While audit and evaluation are both means of assessing processes, products and metrics, there are differences between audits and evaluations in terms of why they are performed and the methodology of conducting the assessment.
Contents: Audit vs Evaluation
edit Differences in Definition
An Audit is the evaluation of a person, organization, project, product or primarily for the purpose of determining its validity and authenticity, or to verify adherence to a set of pre-defined processes.
On the other hand, an evaluation is the determination of merit using a set of standards. Though they are both a kind of assessment, audits are mainly done for financial institutions to make sure they are free from misstatements and errors, whereas evaluations can be done for different spheres such as healthcare, arts, government agencies to judge the efficiency of a working system. Earlier, audits were an important way to assess financial systems only. Now they are also done to assess security risks, environmental and other systems performance as well.
edit Types of audits and evaluations
Audits are mainly of two types, quality and integrated. Quality audits assess the efficiency of management systems, and perform the following functions under a certification: efficiency of system, ability to reach target levels, effectiveness of being able to eliminate or address problems/hurdles and aims towards the improvement of a system. Integrated audits are audits of publicly-traded companies and done under the PCAOB (Public Accounting Company Oversight Board). According to this, along with financial reporting, the company’s internal control is also assessed.
Another classification differentiates auditing into personal, internal, external, statuary, nonstatuary, social, final and performance audits.
- Personal - self auditing to assess personal performance and areas of growth
- Internal - auditing coducted at the company internally by a designated team. Company standards of government regulations are generally followed
- External - performed by a government or other agency according to stipulated regulations
- Statutory - audit governed by a Company’s Act
- Non statutory - not required by any law
- Social – audit to monitor and verify the social performance claims of organizations
- Final –audit of annual statements
- Performance – audit of a system in an organization to assess whether the available sources are being used effectively.
There are two main types of evaluation depending on the object and purpose of evaluation – formative and summative. Formative evaluations examine the quality and implementation, and delivery and assess the organizational context, procedures and so on. Summative evaluations are more geared towards examining the outcome of a particular object that includes judging the effect and impacts of the concerned object on the outcome, and also estimating the cost associated with it.
edit Differences in Strategies and Methodologies
Methods of auditing are well documented and include a few planned steps. It starts with the studying and evaluating the internal control of a system comprising both accounting and administrative areas. The next step is validation or testing the system procedures and records. The methodologies include footing (confirming totals of figures in vertical columns) and crossfooting (confirming totals of figures in horizontal rows), vouching (examining paper records to determine accuracy of entries in ledger etc), reconciliation (comparing and confirming data obtained from two different records), leading to accounting analysis, confirmation, scanning and review, and physical examination and count, which are all used to add up, total and verify the set records. The strategy and methodology varies depending on the project and area of auditing.
There are four main evaluation strategies. These are scientific-experimental models, management-oriented systems models, qualitative/anthropological models and participant-oriented models. Scientific-experimental models focus on impartiality, accuracy, objectivity and validity of the data generated. Management-oriented models are a more comprehensive method of evaluation. Qualitative/anthropological models focus on the significance of observation during the evaluation process. Participant-oriented models highlight the participants of users of the program. Evaluation methods depend greatly on the requirement and question being asked. Some of the methodologies used are Delphi methods, input-output analysis, concept mapping, sample surveys, qualitative research and other qualitative and quantitative methods.
Though audit and evaluation differ in the skills and methods used and practised, there are also some basic similarities between the two. Both methods analyze the data objectively and within defined standards and protocols. Both are conducted by professionals and under fall under committees. These are mutually supportive and organizationally close. The results of both should be posted and easily accessible.
"Audit vs Evaluation." Diffen.com. Diffen LLC, n.d. Web. 25 Oct 2014. < http://www.diffen.com/difference/Audit_vs_Evaluation >