i) Performance audit involves systematic review of part or all of an organization’s activities in relation to the efficient and effective use of resources. The purpose of performance audit is to assess performance, identify areas for improvement, and develop recommendations.

(2 marks)

ii) In this respect the three factors that the Auditor General will be concerned with in carrying out performance audit on the construction of the regional hospital will be:

1. Economy: The audit will be designed to check whether the resources used in the construction were obtained at the least cost for best quality or the quantity of items used was least expected under the circumstances.
2. Efficiency: The measure of the relationship between input and output. Where output is greater than the value of the input, efficiency is achieved. However, defining output for social and other services is a very difficult task.
3. Effectiveness: This deals with the ability to achieve the set targets. In the case of the Regional hospital, measuring effectiveness will involve whether the intended capacity and facilities have been attained as well as the completion and commissioning of the hospital for public use within the set time frame.
4. Check whether the contract for the construction was awarded in line with the Public Procurement Act.

(4 points well explained @ 2 marks each = 8 marks)

(Total: 10 marks)