1. HELPING THE NATION SPEND WISELY Performance audit and evaluation: common ground with Internal Audit ? The UK National Audit Office experience Jeremy Lonsdale Director-General, VFM audit European Commission Internal Audit Service Conference 13 October 2009

2. HELPING THE NATION SPEND WISELY Structure of the presentation Audit: some background Performance audit Evaluation Similarities and differences Implications for Internal Audit Conclusions

3. HELPING THE NATION SPEND WISELY Audit: some background Encompasses a wide range of activities Long history Governed by professional standards and often has legal status In public sector undertaken by organisations with statutory authority End result often a certificate, opinion, discharge Performance audit more recent approach 20-30 years of methodological development

4. HELPING THE NATION SPEND WISELY Characteristics of external audit Independence Coverage: regularity to outcomes Accountability focus Checking against agreed criteria Gathering evidence to form judgement Providing assurance Making recommendations Public findings

5. HELPING THE NATION SPEND WISELY Performance audit Economy, efficiency, effectiveness Resource use Establishing what has happened What has been achieved Shortcomings and weaknesses Good practice and success

6. HELPING THE NATION SPEND WISELY Performance audit Not commenting on policy Limited timescales For publication Usually fitting within wider accountability processes

7. HELPING THE NATION SPEND WISELY National Audit Office VFM work Study selection Study design Fieldwork Analysis Clearance Reporting and publication Supporting parliamentary process Follow up and impact

8. HELPING THE NATION SPEND WISELY Focus of our work Programme and project management Individual organisation - agency Cross-government - procurement Systemic issues - innovation

9. HELPING THE NATION SPEND WISELY Trends Focus Methods Staffing and skills Reporting Mindset Additional products

10. HELPING THE NATION SPEND WISELY Evaluation: some background Developed in last 20-30 years in many countries Broad definitions, approaches and methods Purposes: –increase knowledge –improve management and delivery –justify policy or programme or alterations to them Undertaken by wide range of practitioners in a range of settings

11. HELPING THE NATION SPEND WISELY Similarities between performance audit and evaluation Both forms of assessment Rooted in idea that possible to scrutinise and understand problems and offer solutions Both examine public sector programmes and activities Aim to gather and make use of robust, objective evidence and form judgements Make use of a range of quantitative and qualitative methods; systematic and well tested procedures Design tailored to needs of particular study; contrast with financial audit

12. HELPING THE NATION SPEND WISELY Similarities 2 Both disciplines concerned with the quality of what they do and have developed quality assurance arrangements Shape of work depends on the skills and experience of practitioners Generate reports to enlighten, advise and recommend to others Often recognise that formal reporting not sufficient; developing other ways to share conclusions and recommendations

13. HELPING THE NATION SPEND WISELY But….. Will (must) always be significant differences and audit shouldnt try to be evaluation Different mindset – always accountability flavoured Different status and institutional setting – government role to evaluate its own programmes External audit always public Differently commissioned and different relationship to commissioners Different objectives Clearly some methods that audit would not use

14. HELPING THE NATION SPEND WISELY External audit/Internal Audit: collaboration Collaboration on projects – joint work Share knowledge and insights informally Planning External audit draw on internal audit – reduce testing Audit committees – provide specialist input Secondments – both ways Advise management on quality Joint training

15. HELPING THE NATION SPEND WISELY Implications Clear can work together but need to guard independence Need to acknowledge differences Links with evaluators may be easier than external audit But – IA has clear checking, compliance perspective, evaluation more exploratory IA more organisational and administrative than evaluation IA may need to look at quality of evaluation

16. HELPING THE NATION SPEND WISELY Some final thoughts Subject matter – scope for greater IA attention to VFM ? Methods – scope for IA to draw on wider range as EA has done ? Role – scope for widening activities as EA has ? Quality assurance – scope to draw on approaches used by EA ? But ultimately IA should do what it does best