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The introductory chapter of Government Auditing Standards (GAGAS)1

outlines five concepts describing how public officials are to provide

functions and services: effectively, efficiently, economically, ethically, and 

equitably. When planning, gathering and assessing evidence, and 

reporting audit results, auditors may focus on one or more of these 

concepts. The following discussion is intended to assist auditors when 

developing audit objectives for performance audits of government 

programs and activities.2

This discussion is designed to help auditors understand

and apply the concepts cited above for performance audits 

conducted in accordance with GAGAS. This discussion

does not contain requirements, does not amend GAGAS,

and is not considered interpretive guidance, as defined in 

chapter 2 of GAGAS. 

Paragraph 1.02:

The concept of accountability for use of public resources 

and government authority is key to our nation’s governing 

processes. Management and officials entrusted with public 

resources are responsible for carrying out public functions 

and providing service to the public effectively, efficiently, 

economically, ethically, and equitably within the context 

of the statutory boundaries of the specific government 

program. [Emphasis added.]

Paragraph 1.03:

As reflected in applicable laws, regulations, agreements, 

and standards, management and officials of government 

programs are responsible for providing reliable, useful, and 

timely information for transparency and accountability of 

these programs and their operations. Legislators, oversight 

 1GAO, Government Auditing Standards: 2018 Revision, GAO-21-368G (Washington, 

D.C.: April 2021)

2The concepts cited may also be applicable to other GAGAS engagements, based on the 

auditors’ judgments. This discussion is limited to considering these concepts in 

performance audits.

GAGAS Performance Audits: Discussion of 

Concepts to Consider When Auditing Public 

Functions and Services

GAGAS Paragraphs
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bodies, those charged with governance, and the public 

need to know whether (1) management and officials 

manage government resources and use their authority 

properly and in compliance with laws and regulations; (2) 

government programs are achieving their objectives and 

desired outcomes; and (3) government services are 

provided effectively, efficiently, economically, ethically, 

and equitably. [Emphasis added.]

Government administration best serves the collective interest of the public 

when it is effective, efficient, economical, ethical, and equitable. Auditors 

help inform legislators, oversight bodies, those charged with governance, 

and the public about whether public services are being provided 

consistent with these concepts. Government auditing can contribute to 

accountability and can help improve government administration by 

identifying deficiencies and recommending enhancements to achieve 

effective, efficient, economical, ethical, and equitable outcomes, when 

appropriate within the context of the audit objectives. As such, it is 

important for auditors to understand the concepts below as they relate to 

administering government programs or activities and how they can 

assess or address these expectations of government performance in 

conducting their performance audits.

The examples that follow the discussion of each concept illustrate the

distinctions between these concepts. In a performance audit, it is 

common practice to incorporate more than one of these concepts when 

conducting the audit.

The administration of a government program or activity is effective when 

it achieves the intended results. A performance audit that focuses on the 

effectiveness of a program or activity seeks to establish a cause-andeffect relationship between the operation of the program or activity and 

achieving its stated objectives. Achieving the objectives does not 

guarantee that the program or activity was effective unless the auditors 

can establish that the program or activity caused, or contributed to, the 

desired outcome.

Example: In a performance audit examining how effective a 

housing voucher program was in achieving its goal of improving 

economic outcomes for recipients, auditors may determine 

whether receiving housing vouchers led to better subsequent 

economic outcomes for recipients than those of similarly situated 

individuals who did not receive vouchers.

Discussion

Effective
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Example: In a performance audit assessing the effectiveness of 

an after-school program targeted at helping students improve their 

reading proficiency, auditors may examine the extent to which 

participants’ reading levels improved relative to baseline data from 

before they joined the program.

The administration of a government program or activity is efficient when 

it gets the most value from available resources. When a performance 

audit focuses on efficiency, auditors examine whether the resources used 

to administer a program or activity have been put to optimal or 

satisfactory use, or whether the same or similar results could have been 

achieved more timely or with fewer resources. 

Example: In a performance audit assessing a disaster relief 

agency’s mobilization of resources to respond to a disaster, 

auditors may assess the disaster relief agency’s timeliness in 

providing relief compared to its own previous performance or the 

performance of other similarly situated agencies that have 

responded to comparable disasters. 

Example: In a performance audit assessing a consumer protection 

agency’s response to consumer complaints, auditors may assess 

whether the agency’s efforts to streamline its processes resulted 

in improved timely resolution of complaints.

