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Practice Guide to Auditing Efficiency

Factors Affecting the Efficiency of Regulatory Inspection and Enforcement Functions

The largest inputs for regulatory inspection functions, aside from financial resources, are usually staff and information systems. Staff costs (including payroll, training, travel, and office space) would typically relate to inspection, administration, and, in some cases, research activities.

Information systems include hardware and software related to systems supporting various components of inspection programs, such as databases about the regulated population and electronic records of inspection activity and results. Information systems may also include technology to facilitate the inspection process such as hand-held devices to record inspection results and report-writing templates and software. Such technology can help to reduce manual processes and duplication of effort. It may contribute to cost savings or increase the volume of inspection activity generated from the same resource base.

Audits of efficiency can include the examination of the utilization of staff and information technology. However, while these topics are important, the main factor with an impact on efficiency is whether management has taken a risk-based approach to resource allocation. If management does not have a good understanding of the regulated population and regulatory risks, and has not allocated resources based on a thorough risk assessment (that is, resources are not allocated based on priority to high-risk areas), it is unlikely that optimal enforcement is being generated from the available resources.