manual of the inspection civil wing
TRANSCRIPT
OFFICE OF THE
PRINCIPAL ACCOUNTANT GENERAL (AUDIT)
PUNJAB, CHANDIGARH
MANUAL OF THE
INSPECTION CIVIL WING
VOLUME I
Fourth Edition
PREFACE TO THE FIRST EDITION
This Manual is intended to be a guide for the officers and staff of the Outside
Audit Department. All important orders issued upto 28th February, 1950, have been
incorporated in this book. It is published in two volumes: Volume I deals with
constitution, functions and the rules and procedure of the Department and Volume II
contains instructions regarding the detailed processes of audit of the various offices
and institutions, and compilation of rulings, and important orders issued in this
connection.
2. The Superintendent, Outside Audit Department, will be responsible for
keeping the Manua l up-to-date and for seeing that the orders necessitating any
modifications, additions etc., are incorporated in the Manual with care and
promptitude.
The auditors employed in the Outside Audit Department should make
themselves familiar with the procedure contained in this Manual.
3. The manual is not intended for the use of officials of other departments and
Auditors should not quote it as an official reference in their reports.
4. Any errors or omissions and suggestions for improvement should be brought
to the notice of the Examiner, Outside Audit Department, Punjab.
Simla
The 31st March, 1950. R.C. KHANNA
Accountant General, Punjab, Simla
3
PREFACE TO THE SECOND EDITION
In this second edition of the Manual of the Outside Audit Department,
Volume I, the material contained in the previous edition has been adopted with such
modifications as have been necessitated by the changes which have taken place after
the publication of the 1st Edition in 1950. The latest orders issued by various
authorities have also been incorporated.
2. The Superintendent, O.A.D. (N.C.W.I.) Section will be responsible for
keeping the Manual up-to-date and for ensuring that all orders of an important
nature which may affect the practices or procedures followed in the O.A.D.
are incorporated in the Manual with care and promptitude.
3. Any errors and omissions noticed in this Manual or any suggestions for its
improvement will be appreciated and should be brought to the notice of the
Accountant General through O.A.D. (N.C.W.I.) Section.
SIMLA
The 30th January, 1961. P.D. SETH
Accountant General, Punjab, Simla
4
PREFACE TO THE THIRD EDITION
In this third edition of the Manual of Inspection Civil Wing Volume I, the
material contained in the previous edition has been adopted with the modifications
considered necessary on account of the changes which have taken place and orders
issued subsequent to the publication of previous edition in 1961. The latest orders
issued by various authorities have also been incorporated.
2. Chapters VIII and IX dealing with the audit of Commercial Accounts have
been omitted as the Commercial Audit has since been separated under
Commercial Audit Wing. Chapter X relating to audit of Grant-in-aid has been
re-drafted in order to incorporate the orders of the Comptroller and Auditor
General, regarding Audit of Receipts and Expenditure of Bodies or Authorities
substantially financed by Grants or Loans. A new Chapter on Efficiency-cum-
Performance Audit has been added.
3. The Section Officer Incharge, Inspection Civil Wing Headquarters Section
will be responsible for keeping the Manual up-to-date and for ensuring that the
orders necessitating any modifications, additions, etc., are incorporated in the
Manual with care and promptitude.
4. Any errors or omissions and suggestions for its improvement should be
brought to the notice of the Accountant General through Inspection Civil
Wing.
CHANDIGARH The 9th January, 1980.
L.P. KHANNA, Accountant General (Audit)
Punjab, Chandigarh
5
PREFACE TO THE FOURTH EDITION
This is the fourth edition of the Manual of Inspection Civil Wing (Volume I),
brought out after the separation of Audit and Accounts functions in the Indian Audit
and Accounts Department with effect from March, 1984. In this edition, the material
contained in the previous edition has been adopted with the modifications considered
necessary on account of the changes which have taken place and orders issued
subsequent to the publication of previous edition in 1980. This edition also includes
Indian Auditing Standards published by IA&AD in May 1994 and also incorporates
the latest instructions issued by various authorities from time to time and wherever
possible best International Audit practices consistent with IA&AD mandate. The
instructions contained in this Manual are supplementary to those contained in
Comptroller and Auditor General's Manual of Standing Orders (Audit) Edition 2002.
This Manual has been compiled for use in I.A.&A.D. only and should not be
quoted as authority in any correspondence with other offices.
The Inspection Civil – I wing will be responsible for keeping the Manual up to
date and ensure that all orders affecting changes are incorporated in the Manual with
due care and promptitude.
Suggestions for improvement of this Manual are welcome and should be
brought to the notice of the Principal Accountant General through Inspection Civil
Wing.
SUNIL VERMA Principal Accountant General (Audit)
Punjab, Chandigarh
I
TABLE OF CONTENTS
Chapter-I General Constitution and Functions 1.1 to 1.5 Constitution and Sanctioned strength 1.6 Functions 1.7 to 1.8 Preparation of tour programme 1.9 Undertaking of New Audit 1.10 Special Audit 1.11 Incidence of the cost of the Department 1.12 to 1.13 Consent Audit 1.14 to 1.17 Method of calculation of Audit Fee. Chapter-II Duties and Powers 2.1 Duties and Powers of the Senior Deputy Accountant General/Deputy
Accountant General (I-C). 2.2 Embezzlement 2.3 Inspections 2.4 Duties of Senior Audit Officer/Audit Officer (Headquarters) 2.5 Duties of Inspecting Officers 2.6 Duties of Headquarter Section/Audit Units and other sections 2.7 Distribution of work at Headquarters 2.8 Duties of Assistant Audit Officer/Section Officer-(Headquarters) Chapter III General Rules and Procedure 3.1 Applicability of Manual of Office Procedure and of G.S.M. Branch. 3.2 Conduct Rules 3.3 Hours of Attendance 3.4 Attendance Register 3.5 Penalty for late attendance 3.6 Combination of half casual leave with Regular leave 3.7 Sitting late hours 3.8 Attendance on holidays 3.9 Absence without leave 3.10 Arrangement of work when Group Officer (Inspection Civil) on tour. 3.11 Sectional duty lists. 3.12 Verification of sanctioned strength 3.13 Skeleton Register 3.14 Marking of Sectional Diary 3.15 Report of pending cases 3.16 Remarks on letters 3.17 Report of outstanding letters 3.18 Sending out of letters and Memoranda received from the Comptroller and
Auditor General. 3.19 Signing of letter and statements to be sent to the Comptroller and Auditor
General/Government of India/State Government. 3.20 Issue of Telegrams 3.21 Disposal of unofficial references 3.22 Complaints 3.23 Anonymous or Pseudonymous letters 3.24 Issue of Reminders
II
3.25 Annotated reply of Inspection Reports 3.26-3.27 Opening and Maintenance of files 3.28 Transfer of cases to other Sections 3.29 Closing of files and cases 3.30 Dictionary of references 3.31 Monthly Reports 3.32 Calendar of Returns 3.33 Failure of Audit 3.34 Register of serious financial irregularities 3.35 Co-ordination between Central Audit and Local Audit. 3.36 Making available Departmental files to Audit 3.37 Loss of Accounts records having financial implications. 3.38 Check Register of weekly Diaries of Local Auditors 3.39 Leave other than casual leave 3.40 Casual Leave 3.41 Compensation leave 3.42 Travelling Allowance 3.43 Drawl and disbursement of Pay 3.44 Attachment of Pay 3.45 Pre-requisites in connection with the production of official documents in
a Court of Law 3.46 Office Records 3.47 to 3.49 Scrutiny of Rules and Orders 3.50 Correction to the Inspection (Civil) Manual Chapter IV- Rules of Procedure for the Local Inspection Staff 4.1 General Duties of the Inspection staff 4.2 Strength of Local Audit Parties 4.3 Time allotment 4.4 Extension in time allotment 4.5 Time allotment for Important/long duration Audit. 4.6 Review of time allotment. 4.7 Programme 4.8 Telegrams 4.9 Weekly Diaries 4.10 Period covered by local Audit 4.11 Quantum of Gazetted Supervision 4.12 Intimation of dates of Audit and Inspection 4.13 Accommodation 4.14 Intimation to the Head Office and Monthly Report 4.15 Working hours and Pattern of holidays 4.16 Attendance 4.17 Calling of list of payment for local audit. 4.18 Distribution of work on Inspections 4.19 Defalcations and frauds 4.20 Guidelines for Detection of defalcations and frauds 4.21 Conduct of local Audit. 4.22 Organising local audit work of Important/long duration audit inspections
III
4.23 Postponement and suspension of local Audit 4.24 to 4.26 Attitude of Auditors 4.27 to 4.36 General Audit Instructions 4.37 Check of Cash 4.38 to 4.39 Depreciation 4.40 to 4.42 Raising and Pursuance of objections 4.43 Settlement of old objections 4.44 Report on failure of Audit 4.45 to 4.46 Fixation of responsibility on failure of audit 4.47 Certificates to Government servants of office inspected 4.48 Matter dealt with by auditors to be kept confidential. Chapter-V Central Audit 5.1-5.2 Central Audit 5.3 Central Audit Parties 5.4-5.6 Duties of Central Audit Parties 5.7 Audit enfacement on the vouchers 5.8 Completion of Audit 5.9 Objections on vouchers 5.10 Central Audit Support Section 5.11 Audit of Sanctions 5.12 Co-ordination between CAP and CASS Section 5.13 Audit of Loan and Deposit vouchers 5.14 Quantum of Central audit 5.15 Review of vouchers Chapter-VI Audit Reports 6.1 Collection of information, copies of documents in support of objections
etc. 6.2 Issuing of advance copies of para to the Head of Office 6.3 Compilation of results of Audit 6.4 Pattern of Audit and Inspection Report 6.5 Instructions for drafting of Audit and Inspection Report 6.6 Language and tone of the Audit and Inspection Report 6.7 Discussion of Audit and Inspection Reports 6.8 Test Audit Notes 6.9 Submission of Audit and Inspection Report 6.10 Documents to be appended with the Audit and Inspection Reports 6.11 Procedure for dealing with draft Audit and Inspection Reports in the
Head Office 6.12 Preliminary checks 6.13 Vetting of Audit and Inspection Reports 6.14 Issue of Audit and Inspection Reports 6.15 Time schedule for issue of Audit and Inspection Reports 6.16 Signing of typed copies of Audit and Inspection Report 6.17 Records of objections in the Objection Book 6.18 Authorities to whom copies of Audit and Inspection Reports are to be
sent 6.19 Audit of entertainment and other allowance of President/Governors. 6.20 Audit undertaken on behalf of other Accountant General
IV
6.21 Progress Register of Settlement of Audit and Inspection Reports 6.22 Production of Audit and Inspection Note in a Court of Law. 6.23 Advance Audit Comments 6.24 Annotated copies Chapter - VII
Material for Audit Report
7.1 Material to be supplied to Report Section by Inspection Civil Wing 7.2 Selection of material 7.3 Procedure for preparation of draft paras for inclusion in the Audit Report 7.4 Draft Para on rush of expenditure 7.5 Outstanding audit observations and Inspection Reports 7.6 Expeditious finalization of material for Audit Reports (Central and Civil) 7.7 Miscellaneous instructions Chapter - VIII
General Principles and Processes of Local Audit
8.1-8.3 General Instructions 8.4 General Examination of Accounts 8.5 Detailed Test Audit 8.6 Audit of Receipt 8.7 Audit of Demand Register 8.8 Audit of Receipt Books 8.9 Audit of Cash 8.10 Audit of Cash Book 8.11 Physical verification of cash by Audit 8.12 Accounts of Permanent Advances 8.13 Register of valuables 8.14 Accounting of non-Government money 8.15 Scrutiny of Treasury challans 8.16-8.17 Audit of Expenditure 8.18 Audit of vouchers relating to Central/Punjab Government Employees
Insurance Scheme 8.19 Bill Register 8.20 Money order Acknowledgments 8.21 Value Payable covers 8.22-8.23 Rush of expenditure 8.24 Audit of Stores and Stock Accounts 8.25 Stores and stock Accounts 8.26 Stock Books 8.27 Registers of Immovable Property 8.28 Registers of Forms 8.29 Stationery Registers 8.30 Registers of Telephones and Trunk Calls 8.31 Accounts of Securities 8.32 Audit of contingent expenditure 8.33 Transmitting of paid vouchers to field parties 8.34-8.35 Audit of Contingent Registers 8.36 Audit checks to be applied to contingent expenditure 8.37 Audit of Purchases
V
8.38 Check of Service Books 8.39 Check of Leave Account 8.40 Check of increment certificates and records of Arrear Payments 8.41 Check of tenders and comparative statements 8.42 Check of Contracts and Agreements 8.43 Verification of Remittance to Treasury. 8.44 Verification of withdrawal from the Treasury 8.45 Check of Log-Books of Government Vehicles 8.46 Audit of Establishment Pay Bills 8.47 Test Check of T.A. Bills in regard to counter Signatures 8.48 Audit of T.A. Bills 8.49 Nominal Audit of Establishment Pay Bills 8.50 Nominal check to be conducted during local Inspection 8.51 Checks exercised in local Audit of Establishment charges 8.52 Checks of Stamp Account 8.52 (A) Audit of General Provident Fund Accounts 8.53 Audit of Pay and Accounts Offices and D.D.O’S 8.54 Procedure regarding verification of withdrawal by the D.D.O. of the
Ministries/Department during local Audit. 8.55 Procedure regarding local Audit of Accounts of Public Sector Banks 8.56 Sending copies of Inspection Reports to Bank Authorities and Ministry
of Finance 8.57 Audit of Pension Payment through Public Sector Banks 8.58 Audit checks to be exercised in local audit of Pension Payments 8.59 Audit of Public Provident Fund Scheme 1968 8.60 Introduction of vertical Audit 8.61 Introduction of Audit Planning 8.62 Portfolio Section 8.63 Appropriation of Departmental receipts for meeting Departmental
expenditure. 8.64 Audit of Personal Ledger Account Chapter IX Audit of Grants/Loans under Section 14, 15 and 20 of C.A.G.’S
(DPC) Act, 1971. 9.1-9.5 G.I.A. Section 9.6 Audit under Section 14 of the C.A.G.’s (DP&CS) Act, 1971 9.7 Scope of Audit 9.8-9.10 Arrangement of Audit under Section 14 before Certification of Accounts 9.11-9.13 Audit of the Accounts of Small Farmers Development
Agencies/Marginal Farmers and Agricultural Labourers Agencies situated in various States under Section 14
9.14 Guidelines for conducting Audit under Section 14 9.15 Keeping on record copies of Accounts of Bodies/Authorities audited 9.16-9.19 Audit under Section 15 of C.A.G’s (DP&CS) Act, 1971 9.20-9.26 Scope of Audit 9.27 Grants-in-aid pertains to the year of its drawl 9.28-9.29 Specific purpose grants/loans to Government Companies and other
organizations under audit of the Commercial Wing 9.30-9.31 Audit of Accounts of Co-operative Societies
VI
9.32 Audit of the Punjab State Co-operative Supply and Marketing Federation 9.33 Audit under Section 20 of C.A.G’s (DP&CS) Act 1971 9.34 Quantum of Audit 9.35 Audit of Accounts of Central School Organization (Kendriya Vidyala
Sanghathan) under Section 20. 9.36 Recovery of the cost of audit of bodies and authorities under C.A.G’s
(DP&CS) Act, 1971. 9.37 Issuing of Inspection Reports 9.38 Drafting of Inspection Reports 9.39 Certificates to be furnished with Audit and Inspection Report under
Section 14 and 15 of C.A.G.’s Act, 1971. 9.40 Pursuance of Inspection Reports 9.41-9.47 Reporting of results of audit under Section 14 and 15 9.48 Certificate of accounts of Autonomous Bodies and State Legislature and
laying of certified Accounts on the table of Parliament/State Legislature. 9.49 Laying of audited accounts and separate audit reports of Central/State
Autonomous Bodies before Parliament/State Legislature(s) 9.50 Improvement in quality and contents of Separate Audit Reports (SARs)
and Certification of annual accounts of Central/State autonomous bodies whose audited accounts are placed before the Parliament/Legislatures
Chapter X Efficiency-cum-Performance Audit 10.1 Introduction 10.2 Nature of Audit 10.3 Selection of the Scheme 10.4-10.5 Process of Review 10.6 Preliminary study 10.7 Report to Headquarters Office based on preliminary study 10.8 Development of Audit Plan 10.9-10.10 Review 10.11-10.14 Drafting of Report 10.15-10.16 Review Parties 10.17-10.24 Collection of the material 10.25 Data Bank 10.26 Audit of World Bank and other Externally Assisted Projects - Audit
objectives and scope 10.27 Source documents 10.28 Document essential for Audit certification 10.29 Audit approach 10.30 Issue of Audit Certificate 10.31 Main points to be checked in Different Audit Areas 10.32 Project decision and implementation 10.33 Audit of implementing agencies 10.34 Audit Certificate 10.35 Systems Audit/Introduction 10.36 General principles 10.37 Source documents 10.38 Main stages of systems audit 10.39 Organisational analysis
VII
10.40 Analysis of system of authorization and recording 10.41 Analysis of system of accounting 10.42 Examination of system of internal control 10.43 Evaluation of standards of quality and performance 10.44 Examination of the system of internal audit 10.45 Review and evaluation 10.46 Manpower Audit/Introduction 10.47 Audit approach 10.48 Source documents 10.49 Issues for audit scrutiny - Job analysis, description and specification 10.50 Assessment of manpower requirements 10.51 Allocation and regulation of manpower resources 10.52 Norms/standards adopted for computation of requirements 10.53 Control of manpower 10.54 Training of manpower 10.55 Use of computerized data base 10.56 Audit of Computerised Systems/Introduction 10.57 Controls in a Computer System 10.58 Significance of controls 10.59 Objectives of Computer Controls 10.60 Audit objectives and scope 10.61 Preliminary evaluation 10.62 Audit methodology 10.63 Audit techniques 10.64 Issues for audit scrutiny - Audit of Acquisition 10.65 Audit of Systems Development 10.66 Categories of Systems Development Audit 10.67 Association of audit in systems development 10.68 Main points to be checked by audit 10.69 Audit of Operation and Maintenance - General Controls 10.70 Organizational controls 10.71 Segregation of duties 10.72 Physical Access Control 10.73 Authorisation Control 10.74 Logical Access control 10.75 Operation and File Controls 10.76 Change Management Controls 10.77 Network Communication Security Controls 10.78 Service Continuity Planning 10.79 Important points to be checked in audit 10.80 Application Controls 10.81 Documentation Standards 10.82 Input Controls 10.83 Data Transmission Controls 10.84 Processing Controls 10.85 Output controls 10.86 Master/Standing Data File Controls
VIII
10.87 Audit requirements 10.88 Important points to be checked 10.89 Audit Trail 10.90 Internal Audit – Introduction 10.91 Arrangements for Internal Audit 10.92 Use of VLC data in Audit - Audit with VLC 10.93 Audit of accounts 10.94 Audit of vouchers 10.95 Audit of entitlement work 10.96 Audit of sanctions 10.97 Use of VLC in field audit - Audit planning 10.98 Local audit and scheme reviews 10.99 Use of VLC in Certification Audit
IX
APPENDICES
I List of registers and forms etc., used in the Inspection Civil
II Destruction of Records
III Calendar of Returns
IV Instructions issued by the Comptroller and Auditor-General of India for the calculations of the daily rates of Audit Fee
CHAPTER I – GENERAL
CONSTITUTION AND FUNCTION
Constitution and Sanctioned strength
1.1 The Inspection Civil Wing has been cons tituted for conducting local audit of
the accounts of Civil Departments/Offices of the State and Central Government. The
audit conducted centrally in this office is supplemented by periodical test audit of
initial accounts, documents vouchers etc., with a view to ensure the propriety and the
accuracy of the original data on which the accounts of an office are based and
submitted to this office. Due to increase in the volume of work, the wing is divided in
two parts i.e. Inspection Civil I & II.
1.2 (a) The organisation chart of the Inspection Civil Wing as on 31-12-2004 was as
under:
Organisation Chart IC-I
* including one Supervisor
Sr. DAG/DAG IC-I
Sr. AO - HQ Sr. AO (Vetting) Sr. AO DP
AAO-1
SR/AR-7
Clerks-2
Sr. AO (CAP/CASS/VLC)
Vetting-I Vetting-II
AAO-1
SR/AR-5
Clerks-1
AAO-1
SR/AR-7
Clerks-1
Typists-1
AAO-1
SR/AR-3
Clerk-1
VLC
CASS-1
CASS-2
CAP-1
CAP-2
CAP-3
AAO -1 SR/AR-2
AAO-1
SR/AR-2 Clerks-1
AAO-1
SR/AR-2
Clerks-1
AAO-1
SR/AR-4
AAO-1
SR/AR-10
AAO -1
SR/AR-10
Field Parties 19
Sr. AO/AO 17
AAO/SO 32*
SR/AR 12
2
Organisation Chart IC-II
* including 2 Supervisors
Headquarters section of Inspection Civil I & II is the controlling section and exercises
control over the administration and working of field audit parties.
1.2 (b) The field audit work has been distributed among the following types of field
audit parties:
(i) Review parties for carrying out efficiency cum performance audit.
(ii) Audits under Sections 14, 15, 19 & 20 conducted locally by scrutiny of
records of the sanctioning authorities and autonomous bodies.
(iii) Field Audit Parties for conducting local audit and inspections of the accounts
of the State and Central Government Offices falling under the jurisdiction of
this Office.
1.3 The local audit party normally consists of one Section Officer/Assistant Audit
Officer and two auditors. However, parties which conduct important audits consist of
two Section Officer/Assistant Audit Officers and one auditor.
1.4 It has been decided by the Comptroller and Auditor General that two auditors
for three parties in the field plus one auditor for preparation of programmes and other
miscellaneous work should be posted at Headquarters section and where the number
of field parties is more than 20, one additional auditor may be given.
Sr. DAG/DAG (IC-II)
Sr. AO – HQ Sr. AO – Vetting Sr. AO – DP
AAO-1
SR/AR-4
Clerks-2
Vetting I Vetting II GIA
AAO-1
SR/AR-6
Clerks-1
Typists-1
AAO-2
SR/AR-8
Clerks-1
Typists-1
AAO-1
SR/AR-5
Clerks-1
Typists-1
AAO-1
AR-3
Field Parties 28
Sr. AO/AO -22
AAO/SO 31*
SR/AR 25
3
(Comptroller and Auditor General’s letter no. 1644-Admn. III/268-80, dated 12th August, 1960)
1.5 It has also been decided that the posts of relieving Section Officer/Assistant
Audit Officer may be provided in the Wing at the rate of 15 percent of the total
number of regular field parties subject to availability of Section Officers/Assistant
Audit Officers.
(Comptroller and Auditor General’s Circular No. 47-T.A./1/80 issued vide no. 844-T.A. I/102-80, dated 23rd August, 1980 as modified vide circular No. 39-T.A. I/81/assessed vide Endst. No. 1186/TA I/102-80, dated 28.9.81)
Functions
1.6 The Inspection Civil Wing is responsible for conducting local audits and
inspections of the accounts of the State and Central Government offices and
departments for the audit of which the Comptroller and Auditor General is statutory
responsible under the Comptroller and Auditor General’s (Duties, Powers and
Conditions of Service) Act, 1971 Annexure I to this Chapter.
Preparation of Tour Programme
1.7 (a) Maintenance of Master Programme Register
“Master Programme Registers should be maintained at the Headquarters
section of Inspection Civil wing district wise to show:
(i) the name of the office with full address and telephone number, if any to be inspected.
(ii) periodicity. (Iii) time allotment and (iv) the month and year last audited
The register should contain suitable column to record the dates of audits for
five years after which it should be prepared afresh, after deleting the offices not in
existence and adding newly formed offices. Any additions and alterations in the
existing entries in the register should be made at once quoting full reference to the
relevant orders under the dated initials of the Branch officer. The register should be
put up to Branch Officer on Ist of each month and to Group Officer quarterly on 15th
April, July, October and January.
(b) With the help of the Master Programme Register, quarterly Tour Programme
of the local audit parties should be prepared. No hard and fast rules can be laid down
in this behalf, but the following requirements should be ensured:-
4
(i) The tour programme of the local audit parties should be prepared indicating
(1) Designation of the D.D.O. and name of office, telephone No., if any, (2)
periodicity,(3) period from which an audit is due and (4) time allotment (5) Holidays.
(ii) An office should normally be included in the programme of audit in the month
in which the inspection falls due.
(iii) As far as possible all inspections to be carried out in a particular station or area
should be conducted at a single visit in each quarter of the year to ensure maximum
economy in T.A. The programme should be so framed that normally the field parties
follow the shortest and direct routes, and there is no-over- lapping or covering of the
same routes again by the same party or any other party.
(iv) the dates of inspection of commercial or civil units where proforma accounts
have to be checked and certified, should normally be fixed in such a way that all the
work may be completed in a single visit to that office, sufficiently before the due date
of transmission of proforma accounts to the State Govt./Government of India or the
Accountant General.
(v) To ensure maximum output transit days to the field parties should be allowed
on Sundays and holidays.
1.8 (a) The local audit programme may be organized in such a way as to ensure that
audit of bodies and authorities selected under Section 14 and 15, and the audit of
which is entrusted under Section 19 of the Comptroller and Auditor General
(DP&CS) Act. 1971 and other institutions the audit of which devolves on Comptroller
and Auditor General under any law made by Parliament is completed according to the
Audit Plan drawn out annually before hand. The reviews of schemes selected should
also be completed with the existing staff. The balance of staff may then be deployed
on the normal work and it may be ensured that this is suitably phased so as to
complete it with the available staff. For this purpose, it may be necessary to review
the existing frequency and duration of the inspection of offices coming under the
usual local audit programme of the wing with regard to the importance of the audit of
particular office/institution. For example, the institutions, expenditures of which relate
mainly to salary and allowances and which are not likely to throw up important points
for inclusion in the Audit Report need be given only comparatively low priority in
such programme. The intention is that while all institutions should be covered in the
local audit programme over a period of time, it is not necessary to adhere to fixed
schedules of annual or triennial local audit in respect of institutions, financial
5
transactions of which are more or less of a routine nature and which do not generally
deal with development programme. The old yard-stick of fixed schedules of annual
and triennial local audit in respect of institutions have become obsolete and the
concept of any arrears in local audits should therefore not arise. All institutions
should, however, be covered in local audits over a period of time without any fixity of
schedules.
(Comptroller and Auditor General’s letter No.1062-BRS/192-74, dated 23rd April, 1975 and No.380-Codes-1/41-74/Gr.V dated 5th August, 1975)
(b) The programme of audit of accounts in respect of which financial statements
etc., are incorporated in the Appropriation Accounts and Audit Report, should be
arranged in such a manner that all the audits are concluded well in advance of the date
by which material has to be supplied to Appropriation Section.
Undertaking of new Audit
1.9(i) If the Accountant General is requested by Government or any other authority
to undertake audit which does not pertain to his office or regarding which the
Comptroller and Auditor General has issued no orders, he should refer the matter to
the Comptroller and Auditor General for orders.
(Para 1.1.8 C.A.G.’s M.S.O. (Audit) Edition - 2002
(ii) The Comptroller and Auditor General shall have the authority to audit and
report on the accounts of stores and stock kept in any office or department of the
Union or of a State under Section 17 of Comptroller and Auditor General’s (Duties,
Powers and conditions of Service) Act, 1971.
Special Audit
1.10(a) The special audit of an office or institution may be undertaken at the request of
the State Government when a report of fraud, misappropriation or any other serious
financial irregularity is received or when such irregularities are suspected.
(b) Where a special audit of an office/institution is demanded by the Government
for special reasons, e.g. suspected fraud, misappropriation or any other serious
financial irregularity, the Accountant General should comply even though extra cost is
involved. Before taking up the special audit of any department, the scope and extent
of such audit should be decided in consultation with the department and/or the
Government concerned under orders of the Accountant General. The Comptroller and
Auditor General may also be informed of the extent and scope of special audit
undertaken at the request of Government. The special audit undertaken for such
6
special reasons at the request of the State Government, will be in pursuance of the
statutory function of the Comptroller and Auditor General and cost thereof will fall on
the Audit Budget, vide rule (iii) of Appendix 3 to Account Code, Volume I, viz., “C-
Other charges-VIII incidence of expenditure involved in audit and keeping of
accounts.”
(c) The question of recovery of cost of audit will arise only when the audit of
certain formation/office is not to be the statutory function of the Comptroller and
Auditor General and has been undertaken on consent basis.
(d) In cases where special audit of accounts of guarantee institution is proposed by
the Government on account of suspected irregularities, the audit should be undertaken
with the least possible delay, irrespective of whether the accounts are complete or not.
An audit of even imperfect records would establish, prima facie, the nature of the
irregularities. On conducting this preliminary scrutiny of accounts, the institutions
may be permitted to complete their records after which a second and more complete
audit may be undertaken.
(e) With the departmentalisation of accounts of Central Government it has been
decided that in the case of Central Ministries/Departments whenever request for
special audit, investigation of frauds, etc., is received, the ministry/department
concerned should be advised to approach the Pay & Accounts Officer concerned first
for arranging the investigation as a part of internal audit. If in any case P&AO
requires the assistance of audit, only then the special audit may be undertaken.
However, the review should be done in detail of such of the cases of
fraud/embezzlements and other serious irregularities which come to notice during
audit or otherwise and critical review should be conducted, inter alia, of the results
and effectiveness of the internal audit investigation. Accountant General has
however, a right to take up on his own initiative, special audit of any office in which
fraud, etc. had taken place after obtaining the approval of the Comptroller and Auditor
General of India, wherever necessary.
(C.A.G.’s letter no. 285-T.A.I./110-77, dated 18th April, 1978)
Incidence of the cost of the Department
1.11 The cost of the Department is a Central charge and is debited under head
“2016”Audit
7
Consent Audit
1.12 With the promulgation of the C.A.G’s (DP&CS) Act, 1971 the practice of
undertaking audit on “consent” basis ceases and audit undertaken by the C.A.G. has to
be under one or other section of this Act or any other enactment of Parliament.
1.13 (a) Where the audit is super- imposed on the local body or institution having its
own auditors, i.e. with a view to safeguard government interest and to ensure that the
grants or loans by Government have been utilised for the purpose for ;which they are
given, the Comptroller and Auditor General will be acting in discharge of his statutory
functions and the audit will be at government cost.
(b) The question of recovery of cost of audit will arise only when the audit is not
the statutory function of the Comptroller and Auditor General and is undertaken on a
‘consent’ basis.
Method of Calculation of Audit Fee
1.14 Audit Fee recoverable from bodies and authorities is to be worked out as
detailed below:
(i) The Daily rates of Audit Fee on party basis as recoverable from non-govt
bodies is calculated by dividing the total of ‘Direct Charges” and “Indirect
Charges” for a year by number of working days in a year and is rounded of in
multiples of Rs.5.
(ii) Direct charges for the actual cost of the party engaged in local audit are
worked out by adding together the average cost under F.R. 9(31) and
appropriate allowance thereon. The average cost of the posts should be
worked out from time to time with the revision of scales, etc.
(iii) The ‘Indirect charges’ in connection with the gazetted supervision of the local
audit and the work done in audit office are taken to be 125 per cent of the
“Direct Charges” worked out in (ii) above.
(iv) The daily rates of Audit Fees should be worked out and approved by the head
of the Department within two months of the revision of the rates of pay and
allowance necessitating the revision of rates. Immediately after the rates are
revised and approved, a copy thereof should be sent to the Comptroller and
Auditor General and its regular submission watched through the Calendar of
Returns of Inspection Civil (Headquarters) Section.
8
(v) The accuracy of the daily rates of audit fees calculated should be checked
independently by the Internal Test Audit Section before the rates are approved
by the Head of the Department.
(vi) The accuracy of the daily rates of Audit Fees approved in each office should
be got checked by the Director of Inspection at the time of inspection of that
office and a report to this effect sent to Comptroller and Auditor General after
the inspection is over.
(vii) The powers of sanction of daily rates of Audit Fees have been delegated to the
Heads of Department in the Indian Audit and Accounts Department with
effect from the revision of daily rates of Audit Fees due on Ist September
1968, subject to the following condition :-
(a) The ‘Direct Charges’ should be calculated on the basis of average cost of posts
involved; and
(b) The ‘Indirect charges’ should be computed at 125 percent of the direct charges.
(c) (i) While calculating the Direct charges, the average cost of each category of non-
Gazetted post should be calculated first as per instructions contained in Audit
instructions below F.R. 9.31.
(ii) By applying the formula prescribed in audit instruction in F.R. 9(31) average cost
of each category posts generally utilised in parties should be as under for the
period 1.1.04 to 30.6.04:
Category I Punjab Offices observing 5 days week
Category II Punjab Offices observing 6 days week
Category III Central Offices observing 5 days week
Category IV Central Offices observing 6 days week
Period Category AAO SO Sr. Auditor Auditor I 2115 1875 1590 1260 II 1790 1590 1345 1070 III 2050 1820 1540 1220
1.1.04 to 31.3.04
IV 1760 1560 1320 1050 Period Category AAO SO Sr. Auditor Auditor
I 2270 2010 1710 1360 II 1920 1700 1450 1150 III 2200 1950 1660 1320
1.4.04 to 30.6.04
IV 1885 1670 1420 1130
The figures of average cost would, however, be changed whenever there is
revision of pay.
9
(iii) To the amount of average cost determined in (ii) above, would be added, the
element of DA, ADA, House Rent Allowance, Compensatory allowance etc. based on
the average cost, wherever admissible. The rates of H.R.A. may vary from place to
place. Actual rates of these allowances as applicable may be taken into account.
(iv) Indirect charges would be calculated at 125% sum total of average cost and
allowances as detailed in (iii) above.
(v) For working out the daily rates, the cost as worked out by adding items (ii),
(iii), and (iv) above has to be multiplied by 12 and divided by actual number of
working days available in a year The daily rates so worked out should be rounded to
the nearest rupee for each post separately.
(Authority : C.A.G.’ circular no. 41-TAI (RUL)T-81 issued vide number 1513-TA I I-C(RGL)-81 dated 23.11.82)
(viii) In working out the daily rates of Audit Fee, Allowance may be made for
Sundays, Saturdays, casual leave restricted and gazetted holidays and transit
time.
(ix) The number of working days in a year for calculating Audit Fee is limited to
258 days and 218 days in respect of Government offices observing six days
week and five days week respectively.
(x) On the closing day of audit, the local audit party should serve on the
Authority/Body audited by them, a memo indicating the amount of Audit Fee
recoverable and keep two copies thereof on the Audit and Inspection Report to
be submitted to Head of Office.
(xi) The amount of Audit Fee is required to be paid by the institutions inspected
under the Head of Account “0070-Other Administrative Services-Fees for
Government Audit.”
(xii) Recovery of Audit Fee in respect of Government Departments should be
made according to the instructions contained in F.R. 127 and Government of
India decisions there under read with F.R. 9(31) and F.R. 116.
(Comptroller and Auditor General’s letter number 151/Codes-I/10-76-Gr. I, dated 3rd April, 1976).
1.15 The cost of concurrent audit i.e. audit conducted by the Resident Audit Parties
in respect of Government commercial concerns will be worked out according to the
average cost method as laid down in F.R. 127.
10
In cases where the immediate gazetted supervision of the audit party is
arranged on a part-time basis, the cost of such supervision will be worked out
proportionately with reference to the approximate time spent on such supervision
while the cost of Headquarter's supervision will be worked out in the same manner as
in the case of local audit.
1.16(a) The realization of the audit fee is watched by Grant- in-aid Section through the
Register of Audit Fees maintained in Form S.Y. 338 by G.I.A. The amount of Audit
Fee, calculated on the basis of the rates prevalent, during the period when the audit is
conducted, is entered in the register in columns I-II, when the audit Note relating to
Institution from which the fee is recoverable is received. When the intimation of
credit is received from the Treasury Officer or the Administrator concerned, the fact is
noted in the Register in the remaining columns. A report of the amounts of audit fees
outstanding at the end of each month should be prepared on the 5th of each month and
submitted to the Branch Officer. The register should be submitted to Group Officer
on 15th of April, July, October, January for his information.
(b) Where audit of any body or authority is done as sub auditor on behalf of any
other Accountant General or Principal Director of Audit and Audit Fee is recoverable
from that body or authority, the A.G. auditing the same as sub auditor should prepare
a demand and keep a record to this effect in their register for making recovery of cost
of audit and for sending a demand to their Principal Audit Officer on whose behalf
the audit of that body or authority is conducted. The Principal Audit Officer will
enter the demand in the requisite register. The recovery of audit fee from the apex
body would then be the responsibility of the Principal Audit Officer.
(Authority: CAG’s circular Number. 36-TAI/83/issued vide CAG’s Number. 15th TAI/RUL/7-81/vd I dated 1.12.83)
Note 1 Audit fees are leviable for whole days even though only a part of the day may have been devoted to the Audit work.
Note 2 If a Sunday or holiday is devoted to audit, no audit fee is leviable for that day unless the auditor actually puts in a full day’s work on such Sunday or holiday. It does not, however, imply that the local officials can be compelled to attend to audit on any Sunday or holiday.
1.17 The recovery of audit fee in the case of local bodies or funds which bank with
treasuries is made by the Treasury Officer by book adjustment out of the funds of the
bodies concerned on receipt from the Audit Party of a requisition to that effect
specifying the amount due for recovery. In cases, where such bodies or funds do not
11
bank with the treasuries, the audit fees are credited into the treasury by the
administrator of the funds at the instance of audit.
12
ANNEXURE I
(Para 1.6)
Extracts of Section 2.13 to 20 and 24 of the Comptroller and Auditor General’s Duties, Powers and Conditions of Service Act, 1971
Definitions
2. In this Act, unless the context otherwise requires
(a) “Accounts”, in relation to Commercial Undertakings of a Government,
includes trading, manufacturing and profit and loss accounts and balance-
sheets and other subsidiary accounts;
(b) “Appropriation Accounts” means accounts which relate to the expenditure
brought to account during a financial year, to the several items specified in the
law made in accordance with the provisions of the Constitution or of the
Government of Union Territories Act, 1963 (20 of 1963) for the appropriation
of moneys out of the Consolidated Fund of India or of a State, or of a Union
Territory having a legislative Assembly, as the case may be;
(c) “Comptroller and Auditor General” means the Comptroller and Auditor
General of India appointed under article 148 of the Constitution;
(d) “State” means a State specified in the first schedule to the Constitution;
(e) “Union” includes a Union Territory, whether having a Legislative Assembly
or not.
General provision relating to audit
13. It shall be the duty of the Comptroller and Auditor General-
(a) to audit all expenditure from the Consolidated Fund of India and of each State
and of each Union Territory having a Legislative Assembly and to ascertain
whether the moneys shown in the accounts as having been disbursed were
legally available for and applicable to the service or purpose to which they
have been applied or charged and whether the expenditure conforms to the
authority which governs it;
(b) to audit all transactions of the Union and of the State relating to Contingency
Funds and Public Accounts;
(c) to audit all trading, manufacturing, profit and loss accounts and balance sheets
and other subsidiary accounts kept in any department of the Union or of a
State and in each case to report on the expenditure, transactions or accounts so
audited by him.
13
Audit of receipts and expenditure of bodies or authorities substantially financed from Union or State Revenues
14(1) Where any body or authority is substantially financed by grants or loans from
the Consolidated Fund of India or of any State or of any Union Territory having a
Legislative Assembly, the Comptroller and Auditor General shall, subject to the
provision of any law for the time being in force applicable to the body or authority, as
the case may be, audit all receipts and expenditure of that body or authority and to
report on the receipts and expenditure audited by him.
Explanation Where the grant or loan to a body or authority from the Consolidated Fund of India or of any State or of any Union Territory having a Legislative Assembly in a Financial year is not less than rupees twenty five lakh and the amount of such grant or loan is not less than seventy five percent of the total expenditure of the body or authority shall be deemed, for the purpose of this sub section, to be substantially financed by such grants or loans, as the case may be.
(2) Notwithstanding anything contained in sub section (1), the Comptroller and
Auditor General may with the previous approval of the President or the Governor of a
State or the Administrator of a Union Territory having a Legislative Assembly, as the
case may be, audit all receipts and expenditure of any body or authority from
Consolidated Fund of India or of any State or of any Union Territory having a
Legislative Assembly, as the case may be, in a financial year is not less than rupees
one crore.
(3) Where the receipts and expenditure of any body or authority are by virtue of
the fulfilment of the conditions specified in sub-section (1) or subsection (2) audited
by the Comptroller and Auditor General in a financial year, he shall continue to audit
the receipts and expenditure of that body or authority for a further period of two years
not withstanding that the conditions specified in sub section (1) of sub section (2) are
not fulfilled during any of the two subsequent years.
Functions of Comptroller and Auditor General in the case of grants or loans given to other authorities or bodies
15.(1) Where any grant or loan is given for any specific purpose from the
Consolidated Fund of India or of any State or of any Union Territory having a
Legislative Assembly to any authority or body, not being a foreign State or
international organisation, the Comptroller and Auditor General shall scrutinize the
procedures by which the sanctioning authority satisfy itself as to the fulfillment of the
condition subject to which such grants or loans were given and shall for this purpose
14
have right of access, after giving reasonable previous notice, to the books and
accounts of that authority or body;
Provided that the President, the Governor of a State or the Administrator of a
Union Territory having a Legislative Assembly, as the case may be, may where he is
of opinion that it is necessary so to do in the public interest, by order, relieve the
Comptroller and Auditor General, after consultation with him, from making any such
scrutiny in respect of any body or authority receiving such grant or loan.
(2) Except where he is authorised so to do by the President, the Governor of a
State or the Administrator of a Union Territory having a Legislative Assembly as the
case may be, the Comptroller and Auditor General shall not, while exercising the
powers conferred on him by sub section (1) right of access to the books and accounts
of any corporation to which any such grant or loan as is referred to in sub section (1)
is given if the law by or under which such corporation has been established provides
for the audit of the accounts of such corporation by an agency other than the
Comptroller and Auditor General;
Provided that no such authorisation shall be made except after consultation
with the Comptroller and Auditor General and except after giving the concerned
corporation a reasonable opportunity of making representations with regard to the
proposal to give to the Comptroller and Auditor General right of access to its books
and accounts.
Audit of receipts of Union or of States
16. It shall be the duty of the Comptroller and Auditor General to audit all receipts
which are payable into the Consolidated Fund of India and of each State and of each
Union Territory having Legislative Assembly and to satisfy himself that the rules and
procedures in that behalf are designed to secure and effective check on the
assessment, collection and proper allocation of revenue and are being duly observed
and to make for this purpose such examination of the accounts as he thinks fit and
report thereon.
Audit of accounts of stores and stocks
17. The Comptroller and Auditor General shall have authority to audit and report
on the accounts of stores kept in any office or department of the Union or of a State.
Powers of Comptroller and Auditor General in connection with audit of accounts
18(1) The Comptroller and Auditor General shall in connection with the
performance of his duties under this Act, have authority-
15
(a) to inspect any office of accounts under the control of the Union or of a State,
including treasuries and such offices responsible for the keeping of initial or
subsidiary accounts, as submit accounts to him;
(b) to require that any accounts, books, papers and other documents which deal
with or form the basis of or are otherwise relevant to the transactions to which
his duties in respect of audit extend shall be sent to such place as he may
appoint for his inspection;
(c) to put such questions or make such observations as he may consider necessary,
to the person in charge of the office and to call for such information as he may
require for the preparation of any account or report which it is his duty to
prepare.
(2) The person in charge of any office or department, the accounts of which ;have
to be inspected and audited by the Comptroller and Auditor General, shall afford all
facilities for such inspection and comply with requests for information in as complete
a form as possible and with all reasonable expedition.
Audit of Government Companies and Corporations
19(1) The duties and powers of the Comptroller and Auditor General in relation to
the audit of the accounts of Government companies shall be performed and exercised
by him in accordance with the provisions of the Companies Act, 1956 (I of 1956).
(2) The duties and powers of the Comptroller and Auditor General in relation to
the Audit of the accounts of corporations (not being companies) established by or
under law made by Parliament shall be performed and exercised by him in accordance
with the provisions of the respective legislations.
(3) The Governor of State or the Administrator of a Union Territory having a
Legislative Assembly may, where he is of opinion that it is necessary in the public
interest so to do, request the Comptroller and Auditor General to audit the accounts of
Corporation established by law made by Legislature of the State or of the Union
Territory as the case may be, and where such request has been made, the Comptroller
and Auditor General shall audit the accounts of such corporation and shall have, for
the purposes of such audit, right of access to the books and accounts of such
Corporation :
Provided that no such request shall be made except after consultation with the
Comptroller and Auditor General and except after giving reasonable opportunity to
the corporation to make representation with regard to the proposal for such audit.
16
Laying of reports in relation to accounts of Government Companies and Corporation
19A(1) The reports of the Comptroller and Auditor General in relation to the accounts
of a Government company or Corporation referred to in Section 19, shall be submitted
to the Government or Governments concerned.
(2) The Central Government shall cause every report received by it under sub-
section (1) to be laid, as soon as may be after it is received, before each House of
Parliament.
(3) The State Government shall cause every report received by it under sub
section (1) to be laid, as soon as may be after it is received, before the Legislature of
the State.
Explanation For the purposes of this Section “Government” or “State Government” in relation to Union Territory having a Legislative Assembly , means the Administrator of the Union Territory.
Audit of accounts of certain authorities or bodies
20(1) Save as otherwise provided in section 19, where the audit of the accounts of
any body or authority has not been entrusted to the Comptroller and Auditor General
by or under any law made by Parliament, he shall, if requested so to do by the
President or Governor of a State or the Administrator of a Union Territory having a
Legislative Assembly, as the case may be, undertake the audit of the accounts of such
body or authority on such terms and conditions as may be agreed upon between him
and the concerned Government and shall have, for the purposes of such audit, right of
access to the books and accounts of that body or authority:
Provided that no such request shall be made except after consultation with the
Comptroller and Auditor General
(2) The Comptroller and Auditor General may propose to the President or the
Governor of a State or the Administrator of a Union Territory having a Legislative
Assembly, as the case may be, that he may be authorised to undertake the audit of the
accounts of any body or authority, the audit of the accounts of which has not been
entrusted to him by law, if he is of opinion that such audit is necessary because a
substantial amount has been invested in, or advanced to such body or authority by the
Central or State Government or by the Government of a Union Territory having
Legislative Assembly, and on such request being made, the President or the governor
or the Administrator as the case may be, may empower the Comptroller and Auditor
General to undertake the audit of the accounts of such body or authority.
17
(3) The audit referred to in sub-para (1) or sub section (2) shall not be entrusted to
the Comptroller and Auditor General except where the President or the Governor of a
State or the Administrator of a Union Territory having Legislative Assembly, as the
case may be, is satisfied that it is expedient so to do in the public interest and except
after having a reasonable opportunity to the concerned body or authority to make
representations with regard to the proposal for such audit.
Powers to dispense with detailed audit
24. The Comptroller and Auditor General is hereby authorised to dispense with,
when circumstances so warrant, any part of detailed audit of any accounts or class of
transactions and to apply such limited check in relation to such accounts or
transactions as he may determine.
18
CHAPTER – II
DUTIES AND POWERS
Duties and powers of the Senior Deputy Accountant General/Deputy Accountant General (I.C.)
2.1 Each Inspection Civil Wing is under the direct charge of the Group Officer
who is responsible for general Administration of the Wing ensuring its smooth and
efficient working. His main duties and powers are given below:-
(i) General Administration of the Wing.
(ii) Personal Supervision of important audits by inspection during the course of
audit; as per requirement of HQ's office.
(iii) Preparation of audit Plan/Programmes/Tour notes of Group Officer
(Authority: PAG/Secy/4091 dated 11-11-2003)
(iv) Scrutiny, editing and approval of all audit notes.
(v) Active involvement in the review work at every stage as per instructions
conveyed by Sh. P.K. Lahri, Director General (R.S.) vide d.o. letter dated
21.7.1994.
(vi) Marking of such paragraphs of the Audit and Inspection Reports at the time of
approving the reports, as are of sufficient importance for inclusion in the
Register of Serious Financial Irregularities and in Annual Report of the
department/Government.
(vii) Scrutiny and approval of the weekly diaries of local audit parties.
(viii) Approval of all extensions in the time allotments for local audit.
(ix) Preparation of tour programmes including any deviation of all Gazetted and
Non Gazetted staff of the Inspection Civil Wing for local audit for obtaining
approval of Pr. A.G.
(x) Postings and transfers of all Gazetted and non-Gazetted staff to Headquarters
or to various local audit parties within the Inspection Civil Wing after
approval of the Pr. Accountant General.
(xi) Waiving of objections having monetary value up to the limits prescribed and
subject to the fulfillment of conditions laid down in Para 7.1.16 of the
Comptroller and Auditor General’s Manual of Standing Orders (Audit) 2nd
Edition 2002.
(xii) Granting of regular leaves to Section Officers/Asstt. Audit Officers and
Sr. Audit Officers for periods upto 40 days and Sr. Auditor/Auditors and
19
Class IV for periods upto 30 days without substitute. For sanctioning casual
leave he has full powers in respect of the staff working under him.
(Authority: Admn. I/A/70 dated 9-8-2004).
Embezzlement
2.2 When the audit note reveals errors beyond the ordinary he will bring the
matter to the notice of Pr. Accountant General. He will personally deal with all cases
of defalcation or embezzlement, if necessary, by visiting the office in which it is
detected or suspected. Besides the entry in the audit note, he will at the time of
detection separately report all cases of embezzlement to the Pr. Accountant General
and when the case is complete he will submit a second report fully explaining the
case, pointing out the faults in the system of accounts which led to the defalcation and
suggesting remedies to prevent their recurrence.
Inspections
2.3(a) The Group Officer is to supervise the field parties more often to meet the laid
down requirement of spending 7 working days in a month in the field. He should
submit the tour note in the prescribed format alongwith his tour programme for the
following months to Pr. Accountant General’s approval by 25th of the month,
preceeding the month to which it relates. He should not leave headquarters without
the permission of the Pr. Accountant General
The tour programme shall be framed in such a way that the Group Officer is
available at Headquarters on the dates of PAC/COPU meetings
(Comptroller and Auditor General’s letter No. 4473-GEIP 31-61, dated 19th July, 1961 and his D.O. No. 5117-GEI/53-58, dated 31st October, 1958 and PAG No. PAG/Secy./4091 dated 11-11-03).
(CAG letter No. 1271-O&M/7-81 V dated 24-9-85)
The Group Officer (IC) shall prepare his tour programmes for local and outstation
units, giving coverage to maximum number of units, rotation of stations, parties and
units so as to avoid deviation at a later stage. However, any deviation from approved
programme in respect of party unit, station (local or outstation) dates of supervision
and transit shall have the prior approval of the PAG.
(Authority: PAG/Secy/4091 dated 11-11-2003)
(b) The Group Officer (I-C) is liable at any time to be recalled from tour by the
Pr. Accountant General for special purpose.
20
(c) Other annual, biennial etc. audit should be supervised as under:- Supervision
Category A Units have more than Rs one crore expenditure excluding establishment and will be audited annually
100%
Category B Units having expenditure between Rs 25 lakhs to one crore and will be audited bi-annually
50% by Sr. AO/AO
Category C Units having expenditure less than 25 lakhs and will be audited once in three/four years
No supervision required
Authority: File No. IC-I/HQ/TP/Audit-Plan/2004-2006
In addition to that as far as possible full gazetted supervision should be provided for
the following items of local audit :
(i) Efficiency-cum-Performance Audit
(ii) Audit under section 14, 15, 19 and 20 of the Comptroller and Auditor
General’s (D.P. & C.S.) Act, 1971.
(iii) System audit wherever special audit of specific systems are taken up.
(iv) Audit of district and higher level offices which deal with development
activities under plan programme.
(v) Special Audits (Frauds, embezzlements).
(vi) Other annual, biannual etc. audits should be supervised to the extent of 50%
subject to a minimum period of 3 days towards the closing stages of each local
audit.