Example: In a performance audit assessing the time a state needs

to process unemployment benefits targeted at helping those in 

need, auditors may assess how long the process takes from 

receipt of the unemployment application to the applicant’s receipt 

of the benefit, including steps such as verifying required 

information.

The administration of a government program or activity is economical

when it minimizes the costs of resources used in performing its functions 

while meeting timeliness and quality considerations for those resources. 

When auditing economy, auditors primarily focus on the costs of inputs 

rather than on the outcomes achieved.

Example: In a performance audit examining an agency’s 

international travel expenses, in addition to assessing the design 

of internal controls and compliance with expense guidelines, 

auditors may test whether, for a sample of trips, bookings of 

Efficient

Economical
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equivalent airline tickets and hotel rooms could be found at a 

lower cost.

Example: In a performance audit assessing an agency’s 

acquisition practices, auditors may examine whether the agency’s 

decisions regarding purchasing, leasing, or reimbursing 

employees for the costs of acquiring various supplies or 

equipment achieved the lowest cost while meeting applicable 

requirements.

The administration of a government program or activity is ethical when it 

advances the collective interest of the public rather than private gain and 

is conducted with honesty, integrity, and impartiality. Laws and 

regulations often specify rules of ethical conduct. Therefore, audits 

examining the ethical administration of a program or activity may involve

assessing compliance with such laws and regulations. Fraud in 

administering a government program or activity betrays the public trust 

and is, by definition, unethical. In addition, auditors may identify instances 

of unethical conduct that result in waste and abuse during testing of 

internal controls as part of a performance audit.

Example: In a performance audit assessing agency officials’ 

compliance with conflict-of-interest requirements, auditors may 

compare a sample of financial disclosure reports filed against 

requirements in statute or regulation.

Example: In a performance audit assessing potential regulatory 

capture related to a particular industry, auditors may assess the 

extent to which the regulatory agency has sufficient controls to 

reasonably assure its employees’ independence from the entities 

subject to the agency’s regulation.

Example: In a performance audit assessing an office’s policies 

and procedures for purchase cards, auditors’ testing of the 

program’s controls to identify deficiencies may identify fraud,

waste, or abuse in its administration. 

The administration of a government program or activity is equitable when 

it consistently serves members of the public, distributes public services, 

and implements public policy in a manner that promotes fairness, justice, 

and equality. Auditing whether the administration of a government 

program or activity is equitable may include assessing the 

Ethical

Equitable
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• equality of access to and provision of services;

• procedural fairness and equal treatment of individuals in 

government programs and policies;

• causes of disparate outcomes;

• or distributional impacts of public policies, programs, resources, 

and services.

Disaggregating data by social groups or communities that share a 

particular characteristic (e.g., gender, race, ethnicity, age, or income) 

can help illuminate differences. Reporting on such differences, when 

appropriate within the context of the audit objectives, can increase 

understanding of the effects of policies and programs on issues of 

equity.

Example: In a performance audit assessing the granting of 

waivers from particular requirements, auditors may use 

disaggregated data about waiver recipients to assess whether 

different groups or communities were treated fairly and equally in 

the process.

Example: In a performance audit assessing a grant program 

aimed at expanding internet access, auditors may assess the 

extent to which formulas, criteria, or other factors (such as 

matching funds or capital requirements) considered in the 

distribution of grant funds may be to the specific advantage or

disadvantage of certain groups, regions, or communities, thereby 

causing inequities.

Example: In a performance audit assessing scholarship outcomes 

in higher education programs, auditors may report on the 

distribution of scholarships by race, gender identity, and income to 

illuminate potential disparities among scholarship recipients.

These concepts may overlap. For example, efficiency may also be a 

component of effectiveness. Similarly, when appropriate within the 

context of the program and audit objectives, auditors may disaggregate

the results of performance audits that focus on efficiency or effectiveness 
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issues to illuminate inequities in program administration or in distribution 

of public services. 

While all of these concepts are important to administering government 

programs responsibly, it is up to the professional judgment of the auditors 

to determine the specific concepts that are relevant in conducting the 

performance audit and reporting the results. Auditors’ professional 

judgments are informed by, among other things, the needs of the users of 

the audit reports; the nature, context, and objectives of the program or 

activity under audit; and the public interest.

To view the current Yellow Book, visit https://www.gao.gov/yellowbook.

For technical assistance, call (202) 512-9535 or email 

yellowbook@gao.gov. 

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