Performance Audit

1. Which one is not correct regarding Performance Audit?

A. These guidelines are prescriptive in nature.
B. These are intended to supersede the professional judgement of the Accountant
General, relevant to the individual sectors of entity operations and within each sector,
to the individual subjects.
C. The Accountant General is expected to make situation or subject specific adjustments
to the provisions set out in these guidelines.
D. However, Accountants General will be expected to document the rationale of all
significant departures from the guidelines and obtain authorisation from the competent
authority.

2. Performance audit is an independent assessment or examination of the extent to which an

organisation, programme or scheme operates economically, efficiently and effectively.
Which Regulation of Regulations on Audit and Accounts, 2007 is quoted above?
A. 48
B. 58
C. 68
D. 78 [SAS Mains 2018]
3. Which is not among the 3 Es in Performance Audit?
A. economy
B. enthusiasm
C. efficiency
D. effectiveness

4. Minimising the cost of resources used by acquiring them in due time, appropriate quantity
and quality and at the best price is _____
A. economy
B. efficiency
C. effectiveness
D. None of the above

5. What determines the relationship between resources employed and outputs delivered; in
terms of quantity, quality and timing?
A. economy
B. efficiency
C. effectiveness
D. None of the above

6. _________ is meeting the objectives set and achieving the intended results.
A. economy
B. efficiency
C. effectiveness
 D. None of the above

7. Find the incorrect.

A. Effectiveness is essentially a goal-attainment concept.
B. When focusing on effectiveness, it is important to distinguish between the immediate
outputs or products and the ultimate impacts or outcomes.
C. Outcomes will often be influenced by external factors and may require short-term
rather than long term assessment.
D. Performance Audit assess and establish with evidence whether the observed direct or
indirect social and economic impacts of a policy are due to the policy or to other causes.
E. Performance Audit assess whether the programme complements, duplicates,
overlaps or counteracts other related programmes.

8. By imposing the question- ‘Are things being done in the right way?’, performance auditing is
mainly concerned with aspects of-
A. economy
B. efficiency
C. effectiveness
D. A or B

9. By imposing the question- ‘Are the right things being done?’, performance auditing is mainly
concerned with aspects of-
A. economy
B. efficiency
C. effectiveness
D. A or B

10. Which one is not correct?

A. The performance auditor needs to examine whether the means chosen represent the
most or at least a reasonable economical use of public funds.
B. It questions the intentions and decisions of the legislature, but examines whether any
shortcomings in the laws and regulations or their way of implementation have
prevented the specified objectives from being achieved.
C. The performance auditor is not normally expected to provide an overall opinion on
the achievement of economy, efficiency and effectiveness on the level of the audited
entity in the same way as the opinion on financial statements.
D. Performance auditing is a means to an end and not an end by itself.
E. Performance audit should be aimed at adding value to the Management by way of
reliable, objective and independent information, highlighting the shortcomings in
programme planning, implementation, information systems affecting the outputs and
outcome specifically and quality of expenditure or management generally.

11. Audit objectives could be-

A. descriptive (How are the things?)
 B. normative (are things as they ought to be?)
C. analytical (why are things not as they ought to be?)
D. All of the above

12. Performance auditing generally follows one of three approaches-

A. system-oriented approach
B. result-oriented approach
C. problem-oriented approach
D. All of the above

13 What examines the proper functioning of management systems, e.g. financial management
systems?
A. system-oriented approach
B. result-oriented approach
C. problem-oriented approach
D. All of the above

14. Which assesses whether outcome or output objectives have been achieved as intended or
programmes and services are operating as intended?
A. system-oriented approach
B. result-oriented approach
C. problem-oriented approach
D. All of the above

15. Which examines, verifies and analyses the causes of particular problems or deviations from
criteria?
A. system-oriented approach
B. result-oriented approach
C. problem-oriented approach
D. All of the above

16. In a ______ performance audit, the starting point is a known or suspected deviation from
what should or could be.
A. system-oriented approach
B. result-oriented approach
C. problem-oriented approach
D. All of the above

