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Institute of Internal AuditorsPerformance Auditing

Ron Conrad, Partner

Cherry, Bekaert & Holland, L.L.P.


Course Objectives

• Discuss standards for performance audits

• Discuss application of performance audits among session participants

• Discuss practical applications and situations encountered in performance audits


Objectives of Performance Audits

• Provide an independent assessment of the performance

• Provide an independent assessment of the management of a program

• Provide information to improve program operations

• Facilitate decision making

• Improve public accountability


Types of Performance Audits

• Assessing program effectiveness and results

• Assessing economy and efficiency

• Assessing internal control

• Assessing compliance with legal requirements

• Assessing analyses and other information


General Standards

• Independence– Free in fact and appearance from

organizational, personal and external requirements

– Internal audit is free of organizational impairments if the head of the audit organization is:

• Accountable to the head or deputy head of the governmental entity

• Required to report audit results to the head or deputy head of the governmental entity


General Standards (continued)

• Is located organizationally outside the staff or line management function of the unit under audit

– Internal audit should be sufficiently removed form political pressures to ensure objectivity

– Independence is enhanced if reporting to an audit committee or oversight body

– Internal audit should document the conditions that allow it to be free of organizational impairments


General Standards (continued)

• Professional judgment– Reasonable care and diligence– Objective, independent, integrity

• Competence– Adequate staffing– Training

• Quality control and assurance– Peer review every three years– Policies and procedures


Fieldwork Standards

• Work is to be adequately planned– Understand the program– Consider internal controls– Design the audit

• Supervision is to be documented

• Evidence should be sufficient, competent and relevant– Findings should include the condition, effect,

cause and criteria


Fieldwork Standards (continued)

– Criteria are the standards, measures and expectations of what should exist

– Condition is the situation that exists

• Audit documentation should be sufficient to enable an experienced auditor, who has no previous connection to the audit, to ascertain that evidence supports the auditors judgments and conclusions


Reporting Standards

• Audit reports should include the objectives, scope and methodology used

• Audit reports should include findings, conclusions and recommendations

• Audit reports should reference GAGAS and include views of responsible officials

• Audit reports should include the nature of any privileged and confidential information omitted


Reporting Standards (continued)

• Audit objectives, scope and methodology – Identify the audit subject, why the audit is

performed, the depth of audit work performed, the period covered, the organizational unit audited, any limitations or scope impairments, the relationships between samples and what was audited and how audit objectives were accomplished

– Report findings, conclusions, and recommendations, criteria, condition, cause and effect


Reporting Standards (continued)

– Views of responsible officials are normally written. If oral, auditors should summarize in writing and provide the summary to officials of the audited entity

– When written views oppose the auditors’ findings, the auditors should state the reasons for disagreeing with the written views

– Report should be timely, complete, accurate, objective, convincing, clear and concise


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