# Performance audit 

Performance audit refers to the measurement and evaluation of performance within an organization and plays an important role in strengthening the processes necessary to achieve organizational goals and managing individual work performance and rewards. To do so, various performance-related metrics and criteria are required. 

In a performance audit, performance indicators, compensation systems, personnel policies, etc. should be considered to analyze organizational results and promote individual and organizational growth.

You might be thinking, why do we suddenly have to deal with performance audit when we don't deal with IT audit?

However, even in IT Audit, there are areas such as project audit, and if you have an understanding of performance audit, you can expand it to the area where you can evaluate the performance of employees such as leadership, teamwork, and organizational culture, and you can also use it when you work as an internal auditor or various consulting jobs in the future. In other words, performance audit goes beyond just measuring performance as HR and provides an opportunity for improvement and growth of organizational culture.

The main focus of a performance audit is rewards and incentives. Rewards and incentives play an important role in improving and sustaining individual and organizational performance. To do this, organizations need to build systems that measure performance and reward it accordingly.

So, let's redefine performance auditing and learn more about it.

# What is a performance audit?

A performance audit is an audit that identifies the gaps between the goals set by an organization and its actual performance, and evaluates the recommendations made to improve them. While traditional audits focus on the accounting and financial aspects of an organization, performance audits examine the overall processes and activities that lead to the achievement of an organization's goals. It is often used in the context of public auditing, which is concerned with evaluating the economy, efficiency, effectiveness, and effectiveness of the use of public resources and the performance of public programs.

# What is the purpose of a performance audit?

The most important is to provide stakeholders with assurance that resources are being used efficiently and effectively in accordance with applicable laws, regulations, and policies. It evaluates an organization's goals and outcomes, validates the effectiveness of strategies and actions to achieve those goals, and suggests improvements. It aims to evaluate the organization's performance through performance indicators, identify opportunities for improvement, and assess the efficiency, economy, and transparency of the organization's operations to provide recommendations to management to make and implement improvements for the long-term health of the organization.

# Differences between an accounting audit and a performance audit

While an accounting audit focuses on ensuring that financial statements are accurate, complete, and in compliance with accounting standards and regulations, a performance audit focuses on an organization or entity's performance in achieving its goals and the efficiency and effectiveness of its use of resources. 

# What is the process?

1. Plan: Develop an audit plan, including scope, objectives, methods, and timeline. 
 

2. Analyze the organization's goals and objectives and identify performance indicators: Ensure that the goals and objectives set by the organization are defined and that performance indicators exist to verify that they are valid.

3. Analyze performance metrics and evaluate the organization's performance

4. make recommendations to improve the organization's performance

5. prepare reports and present to stakeholders

# What competencies do performance auditors need?

1. knowledge of and ability to communicate auditing standards and laws, regulations, and policies on resource use 

 : Considering the possibility of resistance from management and other stakeholders who are reluctant to accept audit findings and recommendations, there is a need for performance auditors to have specialized skills and expertise.

2. data analysis skills.

 : The ability to objectively assess the availability and quality of data and information may be required. IT auditors need to be able to analyze an organization's performance metrics, assess how IT systems or processes impact those metrics, and ultimately help the organization achieve its desired outcomes. 

# Performance Audit Example

Let's take a hypothetical scenario to illustrate.Let me explain how it works. 

Set a goal: First, set a goal before conducting a performance audit. For example, let's say your company has recently taken on a new project and you've been pushing the deadline for completing the project, which has resulted in a lack of progress. Your objective is to audit the project team's performance to complete that project. 

Set evaluation criteria: The criteria for evaluating the project team's performance could be project schedule adherence, progress, quality, etc.

Select audit subjects: The subjects are members of the project team you've identified, and they'll write a report describing their roles and performance. For each subject, identify their role in relation to the criteria you've identified, and see what problems they recognize.

Create an audit report: Review the reports written by members and write a report analyzing their performance against the evaluation criteria, identifying any issues, and suggesting ways to improve.

Share your findings: After you've written your audit report, share your findings with everyone involved. Review the report with project team members and discuss issues and ways to improve.

Create an improvement plan: Create an improvement plan based on your audit findings. The plan aims to improve the issues identified in the audit findings and prevent them from occurring in your next project.

Evaluate: While the improvement plan is being executed, evaluate whether the issues identified in the performance audit have improved. This can help you improve the performance of your project team and improve the performance of your organization.