm is checked. It is the way in which an outside accounting concern audits the performance of the asset manager of the concern and also verifies that the figures that have been provided for public viewing are authentic and represent the true value of the result of the business firms. For this purpose the CFA institute has established certain guidelines that have to be taken care of by the asset managers.
Types of Performance Audit:
There are basically two types of performance auditing that is carried out these days.These two types can be classified as: Economy and Efficiency Audits This type of auditing is basically related with protecting, acquiring and the proper use of the resources at hand. This audit finds out the causes of the various problems and also determines that the audit process complies with the various laws and regulations governing the concern.
Program Audits: These kinds of audits are basically undertaken to achieve the desired results and to make the programs more effective. The only similarity between program audit and the Economy and Efficiency audit is that they both work with the compliance of the various laws and regulations.
Performance Audit and its Essentials:
The public sector is rarely subjected to any kind of performance audit. Infact, this is one of the biggest reasons why the officials of any public sector never realize their potential or where they are making a mistake.These audits are considered to be one of the best and the most valuable tools for the management. There are some points that have to be remembered when going in for a performance audit.Some of the points are:
- Efficiency, effectiveness and Economy: Any performance should not only be feasible but should also incorporate things like effectiveness and efficiency. These are the three basic things that should be present in any performance auditing program.
- Competent, Sufficient and Relevant Evidence: All the performance audit programs should bring into use evidences that are relevant and competent.
After the completion of these audits the reports should be written in a comprehensive manner and submitted to the concerned authorities on time.They should also comply with the various laws and regulations set up by the government. Performance audits should be used as frequently as possible as they are the only tools of management by which one can determine the thing that is to be done and things that have to be avoided. Even the experts suggest that these audits ultimately lead to saving a lot of money and an increase in the profits of the concern.
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