Performance Audit

… a core concept used in Implementation and Delivery and Atlas107

Concept description

The Office of the Auditor General of Canada (OAG, reference below) defines performance audit as “an examination of government activities that is planned, performed, and reported according to professional standards for assurance engagements.”

The OAG goes on to say:

“Performance audits seek to determine whether government programs are being managed with due regard for economy, efficiency, and environmental impact, and whether there are measures in place to determine their effectiveness.

“The principles of economy, efficiency, effectiveness, and environment are defined as follows:

  • The principle of economy means minimizing the costs of resources, with due regard to quality. The resources used have to be available in due time, in and of appropriate quantity and quality, and at the best price.
  • Efficiency is defined as the extent to which resources are used such that a greater level of output is produced with the same level of input or a lower level of input is used to produce the same level of output.
  • The principle of effectiveness concerns meeting the objectives set and achieving the intended results.
  • The principle of environment means considering if government programs are managed with due regard to the effects on the environment while conducting an audit.”
Performance audits compared with financial audits

The OAG notes describes the history of the expansion of its mandate from financial auditing to include performance auditing as follows:

“The OAG’s performance audit practice was formalized when Parliament passed the 1977 Auditor General Act. For almost 100 years before the Act was passed, Auditor General reports were intended to focus on financial information. Throughout the history of the OAG, however, Auditors General have reported on whether public money was spent the way Parliament intended; from John Lorn McDougal, the first independent Auditor General of Canada in 1878, who reported on instances of waste, to Maxwell Henderson, Auditor General in the 1960s, who was known for his emphasis on findings of mismanagement and inefficiency.

“The Auditor General Act clarified and expanded the Auditor General’s responsibilities. In addition to looking at the federal government’s 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. For performance audits, the OAG focuses attention on policy implementation but avoids commenting on the merits of the policies themselves. The application of this principle to a particular audit often requires considerable professional judgment.

“An amendment to the Act in 1995 established the position of Commissioner of the Environment and Sustainable Development within the Office of the Auditor General of Canada. On behalf of the Auditor General, the Commissioner has the mandate to report annually to the House of Commons concerning anything that the Commissioner considers should be brought to the attention of the House in relation to environmental and other aspects of sustainable development. In 2005, the “follow the dollar” mandate was inserted into the Auditor General Act, allowing the OAG to audit recipients under a federal funding agreement (excluding other levels of government) that had received at least $100 million in funding over a five-year period. In 2006, however, amendments under the Federal Accountability Act extended the OAG’s mandate to recipients that had received $1 million or more in funding over a five-year period. 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.”

Atlas topic, subject, and course

Controlling Fraud, Waste, and Abuse (core topic) in Implementation and Delivery and Atlas107.


Office of the Auditor General of Canada, 101 Overview of Performance Audits, at, accessed 176 October 2017.

Page created by: Ian Clark, last modified 17 October 2017.

Image: INTOSAI, Compliance Audit Guidelines, Slide 13, at, accessed 17 October 2017.