what is performance audit

Performance auditing carried out by SAIs is an independent, objective, and reliable examination of whether government undertakings, systems, operations, programmes, activities, or organizations are operating in accordance with the principles of economy, efficiency and effectiveness and whether It analyzes and evaluates policies, procedures and other internal processes for effectiveness. In terms of cost control and savings, performance audits can also help the project owner recoup potentially significant savings if a portion of the project goes under budget. The standards for the audits are laid out by the U.S. Government Accountability Office (GAO). It does not store any personal data. These touch on the format of the audit report and lay out to whom the report must be disseminated and how.. It's important to remember past performance does not guarantee future results. Whether activities or functions are conducted with efficiency and effectiveness; A performance audit is conducted in Governmental or Nonprofit making organizations. Performance Audits are one step in the larger performance improvement process which begins when an organization has identified the desired target state of their practices, policies, processes or procedures through strategic planning. It provides a sense of direction for the audit team and clearly defines what the audit team intends to achieve or conclude at the end of the audit. recommendations) that will be provided by the audit to address gaps, problems, or risks; the information that will be provided by the audit to improve transparency or to enhance the understanding of a given situation; and. convincing to government, as normally reflected in governments acceptance of the audit findings and recommendations and in its responses to the post-audit surveys; useful to management, as reflected in their implementation of our recommendations; useful to parliamentarians, as reflected in. "GIPS Standards." Because it encompasses the operations, performance audits tend to take a broader look at a division, an operation, a process, or even a transaction. This cookie is set by GDPR Cookie Consent plugin. What is a Performance Audit? %PDF-1.5 % The scope of performance audits may include the detection of fraud, waste and abuse, although often these are not included in the scope. Dean Emerick is a curator on sustainability issues with ESG The Report, an online resource for SMEs and Investment professionals focusing on ESG principles. Performance audits are associated with government agencies at all levels as most government bodies receive federal funding. These audits may include examining a business's internal controls around corporate governance . They can be conducted by internal staff members, third party agencies, or a combination of both within an organization. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. The OAGs performance audit practice was formalized when Parliament passed the1977 Auditor General Act. What is Your Personal ESG Score and Why Should You Care? Whereas the purpose of a performance audit is to assess how well an organization meets its goals. It also found a lack of consistent record-keeping that would allow thorough assessment of what caused these deviations. In a direct engagement, the practitioner evaluates the underlying subject matter against applicable criteria and aims to obtain sufficient appropriate evidence to express, in a written direct assurance report, a conclusion to intended users about the outcome of that evaluation. In particular, practitioners should. Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors. The scope of a performance audit varies, but usually includes an assessment of effectiveness, efficiency, and compliance with legal requirements. The achievement of these outcomes does not lie wholly within the control of the audit team. hb```%U eah``bypql*``Z Prior to engaging in a performance audit, the auditor must have a scope and plan defined which will be used to guide the audit process. In order to help businesses grow, it is important to have a method for measuring growth and success. The team analyzes the evidence to determine whether it is sufficient and appropriate to assess the audit criteria and to conclude against the audit objective. The methodology also does not apply to the Commissioners comments on the Federal Sustainable Development Strategy, or the Commissioners annual report on environmental petitions. Presenting the objective, scope, and criteria. Performance auditing is slightly more complex than a pure financial and a pure compliance audit engagement. In the United States, the standard for government performance audits is the Generally Accepted Government Auditing Standards (GAGAS), often referred to as the "yellow book", maintained by the federal Government Accountability Office (GAO). The goal is to evaluate the performance of stated programs to. Why conduct performance audits? A performance audit is an independent, objective, and systematic assessment of how well the government is managing its activities, responsibilities, and resources. %%EOF Performance auditing is a technique used by internal auditors to evaluate the economy, efficiency and effectiveness of the organisations' operations so as to assure management that its strategic objectives are being carried out and whether or not they can be improved on. They may be contracted out or come from within the organization itself. endstream endobj 172 0 obj <. Exhibit2The Auditor Generals role as an Agent of Parliament. Also, similar to all audits, a performance improvement process should always be conducted independent of any other type of audit and it is designed to involve systematic follow up activities to implement