RST Ltd., a public sector company engaged in power generation, has recently completed five years of operations. The Board of Directors has requested…

(a) The audit required in this scenario is a Comprehensive Audit (Efficiency-Cum-Performance Audit). The areas covered in comprehensive audit naturally vary from enterprise to enterprise depending on the nature of the enterprise, its objectives and operations. The auditors combine aspects of Financial, Compliance and Performance audits. All the audit information is used in such a way that a holistic assessment is possible. Some of the issues examined in comprehensive audit are: (a) How does the overall capital cost of the project compare with the approved planned costs? Were there any substantial increases and, if so, what are these and whether there is evidence of extravagance or unnecessary expenditure? (b) Have the planned production or operational outputs been achieved? Has there been under-utilisation of installed capacity or shortfall in performance and, if so, what has caused it? (c) Has the planned rate of return been achieved? (d) Are the systems of project formulation and execution sound? Are there inadequacies? What has been the effect on the gestation period and capital cost? (e) Are cost control measures adequate and are there inefficiencies, wastages in raw materials consumption, etc.? (f) Are the purchase policies adequate? Or have they led to piling up of inventory resulting in redundancy in stores and spares? (g) Does the enterprise have research and development programmes? What has been the performance in adopting new processes, technologies, improving profits and in reducing costs through technological progress? (h) If the enterprise has an adequate system of repairs and maintenance? (i) Are procedures effective and economical? (j) Is there any poor or insufficient or inefficient project planning?