Performance audit and evaluation: common ground with Internal Audit The UK National Audit Office exp

1
Performance audit and evaluation common ground
with Internal Audit ? The UK National Audit
Office experienceJeremy LonsdaleDirector-Genera
l, VFM audit

• European Commission Internal Audit Service
• Conference
• 13 October 2009

2
Structure of the presentation

• Audit some background
• Performance audit
• Evaluation
• Similarities and differences
• Implications for Internal Audit
• Conclusions

3
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
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
Performance audit

• Economy, efficiency, effectiveness
• Resource use
• Establishing what has happened
• What has been achieved
• Shortcomings and weaknesses
• Good practice and success

6
Performance audit

• Not commenting on policy
• Limited timescales
• For publication
• Usually fitting within wider accountability
  processes

7
National Audit Office VFM work

• Study selection
• Study design
• Fieldwork
• Analysis
• Clearance
• Reporting and publication
• Supporting parliamentary process
• Follow up and impact

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Focus of our work

• Programme and project management
• Individual organisation - agency
• Cross-government - procurement
• Systemic issues - innovation

9
Trends

• Focus
• Methods
• Staffing and skills
• Reporting
• Mindset
• Additional products

10
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

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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

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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

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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
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

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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

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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