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Practice Guide to Auditing Efficiency

Operational planning

Table 1(c) - Knowledge of business questions for an audit of efficiency focused on application processes

Note: Additions to the questions and risks in the Practice Guide are shown in italics.

Potential Risks to Efficiency

Knowledge of Business Questions

  • Resource budgets are not based on the level of activity.
  • Organizational culture does not stress the need for efficiency.
  • Personnel are not deployed to foster efficiency.
  • Staff are not fully utilized.
  • Costs of activities and programs are not known, or are not regularly collected and reviewed
  • Does the organization have service level standards?
  • Has the organization identified and analyzed the input costs for all its major services and programs?
  • Does the organization have information on the unit costs of delivering its main services and how the unit costs are changing over time?
  • Does the entity collect and analyze cost information for major components of its operations? (For example, is the cost of processing an application, or issuing a licence, collected and monitored?)
  • Does the organization have information on how costs change in response to changing levels of activity?
  • What are operating budgets and resource levels? Are operating budgets established based on unit costs or performance standards (for example, output/input ratios), or on historic funding levels? If the budget is based on unit costs or performance standards, what are the costs or standards reflected in the current budget?
  • How is the budget for the application- processing function established? Is it based on historical amounts, or on the level of activity?
  • What are full-time equivalent (FTE) resource levels in relevant business units? How does the organization optimize the allocation of its personnel to its different services or business units? For example, does it use staffing formulas or other allocation methods? Does the allocation method consider workload or production levels?
  • How does the organization maximize the utilization of allocated personnel to achieve its operational and strategic goals? Is there a staff scheduling system? Does it provide for optimal utilization of staff? If a call center is used, is a formal queuing model utilized to assess staff level needs and staff schedules?
  • Are there defined staff utilization standards, guidelines, or targets? For example, staff may be expected to process X applications per hour. Is staff utilization data collected and monitored? Are staff utilization targets met?
  • Are there required competencies for all staff? Does staff meet the required competencies? Have any competency gaps been identified? If so, is there an identifiable cause for the gaps (such as the fact that the labour market cannot meet demand)?
  • Has the organization identified clear roles and responsibilities for managers and personnel delivering on efficiency objectives? If so, provide examples.
  • Do senior management performance contracts (setting out annual performance objectives) include specific targets and measures related to the efficiency of the programs or services under a manager’s control? If so, provide examples.
  • Are incentives used to encourage managers and personnel to improve efficiency and meet established targets? If so, provide examples.
  • What type of training is provided to managers and personnel in relation to efficiency?

Source: Many of these questions have been adapted from Northern Ireland Audit Office’s Improving Public Sector Efficiency: Good Practice Checklist for Public Bodies (2010), as well as from recent audits of efficiency.