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Practice Guide to Auditing Efficiency

Systems Audits

In a systems audit of efficiency, the focus is on the management systems and practices, including systems of internal control, used by an organization to achieve, maintain, demonstrate, and improve the efficiency of its services or operations.

In practical terms, systems audit work means examining the key organizational systems, practices, procedures, and controls supporting efficiency, such as performance measurement and reporting systems, costing systems, and management’s systems for benchmarking organizational performance. The seven management activities described in this Practice Guide can provide a useful framework for assessing the quality and effectiveness of the management systems that foster efficiency.

A systems approach may be used in audits of efficiency in one of three ways:

  1. The audit may examine the entity’s overall strategy and focus on efficiency.
  2. The audit may examine the systems and practices that relate to efficiency in a particular program or activity.
  3. The audit may combine these two options.

The particular option chosen will depend on the knowledge of business acquired, the auditor’s mandate, and the auditor’s analysis of significance and risk. Auditing an entity’s overall strategy on efficiency may be a good entry point into auditing efficiency. Subsequent audits in particular programs could follow this first audit.This strategy would provide an audit office with a good overview of an entity’s central approach to efficiency prior to undertaking more in-depth audits of the efficiency of specific programs.