A contingency-based approach to performance measurement system auditing

This paper describes EPSRC funded research at the University of Liverpool to create a methodology for the evaluation and audit of performance measurement systems. The approach adopted is based upon contingency theory and the role of performance measurement in the management of complexity and uncertainty. The methodology establishes three viewpoints and examines the position of the performance measures in relation to reference models for each. The initial work is based upon the ideas of Puttick/Hill, Ginzberg/Otley and Kaplan/Norton and uses gap analysis to evaluate the performance measurement system in terms of organisational classification, information system appropriateness and the balance of measures. The research attempts to identify the alignment between the three viewpoints and proposes an audit approach to examining the consistency between each of the elements in an industrial context. The work forms part of a collaborative research programme with the universities of Loughborough and Strathclyde and is illustrated in terms of recent case study work.