PROPRIETY AUDIT - PROBLEMS
It is a moral term.
Auditing requires verifiable propositions establishment of which is very difficult for propriety audit.
It has itinerant element of subjectivity.
However, C and AG has developed norms of propriety for expenses of public funds but it may not apply to transactions of private sector.
If management formulates norms of propriety for the entity, the element of subjectivity will get reduced.
For e.g. – Travel by air (feasible if saves time).
The judgement of auditor shouldn’t be subjective.
COMMITTEES ON PUBIC UNDERTAKINGS
It examine the Audit report.
It can select some enterprises each year to examine whether affairs of same are managed in accordance with sound business principles, etc.
It doesn’t however examine mattes of major Government policy or day-to-day administration.
Supplement Audit
C & AG may comment upon or supplement the report submitted by the professional auditor.
C & AG may issue directives to the auditors in regard to the performance of their function.
Person so authorised may well be the auditor of the company.
The form & content of supplementary audit report may be specified by C&AG.
Supp Auditor may concentrate more on efficiency aspects.
The person so authorised is having same powers as auditors.
COMPREHENSIVE AUDIT
Scope is regarding checking of investment decisions, Project formulation, MIS, Capacity utilisation, Management, Use of material, Labour, Idle capacity, Capital cost, Cost control measure, R & D programs, Repair & maintenance etc.
Directions of C & AG :
(a) System of Account :
1. Examine the following systems and give deficiencies along with suggestions (Receipts/Expenses/Trial Balance/Inventories, etc.)
2. Allocation of expenses during construction.
3. Bank Reconciliation Statement.
4. Control and subsidiaries account are updated and reconciled regularly.
5. Examine accounting policies.
(b) System of Financial Control :
1. Delegation of financial power whether legally made.
2. Whether credit from bank are monitored regularly.
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