10 April 2014
1. effectiveness refers to a state of things (e.g.internal control system, computer system,cash collection system etc..)which satisfies the need of user (i.e. who want to put control) take one example. Bank want to put system on cash collection window for two purpose. One is to reduce any malpractices and another to quickly respond to depositer. So, in effectiveness audit, the aim of auditor is to check whether system in place is satisfying the objective of bank. 2. Efficiency refers to state of things which can be optimized with the minimum use of resources. take a very practical example, in a manufacturing industry, for the purpose of maintaining purchase record there are 3 assistant and 1 head is appointed. Now,head is demanding one more assistant for that you need to spend additional Rs. 7500/month. Now auditors role under efficiency audit is to check pre and post effect of appointment. That's call efficiency.
CAclubindia
