Improving organizational performance through performance audits: when appropriately conducted, performance audits provide an opportunity for organizations to learn and improve.(Solutions)

Governments conduct performance audits for many reasons. One of the most important is to improve the performance of specific operations. Performance audits can provide valuable information that managers and policy makers can use to achieve better results from existing programs, re-design programs to improve results, or reallocate resources to other programs they believe will be more successful.

THE PALM BEACH COUNTY EXPERIENCE

The County of Palm Beach, Florida, has an ongoing program to review the performance of county operations, staffed by the Financial Management Division. Over the past several years the division has completed performance reviews of functions as diverse as code enforcement, human services, and occupational license enforcement. A particularly noteworthy aspect of the county's program is its emphasis on measuring and improving performance. At the conclusion of each performance review, auditors provide the audited agency with performance indicators to be used to assess whether and to what extent audit recommendations, once implemented, actually improve program results. Using performance indicators for this purpose provides critical feedback to "close the loop" in the performance management cycle. It is also a way to evaluate the extent to which performance audits contribute to improving results.

Palm Beach County has also initiated a strategy called "harnessing organizational performance" (HOP) to encourage departments to use performance measures for improvement. HOP includes a systematic review of how departments measure performance and how they use measures to improve service delivery to the public. The County has found that regularly evaluating program performance has not only contributed to improved results but has also fostered an organizational culture focused on performance.

THE PERFORMANCE MANAGEMENT CYCLE

Performance management encompasses a continuous cycle of planning, budgeting, implementation--or operations--and evaluation. Including performance audits or other evaluation processes as part of an organization's performance management system can help to instill an improvement focus into the organization's culture. Performance measures are at the center of the performance management cycle and provide data that tie each phase of the cycle to the others. Each performance audit completed by an organization offers an opportunity to take an in-depth look at individual organizational units or programs. Performance audits can play a key role in the performance management cycle by completing the feedback loop and provide critical information, not only about whether programs are achieving the desired results, but also why programs are or are not effective.

Because auditing resources are limited, programs or activities to be audited should be carefully selected. Programs reviewed should be important to citizens, policy makers and managers. It is easy to make the mistake of "searching under the light" and only reviewing those programs where data is readily available or issues are easily analyzed, or where highly publicized mistakes have been made. Programs that are most difficult to analyze, or have escaped the media's radar, are ...