(Authority- C.A.G. letter number. 974-O&M/7-81/Vol. V dated 30.11.82 and 1271-O&M/7-81-V dated 24.9.85)
Duties of Sr. Audit Officer/ Audit Officer (Headquarters)
2.4 The Sr. Audit Officers/Audit Officers incharge of Civil audit Wing
Headquarters Section shall be responsible for supervision and efficient working in the
sections under their charge. They will assist the Group Officer (Inspection Civil) in
performance of his duties and in the discharge of the duties enumerated in clauses (iii)
to (vi) in para 2.1 above and will undertake such other items of work as may be
entrusted to them by the Group Officer (Inspection Civil). Sr. Audit Officer/ Audit
Officer (Headquarters) may allow extension in time allotments upto 4 days with the
approval of Group Officer. The Audit Officer /Sr. Audit Officer will have power to
grant casual leave up to 8 days at a time to the staff working under the Assistant Audit
Officer/ Section Officers, when the period exceeds the Assistant Audit Officer’s/
21
Section Officer’s power of sanction. In addition, he may sanction regular leave with
pay and allowances to the Assistant Audit Officer/ Section Officer, Sr. Auditor/
Auditor working under him up to a maximum period of 30 days at a time provided he
does not require a substitute. Sr. Audit Officer/ Audit Officer may sanction regular
leave upto 30 days to the Auditors working under him.
(Authority: Admn. I/A/70 dated 9-8-2004)
Duties of Inspecting Officer.
2.5 The Inspecting Officers are responsible for supervision and efficient working
of local audit parties entrusted to their charge. The Inspecting Officers of local audit
parties will have the following duties. :
(i) The duties and responsibilities assigned to the Inspecting Officer according to
the provisions in Section VI of Manual of Stand ing Orders (Audit) are sufficiently
exhaustive. Besides performing the coordinating functions to achieve over-all-
efficiency in performance and seeing that necessary process of audit of the various
documents have been carried out by the staff under him, the Inspecting Officer will do
a certain amount of original work and examine personally with reference to original
documents all important points raised by the staff. He should personally review all
tenders and agreements and also see whether the state of accounts in the office
inspected is satisfactory. He should himself draft the Inspection Report and discuss it
with the head of the office inspected, wherever he is present at the close of the
inspection..
(Annexure to Para 6.1.7 of MSO (Audit) – 2nd Edition - 2002
(ii) In case of important audits he should ensure that he gets necessary briefing
where required from the Group Officer (Inspection Civil) well in time with regard to
any special point to be examined during such local audit. Likewise in the case of
special audits he has to ensure that necessary guidelines on which special audit is to
be conducted are obtained from the Headquarters and the period for which the records
are to be examined in detail is also to be ascertained.
(iii) The Inspecting Officer shall make it a point to call on the Head of Office
being inspected in the beginning of audit and ascertain from him if he has any
suggestions for looking into any point of importance in greater details. He should
examine such suggestions and also other matters which come to his notice for
deciding upon the lines on which the local audit is to be started.
22
(iv) The Inspecting Officer has to acquaint himself with the system of finance of
the office /institutions, the accounts of which he is inspecting what makes up its
receipts and how its money is expended. He should then make up his mind as to what
system of accounts is necessary for these receipts and expenditure, what registers are
necessary for internal check purpose and how far the existing system conforms to this
standard. This is the elementary and primary responsibility of the Inspecting Officer
to be discharged at whatever stage he comes in on the inspection.
(v) The Inspecting Officers should guide their staff, do a certain amount of
original work in respect of important transactions and should personally examine with
reference to the initial documents all important points raised by their staff.
(vi) The settlement of outstanding paragraph of the earlier inspection reports is one
of the important duties of an Inspection Officer.
(vii) He should try to get all the facts and explanations on the spot by discussing the
points raised during inspection with the Heads of Offices concerned. Wherever the
Inspecting Officer feels that the points raised by him are so important that they may
ultimately find a place in the Audit Report of the Comptroller and Auditor General, he
should take particular care to examine all the issues involved, collect all the relevant
information and also take attested copies of those documents which are likely to be
useful in pursuing the matter with higher authorities so that, while editing the draft
paragraphs for the Audit Report, Headquarters should not find themselves at a loss
because of missing links in the facts and arguments set forth necessitating a fresh
reference through the next audit party resulting in avoidable loss of time.
(Comptroller and Auditor General’s D.O. Number. 1307/Admn. I-388-85 dated 24th September, 1985)
(viii) It should be recognised as one of the important duties of Inspecting Officer to
report immediately to the Group Officer (Inspection Civil ) anything really serious or
important which comes to light in the course of his inspection without waiting to be
included it in the inspection report.
(ix) It is essential that in the case of supervised audits, the Inspection Reports
should be drafted and edited by the Sr. Audit Officers/Audit Officers.
(Comptroller and Auditor General’s letter number. 1307-Admn I/388-55, dated 24th January, 1955 and Number. 76-Tech-Admn I-385-65 dated 14th January, 1966)
(x) The Inspecting Officer shall personally attend to the following items of work
during local audit :-
23
(a) Disposal of last Inspection Reports including review of old objections.
(b) Conduct a general review of the cash book and scrutiny of transactions
involving heavy expenditure and receipts of peculiar nature.
(c) Examination of system of stores, purchases and general review of purchases
made.
(xi) The Inspecting Officer shall approve the distribution of duties between the
members of audit party.
The issue regarding sanction of leave to the members of field parties on a
uniform pattern by all the Groups was examined in the light of the Headquarters letter
number. 766-TA I/137-80 dated 16.8.1980. Accountant General accordingly ordered
that the procedure underlined below should be followed by all the Groups:
(1) Casual leave
All kinds of leave shall be applied for in advance. Assistant Audit Officer/
Section Officer incharge of the field Inspection Party may sanction casual leave upto
5 days to the Sr. Auditor/ Auditors and other staffs working under them. Similarly Sr.
Audit Officer/ Audit Officer supervising the field party may sanction casual leave to
the Assistant Audit Officer/ Section Officer upto 3 days at a time.
In case of emergency and urgent necessity, the Sr. Audit Officer/ Audit
Officer/ Assistant Audit Officer/ Section Officer may themselves avail of casual leave
not exceeding 2 days at a time. They, shall, however inform the Headquarters Section
telegraphically before proceeding on leave. For further extension of leave, they shall
apply to the Headquarters sections in advance.
(2) Regular leave
In all cases applications for regular leave should be sent to the Headquarters
Sections for sanction by the Competent authority i.e. Sr. Audit Officer/ Audit Officer/
Group Officer. However, in case of emergency/urgent necessity when casual leave is
not due to the official/officers, provisions as outlined in sub para I above shall apply.
The leave applications in all cases shall be despatched under Registered cover
on the same day to the concerned Headquarters Section. Headquarters Section in all
the Groups shall maintain the casual leave account and verify the same with weekly
diary reports.
(Authority: Control/11-1/Field Parties/leave/87-88/2159-62 dated 21.12.87)
24
(xiii) The Inspecting Officers are required to report important and interesting cases
on the prescribed proforma to the Pr. Accountant General every month, demi-
officially by 5th of the following month with a copy to the Group Officer concerned.
Duties of Headquarters Section/Audit Units and other Sections
2.6 The Civil Inspection Wing Headquarters Section is responsible for the
following items of work :-
(i) Keeping up to date the list of offices to be locally audited.
(ii) To draw out an audit plan of units to be audited in the next financial year for
approval by the Pr. Accountant General.
(iii) Preparation of tour programmes of audit parties and Inspecting Officers under
the orders of the Group Officer/Sr. Audit Officer/ Audit Officer
(Headquarters).
(iv) Sending intimations of dates of local audit to the concerned offices in time.
(v) Ensuring that the local audit and inspection are carried out in accordance with
the approved programmes.
(vi) To get the month/months account selected for detailed audit and intimate the
same to the local audit parties.
(vii) To ensure that Audit Note/ Inspection Report of each office, the audit of which
is completed, is received at Headquarters in time and is not detained by the
local audit party beyond the prescribed period.
(viii) To ensure that all Audit Notes/ Inspection Reports received are properly and
promptly edited and issued to the concerned offices after approval by the
Group Officer within the framed schedule of time.
(ix) Scrutinize the annotated copies of Audit and Inspection Notes received from
the Departmental Heads, issue further remarks, if any, or take any further
action on the same until all points raised in the Audit and Inspection Notes are
finally settled.
(x) To review the outstanding paras and the Audit Inspection Notes monthly and
maintain an up-to-date position of outstanding paras/IRs in the Para Registers
(xi) Maintenance of all prescribed Registers and issue of reminders when due.
(xii) Supplying the local audit parties with copies of all important orders,
interpretations of rules and books, codes and manuals which are useful for
local audit purposes.
(xiii) Correspondence with the State/Central Government regarding local audit.
25
(xiv) To see that photo copies of list of payments and schedules of drawls relating to
selected months are promptly supplied to the local audit parties after obtaining
the original from D.C. Sections of the office of A.G. (A&E) Punjab.
(xv) Furnishing material required by the Report Section for inclusion in Audit
Reports.
(xvi) To see that amount of the Audit Fee charged from auditee organisations as
circulated to the local audit parties has been correctly worked out.
(xvii) Rates of Audit Fees are revised promptly as and when the occasion arises.
(xviii) Examination of the weekly diaries and stamp accounts received from the local
audit parties.
(xix) Checking of movements of the party personnel shown in their T.A. bills with
the sanctioned tour programmes, weekly diaries and casual leave registers,
etc., and passing on the T.A. bills to Administration Section with certificates
regarding verification of dates, etc.
(xx) Staff requirements of the Inspection Civil Wing for each financial year are
correctly worked out and sanction obtained from the Pr. Accountant General/
Comptroller and Auditor General well in time.
(xxi) Budget Estimates are prepared well in time and sent to Administration Section
(xxii) Seeing that all the local audit work is done punctually and regularly.
(xxiii) Preparation of periodical arrear reports and other returns.
(xxiv) Maintenance of important orders files for guidance of the Headquarters
Sections and local audit parties, and keeping the Manual of Inspection Civil
Wing up to date.
(xxv) Casual leave accounts of the staff of the Inspection Civil Wing and
applications for casual leave of local audit parties and Headquarters
establishment will be kept in Headquarter Sections.
(xxvi) All other miscellaneous and policy matters relating to the Inspection Civil
Wing in connection with local audit/inspection and disposal of Inspection
Reports etc., should be dealt with promptly.
(xxvii) Maintenance of all the prescribed registers shown in Appendix I. These
registers should be examined by the Assistant Audit Officer/ Section Officer
and submitted to the Sr. Audit Officer/ Audit Officer (Headquarters ) and
Group Officer (Inspection Civil) on the due dates given in the Calendar of
Returns maintained as per Appendix III of this Manual.
26
(xxviii)All other miscellaneous and ancillary items of work as may be entrusted.
Distribution of Work at Headquarters
2.7 There are 12 sections at the Inspection Civil Headquarters each under the
charge of an Assistant Audit Officer/ Section Officers. The distribution of work
amongst the Headquarters Sections is as under :-
Inspection Civil Headquarters Section (I & II)
(i) General Administration, Co-ordination and policy matters.
(ii) Preparation of Audit Plan, tour programmes and dealing with matters relating
to local audit.
(iii) Preparation of staff requirements and budget estimates.
(iv) Postings and transfers.
IC-I Audit Unit I
General Administration, Police, Punjab Home Guards, Justice, Revenue, Finance, Hospitality, Election, Small Savings, Gratuitous Relief, Village & Khadi Board, Printing & Stationery, BSF, ITBP etc. IC-I Audit Unit II
Food & Supply, Jails including Central Jails, Central offices, Medical, Ayurvedic, Homoeopathic, Family Welfare and other Misc. Units viz. Controller of Stores, Director Colonisation, Government Work Centre Rajpura, Central Medical Store Patiala, Government Aero Engine Workshop Patiala, Government Central Workshop Chandigarh, University Text Board
IC-II Audit Unit I
Industries, Agriculture, Soil Conservation, Cooperation, Economic & Statistics, Transport, Tourism, Sainik Welfare, Welfare of SC & BC, Planning Department, Rural Development, Urban Development, Fisheries, Animal Husbandry and Dairy Development etc., Labour Employment, Social Security and Welfare of Women and Child Development, PUDA, Punjab Mandi Board.
IC-II Audit Unit II
General Education, Technical Education, Sports and Youth Services, Art & Culture, Public relations/Information, N.C.C., Language, Library, Archeology and Museum, Industrial Training Institutes etc., Pension Audit of Banks.
(AG's orders issued vide No. AG/Secy/99-2000/2076 dated 18-6-99 and No. PAG/Secy/3882 dated 12-1-2003)
G.I.A.
All work related to Audit under Section 14, 15, 19 and 20 of C.A.G.’s
(DP&Cs Act) 1971. Preparation of SAR, Externally aided projects, issue of audit
certificates including/maintenance of guard files of World Bank Project.
(Authority: O.O. Insp (c)/HQ/93-94/26 dated 31.3.94
27
(Authority: A.G.’s order dated 5.10.87 in CASS I Section file (IC/CASS I/Portfolio/87-88/Vol. I)
Draft Para Section/Port Folio Section
Maintaining port folio files in respect of State and Central Plan and Centrally
sponsored scheme.
Processing of SIRs for finalisation of Draft Paras and P.A.C. matters
connected with D.Ps.
Central Audit Support Section - I
(i) Processing of material for Chapter I & II of Audit Report (C).
(ii) Preparation of draft paras in respect of losses and defalcation, write off of
losses etc., utlization of contingency fund.
(iii) Issue of audit certificates in respect of State/Central Plan Schemes, Centrally
Sponsored Schemes.
(iv) Scrutiny and verification of Finance and Appropriation Accounts as per
C.A.G.’s Office Circular Number. 1378-Rep (s) 59.84 dated 5.3.84 (vide para
5.2 of MICA)
(v) Vetting of Rules/notifications proposed to be issued by the State Government.
(vi) Review of five grants and omnibus paras.
Central Audit Support Section II
(i) Coordination and framing of audit programmes, deployment of parties, the
audit of compilation Sections (except DC Forest) including RAO Nangal &
Patiala (A&E Sub Offices).
(ii) Vetting, issuance and pursuance of Audit Notes of CAPs.
(iii) Audit of sanctions/Agreements.
(iv) Scrutiny of material for audit report and its transmission to CASS-I.
(Authority : O.O. Number. 103 dated 4.1.1988)
Duties of Assistant Audit Officers/ Section Officers (Headquarters)
2.8 The Assistant Audit Officers/ Section Officers at Inspection Civil Wing
Headquarters hold the supervisory charge of the sections and are required:
(i) to exercise a methodical, complete and clear supervision over the working of
their sections to see that orders are understood and correctly followed, to
maintain discipline and tidiness in the sections, to see that the work of the
section is evenly distributed, to see that standing orders regarding attendance,
leave and general conduct are strictly observed and to bring to the notice of the
28
Sr. Audit Officer/Audit Officer, incharge any irregular habit, disorderly
conduct, neglect of duties or insubordination on the part of their staff as
detected by them.
(ii) To maintain a Calendar of Returns showing the due and actual dates of
submission of reports and returns to the various authorities. This should be
submitted for Branch Officer’s review on the 2nd, 8th 15th and 22nd, of each
month. Blank note sheets should be appended to and bound with the Calendar
of Returns for the purpose of submission of the weekly reports in the form
given below. The Assistant Audit Officer/Section Officer should indicate on
them if any return has been delayed. The Branch Officer should record the
result of his scrutiny and his further instructions, if any. The Calendar of
Returns should in addition be submitted every month to the Branch Officer for
signatures at the end in the space provided for along with the monthly report
on the state of work. The timely submission of the calendar of Returns should
be watched through the Calendar itself.
Page Item No. Brief particulars
When due To whom due
Reasons for delay
Probable date by which it will be submitted.
(Para 1.6.I of Manual of Office Procedure and General Services and Maintenance
Branch, Vol-I Part- A).
(iii) To maintain and keep in safe custody the Attendance Register, casual leave
Registers, Register of Financial Irregularities and to submit all reports
(including Diary Reports), Registers, Statements etc. due from the section.
(iv) To see that :-
(a) the old records requisitioned from the records branch are not unnecessarily
retained in the section; and
(b) all correspondence files and other records are duly arranged and delivered to
the Branch when due.
(v) To see that no arrears of any kind accumulate and to submit to the Branch
Officer on the first of each month an arrear report in the prescribed form O.A.
9 (given in Appendix I to this Manual) reflecting the true state of work in the
section.
This report should reach Group Officer (Inspection Civil) by the end of each month.
29
(vi) to overhaul thoroughly at least once a month all papers on his assistants tables,
racks stools, pigeon holes, drawers, almirahs etc. to see that nothing has
escaped or escapes disposal and that all disposed of papers, vouchers etc., are
regularly and properly filed. The result of overhauling should be reported to
the Gazetted Officer- incharge on the 15th of every month through a Register
which should be submitted quarterly to the Group Officer (Inspection Civil )
on the due date.
(vii) to see that all codes and reference books supplied to the Section are kept upto
date and are readily available.
(viii) to see that the Sectional Order Book and other files containing office orders,
circulars, government letters, etc., are properly maintained and kept up to date.
(ix) to see that the particulars of all documents etc., sent out are noted in the
registers prescribed for the purpose.
(x) to ensure the correctness of all information, facts, figures, communicated to
government departmental authorities other Audit Offices as also to Control
E.C.P.A. and G.I.A. Sections in this office.
(xi) to pursue vigorously all cases of financial irregularities, losses, etc.
(xii) to maintain a note book for recording the various points which he has to watch
but which are not required to be noted in any one of the prescribed registers
and to put it up to the Branch Officer on the 5th of each month. This record
should be handed over to the successor whenever there is a change in
incumbency.
(Para 1.14 of Manual of office procedure and of the General Services and Maintenance Branch)
(xiii) to sign ordinary, routine and printed letters for the Sr. Audit Officer/ Audit
Officer whether he is on tour or at Headquarters.
(xiv) to go through carefully the letters received daily through the Diary to mark
specially those letters which require prompt action and reply and to see that no
delay occurs in their distribution and disposal.
(xv) to see that the disposal of correspondence and bills received through Sectional
Diaries marked under the signatures of Auditor is not only correct but also
complete viz, the case number of the relevant file is given where the disposal
is marked as “Filed”. The Section’s despatch number is given in case reply
has been issued and the number and date of transit register is quoted when a
30
letter is finally transferred to another section for disposal and for this purpose
to check and initial cent percent the entries of disposal in case of letters from
the Government of India, Punjab Government and the Comptroller and
Auditor General of India and five per cent of other entries and give a
certificate to this effect on the weekly diary reports.
(Office order no. TM-119-1/117, dated 4th February, 1958 read with para 4.4.1 of the Manual of office procedure and General Service and Maintenance Branch)
(xvi) to dispose of, himself, as far as possible, after obtaining necessary information
from his assistants all U.O. references and important letters from the
Government of India, State Government and Comptroller and Auditor General
and to see that where necessary a copy is invariably taken of all unofficial
references for inclusion in the office files.
(xvii) to see that letters and other papers which are of interest to more than one
section of the office as also the ruling and orders of general applications which
are received direct in the section are circulated/communicated without delay to
other Assistant Audit Officers/ Section Officers for information and necessary
action.
(xviii) To pass file orders on all letters, half margin, etc.-except letters from the
Government of India, State Government and Comptroller and Auditor General
of India, which should be filed only under orders of Sr. Audit Officer/Audit
Officer/ Group Officer incharge.
(xix) To review the half-margin and despatch registers periodically and to see that
reminders are issued where necessary in accordance with the instructions laid
down in Para 4.22 of the manual of General Office Procedure and General
Services and Maintenance Branch Volume. I Part-A.
(xx) To review the Sectional Transit Register at the end of each month to see that
all letters entered therein for transmission to other Sections are duly received
by them under dated initials without undue delay; that effective steps are taken
to dispose of the disputed letters and undelivered letters are shown as
outstanding in the diary report.
(Office order No.-TM/H-7-11/40, dated 4th April, 1957 read with para 4.20(vi) of Manual of office procedure and of General Services Maintenance Branch Vol-I Part-A)
31
(xviii) Following powers have been delegated to the Assistant Audit Officer/ Section
Officers by the Comptroller and Auditor General of India :-
(a) Monthly indents of forms and stationery will be signed by the Assistant Audit
Officer/ Section Officers.
(b) The Assistant Audit Officers/Section Officers will be competent to give file
orders on all letters except letters from the Comptroller and Auditor General of
India, the Punjab Government and the Government of India, which should be
filed only under the orders of the Branch Officer/Group Officer.
(c) The Assistant Audit Officer/ Section Officers of the Controlling Sections viz.
Control Section and Inspection Civil Wing (Headquarters) may communicate
important orders received for circulation and orders issued by the
Pr. Accountant General and Deputy Accountant General as the case may be.
(d) The Assistant Audit Officer/ Section Officers may grant casual leave to Sr.
Auditors/ Auditors etc. working under them up to five days at a time. They
may also condone late attendance of the members of staff for a maximum of
two days in a month. Not-withstanding the aforesaid delegation in favour of
Assistant Audit Officer/ Section Officer, the Attendance Registers may
continue to be submitted to the Sr. Audit Officer/ Audit Officer daily.
(C.A.G.’S Letter no. F-40SD(P) 73, Volume II, dated 25th August, 1973).
32
CHAPTER III
GENERAL RULES AND PROCEDURE
Applicability of Manual of Office Procedure and of GSM Branch
3.1 The Manual of Office Procedure and of the GSM Branch and orders of general
application in other Manuals of the office apply also to the staff of Civil Inspection
Wing except to the extent that this Manual specifically authories variations from those
orders. Some of the important provisions of the Manual of Office Procedure and of
GSM Branch are reproduced below:-
Conduct Rules
3.2 The standing orders of the Government of India regarding the conduct of all
public servants holding or exercising any civil office (other than a menial office)
under the Government are contained in a separate pamphlet entitled “The Central
Civil Services (Conduct) Rules, 1964”. The rules are applicable to all members of the
office, including all Gazetted Officer and they should make themselves acquainted
with these.
Hours of Attendance
3.3 (i) Normal office hours of attendance on all working days are from 9 a.m.
to 5.30 p.m., with a lunch break for half an hour from 1.00 p.m. to 1.30p.m.
However, the Assistant Audit Officers/ Section Officers have powers to require early
or late attendance when the work is in arrears or the interest of public service requires
it. In the case of compulsory attendance on holidays, Assistant Audit Officers/
Section Officers should obtain prior sanction of the Branch Officer concerned.
(Government of India, Department of Personnel OM NO.-13/4/85-JCA dated 21.5.85 and O.O.No. Admn./A/3057 dated 12.11.86)
(ii) No official should leave office during the day without the permission of his
Assistant Audit Officer/ Section Officer nor should Assistant Audit Officer/ Section
Officer do so without the permission of his Branch Officer.
(iii) Leave of absence should be given to Muslim employees for a period sufficient
to enable them to attend Juma prayers, provided the time so spent is made up, if
necessary, outside the office hours, on the same or other day of the week.
(iv) The Comptroller and Auditor General of India in consultation with the
Ministry of Home Affairs has decided that no Government servant should get any
privilege like coming to office late or leaving office early on the ground of his
community or religion alone.
33
(C.A.G.’s circular Number. 301-NGE I/211-66, dated 17th February, 1967).
Attendance Register
3.4 (i) All assistants are expected to be in their places punctually at 9.00 a.m.
An Attendance Register in the prescribed form will be maintained in the office and
kept on the table of the Assistant Audit Officer/ Section Officer for marking
attendance by the staff. As each person arrives, he should put his initial in the
attendance register and then commence work.
(ii) At 9.10 A.M., the Asstt.Audit Officer/Section officer will make red cross mark
against the names of the absentees under his initials and submit the register to the
Senior Audit Officer/ Audit Officer- incharge. Any member of the staff coming late,
should put down in the red ink the exact time of his attendance below the cross mark
in the presence of the Branch Officer.
(iii) The nature of the absence should be stated in the case of all absentees. After
the register is seen by the Sr. Audit Officer/Audit Officer incharge, it should be kept
under lock and key by the Asstt. Audit Officer/Section officer.
Note: The names of permanent incumbents making up the sanctioned scale of the Section should invariably be shown in order of seniority in the Attendance Register and below them the names of the temporary or officiating clerks working in the Section in leave or other vacancies.
(Authority: Comptroller and Auditor General letter No.301-NGE I/211-66 dated 17.2.67).
Penalty for Late Attendance
3.5 The Government of India have, with a view to ensuring the observance of
punctuality and efficiency in the transaction of work in Central Government Offices,
decided to discontinue the practice of allowing a government servant to attend office
late, and have laid down the following instructions:-
(i) Half a day's casual leave should be debited to the C.L. Account of a
Government servant for each late attendance but late attendance upto one hour on not
more than two occasions in a month may be condoned by the Sr. Audit Officer/Audit
officer if he is satisfied that it is due to unavoidable reasons like illness in the family,
cycle puncture, late running of buses/trains etc. In case such a course does not ensure
punctual attendance of Government servant, suitable disciplinary action may be taken
against him in addition to debiting ½ day's casual leave to his casual leave account, on
each occasion of such late attendance.
34
(Comptroller and Auditor General letter No.3186-NGE I/12-73 Dated 12.9.75 filed in Admn. IV/punctuality 75-76).
(ii) Half a days causal leave for the first half or second half may be granted if
applied for by a Government servant to attend to some urgent private work which
does not require a full days casual leave e.g., when one has to go to Railway Station
or Bus Stand to receive a guest or a friend or to go to a dispensary to have himself or a
member of his family treated.
(iii) For the grant of ½ day's casual leave, as mentioned in sub-para (ii) above, the
lunch break will be dividing line, e.g., a person who takes ½ days casual leave for the
forenoon session, is required to come to office at 1.30 P.M.. Similarly, if a person
takes leave for the afternoon session he can be allowed to leave office at 1.00 P.M.
(iv) In view of the decisions contained in the preceding paragraphs, the balance at
credit in the casual leave account of government servants can be in terms of full day
or half day. In such cases there is no objection to the grant of ½ day’s casual leave in
conjunction with full day or day’s casual leave, if so applied for. Likewise, even
when the casual leave at the credit of a government servant is in terms of full days,
there is no objection to the grant of ½ day’s casual leave in conjunction with full day
or days’ casual leave. The existing restriction imposed on the number of days casual
leave that can normally be granted at a time will, however, continue to apply.
(v) In the case of a government servant who having exhausted his casual leave
attends office late upto one hour at a time for unavoidable reason mentioned in para
(i) above such late attendance may be condoned on not more than two occasions in a
month. If however, he attends office late on subsequent occasion (s), in a month,
disciplinary action may be taken against him.
(vi) As no orders regarding punctual attendance would be fully effective unless
strict measures are taken for their enforcement, the supervisory staff should be very
particular in scrutinizing the Attendance Register. The lunch break must be
scrupulously observed even by the supervisory staff. Surprise daily check must be
carried out in one or two sections by the Branch Officer.
Combination of half casual leave with Regular leave.
3.6 (i) In case where a Government servant has got, only ½ day’s casual leave
due in his casual leave account and avails of the same after the lunch break, and is
unable to resume duty on the next day due to unexpected illness or some unforeseen
compelling grounds, he may as an exception to the general rule be permitted to
35
continue half a day’s casual leave with regular leave. Those who have only half
casual leave due to them and will not attend office on the next working day (having
already applied for the leave of kind due and admissible to cover their absence for that
working day and for subsequent days, if any) should not be allowed the last half a
day’s casual leave for the afternoon.
(ii) In cases where an official has casual leave at his credit but not sufficient
enough to cover the period of leave applied for, there should be no objection to the
grant of ½ a day’s casual leave in combination with regular leave, if the other
conditions mentioned in the last sentence of sub-para (i) above are satisfied. In such a
case it has been held by the C.A.G. of India that, since the casual leave does not
constitute absence from duty and the pay is not intermitted, the Government servant
should hand over charge on the afternoon of the date of commencement of casual
leave. In the case of non-gazetted officers, the officer concerned would be deemed to
have been relieved from the afternoon of the date of the commencement of casual
leave.
(iii) At the end of each month, the Assistant Audit Officer/ Section Officer will see
that the abstract (last 4 columns) in the Attendance Register of his section is complete
and then have number of days on which each Auditor/Clerk attended late, entered in
the casual leave Register. The deduction for casual leave forfeited for late attendance,
during December of any year or when no casual leave be at credit, will be made from
account of casual leave ordinarily admissible during the next year, unless the period is
treated as regular leave. The abstract should be submitted to the Sr. Audit
Officer/Audit Officer- incharge in the first week of the following month.
Sitting late hours
3.7 If in the interest of the office work, it becomes absolutely necessary for some
members of the staff to sit after 7 p.m., they should obtain the prior permission of the
Group Officer concerned and communicate it to Administration Section concerned for
information.
Attendance on Holidays
3.8 It has come to notice that some assistants attend office on Sundays and
holidays even when their Assistant Audit Officer/ Section Officer do not attend the
office and experience inconvenience when the chowkidars refuse to open the section
for them. In such cases the Assistants should obtain written permission from the
36
Branch Officer/Group Officer to the effect that they will attend office on holidays
without their Assistant Audit Officer/ Section Officer.
(Office order no. B/44, dated 10th August, 1950)
Absence without leave
3.9 Staying away from office without leave renders a person liable to dismissal,
except when the cause is sudden illness, or unforeseen circumstances of a pressing
nature. In every case of absence without prior sanction, the reason of absence should
be communicated at once and, if it is due to illness, a medical certificate should be
produced, if so directed by the Branch Officer/Group Officer concerned.
Arrangement of work when Group Officer on tour
3.10 When Group Officer (Inspection Civil) is on tour, all letters on which orders
are required to be passed by him which are to go to Pr. Accountant General through
him should be got approved from the Group Officer who may be looking after the
work of the wing in the absence of Group Officer (Inspection Civil). During this
period if any delay in the disposal of a reference is apprehended, the matter should at
once be brought to the notice of the Group Officer by the Assistant Audit Officer/
Section Officer explaining the reason for the delay.
Sectional duty lists
3.11 With a view to facilitating fixation of responsibility against any of the
Auditors and Assistant Audit Officer/ Section Officer at fault, it has been decided by
the CAG of India that the Sectional Duty lists showing the details of work allotted to
each Auditor in the Section, may be properly drawn up and that continuous record of
incumbents with specimen of their signatures and initials with dates should be
carefully maintained. To give effect to this decision the following instructions are
issued for strict compliance by all concerned :-
(i) Statements showing the detailed particulars of duties on which each member
of the office establishment is employed, duty approved by the Group Officer,
having the supervisory charge should be drawn up and kept up-to-date in each
section of the office.
(ii) The statements referred to in sub-para (i) above should be formally got seen
by each individual concerned and his dated signatures and initials obtained on
the relevant duty lists.
(iii) Whenever a person in a section is transferred to another section or office or
relieved to proceed on leave, etc., the Assistant Audit Officer/ Section Officer
37
should obtain the dated signatures and initials of the relieved and relieving Sr.
Auditors/ Auditors on the relevant duty list and submit the duty list to the
branch Officer concerned in the following manner :-
Made over Taken over
Dated signatures of the relieved Sr. Auditor/ Auditor
Dated signatures of the relieving Sr. Auditor/ Auditor
(Dated initials) (Dated initials)
Dated signatures of the Assistant Audit Officer/ Section Officer.
(Dated initials )
Sr. Audit Officer/ Audit Officer
Besides the relieved Auditor may also be required to submit a detailed charge
report as at present, showing the state of work on his seat to his Branch Officer
through the Assistant Audit Officer/Section Officer at the time of his transfer. The
Assistant Audit Officer/ Section Officer may also submit such a report to the Group
Officer concerned through his Branch Officer at the time of his transfer.
Note:- The specific form of notes to be submitted by Assistant Audit Officer/ Section Officer and Sr. Auditors/ Auditors on the eve of their transfer or proceeding on leave is given in para 1.2.2 to 1.2.6 of the Manual of office procedure and of the General Services and Maintenance Branch Vol. I Part A.
(iv) The detailed duty lists may be kept in the personal custody of the Assistant
Audit Officer/ Section Officer and a specific mention to the effect that the duty lists
have been made over o the successor, Assistant Audit Officer/Section Officer should
invariably be made in charge reports of the Assistant Audit Officer/Section Officer,
whenever necessary.
(Office Order no. Admn I/A/342, dated 16th January, 1960)
Verification of Sanctioned Strength
3.12 The Administration Branch circulates a statement showing the sanctioned
strength of each section both permanent and temporary as on 1st April and 1st October
each year. The controlling sections are required to confirm the strength shown therein
within 15 days of the issue of the statement otherwise it will be presumed by the
Administration Branch that the sanctioned strength shown in the statement has been
accepted as correct.
38
Skeleton Register
3.13 (i) The Skeleton Registers containing the sectional dak should first be
submitted to the respective Branch Officers so that they can avail themselves of the
earliest opportunity of perusing the sectional dak and recording thereon such
instructions as they may consider necessary. With a view to expediting disposal of
inward dak, the Branch Officer should also give proper guidance and indication for
suitable disposal, wherever possible, on the letters received before passing them to the
section. The Skeleton Register should then be passed on to the section concerned.
The Assistant Audit Officer/ Section Officer should examine the letters, etc., received
in dak of the section and after initialing each letter, etc., mark them to the respective
Sr. Auditors/ Auditors. The Assistant Audit Officer/ Section Officer should also
record such instructions on the letters as may be necessary for their disposal.
(A.G.’s orders dated 11th November, 1963, File Admn. I/Misc./63-94)
(ii) While doing so, the Assistant Audit Officer/ Section Officer should keep a
note of all important and urgent letters received in the section either on his
engagement pad or in separate note-book to be started for the purpose. The diarist of
the section will check up the letters entered in the Skeleton Register, give
acknowledgement in this register and enter the dak in the sectional diary (Form
SY 318A). The first seven columns of the diary as also the subject-matter of the
letters received in the section will be duly written up by him. He will make over the
letters to the Sr. Auditors/ Auditors concerned promptly after taking their initials in
the diary. The Sr. Auditors/ Auditors should similarly keep a note-book through
which the receipt, disposal and movement of the letters should be watched. Letters
not pertaining to the section and marked as such under the dated initials of the
Assistant Audit Officer/Section Officer will be passed on to the section concerned or
in case of letters entered in the general/registered diary, G.S.M. Section for further
disposal.
Marking of Sectional Dairy
3.14 (i) In respect of the documents received from other branches of the office
all columns of the sectional diary will be written up by the diarist of the section
receiving them. The disposal of letters should be noted in the diary under the full
signatures of the Sr. Auditors/Auditors concerned and in case of reply sent out, the
sectional despatch number of the letter forwarding the reply should be noted. Where
no reply is necessary, the letter ‘F’ will indicate ‘Filed’. The case number of the
39
relevant file should be given against it. If a letter is transferred to a section other than
G.S.M. for disposal, the fact will be entered in the column how disposed of’ and the
particulars of the letter will be entered in the transit register. In order to ensure the
correctness of the entries of disposal recorded by the Sr. Auditors/Auditors concerned,
the Assistant Audit Officer/Section Officer should check cent percent the entries of
disposal in the case of the letters received from the Government of India, Punjab
Government and Comptroller and Auditor General of India and 5 percent of other
entries and record full signatures in the diary in token of this check and give
certificate to this effect in the weekly reports on the disposal of inward letters.
(Orders of the Accountant General, dated the 6th July, 1955 on page 2 of the
file TA/2-3/and D.A.G. (Sr.)’s note NO. TA/2-3/17, dated the 31st December, 1955)
(ii) The Assistant Audit Officer/Section Officer should personally verify that all
the outstanding letters against which disposal has not been marked in the diary
register have been included in the list of outstanding and append a certificate to this
effect in the report of the outstanding.
(Authority: Orders of Accountant General, dated the 18th February, 1956)
Report of pending cases.
3.15 (a) Pending cases are of two kinds, viz.
(i) cases which are held up awaiting a reply to a reference outside the
office, or the receipt of a document.
(ii) cases in which definite orders have been passed by the Branch
Officer/Group Officer In charge to hold over.
(b) (i) A register of pending cases should be kept in all sections in Form.
S.22, where number of pending cases is usually large (say 10 in number) and a serial
number should be given to the items. The remarks column should be used to show
the date of removal of the item from the register and this entry should be made and
attested by the Assistant Audit Officer/Section Officer.
(ii) The sections in which the number of pending cases is usually small
(less than 10 in number), the maintenance of separate register of such cases may be
dispensed with. A systematic record of such cases should, however, be kept and a
report on them drawn up and recorded in the Sectional Diary below the weekly Report
on outstanding letters.
40
(iii) It should invariably be ensured that timely reminders are issued in
pending cases and that correct certificates are recorded in the despatch registers in this
behalf.
(A.G.’s orders, dated 9th August, 1961).
(c) A report on the pending cases should be submitted to the Branch Officer In
charge weekly and to the Group Officer concerned twice a month along with the
report on outstanding letters prescribed in paragraph 4.3.4 of the Manual of Office
Procedure and of the General Services and Maintenance Branch Vol. I Part A.
(d) When an item has been removed from the register either because it has been
finally cleared, or because a reply has been received to an outward reference which
transforms the case into a current one, the Assistant Audit Officer/Section Officer
should indicate the fact (in addition to attesting the date in the last column) by striking
out the remarks in the ‘subject’ column by a diagonal line in red ink.
(e) When replies from more than one officer are awaited to an outward reference,
the designation of each officer should be given as separate subsidiary item, in the
Pending Register in the ‘subject’ column. As each reply is received, the date of receipt
should be noted against the entry and immediately the last reply is received, the
Assistant Audit Officer/Section Officer should deal with the case as indicated in
clause (d) above.
(f) All ad interim replies received in connection with pending cases should also
be entered in the Pending Register so that effective watch over the progress of
disposal of such cases may be ensured.
Remarks on Letters
3.16 No remarks or orders should be written on letters, etc. received in the office
except ‘File order’ or other prescribed orders.
Report of outstanding letters
3.17 (a) Every Tuesday morning, each section will prepare in the prescribed
form the report on the unanswered correspondence. This report is intended to show
all letters etc. received upto the Friday of the 2nd preceding week, i.e., for example, all
letters received up to Friday, the 12th March, 2004 and not disposed of by 19th March,
2004 must be shown in the report drawn up on Tuesday, the 23rd March, 2004. The
list for the week under report should start with an abstract in totals thus :-
41
Balance as shown in Last Report
Cases retransferred from pending Register
Receipt of the period under report ___________________
Total : ___________________
Cases disposed of in period under report
Cases transferred to Register of Cases Pending ___________________
Total Deduction : ___________________
Balance outstanding :
The balance outstanding at the end of the week as worked out above should be
analysed and shown as below:-
Details of Balance
(a) Letters more than 3 weeks old :
S. No. Name of Asstt.
Diary No.
Date of office stamp
Brief subject From whom received
Section Officer/Assistant Audit Officer’s explanation for delay in disposal (in Section Officer’s/Assistant Audit Officer’s own handwriting).
1 2 3 4 5 6 7
(b) Letters less than 3 weeks old:
Name of Asstt.
Diary No. Date of office stamp
Subject Section Officer/Assistant Audit Officer’s explanation for delay in disposal in cases of receipt over a week old (in Section Officer’s/Assistant Audit Officer’s own handwriting).
1 2 3 4 5
Diarist Section Officer/Assistant
Audit Officer
Branch Officer Group Officer
(Inspection Civil )
Note I Urgent diary letters received upto Thursday of the preceding week may be taken into consideration at the time of preparation of report of this diary.
(D.O. No. TM I/9/61-62/1119 Dated 28th August, 1961).
(Authority Note I under para 4.3.4 of Manual of office Procedure and of General services and Maintenance Branch Vol. I Part A (Office Procedure).
Note II All letters received from the Government of India, Punjab Government and the Comptroller & Auditor General of India which are not disposed of within 3 weeks from the date of receipt should be separately shown in the monthly
42
report on the state of work and the monthly arrears consolidated reports submitted to the Accountant General by Control Section.
(Orders of the Accountant General, dated the 5th July, 1955, in file T.A./2-3 and D.A.G. (Sr.)’s note No. T.A./2-3/21, dated the 31st December, 1955).
(b) Such reports will be submitted to the Branch Officer weekly and to the Group
Officer concerned twice a month, viz. on the second and fourth Tuesday, in each
month. Branch Officers are required to guard against the tendency to treat letter
‘disposed of’ when only an interim reply has been sent, or to give as an explanation
for delay, that the letter has been sent to some other section. A full and satisfactory
explanation should be insisted upon whenever letters remain outstanding for an
unreasonable period. When the fault lies on another office, a strongly worded letter
addressed to the officer by name and signed by the Pr. Accountant General may
sometimes be effective. Similarly by running their eyes over the entries for the past
week, Branch Officers will in almost all cases be able to tell from their own
knowledge, whether any letter has been wrongly shown as disposed of. A section
must show as outstanding against itself all letters which have to be finally disposed of
by it even if such letters be not with it at the time the abstract is prepared and the
report submitted.
(c) The monthly report of outstanding pending diary letters in respect of the entire
office should be put up to the Pr. Accountant General by the Control Section on
receipt of reports from the co-ordinating sections every month. All the co-ordinating
sections in the office should, therefore, send a report to Control Section concerned in
the Proforma given below on the last Tuesday of every month.
These reports should exhibit the position in respect of all the letters
“pertaining to Urgent diary, Ordinary diary and other diaries”. The reports will also
incorporate the position in respect of letters received from the Comptroller and
Auditor General of India. The co-ordinating Sections will also submit separately a
weekly report of outstanding and pending letters received from the Comptroller and
Auditor General to the Pr. Accountant General through their Group Officers in a
consolidated form in respect of sections under the group officer concerned. The
reasons for increase in pending letters as compared to previous month, should also be
clearly indicated.
The Assistant Audit Officer/ Section Officer and the Branch Officer should
ensure that the reports are sent to co-ordinating/Control Section on due date and if any
43
Branch Officer is unable to send the report to co-ordinating/Control Section on that
date he should obtain extension of time from Accountant General through the
respective Group Officer and co-ordinating/Control Section should be informed
accordingly.
Form of Report
Name of Section _______________________________________
Monthly Report of Ordinary/Urgent Diary for the period from _____________ to _________________-
Sr. No.
No. Of letters outstanding as per last report
Number of letters received during the month
Total Number of letters disposed of during the month
Total balance outstanding
Remarks
1 2 3 4 5 6 7
Branch Officer
Note: - In remarks column brief reasons for increase in the number of letters outstanding at the end of the month as compared to the number outstanding in the last report, may be stated.
(d) All complaints received in the office should be diarised in a separate register
to be maintained by each section in the same form as other diaries and the reports of
the disposal of complaints should be submitted to the Branch Officer every Tuesday
as in the case of ordinary letters and to the Group Officer of the wing concerned on
second and fourth Tuesday of the month. The respective co-ordinating sections of the
various wings will, in turn submit through the respective Group Officer, the
consolidated fortnightly report of all the sections in their wings to the Accountant
General for his information.
(A.G.’s order at page 9/c and 16/N on the file Admn. I/Misc./CS 65-68).
Note :- Where letters are outstanding for more than one month and two months, individual details of these complete reasons for their non-disposal and the stage at which these letters are pending should be given in the report of outstanding letters. The Branch Officer should also particularly investigate into the reasons for each of the outstanding letters and take immediate action to dispose them quickly. The Pr. Accountant General has further desired that wherever possible the concerned coordinating/Control Section should conduct a review of the letters outstanding for more than two months, shown outstanding in monthly report, and bring out any special points for his information while submitting the consolidated report.
(Office order No..2170/Dy.Report/67-68/639 dated 24.7.1967)
44
Sending out of letters and memoranda received from the Comptroller and Auditor General
3.18 Sending out to Government and other authorities copies of letters and
memoranda received from the Comptroller and Auditor General, is strictly forbidden.
There is, however, no objection to communicating where necessary the substance of
such letters to Government or other authorities or in some cases to mentioning in
these communications that they represent the views or orders of the Comptroller and
Auditor General.
(Para 4.5.3 of the Manual of Office Procedure and of the General Services and Maintenance Branch, Office Procedure Vol.I Part A).
Signing of Letters and Statements to be sent to the Comptroller and Auditor General, Government of India and State Governments
3.19 (a) All letters to the Comptroller and Auditor General of India other than on
routine matters, should ordinarily be issued under the signatures of the Pr. Accountant
General. Whenever, Comptroller and Auditor General is required under a statutory
provision to certify any figures and they are based upon the figures furnished by the
Pr. Accountant General, the latter should personally sign the statements and certify
their correctness.
(b) All important communications should be issued to the Comptroller and
Auditor General office with the full knowledge of the Pr. Accountant General
particularly in respect of cases involving errors or delays, etc. so that Headquarters
office may know that in all such cases suitable action has been taken and remedial
measures adopted by the Pr. Accountant General, whenever necessary. Whenever, an
important communication is issued by a Group Officer, or other officer, with the
concurrence of the Pr. A.G. the fact should be indicated in the letter itself.
(c) Normally, all important communications emanating from this office be issued
after obtaining the approval of the Pr. A.G. or Group Officer particularly when a
Department or an officer indicate to this office clearly their views as to the manner in
which a particular cases should be dealt with. The Pr. A.G. has, therefore, ordered that
in future in all cases where reply/reference is issued under the orders of a Branch
Officer to a department/an officer stating that their views are not accepted in audit and
if the officer/department reiterate their views giving reasons therefore, the case must
be submitted to the Group Officer for orders if the Branch Officer does not propose to
accept the view/clarifications given by the officer/Department. In cases where the
45
initial reference is issued after obtaining the orders of the Group Officer, the reply of
the department should also be submitted to him for further orders.
(d) The Comptroller and Auditor General has no objection to the Pr. Accountant
General's authorising the Branch Officers to sign acknowledgements of receipt of
C.A.G's letters.
(e) All communications addressed to the Comptroller and Auditor General will
require to be forwarded ultimately to Central Government or other authority (for
example applications for revision of pay, for increased establishment, for extra grants,
etc.) should be submitted in duplicate.
(f) Confidential papers should be placed in double covers, the inner cover being
marked Confidential and superscribed with the name only of the addressee, the outer
cover being addressed to him by his official designation without the addition of his
name.
Issue of Telegrams
3.20 Telegrams should not be sent in cases where letters would serve the same
purpose equally well. In cases where the stations to be addressed are within a day’s
reach by post and there is no special necessity that the communication should reach in
less than 24 hours, letters should be issued instead of telegrams.
Disposal of unofficial references
3.21 The unofficial reference from the Government of India and also of C.A.G. of
India should be dealt with on priority basis. If for any reasons, it is not possible to
give final reply, the non-official papers should be returned without delay with an
interim reply and related copies retained for necessary action.
(Sr. D.A.G. Order on C.A.G. Letter no. 916-(AC)/192-65 KW dated 20th September, 1965)
(Authority : Para 4.13 and Note 2 of Manual of Office Procedure and of the General Services and Maintaince Branch Volume – I Part A (Office Procedure) ).
Complaints
3.22 The complaint letters received in the Inspection Civil Wing shall be submitted
direct to Group officer (I-C) translated into English, if these are in vernacular (along
with the original letters) and the Group Officer(I.C) shall use his discretion in dealing
with them .The information contained therein shall not be made use of by any
member of the office except as directed by the Group Officer.
46
Anonymous or Pseudonymous Letters
3.23 It has been decided that the following procedure may be adopted in case of
anonymous and pseudonymous complaints:-
(a) It is not incumbent on any Ministry or Department to take any notice of
anonymous and pseudonymous complaints as these are to be filed in
accordance with government instructions.
(b) Even if any administrative authority chooses to investigate into such an
anonymous or pseudonymous complaints under the impression that it is
genuine signed complaint or for any reason, Central Vigilance Commission
need not be consulted, if it is found that the allegations are without any
substance. But if the preliminary investigation indicates that prima-facie there
is some substance in the allegation then the Central Vigilance Commission
should be consulted as to the future course of action to be taken.
(Para 4.15 of Manual of Office Procedure and of the General Services and Maintenance Branch Vol. I Part A (Office Procedure) ).
Issue of Reminders
3.24 (a) Ordinarily not more than one reminder should be issued and sufficient
time should be allowed for a reply according to the nature of the case. If no reply is
received, a telegram may be issued in important cases or a special letter addressed to
the officer concerned and a reply asked for within a reasonable but definite period.
The issue of several routine reminders is ordinarily a mere waste of time. If the
special or the telegraphic reminder, again proves fruitless, no further time should be
wasted on the officer concerned and a formal report should at once be made by
official letter to the next higher authority who may be Commissioner of the Division,
the Head of the Department, the Superintending Engineer etc. A reasonable time for
investigation and necessary action must be allowed and report asked for of the action
taken to remove the objection etc. Should this also prove to be unsatisfactory, there
will be no alternative but to report the matter fully by special letter to Government
and to ask that the due notice may be taken of the matter and the result communicated
to this office.
(b) In the case of Half Margins, their returns will be watched and reminder issued
through the Half Margin Registers, which contain necessary columns for the purpose.
47
(c) When a reminder is received in this office it should be submitted immediately
with a brief not explaining the delay even if the case has been submitted to the Group
Officer in the meantime.
Annotated reply of Inspection Reports
3.25 (i) Annotated reply to an inspection report is due to be received within
four weeks of its issue, otherwise, a printed reminder should issue.
(ii) In addition, a list of the inspection reports, for which first replies have not
been received within four weeks from the dates of issue of Inspection Reports should
be prepared separately (Form enclosed) for offices under each Head of the
Department and reminder sent demi-officially under the signatures of the Group
Officer (Inspection Civil) to the appropriate heads of the departments with copies to
the Administrative Secretaries and Finance Secretary by the 5th of each month and
they should be asked to furnish progress reports in regard to the disposal of the
Inspection Reports within a month. The covering letter should also indicate how
many reports have remained unreplied for over six months, over one year and over
two years.
(iii) Where replies have been received, but objections have not been finally settled,
for more than 6 months, a list of such objections for the various offices under a
particular Administrative department/Ministry should be prepared every half year,
showing the name of the office which has failed to clear the audit objection with a
yearwise analysis of objections, and indicating the nature of the objection in brief,
money value if any and particulars of the latest reference, if any, in chronological
order. The list should be sent to the appropriate department/ministry and they should
be asked to furnish progress report in regard to settlement of objections. For this
purpose, the following dates should be observed:-
Sr. No. Particulars Audit objections contained in report issued between.
April and September but not settled by March next
October and March but not settled by September next
1. Half-yearly return due from the Audit Office to the Administrative Department/Ministry
15th June next 15th December next
2. Half-yearly return showing progress in settlement due from the Administrative Department/Ministry to Audit Office.
15th September next 15th March next
48
Opening and Maintenance of Files
3.26 (i) The subject matter should be recorded on the cover of each file. It
should be as brief as possible, but should give at glance sufficient indication of the
contents of a file. Additions and alterations in the file should be made as and when
required.
(ii) When the main file is under submission, a skeleton or keep with (K.W.) file
should be started to dispose of the papers. Subsequently this file should be merged
with the main file after renumbering the pages of notes and correspondence sides of
the skeleton file and also correcting internal references.