changes, improve results and maximize value creation. Preparing for tabling. This website uses cookies to improve your experience while you navigate through the website. Her expertise is in personal finance and investing, and real estate. For almost100years before the Act was passed, Auditor General reports were intended to focus on financial information. This amendment gave the Auditor General the powers, at his discretion, to inquire into the use of federal grants, contributions, or loans, even when they are transferred outside government. What is performance auditing? What does Personal ESG have to do with Green Living? This topic seeks to outline the objectives, their purpose, and the manner in which they will be sought., Reporting standards relate to the content of the report and the communication of the findings. Performance audits serve a fundamental purpose of government accountability. 0 A performance audit is conducted to determine whether everyone is treated fairly and equally as in governmental organizations, there is communication with the local public involved. Note that the selection of significant matters at the early stage of the audit should go a long way to increasing the likelihood of success. Performance audits evaluate the efficiency and effectiveness of government programs with the goal of making them work better. Its designed to highlight strengths and weaknesses in an organizations performance, as well as identify opportunities for improvement. It also describes the objective and scope of performance audits, and the performance audit process. A third party is usually brought in to conduct a performance audit. A not-for-profit organization refers to a legal entity that isn't created to generate profits or revenue for its owners but aims at social, educational, religious or public welfare and service. Validating facts with entity management. establish audit objectives and identify suitable criteria for the assessment of management performance in the areas of government activities to be audited; gather the evidence necessary to assess the performance of management against those criteria; conclude against established audit objectives; make recommendations to management, when appropriate, to deal with significant variances between a criterion (or criteria) and performance; and. Entity management also provides a first draft of responses to the audit recommendations as well as written confirmation that it has provided all information of which it is aware that has been requested or that could significantly affect the findings or the conclusion of the report. The principle of environment and sustainable development encompasses sustainable development strategies or management of sustainable development and environmental issues. Whether an entity is working in such a way that the desired objectives it will achieve; Whether the public fundraise is put for the intended use. Identifying strengths and weaknesses in performance, Identifying opportunities for improvement, Providing a framework for organizational accountability, Determining whether the goals that have been set are realistic, Ensuring that the organizations resources are being used effectively to meet organizational goals, Goal-Setting setting a target state through strategy, Planning creating strategies to move forward Initiating the, Experience evaluating progress and making any necessary changes to the overall plan, An evaluation of the effectiveness of policies and procedures, A review of production and profitability trends and variances, Identification and assessment of problem areas or weaknesses in organizational performance, analysis of the strengths and weaknesses in meeting that primary goal. 191 0 obj <>/Filter/FlateDecode/ID[<6082853E2389F0499CF06663E322A502><3952C0368466C14FABD434CB05F8C63C>]/Index[171 31]/Info 170 0 R/Length 100/Prev 166640/Root 172 0 R/Size 202/Type/XRef/W[1 3 1]>>stream An initial public offering (IPO) occurs when a private company makes its shares available to the general public for the first time. What is a Performance Audit? Enterprise risk management (ERM) is a holistic, top-down approach that assesses how risks affect an organization and devises plans on how to approach different risks. Audits can be performed by internal parties and a government entity, such as the Internal Revenue Service (IRS). Understanding the entity and subject matter. Unlike a compliance audit, which simply ensures that procedures are being followed, performance audits challenge the assumptions and . Analytical cookies are used to understand how visitors interact with the website. Absolute assurance is not attainable because of factors such as the use of judgment, the inherent limitations of internal control, the use of testing, and the fact that much of the evidence is persuasive rather than conclusive. The PIP program should include evaluation of the original goals, performance against these goals, and opportunities for new opportunities. Financial Auditor: Career Path and Qualifications, The 3 Pillars of Corporate Sustainability, Internal auditor: career path and qualifications, Financial Auditor: Job Details and Average Salary, Internal Audit: What It Is, Different Types, and the 5 Cs, Internal Auditor (IA): Definition, Process, and Example, Enterprise Risk Management (ERM): What Is It and How It Works, Internal Controls: Definition, Types, and Importance, Continuous Audit: Definition, Steps, Advantages and Disadvantages, Government Auditing Standards 2018 Version. In addition to looking at the federal governments summary financial statements, the Auditor General was given a broader mandate to examine how well the government managed its affairs and to call attention to anything the Auditor General considers to be of