What is Value for Money Audit?
A value for money audit or value audit is designed to check proper arrangements have been made to secure economy, efficiency and effectiveness in the use of resources for desired quality.
Value for money audit consists of three areas:
Economy is to keep the costs within lowest possible limits and not compromising on desired quality.
Efficiency means using minimum quantity of resources for actual output or quality.
Effectiveness exists when desired aims and objectives are achieved by output in system.
Click here to see difference between efficiency and effectiveness.
How it Works (Example)?
Zooland is a zoo located in the hub of the city. The main expenses of the zoo are feeding for animals and cleanliness of pathways, grounds, and cages. Major issue considering cleanliness is that spectators pile their rubbish (in the form of plastic packing and bottles) beside the bins which lead to litter being spread by the wind. Considering “value for money” audit of expenditures and process of zoo, desired objective of cleaned zoo with minimum possible cost is being compromised. Slight change in activity like regular cleaning of bins might decrease the spread of garbage and add value in process with cost minimization.
Why it Matters?
The responsibilities of managers are to attain economy, efficiency and effectiveness in their designated areas and a VFM audit provides a check to confirm that management is fulfilling this responsibility properly.