Propriety Audit

In: Business and Management

Submitted By jollybs
Words 790
Pages 4
Propriety Audit
Definition
* Propriety audit stands for verification of transactions in the best interest of public, commonly accepted and standards of conduct. The term “propriety” has been defined as “that which meets the tests of public interest, commonly accepted customs, and standards of conduct, and particularly as applicable to professional performance, requirements of government regulations and professional codes”. * Instead of too much dependence on documents, vouchers and evidence, it shifts the emphasis to the substance of the transactions and looks into the appropriateness thereof on a consideration of financial prudence, public interest and prevention of wasteful expenditure. * Thus propriety audit is concerned with scrutiny of executive actions and decisions bearing on financial and profit and loss situation of the company with special regard to public interest and commonly accepted customs, and standards of conduct. * It is also seen whether every offer has exercised the same vigilance in respect of expenditure incurred from public money, as a person of ordinary prudence would exercise in respect of expenditure of his own money under similar circumstances.
Principles of Propriety Audit
Propriety requires the transaction involving expenditure to conform to general principles as under: (1) That expenditure is not prima facie more than occasion demands and the every official exercise the same degree of vigilance in respect of expenditure, as a person of ordinary prudence would exercise in respect of his own money. (2) That the authority exercises its power of sanctioning expenditure to pass an order which will not directly or individually accrue its own advantage. (3) That the funds are not utilized for the benefit of a particular person or a group of persons. (4) That, apart from the agreed remuneration or reward, no…...

Similar Documents

Audit

...audit Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.[1] Internal auditing is a catalyst for improving an organization's effectiveness and efficiency by providing insight and recommendations based on analyses and assessments of data and business processes there are 3 types of Audit : 1. Internal audit ( first party audit),to ensure implementing, maintaining and improvement of the system audited. 2.Customer audit ( second party audit), to evaluate the suppliers performance and compliance for standards. 3.External audit (third party audit), to ensure implementing and documenting according to standards. Audit Process Prevalent Audit Concerns Risk Assessment Process Definition of Internal Audit The audit process is generally a ten-step procedure as outlined below. Please click through the steps in order to better understand the process. 1. Notification 2. Planning 3. Opening Meeting 4. Fieldwork 5. Communication 6. Report Drafting 7. Management Response 8. Closing Meeting 9. Report Distribution 10. Follow-up Notification First, you will receive a letter to inform you of an upcoming audit. The auditor will send you a......

Words: 768 - Pages: 4

Audit

... The Marketing Audit Comes Of Age Philip Kotler, William Gregor and William Rogers Comparing the marketing strategies and tactics of business units today versus ten years ago, the most striking impression is one of marketing strategy obsolescence. Ten years ago US, automobile companies were gearing up for their second postwar race to produce the largest car with the highest horsepower. Today companies are selling increasing numbers of small and medium-size cars and fuel economy is a major selling point. Ten years ago computer companies were introducing ever-more powerful hardware for more sophisticated uses. Today they emphasize mini and microcomputers and software. It is not even necessary to take a ten-year-period to show the rapid obsolescence of marketing strategies. The growth economy of 1950-1970 has been superseded by a volatile economy which produces new strategic surprises almost monthly. Competitors launch new products, customers switch their business, distributors lose their effectiveness, advertising costs skyrocket, government regulations are announced, and consumer groups attack. These changes represent both opportunities and problems and may demand periodic reorientations of the company’s marketing operations. Many companies feel that their marketing operations need regular reviews and overhauls but do not know how to proceed. Some companies simply make many small changes that are economically and politically feasible, but fail to get to the heart of the......

Words: 6893 - Pages: 28

Audit

...Chapter 1 - The Demand for Audit and Other Assurance Services 1-1 The relationship among audit services, attestation services, and assurance services is reflected in Figure 1-3 on page 13 of the text. An assurance service is an independent professional service to improve the quality of information for decision makers. An attestation service is a form of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party. Audit services are a form of attestation service in which the auditor expresses a written conclusion about the degree of correspondence between information and established criteria. The most common form of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as to whether the financial statements are presented in conformity with generally accepted accounting principles. An example of an attestation service is a report on the effectiveness of an entity’s internal control over financial reporting. There are many possible forms of assurance services, including services related to business performance measurement, health care performance, and information system reliability. 1-2 An independent audit is a means of satisfying the need for reliable information on the part of decision makers. Factors of a complex society which contribute to this need are: 1. Remoteness of information a. Owners (stockholders)......

Words: 34322 - Pages: 138

Audit

...Audit Committee Material Weaknesses in Smaller Reporting Companies December 2nd, 2010 OUTLINE: I. SUMMARY OF THE ARTICLE II. PROBLEM STATEMENT III. SUGGESTIONS FROM THE AUTHORS IV. RELEVANCE TO AUDITING ENVIRONMENT V. CONCLUSION I. Summary of the Article This report summarizes the article published by Gramling, Audrey A, Hermanson, Dana R, Hermanson, Heather M in the CPA journal of 2009. The main focus of the article is to show the importance of audit committee in auditing and analyze problems of small companies face in developing effective audit committee. The critical issue of the article is material weaknesses related to audit committee and possibility of management’s override of internal control within small companies. Before, the Sarbanes-Oxley Act, audit committees in public companies were under more pressure to understand not just a company's financial statements, but to challenge management and auditors on key accounting, internal control and compliance issues. After the financial scandals that caused firms like Enron and WorldCom to collapse, audit committees have risen from relative darkness to center stage in modern corporate world. As it’s indicated in the article, the new role, the typical audit committee is charged with many duties. Because new role of audit committee increased complexity and accountability, it's easy for directors of small public companies to feel besieged when...

Words: 1917 - Pages: 8

Audit

...Section A: Audit Practice Part b (i): Why is the audit of cash important part of the audit? From an auditing standpoint, cash is an important account because cash transactions affect all other business and financial processes. Businesses acquire cash by selling goods or services, disposing of fixed assets, or acquiring debt or equity. The same businesses put their cash to use through purchasing, paying employees, and buying inventory. Audits are an important part of business. Cash audits check that money has been handled properly, and performance audits ascertain whether employees are doing their jobs properly. Corporations are likely to undergo tax audits to ensure proper tax reporting and withholding. Audits may be performed in-house by management or human resources, by a third-party consulting firm hired specifically to perform the audits or by IRS agents who are auditing company tax records. The audit of cash is considered an important part of an audit mainly due to almost all business transactions will be ultimately settled through the cash accounts, the audit of cash accounts also assists in the verification of other asset and liability accounts as well as revenue and expenses. Some of the investor relies on the accuracy of the cash account to evaluate the financial health of the company. They use current asset which include the cash account to compute several financial measures. Other than that, cash is the highly liquid asset in a company and it is an area of high...

Words: 9221 - Pages: 37

Audit

...THE RELATIONSHIP BETWEEN INTERNAL AND EXTERNAL AUDIT Professor PhD Atanasiu Pop, „Babeş-Bolyai” University of Cluj-Napoca, e-mail: apop@econ.ubblcuj.ro PhD Student Cristina Boţa-Avram, „Babeş-Bolyai” University of Cluj-Napoca, e-mail: botaavram@gmail.com PhD Student Florin Boţa-Avram, „Babeş Bolyai” University of Cluj-Napoca, e-mail: botaavramflorin@yahoo.com ABSTRACT: Analyzing the evolution process of internal audit, from its beginnings and so far, we can easily notice that internal audit function was born through detaching of some activities from external audit, the result being that there some situations when these two functions could be easily confused. The reality is that internal audit and external audit are two distinctive functions; net differenced, but which are also characterized through some complementary relationships. In this paper, we try to give our contribution at the clarification of the similarities and differences between these two functions, making a literature review that allowed us to identify some very interesting studies that permitted us to emphasize the main criterions that influenced the relationship between internal audit and external audit. Keywords: internal audit, external audit, objectivity, competence JEL Codes: M42 1. Introduction The coordination of internal audit activity with external audit activity is very important from both points of view: from external audit’s point of view is important because, in this way,......

Words: 3860 - Pages: 16

Audit

...interest in an audit client. Self review threat It occurs when the audit from a member or audit team put itself in a position of reviewing the subject that previously the member is responsible Familiarity threat It occurs when auditor has a close relationship with the client Advocacy threat It occurs when the audit from a member of the audit team promotes/support or may be perceived to promote an audit client’s position or opinion. Intimidation threat It occurs when a member of the audit team may be deterred from acting objectivity and exercising professional judgment due to pressure given by the audit client to terminate the service. Auditors have an obligation to disclose -where the courts order them to do so -where they suspect their client of offences of terrorism -they suspect the client to be a drug trafficker -under banking, insurance and financial services, they consider the client is either acting recklessly or is not fit & proper person to managing such business. Safeguards Family and other personal relationship Ensure personal relationship do not affect their objectivity Beneficial interests in shares and other investment Dosnt not hold share or ahs a beneficial in shares Loans Should not make or accept loans to or guarantee from audit client Provison of other service Not to perform mgmt. functions or to make mgmt. decision Oversue fees Auditor should collect all outstanding fee in full before providing a new audit......

