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Equity in Performance Auditing

Archived article - originally published on August 17, 2022

This article expands on the discussion in Episode 5 of The Performance Audit Report, with details and examples.

Equity in context

Performance audits have traditionally focused on the ‘3 Es’:

  • Effectiveness – if, or how well, the expected results are being achieved
  • Efficiency – getting the most out of the inputs and effort
  • Economy – the right inputs at the lowest cost

Some PAs may also focus on ethics and compliance.

We have seen an increase in PA reports that focus on or include another E: Equity.

In the context of performance auditing – and this may be slightly different to legal definitions – equity means that a public service or activity is fair, impartial, and supports equality of access and equitable outcomes for the users of the service.  

Conversely, public services that are inequitable may lack procedural fairness, be biased towards certain groups or people, or lead to different outcomes for different socio-economic cohorts. An example could be where only certain sections of the community are made aware that a government grant is available to them, rather than all potential applicants being advised. This could be deliberate, or it could be unconscious; but neither of those scenarios is desirable.

Equity is a focus of governments. In the U.S., for example, there has been a concerted effort to incorporate equity into the work of the federal government. In January 2021, President Biden issued an Executive Order aimed at delivering a whole-of-government equity agenda.

“…executive departments and agencies (agencies) must recognize and work to redress inequities in their policies and programs that serve as barriers to equal opportunity…”

“…each agency must assess whether, and to what extent, its programs and policies perpetuate systemic barriers to opportunities and benefits for people of color and other underserved groups. Such assessments will better equip agencies to develop policies and programs that deliver resources and benefits equitably to all…”

Source

This is just one example of a focus on equity from the highest levels of public administration.

Mark Funkhouser, co-founder of the International Center for Performance Auditing (ICPA) spoke at length about equity in PA in Episode 3 of The Performance Audit Report.

In Episode 5 of The Performance Audit Report, we briefly introduced the categories explored in this article.

In this article, we expand on the details with links to specific PA reports.

 

Performance auditors improve equity in many ways

Equity appears in the work of performance auditors in various forms at a strategic level (selecting what they audit, why and when) and at an operational level (how they execute and report specific audits).

Equity-related work can be divided into six broad categories and 13 subcategories.

Category Equity is…
Work program theme a focused theme in the planned portfolio of performance audits
deliberately considered for each audit
Focus of the activity the objective of the activity (program/service) being reviewed
one of the objectives of the activity (program/service) being reviewed
Audit objective the audit objective
one of the audit objectives
directly or closely related to the audit objective
Findings not the objective/focus, but the findings relate to equity
raised as an internal finding (e.g. workplace equity)
Non-audit reports an area of focus in research reports
a thematic area of focus in advisory reports drawn from previous audits
Ops and comms a focus area for corporate practices (e.g. HR, procurement)
a focus area for reporting and communications

These categories and the examples below are not exhaustive, but they demonstrate the many ways in which performance auditors can incorporate equity into their work.

 

Details and real-life examples

1. Equity considered in the audit work program or as a cross-audit theme

a. Equity is a theme in the planned portfolio of performance audits

Many audit offices produce a forward work plan for their intended performance audits for a future period (they can span one or more upcoming years). This plan may include targeted audits that relate to a vulnerable demographic group or an underserviced community cohort.

Example: Controller and Auditor-General (New Zealand)

The 2022 Annual Plan:

  • has a central theme of equity of access and outcomes for certain population groups
  • has a focus on equity in services such as housing affordability and family and sexual violence
  • included a survey of New Zealanders; this identified a new PA looking at the Government’s work to reduce child poverty in New Zealand.

b. Equity is deliberately considered for each audit

For each audit project, equity is discussed and considered during audit planning and fieldwork.

Example: Office of City Auditor, Seattle (U.S.)

Race & Social Justice Initiative (RSJI)

  • a deliberate focus on equity
  • examines city programs against equity values such as access, inclusion, and opportunity
  • openly displays this commitment on its website.

 

2. Equity is the focus of the activity (program / service) being audited

a. Equity is the objective of the activity reviewed

Some public services have a primary objective to specifically address identified issues of inequity. Performance audits can determine if those objectives are being achieved.

Example 1: New South Wales Audit Office (Australia)

COVID Intensive Learning Support Program (2021)

  • a $337 million program
  • the primary program goal: to deliver intensive small group tuition for students who were disadvantaged by the move to remote and/or flexible learning, helping to close the equity gap.
Example 2: Commonwealth of Virginia Office of the State Inspector General (United States)

Department for the Blind and Vision Impaired Virginia Enterprise Business Program (2021)

  • the Vending Facility program was authorized by the Randolph-Sheppard Act
  • the program provides persons who are blind or visually impaired with remunerative employment and self-support through the operation of vending facilities on federal and other property.

b. Equity appears in a subset of the objectives of the activity reviewed

Even where equity may not be the primary focus of an activity, it is sometimes included as an objective.

Example: Office of the Auditor General of Ontario (Canada)

Ontario Midwifery Program (2000) - two of the three key objectives relate to equity:

  1. To provide greater equity in access to midwifery services across Ontario.
  2. To provide an equitable funding mechanism that supports the integration of midwifery services.

 

3. Equity is the objective of the audit

a. Equity is the audit objective

Equity is the sole, or primary, audit objective.

Example 1: Office of the City Auditor, San Diego (United States)

Performance Audit of Equity in Recreation (2021).

