Acca aaa s21 Notes

September 2021 to June 2022 exams
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2.2. Auditing
There are two types of audit:
๏
‘Performance audit’ – this ‘value-for-money’ audit examines efficiency and effectiveness having 
regard for economy. It focuses on government policy or management processes and its main 
aim is to lead to improvements.
๏
‘Audit of performance information’ – this provides assurance that the performance reported 
against predetermined objectives is reliable, accurate and complete (in all material respects). It 
focuses on:
‣
Data reliability – is it accurate and complete? The auditor must assess the systems that 
produce the performance information.
‣
Content quality – is it relevant (ie linked to objectives), comparable (eg with past periods) and 
verifiable (ie supported by documentation)? Is it well-defined (ie clear and unambiguous) and 
timely (to be useful)? Does it avoid ‘perverse incentives’ (ie not encourage wasteful 
behaviour)?
‣
Compliance with reporting requirements – is the report clear? Is there sufficient explanation 
of inputs, outputs and outcomes? Has actual performance been evaluated?
3. Planning the audit of performance information 
To audit that performance information the auditor needs to know how that information (actual 
performance and target performance) was produced. There are five stages to the production of 
performance information:
(1)
Defining a measurement objective
(2)
Formation of relevant indicators
(3)
Data collection
(4)
Data analysis
(5)
Reporting
These stages are explained below along with typical examination procedures that can be used by the 
auditor.