Instituting performance audits

PUBLIC, private and non-governmental institutions tasked with delivering public services and those in receipt of public funds have to improve their governance performances for Papua New Guinea to achieve its strategic targets set out in Vision 2050 and the 2030 development strategic plan.

Service delivery institutions, over the last 35 years, have not been adequately equipped to meet the development challenges of a developing nation to improve the lives of the rural masses. Hence, the ongoing calls for more funding towards service delivery will not achieve much; rather, such resources would only be captured by conduits.

Speaking at the annual Certified Practicing Accountants of Papua New Guinea (CPAPNG) conference in Lae, Morobe, last Thursday, University of Papua New Guinea academic and Vision 2050 national strategic plan task force chairman Prof David Kavanamur highlighted the need for service delivery institutions to be adequately geared for the implementation of the government’s Vision 2050.

He said for this to happen, “performance audits have to be instituted on a higher scale”.
“Institutions in receipt of public funds, be they public, private or non-state, should avail themselves to performance audits or be compelled by law, possibly through amendments to the Audit Act incorporating government performance results auditing, a proven practice in the US and many other countries,” Kavanamur said.

“The end result is improved deliverables based on corporate plans, annual work plans, budgetary allocations and annual performance plans.
“Realistically, many institutions of government, left to their own devices, will not deliver on Vision 2050 and the 2030 development strategic plan (DSP) outcomes unless they are compelled to do so.”

Unlike financial audits, very little performance audits have been carried out over the years in PNG. Much concentration has been on financial audits where auditors used standard procedures and relied on accounting principles to determine the financial health of an organisation.
State institutions like the parliamentary Public Accounts Committee were also set up to keep a check on government departments and state entities to ensure they account for what they spend.

This year, the office of the attorney-general began conducting performance audits of waste management using existing scarce resources.
Auditor-General George Sulliman has committed his office to developing a larger performance audit capability over the next few years. He has established a small section, led by a senior staff member, which will become the nucleus of a larger group in a near term.
As far as Kavanamur is concerned: “This important initiative of the auditor-general will require genuine resource commitments as he endeavours to conduct audits on departments on a current year basis and enlarge audit coverage,” having just successfully cleared the backlog of government agency audits by 2008 (AGO brief Aug 10, 2010).

The real benefit of performance auditing is that it complements financial audits and its findings could be utilised immediately by top management to improve performance against Vision 2050 strategic targets.
“Performance against audits can quickly relate inputs, including finance to an agency’s output and then link to Vision 2050 outcomes through balance scorecard reporting.”
Unlike financial audits, performance audits do not have to wait for the submission of financial statements.

“Its usefulness, though, depends on each agency to prepare an annual performance plan covering each programme activity set forth in the budget of such an agency,” Kavanamur told the practicing accountants conference.
“I do trust that we will all get the opportunity to discuss issues that are pertinent to performance improvement in public sector organisations so that our strategic targets, as laid out in Vision 2050 and DSP 2030 are achieved within our lifetime.”

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