The audit objective focused on equity, including whether the Parks and Recreation Department:

  1. effectively identifies recreation programming equity needs in each community
  2. meets identified programming needs equitably via resource allocations
  3. provides residents with equitable access to recreation programs.

Example 2: Office of the District of Columbia Auditor (United States)

D.C. Schools Shortchange At-Risk Students (2019)

The audit objectives focused on equity:

  1. Evaluate DCPS’s compliance with “supplement not supplant” requirements for at-risk funding in FY 2018.
  2. Identify and track the specific uses of at-risk funding, in DCPS and charter schools, since its inception in the FY 2015 budget.

b. Equity is included as one of the audit objectives

There are other audit objectives (sub-objectives) that relate to the other 3E’s, compliance and/or ethics.

Example 1: California State Auditor (United States)

The objective of the School Facilities Program (2022) audit included (but was not limited to) determining whether equity gaps exist in funding for modernization of school facilities.

Example 2: West Virginia Legislative Auditor (United States)

Regulatory Board Review of the Board of Examiners in Counseling (2021)

  • An additional objective was to assess the Board’s general compliance with the Americans with Disabilities Act checklist on November 20, 2019.
  • The evaluation includes a review of the Board’s website on January 10, 2020 for user-friendliness and transparency.

c. Equity is directly or closely related to the audit objective

“Equity” is not explicitly stated, but the subject matter and/or objective are clearly focused on equity.

Example 1: The Swedish National Audit Office

Please hold, the agencies are going digital – service for individuals who cannot or do not want to be digital (2021)

  • The ability of 22 government agencies to provide service with good availability and quality for individuals who cannot or do not want to be digital
  • How this has changed over the previous ten years.

Example 2: Office of the City Auditor, Austin, Texas (United States)

City Efforts to Address Displacement and Gentrification (2018)

  • Gentrification occurs when higher income residents displace lower income residents of a neighborhood, changing the character and culture of that area.
  • The objective was to determine the status of City policy and recommendations related to displacement and gentrification in the City.

4. Equity is included in the audit findings

a. Equity is neither the objective nor the key focus area, but the findings identify issues relating to equity

There is no specific focus on equity in the audit objective, but in conducting the audit, equity related issues are identified.

Example: Australian National Audit Office

Establishment and Use of ICT Related Procurement Panels and Arrangements (2020)

  • The objective was to assess the extent to which entities’ establishment and use of ICT related procurement panels and arrangements supported the achievement of value for money outcomes.
  • Given certain practices that were identified, the findings suggest that suppliers may not have been treated equitably, resulting in potential failure to demonstrate the achievement of value for money outcomes.

b. Equity is neither the objective nor the key focus area, but the findings include internal equity issues

There is no specific focus on equity in the audit objective, but in conducting the audit, internal (e.g. workplace) equity related issues are identified.

Example: Office of Public Accountability (Guam)

Public Safety Overtime (2020)

  • The objectives of the analysis were to determine:
    1. the increase/decrease of each public safety entity's overtime compensation over 5 years
    2. the top earners of overtime compensation over 5 years.  
  • The findings reflect several workplace equity issues.

5. Equity is the focus of other types of (non-audit) reports

a. Research reports with a focus on equity

Where an audit office publishes research it has conducted into the views or experiences of a vulnerable or disadvantaged group about the delivery of public services.

Example 1: Office of the District of Columbia Auditor (United States)

Enrollment Projections in D.C. Public Schools: Controls Needed to Ensure Funding Equity (2020)

  • A research report prepared for ODCA, by the Johns Hopkins Center for Research and Reform in Education, in response to a request of the Council of the District of Columbia.
  • A follow-up to an earlier research report, as a deeper dive into enrolment data, with a focus on the impact on subgroups of students.
  • These include students of color, students considered at-risk under D.C. Code provisions, students with disabilities (SWD), and students who are English language learners (ELL).

Example 2: Controller and Auditor-General (New Zealand)

Maori Perspectives on Public Accountability (2022)

  • Results of a study into the views of Maori (indigenous peoples) about effective public accountability and what this means for the public sector and the work of the Auditor-General.
  • The research findings include implications for the Maori focused future work of the Auditor-General around four themes:
    1. Power and equity imbalances
    2. Explicit focus on outcomes for Maori
    3. Audit specific Maori engagement strategies
    4. Education outreach work with Maori.

b. Advisory reports with equity as a thematic focus

A report that brings together equity matters drawn from a range of audits, highlighting thematic findings or risks.

Example: Oregon Audits Division (United States)

K-12 Education — Systemic Risk Report (2022)

  • “State Leaders and Policymakers Must Address Persistent System Risks to Improve K-12 Equity and Student Success”
  • An advisory report, drawing on work conducted in six previous audits that each included a focus on equity.

6. Audit office operations, reporting and communication

a. Equity (and diversity, inclusion, accessibility) in the audit office’s corporate practices

This is already a focus for all (or most) audit offices. It includes, for example, HR practices and procurement practices.

Some peak audit bodies have produced guidance material for audit teams. For example, the Association of Local Government Auditors (ALGA) has developed and published a range of resources to support diversity, equity, and inclusion.

b. Equity (and diversity, inclusion, accessibility) in reporting and communications

Audit offices and integrity agencies use several ways to provide alternate versions of their reports, making them easier to access and consume.

This includes delivering key audit messages via audio (podcasts), video, short report summaries, Easy English versions, and others.

Podcasts:

Others: