Propriety Audit

In: Business and Management

Submitted By jollybs
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Propriety Audit
* 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…...

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