Value for Money Audits (VFM)2019-04-09T09:59:35+00:00

Value for Money Audits (VFM)

The Public Finance Management Act 2012 (Section 73(3)(b) provides that “The Internal Auditor General Department of The National Treasury shall ensure that its arrangement for conducting internal auditing include; conducting Risk-based, Value-for-Money and Systems audits aimed at strengthening Internal Audit control mechanisms that could have an impact on achievement of the strategic objectives of the entity.”

Value for money (VFM) is about obtaining the maximum benefit with the resources available. Decisions about VFM are a daily reality in all our lives. We are constantly choosing which items or services to buy, and judging the right balance for us between quality and cost.

Value for Money is about achieving the right local balance between economy, efficiency and effectiveness, the 3Es – spending less, spending well and spending wisely;

  • Economy – Acquisition of resources in appropriate quality and quantity, at minimum cost.
  • Efficiency – Maximum output for any given set of inputs or the minimum inputs for any given quantity and quality of goods and services provided.
  • Effectiveness – Extent to which any activity achieves the intended results, which can be either quantitative or qualitative.

This means that Value for Money not only measures the cost of goods and services but also takes account of the mix of cost with quality, resource use, and fitness for purpose and timeliness to judge whether or not, together, they constitute good value.

Value for Money is not about cuts. It can be achieved in different ways including:

  1. reducing costs (e.g., labour costs, better procurement and commissioning) for the same outputs ,
  2. reducing inputs (e.g., people, assets, energy, materials) for the same outputs,
  3. getting greater outputs with improved quality (e.g., extra service or productivity) for the same inputs,
  4. getting proportionally more outputs or improved quality in return for an increase in resources.


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