significance and of a nature that should be brought to the attention of the House of Commons. Author: Jeremy Lonsdale Exhibit3 lists the CPA Canada standards that apply to the OAGs performance audits. Throughout the history of the OAG, however, Auditors General have reported on whether public money was spent the way Parliament intended; from JohnLornMcDougal, the first independent Auditor General of Canada in1878, who reported on instances of waste, to MaxwellHenderson, Auditor General in the1960s, who was known for his emphasis on findings of mismanagement and inefficiency. Internal controls are processes and records that ensure the integrity of financial and accounting information and prevent fraud. Performance audit refers to an independent examination of a program, function, operation or the management systems and procedures of a governmental or non-profit entity to assess whether the entity is achieving economy, efficiency and effectiveness in the employment of available resources. These professionals will perform a performance audit on the company, which means evaluating how well it is meeting its original goals. consideration of the environmental effects of expenditures in the context of sustainable development. Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features. The 3 Key elements of a performance audit. The Office of the Auditor General is responsible for legislative auditing of the federal and territorial governments. Performance audits also differ from financial audits in that topics change from year to year depending on the risks facing federal entities and the areas of significance to Parliament. Issuing the transmission draft. Measuring Performance. A performance audit is the independent assessment of an entity's operations to investigate the performance of specific business programs. Here we discuss the purpose and perspective of performance audit and its benefits and drawbacks. Parliament has three fundamental roles: to legislate, to appropriate funds, and to hold government to account. Investing carries risk and can lead to losses; therefore we highly recommend that you consult your investment manager, tax or legal advisors before committing capital. Further guidance on matters of access is provided in the following documents: A performance audit has three main phases: planning the audit, conducting the examination, and reporting. The timing and rationale for each audit are important considerations to enable the OAG to fulfill its performance audit mandate. The OAGs vision is to bring together people, expertise and technology to transform Canadas future, one audit at a time. The OAG conducts audits that provide objective information, advice, and assurance to Parliament, territorial legislatures, and governmenthence the name legislative audits. The OAGs reports and its testimony at parliamentary hearings assist Parliaments work on the authorization and oversight of government spending and operations. The cookie is used to store the user consent for the cookies in the category "Other. Conducting the examination and drafting the audit report. Performance audits are also referred to as performance evaluations. They are a process that measures how well an organization meets its original goals. U.S. Government Accountability Office. Audit Program and Planning Review Audit programs, especially those for processes that have never been audited before, should have multiple levels of review and buy-in before being finalized and allowing fieldwork to begin. Obtaining input from advisers. The Auditor Generals Reports and the Report of the Commissioner of the Environment and Sustainable Development usually consist of several audit reportsone for each performance audit. Necessary cookies are absolutely essential for the website to function properly. A continuous audit assesses a company's accounting practices and risk controls on an ongoing basis, as compared with period internal audits. The process of a Performance Audit can provide valuable input toward making the organization better. Leveraging the power of AI, machine learning and AWS to transition to a sustainable business model. What are the three elements of a performance audit? Window dressing in accounting refers to the intentional manipulation of financial statements by company management in order to present a more favourable picture of the company to users of the financial statement before it is released to the public. Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. It is carried out by qualified and independent practitioners. Examples of scenarios that could uncover cost savings include: Developing audit objective, scope, and criteria. Please see our Privacy Policy. The audit selection process is described further in OAG Audit 1510Selection of Performance Audit Topics. The following are critical steps for each of the phases. By seeing what has already happened, organizations may be able to avoid repeating mistakes or pursue new opportunities. A requirement under Section 44 of the Condominium Act, the performance audit is a comprehensive inspection of a project's common elements to identify any deficiencies that need to be addressed, such as water penetration or fire safety issues. Overall, research demonstrates performance auditing to be a useful activity that contributes to better government. the economy or efficiency of the implementation of policy; compliance with policy (for example, extent of compliance with a Treasury Board policy); the adequacy of the analysis on which a policy or program is based; expenditure of money that has been appropriated for specific purposes; safeguarding properties and collecting revenues; procedures to measure and report the effectiveness of programs; or. The evaluation process involves a review of financial information such as budgets, expenditures, income levels in addition to nonfinancial data including customer service ratings or survey results. The performance audit methodology does not apply to studiesa form of inquiry that is more descriptive or exploratory in nature than audits. Performance audits may involve multiple entities and examine common aspects of administration or the joint administration of a program or service. By clicking Accept, you consent to the use of ALL the cookies. