NCJ Number
74656
Journal
Federal Accountant Volume: 19 Issue: 1 Dated: (March 1970) Pages: 60-72
Date Published
1970
Length
13 pages
Annotation
Following an explanation of performance auditing and how it has been used successfully by Federal agencies, the article proposes standards for this type of audit.
Abstract
Performance auditing is essentially the observation of operations and testing of transactions which lead to logical and effective conclusions. Noted theorists have identified control as a crucial element in management. Fiscal audits only ensure that funds are being spent for the purposes appropriated, but do not indicate if management policies are being followed. The performance or internal auditor has been called the eyes and ears of management and can provide legislatures with an evaluation of a public agency's faithfulness, efficiency, and effectiveness in discharging its responsibilities. A 1962 survey found that most Federal internal audits had investigated budgeting, purchasing, supply, and personnel management operations, as well as accounting matters. Audits conducted of selected contractor operations by Atomic Energy Commission (AEC) auditors are described to illustrate the technical competence of financially oriented personnel in areas such as warehousing and inventory control. These efforts have resulted in cost reductions and operating improvements for the AEC. Although Federal audit standards are needed to certify State and local auditing systems and avoid unnecessary duplication, no proposals acceptable to the General Accounting Office have been formulated. Important provisions of such standards that concern performance auditing should require an independent audit staff at all levels of government, establish a training program that would cover grant administration, and develop performance auditing manuals. The scope of audit programs would include evaluations of efficiency and economy, along with assessments of policies, internal controls, and compliance with Government regulations.