Value for Money Audit/ Performance Audit

This describes the combination of economy, efficiency and effectiveness within an organization or its processes. The 3 concepts define the relationship between plans, objectives, inputs and outputs.

Economy – Minimizing costs of resources used for an activity having regard to appropriate quality.
Efficiency – Relationship between output in terms of goods or services and resources consumed.
Effectiveness – This is the extent to which objectives of an activity are achieved and relationship between the intended and actual impacts of an activity.

In performing VFM audit, auditor should:

  1. Clearly identify and appraise the framework of controls associated with the entity‘s VFM Strategy.
  2. Emphasize VFM considerations when planning for the audit works.
  3. Consider the need to adopt a particular approach to appraising value for money in intensive systems.
  4. Ascertain the accounting officers requirements for VFM audits and if the organization has adequate resources to meet the requirements.
  5. Make clear the extent to which they intend to comment on VFM issues within their statement of assurance in their procurement audit report.

Steps in conducting this audit
1. Understanding the process, the auditor should identify business objectives, high risk procedures gaps in the processes and develop audit objectives and scope to focus on VFM issues.
2. Identifying process gaps. May include: Identification of new controls needed for improving the design for existing controls and those that could inhibit efficiency.
3. Validating process performance measures and assess controls; involves value added analysis of process design to validate performance measures which management relies on.
4. Make process improvement recommendations; helps management improve effectiveness and efficiency of the proc. process as well as controls in it.

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