Performance audit with enhancing effectiveness of Collecting and spending toll fee

? Are there effective incentive regimes that reward good performance with, for example, additional funding, recognition, awards and increased autonomy from central monitoring and inspection? Is there clear accountability for performance data? Has the organization agreed responsibilities for the key steps involved in collecting, processing, reporting and checking data? Organizations may find it helpful to allocate responsibilities for data including: the initial specification and definition of the measure; the data collection procedures; the specification of formulae; the analysis and interpretation of results; the reporting of results in the required formats; and the retention of information for the validation process. Does management play an active role in ensuring data quality? Does management support commitment to good quality data by, for example, providing incentives for staff to collect reliable data, holding managers accountable for data quality and providing technical and financial support to those involved in collecting data? Does management use its routine monitoring of performance data to help ensure data quality by, for example, seeking explanations of variations between outturn and target? Management’s routine monitoring of performance data can be an important mechanism in helping to ensure the quality of data. Where they actively monitor performance information, they are able to identify unexpected variations between actual performance and targets or trends which call for examination. Are there effective controls which reflect the type and source of performance data? For data collected through the organization’s own systems, have controls been established and operated over: initial capture or recording of performance data; processing and aggregation of performance data; and Monitoring of the quality of data? Management should also assure them that the organization’s performance information systems are operating effectively and consistently and continue to provide a reliable basis for capturing and reporting the performance data. They may seek this assurance from internal auditors or independent checking sections. Where performance data is lost or corrupted in a way which may cause the data to be unreliable, management will also need assurance that appropriate follow-up action is taken to address the control failures and correct any actual errors in the data. Performance data may be collected in a variety of ways. The following sections outline some of the control issues that may need to be addressed in collecting performance data from: the organization’s information systems; surveys; External sources. Reliable performance information systems, whether manual or computerized, require: Controls over the processing of performance data. These are controls that govern the processing and aggregation of data to calculate performance measures included in the agency’s annual report. They ensure that the correct data are used and that the correct procedures are being followed to calculate the performance measure. The following are some of the generic controls over the capture and processing of data that might be expected in good performance information systems. Data Capture guidelines and procedures for data recording and entry are developed and consistently used; operational staff are trained on which data to enter, how to enter the data, and the importance of data accuracy; information is logged at the point of receipt; and data entered into the computer system is reviewed for accuracy. Data Processing reconciliations and other checks are performed to ensure the completeness and accuracy of the updating of the databases where the performance data are held; where appropriate, systems include automated checks on data values, such as “range-checks” and consistency checks between data elements; checks are undertaken to ensure that the correct data are used in the calculation of performance measures; access to data records is restricted; and procedures for controlling the system and the retention of supporting data are documented. For data collected through surveys, have experts been consulted about the use, design and application of survey techniques? Surveys are frequently used by agencies to obtain data about customer satisfaction or service quality. The quality of information required will influence how the survey is designed. In designing surveys organizations should consider: Bias. A questionnaire conducted by personal interview may be at more risk of bias than an anonymous survey. Questionnaire design. The design of the questionnaire can have a significant bearing on the response rate and the validity of the responses generated. The wording of questions should be clear, unambiguous and unbiased. Sample size. The size of the sample of people surveyed, and the extent to which that sample is representative, will have a direct bearing on the quality of the data gathered and the conclusions drawn from it. Data analysis and interpretation. The analysis and interpretation of survey data does not merely require the collation of data but rather an analysis of what the data mean. There are various types of analysis that can be used, each of which is appropriate for particular types of data. Complex data analysis should be the responsibility of statisticians. For data collected from external sources, has the quality of data been established by confirming: the original purpose of data collection; whether the external party is a recognized provider of data; and the quality controls exercised by the external provider? The following are some of the issues that organizations should consider when using data from external sources to measure performance. Where the organization wishes to commission their own study or survey The organization should ensure that: the study is conducted by appropriately qualified people; the methodology for gathering data is documented; appropriate arrangements have been made for ensuring quality control; and accepted practices or standards have been applied. Where the organization wishes to use data