Value for

Money Audit
Characteristics of Performance audits, which include economic,
efficiency, and effectiveness audits, are
Value for Money basically an extension of financial audits in
Audit terms of their objectives and procedures. The
definition of performance audit is a systematic
process to obtain and evaluate evidence
objectively, in order to be able to carry out an
independent assessment of the economics and
efficiency of operations, effectiveness in
achieving the desired results, and compliance
with applicable policies, regulations and laws,
determining the suitability between
performance have been achieved with
predetermined criteria, and communicate the
results to the users of the report
Value for Money Audit
One of the differences between VFM audit and
conventional audit is the audit report. In a
conventional audit report, the audit result is in
the form of an independent and objective
auditor's opinion about the fairness of the
financial statements in accordance with the
standard criteria that have been set, without
providing recommendations for improvement.
Whereas in VFM audits do not only convey
conclusions based on the audit stages that have
been carried out, but are also equipped with
recommendations for future improvements.
The Purposes of To determine whether each entity has
acquired, protected, & used resources (such
Economic and as employees, buildings, space, & office
Efficiency Audit equipment) economically & efficiently

To determine the causes of uneconomical or

inefficient practices, including the
organization's inability to manage information
systems, administrative procedures, &
organizational structures
Economic and Efficiency Audit
The General Accounting Office Standards (1994) asserts that an economic
and efficiency audit is carried out by considering whether the audited entity
has:
Follow the provisions of the implementation of a healthy procurement;
Procurement of resources (type, quality, and quantity) as needed at the
lowest cost;
Protect and maintain all existing resources adequately;
Avoid duplication of work or activities that are aimless or unclear in
purpose;
Avoid resource unemployment or excessive number of employees;
Using efficient work procedures;
Using minimum resources (staff, equipment, and facilities) in producing or
delivering goods or services with the right quantity and quality;
Comply with the requirements of laws and regulations relating to the
acquisition, maintenance, and use of state resources;
Reporting legal and accountable measures of economy and efficiency
 Audit Effectiveness
The objectives of conducting an effectiveness audit or program audit are to:
a. Assessing program objectives, both new and existing, whether they are
adequate and appropriate;
b. Determine the level of achievement of the desired results of a program;
c. Assess the effectiveness of the program and program elements separately;
d. Identify factors that hinder the implementation of a good and satisfactory
performance;
e. Determine whether management has considered alternatives to implementing
the program that might provide better results and at a lower cost;
f. Determine whether the program is complementary, overlaps or conflicts with
other related programs;
g. Identify ways to better implement the program;
h. Assess compliance with laws and regulations applicable to the program;
i. Assess whether the management control system is good enough to measure,
report, and monitor the level of program effectiveness;
j. Determine whether management has reported valid and accountable measures
of program effectiveness
 3 Categories of Value for
Money Audit Activities
By Product VFM Work An Arrangement Review Performance Review
VFM audit work that is a VFM audit work: To ensure that Work carried out to objectively
secondary objective is the client performs the assess the VFM achieved by
administrative duties the client & compare it with
usually less structured. valid (comparison) criteria.
necessary to achieve VFM
Type of work: Seeks to find based on existing formal Assessment of the client's
savings by making small regulations. In the Arrangement performance can be done by
changes in work practices Review, the auditor can check comparing the results
& having substantial & assess the existence of this achieved with past
kind of formal regulation, as well performance, previously set
benefits.
as provide an overview for the targets or the performance of
auditor to review performance. other similar organizations.
Prerequisites for Performance Audit
1. Auditor (person/institution conducting audit)
auditee (party being audited) recipient (party
receiving audit result);
2. Accountability relationship between auditee
(subordinate) and audit recipient (higher
authority);
3. Independence between auditors and
auditees;
4. Certain testing and evaluation of activities
that are the responsibility of the auditee by
the auditor for the audit recipient.
1. An auditor must have been recognized as being able
to conduct an audit;
a. Have an understanding of existing accounts, in
accordance with applicable regulations and comply with
existing laws.
b. Auditors have been recognized for their ability to
perform auditing practices.
c. The auditor must understand whether the client has
utilized the available resources economically, efficiently,
and effectively.
2. An auditor must comply with the applicable code of
ethics;
3. An auditor must be able to carry out a responsible
audit, because he is motivated by the awareness that
audits are carried out on public sector organizations,
especially to meet the interests of the community.

Requirements to Become a Public

Sector Auditor
 The purpose of the value for money audit is to
increase the accountability of institutions and the

Overview public and to improve government performance.

Performance audits, which include economic,
efficiency, and effectiveness audits, are basically an
extension of financial audits in terms of their
objectives and procedures. One of the things that
distinguishes VFM audits from conventional audits is
that the audit results are in the form of an
independent and objective auditor's opinion on the
progress of the financial statements in accordance
with predetermined criteria, without providing
recommendations for improvement. Whereas in VFM
the audit does not merely convey conclusions based
on the stages of the audit that have been carried out,
but is equipped with recommendations for
improvements in the future.
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