3.27 The importance of filing papers properly and submitting them in proper order
cannot be overemphasized. It does not only lead to greater efficiency but it also saves
time all round. The more important points are enumerated below for the guidance of
all concerned :-
(a) a separate file should be opened for each important subject;
(b) all matter which do not justify the opening of a separate file should be dealt
with in a miscellaneous file;
(c) sub-files should be opened as and when necessary to deal with important
subjects subordinate to a main subject;
(d) all files and sub-files should be entered in a register of cases which is
supposed to be maintained in each section. Section Officers/ Assistant Audit
Officers are expected to see that this is invariably done;
(e) each file and sub-file will be maintained in two separate parts the
correspondence side and the note side;
(f) the papers should be so filed that these can be read as in the case of a book;
(g) all the pages both in the correspondence side and the note side should be
numbered;
(h) every page whether it is blank or written will carry a number;
(i) the obverse side of each page will bear “odd” numbers and reverse side “even”
number;
(j) the number should be indicated on the right hand corner of each page in ink;
(k) whenever a reference is received from outside or another section in this office
it should first be placed in the file and properly page numbered;
(l) if it is in reply to any reference from his office or section the words “reply at
page ......................................” should be recorded on the said references;
49
(m) before dealing with the P.U.C. it should be properly referenced and every
letter should be referenced by indicating the page and file number;
(n) if the reference is in the same file it is not necessary to quote the file number;
(o) on the note side the disposal should start by quoting the letter number and the
date alongwith the designation of the authority from whom it has been
received.
(p) In the margin, the page number at which the P.U.C. can be found should only
be quoted;
(q) all documents referred in the notes should be duly referred by quoting the page
number and the file at which these could be found;
(r) notes should be brief and informative, these should not reproduce the
substance of the paper under disposal;
(s) Assistant Audit Officers/Section Officers and Branch Officers need not
reproduce the arguments already recorded by the section. In important cases,
however, it may be necessary to give self-contained precise but that should be
an exception rather than the rule;
(t) all notes should be signed in full by the persons writing the same;
(u) if the signatures are illegible the name should be given below the signatures in
block letters;
(v) wherever a reply is to issue, the Assistant Audit Officer/ Section Officer
should ensure that the draft reply is submitted for approval along with the
notes;
(w) similarly when the case is submitted to the Group Officer/A.G., the draft
should be submitted alongwith the notes according to the views expressed
therein. It will avoid re-submission of the file and save time. If the higher
authority does not agree with the views, the draft can be amended. In very
rare cases where decision of the Group Officer/A.G. is absolutely necessary, a
note should be submitted first and the draft put up afterwards;
(x) Assistant Audit Officer/ Section Officers will examine the drafts approved by
higher officer and point out any factual mistakes. After the draft has been
approved and issued it should be placed in the proper file and page numbered;
(y) the words “reply at page ........................” should be noted on the letter to
which it is a reply;
50
(z) when dealing with the case it is normally not necessary to reproduce the
previous notes. It should suffice, excepting in a few important cases, to refer
to the previous noting.
The above instructions are not intended to be comprehensive. The idea is to
ensure that the papers are dealt with in a manner which would enable any one to study
the case without difficulty. This procedure, if properly fo llowed, should eliminate the
use of “flags”.
(Office Order No. AG/PA/125, dated 10th June, 1960).
Transfer of cases to other sections
3.28 Cases referred to other sections should pass through Branch Officer except in
case of purely-routine matters, e.g., when some information is only to be obtained.
The Branch Officer should see that consultation with other sections is confined to the
minimum required for the efficient working of the Section.
(O.O. 625, dated the 24th June, 1938)
Closing of files and cases
3.29 Cases in which correspondence is going on or in which further matter is likely
to be included, should not be closed at the end of the financial year unless they have
become bulky. Apart from this, where it is convenient to keep the papers relating to
different financial years separately, cases should be closed when they are complete for
the financial year. All other cases except those dealt with in clause (b) should be
closed at the end of the financial year. Whenever a case is closed the year proposed
for its destruction should be recorded prominently on the outer cover over the dated
initials of the Assistant Audit Officer/ Section Officer. Every section will be
responsible for the custody of its files and cases whether closed or not till they are
sent to Record Section. Record Keeper will acknowledge their receipt in the Case
Register of the section under each file heading.
(Para 9.4 of Manual of Office Procedure and of the General Services and Maintenance Branch Vol.I Part B ).
Dictionary of references
3.30 A Dictionary of References should be started in Form Number SY 256 which
should contain a gist of all important orders, rulings or decisions of Group Officer and
Accountant General on Audit and Accounts matters. It will ensure uniformity of
interpretation and practice.
(O.O. No.79/TM, dated the 3rd March, 1949)
51
Monthly Reports
3.31 (i) Headquarters section of Inspection Civil Wing will prepare a statement
showing the state of work in the section in Form O.A. 9 given in Appendix I
incorporating inter-alia, the reports received from the Assistant Audit Officer/ Section
Officer in pursuance of para 4.13 supra. The consolidated report on the state of
affairs in the Inspection Civil Wing will be submitted monthly by the Assistant Audit
Officer/ Section Officer, Inspection Civil Wing, Headquarters to the Group Officer (I-
C) through Branch Officer (Headquarters) by the 5th of every month. The report is to
be submitted to the Pr. Accountant General quarterly through Control Section.
(ii) In the preparation of quarterly arrears reports, it should be seen in particular,
among other things that--
(a) the arrears on account of the inspections scheduled but not carried out during
the year are shown in the quarterly report for the period ending 31st March.
The same is, however, not to be carried over to the subsequent quarterly
reports.
(b) The time taken in special audits not provided in the regular programme is
shown separately in the arrear reports and is not deduced from the arrears of
inspection scheduled but not carried.
Note- Group Officer (I-C) will state if he is satisfied with the state of affairs indicated in the report and if not, he will suggest the steps necessary to improve them.
(Authority:- Comptroller and Auditor General Order No. 1095-Admn.II-286-62, dated the 19th/21st June, 1963 in file OA/NCW/I/I-17/1963-64).
Calendar of Returns
3.32 (a) A calendar of returns in Form No. SY.264 showing the due and actual
dates of completion of various items of work shall be maintained at the headquarters
Section. Blank note sheets should be appended to and bound with the Calendar of
Returns for the purpose of the submission of weekly reports in the following form to
the Branch Officer on the 2nd, 8th, 15th, and 22nd of each month.
Page Item No. Brief Particulars
When due
To whom due
Reasons for delay
Probable date by which it will be submitted
1 2 3 4 5 6 7
52
Asstt. Audit Officer/ Section Officer will be responsible for seeing that the
sectional Calendar of Returns is at all times complete and kept up to date.
(b) (i) The Calendar of return will be maintained in form SY.264 and should be kept
in four different sections as indicated below:-
Section I All returns of a permanent or recurring nature due to authorities
outside this office.
Section II All reports, objection books register etc. of a permanent or recurring
nature due for submission to Branch Officer or other sections within
the office.
Section III All returns, reports, registers etc. of a permanent or recurring nature
due either from outside authority or from other sections of the office.
Section IV Unforeseen entries, which a section is required to make in the calendar
of return in respect of matters to be taken up for disposal in or about a
given date on or in respect of occasional matters on which information
or reports are expected from outside offices or office sections.
Entries in this section should be made as soon as the occasion for doing so arises.
(ii) Section I, II and III should be sub-divided into (A) Annual (B) Half yearly (C)
Quarterly (D) Monthly (E) Fortnightly and (F) Weekly. Enteries in each of
these sub-sections should be arranged in the order of dates on which they are
due, Sufficient spaces should be allowed after each sub-division for new
enteries occurring during the year.
(iii) The first 5 columns of the calendar viz. (1) Serial No. (2) Name of return (3)
To whom due or from whom due in case of Section III (4) When due; and (5)
authority, should be entered at the beginning of each official year from the
previous year’s calendar, the enteries being re-arranged as necessary. The
Asstt. Audit Officer/ Section Officer will check all the enteries and record a
certificate on the fixed page of the calendar.
Any addition due to orders received in the course of the year should be made
at the end of the sub-division concerned without altering serial number of
existing items.
(iv) Section Officers/ Assistant Audit Officers will be responsible for seeing that
their respective sectional calendars are at all times complete and kept upto
date. Separate enteries in respect of each unit or each Auditor should be made
in calendar in case of items like Half Margin register, Auditor’s Note Book
53
etc. which are to be submitted by the different Auditors in the section and
which may not always be submitted or despatched in respect of all units or
Auditors on the same day.
(Authority: Para No. 1.6.2(i) of Manual of Office Procedure and of General Services and Maintenance Branch Vol. I Part A (Office Procedure First Edition 1987).
(C) A list of various returns indicating the due dates of their submission /receipt is at Appendix III.
Failure of Audit
3.33 A separate report of every serious case of failure of audit as soon as it comes
to light including those pointed out by the Director of Inspection, if any, irrespective
of any report which may be required for other purposes should be submitted to the
Pr. Accountant General through the Group Officer. The report should explain the
manner in which the failure occurred and mention the names of the persons
responsible and the disciplinary action taken or recommended.
(Para 47 of C.A.G.’s Manual of Standing Orders (Admn.), Vol. II).
Register of Serious Financial Irregularities
3.34 (i) A register of Serious Financial Irregularities in Form SY-276-A is
maintained in the Inspection Civil Wing for recording serious financial irregularities
noticed during the local audit. This register is intended to furnish the material which
merits inclusion in the Audit Reports.
(ii) The Asstt. Audit Officers/ Section Officers while submitting Audit and
Inspection Notes to the Headquarters should indicate in the covering Title Sheet, the
important paras which in their opinion merit inclusion in the Audit Report. After the
approval of the editing note by the Group Officer (I-C), these paras will be transferred
to the Draft Para Section for recording in the S.I.R. for further processing.
Reports of the Register of Serious Irregularities shall be submitted on 5th of the
month to the Group Officer and on 10th of the month to the Pr. Accountant General.
This Register should be kept in the personal custody of the Asstt. Audit
Officer/Section Officer, who shall be personally responsible for properly recording
the progress of each case therein and for keeping it up to date.
(O.O. No. Control/10-1/93-94/5 dated 29.12.1993 Authority- AG’s orders dated 28.12.1993 in file Control/362/AR/93-94)
54
Co-ordination between Central Audit and Local Audit
3.35 The audit conducted in the Audit Office is supplemented by periodical test
audit of initial accounts and such other accounts, vouchers, etc., as are not rendered to
the Audit Office or as cannot be checked adequately except during local audit. It is of
the utmost importance that close co-ordination should exist between Central and
Local Audits and that the system should be viewed as a whole and not in separate
compartments. It is essential that the two wings of audit should function as they are
intended to do, that is to say, one supplementing the other and not independently.
The following instructions are, therefore, laid down for careful and strict
observance by the Central Audit Support Sections and the Inspection Civil
Headquarter's Sections.
(1) Co-ordination of Audit arrangements for new schemes or institutions:-
(i) As soon as a new scheme comes to the notice of the Central Audit Support
Section concerned either through the E.C.P.A. Section or from an examination of the
Budget Estimates or on receipt of a sanction to establishment, grant of loan, subsidy
or other grant etc., relating to a new scheme, detailed enquiries shall be made
immediately by the Central Audit Support Section concerned from the departmental
authorities to secure full particulars and detailed literature relating to the scheme, so
that timely action may be taken in this office for laying down a suitable procedure for
the audit and accounting of the transactions of the scheme. All relevant orders of the
Government of India bearing on the financial and other arrangements relating to the
execution of the schemes shall also be obtained.
In making these enquiries special emphasis shall be laid on the urgency of
drafting an adequate system of initial accounts for the scheme by the Government in
consultation with this office, and, as far as possible, issuing it for the guidance of all
concerned before the actual execution of the scheme is taken up by the departmental
authorities.
(ii) When the necessary information is received, it should be supplied to the
Inspection Civil Headquarter Section concerned immediately to enable them to
include the scheme in the local audit programme and to examine other arrangements
for local audit side by side with the scrutiny of the scheme in Central Audit. On
receipt of particulars of the scheme from the Central Audit Support Section,
concerned Inspection Civil Headquarter. Section shall consider the arrangement for its
55
local audit and shall call for from the departmental authorities direct such further
information as is not available from the Central Audit Support Section and is
necessary to evolve a proper system of local audit. It should be seen whether;
(a) Adequate procedure, rules and account forms suited to the activities of, and
transactions involved in the scheme have been laid down for the maintenance
of initial accounts.
(b) Proper financial powers have been delegated to the authorities responsible for
the execution of the scheme and that the responsibility of the various
authorities in regard to the maintenance of the accounts have been specified
fully and in a clear cut manner.
(c) All the necessary accounts and returns which should be submitted to audit
office have been duly prescribed in the rules relating to the scheme.
(iii) In the light of the above examination a suitable audit procedure shall then be
drafted by the Central Audit Support Section in consultation with Inspection Civil
Headquarter Section concerned and if necessary, also E.C.P.A. and orders of the
Pr. Accountant General obtained thereon through the Group Officer.
(iv) A copy of the audit procedure relating to the scheme, as approved by the
Group Officer shall be supplied by the Central Audit Support Section to Inspection
Civil Headquarter Section concerned without any delay. On receipt thereof, the
concerned Section at Inspection Civil Headquarter shall review and finally settle all
the detailed arrangements regarding the local audit of the accounts, e.g. the quantum
and frequency of audit, any special checks to be applied during local audit, etc.
(2) Selection of points or cases by Central Audit Support Section for detailed investigation or settlement through Local Audit:-
(i) Each Central Audit Support Section should carefully review each month the
audit conducted by it (with reference to Objection Books, Audit Register etc.) of
institutions which are locally audited by the Inspection Civil audit parties. Any
important cases or points in regard to which a detailed or further scrutiny in local
audit is desirable, should invariably be communicated to the concerned Headquarter
Section and a report obtained and dealt with in the Central Audit Support Section in
the normal course. The points referred to the concerned Headquarter Section should
include important objections in respect of which satisfactory replies are not being
furnished by the departmental authorities to Central Audit Support Sections or those
56
relating to delay in the submission of vouchers, detailed accounts, etc. in support of
expenditure incurred by the institutions concerned.
(ii) The visits of the Inspection Civil aud it parties may further be utilized by the
Central Audit Support Sections in getting points settled not only in relation to that
particular institution which is visited by them according to their local audit
programme but also of other offices or any other departmental offices where
objections which can best be settled by personal discussion have remained unsettled
for a long time inspite of the exchange or considerable correspondence.
(iii)(a) Besides the objections taken in Central Audit on individual transactions, it
may at times be considered desirable by a Central Audit Support Section, in view of
heavy expenditure or imperfect control exercised by Disbursing and Controlling
Officers, or again, as a result of general extravagance in particular office or
department, that the accounts of that office should be subjected to a special
examination in local audit. The Sr.A.O./A.O. (CASS) has been assigned a target for
indicating, as a result of scrutiny of sanctions, suggesting at least 5 specific points
each quarter, for detailed examination during local audit.
(A.G.’s orders No. A.G Sectt/CAG’s Inspection/94-95/378-80 dated 6.8.1994)
(b) A proper and complete record of important points or cases noticed in Central
Audit requiring further investigation in local audit should be personally maintained by
the Asstt. Audit Officer/ Section Officer of each Central Audit Support Section. This
register should be scrutinised by the Branch Officer each month to ensure that all
important points, cases, etc., which can be speedily and more appropriately settled
through local audit are duly noted in the register and communicated to the concerned
Headquarter Section. The Central Audit Support Section shall keep a watch, through
this register, over the receipt of reports from the concerned Headquarter Section on
the points referred to the latter for investigation in local audit.
(c) All the Central Audit Support Sections should furnish a report to the
Inspection Civil Headquarters on the 5th of each month containing the following
information:-
(i) The names of new schemes undertaken or proposed to be undertaken
by the Government.
(ii) Full particulars regarding these schemes when received from the
departmental authorities.
57
(iii) Important points and cases requiring further investigation and intensive
scrutiny in local audit.
The above report, even though nil, must be furnished to the Headquarters
Section by the prescribed date.
(Office Order No. TM/II-I/Insp.-1077, dated the 7th July, 1954 read with office order No. OAD/C/1375, dated the 23rd June, 1955).
(iv) With a view to securing the speedy settlement of outstanding objections in co-
ordination with local audit, the following procedure should be followed:-
(a) The Asstt. Audit Officers/Section Officers (field) shall call from Central Audit
Support Section, the statements of the outstanding audit objections in respect of the
particular office, audit of which is to be conducted by them at least 15 days in
advance of the date of audit. The Central Audit Support Sections concerned shall
furnish these statements in duplicate within three days of the receipt of the requisition
of the Asstt. Audit Officers/Section Officer (field) clearly indicating the action
required to be taken by him in respect of each objection. The objections pertaining to
the last three months preceding the month in which the local audit is scheduled to be
conducted need not be included in these statements unless any specified points
requires immediate local investigation or discussion.
(b) After the objections have been discussed with the departmental authorities, the
Asstt. Audit Officer/ Section Officer (field) will record his findings on the statement
and send one copy of it to the Branch Officer in charge of the Central Audit Support
Section concerned and the other to the concerned headquarters Section along with his
Inspection Note, diary etc. in justification of the additional time, if any, taken by him.
The Central Audit Support Section will then take further necessary action towards
settlement of the objections on the basis of the remarks offered by the Asstt. Audit
Officer/ Section Officer (field).
(Comptroller and Auditor General’s No. 2585-Admn.I/195-55, dated the 19th December, 1955 and Office Order No. TM/9-62/Genl/3415, dated the 10th February, 1956).
(3) Points or irregularities detected in local audit requiring further investigation in Central Audit:-
(i) While conducting local audit, the Inspection Civil Audit parties should keep a
vigilant eye for selecting any points or irregularities (including those relating to
personal claims) in respect of which it may be desirable that the Central Audit
Support Sections should conduct a more comprehensive or general examination of the
58
complete accounts of an office or institution or in regard to a group of offices. If
during local audits, it is found that the audit of any particular expenditure requires
closer scrutiny than can be given during a periodical test audit, the work should be
entrusted to the Central Audit Support Section concerned provided it is otherwise
susceptible of such treatment. To enable the Central Audit Support Section to acquire
a general idea regarding the state of accounts of any particular office or institution, as
brought out during local audit a copy of each Audit and Inspection Note shall be
furnished to the Central Audit Support Section concerned. The points and
irregularities mentioned in the Audit and Inspection Note which require to be
scrutinised in detail and pursued in Central Audit and any special points with
reference to which examination in Central Audit is to be conducted should invariably
be specified clearly.
(ii) In regard to important objections or irregularities taken up in the Audit and
Inspection Notes as a result of local audit of the initial accounts of an office or
institution, the Audit Unit concerned shall be responsible for pursuing with the Head
of the Departments of Government all such important objections or irregularities in
order to develop them into paras for inclusion in the Audit Report. However, such
irregularities or objections as figure in the accounts rendered by the office or
institution to the Audit office and require a general scrutiny of the bills, vouchers and
other documents rendered to the Audit office over a certain continuous period sha ll be
pursued with the departmental authorities or Government by the Central Audit
Support Section concerned. The concerned Headquarter section shall pass on to the
CASS section concerned any further information which they may receive in such
cases. Information in regard to the settlement of any objections which are raised in
local audit, but are finally settled in Central Audit will be furnished immediately by
the Central Audit Support Section concerned to the Audit Unit concerned to enable
them to keep a note against the original objections in the audit notes.
4. Intimation regarding termination of a scheme or closure of an office or institution:-
As soon as any particular scheme, office or institution is terminated/closed, an
intimation thereof shall be sent by the Central Audit Support Section to the Inspection
Civil Headquarters Section concerned promptly so as to enable them to make such
changes in the local audit programme as may become necessary on this account.
59
(Office order No. T.M./II – I/Inspection/1077, dated the 7th July, 1954 read with office order No. O.A./N.C.W./II, dated the 3rd February, 1958).
Note: - The Assistant Audit Officer /Section Officer (field) should pay proper attention to the settlement of Central Audit Objection during local aud it. The list of such objections should not be left with the departmental authorities but the Head of Party should see that the wanting information is collected and forwarded to the concerned Central Audit Support Section as soon as the audit is concluded.
(O.A./I-35/772, dated 26th May, 1960)
Making available Departmental files to Audit
3.36 (a) During the course of local or Central Audit, the production of files of
the Administrative offices should not ordinarily be required unless they are absolutely
necessary for the investigation or settlement of an objection. Files which have not
been shown by the Heads of Offices when their audit was conducted may be
requisitioned by an officer not below the rank of a Deputy Accountant General, who
would mention in the requisition that the Accountant General’s approval was obtained
to call for the files. Objections raised as a result of scrutiny of such files should be
issued only at a level not below that of the Deputy Accountant General. Further, if
any part of the objections required production of the notings in the file, it should be
done only after discussion with a senior officer of the department concerned.
(Office order No. B. 163, dated the 27th June, 1955, and Comptroller and Auditor General’s letter no. 1447-Rep./209-58, dated the 12th July, 1958 filed in file no. W.M.I. 14-I-Misc.)
(b) In this connection, the instructions issued by the Punjab Government to all the
Heads of the Departments are reproduced below: -
I am directed to address you on the subject noted above and to state that
Government have decided that in future office files which have not been shown when
the audit was conducted in the various offices, should, ordinarily, be made available
to the Pr. Accountant General, Punjab, on request. The Pr. Accountant General,
Punjab, on his part will ensure that the files are sent for in case of absolute necessity
and that these are seen by officers of the rank of Deputy Accountant General and
above only. Further, if any part of the noting will be required it will be only after
discussion with the Senior Officers of the department concerned.
(Punjab Government letter No. 3551-P-55/14284, dated the 30th May, 1955, from the Chief Secretary to Government, Punjab to all Heads of the Departments, etc.)
60
Loss of Accounts records having financial implications.
3.37 The Comptroller and Auditor General of India has decided that the loss of
records having financial implications does not require write off.
It was further laid down that in order to meet the requirements of audit in such
cases, normally the records which had been lost, should be reconstructed, as far as
possible. Where, however, it is not possible to reconstruct them it would suffice if a
certificate covering the following points is furnished by the head of office duly
countersigned by some responsible superior authority :-
I. That it is not possible to reconstruct the lost record;
II. That the loss was accidental; and
III. That all the transactions (both receipt and issue, payment/consumption etc.) for the relevant period required to be accounted for in it were duly entered in it and that expenditure etc. accounted for in it was incurred in the public interest in accordance with the relevant rules and orders.
Accountant General, can ask for such additional information and certificate as
he may consider necessary in individual cases depending upon the nature of the
record.
Notwithstanding the above certificates, any case of loss of accounts records,
where audit is not satisfied with the certificate or where it is fe lt that the loss involves
grave financial implications meriting notice of the Finance Department, should be
brought to the notice of the Government in the Finance Department
The above instructions of the Comptroller and Auditor General of India, must
be kept in view by all, while dealing with cases of loss of records.
(Letter No. OA/NCW/, I/6-15/3092 dated 22nd September, 1960)
Check Register of Weekly Diaries of Local Auditors
3.38 (a) While checking the weekly diaries (Form S.Y. 324) received from the
local audit parties it should be seen: -
(i) that the work done by each auditor is shown in sufficient detail.
(ii) that the certificate regarding spending of holidays and Sundays in camp is recorded.
(iii) that leave applications are received, where necessary.
(b) A check register of weekly diaries should be maintained in Form S.Y. 325 to
watch the receipt of diaries.
This register should be posted from the weekly diaries of auditors on each
Wednesday morning. It will be put up to the Senior Audit Officer/Audit Officer
61
(Headquarters) on that day alongwith the weekly diaries which have been scrutinised
in the office, any deviation from the approved programme, waste of time, either in
regular audit or in transit being brought to the notice of the Senior Audit Officer/Audit
Officer (Headquarters). He will also see whether the details of the work done
represent a full day’s work.
The diaries should, thereafter, be carefully filed for each party in
chronological order and preserved for the prescribed period for reference.
Leave other than Casual Leave
3.39 Procedure regarding grant of leave contained in the Manual of Office
Procedure and of the G.S.M. Branch applies to Inspection Civil Wing as well.
Casual Leave
3.40 All kinds of Leave shall be applied for in advance, Assistant Audit
Officer/Section Officer incharge of the field Inspection Party may sanction casual
leave upto 5 (five) days to the Sr. Auditors/Auditors and other staff working under
them. Similarly, Sr. Audit Officer/Audit Officer supervising the field party may
sanction casual leave to the Assistant Audit Officer/Section Officer upto 3 (three)
days at a time provided that no deviation in the approved tour programme is caused as
a result of grant of such leave.
In case of emergency and urgent necessity, the Sr. Audit Officers/Audit
Officers/Assistant Audit Officer/Section Officers may themselves avail of casual
leave not exceeding 2 (two) days at a time. They shall, however, inform the
Headquarters Section telegraphically before proceeding on leave. For further
extension of leave they shall apply to the Headquarters Sections in advance.
The leave applications in all cases shall be despatched under registered cover
on the same day to the concerned Headquarters Section. Headquarters Sections shall
maintain casual leave accounts and verify the same with weekly diary reports.
(Control/11-1/Field Parties/87-88/2159 dated 18.12.1987).
Compensation Leave
3.41 Compulsory attendance except for clearing arrears on Sundays or other public
holidays under the Negotiation Instrument Act entitles a person to compensation leave
for the number of days he attends. Assistant Audit Officer/Section Officers will put
up a memorandum to the Sr. Audit Officer/Audit Officer (Headquarters) for their Sr.
Auditors/ Auditors, with their monthly reports, stating the holidays in the month that
62
they attended office and orders requiring them to attend. The number of days of
compensation leave allowed will be entered in red ink in the casual leave register
against the name of the person concerned.
Travelling Allowance
3.42 (a) The Travelling Allowance bills of the inspecting staff of Inspection
Civil Wing are received in Headquarters sections. After applying checks as laid down
in clause (d) below they may be sent to the Administration branch for further action.
(b) The members of the Inspection Civil Wing are paid travelling
allowance for journeys and halts in accordance with the Government of India
Supplementary Rules.
(c) The field staff should submit their travelling allowance bills in
duplicate to the Headquarters section by the 4th of every month.
(d) The bills should be checked with the approved tour programmes and
weekly diaries of the AAOs/SOs/Sr. Auditors/Auditors and casual leave register.
(e) Casual leave or compensation leave enjoyed by the officers/officials
should in all cases be noted in the margin of travelling allowance bills, as they are
solely responsible for dates and correct charges in accordance with rules. Daily
allowance is not admissible for holidays and Sundays unless the claimants are actually
and constructively remained in camp on those days.
(f) No daily allowance will be drawn during casual leave, whether an
auditor is remained in camp or not.
(g) Hotel receipt should be pasted on the fair copy of the T.A. bills. It may
be ensured that the Room No. of the hotel is indicated in the cash receipt.
(Office order No. Admn. III/TA/78-79/239, dated 23rd February, 1979).
Drawal and disbursement of Pay
3.43 The pay is drawn along with the main office staff for both the Head Office as
well as the field staff.
Attachment of Pay
3.44 (a) The rules relating to the attachment of pay contained in Rules 225 to
229 of the Central Treasury Rules, Volume I, are applicable to all members of staff
both Gazetted Officers and Non-Gazetted Officials of the Audit Department.
(b) The Comptroller and Auditor General has disapproved of an employee’s
standing surety to another and has observed that the heavy indebtedness arising out of
63
a Government servants standing surety for another is by itself an imprudent act not
due to circumstances beyond his control.
(Ar. General’s letter No. 1972, NGE/292-3-6 dated 17th December, 1937)
Note: - The above instructions have been relaxed by the Comptroller and Auditor General in case of co-operative credit societies in the various Audit Offices.
Pre-requisites in connection with production of official documents in a court of law
3.45 In order to expedite the fulfillment of pre-requisites in connection with the
production of official documents in a court of law, the Pr. Accountant General has
ordered that on receipt of summons from a court in this office, the following
procedure should be observed: -
(a) All the summons will, in the first instance be received in the concerned
sections/officials concerned through their respective Branch Officers. Summons
requiring the attendance of the official in their private capacities will, however,
continue to be received by them direct without intervention of office.
(b) On receipt of the summons in the section concerned, the Assistant
Audit Officer /Section Officer will immediately examine its requirements and if the
attendance is not in the private capacity of the government servants, he will submit a
detailed report to the Group Officer/Pr. Accountant General through his Branch
Officer. The case should be expedited at all stages and should reach the Group
Officer as early as possible and in any case within two days of the receipt of summons
in this office. When asking for the sanction of the State Government or Central
Government as the case may be, it should be mentioned that the Court has been
informed that the sanction of the authority concerned is being obtained. The
confidential orders issued by the Ministry of Home Affairs/Comptroller and Auditor
General from time to time on the subject may also be referred to as and when
necessary.
(Para 5.6 of Manual of Office Procedure and of the General Services and Maintenance Branch, Volume I Part A (Office Procedure) ).
Office records
3.46 The records of the Inspection Civil Wing are preserved for the period specified
in Appendix II.
Scrutiny of Rules and Orders
3.47 In relation to audit of expenditure against regularity, it is the duty of Audit to
examine all financial rules and orders affecting expenditure and other transactions
64
subjected to audit issued by the Executive authorities, to see that rules, etc. are
themselves interavires and that the audit of transactions which they govern may be
effectively conducted against them.
(Para 2.2.26 of C.A.G.’s M.S.O. (Audit) – IInd Edition 2002).
3.48 All general rules and orders of a financial character (including those relating to
conditions of services) issued by the President are scrutinised by the Comptroller and
Auditor General himself. Other rules and orders of a financial character issued by the
President, which are not of a general nature but are applicable exclusively to specified
departments, and all rules and orders of a financial character issued by authorities
subordinate to the President are scrutinised by the Accountant General concerned but
when such rules and orders concern more than one Accountant General, the following
procedure should be followed: -
(i) The Principal Director of Audit, Economic and Services Ministries will
scrutinise all rules and orders which affect him and one or more of the State
Accountant General but not the Director General of Audit, Central Revenues.
(ii) The Director General of Audit, Central Revenue will scrutinise other rules and
orders.
The Director General of Audit, Central Revenues and the Principal Director of
Audit, Economics and Services Ministries may consult other Accountants General
concerned where necessary.
Note1: In the case of delegation of powers to the Comptroller and Auditor General, no scrutiny by the Indian Audit and Accounts Department is necessary as such delegation are made by the Union Government after consultation with Comptroller and Auditor General.
Note2: Rules and orders issued by the Comptroller and Auditor General of India himself are not subject to the scrutiny of any officer subordinate to him.
Note3: The Accountants General will act on the assumption that such rules and orders have been scrutinised by the Director General of Audit, Central Revenues/Principal Director of Audit, Economic and Service Ministries and have been accepted in audit. However, the Accountants General may, if they so wish, bring to the latter's notice any specific constitutional or legal infirmity in the rules and orders.
(Para 2.2.5 of C.A.G.’s M.S.O. (Audit) – 2nd Edition 2002).
3.49 All rules and standing orders of a financial character issued by State
Governments or by authorities subordinate to State Governments should be
scrutinised finally by the Accountant General of the State concerned.
65
(Para 2.2.7 of C.A.G.’s M.S.O. (Audit) – 2nd Edition 2002)
Corrections to the Inspection (Civil) Manual
3.50 (a) Instructions and decisions of a permanent nature relating to the
Inspection Civil Wing should be incorporated in this Manual with reference to the
number and date of the letter, the case etc. Draft correction slips, if it involves mere
incorporation of the orders issued by the Government, Comptroller and Auditor
General or the Accountant General will finally be approved by the Group Officer (I-
C) while in other cases the draft correction slips should be submitted to the
Accountant General for approval. After approval, each correction slip should be
pasted in the register of correction slips in serial order of issue. The Assistant Audit
Officer/Section Officer (Headquarters) is personally responsible that this is done
regularly and the Manual is kept up-to-date. The register of Correction Slip should be
submitted to the Group Officer (I-C) on 15th of each month and quarterly to the
Accountant General on 10th of April, July, October and January each year. The
approved correction slips for each quarter should be sent to G.S.M. Branch for
printing on the 15th of April, July, October and January.
(b) Whenever it is possible or necessary to issue a correction slip an office order
should not be issued, but the copies of the correction slips should be circulated.
66
CHAPTER – IV
RULES OF PROCEDURE FOR THE LOCAL INSPECTION STAFF
General Duties of the Inspection staff
4.1 The inspection staff is responsible for carrying out the actual
audits/inspections, drafting of the audit reports and despatching of such reports to the
concerned auditee units at Headquarters of the Inspection Civil Wing alongwith all
necessary documents. All the remaining work of the Wing is carried out by the unit
concerned. The inspection staff should, however, draw the attention of the
Headquarters Section by separate notes to the defects in this Manual and should
scrutinise at each inspection the relevant portion of the Manual to see whether it
requires amendment in any respect.
Strength of Local Audit Parties
4.2 Ordinarily one Section Officer/Assistant Audit Officer, one or two
Auditors/Senior Auditors are attached to each local audit party. The Auditors/Senior
Auditors work under the supervision of the Section Officer/Assistant Audit Officer.
Where there are two Assistant. Audit Officers/Section Officers in a local audit
party, the Senior Assistant Audit Officer/Section Officer will be the incharge of the
party.
Time allotment
4.3 The time allotment for each account is fixed in terms of (single) mandays after
taking into consideration the quantum of work in each account and past experience of
the same account as well as additional work, if any, to be done during local audit.
Extension in time allotment
4.4 (a) The time allotment for the audit of an office/unit should not be
exceeded except for very special reason and with the previous sanction of the Group
Officer (Inspection Civil). The local audit parties should take care to send the request
for extensions well in advance so that the orders of the Group Officer (Inspection
Civil) in this regard are communicated to them before the time originally allotted
expires. In no case may an extension be availed of before it is actually sanctioned.
(b) While submitting request for extension in time allotment for any audit, full
particulars of the additional work involved i.e. No. of vouchers, amount of
expenditure vis-à-vis figures for months selected in the previous audit and other
information concerning the accounts necessitating such extension should invariably
be given to justify the request for extension in time allotment.
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Time allotment for Important/Long duration Audits
4.5 Ordinarily, the period of local audit should never exceed 50 days. The
composition of local audit party should be determined keeping in view the nature and
complexity of the work of the organisation to be inspected. The composition of the
party can be varied, particularly in respect of major and important local audits. For
really important local audits, even 3 or 4 Assistant Audit Officers/Section Officers
can be deputed with one or two Auditors and full time gazetted supervision provided
with a view to improve the quality of local audit and cutting down its duration. It is
also imperative to ensure that before starting the local audit the party undertakes a
detailed and in-depth study at the Headquarters of the functions, nature and extent of
activities and magnitude of its financial transactions of the office or organisation to be
inspected. The Inspecting Officer should himself undertake some important and
original work and a brief description of the work done by each member of the
inspection party should be kept on record.
Detailed planning of the work should, from its very inception be the personal
responsibility of the supervisory officer at the level of the Group Officer, who should
ensure effective supervision of inspection work and provide necessary guidance.
Their close supervision would be required particularly in the second half of inspection
of major department offices and organisations. It is also necessary to ensure that the
personnel of local audit party particularly Assistant Audit Officers/Section Officers
and Audit Officers/Sr. Audit Officers are not changed in the midst of inspection. In
all cases in which it is considered necessary to allow local audit party more than 50
days, full facts of the case with detailed justification should be reported to the
Comptroller and Auditor General’s Office. A register for this purpose should be
maintained by Inspection Civil (Headquarters).
(Deputy Comptroller and Auditor General’s D.O. letter No. 673-TAI/ID (TA)/75 dated 5th August 1976).
Note 1. The time allotted in tour programmes includes the time for writing of the audit notes, but excludes time taken on journeys and Sundays and holidays on which work cannot be done. It should be understood that auditors are liable to have their daily allowance stopped if they exceed the time allotted in the programmes of work.
Note 2. Local holidays and any other holidays declared by the State Government should be observed by the Auditors only if the office in which they work is actually closed. A copy of the orders in support thereof should be submitted to Head office alongwith the relevant weekly diary.
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Note 3. If any audit or work for a part of any working day, it should be considered as full day for the calculation of time allotment.
Exception: - These orders have been waived in the case of accounts the time allotment for which it is not more than two days.
Note 4. If transit from one station to another falls on a holiday such a day should be utilised for transit and not availed of as holiday.
Note 5. The auditors will not be allowed a day or as a part of a day during working hours for looking for accommodation or attending to papers received from the Head Office. Auditors arriving at a station before 12 noon are expected to put in at least half a day’s work.
Note 6. The time allotted for local audits also includes time for the disposal of old objections. Disposal of Dak should be done after office hours.
Review of Time allotment
4.6 A review of time allotments should be carried out every third year in order to
see that the time allowed for the local audit of various types of offices is adequate and
not more than adequate.
(Comptroller and Auditor General’s Confidential letter No. 380-Admn. III/517-61, dated 5th March, 1962)
Programme
4.7 No variation is allowed from the prescribed programme without the previous
permission of the Group Officer (Inspection Civil).
Note 1. The accounts allotted to a Section Officer/Assistant Audit Officer at the station at which he may be working should be audited by him before leaving that station. If for any reason any account can not be audited before leaving that station, previous orders of the Group Officer (Inspection Civil), should be obtained. A note of such orders having been obtained should always be given in the weekly diaries. The tour programme should also be arranged in such a manner that journey to the same side is not undertaken more than once.
Note 2 In some cases weekly diaries indicate several accounts in hand; audits once commenced should be completed before another one is taken up and suspension of audits without adequate reasons is strictly prohibited. Where, however, due to unavoidable circumstances and pressing reasons an audit has to be suspended the reasons for doing the same should promptly be brought to the notice of the Group Officer.
(Office Order No. OA/1-53/1960-61/1188 dated 14th June 1960).
Telegrams
4.8 When a telegram is sent by the Group Officer (Inspection Civil) to a Section
Officer/Assistant Audit Officer/Inspecting Officer for any specific purpose it s receipt
should at once be acknowledged by post. Similarly, when a telegram is sent by a
Section Officer/Assistant Audit Officer/Inspecting Officer to the Group Officer
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(Inspection Civil), a copy of the same should be sent on the same day to the Head
Office by post.
Weekly Diaries
4.9 (a) Preparation and Submission of Weekly Diaries – Each auditor is
supplied with a bound diary. The entries of work done by him should be made in the
diary each day or on the morning of the next day. Once a week (on Friday afternoon)
the week’s entries should be copied into the diary extract in Form SY 324. Section
Officer/Assistant Audit Officer incharge of the party should not omit to fill in the
reverse of the Form. Weekly diaries of the auditors should be countersigned by the
Section Officer/Assistant Audit Officers who should also record a certificate to the
effect that the work of auditor was reviewed and found satisfactory or otherwise as the
case may be.
Weekly diaries should be forwarded to the Headquarters on the last working
day of the week or on the morning of the next working day.
Where duration of local audit exceeds seven working days, weekly diary
report forwarded by the Inspecting Officer should be scrutinized by the Audit
Officer/Sr. Audit Officer (Headquarters) and submitted to the Group Officer. The
other weekly diary reports should be finalised by the Audit Officer/Sr. Audit Officer
(Headquarters).
(Comptroller and Auditor General’s letter No. 173-OLM/12-75/1 dated the 24th September 1975).
If on any day a local holiday or half-holiday is observed it should be stated in
the diary that the office where the auditor was working was actually closed.
(b) Review of the work done by the auditors during Local Audit by the Supervisory Staff
(i) At present the supervisory staff conduct only a general review of the work
done by the auditors during local audit. No record of the items of work specifically
reviewed, the extent and the result of such a review is kept in any register or return.
With a view to ensuring that the items of work attached to the audit or have been
checked adequately during the local audit, it has been decided that the Section
Officer/Asstt. .Audit Officer incharge of the party (senior most among them in case
there are more than one Section Officer/Asstt. Audit Officer) should conduct a test
check of the work done by the auditor including the check of totals expected to be
made by the latter. While recording a certificate of the general review the Section
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Officer/Asstt. Audit Officer should also specify the items test checked by him. The
quantum of test check in this regard may be fixed by the Accountant General,
according to local needs.
(Comptroller and Auditor General letter No. 48-T.A.½-79, dated 17th January, 1979 filed in Pilot File).
(ii) The Section Officer/Assistant Audit Officer field should carry out the
following quantum of test check of the work done by the auditors: -
(i) If there is one auditor, 10% of each item checked by the auditor.
(ii) If there are more than one auditor, 5% each item checked by the auditors.
The details of the items checked by the Section Officer/Assistant Audit
Officer should be given in his weekly diary reports as well as in the duty list attached
with the Audit and Inspection Note. The Section Officer/Assistant Audit Officer at
the time of his transfer should specifically bring these orders to the notice of successor
Section Officer/Assistant Audit Officer.
The Inspecting Officer while countersigning the diary reports should ensure
that the requisite details are given by the Section Officer/Assistant Audit Officer.
(Circular No. OAD/C/78-79/5830 dated 25th February 1979).
Period covered by Local Audit
4.10 (a) As far as practicable, every local audit or inspection should cover
transactions from the date upto which the account was last audited to the month
preceding the month in which inspection takes place. The Cash book should,
however, be checked upto date. The local audits and inspections should be complete
and thorough in respect of the transactions covered by them. There have been cases
in which local audit by our staff failed to bring to light serious irregularities and even
defalcations, which were later discovered by other agencies. It is needless to point out
that even single instance of this kind brings the whole Audit Department into
disrepute. The inspecting staff should be very careful in this regard and ensure that no
such case goes undetected.
(Comptroller and Auditor General’s D.O. letter No. 1307/Admn. I/388-55, dated 26th April, 1955).
(b) In case of accounts in respect of which an audit certificate is required to be
issued by this office i.e. Family Planning, Sainik Welfare Department, World Bank
Schemes etc. period of audit would be upto end of the last financial year. As regards
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half yearly accounts, the period of audit would be upto the end of preceeding half-
year.
Quantum of Gazetted Supervision
4.11 (a) As far as possible full gazetted supervision at the level of Audit
Officer/Sr. Audit Officer, should be provided for the following items of local
audit: -
(i) Efficiency cum performance audit.
(ii) Audit under Section 14, 15, 19 and 20 of the Comptroller and Auditor
General’s (DP&CS) Act, 1971.
(iii) System audit wherever special audit of specific system are taken up.
(iv) Audit of district and higher level offices which deal with development
activities under Plan Programme and
(v) Special audits (frauds, embezzlements etc.)
(Authority CAG letter No. 1271-O&M/7-81 V dated 24-09-1985).
(b) Other annual, biennial etc. audits should be supervised as under:-
Supervision Category A Units having more than Rs one crore
expenditure excluding establishment expenditure and will be audited annually
100%
Category B Units having expenditure between Rs 25 lakh to one crore and will be audited biennially
50% by Audit Officers/Sr. Audit Officers
Category C Units having expenditure less than Rs 25 lakh and will be audited once in three/four years
No supervision required
(Authority: File No. IC-I/HQ/TP/Audit Plan/2004-2006)
Intimation of dates of audit and Inspection
4.12 (i) Before an audit is taken up, an intimation of the date of inspection
should be sent to the Head of Office to be inspected in Form SY 330 a week or 10
days in advance of the actual date of commencement of audit of the concerned office
so as to permit any representations from the officers concerned for the postponement
of the audit, being received before the local audit party leaves the station where they
are working and that request for postponement could be considered and resultant
adjustments made without much disturbance in the approved programme.
(ii) Immediately after the programme of local audit for an audit party is approved,
a copy thereof should be sent to the Sections (audit units) concerned so that these
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sections may take necessary steps to keep their records ready for being sent to the
local audit parties.
(iii) Copies of the approved programmes of local audit parties and Inspecting
Officers as well as subsequent amendments made therein should also be supplied to
the respective Inspecting Officers/ Section Officers/ Asstt. Audit Officers for their
guidance.
(iv) Intimation regarding change of dates of audit of any office consequent upon
grant of extension/ postponement or otherwise should be sent to the Head of Office
concerned immediately.
Note: - The Codes and Manuals provide for suitable notice to be given before an inspection is taken up. This notice is provided for on practical considerations so that the required books/records may be kept ready for audit as otherwise the time of audit party might be wasted. A surprise inspection when temporary misappropriation is suspected is, however, a different matter. Such inspections should not be undertaken too frequently or frivolously but only on reasonable suspicion of temporary misappropriation. Such inspections may, in view of absence of notice of regular inspection, have to be confined to the limited purpose of verification of cash and of the books relevant to that purpose. The verification should be undertaken as soon as the necessity for the same is felt and this should preferably be done at a time when the officer-incharge is present.
(Comptroller and Auditor General’s confidential D.O. to the Accountant General, Madhya Pradesh, Nagpur No. 70 Admn 1-54 dated 26th July 1954 and copy endorsed to all Accountant Generals and Comptrollers. (Original letter filed in case TM-4A/ 1954-55).
Accommodation
4.13 If Auditors wish to enlist help from local authorities to secure suitable
accommodation for themselves or for their assistants at any place of work, they
should write privately to the person concerned. They are not entitled to address the
Head of Offices on this subject officially.
Intimation to the Head Office and Monthly Reports
4.14 (a) Before an Auditor leaves a station and as soon as he arrives at a new
station he should send intimation in form SY 342 to the Head Office. The office will
put it up to the Audit Officers/ Sr. Audit Officer (Headquarters) before it is filed.
(b) When the audit of an account has been taken up, intimation should be sent to
the Head Office promptly in the Form No. OA 5 given in Appendix I. The office
should verify the period of audit and months selected for test audit before making
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necessary entries in the progress registers (Form SY 326). Where selected months
differ from those approved by the Group Officer (Inspection Civil), the deviation
should be brought to his notice.
(c) Sections Officers should maintain a calendar of Returns and note therein all
the returns required to be submitted to the Head Office to avoid any delay in the
submission of any return and for the guidance of their successors also. The register
should be submitted to the Audit Officer/Senior Deputy Accountant General
(Inspection Civil) whenever any of them happens to visit the party. Calendar of
Returns is given in Annexure I to this Chapter for guidance.
(OA/M.C.W. 1/19 dated 10th February, 1959).
Working hours and Pattern of Holidays
4.15 (a) The local audit parties will observe the working hours and the pattern
of holidays of the office/department visited by them. Every Saturday and Sunday,
however, will continue as full closed holidays for Central Government Offices.
While every endeavour should be made to observe the above instructions as
far as practicable, there would be no objection to minor adjustments being made in
working hours or pattern of holidays in case of such parties to suit administrative
convenience.
(Comptroller and Audit General’s letter No. 2492-NGE I/295-65 II, dated 24th September 1966 and No. 208/NGE I/295-65 II dated 2nd February 1967).
(b) The Punjab Government observes the working hours from 9 a.m. to 5 p.m.
with half-an-hour break and every Saturday closed in the Punjab State.
(c) The local audit parties should observe these working hours.
Attendance
4.16 (a) All the members of local audit party must attend the office which they
inspect during the regular hours.
(b) Each local audit party should maintain an Attendance Register in which each
member of the party shall mark his attendance. The attendance register should be
closed in accordance with the instructions laid down in the Manual of Office
Procedure and of the General Services and Maintenance Branch and para 3.6 (iii) of
this Manual. The attendance register should be submitted to the Inspecting Officer at
the time of his visits to supervise the work of the party.
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Calling of lists of payments for local audit
4.17 In partial modification of the existing procedure regarding collecting of the
original paid vouchers for check with reference to the records of auditee organization,
a revised procedure for sending a copy of list of payments and also schedule of
drawals for the selected month to the field parties is laid down for verification during
the course of audit of an auditee organization. Accordingly the requisition for list of
payments etc. will be sent to the concerned D. C. Section of the office of the
Accountant General (A&E) in time by Inspection Civil (Headquarters). After receipt
of documents from the office of the Accountant General (A&E), the Inspection Civil
(HQ) will photocopy them as required and send them to the field parties in accordance
with the programme. The original list of payments etc. will be sent to D.C. Section
thereafter.
In cases where documents are not received by the field parties at the
commencement of audit they should prepare the list of drawals/ receipts from the
treasury for verification of transactions with the records of DDO viz cash book etc.
(Authority: - Comptroller and Auditor General’s letter no. 642-Audit II/ 87-87 (ii), dated 27.5.92 circulated vide Insp (c) HQ/C.Slip /92-93/1854 dated nil).
Distribution of work on Inspections
4.18 It is always convenient in the matter of practical results to entrust the
more mechanical and routine portion of the work to the Auditors and the Section
Officer/ AAO doing the more important work and pursuing other complicated
investigations. Distribution of duties amongst the members of Audit party should be
approved by the Inspecting Officer in case of supervised audit. The broad line of the
distribution of work as laid down in annexure appended to para 6.1.7 of Comptroller
& Auditor General's Manual of Standing Orders (Audit) 2nd Edition should be kept in
view (Annexure II of Manual)
Defalcations and Frauds
4.19 (a) In the event of Auditors finding anything likely to lead to the discovery
of a defalcation or fraud or any serious irregularity, the circumstances should be
communicated to the Group Officer (Inspection Civil) at once and daily reports
should be sent of the progress made in the investigations. Such reports must not be
postponed to the following day. When defalcation is of an important nature and in the
auditor’s mind beyond doubt, intimation should be sent to the Group Officer
(Inspection Civil) by wire.
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(b) In cases where frauds are suspected during the course of local audit, local
Audit Party should take note of the detailed particulars of the documents on the basis
of which the fraud is likely to be established and bring the matter promptly to the
notice of Inspection Civil Headquarters by means of special D.O. letter to the Audit
Officer/ Sr. Audit Officer (Headquarters) with a copy to the Head of the Office.
Inspection Civil headquarter should bring them to the notice of the next superior
authority of the department and, if necessary, to the Head of the Department. It would
not be necessary for inspecting parties to bring the documents to headquarters for
taking photostat copies. Inspection Civil Headquarters should maintain a register in
this behalf where details of the cases are kept on record and action taken by the
departmental offices are watched in the usual manner. This register should be put up
to the Group Officer (Inspection Civil) once every month on the 10th.
(Comptroller and Auditor General’s Secret D.O. No. 684/TA-I/164-175 dated 2nd August 1976).
(c) As per instructions contained in Headquarters letter No. 843-Rep(S)/40-2001
dated 31.8.2001, cases of fraud and corruption appearing in the Audit Report which
warrant vigilance investigation are to be communicated by the Accountant General
(Audit) to the Chief Secretary/Administrative Secretary to the State Government for
taking up the matters with State Vigilance Authority. It was further clarified in
Headquarters letter No. 932-Rep(S)/187-2003 dated 30.6.2003 that such cases should
be forwarded for obtaining prior approval of the Headquarters only after the Audit
Report has been approved.
In order to streamline and regulate the process, it has now been decided that
all Group Officers, while approving an Inspection Report should identify and submit
to the Principal Accountant General/Accountant General the cases of suspected fraud,
malafide and corruption warranting vigilance investigation. Accountant General
would examine the cases and record speaking orders before forwarding the extracts of
Inspection Report paras to the Administrative Secretaries of the Department
concerned demi-officially in strict confidentiality, highlighting the need of making
vigilance investigation under intimation to the ADAI. The matter would be followed
up with the Government till finality. Meanwhile, in case the matter is proposed for
inclusion in the Audit Report, the fact of having intimated the State Government for
taking urgent action on the matters may also be mentioned in the final Audit Para.
(CAG’s office DO No. 1149-Rep(s)/187-2003 dated 28-8-2003)
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Guidelines for detection of defalcations and frauds
4.20 The efficacy of local audit depends largely on the intelligence, thoroughness
and resourcefulness which are brought to bear on it. Even an apparently minor defect
or irregularity might conceal a potential fraud or misappropria tion which may come
out through intelligent probe. The inspecting staff should be alive to this and exercise
the checks intelligently and not in a mechanical way. An illustrative list of
irregularities which are likely to conceal potential frauds is given below for guidance:-
(i) Erasures, over-writings, interpolations, alterations and un-attested corrections
in figures, pass orders etc. in account books and registers, bills presented at
treasuries, invoices, sales bills, receipts etc.
(ii) Removal of pages from account books and registers.
(iii) Tamperings in totals and carry forward of totals, specially in cash books and
stock books.
(iv) Errors in totaling in bills
(v) Errors in carry over figures from subsidiary registers to main registers
(vi) Delay in disbursement of money drawn from treasury to payees (including
moneys recovered against court attachment, undisbursed salaries etc.)
