Page 207 - DCOM509_ADVANCED_AUDITING

Advanced Auditing

Notes Measuring Inputs: Inputs (e.g., labour, materiel, or capital) can be measured in either physical or
monetary terms. Labour inputs, for example, can be measured in units of time or dollars.
Materiel and capital resources are generally measured in dollars.
Measuring Outputs: Outputs of some operations are uniform. These outputs can be readily
counted and the amount of resources consumed can also be measured to calculate the efficiency
of producing them. If outputs are not uniform, it is not appropriate to count them as standard
units of production requiring equal amounts of resources for calculating efficiency.
Standards for Efficiency: Standards provide a reference point or benchmark to measure and
assess efficiency. Different kinds of standards can be used as benchmarks so long as they represent
a reasonable level of expected efficiency.

 Engineered Standards: These are developed with well-established work measurement
techniques. Therefore, engineered standards provide a reliable basis for measuring and
assessing efficiency levels.
 Historical Standards: Productivity ratios, representing efficiency achieved in the past,
can be used as a base to assess current efficiency levels.
 Organizational Comparisons (benchmarking): Comparing against standards based on
the achievements of other organizations that are doing similar work and are considered
leaders in the field, or comparing with the generally accepted industry or business standards
are other ways of assessing an organization’s efficiency.
 Capacity Utilization: The efficiency of staff, equipment, and facilities, etc., is strongly
influenced by the extent to which such resources are used productively in relation to the
time available for use. Utilization is expressed as the percentage of the available capacity
that is actually used.

11.2.5 Benefits of Auditing Efficiency

Auditing efficiency can directly or indirectly help departments and agencies to identify
opportunities to provide more or better services at the same or lower cost. More specifically,
such audits can:

 help managers and staff to be more sensitive to their obligation of due regard to efficiency;
 underline the importance of measuring efficiency and of using that information for
managing operations and providing accountability;
 identify means for improving efficiency, even in operations where efficiency is difficult to
measure;

 demonstrate the scope for lowering the cost of delivering programs without reducing the
quantity or quality of outputs or the level of service;

 Identify needed improvements in existing controls, operational systems, and work
processes for better use of resources.

Did u know? Auditing Efficiency increases the quantity or improves the quality of outputs
and level of service without increasing spending.

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