Audit Metrics and Performance Measures—Survey Results

1. Audit Metrics and Performance Measures—Survey Results Audit Policies and Practices Committee

2. Objective Identify and compile internal and external metrics and performance measures used in the Federal audit community for evaluating audit quality and timeliness. Compile factors and best practices used in annual audit planning.

3. Approach • Collaboratively developed survey questions on • Internal Reporting – 6 questions • External Reporting – 2 questions • Annual Planning – 10 questions • Solicited input from FAEC community in May 2013 • Received responses from 34 Audit organizations.

4. Defining a Quality Audit • Answers objectives • Provides timely findings and actionable recommendations • Addresses critical and high-risk areas • Adheres to quality assurance guidance (e.g., Yellow Book, internal and peer reviews) • Involves client satisfaction surveys to obtain feedback.

5. Audit Quality and Timeliness • 8 metrics and performance measures surveyed • Considerable feedback provided

6. Audit Cycle Time • Tracked and monitored • Included in employee performance standards.

7. Audit Process Efficiency • Internal guide to evaluate audits in process • Performance metric and tracking of • Timeliness of specific phases • Staff workdays • Direct time charges • Return on investment

8. High Risk Activities/Programs • Agency strategic goals/priorities • GAO high-risk areas • IG management challenges • Enterprise-level risk assessment • Input from senior organizational leaders • Annual risk-based program assessments • Percentage of planned performance audits address high risk areas

9. Congressional and OMB Mandates • Establish metrics to ensure audits meet statutory • mandated deadlines • Establish individual performance standards

10. Financial Benefits • Tracks monetary benefits with specific goals • Report at least $30M in potential monetary benefits each fiscal year • Meet a return on investment goal of at least $10: $1, $8: $1 • Ensure 10% of published reports identify potential monetary benefits • Ensure 60% of performance audits include recommendations leading to demonstrable cost savings and/or funds put to better use • Monitors benefits via management information system • Performance metric based on the dollar savings identified during the year. • Reviews actual realized benefits during follow-up engagements • Reports financial benefits only as a workload measure; no goal

11. Significant Identifiable Benefits • Monitors recommendation implementation and follows up when implementation has not occurred by target date of completion • Discusses audit work in context of organization’s qualitative goals • Includes corporate goals such as: • 70% of past recommendations implemented within two years of the fiscal year in which the report was issued • 60% of performance audits should include recommendations leading to demonstrable cost savings, program efficiencies, and/or funds put to better use

12. Management Decisionsand Implementation • Information obtained before the report is issued • Information tracked via internal management system. • All open audit recommendations are discussed monthly with audit resolution officials • Metrics established for receipt of comments and actions taken • Request comments and recommendation responses within 30 days of the draft report issuance. • Achieve a 5-year average implementation rate of 85% for accepted recommendations. • Obtain final management decisions and/or target implementation dates within 90 days of report issuance. • Write recommendations so organization can complete them within 6-9 months. • Receive action plans within 60 day of final report issuance. • Report twice a year on all unimplemented recommendations past 6 months of original target date to agency senior leadership.

13. Established Milestones • Weekly exception report for projects that have not met milestones • Communicate status of high impact audits during monthly senior management meeting • Establishes an estimated amount of audits to complete in the fiscal year • Incorporates an organization milestone goal for deliverables • Deliver 60% of audits with draft reports within 300 elapsed days • Issue reports within 270 days of audit start • Complete 80% of projects with a year. • Finalize 90% of assignments within 30 days of established final report milestones • Finish audits within one year from entrance conference • Conclude audits based on audit scope: Standard audit is 11 months from entrance conference to final report; limited scope is 2.5 to 10 months from entrance to final report

14. Measure Office Performance Balanced Scorecard Approach Try to do a balanced approach for financial, process efficiency, and program impact, but no formal scorecard

15. Setting Targets for Quality and Timeliness • Total cycle time • From initiation to report issuance -- 8 months for non complex audits to 13 months for complex audits. • Total elapsed days for each project • Contract/Grant audits:5 days on-site & 5 days for survey and report completion. • Recommendations concurred with by Agency • 80% are accepted • Percent of open Recommendations implemented • 95% of past recommendations are implemented. • Number of Audit reports produced; percentage of reports containing one or more recommendations • Financial Benefits & Non financial benefits • Return on Investment • Percentage of audit completed with established timeframes (90%, 75%) • Complete 90% of audits within 15% of established budget and within 30 days of report milestones; • 75% of audits address high risk activities

16. Ability to Sustain Funding No Furloughs this Fiscal year Money is available for travel and training at a reduced rate. Work plan focused on audits requiring less travel; on track to meet CPE requirements. Additional funding from ARRA and Hurricane Sandy relief.

17. Measuring Client Satisfaction

18. External Reporting

19. External ReportingDollar Amount Reported Report Issuance 24 Amounts Agreed to 13 Amounts Agency Agreed to Collect 1 9 report at issuance and agreed to

20. Annual Planning • One associated this with assessing the risk environment to develop risk categories

21. Annual Planning • Number of intended reviews • Timeliness • Ratio of requested to internally-generated audits • Coverage of Agency priorities/mission • Coverage of Management Challenges • Coverage of GAO High Risk Areas • Amount of Direct Staff time applied to critical and high impact projects • Number of reports issued aligned by Management Challenges

22. Annual Planning

23. Annual Planning • Other Factors Considered • Congressional or Agency leadership requests, • New programs, • Audit history and risk with existing programs • Follow up on prior recommendations • Stakeholder input • Risk Assessment • Resource Availability • Balance of coverage across Agency programs • Timing to ensure most value to client

24. Annual Planning • Other Factors (cont.) • Hotline complaints • Large grant recipients/dollar programs • OMB A-123 and FMFIA assessments • Government-wide initiatives • Statutory requirements • Media interests/emphasis • Special funding allocations (e.g., Recovery Act, Disaster Oversight, etc.) • Investigative referrals • Impact on the delivery of services and benefits to recipients • Public interest

25. Annual Plan Drivers

26. Plan Modification Ad Hoc (as needed) 22 Scheduled update 6 Not Typically Modified 6

27. Thanks to the Team John Needham, SBA Stephen Dingbaum, NRC Terri Alvarado, Army Audit Ann Eilers, Commerce Jane Mintz, Commerce Julie Marlowe, SEC Gil Harden, USDA

28. Final Thoughts Questions Thanks for providing information