(vii) Non availability of challans in support of remittance entries in cash book.
(viii) Tampering of figures in challans.
Note: Fictitious entries of remittance in Cash book will be brought to light during the verification of credits for remittances for selected month/months direct from the books of the Treasury.
(ix) Persistent delay in submission of payee stamped receipts, suppliers invoices
and counter signed detailed bills to audit.
Note: For this purpose a list of such items should be furnished by the Audit units to the Inspection Civil Wing along with the vouchers and other documents for check in local audit.
(x) Payments made on duplicate invoices, absence of proper reference in invoices
to entry in stock books.
(xi) Issue in stock accounts not supported by proper indents and acknowledgement
issued on free transfer bills not acknowledged by the recipients.
(xii) Failure to cancel sub vouchers or paid vouchers.
(xiii) Bills presented at the treasury without entry in the Bill Register, interpolations
and alterations of entries in the Bill Register.
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(xiv) Items of stores, works, etc. paid for in bills and not being traceable in the
relevant registers, viz., stock accounts, works registers measurement books,
etc.
(xv) Signing office copies of bills in full, difference between the entries in the
office copies and fair copies of the bills.
(xvi) Persistent failure to conduct physical verification of stores or to take action on
the verification reports.
(xvii) Entries in important records like Cash Book stock accounts, etc, not being
attested.
(xviii) Absence of proper periodical scrutiny of cash book, stock books, contingent
registers by the Head of Office or the authorized Gazetted Government
Servant.
(xix) Non reconciliation of departmental figures with those of Treasury.
(xx) Non accountal of cheques drawn from the treasury in DDO's Cash Book.
Necessary guidelines for dealing with frauds and corruption cases as issued by
ASOSAI and INTOSAI’s auditing standards i.e., General Principals, General
Standards, Field Standards and Reporting Standards may also be kept in view during
audit of records of any organisation/office.
Conduct of Local Audit
4.21 Before taking up the audit of a Government office or body/authority, the Asstt.
Audit Officer/Section Officer/Inspecting Officer should -
(i) study the documents in Inspection Civil Headquarters relating to the office and
make themselves conversant with its set up, i.e. if a government office, whether
it is an attached or subordinate office and if a body or authority whether it has
been set up under an Act of Parliament or a Registered Society, etc., its
Governing body and General body, the functions entrusted to it and the system
of finance obtaining in the office, i.e., what makes up its receipt and how its
money is expended, what system of account is being followed, what accounts
books are prescribed and what are the details of its budget etc. The Act of
Parliament, Memorandum and Article of Association, Regulations, Rules etc.
relating to the body or authority, the Annual Administrative Reports, the
Departmental Manuals, Delegation of Financial Powers relating to the office or
any other publications or Evaluation Reports should also be examined in
addition to Inspection Reports of previous years.
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(ii) Study the Comptroller and Auditor General's Secret Memorandum of
Instructions where in some of the important matters to which attention should
be given by the local audit party and the Inspecting Officer are indicated. (Para
6.1.25 of the Comptroller and Auditor General's Manual of Standing Orders
(Audit) Second Edition 2002).
(iii) Ensure that the records which are required to be received from the Inspection
Civil Headquarters/Audit Units concerned have been received.
(iv) Call on the Head of the Office, the accounts of which are about to be audited at
the very commencement of audit and seek his assistance in settlement of old
objections, supply of records and information for the current audit and
provision of office accommodation and facilities for the conduct of audit. The
officials directly concerned with audit, namely Drawing and Disbursing
Officer, Administrative Officer, Accounts Officer etc. should also be met.
(v) Obtain in writing from the Head of office an exhaustive list of various fields of
activities and the records maintained so as to ensure that all fields of activities
of the office inspected and all financial records maintained in the office are
covered during local audit.
(vi) Ensure that distribution of work among the members of local audit party has
duly been made. It should also be ensured that full details regarding the nature
of work allocated to each member of the party is attached to the Inspection
Report.
(Comptroller and Auditor General’s letter No. 3010/Admn I/463-60 dated 2nd November 1962)
Note: The auditors in the course of their audits should not express independent opinions on their own authority connected with the interpretation of various Act or Rule nor give rulings of doubtful points or procedure etc.
Organising local audit work of important/long duration audit inspections
4.22 The local audit arrangement should be organised with a view to ensuring that
in every important/long duration local audit, the local audit parties go reasonably
prepared and briefed from the Headquarter’s office and that the supervision is closed.
With a view to having an effective, purposeful and result oriented audit, briefing
should be done at the level of senior officers. It has been decided that before an Audit
party proceeds to a particular Ministry/Department for conducting important/long
duration audit, all members of the party should be briefed by a Senior Audit
Officer/Group Officer at the Inspection Civil wing Headquarters about the functions,
79
nature and extent of the activities and the magnitude of the financial transactions of
the offices/organisations to be inspected. The inspection staff may also be provided
with suitable guidelines on the salient points to be examined during such audits.
(Comptroller and Auditor General’s D.O. letter No. 673-T.A. I/JDD(TA)/75 dated 5th August 1976 and D.O. No. 184-TA-I/13-80 dated 6th March 1980)
Postponement and suspension of Local audit
4.23 Requests for postponement of audit are considered only in exceptional
circumstances. All cases of postponement should have approval of the Group Officer
(Inspection Civil). In cases whose requests for postponement of audit were not
received through the Head of the Office/Department and the departmental office fails
to produce the records on the scheduled date of audit, the Sectio n Officers/Assistant
Audit Officer of the field audit parties should ascertain the reasons for non production
of records in writing from the Head of the office. The position should be brought to
the notice of the Inspection Civil Wing Headquarters before taking up next audit in
the programme.
Where due to non production/non availability of prescribed account records of
vital importance an audit party is unable to proceed with the audit of an office, a
detailed note indicating reasons for non production/non-availability of records
alongwith the remarks of the Head of the office inspected may be sent by the Section
Officers/Assistant Audit Officer/Inspecting Officer of the audit party to Inspection
Civil Wing (Headquarters) seeking suspension of audit. Such note, if any, received
from any party shall be accorded priority and orders thereon shall be obtained from
the Group Officer (Inspection Civil). No audit should, however, be suspended
without his prior permission.
Where any audit is ordered to be suspended the reasons for suspension of audit
shall immediately be intimated to the next higher authority of the office inspected
with a request to trace/re-construct the concerned records for facility of audit.
Attitude of Auditors
4.24 The Auditors should be careful to see that no grounds are afforded for
complaint from local authorities against the manner in which Inspection and Audits
are conducted or in regard to the tone or the substance of their inspection reports. If
the work of inspection of audit is to be of any value it should be conducted with tact
and discretion and in a manner to avoid as far as possible all irritation to the local
officers. They should also bear in mind that unnecessary meticulous or badly
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expressed objections not only bring discredit on audit and give rise to reasonable
irritation but also cause an increase of work in both the Audit and the local offices.
4.25 Auditors, while yielding in nothing they consider to be part of their official
duty should be careful to avoid friction with any of the officials with whom they come
in contact. If they convince the officers by the manner in which they go about their
work that they are there not to complicate procedure but to simplify it not merely to
criticise but to assist they will meet with little difficulty in this direction. They should
assist the local authorities with advice and may show by means of practical example,
if necessary, how account registers should be posted and how a proper check is
exercised, in order that there may be no possibility of mistake or omission due to
ignorance on the part of the local officials. It is much better to prevent mistakes that
in procedure than to discover such mistakes after they have been committed.
4.26 The Inspection staff is strictly prohibited from being in any way under the
obligation of any member of an office whose accounts are being or will be inspected
by them and should not ask for, or obtain free any supply or service which has a
definite financial implication. In the matter of house accommodation, outside help
may be enlisted but it should be strictly on payment of rent and other charges by the
members of the inspection party themselves. The use of the transport pertaining to
any local departmental office for private purpose is definitely prohibited. The
reputation of the office regarding honesty and efficiency depends to a large extent on
the behavior of the Inspecting staff. Any breach of these instructions should be
reported forthwith by the Section Officers/Assistant Audit Officer/Audit Officer/Sr.
Audit Officer to the Group Officer (Inspection Civil) confidentially.
General Audit Instructions
4.27 For an intelligent and efficient audit or inspection of accounts it is necessary
that the local Auditors should have an intimate acquaintance with the various Acts,
Codes and Manuals relating thereto, and they should also be conversant with the
subsidiary rules and orders issued from time to time. Local Auditors will be supplied
with copies of all Acts Codes and Manuals required and they should also keep a note
book in which they should record briefly important decisions contained in
Government orders and in the orders issued from the department or in the papers sent
for circulation. The formal rules for audit should be strictly complied with. Many of
these rules represent in concise form the experience of many years and their value can
not be overlooked. Only they must not be converted into a fetish and applied in a
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rigid spirit or considered as all sufficing under circumstances where they are
obviously inadequate. But when anything less is done than is laid down in them, the
Auditors must bring the fact to the Audit officer’s notice. Ordinarily they must be
taken as the minimum of a good audit.
4.28 The value of an audit depends la rgely on the intelligence and thoroughness
with which the work is done. Sometime some informality, some irregular payment or
some slight discrepancy is detected in the course of audit. The tendency is to embody
this in a formal objection statement, which in course of time is replied to the
requirements of the Audit Department. These are complied within the particular case
in question and there the matter ends. But that is where it should not end. Small
circumstances like these if taken up may lead to the detection of larger irregularities
or a defect of system liable to lead to fraud, and their value as such must be borne in
mind. The Section Officers/Assistant Audit Officer should look at everything in a
fresh and original way, and when he realizes that he had touched on a matter which
may repay investigation, he should go into it with an exhaustiveness which will leave
no detail undiscovered. He must take nothing for granted. It is not, however, the
function of an Auditor, except under special orders, to undertake such duties as
enquiry into alleged oppression, the taking down of statements of witness, the
examination of books of traders, the taking or checking of stock. If there are
suspicious circumstances in the accounts, the Auditor should report the fact to the
Group Officer (Inspection Civil). It is not the business of the Auditor but that of the
executive to undertake an enquiry.
4.29 As the object of the account is to present a true financial picture, intelligent
and proper audit requires the visualising of all financial transactions in their proper
perspective as a whole and not merely the examination of the details of the
transactions which work to the final result. The Auditors should, therefore, prior to
taking up the audit of the accounts of any particular institution, consult the printed
administrative report of any other Government publications where the accounts of
income and expenditure of the institution appear, so that they may obtain a correct
perspective of the financial side of the institution and make their audit both intelligent
and useful instead of allowing it to become merely a process of checking registers in a
disconnected and mechanical way.
(CAG’s letter No. 57/Admn-I/135-34 dated the 28th January 1935).
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4.30 It is most undesirable in local inspections that the check of initial records such
as the cash books should be neglected in favour of material which may provide cases
for “Higher Audit”. The Comptroller and Auditor General of India has emphasised
that the primary duty of the Indian Audit Department is to secure the correctness of
accounts and not criticism of a higher audit character of the executive work of a
department.
(Comptroller and Auditor General’s letter No. 31 Admn.-I/205-36 dated 15th January 1937).
4.31 No auditor is competent to undertake any investigation which is not strictly
within the scope of the test audit whether such an investigation results in extra time
being taken or not. If anything is noticed in the course of an audit, the Section
Officer, Asstt Audit Officer and Senior Auditor should bring it specially to the notice
of Group officer. In no case can Senior Auditors undertake any special investigation
work of any kind at the instance of administrative authorities without the Group
Officer’s sanction.
4.32 Auditors should confine themselves to facts which have a bearing on accounts
and finances and matters not falling strictly within the scope of audit should not be
touched by them.
4.33 Auditors must call in writing for all registers and accounts of the offices
inspected, required for audit purposes.
Note: Section Officer/Assistant Audit Officer must examine all records required for audit and if any records can not be produced they should make sure of the reasons for its non production and bring such failure, to the notice of the Head of the Office etc. The production of this record at the following audit should also be insisted upon.
4.34 In auditing accounts all entries checked should be ticked by the Auditors and
all vouchers, registers etc. examined should be initialled by them. For this purpose
special audit pencils should be used. Assistant Audit Officer/Section Officer/Auditors
should not make notes, corrections or remarks in any of the registers or documents of
the office which they may audit.
4.35 The State Government has permitted the Audit Officers to make use of the
unsolicited information which comes to their hand in the course of Audit.
Note: For procedure in connection with anonymous letters received, see para 3.23 of the Manual.
4.36 Auditors should not apply merely mechanical checks to payment vouchers e.g.
seeing that there is a proper acquittance in support of payments, that amounts charged
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are arithmetically correct and that the rates are in accordance with the schedule of
rates. In the interest of thorough audit it is necessary to see that the charges in the bill
are not extravagant and if doubt arises, the prevailing market rates may be ascertained
through the District Officer. Cases of different rates paid for the same articles
observed in auditing the accounts of two or more offices in the same locality should
be investigated and the auditors should find out carefully the causes of such
difference. In such cases, however, no hard and fast rules can be laid down as it
demands the exercise of great care on the part of the Section Officer/AAO. Such
cases should generally be reported to the Group Officer (Inspection Civil) for orders.
Check of Cash
4.37 The Inspecting Officers are not required to verify by count the cash balance of
the office inspected. It is, however, not the intention that an Inspecting Officer is
debarred from verifying the cash of an office if the circumstances in any case warrant
this. In such a case, the verification should be undertaken as soon as the necessity of
the same is felt, and this should preferably be done at a time when the officer incharge
is present.
In this connection it may be borne in mind that if in any case the cash balance
pertaining to a cash book is counted, a simultaneous count of all cash balances (with
relevant accounts) in the charge of the disbursing officer or other custodian of the
cash chest is desirable.
The same consideration applies in respect of surprise inspections.
Wherever cash is verified it should be seen that the cash book is written up to
date and all entries should be vouched to the date of verification. It should also be
seen in audit that the cash chest contains nothing but the Government money and
Government valuables.
Depreciation
4.38 Depreciation should be shown as an item in the Stores Accounts only when
there is a definite policy of writing down stores values by such means. Where there is
no such policy actual writes off of surplus, unserviceable or lost stores should be
shown or losses on revaluation. This principle will apply both to Commercial as well
as non-commercial department. These instructions should be carefully borne in mind
when auditing the stores accounts.
(Comptroller and Auditor General of India’s letter No. 235 RS 95.36, dated the 29th October, 1936)
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4.39 The following criteria may be kept in view, while checking prices fixed by
Government for various commodities:-
a) Where Government or Government owned or controlled institutions are
monopolistic producers of the commodities, it should be seen that a policy has been
laid down by the authority competent to do so and that the policy is properly
implemented. For instance, if the policy is that prices should be based on cost, it
should be ensured that cost data are properly collected and prices are actually based
thereon. It is not for us to comment on the merits of the policy but our view should
bring out the financial results of the policy adopted we should then leave it to P.A.C.
to make comments, if any.
b) Where the Government owned or controlled institutions are not monopolistic
producers but their production form a significant proportion of the total production of
the article consumed and the price of the article is fixed under orders of Governments,
the duties of audit are more or less the same as in (a) above. Where, however, the
Government fixed prices on the recommendations of Tariff Commission and the
Commission has recommended the prices for a certain period only and has also
recommended their revision on the basis of certain variations in the cost data and the
Government have agreed to such review or to an escalation on a certain basis it should
be seen that these are actually implemented.
c) Where Government or Government owned or Government controlled
institutions are not producers or do not produce any significant portion of the total
production and the Government (a) are not major consumers of such commodities (b)
may consume a significant portion of the total production, it may be more desirable
not to embark upon the scrutiny of the fixation of prices. It is a matter which may be
left to the executive to be controlled by Parliament and unless we are specifically
requested to look into a particular price fixation case by Government, we need not get
ourselves involved in this matter. Cost is certainly one of the important factors taken
into account in fixation of prices. But it is not the only factor, there are so many
considerations involved in fixing controlled prices that we should not question them
unless some thing looks very patently wrong.
(Authority- Comptroller and Auditor General’s letter No. 515-Tech Admn. 1/167-64 dated the 3rd March 1964 filed in CW-8-9/X-page 227/C.)
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Raising and pursuance of objections
4.40 (a) The Section Officer/Asstt. Audit Officer in the course of audit should use
the following forms:
(i) S.Y. 322-A
(ii) S.Y. 327
(iii) S.Y. 335
All points on which any information is required or are important enough to go
into the audit note should be noted in Form SY 327. Urgent and important
information should, however, be obtained on Form SY 322-A. Any remarks for note
and guidance should be written on Form SY- 335, which after being noted by the
local authorities will be filed after scrutiny. These will be sent to the Section Officers
conducting the next audit for verification.
(b) All memos/other documents issued during the local inspection should bear the
dated signatures of the issuing officers.
(AG’s orders dated 8.12.1992)
(c) Replies to memoranda in Form SY 322-A and SY 327 should be carefully
scrutnised by the SO/AAO. An attempt should be made to remove as many
objections as possible during the course of audit. The items settled should be struck
off and initialled by the SO/AAO.
Before the close of the audit the objection memos should be received back
from the officer incharge. The efficiency of an Auditor will be judged partly by his
success in having the objection cleared before he leaves.
(d) At the end of the audit the Auditor will remove such of the objections as can
be removed in the light of the explanation given by the officials and divide the
remaining items into two categories
(i) Those that are fit for inclusion in the Audit Report and (ii) those that are to go
in the Test Audit Notes (Form SY-348). He will then draft the audit note and submit
it to the Group officer (Inspection Civil) according to the instructions in Chapter 6 of
this Manual. The minor items that remain will be classified and abstracted on Form
SY 348. In doing so, the Auditors concerned will in the light of the explanation given
proceed to draft the objections in the final form and these final objections alone will
be incorporated in the Test Audit Notes. The Test Audit Notes should also be drafted
according to the instructions given in Chapter 6 of the Manual in duplicate. One copy
of the Test Audit Note should be issued on the spot to the Head of the Office
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inspecting after obtaining acknowledgement. Duplicate copy of the Test Audit Note
should be sent to Head Office alongwith the draft Audit and Inspection Report.
Note 1: Section Officer/Assistant Audit officer should see that the requisitions and memos are promptly dealt with during audit and except in very exceptional circumstances which should be reported to the Group Officer (Inspection Civil) these must not be left with the local officials after the Auditors departure from the place of audit.
Note 2: If in any circumstances any of the objections finally included in the list of unsettled objections have not been made over to the officer whose accounts have been audited a note to that effect should be made at the foot of the last sheet of the Test Audit Notes.
Note 3: Auditors should omit from the Test Audit Notes, all individual items where the sum involved is less than one rupee. Where there are many petty items of similar nature and the total involved is more than one rupee they can be grouped together in the Test Audit Notes and one remark made against the lot. When individual items are omitted from the Test Audit Notes under this order, the Auditor should make a query mark with the audit pencil against the particular items in order that the Group Officer (Inspection Civil) may see, when inspecting, that the Auditor have noticed discrepancy.
Note 4: In the case of Government Institutions all small irregular, payment should be specially reported so that the Branch officer (Headquarters), the Group officer (Inspection Civil) or the Accountant General may waive the recovery thereof under para 7.1.16 of the Comptroller and Auditor General’s Manual of Standing Orders (Audit) 2nd Edition 2002.
A waiver register is kept in the Central Office for this purpose. The amount proposed to be waived under para 7.1.16 of Comptroller and Auditor General’s Manual of Standing Orders (Audit) 2nd Edition 2002 together with the nature of the payments and the reasons for the proposed waiver, should be listed and submitted for orders along with each audit note.
Note 5: When objections can be settled at the time of audit there is no need of incorporating them in the Test Audit Notes (Form SY 348) sent to the local office.
Note 6: It should be understood that only replies enabling an objections to be totally withdrawn, can be accepted. Replies such as ‘noted’, 'will be done’, etc. and partial answers to objections are of no value.
Note 7: When in any case a Test Audit Note is blank the Auditor will/make a note of the fact in the Audit Note as well as in the forwarding memo.
Note 8: The fair copy of the Test Audit Notes should be prepared by the Assistant or Assistants who are working with the Section Officer/Assistant Audit officer at the time the draft Audit Note is despatched by them to the Head office. The list of unsettled objections should not contain the original objections and the reply recorded at the preliminary stage but each objection should be drafted afresh after taking into account the reply of the local officials. In fact each item of the list of unsettled objection should be a self contained paragraph drafted after due considerations of the reply and not merely a verbatim copy of the original objection issued at the preliminary stage.
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4.41 The Section Officer/Assistant Audit Officer should invariably record a
specific objection in the Audit and Inspection Note in respect of all vouchers,
documents or other relevant records as are not produced by an office at the time of
local audit but are promised to be shown later on. These objections could
subsequently be dropped when vouchers are made available either before conclusion
of audit or at the time of next audit.
(Authority- Accountant General’s order dated 30th December 1953 on P-22/N of File O.A./12-6/ Conf. 28 of 1957-58-59).
4.42 Oral orders and explanation should not be given by Auditors. When oral
instructions are given the same should always be repeated in the objection memos.
Settlement of old objections
4.43 (a) Settlement of outstanding paras of the earlier Inspection Report is one
of the important duties of an Inspecting Officer and should be given adequate
attention. The Inspecting Officer should take up the work relating to discussion of
outstanding paras of previous Inspection Reports with the Head of Office and other
concerned authorities soon after the audit commences and follow up the discussion
with actual settlement of objections on the spot. This aspect of the Inspecting
Officer’s work is important and the Inspecting Officer should devote considerable
portion of his time and attention to this work. The discussion and settlement of such
items of objections in respect of office situated at a station visited by the Inspection
party but which are actually inspected by that party should normally be done by the
Inspecting Officer himself.
Settlement of outstanding objections/paras ultimately depends on the merits of
each case and should be dealt with extreme care and caution. However, the following
guidelines may be kept in view for settlement of objections/paras which are
outstanding in the old reports:-
(i) The Inspecting Officers before treating objections/paras in the previous
Inspection Reports as settled should ensure that the office concerned has furnished
written reply/explanation for each objection so settled and their reply is placed on
record. Based on replies/discussion with the authorities he should also record brief
justification for dropping the objection in the original Inspection Report. In no case
an outstanding objection/para should be treated as settled merely by recording
“discussed and dropped”.
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(ii) Paras which are instructive in nature may be dropped provided the instructions
are noted in writing by the department concerned.
(iii) Paras on non-completion of minor records may be dropped, if their completion
has been made and got verified in audit.
(iv) Paras on procedural matters like non-maintenance of a record, non-obtaining
of a certificate relating to personal matters, non-attestation of some entries, etc., may
be settled when complied with. When such type of procedural objections/paras are
outstanding in one or more previous Inspection Reports and the irregularity has
continued during current audit, the outstanding objections/paras in the previous
reports may be dropped and a para included in the current report mentioning it that it
was pointed out in earlier Inspection Reports.
(v) Paras which are more administrative in nature may be dropped subject to the
noting of the correct procedure by the departmental authorities.
(vi) Recoveries of petty amounts falling within the powers of the waiver under
para 7.1.16 of the Comptroller and Auditor General’s Manual of Standing Orders
(Audit) 2nd Edition 2002 may be waived by the Inspecting Officer or proposed for
waiver by the Group Officer/Pr. Accountant General, after issuing suitable
instructions to the officers concerned.
(b) It is an important part of the duties of the field staff to see that the defects
reported in previous Audit and Inspection Notes/Test Audit Notes have been
remedied and old objections are settled after review. There is a general tendency on
the part of the field staff, to leave the review of old objections on the plea either that
the annotated replies to the Audit and Inspection Notes have not been prepared by the
office concerned or these have been submitted to Headquarters Section and further
comments thereon are awaited. Leaving the review of old objections uncovered or
making a half hearted approach to this work does not help in reducing the number of
old objection but also defeats the purpose of audit as it gives an impression to the
office/ department concerned that we are not serious about the pursuit and settlement
of the objections raised by the previous audit parties. It may also be possible to
develop certain points into draft paras, if their latest position is ascertained and
incorporated in the Audit and Inspection Notes. The Comptroller and Auditor
General is also laying great emphasis on the settlement of old outstanding paras and
Inspection reports.
89
All Section Officers/ Assistant Audit Officer (Field) and Inspecting Officers
are, therefore, directed that this item of work should be taken up in all seriousness.
Immediately on reaching the office to be inspected, the Head of the Office should be
requested for preparation of annotated replies to previous objections if not already
sent to Central Audit. Special attention should be paid to settle maximum number of
old objections (including those for which reply has been sent to Central Audit) by the
discussion with the Heads of Offices and obtaining information on the spot.
(Office Order no. OA/PB/Civil/Arrear Reports/78-79/44-51 dated 13th December, 1978)
(c) It has been decided by the Comptroller and Auditor General of India that the
objections remaining outstanding for more than eighteen months from the date of
issue, may be reviewed and a joint meeting of the concerned departmental officers,
with the Audit Officers and Section Officers/AAOs of the respective Audit Units of
Inspection Civil Wing may be arranged for linking of record/papers sent by the
former, for discussion and settlement. The objections remaining outstanding even
thereafter may be taken up at the Group Officer’s level and those which would be
really important may be proposed for inclusion in the Audit Reports.
The following proforma has been prescribed for reporting the results of
reviews of outstanding paras which should be adopted and included in the audit and
inspection not properly filled in.
Sl. No.
Number and Year of Inspection Report
Para no. Gist of para Latest position
Recommendation of Inspecting Officer
Orders of D.A.G./Sr.DAG
All the Inspecting Officers/Section Officers/Assistant Audit Officers should
incorporate the latest position of the outstanding paras including the reasons as to why
these are outstanding and their recommendations as a result of the discussion which
they have with the departmental officers in the above proforma.
(Office order no. OA/C/79-80/Review of old objections/6038 dated 31st October, 1979).
(d) It has been decided by the Comptroller and Auditor General of India that:-
State Level Audit Committees may be activated to ensure that fruitful
meetings are organised on continuing basis. The meeting should be carefully
organised in order to elicit written replies during the meeting and on the basis of the
90
discussions and minutes drawn, objections should be treated as settled wherever
compliance is satisfactory.
(i) The inspection party should compulsorily hold discussions with the Executive
on the outstanding audit objections in the field and draw up minutes of the discussions
for the settlement of audit objections which should subsequently be approved by the
Group Officer. The inspection report should not contain objections of more than 3 to
5 years old and all efforts should be made by the inspecting parties either to settle the
objections through discussion or transfer the old objection to the new inspection
report by updating them and dropping these from the old inspection reports.
(ii) The Group Officer should draw up an Action Plan for holding discussions on
outstanding Inspection Reports and objections with the Executive either at
Headquarters (AG office or department) or during his inspection to the field offices.
Detailed minutes should be drawn up indicating the compliance reports/replies and
settle the objections on the spot on the basis of compliance.
(iii) Accountant General may bring the matter of outstanding audit objections to
the notice of Finance Secretary/Chief Secretary during periodical meetings with them.
(CAG letter DO No. 27 Audit (AP)/34-2001 dated 4-6-2002).
(e) Objections for more than 10 years old which are of routine nature i.e. petty
recoveries, non reconciliation with treasury, excess expenditure over budget
allotment, recoveries from other Government Departments etc. may be transferred to
the respective Administrative Departments with a copy to the Finance Department for
follow up of the objections departmentally. These objections will however, be
watched through quarterly returns by the respective wings/sections but these will not
be shown as arrears. The department wise list of outstanding paras showing the
period, nature of objection, para number and brief gist along with all relevant papers
may be forwarded demi officially to Government after approval of Principal
Accountant General.
(f) Objections which have already become a part of Audit Report but are under
discussion in PAC/COPU shall continue to be pursued till final settlement of
objections by PAC but these will not form part of arrears.
(Authority: ECPA/Audit Committee/2002-03/1054-58 dated 29-11-2002)
Report on failure of Audit
4.44 The Civil Accountant General should submit to the Comptroller and Auditor
General a separate report of every serious case of failure of audit as soon as it comes
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to light (including those pointed out by the Director of Inspection, if any) irrespective
of any report which may be required for other purposes. The report should explain
the manner in which the failure occurred, and mention the names of the persons
responsible and the disciplinary action taken or recommended.
(Para 47 of the Comptroller and Auditor General’s Manual of Standing Orders (Admn.) Volume 1).
Fixation of responsibility for failure of audit
4.45 With a view to facilitating fixation of responsibility for failure of audit against
any of the Auditors and Section Officers/ Assistant Audit Officers it has been ordered
by the Comptroller and Auditor General of India that proper records bearing the
signature of each Auditor indicating work done by him should be maintained.
Accordingly a proforma in the form given in Annexure II to this Chapter
indicating duties allotted and work done by each auditor, bearing dated signature of
the Auditor concerned should be appended with each audit and inspection note.
(O.A./1-53/NCWI/5507 dated 9th March, 1980)
4.46 Each Section Officer/Asstt. Audit Officer should ascertain whether the Group
Officer (Inspection Civil) has issued any notes on the inspection of any of the
accounts and see that the defects have been remedied.
Certificates to Government servants of offices inspected
4.47 Auditors are forbidden from giving certificates of any kind to the Government
servants of the offices inspected by them.
Matter dealt with by Auditors to be kept confidential
4.48 Auditors should note that matters with which they have to deal are
confidential. The audit is intended to be for the assistance of local officers and the
Audit Department is not justified in permitting their shortcomings to become public.
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Annexure I
Calendar of returns_________________ to be maintained by the Local Audit Parties.
(Vide Para 4.14 (C) of the Manual)
Sl. No
Name of Return or report When due To whom due
Authority
1 2 3 4 5 Weekly
1. Weekly Diaries accompanied by the following documents.
By Wednesday following the Saturday to which the diary pertains.
Head Office
CW/1-47/855 dated 28.5.58
(a) Review certificate on Auditors work. (b) Reports of letters outstanding.
Monthly 1 Monthly Arrear Report By the last of the
month --do-- --do--
2 Pay addresses By the 25th of each month
--do-- --do--
3 T.A. Bills of the party By the 3rd of each month
--do-- --do--
4 Intimations:- i) of taking up and completion of audit Immediately
after the occasion
--do-- (Para 4.14 of the Manual)
ii) of change of address -do- -do- (Para 4.15 of the Manual)
5 Audit Notes and Test Audit Notes Within 3 days of the completion of audit.
--do-- CW/1-47/855 dated 28.5.58
Quarterly Certificates of possession of Secret
memo of Instructions 31st March 30the June 30th September 31st December
--do-- O.O./1-53/New 5689, dated 21.3.60
Half yearly Progress report of audit of grants-in-aid. Ist April
Ist October --do-- OA/Misc/37-12/
372 dated 18.11.59
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Annexure II to Para 4.45
PROFORMA
Office of the Pr. Accountant General (Audit) Punjab, Chandigarh
Proforma showing work done by members of field parties.
(Referred to in Para 4.45)
S. No. Name/Designation Duties allotted Signatures 1. 2. 3. 4.
Signature of Section Officer/ Assistant Audit Officer
Place: Dated:
94
CHAPTER – V
CENTRAL AUDIT
5.1 Central audit is conducted by the Central Audit Parties (CAPs) of this office in
the office of A.G.(A&E) every month and by the Central Audit Support Section
(CASS).
Instructions relating to Central Audit are contained in C.A.G.’s Manual of
Instructions for Central Audit and Chapter I of Section-III of C.A.G.’s M.S.O. (Audit)
2nd Edition 2002. Important instructions are reproduced below:-
5.2 Central audit of vouchers pertaining to a month should as a general rule be
conducted as soon as the monthly accounts are closed and the posting of vouchers in
the registers prescribed is completed by the Accountant General (A&E) Punjab. This
general instruction may be departed from only in special circumstances and with the
express sanction of the Pr. Accountant General (Audit).
Central Audit Parties
5.3 The Central Audit work is carried out every month by Central Audit Parties of
the Audit Office in the Office of A.G. (A&E) Punjab. Central Audit Support Section
of this office coordinate and pursue the work of Central Audit Parties and carry out all
supporting functions like drawing up audit programmes of the parties, auditing
sanctions and follow-up work like maintaining objection books, selecting potential
material for audit reports etc. Generally, each Central Audit Support Section will be
under the charge of an Audit Officer/ Sr. Audit Officer while two Central Audit
Parties will be under the charge of one Assistant Audit Officer.
The Checks required to be exercised by Central audit parties and Central Audit
Support Section are incorporated in Annexure I to IV to this Chapter.
5.4 The duties and responsibilities of various members of the Central Audit
Support Sections and Central Audit Parties are broadly indicated in Annexure I and II.
It is open to the Pr. Accountant General (Audit) to entrust any other item of work to
any member of the section or party to authorize the Group Officer, Audit Officer/Sr.
Audit Officer incharge of Central Audit Support Section or the Assistant Audit
Officer incharge of the Central Audit Party to make such changes as may be necessary
from time to time in the distribution of work, considering the persons available and
their suitability for particular types of work. Such changes should be made in writing
keeping in view the need for clear demarcation of duties for personnel in the
95
section/party to ensure accountability and identification of performance in execution
of work.
5.5 Each member of the Central Audit Party including the Assistant Audit Officer
will be individually responsible for the duties entrusted to him. Normally Sr.
Auditors/ Auditors should be able to finalise audit memos on their own, but on
important or doubtful questions they may seek the guidance of the Assistant Audit
Officer.
Note:- The Assistant Audit Officer should determine the extent of independent action to be allowed to each member of the party with reference to his experience, quality and capacity to act independently. Final audit memo will be sent to the Central Audit Support Section vide Para 5.8 below only after they are vetted by the Assistant Audit Officer.
5.6 Assistant Audit Officer incharge of the Central Audit Party will ensure that all
members of the party perform their duties promptly, regularly and efficiently. He
will be responsible for the audit as a whole, guiding the staff under him and always
keeping himself posted with the progress of audit. Selection of vouchers and records
to be audited and reviewed will be made by the Assistant Audit Officer of the party on
the spot.
5.7 The audit enfacement on the voucher vide paragraphs 3.1.21. of CAG's
M.S.O. (Audit) 2nd Edition 2002 should indicate the amount admitted/objected to in
audit. Current review of vouchers audited by the auditors will be conducted
immediately after the audit is over to the prescribed extent by the Assistant Audit
Officer, who, as he passes each voucher will place distinct mark (either his initial or
some shorter distinctive mark) below the enfacement on the voucher.
5.8 After audit and review is over, the Central Audit party will forward the
Selection Register, the Completion Certificate and the Audit Notes/Memos (in
triplicate) to the relevant Central Audit Support Section.
5.9 In regard to objections of an accounting nature, such as want of D.C. Bills,
want of vouchers, want of payee’s receipts, errors in treasury/divisional accounts etc.,
which are required to be watched by the Accountant General (A&E), the system,
procedure and effectiveness of pursuance of the objections will be watched by the
Pr. Accountant General (Audit). He will audit these documents as and when they are
received to the prescribed extent as per provision of paragraphs 3.1.24 of C.A.G.’s
M.S.O. (Audit) 2nd Edition 2002.
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Central Audit Support Section
5.10 Central Audit Support Sections will coordinate and pursue the work of CAPs.
After scrutiny and editing of the audit note/memos where necessary, CASS will send
them in convenient batches every month to the departments concerned, with a copy to
the Accountant General (A&E) Punjab. CASS will deal with all connected
correspondence there after upto finality. CASS will also carry out supporting
functions like drawing up audit programme of CAPs and auditing sanctions, and
follow-up work like maintaining objection books, selecting potential material for
audit reports and co-ordination work generally Each CASS will normally comprise
one Sr. Audit officer/Audit officer, two Assistant Audit officers/Section officers, eight
Auditors /Sr. Auditors and two clerks. The duties of Central Audit Support Section
are broadly indicated in Annexure I.
5.11 (a) Copies of sanctions issued by the Central/State Government and
subordinate authorities will be received by the concerned Central Audit Support
Section where they will be examined in accordance with the provisions of Paragraphs
2.2.27 to 2.2.45 of C.A.G.’s Manual of Standing Orders (Audit) 2nd Edition 2002.
Arrangements for receipts/scrutiny and processing of sanctions and maintenance of
files/folders in a regular and systematic manner will be made by the Pr. Accountant
General (Audit). Objections arising out of audit of sanctions should be communicated
by Central Audit Support Section to concerned department with a copy to the
Accountant General (A&E) and their settlement closely watched.
(b) In addition, it has been ordered by the Pr. Accountant General that henceforth
each CASS Section in Inspection Civil Wing shall also submit all sanctions for and
above Rs.10 lakhs to the Group Officer in suitable lots. Out of these, the sanctions of
Rs.25 lakhs and above shall be submitted for further perusal by the Pr. Accountant
General.
The Sr. Audit Officer (CASS) would be assigned a target for indicating, as a
result of the scrutiny of sanctions, suggesting at least 5 specific points each quarter,
for detailed examination during local audit. Besides targets for contributing tentative
draft paras annually would also be allocated to the CASS Section.
(No. AG Sectt/C.A.G.’s Inspection/94-95/378-80 dated 6 June, 1994).
(c) The above procedure will, however, not absolve the concerned officers of their
responsibilities prescribed for conducting proper scrutiny of such sanctions.
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(Office Order No. Control/0.0/1 dated 22.4.93 issued by endorsement No. Control/2-4/MICA/93-94/42-46 dated 22.4.93)
5.12 There should be close coordination between each Central Audit Support
Section and concerned Central Audit Parties. The results of scrutiny of all sanctions
should be made readily available to the latter before actual central audit of the
transactions concerned takes place. It is the duty of the concerned Central Audit
Support Section to supply the relevant sanctions files along with important points to
the Central Audit Parties when such parties take-up audit.
5.13 Audit of vouchers in Loan Sections, Book Sections, Deposit Sections and
Account Current Sections in the Accounts Office will be done by a Central Audit
Support Section. The Finance Accounts and Appropriation Accounts prepared by the
Accountant General (A&E) will also be checked by a Central Audit Support Section.
Quantum of Central Audit & Review
5.14 The quantum of central audit to be followed will be the same as was in force
prior to the reorganisation of offices, except to the extent indicated in the Manual of
Instructions for Central Audit. The quantum has been increased by the A.G. vide
orders dated 30-4-98 (Annexure V).
5.15 Current review is limited to 10% of each Auditors work by Assistant Audit
Officer. Post review is discontinued. The relevant provisions of the Comptroller and
Auditor General’s Secret Memorandum of Instructions regarding the extent of Audit
stand modified accordingly.
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Annexure-I
(vide para 5.3)
Duties of members of Central Audit Support Section
a) Audit Officer/Sr. Audit Officer
(i) Coordination and General Supervision.
Framing of audit programme, deployment of audit parties and watching
completion of audit/audit performance.
(ii) Audit of sanctions exceeding Rs.50,000 other than those relating to
entitlement.
Audit of sanctions of general nature relating to entitlement.
(iii) Audit of guarantees.
(iv) Audit of contract agreements.
(v) Review of files containing objection memos issued to entitlement/accounting
sections.
(vi) Review of Portfolio files, Central, Centrally sponsored and State plan
schemes.
(vii) Scrutiny of materials for audit reports.
Audit of Appropriation Accounts and Finance Accounts.
(viii) Preparation of quarterly report in the working of each department with
reference to the material collected, objection memos received from Audit
teams etc.
(ix) Examination of rules and regulations proposed/issued by Government.
(x) Report regarding failure of Audit.
b) Assistant Audit Officer
(i) Audit of sanctions to expenditure upto Rs.50,000/- other than those relating to
entitlement.
(ii) Disposal of reference seeking clarifications and allied correspondence.
(iii) Review of files containing objection memos issued to departmental officers.
(iv) Check of consolidation of statistics.
(v) General check of objection book and approving the closing.
(vi) Processing materials for audit reports
(vii) Scrutiny and pursuance of cases of losses, frauds, embezzlement etc.
(viii) Check of reports/returns.
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(ix) Quarterly review of broadsheets of PAO (Suspense) and R.D. Suspense
(Headquarters) in Account Current Sections.
(x) General scrutiny of accounts of loans by Central Government to State
Government.
(xi) Quarterly review of broadsheets of loans and advances by Central Government
to State Government.
(xii) Quarterly review of adjustment register for inward accounts in A.C. Sections
to see that there is no undue time lag in adjustment.
(xiii) Quarterly review of outward claims register in A.C. Sections to see that timely
action is taken for adjustment.
(xiv) Quarterly review of the register of valuables.
(xv) Quarterly review of the position of outstanding differences under the head
“875-R.D. deposits” as per the figures of A.G. and Reserve Bank of India.
c) Senior Auditors
(i) Audit of loan and deposit vouchers.
(ii) Maintenance of portfolio files-Central, Centrally sponsored and State Plan
Schemes, which are susceptible of performance appraisal.
(iii) Issue and pursuance of objection memos with accounting/entitlement sanction
and with departmental officers.
(iv) Maintenance of register of important points for local audit.
(v) Compilation and consolidation of statistics including those for calculation of
Staff requirements.
(vi) Preparation and consolidation of reports/returns.
(vii) Half yearly report of digest of important and interesting cases.
(viii) Quarterly review of broadsheets of loans and advances granted by the State
Government.
(ix) Preparation of audit certificates on plan schemes; World Bank Projects etc.
d) Auditors
(i) Maintenance of objection book and closing.
(ii) Providing assistance in Administrative work like posting and transfers, leave
etc.
(iii) Other routine work not specifically listed, or other work entrusted by the Audit Officer/Sr. Audit Officer.
(iv) Quarterly review of departmental figures with account figures.
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Annexure – II
(vide para 5.3)
Duties of the Members of the Central Audit Parties
A) Assistant Audit Officer
(i) Over all supervision and co-ordination of work of audit parties.
(ii) Selection of vouchers for audit and review.
(iii) Audit of contingent vouchers over Rs.50,000.
(iv) Review of vouchers audited by Sr. Auditors/ Auditors.
B) Sr. Auditors
(i) Audit of T.A. Bills including L.T.C. Bills of Non-gazetted Officers.
(ii) Audit of contingent bill upto Rs.50,000/-
(iii) Audit of medical bills of non-gazetted officers.
(iv) Audit of grants in aid vouchers.
(v) Audit of P.W. and forest cheques
(vi) Audit of other miscellaneous vouchers.
C) Auditors
(i) Listing of vouchers for selection of audit and review.
(ii) Audit of establishment vouchers of non-gazetted officers.
(iii) Audit of vouchers in respect of advances to Government servants.
(iv) Any other routine work or other work entrusted by Assistant Audit Officer.
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Annexure – III
(See Para 5.3)
Duties and responsibilities of the members of CAP’s
Sr. No.
Assistant Audit Officer/Sr. Auditors/ Auditors Periodicity/due dates given in brackets/sections involved.
1. Register of O.B. Suspense To see that in case of wanting vouchers proper
and timely action had been taken to obtain the
wanting documents.
33 1/3 % of the register maintained every month.
(4/92 to be completed by 15.7.92)
2. Combined transfer ledger Annual See that all the adjustments necessitated due to
misclassification or otherwise in previous
month(s) had been incorporated and the mode of
adjustments adopted was correct.
All D.C. Sections to be selectively
covered in a year. Compilation
and Book Sections.
(31st July)
3. Check of action taken on Reconciliation
statements
Annual
See that all the adjustments necessitated due to
misclassification or otherwise in the previous
month(s) had been incorporated and the mode of
adjustment adopted was correct.
All D.C. Sections to be selectively
covered in year. Compilation and
Book Sections. (31st July).
4 Monthly checks/check of Classification
To see that full classification as per ‘Budget’ has
been recorded; where any amount is
provisionally classified under “other
receipts/other expenditure” on the basis of
insufficient/incomplete classification; proper
follow up action has been taken to get the
particulars from the D.D.O.s.
The check will be carried out as
per provisions in para 2.3.1 of
MSO (Audit) and para II of Secret
Memorandum of Instructions and
para 2.4 read with Annexure 2.4.1
of MICA (Appendix 23 of MICA)
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The classification of ‘loans’ should receive
special attention to see that all the repayments
have been booked properly.
(Department Compilation Section)
The sentence Classification
checked by the Assistant Audit
Officer will not be subject to
review by the A.O. or any higher
officer in para B(a) of Appendix
23 page 77 of MICA requires
modification. Now 20 percent of
the vouchers checked by the
A.A.O. will be reviewed by the
.A.O. The group officer can also
undertake test check of
classification from time to time at
his discretion.
Broadsheet of Departmental Adjusting
Accounts Suspense
to ensure that all the transactions which are
required to be accounted for have been
accounted for.
Item in respect of vouchers actually received
but not compiled are not transferred to O.B.
Suspense.
33 1/3 percent of the Broadsheets maintained every month.
All suspense slips have been received from
various sections and incorporated in the
accounts.
(Departmental Compilation section)
(e.g. 15th July for April)
All ‘Suspense Slips’ which were to be issued
had actually been issued.
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Annexure IV to Para 5.3
Duties and responsibilities of Appropriation Accounts and Finance Accounts parties (CASS-I)
Assistant Audit Officer Periodicity/due dates given in brackets/Sections involved.
Register of loans and grants from Government of India.
To see that loans and grants released from
Government of India were promptly adjusted, in
case where Government of India sanctions were
found wanting immediate action was taken for
obtaining the same.
Monthly (15th of each month) (Loan and Book Section)
Adjustments to see that all adjustments relating to ways and
means advances, shortfalls in cash balances,
overdrafts cash balances investment accounts
were promptly carried out.
Monthly (15th of each month) (Book Section)
Inward/Outward Claim register to see that all outward claims were preferred
against the concerned accounting authorities
promptly and all inward claims were promptly
examined and to the extent the claims were
found acceptable necessary action was initiated
for adjustment and payment of claims.
Quarterly. (15th July, October, January & April)
(Account Current Section)
Adjustment Register to see that the suspense slips in respect of
adjustments affecting revenue and service heads
were promptly prepared and sent to the
concerned compilation section for in
corporation.
Quarterly. (15th July, October, January & April)
(Account Current Section)
Objection book/broadsheet relating to unclassified suspense
to see that adequate action was taken for
obtaining wanting particulars/documents from
the concerned accounting authority, clearance of
items placed under the head was made promptly
Quarterly. (15th July, October, January & April)
(Account Current Section)
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on receipt of wanting particulars/documents.
Broadsheet of R.B. suspense PAO suspense to see that timely and effective action was taken
for clearance of balances under these heads in
respect of claims referred against outside
authorities awaiting reimbursement, a proper
pursuance was made.
Quarterly. (15th July, October, January & April) (Account Current Section)
Broadsheet of R.B. Deposits (CAO and Headquarters)
to see that broadsheets had been maintained
properly and difference between A.G.’s figures
and RBI’s figures were properly analysed and
suitable action was taken for settlement of
differences.
Quarterly. (15th July, October, January & April) (Book Section and Account Current Section)
Register of Valuables in A.C. sections to see that Bank Drafts received from outside
accounting circles in reimbursement of claims
were promptly deposited in the Bank for Credit
to Government account and the Bank Drafts
obtained in reimbursement of inward claims
were promptly despatched.
Quarterly. (15th July, October, January & April) (Account Current Section)
Adverse Balances
to see that cases of adverse balances noticed on
annual closing of accounts were promptly
brought to the notice of concerned groups for
investigation and initiating rectificatory action.
Annual To be checked at the time of annual closing of accounts along with the other checks already prescribed.
(Book Section)
Classified Abstracts/Consolidated Abstracts to check whether these had been maintained
properly/timely.
3rd & 4th quarter to be checked full (Departmental compilation sections)
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Annexure V to Para 5.14
Sr. No.
Nomenclature of vouchers %age to be audited by Adr/Sr. Adr.
%age to be reviewed by the AAO
1. Pay 8� 10
2. T.A. 8� 10
3. Medical 8� 10
4. Scholarships 8� 10
5. Returns 8� 10
6. Contingency vouchers
Upto Rs 1000 8� 10
Rs 1001 to 5000 8� 10
Rs 5001 to 10000 25 10
Rs 10001 to 50000 100 10
Above Rs 50000 100 10
7. Grants in aid voucher
Upto Rs 50000/- 25 10
Above Rs 50000/- 100 100
8. Loans and Advances 100 100
9. Transfer Entries 100 100
Accountant General (Audit) vide orders dated 30-4-98 ordered to triple the quantum and scope of audit.
106
CHAPTER-VI
AUDIT REPORTS
Collection of information, copies of documents in support of objections, etc.
6.1 (a) All objections detected during the course of local audit should be
communicated to the Head of the office inspected through Audit Memoranda/Half-
Margin issued over the signature of the Inspecting Officer/ Assistant Audit Officer/
Section Officer. The Audit Memoranda/Half-Margin should be brief, precise and to
the point. They should only seek confirmation/ information and not suggest any
conclusion or pre-disposition on the part of the local audit party. Wherever possible,
the return of these Audit Memoranda/Half margins within three days from the date of
issue should be insisted upon and cases of delay should be brought to the notice of the
head of the office by the Inspecting Officer/ Assistant Audit Officer/ Section Officer
promptly. Paras for the Audit and Inspection Report should be prepared after
considering the information/arguments advanced in the replies to Audit
Memoranda/Half-Margin. Where no replies are received, the para should be prepared
on the information gathered from records.
(b) The Inspecting Officer and the audit party should try to get all information
through accounts and other connected records and obtain explanations on the spot by
personal discussion so that Audit Memoranda/Half-Margins are reduced to the
minimum. The issue of Audit Memoranda/Half-Margins should mostly be confined
to confirmation of objections.
(c) The finalisation of material on each objections should not be postponed till the
final stages of local audit as this is likely to lead to accumulation of unverified data
and it may not be possible to include these objections in the Draft Inspection Report
due to shortage of time towards the close of Audit.
(d) The Inspecting Officer/ Assistant Audit Officer/ Section Officer should ensure
that the paras which merit inclusion in the Comptroller and Auditor General’s Report
are fully supported by attested copies of all the documents referred to in the paras, the
view of the Department on the paras and other relevant facts and arguments so that
there is no difficulty in the Inspection Civil Wing Headquarters in processing and
finalisation of the paras for the Audit Report.
(e) The full financial implications of each objection, or approximate value thereof,
calculated from the data in hand should be brought out in the Inspection Report to
stress the significance and gravity of the audit objection.
107
(f) The amount of overpayments or other irregular payments which have to be
kept under objection should be worked out to the extent feasible during the inspection
itself and not left to be calculated by the office inspected and intimated to Audit later
on.
(g) Where important initial records e.g. cash book, pass books, security registers,
etc., are not maintained properly, the Inspecting Officer and the audit party, besides
mentioning the technical defects and shortcomings in keeping these records should
make a probe to see if the defective maintenance or non-maintenance indicates any
misappropriation, etc.
6.2 In the case of audits of longer duration, advance copies of the paragraphs
proposed to be included in the draft Inspection Report should be issued to the Head of
the Office from time to time so that discussion of the draft Inspection Report is not
postponed by the Head of the Office on the ground that he requires time for studying
the Report prior to discussion.
Compilation of results of Audit.
6.3 The results of local audit by the Inspection staff are communicated through
Audit and Inspection Reports and Test Audit Notes in Form S.Y. 203. Audit and
Inspection Reports should include only important points and cases of serious financial
irregularities. Test Audit Notes should contain minor irregularities to which should
be attached a schedule of items settled on the spot. The procedural irregularities in
respect of which the head of the office has held out assurances about following the
correct procedure in future should be noted in the Schedule.
(Comptroller and Auditor General’s letter no. 1647-Admn. III/268-60, dated 16th August, 1960)
The Audit and Inspection Report alongwith Test Audit Note should be
submitted by the local audit parties to the Headquarters duly attached with a Title
Sheet in Form No. OA 8 given in Appendix I.
6.4 (a) The Audit and Inspection Report should be drawn upon in the
following pattern:-
Part I – Introduction
This part is divided into the following three parts:-
(a) Introduction
(b) Review of old objections
(c) Schedule of Persistent Irregularities.