17. Find the incorrect one.

A. Audits can be pursued from a top-down or bottom-up perspective.
B. Top-down audits concentrate mainly on the requirements, intentions, objectives and
expectations of the legislature and central government.
 C. A bottom-up perspective focuses on problems of significance to people and the
community.
D. None of the above

18. What are the reasons why a regular communication is of particular importance in
performance audit?
A. As performance audits are not normally conducted on a regular (e.g. annual) basis on
the same audited entities, channels of communication may not already exist. While
there may be contacts with the legislature and government bodies, other groups (such
as academic and business communities or civil society organisations) may not have been
engaged with previously.
B. Often there are no predefined criteria (such as a financial reporting framework), and
therefore an intensive exchange of views with the audited entity is necessary.
C. An active effort is required to obtain insight into the points of view of the various
stakeholders to bring out a balanced report.
D. All of the above

19. Which is not correct about Strategic Audit planning?

A. Strategic Audit planning is the process of determining the goals for the Department
and the best approach for attaining them.
B. The goals should be long term.
C. The goals may be long as well as short term.
D. The field audit offices are also required to prepare their audit plans with reference to
the Department's strategic audit plan.

20. The Department's Senior Management may conduct brainstorming meetings with
Accountants General from time to time in respect of strategic audit and annual audit plans to
select the subjects which address the Department's concerns for high risk programmes and
activities. Senior Management comprises-
A. C&AG of India, Deputy C&AG and Additional Deputy C&AG.
B. C&AG of India and Deputy C&AG.
C. Deputy C&AG and Additional Deputy C&AG.
D. C&AG

21. _______ of a subject is an assessment of the interest it generates in the general public and
the legislature.
A. Materiality
B. Significance
C. Visibility
D. Scope

22. Before implementing the performance audit, it is important to identify the audit objectives,
the scope and the methodology to achieve the objectives of a particular performance audit.
This is often done in the form of-
 A. Pilot study
B. Preparation of Audit Design Matrix
C. Determining audit criteria
D. Planning individual performance audits

23. Find the incorrect one regarding Pilot Study?

A. The purpose of this study is to establish whether the conditions for carrying out a
performance audit exist and, if they do exist, to produce an audit proposal.
B. It provides background knowledge and information needed to understand the entity,
program, or function.
C. At the end of the study, it may be clearly stated whether performance audit is
feasible or not.
D. Pilot study should normally be carried out in a fairly long period.

24. The most important stage in the performance audit process is-
A. Defining the audit objectives
B. Determining audit criteria
C. Deciding audit approach
D. Developing audit questions

25. Which criteria are free from any bias of the auditor or management?
A. Reliability
B. Objectivity
C. Comparability
D. Completeness

26. Find the correct one about Audit Design Matrix (ADM).
A. The Audit Design Matrix is prepared on the basis of information and knowledge
obtained in the planning phase during the course of pilot study.
B. Audit teams are encouraged to update the Audit Design Matrix as and when it
acquires more in-depth knowledge of the audit subject matter.
C. A well-designed Audit Design Matrix leads to efficient planning and resultant effective
audits thereby providing highest assurances to the audited entities and those charged
with governance.
D. It is desirable to prepare ADM for each of the audit objectives.
E. All of the above.

27. Find the correct one about Audit Findings Matrix (AFM).
A. The audit teams are encouraged to prepare an Audit Findings Matrix indicating the
audit findings vis-à-vis good practices and the potential audit recommendation along
with the expected benefits in case the recommendation is implemented.
B. It is meant to provide a link between the audit objectives, criteria, the audit
observation and the recommendations emerging there from.
 C. The audit teams should link the Audit Findings Matrix with Audit Design Matrix and
highlight the Para number as well as chapter number of the draft report against each of
the audit objective where the observations are reported.
D. All of the above.

28. Audit findings are the specific evidence gathered by the auditor to satisfy the audit
objectives. Audit findings contain four elements.
A. criteria ('what should be')
B. condition ('what is')
C. effect ('what are the consequences' – observed as well as 'reasonable and logical
future impact')
D. cause ('why is there a deviation from norms or criteria')
E. All of the above.

