Selecting the Audit Approach and Objectives
When auditors have developed an adequate knowledge of the inspection and enforcement function and determined that there are efficiency concerns justifying an audit, the next step is to select an audit approach and audit objectives.
As noted in the Practice Guide to Auditing Efficiency, it is unusual to find a pure “systems” or pure “results” audit of efficiency. Although the starting point is usually systems, audits of efficiency typically include some results questions and procedures, particularly in cases where efficiency systems were found to be operating improperly. Auditors can use a balanced approach where there is a system in place to achieve efficiency and where efficiency results are measureable. An audit approach that combines both systems and results audit objectives and procedures will reduce the risk of reaching an incorrect conclusion, provide better assurance, and enable auditors to tell a more complete story.
Table 2 lists key questions that will assist auditors in determining the most appropriate emphasis, either a systems emphasis or a results emphasis, for the specific inspection and enforcement program audit under consideration.
Table 2 – Key Questions to Ask when Determining the Audit Emphasis
|
Question |
What a “Yes” Response Indicates |
What a “No” Response Indicates |
|---|---|---|
|
1. Has management implemented systems and practices to achieve efficiency? |
An audit with a systems emphasis is feasible. |
A systems emphasis is not advisable (that is, there is no system to audit; this could be the single reportable finding). |
|
2. Has management implemented a recognized efficiency improvement framework, such as Lean or balanced scorecard? |
An audit with a systems emphasis on the implementation of this specific system is feasible. |
The audit should not emphasize framework implementation. |
|
3. Does management measure efficiency? |
An audit with a results emphasis is feasible. |
Auditors will need to probe further (see question 4 below) to determine if an audit with an emphasis on results is feasible. |
|
4. Could auditors measure efficiency themselves? |
An audit with a results emphasis is feasible. |
A “No” response combined with a “No” response from question 3 indicates that a results emphasis is not advisable because neither management nor auditors are prepared to measure efficiency results. |
|
5. Are comparative benchmarks, recognized standards, or performance targets available? |
An audit with a results emphasis including a comparison with standards, targets, or benchmarks is feasible. (This would be a “normative” audit objective, as described in the section “Drafting Audit Objectives” of the Practice Guide.) |
A normative audit objective is not feasible. The result could still be examined as a “descriptive” objective. However, descriptive objectives are less likely to provide value-added findings than normative ones. |
Note that there may be situations where it is not advisable or possible to perform an efficiency audit. In some cases, the subject matter is not auditable. If management has not implemented systems and practices to achieve efficiency, and management does not measure efficiency, and the auditor cannot measure efficiency, then it will not be possible to perform an audit.
Once a decision has been made on the appropriate emphasis for the audit of a specific inspection and enforcement function, auditors must determine what their audit objective(s) will be.
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