108
(b) In Part- I(a) (i) (Introduction) brief introductory remarks about the office/body
audited giving broad financial position main source/sources of receipts of money and
the purpose of expenditure and activities in which the department/Institution is
engaged should be mentioned. Further, the period of audit and the date of
commencement and completion of local audit as well as the name of the Section
Officer/ Assistant Audit Officer who headed the audit party which conducted the local
audit should be given. The name of the Inspecting Officer in case the audit was
supervised by him may also be mentioned in this part of the report.
The amount of Audit fee in cases where recoverable should also be indicated
together with the details of calculations either in the sub-para itself or in an Annexure
to be attached with the Report.
Part- I(a) (ii) Non production of records.
(Comptroller and Auditor General’s letter no. 1647-Admn.III/268-60, dated 16th August, 1960).
Part I-(B)-Review of old objections
(c) In part I(b) the latest position of the outstanding objections /paras from the
previous Audit and Inspection Report and the action still to be taken by the
Department should be incorporated.
Part I-C- Schedule of persistent irregularities
(d) Part I(c) will contain irregularities which are being pointed out from time to
time but which continue to persist although the Department/Office may, at the time of
earlier inspection have noted the observations for future compliance.
Part II Present Audit
(e) In Part II of the Audit and Inspection Report are incorporated important
irregularities, i.e. irregularities involving recoveries, questions of principle or losses,
etc., which are likely to materialize into draft paragraphs for Audit Reports.
The Part - II of the Audit and Inspection Reports should be sub divided into
Section ‘A’ and ‘B’ as under:-
Section A- Consisting of major and important irregularities which are likely to
materialize into draft paragraphs for the Audit Report.
Section B- Consisting of irregularities which though not major but are to be
brought to the notice of higher authorities and followed up by the Pr. Accountant
General. Broadly speaking, all cases where the Head of the office inspected has to
approach higher authority for obtaining orders of rectification/regularisation/
109
condonation/write off should figure in Part II-B. Besides cases of financial
irregularities such as extra expenditure, avoidable expenditure, infructuous
expenditure, losses, etc., should find place in this part. Where final action to settle a
point of objection rests at the level of office inspected such points may be included in
Part - III - Test Audit Note unless the defects pointed out reflect lapses of a serious
nature.
(Comptroller and Auditor General’s letter no. 1647-Admn. III/268-60, dated 16th August, 1960 and No.2583-Admn.III/KW 268-60, dated 2nd January, 1961)
Part III-Test Audit Note
(f) In this part a mention of the issue of Test Audit Note to the head of the office
inspected, containing minor and procedural objections not settled on the spot, should
be made, indicating the no. and date of the forwarding letter. In case no Test Audit
Note was issued and minor and procedural objections were settled on the spot, the fact
should be mentioned as such.
Instructions for drafting of Audit and Inspection Report.
6.5 (i) Audit Notes should be entirely in the handwriting of the Sr. Audit
Officer/ Audit Officer in respect of the units supervised by him. Where, however, no
supervision has been provided, the audit note should be written by the Assistant Audit
Officer/ Section Officer.
(ii) Audit Notes should be in a legible hand prepared on one side of the paper only
and in half margin with sufficient space for corrections. The pages must be serially
numbered. All headings of paragraphs should be written on the top of each
paragraph.
(iii) Audit Notes should be written in a clear and concise manner, the value of a
report is not to be judged by its length or number of paras, though every point worthy
of notice must be included by the Auditor who should give special attention to all
matters which cannot be covered by a set of formal audit rules. Reports must be
clearly expressed so that there can be no doubt as to the meaning of the point at issue.
(iv) In view of the necessity of treating the percentage of audit in the case of
statutory audit as secret, the Comptroller and Auditor General had decided that, in the
Audit Notes/ Inspection Report issued, it should be sufficient to state in the opening
paragraph that a test audit was conducted without specifying the months for which the
accounts were subjected to detailed check or other quantum of audit checks applied.
110
In the office file, however, a note should be kept as to month’s accounts which were
subjected to detailed audit.
(Comptroller and Auditor General’s letter no. 12/Admn.II/1954, dated 6th February, 1954).
(v) Each paragraph should first explain the transaction objected to, narrating the
order of their occurrence, next the rules or orders infringed and then the nature of the
irregularity with its likely results and lastly the action suggested/required to be taken
for removing the objection.
(vi) The Audit and Inspection Reports should contain only such cases/objections as
are really important and likely to be eventually developed into draft paras for the
Audit Reports. These should be very carefully drafted as potential draft paras and
should invariably include dates (at least 1 month) of various events or stages involved,
e.g., in respect of drawal of amounts from the Treasury, date(s) of supplier bills,
date(s) of payments and receipts of suppliers, date(s) of relevant sanctions or orders,
particular financial rules or departmental requirements or orders infringed. The
financial implications in respect of overpayments, irregular expenditure, non-
accountal or short recoverie s, losses and shortages etc., should always be mentioned,
the full money value involved being assessed or worked out together with
person(s)/Official(s)/Officer(s) involved or held responsible.
(vii) The draft paras should be drafted in a detached and dispassionate language and
should be factually correct, brief and include all relevant information and financial
aspects and dates, and emphasis should be laid on the exact point to be brought out,
and only really essential comments which obviously follow may be added as
statements or observations without qualifying words “Audit thinks that” or “The audit
comments, etc. are”. Copies of relevant correspondence/notings from the
departmental files or the original files should also be sent along with the Draft
Paragraphs.
(viii) All cases of minor irregularities and audit objections pertaining to procedural
defects in initial accounts and records, non-production thereof in audit, and other
minor objections and contravention of rules, etc. shall be relegated to Test Audit Note.
(ix) All corrections of minor errors or compliance of financial rules and
requirements should be got rectified and attended to and dropped during audit after
discussions locally with Heads of Offices. Serious efforts should be made to have as
many items as possible settled on the spot by giving proper guidance to the
111
accounting staff, holding discussion with the Heads of Offices and ensuring as far as
possible, the rectification of the irregularities during the pendency of audit or at leas
by obtaining commitments to that effect on the rough sheets.
(x) When an Auditor feels doubtful whether to include a certain objection in the
Audit Note or in the Test Audit Note, he should include it in the former.
(xi) Details of facts should, as far as practicable, except in serious cases, be shown
in separate statements attached as Annexure to the Audit Note. This makes it more
effective and easier to handle.
(xii) The Report should be couched in polite language. Offensive or strong words,
sarcastic language, etc should always be avoided.
(xiii) Mention of the names of officials should be avoided except in the case of
personal claims, etc. However, the names of the officials responsible for the
irregularities should be kept on record in the Rough Notes in all cases of serious
irregularities.
(xiv) No suppositions, assumptions or allegations should be included in the Report.
Only facts should be mentioned and inevitable conclusions drawn. There should be
no reference to responsibility being fixed for any irregularity. It is for the
administrative authority to take action in this respect.
(xv) No abbreviations should be used. If a set of words, for which an abbreviation
is commonly used in the Office locally audited, occurs repeatedly in the Report, the
words in full should be used on the first occasion, with the abbreviation in brackets,
and thereafter only the abbreviation may be written.
Note 1. The State Government desires that the Audit Officer should not merely examine accounts and point out defects, but also convey some assurance to the administration that the accounts are satisfactorily maintained and that there are no indications of dishonesty. All Auditors should, therefore, add a general paragraph in sufficient detail in their draft audit notes indicating the general state of accounts and bringing to notice serious cases of failure in duty and of financial irregularities and likely and actual cases of embezzlement, in a concise form quoting reference to the paragraphs in the report.
Note 2. Serious notice will be taken if any serious defects or irregularities omitted are subsequently discovered.
Note 3. If in any case, complete account records are not available of an individual item or head of accounts it will ordinarily be sufficient, to comment on it in the audit note and mention it in the general remarks. In cases, however, where the amount involved is considerable or where the completeness of the records and information supplied effect the general system of accounts the matter should be promptly brought to the notice of the Group Officer (Inspection Civil)
112
setting forth full facts for deciding if the audit should be suspended. Till orders are passed the Auditor will continue to check the items for which papers are available.
Note 4. In the draft audit notes relating to the accounts of Jails, names of the Deputy Superintendents incharge during the period under audit should be specified.
(xvi) When higher sanction for any charge or practice is called for; the rule under
which the authority sanctioning the charge in the first instance is not competent must
be distinctly stated and the authority whose sanction is necessary specially named.
Terms like “this appears to require higher sanction” or “the sanction of competent
authority, is needed” only shows the inefficiency of the Auditor.
(xvii) Auditors will avoid repetition of what has already been said, but it will be
open to them to bring fresh criticism on the accounts.
(xviii) Auditors should quote freely in the audit notes the rules in the various codes
and rules and sections of the Acts to which reference has been made. When a letter or
a Government order is quoted, a copy should be attached to the audit note unless there
is a copy in the central office.
(xix) When an Auditor finds clear evidence or mal-practice or dishonesty on the
part of the member of a Board, he should privately bring it to the notice of the
President and report the facts to the Group Officer (Inspection Civil). Remarks
reflecting on the conduct of a member of a Board must not be made in published
notes.
(xx) When Auditors come across cases of shortages in Government stores or
defalcation of public money, they should report the case in detail separately alongwith
the draft audit and inspection note for transmission to the main office for necessary
action under Rule 2.34 read with Annexure B of Chapter II of Punjab Financial Rules
Volume I and Para 7.1.28 M.S.O. (Audit) 2nd Edition 2002. If such cases have not
already been reported to that office by the departmental officers as required by these
rules, the omission to do so should be specially mentioned in Assistant Audit Officer/
Section Officer’s report. The shortages as usual will have to be commented upon in
the audit notes.
(xxi) When an Auditor comes across cases where an allowance is being paid to a
Government Servant and Government sanction has not been obtained to the allowance
he should report the case to the Group Officer (Inspection Civil) who will inform the
CASS concerned.
113
(xxii) When any irregularity is noticed, which occurred during or which related to,
periods covered by earlier inspections, the Inspecting Officer should specifically
indicate, in a covering letter addressed to the Group Officer (Inspection Civil), his
definite opinion whether the irregularity, in question, could have been noticed in the
earlier inspection or inspections, and what in his opinion were the circumstances in
which this was not noticed earlier. It will be the duty of the Headquarters Section
editing the report to verify the previous inspection reports, find out whether this
irregularity or any aspect of it was actually noticed and to get the circumstances of
any omissions investigated fully. Where necessary, explanations of previous
inspection staff and officers should be called for under the orders of the Group
Officer.
(Authority-D.A.G.’s order File no.1-19).
Language and tone of the audit and inspection reports.
6.6 (a) Paras in the draft Inspection Report should be self contained and
written in simple language so that it is intelligible to one, not familiar with the details
of the working of the office locally audited and not fully conversant with audit
language.
(b) In order to bring about uniformity in the style of reporting “Style Guide” for
Audit Reports has been issued by the CAG of India vide No. 138-Audit (AP)/6-2003
dated 29-9-2003 for adoption which seek to encourage the use of plain simple English
- short words, short sentences and short paragraphs.
Discussion of Audit and Inspection Reports
6.7 (a) The Draft Inspection Report should be discussed with the Head of the
Office inspected on the last day of the audit. The discussion should not be postponed
and the Inspecting Officer should have prior arrangements with the Head of Office or
in his absence his Deputy. The Report should be finalised on the last day of audit
after discussion. In cases where no supervision at the level of Sr. Audit Officer/ Audit
Officer has been provided, the Draft Inspection Report should be discussed and
finalised by the Assistant Audit Officer/Section Officer himself. Where there is
difference of opinion, the views of the Head of the Office should be fully recorded
against the relevant paras.
(b) After discussion the Head of the office should be asked to record on the last
page of the Audit and Inspection Report “Seen, discussed and facts verified” over his
dated signatures in token of his acceptance of the facts.
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Test Audit Notes
6.8 (a) A Test Audit Note is issued in Form S.Y. 203. All minor points
should, as far as possible, be settled on the spot and only those which are not possible
of such settlement should find a place in Part-III of the Audit and Inspection Note (i.e.
Test Audit Note). The procedural irregularities in respect of which the Head of the
Office had held out assurances about following correct procedure and objections
where final action to settle a point of objections rests at the level of office inspected
should be included in the Test Audit Note. Persistent omissions and defects and those
which remain unrectified for many years should be specially discussed with the Head
of Office and commented upon in the Audit and Inspection Report.
The Test Audit Note (Part III of Audit and Inspection Report) should be issued
on the spot to the Head of the Office inspected, over the signatures of the Inspecting
Officer in the case of supervised audit and the Assistant Audit Officer/ Section
Officer in other cases for necessary action and verification at the subsequent audit. A
copy of the Test Audit Note should be sent to the Headquarters alongwith the draft
Inspection Report.
(Comptroller and Auditor General’s letter No.2374-Technical-Admn./367-65, dated 7th August, 1965).
(b) In case no Test Audit Note is issued by the local audit party, the fact should be
mentioned in Part III of the Audit and Inspection Report.
Submission of Audit and Inspection Reports
6.9 (a) The draft Audit and Inspection Reports after having been discussed
with the Department/Office concerned together with the duplicate copy of Test Audit
Note and where possible tentative draft-paras, should invariably be despatched to the
Inspection Civil Headquarters within three days from the date of completion of an
audit. The responsibility for securing back the objection/audit memos from the Head
of Office concerned and preparing tentative draft paras devolves entirely on the
Assistant Audit Officer/ Section Officers and any delay in this regard will not be
accepted as an excuse for delay in the submission of Audit and Inspection
Reports/Tentative Draft Paras to the Headquarters.
(b) The Headquarters Section should ensure that the Audit and Inspection Reports
are received within three days from the date of completion of an audit. Whenever the
submission of the Audit and Inspection Reports is delayed by an Assistant Audit
Officer/ Section Officer by more than 3 days, an express reminder should be issued by
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the Headquarters for securing early submission of the reports to Headquarters. The
cases of delay in submission of Audit and Inspection Reports by the local audit parties
without adequate reasons should be brought to the notice of the Group Officer
(Inspection Civil).
Documents to be appended with the Audit and Inspection Reports
6.10 The following document should invariably accompany a Draft Audit and
Inspection Report submitted to Head Office:-
(i) Forwarding Memo. in form No. O.A. 6 given in Appendix I, which should be
properly filled in.
(ii) Title sheet in Form No.O.A.8 given in Appendix I duly completed in all
respects and signed by ;the Assistant Audit Officer/ Section Officer.
(iii) Four spare copies of all the Appendix/Annexures attached to the Inspection
Report.
(iv) Duty List showing the distribution of work among the members of local audit
party in the proforma given below duly approved by the Assistant Audit
Officer/ Section Officer and by the Inspecting Officer where supervis ion is
provided, should be attached with the Draft Audit and Inspection Report. This
duty list should also indicate the work done by each member of the party
under his dated signature.
Pro-forma
Proforma showing the work done by Members of field parties.
Serial No. Name/Designation Duties Allotted Signatures
Place:
(Authority-O.A./I--53-NCWI/5507, dated 9th March, 1960).
(v) List of Service Books checked alongwith the list of Service Books in respect
of the persons who are likely to retire during the next five years.
(vi) A copy of Test Audit note as issued to the office audited.
(vii) Certificates prescribed from time to time to be furnished by the Local Audit
Party. A list of certificates is given in Annexure I to this Chapter.
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(viii) Where Audit Fee is recoverable from the Institution/Office inspected, a copy
of the Audit Fee Memo served on the Institution/Office.
Procedure for dealing with draft Audit and Inspection Reports in the Head Office
6.11 Watching the receipt of Audit and Inspection Reports:- A Register for
watching the receipt and issue of Audit and Inspection Reports is maintained in Form
S.Y. 336 in the head office. Columns 1 to 5 of this register are filled in from the
weekly diaries of the local audit parties on each Wednesday. On receipt of the Audit
and Inspection Report, columns 6 and 12 of this register should be filled in. The
remaining columns are to be filled in after the issue of the Audit and Inspection
Report.
The register shall be reviewed from time to time to ensure that all the Audit
and Inspection Reports are received within three days from the last day of audit.
Where the Audit and Inspection Reports are not so received, reasons thereof should be
ascertained by reference to the Assistant Audit Officer/ Section Officer concerned and
steps taken to secure early submission of the Reports to Headquarters. The register
shall be submitted to the Sr. Audit Officer/ Audit Officer on the Ist of each month
with a report indicating the number of Audit and Inspection Reports outstanding at the
beginning of the previous month, the number of accounts audited upto 20th of the
previous month, the number of reports issued during the month and details of Audit
and Inspection Reports which have not been issued finally indicating the stage at
which the various Audit and Inspection Reports stand in the process of issue.
The register should be submitted to the Group Officer for his review quarterly
on 15th April, July, October and January.
Preliminary Check
6.12 After the Audit and Inspection Reports is diariesed it shall be subjected to
preliminary examination to see that :-
(i) Local audit has been carried out to the extent prescribed.
(ii) All columns of the Title Sheet have properly been filled in and the Assistant
Audit Officer/ Section Officer has signed at all places provided for in the title
sheet.
(iii) All statements, certificates and proformas, etc required as per title sheet and
paras of the Audit and Inspection Report have been received.
(iv) The Audit and Inspection Report has been discussed with the Head of Office.
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(v) Test Audit Note containing minor objections, has been issued where necessary
to the office inspected and acknowledgement thereof exists.
(vi) Where Audit Fee is recoverable a copy of the Audit Fee Memo issued to the
Institution is attached.
(vii) There are no blanks and omissions of any data etc.
(viii) The endorsements made on the forwarding memo of Audit and Inspection
Report are correct.
Vetting of Audit and Inspection Reports
6.13 In the case of local audit/inspections supervised by Sr. Audit Officer/ Audit
Officers, the Inspection Reports should be drafted and edited by the Sr. Audit Officer/
Audit Officers themselves. Scrutiny and vetting of these Inspection/Local Audit
Reports drafted by the Inspecting Officers by another Sr. Audit Officer/ Audit Officer
or Assistant Audit Officer/ Section Officer at the Headquarters will take away the
initiative of the Officers supervising the local audit/Inspection and is likely to lessen
their responsibility in careful drafting and vetting of the Reports. These reports
should be vetted only by the Group Officer (Inspection Civil) who may be assisted by
the Sr. Audit Officer/ Audit Officer of Audit Units in verifying the facts in the
Reports of the inspections supervised by Inspecting Officers.
Sr. Audit Officers/ Audit Officer (Headquarters) should be entrusted with the
work of vetting the reports of Inspections/local audits supervised by Section Officers/
Assistant Audit Officers, finalising and issuing them at their level unless there are
important points to be brought to the notice of the Group Officer (Inspection Civil).
(Comptroller and Auditor General’s letter No.76-Tech. Admn I/385-65, dated 14th January, 1966).
Issue of Audit and Inspection Reports
6.14 (a) The important paras which in the opinion of Assistant Audit Officer/
Section Officer merit inclusion in the Audit Report of the Comptroller and Auditor
General should be transferred to the Draft Para Section dealing with Draft Paras cases
who will process them into draft paras on the lines given in Chapter VIII of this
Manual.
(b) On receipt of the draft report, duly approved by the Group Officer/Sr. Audit
Officer/ Audit Officer (Inspection Civil), his orders, if any, should be complied with
and after noting the date of return of the report from the Group Officer/Sr. Audit
Officer/ Audit Officer (Inspection Civil) in the Register for watching the receipt and
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issue of Inspection Reports, the report should be handed over to the Typist and his
dated acknowledgement taken in the register.
The typists should prepare the requisit e number of copies of the Inspection
Report according to the endorsement given on the Forwarding Memo and return the
report alongwith fair copies to the auditor concerned through a Transit Register and
obtain dated acknowledgement of the recipient.
Fair copies of Inspection Report should be compared by auditors by mutual
co-operation and the persons comparing the fair copies are responsible to see that all
errors and mistakes are duly corrected in all the copies.
In order to ensure that there is no undue delay in the comparison and issue of
the Audit Reports, the Auditors should indicate the date of receipt of typed copy by
them and the date of comparison on the office copy of the Inspection Report itself at
the time of submission of fair copy for signature. Cases of delay on the part of
Auditors, in this regard, should be brought to the notice of the Branch Officer.
(c) After necessary action has been taken as indicated above, the Audit and
Inspection Report should be submitted to the Sr. Audit Officer/ Audit Officer
(Vetting).
Time Schedule for issue of Audit and Inspection Reports
6.15 The Audit and Inspection Reports should be issued within one month from the
date of completion of the inspection.
(Comptroller and Auditor General’s letter No. 799-TAI/83-83 dated 16-7-83).
The following Time Schedule has been prescribed in order to observe these
orders:-
(i) The Audit and Inspection Report should reach Inspection Civil Wing
Headquarters within 5 working days of completion of audit.
(ii) The Audit and Inspection Report should be put up to the Branch Officer or
Group Officer (Inspection Civil) within 5 working days of its receipt from
Audit party.
(iii) The Group Officer (Inspection Civil)/Branch Officer will take 4 working days
to pass the report.
(iv) The Report as finally approved should be typed, compared and issued within
10 working days of its approval. Any departure from this time schedule
should be brought to the notice of the Group Officer (Inspection Civil) and his
orders obtained.
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In the cases in which the Audit and Inspection Reports have been received but
have not been vetted, typed out, compared and issued within one month from the date
of completion of the inspection, the concerned Auditors/typists should be reminded
and such cases of delay brought to the notice of the Group Officer (Inspection Civil).
Delay in issue of Inspection Reports upto one month may be condoned by the Group
Officer after satisfying himself about genuineness of reasons. The audit and
Inspection Reports which are not issued within one month of the date of the
completion of audit should be shown in arrears and the delay should be got condoned
from the Pr. Accountant General.
Office order No. Control (ITA) 24, dated 28.11.88 circulated vide endst. No. Control (ITA)/5-7/88-89/1684 dated 28.11.88 and CAG letter No.799-TAI/83-83 dated 16-7-83).
6.16 In case of supervised audits, the Audit and Inspection Report will be approved
by the Inspecting Officer either in camp or at Headquarters if the audit is not
concluded in his presence. This approved copy will be typed in the Headquarters
office and will be signed in full over the name and signatures of the Sr. Audit Officer/
Audit Officer (Headquarters) irrespective of the fact that the office copy has been
approved by any other officer. In the case of unsupervised audit also, even though the
office copies of the report will be signed by the Assistant Audit Officer/ Section
Officer on field inspection duty, the fair copy of the report will be signed over the
name and signatures in full of the Sr. Audit Officer/ Audit Officer (Headquarters).
These reports after signatures by the Sr. Audit Officer/ Audit Officer (Headquarters)
will be sent with a forwarding letter in Form No. OA6 to the parties concerned. The
Assistant Audit Officer/ Section Officer should send the draft forwarding letter with
the Audit and Inspection Reports instead of making endorsements on the Report itself.
(Comptroller and Auditor General’s Secret letter no. 418-Admn. I/165-57, dated the 9th February, 1959 and office order no. NCW-1/20, dated the 23rd February, 1959).
Record of objections in the objection Book
6.17 As required under Note 1 below para 7.2.7 of Comptroller and Auditor
General’s Manual of Standing Orders (Audit) 2nd Edition 2002, all objections arising
out of local audit as embodied in the audit and inspection reports should be registered
in Objection Books with the exception of those objection raised in local audit which
cannot be expressed in money values. Necessary action to note the objections in the
objection books should be taken after the draft audit and inspection reports have been
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approved by the Group Officer. The No. and month of the item of objection books
should be noted against each item in the Audit and Inspection Report.
(Authority- Comptroller and Auditor General’s letter no. 40-Admn1/684-54 dated the 10th January, 1955).
Note 1: The Comptroller and Auditor General has decided that following categories of objections should also be noted in the objection Books maintained at the Headquarters section:
1. Outstanding dues to Government on account of credit sales for which accounts
are kept by the departments for the purpose of effecting recoveries.
2. Advances made by departmental Agencies pending recovery in respect of
which accounts are kept either in the Department or by the Pr. Accountant
General.
3. Short or non-recovery of departmental receipts noticed during the course of
audit of initial accounts in the departmental office.
4. Cases of shortages in department balances of stock and difference between
book balances of stock and counted balances noticed by Departmental
authorities.
5. Discrepancy or shortage arising out of local audit in the initial accounts of
stores and of a department the audit of which has not been entrusted to the
Pr. Accountant General by the Government
(Authority- Comptroller and Auditor General’s endorsement No.2666 Admn./385-60, dated 28th August, 1960, File OA/1-28).
Before marking any item for keeping in objection book of Headquarters it
should be ensured that-
(i) Where credit sales are a normal feature of the activities of a concern, only
delayed recoveries, which need to be pursued specially with the department
are marked for keeping in Objection Book.
(ii) Where detailed records to watch recovery of a particular item are already kept
in the various sections (such as D.C., Loan) of the office of the Accountant
General (A&E) (for example advance of pay and allowances, house building
and conveyance advances etc.) the items need not be kept in Objection Books
of Inspection Civil Sections.
(iii) The items to be kept in Objection Book should invariably be specified on the
titled sheet of the Audit and Inspection Report by the Assistant Audit Officer/
Section Officer. The approving officer should also pass orders on the items
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finally approved by him for keeping them in Objection Books of Headquarters
sections.
(Authority-OA/NCW-1/1-38/4933-35, Dated 17th February 1961).
6.18 In addition to the copy or copies sent to the head of the Government office or
institution inspected, a copy of the inspection report of non commercial accounts is
also sent simultaneously to the next higher authority and his attention is invited
specially to important items or serious irregularities or other points requiring his
special attention. If the next higher authority happens to be an officer other than the
Administrative Ministry/Department of Government, it is for this officer to consider
the necessity of forwarding a copy of the Inspection Report to the Ministry or
Department in whole or in part.
Necessary endorsements to this effect should invariably be recorded by the
Auditors on the forwarding memos, attached to the audit note.
(Comptroller and Auditor General’s letter No.2205-Admn II/608-Admn. I/58, dated
the 11th September 1959).
In cases of offices, where the copies of Inspection Report of non-commercial
accounts are at present, endorsed to two or three next higher authorities other than the
Administrative Ministry/Department of Government for instance schools, sub-judges
etc. the endorsements may continue to be made to more than one authority upto Head
of the Department only. The endorsement to Section Officer/ Assistant Audit Officer
concerned may also continue to be made as usual. Endorsements to the
Administrative Ministry/ Department should not be made unless they happen to be the
next higher authority.
(Office Order No. OA/NCW I/3385, dated the 28th October 1959).
Audit of entertainment and other allowances of President/Governors
6.19 The local audit of the account of Entertainment and other allowances of the
Governor will be supervised by the Group Officer (Inspection Civil). All preliminary
objection memos will be issued over the signature of that officer to ensure that
frivolous and petty objections are avoided.
(Authority: Comptroller and Auditor General’s letter no. 939-Admn.I/21-56(II), dated 28th April, 1962).
Note: The audit of Punjab Vidhan Sabha will also be supervised by the Group Officer. The guidelines for conducting audit of the accounts/records etc. of the Governor and the Punjab Vidhan Sabha stand framed and should be collected by the Audit parties before conducting audit of these offices.
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Audits undertaken on behalf of other Accountants General;
6.20 In the case of local audit of Government Departments/Autonomous bodies
conducted on behalf of the other Accountants General, the Inspection Reports and
Audit Comments etc., should be forwarded to the main Audit Officer viz., the
Accountant General concerned on whose behalf the audit had been entrusted who will
issue the Report and pursue the same to finality.
(Authority: Comptroller & Auditor General letter No. 1836-Admn. I/Admn. III-138/62, dated the 28th July, 1962)
Progress Register of Settlement of Audit and Inspection Reports
6.21 A register in Form SY-328 to watch the progress in the settlement of
inspection reports should be maintained. Separate pages may be allotted to each unit.
At the time of issue of the inspection report, it should be entered in the particular page
giving number of paras contained in it. The old paras existing in the old reports
already entered in the register should be scored by drawing a pen indicating the month
of settlement. This register will be concise one depicting the position of inspection
reports/paras outstanding at any given time or for more than six months old.
A report of the register should be submitted to Branch Officer on the Ist of
each month as laid down in Para 6.11. The register should be put up to Group Officer
for his review quarterly on 15th April, July, October and January.
Production of Audit and Inspection Note in a Court of Law.
6.22 It has been decided by the Comptroller & Auditor General that once the
inspection report has been made available to the Head of the Office inspected in its
final form, the question whether or not a privilege should be claimed for its
production in a court of law should be decided by the Pr. Accountant General in
consultation with the departmental authorities concerned, and Audit need not claim
any privilege for a report already issued if the departmental authorities do not wish
themselves to claim any privilege to produce in a court the audit office record, only
the finally approved office copy should be produced and not the original notes or
drafts.
Note: The audit notes should be put up to the Pr. Accountant General for perusal, if there are any important points, which in the opinion of the Group Officer (Inspection Civil) should be specially brought to his notice.
(Accountant General’s orders dated the 11th January, 1940, case OA/3-1, Volume II)
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Advance Audit Comments
6.23 It will be open to the Audit Department to bring at once (i.e. even in advance
of the ordinary report) to the notice of the higher authority irregularities which may be
held to be so serious as to justify this course.
Annotated Copies
6.24 The receipt of annotated copies is watched through register in form SY-328 as
described in para 6.21 above. After the issue of the audit and inspection report, all the
subsequent correspondence regarding the audit note is to be noted in the relevant
columns of the register. In the remarks column of the register should be indicated
individual No. of paras outstanding after six months of issue of the report. Paras
which are subsequently settled should be circled and cross reference, to the letter No.
etc. with which settled as per column 13 of the register, be given. Paras in respect of
which the explanation etc. given by the department has been accepted, subject to
verification at the time of next local audit, should be treated as settled for the purpose
of the report of the register to be prepared monthly. A report of the register should be
prepared on the Ist of each month and submitted to the Senior Audit Officer/Audit
Officer (Headquarters). The report should detail cases in which annotated copies
were due by the end of the preceeding month have not been received. Cases of
outstanding Inspection Reports for over six months should be indicated separately.
The total number of paras outstanding after six months of the issue of the
Inspection Report should also be indicated in the report.
[Comptroller & Auditor General’s letter No. 1656-Admn.III/152-60, dated 16th August, 1960. (File/I-Misc./R)]
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ANNEXURE I to Para 6.10 (vii)
CERTIFICATE TO BE ATTACHED WITH AUDIT NOTES
1. Certificate of verification of credits paid into the Treasury/Bank.
Certified that the credits as shown in the books of the Office of the _________
for the months selected for detailed audit and such other items as came to notice
during the general review of accounts for the period from _________ to ________ or
as a result of disposal of old and current Audit Objections were duly verified by
Sh. _____________ member of audit party with reference to the record of Try./Sub-
Division-Treasury/Bank concerned/except which have been commented upon in the
Audit and Inspection Report.
Signature of the person certifying the credits
Section Officer/AAO
2. Certificate of time allotment.
Certified that the time allotted for this audit was adequate or inadequate.
Note - In case the time allotment is considered inadequate full justification supported by facts and figures to be attached.
Section Officer/AAO
3. Certificate of Check of record.
Certified that the records were checked and test checked in accordance with
the Rules/instructions issued from time to time and the irregularities noticed have
been brought out in the Audit and Inspection Note/Test Audit Note or got settled at
spot.
Section Officer/AAO
4. Certificate of Service Books and Leave Accounts
(i) Certified that the Service Books and Leave Accounts to the extent of
prescribed percentage have been checked and the audit certificate in the prescribed
form recorded in the Service Books under the full dated signature of the Section
Officer/Asstt. Audit Officer subject to the remarks in the Test Audit Note.
(ii) It is certified that the total No. of responsible personnel whose service books
are required to be checked in the Office of ___________ and out of this ________
Service Books and _______Leave Accounts have been checked by consuming time
allotment of _____________ party days/no extra time allotted.
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Sr. Auditor Section Officer/AAO Audit Party (IC) Dated___________
Countersigned ____________
5. Certificate regarding check of totals of cash book.
Certified that the total of cash book for payments and receipt side for the
month of ______________ and _____________ have been checked to the extent of
100% by Shri ___________ under my supervision.
Signature of Auditor in token of check
Asstt. Audit Officer/ Section Officer
6. Certificate regarding check of receipt side of Cash Book
Certified that the receipt side of the cash book has been checked with
reference to the counterfoils of the receipt books to the extent of 100 per cent.
Section Officer/AAO
7. Certificate regarding check of GPF and CDS Accounts.
Certified that the GPF and CDS Accounts have been checked.
Section Officer/AAO
8. Certificate regarding Calling of Records
Certified that the records were called for from the Main Office and returned
after verification as under:
a) No. and date vide which records called for.
b) Whether records were received.
c) No. and date, vide which the records were returned to Audit Unit.
Section Officer/AAO
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CHAPTER – VII
MATERIAL FOR AUDIT REPORT
7.1 The Inspection Civil Wing Headquarters is required to furnish the under-
mentioned material for inclusion in the Audit Reports in respect of Central and State
Government to Report Section, on the dates prescribed from time to time:-
A - General
(1) Draft Paragraph relating to financial and other irregularities of the kind
mentioned in Chapter 3 of Section VII of the Comptroller & Auditor General’s
Manual of Standing Orders (Audit) 2nd Edition 2002.
(2) A review of the working of the Inspection Civil Wing covering typical
irregularities noticed in local audit of the offices concerned, to be included under
“Other topics of Interest”.
(3) Accounts and review of Government concerns (other than Commercial) under
the audit of Inspection Civil Wing.
(4) Information regarding the number of Civil Offices test-audited during the
course of the year and comments on the results of such audits.
B-Returns relating to Audit Report of Punjab State
The revised returns due to Report Section are mentioned below:
Sr. No.
Name of return From whom due
Due date latest by
1. Material for the Report including reviews selected by ECPA Section*
Inspection Civil
31st May every year
2. Withdrawal of funds in advance of requirements
-do- -do-
3. Financial assistance to local bodies and others, audits under section 14, 15, 19 and 20 of the C.A.G’s D.P.C.S Act, 1971
-do- -do-
4. Results of review of outstanding Audit observations of selected departments etc. as per C.A.G’s letter No. 1204/Rep (s)/76-82 dated 30.7.82, copy supplied vide Report Section d.o. letter No. Rep-I/I-5/Inst-IV/Vol.II/82-83/994-98 dated 18.1.1983
-do- -do-
* For reviews selected by the Headquarters, dates are those as fixed by the Headquarters. The Wings should send the reviews to Report-I Section 20-25 days in advance of the scheduled date(s) fixed by Headquarters
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5. Results of review of outstanding inspection reports of selected departments (as per C.A.G letter No. 222-Rep(s)/89-87, dated 26.2.88, copy supplied vide Rep-I Section No. Rep-I/Insp/407-4/Chap. III, IV,V/83-88/418-21 dated 16.3.88) issued upto 31st December and remaining outstanding on 30th June of the following year.
-do- 15th July every year
6. Grant and their utilisation IC-II (G.I.A.)
31st May every year
7. Write off of losses revenue etc. Inspection Civil Wing
-do-
8. Misappropriations, defalcation etc. -do- -do-
9. Para on non-receipt of replies to paras/reviews from Government (for this para, it would be necessary for the wings to report the delay in receipt of replies to the Administrative Secretary and Chief Secretary, demi-officially in a concerned manner. only if, no reply is still received, this para should be attempted).
-do- -do-
10. Copy of draft Finance Accounts duly checked Inspection Civil
5th October every year
11. Copy of draft Appropriation Accounts duly checked.
-do- 15th October every year
12. Paragraph on excess over Budget grants still awaited regularisation
-do- -do-
13. Shortfall/excess in recoveries -do- -do-
14. Rush of expenditure towards the end of the financial year in the proforma supplied vided Rep-I/i-5/1-574 dated 2.3.1981
-do- 31st May every year
15. Draft Para on ‘New Services’. -do- -do-
16. Irregular utilisation of Contingency Fund. -do- -do-
17. Para on non-reconciliation of figures by the departments with AG(A&E) as per instruction contained in C.A.G’s of India circular 19-Audit-II/85 issued vide No. 753-Audit II/120-85, dated 25.5.1985
-do- -do-
18. Preparation of Chapter I as modified vide C.A.G’s office D.O. No. 491-Rep(s)/134-90, dated 12.4.91.
-do- 15th October every year
19. Comment on delay in rendering of initial accounts by State Government for incorporation in Chap-I as per C.A.G. of India Circular No. 7 Rep(s)/90 issued vide No. 526/Rep(s)/67/90, dated 17.5.90 (copy supplied vide No. Rep-I/407-2/Imp Chap II/75-76 dated 19.6.90).
-do- -do-
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20. Preparation of Chapter II on the pattern intimated vide No. Rep-I/5/Inst II/84-85/241 dated 16.8.84.
-do- 20th October every year
21. Review of 5 to 10 grants as per C.A.G of India Circular No. 3/85 issued vide No. 212-Rep(s) 59-84/K-II/dated 25.2.85 copy supplied vide No. Rep-I/407-2/Inst/Chap-II/84-85/394, dated 6.3.85
-do- 20th October every year
22. Any other material of interest meriting inclusion in the report
All Sections 15th June every year
23. Para regarding delay in reconciliation of united accounts of State Government for inclusion in Audit Report
Inspection Civil Wing
5th October every year
Authority : Report I/405-I/Return/Audit/92-93/904, dated 23.3.93
24. Cases likely to be developed as draft Paras. -do- 10 to 25th each month
Authority : Report I/405-I/Return/Audit/86-87/1534, dated 12.3.1987
25. Programme of local audit conducted under the supervision of Audit Officers
-do- 10th April every year
Authority: Insp(C) No. OA(C)/H/110/599-604, dated 10.6.87
26. Information regarding number of civil offices and institution test audited during the course of year and comments on the results of such audit
-do- 30th July every year
Authority : Insp(C)/HQ/Misc/833, dated 15.6.93
27. Copy of draft finance accounts duly checked -do- 5th November every year
Authority : CAG /74-AC-I/1986 issued vide No. 1377- AC-I/217-86, dated 17.12.86
28. Copies of draft appropriation accounts duly checked
-do- 25th November every year
Authority : CAG /74-AC-I/1986 issued vide No. 1377- AC-I/217-86, dated 17.12.86
29. Paragraphs on excess over Budget grants still awaiting regularisation
Inspection Civil Wing
25th November every year
Authority : CAG /74-AC-I/1986 issued vide No. 1377- AC-I/217-86, dated 17.12.86
30 Short fall/excess in recoveries -do- 15th November every year
Authority : CAG /74-AC-I/1986 issued vide No. 1377- AC-I/217-86, dated 17.12.86
The manner in which the above material should be prepared is laid down from
time to time but the important instructions and orders contained in the succeeding
paragraphs should also be borne in mind.
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Selection of Material
7.2 It is difficult to lay down any hard and fast rule in regard to the choice of the
material to be included in the Audit Report. Audit Officers will keep in view the
following points in selecting material for comment in the Report:-
(a) Cases involving transgression of statutory provisions, rules or orders and other
cases which have led to or are likely to lead to substantial loss of public
money may be mentioned individually. Common defects in financial control
or administration may be commented upon collectively. Normally, however,
such irregularities should not be considered for comment, if adequate remedial
action has been taken by the administration. The importance of an irregularity
or a case of loss should be judged in the context of size of a scheme or project
and the condition in which the work has been executed.
(b) Cases which are Sub-judice will not be mentioned in such a way as to
prejudice the claim or defence in a court. Similarly, caution should be
exercised in referring to cases which though decided in a lower court are likely
to be taken to a higher court on appeal.
(c) The Audit Report should not normally include very old cases. Exceptions
may be made only where the cases could not, have come to notice of audit
earlier and some questions of principle is involved. Cases where there has
been lack of response to constructive suggestions made by Audit for the
rectification of defects in financial or accounts control may be commented
upon, if the continuance of the unsatisfactory features is fraught with risk of
fraud or loss to Government.
(d) Cases on which Government are taking or have promised reasonably adequate
action should not ordinarily be included in the Audit Report] unless in any
case there are any special features to be brought of the notice of the
legislature. See also para 7.3.2.3 of M.S.O (Audit) 2nd Edition 2002 in regard
to the inclusion of such cases in the Audit Report on Revenue Receipts.
(e) It is difficult to question on grounds of financial matters which are
predominantly administrative or technical in character, if it is considered
necessary to draw attention to any such case in the Audit Report, the
Pr. Accountant General should assure himself that he has properly
apprehended the facts and that the raising of the question would serve some
practical purpose from the financial point of view. In all such cases,
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discussion between the Pr. Accountant General and the Administrative
Department and if necessary, the Finance Ministry/Department of the
Government concerned, must be the first step and drafting a paragraph for the
Report almost the last. It is inadvisable to initiate a controversy by making a
premature mention in the Audit Report of cases involving administrative or
technical issues which have not been finally considered in consultation with
Government
(f) While Audit is not precluded from drawing attention to the adequacy or
otherwise of the disciplinary action taken in any case, Audit should not as a
normal rule criticise the decision of the Administrative authorities in regard to
the nature of quantum of punishment imposed. On the other hand, Audit
would be in order in offering comments, for example, when in a series of cases
occurring more or less continuously, the disciplinary action taken has been
obviously and extremely lenient. Similarly if a marked difference is noticed in
the standards of disciplinary action observed by different departments of
Government, this feature may be brought to notice through the Audit Report
with adequate supporting evidence.
Critical comments regarding the adequacy of disciplinary action taken should
not, however, be conveyed to Government without the approval of the
Comptroller & Auditor General.
(g) Some of the important points which can form the subject matter of comment
in Audit Reports are indicated in Annexure I; this list is only illustrative and
not exhaustive.
(h) Measurement of effectiveness of audit
While sending material for audit report, the following instructions received
from CAG on Audit Effectiveness may be kept in view.
2. Measurement of effectiveness of audit could be for two purposes:
a) for external dissemination of the contribution made by us towards the larger
end of improved governance and to meet public expectations and
b) for internal evaluation so that performance could be assessed and benchmarks
could be set for enhancing results in the future. Such internal evaluation
would take into account the different circumstances in which offices function
and comparisons of performance would necessarily be inter temporal rather
than inter state.
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The Coverage
3. The Committee recognise that the impact of audit cannot be assessed only
from the limited stand point of Audit Reports placed before the Legislature. A
considerable part of the audit effort stands reflected in Inspection Reports that are
issued to auditee units. Other SAIs also take into account audit impact generated
through management letters i.e. Inspection Reports. Such recommendations/
observations included in IRs which have been accepted by auditee units or where
remedial action has been taken could also be reported in an omnibus para in the Audit
Report. This is suggested since it will not be possible to report all findings contained
in Inspection Reports to the Legislature.
External dissemination
4. The Committee considers that it is time that we communicate more effectively
with the society at large in order to disseminate knowledge of the impact of audit and
the role played by us in promoting effective governance and in improving the
management of public finances. Currently, the Audit Reports are perhaps our only
instruments of communication. These are not able to highlight the impact of audit
because of the time lag involved in follow up on audit findings/recommendations.
5. The following could be included in developing a document to be periodically
released for external dissemination
(a) Recoveries of public monies carried out at the instance of audit;
(b) Audit observations/recommendations accepted by Government and the
financial implications thereof;
(c) Changes in law, procedures or schemes attributable to observations by Audit
and financial implications thereof;
(d) Recommendations made by the Public Accounts Committees that are accepted
by Government and the Financial implication thereof;
(e) Acceptance of audit observations/details of remedial action taken through
Action Taken Notes of audit paras not discussed by the PAC.
6. It is emphasized that the impact of audit, for the purpose of external
dissemination, will be reported in a year irrespective of the audit cycle in which the
actual observation arose. In order to reflect the results of audit comprehensively
findings contained in the Audit Reports presented during the period should also be
incorporated in such dissemination. It would be possible to quantify, with a
reasonable degree of accuracy, the financial impact of the audit effort in comparison
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to overall costs of the Department. For the purpose of enhanced readability and
professional presentation, it is suggested that the preparation of the document of audit
impact be outsourced.
Internal evaluation
7. The Committee also considered the development of appropriate criteria for the
purpose of internal evaluation of the audit effort. Separate criteria are suggested for
Revenue Audit and Financial Audit (expenditure audit). These criteria are indicative
and not exhaustive. They could be developed further if required. Developing criteria
for expenditure audit is more complex in comparison to revenue audit. In some cases,
like schematic reviews and All India Reviews, it is difficult to quantify impact since
such reviews are largely directed towards examining the overall achievement of
scheme objectives. Similarly, the audit effort of offices like DGACR and PDSAESM
which examine Central Ministries has to be viewed in the context of resource
transfers to the States (where expenditure is audited by the State Accountant General).
Desirability-Acceptance matrix
8. The criteria developed for revenue and expenditure audit are contained in the
enclosed matrices (Annexure I). While developing the criteria, the Committee has
taken into account the kind of findings that audit has reported in the past. The
findings have been categorized and arranged hierarchically i.e. greater emphasis is
placed on audit findings that would lead to enhanced impact. The hierarchy of paras
will need to be tempered by an acceptability index since the impact of audit would be
greatly enhanced if audit observations were responded to/accepted by the concerned
management. This would increase credibility of audit findings. Weights have been
assigned relying on both the criteria. Each bond copy will need to be accompanied by
a weighted aggregation of money values as shown in Annexure II.
Beyond the matrix
9. Adoption of the matrix will result in the following benefits:
(a) more efforts will be made to obtain Government's responses to audit
findings.
(b) increased emphasis would be placed on raising material issues and making
sound recommendations and
(c) the focus of audit planning, execution and reporting will correspond to the
para hierarchy leading to an overall improvement in the Audit Reports.
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Caveat
10. The Committee recognized that the criteria developed could not be uniformly
applicable. For example, the audit/certification of the accounts of companies of
Autonomous Bodies are a distinctive type of audit. A considerable part of our audit
effort is deployed in this area. This effort would need to be separately evaluated. For
example, recasting/revision of corporate accounts at our instance/modification of
Annual Accounts based on the previous year's audit comment would constitute a
significant contribution of audit to the integrity and accuracy of the entity's financial
statement. Similarly, there could be other distinctive areas of audit that may need to
be separately evaluated.
Annexure I
ALLOTMENT OF WEIGHTS ON THE
DESIRABILITY – ACCEPTABILITY MATRIX
EXPENDITURE AUDIT REPORTS
Acceptability Index/Para Desirability Index
Recovered Accepted by the Dept./ Govt.
Not accepted by the Dept/Govt but effectively rebutted by audit
No reply from Dept or Govt.
Fraud/misappropriation/ embezzlement/losses detected in audit
A1 (5)
A2 (4)
A3 (2)
A4 (1)
Recoveries at the instance of audit B1 (5)
Overpayments detected in audit C1 (4)
C2 (3)
C3 (2)
C4 (1)
Violation of contractual obligations, undue favour to Contractors
D1 (4)
D2 (3)
D3 (2)
D4 (1)
Avoidable/excess expenditure E2 (2)
E3 (1)
E4 (0.75)
Waste/infructous expenditure F2 (2)
F3 (1)
F4 (0.75)
Regularity issues G1 (2)
G2 (1.50)
G3 (1)
G4 (0.75)
Idle investments/idle establishment/Blockade of funds
H2 (1)
H3 (0.75)
H4 (0.50)
Delays in commissioning equipment
I2 (1)
I3 (0.75)
I4 (0.50)
Non achievement of objectives J2 (1)
J3 (0.50)
J4 (0.25)
Miscellaneous K2 (1)
K3 (0.50)
K4 (0.25)
Note: Weights in brackets
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RECEIPT AUDIT REPORTS
Acceptability Index/Para Desirability Index
Recovered Accepted by the Dept./ Govt.
Not accepted by the Dept/Govt but effectively rebutted by audit
No reply from Dept or Govt.
Non compliance to law, rules etc. R1 (5)
R2 (4)
R3 (2)
R4 (1)
Lacuna in law/procedure, policy S2 (2)
S3 (1)
S4 (0.75)
Control Weakness T1 (1.50)
T2 (1)
T3 (0.75)
T4 (0.50)
Note: Weights in brackets
Annexure II
WEIGHTED AGGREGATE OF MONEY VALUE
(AUDIT REPORT) (FOR THE YEAR ENDING)
Para No.
Financial period
Money value
Premium for timeliness
Matrix identify
Matrix weight
Weighted money value
Contributing office
(4.2) (2001-02) (50 lakh)
(55 lakh) (H4) (0.50) (27.50 lakh)
Total
Note 1 : Money value of paras pertaining to transactions of preceding two years will be enhanced by 10 percent.
Note 2 : The last column needs to be filled up only for the reports for which material is contributed by more than one office.
Figures in bracket are shown as illustration.
(CAG letter No. 745-RECA(D) Audit effectiveness dated 9-9-2003)
(i) In addition, the following points may be kept in view while finalising material
for Audit Report.
The HQ's office has made the following suggestions for improving the quality of
Audit Reports
1. An Audit para should present a complete picture and wherever necessary
different wings i.e. Works and Commercial should be integrated so that a
complete picture is presented.
2. Paras which are repetition of earlier audit findings and are awaiting discussion
by Public Accounts Committee should not be included in the Audit Reports
(with change of department and amount).
3. Reviews should not be based on response to questionnaires issued to the
departmental officers without adequate scrutiny.
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4. Non performance or short performance in any area should be analysed by the
audit parties on the basis of available records and reasons given by the
departments should be cross checked.
5. Wherever audit parties had an opportunity to detect a mistake, but failed to
and a subsequent party detected it, responsibility should be fixed. This would
firm up audit and keep audit parties fit.
(Authority: CAG letter No. 745 REC A(D) Audit Effectiveness dated 9-8-2003)
Procedure for preparation of draft paras for inclusion in the Audit Report
7.3 (a) Whenever any case of financial irregularity, fraud, embezzlement, loss
etc., comes to notice, the section concerned should expeditiously call for from the
departmental authorities concerned by special letters (as per specimen given in
Annexure II to this Chapter) such further information as may be necessary on the
subject for the examination of the case in accordance with the instructions contained
in para 7.1.2 of MSO (Audit) 2nd Edition 2002. On receipt of the complete
information, the case should be submitted for orders of the Pr. Accountant General as
to whether or not it is a fit case to be brought to the notice of the Legislature/Public
Accounts Committee through the Audit Report. If it is decided to do so; a report
should be made to the Administrative Department and the Finance department
according to the procedure in para 7.1.8 of M.S.O. (Audit) 2nd Edition 2002, it being
specifically mentioned in the report that the case has been registered provisionally for
inclusion in the next Audit Report. A note of the case should also be made in the
Register of Draft Paras for the Audit Report on the Appropriation Accounts which
should be reviewed fortnightly by the Branch Officer and action at higher level taken
in respect of all outstanding cases. The result of review should also be submitted
quarterly to the Pr. Accountant General for orders.
(b) After the comments of Government have been received, a draft paragraph
along with a detailed key should be prepared and submitted to the Accountant General
for approval together with a forwarding letter to Government in the Administrative
Department (with a copy to the Finance Department) requesting for the acceptance of
the facts stated therein. A model draft of the forwarding letter, which may be adopted
by Audit in the case of the draft paras relating to the Punjab Government, is given in
Annexure III. In the case of Central Government and in other peculiar cases, the draft
of this forwarding letter may be suitably modified according to requirements.
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(c) The draft para should be brief but should contain all the important points
relating to the case as laid down in Chapter 3, Section VII of M.S.O. (Audit) 2nd
Edition 2002 including disciplinary action taken by the Government against the
officials(s) at fault.
(d) The office and fair copies of the draft para should be annotated in the margin
with full particulars (not merely flag or page numbers but with full references). A
copy of the forwarding letter with two attested copies of the draft para and key
together with a copy of the relevant correspondence referred to in the key, should also
be sent to the Report Section for keeping a consolidated record of all the draft paras
sent to the Government.
