ABSTRACT
Performance audit has become an important tool in the armoury of auditors-general. Refocusing the assurance process towards efficiency and effectiveness, auditors-general use performance audit to evaluate managers’ performance in accordance with the implementation of executive government policy. It is becoming a popular assurance method as it allows for an in-depth examination of outcomes achieved across all aspects of policy implementation—including, but not limited to, the more traditional financial audit process. Similar to the private sector, public sector agencies use performance audit in their internal audit programmes to test efficiency and effectiveness, ultimately informing both practice and governance. In the private sector, performance audit has been labelled operational audit and, arguably, has a shorter history than performance audit in the public sector.
In this chapter, a brief review is conducted of the background of performance audit internationally, placing it within a broader operational audit paradigm. Differences between operational audit and performance audit concerning available standards are then discussed. This is followed by a comparison of operational audit and performance audit in the context of Australian practitioners’ organisational status, their independence and their mandate. Finally, a discussion is presented regarding whether it is appropriate to consider them to effectively be the same activity. This discussion contributes to the literature and assists practitioners by highlighting and clarifying distinctions between operational and performance audits and reducing conceptual ambiguities.
