The statement “There can be no performance auditing without performance budgeting” highlights the intrinsic and indispensable link between these two crucial public financial management tools. They are two sides of the same coin, with performance budgeting laying the essential groundwork for effective performance auditing.

Performance Budgeting is a budgeting system that links financial outlays to specific, measurable outputs and outcomes. Instead of merely focusing on inputs (how much money is spent) or line items, it emphasizes what the government aims to achieve with its resources. It involves setting clear objectives, defining performance indicators, and allocating funds based on expected results. In essence, performance budgeting establishes the 'standards' or 'benchmarks' against which performance can be measured.

Performance Auditing, on the other hand, is an independent examination of the economy, efficiency, and effectiveness of government operations, programs, or organizations. Its purpose is to assess whether resources are being used wisely and whether desired results are being achieved. It seeks to answer questions like: Are programs delivering on their promises? Are they cost-effective? Are they achieving their intended impact?

The critical connection is that performance auditing requires a framework of predefined expectations and measurable targets to function effectively. Without performance budgeting, which explicitly articulates these objectives and indicators, a performance auditor would lack the necessary criteria to evaluate actual performance. How can one audit the 'effectiveness' of a program if its intended outcomes were never clearly defined in the budget? The auditor would have no objective basis to compare actual achievements against planned goals, rendering the audit subjective and largely ineffective in assessing true performance.

Therefore, performance budgeting provides the 'what' and 'why' – the goals, targets, and expected results – while performance auditing verifies the 'how well' – whether those goals were met efficiently and effectively. One sets the stage for accountability, and the other ensures that accountability is enforced. Without the explicit performance framework established by performance budgeting, performance auditing would be largely blind, reduced to merely financial compliance checks rather than a comprehensive assessment of government effectiveness.