Page 205 - DCOM509_ADVANCED_AUDITING

Advanced Auditing

Notes  Quantity refers to the amount, volume, or number of outputs produced. For example,
number of passports issued, number of income tax returns processed, number of applicants
selected as immigrants, and area of facilities maintained.
 Quality refers to various attributes and characteristics of outputs such as reliability,
accuracy, timeliness, service courtesy, safety, and comfort.

 Productivity is the ratio of the amount of acceptable goods and services produced (outputs)
to the amount of resources (inputs) used to produce them. Productivity is expressed in the
form of a ratio such as cost or time per unit of output.
 Level of service refers to the “richness” of service in terms of such characteristics as
accessibility, options, frequency, and response time. Level-of-service standards are
sometimes defined by statute, regulations, or policies. Such standards may influence quality
as well as the cost of service.

Staff and work processes, among other factors, determine the rate at which resources are consumed
in producing goods or services. Thus, staff and work processes affect the productivity of an
operation.
Efficiency is a relative concept. It is measured by comparing achieved productivity with a
desired norm, target, or standard. Output quantity and quality achieved and the level of service
provided are also compared to targets or standards to determine to what extent they may have
caused changes in efficiency.

Notes Efficiency is improved when more outputs of a given quality are produced with the
same or fewer resource inputs, or when the same amount of output is produced with fewer
resources.

11.2.2 How does Efficiency relate to Economy and Effectiveness?

Efficiency is only one dimension of the performance of a government program or operation.
Auditors should be equally aware of other dimensions of performance, including economy and
effectiveness.
Due regard to economy requires that resources of appropriate quantity and quality be obtained
at least cost. Because efficiency derives from the relationship between resource inputs and
outputs, the concepts of efficiency and economy are inextricably linked. Economic acquisition of
resources contributes to efficiency by minimizing the cost of inputs used.

Effectiveness questions overlap with and extend beyond efficiency into program effects and
impacts (outcomes). Efficiency is closely linked to effectiveness because it is an important factor
in determining the least-cost method of achieving desired outcomes.

11.2.3 Auditing Operations with Non-uniform Outputs

Government operations cover a wide variety of work ranging from repetitive clerical tasks to
complex intellectual analyses, and from manual tasks to automated operations using expensive
equipment and technology. Efficiency of some operations with dissimilar outputs can be difficult
to measure.

Examples of such operations include planning, policy development, research, advisory support
functions, administrative overhead, and project management.

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