The Performance Auditing Methods for Public Enterprises

Abstract

Auditing is an important part of the accountability process because it provides independent judgement of the credibility and lawfulness of financial statements and of the manner in which public officials have carried out their responsibilities. By examining the procedures, operations, and management of policies or programs, auditing can help agencies or organizations improve efficiency and economy. By conducting an evaluation focusing on whether alrogram was carried out as planned and met its objectives or whether a program produced some change, or both, auditing can also help decision makers improve the effectiveness of public enterprise operations. Until very recently, auditing of public enterprise has put its emphasis upon financial and compliance auditing. In other words, it has been assumed that once a policy, a program, or a project is made, the policy, program or project will be implemented, and the result will , approach the expected goal. Thus, under the concept of financial and compliance audting, procedures were developed mainly to check the legality of expenditures and insure honesty in fiscal affairs. Key tests made by the auditor were to determine if expenditure were properly documented and authorized, and whether funds were properly receipted, accounted for, and safeguarded. As public enterprise program grew in size and complexity, however, the demands made of the auditor for additional information also grew, and management performace became a matter of special concern for auditors, policy makers, and administrators, since a good policy, program, or project may result as a bad one because of ineffective management. The manner and extent to which the expected goal of a policy, a program, or a project is achieved, has become a crucial concern for public enterprise auditing, and the scope of audit has consequently expanded.