Para 3.8.1 — MSO (Audit)
Original Rule Text
3.8.1 Regularity audit and propriety audit, which are generally applied to individual transactions, alone are not adequate for an assessment of the implementation and results of a plan, project, programme or scheme, or the functioning of an organisation in terms of its goals and objectives. Such an assessment can be made only on the basis of a comprehensive review of the projects, programmes, schemes, organisations, etc. in terms of their goals and objectives aimed at ascertaining the extent to which the expected results have been achieved from the use of available resources of money, men and materials. This audit is known as Efficiency-cum-Performance Audit (ECPA) or Value for Money (VFM) Audit. ECPA is a technique of audit adopted to assess and evaluate the economy, efficiency and effectiveness of development schemes, projects or organisations and hence this branch of audit is also known as Economy, Efficiency and Effectiveness Audit or the Three Es Audit. Economy means operation at the lowest possible cost, while efficiency is the maximization of outputs from a given input. Effectiveness deals with achieving the programmed objectives and goals and ensuring that intended benefits arise in real terms
What This Means
Regular transaction-level audit (regularity and propriety) is not sufficient to assess whether government programmes, projects, or organizations are achieving their intended goals. A broader review is needed — called Efficiency-cum-Performance Audit (ECPA) or Value for Money (VFM) audit — which evaluates economy, efficiency, and effectiveness (the 'Three Es'). Economy means operating at the lowest possible cost, efficiency means maximizing outputs from given inputs, and effectiveness means achieving the programmed objectives and ensuring intended benefits materialize.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Regularity and propriety audit alone cannot assess programme outcomes
- 2ECPA/VFM audit evaluates economy, efficiency, and effectiveness (Three Es)
- 3Economy: operating at lowest possible cost
- 4Efficiency: maximizing outputs from given inputs
- 5Effectiveness: achieving objectives and delivering intended benefits
Practical Example
A state government scheme for rural electrification has been running for five years with Rs 500 crores spent. Regularity audit confirmed all payments were properly sanctioned and vouched. However, an ECPA review reveals that only 40% of targeted villages were electrified (poor effectiveness), the per-village cost was 60% higher than comparable schemes (poor economy), and equipment purchased was underutilized due to poor maintenance systems (poor efficiency). These findings would not emerge from transaction-level audit alone.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
How is ECPA different from regular audit?▼
Why is it called 'Three Es Audit'?▼
Does ECPA replace regularity and propriety audit?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.