Explain the purpose of value for money audit. (4 marks)
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VFM focuses on the best combination of services for the lowest level of resources. The purpose of a VFM audit is to examine the economy, efficiency and effectiveness of the activity or process in question.
- Economy – Attaining the appropriate quantity and quality of physical human and financial resources (inputs) at lowest cost.
- Efficiency – The relationship between goods or services produced (outputs) and the resources used to produce them.
- Effectiveness – Concerned with how well an activity is achieving its policy objectives or other intended effects.