(e) If the Administrative Department/Government have no comments to offer, the
draft para already prepared should be treated as final after obtaining the approval of
the Pr. Accountant General. The copies thereof with a copy of the letter containing
the acceptance of the Administrative Department/Government should then be sent to
the Report Section. If any comments necessitating a change in the original para are
received from the Administrative Department/Government, orders of the
Pr. Accountant General in the matter should be obtained and copies of the para, as
finally adopted sent to the Administrative and Finance Department as also the Report
Section (in duplicate). A copy of the correspondence which is exchanged with the
Government/Department should also be sent to the Report Section.
(f) If any abnormal delay is apprehended in any individual case, the paragraph
should be finalized making it factually correct. According to the instructions
contained in the Punjab Government Finance Department Circular letter No. 7755-8-
50/6016, dated the 30th November, 1950 and Government of India, Finance
Department Office Memorandum No. F.II(8) F II/46, dated the 25th April, 1946, the
departments are required to see that the draft paras received from the Pr. Accountant
General are returned to him as early as possible and in any case within a period of six
weeks failing which Audit is at liberty to consider the draft para as final.
(g) A register of Draft Paragraph should be maintained in Form given in
Annexure IV to this Chapter to show the number of Draft Paragraphs issued, cases in
which acceptance or comments have been received, action taken in the remaining
cases and draft paragraphs finalized and sent to Report Section. A monthly report of
this register should be submitted to the Audit Officer/Sr. Audit Officer on 5th of every
month D.P. Section should submit a monthly report of this Register to the
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Pr. Accountant General through the Report Section regarding the number of draft
paras issued, cases in which acceptance or comments have been received and action
taken in the remaining cases.
(h) If in the light of the subsequent developments, any paragraph required
amendments before its incorporation in the Audit Report, the amendments should be
submitted to the Pr. Accountant General for approval and Report Section informed
accordingly. Any development occurring after the Audit Report have been finally
printed, should also be brought to the notice of the Pr. Accountant General under
intimation to the Report Section, so that the up-to-date position of the case may be
available at the time of examination of the Audit Report by the Public Accounts
Committee.
(i) A separate case file should be started in connection with each draft para and
all references relating thereto should be kept in the file.
(j) Some of the draft paragraphs, more particularly Reviews, might be understood
better if supporting maps, charts, sketches, etc. having proper authenticity are given at
appropriate places. This may be kept in view while submitting Draft Paragraphs. It
would of course be necessary to keep in view the point that if maps etc. are to be
printed, it would need clearance from the concerned authorities.
It might also be useful in some cases, particularly in case of reviews to add a
summary at the end of the paragraph. This may also be kept in view when submitting
draft paragraphs.
(Paras 3 & 4 of Comptroller & Auditor General’s letter No. 720. Rep/202-77, dated 2nd September, 1977).
(k) While sending the draft para to the Report Section, the following particulars
should invariably be furnished :-
(i) The brief subject matter of paragraph.
(ii) The name of the department, office etc.
(iii)The names(s) of the official(s) responsible for the irregularities.
(iv) The case number in which the papers have been filed
(v) It should be particularly seen that-
(1) The copies of the draft paras, correspondence, etc. are cleanly typed in double space and that they contain no typographical or drafting errors.
(2) There are no abbreviations as far as practicable and sub paras are not numbered, and
(3) The copies are duly attested by the Branch Officers.
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(O/O No. B/100, dated the 14th October, 1954 issued by the Appropriation Section).
(l) The draft paras, duly approved by the Group Officer (Inspection Civil) should
be routed through Report Section before submission to the Pr. Accountant General.
(O/O No. B/104, dated 8th November, 1954)
(m) After a para has been approved by the Pr. Accountant General all subsequent
correspondence in connection therewith exchanged between the Administrative
Department and Audit should be invariably shown to him through Report Section
expeditiously in every case.
(Authority Officer Order No. B/6 dated 4th may, 1959)
(n) The Audit Reports are treated as confidential documents till these are
presented to Parliament. Accordingly, while sending the draft paras, which are also
considered as confidential to the Comptroller & Auditor General of India or to the
Government for approval/verification of facts, and the subsequent correspondence
thereto, these should invariably be marked as confidential in order to maintain
secrecy.
(Comptroller & Auditor General’s letter No. 1752-Rep/256-68, dated 2nd September, 1968)
Draft para on rush of Expenditure
7.4 The Financial rules require that expenditure is evenly phased throughout the
year as far as possib le. But, in practice, much of the expenditure is incurred towards
the end. The disproportionate expenditure during the last three months, with
particular emphasis on expenditure in March, may be highlighted in Chapter II with
reference to the flow of Governmental expenditure during the year. Specific mention
may be made of departments in which this type of distortion is pronounced. While
doing so, due allowance would have to be made for factors like expenditure incurred
earlier but adjusted in the accounts towards the end of year (e.g. for supplies) as also
expenditure due towards the end of the year (e.g. interest payments. loan repayments,
interest on G.P.F) etc. Apart from presenting the broad picture, it would be desirable
to include specific comments on the causes and consequences of the rush of
expenditure like non-finalisations of proposals resulting in money being drawn and
remaining unutilized and payments being made before receipt of goods.
(Copy of D.O. letter No. 1053-Rep/104-80, dated 28th/30th June, 1980 from Shri G.B. Singh, Addl. Deputy Comptroller & Auditor General (Report) to Sh M.Y. Priolkar, Accountant General, Punjab, Chandigarh)
139
Outstanding Audit Observations and Inspection Reports
7.5 The last Chapter in the Civil Audit Report gives statistical information on the
number and amount of Audit Observations pending settlement and the number of
Inspection Reports and paragraphs outstanding. A paragraph on outstanding Audit
Observations and Inspection Reports should be prepared for inclusion in the Civil
Audit Report in the following manner:-
(i) Besides giving the total number of outstanding Inspection Reports and the
total number of unsettled paragraphs, the department wise and age-wise break-up
highlighting the departments having the oldest and maximum number of outstanding
items may also be indicated. Similarly, department-wise break-up of the Inspection
Reports in respect of which even first replies were not received, may also be
mentioned.
(ii) In addition to the statistical material, special review of a few selected
departments/offices may be undertaken and an analysis of the pending Inspection
Reports and paragraphs relating to both Outstanding Audit Observations for this
purpose will be done by the Pr. Accountant General
(iii) Based on such a review, a synopsis of the pending paragraphs may be
prepared under specific and meaningful categories bringing out the implications of the
outstanding items. The irregularities such as non-maintenance of initial records, non-
adherence to the prescribed procedure for dealing with cash, etc. may be specifically
highlighted. Instances where the irregularities have persisted even after having been
pointed out by Audit may also be specifically mentioned.
(iv) The paragraphs containing the Review/Synopsis prepared in the above manner
may be issued to departments/ Government for obtaining their comments, as is being
done for the other draft paragraphs. It is essential to obtain comments of the
Departments/ Government as department replies might not have been received for the
Inspection Reports in many cases. Copies of paragraphs relating to both Outstanding
Audit observations and Outstanding Inspection Reports may be sent to the
Comptroller Auditor and General as and when sent to Government.
(The Comptroller Auditor and General’s letter no. 801-Rep./82-75 II, dated 12th June, 1979).
Expeditious finalization of material for Audit Reports (Central & Civil)
7.6 The objections taken in local audit take long time to finalize for incorporation
in the Audit Report and hence lose their importance by the time they come to the
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notice of the Public Accounts Committee. In order that the major irregularities
mentioned as a result of local audit are incorporated in the Audit Report for the year
following the financial year to which the accounts relate, the following procedure
should be strictly observed:-
The Inspecting Officers should see that the replies to the Audit queries which
are issued to the Heads of Offices, etc., are received within the stipulated period of 3
days and any lapses on this account should be promptly brought to the notice of the
highest officer available on the spot.
The Inspecting Officers should endeavour to have as much of personal
contacts and discussions with the head of the office as possible so that the number of
formal written audit queries is reduced to the minimum. Wherever necessary, the
explanation given by the department during the course of discussions should be
recorded.
Miscellaneous Instruction-
7.7 (a) Material required for the Audit Reports should be sent to the Report
Section in duplicate.
(b) Paise should be eliminated from figures relating to amounts which should be
shown to the nearest rupee except in the case of rates, when a smaller unit may be
quoted.
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ANNEXURE-I
Referred to in para 7.2 (g)
Important Points which can form the subject matter of comments in Audit Reports
1. Administration of grants and control over expenditure
(a) Any notable changes in the arrangement of grants e.g. notable increase or
decrease in their number, their amalgamation and sub-division.
(b) Matters affecting the completeness or accuracy of the accounts.
(c) Any expenditure on a Service which has not been duly authorized in the
schedule to an Appropriation Act.
Note : In the absence of an authoritative definition of the term ‘New Service’, the Pr. Accountant General should be guided by such case- law as may have been evolved by the Committee on Public Accounts concerned, and in doubtful cases he should take the orders of the Comptroller and Auditor General.
(d) Expenditure not in accordance with instructions of Legislature or which
indicates gravely faulty Administration of the grant or appropriation. Any
reappropriation required to be brought to the notice of the P.A.C.
(e) Any expenditure on any object disapproved by the Legislature or requiring but
incurred without retaining its approval.
(f) Any important expenditure incurred without necessary sanction or contrary to
a valid condition or restriction imposed by the Legislature.
(g) Expenditure in excess of the Grant or appropriation.
2. Revenue
(a) Actual realization from additional or fresh taxation as compared with the
forecast at the time of Budget.
(b) Any disproportionate increase in recent years in the cost of collection of taxes.
(c) Non-revision of rates of forest produce etc. sold by Government in the light of
prevailing market prices.
(d) Arrears and any other irregularities in realisation of the revenue.
(e) Delay in issuing detailed rules for collection of taxes after an Act has been
passed by Legislature.
(f) Existence of an efficient Internal Audit System in the major revenue earning
Departments. Review of the results of such internal audit.
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(g) If the amount of extra-ordinary receipts realized by Government every year is
considerable and appears to be a continuous source of revenue this feature of
the revenue position may be elucidated.
(h) Remissions of revenue (except land revenue remissions) and abandonments of
claims to revenue, which are required to be reported to the Audit Office by
Heads of Departments.
(i) Any large claim against a foreign Government, local body or other outside
party which has been outstanding for an unduly long-time.
3. Expenditure
(a) Expenditure not in conformity with the authority which governs it.
(b) Irregularities connected with contracts.
(c) Important items of extraordinary or apparently unnecessary expenditure such
as:-
(1) Ex gratia payments.
(2) compensation paid for damage sustained.
(3) Payments in excess of amounts admissible under a statute, contract or rule.
(4) Payments necessitated by failure to enforce the terms of a contract.
(5) Irrecoverable balances of advance payments made on account of services, etc.
which were ultimately not rendered.
(d) Any uneconomical or apparently wasteful expenditure due to :-
1) the inception of works without adequate investigation of their utility or
feasibility.
2) the execution of works by a Government agency which lacks the ability or the
facilities to execute them properly.
3) the unsatisfactory working of Government Commercial Undertakings.
4) expenditure on schemes and Projects not commensurate with the physical
achievements.
5) Other causes.
(e) Important cases of losses, write off, nugatory or improper expenditure.
4. Debt, Deposits and Remittances transactions
(a) Debt Position of the Government
A consolidated statement of debt may be given and salient features e.g. the
magnitude of debt, expenditure on the service of debt, amortisation, arrangements,
arrears in repayment of debt, etc. may be brought out.
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(b) State of loan records
(c) Arrears in realization of loans.
(d) Acceptance and verification of balances.
(e) Whether the proceeds of loans are expended only on objects for which the
loans were originally raised or to which borrowed money may properly be
applied in accordance with sound principles of public finance.
(f) Review of Reserve Fund-how far the objectives of the funds are fulfilled.
(g) Review of outstanding under suspense and remittance heads.
5. Grants-in aid
(a) Irregularities connected with the Administration and utilization of grants- in-
aid.
(b) Over payments and irregular payment.
(c) Review of the result of audit of bodies or authorities receiving substantial
financial assistance from Government in the form of grants-in-aid and loans
under section 14 and 15 of the Comptroller Auditor and General’s (D.P.&
C.S.) Act, 1971.
6. General
Any irregularity in connection with the withdrawal and disbursement of
money, designed to bring expenditure into closer accord with allotment such as :
(1) Withdrawal of money in advance of requirements, particularly towards the
close of a financial year, and
(2) Postponement of payment which are due and fully matured.
(b) State of initial accounts and delay in submission of accounts by Treasuries,
Public Works and Forest Divisions-the types of irregularities generally committed-
Steps taken by Government to improve the efficiency of working.
(c) Absence of Administrative regulations and procedure sufficient to secure a
proper and effective check upon monetary transactions e.g. Purchase and control of
stores.
(d) Points arising out of a scrutiny of the utilization of Central assistance by the
State Government. They will be reported by the State Accountant General to the
Central Ministry concerned and after obtaining the comments of the Central Ministry,
Pr. Accountant General will propose suitable draft paragraphs for incorporation in the
Central Audit Report.
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Note : Any serious delay in the issue of necessary financial or accounts rules (Statutory or non-statutory) by a Government should receive suitable notice in the Audit Report, unless the Pr. Accountant General considers that the rules to be framed are not so important as to cause any serious loss of efficiency, or is satisfied that there will be no further delay. When making any comments, he should, however, state the cause of the delay, particularly in cases in which it would be unfair to comment without indicating the causes.
145
ANNEXURE II
Referred to in Para 7.3 (a)
OFFICE OF THE PRINCIPAL ACCOUNTANT GENERAL (AUDIT) PUNJAB, CHANDIGARH.
No. ______________________ Dated ____________________
To
The _____________________,
_________________________,
_________________________.
Subject :- _______________________________________________
_______________________________________________
_______________________________________________
Sir,
With reference to your letter/endorsement No. _________________
dated ___________________ I am to request that as required by Rule 2.34 and 2.35
of Punjab Financial Rules, Volume I/Rule 20 and 21 of the General Financial Rules,
Volume I, this office may be furnished as soon as possible with a complete report (in
duplicate) on the subject indicated above showing clearly the following particulars :-
(i) The exact nature of the defalcation/loss and brief description as to how it was
detected (a copy of the loss of defalcation to higher authority may also be
sent).
(ii) The full extent of the loss.
(iii) The actual period covered by the defalcation/loss.
(iv) The defects in or neglect of rules by which the loss was rendered/possible and
the circumstances which facilitated the defalcation/loss.
(v) The names of officials held personally or technically, directly or indirectly and
wholly or partly responsible for the irregularities committed in the case and
the action taken or proposed to be taken against them.
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Note :- In the assessment of personal responsibility in such cases the General
principles laid down in Para I of Appendix I to the Punjab Financial rules, Volume II,
should be followed.
(vi) Whether the case has been judicially tried in a court or not, if so, copies in
duplicate of the judgment thereof may please be furnished. If not, the reasons
for not doing so may be stated and a copy of the police report, if any
furnished.
(vii) The remedial measures adopted as safeguards against such losses hereafter.
(viii) The prospects of the recovery of the loss. The amount of their security taken
from the Government servants at fault or their pay, pension allowances, etc.
withheld and their other property confiscated may be stated. Otherwise,
sanction to the writing off of the loss may be obtained and furnished.
(ix) The progress of the departmental enquiry if conducted and the result thereof.
2. The report may please be submitted to this office in duplicate through the ___
__________________________________________________________.
Yours Faithfully,
Sr. Deputy Accountant General (Inspection Civil Wing), Punjab.
147
No. __________________ Dated _____________
Copy forwarded to the __________________________ ______
______ for information with reference to ______________________ ___________
his letter no. _________ dated ________________ . The letter no. _____ ______ _
___________________________________ dated __________________ from the
________________________________ (and with the request that the above report
along with his comments thereon in duplicate) may please be furnished to this office
at a very early date.
Sr. Deputy Accountant General (Inspection Civil Wing)
148
ANNEXURE III
Referred to in Para 7.3 (b)
OFFICE OF THE PRINCIPAL ACCOUNTANT GENERAL (AUDIT) PUNJAB, CHANDIGARH.
No. ______________________ Dated ____________________
From
The Pr. Accountant General (Audit), Punjab,
____________________ Section.
To
The Secretary to Government, Punjab,
_________________________ Department,
_________________________.
Subject :- _______________________________________________
Sir,
I am to invite a reference to the correspondence noted in the margin
(copies enclosed) and to state that it is proposed to mention the case indicated above
in the Audit Report for the year _______________. A copy of the draft para which
has been registered in this office for this purpose is sent herewith.
2. It is required that the facts stated in the para, may please be verified
and your acceptance thereof communicated to this office within a period of six weeks,
as prescribed in the letter from the Secretary to Government, Punjab, Finance
Department addressed to all Heads of Departments No. 7775-B-50/6016, dated the
30th November, 1950. In case of your reply is not received within a period of six
weeks, the draft para will be treated as final.
3. Action taken or proposed to be taken against the official(s) responsible
for the irregularities/loss of Government money, etc., may also please be intimated.
In this connection a reference is invited to this office letter No. _____________ dated
__________.
4. For facility of reference a copy of the key to the draft para is enclosed.
Yours faithfully,
Pr. Accountant General (Audit) Punjab
149
No. _________________________ dated the ___________________
Copy together with a copy of the enclosures, forwarded to the
Secretary to Government, Punjab, Finance Department, Chandigarh for information
and necessary action.
Pr. Accountant General (Audit) Punjab
No. _________________________ dated the ___________________
Copy together with a copy of the enclosures, forwarded to the Report
Section for information and necessary action.
for Pr. Accountant General (Audit) Punjab
150
Annexure IV
Referred to in para 7.3 (g)
Register of Draft Paragraphs
Seri
al N
o.
Nam
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Dep
artm
ent
Subj
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f Par
agra
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Dat
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app
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Sr. D
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Dat
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Rep
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No.
and
dat
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whi
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sent
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over
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com
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No.
and
dat
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rom
Gov
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Dat
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whi
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by th
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. A
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Dat
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whi
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.A.G
. of
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C.A
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to C
.A.G
. of I
ndia
Rem
arks
1 2 3 4 5 6 7 8 9 10 11 12
151
CHAPTER VIII
GENERAL PRINCIPLES AND PROCESS OF LOCAL AUDIT
GENERAL INSTRUCTIONS
8.1 This Chapter deals with the general rules and principles in regard to the Local
audit of receipts and expenditure. The special rules applicable to individual accounts
or types of accounts are given in volume II of this Manual. They are explanatory of,
supplementary to the rules and instructions contained in the M.S.O. (Audit) and other
appropriate codes issued by the Comptroller and Auditor General. It must be clearly
understood that these instructions represent the minimum that is expected of an
intelligent auditor and should never be construed as limiting the auditor's duties.
8.2 (a) It should not be forgotten that what differentiates a local audit from the
central audit is that the local auditor has access to basic facts and to the men who deal
with them. The auditors should look at everything in a fresh and original way and
when they notice that they repay investigation, they should go into it with
exhaustiveness which will leave no detail unexamined. Some time some irregular
payment or some slight discrepancy is detected in the course of audit and the tendency
is just to embody them in a formal Test Audit Note and there the matter usually ends.
Matters apparently of no moment, if properly pursued may and do lead to the
detection of a large irregularities or of a defect of system liable to lead to fraud and
their value as such must be borne in mind.
(b) Local audit has to regard the detection of fraud as one of its duties. Such
detection is almost impossible except at the verification of the original records. The
local inspections give the expert eye of the trained auditors an opportunity to detect
from the original records suspicious factors which could not come to notice in the
Central Audit Office. Necessary guidelines for dealing with fraud and corruption
(October 2003) as approved during IX ASOSAI Assembly October 20 – 26, 2003
Manila, Philippines may be kept in view during audit of records of any organization.
(Authority: CAG letter No. 283-Audit/M&C/252-2000 dated 8-11-04)
8.3 A pre-requisite to an intelligent examination of account is also a study of the
budgets, annual accounts and the administrative reports of the institution concerned.
The reports of the departmental auditors wherever they exist, should also be studied.
A comparative study of the financial results obtained in more than one institution of
the same kind might also be profitable.
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GENERAL EXAMIANTION OF ACCOUNTS
8.4 (a) The Accounts of assessments and collection of receipts, stores, cash,
measurements, muster rolls, etc., for the entire period covered by the Inspection
should be inspected and examined generally to see that they are maintained and
checked in accordance with the prescribed rules and that the writings do not indicate
any attempt to tamper with the records or to evade the requirements of rules. The
recorded transactions should be surveyed intelligently and, if necessary, doubtful and
abnormal items should be examined closely. Ordinarily, this general examination
should be conducted by the Section Officer/AAO himself and not left to his auditors.
Where subsidiary registers of cash and stores accounts are kept it should be verified
that they are properly maintained and the totals and balances are correctly taken over
to the main registers.
b) The nature of accounts records kept in an office depends upon the nature of
business the department/office has to transact. Nevertheless, every office handling
cash and establishment matters is expected to maintain the following basic accounts
records:-
(i) Cash Book.
(ii) Bill Register.
(iii) Contingent Register.
(iv) Stock Registers.
(v) Service Books.
(vi) G.P. Fund ledger and Broadsheets.
Besides the basic records referred to above, there are other accounts records
which an Audit Party has to see quite frequently during local audit. The most
common records and procedures which have to be scrutinized in local audit are
indicated in this Chapter.
c) In examining various registers, etc., it should be seen in general that :-
(i) the Registers under scrutiny are maintained in the prescribed form.
(ii) the registers are page numbered and a certificate of page counting is
recorded by a responsible officer on the first page.
(iii) all the columns provided therein are correctly filled in.
(iv) the transactions recorded therein are entered in chronological order.
(v) there is no evidence of tampering with the entries or pages of the
registers.
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(vi) There are no overwritings, erasures, etc. all transactions are properly
made by drawing a line through the erroneous entry and inserting a
fresh entry under proper attestation by the competent authority.
(vii) Each register is kept up to date and is reviewed by the competent
authority at regular intervals, as provided in the Rules.
(viii) The recorded transactions should be surveyed intelligently and, if
necessary, doubtful and abnormal items should be examined closely.
(ix) Ordinarily the general examination should be conducted by the Section
Officer/AAO and not left to his auditors.
Detailed Test Audit
8.5 The months, the accounts of which are to be subjected to detailed test audit are
selected by the Group Officer (I-C) and intimated to the Section Officer/AAO
confidentially from time to time. The detailed test audit of the selected month
consists of
(i) audit of the accounts of Receipts.
(ii) examination of the Cash Book.
(iii) Audit of the accounts of Stores.
(iv) examination of vouchers, which are submitted to Central Audit with
original records and with contracts, etc.
(v) audit of all vouchers not submitted to Central Audit.
Audit of receipts
8.6 (a) The audit of receipts of Government revenues entrusted to the
Comptroller and Auditor General under provisions of Section 16 of the CAG's
(Duties, Powers and Conditions of Service) Act, 1971 is conducted by the Revenue
Audit Wing of this office. Petty departmental receipts, in respect of the office locally
audited by Inspection Civil Wing are, however, examined in local audit to see that
general rules regarding the audit of receipts as laid down in Chapter 3 of Section II of
CAG's Manual of Standing Orders (Audit) 2nd Edition – 2002 and Instructions for
grant of receipts to payee as laid down in Rules 82 and 86 of the Compilation of
Treasury Rules are observed by the office inspected.
b) Departmental receipts of the Central and State Government are generally in
the nature of receipts for services rendered or supplies made and issue of licences and
receipts of miscellaneous nature, the sale proceeds of condemned dead stock, etc.
These receipts are at present being checked by audit, while conducting audit of the
154
expenditure of the department concerned. After the enactment of Comptroller and
Auditor General Duties and Powers Act, 1971, the responsibility of C.A.G. in respect
of departmental receipts is as great as in respect of statutory receipts and as such
intensive audit of departmental receipts is necessary for this purpose. in respect of
some types of receipts as a general measure in addition to the check and guidelines
already in practice, our basic aim should be to see whether
(i) The amounts collected as service fees, license fees, etc. are in
accordance with the provisions of the Act and the rules framed there
under.
(ii) The procedure prescribed by Government or any other authority
specified in the Act have been followed.
(iii) Instructions or orders issued by higher authorities have been complied
with.
A few illustrative cases of these types of receipts are given below :-
(1) Receipts under Arms Act.
(2) Receipts under weights and measures enforcement Act.
(3) Receipts under registration of companies, under the Indian Companies
Act, 1956.
(4) Petroleum Concession Fee and Royalties under Petroleum Act.
(5) Permit fees under Bombay Essent ial Commodities and Cattle (Control)
Act.
(6) Inspection fees under the Factories Act.
(7) Receipts from Employees State Insurance Corporation.
(8) Audit fees under Co-operative Societies Act.
(9) Betterment levy.
c) Audit of Receipts consists in seeing that :
(a) sums due are regularly recovered and checked against demand; and
(b) sums received are duly brought to credit in the accounts.
(c) adequate regulations and procedures have been framed to secure an
effective check on the determination of revenue realizable for the
services rendered at the rates if any prescribed and their collection and
the proper allocation of revenue so collected and such regulations and
procedures are observed.
155
(d) where any financial rule or order prescribed the scales or periodicity of
recoveries, there is no deviation without proper authority from such
scales or periodicity.
(e) A register of all recurring and non-recurring demands is kept in
accordance with the rules and the collections are watched against it.
(f) Arrangements for collection are satisfactory and there are no
outstandings requiring special notice.
(g) Payee are invariably granted machine numbered receipts in the
prescribed form, a proper stock account is kept of all receipt books, the
stock thereof is periodically verified, certificate to count of receipt
forms is recorded before a receipt book is issued from stock.
(h) moneys received are brought to account immediately and ordinarily
there is no undue delay in their remittance into treasury.
(i) the return of the counterfoils of used receipt books is properly watched
and the counterfoils are recorded after check to ensure that there has
been no delay or omission in bringing the receipts to account.
(j) there is a system of internal check and the responsibility of conducting
the internal check is entrusted to some responsible official and there is
recorded evidence to the effect that these checks have been exercised.
(CAG'S circular No. 3, letter No. 1320-RW-A/8-73, dated 5-3-73 filed
in OA/Pb/Civil/Receipt).
(k) the receipts are not directly appropriated to departmental expenditure,
except to the extent provided in the rules.
(l) any remissions granted are duly supported with the sanction of the
competent authority.
(m) for cancelled receipts both the original and duplicate foils are on
record.
(n) the amount realised on a receipt has been clearly written in words and
figures. Any indistinct and doubtful entry, should be viewed with
suspicion and further proof regarding the amount actually realised
should be demanded from the office inspected.
(o) the amount realised as per the receipt issued has been correctly noted
in the Demand Register.
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Audit of Demand Register
8.7 The Demand Register should be examined to see that :-
a) all demands have been correctly noted in it;
b) all sums due are received and checked against demands; and
c) the demands are punctually and fully realised.
It should be examined whether the names of all persons from whom taxes, fees
or other revenue are due have been noted in the Demand Register. The register
should, therefore, be checked with any other register, roll or othe r records maintained
showing their names to ensure correctness of the entries made therein. It should
further be seen that the closing balance of the previous demands have been correctly
brought forward, and all amounts shown in the counterfoils of the receipts granted to
the parties have been noted in the Demand Register and also credited in the Cash
Book.
Audit of receipts books
8.8 The stock account of receipts books should be examined to see that -
(i) the number of blank receipt books received agrees with the indent or
requisition sent to the press or other authorities and that all such receipt
books are kept under lock and key by a responsible officer.
(ii) only one book is issued to an individual officer on return of the
previous used up book and the issues are in chronological order.
(iii) the number of receipt forms contained in each book have been counted
and a certificate to the effect recorded on the covering page under the
initials of a responsible officer and all the forms are machine
numbered.
(iv) the issue of a receipt book and the return of a used up book are duly
recorded and acknowledged.
(v) for cancelled receipt form there should be both the original and the
duplicate portions in the receipt book.
(vi) the stock is periodically verified and the closing balance in the stock
account is verified by the Head of the office by actually counting the
numbers of receipts books in hand periodically and a certificate to that
effect is recorded in the stock account.
(vii) the return of the counterfoils of the used receipt books is properly
watched and that counterfoils are recorded after check.
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(viii) Similar verification should be done by the auditors as well.
Audit of cash
8.9 It should be seen that :-
(i) The arrangements for obtaining cash from treasuries and of realization
from other sources and for the custody, payment and accounting
thereof should be examined to see that they are in conformity with the
prescribed rules.
(ii) Moneys received as revenue and creditable to Government are
deposited in full into the Government treasury without undue delay and
without appropriating them to meet departmental expenses which is
strictly prohibited under Rule 7 of the Punjab Treasury Rules.
(iii) No money is drawn from the treasury in anticipation of demands or to
prevent lapse of budget grants.
(iv) Government money is kept in strong treasury chests secured by two
locks of different pattern. All the keys of the same lock should be kept
in the same person's custody and, as a general rule, the keys of one
lock should be kept apart from the keys of the other lock and in a
different person’s custody.
(v) Advances paid for departmental purpose do not remain unadjusted for
unduly long periods for want of accounts supported by vouchers or
refund, as may be necessary.
(vi) Private cash (collection of Cooperative dues etc.) is not mixed up with
the regular cash balance of government.
(vii) Accounts of imprests and Temporary Advances if any, should be
examined to see that they are regularly closed and rendered punctually
every month, and that they are properly examined by the recouping
officer before recoupment.
(viii) Audit of system of cash management by various DDO's.
It has been desired by the Headquarter office that with a view to
examine the system of cash management, our field audit parties while conducting the
audit of various DDO's may ask the DDO's to carry out physical verification of cash.
Keeping in view above orders of the headquarter the audit parties are requested to get
physical verification of cash done by DDO's during the course of audit. Findings of
158
physical verification should be processed to develop comments on the following lines
and incorporated in the LARs.
(i) Whether there is any shortage of cash? The reasons for shortage may be
investigated and reported.
(ii) Whether any advance have been given unauthorisedly to the staff out of
undisbursed cash balances and the purposes for which these advance were given may
also be examined.
(iii) Whether any cash has been held in vouchers?
(iv) Cases where amount was withdrawn from the treasuries but were not entered
in cash book may be examined.
(v) Was the cash physically verified at the end of month by Head of Office?
(vi) Undue retention of heavy cash balances by the DDO's may also be examined.
(vii) Whether there has been any misappropriation and misutilisation of
Government money?
(viii) Any other point which may merit mention in the Report may also be
commented upon.
(O.O. No. WHQ/Inst/3 dated 12-7-99)
Audit of Cash Book
8.10 The Cash Book should be checked in detail for the selected months and for
other months a general scrutiny should be made.
A – General Examination :
General examination of the Cash Book is conducted to ensure that it is being
maintained properly, in the prescribed form and the provisions of rules in this regard
are being observed. It should be seen inter alia that :-
(i) All transactions of receipts and payments are correctly recorded in a
cash book strictly in the order of occurrence and on the dates they
actually took place and attested by the Head of the Office in token of
check.
(ii) The totals of the cash book if not checked by the officer-in-charge of
the cash book are verified by a responsible subordinate other than the
writer of the cash book who initials it as correct.
(iii) The cash book is closed and balanced on the prescribed dates.
(iv) At the end of each month, the cash in chest is verified by the officer in
charge of the cash book who has to mention in his own handwriting
159
and over his dated signatures the cash actually found at the time of
verification and whether the same tallies with the balance appearing in
the cash book.
(v) There are no erasures or interpolations and that errors are rectified
properly.
(vi) Adequate security as envisaged in Rules in respect of the Cashier has
been obtained, accepted by competent authority and relevant document
kept in the safe custody of the department.
(vii) There is no tendency to keep an unduly large cash balance in hand and
that cash in hand of cashiers, etc. does not exceed the amount of
security taken from them.
(viii) A complete account of the permanent advance held, if any, is available
in the cash book, full details of the cash in hand and unrecouped
vouchers are being worked out and clearly recorded whenever the cash
book has been closed.
(ix) The expenditure has not been incurred in excess of the permanent
advance by spending irregularly from departmental receipts or other
undisbursed balances of amounts drawn from treasury for different
specific purposes.
(x) Full details of the money (other than permanent advance) held in the
cash balance are also worked out and recorded in the cash book
whenever the cash book has been closed.
(xi) In the case of undisbursed amount of pay and allowances, the dates of
their withdrawal are recorded and no item is held in hand undisbursed
for more than three months.
(xii) There is no evidence of removal of or tampering with the pages of the
cash book, and that its pages are duly machine numbered; that the
certificate of count of pages contained in a cash book is recorded under
the signatures of the Head of the Office in the fly leaf before bringing
the same in use.
(xiii) The expenditure has not been incurred in excess of the permanent
advance by spending from the departmental receipts which is a serious
irregularity.
160
(xiv) When the cash book is closed at the end of the financial year, it is to be
seen that the permanent advance is fully recouped and does not exceed
the sanctioned amount of the advance.
(xv) In the case of annual audit of accounts having annual periodicity, in
addition to the detailed check of accounts of one month, arithmetic
accuracy of cash book should be checked for one more month selected
as heretofore, at random. This should include checking of the opening
balance for proper carry forward from the closing balance of the
months selected for the scrutiny to the next month. In the case of
biennial or triennial audits and audits in arrears, checking of
arithmetical accuracy of the cash book may be confined to two months
selected for test check.
(Control O.O. No. 17 dated 24-10-85)
Physical verification of cash by audit
8.11 (i) The inspecting officers are not required to verify by actual count the
cash balance of the office inspected. It is, however, not the intention that an
inspecting officer is debarred from verifying the cash of an office, if the
circumstances of any case warrant this. In such a case, the cash verification should be
undertaken as soon as the necessity for the same is felt and this should preferably be
done at a time when the officer in charge is present. The same consideration applies
in respect of surprise inspection too.
(ii) It may, however, be mentioned that if, in any case, the cash balance pertaining
to a cash book is counted, a simultaneous count of all cash balances (with relevant
accounts) in the same office with the disbursing officer or other custodian of the cash
chest is desirable.
(CAG's D.O. No. 70-Admn. 1/54, dated 27th June, 1954).
(iii) Whenever cash is verified, it should be seen that the cash book is written up to
date and all entries should be vouched to the date of verification.
(iv) A note of the count specifying the amount counted both in words and figures,
should be made in cash book or the account concerned and a memorandum, may, if
necessary be drawn up as follows :-
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Previous day's balance as per cash book
Add- Amount received during the day as in the cash book and as verified with reference to the counterfoils of receipts, cheques etc.
Deduct- Payments made during the day as per cash book and as verified with reference to sub-vouchers
Net total =
The amount of cash in hand should agree with this total.
It should also be seen in audit that the Government safe contains nothing but
Government money and Government valuables.
(CAG's U.O. No. 1965-Admn/244-50, dated 28th July, 1951 and D.O. No. 70/Admn.1/54, dated 26th July, 1954).
Accounts of permanent advances
8.12 The permanent advance accounts should be examined to see that :-
i) The amounts of permanent advances held by various disbursing officers are
not in excess of their normal monthly requirements as judged from the expenditure
incurred out of these advances;
ii) These advances are not multiplied unnecessarily by obtaining separate
advance for subordinate officers in the same office who may require petty sums for
their use; and
iii) Where an officer spares small portion of his own advance for use by his
subordinates who may require petty sums, acknowledgements therefor are obtained
and retained properly on record.
Para 3.13.12 of M.S.O. (Audit) 2nd Edition 2002.
Register of valuables
8.13 In the case of offices/departments which receive a sufficient number of
valuables such as bank drafts, cheques, postal orders, etc., it should be seen that all
these valuables are noted in a valuable register maintained for the purpose. The
register should be examined to see that :-
i) each valuable received is entered in this register on the day of its actual
receipt.
ii) full particulars of each valuable, i. e. the nature of valuable, its number and
date, the name of person and office from whom received, the name of the bankers, if
any, on whom drawn, the amount, the purpose of deposit and the reference to the
162
authority under which each valuable has been received is invariably recorded in this
register.
iii) proper and complete reference to remittance is shown against each valuable.
iv) there has been no undue delay in remittances of valuable to treasury for credit
to Government account.
Accounting of non government money
8.14 Where, under any special sanction a Government servant deals with both
Government and non government money, in his official capacity, the government
money should be kept in cash box separate from the non-government money and the
transactions relating to the latter should be accounted for in a separate set of books
and kept entirely out of Government account.
(Punjab Government, Finance Department letter No. 42003-(Fin. Genl.) dated the 9th December, 1935).
It should be seen in audit that orders are observed.
Scrutiny of treasury challans
8.15 Treasury challans should be examined to see :
i) that they are presented to the treasury in the prescribed form and are prepared
in accordance with instructions contained in Rules 92 to 95 of the Compilation
of Treasury Rules indicating full particulars of remittances.
ii) that the authorised official of the treasury or the bank has given a legible
receipt of the amount received over his official stamp and that it tallies with
the amount both in words and figures for which the challan was prepared. It
should also be seen that the Treasury Challans have been signed in full as
required under Treasury Rules.
iii) that the challan by its appearance does not suggest any tampering in the entry
of the amount deposited; and that due precautions are taken in writing the
amount (both in words and figures) to exclude the possibility of a fraudulent
interpolation.
iv) that wherever practicable the signatures of the bank or treasury official signing
the receipt on the challan should be compared with those on other challans,
and the genuineness thereof got confirmed from the Bank or Treasury, if they
differ.
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Audit of expenditure
8.16 The expenditure of Government offices and Departments is audited centrally.
But the accounts and supporting documents consist partly of original records and
partly of copies of original records. The audit conducted centrally is largely
dependent for its efficiency on the degree of care exercised by the departmental
authorities over the accuracy of the original records from which the public account is
built up. The main object of the local audit of the accounts of expenditure, therefore
is :-
i) to review such original records as are not received in the Central Office for
audit.
ii) to test the degree of care exercised by departmental authorities over the
accuracy of such records and to see that they are properly maintained in the
prescribed forms; and
iii) to apply a test audit to such accounts, vouchers etc. as are not audited centrally
or cannot be checked completely except at a local audit.
8.17 (a) Before commencing the audit of expenditure in local audit the budget
estimates and the actual expenditure incurred by the office under various heads of
account should be examined to know the nature and extent of expenditure under each
head of account. It should be seen that the financial rules, delegation of financial
powers and other orders specifically pertaining to the office for regulations of its
expenditure are themselves intravires and that the audit is effectively conducted
against them. The general instructions governing the audit of expenditure are
contained in Chapter 2 of Section II of Manual of Standing Orders (Audit) 2nd Edition
2002. These instructions have to be borne in mind and carefully applied in the audit
of expenditure so as to yield practical and material results
(b) Besides INTOSAI's auditing standards i.e. Basic principles, General
Standards, Field Standards and Reporting Standing which contain the basic postulates
and principles for carrying out of audit work by the auditors may also be kept in view.
The auditing standards of the International Organization of Supreme Audit
Institutions (INTOSAI) which have been adopted with due consideration of the
Constitution of India, relevant statutes and rules for the auditing standards for the
Supreme Audit Institution of India (SAI) are as under:-
The auditing standards consist of four parts:
a) Basic postulates
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b) General Standards
c) Field Standards
d) Reporting Standards
A. Basic Postulates
(i) The basic postulates for aud iting standards are basic assumptions, consistent
premises, logical principles and requirements which help in developing auditing
standards and serve the auditors in forming their opinions and reports, particularly in
cases where no specific standards apply.
(ii) The basic postulates are:
a) The SAI should comply with the INTOSAI auditing standards in all matters that
are deemed material.
b) The SAI should apply its own judgement to the diverse situations that arise in the
course of Government auditing.
c) With increased public consciousness, the demand for public accountability of
persons or entities managing public resources has become increasingly evident so that
there is a need for the accountability process to be in place and operating effectively.
d) Development of adequate information, control, evaluation and reporting systems
within the Government will facilitate the accountability process. Management is
responsible for correctness and sufficiency of the form and content of the financial
reports and other information.
e) Appropriate authorities should ensure the promulgation of acceptable accounting
standards for financial reporting and disclosure relevant to the needs of the
Government, and audited entities should develop specific and measurable objectives
and performance targets.
f) Consistent application of acceptable accounting standards should result in the fair
presentation of the financial position and the results of operations.
g) The existence of an adequate system of internal control minimizes the risk of
errors and irregularities.
h) Legislative enactment's would facilitate the co-operation of audited entities in
maintaining and providing access to all relevant data necessary for a comprehensive
assessment of the activities under audit.
i) All audit activities should be within the SAI's audit mandate.
j) SAIs should work towards improving techniques for auditing the validity of
performance measures.
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k) SAIs should avoid conflict of interest between the auditor and the entity under
audit.
B. General Standards in Government Auditing
The standards common to auditors and audit institutions are:
a) The auditor and the institutions must be independent.
b) The auditor and the institutions must possess the require competence.
c) The auditor and the audit institutions must exercise due care and concern in
complying with these auditing standards. This embraces due care in planning,
specifying, gathering and evaluating evidence, and in reporting findings,
conclusions and recommendations.
The general auditing standards for the audit institutions are that they should adopt
policies and procedures to
a) Recruit personnel with suitable qualifications.
b) Develop and train employees to enable them to perform their tasks effectively,
and to define the basis for the advancement of auditors and other staff.
c) Prepare manuals and other written guidance notes and instructions concerning the
conduct of audits.
d) Support the skills and experience available within the audit institutions, and
identify the skills which are absent; provide a good distribution of skills to
auditing tasks and assign a sufficient number of persons for the audit; and have
proper planning and supervision to achieve its goals at the required level of due
care and concern.
e) Review the efficiency and effectiveness of internal standards and procedures.
Besides, the following audit standards which have ethical significance may be
followed:
� The auditor and the SAI should be independent and should avoid conflicts of
interest with the audited entity on matters that may impair their independence
materially.
� The auditor and the SAI must possess the required competence.
� The auditor must exercise due care and concern in complying with the
auditing standards.
� The auditor should at all times maintain absolute integrity and devotion to
duty.
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� Auditors should not disclose information obtained in the auditing process to
third parties, either orally or in writing.
C. Fields Standards in Government Auditing
The field standards applicable to all types of audit are:
a) The auditor should plan the audit in a manner, which ensures that an audit of high
quality is carried out in an economic, efficient and effective way and in a timely
manner.
b) The work of the audit staff at each level and audit phase should be properly
supervised during the audit; and a senior member of audit staff should review
documented work.
c) The auditor, in determining the extent and scope of the audit, should study and
evaluate the reliability of internal control.
d) In conducting regularity (financial) audits, a test should be made of compliance
with applicable laws and regulations. The auditor should design audit steps and
procedures to provide reasonable assurance of detecting errors, irregularities, and
illegal acts that could have a direct and material effect on the financial statement
amounts or the results of regularity audits. The auditor also should be aware of the
possibility of illegal acts that could have an indirect and material effect on the
financial statements or results of regularity audits.
In conducting performance audits, an assessment should be made of compliance with
applicable laws and regulations when necessary to satisfy the audit objectives. The
auditor should design the audit to provide reasonable assurance of detecting illegal
acts that could significantly affect audit objectives. The auditor also should be alert to
situations or transactions that could be indicative of illegal acts that may have an
indirect effect on the audit results.
Any indication that an irregularity, illegal act, fraud or error may have occurred which
could have a material effect on the audit should cause the auditor to extend procedures
to confirm or dispel such suspicious. The regularity audit is an essential aspect of
government auditing. One important objective, which this type of audit assigns to the
SAI, is to make sure, by all the means put at its disposal, that the State budget and
accounts are complete and valid. This will provide Parliament and other users of the
audit report with assurance about the size and development of the financial
obligations of the State. To achieve this objective the SAI will examine the accounts
and financial statements of the administration with a view to assuring that all
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operations have been correctly undertaken, completed, passed, paid and registered.
The audit procedure normally results, in the absence of irregularity, in the granting of
a "discharge".
e) Competent, relevant and reasonable evidence should be obtained to support the
auditor's judgement and conclusions regarding the Organisation, program, activity or
function under audit.
f) In regularity (financial) audit and in other types of audit when applicable, auditors
should analyse the financial statements to establish whether acceptable accounting
standards for financial reporting and disclosure are complied with. Ana lysis of
financial statements should be performed to such a degree that a rational basis is
obtained to express an opinion on financial statements.
D. Reporting Standards
The following standards apply equally to all these reports with variations in the scope
of these reports.
a) On the completion of each audit assignment, the Auditor should prepare a
written report setting out the audit observations and conclusions in an appropriate
form; its content should be easy to understand, free from ambiguity and supported by
sufficient, competent and relevant audit evidence and be independent, objective, fair,
complete, accurate, constructive and concise.
b) The auditor should issue the reports in a timely manner for use by
management, legislature and other interested users.
c) The audit report may be presented on other media that are retrievable by other
users and the audit organisations. Retrievable audit reports include those, which are
in electronic formats and may be released on the internet.
d) With regard to audit of financial statements, the auditor should prepare a
report expressing opinion on the fair presentation of the financial position of the
audited entity in the financial statement. Form and content of this report and the
nature of opinion is discussed in the following paragraphs.
e) With regard to fraudulent practice or serious financial irregularities detected
during audit or examined by audit, a written report should be prepared. This reports
should indicate the scope of audit, main findings, total amount involved, modus
operandi of the fraud or the irregularity, accountability for the same and
recommendations for improvement of internal control system, fraud prevention and
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detection measures to safeguard against recurrence of fraud/serious financial
irregularity.
f) With regard to Performance or Value for Money Audits, the report should
include a description of the scope and coverage of audit, objective of audit, area of
audit, main findings in respect of the efficiency, economy and effectiveness
(including impact) aspects of the area (subject matter) which was audited and
recommendations suggesting the improvements that are needed.
g) With regard to regularity audits, the auditor should prepare a written report
which may either be a part of the report on the financial statements or the value for
Money Audit or a separate report on the tests of compliance of applicable laws and
regulations. The report should contain a statement on the results of the tests to
indicate the nature of assurance i.e. positive or negative obtained from the tests.
h) Reporting standards constitute the framework for the audit organization and
the Auditor to report the results of audit of regularity or performance audit or
expressing his opinion on a set of financial statements.
i) These standards are to assist and not to supercede the prudent judgement of
the Auditor in making audit observations, conclusions and report.
j) The expenditure 'Reporting' embraces both the Auditor's opinion on a set of
financial statements and the Auditor's report on regularity, performance or value for
money audit and also the reports prepared on periodical inspection of the records of
an audit entity.
Follow up of Audit Reports
(i) Adequate, prompt and proper follow up action by the entity on and in the light
of audit conclusions projected will enhance the effectiveness of audit and promote
public accountability.
(ii) Systems and procedures should be in place and implemented for securing
appropriate conclusions and preventive follow up action on audit reports. In
subsequent audits and otherwise, the Auditor should examine and report whether
satisfactory action was taken on the audit reports.
Report distribution
Written audit reports are submitted by the audit Organization to the
appropriate officials of the Organization audited. Copies are also sent to other
officials who may be responsible for taking action on audit observations and
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conclusions. However, the report is not a public document till it is presented to the
legislature.
Internal controls
(a) Auditors should report the scope of their work on management controls and
any significant weakness found during the audit.
(b) Reporting on management controls will vary depending on the significance of
any weaknesses found and the relationship of those weaknesses to the audit
objectives.
(c) In audits where the sole objective is to audit the management controls,
weaknesses found of significance to warrant reporting would be considered
deficiencies and be so identified in the audit report. The management controls that
were assessed should be identified to the extent necessary to clearly present the
objectives, scope and methodology of the audit. In a performance audit, auditors may
identify significant weaknesses in management controls as a cause of deficient
performance. In reporting this type of finding, the control weaknesses would be
described as the "cause".
The form and content of audit opinion and report.
The form and content of all audit opinions and reports are founded on the
following general principles:
(a) Title. The opinion or report should be preceded by a suitable title or heading,
helping the reader to distinguish it from statements and information issued by others.
(b) Signature and date. The opinion or report should be properly signed. The
inclusion of a date informs the reader that consideration has been given to the effect
of events or transactions about which the auditor became aware up to that date
(which, in the case of regularity (financial) audits, may be beyond the period of the
financial statements).
(c) Objectives and scope. The opinion or report should include reference to the
objectives and scope of the audit. This information establishes the purpose and
boundaries of the audit.
(d) Completeness. Opinions should be appended to and published with the
financial statements to which they relate, but performance reports may be free
standing. The auditor's opinions and reports should be presented as prepared by the
auditor. In exercising its independence CAG may acquire information from time to
time, which in the national interest cannot be freely disclosed. This can affect the
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completeness of the audit report. In this situation the auditor should consider the need
to make a report, possibly including confidential or sensitive material in a separate,
unpublished report.
(e) Addressee. The opinion or report should identify those to whom it is
addressed, as required by the circumstances of the audit engagement and local
regulations or practice. This is unnecessary where formal procedures exist for its
delivery.
(f) Identification of subject matter. The opinion or report should identify the
financial statements (in the case of regularity (financial) audits or area (in the case of
performance audits) to which it relates. This includes information such as the name
of the audited entity, the date and period covered by the financial statements and the
subject matter that has been audited.
(g) Legal basis. Audit opinions and reports should identify the legislation or
other authority providing for the audit.
(h) Compliance with standards. Audit opinions and reports should indicate the
auditing standards or practices followed in conducting the audit, thus providing the
reader with an assurance that the audit has been carried out in accordance with
generally accepted procedures.
(i) Timeliness. The audit opinion or report should be available promptly to be of
greatest use to readers and users, particularly those who have to take necessary action.
The general principle for guidance in the audit of expenditure are :-
i) that a proper vouchers, complete in all respects and in the proper form where
one is prescribed, exists in support of every item of expenditure and bears
evidence of due scrutiny of the claim and 'Pay Order' by the Head of the
Office concerned;
ii) that full detail of each item of expenditure is either recorded on the voucher
itself, or is available in a reliable and recognized subsidiary records;
iii) that the expenditure incurred does not contravene any financial rules and
procedure laid down by the Government and all pre-requisites to the incurring
of expenditure have been complied with;
iv) that there is provision of funds for the expenditure duly authorized by
competent authority;
v) that expenditure is in accordance with a sanction either special or general
properly accorded and is incurred by an officer competent to incur it;
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vi) that expenditure sanctioned for a limited period is not incurred beyond that
period without further sanction;
vii) that the rules regulating the method of payment have been duly observed by
the disbursing officer;
viii) that payments has, as a fact, been made, and has been made to proper person,
and that it has been so acknowledged and recorded in connected records that a
second claim on the same account is impossible;
ix) that the charge is correctly classified and that if a charge is debitable to the
personal account of a contractor, employee or other individual or is
recoverable from him under any rule or order it is recorded as such in a
prescribed amount;
x) that the payment have been correctly brought to account in the original
accounts;
xi) that the expenditure has been incurred with due regard to financial rules and in
conformity with the cannons of financial propriety, e.g. supplies in excess of
requirements have not been obtained, the purchases have not been made at
higher than reasonable prices and the expenditure has been incurred only for
legitimate objects, etc.;
xii) that the rates paid for work done or supplies made are in accordance with any
scale or schedule prescribed by the competent authority;
xiii) that the sub vouchers and acquittances not required to be sent to Audit Office
are on record and are cancelled or so defaced after payment in such a way that
they cannot be used again to prefer a second claim and are not destroyed
before the expiry of the period of preservation;
xiv) that the expenditure has not been incurred to prevent the lapse of budget
allotment or that the charges incurred in the year have not been met from the
budget allotment of the next year.
