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Performance auditing and compliance functions

Tina Rolling ( is an assistant professor of Business Administration at Alma College in Alma, MI. Tom Ealey ( is a professor of Business Administration at Alma College.

When most people think of auditing, they think of external and sometimes internal auditing, both being focused on financial results and financial internal controls.

A third type of auditing, performance auditing (earlier known as operations auditing)[1] has great promise for improving the compliance function, and also the operations of the provider. Performance auditing can be applied to a wide range of business practices and regulatory compliance targets, because it focuses on effectiveness, efficiency, and compliance.

Performance auditing was pioneered and has been enhanced by the federal General Accountability Office (GAO) as well as private sector internal auditors and consultants. The GAO uses performance auditing to evaluate everything from military procurement efficiency to social service program effectiveness. GAO developed a common set of tools to evaluate the performance of people and hardware across a wide range of government programs.

Performance auditing differs from financial auditing in intent, scope, procedures, and reporting. Performance auditors need not be independent from the company or highly trained audit practitioners.

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