Performance Audit

A financial audit asks whether accounts are right, and a compliance audit asks whether rules were followed. A performance audit asks a different question: did the spending deliver what it was meant to, and at a reasonable cost? It is often described in terms of three Es: economy, meaning inputs bought at a fair cost; efficiency, meaning the best output from those inputs; and effectiveness, meaning the objectives were met. Some add equity or environmental effects. Auditors define criteria, collect evidence from data, site visits and interviews, compare with benchmarks or similar bodies, and report findings and recommendations, usually to the legislature. Supreme audit institutions carry out most such work in the public sector, though internal audit teams and private firms also do. Findings are generally published. Legislators and taxpayers learn whether spending produced results, beyond whether it was legal.

A national audit office reviews a scheme that funds rural health clinics. It finds that clinics were built on schedule and within budget, but a third lack staff and have been open for under half the planned hours. The report recommends linking funding to staffing, and the ministry agrees to revise the scheme.