Page 315 - CA Final PARAM Digital Book.

results;
• assess and establish with evidence whether the observed direct or indirect social
and economic impacts of a policy are due to the policy or to other causes;

• assess the effectiveness of the program and/or of individual program
components;

• determine whether management has considered alternatives for carrying out the
program that might yield desired results more effectively or at a lower cost;
• identify ways of making programmes work more effectively.
• assess whether the programme complements, duplicates, overlaps or counteracts
other related programmes;
Author’s Note
There is controversy in this question — Answer provided as per May 16 RTP / Nov 18 RTP / Nov 18 exams
differ from each other, I think answer of Nov 18 RTP is best and recent, answer for Nov 18 Exams is too
short Above is the answer as per Nov 18 RTP which should be followed.

QNO Performance Audit - Audit Report Rejected Old Course-- (N22R, M23M)
600.005 #Unique
"Comptroller & Auditor General appointed Sambhav & Associates, a chartered accountant firm, to
conduct Performance audit of MAP Ltd., a public sector undertaking of Government of India. The firm
conducted the audit with a view to check all the expenses of the unit are in conformity with the public
interest and publicly accepted customs. The audit report submitted by audit firm was rejected by C&AG.
Give your opinion on the action of C&AG."
Answer In the given scenario, C&AG appointed Sambhav & Associates, a chartered accountant firm, to conduct
Performance Audit of MAP Ltd., a PSU of Government of India. The firm conducted audit with a view to

check all the expenses of the unit are in conformity to the public interest and publicly accepted customs
which is not Performance Audit.

A performance audit is an objective and systematic examination of evidence for the purpose of providing
an independent assessment of the performance of a government organization, program, activity, or
function in order to provide information to improve public accountability and facilitate decision-making by
parties with responsibility to oversee or initiate corrective action.

Performance audit in PSUs is conducted by the C&AG (Supreme Audit Institutions) through various
subordinate offices of Indian Audit and Accounts Department (IAAD). In conducting performance audit, the
subordinate offices are guided by manual and auditing standards prescribed by C&AG.

Therefore, the objectives of performance auditing are evaluation of economy, efficiency, and effectiveness
of policy, programmes, organization and management. It also promotes accountability by assisting those
charged with governance and oversight responsibilities to improve performance; and transparency by
affording taxpayers, those targeted by government policies and other stakeholders an insight into the
management and outcomes of different government activities.

Performance auditing focuses on areas in which it can add value which have the greatest potential for
development. It provides constructive incentives for the responsible parties to take appropriate action.

Regulations on Audit and Accounts issued by C&AG lay down that the responsibility for the development of
measurable objectives and performance indicators as also the systems of measurement rests with the
Government departments or Heads of entities. They are also required to define intermediate and final
outputs and outcomes in measurable and monitorable terms, standardise the unit cost of delivery and
benchmark quality of outputs and outcomes.

Thus, rejection of audit report (submitted by audit firm) by C&AG is in order as audit with a view to mere
check all the expenses of the unit are in conformity to the public interest and publicly accepted customs
done by audit firm is not performance audit in all aspects.

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