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Performance Audits and Performance Reporting

This page provides a discussion of performance audit laws for Washington State government entities.

Introduction

RCW 43.09.470 defines what a performance audit is, and provides local government illustrations of performance audit policies and performance audit reporting. The State Auditor's Local Government Performance Center provides performance tools, templates, and other resources that can be used by local governments to evaluate programs and services, improve results and communicate with citizens.

State Provisions Related to Performance Auditing

Initiative 900

Initiative 900, Performance Audits and Government Entities, passed by citizens in 2005, requires all state and local government entities to undergo performance audits to ensure accountability and guarantee that tax dollars are spent as cost-effectively as possible. The performance audits are to be conducted by the Washington State Auditor's Office in accordance with the U.S. General Accounting Office auditing standards.

The U.S. General Accounting Office defines performance audits in the Government Auditing Standards (also called the Yellow Book), as follows:

"Performance audits entail an objective and systematic examination of evidence to provide an independent assessment of the performance and management of a program against objective criteria as well as assessments that provide a prospective focus or that synthesize information on best practices or crosscutting issues. Performance audits provide information to improve program operations and facilitate decision making by parties with responsibility to oversee or initiate corrective action, and improve public accountability. Performance audits encompass a wide variety of objectives, including objectives related to assessing program effectiveness and results; economy and efficiency; internal control; compliance with legal or other requirements; and objectives related to providing prospective analyzes, guidance, or summary information. Performance audits may entail a broad or narrow scope of work and apply a variety of methodologies; involve various levels of analysis, research, or evaluation; generally provide findings, conclusions, and recommendations; and result in the issuance of a report."

There are nine specific elements to be included in each performance audit:

  1. identification of cost savings;
  2. identification of services that can be reduced or eliminated;
  3. identification of programs or services that can be transferred to the private sector;
  4. analysis of gaps or overlaps in programs or services and recommendations to correct gaps or overlaps;
  5. feasibility of pooling information technology systems within the department;
  6. analysis of the roles and functions of the department, and recommendations to change or eliminate departmental roles or functions;
  7. recommendations for statutory or regulatory changes that may be necessary for the department to properly carry out its functions;
  8. analysis of departmental performance data, performance measures, and self-assessment systems; and
  9. identification of best practices.

This audit is in addition to the fiscal audits performed by the state on local governments. The initiative did not exempt smaller units of government audit nor did it acknowledge existing performance programs of local governments.

See also: 2010 Status Report: Implementation of State Auditor I-900 Recommendations to the Legislature

Joint Legislative Audit and Review Committee (JLARC)

The state legislature's Joint Legislative and Audit Review Committee is also tasked with doing performance audits for state agencies and local governments that recieve state funding. Their work is codified in Ch 44.28 RCW. Since they are focused on state operations they are limited in their auditing of local governments to determining, "whether the local government is using state funds for their intended purpose in an efficient and effective manner."

Other State Legislation

There are a number of other state laws related to performance audits but they are limited in scope to state government operations.

  • Laws of 2005, ch. 384 - An act relating to improving government management, accountability, and performance. Requires that State agencies, within available funds, develop and implement a quality management, accountability, and performance system. Codified at RCW 43.17.380 -.390 - Quality management, accountability, and performance system
  • Laws of 2005, ch. 385 - This Act creates Citizen Oversight Board to improve efficiency, effectiveness, and accountability in state government. Areas to be assessed include quality management, productivity and fiscal efficiency, program effectiveness, contract management and oversight, internal audit, internal and external customer satisfaction, statutory and regulatory compliance, and technology systems and on-line services. The Board is to establish performance audit criteria consistent with criteria and standards followed by the JLARC. Criteria shall include, at a minimum, the auditing standards of the United States government accountability office, as well as legislative mandates and performance objectives established by state agencies and the legislature. Governor's Veto Message for Section 4. Codified at RCW 43.09.430 -.460 - Performance Audits

Performance Auditing at the Local Level

A number of Washington local governments have implemented various elements of Service Efforts and Accomplishments, the Government Accounting Standards Board webpages on performance management reporting, as a way to improve how they operate and how they are perceived. The approach to managing for results involves seven basic steps:

  1. planning for results (strategic planning)
  2. program (activity) planning
  3. developing meaningful performance measures
  4. budgeting for results
  5. managing work processes
  6. collecting data and using the data to manage, evaluate, and respond to results
  7. reporting results to elected and appointed officials and constituents

Illustrations of performance audit policies and methods of reporting appear below. See MRSC's page Performance Measurement for examples of measures, indicators, and dashboards being used by local governments.

Examples

Cities

  • Seattle Municipal Code Sec. 3.40.020 - City Auditor -- Ancillary powers - Includes performance audits and other initiatives to improve City operations for all City departments
  • Tacoma Municipal Code Ch. 1.35
  • Vancouver Performance Measurement and Management - Describes how city uses performance measures to aid management

Counties

  • Clark County Code Sec. 2.14.025 - Performance Audits
  • King County Charter Sec. 2.20 - Provides for financial and compliance audits, economy and efficiency audits, and program result audits for the purpose of reporting to the council regarding the integrity of the function of the financial management system, the quality and efficiency of agency management, and the effectiveness of programs.
  • Pierce County County Charter Article 2, Sec. 2.20 (1)(f) - Relating to performance audits
  • Snohomish County Charter Sec. 2.150 - Office of Performance Auditor

Additional Resources


Last Modified: June 29, 2015