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Efficiency audit

A process of checking whether an organization is working as efficiently as possible. This may be done internally, as management tries to improve profitability, or externally by regulatory bodies, for example those in the UK responsible for supervising privatized utilities. The two standard methods of efficiency audit are the engineer’s approach, of comparing practice with what theory suggests is possible, and the statistician’s approach, of comparing performance with that of similar enterprises elsewhere in the economy, or in other countries.

Reference: Oxford Press Dictonary of Economics, 5th edt.