Controls should not be overly strict, as it stifles creativity and
requires considerable time for management to review. A tradeoff
exists between control and autonomy.
A tradeoff exists between control and
No single form of control is optimal. Controls and their related
autonomy.
performance measures must be reassessed and modified as the
organization grows. Over time, procedures will become more formalized and well documented.
When To Measure
Performance measures should be developed in the program design stage to ensure desired performance data is tracked and available for future monitoring and evaluating. It is at this stage
when organizations will request the services of third parties. Therefore, CPAs can objectively
recommend reporting requirements for the information system and monitor their operating effectiveness, discussed in the “How To Measure” section below.
If no measures have been developed for ongoing programs, they should be implemented immediately to ensure the required information is collected on a timely basis.
Performance measures should continuously be reviewed and revised as the business environment
and strategy changes. This continuous process provides ongoing demand for CPA services.
How To Measure
Once an organization has established which controls will be used, based on what is likely to occur, cost-benefit analysis, and significant risk areas, performance measures must be developed in
order to track whether controls are operating effectively and targets are being achieved. Managers of NFPOs and public sector agencies generally do not have a single, quantitative bottom line
figure available to measure performance. Therefore, a number of successful NFPOs use combination-of-measures approaches, such as the balanced scorecard. Refer to Figure 2 on the next
page for the four steps to develop effective performance measures.
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