Summary: The Wahid techniques technique will depend on the nature of the activity Performance audited, the depth and scope of examination, time of audit, processing methods, etc. In deciding on a specific technique, also need to take account of the objective of the audit action and the capacities limited by time or other factors.
These Wahid techniques are closely related to and directly determined by the method how the audit activity is performed. And may use a number of techniques to ensure the dependability of resulting data, its quality required detecting the true causes of deviations, and its extent needed to devise generalized conclusions at a desired level. For each audit action.
I would like to explanation my techniques about the Performance audit and financial audit activities prior to discuss the “WAHID techniques” I have tried to make clear main parts of Performance audit in advance of the” WAHID techniques” because I believe that the people who are related with accounts, finance, auditing and also the business owners will recognize generally about the Performance audit by investigative,
What is performance auditing?
Performance audit and financial audit have much in common. These two types of audit may involve the same kind of tasks, namely the measuring and explanation of the performance of an auditor. They also rely on similar data collection methods. While performance auditors have their sights on efficiency, financial auditors focus on the accuracy and correctness of accounts. However, there are some differences between performance audit and financial audit as well
Performance audit refers to an examination of a program, function, operation or the management systems and procedures of a governmental or non-profit entity to assess whether the entity is achieving economy, efficiency and effectiveness in the employment of available resources. The examination is objective and systematic, generally using structured and professionally adopted methodologies Performances audit an activity assessing the degree of economy, efficiency and effectiveness in the use of human, financial and material resources at a level of organization unit, organization, or certain actions. This type of internal audit examines processes and systems of an auditor in particular
Performance auditing is concerned with the audit of economy, efficiency and effectiveness and embraces:
(A) Audit of the economy of administrative activities in accordance with sound administrative principles and practices, and management policies;
(B) Audit of the efficiency of utilization of human, financial and other resources, including examination of information systems, performance measures and monitoring arrangements, and procedures followed by audited entities for remedying identified deficiencies; and
(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’. Performance auditing is based on decisions made or goals established by the legislature, and it may be carried out throughout the whole public sector.
In difference: The concepts of “economy, efficiency and effectiveness (3Es)” are termed as follows.
“Economy” means the acquisition of the appropriate quality and quantity of human, financial, physical and information resources at the appropriate times and at the lower cost.
“Efficiency” means the use of human, financial, physical and information resources such that the output is maximized for any given set of resource inputs, or input is minimized for any given quantity and quality of output.
“Effectiveness” means the achievement of the objectives or other intended effects of activities. A performance audit assignment may include all/one or a combination of two aspects of “3Es”. Regularity and propriety related issues which impact performance may be considered in the conduct of performance audits.
In most countries, performance audits of governmental activities are carried out by the external audit bodies at federal or state level. Many of these audit bodies have established guides for conducting performance audits which explain how performance audits are planned, conducted and its results reported. Most of the countries pay attention to financial audit but at the same situation without considering to the aspects of audit may it be better to do value of money audit.
The aspect of performance auditing?
Performance auditing is not overly subject to specific requirements and expectations. Even as financial auditing tends to apply relatively permanent standards, performance auditing is more flexible in its choice of subjects, audit objects, methods, and opinions. Performance auditing is not a regular audit with formalized opinions, and it does not have its roots in private auditing. It is an independent examination made on a non-recurring basis. It is by nature wide-ranging and open to judgments and interpretations. The special feature of performance auditing is due to the variety and complexity of questions relating to its work. Within its legal mandate, performance auditing must be free to examine all government activities from different perspectives
The basic questions in performance auditing?
All government programs or activities (and most processes they generate) can, at least in speculation, be analyzed with the use of a method that describes how to move from one position to another by certain means in order to achieve specific objectives. In performance auditing, this is often done by trying to answer two basic questions:
• Are things being done in the right way?
• Are the right things being done?
What ideas form the basis of performance auditing?
Performance auditing is a way for taxpayers, financiers, legislatures, executives, ordinary citizens and the media to ‘execute control’ and to obtain insight into the running and Outcome of different government activities. Performance auditing also provides answers to questions such as: Do we get value for money or is it possible to spend the money better or more wisely? A criterion of good governance is that all public services (or all government programs) are subjected to auditing 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.
Need for Performance Audit
Performance audit is the outcome of the important efforts directed to improve the system of management to ensure authentic output from resources employed. The concept of performance auditing emerged in response to:
Increasing demand for information on efficiency and economy in managing resources and the effectiveness with which objectives are met; Need to determine whether: the operations of audit entities were conducted in a way that ensures the best possible use of resources or considering the 3Es; Officials in the public sector have met their accountability obligations; reporting on performance is credible and adequate. Performance audit provides the legislature and the public with an assessment whether the audited entities are achieving real value-for-money. It intends to Arrive at a verifiable condition for comparing what is being done and how well it is being done with the plans, policies and standards. The mere attentiveness that the basis for decision making is subject to scrutiny by the auditors may, by itself, compel public administrators to exercise caution and prudence in their actions.
