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

An auditor is evaluating the criteria used by a municipal water authority. The objective is 'ensure safe drinking water'. The authority reports only 'number of water treatment plants maintained' as its indicator. What is the auditor's main concern about suitability?

The main concern is relevance. Plants maintained is an activity or input measure and does not show whether drinking water is actually safe, so the indicator does not reflect achievement of the stated objective even though it can be counted easily.

  1. AThe indicator is not relevant, as it measures an input or activity rather than the result the objective describesCorrect
  2. BThe indicator is too difficult to measure
  3. CThe indicator is not understandable to the public
  4. DThe indicator has too many targets

Explanation

Relevance requires the indicator to bear on the achievement of the objective. Counting plants maintained reflects activity, not whether water is safe, so it does not show the outcome. Measurability is not the problem as plants can be counted.

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