Value for Money Reviews

Value for Money (VFM) Reviews

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

VFM reviews 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 VFM examinations.

VFM examinations 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. VFM 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. VFM reviews 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 in order 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 VFM is judged most at risk and where there are greater opportunities to enhance performance. All studies undertaken as part of the VFM programme should have a lasting benefit to the audited body through improved service delivery, financial savings and/or improved governance.

Audit work on VFM exercises 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 audit programme of VFM studies and from improvements made to systems and procedures on the specific areas examined.

Draft VFM 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 VFM reviews given that VFM examinations 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 VFM reviews are presented annually in Part 5 of the Principal Auditor’s Report on the public accounts of Gibraltar.