## Audit of Government Expenditure — Five Basic Standards

The audit of government expenditure is one of the major components of government audit. The basic standards ensure that spending is authorised, rule-compliant, properly sanctioned, within budget, prudent, and effective.

### The Five Standards (types of expenditure audit)

#	Standard	Called As
1	Expenditure conforms to statutory provisions, Financial Rules and Regulations framed by competent authority	Audit against Rules and Orders
2	Expenditure is covered by a sanction (special or general) from competent authority	Audit of Sanctions
3	A provision of funds exists, authorised by competent authority, within which expenditure is incurred	Audit against Provision of Funds
4	Expenditure is incurred with due regard to broad principles of financial propriety	Propriety Audit
5	Programmes, schemes, and projects where large expenditure is incurred are run economically and yield expected results	Performance Audit

### Memory Aid — RSPP-P

Rules and Orders
Sanctions
Provision of Funds
Propriety
Performance

Worked example

### Example 1

MTP 1 Question: The audit of Government expenditure is a major component of Government audit. Briefly explain the basic standards set in relation to audit of Government expenditure.

Answer structure: Five standards — (i) Audit against Rules and Orders: conformity with statutes and financial regulations; (ii) Audit of Sanctions: existence of special/general sanction from competent authority; (iii) Audit against Provision of Funds: authorised budget provision exists; (iv) Propriety Audit: adherence to principles of financial propriety; (v) Performance Audit: economy and effectiveness of large programmes/schemes.

⚠️ Common exam mistakes

Confusing 'audit of sanctions' with 'audit against provision of funds' — sanctions relate to approval authority; provision relates to budget availability
Omitting Performance Audit (standard 5) in exam answers — it is often the most neglected
Using the wrong label — each standard has a specific name that the examiner expects
Mixing up 'propriety audit' with 'compliance audit' — propriety audit checks prudence and financial ethics, not just rule compliance

Reference:

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Government Audit – Standards for Audit of Government Expenditure

Worked example

⚠️ Common exam mistakes