Performance Audits
What is a performance audit?
Perhaps the simplest definition is used by the Washington State Legislature’s audit staff: a performance audit is analysis that answers a question. The audit uses objective analysis to compare the current condition (“what is”) against stated criteria (“what should be”).
Government auditing standards list four types of performance audits:
- Program effectiveness (Is a program achieving its goals and objectives?)
- Internal control (Are controls sufficient to achieve goals and objectives?)
- Compliance (Is the program following the law, regulations, contracts and agreements?)
- Prospective analyses (What might happen in the future and what actions might the program take?)
What is a performance review?
Although government auditing standards do not mention performance reviews, audit offices sometimes issue reviews or studies in addition to more detailed audits. In 2009, the State Auditor’s Office initiated a “State Government Performance Review” work program.
For more information about this particular review, please see the State Government Performance Review page. For a quick reference guide from the State Auditor’s Office on the differences between a performance audit and review, please click here.
How do performance audits differ from financial audits?
In financial audits, auditors use standard procedures and rely on accounting principles to determine the financial health of an organization. Performance audits determine whether an agency program is efficiently and effectively delivering the intended results.
In contrast to financial audits, performance audits are research-based, and often require the auditor to determine the criteria against which a program will be evaluated. These audits apply a variety of methodologies beyond accounting procedures.
Who conducts performance audits for Washington State agencies?
The Joint Legislative Audit and Review Committee conducts objective performance audits and other studies and reviews on behalf of the Legislature and the citizens of Washington. The State Auditor’s Office in 2005 received authority via citizen initiative to conduct performance audits on behalf of Washington citizens. Performance audits may also be conducted by agency internal auditors or consultants hired by an agency.
How will I know if my agency is chosen for a performance audit?
You should receive written notification from the auditor. For audits requested by the Legislature, you can review the JLARC work plan published here.
What do I do if my program has been chosen for a performance audit?
Begin by familiarizing yourself with basic performance audit information. The Governor’s Office has gathered the following tools and resources to assist state agencies in hosting performance audits. The templates are organized by the phases of a performance audit. Agencies may customize the generic templates provided below, or choose to start with the templates customized by a state agency that has already hosted performance audits.
The Governor’s Office also strongly advocates the following general approach:
- Welcome the auditor.
- Set a constructive tone internally and with the auditor.
- Use the audit to look critically at the program.
- Educate the auditor.
- Program mission, goals, objectives and accomplishments.
- Constraints and obstacles.
- Efforts to correct previously noted problems.
- Work with (help) the auditor.
- Selecting and setting the criteria.
- Interpreting the evidence.
- Diagnosing problems.
- Be an open book.
- Set a tone of openness and transparency.
- Assist the auditor with data collection.
- Provide requested evidence.
- Make auditors aware of problems – don’t make the auditors “find” them.
- Make the auditor part of the solution.
- Enable the auditor to become your consultant.
- Listen to and learn from the auditor.
- Ask for best practices and proven solutions.