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The introductory chapter of Government Auditing Standards (GAGAS)1
outlines five concepts describing how public officials are to provide
functions and services: effectively, efficiently, economically, ethically, and 
equitably. When planning, gathering and assessing evidence, and 
reporting audit results, auditors may focus on one or more of these 
concepts. The following discussion is intended to assist auditors when 
developing audit objectives for performance audits of government 
programs and activities.2
This discussion is designed to help auditors understand
and apply the concepts cited above for performance audits 
conducted in accordance with GAGAS. This discussion
does not contain requirements, does not amend GAGAS,
and is not considered interpretive guidance, as defined in 
chapter 2 of GAGAS. 
Paragraph 1.02:
The concept of accountability for use of public resources 
and government authority is key to our nation’s governing 
processes. Management and officials entrusted with public 
resources are responsible for carrying out public functions 
and providing service to the public effectively, efficiently, 
economically, ethically, and equitably within the context 
of the statutory boundaries of the specific government 
program. [Emphasis added.]
Paragraph 1.03:
As reflected in applicable laws, regulations, agreements, 
and standards, management and officials of government 
programs are responsible for providing reliable, useful, and 
timely information for transparency and accountability of 
these programs and their operations. Legislators, oversight 
 1GAO, Government Auditing Standards: 2018 Revision, GAO-21-368G (Washington, 
D.C.: April 2021)
2The concepts cited may also be applicable to other GAGAS engagements, based on the 
auditors’ judgments. This discussion is limited to considering these concepts in 
performance audits.
GAGAS Performance Audits: Discussion of 
Concepts to Consider When Auditing Public 
Functions and Services
GAGAS Paragraphs
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bodies, those charged with governance, and the public 
need to know whether (1) management and officials 
manage government resources and use their authority 
properly and in compliance with laws and regulations; (2) 
government programs are achieving their objectives and 
desired outcomes; and (3) government services are 
provided effectively, efficiently, economically, ethically, 
and equitably. [Emphasis added.]
Government administration best serves the collective interest of the public 
when it is effective, efficient, economical, ethical, and equitable. Auditors 
help inform legislators, oversight bodies, those charged with governance, 
and the public about whether public services are being provided 
consistent with these concepts. Government auditing can contribute to 
accountability and can help improve government administration by 
identifying deficiencies and recommending enhancements to achieve 
effective, efficient, economical, ethical, and equitable outcomes, when 
appropriate within the context of the audit objectives. As such, it is 
important for auditors to understand the concepts below as they relate to 
administering government programs or activities and how they can 
assess or address these expectations of government performance in 
conducting their performance audits.
The examples that follow the discussion of each concept illustrate the
distinctions between these concepts. In a performance audit, it is 
common practice to incorporate more than one of these concepts when 
conducting the audit.
The administration of a government program or activity is effective when 
it achieves the intended results. A performance audit that focuses on the 
effectiveness of a program or activity seeks to establish a cause-andeffect relationship between the operation of the program or activity and 
achieving its stated objectives. Achieving the objectives does not 
guarantee that the program or activity was effective unless the auditors 
can establish that the program or activity caused, or contributed to, the 
desired outcome.
Example: In a performance audit examining how effective a 
housing voucher program was in achieving its goal of improving 
economic outcomes for recipients, auditors may determine 
whether receiving housing vouchers led to better subsequent 
economic outcomes for recipients than those of similarly situated 
individuals who did not receive vouchers.
Discussion
Effective
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Example: In a performance audit assessing the effectiveness of 
an after-school program targeted at helping students improve their 
reading proficiency, auditors may examine the extent to which 
participants’ reading levels improved relative to baseline data from 
before they joined the program.
The administration of a government program or activity is efficient when 
it gets the most value from available resources. When a performance 
audit focuses on efficiency, auditors examine whether the resources used 
to administer a program or activity have been put to optimal or 
satisfactory use, or whether the same or similar results could have been 
achieved more timely or with fewer resources. 
Example: In a performance audit assessing a disaster relief 
agency’s mobilization of resources to respond to a disaster, 
auditors may assess the disaster relief agency’s timeliness in 
providing relief compared to its own previous performance or the 
performance of other similarly situated agencies that have 
responded to comparable disasters. 
Example: In a performance audit assessing a consumer protection 
agency’s response to consumer complaints, auditors may assess 
whether the agency’s efforts to streamline its processes resulted 
in improved timely resolution of complaints.
