AUDIT - CG
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Value for Money (VFM) Overview
Definition: Achieving the best service combination for least resources and involves assessing economy, efficiency, and effectiveness.
Measurements of VFM
Comparisons often made using performance indicators.
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In-Class Exercise: VFM Audit of a Supermarket
Economy: Good quality supplies at the best cost.
Efficiency: Customer satisfaction metrics.
Effectiveness: Meeting organizational objectives.
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Efficiency Review
Defined as the productivity relationship between inputs and standards, aiming for optimal utilization of resources.
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Effectiveness Review
Centered on measurable objectives and outcomes and assessing the barriers to achieving effectiveness.
Broad Overview
A reminder of the three E's: Economy, Efficiency, Effectiveness, though not exhaustive.
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Interlinked Relationship of Three E's
The effective management requires ensuring that one aspect does not detract from the others, emphasizing focus towards organization objectives.
Problems with VFM Audits
Potential for short-termism and cost-cutting at the expense of effectiveness.
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Internal Audit Reports
Typically include findings and recommendations, with discussions and feedback from key personnel before formal reporting.
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Outsourcing Internal Audit
Definition: Utilizing external firms to complete in-house functions.
Pros and Cons of Outsourcing
Advantages:
Access to expert staff, flexibility, and cost savings.
Disadvantages:
Potential loss of consistency, independence issues, and short-term focus.
Summary of Learning Objectives
Review major concepts related to internal audits and their responsibilities concerning fraud detection and governance.