Audit of vouchers relating to Central Government Employees Group Insurance Scheme/Punjab Government Employees Group Insurance Scheme 1982
8.18 The scope and extent of audit of the transactions relating to the Central
Government Group Insurance Scheme and Punjab Government Employees Group
Insurance Scheme 1982 introduced, vide Government of India, Ministry of Finance
(Department of Expenditure) O.M. No. F-60/14/77-IC, dated 23-6-77 and Punjab
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Government notification No. 7 (10)-WD (F)-82/6494 dated 2-10-82 has been under
consideration of this office and it has been decided that :
a) the monthly contribution recove red from the employees towards the Insurance
Scheme may be checked, while conducting audit of the pay bills, selected for
audit in the same way as other recoveries like GPF/CPF/CGHS/etc. are
checked during audit of pay bills.
b) the nominations made by the government servants under the scheme and
pasted in their service books may be checked at the time of checking of
Service Book during local audit of the D.D.O's/Heads of Offices concerned.
c) the vouchers relating to insurance payments made to the Government servants
under the scheme may be audited/reviewed to the following extent :-
Percentage of audit/review by
Section Officer A.A.O. Branch Officer i) Vouchers in respect of cash sum payable on
retirement 33 �% 10% 10%
ii) Vouchers in respect of lump sum amo unt payable to the nominees of the Government servant who dies while in service
25% 10% 5%
The quantum of audit prescribed above may be reviewed after a period of two
years and your views intimated to this office.
(CAG secret Memo No. 932 TA 1/168-78 dated 20th September, 1978 filed in File No. OA/Pb/Civil/Dept./Accounts/Vol. I/76-79).
Bill Register
8.19 A Bill Register in the prescribed form (given in Annexure to this Chapter) is
maintained by every officer authorized to draw money from the treasury on bills
signed by him. In examining the bill register it should be seen that :-
i) no bill drawn on the treasury escapes entry in the bill register.'
ii) the bills are entered in chronological order and on the day on which they are
actually signed by the competent officer.
iii) the dates of encashment of bills and the amounts of the bills are correctly
traceable in the cash book.
iv) all the columns provided in the bill register are filled in and the entries made
therein are attested by the Drawing and Disbursing Officer.
v) the register is reviewed monthly by a Gazetted Officer and the results of
review are recorded therein.
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Money order acknowledgements
8.20 Money order acknowledgement may be accepted in audit a sufficient voucher
in support of payment as the payee cannot be compelled to furnish any other receipt
but the nature and particulars of money remitted should be written by sender after the
words printed "Received the sum specified" before the money order is issued or by
the payee when signing receipt of the amount remitted.
Value payable covers
8.21 Value payable covers may be accepted as sufficient for audit purposes in lieu
of receipts from actual payees for amounts paid on account of articles received
through the post office per value payable post. The fact of payment should, however,
be supported by a bill or invoice of the payee (firm sending the articles) and payment
endorsed on the covers by the disbursing officer.
Rush of expenditure
8.22 The expenditure brought to account during the month of March of the last
financial year should be scrutinized to see :-
i) that the charges against the appropriations of the year, as brought to account,
are regular.
ii) that the liabilities of one year are not brought to account in another year; and
iii) that irregular methods of dealing with assets and liabilities of the year have not
been resorted to, which might either have caused actual loss or extra expenses
or might possibly result therein or be otherwise not conducive to financial
efficiency.
8.23 The irregularities liable to occur after accounting heavy expenditure at the end
of a year are :-
i) Payments charged off in the accounts but not actually made to the parties
concerned at the time;
ii) Payments made before the work or service representing the payment is
performed.
Audit of Stores and Stock Accounts
General
8.24 (a) Audit of Stores and Stocks accounts kept in any office or Department is
conducted in pursuance of provisions contained in Section 17 of the Comptroller and
Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 and is
directed to ascertaining that the departmental regulations governing purchase, receipt
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and issue, custody, condemnation, sale and stock taking of stores are well devised and
properly carried out. Important deficiencies in quantities of stores held or any grave
defects in the system of control detected in audit are brought to the notice of the
Government.
(Para 2.4.3 of the CAG's MSO (Audit) 2nd Edition 2002 )
(b) Detailed instructions with regard to the audit of stores and stock kept by
various offices or departments are contained in Chapter 4 of Section II MSO (Audit)
2nd Edition 2002.
Stores and Stock Accounts
8.25 The accounts of stores should be generally examined to see :-
i) that they are kept in the prescribed form;
ii) that entries of receipts of all stores purchased or otherwise obtained and of
their issues are made in them as transaction actually occur;
iii) that issues are supported by requisitions and indents approved by the proper
authority;
iv) that proper acknowledgements of the recipients exist;
v) that an accurate and detailed account of consumption of consumable stores, is
maintained by the indentors to whom these stores are issued;
vi) that where a scale has been prescribed by Government or other authority for
issue of stores of any particular kind, the same has not been exceeded;
vii) that some official is held responsible for checking that this is done properly
and for seeing that balances are worked out correctly;
viii) that the accounts of balances which were audited in the previous inspection
have been produced complete in all respect and that no entries in them have
been tampered with;
ix) that all transactions and balances in the stock registers, ledgers have been
attested by a responsible officer;
x) that stores are periodically counted, weighed or otherwise examined, and a
certificate to this effect recorded in the stock registers by some responsible
official, other than the custodian of stores or his subordinates and verified with
the balance in the stock book; and that necessary action has been taken to
adjust the surplus or shortages noticed as a result of the verification;
xi) that the system of verification adopted by the Executive is adequate and
proper;
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xii) that the staff responsible for the verification of stores is independent of the
staff entrusted with the custody of stores or for keeping their accounts;
xiii) that a reserve limit of stock has been fixed by Government or other competent
authority;
xiv) that the balances in hand does not exceed the limit, if any, prescribed by
competent authority and is not in excess of requirements for a reasonable
period;
xv) that adequate action has been taken to survey, segregate and arrange for the
disposal of surplus, obsolete and unserviceable stores;
xvi) that where a period account is maintained -
a) the stores are priced with reasonable accuracy and the rates initially fixed are
reviewed from time to time and revised where necessary so as to bring them
within the market rates;
b) the value accounts tally with the accounts of works and of departments
connected with stores transactions that the total of the valued account agrees
with the outstanding amount in the general account; and that the numerical
balance of stock materials is reconcilable with the total of value balances in
the account at the rates applicable to the various clauses of stores; and
c) the value of the balance of stock is worked out at reasonable rates within the
current market rates and includes cost of storage, etc. and it agrees with the
value deducted from the account for which purpose and adjustment entry may
be made if necessary;
d) the value accounts as a whole are correct and the allocation of the debits to the
various heads of the accounts for the cost of stores issued is correct;
e) there is a certificate recorded in all stores registers or ledgers, etc. signed by a
responsible officer, that the articles in stores have been periodically counted or
otherwise physically verified with the balance shown in the accounts;
f) steps are taken for the adjustment of profits or losses due to revaluation, stock
taking or other causes, and that these are not indicative or any serious
disregard of rules.
Stocks books
8.26 The Principal points to be looked into in auditing the Stock Books are :-
i) see that the stock books are maintained in the prescribed form and correctly
written up;
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ii) see that the transactions are recorded in the stock books as soon as they occur;
iii) see that all purchases made and articles received from other sources have been
duly recorded in the stock books;
iv) see that a distribution list of Government property/stores, especially of
furniture is maintained to show its distribution amongst the various officers
and sections in the office/institution;
v) see that all losses are duly recorded immediately as they occur or brought to
light and formal sanction of competent authority is obtained in this respect;
vi) see that the periodical verification/valuations/reviews are duly carried out and
certificates to this effect 'Recorded in Stock Books';
vii) see that articles are not held in excess of the requirements of reasonable period
and that report of surplus articles classifying them as serviceable/
unserviceable/obsolete, is made to the competent authority as and when
noticed;
viii) see that unserviceable articles are written off under the orders of competent
authority and duly disposed of. Credits of sale-proceeds of such articles sold
should be verified;
ix) see that library and furniture registers are properly maintained and that
periodical examination and verifications are duly made and certificate to this
effect recorded on the register;
x) see that service stamps purchased from the Treasury are duly entered in the
stamp register;
xi) see that the pages of stock books are machine numbered and a certificate of
page count is recorded therein by a responsible officer;
xii) see that the closing balance of previous year/stock book have not been
tampered with and carried over to the current year's stock book;
xiii) see that all stores when received are examined, counted, measured or weighed
as the case may be, before delivery is taken and are entered in the appropriate
stock register after verifying that the quantities are correct, their quality is
good and they are according to the specification where prescribed;
xiv) see that full particulars of all stock articles are entered in the stock registers as
are sufficient to identify the articles;
xv) see that for all stores transferred to other offices there are proper
acknowledgements on record in support thereof;
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xvi) see that totals and closing balances have been correctly worked out and there
are no erasings/overwritings etc.
Audit may call attention to cases of uneconomical purchase of stores and to
any losses which may be clearly and definitely attributed to the defective or inferior
nature of stores which were accepted and certified to be satisfactory in quality. In
respect of stores stocked in excess of requirements leading to locking up of
Government money a list of such stores indicating the date of purchase and value
should be obtained duly attested by the officer in charge. Where maximum limits are
not prescribed the average of the actual consumption during the previous three years
may be taken as the fair basis for working out the maximum limit of stores to be
maintained in an office and the quantum of surplus stock worked out. In some cases,
overall position of stock may be considered as satisfactory. In some of the component
parts comprising the overall stock may remain stagnant and unmoving, thus resulting
the locking of Government money. Such items of stores should be taken into account
for working out stores stocked in excess of requirements.
Registers of immovable property
8.27 The Section Officers/AAO should pay adequate attention to immovable
property registers and conduct an effective audit of property records with a view to
safeguard the financial interest of Government. In this connection the instructions
contained in Rule 16.7 of PFR Vol. I may be strictly followed and the following
further points should be kept in view at the time of local audit of the various offices :-
i) that the registers of Land and Buildings are maintained in the prescribed form,
and are correct and upto date.
ii) that the cost of residential buildings shown in the registers agrees with that
shown in the last Capital and Revenue Accounts for such buildings.
iii) that the cost of land, fittings and installation has been shown separately from
that of the cost of the buildings.
Lands
(a) It should be verified in the case of purchase of lands whether the procedure for
the acquisition of land through Land Acquisition Officers was followed.
(b) Whether mutation deeds have been obtained and are on record.
(c) In case lands have got any Agricultural Cultivation, fruit trees, gardens, etc. it
should be looked into whether the receipts realized therefrom are properly
accounted for.
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Buildings
(a) In the case of buildings leased out to private individuals and Government
servants on rent, it should be ascertained that the rents are being properly
realized and there are no outstanding arrears.
(b) It should be seen that proper estimates for annual repairs (special and ordinary
repairs etc.) prepared and repairs are carried out.
(Authority: Comptroller and Auditor General's letter No. 83-Admn/1/152-61, dated the 11th January, 1962)
Registers of forms
8.28 In case of registers of Forms, besides other checks, special care has to be taken
in the scrutiny of stock account of saleable forms, license forms, or the receipt forms
to ensure that no such forms are issued without realisation of the cost thereof which
should be traceable in the Cash Book.
Stationery Registers
8.29 It should be seen that :-
i) All purchases of stationery and stationery received from the Controller of
Printing and Stationery, Chandigarh or Stationery office, Calcutta during the
period of audit has duly been accounted for in the stationery register.
ii) Issues of stationery articles are regulated by the sanctioned scale and all
issues, are bona fide.
iii) Periodical inspections and verifications are made in accordance with
instructions contained in the Stationery Manual.
iv) Totals and closing balances should be checked.
Registers of Telephones and trunk calls
8.30 In local audit it should be seen that the instructions issued by the Government
regarding the expenditure on official as well as residential telephones are being
followed and the registers meant for keeping records of calls made, bills paid for
telephone calls etc. are properly being maintained in forms prescribed for the purpose.
It should be seen that :-
i) All trunk calls have been made under proper authority and signed by the
person making the call.
ii) Dues have been paid without delay.
iii) In case of private calls necessary recovery has been made, and credited to
Government. The receipts may be traced in cash book.
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iv) The bill may be checked with trunk call register to ensure that the trunk calls
have been recorded and over charging if any has not gone unnoticed.
Accounts of securities
8.31 It should be seen that :-
i) that security is taken as required under rules from persons entrusted with the
custody of cash or stores and from contractors for works and supplies; and is
in the form prescribed by the Government;
ii) that security deposits are covered by a properly executed bond or agreement
setting forth the conditions under which the security is held;
iii) that Government paper tendered as security is taken at its market value and
that a readjustment is made if there is subsequent depreciation in value;
iv) that the register of the receipts and disposal of securities is properly
maintained and that all entries since last audit are correct, and specially that
acknowledgement of depositors for return of securities exist against the
corresponding entry of receipt.
v) that the register as well as securities are examined at least once a year by a
gazetted officer of the Department.
vi) that either the securities or the acknowledgement of their authorized
custodians (vide Government Securities Manuals) are produced for inspection;
vii) in the case of Post Office Saving Bank Pass Books see also that they are
hypothecated to the Head of the Office for the full amount of security required
and are kept in his custody;
viii) that in the case of recovery of security deposits from subordinates in
installments the monthly installments are regularly recovered, and correctly
accounted for in Government account and promptly deposited into the Post
Office Saving Bank and the prescribed registers are maintained correctly;
ix) securities and security bonds are kept in safe custody according to the rules in
this regard and are not released without specific orders of a competent
authority.
Audit of Contingent Expenditure
8.32 The audit of contingent expenditure requires a detailed knowledge on the part
of the auditor of the rules and orders governing the transactions of the department
whose account is inspected. All financial rules, delegations and orders affecting
expenditure and the other transactions subjected to audit, must be scrutinized before
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the audit of transactions which they govern is conducted. This should be done with a
view to seeing that they do not conflict with the orders of any higher authority and in
case they have not been separately approved by a competent authority, the issuing
authority possesses the necessary powers. If these powers are clearly defined it
should be ascertained that the orders defining the powers are exactly obeyed in every
instance.
8.33 In partial modification of the existing procedure laid down vide Headquarter's
office circular No. 16-Admn-II/86 issued vide No. 794-Audit-II/284-85 dated 21-5-
1986 regarding collecting, segregating and transmitting the original paid vouchers to
the field audit parties for check with reference to the records of the auditee
organisations, a revised procedure of sending a copy of list of payments and also
schedule of drawals for the selected months to the field parties is laid down for
verification during the course of audit of the auditee organisation for effective
implementation as under :-
i) the requisition for list of payments etc. will be sent to D.C. section of the
office of the A.G. (A&E) in time by OAD Headquarter.
ii) After receipt of documents from A.G. (A&E), OAD Headquarters will
photocopy them as required and send them to field parties in accordance with the
programme. The original list of payments etc. should be returned to the D.C. Section
thereafter.
iii) In cases where documents are not received by OAD, parties before the audit
commences, they should prepare the list of drawals/receipts from the treasury for
verification of transaction with the records of DDOs viz. Cash Book etc.
The above procedure will apply to Civil Audit only excluding Public Works,
first where existing procedure for sending vouchers would continue.
(Authority: Comptroller and Auditor General's letter No.642-Audit-II/87-87 (ii) dated 27-5-92)
Audit of Contingent Registers
8.34 The contingent register should be examined to see :-
i) the contingent register is maintained in the prescribed form.
ii) no bill for contingent expenditure drawn at the treasury is left unentered in this
register.
iii) charge represented by each sub-voucher is correctly entered in the column
provided for the head to which it relates.
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iv) appropriation for each head of contingent expenditure has been noted at the
top of the column allotted to it.
v) progressive totals of all columns are struck monthly.
vi) that it is an accurate record of the contingent expenditure incurred in cash as
well as by book adjustment.
vii) that charges are recorded properly under the detailed heads of contingent
expenditure and no items have been omitted.
viii) that each entry is initialed by the drawing officer; and
ix) that total expenditure during the year under each head of classification does
not exceed the allo tment noted at the top respective columns.
8.35 while generally reviewing the contingent register, particular attention should
be paid to bills of heavy amounts, which should be intelligently and carefully
examined in detail after linking with other bills for similar items of expenditure.
Audit checks to be applied to Contingent Expenditure
8.36 (a) (i) It should be seen that all sub vouchers pertaining to the contingent bills
relating to the months selected for detailed check, as are not submitted to Audit Office
are made available to Audit.
ii) See that the rates paid agree with the rates given in the approved quotations
contracts, agreements, etc., executed for the supply of material purchased.
iii) Where acknowledgements of payments are received in advance and the actual
payment are made subsequently, separate acknowledgements of payees are
obtained at the time of payment. Such subsequent acknowledgements need
not be stamped, if the acknowledgements obtained in advance are already
stamped.
iv) Where a single stamped receipt is obtained from a payee in acknowledgement
of payment against more than one voucher at a time, a preference is tiven on
all concerned vouchers and the total amount of such vouchers agrees with the
amount for which acquaintance is obtained.
v) See that all paid vouchers and sub vouchers are stamped 'PAID' or so
cancelled as to prevent a second claim being preferred against the Government
on the same score.
vi) Cash Memoranda from tradesmen are not taken as sub-vouchers unless they
contain an acknowledgement of receipt of money and are affixed with stamp
where the amount paid exceed is Rs 500.00 In cases where
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acknowledgements cannot be obtained, the cash memoranda should be
stamped 'PAID' and initialed by the Drawing and Disbursing Officer.
vii) See that all vouchers for purchase of stores bear certificate by the competent
officer regarding entry of stores in the relevant stock register indicating the
page number of the stock register. Such voucher also bear certificate of the
competent authority to the effect that the quantities of stores received are
correct. Their quality good and they are according to the approved
specifications, where prescribed.
viii) See that there are no erasures, over writings or alterations of total amount of
the bill written in figures or in words. Corrections, if any, are properly
attested by the disbursing officer and the amount of bills tally with the actual
payees receipts.
ix) See that suitable notes regarding payments having been made on various sub
vouches are also kept on the relevant purchase orders, indents and invoice/bills
to prevent double payments.
x) See that where Sales Tax has been paid it was payable on the stores purchased
under the provisions of Sales Tax Act and that the tax paid was in accordance
with the specific provisions of the Act and the amount paid was correct.
xi) Records relating to the under mentioned items of contingent expenditure, if
any, should also be scrutinized in accordance with the rules, orders,
restrictions or scales laid down by the State Government:-
a) Purchase/repairs of bicycles for office use.
b) Conveyance hire charges.
c) Hire of office furniture, electric fans, heaters, coolers, clocks and call bells etc.
d) Rent for accommodation for office or residential.
e) Staff paid from the contingencies.
f) Purchase of stationery articles.
g) Entertainment/light refreshment.
xii) See that every public office exercises the same vigilance in respect of
contingent expenditure as a man of ordinary prudence would exercise in
spending his own money and that the rules regarding the preparation of
vouchers as laid down in rule 269 to 278 of Punjab Treasury Rule, Part I are
observed by the Drawing Officer (Rule 8.34 PFR Vol. I).
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xiii) See that the charges are of obvious necessity, are made at fair and reasonable
rates and previous sanction for any special item requiring such a sanction has
been obtained.
xiv) It should be seen that every payment is supported by a payment order signed
by the head of the Office or disbursing officer serving under his authority in
this behalf under Note 1 below Rule 269 to 278 of Punjab Treasury Rules
Part I. The payment order should specify the amount payable both in words
and figures and that all pay orders are signed by hand and in ink. Every
payment should be acknowledged by the payee and dated. When the
acknowledgement on a voucher is given by a mark or seal or thumb-
impression it should be seen that it has been attested by a responsible officer.
xv) See that all payments for sums in excess of Rs 500/- bear a revenue stamp and
has been defaced unless they are exempted from stamp duty.
xvi) Check all payments with vouchers. Those vouchers which sent to the office of
the Accountant General (A&E), Punjab, in accordance with the Rule 8.2 (III)
of the PFR Vol. I should be obtained from the office. Necessary procedure in
this behalf has been laid down in paragraph 4.17 of this Manual. If any
voucher or sub-vouchers, which under the aforesaid rule, should have been
submitted to the Accountant General are found to have been retained, the
reasons for their retention should be enquired and their submission insisted
upon.
xvii) See that sundry ruling in Chapter VIII of PFR Vol. I and Appendix 9 of PFR
Vol. II are observed and that the powers of sanctioning expenditure on various
matters delegated in the book of financial powers have not been exceeded.
xviii) See that liveries, boots and warm clothings to peons and other inferior servants
are supplied subject to the conditions in the rules for the supply of liveries, etc.
contained in appendix X of PFR Vol. II.
xix) See that the purchase of typewriters, duplicators and duplicating machines, as
well as stationery are made in accordance with the rules contained in the
printing and stationery manual and that typewriters are not hired for a period
exceeding two months without the previous sanction of the State Government
in the Finance Department.
xx) In the case of labourers employed at daily or monthly rates see that muster
rolls have been duly maintained and written up daily by the official immediate
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in charge, checked periodically by the supervising officer and that a certificate
in terms of note 5 is recorded by the disbursing officer. Check the entries in
the Muster rolls with daily reports, if any, submitted by the official in
immediate charge to the disbursing officer showing on what work each
labourer was employed on a particular date.
xxi) see that (i) each item of payment has been recorded in the contingent register
and is initialed by the Head of the Office or other Gazetted Officer authorised
in this behalf (PFR 8.15 and Rules 269 to 278 of Punjab Treasury Rules Vol. I
Part I (ii) that the amounts of work bills posted in the Contingent Register and
included in the total is initialed by the disbursing officer (S.T.R. 4.55 and Rule
8.21 of PFR Vol. I (iii) that progressive totals of expenditure are made from
month to month and do not exceed the budget allotment noted at the top of the
register under cash head (Para 8.17 of PFR Vol. I (iv) that sub vouchers are
properly numbered.
xxii) see that (i) the permanent advance is recouped whenever it is running short
and in any case at the end of each month (STR 4.47) (ii) the amount of the
permanent advance is not in excess of monthly requirements and larger than
absolutely necessary (para 2.8.4 of PFR Vol. I) and that only petty contingent
expenditure is met out of it except as provided in notes 2 and 4 of Rule 2.8 of
PFR Vol. I.
xxiii) see that subordinates who have been given advances out of the permanent
advance of the Head of the Office submit acknowledgements at the transfer of
charge and in April each year to the Head of the Office and that the latter
submits one to the Accountant General (A&E) in respect of the total
permanent advance held by him (Rules 2.8 of PFR Vol. I).
b) The following points should also receive attention :-
i) that the flow of expenditure is even (Rule 8.26 of PFR Vol. I) and that if
expenditure is unusually large in March, it does not lead to financial
irregularities.
ii) that the expenditure is within the available appropriation and that all steps
have been taken by the drawing officer with a view to obtain an additional
appropriation if the original has either been exceeded or is likely to be
exceeded (Rules 8.24 of PFR Vol. I)
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iii) an appropriation is intended to cover all the charges including the liabilities of
past years, to be paid during the year or adjusted in the accounts of it. It is
operative until the close of the financial year. Any unspent balance lapses and
is not available for utilisation in the following year. It should, therefore, be
seen that no money is withdrawn from the treasury to prevent the lapse of
budget grant (Rule 17.19 of PFR Vol. I).
iv) all charges incurred must be paid and drawn at once, and under no
circumstances they may be allowed to stand over to be paid from the grant of
another year (Rule 17.18 of PFR Vol. I).
v) that no money is withdrawn from the treasury unless it is required for
immediate disbursement (Rule 2.10 (b)(5) of PFR Vol. I).
vi) that charges which are inadmissible or in excess of the sanctioned scale have
not been sought to be concealed by showing them under contract
contingencies or by splitting them into two or more different bills or classes.
vii) that telephone connections have been made with the sanction of the State
Government.
viii) that remittances to places where there are treasuries or Sub-treasuries have
been sent by Government Bank Drafts or Cash Orders whenever rules permit
and money order fee is not unnecessarily spent. (Rules 11.10 to 11.14 of PFR
Vol. I).
Audit of Purchases
8.37 Purchases are examined to see that :
i) They are properly sanctioned by competent authority and are made subject to
usual restrictions, regarding the existence of necessary appropriations and to
any monetary limits and other conditions prescribed generally or in regard to
specific articles or class or articles as laid down in the Schedule V and
Annexure thereto of Delegation of Financial Powers Rules 1978.
(Rule 101 of G.F.R.)
ii) The instructions governing purchase of stores as laid down in rules 102 to 105
of G.F.R. and Punjab Government letter No. 14/130/78-61B/425 dated
29-2-1978 (Annexure I) are followed so as to ensure that they are made in the
most economical manner in accordance with the definite requirements of the
public services and the purchase orders are not split up to avoid the necessity
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for obtaining the sanction of higher authority with reference to the total
amount of the order;
iii) In so far as can be ascertained from the purchase files, demands of other
indenting officers received at the time of purchase have been bulked together,
as far as possible, to secure the advantage of bulk supply rates, etc. and the
total quantity in respect of all the individual contracts issued against the
bulked indents does not exceed the quantity of bulked indents;
iv) Whether purchase has been effected by single tender or negotiation. If so,
whether sanction of the competent authority has been obtained and reasons
recorded for resorting to this method of purchase;
v) All tenders were opened on the due date and numbered and intialled with date
by the officer opening them;
vi) The comparative statement duly signed is on record and has been checked
with original tenders;
vii) Whether any delayed/late tender has been incorporated in comparative
statement and considered, and whether orders of the competent authority have
been obtained to the consideration and acceptance of these tenders;
viii) The lowest offer has been accepted. If not, the difference between the lowest
offer and the offer accepted and the reasons recorded for rejecting this lower
offer should be examined. It should also be seen whether the reasons are
adequate. When favourable quotations are rejected on the ground that the
capability of the firm was not tried before hand it should be seen if the matter
regarding placing of a trial order with a view to secure economy in future
purchases have been considered and appropriate action taken;
ix) The successful tenderer has not indirectly derived an advantage over the other
tender by the insertion of special conditions which have the effect of raising
the rate quoted by him;
x) The purchase price accepted is within the required limit of the estimated price
of the indentor and if not, it should be examined whether confirmation about
the availability of additional funds was obtained;
xi) Suitable security as also sanction of the competent authority has been
obtained.
xii) No stores of defective and inferior nature are accepted and certified to be
satisfactory in quality.
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(Para 2.4.4 of MSO (Audit) read with para 3.7.18 of MSO (Audit) 2nd Edition 2002.
xiii) The specifications indicated in the quotations agree with those shown in the
notice inviting tender/quotations.
xiv) That the articles against Government requirements were purchased from
approved sources i.e. Jail factories/Institutions/Indian Red cross Society
Punjab State Branches run by Department/State Government. In the event of
non availability the articles were purchased against rate contracts if available
otherwise made local purchases within his competency.
(Controller of Stores Punjab letter No. 40553 dated 2-12-91 and Punjab Government letter No. 1/210/98-23/8502 dated 1-6-98).
Check of Service Books
General
8.38 (a) The local audit party should obtain from the office inspected the sanctioned
strength of gazetted/non-gazetted staff under various categories as also a list of staff
employed there against on the date of commencement of audit. It should be
ascertained whether service books for all Government servants in employment are
maintained. In case service books for some of them are not maintained reasons
therefore should be ascertained. With the discontinuance of Annual Establishment
returns the service books are the only document for the verification of service for
pensions and as such adequate attention should be paid during local audit to the
verification/check of service books. The list of staff members obtained from the
office inspected and the list of service books checked in the course of local audit
should be attached with the Audit and Inspection Report. A separate Test Audit Note
(in duplicate) on the check of service books should be prepared on the spot, issued to
the office inspected and copy thereof sent to vetting section along with audit note.
Audit checks
(b) In the audit of service books it should be seen that :-
i) the service books are maintained in the prescribed form;
ii) each service book is maintained for a Government servant from the date of his
appointment and is kept up-to-date.
iii) all entries on the first page of the service book are complete, particularly the
date of birth, and are attested at least after every five years.
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iv) every step in the Government servant official life is recorded in his service
book and each entry is attested by such superior officer as may be authorised
in this behalf;
v) the official concerned signs his name in the relevant column of the service
book in token of his scrutiny and acceptance of entries made in his service
book;
vi) the period of suspension from employment or any other interruption of
service; is promptly recorded in the service book with full details of its
duration under attestation of authorised officer.
vii) certificates of verification of service are recorded in each service book by the
Head of Office. Where, however, the official was on foreign service, similar
certificate is recorded by the audit officer in respect of the period spent on
foreign service;
viii) except in the case of clerical error, no alteration in the date of birth once
recorded in the service book is made without sanction of the head of the
department.
ix) entries in pay columns agree with those shown in office copies of pay bills for
the month or months selected for detailed audit;
(CAG's letter No. 928-Admn.II/349-61, dated 26th June, 1962 filed in TM I/II-I/Inspn. (Ares/61-62-63).
x) increments have been granted correctly after excluding periods not counting
for increment and where efficiency bar is prescribed in a time scale of pay the
next increment is not granted without obtaining a certificate of fitness to cross
efficiency bar granted by a competent authority;
xi) all leave sanctioned to a Government servant is recorded in his service book
and the debit thereof is traceable in the leave account;
xii) no pay is allowed to a Government servant from the date of superannuation or
on the expiry of a term of extension of service sanctioned by a competent
authority. Condition, if any, of passing of departmental examination, before
grant of Annual increment may also be kept in view,
xiii) the certificates regarding verification of antecedents as also of medical fitness
are recorded in the Service book;
xiv) the Service Books selected for check should include those of all Government
servants who are due to retire during the next five years. The check envisaged
189
in para 3.3.7 of MSO (Audit) 2nd Edition 2002 should also be exercised during
local audit.
xv) audit checks of pay fixation cases of Group A & B Officers may be exercised
to the extent of 8� % of pay fixation cases.
(CAG letter No.352-Audit/M&C/227-2003 dated 31-12-2003)
The Service Books checked should bear an audit endorsement duly signed by
the Section Officer/A.A.O. under his dated signatures in the following forms:-
"Certified that the entries in the Service Book regarding verification of service with
reference to pay bills and acquittance rolls have been checked upto ……………. and
the defects noticed have been incorporated in the Inspection Report/Test Audit Note".
Check of Leave Accounts
8.39 The following procedure should be followed in checking the leave accounts :-
a) The total number of employees gazetted/non-gazetted in the office visited
should be ascertained with reference to the gradation list, establishment bills
or other records. This will enable the auditor to make sure that all service
books and leave accounts have been put up for inspection.
b) The object of inspection of leave account is mainly to educate the local
officers to maintain these accounts correctly and to discover any mistakes with
a view to their ultimate rectification. The auditors should not make any
corrections or alterations in the leave accounts themselves but get them
corrected by the office concerned, but when these cannot be got corrected on
the spot, these should be incorporated in objection memos.
c) (i) The leave accounts of the persons likely to retire before the next inspection
should be selected first and checked carefully, thereafter those of men who
have taken long leave and finally of men who have taken leave rather
frequently.
(ii) If for any reason the service records of persons, due to retire before the new
audit falls due are not put to audit, AAO/Section Officers will furnish a list
showing the names and designations of such persons to Inspection Civil
Headquarters in duplicate along with the draft inspection report and will also
incorporate the fact of non production of such records in the Test Audit Note
specially instructing the office concerned to send relevant service books to the
Audit Unit concerned directly for necessary checking.
d) It should also be seen that :-
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i) Leave accounts are maintained in the prescribed form in all cases.
ii) Credits afforded to leave accounts are correct.
iii) The leave debitable to leave accounts are correct.
iv) Balances have been correctly worked out.
Check of increment certificates and record of arrear payments
8.40 The increment certificates of Government servants whose names are omitted
from pay bills under rule253 of Sub Treasury Rules Part-I Vol. I should further be
verified to see that notes of the arrear claims due to increment, revision of pay
sanctioned retrospectively, supplementary claims in respect of allowances etc., of
Government servants whose names do not appear in the pay bills, vide Rule ibid are
duly kept in the office copies of the original bills for the period to which the arrears
pertain.
(T.M. Section Endst. No. T.M. 1/2/9/58-89-60/1160 dated the 24th September. 1959).
Check of tenders and comparative statements
8.41 The tenders received and the comparative statements prepared should be
examined to see :-
i) that the widest possible publicity was given for calling the tenders and due
(Sufficient) period of notice was allowed;
ii) that tenders have been received on the prescribed forms in sealed covers;
iii) that all tenders bear the dated initials of the officer opening them.
iv) that the rates quoted by the tenderer have not been overwritten or changed
without attestation by the tenderer and have been correctly transcribed in the
comparative statement;
v) that comparative statements have been duly checked and approved by the
competent authority and contain his orders about the tenders accepted;
vi) that a complete and regular stock account of receipt and consumption of blank
tender forms has been kept.
vii) that the sale proceeds of tender forms have been correctly accounted for in the
books and promptly credited to Government Account.
viii) That the lowest tender has been determined by working out the cost of all
items of work or supplies on the basis of an estimated quantity of work to be
done or supplied and not merely by usual comparison of the tendered rates,
without reference to the cost of work or supplies involved.
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Check of contracts and agreements
8.42 The audit has power to examine contracts and to being to the notice of the
proper authority any cases where competitive tenders have not been sought or where
high tenders have been accepted or where other irregularities have come to light.
Standing contracts should be reviewed occasionally and if audit has reasons to believe
that the rates accepted in those contracts are considerably higher than the rates
prevailing at the time of review such variations should be brought to the notice of the
competent authority. The general checks to be exercised in the course of scrutiny of
contracts or agreements are detailed in paragraphs 3.7.1 and 3.7.21of the Comptroller
and Auditor General's Manual of Standing Orders (Audit) 2nd Edition 2002. The
contracts and agreement should further be scrutinized to see that :-
(i) that the terms of contract are precise and definite and there is no room
for ambiguity;
(ii) that standard form of contracts have been adopted, wherever possible,
and as far as possible legal and financial advice has been taken in the
drafting of the contracts;
(iii) that the terms of contract once entered into are not varied without the
previous consent of the competent authority;
(iv) that the contracts are placed only after tenders have been openly
invited and in cases where the lowest tender is not accepted, reasons
therefore have been recorded by the officer competent to accept the
tender;
(v) that in case where formal written contract is not made no order for
supplies etc. has been placed without at least a written agreement as
regard to price;
(vi) that provision has been made in contracts for safeguarding
Government property entrusted to a contractor;
(vii) that deviation from conditions of contracts are duly authorised by the
competent authority.
(viii) that no payments outside the strict terms of the contract or in excess of
contract rates have been made without the consent of the competent
authority;
(ix) that, as far as possible, legal and financial advice has been taken in the
drafting of contracts and before they are entered into;
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(x) that no contract involving an uncertain or indefinite liability or any
condition of unusual character is entered into without consent of the
competent financial authority;
(xi) that in selecting the tender to be accepted the financial status of the
individual and firms tendering has been taken into consideration in
addition to all other relevant factors;
(xii) that when a contract is likely to endure for a period more than five
years, it wherever feasible includes a provision of an unconditional
power of revocation or cancellation by Government at any time after
the expiry of six months notice to that effect;
(xiii) the contract or agreement has been signed by an authority which is
competent to enter into the contract;
(xiv) if the acceptance of tender provides full payment to a party other than
the contracting firm/supplier, a power of attorney is already registered
on the books of the office;
(xv) there is no omission of any important clause, e.g., inspection of stores,
dates and place of delivery, despatch instructions, name of consignee,
penalty for delay etc.
(xvi) the provisions for the payment of Sales Tax, Excise Duty, etc. should
be checked with reference to the instructions issued by the Government
from time to time. Vague provisions such as 'Sales tax will be paid, if
legally leviable' should be objected to and the contracting officers
asked to state in definite terms whether sales tax, excise duty, etc. are
payable, and if so, at what rate and on what amount.
(xvii) acceptances of tenders placed in the later part or fag end of a financial
year should be specially scrutinized and any tendency to rush of
expenditure brought to notice.
(xviii) the contract has not been made by or on behalf of a minor;
(xix) the security deposit in the appropriate form and of correct amount has
been deposited within the period stipulated in the contract and that in
the event of default, penalties leviable under the conditions of the
contract have been enforced;
(xx) all the conditions and requirements printed on the contract form have
been complied with;
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(xxi) if the contract has been entered into with a firm, each one of the
partners has signed all the documents constituting the contract and if
any partner be absent, these forms are signed by his duly constituted
attorney.
Verification of remittances to treasury
8.43 (a) The State Government had required all the subordinate offices to carry
out monthly reconciliation of the departmental figures of receipts remitted into the
Treasury with the treasury figures so that discrepancies in the amounts remitted and
the amounts credited by the Treasury may not remain unreconciled and frauds or
embezzlements of receipts may not remain undetected. For this purpose these offices
are required to maintain “Remittance Book”. At the end of every month, the Head of
office should prepare a consolidated receipt and forward the same to the Treasury
Officer for signatures. The Treasury Officer will send back the consolidated receipt to
the Head of the Office after affixing his signatures thereon in token of acceptance or
pointing out the discrepancies, if any.
Detailed instructions in this regard issued by the Punjab Government are
incorporated in Annexure II to this Chapter.
b) It should be seen during local audit whether the `Remittance Book is being
maintained in the offices inspected and whether monthly verification with the treasury
records is being made. With a view to facilitate early detection of embezzlement of
moneys, if any, by entry of fictitious remittances in the Cash Book, the Comptroller
and Auditor General had decided that during local audit, credits for the receipts
entered in the Cash Book for the months selected for detailed check should be verified
directly from the books of the treasury. The Section Officer/AAO should have a list
of remittances in respect of the selected months prepared from the entries in the Cash
Book. He should then arrange to have the credits verified from the books of the
treasury by deputing an auditor whenever necessary.
The verification should be made in respect of all remittances made by the
office inspected during the months, selected for detailed check, including those made
at sub-treasuries. As every sub-treasury is required to render a daily sheet
accompanied by challans in support of receipts and as these daily sheets are extracted
from the initial records maintained at sub-treasuries, it will be sufficient if the
remittances made at sub-treasury are verified in the District Treasury from the sub-
treasury returns. In case the verification to be made relates to one sub-treasury and
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the sub-treasury is situated in the same station as the office locally audited the
verification may be made in the sub-treasury.
(C.A.G.`s letter No. 1986-Admn/1/425-52, dated 23rd July, 1953 and No. 2465/Admn. 1/425-52, dated 6th September, 1953).
(c) Discrepancies coming to notice of the Section Officer/AAO in the course of
the above verification should be investigated and the discrepancies which are not
satisfactorily reconciled should be reported in the Audit and Inspection Report. The
Section Officer/AAO should furnish alongwith the Audit and Inspection Report a
certificate to the effect that the amounts deposited into the treasury by the Head of the
office during the months selected for detailed check (months to be specified) as
recorded in the Cash Book have been verified with the Treasury Records and agree
with the same or discrepancies have been reported in the Audit and Inspection Report.
Verification of withdrawals from the treasury
8.44 The withdrawals made from the Treasury by a Drawing Officer as recorded in
his cash book should be verified at the time of local audit with the entries of those
transactions, in the Treasury Officer records. For this purpose the local audit party
should call for copies of the Treasury payment Schedules for the months selected for
the detailed check from the Audit Unit concerned. The requisition for these schedules
should be sent by the Section Officer/AAO well in time so that the requisite copies of
schedules are received by the local audit party before the actual commencement of an
audit. In case, copies of schedules are not received, the local audit party should
prepare list of withdrawals from the cash book and verify it with the Treasury records.
This list duly verified and audit observations in regard to discrepancies, if any, should
be sent to the Audit Unit concerned for further necessary action. The discrepancies
noticed in the two sets of figures should be investigated and the items remaining un-
reconciled should suitably be commented upon in the Audit and Inspection Report.
A certificate of verification of withdrawal should also be furnished by the
Section Officer/AAO with the Audit and Inspection Report submitted to
Headquarters.
Check of log books of Government vehicles
8.45 (a) A list of Government vehicles including staff cars, jeeps, station wagons
and trucks, etc. should be called for in local audit from the office inspected. It should
be ascertained whether rules and regulations regarding their use and maintenance
have been framed and got approved by the Government. It should also be examined
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whether these rules are being observed in actual practice. It should further be seen
whether the fo llowing essential records are maintained:-
(i) Log Books for each Government vehicle.
(ii) A record of repair and replacement indicating the cost and the dates on which
carried out and of spare parts.
(iii) A record of cost of petrol etc. consumed and all incidental receipts and
expenditure.
b) The log books of Government vehicles should be examined to see-
i) that the log books are maintained in respect of each vehicle in the prescribed
form;
ii) that the vehicle is used only for bonafide public purposes permissible under
the rules and orders of Government and not for any private purposes without
the orders of the competent authority.
iii) That full details of all journeys undertaken are recorded covering the mileage
done, places visited and relevant miles in meter recordings;
iv) that in the case of authorised private or non-official journeys the charges
recoverable, at the prescribed rates, have been recovered and credited to
Government;
v) that the purpose of journey is always recorded in detail under the signatures of
the official using the vehicle, counter signed by controlling officer of the
vehicle;
vi) that all issues of petrol, mobil oil and other lubricants and consumable stores
are duly recorded in the log books;
vii) that the log books are closed after the prescribed periodical intervals and
average number of kilometers run per liter of petrol or diesel oil is worked out;
viii) that the yield of the kilometer per litre is not unduly low and where it is so the
causes, leading thereto should be investigated;
ix) that the petrol in tank of the vehicle is periodically verified by dip stick
measurements or by any other standard method of estimation and a certificate
recorded in the log book;
x) that a kit of equipment and tools kept with the driver of the vehicle is entered
in the log book;
xi) that full details of all repairs to vehicle and replacement of parts are duly
recorded in the log book;
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xii) that in cases where frequent repairs to vehicles, engines or replacement of
some parts have been carried out, they are not indicative of any foul play;
xiii) that a stock account of the condemned and replaced parts and accessories is
maintained and their final disposal has been made to the best advantage of
Government
xiv) that entries made in the log books are in ink or copying pencil;
xv) that entries of mileage at the start of journey as also at the Completion of the
trip are noted in the log books by the officers using the Government vehicle, in
their own hand writing and these entries have been signed by such officers;
xvi) that all officials journeys outside the headquarters or jurisdiction of the vehicle
(s) are supported by written sanction of the competent authority;
xvii) that Government vehicles are not used for non-duty purposes to places of
entertainment, public amusements, parties and pleasure trips etc. and by
officers on leave.
c) The records of repairs and replacements kept in the log books or separately
should be examined to see:-
i) that the cost of repairs and replacements is not on the high side;
ii) that the replacement of some part/parts is/are not repeated in quick succession;
iii) that the reasons for frequent repairs/breakdown of Government vehicles are
not such as to indicate negligence of the drivers or laxity of control;
iv) that such repairs and replacements have been executed either by Government
workshops or by authorised dealers or garages in accordance with the orders
of Government or Transport Commissioner in this behalf;
v) that the replacement of parts, for which a life has been prescribed i.e engine,
tyres, etc. have been made only after completion of the prescribed life;.
vi) that the vehicles have been periodically tested and inspected by the Transport
Department.
(d) The inventory of equipment is scrutinised to see that it is checked by the
Controlling Officer every month and losses, if any, due to negligence or fault are
promptly recovered.
Audit of establishment pay bills
8.46 Office copies of Establishment Pay bills obtained by the local audit party from
the DDO`s concerned are checked in local audit to see that:
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i) there is proper and legally valid acquittance for each amount disbursed duly
stamped where necessary and the amounts are disbursed to the persons entitled
to receive them.
ii) an amount of undisbursed pay and allowances is kept in a register and
accounts remaining undisbursed for three months are refunded either in cash
or by short drawal from subsequent bills.
iii) arrears of pay, allowances, leave salary etc. are not drawn through regular
monthly pay bills but are drawn in separate bills and a note of payment of
arrears in the office copies of the bills for the period to which claim pertains is
being made;
iv) disbursements made are traceable in the Cash book on the dates on which they
are actually made.
v) Where pay and allowances are remitted through postal money order it should
be seen that the commission due/paid on the money order has been deducted
from the amount remitted and that the money order acknowledgment
containing the nature and particulars of remittances and the period to which
pertain, are on record with the Department and compare with the remittances
shown in records.
vi) The bills relating to Class IV Government servants and such class III
Government servants whose names do not appear in the pay bills under the
orders of competent authority are audited in the Central audit to see that the
number of employees for whom pay has been drawn agrees with the sanction
strength of the establishment. The nominal check which consists in comparing
the rate of pay of each individual drawn in the bill is correct cannot be
exercised in Central Audit since the pay of such employees from time to time
is not recorded in the Fly Leaf of the audit register. In respect of such bills the
nominal audit should be conducted in local audit with the help of service
books.
Test check of T.A. bill in regard to counter-signatures
8.47 The countersignatures of the Controlling Officers of the T. A. Bills are taken
as sufficient proof that they have, before countersigning, fulfilled the responsibility
entrusted to them. With a view to ensure that the duties assigned to the controlling
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officers in respect of T.A Bills are properly exercised by them, the T.A. Bills in the
offices/institutions visited by them should be test-checked by the local Audit parties
on the following lines:-
i) that stations which could conveniently be visited in one continuous circuit
were visited on different occasions necessitating more than one journey from
Headquarters in the same direction;
ii) that claims to travelling expenses for journeys performed by special means of
conveyance were only paid in cases where the journey had actually been
performed by such special means of conveyance and that were the good
reasons for using the latter;
iii) that there is adequate evidence on which the Controlling Officer has been
satisfying himself regarding the necessity, frequency and duration of journey
and halts. It should also be seen that where the journey was performed by a
State Conveyance, necessary recovery at prescribed rates for the use of the
conveyance has been made in cash or deducted in the bills.
The results of this test-check and the cases in which the controlling officers
did not discharge the responsibilities assigned to them should be incorporated in the
audit and inspection note of office concerned
Inspection Civil Wing (Headquarters) will keep a record of cases of failure of
Controlling Officers, noticed during local audit and report them to control Section in
the first week of April each year for onward transmission to Comptroller and Auditor-
General of India.
(Office Order No. B/42, dated 24th November, 1959)
Audit of T.A. bills
8.48 While auditing travelling allowance bills it should also be seen that:-
i) travelling allowance advance drawn by individuals are adjusted promptly and
in full and that a second travelling allowance advance is not drawn before an
account of the first advance is received.
ii) Travelling allowance bills not preferred within one year from the date on
which they become due (i.e. the date following the date of completion of
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journey in respect of which the claim is made) are not entertained and the
travelling allowance advance granted in relation thereto are recovered in full.
iii) Legally valid acquittance of the person entitled to receive the payment has
been obtained in accordance with the provisions of Rule 283 of the
Compilation of Central Treasury Rules.
iv) Amounts in respect of travelling allowance bills remaining undisbursed for
three months are refunded in cash or by short drawl from the next bill.
Nominal Audit of Establishment Pay Bills
8.49 (a) Consequent upon the revision of Establishment Audit Procedure, the
nominal audit of establishment has been entrusted to Inspection Civil Wing. It has,
therefore, been, decided by the Comptroller and Auditor General of India that the
nominal audit of the Pay and allowance drawn by the individual should be conducted
during local inspection in the manner and to the extent indicated in the following
paras.
(b) The Inspecting Officers/Section Officers/AAO should include, in separate
para of the Inspection report either in Part-II (a) or (b) or Part-III as the case may be,
the results of Local audit of Establishment, the service books and leave account. The
covering memo of the Inspection Report should indicate clearly the checks exercised
and include a certificate to the effect in respect of nominal audit, audit of increment
certificates, pay fixation on promotion/reversion, check of service books and leave
accounts and check of office copies of bills and acquittance rolls.
Nominal check to be conducted during local inspection
8.50 (i)(a) The nominal check during local Inspection will be conducted in respect
of pay bills of establishment of the month/months selected for test audit (under the
extent instructions in the case of annual inspections, one month is selected for detail
test audit and in the case of biennial or less frequent inspections, two months are
selected for detailed test audit. The months so selected for test audit will be the
months for conducting the nominal check of establishment).
b) The nominal check will be exercised with reference to initial and primary
records containing the authority for the events necessitating the regulation of pay and
allowances of Government servants such as increment certificates sanctioning the
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increment, orders declaring him fit to cross the efficiency bar, orders of
promotion/reversion and fixation of pay on such promotion/reversion, sanctions of
leave and the leave salary, orders of suspension if any and the subsistence allowance
granted to him, general orders of Government governing the pay scales, different
types of allowances admissible and specific orders of Government in regard to grant
of special pay or compensatory allowance to any number of establishment or type of
establishment. For this purpose, the local audit party will maintain a guard file of
general orders governing pay and allowances of establishment. Copies of specific
orders relating to particular establishment should be made available to local audit.
The photo copies of payment for the month selected for audit should invariably be
made available to the local audit parties well in time.
Apart from comparing the pay and allowances drawn by each Government
servant in the pay bills of selected test audit month/months with the corresponding
entries in the pay columns of the service books and checking the acquittance rolls to
ensure that the pay and allowances drawn have been disbursed and acquittances
obtained properly and accurately, the admissibility of pay and allowances drawn for
each individual Government servant in these pay bills should be checked completely
in the manner indicated above.
c) The above checks should be integrated with the check of service books as
already prescribed and when service books are not made available they should be
checked independently with reference to the initia l and primary records mentioned
above.
d) In addition to audit of pay and allowances drawn in the pay bills of
establishment for the month/months selected for test audit in the manner prescribed
above, 20 per cent of (a) cases of increments sanctioned to the members of the
establishment of the office under inspection and (b) cases of fixation of Pay on
promotion or reversion during the period covered by local audit should also be
checked during local inspection.
e)(i) The Inspecting Officers should include in a separate para of the inspection
report either in Part II (a) or (b) or Part-III as the case may be, the results of local
audit of establishment, the service books and leave accounts. The covering memo to
the Inspection Report should indicate clearly the check exercised and include a
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certificate to that effect, in respect of nominal audit; audit of increment certificates,
pay fixation on promotion/reversion, check of service books and leave accounts,
check of office copies of bills and acquittance rolls.
ii) It has also been decided that nominal audit of establishment will be conducted
during the regular local audit of departmental offices and that it is not necessary to
form separate local audit parties nor to prescribe separate periodicity of local audit for
the purpose. In case any departmental office is not subject to local inspection at all
because of smallness of contingent expenditure incurred by that office it should be
ensured that such offices should be subject to local audit at least once in 3 to 5 years
for establishment audit.
iii) As regards the procedure of audit of pay bills of gazetted officers in whose
cases the system of issue of pay slips by audit offices has been dispensed with and
salary and allowances are drawn in the same manner as the non-gazetted
establishments, the existing system will continue. Instructions contained in Chapter 2
titled “Gazetted Government Servants Audit” of CAG”s Manual of Standing Orders
(Edition 2002) shall also be applicable..
Checks exercised in local audit of establishment charges
8.51 (a) Office copies of the establishment vouchers relating to the test audit
month or months selected for check of the initial and subsidiary records kept in the
departmental offices are taken by the Inspection parties fo r checking them with cash
book, office copies of the pay bills, acquittance rolls, treasury bill book etc.
Acquittance rolls and the register of undisbursed pay and allowances are
examined to see that each amount shown as disbursed has been disbursed to the
person entitled to receive them and the arrangement for keeping a proper watch over
the undisbursed amount is satisfactory.
b) Besides, the overtime allowance claims, Children’s education claims,
reimbursement of tuition fees’ claims, T.A. bills, are checked with reference to the
local records kept in the departmental accounts offices to satisfy about the correctness
of the certificates on the basis of which the claims have been drawn and to see that the
rules and regulations in regulating such claims have been followed.
Check of Stamp Accounts
8.52 Stock account of postage stamps should be scrutinised to see that-
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i) Balances of stock of service stamps have been correctly carried over from
previous month or months and that the totals and closing balances have been
correctly worked out during the months selected for detailed check.
ii) All purchases of stamps whether by cheque/contingent bills/cash, made during
the selected months are traceable in the stock register of service stamps.
iii) Balances of service stamps in hand at the end of each month is physically
verified by the competent authority and a certificate to that effect is recorded
in the stock register.
iv) All issues of stamps relating to the registered letters are supported by postal
receipts.
v) Where stamps are issued in bulk to branches/sub-offices of the same office for
use, proper accounts thereafter are rendered by such branches/sub-offices.
vi) Service stamps have been used strictly only for official purposes.
