Page 313 - CA Final PARAM Digital Book.

Systems of project formulation and implementation.
Comparison of the overall capital cost of the project with the approved planned costs.
Accepted production or operational outputs been achieved? Has there been
underutilization of installed capacity or shortfall in performance?
Cost control measures adequate and are there inefficiencies, wastages in raw materials
consumption, etc.
Undue waste, unproductive time for men and machines, wasteful utilization or even non-
utilization of resources.
Effective and economical.
Planned rate of return.
System of repairs and maintenance.

➢ The efficiency and effectiveness audit of public enterprises is conducted on the basis of certain
standards and criteria. Profit is not the key criterion on performance; management’s performance
in the economical and efficient use of public funds and in the achievement of objectives is more
relevant. Public enterprises have been set up with certain socio-economic purposes and for
fulfillment of certain objectives. The objectives vary from enterprise to enterprise. Audit appraisal
analyses the performance of an enterprise to bring out the extent to which the objectives for
which the enterprise was set up have been served.

QNO Performance Audit Planning Old Course-- (M14E, SM17, PM17, N17R, M18M, SM21, M22R)
599.200 TITANIUM CNO – PSU.175 New Course-- (SM23)
The objectives of audit in connection with a State Electricity Distribution Company were to ascertain
whether the:
(i) total cost of providing electricity is being recovered by timely submissions to the State Electricity
Regulatory Commission;
(ii) tariff orders, sales circulars and sales instructions were issued timely, without any ambiguity. They

were implemented in time;
(iii) metering, billing and collection was managed efficiently and effectively;
(iv) monitoring and internal controls were efficient.
What kind of audit is referred in the above scenario? Also briefly discuss the steps suggested to the
auditors for planning such an audit.
Answer ➢ In the given scenario, in view of the objectives discussed, performance audit is being referred.

The following steps are suggested to the auditors for planning while conducting the performance
audit:

(A) Understanding the Entity/Programme - It is the starting point for planning individual
performance audit.

➢ The auditor may use the following sources for understanding the entity:
(i) Documents of the entity: Documents on administration and functions of the entity, policy files,
annual reports, budget documents, accounts, minutes of meetings, information on the website,
internal audit reports, electronic databases and MIS reports, RTI material etc.
(ii) Legislative documents: Legislation, parliamentary questions and debates, reports of the Public
Accounts Committee, the Committee on Public Undertakings, the Estimates Committee, and
letters from Members of Parliament.

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