Direct Observation and Indirect Ways of Assessing Efficiency
When conducting audit procedures that require complete and reliable financial or performance information to assess efficiency, auditors may be confronted by a lack or absence of quality data. In such situations, auditors may have to reconsider their audit approach and put more emphasis on other types of audit procedures. In particular, auditors can make use of direct observation techniques.
For example, an audit team can select specific processes to audit, at one or more locations, and directly measure how much time (or some other input) it takes to complete distinct steps in the selected processes. This will allow auditors to compare their observations against expected results or to compare the efficiencies of different locations against one another. It should be noted, however, that these observations would be valid only for the period under observation and could not be extrapolated to produce representative data for a longer time frame.
Indirect ways of assessing efficiency may also be used by auditors to complement their main audit procedures. Surveys of service users, focus groups and interviews of various stakeholders will help auditors to identify areas where inefficiencies exist and where further audit procedures could be directed. Surveys and interviews may also provide auditors with useful information on potential solutions that could be further examined during the audit.
The two Applied Guides (on regulatory inspections and application processes for programs or licences) and the Focus on Efficiency publication that accompany this Practice Guide include more examples of audit procedures applicable in the context of audits of efficiency.