Management and performance audit: taking action before a crisis occurs

Summary

An external management and performance audit assesses the performance, governance and risks that mandatory bodies face. When carried out periodically, it helps municipalities to prevent crises and improve the quality of their services.

In concrete terms, these audits allow municipalities to:

• verify whether the organization’s mandate still meets the needs of citizens;
• assess the quality of services and user satisfaction;
• analyze governance, financial management and compliance;
• identify weak areas before they become critical;
• equip elected officials with reliable data for decision-making;
• strengthen transparency and trust in the management of public funds

Municipalities like yours must delegate the management of important services to mandatory bodies. But do you really know whether they are still carrying out their mandates?

Every year, you entrust the management of public services, including recreational centres, arenas and performance venues, to mandatory bodies. These contractors manage large budgets and have a direct impact on citizens’ quality of life. You trust them, but is this enough?

What the annual reports don’t reveal

Reading annual reports and analyzing financial statements are a starting point. However, you must delve deeper to paint a detailed picture of the situation. These documents show what has been completed, but they rarely explain why certain results did not meet expectations. Furthermore, you could end up in the dark when things are quietly deteriorating. As a result, governance drift, a lack of alignment with the mission and organizational erosion can remain undetected. You must look beyond the numbers to pinpoint these issues. This is precisely what an external management and performance audit can achieve.

Why do organizations wait until a crisis occurs?

Municipalities are very familiar with contractors’ reality (internal conflict, citizen complaints, poor management and a difficult work environment, for example) as ample proof has been provided in recent years. In most cases, the warning signs were evident long before the situation deteriorated. However, they were not detected or not spotted in time. When you call on external experts, you’re choosing to take action before a crisis can take root.

A proven model in Quebec

Under the Act respecting the governance of state-owned enterprises introduced by the Quebec government, government corporations are required to conduct an external performance audit on a periodic basis. The goal is simple: verify alignment with the mission, evaluate overall performance and formulate actionable recommendations. This type of exercise encourages transparency, accountability and continuous improvement. In a municipal context, the challenges are different, but the needs are just as real.

Management and performance audit: evaluating performance and governance

When entrusted to external experts, this audit is a structured tool that offers an objective insight into the reality of your mandatory bodies. In particular, it allows you to evaluate:

• the engagement’s relevance in relation to actual needs;
• the quality of services and user satisfaction;
• governance and management practices;
• the financial situation, human resources, compliance and risks;
• dialogue between your municipality and the organization in question.

This is not a control assignment. It’s a tool that helps you fully understand and make the best choices to guide future development.

What’s involved in a municipal management audit?

The process is made up of the following three structured stages.

1. Information gathering

Document analysis (governing statutes, annual reports, financial statements, Memoranda of Understanding), interviews with stakeholders (Board of Directors, leadership team, elected and municipal officials), user and partner surveys and comparison with similar organizations.

2. Diagnosis

Objective portrait of the situation focused on performance gaps, and identifying issues relating to governance, management, financing and provision of services. Clear presentation of observations to your municipality and the organization in question.

3. Recommendations

Tangible courses of action adapted to the local reality and prioritized based on their impact and feasibility. Clear presentation to the organization in question in relation to the action plan and commitments made.

In concrete terms, what municipalities and mandatory bodies can benefit from

A management and performance audit goes beyond simply carrying out a diagnosis. It creates value.

• You can detect weak areas before they qualify as crises.
• You can enhance the quality of services by focusing on citizens above all else.
• You can boost credibility with respect to using public funds.
• Your elected officials and decision-makers can rely on facts rather than impressions when making decisions.
• Your teams can have a clear understanding of how to better move forward and mobilize.

Take action now rather than after a crisis

In many municipalities, managing mandatory bodies is still a reactive approach. Intervention is set in motion when things go wrong. However, you have another option: carrying out an external audit every 10 years.

This is more than a formality. It gives you a framework for asking the right questions at the right time, clarifying expectations and making decisions built on strong foundations. State-owned enterprises in Quebec have already adopted this approach. Several municipalities have also followed suit, but often in the aftermath of a crisis. You can choose to take action before this happens.