originally collected for a different purpose The organization should consider: the original purpose of the data collection; what quality controls operate in relation to the data provided; and whether any limitations have been placed on the information provided by the external party and the relevance of such limitations to the organization’s performance measures. Presentation of results; Does the annual report or organizational statement present performance information clearly? Has government legislation and guidance been followed in presenting performance information against objectives and targets? Has the best use been made of diagrams, for example, to show trends over time? Effective reporting of performance could include a description of each target in the following categories: efficiency, throughput, quality, financial performance and other. It should also show targets, outturns and achievements for at least three years (that is, the current year plus two preceding years) on the target set and outturn achieved. Does the annual report or statement explain performance measures? Does the annual report or statement give information so that the reader can understand: the broader environment surrounding an organization’s activities, including those factors that influence an organization’s inputs, outputs and outcomes? the performance measures and related terminology? the level of performance achieved and the significance of underlying factors that affect reported performance? and the actions that have been taken or are being taken in response to reported information, particularly for unexpectedly high or low performance? Ideally, performance statements should be able to stand alone. That is, the description of the measures and any accompanying notes should be adequate to enable readers to understand the organization’s performance against targets. Organizations may therefore use explanatory information to: describe performance measures which are complex or use indices; help users understand the level of performance achieved and evaluate the significance of underlying factors that affect reported performance. (Source: Performance Audit Guide- EC project) Table 2.5: Audit questions on performance targets Main question Sub-question Are performance measures supported by a clear understanding of how programs and activities affect planned outcomes? Have the main influences on the planned outcome been clearly identified? Have the organization’s performance measures been chosen with regard to: The main influences on outcomes? The motivations of people involved in delivering and receiving services? The results of relevant research and program evaluations? Have modeling methodologies which, for example, demonstrate the logic of programs, been used when they can cost-effectively assist with the formulation of targets, help monitor progress towards the final outcome and assist the organization to account for performance? Have data collection and analysis methodologies been chosen so as to show the contribution of the organization’s program to the achievement of the desired outcomes, from that of other factors? Do performance measures complement evaluation and research programs? Have the organization considered the form of target which would most closely support the policy objective? Options include: Measures of average performance or improvement; Measures of minimum standards; Measures of variation, for example, between different parts of the country or  different groups of people Are targets designed and implemented so that they minimize the potential for perverse behaviors and avoid unwanted skewing of performance? Are proposed targets actively reviewed by a range of stakeholders and professionals to identify perverse incentives or misleading information which could be unintentionally generated? Are outcome targets set within a broader framework of performance measurement to guard against over-emphasis on targeted areas? Have opportunities been sought to assist external service providers to set, where appropriate, and achieve effective local targets? Does the organization explain to external service providers the purpose and potential benefits of the target setting process? Are external service providers helped to obtain the skills they need to set local targets, for example, by giving them access to experts, funding, and training or by providing analytical tools? Has the organization asked external service providers' views about the presentation and substance of any performance information collected and disseminated by the organization? Does the organization make available guidance and good practice on setting and achieving targets? Are organizational targets located within a wider organizational business planning system? Does the planning system help the organization and service providers to focus on the achievement of national priorities? Does the planning system define performance in a balanced and consistent way? Does the planning system assist management to examine and compare the performance of different programs or service providers? Has the organization considered the best way of influencing the priorities of service providers and staff? Are local targets revised promptly to reflect changes in central targets? Can local targets be weighted so that they focus staff attention on priorities? Are there effective incentive regimes that reward good performance with, for example, additional funding, recognition awards and increased autonomy from central monitoring and inspection? Do organizations and their service providers make cost-effective use of all existing information sources? Are performance measurement systems regularly reviewed to identify items of information which are no longer needed or items which are collected more than once? Can information be presented in a form which would make it easier for service providers to access and analyze data on different aspects of performance? Have arrangements for obtaining assurance been designed and implemented to ensure that data collected meet the required standards? Have the different options for obtaining assurance on the accuracy and quality of performance data