Types of audits conducted by the Comptroller and Auditor General of India

Financial audit 

An audit is primarily conducted to express an audit opinion on a set of financial statements so as to enhance the degree of confidence of intended users. Audit opinion expressed as to whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework or whether the financial statements are presented truly and fairly, in all the material respects which is required, or give a true and fair view, in accordance with the financial reporting framework.

Compliance audit 

A compliance audit is an independent assessment of whether a given subject matter is in compliance with the applicable authorities identified as criteria.  Compliance audits are carried out by assessing whether activities, financial transactions, and information comply in all material respects, with the authorities which govern the audited entity. 

Compliance auditing may be concerned with: 

  • Regularity- adherence of the subject matter to the formal criteria emanating from relevant laws, regulations, and agreements applicable to the entity. 
  • Proprietary- observance of the general principles governing sound financial management and the ethical conduct of public officials. 

While regularity is the main focus of compliance auditing, proprietary is equally pertinent in the public sector context, in which there are certain expectations concerning financial management and the conduct of officials. 

Comprehensive audit 

Comprehensive audit in overall efficiency and effectiveness of public Enterprises. This is done by reference to certain predetermined standards, objectives, and criteria. The starting point of a comprehensive audit of a public enterprise, which covers the aspect of the economy, efficiency, and effectiveness, is the preparation of an audit program based on the study of decisions relating to the setting up of the enterprise, its objectives, and operational budget and other relevant available papers. These audit programs or guidelines identify the areas/aspects which are required for the detailed audit analysis. 

Propriety audit 

The propriety audit stands for the verification of transactions on the basis of public interest, commonly accepted customs, and standards of conduct. 

Instead of too much dependence on documents, vouchers, and evidence, it shifts the emphasis to the substance of the transaction and looks into the appropriateness thereof on a consideration of financial prudence, public interest, and prevention of wasteful expenditure. 

Thus proprietary audit is concerned with the scrutiny of executive actions and decision bearing on financial and profit and loss situation of the company with special regard to the public interest and commonly accepted customs, and standards of conduct. 

Performance audit

A performance audit is an objective and systematic examination of the evidence to provide an independent assessment of the performance of a government organization, program, activity, or function to provide information to improve public accountability and facilitate decision-making by parties with responsibility to oversee or initiate corrective action. Planning a performance audit some factors to be considered like significance and the need of potential users of audit report, obtaining and understanding of the program to be audited, identify the significant finding and Recommendation from a previous order that could affect the current audit objectives, identify the significant findings and recommendations from the previous audit that could affect the current objectives, consider whether the word of other auditors and experts may be used to satisfy some of the auditor’s objective, a potential source of data that could be used as audit evidence and considered the validity and reliability of the data.

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