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Generally, in companies and other big organizations, ownership and management are separate. This means the real owners of the business have to rely on executives to make the correct decisions and take the due course of action as per the law. This is where the concept of propriety audit is born.
Propriety audit has been described as an audit of the actions and decisions of the executives. The focus of such an audit is on the financial discipline, the authority structure, efficiency, rules and regulations and the protection of public interest.
Some of the important aspects of verification during a propriety audit are as follows
- Financial records and accounts are accurate and up to the mark
- The assets of the company are safeguarded and not misused
- Propriety audit will check the utilization of funds
- The results that are budgeted and expected are being met
One of the biggest use of propriety audit is for government companies and public organizations as such. In such organizations, there is heavy involvement of public funds and deposits.
And so public interest is a concern here. So a propriety audit will keep a check on improper expenditures, disregard for rules, wastage of public money and any such irregularities.