been fully explored and the most appropriate and cost-effective option selected? Have the arrangements for obtaining assurance on performance data been documented? Are there controls in place to ensure that the assurance arrangements are operating as designed? Are any shortfalls in the quality or accuracy of performance data fully recorded? Are any shortfalls remedied, and systems reviewed and revised as necessary to ensure the production of better data in future? (Source: Performance Audit Guide- EC project) When evidence is important but does not answer the audit questions, it may happen that some of the audit findings from fieldwork do not answer the issues analysis questions. The findings may be important, but if they do not relate to the issues auditors planned to examine, the auditors should send them to the audited body separately in a letter. It is not advisable for auditors to include them in their current report, but they may want to include them in a different report later on. If the evidence changes some of the audit questions, this might happen if audit findings were very different from those expected, for example if auditors found a new operation or system that needed investigation. In this situation auditors should re-perform the issues analysis and restructure the audit questions. Only then are they ready to assess whether their audit findings provide satisfactory evidence to answer the questions and justify going ahead to the report drafting stage. When auditors have completed the audit results form, the final stage in the analysis of data involves combining the results from different types of sources. This phase involves weighing up arguments and assertions, consulting experts, and making comparisons and analyses. After that, auditors implement to make performance audit report Preparation of collecting and spending toll fee audit report After collected all reliable and sufficient evidences which answered the audit questions auditors prepared the report outline and proceed to the report drafting stage. Effectiveness evaluation of Fee Collection. In 2005: collected 1,020,622 million dong, reached 97.05% of the estimate, equivalent to 104.14% year-on-year. In 2006: collected 1,063,939 million dong, reached 99.57% of the estimate, equivalent to 104.5% year-on-year. Road toll stations mostly used manual collecting ways, only road toll station No.2- National Road 14 (Binh Phuoc province) has been applying automatic technology with the project values for balance-sheet proposals of 3,729.8 million dong. The application of automatic collecting technology has contributed to increase the receipts as compared with the manual method by 16%, reducing the regular staff of 16% while the salary increases by 11%. So in the consecutive 2 years, Vietnam Road-way department failed to accomplish the receipts estimates while the economic growth rate increased annually by 8% and the increase in receipts of taxation, fees, and charges from 10% to 15%. If Vietnam Road-way department sets up the fact-based estimates in line with the economic growth rate and the increased collecting speed of the National budget and with the application of automatic collecting method, losses in road tolls shall be escaped, increased the National budget. Effectiveness evaluation of expenditure uses for road toll collection As regulated, expenditures used for road toll collection is 15% taken from its general receipts. The regular staff assigned by Vietnam Road-way department to stations in 3 years (2004-2005-2006) was 4,232 people. The average expenditure of the whole administration in 2006 was 41,378 million dong/person/year, of which the highest average was 48,378 million dong/person/year in Road Way Management Area II; the average expenditure for a selling ticket in the whole Administration was 2,825 dong/ticket, of which the highest was 3,464 dong/ticket in Road Way Management Area IV, the lowest was 2,537 in Road Way Management Area II. In parallel with inadequate usage of expenditure contents serving for fee collecting activities such as: police hiring, audit for financial statement, advertisement…the amount of expenditure can be reduced for saving National budget. In order to ensure annual road maintenance, the capital need is up to 3,000 billion dong but the receipts number is only 1,000 billion dong, accounted for only 30% of the need. Therefore, the collecting fee rate is currently still low. Audit results shows that the inefficiency of receipts, and usage of road tolls can be attributed to the following reasons: Firstly, the current fee collecting models display many shortcomings: road toll collecting stations are subsidiaries to enterprises, thus the receipts appropriation and wrong purpose usage of the national budget widely occur. Secondly, the road toll collecting technologies are backward, the expenditure serving for road toll collection remains high, national budget loss still happens. Thirdly, the expenditure for replacing equipments is high, the expenditure for road toll ticket printing is also high, regulated regular staff is higher than the factual requirements. Effectiveness evaluation of using the modernization fund. The modernization fund was established in 2003 to maintenance road way and shopping equipment for collecting toll fee; the surplus of this fund on 31.12.2006 was up to 184,718 million dong. While the Vietnam Road way department still has to loan capital for its investment, the surplus of this fund is a waste to the National budget (the interest amount is estimated at 10 billion dong annually). The application of automatic collecting technology has got outstanding results, both contributing to the budget receipts increase, save for the National budget, at the same time presenting the civilization and connivance for participating transport vehicles. However, this modernization is still slow, up till now there are only 4 stations being modernized. The investment capital for 1 modernized station is estimated at 4 billion dong, which is completely met by the modernization fund. Therefore, it is necessary to consider 5% rate extracted in the modernization fund in the following years. Effectiveness