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Practice Guide to Auditing Efficiency

Balancing Systems and Results

It is unusual to find a pure “systems” or pure “results” audit of efficiency. Although the starting point is usually systems, audits of efficiency typically include some results questions and procedures, particularly in cases where efficiency systems were found to be operating improperly. A balanced approach is advisable in situations where there is a system to achieve efficiency in place and efficiency results are measurable.

By using a balanced approach, auditors can provide assurance on both systems and results and tell a more complete story. This will increase the validity of audit conclusions and reduce the risk of reaching a conclusion that does not reflect the actual state of efficiency.

For example, an organization’s systems may not function as intended but the organization is nevertheless very efficient in relation to its peers. If the audit team only concluded against a “system objective,” its conclusion would be limited to the fact that systems are not functioning as intended, which does not inform the report’s audience about actual efficiency.

A similar situation can also happen if an audit has only a “results” objective. For instance, it may be that an organization has poor control systems but is nonetheless very efficient. In this case, the audit team, looking solely at results, would conclude only that the organization is efficient, leaving readers with the impression that control systems must be sound.

GOOD PRACTICE: An audit approach that combines both systems and results audit objectives and procedures will reduce the risk of reaching an incorrect conclusion, provide better assurance, and enable auditors to tell a more complete story.