Performance Audits

Although the Principal Auditor does not yet have specific statutory authority to carry out performance audits he has been doing so, with the support of the Government, since 1992. However, audit law reform is proposed to give statutory basis for the examination and reporting on the economy, effectiveness and efficiency of government departments and statutory corporations, authorities and agencies.

Performance audits do not question the merits of policy objectives. However, the means by which policy objectives are pursued, the implementation arrangements and controls, the costs incurred and the results achieved are all legitimate subjects for performance audits.

Performance audits assess the extent to which government departments and other public bodies have employed their resources; whether financial, human or material; in the performance of their functions and activities. Performance audits principally provide independent information, advice and assurance concerning economy, efficiency and effectiveness in the major fields of revenue, expenditure and the management of resources, including the evaluation of service quality and the measurement of performance. Performance audits also highlight appropriate means of securing improvements in financial control and value for money, and encourage, support and assist audited bodies in taking proper action where improvements are shown to be necessary and cost effective to enhance accountability.

The Principal Auditor reports both good practice and management deficiencies. The selection of topics for investigation is based on a systematic review of government spending with particular attention given to areas where the largest resources are involved, where performance is judged most at risk and where there are greater opportunities to enhance performance. All studies undertaken as part of the performance audit programme should have a lasting benefit to the audited body through improved service delivery, financial savings and/or improved governance.

Audit work on performance audits conducted so far has generally provided a positive and valuable effect on departments and other public bodies, by delivering a greater awareness in the areas covered by the performance audit programme and from improvements made to systems and procedures on the specific areas examined.

Draft performance audit reports are discussed with the audited body concerned with a view to identify any fundamental differences of opinion on the main facts and conclusions to ensure accuracy and completeness as well as a balanced and fair presentation. Reports do incorporate responses received to the main issues raised.

The Principal Auditor is committed to continue undertaking performance audits given that they play a crucial role in providing an independent assessment on whether government departments and other public entities are spending taxpayers’ money economically, efficiently and effectively.

A summary of the main findings and recommendations of performance audits are presented annually in Part 5 of the Principal Auditor’s Report on the public accounts of Gibraltar.