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Practice Guide to Auditing Efficiency

Why Focus on Regulatory Inspection and Enforcement?

Inspection and enforcement functions are common at all levels of government and make a significant contribution to achievement of important government objectives, including public safety.

The focus of an audit of the efficiency of these functions is to determine whether the resources available generate optimal enforcement. The key challenge for inspection and enforcement programs is to balance the size of the regulated population, the relative risk that each member of the regulated population poses, and the usually limited number of people and resources devoted to inspection and enforcement activities.

When governments are attempting to find cost savings, inspection and enforcement program budgets may be targeted for reductions because they are viewed as administrative and a lower priority than programs providing direct funding or services to beneficiaries. Budget reductions underscore the need to maximize efficiency in order to maintain the same level of activity with fewer resources.

Inspection frequencies are often laid out in regulation or policy. However, desired frequencies, or population coverage targets, may not always be met and enforcement programs can become ineffective. In such cases, program management may believe deficiencies in coverage are due to insufficient program budgets and staffing levels, but inefficiencies could also be a major factor leading to program ineffectiveness.

Staff and information are two large components of the inspection and enforcement function. The potential to better utilize staff and information technology makes this function an ideal candidate for an audit of efficiency.