ECOSAI - 2019
Creativity and Innovation in Performance
Sheraz Manzoor Haider
Director General
SAI Pakistan
In a system of parliamentary control, concept
of public accountability carries the logic that
those responsible for conducting public
business by using public resources are held
accountable to those who use and pay for the
services provided in accordance with the law.
The process starts as a government annually
generates the critical financial information.
The Supreme Audit Institution (SAI)
examines this information and provides a
report on the reliability of the nancial
information to the Parliament. The SAI,
monitoring government conduct to control
for the abuse or misuse of public authority,
also informs the Parliament about the use of
public resources by the government; the
safeguarding of the public assets and
resources entrusted to government; and
government's compliance to the laws,
regulations for in its conduct. The parliament
reviews report of SAI to hold the government
to account for its conduct ensuring on behalf
of the citizens that the former uses resources
legally and responsibly, for the purposes
The mandate of SAIs for provision of
assurance and credible information to the
parliament creates an independent and
objective role for the former in the public
accountability framework. For finely fitting
into this role, the public sector auditors work
in a professional straitjacket. For achieving
the ideal of avoiding arbitrariness and
subjectivity in their findings, opinions and
conclusions, auditors work in a highly
regulated environment. They keep their
focus on determining auditee's compliance
to the law, regulations, processes,
procedures, principles of fairness and equity.
They operate, on a recurring basis, with
denite procedures, use checklists and
demand detailed information which helps
them developing a formalized opinion, which
is explicit and unambiguous. Consequently,
financial auditing- the core work of SAIs-
appears to be a very structured exercise
involving application of relatively xed
standards and use of a set approach and
More often than not, the auditee believe that
the standard approaches and methods of
auditing trie exibility and initiative
reecting a rigidity, which renders the
process mechanistic, leaving no space for
auditors to add value to the work of
government. The auditors reflect that it is the
formalized rigidity of financial audit which
makes it possible for them to assess financial
reports and conduct of the government and
inform the parliament without being
regarded as biased and passionate.
The theory and practice of performance
auditing allows diluting the rigidity of audit,
offers scope to auditors for innovation, adds
v a l u e t o t h e w o r k o f g o v e r n m e n t.
Performance auditing- primarily and
essentially concerned with the audit of
economy, efficiency and effectiveness-, is a
exible au diting a pproach, f or not
necessarily having a direct focus on financial
accountability, in its choice of subjects, audit
objects, methods, and opinions. Conducted
on a non-recurring and on an ad- hoc basis,
performance audit does not involve
formalized opinions but an independent
examination. It is by nature wide-ranging and
open to judgments and interpretations. It
allows complex and diverse audit objective,
exploration of a knowledge base unknown to
nancial auditing and wide selection of
investigative and evaluative methods. It is
not a checklist-based form of auditing.
Performance auditing has its focus on
performance, rather than expenditure and
accounting, with a view to promoting
economy, efficiency and effectiveness in the
operations of government. It enables
auditors to advising on better government
spending, better public services and better
public management. It is equated with an
early warning system to management and a
vehicle for improving accountability to the
public. 'Instead of trying to find out who is at
fault', it helps 'analyse the factors behind the
problems uncovered and to discuss what may
be done about these problems'.
Section 1.8 of Performance Audit Guidelines
of INTOSAI suggests that Performance
auditing should not be streamlined.
'Standards as well as quality assurance
systems – that are too detailed should be
avoided'. This amounts to suggesting that
the approaches, methods, procedures of
performance should not be narrowly defined.
' P e r f orma n c e a u diti n g i s c o mpl e x
investigatory work that requires flexibility,
imagination and high levels of analytical
skills'. Streamlined procedures, methods and
standards may in fact hamper creativity and
professionalism and the functioning and the
progress of performance auditing'. The very
purpose of this advisory is to discourage the
inkling of reducing practice of performance
auditing to a mechanical exercise through
highly structured performance audit
manuals. Excessive emphasis on following
procedural diktats may hamper the flexibility,
professional judgment and high levels of
analytical skills that are required in a
performance audit.
In the process of developing new knowledge
through the practice of performance auditing,
auditors need to be creative, reective,
flexible, resourceful and practical in their
efforts to collect, interpret and analyse data.
Performance audits are concerned with a
variety of topics and perspectives covering
the entire range of government activities. It is
not possible for SAIs to develop detailed
standards and procedures that work equally
well in all these situations. Each performance
audit is a unique situation and application of a
prescriptive, formalized investigative
method and analytical procedure may not
cater to every situation. Prescriptions
reinforce routine and monotony and
minimize the scope for out of box solutions.
The best way for auditors is to work under
broad principles and guidelines and conceive
particular audit design requirements suiting
each audit assignment. This imperative is
doable in environments that allow auditors to
work under realistic timelines. Unrealistic
timelines are a big irritant to creativity and
innovation. Narrowly defining the scope of a
performance audit and limiting the number
of key audit questions is one of the best ways
to manage an audit activity.
ECOSAI - 2019
ECOSAI - 2019
INTOSAI recognizes accountability approach in performance auditing which can be 'described as judging how well those
responsible at different levels have reached relevant goals and met other requirements for which they are fully accountable',
however this approach is based on the assumption that factors outside the control of the auditees are not expected to
influence the outcome. Section 1.8 Focus on accountability or causes to the problems of Performance Audit Guidelines of
INTOSAI for further detail.
Para 4 of Fundamental Principles of
Performance Auditing of INTOSAI envisages
that 'Standards for performance auditing
should reflect the need for flexibility in the
design of individual engagements, for
auditors to be receptive and creative in their
work and for professional judgment at all
stages of the audit process'. If the plan for a
performance audit assignment allows
flexibility, auditors can benefit from insights
obtained during the course of the audit. The
audit methods chosen should be those which
best allow audit data to be gathered in an
efficient and eective manner. However,
practical considerations such as the
availability of data may have a strong bearing
on the choice of methods. It is therefore
advisable to be flexible and pragmatic in this
respect. Overly standardized procedures
carry the potential of minimizing scope for
Paragraph 31 of Fundamental Principles of
Performance Auditing warns that auditors
should exercise professional skepticism-
following a critical approach, maintaining an
objective distance from the information
provided, making rational assessments and
discounting their own personal preferences
and those of others- but also be receptive to
views and arguments and willing to innovate.
Respect, flexibility, curiosity and a willingness
to innovate are equally important. It is
important for the auditors to appreciate that
where they are open to principle of
innovation in the audit process, they should
not disagree to scope for in innovation in the
audited processes or activities as well.
C o ns i d e r i n g i ss u e s f r o m d i e r e n t
perspectives and maintaining an open and
objective attitude to various views and
arguments, helps avoiding missing important
arguments or key evidence.
A performance auditor must look after the
public in teres t; th inking and acting
'independently in order to show and question
the current situation'.
An audit report which does not offer an
overview and insights into government
activities and lacks the ability to influence and
i m p r o v e i ts p e r f o r m a n c e i s o f n o
consequence. The outcome of a performance
audit must promote 'incentives for learning
and change and improved conditions for