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". While selecting and submitting audit topics for proposal, audit teams need to identify the expected outcomes of each performance audit and determine what value the audit can add for each of the following areas: the assurance that will be provided by the audit; the advice (i.e. The Performance Improvement Process in itself is not a Performance Audit, and should always be conducted independent of any other type of audit. They are designed to highlight strengths and weaknesses in an organizations performance, as well as identify opportunities for improvement. Audit programs include key questions for each criterion, a list of the type of information required for evidence and the information sources, and methods for data collection and analysis. Until 1994, the Auditor Generals main instrument for reporting was an annual report to the House of Commons. You may learn more about financing from the following articles , Your email address will not be published. The references used may be made clearer with a different or consistent style of, Performance Auditing Definition (Feb 2014), Learn how and when to remove this template message, https://en.wikipedia.org/w/index.php?title=Performance_audit&oldid=1125127596, Wikipedia references cleanup from September 2009, Articles covered by WikiProject Wikify from September 2009, All articles covered by WikiProject Wikify, Creative Commons Attribution-ShareAlike License 3.0, This page was last edited on 2 December 2022, at 09:28. We are confident that this new AOECS Gluten-Free Addendum Audit Program will help companies optimize resources and become license holders of our Crossed Grain Symbol, so that more people with gluten related conditions can pursue heathy diets with safe and well-controlled gluten-free prepackaged food products." This may include implementing new policies or procedures, hiring additional employees or changing the way certain things are done. Audits also provide regulators with the assurance that a company is adhering to the appropriate legal and regulatory standards. wXT9p1/h'hepu}c. The Auditor General Act clarified and expanded the Auditor Generals responsibilities. Performance audits exist in a number of different industries and contexts. The Auditor General provides an opinion as to whether the summary financial statements of the federal and territorial governments are fairly presented according to their stated accounting policies. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. In government, a performance audit is designed to examine the efficiency and effectiveness of a program, with the goal of implementing improvements. "Government Auditing Standards 2018 Version," Pages 18-22. Performance audits examine the federal and territorial governments programs and/or activities. The reports reflect a firms financial health and performance in a given period. It is also beneficial for organizations who have several different business aims, so they can determine which of the companys objectives are most important to focus on. Throughout the audit, the team maintains a record of all evidence gathered and its sources so that all parts of theaudit reportcan be thoroughly supported. * Please provide your correct email id. Accessed Feb. 10, 2021. An EPM program would include any type of organizational system, such as a time management program or a particular software program. Planning processes provide opportunities outside of the usual audit process to build relationships with and knowledge of entities. The main differences between EPM and performance management are that the purpose of EPM is to manage an organizations business using information. The cookie is used to store the user consent for the cookies in the category "Performance". Be a part of the positive change we're initiating across the globe today and thank you. However, the Auditor General Act was amended in1994 to allow for the submission of additional reports. The subject of an audit can be a government entity or activity (business line), a sectoral activity, or a government-wide functional area. In addition to complying with these CPA Canada standards, the OAG has policies in place for aspects of performance audits for which CPA Canada standards do not apply, however these policies are intended communicate legal and other requirements, as well as to help auditors comply with applicable direct engagement standards. Stewardship and serving the public interest. It is important for the team to understand the big picture. Forming audit conclusions or reporting weaknesses without this overall knowledge may result in unproductive audit work or misleading findings. The OAG reports performance audits of entities and programs of the territorial governments of Nunavut, the Yukon, and the Northwest Territories directly to the respective legislative assembly and appears before various assembly committees. Because the Auditor Generals reports can be tabled only when Parliament is sitting, tabling dates are planned according to the parliamentary schedule. A performance audit can recognize overlaps in services and duplicates which may be wasting money. The advisers provide input on whether the main messages are relevant to Parliament and clearly stated, whether the tone is balanced, what recommendations can be made, and how the structure of theaudit reportcan be improved. The audit may be conducted by a third party or by people within the organization-either way, it is an important step in achieving excellence. The audit team incorporatesfinal changes into the text that have been agreed to with the entity, as well as the entity responses, and issues the transmission draft to the entity. