Performance Audit

Performance Audit in the Public Sector
Johann Rieser
Senior Auditor, Ministry of Finance, Vienna
Rieser Johann
(Senior Auditor, Ministry of Finance, Vienna, Austria)
40 years public service;
Risk Management, Performance Audit;
20 years auditing EU-funds and „Own Resources“;
Public Internal financial Control (PIfC);
Expert „Public Internal Control“ (PIC);
International networks and working groups;
Twinning activities – LT, HU, RO, BG, SI, HR, AL……..
Evolution in Public management
Traditional bureaucracy model:
- bureacratic style, ineffective management;
The new public management:
- market-driven approach, effective
management but social disappointments;
Good governance:
- new syntesis and maturity - aimed to reach
sustainable growth and public sector
efficiency , as well as citizens satisfaction
and social welfare
Performance development
Traditional Bureaucracy
(up to 1980s)
New Public
Good Governance
(since 1990s)
law & order
social welfare
citizens, civil society
market, competition
networking, partnerships
(state as sole actor)
(state is one actor among many)
Performance relationships
Citizen / customer
performance budgets and performance audits between executive and Parliament
general charters between executives and citizens
contracts between executives and administration
specific charters between administration and citizens, service levelagreements and quality survey
accountabilty agreements between administration and Parliament
interaction between citizens and Parliament (through input policy process via committee work,
or remodelled ombudsman)
Performance Management – Performance
Performance-based public management – is taking
responsibility for the performance of the organisation and
system and being accountable for its results, thus the
Managerial Accountability (MA) of public managers has
become a crucial issue.
Performance auditing works with the same performance
management concepts used by program managers to
plan, monitor, and evaluate how public resources are
used to achieve public policy objectives.
Performance Audit
Performance audits give management valuable
recommendations for improving program
performance, one of the primary goals of
performance management.
Auditors help management understand how to
improve the system and use it better to improve
decisions, performance, and accountability.
Performance Audit
Performance auditing is a way to ‘execute control’
and to obtain insight into the running and outcome
of different government activities.
Legitimacy and trust are essential values in all
government undertakings, and performance
auditing may contribute to strengthening these
values by producing public and reliable information
on the economy, efficiency, and effectiveness of
government programs (TRANSPARENCY).
Performance Audit – a driver for public reforms
Government audit functions must be configured appropriately to enable
governments and government entities to fulfil their duty to be accountable to
the citizens, while achieving their objectives effectively, efficiently, and
IIA-Position Paper The Role of Auditing in Public Sector Governance, 2006
Other examples:
Internal Audit Capability Model for the public sector (IIA, 2009)
Three Lines of Defence Model (ECIIA, 2012)
INTOSAI GOV - e.g. 9140, article 1.6 “The role of internal auditing has
evolved from an administrative procedure with a focus on compliance, to an
important element of good governance.”
Performance audit – a driver for public reforms and
a challenge for auditors
The audit universe is based on the strategy of the organization!
Audit engagements result from a risk-oriented and comprehensive
1. positioning directly under the highest management level;
2. strategy of the IAS linked to the administration and its dynamic
3. team-oriented organisation;
4. human resource development and knowledge management;
5. excellent networking, also with the professional – and scientific
6. internal and external quality assurance;
7. measures to safeguard the results
Performance audit – definition
a) Audit of the economy of administrative activities in accordance with
sound administrative principles and practices, and management
b) Audit of the efficiency of utilization of human, financial and other
resources, including examination of information systems, performance
measures and monitoring arrangements;
c) Audit of the effectiveness of performance in relation to achievement
of the objectiveness of the audited entity, and audit of the actual impact
of activities compared with the intended impact.
And it is intended to improve the “performance” of the organization!
Performance audit – a driver for public reforms
o New challenges arise for public managements and
public audits as they have to deal with
- rapid and accelerating economic change,
- increasing complexity of regulatory issues,
- new technologies and services, and
- calls for openness, transparency and citizen
Performance audit – how and what?
Audit universe
• Performance auditing covers the full spectrum of
public administration and therefore it is important
that the skills and competencies of staff reflect
• It is an information-based activity that requires
political, analytical and creative skills.
• Additional training and life long learning will be
essential to meet the challenge.
Performance audit – a driver for public reforms and
a challenge for auditors
team orientation
knowledge of the enterprise
process knowledge
audit competence
IT knowledge
internal control, risk management
techncological knowledges
audit experience
financial knowledges
financial exp.
technology exp.
special investigation
special agendas
Performance audit – auditing standards
ISSAI 3000
What is Performance Auditing – standards and guidelines
The guidelines take into account relevant INTOSAI auditing
standards based on generally accepted principles of
performance auditing, distilled from the experience of INTOSAI
The manual is based on generally accepted principles of
performance auditing and current good practice in this area.
It explains in broad terms how performance audits should be
planned, conducted and reported.
Performance audit – how and what?
Audit universe
• „Performance Management“ – all the steps that can be
taken to improve the delivery of public services.
• Ensures, the best possible output from limited
resources by the public sector.
• The Council of Europe is promoting the
improvement of service and value for money
through the development of performance
management and performance audit!
Performance audit – how and what?
Audit universe
• Is there a clear structure of performance goals
and have the appropriate priorities and
instruments been chosen for the use of public
• Is there a clear distribution of responsibility
between the different levels of authority,
bearing in mind the principle of subsidiarity?
Performance audit – how and what?
Audit universe
• Is there a general cost awareness and an
orientation towards production of services,
putting citizens’ needs in focus?
• Is there an adequate emphasis on
management controls and reporting
Performance audit – how and what?
Audit universe
o Evaluating
o Organizations – objectives, what they are supposed to
o Valid measures of performance need to exist;
o Accurate measures of cost need to be developed;
o Cost and performance information should be brought
o Participants need to have incentives to use the
Performance audit – how and what?
Audit universe
• Basic questions: Are things being done in the
right way - Are the right things being done?
• It is investigatory work that requires flexibility,
imagination and analytical skills.
Performance audit – how and what?
Audit universe
Strategy and objectives – defining outcome/output?
Developing effective measurement mechanisms?
Defining adequate standards?
Defining responsibility?
• This should turn public servants into managers,
who are made accountable for the performance
of their organisation.
Performance audit – how and what?
Audit universe
o Internal auditors play a critical lead role in helping
management and the board understand, assess, mitigate
and manage the organization’s risk through activities
detailed in the internal audit plan.
o IA´s commitment to ongoing learning and capabilities
improvement, along with a deep understanding of the
organization’s needs and how they can be met through the
internal audit function.
Thank you very much……
[email protected]

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