Performance Audits and Performance Reporting
This page provides a discussion of performance audits for government entities, codified in RCW 43.09.470 passed by citizens as Intitiative 900 in 2005. It defines what a performance audit is, and provides local government illustrations of performance audit policies and performance audit reporting. The additional references section provides links to guides and reports related to performance audits. See MRSC's page on Performance Measurement for illustrations of performance measures. The State Auditor's Local Government Performance Center provides performance tools, templates, and other resources that can be used by local governments to evaluate programs and services, improve results and communicate with citizens.
Overview of the Law
Initiative 900 passed in the November 2005 General Election, requiring that all state and local government entities undergo performance audits to ensure accountability and guarantee that tax dollars are spent as cost-effectively as possible. The performance audits are to be conducted by the state auditor in accordance with the United States General Accounting Office auditing standards.
There are nine specific elements to be included in each performance audit: (1) identification of cost savings; (2) identification of services that can be reduced or eliminated; (3) identification of programs or services that can be transferred to the private sector; (4) analysis of gaps or overlaps in programs or services and recommendations to correct gaps or overlaps; (5) feasibility of pooling information technology systems within the department; (6) analysis of the roles and functions of the department, and recommendations to change or eliminate departmental roles or functions; (7) recommendations for statutory or regulatory changes that may be necessary for the department to properly carry out its functions; (8) analysis of departmental performance data, performance measures, and self-assessment systems; and (9) identification of best practices. This audit is in addition to the fiscal audits performed by the state on local governments.
This audit is in addition to the fiscal audits performed by the state on local governments. The initiative did not exempt smaller units of government audit nor did it acknowledge existing performance programs of local governments.
What is a Performance Audit?
- Government Auditing Standards, by the Comptroller of the United States, 2003 Revision, U.S. General Accounting Office, GAO-03-673G, June 2003
- Sec. 2.09 - Performance audits entail an objective and systematic examination of evidence to provide an independent assessment of the performance and management of a program against objective criteria as well as assessments that provide a prospective focus or that synthesize information on best practices or crosscutting issues. Performance audits provide information to improve program operations and facilitate decision making by parties with responsibility to oversee or initiate corrective action, and improve public accountability. Performance audits encompass a wide variety of objectives, including objectives related to assessing program effectiveness and results; economy and efficiency; internal control;11 compliance with legal or other requirements; and objectives related to providing prospective analyzes, guidance, or summary information. Performance audits may entail a broad or narrow scope of work and apply a variety of methodologies; involve various levels of analysis, research, or evaluation; generally provide findings, conclusions, and recommendations; and result in the issuance of a report. (See chapters 3, 7, and 8 for standards and guidance for auditors performing a performance audit in accordance with GAGAS.)
- RCW 43.09.430 - Performance Audit Definitions - (5) "Performance audit" means an objective and systematic assessment of a state agency or any of its programs, functions, or activities by an independent evaluator in order to help public officials improve efficiency, effectiveness, and accountability. Performance audits include economy and efficiency audits and program audits.
- RCW 44.28.005 - Definitions re: Joint Legislative Audit and Review Committee - (7) "Performance audit" means an objective and systematic assessment of a state agency or any of its programs, functions, or activities, or a unit of local government receiving state funds, by an independent evaluator in order to help public officials improve efficiency, effectiveness, and accountability. Performance audits include economy and efficiency audits and program audits. A performance audit of a local government may only be made to determine whether the local government is using state funds for their intended purpose in an efficient and effective manner. (8) "Performance measures" are a composite of key indicators of a program's or activity's inputs, outputs, outcomes, productivity, timeliness, and/or quality. They are means of evaluating policies and programs by measuring results against agreed upon program goals or standards.
Washington State Provisions for Performance Audits
- Laws of 2005, ch. 384 - An act relating to improving government management, accountability, and performance. Requires that State agencies, within available funds, develop and implement a quality management, accountability, and performance system. Codified at RCW 43.17.380 -.390 - Quality management, accountability, and performance system
- Laws of 2005, ch. 385 - This Act creates Citizen Oversight Board to improve efficiency, effectiveness, and accountability in state government. Areas to be assessed include quality management, productivity and fiscal efficiency, program effectiveness, contract management and oversight, internal audit, internal and external customer satisfaction, statutory and regulatory compliance, and technology systems and on-line services. The Board is to establish performance audit criteria consistent with criteria and standards followed by the JLARC. Criteria shall include, at a minimum, the auditing standards of the United States government accountability office, as well as legislative mandates and performance objectives established by state agencies and the legislature. Governor's Veto Message for Section 4. Codified at RCW 43.09.430 -.460 - Performance Audits
Local Government Performance Audits and Reports
A number of Washington local governments have implemented various elements of Service Efforts and Accomplishments, the Government Accounting Standards Board Webpages on performance management reporting as a way to improve how they operate and how they are perceived. The approach to managing for results involves seven basic steps: planning for results (strategic planning); program (activity) planning; developing meaningful performance measures; budgeting for results; managing work processes; collecting data and using the data to manage; evaluating and responding to results; and reporting results to elected and appointed officials and constituents. Illustrations of performance audit policies and methods of reporting appear below. See MRSC's page Performance Measurement for examples of measures, indicators, and dashboards being used by local governments.
Cities with Performance Audits
- Seattle Municipal Code Sec. 3.40.020 - City Auditor -- Ancillary powers - Includes performance audits and other initiatives to improve City operations for all City departments
- Seattle Office of the Auditor - The Office of City Auditor conducts financial audits, performance audits, management audits, and compliance audits of City of Seattle programs, agencies, grantees, and contracts.
- Seattle Auditor Publications and Reports
- Tacoma Performance Management System - Explains the performance management system and provides citizens information on how the city is performing
- Vancouver Performance Measurement and Management - Describes how city uses performance measures to aid management
Counties with Performance Audits
- Clark County
- King County
- King County Charter Sec. 250 - County Auditor - Provides for financial and compliance audits, economy and efficiency audits, and program result audits for the purpose of reporting to the council regarding the integrity of the function of the financial management system, the quality and efficiency of agency management, and the effectiveness of programs.
- King County Code Ch. 2.20 - County Auditor, see Sec. 2.20.035, Types of Audits; Sec. 2.20.040, Scope of Authority
- Performance Management
- Pierce County
- Snohomish County
- Association of Local Government Auditors
- Governmental Accounting Standards Board
- International City and County Management Association Center for Performance Measurement
- PEW Center on the States
- Performance Auditing for Added Value: Governance, Politics and Accountability, 2nd Biennial Forum of Central Region Government Auditors, presented by Mark Funkhouser, City Auditor, Kansas City, Missouri
- The Fine Art of Reporting Results, by Jonathan Walters, Governing, 08/2006
- Performance Auditing: Beyond 'Gotcha!', by Jonathan Walters, Governing, 11/2009 - Washington State's new approach to performance audits is generating mixed reviews.
- Using Performance to Deliver Promises, by Jonathan Walters, Governing, 03/2010 - Can the feds and states find an effective way to achieve the results everyone wants to see?