Words: 6177 - Pages: 25

Audit

...Auditing HW #1 – Aug 26 1-36: a. Explain why management might want an independent audit of its financial statements. McIver’s management may want an independent audit of its financial statements for several reasons. First of all, due to the desired increasing growth, there is now a greater risk that salesmen and/or managers could report inflated numbers that align with management’s goals. An independent audit would be beneficial in discovering any such activity. Also, if McIver’s acquires the other swimwear distributorship there is an added risk. McIver’s probably does not have an in-depth knowledge of the other company, so an independent audit could also bring to light any malfeasance on the acquired company’s end. Finally, McIver’s could desire to go public in the near future considering its growth. Audits are necessary for public companies, and so it would make sense that management would want one. b. What are the factors that McIver’s might consider in deciding whether to seek an audit from a large national audit firm, a regional audit firm, or a local firm? McIver’s decision of whether to hire a national, regional, or local audit firm should be determined by various factors including quality, cost, familiarity with the industry, and familiarity with the region. Generally speaking, if McIver’s number one aspect of the audit was quality, they would choose a national firm. The downside of that would be the cost, which is generally higher. A local firm on the......

Words: 1732 - Pages: 7

Audit

...6-22 a. The function of the independent auditor in the audit of financial statements is expression of an opinion on the fairness with which they present, in all material respects, financial position, results of operations, and its cash flows in conformity with generally accepted accounting principles. The auditor's report is the medium through which he expresses his opinion or, if circumstances require, disclaims an opinion. In either case, he states whether his audit has been made in accordance with generally accepted auditing standards. These standards require him to state whether, in his opinion, the financial statements are presented in conformity with generally accepted accounting principles and to identify those circumstances in which such principles have not been consistently observed in the preparation of the financial statements of the current period in relation to those of the preceding period. The responsibilities of the independent auditor in the audit of financial statements are planning and performing the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. Because of the nature of audit evidence and the characteristics of fraud, the auditor is able to obtain reasonable, but not absolute, assurance that material misstatements are detected.   b. The responsibilities of the independent auditor for the detection of fraud is provide reasonable assurance of detecting......

Words: 566 - Pages: 3

Audits

...Accountancy University of Waterloo Waterloo ON N2L 3G1 October 2004 Atlas Cold Storage Inc. It had been a stressful summer for the executives and board of Atlas Cold Storage; in fact it had not been a summer at all. But Joseph Wiley as Chair of the Audit Committee and representative on the board of Atlas’s largest unit holder, TD Capital, felt the pressure most acutely. Although it was August 29th and summer was over, a new phase of the Atlas saga was about to start now that the press announcement was being proofed for the final time. When investors returned from their Labour Day weekend they would know what he had been living with for months -- that Atlas’s financial results would need to be significantly restated. It had all started with the anonymous letter sent to the Ontario Securities Commission (OSC) on April 28, 2003. Had the letter not gone to the OSC perhaps the situation could have been dealt with internally without a need to announce to the public that the financial statements were wrong, very wrong. But with the letter they were forced to tell the auditors, Ernst and Young (E&Y) who insisted on coming in to review the books, again -- no doubt afraid that they might get sued for issuing a clean audit opinion on financial statements that were materially incorrect. To make matters worse, the independent board members insisted that E&Y should not do the investigation, claiming the auditors were not independent enough. Those board......

Words: 3608 - Pages: 15

Audit

...divisions and subsidiaries in the organization. | B.  | Measuring performance and awarding bonuses based on short-term operating results. | C.  | Giving employees performance feedback that considers positive and constructive praise along with critical and negative observations on their work. | D.  | Establishing work teams that share responsibilities, performance, and bonuses based on collective efforts. | |   | 3. | Which of the following is not considered one of the three factors increasing the probability of fraud?    A.  | Motive. | B.  | Lack of training. | C.  | Opportunity. | D.  | Rationalization. | |   | 4. | Which of the following is ordinarily considered an extended procedure during the independent audit of financial statements?    A.  | Sending positive confirmations on recorded customer accounts receivable balances. | B.  | Performing physical observation and test count during the client's inventory taking. | C.  | Measuring the time lag between the date of recording cash receipts in the books to the date of the deposit credit in the bank. | D.  | Conducting interviews with the client's sales billing personnel to learn about sales recording control activities. | |   | 5. | If an employee altered the amount of a check after it has cleared the bank, the change can be detected by    A.  | Comparing the amount written on the check face to the amount written in the cash disbursements journal. | B.  | Comparing......