29. Evidence should be obtained to support the auditor's judgment and conclusions regarding
the organisation, programme, activity or function under audit. Which one is not a basic
evidence?
A. Competence
B. Reliable
C. Relevant
D. Reasonable

30. Evidence is _______ when it is valid and reliable and actually represents what it purports to
represent.
A. Competent
B. Reliable
C. Relevant
D. Reasonable

31. _________ is measure of quality of audit evidence.

A. Competence
B. Reliability
C. Relevance
D. Reasonableness

32. The minutes of exit conference should be recorded and endorsed to the entity with a
request to acknowledge the minutes within stating that in case of non receipt of
acknowledgement with in stipulated period, it will be presumed that audited entity concurs
with the minutes.
A. two weeks
B. three weeks
C. four weeks
D. six weeks
33. Find the incorrect statement.
A. While third parties may not generally be the audited entities, their activities affect the
program and service delivery, and audit reports often include commentary about their
responsibilities and performance.
B. Auditors should not communicate to third parties, neither in writing nor orally any
information they obtain in the course of audit work, except where doing so is necessary
to discharge the statutory or otherwise prescribed responsibilities.
C. In case any information is required from third parties, audited entity would
requisition the same from the third party and provide to Audit. Further, where role of
identified third parties is considered very significant to the audit conclusions and
recommendations, the audited entities may be encouraged to bring out the concerns of
those parties in their replies to audit.
D. None of the above.

34. The audit report is ______ if the results of audit are presented persuasively and the
conclusions and recommendations follow logically from the facts presented.
A. Objective
B. Convincing
C. Consistent
D. Constructive

35. _______of audit report is ensured through fair conclusions and balanced content and tone.
A. Objectivity
B. Convincing ability
C. Consistency
D. Constructiveness

36. ______ of the report is secured by ensuring that it does not contain contradictory findings
or conclusions in similar contexts or the conclusions on the same segment in different sections
or parts of the report are not incompatible.
A. Objectivity
B. Convincing ability
C. Consistency
D. Constructiveness

37. The report is ______ if it manifests a remedial approach rather than a critical approach and
includes appropriate recommendations.
A. Objective
B. Convincing
C. Consistent
D. Constructive

38. A report is ________ if it does not focus on criticism alone but contains fair assessment or
evaluation, which would mean that good performance should also be reported.
 A. Objective
B. Balanced
C. Consistent
D. Convincing

39. All the performance Audits should ideally be completed within a period of ______. The
audit implementation cycle i.e from the date of entry conference to the finalisation of the audit
report by the headquarters should be completed preferably within this period.
A. 6 months
B. 9 months
C. 10 months
D. 12 months

40. The follow up or evaluation of Performance audits can be performed by-

A. carrying out a desk review, which involves more detailed review of the
implementation of the recommendations, including meeting, discussions and
presentations, but does not necessarily comprise extensive field work
B. detailed follow-up review consisting of comprehensive field work in relation to the
action taken by the entity on Audit's recommendations with the objective of preparing a
report to the legislature.
C. A & B
D. None of A & B

41. What is desk review?

A. detailed follow-up review consisting of comprehensive field work in relation to the
action taken by the entity on Audit's recommendations with the objective of preparing a
report to the legislature.
B. more detailed review of the implementation of the recommendations, including
meeting, discussions and presentations, but does not necessarily comprise extensive
field work.
C. Only a sample of completed audit engagements should be selected for review by the
group. Once the audits are selected, the quality review team may review the audit
documentation and meet some of the staff members who worked on those
engagements.
D. performed by an independent team which may be internal or external to the
Department to evaluate whether an organization's internal quality control system is
suitably designed and operating effectively to provide the entity with reasonable
assurance that established policies, procedures and applicable government auditing
standards were being followed.
ANSWERS

1 B not intended to 22 A  
2 C   23 D short period
3 B   24 A  
4 A   25 B  
5 B   26 E  
6 C   27 D  
long-term rather than
7 C short-term assessment 28 E  
8 D   29 B  
9 C   30 A  
10 B does not question 31 C  
11 D   32 A  
12 D   33 D  
13 A   34 B  
14 B   35 A  
15 C   36 C  
16 C   37 D  
17 D   38 B  
18 D   39 C  
19 C   40 C  
C is Quality assurance review
20 A   41 B programme, D is Peer review
21 C