Northern Territory Auditor‑General's Office
Auditing for Parliament
Performance Management System Audits
A Chief Executive Officer, as an Accountable Officer, is responsible to the appropriate Minister under section 23
of the Public Sector Employment and Management Act 1993 for the proper, efficient and economic administration of his or
her agency. Under section 13 (2)(b) of the Financial Management Act 1995, an Accountable Officer shall ensure that
procedures “in the agency are such as will at all times afford a proper internal control”. Internal control is
further defined in section 3 of the Act to include “the methods and procedures adopted within an agency to promote
operational efficiency, effectiveness and economy”.
Section 15 of the Audit Act 1995 complements the legislative requirements imposed on Chief Executive Officers by providing
the Auditor‑General with the power to audit performance management systems of any agency or other organisation in
respect of the accounts of which the Auditor‑General is required or permitted by a law of the Territory to conduct an audit.
A performance management system is not defined in the legislation, but section 15 identifies that: “the object of an
audit conducted under this section includes determining whether the performance management systems of an agency or
organisation in respect of which the audit is being conducted enable the Agency or organisation to assess whether its
objectives are being achieved economically, efficiently and effectively.”
The Northern Territory Auditor‑General's Office has developed a framework for its approach to
the conduct of performance management system audits, which is based on the premise that an
effective performance management system would contain the following elements:
identification of the policy and corporate objectives of the entity;
incorporation of those objectives in the entity's corporate or strategic planning process and allocation of these to programs of the entity;
identification of what successful achievement of those corporate objectives would look like, and recording of these as performance targets;
development of strategies for achievement of the desired performance outcomes;
monitoring of the progress toward that achievement;
evaluation of the effectiveness of the final outcome against the intended objectives; and
reporting on the outcomes, together with recommendations for subsequent improvement.
Performance management system audits can be conducted at a corporate level, a program level, or at a category of
cost level, such as capital expenditure. All that is necessary is that there is a need to define objectives for intended or desired performance.
Refer to Frameworks page for examples.
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