CHAPTER
14
Program Audit
and Evaluation
I. LEARNING OBJECTIVES
After reading Chapter 14 in the textbook, the student should be able to:
1. Define the term audit and assess the different types of
pp. 558–559;
2. Understand the history of auditing and the mission, role,
pp. 560–562
3. Analyze the distinction between program evaluation and
policy analysis, and explain different types of program
evaluation and standards against which programs can be
measured.
pp. 567–575
II. SUGGESTED LECTURE
A. The Audit
An audit is any independent examination or objective assessment of an organiza-
tion. In all cases an audit involves comparison with an accepted standard, or bench-
mark. In public administration, the audit refers to two very common activities,
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B. Auditing in Accounting
Auditing has become a major branch of the accounting profession. Accounting
functions similarly in public administration and in the private sector. It remains the
C. Auditing in the Federal Sector
Auditing in the federal sector is the responsibility of the General Accounting Office
(GAO). Established in 1921, the office serves as a support agency to audit federal
government expenditures and assist the Congress in its legislative oversight respon-
sibilities. A comprehensive audit program under the GAO should include the fol-
lowing three types of audit:
1. Financial and compliance: determines whether funds are properly spent and
D. Independence of Auditors
Criteria have been developed to ensure that the auditors stand independent of the
organizations they are auditing. These criteria for auditors include a location in the
bureaucracy outside of management, a high reporting line for the audit results, and
a reasonable latitude for the auditors in selecting the assignments for the audits.
E. Program Evaluation and Policy Analysis
The two are often confused. A policy analysis is a set of techniques that seeks
to answer the question of what the probable effects of a policy will be once
F. New Models for Program Evaluation
New models for program evaluation have emerged—especially at the Federal
Level—following the passage of the Government Performance Results Act In 1993
and its update in 2010. The main idea of evidence-based evaluation is to move
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III. Assessments
III. ASSESSMENTS
Multiple-Choice Questions
1. Which of the following was created by the Budget and Accounting Act of
1921?
a. The Bureau of the Budget, later the Office of Management and Budget
2. An official examination of a financial report submitted by an individual
or organization to determine whether it accurately represents expenditures,
deductions, or other allowances determined by laws and regulations is
called a(n):
a. line-item budget.
b. audit.
c. cost-benefit analysis.
d. integrated budget.
p. 563, b
3. The GAO is an acronym for:
a. The General Accounting Office
4. The federal government now has over 70 Inspector Generals or IGs. What
does the term Inspector General usually mean?
a. A military officer with general status rank.
b. The investigative head of the agency to ensure audit and compliance.
c. The person who inspects the agency to ensure it meets standards.
d. Both b. and c.
p. 566, d
5. The GAO briefs Congress about:
a. financial management in government.
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6. The process of systematic examination of any activity or group of activities
undertaken by government to make a determination of their efforts both
long and short is known as:
a. forecasting.
b. accounting.
c. program evaluation.
d. none of the above.
p. 567, c
7. According to the late public policy scholar, Aaron Wildavsky, the problem
with program evaluation is that:
8. Efficiency evaluations need to ask the following questions except:
a. Is the responsibility for specific tasks clearly delegated?
b. Are employees adequately qualified to perform their tasks?
c. Is the waste of resources being avoided?
d. What entrepreneurial activities have been added?
p. 570, d
9. The review of an agency’s hiring practices to ensure that there is no discrim-
ination by government contractors on the basis of race, creed, color, religion,
10. When an agency is being audited for compliance, this means that the auditor
will look for:
a. whether the agency has been compliant with the law.
b. the agency’s failure to meet standards.
c. conscientious objections to policy.
d. both a. and b.
p. 563–564, d
11. When government undertakes an audit within a unit—such as the DMV
(Department of Motor Vehicles) which takes into account financial, effi-
ciency, and managerial practices—this kind of audit is referred to as:
12. The audit function in government is especially powerful in terms of impact-
ing public management because auditing:
a. is a major branch of the accounting profession.
b. has complex professional standards.
c. has professional procedures on administration, practice and reporting.
d. all of the above.
p. 571, d
Chapter 14 Student Self Assessment Questions
Q1 Audits are always a part of the budgeting process of a governmental unit.
At which phase of the budget does it occur?
Q2 When did the modern audits develop to tackle the complex financial
management of public sector activities?
Q3 What is the oldest and most traditional form of auditing activity?
Q7 The passage of the Budget and Accounting Act of 1921 was motivated by
what?
Q8 What are the two steps in the performance audit chain?
Q9 A set of techniques that seeks to answer the question of what the probable
effects of a policy will be before they actually occur is called what?
Q10 Which of the following are the three standards against which a program
can be evaluated?
Q11 In terms of comparison, financial statements are audited to determine
when they are in accord with what?
Q12 What is the mission of the Government Accountability Office?
Q13 What type of audit is conceptually a part of a control system that focuses
organization with the objectives that have been assigned to it is known
as what?
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Q19 According to Wildavsky, what is the problem with evaluation?
Q20 Although the “thirst” for evaluation may be induced from various
motives, what is the noblest motivation?
