Advanced Audit and Assurance (International) · The audit of performance information (pre-determined objectives) in the public sector

Assessing the Suitability of Criteria and Indicators in Public Sector Audit

Updated 11 October 2026 · Fact-checked

Assessing suitability means judging whether the criteria and indicators used to report performance are good enough to measure it against. You test each one for being specific, measurable, relevant, consistent, verifiable and complete. Weak indicators make a reliable conclusion impossible, so you assess them before gathering evidence.

Understand Assessing Suitability of Criteria and Indicators

In an assurance engagement on performance information, you need a yardstick. The criteria are the benchmarks used to measure or evaluate the subject matter. In the public sector, the subject matter is often performance against pre-determined objectives, such as targets set in a plan or budget. The indicators are the measures used to show whether each objective was met.

If the yardstick is poor, your conclusion is poor. A vague objective such as 'improve health outcomes' cannot be tested. An indicator that nobody can recalculate cannot be verified. So the first job is to decide whether the criteria are suitable. Suitable criteria let different competent practitioners reach similar conclusions on the same subject matter.

The usual test uses SMART-type characteristics. Objectives and indicators should be specific, measurable, achievable, relevant and time-bound. Auditors also look at consistency (the same basis from year to year and with the approved plan), verifiability (evidence exists and can be re-performed), completeness (nothing important is left out) and neutrality (no bias towards a good result). Different frameworks use slightly different lists, so in the exam use the characteristics that fit the scenario and explain them.

Assess at two levels. First, the objective: is it clear and linked to the entity's mandate? Second, the indicator: does it really measure that objective, with a defined formula, data source, unit and period? Then judge the effect. A weakness may mean you ask management to fix it, report a limitation, or modify your conclusion.

Remember that you assess suitability to decide whether you can accept or continue the engagement, and to plan what evidence to gather. It is not a box-ticking list. Link each weakness to a consequence for the assurance work.

Key rules to remember

SMART test for objectives: Specific + Measurable + Achievable + Relevant + Time-bound; Use it on each objective. Some sources use 'Realistic' instead of 'Relevant'. State your meaning in the answer.
Suitable criteria characteristics: Relevant, complete, reliable, neutral, understandable; These are the general characteristics of suitable criteria in the assurance framework. Apply them to the indicators as a group.
Indicator definition check: Indicator = clear definition + formula + data source + unit + period + owner; If any element is missing, the indicator is hard to measure and verify consistently.
Consistency check: Reported indicator = indicator in approved plan = prior-year basis; Differences need disclosure and explanation. Unexplained changes reduce comparability.

How to solve Assessing Suitability of Criteria and Indicators questions

Use this method for any question asking you to evaluate objectives, criteria or indicators.

1Identify the objective or indicator in the scenario and what it claims to measure.
2Test it against each characteristic: specific, measurable, achievable, relevant, time-bound, consistent, verifiable, complete.
3For each failure, quote the scenario fact that shows it. Do not just name the characteristic.
4Explain the effect on the engagement: unreliable measurement, no way to gather evidence, or misleading users.
5Say what you would do: ask management to define or amend it, perform alternative procedures, or consider a limitation.
6Conclude on overall suitability and whether you can proceed or must modify the conclusion.

Quickest way: Four-question quick test

When to use it: Use when time is short, or the scenario lists several indicators and you need fast coverage.

Can I measure it? Look for a formula, unit, source and period.
Does it match the objective and the approved plan?
Can I get evidence and recalculate it?
Is anything missing, biased or changed from last year?
Write one sentence per weakness: fact, problem, consequence, action.

Common mistakes in Assessing Suitability of Criteria and Indicators

Listing SMART words without applying them to the scenario.
Students memorise the acronym and write it out to fill space.
Fix: Take each indicator, quote the fact, and say which characteristic fails and why.
Confusing suitability of criteria with testing the reported results.
Both relate to performance information and look similar.
Fix: Suitability is judged before evidence work. It asks if the yardstick is good, not if the number is right.
Ignoring the consequence for the assurance conclusion.
Students stop at describing the weakness.
Fix: Always add the effect: limitation of scope, modified conclusion, or request to management to amend.
Treating every indicator as a failure.
Students assume the question wants only criticism.
Fix: Note strengths where they exist, such as a clear formula and independent data source, then focus on the real gaps.
Missing consistency and completeness.
Focus stays on the SMART letters.
Fix: Compare the reported indicators with the approved plan and prior year, and ask whether key objectives have no indicator.

Worked examples

Example 1

A public health agency has the objective 'improve patient experience'. Its indicator is 'patient satisfaction', reported annually. There is no defined survey method, sample size or scale. Assess the suitability of the indicator.

Show the solution

The objective is not specific. 'Improve' has no target level and 'patient experience' is not defined.
The indicator is not measurable as set. With no survey method, scale or sample, different people would calculate different results.
It is hard to verify. Without a defined data source and method, you cannot re-perform it or check that the sample was representative.
Consistency is at risk. Without a fixed method, results may not compare year to year.
Effect: you cannot form a reliable conclusion against these criteria.
Action: ask management to define the target, survey method, sample and scale. If they do not, consider whether the engagement can proceed or whether the conclusion should be modified.

Answer: The indicator is unsuitable as it stands because it is not specific, measurable or verifiable, and may not be consistent. Management should define it, otherwise the conclusion may need to be modified.

Example 2

A road agency's plan sets the target 'build 200 km of road by 31 March'. The annual report shows 'kilometres of road works started' as the indicator and reports 230 km. Evaluate the indicator.

Show the solution

The objective is specific, measurable and time-bound. It has a quantity, a unit and a date.
The indicator does not match the objective. The plan says built, the report says started. This is a relevance and consistency failure.
The result of 230 km is not comparable with the target, so it could mislead users into thinking the target was exceeded.
Completeness: no quality or cost measure is given, so users cannot judge whether the work met standards.
Effect: the reported indicator cannot be assessed against the approved target.
Action: ask management to report kilometres completed, or disclose the change and its reason. If they refuse, consider a modified conclusion.

Answer: The target is well defined, but the indicator is inconsistent with it and potentially misleading. Management should align it to 'completed' or disclose the change, otherwise the conclusion should be modified.

Exam tips

Apply each characteristic to a scenario fact. Marks go to application, not definitions.
Always finish with the consequence for the engagement and a recommended action.
Check the wording of the indicator against the wording of the objective. Mismatches such as started versus completed are common exam traps.
Use clear headings in written answers, one per indicator, so the marker can find points quickly. This helps professional skills marks.
Note any strengths briefly. A balanced evaluation shows judgement.

Practice questions from The audit of performance information (pre-determined objectives) in the public sector

Assessing Suitability of Criteria and Indicators: frequently asked questions

What does suitability of criteria mean in an assurance engagement?

It means the benchmarks are good enough to evaluate the subject matter reliably. Suitable criteria are relevant, complete, reliable, neutral and understandable. Without them, practitioners cannot reach a consistent conclusion.

Is SMART the only test for performance indicators?

No. SMART is a common starting point for objectives. For indicators you should also consider consistency, verifiability and completeness. Use the characteristics that fit the scenario and explain them.

When do I assess suitability in the engagement?

At acceptance and planning, before gathering evidence. The result shapes whether you accept the work and what procedures you design. You may revisit it if new facts appear.

What if the indicators are unsuitable?

First ask management to improve them. If that does not happen, you may need to limit the scope, modify your conclusion or decline the engagement, depending on how serious the weakness is.