Performance Audit in Construction Organisations: Relevant Criteria and Analytical Procedures

Abstract

Performance audit is becoming increasingly ubiquitous in commercial and business spheres internationally. Due to itsimportant role in promoting efficient organisational and administrative practices, performance audit is becoming asubject more rigorously analised in the academic sphere.This study seeks to develop and test analytical tools of performance audit in Russian construction organisations. Weplace emphasis on the industry-specific dimensions of information disclosure. We intend to offer a solution to severalcrucial challenges in the field, which will allow for the development of a comprehensive method to implement analyticalprocedures. This is done with a view towards obtaining and collating sufficient and adequate audit evidence to helpachieve business goals.In order to devise a consistent methodology, first, a link is highlighted between construction industry constraintsand performance audit criteria. Second, an algorithm is developed to carry out comparative integrated estimation ofperformance audit criteria in order to shortlist relevant indicators. Third, the algorithm is tested using financial reportingof selected construction companies, which makes it possible to build a consistent system of performance audit criteriaand identify a reliable set of controlled parameters.A profile of practical analytical procedures, performance audit criteria and measurement indicators is formed throughfinancial and performance audit and imbedded statistical methods. Implementing this approach will be seen to closesome information gaps commonly found in the reporting data of construction industry, as it links the subject area ofperformance audit and the objective criteria of effectiveness, efficiency and economy.The findings are presented with reference to existing statistical surveys on construction industry constraints. Whilerecent studies provide a broader picture across construction industry, they do not address its regional aspects. Assuch, within this study we have carried out estimates of performance indicators for construction companies operatingin the Novosibirsk region. The estimates are based on the information available through Professional Market andCompany Analysis System. As a result, a system of performance audit criteria is identified in relation to the dimensionsof effectiveness, efficiency and economy and a framework of controlled parameters is shaped. The level of disclosureconcerning these parameters presented in a company’s reporting is supposed to determine the decisions of stakeholdersand potential investors.In consideration of further research, this study highlights that it is necessary to identify and validate performance criteriain view of the fact that only few construction companies are profitable. The mix of qualitative and quantitative analyticalprocedures demonstrated herein is an effective approach to address the challenges of information integrity assessment.We consider that the most promising aspect of this study is the analysis of how the quality and amount of informationdisclosed in the reporting of construction companies affects their public image and business activities. This can be seento have widespread industry and academic applications. Additionally, our approach represents a suitable framework forpossible adaptation towards not only other industries, but also further development of the methodological approachitself