evaluation of using loan capital. Mechanism for capital loan of road repair projects lack tight regulations, lack the control of competent authorities (the Planning and Investment Ministry, State Treasury). The identification for debt payment sources for loan capital based- investment projects and the statement making for balance sheets of debt payment sources do not attach to factual situation. Some loan capital based- investment projects must require the extension of the debt payment term, debt localization and lengthening, which increases the expenditure of interest loan rate, even affects the targets of the Project with overdue projects. Audit results show that almost all projects must pay the interest rate of 30- 50% of the loan, which decrease the efficiencies of project investment and increase the National budget’s expenses. Therefore, it is necessary to consider carefully investment efficiency prior to investing in load capital- based projects. Effectiveness evaluation of using the road repair expenditure. Vietnam Road way Ministry department has misused the road repair expenditure sources as per regulated in the National budget Law. This fail to follow the targets of National budget expenses as per estimated approved by the National Assembly, which reduces the efficiency for using the National budget, with the total investment of 354,306 million dong, of which 123,358 million dong has been paid. Assessing the real situation of Collecting and spending toll fee audit Collecting and spending toll fee audit findings In 2 months, audit association has evaluated effectiveness of Collecting and spending toll fee with many sides: effectiveness evaluation of Fee Collection, effectiveness evaluation of expenditure uses for road toll collection, effectiveness evaluation of using the modernization fund, effectiveness evaluation of using loan capital, effectiveness evaluation of using the road repair expenditure. The audit helped Vietnam Road way Ministry department to find shortcoming in using and spending toll fee; enhance effectiveness in management of using and spending toll fee; stopping false expenditure national budget; research and develop a new collecting fee model to enhance effectiveness in collecting toll fee; This audit get so close to audit the economy, effectiveness, efficiency in Collecting and spending toll fee, take the recommendations to enhance economy, effectiveness, efficiency in Collecting and spending toll fee. All of auditors tried their best, so this audit finding has very high persuasive. The audit has built basic of new audit method- performance audit; through Collecting and spending toll fee audit, investigate and improve performance audit, get performance audit theory to audit reality and implement more performance audit. Step by step, enhance economy, effectiveness and efficiency in national budget management and using economy resources. Make State auditor a chance to approach new audit method, turn them in to higher level audit force, since then, implement more performance audit in the future and training the other auditors. Shortcomings of Collecting and spending toll fee audit Although the audit obtained good results, this is the first time, the State Audit of Vietnam has implemented performance audit, mistakes can’t be avoided. They included: The auditors were not sufficiently rigorous to identify and report the control weaknesses associated with problems. Even though auditors reported problems, no mechanism was in place to ensure that. The scope of the audit was so wide and great, the audit quality was low, making audit report without caring, audit findings is not go into the details of performance audit contents. Communications with audited bodies is very important element of performance audit function. It is more important than in some other operations because management issues and output audit function are more qualitative than quantitative. In a manufacturing or distribution operation, one can measure the output in units and analyze it in many ways. Audit function have a lot of control over quantities and quality of the work they perform. However, it is difficult for management at audited bodies to understand the issues involved in running a successful audit function and producing quality audit reports. Audit management has a number of opportunities to express their issues and report on activities. Audit report results have not yet be care by the audited bodies because the quality of audit results have many weakness, not meet the requirements of them. In some audit team, auditors are so young, not enough economy and social experiences to implement performance audit, the other have not certificates…. So, they have not enough conditions to follow the dimensions of the score of the audit and requirements of the leader of the audit associate. Auditors don’t collect enough data so they don’t deeply understand about audited bodies. There are so many policy, implementation guiding document, so they can’t read all. When implement audit, it was easy to make mistake, inaccurate appraisals. Causes of shortcomings To be effective, policies and procedures need to be effectively communicated to all personnel involved in the audit. Some losses in performance audit in audited bodies occurred because relevant personnel were not aware of or misunderstood policies and procedures. So, Regulations and policies for performance audit should be enhanced. The Collecting and spending toll fee audit has so many objectives and has a wide scope, but the number of auditors was so limited. So each auditor had to work very hard while time was limited. It reduced the quality of audit. Based on information of the questionnaires answered, leaders give evaluations. With this big audit, there were so many mails sent and received, so it is too difficult for the leaders to take a audit guide. In some cases, inadequate knowledge and training of performance audit staff in field economic overall, electronic information systems and other highly sophisticated areas also contributed to performance audit problems. Because auditor did not have the necessary expertise, they was often hesitant to ask questions when they