Performance Audit Performance Audit will entail examination of issues of performance and results, focusing on accountability for results

and performance as value for money audit, which will significantly contribute towards modern management practices and change management style. Mandate and Concepts The main purpose of conducting performance audits is to provide an independent evaluation of the economy, efficiency and effectiveness with which resources have been used. Although performance audit can be very wide-ranging, in broad terms, it can be applied to: those activities involving a considerable level of resources The term value for money refers to the way in which resources (financial, human or physical) have been allocated and utilised by the entity. The Performance Audit will be an objective and systematic examination of the Kisumu Water and Sewarage Companys programs, activities, functions, management systems and procedures to provide an assessment of whether the Company, in the pursuit of predetermined goals, has achieved economy, efficiency and effectiveness in the utilisation of its resources. The economic assessment will evaluate whether the cost of resources used are in accordance with sound administrative principles and practices and management policies. Assessment of the efficiency will determine whether the Company produces the maximum output of services from the resources used in their production. Assessment of the effectiveness will establish whether the Company has achieved the desired results, objectives, targets and goals. MODEL Responsibility for Achieving Value for Money The achievement of economic, efficient and effective resource utilisation depends on the existence of good management controls. Responsibility for establishing the best arrangements and achieving optimum VFM rests with the management of the entity concerned.

Management Controls that will be examined will include policies and procedures for: Planning, organising, directing and controlling programme operations Confirming that resource use is consistent with legislation and regulations Safeguarding resources against waste, loss and misuse Measuring, monitoring and reporting on the entitys performance Ensuring that a programme or activity meets its objectives Ensuring that valid and reliable data are obtained, maintained and disclosed accurately in annual reports and other documents. The Auditors will provide independent verified information that management has the proper arrangements in place and that they are effective. 1. Objectives

a. The Primary Objective of the Performance Audit will be to provide

Kisumu Water and Sewarage Company Management with independent information, assurance and opinion about economy, efficiency and effectiveness in revenue, expenditure and the management of resources.

Independent performance reviews will indicate whether, in using its resources to achieve organisational goals, the Companys Management has achieved or realised its policies, principles or standards economically, efficiently and effectively.

b. The Secondary Objective of the Performance Audit will be to

identify ways of improving value for money and to encourage and assist the Company to take the necessary action to improve systems and controls. The approach will involve examination and evaluation of arrangements for securing good value for money, expose serious waste, extravagance or other examples of poor performance. The Auditors will evaluate how far and how well the management of resources is being discharged by the Company. 2. Impacts

a. Increase Income

b. Reduce Costs or Expenditure (Financial Savings) c. Improve Efficiency d. Strengthen or Enhancing Management and Administrative
Processes

e. Improve Quality of Services Provided f. Achieve the Companys Aims and Objectives more Cost-effectively g. Develop Policies h. Create Awareness of Good Accountability and Transparency in the
Use of Resources.

3.

Areas of Performance Audit The Performance Review will cover Management Activities and dependent on the complexity or critical nature of activity, may be conducted as:

a. Selective Examination.
b. Broad-based Examination. c. Review of Standard Managerial Operations. d. Smaller-scale Examination. 4. Performance The Auditors will deploy a structured approach to performance of the audit work that will entail the following elements:

a. Planning b. Examination c. Reporting

Key Stages of Performance will involve:

Strategic Planning of Performance Audit Programme Planning Individual Examinations

Carrying Out Each Examination Preparation of the Report Clearance of Reports with Auditees Consideration by Kisumu Water and Sewarage Company Management Response and Follow Up

Key Steps of Performance will be as follows:

General Surveys and Marking of Potential Study Areas to Obtain Upto-date Knowledge and Understanding of Kisumu Water and Sewarage Company Planning and Preparation of the Performance Audit Strategy and Decisions on Areas to be Examined, Taking Account of High Risk Areas Preliminary Studies and Planning Individual Performance Audits, Including Confirmation of the Terms of Reference Conducting the Full Performance Audit Examination, Detailed Factfinding, Research and Analysis of Operations Preparation of Reports Resulting from Audit Examinations Agreeing Findings and Clearance of Reports with Auditees Finalising and Publishing of Reports and their Presentation to Management Review of Follow-up to the Reports

5.

Performance Audit Standards The Auditors will develop audit criteria that will allow for measuring the performance of the areas subject to audit. The audit criteria will as much as possible be: Relevant Reliable Neutral Understandable Complete

6.

Examination of Policy Matters The Auditors will enquire into objectives of policies anf the basis on which decisions were taken by review of:

Accuracy, Reliability and Completeness of Information provided for Determining Policy Objectives and Means of Pursuing Them Clarity with which Policy Objectives have been Defined and Communicated to Responsible Staff Consistency of Lower Level Operational Aims, Targets and Priorities Management Information Systems for Monitoring Results and Achievements against Objectives Assessments of the Economy, Efficiency and Effectiveness with which Objectives are Pursued and Achieved