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Performance Audits - creating and sustaining Public Value

performance audit Oct 08, 2019

This article is for:                            

  • Performance Auditors, to help explore their critical role in sustaining Public Value.[1]
  • Internal Auditors, in conducting performance audits i.e., assessing economy and efficiency within their organisations.

 

Remind me: what is ‘Public Value’?

 

Progressive organisations recognise the important role of audit and assurance activities in helping create and sustain value.

 

Public Value is achieved through the delivery of programs and services to achieve collective community outcomes e.g., programs to improve kids’ school results or to help the elderly stay active in their communities.

 

The concept of Public Value was first discussed 25 years ago by Mark Moore from Harvard University.[2]

It is based on the following interlinked factors:

  • The production of valued outcomes
  • Within available resources and capability constraints and…
  • In an accountability framework (formal or informal).

Things that performance auditors are good at measuring and evaluating.

 

(In this article, “performance auditing” encompasses performance audits undertaken by auditors-general and by internal audit functions.  “Performance auditors” refers to both groups of professionals).

 

 

Community needs at the core

 

Performance auditors understand that Public Value can only be created – in any lasting sense – when organisations properly understand the needs of the community.

 

Too often these needs are only identified after the fact, usually where services have failed significantly or haven’t been delivered in line with community expectations.

 

This is evidenced by the sheer number of expensive royal commissions or ‘taskforces’ established to investigate significant underperformance.  

 

 Thankfully, in more recent times there is more and more focus on the design of public policy and programs to ensure they deliver on their promise.

 

Some examples of community focused approaches include the use of community voting on projects (Victoria’s Pick my Project), public involvement in program design (Auckland’s Co-design lab) or ongoing refinement of proposed new public services (the UK’s Policy Lab).

 

Because performance auditing often commences with understanding what’s important to the community, when timed properly, it can be effective at identifying where service delivery may not be meeting expectations. This allows for early intervention to mitigate delivery risk and reputational risk.

 

 

Performance auditing to enhance Public Value

 

Performance auditors know that they provide an essential independent evaluation of how well public services are being delivered. That’s a given.

 

But performance auditing as a profession has substantial potential to contribute even more to Public Value.

 

It should demonstrate not just if Public Value has been created, but also how it can be sustained.

 

A well-developed audit program identifies the critical success factors that should inform the future design and delivery of public services.

 

Sometimes performance auditors struggle to articulate these beneficial outcomes, even though they extend well beyond the individual audit to the broader community.

 

Progressive public service organisations will recognise this legacy value from a performance audit. They will draw on the outcomes and insights to frame critical service delivery design questions, such as (with example answers):

 

Q1. What are the needs of the community receiving the services?
A. The community is geographically remote but has a high demand for social services.
   
Q2. Have services been properly designed to meet community needs?
A. Reports demonstrate that the community profile is digitally literate, so we need to have a strong online presence.
   
Q3. Are services being delivered efficiently?
A. The service has been designed with as few procedural steps as possible to increase community uptake.
   
Q4. What are some of the outcomes we could/should be measuring?
A. We expect jobs growth and savings through a reduced demand on the criminal justice system.
   
Q5. How do we measure outcomes?
A. The program has been designed so that there are data collection points and KPIs at various stages to provide an overall picture of performance.
   
Q6. How should we report our performance to the community and improve where we can?
A. We commit to reporting performance annually through community town halls and electronic community newsletters, and to use community feedback to improve future implementation.

 

 

Performance auditing can help bridge the gap between how well services have been delivered in the past, and how they should be delivered in the future.

 

 

Performance auditing is critical to delivering value

 

Performance auditing can help governments and delivery agencies enhance how they create and sustain Public Value.

 

In this way, the audits can help identify lessons for how future services and programs should be designed to maximise value.

 

Delivering Value – whether in the public or private sectors – is an outcome that everybody is working towards.  

  

 

Are you clearly articulating how performance auditing enhances Value?

 

[1] We acknowledge that Public Value is created by the public, private and not-for-profit sectors, but for this article we have focused on the role of government.

[2] Creating Public Value: Strategic Management in Government, Mark Moore, 1995, Harvard University Press.

 

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