What is meant by "Value for Money" (VFM)?
Value for Money is a phrase used by government and in auditing legislation. It has three components:
- Economy - buying inputs of a given quality at the lowest cost.
- Efficiency - ensuring that the maximum amount of output is achieved from an operation for the minimum amount of input.
- Effectiveness - ensuring that the outputs of an organisation are as closely aligned as possible to its objectives.
Management of bodies in receipt of public funds, including Universities, are required to demonstrate how they achieve the above.
What is Internal Audit's role in respect of VFM?
Internal Audit are required to provide an annual opinion to the University on whether its arrangements for VFM are adequate and effective. This in turn is used by the Audit and Risk Committee to assist in formulating the conclusions they make about value for money in their annual report.
Internal Audit provides an annual report to the Audit and Risk Committee, which underpins its opinion. This report draws on a variety of evidence, including comparative information from other universities.
Internal Audit assesses all audits in respect of their capacity to provide value for money improvements. In some cases the audit will relate mainly to Value for Money. In other cases specific audit findings relate to potential improvements in VFM and the associated recommendations are flagged accordingly.