Value for money audit

Value for money (VFM) audits try to determine whether the optimal combination of goods/services have been obtained for the lowest level of resources. 
VFM audits tend to focus on three areas: economy, efficiency and effectiveness. These are commonly known as ‘the three Es’:

Economy: Buying the resources needed at the cheapest cost
Efficiency: Using the resources purchased as wisely as possible
Effectiveness: Doing the right things and meeting the organisation’s objectives

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

• reducing costs (e.g., labour costs, better procurement and commissioning) for the same outputs,
• reducing inputs (e.g., people, assets, materials) for the same outputs,
• getting greater outputs with improved quality (e.g., improving productivity) for the same inputs,
• getting proportionally more outputs or improved quality in return for an increase in resources.