i) Principles of Performance Audit:

1. Economy:
   • Economy refers to minimizing the cost of resources used for an activity while maintaining an appropriate level of quality. It is concerned with the availability of resources in due time, in the appropriate quantity and quality, and at the best price. The principle of economy ensures that resources are acquired at the lowest possible cost without compromising on quality.
2. Efficiency:
   • Efficiency is about getting the most from the available resources. It assesses whether resources have been put to optimal use or whether similar results could be achieved with fewer resources. Efficiency focuses on the relationship between resources employed, conditions given, and results achieved, including the quality, quantity, and timing of outputs and outcomes.
3. Effectiveness:
   • Effectiveness is concerned with meeting the objectives set and achieving the intended results. It is a goal attainment concept that examines whether the outcomes observed are the result of the program or other circumstances. Effectiveness assesses whether the desired impact has been achieved and whether the program’s goals have been met.

(3 principles @ 2 marks each = 6 marks)

ii) Documentary Evidence Useful at the Planning Stage:

1. Background Information:
   • Collect and document background knowledge and information about the entity, such as its name, address, organizational structure, history, objectives, strategies, and the qualifications of senior management personnel. This information helps the auditor understand the nature of the entity’s operations and facilitates the audit process.
2. Audit Objectives and Sub-Audit Objectives:
   • Clearly define the audit objectives and sub-audit objectives. Documenting these objectives outlines what the auditor aims to achieve and the level of achievement expected, providing a framework for the audit process.
3. Audit Scope:
   • Determine and document the scope of the audit, including the areas to be audited and the likely timeframe for coverage. This ensures that the audit is focused on relevant areas and that sufficient time is allocated to achieve the audit objectives.
4. Audit Criteria:
   • Establish and document the audit criteria, which define the standards against which the audit evidence will be evaluated. Audit criteria provide the basis for assessing whether the entity’s operations are in line with the principles of economy, efficiency, and effectiveness.
5. Audit methodology; the approach to be used for the audit.
6. The estimated cost of the audit

(4 points @ 1 mark each = 4 marks)