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QNO Propriety Audit (General Principles) Old Course-(M08R, N08E, M11R, M11E, M12R, SM17, PM17, SM21)
602.000 TITANIUM CNO – PSU.140
What are the principals involved regarding “Propriety audit’ in the case of Public Sector Undertaking?
Answer ➢ Principles: -
Propriety requires the transactions, and more particularly expenditure, to conform to certain
general principles. These principles are:
that the expenditure is not prima facie more than the occasion demands (E.g. Car of 1
crore for MPs)and that 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; (E.g. 50 cars were ordered without quotations)
that the authority exercises its power of sanctioning expenditure to pass an order which
will not directly or indirectly accrue to its own advantage;(E.g. Cars were used by
government employees or given for rent)
that funds are not utilized for the benefit of a particular person or group of persons and
(E.g. Benefit was given only to ruling parties)
that, apart from the agreed remuneration or reward, no other avenue is kept open to
indirectly benefit the management personnel, employees and others. (E.g. Bribes were
paid to government employees)
QNO Propriety Audit (Company Act)- Old Course-- (M04E, M12R, N12E, M15R, N16M, SM17,
603.000 TITANIUM CNO -- Unique PM17, M18E, M19M, N19R, SM21)
Write a short explanatory note on – Areas of propriety audit under Section 143(1) of the Companies Act,
2013
Answer ➢ Areas of propriety audit under Section 143(1):
Section 143(1) of the Companies Act, 2013 requires the auditor to make an enquiry into certain
specific areas. In some of the areas, the auditor has to examine the same from propriety angle as
to
whether loans and advances made by the company on the basis of security have been
properly secured and whether the terms on which they have been made are prejudicial to
the interests of the company or its members;
whether transactions of the company which are represented merely by book entries are
prejudicial to the interests of the company; Again, considering the propriety element,
rationalizing the proper disclosure of loans and advance given by company is made;
where the company not being an investment company or a banking company, whether so
much of the assets of the company as consist of shares, debentures and other securities
have been sold at a price less than that at which they were purchased by the company;
whether loans and advances made by the company have been shown as deposits;
whether personal expenses have been charged to revenue account;
where it is stated in the books and documents of the company that any shares have been
allotted for cash, whether cash has actually been received in respect of such allotment,
and if no cash has actually been so received, whether the position as stated in the account
books and the balance sheet is correct, regular and not misleading. A control has been set
up to verify the receipt of cash in case of allotment of shares for cash. Further, if cash is
not received, the books of accounts and statement of affairs shows the true picture.
QNO C&AG (Audit Report)- Old Course-- (N17E, M19E, N21E)
604.000 TITANIUM CNO – PSU.240 New Course—(SM23)
Contents of audit report given by Comptroller & Auditor-General of India.
Answer ➢ Contents of Audit Report of the Comptroller and Auditor General:
For facility of consideration, the reports of the Comptroller and Auditor General on the
public sector undertakings of the Central Government are presented to the Parliament in
several parts consisting of the following:
• Introduction containing a general review of the working result of Government
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