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

The audit office of a national government is planning an audit of the performance report of a public health agency. The agency's annual report states its pre-determined objectives and targets for the year. At the planning stage, which action is most appropriate for the auditor to take first to assess whether the performance information can be reliably audited?

The auditor should first evaluate whether the agency's objectives and indicators are well defined, relevant and measurable, because suitable criteria are needed before any testing. Sampling results or drafting conclusions comes later, and financial materiality cannot simply be reused for non-monetary performance measures.

  1. AEvaluate whether the agency's objectives and indicators are well defined, relevant and measurable against suitable criteriaCorrect
  2. BSelect a sample of reported results and agree them to supporting records
  3. CDraft the auditor's report conclusion on the usefulness of the targets
  4. DSet the performance materiality at the level of financial statement materiality without further consideration

Explanation

Before testing results, the auditor must establish whether suitable criteria exist, meaning objectives and indicators that are clearly defined, relevant and measurable. Testing samples or drafting conclusions comes later. Simply adopting financial statement materiality ignores that performance information may be assessed on non-monetary and qualitative grounds.

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