Audit Tips

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When reviewing documents, conducting interviews, or visiting sites during the planning phase of an audit of efficiency, performance auditors may come across information or situations that suggest that the achievement of efficiency is at risk in a given program or organization. In such cases, auditors should document their observations and obtain additional information as required. The following are some of the potential indicators that efficiency may not be optimized in an organization.

	There is a lack of performance information or insufficient attention is paid to available information. Basic information on inputs and output volumes may not be collected and analyzed; performance information may not relevant, reliable, complete and timely; or performance reports may not be made available to those charged with governance.
	Personnel are not deployed to foster efficiency. There may be a high staff turnover or a lack of training.
	Costs of activities and programs are not known, or are not regularly collected and reviewed. Some program cost information may be available, but the unit cost of each output is unknown; complete financial information may not be made available to those charged with governance.
	Controls are excessive in relation to similar well-managed organizations. There may be multiple signoffs required for routine, low-risk transactions.
	No (or limited) internal audit function. This may mean that the organization does not pay sufficient attention to management controls and their impact on efficiency.
	Program design does not support efficiency. There may be poor process flow and duplication of efforts or information. Review of key performance indicators and comparison with internal or external standards may identify issues.
	Opportunities for shared services have not been explored. The efficiency gains that could result from sharing back office services such as financial transaction processing, procurement, human resource management, and payroll functions may not have been assessed.
	Systems and processes do not make effective use of information technology. Files may be paper-based and hard copy documents form the basis of the systems and procedures.
	Senior management challenge of the status quo is not sufficiently rigorous. Formal comparisons of program efficiency against similar programs in other organizations may have not been undertaken to provide objective information for decision making.
	Standards of service are not met. Client complaints may be numerous and/or not addressed, there may be long waiting lists for services or backlogs of files, and there may be excess space (office, storage, and so on).

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