In response to the Governor's challenge, we dreamed up - and threw out - several good ideas for improving performance audits. Finally, we decided to propose their elimination. We proposed doing away with performance audits - and replacing them with a service or strategy audits. We alerted our potential client to the fundamental choice up front. "A performance audit can be approached either as a 'savings audit' or as a 'service or strategic audit.' The difference matters and is described in the table below".
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Savings Audit |
Service Audit |
| Principal purpose? |
Identify cost saving opportunities |
Improve service to customers within fiscal limits |
| How is it done? |
Outside experts investigate and prepare a report |
Staff (inside experts) realign resources and activities to meet or exceed customer expectations within fiscal limits |
| What is done? |
Audit operations Report on variances |
Audit strategies Develop better strategies |
| What role for customers? |
Little - perhaps identify wasteful practices |
Define service expectations - the results that the redesign must deliver |
| Where do savings come from? |
Saving opportunities are discovered or uncovered |
Off the top - the required savings become one constraint that a strategy or service redesign must fulfill (Customers can name additional benefits to be realized) |
| What about inefficiencies? |
Identify inefficiencies |
Fix the causes of inefficiencies |
| What about the existing system? |
Make the existing system work more efficiently |
Change the system - so that it produces more value for the dollar |
| What role for staff? |
Little - perhaps identify wasteful practices |
Create the redesign - provide the needed expertise |
| Where to start? |
With the budget - looking for savings |
With customer expectations compared to the actual results achieved |
| Need to repeat? |
Yes |
Maybe. The redesign should build in accountability for ongoing service quality and cost improvement |
We at PSG pitched this service redesign/ strategic audit as the preferred approach because it:
- Keeps the focus on serving customers - and value received
- Engages both customers and staff in the work
- Produces results that are more likely to last
- Goes beyond identifying inefficiencies to fixing the root causes of inefficiency.
But, you say, tell me again how any savings are realized. While there are no magic bullets, this approach gets savings by deciding how much must be saved at the outset - and then redesigning the system to produce better service within whatever resources remain.
And, you're probably wondering if PSG got the contract. The answer is no. An "accounting firm" approach won out. But, I simply didn't want to let this idea fade away. Just imagine the difference if audits were re-chartered - away from focusing on waste and inefficiency and toward clarifying what constitutes success - and then unleashing the best minds to produce strategies that outperform current practice.
Now, that's a performance audit I would eagerly sign up for!
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