520-7 SPECIAL ITEM NUMBER- FINANCIAL AND PERFORMANCE AUDIT

• Financial Audits
• Financial Related Audits
• Performance Audits
• Other Miscellaneous Activities of audit Organizations

FINANCIAL AUDIT

Financial audits include: 1) financial statement audits, 2) segments of financial statements, 3) internal management controls, 4) compliance with laws and regulations, 5) economy and efficiency audits, and 6) program results and program fraud audits. Examples include but are not limited to the following:

FINANCIAL STATEMENT AUDITS

CFO Act Financial Statement Audits, Forensic Audits conducted on behalf of OIG as part of its responsibilities under the IG Act. Financial statement audits provide reasonable assurance about whether the financial statements of an audited entity present fairly the financial position, results of operations, and cash flows in conformity with generally accepted accounting principles.

Financial statement audits also include audits of financial statements prepared in conformity with standards of accounting discussed in auditing standards issued by Statement of Federal Financial Accounting Standards (SFFAS) and may also include standards issued by the American Institute of Certified Public Accountants (AICPA).

FINANCIAL RELATED AUDITS

Financial related audits include determining whether (1) financial information is presented in accordance with established or stated criteria, (2) the entity has adhered to specific financial compliance requirements, or (3) the entity's internal control structure over financial reporting and/or safeguarding assets is suitably designed and implemented to achieve the control objectives. Financial related audits may, for example, include audits of the following:

1. Segments of financial statements; financial information (for example, statement of revenue and expenses, statement of cash receipts and disbursements, statement of fixed assets); budget requests; and variances between estimated and actual financial performance.
2. Internal management controls over compliance with laws and regulations, such as those governing the (1) bidding for, (2) accounting for, and (3) reporting on grants and contracts (including proposals, amounts billed, amounts due on termination claims, and so forth).
3. Internal management controls over financial reporting and/or safeguarding assets, including controls using computer- based systems.
4. Compliance with laws and regulations.

PERFORMANCE AUDITS

A Performance Audit is an objective and systematic examination of evidence for the purpose of providing an independent assessment of the performance of a government organization, program, activity, or function in order to provide information to improve public accountability and facilitate decision-making by parties with responsibility to oversee or initiate corrective action. Examples of Performance Audits include but are not limited to Economy and Efficiency Audits, Program Results, and Program Fraud.

a. Economy and Efficiency Audits include determining (1) whether the entity is acquiring, protecting, and using its resources (such as personnel, property, and space) economically and efficiently, (2) the causes of inefficiencies or uneconomical practices, and (3) whether the entity has complied with laws and regulations on matters of economy and efficiency.

* Economy and Efficiency Audits may, for example consider whether the entity

1. is following sound business practices (e.g. procurement, logistics, etc);
2. is acquiring the appropriate type, quality, and amount of resources at an appropriate cost;
3. is properly protecting and maintaining its resources;
4. is avoiding duplication of effort by employees and work that serves little or no purpose;
5. is avoiding idleness and over staffing;
6. is using efficient operating procedures;
7. is using the optimum amount of resources (staff, equipment, and facilities) in producing or
   delivering the appropriate quantity and quality of goods or services in a timely manner;
8. is complying with requirements of laws and regulations that could significantly affect the
   acquisition, protection, and use of the entity's resources;
9. has an adequate management control system for measuring, reporting, and monitoring a program's economy and efficiency; and
10. has reported measures of economy and efficiency that are valid and reliable.

b. Program Audits includes determining (1) the extent to which the desired results or benefits established by the legislature or other authorizing bodies are being achieved, (2) the effectiveness of organizations, programs, activities, or functions, and (3) whether the entity has complied with significant laws and regulations applicable to the program.

* Program Results may, for example

1. assess whether the objectives of a new, or ongoing program are proper, suitable, or relevant;
2. determine the extent to which a program achieves a desired level of program results;
3. assess the effectiveness of the program and/or of individual program components;
4. identify factors inhibiting satisfactory performance;
5. determine whether management has considered alternatives for carrying out the program that might yield desired results more effectively or at a lower cost;
6. determine whether the program complements, duplicates, overlaps, or conflicts with other related programs;
7. identify ways of making programs work better;
8. assess compliance with laws and regulations applicable to the program;
9. assess the adequacy of the management control system for measuring, reporting, and monitoring a program's effectiveness; and
10. determine whether management has reported measures of program effectiveness that are valid and reliable.

    These audits may apply to services, activities, and functions as well as programs.

520-8 SPECIAL ITEM NUMBER- COMPLEMENTARY AUDIT SERVICES

OTHER MISCELLANEOUS ACTIVITIES OF AN AUDIT ORGANIZATION

Auditors may perform services other than audits. For example, Auditors may:

a. assist a Government body by developing questions for use at hearings,
b. develop methods and approaches to be applied in evaluating a new or a proposed program,
c. forecast potential program outcomes under various assumptions without evaluating current operations.
d. Perform peer reviews