For companies, internal auditing is a crucial part of long-term success and ensuring effective and efficient operations. The internal auditing process involves looking at a company’s internal control systems and risk management. It also revolves around the company’s financial report and accounting systems. By streamlining these processes, companies can ensure the best possible operations.
Internal auditing has become mandatory for public companies under several jurisdictions. However, for companies that do not comply with these requirements, having an internal auditing department is optional. However, most of these companies have also adopted internal auditing in their operations. However, the importance of internal auditing isn’t limited to companies only. It also has an application in government or public organizations. One area where it may be beneficial is best value audits.
What is Best Value?
The concept of best value is a crucial one in government and public organizations. The best value represents the process of ensuring that there is good governance and effective management of resources within these organizations. It also aims to improve and deliver the best possible outcome for the general public. For most government organizations, it is crucial to prioritize the welfare of the general public ahead of everything else. Best value provides a framework for that.
Best value applies to all government bodies. It is a statutory duty of these bodies to ensure the provision of the best value to the general public. Since this concept relates to the outcome provided to the public, it can be significantly impactful in improving performance. On top of that, it also promotes accountability within government bodies.
Several principles can help governments set the basis for a consistent approach towards best value. These principles provide a benchmark for governments for performance. Therefore, these principles can also be substantial in providing a base for evaluating a government body’s performance. It, in turn, helps in best value auditing.
What is Best Value Audit?
Best value audits work similarly to value for money audits. Value for money audits looks at three aspects. These include efficiency, effectiveness, and economy. Best value audit looks at how government bodies use the best possible combination to provide the best possible outcomes. For example, it may include the most advantageous combination of quality, sustainability, whole-life cost, etc.
All audits include evaluating a subject matter against set criteria. As mentioned, these criteria come from the concept of best value, which sets a benchmark for government bodies. Best value provides a good practice benchmark for government bodies. Best value auditing looks at how an organization has performed in relation to the identified best practice benchmark.
What is Best Value Audit in Internal Auditing?
Best value auditing also extends to internal auditing. Like other audits, internal auditors can also perform best value audits to look at how a government body’s operations provide the public with the best possible outcome. In internal auditing, these audits involve looking at an organization’s performance with an internal view. After the process, the internal auditors will conclude and provide their opinion in a report.
With best value audits in internal auditing, these reports will include a detailed analysis of the internal auditor’s findings. It will consist of recommendations from the internal auditors regarding any deficiencies. Overall, the best value audit process will involve the auditors looking at a government body’s performance against an identified good practice.
Auditors may conclude in one of many ways during the best value audit process. If an organization does not demonstrate the basic practice level against the identified good practices, the auditors will report it. Some organizations may also show minimum compliance with those practices. In that case, the auditors will conclude that the organization meets the basic practices.
Some organizations may also show good compliance with some practices and may not comply with others. In these cases, the auditors will conclude that the organization has better practices. Lastly, some bodies will illustrate best practices within all sectors. In these cases, the auditors will conclude that the government body has advanced practices.
What is the importance of Best Value Audit?
Best value audits are crucial for several reasons. Firstly, they report on delivering outcomes for people who rely on a government body’s services. Through this, it can significantly increase the efficiency and effectiveness of organizations. Since best value audits relate to government bodies, these also help protect taxpayers’ interests by examining how they use resources.
Best value audits put emphasis on self-assessment by public bodies with audit support and validation. It is an area that internal auditors can play a significant role. Similarly, these audits ensure that any work performed by government bodies is according to a set standard. Overall, best value audits can be significantly impactful for governments.
Internal auditing does not apply to companies only. This process also works in government organizations. Best value audit in internal auditing refers to examining a government body’s performance against a set standard. This standard or benchmark is known as best value. Best value auditing is of significant importance, as listed above.