4 Information Technology as a Tool For Performance Measurement and Auditing

Abstract

With the development of large, multiproduct companies in the nineteenth century, there has been an interest and a need to find new ways to organise and control companies now too big for an individual to understand and manage. Many new management structures and techniques have been tried, with varying degrees of success, but several have shown that they can offer improved performance and understanding; one of these is the obvious idea of measurement!

Although simple in concept performance measurement has many other benefits, and presents many dangers and problems if it is not properly understood and applied. It tells the managers, employees and other stakeholders if the company is performing well, and where weaknesses lie. It communicates what is important throughout the company and it can act as an integrative system, ensuring the business processes are achieving the required goals.

Information technology (IT) has many characteristics that make it suitable for contributing to a performance measurement system. It can collect, analyse and present data speedily and inexpensively. It can monitor performance, ‘flag’ any discrepancies and act as an early warning system for problems. It can also assist in the auditing of company performance. By incorporating measures which can assist an auditor in deciding whether the company is satisfying its requirements and by allowing the auditor to unobtrusively examine the data themselves, the auditing process may be significantly improved.