'Are National Audit Office “Value for Money” Audits Themselves Value for Money?\r'

'The subject field Audit Office (NAO) is responsible for the pecuniary and â€Å" jimmy for m peerlessy” scrutinises of central government exp completeiture, as comfortably as opposite familiarly related bodies.Although in that location is no single definition for what a judge for m acey study is, the most widely trustworthy definitions connect look on for money audits with the review of the trio E’s (Lecture 2, AC340 Lent Term, Liisa Kurunmakii): •Economy †providing the think service at the lowest cost possible, with regards to maintaining the tonus of service •Efficiency †gaining the maximum output from a given level of inputs •Effectiveness †the completion to which these state-supported bodies achieve their policy objectivesWith this in mind, it is clear that in order for a â€Å" nurse for money” audit (henceforth de noned as VFM audit) to digest survey for money it must likewise adhither to these trine Eà ¢â‚¬â„¢s; a VFM audit must be marginal in terms of cost, it must be strong in terms of finding beas for im sustainment, and it must bring about the most of resources purposed. The VFM audit’s benefits must outdo its costs. Throughout this essay I will come upk and demonstrate with examples the conditions under which VFM audits do provide value for money, as well as when they don’t.Ultimately a VFM audit is only value for money to the extent that it leads to improvements in the way the audited bodies net improve their processes, with regards to the one-third E’s. Without this, the VFM audit is an unnecessary and costly fender of the financial audit. However, if the VFM audit itself is in possession of the three E’s, then it should provide value for money. In 2011, the NAO’s recommendations generated nest egg of ? 1. 1 billion come to the back of an expending of ? 67. 8 million (NAO yearbook Report 2012).From this, it is easy to front that the NAO’s roleplay overall yields signifi fundamentt benefits over costs. A 1997 report by Summa and Pollit also shows that 95 per cent of the NAO’s recommendations were mootn on board by the semipublic Accounts Committee (PAC) in 1994, suggesting that the organisations efforts and resources argonn’t wasted. This paper also shows how the savings from recommendations coming directly from VFM audits had grown among 1992 and 1994, suggesting their growing importance.The NAO also consistently look to minimise costs and maximise efficiency, as shown in the NAO’s 2012 Annual Report. Therefore, in a very dewy-eyed cost-benefit analysis, the VFM audit does seem to provide value for money. With deeper analysis, however, thither are instances where such audits could lead to sub-optimal results in more or less situations. The bodies subjected to VFM audits primarily have favorable goals.For example, the NHS’ priority is to break up across the unwell, while financial concerns are secondary. The mere movement of VFM audits, which despite having many non-financial aspects are ultimately financial in nature, terminate lead to a focus on achieving cost efficiency as an end in itself, above any social goals. This is what post refers to as a ‘colonising’ effect of auditing; the forepart of the audit leads to the auditee focusing on the audited measure, in this case value for money.This was the case in the recent Mid Staffordshire sureness scandal; in order to achieve radix Trust status, the management at this hospital cut costs by removing beds, failing to invest in medical equipment and staff, and neglecting their medical duties in order to tinct heads (for example, one measure on which they were judged were patient hold times in A&E; this lead to dysfunctional behaviour, as there were cases when minor injuries were straining-boiled above major illnesses in order to pick up the four hour waiting time ).These cuts, along with other failures, resulted in hundreds of unnecessary deaths. And yet, the hospital hit its target saving of ? 10 million; financially, it was a success, and medically a massive failure. While it was not directly the fault of a VFM audit, this case shows how the use of financial/economic measures for evaluating the efficiency of an organisation can lead to unintended dysfunctional outcomes.As part of the ‘ new-fangled Public Management’ idea of introducing market concepts into public organisations, it could be argued that VFM audits, by explicitly mentioning ‘money’, could result to such failings by being rooted in the financial; a better term for VFM audits could be â€Å"performance audits”, as less emphasis is put on financial terminology, perhaps giving the NAO mount for a more rounded audit. With this in mind, it can be argued that one of the VFM audit’s strengths is that it does ascertain into account the str ong point of the auditee in reaching their social objectives (as shown by the three E’s).The inherent difficulty for any public body is to balance forte with efficiency and economy; the NAO must therefore tear this into account when carrying out VFM audits, in order for the audits themselves to be of value. Auditing the posture of a public organisation is a difficult task in itself, however. What does effectiveness entail, and how does one measure it? You could argue that the effectiveness of the police issue could be measured by looking at the ratio of number of abhorrences reported to the number of crimes solved.This seems to be in line with the police mogul’s social goals, so in theory seems an suppress proxy for effectiveness. Yet it is also easy to see how this metric could be manipulated; where it is unlikely that a crime will be solved, the reporting of the crime whitethorn be ignored. The measure will give a false image of the efficacy of the police for ce in question, when in reality they have been faraway from effective. This is what Power refers to as ‘de-coupling’, where the auditee is compliant with the recording of the measure, further does not behave in a way consistent with the intended goal of the measure.The problem here comes with making things auditable. When measuring non-financial items such as effectiveness, one must use imperfect proxies (as you cannot simply take a yard stick and measure ‘effectiveness’). If we are unable to find suitable proxies, we are not fully able to audit the effectiveness of an organisation. This then compromises the usefulness, and hence value, of a VFM audit. The above problems debunk the inherent problems of VFM audits; by being rooted in the financial, they can lead to public organisations de-prioritising their social obligations and objectives in order to enhance efficiency and economy.By auditing what is arguably inauditable, VFM audits can create surface compliance, where the letter but not the spirit of what is being measured is followed. Both of these are risks that need to be considered by the NAO, as they some(prenominal) seek to undermine the value of VFM audits. But ultimately, VFM audits prove their worth when they result in efficiency improvements in public organisations. This can be assessed tangibly, shown by the savings of ? 1. 1 billion from a net outlay of ? 67. 8 million. We can also clearly see the implementation of efficiency improvements in public firmament bodies.It can also be argued that even the presence of VFM audits help to promote the three E’s in public sector companies (they know that they could be assessed in such a way, and will not want to appear to be excessively inefficient), although it is a great deal more difficult to assess whether NAO audits provide value for money in this context as it is hard to know to what extent the audit presence make a difference. But overall, I believe that the inference above shows that for the majority of situations VFM audits do indeed provide value for money.\r\n'