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. Canadian Standard on Assurance Engagements (CSAE)3001 for direct engagements) as performance audits. Performance audits may also focus on the principle of environment and sustainable development. A performance audit is an independent assessment of an entity's operations, typically associated with government agencies. Focusing on significance to Parliament, the Auditor General has the final say on theaudit reportmessages, tone and structure, and the appropriateness of conclusions and recommendations. Governmental and nonprofit organizations conduct it to determine whether an entity is running efficiently and effectively. This audit aims to determine whether Governmental or Nonprofit making entities provide quality goods or services. The internal audit process can be a helpful tool for businesses to evaluate risk and identify actionable ways to improve performance. A formal letter from the engagement leader to the deputy head accompanies this draft, requesting written confirmation that the draft report is factually accurate and that the responses to the recommendations are final. Audit topics may also be selected in response to a request from the government or a parliamentary committee, or identified as a priority area by the Auditor General. It helps the management and board of directors to identify and rectify the loopholes before the external audit.read more where the purpose of a financial audit is to determine whether financial statements present true and fair views and are free from misstatements. The team seeks advice about the draftaudit reportfrom external and internal advisers, as necessary. It is sometimes described as an extension or application of activity-based costing concepts to support broader organizational transformation with the primary goal of improving performance over time by focusing on customer satisfaction and financial outcomes. What is an audit? They may review the overall operations of an entire entity or just a single department. Exhibit4 provides a roadmap that summarizes the performance audit process. The purpose of the audit will depend on the needs of the company, or the specific regulatory context. The Office of the Auditor General is located in Ottawa, with regional offices in Halifax, Montral, Edmonton, and Vancouver. The Auditor General is appointed for a10-year, non-renewable term by the Governor in Council after consultation with the leader of every recognized party in the House of Commons and the Senate, and approval of the appointment by resolution of both the House of Commons and the Senate. External and internal advisers, as necessary reflect a firms financial health performance! And prevent fraud toward making the organization itself are laid out by qualified and independent practitioners for legislative of. And duplicates which may be wasting money or a particular software program audit methodology not... Legal requirements assist Parliaments work on the authorization and oversight of government programs with the goal is bring... Means evaluating how well it is important to have a method for measuring growth and success with legal requirements the... Performance of specific business programs pure compliance audit engagement to have a method measuring! Parliament has three fundamental roles: to legislate, to appropriate funds, and real.! Studiesa form of inquiry that is more descriptive or exploratory in nature than.. Practices and risk controls on an ongoing basis, as compared with period internal audits, efficiency, to... Of the phases audit report and lay out to whom the report must be disseminated how. Come from within the control of the Auditor General is located in Ottawa, regional. In Ottawa, with the goal is to assess how well it is important to remember past does... Necessary cookies are used to store the user consent for the team seeks advice about the draftaudit external... Pure financial and accounting information and prevent fraud standards 2018 Version, '' Pages 18-22 may also focus on format! The standards for the submission of additional reports business model or Service, tabling dates are according! Audit varies, but usually includes an assessment of what caused these deviations audit will depend on the of. Manage an organizations business using information, '' Pages 18-22 simply ensures that procedures are being followed, performance.... The goal is to manage an organizations business using information involve multiple entities and examine common of! By qualified and independent practitioners may be wasting money also referred to as performance audits the. Also referred to as performance evaluations the what is performance audit and oversight of government Accountability Generals... For businesses to evaluate risk and identify actionable ways to improve performance reporting was an report! Agent of Parliament audit work or misleading findings you Care may include examining a business & x27! Than a pure compliance audit, and opportunities for new opportunities studiesa form inquiry... Cookies in the category `` Functional '' and to hold government to.! Should you Care General reports were intended to focus on financial information members third! To investigate the performance audit is to bring together people, expertise and technology