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      Value For Money (VFM) audits can be defined as an objective, professional and systematic examination of systems and procedures that management has established to ensure:

      • financial, human and physical resources are managed with due regard to economy, efficiency and effectiveness; and
      • accountability relationships are served.

      With increased scrutiny from the public and shareholders, there has been an increasing call for the public and private sector to demonstrate their accountability and regard for economy, efficiency and effectiveness in the use of public/shareholders' funds and resources.

      In the public sector, the key question being asked frequently is whether an agency's vision, mission and their desired outcomes of activities/programs are achieved in a cost effective manner.

      How we can help

      KPMG has an established methodology that helps public sector organizations develop a Value For Money Framework, and to operationalize and embed VFM in their work processes. KPMG has vast experience in performing VFM audits.

      We offer a fresh perspective on traditional issues as well as a dynamic and innovative take on some of the new challenges that today's globalized economy presents. We have also embedded increased performance components into our internal audit reviews, amid increased interests on this area.

      We can work with you to customize an assessment framework that best suits your organization, whether in the public or private sector. As part of our review we will look into your processes to ensure that these carry the right balance to ensure the three Es (Economy, Efficiency and Effectiveness) are achieved.

      The three Es aim to achieve different objectives in the organization:

      • Economy - Acquisition of resources in appropriate quality and quantity, at minimum cost.
      • Efficiency - Maximum output for any given set of inputs or the minimum inputs for any given quantity and quality of goods and services provided.
      • Effectiveness - Extent to which any activity achieves the intended results, which can be either quantitative or qualitative.

      A diagrammatic representation of our approach:

      VFM is about achieving the right balance between the 3'E's in order to reduce wastages, extravagance and inefficiencies.

        The KPMG difference

        Success stories
         
        Client needsHow KPMG helpedOutcomes
        Local Statutory Boards

        Performance Audits focusing on VFM for a number of government agencies. The audit was performed on behalf of AGO.

        Designed to determine whether government agencies are meeting economic, efficiency and effectiveness criteria (the "three Es") in carrying out their core missions and initiatives using public resources.

        Carried out a performance audit of the Boards and presented our findings to AGO in three phases: planning and scoping, evidence gathering and reporting.

        The main objective of the audits was to identify deficiencies in the agencies' use of public resources by evaluating the three Es of the agencies, including the examination of governance issues, such as risk management and other control structures, resource use, performance measures, performance reporting and performance monitoring system.

        A systematic three phased project approach was developed to identify appropriate key VFM findings covering the programs and processes of the audited agencies. Our structured, project reporting at each phase, allowed AGO to track the progress and ensure the overall objectives are met.

        The high degree of involvement by project partners and directors at critical stages to drive discussion of business risk and operational controls with management were well received by AGO and the boards.

        Local Ministry & its Statutory Boards
        To assist the Ministry to administer a comprehensive knowledge module that encapsulates the theory of VFM and the conceptual framework for operationalizing VFM as well as its applications in the internal processes of its supervised statutory boards.

        Designed a three phased approach to assist the Ministry and its statutory boards to embed a VFM framework in its statutory boards:

        - Phase 1: Build and Develop Content

        - Phase 2: Deliver Content

        - Phase 3: Embed Content

         

        In Phase 1, we studied 3 operational processes of the statutory boards and using the KPMG VFM Public Sector Model, a gap analysis was performed to identify the current VFM gaps in its processes and the associated VFM guiding principles required to conceptualize a framework for operationalization.

        Phase 2 comprised training workshops to educate key officers of the board on the proposed VFM framework and to operationalize the framework in their respective agencies across various processes.

        Phase 3 assisted the statutory boards to embed the training contents in the SBs training portal for a wider outreach to the agency staff.

        Recommendations provided enabled the Ministry and statutory boards to agree on a working definition of VFM in which a performance measurement system can be put in place between the Ministry and the Statutory Boards.

        Used selected processes in statutory boards as case studies, the project lever on the 'as-is' picture of the processes and took the participants through the proposed 'future state'. The transformation process required the implementation of both a guiding principles framework as VFM is in many instance a subjective matter as well as an effective communication program in the statutory boards to obtain consensus on how VFM is to be measured.

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          Jonathan Ho
          Jonathan Ho

          Partner, Head of Risk, Advisory and Head of Infrastructure, Government & Healthcare

          KPMG in Singapore

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