Example: In a performance audit assessing the time a state needs
to process unemployment benefits targeted at helping those in 
need, auditors may assess how long the process takes from 
receipt of the unemployment application to the applicant’s receipt 
of the benefit, including steps such as verifying required 
information.
The administration of a government program or activity is economical
when it minimizes the costs of resources used in performing its functions 
while meeting timeliness and quality considerations for those resources. 
When auditing economy, auditors primarily focus on the costs of inputs 
rather than on the outcomes achieved.
Example: In a performance audit examining an agency’s 
international travel expenses, in addition to assessing the design 
of internal controls and compliance with expense guidelines, 
auditors may test whether, for a sample of trips, bookings of 
Efficient
Economical
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equivalent airline tickets and hotel rooms could be found at a 
lower cost.
Example: In a performance audit assessing an agency’s 
acquisition practices, auditors may examine whether the agency’s 
decisions regarding purchasing, leasing, or reimbursing 
employees for the costs of acquiring various supplies or 
equipment achieved the lowest cost while meeting applicable 
requirements.
The administration of a government program or activity is ethical when it 
advances the collective interest of the public rather than private gain and 
is conducted with honesty, integrity, and impartiality. Laws and 
regulations often specify rules of ethical conduct. Therefore, audits 
examining the ethical administration of a program or activity may involve
assessing compliance with such laws and regulations. Fraud in 
administering a government program or activity betrays the public trust 
and is, by definition, unethical. In addition, auditors may identify instances 
of unethical conduct that result in waste and abuse during testing of 
internal controls as part of a performance audit.
Example: In a performance audit assessing agency officials’ 
compliance with conflict-of-interest requirements, auditors may 
compare a sample of financial disclosure reports filed against 
requirements in statute or regulation.
Example: In a performance audit assessing potential regulatory 
capture related to a particular industry, auditors may assess the 
extent to which the regulatory agency has sufficient controls to 
reasonably assure its employees’ independence from the entities 
subject to the agency’s regulation.
Example: In a performance audit assessing an office’s policies 
and procedures for purchase cards, auditors’ testing of the 
program’s controls to identify deficiencies may identify fraud,
waste, or abuse in its administration. 
The administration of a government program or activity is equitable when 
it consistently serves members of the public, distributes public services, 
and implements public policy in a manner that promotes fairness, justice, 
and equality. Auditing whether the administration of a government 
program or activity is equitable may include assessing the 
Ethical
Equitable
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• equality of access to and provision of services;
• procedural fairness and equal treatment of individuals in 
government programs and policies;
• causes of disparate outcomes;
• or distributional impacts of public policies, programs, resources, 
and services.
Disaggregating data by social groups or communities that share a 
particular characteristic (e.g., gender, race, ethnicity, age, or income) 
can help illuminate differences. Reporting on such differences, when 
appropriate within the context of the audit objectives, can increase 
understanding of the effects of policies and programs on issues of 
equity.
Example: In a performance audit assessing the granting of 
waivers from particular requirements, auditors may use 
disaggregated data about waiver recipients to assess whether 
different groups or communities were treated fairly and equally in 
the process.
Example: In a performance audit assessing a grant program 
aimed at expanding internet access, auditors may assess the 
extent to which formulas, criteria, or other factors (such as 
matching funds or capital requirements) considered in the 
distribution of grant funds may be to the specific advantage or
disadvantage of certain groups, regions, or communities, thereby 
causing inequities.
Example: In a performance audit assessing scholarship outcomes 
in higher education programs, auditors may report on the 
distribution of scholarships by race, gender identity, and income to 
illuminate potential disparities among scholarship recipients.
These concepts may overlap. For example, efficiency may also be a 
component of effectiveness. Similarly, when appropriate within the 
context of the program and audit objectives, auditors may disaggregate
the results of performance audits that focus on efficiency or effectiveness 
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issues to illuminate inequities in program administration or in distribution 
of public services. 
While all of these concepts are important to administering government 
programs responsibly, it is up to the professional judgment of the auditors 
to determine the specific concepts that are relevant in conducting the 
performance audit and reporting the results. Auditors’ professional 
judgments are informed by, among other things, the needs of the users of 
the audit reports; the nature, context, and objectives of the program or 
activity under audit; and the public interest.
To view the current Yellow Book, visit https://www.gao.gov/yellowbook.
For technical assistance, call (202) 512-9535 or email 
yellowbook@gao.gov. 
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