There can be no performance auditing without performance budgeting.” Elucidate.

Answer: Performance budgeting is an approach to budgeting that focuses on linking funding decisions to the expected outcomes and results of government programs and activities.
Performance auditing is an independent and systematic assessment of the efficiency, effectiveness, and economy of government programs, activities, and organizations. It involves evaluating whether the intended results and objectives of programs are being achieved and whether resources are being utilized optimally.
Linkage between Performance Budgeting and Performance Auditing:
Performance budgeting and performance auditing are closely interconnected and mutually reinforcing:

• Setting Performance Targets: Performance budgeting sets specific performance targets and indicators for government programs. These targets become the basis for assessing performance in performance auditing. Without the establishment of clear performance objectives through budgeting, it would be challenging to evaluate the performance of programs in performance auditing.
• Measurement and Evaluation: Performance budgeting requires the measurement and evaluation of program performance against predetermined targets. Performance auditing uses these measurements as a reference point to evaluate the actual performance of programs.
• Accountability and Transparency: Both performance budgeting and performance auditing contribute to accountability and transparency in public administration. Performance budgeting promotes accountability by linking funding decisions to the expected results, while
  performance auditing ensures accountability by assessing whether the outcomes and objectives are being met and whether resources are being utilized efficiently.
• Continuous Improvement: The feedback provided by performance auditing is crucial for the improvement of performance budgeting. Performance auditing identifies areas for improvement and suggests corrective actions, which can be incorporated into future budgeting
  cycles. The findings of performance auditing inform the budgetary decisions and help in enhancing the effectiveness and efficiency of programs.
  In summary, performance budgeting and performance auditing are interrelated processes in public administration. Performance budgeting provides the framework for setting performance targets and allocating resources based on desired outcomes. Performance auditing evaluates the actual performance against those targets and provides independent assessments for accountability and improvement. Together, these processes promote effective resource allocation, accountability, transparency, and continuous improvement in government programs and activities.

UPSC General Studies Paper Preparation