Academic journal article The Government Accountants Journal

Performance Auditing in Municipal Governments

Academic journal article The Government Accountants Journal

Performance Auditing in Municipal Governments

Article excerpt

There currently is a great deal interest in the efficiency, economy and effectiveness of management and operations at all levels of government. Public demand for greater government accountability has resulted in performance measurement initiatives in the public sector. Efforts are underway to help governmental units establish meaningful performance standards, collect and analyze data and report results to the citizen-taxpayers they serve. Many cities have established a performance audit function or have defined a requirement for periodic independent management audits of various functions and programs.

The audit function or requirement may be defined in the city charter or adopted ordinances. Examples of two such requirements are as follows (emphasis added):

* The City Council shall provide for an evaluation of functions and programs carried out by administrative agencies and shall submit a biennial report to the public on such functions and programs. The City Council is hereby empowered to hire or secure whatever assistance as may be necessary to evaluate such programs. Lafayette. Louisiana: Sec 2.06 B!

* A management evaluation of the administrative activities of the City shall be conducted at least once every two years by a professional consultant. The management evaluation and all reports and recommendations shall be directed to the Council. St. Petersburg, Florida: Sec 4.05(b)!

Several questions arise from the charter requirements of these two cities and an interest in understanding other situations in which municipalities might conduct an "evaluation of functions and programs," "management evaluation of administrative activities" or other forms of performance audits. Among them are the following:

* Method and Purpose of Performance Audits

Do larger cities hove charter provisions requiring periodic performance audits?

Have larger cities undertaken performance audits absent a city charter requirement to do so?

Are city officials aware of standards in the governmental area?

Are performance audits done by internal auditors, independent outside auditors, or management consulting firms?

* Scope and Cost of Performance Audits

What is the scope of a typical performance audit?

Are performance audits effective and efficient? How many recommendations are made and what costs are involved?

Is there a relationship between the use of performance auditing and the use of a formal performance measurement process?

* Charter Provisions

How are provisions for performance audits incorporated into the charter?

What issues should be addressed?

* Audit Quality and Results

How and to whom are performance audit results communicated?

What type and quality of performance reports are generated?

Is Service Efforts and Accomplishments (SEQ) a part of performance audit reporting?

To answer these questions. we mailed a survey to municipalities. The remainder of this article describes the background, nature and extent of performance auditing in municipal governments.

BACKGROUND

Activities shaping the development of performance auditing in municipalities and other governmental entities include an evolution of auditing standards, the development of performance measurement and progress in performance reporting.

* Development of Performance Auditing Standards. The original authoritative work in this area by the Comptroller General of the United States is Standards for Audits of Governmental Organizations. Programs. Activities and Functions, first published in 1972. The "Yellow Book" standards were revised in 1988 and published under the simpler title Government-Auditing Standards. In addition, extensive work in developing alternative approaches to performance auditing have come from the Canadian Comprehensive Auditing Foundation.

* Performance Measurement. Performance measurement in the government sector has been of interest to a number of authors since the early 1970s. …

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