suspected problems. Performance auditors have not been equipped all audit techniques as independent auditors. Chapter 3: Recommendations and conclusion Requirements of enhancing effectiveness of Collecting and spending toll fee Independence Auditors should be independent of all activities they audit. It is essential that the auditors is, and is seen to be, independent of the area being audited. An auditor is guaranteed a measure of independence by legislative and ethical pronouncements. The standards in which auditors can be independence of the activities they audit. The first is to have sufficient organizational status to permit the accomplishment of audit responsibilities. The second is in part a mental attitude, and is compromised if staff assumes any direct operating responsibilities or audit an area for which they were responsible immediately before joining the audit department. Ethical behavior The objectivity is a mental attitude, and auditors should not be placed in situations in which they feel unable to make professional judgments. Audit staff assignments should be made to prevent possible bias or conflicts of interest; Auditors should immediately report any conflicts of interest to the head of the audit department; Staff assignment should be periodically rotated; Auditor should not assume operating responsibilities; It is not appropriate for auditor to design, install or operate systems or draft procedures for the system because their objectivity may be impaired or reduced. This evaluation requires member to exercise honesty, objectivity and diligence in the performance of their duties. Auditors are prohibited from accepting anything of value from an employee, client, customer, supplier or business associate of their entity which would impair, their professional judgment. They must also refrain from entering into any activity that could result in a conflict of interest. The code of Ethic requires members to maintain high standard of professional competence and they should not knowingly be party to any illegal or improper activity. Audit or competence Professional proficiency: It is requires audits to be performed with proficiency and due professional care. Therefore, it is the audit department’s responsibility to assign persons who collectively possess the knowledge, skills and disciplines needed to conduct the audit. The work should be properly supervised and auditors should comply with professional standards of conduct, which include the Code of Ethics. Auditors need to maintain their professional competence through continuing education. Target requires auditors to exercise due professional care in performing audit. They must apply the care and skills expected of a reasonably prudent and competent auditor in similar circumstances. This requirements point out that due professional care requires auditors to be alert to the possibility of wrongdoing, errors and omissions, waste, inefficiency, ineffectiveness and conflicts of interest Scope of auditor’s work: Target states that the scope of auditing should encompass an examination of the adequacy of the entity’s audit activity to determine whether it provides reasonable assurance that the entity’s objectives and goal are being met effectiveness, efficiency and economically; an examination of the effectiveness of the entity’s audit activity to determine whether the system is functioning as intended; a review of the quality of the performance to determine whether the entity’s objectives and goals have been achieved. Thus the scope of the auditor’s work include: looking at the reliability and integrity of information; compliance with policies, plans, procedures, laws and regulations; safe- guarding of assets; economical and efficient use of resources; accomplishment of established objectives and goals for operations or program. Research findings Enhancing effectiveness of performance audit methods It is easy to get too close to the audit topic, and lose perspective on the quality of the evidence. It can therefore be helpful to obtain the views of independent observers, such as internal reference partners or members of an Expert Panel. Constructive discussion of initial findings with the audited body is another important way to establish the quality of the evidence gathered, whilst also preparing the audited body for the clearance process. Most performance audit examinations produce a mass of evidence on paper. Teams should therefore ensure that a simple audit trail exists. This is particularly helpful if findings are challenged by the audited body during the clearance process. Auditors must record and retain key documents including: major decisions influencing the examination and its management; key correspondence and other contact with the audited body; the main items of evidence, their source, and the analysis undertaken. Quality of evidence is vital, since performance audit is open to judgment. INTOSAI Auditing Standards state that ‘Competent, relevant and reasonable evidence should be obtained to support the auditor’s judgment and conclusion regarding the organization, program, activity or function under audit’ (INTOSAI Auditing Standard 3.5.1). At the planning stage it is advisable to choose audit tests that result in evidence that is easy to evaluate. Audit evidence should be sufficient, measurable in quantity or convincing in quality and able to persuade a reasonable person that conclusions and recommendations are justified and supported. Audit evidence should be relevant, logical and sensible in relation to audit objectives and criteria and noting the purpose, source, and scope of evidence. Audit evidence also should be reliable, consistent with facts and valid, corroborated by more than one source and conform to principles (documentary rather than oral, direct rather than indirect; original rather than photocopies). Enhancing effectiveness of auditors organization and management In every management and specific operations, specialization is the foundation of effect and quality improvement in work. Up to present, state-performance audit has already shaped a fixed specialization (professional national auditors and auditing officers). In