What is a Performance Audit?

A performance audit is used to examine how well a process or activity is performed. This examination can address such factors as the amount of time incurred to complete an activity, the cost-effectiveness or speed of a process, the transaction error rate, the effectiveness of internal controls, and how well it supports the objectives of the business. Such an audit can also compare the budgeted cost of a program or process to its actual cost. Performance audits are useful for locating ways to improve the efficiency and effectiveness of an organization's operations. They are most commonly employed within government organizations, in order to maximize the return on limited taxpayer funding.