Unnati Rathi RathiUnnati Rathi rathi asked 11 months ago
1 Answers
RaviRavi Staff answered 11 months ago

Meaning: – Propriety Audit stands for verification of transactions on the tests of –
Public Interest
Commonly accepted customs and
Standards of Conduct
Emphasis/Scope: Instead of too much dependence on documents, vouchers and evidence, it shifts the emphasis to the substance of 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 officer 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: – 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 (Eg 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; (Eg 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; (Eg 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 (Eg 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. (Eg Bribes were paid to government employees)

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