reality, however, specialization here still is too general with its wide sphere. In the condition of deploying financial report auditing, the limit of that organization has not appeared, but on executing the performance audit, due to the diversity of quality, size and deep requirement of specialization, auditing has become an urgent mission. Specialization need to be executed on two side of operation as: In every management and specific operations, specialization is the foundation of effect and quality improvement in work. Up to present, state-performance audit has already shaped a fixed specialization (professional national auditors and auditing officers). In reality, however, specialization here still is too general with its wide sphere. In organizing audit activities, it is especially necessary to share the work to the level of officers and groups, and controlling audit activities as following the groups having the same features in operations functions. For example, for the office which control budget auditing, it should be divided into management units for the public career units and direct the auditors to manage each sub majorities such as education, health, and science research During the auditing organization activities, it is necessary to change the general auditing activities to intermediary ones following the party’s method. In which, each uninterrupted auditing activity includes a series of audited bodies, which have the same features of field of operation as well as function of operation, especial with the using national budget units. Enhancing audit quality control and assessment Quality control of performance audit should consider the time, cost and technical quality of outputs. The audit manager and SAI management are responsible for ensuring that the performance audit is completed within budget and on time. The audit manager is also responsible for ensuring technical quality of audit work. (INTOSAI Audit Standards 2.1.26-28, 2.2.36 and 3.1.4). Line Management Review: The first step in quality assurance is line managers’ review of auditors work. This is fundamental. Managers must check the work of their performance audit staff in order to ensure that auditing standards are being met and to raise quality. Manager level quality control checks: There are four stage of the audit at which managers will need to review audit quality: Planning, fieldwork, report outline, report completion. At the planning stage the manager should check that the original reasons for selection of the audit topic are properly reflected in the plan. The plan format is in accordance with the approved approach. The issues analysis diagram – attached as an Annex – presents a logical structure of audit questions, there are no major areas of enquiry missing from the audit questions. The proposed audit will examine all the main issues and risks that an knowledgeable reader would expect. The main audit question in the issues analysis diagram focuses on at least one of the three performance audit principles – economy, efficiency and effectiveness. The audit methodology annex has been completed correctly and shows clearly what evidence is required to answer the audit questions. At the fieldwork stage the manager should check that the audit programs supporting the audit tasks needed answer the audit questions and obtain the evidence required in the audit methodology. At the beginning of each week, that individual auditors have completed tasks for the previous weeks and obtained the correct evidence. At the report outline stage the manager should check that the evidence in the audit results schedule is sufficient, relevant and reliable. The main report statement is supported by the sub-statements and third level statements, and that the audit evidence supports the third level statements. At the report completion stage the manager should check that all audit work included in the audit plan has been completed, the audit evidence fully supports the audit findings. All relevant audit findings are included in the report outline and the answers to the audit questions are logical and convincing. At the report drafting stage the manager should check that in each chapter, answers to the issues analysis questions are based on logical arguments, the report contains up to three key messages that are clearly stated in the executive summary. The conclusions and recommendations are based on convincing and reliable evidence that is clearly explained in the report. The recommendations will lead to improved outcomes or financial savings and the text of the report is easily readable and easy to understand. Quality improvement of selecting and training auditors - On selecting auditors: It is necessary to have long-term strategies of selection, training and using auditors. Currently sixty percent of those who had ever worked in financial positions, enterprises, banks and universities should be selected due to their rich real experience and high professional skills. Forty percent of those are graduated students, who update the latest knowledge from their universities and they are active in work. Both of these selected auditors will assist each other. - On training and improving auditors The new auditors and in-work auditors should be trained periodically following these contents: + Understand the standards and rules related to performance audit in some specific fields and the latest performance audit technology + Regularly participate classes for updating knowledge on economics, finance, accountancy, IT skills and the latest national policies. + Regularly participate in meetings, researches to improve the skills and process of performance audit - Build and implement the method of auditors’ level, ability and professional ethics control. This activity can help state auditors in consideration, estimation and treatment the auditors’ professional ethics, if any. In other hand, this can help auditors in consideration their own work quality, then try to self-improve their ethics, to enhance their professional skills and successful complete their missions. Recommendations Recommendations to audited bodies In the first meeting, audited bodies have to setup