Performance audits depend on selecting scope and methodology that directly address the audit’s objectives. These insights highlight the standards and concepts that guide those choices.
This lesson is a preview from Graduate School USA's Conducting Performance Audits Course.
Auditors have much discretion in how they go about planning an audit. While audit organizations establish a protocol that best meets the needs of the organization, and specific documentation may be required, the following steps are usually followed.
- Prepare audit plan
- Set fieldwork and reporting milestones
- Determine staff and other resource needs
- Select scope and methodology to satisfy objectives
- Formulate audit’s objectives
Planning is a continuous process throughout the audit. Therefore, auditors may need to adjust the audit objectives, scope, and methodology as work is being completed.
Important Role of Audit Objectives
Setting clear and appropriate objectives are critical to the goal of developing findings that will be meaningful to those who will be interested in the results of the audit. Per the auditing standards, the objectives are what the audit is intended to accomplish. Thus they:
- establish the direction for planning and detailed audit work, and
- provide the focus for developing subsequent findings.
Accordingly, the first and most fundamental task in planning every performance audit is to ensure that the audit’s objectives are the correct ones.
Posing objectives incorrectly or imprecisely leads to wasted work, unclear reporting, and ineffective audits.
Form and Content of Well-Defined Audit Objectives
GAGAS provides guidance for making objectives precise:
- Phrase objectives in answerable form.
- Identify the audit subject.
- Identify the performance aspects to be included.
- Identify the finding and reporting elements that the auditors expect to develop.
- Indicate the audit approach.
- Include the audit criteria (if applicable).
A. Phrase Objectives in Answerable Form
Objectives may be stated as questions or as “to determine” statements, such as:
- Is the federal wool subsidy program achieving the intended results?
- To determine if the federal wool subsidy program is achieving the intended results.
B. Identify the Audit Subject
Audit subjects should be clearly defined (e.g., Department of Agriculture, Food Stamps, eligibility determination).
C. Identify the Performance Aspect
Auditors should specify which aspect of performance is being assessed (e.g., timeliness, quality, outcomes).
D. Identify Finding Elements
Depending on office policy and assignment type, auditors may develop all or only selected finding elements.
E. Identify the Audit Approach
Approaches include:
- Accomplishments: assessing adequacy of output/outcome results.
- Processes and Controls: examining how things are done.
- Impact: evaluating benefits attributable to an intervention.
- Compliance: assessing adherence to authoritative requirements.
- Detect Fraud: identifying occurrences of fraud.
F. Identify Criteria
Relevant criteria must be clearly stated in the objective or subobjective.
Example:
- Are applications processed within 30 days as required?
Developing answerable audit objectives is essential to producing focused, reliable audit results. When auditors clearly identify the subject, performance aspects, finding elements, approach, and criteria, they create a roadmap that guides fieldwork and leads to findings that matter to decision makers. Strong objective formulation ensures that the audit remains purposeful, relevant, and aligned with standards throughout its execution.