Words: 2571 - Pages: 11

Audit

...ILLUSTRATIVE AUDIT ENGAGEMENT LETTER (Date) Name of Auditee Address Dear ________________ We are pleased to confirm our understanding of the services we are to provide you with under this engagement. Audit Scope. USAID’s applicable scope of work that was part of your RFP will be included or referenced to. Audit Objectives. The objective of our audit is the expression of opinions as to whether your basic financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles, the objective also includes reporting on: • Internal control related to the financial statements and compliance with laws, regulations, and the provisions of contracts and grant agreements, noncompliance with which could have a material effect on the financial statements, in accordance with Government Auditing Standards. • Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance with laws, regulations, and the provisions of contracts and grant agreements that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Our audit will be conducted in accordance with generally accepted auditing standards established by the Auditing Standards Board (United States); the standards for financial audits......

Words: 2547 - Pages: 11

Audit Cash and Investments Audit

...INVESTMENTS 1. CASH Audit objects : - existence  recorded cash balances exist at the balance sheet date. - completeness  recorded cash balances include the effects of all cash trans-actions that have occurred; year – end transfer of cash between banks are recorded in the proper period. - rights and obligations  the entity has legal title to all cash balances shown at the balance sheet date. - valuation  recorded cash balances are realizable at the amounts stated on the balance sheet and agree with supporting schedules. - presentation and disclosure  cash balances are properly identified and clas-sified in the balance sheet; lines of credit, loan guarantees and other re-strictions on cash balances are appropriately disclosed. !!! REMARKS: o A high volume of cash transactions result in a high inherent risk. o Controls over cash transactions are usually strong and are tested in connec-tion with the audits of sales and purchases. o Regular bank reconciliations are an important control over the prevention and detection of fraud and error. o The use of “imprest” accounts for petty cash and for payroll and dividend cheques is a further control over safeguarding cash balances. o Cash balances are usually relatively small but significant because of their importance for liquidity. o The small balance means that auditors tend to adopt a predominantly sub-stantive approach to the audit of cash balances. o Analytical procedures are little used in the audit of......

Words: 1397 - Pages: 6

Audit

...JetBlue Audit Paper Name Institution Introduction JetBlue boasts to be a local low-cost airline in the United States having being incorporated back in 1998 with the delivery of services commencing in 2000. The incorporation of the airline occurred in Delaware in August, and many consider it a New York hometown carrier. Jet Blue had an approximately 32 million passengers in the year 2014 and the mean flights in a day were 825. Last year, the carrier number of passengers increased to 35 million with an average of 900 flights in a day. Moreover, it was the fifth largest carrier of travelers in 2015 with around 90 destinations in the USA. Considerably, JetBlue since the commencement of operations accomplished success in a duration of six years (JetBlue , 2016). Nevertheless, the company has various shortcomings in its procedures, and the evaluation of the corporation can provide more insights. JetBlue operating environment In the past years, the cost of fuel has continued to be low, and this has enabled JetBlue to have up surged revenues. The airline is also high with a considerable demand of customers as it has one of the best customer services. JetBlue management has over the years continued to monitor expenditures, and this has led to the success of the carrier. The revenue increment of JetBlue has tom some extent outperformed the airline industry by a mean of 6 %. JetBlue had a debt ratio of approximately 0.48 in 2015, which is at its lowest. Undeniably, this is......

Words: 2894 - Pages: 12

Propriety Software

...Propriety software and open source applications are anything but similar. What are the pros and cons of buying Microsoft Office (proprietary) versus downloading and using Open Office (open) for free? I believe the pros of buying propriety versus downloading and using Open office is that for one that by purchasing the product you have all of the features available to and it lasts. When you download a free trial off of the internet it normally only last for a certain amount of time which is usually somewhere between 30 to 90 days. Also often times with the trial version it doesn’t allow you to do everything that you would normally be able to do if you had the paid version. A pro for using open office, of course is that it is free. So if you don’t have hundreds of dollars to go out and spend on software which most people don’t then downloading the free version will allow you to get the job done while being able to keep your money in your pocket. Social networks allow people to connect for a variety of reasons in a digital environment.  You might join LinkedIn to meet business contacts, MySpace to find a band member, or Facebook to see pictures of old friends and meet new ones. Whatever environment you decide to be a part of, posting information about you has become an issue of concern. What are those concerns? I mean what is the big deal about privacy? I guess the biggest concern most people have with privacy is worrying about who can see what they post on the internet. I......

Words: 651 - Pages: 3

Overlord (5) | Join Link Exchange | Areas Of Computer Science