Q21 What is the basic task of auditors in virtually all modern organizations?
Q22 The Bush Administration integrated program evaluation into budgeting
through the use of the PART. What did PART stand for?
IV. ACTIVITIES
Critical Thinking: “Should The Fed be Audited?”
To many politicians and citizens alike, the Federal Reserve is the prime miscreant
behind the growing economic crisis. Opponents claim that its large and unchecked
power and lack of transparency to create money “out of thin air,” distort interest
rates and erode the value of the dollar has brought the United States to its now
frequent financial boom and bust cycles. Other factors pointed to are that aside
from the Chair, Fed board members serve the longest terms of any federal bureau-
Class Exercise: Thought Piece—“Rabbits and the Taxpayer”
You are the manager of a pre-school center partially funded with tax dollars. In
an effort to assist former welfare recipients in getting back into the workplace,
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IV. Activities
Writing Exercises
Using one of the following key words or phrases of your choice, write a short
analysis linking the word or phrase from the scholarly text to an incident in your
workplace, your daily life, a media report that you have heard, or an historical
event.
Web–Based Discussion and Writing Assignment:
“Dinner in the Diner, Nothing Could be Finer”
Amtrak, a national passenger railway network, operates passenger trains with
federal and state subsidies. Amtrak has been a money-losing proposition since its
inception in 1971 and different presidential administrations have struggled with
Congress to address the subsidies paid to Amtrak. On June 13, 2006, the House of
Representatives voted an additional $214 million to H.R. Bill 5576, the funding
196 Program Audit and Evaluation
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Sources: Trains , April 2006, Vol. 66 No.4, and NARP NEWS , June 2006, Vol. 40
No.6.
In this exercise, go to the NARP Website (www.narprail.org) for updated infor–
mation on this issue. Follow related links on the site for additional discussion.
Using Blackboard or another online forum, discuss the pros and cons of how food
service is being impacted by program evaluation. Discuss the evaluation methods
being used by different sides in the Amtrak food issue and resolve what you feel is
the fair way to evaluate this issue. Is not serving food on a train an option?
Individual Exercise
MAKING GOVERNMENT LOGICAL
Cass R. Sunstein, New York Times , Sept. 19, 2015
THERE wasn’t a lot of fanfare, but last week may turn out to be among the most
consequential of President Obama’s second term. Byexecutive order, Mr. Obama
directed federal agencies to incorporate behavioral science—insights into how
people actually make decisions—into their programs.
When government programs fail, it is often because public officials are clue-
It’s one thing to make financial aid available to students, so they can attend
college. It’s another thing to design forms that students can actually fill out.
Building on impressive new findings from the White House’s Social and
Behavioral Sciences Team, Mr. Obama ordered his government to use behavioral
insights to simplify forms, cut wait times, eliminate administrative hurdles and
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IV. Activities
An outreach letter to farmers, designed to promote awareness of a loan pro-
gram, produced a 22 percent increase in the proportion of farmers who ultimately
obtained loans.
A new signature box on an online form, requiring vendors to confirm the
accuracy of self-reported sales, produced an additional $1.59 million in fees
collected by the government in just one quarter, apparently because the box
increased honest reporting.
Notwithstanding the success stories, official use of behavioral science raises
two legitimate concerns.
For example, behavioral scientists have found that the default rule, establish-
ing what happens if people do nothing, has surprisingly big effects.
If employersautomatically enrollnew employees in savings programs, they
can produce significant increases in participation—inone study, an increase
of more than 30 percentage points. And more controversially, if utility compa-
niesautomatically enrolledpeople in green energy, there would inevitably be
reductions in greenhouse gas emissions, even with the right to opt out.
The best safeguard against manipulation is accountability. Official uses of
behavioral science should never be hidden, and they should always be undertaken
within the limits of law and for legitimate ends, such as promoting retirement
security, lowering barriers to college, increasing employment and saving taxpayers
money.
If the law requires people to obtain licenses or permits, to pay taxes, or to
apply for benefits or training, the government must select some method of com-
munication. Public officials need to experiment if they want to know the effects
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When government programs aren’t working, those on the left tend to support
V. WEB BASED RESOURCES
Association of Local Government Auditors (ALGA)
www.governmentauditors.org
The ALGA provides resources to individuals who perform financial audits of counties, cities,
California State Auditor (CSA)
www.bsa.ca.gov
California’s State Auditor is responsible for assuring that state expenditures are done legally.
Defense Contract Auditing Agency (DCAA)
www.dcaa.mil
The DCAA plays a pivotal role in ensuring that defense spending is being done in an efficient
US Government Accountability Office (GAO)
www.gao.gov
The GAO examines the effectiveness and efficiency of federal programs and spending.
California Legislative Analyst Office
www.lao.ca.gov
The majority of states have some form of evaluation arm—California’s is only one good
IGs Inspector Generals
Another important source for evaluation information in the federal government are Inspec-
tor Generals. For a good overview of what IGs are and what they do, see a study by CRS:
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V. Web Based Resources
Evaluation Review (ERX)
erx.sagepub.com
An interdisciplinary forum for social science researchers, planners, and policy makers who