subject: VALUE FOR MONEY (VFM) AUDIT IS A TRUE SENSE OF RESOURCE & THIS IS THE PART OF CONSULTANCY SERVICES [print this page] What is Value for Money? What is Value for Money?
Put simply, value for money (VfM) is about obtaining the maximum benefit with the resources available. Decisions about VfM are a daily reality in all our lives. We are constantly choosing which items or services to buy, and judging the right balance for us between quality and cost. Public services are no different. VfM is about achieving the right local balance between economy, efficiency and effectiveness, spending less, spending well and spending wisely.
This means that VfM not only measures the cost of goods and services but also takes account of the mix of cost with quality, resource use, fitness for purpose and timeliness to judge whether or not, together, they constitute good value.
Component of the scope of internal audit involves evaluating it acquires and/ or provides for securing value for money (VFM), within the resources available to it. It not only measures the cost of goods and services, but also takes account of the mix of quality, cost, resource use, fitness for purpose, timeliness and convenience to judge whether or not, when taken together, they constitute good value.
The end product of the audit will be an assessment of the management of the audited body.Such audits should be tailored to the circumstances of the audited body.Auditors should plan their work to be able to identify problems and determine the scope for improvement; they should involve management in a continual search for efficiencies that may result in a level of savings. It is not internal audit's responsibility to identify these savings, and this performance measures should not include the amount of money saved through implementing audit recommendations.
In observe to Value for Money Audit, it is notcriteria of the audit to identify the policy virtually, but the auditor shouldfind outthe effects of policy and how policy decisions are arrived. Suffice it to saythat the auditors may consider whether there are satisfactory arrangements for considering alternative policies. Value for money as an integral part of its corporate and academic strategy. While it has a specific responsibility to achieve VfM from its use of public funds, this principle extends to all sources of funding. Similarly, the responsibility for pursuing VfM lies with all staff, and not just those with financial duties. This point must be understood and may be restated in that we would expect our audit recommendations to place management in a position to identify areas where they may make savings Our duty is to get management to implement improvements in systems of control where required. It is possible to resource as part of our consultancy services VFM reviews that are designed to lead to savings for management. There are two views of VFM: VFM in its true sense is about the way management organizes and controls its resources to maximum effect.
In general, the following equation expresses cost effectiveness:
Cost effectiveness = effectiveness x efficiency x economy
Economy is what goes into providing a service, such as the cost per hour of care workers or the rent per square meter of accommodation. Also Resources required to perform the operation are acquired the most cost effectively
Efficiency is a measure of productivity; resources are employed to maximize the resulting level of output how much you get out in relation to what is put in. For example, the number of people visited per home care worker per week or the amount of refuse collected per refuse-lorry.
Effectiveness is a measure of the impact that has been achieved, which can be either quantitative or qualitative. Examples include how many people were prevented from needing residential care through using home care services (quantitative), and feedback from different sections of the community with arrangements for tenant participation (qualitative). Outcomes should be equitable across communities, so effectiveness measures should include aspects of equity, as well as quality. Sustainability is also an increasingly important aspect of effectiveness
The some criteria of value for money audit:
The slight view sees VFM as ad hoc initiatives that result in defined savings and/or a greater level of service/output. Auditors should pay particular attention to the critics of good practice in performance audits and may refer to studies produced from time to time through proportional performance.
The scope of a performance audit be capable of extensive but capacity include, for example
Interviewing the principal stakeholders, such as political parties,
Reviewed relevant, temporary staff or contractors engaged for the activities.;
Examining the strategic plan, management structure, relevant policies, operational plans, and task assignments, and the implementation of these planned activities;
Value for money Implementation:
In order to confirm that satisfactory arrangements are in place to promote economy, efficiency and effectiveness's across the organization and controls, theVfM direction-finding Group will consider the evidence provided by a wide range ofexisting activities whichform part of the Organizes and controls management practices and which can provide a broad appreciation of The Organizational effectiveness.
Value for Money Annual Review of Effectiveness:
The board advised by the Audit Committee, must be satisfied that the organizations has fulfilled its obligation to achieve VfM from its use of public funds so that the appropriate statement can be made in the organizational Financial Statements each year. In order to meet this deadline,
Dissemination of Good Practice:
Faculties, Departments and Divisions may not always be aware of opportunities to achieve greater VfM or of the full extent of the potential benefits. Thedirection-finding Groupwill take the lead in promoting the sharing of good practice throughout the organization, where this has implications for VfM. To this end, the Central Secretariat will maintain a Value for Money site on the organization web site, which will include a copy of this Policy, copies of VfM strategy, copies of the annual reports and any other published VfM reports or guidance.
Conclusion: For efficiency reviews a systems-based approach to an efficiency review would consider the standards, plans, direction and type of information that management applies to controlling their operations. The key objectives of a financial management are to generate wealth for the business and its shareholders, to provide a return of investment and to generate cash flow. There are two main aspects of financial management, The investigative approach, on the other hand, concentrates on specific methods by which efficiency may be improved. This may be by applying best practice in terms of alternative operational practices,
VALUE FOR MONEY (VFM) AUDIT IS A TRUE SENSE OF RESOURCE & THIS IS THE PART OF CONSULTANCY SERVICES