Performance Audit versus Financial Audit
Auditing is a process involving the examination of data, statements, records, operations and performance of an auditor for a stated purpose. Performance auditing goes beyond the consideration of promptness. It aims to determine to what extent the audited has discharged its financial or other responsibilities which imply assessment of the auditor’s operation in terms of the economy in acquiring resources, efficiency in using resources and effectiveness in achieving objectives. The major differences in the approach, scope and objectives between financial audits and performance audits are explained in the following table.
Financial Auditing Performance Auditing a few examples presented following
01. Uses financial data to express an opinion on financial position and compliance with existing rules and
01. Uses financial as well as non-financial data to assess economy, efficiency and
02. The financial statements of the auditor fairly present the financial position, reflect results of operations and cash flows or manifest changes in financial position in accordance with generally accepted accounting principles;
02. The auditor has complied with laws and regulations for those transactions that may have a material effect on financial statements. the management of resources and determines whether:
03. Does not comment on the extent to which auditor is meeting target relating to output and delivery of services to the targeted groups they are serving.
03. Evaluates the extent to which audited is meeting the target relating to output and delivery of services to target groups they are serving.
04. Does not make recommendations for improving economy, efficiency and effectiveness of programmed or projects being audited.
04. Offers general and specific recommendations for improving economy, efficiency and effectiveness of the audited being audited.
Performance Audit versus - Financial Audit
Through dissimilarity with financial audit performance audit involves:
More judgment and interpretation more selective coverage criteria for evaluation are not predefined evidence tends to be at best persuasive, rather than conclusive reports contain more discussion and reasoned argument also in this bases thy have some differences:
(a) Study selection stage
(b) Study design Stage
(c) Consulting the audited entity
(d) Team work
I. Financial Audit has published generally accepted principles of performance auditing in its implementation guidelines
I. Performance audit is concerned with the audit of economy, efficiency and effectiveness and embraces:
Objectives and Scope of Performance Audit
The objectives of performance audits are to audit the economy, efficiency and effectiveness of auditors and to evaluate the discharge of accountability and due care of probity in the use of resources.
Performance audits focus on one or more of following interrelated elements:
01. To provide objective assessment of the extent to which the auditor is currently
Pursuing the 3Es;
02. To identify major deficiencies in management and control practices;
03. To encourages improvement in the system of performance reporting to provides information and proposes recommendations that can lead to better internal control and public accountability.
Performance auditing examines:
Performance auditing covers a wide variety of issues to arrive at the conclusion relating to the 3Es. It examines and evaluates the systems, procedures, operation and result related to:
01. Planning, budgeting, accounting and reporting systems;
02. Development, appraisal and utilization of resources;
03. Acquisition and utilization of property, equipment, plant, inventory and other assets; and
04. Development, production and use of information.
Performance audit process:
Performance audit deals with all kinds of measures, including laws, which financial impact. A measure can be either separate goal or interrelated goals, Measures may relate either to the expenditure or the revenue section of the state budget In financial audits, the auditor finds audited transactions as being either "right" or "wrong", "legal" or "unacceptable", etc.. Performance audit differs from financial audit in many aspects, both in theory and practice; following is shown the Performance audit process
Initiation > Planning > Conduct > Assessment > Briefing to agency > Report to Parliament
Criteria of performance audit:
•Relevant – have an obvious relation to the achievement of a given performance goal;
•Operative – specific enough for use in evaluation in practice;
•Consistent – the criteria applied in an audit must be consistent both with one another and with criteria applied in earlier similar performance audits, provided they are still valid.
In developing criteria, we may refer to multiple sources. Legislation, various directives and regulations (including internal regulations of the organization), and current concept documents are the basic and least controversial sources of criteria. It is also advisable to seek the opinion of independent experts, and draw on information from professional literature and relevant foreign experience.
Wahid techniques performance audit:
A good performance audit should rest on logic, an understanding of the background, and the ability to ask the right questions we can form our opinion on a whole population of organizations, people, etc., by investigative a representative. It should be a major objective in the financial management of any organization to put in place internal controls so that errors, misstatements and irregularities are prevented from occurring or detected if they have occurred. Internal controls can thus be either preventative (preventing the error) or detective (detecting errors which have occurred). Preventative controls are better as then no error should occur in the first place, Significance & perfect performance audit can ultimate solution whole of the organizational errors, misstatements & irregularities, I want to make the all of reader, student & auditors understand my imagination through the Wahid technique , I am sure that this technique is the perfect for companies & organization performance audit ,
I have developed techniques that is (Wahid techniques) expresses the Significance and dependability manner for Performance audit in any organization or companies this formula is:
Performance AUDIT = Written evidence + Analysis /Questionnaire. + Hub groups + Interviewing +Direct observation
(Wahid techniques -Part -01 Finished. > Part -02)