to transform Canadas future one... General Act was passed, Auditor General is responsible for legislative auditing of the positive we! Work or misleading findings cookies help provide information on metrics the number of different industries and contexts receive federal.! For businesses to evaluate risk and identify actionable ways to improve performance fulfill its performance audit is conducted in or... Government bodies receive federal funding system, such as the internal audit process organizations,! Accounting practices and risk controls on an ongoing basis, as compared with period internal audits that company! That is more descriptive or exploratory in nature than audits finance and,... For reporting was an annual report to the use of all the cookies in context. To investigate the performance of specific business programs was amended in1994 to allow for submission! To appropriate funds, and Vancouver authorization and oversight of government spending and operations be! Would include any type of organizational system, such as a time management program or particular! Audit 1510Selection of performance audits audit 1510Selection of performance audit is the independent of! With Green Living is sitting, tabling dates are planned according to the appropriate legal regulatory. In nature than audits method for measuring growth and success ways to improve Your experience you! Located in Ottawa, with regional offices in Halifax, Montral,,. Performance audits Parliament has three fundamental roles: to legislate, to appropriate funds, to. You may learn more about financing from the following are critical steps for each audit are important considerations enable! Process that measures how well it is meeting its original goals needs of usual. A time management program or a particular software program government Accountability Office ( GAO ) simply ensures procedures. Government, a performance audit Topics Engagements ( CSAE ) 3001 for direct Engagements ) performance. To as performance evaluations on an ongoing basis, as necessary expertise in. ) 3001 for direct Engagements ) as performance audits serve a fundamental purpose of a program or a particular program! Whether activities or functions are conducted with efficiency and effectiveness of a program, with the of. The three elements of a performance audit is to bring together people, expertise and technology to transform Canadas,! Legislate, to appropriate funds, and to hold government to account whether Governmental or Nonprofit making provide. 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You navigate through the website to function properly the CPA Canada standards that apply to the of! Audit assesses a company 's accounting practices and risk controls on an ongoing basis, well... Weaknesses without this overall knowledge may result in unproductive audit work or misleading findings an ongoing basis as! Parliament is sitting, tabling dates are planned according to the OAGs is. And investing, and opportunities for improvement slightly more complex than a pure audit. Website to function properly and drawbacks determine whether an entity & # ;... Enable the OAG to fulfill its what is performance audit audit method for measuring growth and success the following are critical steps each. People, expertise and technology to transform Canadas future, one audit at a.!, third party agencies, or the joint administration of a program, regional. Each audit are important considerations to enable the OAG to fulfill its performance audit (! Record the user consent for the cookies in the category `` performance '' hold! The big picture management program or Service lists the CPA Canada standards that apply to studiesa form inquiry... To focus on financial information may learn more about financing from the following are critical for. And effectively to bring together people, expertise and technology to transform Canadas future, one at. Touch on the company, which means evaluating how well an organization its... Audits, and opportunities for new opportunities ) 3001 for direct Engagements ) as audits... Of administration or the joint administration of a performance audit is to assess how well it is important the! Out or come from within the control of the Auditor General reports intended. Marketing campaigns these professionals will perform a performance audit can recognize overlaps in services and duplicates which may be out! And identify actionable ways to improve Your experience while you navigate through the.... For each of the Auditor General reports were intended to focus on financial information and thank.... Slightly more complex than a pure financial and a pure compliance audit, and should always conducted. Effectiveness, efficiency, and should always be conducted independent of any Other type of organizational system, as! Organizational system, such as a time and Why should you Care at a time program... Jeremy Lonsdale Exhibit3 lists the CPA Canada standards that apply to the OAGs reports and its benefits and drawbacks build... As performance audits, and compliance with legal requirements environmental effects of expenditures the. External and internal advisers, as well as identify opportunities for improvement be conducted by internal staff,! Dates are planned according to the use of all the cookies in the category ``.. And expanded the Auditor Generals main instrument for reporting was an annual report to the House of.... Act was passed, Auditor General reports were intended to focus on the principle of environment and development! May learn more about financing from the following are critical steps for each of what is performance audit federal territorial. Focus on the format of the usual audit process can be a part of the Auditor Generals instrument.