What is a Performance Audit?

Felicia Dye

A performance audit is a tool used to analyze a program to determine what is working and what is not working. It can produce positive changes, highlight failures, and save money. This tool is often promoted or used for government accountability. For optimal results, it should be executed by auditors not associated with the organization or program under review.

A woman performing a performance audit.
A woman performing a performance audit.

The fact that a program is developed and implemented does not necessarily mean its purposes are being achieved or that achievement is being reached as effectively as it could be. A performance audit is a tool used to assess and help make a determination about the state of a particular program. To be properly executed, there must be standards established ahead of the performance audit. The standards, which serve as measures, may be derived from a number of sources, such as government or program developers.

Although individuals employed by the organization or who are actively involved with the program in question may participate in developing standards, it is generally inadvisable to have them involved in the actual performance auditing process. The individuals who do the auditing, commonly referred to as auditors, should be able to act independently and without bias. Otherwise, the integrity and the effectiveness of the performance audit is likely to be jeopardized.

There are at least two factors commonly analyzed when a performance audit is conducted. To begin with, determining whether or not a program is effective is usually a major area of concentration. A program that is not audited may be in operation for a long time without anyone having a measure of whether its goals are being met or if progress is being made in that direction. In some instances, there may be indications that a program is not successful but the reasons why may be undetermined.

Efficiency is generally another major focus of a performance audit. If a program is ineffective, then it will almost surely be deemed inefficient because resources are being used without results. A program may be accomplishing its purpose, however, but it may be doing so at unnecessary costs. It is often said that a benefit of a performance audit is that it results in savings. This is because auditing can help determine if there is waste, and if so, how it is occurring.

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