How to avoid a negative performance audit

A performance audit involves “the independent and objective assessment of all or part of an entity’s operations and administrative support systems. The audits can include consideration of:

economy (minimising cost)
efficiency (maximising the ratio of outputs to inputs)
effectiveness (the extent to which intended outcomes were achieved)
legislative and policy compliance

You can easily avoid a negative performance audit finding through a little bit of preparation and effort. Not only will this save you from a negative audit finding but you’ll:

improve the performance of your program in general
save yourself time in the long run because of how smoothly your program runs
look good in front of your boss

If these sound like the type of benefits you would like to enjoy, then implement the four-step process below:

1. Inform

This first step aims to provide a good grounding in what a performance auditor will be looking for with regards to good practice program administration and performance.

Review any relevant better practice guidance from your audit office, similar past audit reports, requirements or guidance material relevant to the type of program and your own department’s guidance or requirements.

This can be used as a framework for undertaking the gap assessment in the next step.

A starting point is included below for some program types/areas:

Regulation

ANAO Administering Regulation – Better Practice Guide, June 2014

Guidance for regulators

ANAO Report No. 5 of 2016-2017: Passenger Security screening at Domestic Airports

ANAO Report 56 of 2016-2017: Pesticide and Veterinary Medicine Regulatory Reform

ANAO Report No. 34 of 2016-2017: Implementation of the Biosecurity Legislative Framework

Procurements

ANAO Developing and Managing Contracts – Better Practice Guide, 2012

Commonwealth Procurement Rules

ICT procurement

ANAO Report No. 48 of 2014–2015: Limited Tender Procurement

ANAO Report No. 31 of 2011–2012: Establishment and Use of Panels

ANAO Report No. 18 of 2016–2017: Confidentiality in Government Contracts

Grants

Commonwealth Grant Rules and Guidelines and associated guidance

ANAO Report No. 25 of 2015-2016: Delivery and Evaluation of Grant Programs

ANAO Report No. 36 of 2011–2012: Development and Approval of Grant Program Guidelines

ANAO Report No. 21 of 2011–2012: Administration of Grant Reporting Obligations

General program performance

Public Sector Governance: Strengthening Performance through good governance – Better Practice Guide, June 2014

Successful implementation of policy initiatives – Better Practice Guide, October 2015

Department of Finance Resource Management Guides

ANAO Report No. 6 of 2017-18: The Management of Risk by Public Sector Entities

2. Assess

This step is about identifying what’s in place and working well and gaps or areas that can be improved.

The combination of the requirements and guidance applicable to your program type as well as your own program planning and management documentation provides the basis for assessing the current state and areas for action.

3. Plan

Once you have identified the areas requiring action, work with your team to brainstorm possible solutions before narrowing down on the best options. Make sure to assess the relative benefits, effort, practicality, cost and risk of each option.

Your plan will ideally assign responsibility for completing the action as well as a realistic timeframe for it to be completed.

If you have a range of actions, be sure to prioritise your effort.

Some common areas for action that may be identified and some options for addressing these include:

Area for action	Possible options to address this area
Clarity on program aims and outcomes	develop a program logic conduct workshops to gain consensus revise program documentation to improve alignment in key messages
The need for enhanced compliance activity	assess compliance risks to inform targeting ensure adequate resources are allocated to this task develop a compliance framework standardise compliance actions improve guidance material and information to clients/stakeholders
Data and reporting on efficiency and effectiveness	develop KPIs draft a monitoring and evaluation framework review reporting arrangements collect new data and feedback
Better stakeholder engagement	change from ad hoc engagement to regular and routine engagement seek feedback on how to improve set up a committee or interest group establish an email/newsletter subscription and send out regular communications formalise communication paths develop a stakeholder engagement framework
Enhanced quality assurance processes	assess quality risks to inform targeting ensure adequate resources are allocated to this task develop a quality assurance framework develop standardised processes improve training and documentation capture trends and results report on quality
Improved governance arrangements	compare to other governance arrangements – what has worked elsewhere identify key barriers to better governance seek feedback clarify roles and responsibilities draft/revise terms of reference for any committees review the appropriateness of committees

4. Implement

Once you have your plan, it is critical that it remains active. Don’t leave it on the shelf to gather dust. Ensure you are monitoring the progress of implementation and the currency of your plan.

Soon your program will be running more smoothly than ever and, as a bonus, you will be better informed about its performance overall – not to mention any anxiety about an upcoming audit will have evaporated!