Reporting the Results of an Audit of Efficiency
The focus of this section of the Practice Guide is on techniques that can be used to increase the impact of reports of audits of efficiency. Formats and writing styles for performance audit reports are specific to individual audit offices and are not discussed in this Practice Guide.
As with any audit report, it is important to consider how audit findings can best be presented to achieve maximum impact and to reduce the potential for misinterpretation of audit observations and conclusions. That being said, audit reports on efficiency pose particular risks that must be considered and managed.
For example, quantifying the potential cost savings that would result from efficiency improvements is an effective way of highlighting the significance of inefficient programs or processes. However, quantifying cost savings is a difficult exercise that must be based on reliable data and sound assumptions. Auditors should only use this tool when they are confident that their data and assumptions are solid. In addition, auditors should have their calculations validated by a subject matter expert before they are published.
In addition, audit reports on efficiency routinely use tables, charts, and graphs to convey audit findings. While these communication tools can be highly effective—they will capture the reader’s attention if done well—they are susceptible to misinterpretation and could raise questions by readers. When using charts and graphs, auditors must take care to provide in the accompanying text all the information necessary to answer these potential questions.
Finally, because the media and public may have preconceived opinions of the level of efficiency in public sector organizations, it is possible that published findings will generate strong stakeholder reactions and potential unintended consequences. For example, there could be calls to outright cancel a program that presents some inefficiencies that could be fixed. The risk of sparking strong reactions is heightened in cases where the audit report involves comparison or benchmarking with other organizations. It is therefore important that audit reports and media communications contain very clear messages. In particular:
- When reporting on a stand-alone audit of efficiency, it should be clearly explained that the report does not conclude on an entity’s effectiveness.
- When reporting that more could be done with the same resources, it may be appropriate to emphasize that in such a case efficiency could be achieved in a cost-neutral manner.
- When reporting on savings that could be achieved through efficiency improvements, it should be clarified whether these improvements will require upfront investments (such as a new IT system).
Finally, auditors should be aware that the successful use of quantification, tables, charts, and graphs often depends on thinking about presentation formats and the data required early in the audit. Waiting for the reporting phase to identify the data required for a chart or graph may not leave enough time for the auditor to obtain reliable information and still meet reporting deadlines. Auditors should also remember that information used in charts and graphs must be subjected to rigorous quality assurance in the same way as other types of audit evidence.
The following pages include samples of good presentations of efficiency findings from actual performance audit reports. More examples can be found in recent audits of efficiency – see our publication Focus on Efficiency for a list of recent audits with hyperlinks to the full reports.