a formal relationship, informal relationship with auditors. An open relationship is the basing of implementing audit, creating good conditions for auditors in auditing Get in touch with audited bodies leaders. Audited bodies leaders is an important part to solve almost of potential audit problems which arise between auditors and audited bodies. At the same time they are the one who can direct the implementation audit recommendations. Collecting their suggestion about what is auditing, let them know what change in the audit implementation. Since then, they can understand about the audit process and cooperate with audit team in producing audit evidences and creating good conditions for auditor in auditing. Recommendations to the State audit of Vietnam Improve the network management structure and standard norms in audited bodies. The most important foundation as well as the object of performance audit is management and internal auditing structure and standard norms system in economy, technique and finance. At present, self-control structure and organization of all audited bodies has completely shaped. In which, however, there are limit on lacking the standards, norms of inputs and output and incomprehensive. To deploy the role of performance audit, it should be carried out following these steps: - The government should direct all braches and localities to build comprehensively the mainly economic, technical, and financial standards in using input and output elements for public service operations to become the foundation of management and auditing. - All the branches and localities should direct their own subunits to build comprehensively internal control regulations. This is not only a foundation of self-control operation and management quality improvement but also a test condition to test and control all level management and auditing. Build the road to deploy performance audit of the State Audit of Vietnam. The functions of performance audit of state auditing are verified in decree No.93/2003/NĐ- CP. To deploy the executing of performance audit, it is necessary for the state auditing needs to have an executing process, which will meet the requirements of general financial innovation executing and the real conditions of state auditing, specifically: - In the period of 2009 to 2012, the State Audit of Vietnam should study and promulgate the instruction document on performance audit process and standards, as well as to deploy cultivating professional skills for auditors, that will supplying for the plan of periodic executing the performance audit on several main fields by the year of 2010. - In 2015 performance audit will be deployed into all units belonging to object auditing of state auditing. - Due to the importance of performance audit, therefore, the performance audit will be executed in the way of not only executing but also continuous researching and improving. Recommendations to agencies of government Regulating the procedures, policies particularly for performance audit The agencies such as the Ministry of Finance, National budget and finance commission of National Assembly, Professional Association need to have formal legal and details documents to guide about performance, procedures, process, interests, responsibility, etc to audited bodies, State Audit of Vietnam and other agencies to know more about performance audit and the difficulty in the audit process to regulations have reality and need to hasten that issuing process. With regulations for performance audit auditors: Government allow the State Audit of Vietnam setup Audit Academy to train the audit knowledge and experience for auditors about performance audit. The auditors have to have certificate at here who want to implement performance audit in audited bodies. Conclusion Basing on a number of research methodologies, especially methodologies of performance audit which have been established and applied in reality, the thesis “Performance audit with enhancing effectiveness of Collecting and spending toll fee” has achieved following objectives: Proving a systematic overview of theoretical literature about process and methodology of performance audit in Collecting and spending toll fee audit. Firstly, the thesis has mentioned about theoretical framework of performance audit, procedures of it and a brief description of performance audit process. Secondly, described and analyzed the real situation of collecting and spending toll fee audit of the State Audit of Vietnam, then the thesis recommended solutions for enhancing effectiveness of performance audit through Collecting and spending toll fee audit analyzing. Finally, the thesis has a conclusion that: although there are some specific differences in legal form, a standard and popular process of performance audit often includes four steps: preparation, implement, making auditing report and reviewing implementation of performance audit recommendations. In addition, basing on State Audit of Vietnam’s experiences in financial statement auditing, as well as recent “Collecting and spending toll fee” audit affair, the thesis has provided solutions to enhance effectiveness of performance audit. With the objective of enhancing effectiveness of performance audit, the thesis has proposed a number of recommendations, such as: The details of improvement of the Law and professional regulations of state-audit include: Improving decisions, regulations of the state-audit Law, improving standards of audit and improving the system of auditing processes. The most important foundation as well as the object of performance audit is management and internal auditing structure and standard norms system in economy, technique and finance. At present, self-control structure and organization of all audited bodies has completely shaped. In which, however, there are limit on lacking the standards, norms of inputs and output and incomprehensive. Developing the appraisement and monitoring of auditing quality. Enhancing auditors’ awareness of knowledge and increasing the quality of recruiting and training auditors. Recommendations are as following: Recommendations to audited bodies: Mainly collecting their suggestion about what