Ensuring the Potential Benefits are Realised
So far this article has focused on what needs to be done to ensure that an audit is completed successfully. But completing the audit is just the beginning. The acid test is how a board responds to its audit’s findings and recommendations in order to improve its performance.
Confidentiality of auditor’s benchmarks a weakness
An inherent feature of performance and efficiency audits is that the judgments of the auditor must be accepted without full knowledge of the information on which those judgements were made. This may best be illustrated with reference to the audit of the Dairy Board and the evaluation methodology used by the Boston Consulting Group.
The approach of this auditor was to assess the performance of the Board against "international best practice"; a process known as benchmarking. The benchmarks used were based on the experience of the auditor in evaluating the performance of other clients, including many recognised top food companies world wide. For example, what constituted best practice in marketing may have been established by Kraft, and in research and development by Hewlett-Packard.
The Boston Consulting Group did not reveal details of international best practice; nor were reasons provided as to why certain practices were judged to be best practice. Although this makes it difficult to comment meaningfully on the evaluation criteria used by the auditor, the reality is that what constituted best practice (against which the Dairy Board was assessed) will never be known.6 This situation may be viewed by some parties as a major weakness of the audit process.
Explain performance assessment weightings
The extent to which the lack of information on best practice is a serious limitation of the audit process will be influenced by:
- the strong commercial incentive for auditors to maintain their professional integrity; and
- the information that is made available concerning how a board’s performance was assessed.
- respect to the second aspect, it is important that the auditor’s public report specifies:
- the areas/activities of a board that have been evaluated; and
- the relative importance given to those areas/activities in evaluating the overall performance of a board.
Such detail would:
- help facilitate a constructive discussion of the contribution of a board’s different activity areas to its current performance; and
- help stakeholders determine priority for action by the board.
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
Contact this person
