Association of Government Accountants Olympia chapter “Measuring Up” symposium Nov. 2, 2006 Presented by Chris Cortines, Local Government Performance Audit Coordinator

How can entities prepare for a performance audit? You already use performance criteria. Once you know the performance audit objective, preparing for a performance audit really entails determining who is making those performance measurements and the criteria they are using. Sometimes your performance criteria reside at multiple locations and with multiple people. Creating an inventory of those people and the criteria they use is a big part of the preparation process.

What criteria will the Auditor’s Office use? This topic generates significant interest at all entrances and presentations about SAO performance audits. Chapter 7.28 of Yellow Book reads: “Criteria are the standards, measures, expectations of what should exist, best practices, and benchmarks against which performance is compared or evaluated. Criteria, one of the elements of a finding, provide a context for understanding the results of the audit…In selecting criteria auditors have a responsibility to use criteria that are reasonable, attainable, and relevant to the objectives of the performance audit. The following are some examples of possible criteria:

Criteria, cont. “Purpose or goals prescribed by law or regulation or set by officials of the audited entity Policies and procedures established by officials of the audited entity Technically developed standards or norms Expert opinions Prior periods’ performance Performance in the private sector, or Best practices of leading organizations”

How will SAO and its contractors consider criteria already in use? Chapter 7.10 of Yellow Book states that we must understand the entity’s internal controls, which “includes the processes for planning, organizing, directing and controlling program operations. [Internal controls] include the system for measuring, reporting and monitoring program performance.”

How do criteria factor into the performance audit process? Our auditors ask how the entity measures its own performance. We determine whether we agree or disagree with those performance criteria. We ask whether additional criteria or benchmarks are necessary.

Group discussion on potential audit criteria that may exist for five hypothetical performance audits: County road department inventory (efficiency) Transit fuel purchases (economy) Cruise ship maintenance program (efficiency, effectiveness and economy) City administrative operations (efficiency and economy) County travel (economy)