Performance audit is an independent, objective and reliable examination of whether public sector undertakings, systems, operations, programmes, activities or organizations are operating in accordance with the principles of economy, efficiency and effectiveness. The main objective of performance audit is to constructively promote economical, effective and efficient governance. It also contributes to accountability and transparency. Performance audit promotes accountability by assisting those charged with governance and oversight responsibilities to improve performance through an examination of whether:

a) decisions by the legislature or the executive are efficiently and effectively prepared and implemented and
b) tax payers or citizens have received value for money.

It does not question the intentions and decisions of the legislature, but examines whether any shortcomings in the implementation of the law and framing of regulations have prevented the specified objectives from being achieved. Performance audit focuses on areas in which it can add value for citizens and which have the greatest potential for improvement. It provides constructive incentives for the responsible parties to take appropriate action.

Performance audit promotes transparency by affording all stakeholders an insight into the management and outcomes of different public sector activities. It thereby directly contributes to providing useful information to the citizen, while also serving as a basis for learning and improvements.

Perspective of Performance Audit

in such circumstances the following points shall be considered:

a) Elements of performance audit can be part of a more extensive audit that also covers compliance and financial auditing aspects.
b) In the event of an overlap, the primary objective of the audit shall guide the auditors as to which standards to apply.

In determining whether performance considerations form the primary objective of the audit engagement, it should be borne in mind that performance auditing focuses on activity and results rather than reports or accounts, and that its main objective is to promote economy, efficiency and effectiveness rather than report on compliance.