is auditing, let them know what change in the audit implementation to get in touch with audited bodies leaders then solve almost of potential audit problems which arise between auditors and audited bodies. Recommendations to State Audit of Vietnam: Improve the network management structure and standard norms in audited bodies to deploy the role of performance audit. Build the road to deploy performance audit of the State Audit of Vietnam. It is necessary for the State Audit to have an executing process, which will meet the requirements of general financial innovation executing and the real conditions of state auditing. Recommendations to government: Form the legal and details documents to guide about performance, procedures, process, interests, responsibility, etc to audited bodies, State Audit of Vietnam and other agencies. Relying on the above results, the thesis has achieved the purposes of researching in terms of theoretical and practical aspects. The thesis has not only contributed the literature background to study, build up and improve the process of performance audit but also provided a basis of applying performance audit in Collecting and spending toll fee audit. In addition, the thesis has supplemented a resource of reference for studying and training performance audit which is considered as a new field in state-audit. References In Vietnamese Bộ Tài chính (2003) Hệ thống Chuẩn mực Kiểm toán Việt Nam. Quyển II, III, IV. Nhà xuất bản Tài chính Bộ Tài chính (1998) Hệ thống Chuẩn mực Quốc tế về kế toán, kiểm toán. Đại học Kinh tế TP HCM (2004) Kiểm toán Nhà xuất bản Thống kê Kiểm toán Nhà nước Báo cáo kiểm toán Cục Đường bộ 2006 Kiểm toán Nhà nước Báo cáo kiểm toán Việc thu và sử dụng phí giao thông đường bộ 2006 Kiểm toán Nhà nước Báo cáo kiểm toán 2006 Kiểm toán Nhà nước (2006) Kỷ yếu hội thảo Kiểm toán chuyên đề và Kiểm toán hoạt động In English INTOSAI Audit standards INTOSAI Audit Process Business School- NEU (2004) Research Methodology EC Project (2007) Performance audit guide G.S. Gill and G.W. Cosserat (1996) Modern Auditing in Australia. John Wiley & Sons. John Dunn (1996) Auditing, Theory and Practice. Prentice Hall, Glasgow Micheal P. Cangemi and Tommie Singleton (2002) Managing the Audit Function Acknowledgements I would like to express my sincere thanks and appreciation to my supervisor Dr. Nguyen Thi Phuong Hoa, Head of the Auditing Department, Accounting Faculty, NEU, for her invaluable guidance, suggestions and encouragement throughout the Master course. I also take this opportunity to thank Dr. Tran Thi Van Hoa, Rector of NEU Business school and the other teachers at Business School- NEU, for providing me valuable assistance throughout the course of E-MBA program. I extend my special thanks to Mr. Le Hoang Quan, Vice General Auditor- State Audit of Vietnam and other auditors answered the interview and questionnaire for me, for their guidance; Associate Professor Dr. Ngo Tri Tue, Director of Central of Cadre Training and Cultivation- State Audit of Vietnam, Dr. Thomas Kertess, Mr. Karlheinz Reill, Mr. Tien, GTZ expert advice for guidance and support this study. I am also thankful to Mr Hoan, Mr Ngoc and other leaders and staffs of Vietnam Road way Ministry department and Road way Area Managers for supporting me with valuable materials. Finally, my deepest thanks go to my parents, my family for their invaluable, inspirational and spiritual supports. TABLE OF CONTENTS List of abbreviations SAV State Audit of Vietnam INTOSAI International Organization of Supreme Audit Institutions ASOSAI Asian Organization of Supreme Audit Institutions CISA Certificated Information System Auditor CMA Certificated Management Accountant CPA Certificated Public Accountant F/S Financial Statements List of tables Table 1.1: Audit Methodology Analysis Table Table 2.1: Typical Risks Table 2.2: Worked audit summary form Table 2.3: Audit questions on performance targets List of figures Figure 1.1: Meaning of economy, effectiveness and efficiency in performance audit Table 1.2: Audited body’s activities Figure 1.3: Typical risk factors to consider in government ministries Figure 1.4: Main categories of risk that affect government ministries: Figure 1.5: Examples of Audit Methodologies for Fieldwork Figure 1.6: The system-model type a Figure 1.7: The system-model type b Figure 1.8: The system-model type c Figure 1.9: The complete system model Executive summary Auditing activities become increasingly important in the market- based economy. Performance audit is a type of auditing, which occurs later than financial audit. Performance audit emerges because of increasing demand of efficient usages of source. Performance audit is implemented primarily by State Audit and Internal audit. Unlike tradition audit (financial audit), performance audit is a new audit type. Its objectives and contents are multiform. Performance audit is a complicated audit field and being developed. Firstly, this thesis mentions about theoretical framework of performance audit, procedures of it and a brief description of performance audit process. Secondly, the thesis analyzes Collecting and spending toll fee audit process by the State Audit of Vietnam. Based on that, recommendations for enhancing effectiveness of performance audit through Collecting and spending toll fee audit are provided. Finally, the thesis draws a conclusion that: although there are some specific differences in legal form, a standard and popular process of performance audit often includes four steps: preparation, implementation, preparation of audit report and reviewing implementation of performance audit recommendations. In addition, from the State Audit of Vietnam’s experiences in recent “Collecting and spending toll fee” audit affair, the thesis has provided recommendations for enhancing effectiveness of performance audit. In the course of this research, performance audit activities have been investigated thoroughly and then some recommendations have been given in hoping that performance audit activities will be better in the near futures. Enhancing effectiveness of performance audit is a long and continuous process to both of the State Audit of Vietnam and auditors.