What is a Performance Audit?
Performance audits provide elected officials and government employees with an objective, third-party analysis of their operations to help them improve performance, reduce costs, and make informed, data-driven decisions. The Auditor of State’s office conducts performance audits of Ohio’s schools, local governments and state agencies.
Principles of Performance Audits
A performance audit is a non-recurring examination of the economy, efficiency and effectiveness of government programs and functions. The principles guiding performance auditing are often called the “Three Es”:
- The principle of ECONOMY is keeping the cost low.
- The principle of EFFICIENCY is getting the most out of available resources.
- The principle of EFFECTIVENESS is meeting the objectives set.
Tailored to each client, Auditor of State performance audits are flexible and may include a range of subject areas. Performance audits can analyze the operations of an entire entity or a particular department. They can also examine a function or service that cuts across the operation or a single issue that involves several departments. Some examples of areas commonly analyzed are staffing, health insurance, collective bargaining agreements, employee compensation, contract management, transportation systems, and facility and asset utilization. Results may identify cost savings, duplicative or underused services that could be reduced or eliminated, and gaps and overlaps in services. Performance audits are collaborative efforts requiring the participation of the governments being audited during all three phases of the engagement: planning, fieldwork, and reporting.
A performance audit can be used by any government seeking to improve operations, identify cost savings and produce sustainable, balanced budgets.
Who Benefits from Performance Audits?
In 2011, the Ohio General Assembly passed Senate Bill 4, which requires performance audits of four state agencies every two years. The first four agencies to receive a performance audit were the Ohio Departments of Job and Family Services, Education, and Transportation, as well as the Ohio Housing Finance Agency.
The Auditor of State's office volunteered to undergo the first state agency performance audit. Completed in November 2011 by Plante & Moran PLLC, the audit led to the restructuring of several departments and more than $1 million in savings to date.
In compliance with Ohio Revised Code 117.463, the Ohio Performance Team releases an annual report to provide a status update of the state agency performance audits.
Local Government Agencies
There are more than 5,800 state and local government agencies in the State of Ohio. Any public or quasi-public entity in Ohio that receives funds from or through the state may request a performance audit. The Auditor of State’s office may also elect to exercise statutory authority and conduct a performance audit of an organization.
As a public sector organization, the Auditor of State’s office works for the taxpayers and keeps audit costs low, seeking only direct cost recovery. Ohio governments using the Auditor of State’s services for a performance audit may be eligible for financial assistance through the LEAP Fund.
Any school district can request a performance audit, but those declared in fiscal caution by the Ohio Department of Education may be required to undergo a performance audit to help address financial troubles.
Ohio Performance Team
The Ohio Performance Team (OPT) conducts all performance audits for the Auditor of State’s office. The team is made up of professionals with a blend of government and industry backgrounds, as well as in-depth experience in research, operations and management. OPT seeks to develop recommendations that provide detailed steps toward improving performance, generating real change within the organization and offering clear benefits for the ultimate customer: the taxpayer.