1. Auditing of Performance A conceptual discussion

2. Auditing of performance To demonstrate and discuss the differences between auditing of performance information and performance auditing: –Roles and responsibilities –Conceptual differences –Mandate and methodology –Skills requirements Objectives

3. Auditing of performance External auditing in public sector Audit of financial statements in annual report Audit of compliance with laws and regulations Audit of performance information in annual report Performance Auditing Regularity Auditing Why a separate approach? Confirm credibility of information in annual report (financial and performance information) against frameworks established by NT Entity level evaluation Evaluation of impact/outcomes of spending over time at project, programme or strategic goal level against best practices, norms and standards and public interest Mostly a transversal evaluation, which could cover all three tiers of government and related public entities Evaluate the economic, efficient and effective utilisation of resources and/or impact of spending

4. Auditing of performance AOPIPerf. Aud Root causes Framework development Policy development Strategy development Roles and responsibilities Legislatures / Executive External Audit INSIGHT FORESIGHT Annual evaluation of achievement of “milestones”Evaluation of impact over time

5. Auditing of performance Conceptual differences SPECIALISTS (NATIONAL TREASURY, STATS SA) CABINET AND LEGISLATURE EXECUTIVE AUTHORITY Reporting frameworkNational indicators / industry norms Policy development, strategic planning and budget Implementation, monitoring, corrective action and reporting on performance information EXTERNAL AUDIT AOPI Performance Audit Review and confirm validity and completeness (assertions) Evaluate the 3 E’s at a project/programme level Report at entity level Report at entity level / transversally (by segment/cluster and across tiers of government and related public entities) Compliance (has this happened), done by regularity auditor Expert analysis (qualitative), often done by subject matter experts

6. Auditing of performance Mandate and methodology AOPI Mandate – Must be done annually (PAA) Validation of performance information against supporting records External quality assurance: IRBA Performance audit Mandate – May be done (PAA) Evaluation of 3 E’s & comparison of outcomes/progress towards goals against norms and benchmarks External quality assurance: International peer reviews by other SAIs

7. Auditing of performance Mandate and methodology (continued) AOPI Auditor evaluates the annual performance report contained in the annual report. This report focuses on WHAT the entity achieved during the year, compared to the original objectives it set during the budget process for that year. Objective: build 100 houses in year 1 Annual Perf. Report: built 90 houses in year 1 Aud. Report: confirm that 90 houses, as reported, were built in year 1 Performance audit Auditor evaluate the utilisation of resources and the IMPACT of what was done over a period of time, compared to the mandate / strategy of the entity involved The annual financial and/or performance reports may inform aspects of the evaluation, but the focus in much wider than just the annual report Mandate / strategy: provide the housing needs of a community, creating safe communities in 5 years time Audit report: confirm that houses were built with best possible utilisation of resources (efficiency and economy) and that impact (effectiveness) as envisaged in long term strategy was achieved (or that efforts are still on track)

8. Auditing of performance Skills requirement AOPI Done by regularity auditor Same skills as required for the evaluation of financial information Performance audit Done using subject matter experts Expert analysis and evaluation, different to the annual process of evaluating financial and performance information as part of regularity audit

9. Auditing of performance Audit of performance information An annual audit of reported actual performance against predetermined objectives is an integral part of the annual regularity audit (referred to as AOPI) All public sector entities to report performance information in accountability documents (e.g. annual reports, that cover financial statements and performance reports) to enable Parliament, provincial legislatures, municipal councils and public to track government performance and to hold it accountable. Although performance info is annually reported, the performance information process continues through the planning, budgeting, implementation and reporting stages.

10. Auditing of performance Performance Auditing An independent evaluation of the management measures instituted to ensure the economical procurement and efficient and effective utilisation of resources –Economical – to procure resources of the right quality in the right quantities at the right time and place at the lowest possible cost –Efficient – to achieve the optimal relationship between the output of goods, services or results and the resources used to produce them –Effective – to achieve policy objectives, operational goals and other intended effects During a performance audit the auditor will focus on the business processes and specific measures, aimed at improving the economy, efficiency and effectiveness of the entities activities. A performance audit can focus on the entity as a whole or a programme or an activity or a project The scope of performance audits are not bound to a financial year Performance audit focus areas are mostly addressing transversal issues across government, but can also focus on entity specific issues

11. Auditing of performance Performance Auditing (continued) Ways in which a performance audit can be initiated can include international trends and focus, research on state of nation address, parliamentary interaction and specific requests Performance audit reports focus on factual findings, leading to AG recommendations (insight) Performance audit reports are reported and tabled separately from regularity reports to Parliament / Provincial Legislatures/ Councils Performance audits include interactions with expert groups, similar organisations and practices outside the public sector