Selecting Audit Criteria
Audit criteria represent the standard expected of the entity being audited. Audit criteria are a key contributor to the strength of an audit and its potential impact. Audit procedures focus on determining whether criteria are met or not met. Suitable criteria are clear, concise, relevant, reliable, neutral, understandable, and complete. If the audit criteria are irrelevant or incomplete, then the audit will likely be irrelevant and incomplete as well.
Finding suitable criteria is a challenge for any performance (value-for-money) audit, not just for audits of efficiency. Each audit is unique due to the auditor’s mandate, audit focus, audit objectives, and the way the organization being audited approaches the audit’s subject matter. There are a number of valid approaches to an audit of efficiency and the focus can range from assessing the entire government’s approach to efficiency, to assessing how a particular program achieves efficiency. Accordingly, there is no “one-size-fits-all” approach to criteria.
Generally, auditors attempt to locate appropriate audit criteria by:
- researching best practices, standards, and regulations;
- identifying reliable benchmarks in a given sector or using baseline data on an organization’s past performance as benchmarks;
- reviewing prior audit files and published audit reports;
- contacting colleagues in other jurisdictions; and
- consulting with auditees, academics, and subject matter experts.
GOOD PRACTICE: Since not all audit offices include criteria in their published audit reports, and since some audits are not made publicly available, it is advisable to contact other offices directly to obtain their audit criteria.
Subject matter experts can be a valuable resource during this phase of the audit. Literature reviews and searches of publicly available databases can be used, but they are time-consuming and may not identify the best criteria. The auditor who relies solely on published works may fail to identify the most appropriate source of criteria. Consulting internal or external subject matter experts will reduce this risk.
This Practice Guide does not provide a standard list of criteria since there are no universal criteria that would fit all audits of efficiency. The Practice Guide provides examples of potential criteria to:
- assess management’s systems and practices (controls) for achieving efficiency; and
- assess the level of efficiency achieved in relation to reliable benchmarks, performance targets, or baseline data.
The next sections provide examples of criteria related to systems and to results. Auditors who want to see more examples of audit criteria can also consult companion documents to this Practice Guide:
- Applied Guides for auditing the efficiency of regulatory inspection programs and of programs that deliver licences, permits, and other standardized approvals; and
- Focus on Efficiency is a publication of the Canadian Audit & Accountability Foundation that provides audit summaries for about 20 recent audits of efficiency, including audit criteria where available.