Brief Introduction


  • Performance Audit

Performance audit is an objective and systematic examination of a public sector organization’s program, activity, function or management systems and procedures to provide an assessment of whatever the entity, in the pursuit of predefined goals, has achieved economy, efficiency and effectiveness in the utilization of resources.


  • INTOSAI definition:

“An audit of the economy, efficiency, and effectiveness with which the executives/audited entities uses its resources (four resources called 4M’s i.e. men, money, materials, machines) in carrying out its responsibilities”.



Performance audit, therefore, involves an independent assessment of whether economy, efficiency and effectiveness have been achieved by the organizations concerned. These three key elements of VFM can be defined in various ways, as follows:

  • Economy:

Economy is concerned with minimising the cost of resources used (staff, materials and equipment) for any activity in the persuit of its objectives and whether they are in accordance with sound administrative principles and practices and management policies. An economical organization acquires its input resources, appropriate quality and quantity, at the lowest. In summary, economy means minimizing the cost of resources used for an activity, having regard to quality I.e spending economically, whilst maintaining quality.


  • Efficiency:

Efficiency is concerned with the relationship between goods and services produced (the inputs). A efficient entity produces the maximum output from any given set of inputs alternatively, it may require minimum inputs to achieve a given quantity and quality of output, this will be reflected in increased productivity and lower unit costs, in summary, efficiency means ensuring that maximum output of goods and services has been gained from the resources used in their production i.e spending well.

  • Effectiveness:

Effectiveness is concerned with achieving predetermined objectives (specific planned achievements) or goals and with the actual impact (the output achieved ) compared with the intended impact (the objectives ), using a range of performance measures and indicators, it is possible to assess an entity’s effectiveness, in summary, Effectiveness means ensuring that the desired results, objectives, targets or policies have been successfully achieved I .e spending wisely.

Performance Audit Mandate


  • The authority of the CAG to carry out all types of audit is derived from the Constitution of the People’s Republic of Bangladesh.
  • Article 128 of the Constitution and the Comptroller and Auditor General (Additional Functions) Act 1974 empower the CAG to audit all public accounts of the Republic.
  • The CAG and any person authorized by him has unrestricted access to all records, books, vouchers, documents or other items required for the audit.



Areas of Performance Audit

  • All types of management activities.
  • All types of projects, activities and program.
  • Particular sectors or government-wide.
  • Input based – concerned with the cost of resources used.
  • Output based – concerned with effectiveness.



Benefits of Performance Audit


  • Providing an independent, objective evaluation of operations
  • Identifying criteria for measuring the achievement of organizational goals and objectives
  • Locating opportunities for eliminating waste and inefficiency, that is, cost reduction
  • Reporting irregularities: Reviewing compliance with legal requirements and organizational goals, objectives, policies, and procedures
  • Strengthening management and administration or organizational process
  • Improving the quality of services provided
  • Developing policy
  • Creating awareness of need for good accountability and transparency in the use of resources

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