Performance Auditing is a landmark in the evolution of public auditing. Auditing for a long period was considered as a verification function concentrating mainly on the books of accounts, administrative and legal procedures. The introduction of performance auditing brought a significant change in that perception and translated auditing into an academic discipline. Such auditing expanded its scope and objectives by incorporating critical issues of public domain i.e., public accountability, performance measurement and evaluation.
Performance Auditing: Concept and Practice is written by one of the most experienced audit practitioners in the region. This book has contributed a great deal in meeting the longfelt need of a comprehensive publication on this topic.
The book is divided into five sections and one annex. The first section of the book discusses the core aspects of the topic i.e., concept, elements, features, objectives and scope, factors influencing the evolution of performance auditing, contribution of audit and mandate of the Auditor General of Nepal.
The second section deals with the practical aspect of the concept - approach and methodology. It contains audit approach such as system based, performance measurement and effectiveness attributes approach. In methodology, the author has classified the issues suitable for performance auditing under three headings i.e., systems, multi-sectoral/agency and specific project. This section also presents the relative advantage and disadvantage of classifying these issues as such.
The third section presents a complete overview of the performance auditing situation in Nepal. The author has appraised the prevailing practice of performance auditing in Nepal. He has also summarized some of the common weaknesses in management system observed in course of performance auditing. He shares common views on the management practice such as decision making in haste, lack of clearly and precisely defined performance indicators, negligence in addressing basic management issues, decision making on ad-hoc basis and non- availability of performance related information. Lack of adequate attention in safeguarding key and costly assets, problems in securing optimum benefits from completed projects due to lack of complimentary activities, serious lack of the system of appraising environmental factors that might affect a project at different stages of implementation and ignoring sustainability concerns are the most common problem in managing public projects and programs. He highlights seven major issues and problems in enhancing performance auditing that include (1) an exclusive preoccupation with financial control, compliance issues and measures, (2) absence of clear objective, agreed performance indicators and audit criteria, (3) lack of performance information, (4) reluctance of audit entities to provide available information, (5) lack of adequate number of qualified manpower, (6) lack of encouragement to staff and (7) lack of integrated efforts to convince audit entities about the benefits of performance auditing to secure their cooperation.
The fourth section of the book contains seven articles. These articles were already published in national and international journals. Out of those seven, the article entitled 'Dimensions of Revenue Auditing' published in the International Journal of Government Auditing received Elmer B. Staats Award in XVI INCOSAI in Montevideo, Uruguay in November 1998.
The fifth section is about strategies to increase the practice of performance auditing and strengthen its application. According to the author the suitable strategies to strengthen performance auditing are: (a) quality assurance, (b) development of methodology and professional standards, (c) training and professional development programs, and (d) improving relationship with client i.e., audit entities and Parliament by opening dialogue to remove any misconceptions and highlighting possible benefits of such auditing. Under future direction, author offers certain advice to overcome common misunderstanding about performance auditing.
The appendix of the book contains resolutions of the INTOSAI and ASOSAI on performance auditing. These resolutions provide an overview of the forces inspiring evolution and suggested methodologies.
This book provides useful information on the concept and practice of performance auditing. However, consideration to following matters in future editions will add its value and help readers to appraise the realities of performance auditing.