Audit of General Provident Fund Accounts
8.52 (a) General Provident Fund Accounts of the Central and State Government
employees are maintained by the Departmental Officers as per annexure III & IV of
this Chapter.
(b) In the local audit of General Provident Fund accounts of employees, the
Section Officer/A.A.O. shall be responsible to see that the requirements of the
Government of India’s letter, dated 27th June, 1960 and the Punjab Government’s
letter dated 19th May, 1978 are duly complied with by the Departmental Officers who
are responsible for maintaining the accounts. He should further supplement his audit
with reference to the various rules and orders in the General Provident Fund Rules of
the Central and State Government. To make himself conversant with the detailed
instructions and procedure for the maintenance of the General Provident Fund
accounts, the Section Officer/AAO may do well to refer to the relevant G.P.F. Rules.
It should be seen in the local audit of General Provident Fund accounts
whether subscriptions have been properly recovered and credited to the accounts of
the subscribers concerned. Whether interest has been calculated properly and whether
advances and withdrawals from the Fund have been properly sanctioned and
accounted for. It may also be seen that suitable notes regarding receipt of all
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nominations and Insurance Polices have been kept and physical verification thereof
carried out from time to time. Final payment cases should be specifically scrutinised.
It should also be seen that the various provisions of G.P. Fund rules are duly observed
by the Departmental Officers. Local audit should be conducted annually for every
head of office.
(c) The following records are to be checked in local audit:-
i) Index Register and Applications for admission.
ii) Provident Fund Ledger Accounts.
iii) Broadsheet.
iv) Statement indicating the totals of debits and credits for each month.
v) Stock Register of Insurance Policies.
d) Index Register and Application Forms.
These records are checked to see that:-
i) The General Index Register is maintained in the prescribed form No.
PF.II(ATM65) in case of Central Government Offices) and is kept up to date;
ii) the Account number was allotted by the Departmental officer only after
obtaining the application for admission duly supported by a nomination in the
prescribed form. It should also be seen that particulars of member to whom an
Account number has been allotted are noted in the General Index Register and
the Ledger.
iii) for each subscriber there is a nomination or record which has been accepted as
valid by the officer competent to do so. The entries of the nomination form
are attested by the competent officer in the Index Register;
iv) a separate ledger folio is opened for maintaining the account of each
subscriber.
Applications for admission to General Provident Fund are examined to see
that they are obtained in the form prescribed under the G.P. Fund Rules, duly
completed in all respect and no employee whether permanent or temporary except re-
employed pensioner, is admitted to G.P. Fund unless he has been in continuous
service for more than one year.
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e) Nomination of the Subscribers.
It should be seen that nomination in the form prescribed under G.P. Fund rules
has been received from each subscriber and a note to that effect is kept in the General
Index Register and the ledger account of the subscriber. In scrutinising nominations it
should be seen that if at the time of making a nomination the subscriber has a family,
the nomination is not in favour of any person or persons other then the member of his
family as defined in the G.P. Fund Rules.
f) Subscriptions.
i) The subscribers are contributing at the rate of not less than 6 percent of the
basic pay as defined in F.R.9(a)(21) and para 2.44 of Punjab, C.S.R. Vol. I and not
more than their basic pay.
ii) No subscriber is allowed to discontinue subscribing to the Provident Fund
except during leave which either does not carry any leave salary or carries leave
salary equal to or less than half pay or half average pay or during the period he is
placed under suspension.
iii) The amount of subscription fixed by the subscriber is not enhanced or reduced
more than once at any time during the course of a year.
(g) Withdrawals
i) The refundable and non-refundable advances from the Provident Funds are
sanctioned by the competent authority only for the purposes laid down in Rule 15 of
the G.P.F. (C.S.) Rules and relevant orders on the subject.
ii) The temporary advance is refunded in not more than 24 installments or in not
more than 36 installments in cases they exceed three months pay, or equal amount in
whole rupees.
iii) The advances are regularly recovered from the monthly pay bills and that the
interest on the advance is recovered in the following manner.
iv) Audit check of final payment cases/transfer advances may be exercised to the
extent of 25% of such cases
(CAG letter No. 352-Audit/M&C/227-2003 dated 31-12-2003
Interest:- Amount of advance X No. of installments of recovery/500.
h) Interest
i) The interest on subscriptions and withdrawals is allowed at the current rate
prescribed by the Government of India, Ministry of Finance from year to year in the
manner laid down in rule 14 of the General Provident Fund (Central Services) Rules.
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The interest worked out for recovery by the Departmental Officers should be actually
checked by the Section Officer/AAO at the time of local Inspections.
ii) The interest in fractions of a rupee exceeding 50 paise is rounded to the next
higher rupee.
(i) Provident Fund Ledger
The provident Fund Ledger is examined to see that:-
i) the ledger accounts are maintained in the prescribed form;
ii) the name and designation of subscriber, his account number, particulars of the
insurance policy/policies being financed from G.P. Fund and the fact of nomination
having been accepted are neatly recorded on the ledger folio assigned to each
subscriber the entries relating to acceptance of nominations are also attested by the
Competent authority;
iii) the pay of the subscriber as on 31st March each year is noted in the column
prescribed in the ledger;
iv) the subscription to G.P. Fund is not less than 6 percent of the pay of the
subscriber as on 31st March of the preceding year;
v) the G.P. Fund account is maintained in whole rupees;
vi) the head of the office or a gazetted officer nominated by him initials the
Provident Fund Accounts monthly in token of having verified that the amount of
subscription deducted, refund of advances and temporary and final withdrawals are
posted correctly;
vii) sanctions to withdrawal from the General Provident Fund are promptly
recorded in the ledger accounts and the entries made in the ledger are initialled by the
Head of office or a Gazetted Officer nominated by him, while signing the bills for
withdrawal from Provident Fund;
viii) subscriptions and refunds of advances as shown in the G.P. Fund schedules
duly signed by competent authority and the payment of advances and withdrawals as
per vouchers are correctly posted in the ledger accounts of the concerned subscribers;
ix) where balances at the credit of subscribers have been received from other
offices complete details thereof are recorded in the ledger under the attestation of
competent authority;
x) Ledger accounts are closed regularly every year and correct amount of interest
has been credited to the ledger accounts of the subscribers;
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xi) G.P. Fund Accounts statements are issued regularly to the subscribers every
year and their acceptance of the balance noted in their respective ledger account.
xii) General review of ledger cards unposted items, missing credits are to be
checked to the extent of 3% of the account maintained with reference to original
Provident Fund Schedules.
(CAG letter No.352 Audit/M&c/227-2003 dated 31-12-2003)
(j) Broad-sheet
Broad-sheet is examined to see that:-
i) it is maintained in the prescribed form;
ii) it is closed regularly every month;
iii) the total amount of credit booked every month in the broad-sheet agrees with
the total of the G.P. Fund deductions made in pay bills for that month and that the
total of the debits booked in the broad sheet agrees with the total of payment made out
of the Provident Fund in that month as abstracted separately.
iv) at the end of each year the ledger balances are agreed with the broad-sheet
balances and the broad-sheet is squared up to ensure its accuracy.
k) Statement of totals of debits and credits
It should be seen that the statements of totals of debits and credits as worked
out in the Broad-sheet each month are correctly prepared in Form (PF-14) and sent to
the Head of the Department regularly every month.
l) Insurance policies
The facility of financing new insurance policies from G.P. Fund account had
been withdrawn with effect from 17.12.1960. Insurance policies in respect of which
at least one withdrawal has been made from G.P. Fund before 17th December 1960
will, however, continue to be financed from G.P. Fund Account.
The conditions governing financing of such insurance policies from G.P. Fund
are laid down in rules 17 to 28 of the G.P. Fund (CS) rules. It should be seen in local
audit that:-
i) the Insurance policy is one which can, under Rule 17 of the G.P Fund (CS)
Rules, be financed from the provident Fund.
ii) the Policies already financed from G.P. Fund are entered in the Stock Register
of Insurance Policies maintained in Form P.F.R. 13 (ATM 68) under the
signatures of the Head of Office;
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iii) the details of the policies including rate of annual premium, the date of
payment of premium and the stock register number of policy have been noted
on the top of the ledger folio of the subscriber, under proper attestation;
iv) the policies are kept in the safe custody of the head of the office;
v) not more than the amount of annual premium is being drawn from the G.P.
Fund for financing the policy every year;
vi) the policy has been assigned in favour of the President of India and the
assignment has been executed strictly in accordance with the rules and
regulations and that it is good in law.
Note:- Detailed instructions regarding maintenance of G.P. Fund Accounts of Class IV employees by the Government of India,-vide circular letter No. F52(a)-EV/60, dated 27th June, 1960 and by the Punjab Government, vide letter No. 64-OSD(F)-78-17507 dated 19th May, 1978 are incorporated in Annexure III and IV to this Chapter.
m) Interest
i) the interest on subscriptions and withdrawals is allowed at the current rate
prescribed by the Government of India, Ministry of Finance from year to year
in the manner laid down in rule 14 of the General Provident Fund (Central
Services) Rules. The interest worked out for recovery by the Departmental
officer should be actually checked by the Section Officer/A.A.O. at the time of
local inspections.
ii) The interest in fraction of rupee exceeding 50 P. is rounded to the next higher
rupee.
n) Withdrawals
i) the refundable and non-refundable advances from the Provident Funds are
sanctioned by the competent authority only for the purposes laid down in Rule
15 of the G.P.F.(C.S.) Rules and relevant orders on the subject.
ii) the temporary advances are refunded in not more than 24 installments or in not
more than 36 installments in case they exceed three months pay or equal
amount in whole rupees.
iii) the advances are regularly recovered from the monthly pay bills and that the
interest on the advance is recorded in the following manner
Interest:- Amount of advance X No. of installments of recovery/500
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Audit of Pay and Accounts Offices and D.D.O.’s
8.53 1. After the Departmentalization of accounts in Central
Ministries/Departments with effect from 1.10.76 all payments as a general rule made
by the pay and Accounts Office after pre-check except in case of bills paid by the
D.D.O.’s with cheque drawing powers under the powers vested in them. In the later
cases, the Drawing and Disbursing Officers render account duly supported by
vouchers to pay and Accounts Offices who exercises post check. The scope and
extent of pre-check and post check by the P.A.O.’s have been laid down in Chapter IV
of the Hand Book of Accounting Instructions under the Departmentalised Accounting
system.
2. Pending finalisation of the scope of audit of the P.A.O.’s and the cheque
drawing D.D.O.’s of the Ministries/ departments of the Government of India, the
Accountants General were advised vide C.A.G.’s circular D.O. No. 966-TA-1/75-76
dated 1.11.76 to adopt as an interim arrangement, the same scope and extent of audit
as was being applied by the Director of Audit, Commerce, Works and miscellaneous
in regard to P.A.O.’s of the department of Food, rehabilitation and supply where the
separated accounting system was established in 1953. After taking into consideration
cent per cent checks applied by P.A.O.’s to the various categories of bills and the
quantum of checks and general reviews of accounts records by the internal Audit
organisation of each Ministry/ Department it has been decided to revise scope and
extent of audit of the departmentalised Pay and Accounts Officers and cheque
Drawing Officers. It has also been decided that local audit of Pay and Accounts
Office be directed towards testing the adequacy and efficiency of Internal checks and
checking the efficiency and effectiveness of working of systems.
3. The quantum of check prescribed for audit parties are grouped under the
following categories:-
i) Checks to be exercised on the transactions relating to the month selected.
ii) Checks to be exercised in respect of cases and records covering the period
since last inspection.
iii) Checks to be exercised for examining the efficiency of the working of Internal
Audit units.
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iv) Review of Central records.
While the annual audit of Pay and Accounts Offices can take care of the first
three categories referred to above, an horizontal inspection for critical review of all
the central records in the Pay and Accounts Offices under each Ministry can be under
taken with advantage once in three years for in depth examination.
4. At present audit of sanctions to the payments of grants in aid is done in the
main office and audit of payments is done in the Pay and Accounts Offices and check
of utilisation and audit of effectiveness of expenditure is conducted in the office of the
sanctioning authority. For this purpose P.A.O's can be asked to give voucher wise
details of the grants paid in a year so that audit under Section 13 and Section 15 can
be done with the advantage in the offices of the sanctioning authority.
5. Audit of contingencies can be effective only by an intelligent scrutiny of the
transactions with the purchase files and other related documents available in the
offices of the D.D.O.’s. A list of important and heavy transaction under contingencies
should be prepared from the records of P.A.O.’s during local audit for further audit of
transactions. In view of the disposal of records in the P.A.O.’s and D.D.O.’s for the
same type of transactions a equential local audit of the P.A.O.’s and D.D.O.’s as far as
possible would be preferable.
6. The Drawing and Disbursing Officers with cheque drawing powers act on
behalf of the P.A.O.’s in discharge of the functions. The paid folios (cheques) and
original vouchers are with the Pay And Accounts Office concerned. Hence the checks
to be exercised during local audit of these offices (D.D.O.’s) will be of limited scope
and confined to the following:-
i) Verification of the correctness of the net amount drawn and shown in the pay
bills register or office copies of the paid vouchers for the selected month with the
amount noted in the counter foil of the cheques.
ii) Verification of the entries in the Cash Book and other relevant records with
reference to the accounts noted in the office copies of the vouchers.
iii) Verification of the entries relating to the paid cheques in the copies of the
Bank scrolls received by the D.D.O.’s from the bankers with the amount noted in the
counterfoils and;
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iv) Check of other accounts records maintained by the D.D.O.’s with cheque
drawing powers.
7. Taking into account the smaller percentage of checks now prescribed in
duration of audit of Pay and Accounts Offices has been fixed at 12 to 15 days and that
of D.D.O.’s with cheque drawing powers at 3 to 5 days for the limited purpose of
check of amounts records maintained on behalf of the P.A.O.’s.
8. It has further been decided that :-
(a) The present system of local audit of P.A.O.’s and D.D.O.’s with cheque
drawing powers by paripatatic parties should continue. The resident audit parties in
the Lok Sabha, Rajya Sabha, B.S.F. & C.R.P.F. which were set up before
departmentalisation may now be discontinued.
(b) The existing composition of audit parties i.e. double Section Officer party for
audit of Pay and Accounts Offices and single Section Officer party for audit of
D.D.O.’s with cheque drawing powers and the existing gazetted supervision of 50%
will continue.
(C.A.G.’s circular No. 36 TA.I/147-81 dated 14.8.81)
Procedure regarding verification of withdrawal by the D.D.O. of the Ministries/Departments during local audit.
8.54 Prior to departmentalisation of accounts drawals of bills made from the
Treasuries by an office taken up for local audit were verified with original vouchers
available in the Audit Office and for this purpose all the vouchers paid in selected
months in respect of drawing officer used to be taken from the Headquarters by the
inspecting parties for being traced in the initial records. After the departmentalisation
of accounts, the paid vouchers are not available in the Audit Office, but will be finally
recorded with the P.A.O.’s concerned who will retain in their possession, not only the
vouchers paid by them but also the vouchers sent by the DDOs having cheque
drawing powers. A question has now arisen, how audit can satisfy itself whether all
the payments made by the PAOs to a drawing officer, or drawn by a cheque Drawing
and Disbursing Officer have been properly accounted for in the initial records of
drawing officer concerned. The following instructions are issued for this purpose:-
(i) In the case of D.D.O’s with cheque Drawing powers, the counterfoil of
cheques will be available with them, though the paid foils and the original vouchers
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would have been sent to and recorded by the PAO’s concerned. In these cases, the net
amounts drawn as shown in the office copies of the vouchers should first be compared
for the selected months with the amounts noted in the counter- foils of cheques and
after this tally, the entries in the Cash book and other records should be verified, with
reference to the amounts noted in the said office copies. In order to verify that the
amounts in the paid foils of the cheques are not different from the amounts noted in
the corresponding counterfoils, the entries relating to the paid cheques in the copies of
bank scrolls, received by the D.D.O should be verified with the amounts noted in the
counterfoils. If these checks are carried out carefully, audit can be reasonably satisfied
that all the amounts, drawn by the drawing officer have been entered his initial
accounts. Any serious and important discrepancies, during any of the foregoing
checks should be promptly reported by the Inspection staff to the P.A.O concerned for
immediate investigation and report, apart from making the usual mention of such
cases in the Inspection report. Before the local audit of a cheque drawing D.D.O is
taken up, the P.A.O concerned should also be asked to inform audit, before the
commencement of the audit or during its progress, any case of discrepancy, defect or
irregularity noticed by him in the course of his check of the bank scrolls with paid
cheques and of the original vouchers received from the drawing officer. If there are
any case in which cheques have been drawn by the P.A.O and sent to the D.D.O for
disbursement, a list of such cases, during the period taken up for audit should also be
obtained from the P.A.O for being traced in the initial records of the D.D.O’s
(ii) in the case of D.D.O’s without cheque powers, the payments will be made by
cheque issued by the P.A.O’s directly. It will be necessary in these cases to obtain
lists of cheques issued by the P.A.O’s alongwith all relevant particulars for the period
covered by audit in order to enable the local audit party to verify whether all these
cheques have been accounted for in the initial records of the drawing officer.
(iii) The requests for information, lists of payment etc, from the P.A.Os should be
made within a reasonable time before the audit is due to commence.
(iv) In carrying out these checks though the audit may be restricted to a test audit
of the transactions of a month or two, the information about the actual months
selected for detailed audit should not be divulged to the P.A.O or the D.D.O.
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(v) In case where the D.D.O proposed to be audited and the concerned P.A.O. are
under the jurisdiction of different Accountant General, the information etc. required
for the audit of D.D.O in terms of the foregoing instructions, may be directly obtained
from the P.A.O. concerned without routing such requests through the A.G. incharge
of the audit of the P.A.O.
(C.A.G`s letter No. 226-TA-I/75/76/KW/VI dated 23rd March, 1978 filed in the file No. OA/Pb. Civil Deptt./Accounts/Vol.1/76-79.
Procedure regarding local audit of the accounts of the Public Sector Banks (including State Bank of India and its subsidiaries) handling receipts and
payments on behalf of various Ministries, Departments under the scheme for departmentalisation of Union Ministries account
8.55 Under the departmentalised accounting system, the receipts and payments of
each Ministry Department of Government of India are handled by the Public Sector
Banks (including S.B.I. and its subsidiaries) nominated for the particular
Ministry/Department by the Reserve Bank of India in accordance with the
Memorandum of Instructions issued by the R.B.I for the guidance of the Public Sector
Banks concerned, reproduced in Appendix 3 to the `Hand Book of Accounting
Instructions. In para 29 of these instructions provision has been made for a
percentage audit by this department of the transactions under this scheme. The
manner in which the audit is required, to be conducted by this department in the
branches of the Public Sector Banks has been under consideration of this office and it
has now been decided that the following procedure may be followed for the audit of
the transactions in these banks on Government account:-
i) The banks will no doubt be audited by their own auditors who are expected to
cover also the transactions of Government. The scheme does not provide for an
internal audit by the organisation of the Controller General of Accounts, who has also
informed this office that no decision has been taken in this matter so far. The scope of
our scrutiny should therefore take into account these factors.
ii) Since the branches of the Public Sector Banks are discharging more or less the
treasury functions the inspection should be on the lines of treasury inspection in
accordance with the general principles contained in Section VI B of the M.S.O. (T)
Vol. I and Section V.C. of the secret memorandum of instructions regarding the extent
of audit.
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iii) All Public Sector Banks conducting Government business should be inspected
annually by the Civil Inspection parties. The Primary object of inspection by the
Audit Department is to assist the Banks/Government in establishing a system of sound
working strictly in accordance with the prescribed rules. It is thus intended to
supplement the system already existing in these banks. The audit inspections can do
no more than check generally that the rules prescribed by the Government are
observed, apart from any other special enquiries which the Government may desire.
iv) It will be ensured during local audit that-
a) the procedure observed at the Public Sector Banks transacting Government
business meets all requirements of audit and that the accounts are properly
maintained;
b) the scrolls and challans are being despatched in time and credits are being
afforded to the Ministry, Department of office of Government concerned
without any delay;
c) the specimen signature of all drawing officers are properly recorded and are
referred to by the Bank officials before they make the payments;
d) The procedure for dealing with the cheques, the encashment of which is
subject to the limitation of assignments, letters of credit, etc., should be
examined to ensure that the rules are complied with.
At present Civil Inspection parties visit branches of the Public Sector banks
(including S.B.I. and its subsidiaries) in connection with the audit of Public Provident
Fund Accounts, Special Deposits Accounts, and Pension payments. The same
inspection parties should also be entrusted as far as possible with audit of the accounts
of these banks transacting Government business so as to avoid multiple visits to the
banks.
(C.A.G.`s letter No. 349-TA 1/222-78, dated 24th April 1979)
Sending of copies of Inspection Reports to Bank Authorities and Ministry of Finance
8.56 (a) In the case of audit of Public Sector Banks including State Bank of
India and its subsidiaries handling receipts and payments on behalf of various
Ministries/Departments, a copy of the inspection Report may be sent to Public Sector
Bank inspected, with a copy to the Head office/link office of the branch inspected. In
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cases where a particular bank may be having transactions with the departments/offices
of the various Ministries, as such instead of sending a copy of the report to the
Administrative Ministry, a copy of report may be sent to the Ministry of Finance
(Banking Department) in terms of instruction contained in para 7.1.12 of the
Comptroller and Auditor General’s M.S.O. (Audit) 2nd Edition 2002. Half yearly lists
of outstanding paras of the Inspection Reports may also be furnished to the Ministry
of Finance as per instructions issued from time to time.
(C.A.G.`s letter No. 590-TA 11/93-80, dated 17th May, 1980 addressed to Accountant General, Tamil Naidu, Madras)
Note 1:In partial modification of the above orders, it has been decided that separate reports regarding audit of pension payments made by banks may be prepared in respect of each category of pensioner i.e., Central, Civil, Defense, Railways and State and copies thereof may be sent separately to the authorities mentioned below, instead of sending a consolidated report to the Ministry of Finance (Banking Division) besides copies of reports being sent to the concerned branch of the bank as also to the head office/Link office of the branch.
1. Central Civil Pensioners Controller General of Accounts.
2. Defence Pensioners Controller of Defence Accounts (Pension)
3. Railways Pensioners Deputy Director Finance (Accounts) Ministry of Railway, Railway Board. New Delhi.
(C.A.G.`s le tter No. 1470-TA 11/93-80, dated Ist November, 1980).
Note2: In partial modification of the orders contained in Note I, it has been decided that copies of inspection Reports in respect of the pensions paid to Railway Pensioners by the Public Sector Banks may be sent to the designated Financial Advisor and Chief Accounts Officer of the respective area (as per list attached to the scheme of disbursement of pensions to Railway Pensioners by the Public Sector Banks) instead of the Deputy Director of Finance (Accounts), Ministry of Railways as earlier laid down.
(C.A.G.`s letter No. 848-TA-11/17-80 dated 16.7.81)
Note 3:- It has been decided that Reports relating to audit of Direct and Indirect taxes collected at the Branches of the State Bank of India, its subsidiaries and by other Public Sector Banks may also be prepared separately and sent to the under mentioned authorities instead of sending a consolidated report to the Ministry of Finance (Banking Division) in addition to copies being sent to the concerned designated branch of the Bank.
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i) Receipts relating to Income tax
and other Direct taxes
Chief Controller of Accounts, Central
Board of Direct Taxes.
ii). Receipts relating to Central
Excise and Indirect Taxes.
Chief Controller of Accounts, Central
Board of Excise and Customs
(C.A.G.’s letter No. 233-TA 11/27-81 dated 23-2-81).
Note 4: It has been decided that reports relating to audit of Public Provident Fund Accounts and Special Deposit Scheme at the State Bank of India, its subsidiaries and other Public Sector Banks may be prepared separately and copies of such reports may be sent to the (Controller of Accounts), Ministry of Finance, in addition to copies being sent; to the concerned branches of the Bank. The inspection reports relating to reconciliation with Public Sector/Reserve Bank may be sent to the concerned Controller of accounts and Pay and Accounts officers with a copy to the Reserve Bank deposits group of C.C.A`s office.
(C.A.G.`s letter No. 210-TA.I/235/79 dated 27-2-81.)
8.56(b) The recovery of amount, if any, overpaid or erroneously paid to pensioners by
the paying branches which comes to notice during local audit should be watched
through the objection book in the usual manner. The recovery when effected will be
noted in the objection book quoting reference to its particulars appearing in Column 5
of the original payment scroll (annexure IV) furnished to this office by the Treasury
Officer with the relevant monthly accounts. In cases where over-payment or an
erroneous payment becomes irrecoverable and the amount involved is found to have
been paid in excess of the authorised amount or in violation of the instructions issued
to the paying branches by the Government or by the Reserve Bank of India from time
to time, the matter will be taken up with the Reserve Bank of India/State Bank of
India or its subsidiary responsible for reimbursement of pensioner’s payments to the
linked branches of the concerned paying branch (which has made the over- payment)
with copies to the paying branch and its link branch. The former bank (Reserve Bank
of India/State Bank of India) and its subsidiary will ensure early recovery of that
amount and will deduct the same from the subsequent amount to be reimbursed on
account of pensioner payments made by it or by other Paying Branch of the same
Public Sector Bank at the same place. The amount short reimbursed will be
prominently indicated in the debit advice quoting particulars of Accountants General
communication as an authority for the deduction made so as to enable the
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Accountants General to clear the amount from the objection book and will give credit
in the Government accounts on receipt of the copy of the debit advice alongwith the
monthly accounts from the treasury.
(C.A.G.’s letter No. 1074-T-11/34-80, dated 5th January, 1981)
AUDIT OF PENSION PAYMENTS TO THE CENTRAL CIVIL PENSIONERS AND PUNJAB GOVERNMENT PENSIONERS THROUGH THE PUBLIC
SECTOR BANKS.
8.57 The Scheme for the payment of Pension to the Civil Pensioners of the Central
Government through Public Sector Banks was introduced in Punjab with effect from
the pensions for the month of November, 1976 payable in December, 1976, by the
Government of India-vide Ministry of Finance’s letter No. O.M. No.
F10/23(B)/TR/76 dated 11th June, 1976. This scheme was also introduced by the
Punjab Government for its pensioners with effect from the pensions for the month of
July, 1977 payable in August, 1977 vide Punjab Government Finance Department
letter No. 473 OSD(F)/77/15357 dated 13th June, 1977. The audit of pension
payments by Public Sector Banks has been entrusted to the Inspection Civil Wing by
the Pr. Accountant General.
Before taking up the audit of pension payments by the Public Sector Banks,
the Inspecting Officer and the local audit party should study the files containing
orders/instructions issued on the subject in Inspection Civil Wing Headquarters and
make themselves conversant with all the aspects of the scheme and the checks to be
applied in local audit.
INSTRUCTIONS FOR CONDUCTING LOCAL AUDIT ISSUED BY THE COMPTROLLER AND AUDITOR GENERAL
a) The accounts records and registers maintained in the branches of the Public
Sector Banks and also in link branches of the banks making pension payments should
be audited as follows:-
i) Local audit should be done in such a way that it supplements the checks
exercised in Central Audit, while doing so it should be ensured that the provisions of
the scheme are strictly followed by the Public Sector banks. If they are not following
the provisions strictly, they should be asked to do so. Such a check should, inter-alia,
include the following points particularly:-
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a) Income Tax is deducted at source wherever required and certificates of tax
deduction is issued in April each year.
b) Payment is made only upto the date of death of the pensioner and any
over-payment made has been recovered and refunded to Government.
c) Payment of life-time arrears of pension has been made only to the heir of the
pensioner.
d) When a pension ceases to be payable, the P.P.O. is returned by the paying
branch to the Treasury Officer through the link branch after making necessary
entries in the P.P.O. as well as in the records of the bank.
In addition to the above checks with reference to the provisions of the Scheme,
the following checks should also, interalia, be applied.
a) No amendment or change is made in the P.P.O. by the Bank itself;
b) The correct amount of pension has been credited to the pensioner’s account on
the basis of the P.P.O. issued by the Accountant General and received through
the Treasury under proper authorisation.
c) The amount claimed by the link branch of the public Sector Bank from
Government on account of Pension payments agree with the total amount
credited to the accounts of pensioners.
(C.A.G.`s letter No. 2795-T.A. 11/86-76 dated 24th December, 1976)
Audit checks to be exercised in local Audit of Pension Payments.
8.58 The following audit checks should be exercised during local audit of pension
payments made through the Public Sector Banks:-
I CHECKS AT LINK BRANCH:
i) Check all the entries in the bank scrolls brought from the Headquarters in the
Index Register to ensure that there are no discrepancies.
ii) In respect of payments, if any, made directly by Link Branch the checks
prescribed for paying Branch should be exercised.
iii) Ensure that total amount claimed from Government agrees with the total
amount credited to individual ledger accounts of pensioners.
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II. CHECK AT PAYING BRANCH
i) Check that no payment, prior to the date upto which pension has been shown
credited by the Treasury Officer has been made by the Bank.
ii) Check that all the payments of the relevant Bank Scrolls brought from the
Headquarters tally with credits posted in ;
a) the pensioner’s accounts in the ledger; and
b) record of Pension payments in Form Annexure (IV). The payment entries in
the later bear authentication by the authorised officer of the bank.
Note- The exercise of this check in all the paying Branches of the Bank in the District will ensure that the amount claimed by the Bank from the Government agrees with the total amounts credited to the individual ledger accounts of the Pensioners.
iii) Conduct general review of the ledger accounts of the pensioners to see that:-
a) the ledger account is not a joint or either survivor account.
b) Monthly pensions are credited within first seven days.
iv) Income tax is deducted at source and a certificate to that effect issued to
pensioner in April each year.
v) No payment of adhoc relief is made without authorisation from the Treasury
Officer.
vi) Payment is made only upto the date of death and any overpayment made is
recovered and refunded to Government.
vii) Payment of life time arrear of pensions is made only to the heirs.
viii) When pension ceases to be payable, necessary entry is made in P.P.O. and the
same is returned to the Treasury Officer.
ix) No amendment/change is made in the PPO by the Link/Paying Branch of the
Bank.
x) Ensure that procedures as mentioned below is followed correctly:-
a) Life certificate as per Annexure V(i) is obtained in November each year.
b) Declaration in Form Annexure V(ii) is obtained from Central Service Class I
and All India Service Officers in May/November each year regarding
commercial employment.
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c) An undertaking from widow recipients of family pensions is obtained for
reporting re-marriage. In case of other recipients family Pension Certificate of
re-marriage is obtained in May/November each year.
d) Before commencing payments to any pensioner, he is called for identification;
undertaking is obtained regarding recovery of excess payment/credit of
pensions, Specimen signatures or thumb impression is obtained on the
disbursers portion of PPO.
e) After all the pages of P.P.O. are fully used up, the paying branch may add
extra sheet(s) for noting further payments and number of pages available are
noted on P.P.O.
III. DRAFTING OF AUDIT NOTE:
Audit Note should be prepared ‘Link Branchwise/Paying Branch’ in each
District and submitted to Headquarters immediately after the completion of audit.
IV. Norms for conducting local audit of pension payments through the Public Sector Banks, are as under:-
For Paying Branch Time Allowed
1. Upto 25 pensioners Nil
2. Between 26 and 100 Pensioners 1 party day
3. Between 101 to 200 pensioners 2 party days
4. Above 200 Pensioners 3 Party days
For Link Branches
1. Making payment to State or Central Pensioners
2 days
2. Making payments to both State and Central Pensioners
3 days.
(C.A.G.`s letter No. 46-TA 11/1982 issued vide letter No. 663-TA-11/111-82 dated 17.6.82.)
Audit of Public Provident Fund Scheme 1968
8.59 The records maintained in connection with the Public Provident Fund Scheme
transaction in each branch of the State Bank of India and its subsidiary whether
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conducting Government Business or not should be test-checked alongwith the Annual
Audit of the returns of the Banks undertaken for arriving at the cost of Govt.
Business. The local audit of the Public Provident Fund transaction will, however, be
conducted on a selective basis i.e for the purpose, the branches in the State shall be
divided into the following three categories.
Category-I Those having more than 5000 Accounts
Category-II Those having accounts above 1000 but not more than 5000.
Category-III Those having accounts upto 1000.
The information as to the names of the branches falling into the respective
categories will be called for by OAD(C) from the Head office of the banks in the
beginning of each financial year and the selection of the branches for audit purpose
will be made to the extent laid down in (ii) below.
(ii) In respect of the branches falling under category 1 the audit will be conducted
once a year, for category II once in two years and in respect of category III once in
three years.
iii) The quantum of audit to be conducted during local Inspection of the selected
banks should be more or less on the scale prescribed for Employees Provident Fund
organisation vide Annexure to C.A.G.’s letter No. 4222-TA 1/13-66-KW-(I) dated
28.12.67 which is reproduced as an Annexure to this para. The procedure to be
followed during local audit of the individual fund accounts with connected and
subsidiary documents is also indicated in the said annexure.
ANNEXURE
LOCAL AUDIT PROCEDURE
In addition to the check of relevant records right from application for
admission to the fund till the stage of final refund of the amount maintained in the
branches of the State Bank of India and its subsidiaries the individual transaction
should be test checked to the extent of 10% with reference to the statements already in
OAD(C) from various branches. These statements will be supplied by OAD(C)
Inspection Party concerned, local audit will specifically be directed to verification of
:-
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i) The correctness of the amount of interest allowed with reference to the rate
prescribed for the purpose.
ii) The signature of the office of the Bank authorised the payment.
iii) The quantum and manner of the test audit of accounts of employees Provident
Fund Organisation to be applied to the Public Provident Fund Transaction.
1. Audit of individual Fund accounts with connected and subsidiary documents:-
a) One month transaction in 10% of the total number of accounts covering all
factories with a general scrutiny in respect of other months.
b) Calculation of employees subscriptions and the employees contributions
should be confirmed to one month transaction 5% of the total number of
accounts selected relating to all the factories.
c) Calculation of interest should be checked for all previous years since it was
test checked in respect of accounts selected as per (b) above.
d) Scrutiny of the transaction to advance from the accounts selected as per item
(a) above.
e) Check of the nominations in respect of the accounts selected as per item (a)
above.
f) Final payments
i) Below Rs.1000 5%
ii) Rs.1000/- and above but below Rs.5000/- 10%
iii) Rs.5000/- and above but below Rs.10,000/- 50%
iv) Rs.10,000/- and above 100%
II AUDIT OF FINANCE AND ADMINISTRATIVE ACCOUNTS
a) Cash accounts of contributions etc. i.e. their receipts investments and refunds
and accounts of securities. Four months accounts selected at random with a
general review of the rest of the accounts as a whole.
b) Accounts of administrative expenses (including Cash Book). One months
accounts in full with a general scrutiny of the years accounts as a whole.
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c) Audit of vouchers relating to pay, Travelling Allowance and contingencies-
10%.
Introduction of Vertical Audit
8.60 Consequent on receipt of instructions from the Headquarters office for
implementation of scheme of vertical audit, it was decided to give effect to vertical
audit to the following departments :
1. Animal Husbandry Department
2. Soil Conservation
3. Social Welfare
4. Director Research, Medical Education.
The ‘strategic plan’ will thus be a rolling plan for 2-3 years to be framed each
year. The second aspect which is a crucial component in “Operational Planning”.
This will be the detailed planning for major institutions taken up for audit in a year, in
accordance with the strategic plan. Identification of issue, extent of scope of audit
and speaking out methodology would be required at this stage.
The strategic and Operational plans should serve to ensure coverage and depth
according to an acceptable standard utilising the available manpower optimally. The
Planning process is to be made on annual exercise the results of which should be well
documented. This will serve as an effective aid for the management of audit.
In order to make the local audit programme more effective and taking into
account the time and staff constraints and the number of units to be audited, it will
perhaps be necessary to reconsider the cycle of audit in respect of certain items of
works/units. For this purpose, an A.B.C. analysis type should be made in order to
identify units and items of audit which require yearly audit on a statutory basis and
other units/items of check which could be conducted in a phased manner on a 3 year
cycle without sacrificing the audit obligations and broad objective in regard to these
routine items. Before taking up inspection by the parties, a meaningful discussion
with the Group Officer/Audit Officer (Headquarters) of the concerned party should be
held.
The audit Plan could also perhaps include departmentally oriented audit for
comprehensive examination of the activities of a Department/Ministry. Perhaps one
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Ministry could be selected in a year for such study. It will be difficult to foresee the
efficacy of such a review till report is ready. However, as an Audit Plan items
departmentally oriented audit is worth considering on a regular basis.
To make the Audit Plan effective, it is also necessary to restructure the audit
parties in such a way that it becomes more officer oriented. Only a small beginning
has been made in this direction after the formation of the Assistant Audit Officer
cadre. For important audit coming under 'A'` category and also audit of Autonomous
Bodies etc. It is perhaps worthwhile to consider induction of more officers at the
Audit Officers/Assistant Director of Audit’s level to man the audit parties.
Introduction of Audit Planning
8.61 Consequent on the receipt of instructions from the Headquarters Office for
implementation of the scheme of Audit Planning new procedure is to be adopted. The
salient features of which are as follows:
a ) denovo examination of periodicity of audit and duration of individual audits,
b ) Prioritization of audit assignment,
c ) matching the available audit resources with the audit requirement and
d ) acquiring in-depth knowledge of the auditee organisation and developing
appropriate data base.
In formulating the audit plans consistent with the availability of manpower
resources, the existing norms relating to periodicity, composition of audit parties etc.
need not be considered inflexible. AG`s have also been empowered to relax the
percentage of audit prescribed in the memorandum of secret instructions wherever
necessary. After providing for statutory and/or obligatory audits (as mentioned
below) it is necessary to undertake necessary rigorous examination, each year of the
periodicity’s and during of the other units. Any omission of unit/organisation in the
Audit Plan should be deliberate and well considered and so should be the inclusion of
any particular Audit.
a ) Audits necessary for certification as Sole auditor of accounts including
Finance and Appropriation accounts.
b ) Audits under section 19 of CAG`s (DPC`s) Act, 1971.
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c ) Audits Under Section of 20 of DPC`s Act.
d ) All India reviews and local reviews.
e ) Audits under Section 13,16 and 17 of the Act ibid likely to give rise to
paragraphs for Audit Reports.
f ) Audits under Section 14 and 15 of the Act ibid likely to give rise to paragraphs
for Audit Reports.
The requirement at (a), (b), (c), are mandatory and admit no flexibility. The
requirement of (d) should be next charge on available Audit resources. The remaining
Audit resources should be utilized on audits mentioned at (e) and (f) after carefully
reviewing the necessity and potential of each Audit assignment and the number of
Party days required for it priority being accorded to audit of accounts of DRDA'S. as
huge amounts of grants- in-aid are released to these agencies.
The audit staff is expected to develop an in-depth awareness about the auditee.
Understanding the mandate and objectives of the auditee organisation and the
environment in which it operates including the element of risk involved will help in
ensuring that the auditor is able to provide constructive cost effective and creative
service. In some cases preliminary survey could be very useful for acquiring a
working knowledge of auditee and its environment.
Necessary data bank and documentation covering reports of various
Committees, study Reports, Plan/Budget documents, newspaper and journal clippings
etc. Should be carefully built up under functional heads or subject wise as these will
be of immense help in Planning for Audit and for detailed Audit.
Portfolio Section
8.62 A portfolio in respect of each scheme and programme which is susceptible of
performance appraisal, should also be built up. It should inter alia contain complete
details or the progress covering the objectives, financial and fiscal targets,
performance standards, time schedules for the different components of sanction and
copies of sanctions etc. In this context, various documents brought out by Planning
Commission/Planning Department of the State Government, National Statistical
Organisation and other institutions of national importance dealing with financial and
fiscal areas should be made use of. These portfolios should form the basis and
225
provide the necessary basic data and information for conducting meaningful audit.
Needless to say that the portfolio files should be regularly updated.
The percentage of audit for Central Audit work may be fixed by the
Accountant General/Group Officer taking into account the volume of vouchers for
audit and the availability of staff in the Central Audit Group. Deployment of staff for
Central Audit and the percentage of audit may be so fixed by A.G. which will enable
him to manage Central Audit Work with available staff. If even by keeping the
percentage of audit at the maximum desirable level, there is a surplus of staff in the
Central Audit group, the surplus may be redeployed for local audit in Civil,
Commercial and Receipt Audit Groups. Suitable objection books and office copies of
the objection memos sent to Government Departments may be kept in the
Headquarters Section of the Civil Inspection as other local audit Reports are kept and
perused. Suitable number of staff in Central Section for such recording and pursuing
of the objections may be provided for in civil inspection in his Audit Plans.
With a view to watch audit planning being conducted in proper manner, audit
plan in the prescribed format should be sent to Headquarters office so as to reach by
15th April each year. An appreciation note indicating the priorities adopted,
relaxation in percentage of audit, if any, applied viz-a-viz those prescribed should
invariably accompany the audit plan.
Appropriation of Departmental receipts for meeting Departmental expenditure
8.63 Rule 7 of CTRs Volume. I and para 2.10 of PFR, Vol.I prescribe that all
moneys received by or tendered to Government offices on account of the revenues of
the Union or State should be paid in full without delay into the Treasury or Bank.
Except to the extent provided therein, departmental recoveries should not be
appropriated for departmental expenditure.
The appropriation of departmental receipts for meeting departmental
expenditure contrary to the provisions of rules mentioned above is a serious
irregularity. Cases of such irregularity that may come to light in the course of audit
should be brought prominently to the notice of all the heads of office and
departmental Disbursing Officer.
Audit of Personal Ledger Account
Checks on Personal Ledger Account
8.64 As per provisions of the Punjab Treasury Rules Vol. I special banking account
shall be kept for certain classes of deposit transactions of public or quasi-public
226
nature. The account kept for these transactions in the Treasury shall be of the nature
of banking account called Personal Deposit Accounts.
Ordinarily the opening of a banking deposit account or of a Personal Ledger
Account (PLA) is sanctioned by Government after consultation with the A.G. (A&E).
It is generally recognized that Government should not agree to the opening of such an
account unless it is satisfied that the initial accounts of moneys in the Personal Ledger
Account are properly maintained and are subject to audit. it will rest with the
Pr. Accountant General (Audit) to determine whether or not audit of initial accounts
should be conducted. Such audit will be conducted locally in the office in which the
detailed accounts are maintained or centrally in the office of the Accountant General
(A&E) where detailed monthly accounts with challans/vouchers in support of lump
sum deposits/withdrawls made during the months are received in that office. If the
Pr. Accountant General (Audit) decides that this audit need not be undertaken by him
on the ground that the money involved belongs to a Local Fund or a Private Fund not
administered by a Government servant or for any reasons, it will be for Government
to entrust audit of initial accounts to another recognized authority like the Examiner,
Local Fund Accounts or a qualified auditor.
Besides instructions of Punjab Government of October, 1961, Personal Ledger
Accounts in respect of Government schemes, could also be operated by debit to the
Consolidated fund. Such accounts are required to be closed to 'Nil' balance at the end
of the financial year by minus debit of the balance to the relevant service heads in the
Consolidated fund and may, if necessary, be reopened in the next year after following
the prescribed procedure.
The departments operating Personal Ledger Accounts in the treasuries and
nature of transactions are as under:-
Sr. No.
Name of department Purpose of opening PLA
1 Rural Development For receipts and expenditure relating to Cattle Fair Fund
2 Food & Supply (i) For making payments to rice millers for procurement of levy rice for Central pool after arranging funds from F.C.I.
(ii) Deposit/repayment of tender money
3 Transport Cash transactions relating to passenger bus services
227
4 Police Transactions relating to police clothing and equipment
5 Soil Conservation & Agriculture
Lining of water courses
6 Educational Institutions
Fees & funds from students etc.
7 Sheriff Petty Courts Diet money and witness's commission money etc.
Following audit checks are required to be exercised during local audit in the
process of opening, operating and handling of Personal Ledger Accounts by the
departmental officers other institutions:-
1. Audit should see that the PLA is opened in the treasury with the sanction of
the competent authority which is issued with the consent of the Accountant General
(A&E).
2. That PLAs opened by debit to the Consolidated Fund are closed to 'Nil'
balance at the end of the financial year and reopened only after following the
prescribed procedure.
3. That the deposits withdrawls from PLAs relates to the purpose for which the
same was opened.
4. That the expenditure incurred out of PLA is in accordance with the financial
rules of the Government.
5. That there is no diversion of funds from the PLA into any other head of
account and vice versa.
6. Details of the transaction in PLAs shall be worked out and agreed with the
balances maintained in the PLA as well as record of the Treasury Officer.
Instructions regarding audit of transactions of PLA and incorporating their results in
the LARs on the following checks.
i) No. of PLAs in a year, any increase/decrease
ii) Date of Opening of PLA.
iii) Whether opened in consultation with Accountant General (A&E).
iv) Opening balance on 1st April of the year.
v) Amount deposited with/without approval of competent authority.
vi) Number of vouchers, test checked in Audit (Not less than 25% of
transactions).
vii) Purpose of expenditure.
228
viii) Diversion of funds.
ix) Whether amount deposited un-necessarily?
x) Frequency/periodicity of drawals.
xi) Whether drawals authorized by competent authority?
xii) Whether utilized immediately after drawal?
xiii) Whether scheme-wise register maintained by the Drawing and Disbursing
Officer?
xiv) Whether transferred from Central/State Plan Funds?
xv) Impact on schemes/projects, due to unutilized funds remaining parked in PLA;
xvi) Timely closure of PLAs.
229
ANNEXURE I
(Referred to in Para 8.37)
Copy of letter No. 14/130-28/61B/425, dated 29th December 1978, from Finance
Commissioner, Industries & Secretary to Government, Punjab Industries & Industrial
Training Departments, to all Heads of Departments in the State of Punjab etc.
Subject:- Decentralisation of work relating to Store Purchases.
Sir,
I am directed to refer to the subject noted above and to say that the matter
regarding decentralisation of work regarding purchase of stores and enhancement of
purchase powers has been under consideration of the Government for sometime. In
order to remove bottlenecks in the existing purchase procedure and to make it more
practical Government had decided to decentralise the store purchase procedure as
under:-
i) All the Heads of Departments will be declared direct demanding Officers for
the operation of DGS&D rate contracts. However, if the Controller of stores of
Punjab has arranged the rate contract for any of these items, it will be incumbent upon
the purchasing departments to make purchases against that rate contract.
ii) Standing purchase committee may be set up in all the departments with the
approval of the Finance Department. These Committees will function independently
of the Store purchase Organisation and the functions of Servicing these Committees
will stand transferred from Store purchase Organization to these Departments. In case
of major departments at the time of approving constitution of the Committee Finance
Departments. The convenor will put a representative of the Store Purchase
Organisation as one of the member of the purchase Committee. The convenor of
these Committees will be the Head of the concerned Executive Department.
iii) There will be no ceiling on the financial powers of these purchase committees
except that where the purchase of single item consisting more than Rs. 1 lac is
involved, the approval of the Government in the concerned Administrative
Department will be obtained.
230
iv) The financial powers regarding purchase of stores from the local market as
enumerated in Sr. No. 20 of rule 19.6 of Punjab Financial Rules Volume I, be
enhanced as indicated in Annexure A to this letter.
v) While indicating specifications of the stores required to be purchased as
required under rule 4 of the Store Purchase Rules, first preference be given to stores
which have I.S.I. Markings, and in the absence of I.S.I. Markings, I.S.I. Specifications
or the Punjab Quality Markings shall be adopted. In order to ensure uniform practice
in respect of specifications, general guidelines will be issued every year by the
Department of Industries (Store Purchase Organisation) which should be adopted by
the Purchase Committee of the Departments.
vi) The condition requiring invitation of tenders through DGS & D in respect of
machinery of Stores of imported origin of value exceeding Rs. Two lacs as given in
Rule 2 of the Store purchase Rules, be deleted and the purchase of such machinery or
stores should be made through the Store Purchase Organisation of the State.
vii) The Present procedure whereby arrangements for the inspection of Stores are
made by the Store Purchase Organisation be discontinued and Inspection be carried
out by the department making the purchase. However, in order to make the inspection
of stores stringent, at least two officers having sufficient technical knowledge of
stores should inspect the stores before accepting them.
viii) The limits for making purchases without quotations as laid down in Rule 7 of
the Store Purchase Rules, be raised from Rs. 50 to 500 per item subject to the
condition that the total value of such purchase does not exceed Rs. 10000 in a year.
It has also been decided that the Stores Purchase Organisation should try and
bring the maximum number of items which are of common use in different
departments and are of repetitive nature under the rate contract of the State
Government.
The review of this new procedure will be conducted after one year to assess
the success of this new policy.
2. You are, therefore, requested to initiate action for constituting the Purchase
Committees etc. Steps to amend the rules from the date of issue of this letter will be
taken in due course.
231
3. This has concurrence of the Finance Department received vide their U.O. No.
6121-4FDII-78, dated 28th December, 1978.
Endst. No. 14/139/78-BL-61-3(2)/426, dated Chandigarh the 29th December, 1978.
A copy is forwarded to the Controller of Stores, Punjab, Chandigarh for
information and necessary action. He should try to bring maximum number of
articles on rate contract of the State Government which are of common use and of
repetitive nature and a list of such articles be circulated to all Heads of Departments
immediately and thereafter from time to time. Action may also be taken to declare all
Heads of Deptts. as direct demanding officers against DGS & D rate contracts and it
should be ensured that the list of such rate contracts are received by the Departments
in time. He is also requested to issue general guide lines in respect of specifications
every year so that uniform specifications are adopted by the various Purchase
Committees. As this procedure is to be reviewed after one year, he is requested to
ascertain the views of the departments in this matter at the appropriate time and then
send his comments to Government.
Endst. No. 14/39/78-61-B(2)/127, dated 29th December, 1978.
A copy is forwarded to the Secretary to Government, Punjab, Finance
Department, for information and necessary action.
Endst. No. 14/139/78-61-B(2)/428 dated 29th December, 1978.
A copy is forwarded to the A.G. Punjab, Chandigarh.
MOST IMMEDIATE;
Office of the Inspector General of Prisons, Punjab, Chandigarh.
Endst. No. 4645-55/GI/1-1/F-21 Factory, dated 30th January, 1979.
Copy alongwith copy of Annexure I forwarded to the Superintendents of all
Central and District Jails including Borstal Jail, Faridkot for information and
necessary action.
2. Necessary action regarding the Constitution of Departmental Purchase
Committee for the purchase of stores from Jail Factories is being taken by this office
separately.
3. Please acknowledge receipt and ensure strict compliance.
232
Sd/- Inspector General of Prisons, Punjab
Endst. No. 4656-GI/1-1, dated 30th January, 1979.
Copy alongwith Annexure-I, is forwarded to the Head Assistant, Accounts
Branch in Head Office, for information and necessary action in respect of
Maintenance side, at his end.
2. Copy forwarded to 1-5 in Head Office, for information and necessary action.
233
Annexure-A
Sr. No.
Name of Power Designation of the Officer
Extent of power delegated
1 2. 3. 4.
20 Sanction direct purchase of
stores from the local market
after exhausting all approved
sources of supply mentioned
in Appendix 17 of P.F.R.
Volume. II and the rate
contract arranged by
Controller of Stores, Punjab,
if available
(1)Deptt. Of
Government except
Engineering
Officers of P.W.D.
and Irrigation
Heads of Deptts.
Rs. 40,000 in each case.
Rs. 20,000 for any one item in a
financial year or one disbursing
Officer under him.
Controlling Officer Rs.4000 for any one item in a financial year.
Disbursing Officer Rs.2000 for one item total value of which in a financial year should not exceed Rs.8000.
2)Chief Engineer in P.W.D., B&R P.H. & Irrigation.
Rs. 50000 per item without any limit.
Superintending Engineer (Engs)
Rs. 20000 per item subject to a ceiling for Rs. One lac per annum per division under the circle in addition to the power of Executive Engineer.
Executive Engineer Rs. 5000 per item subject to a ceiling of Rs. 50000 per annum.
Sub-Divisional officer/Sub-Divisional Engineer
Rs. 250 per item subject to a ceiling of Rs. 5000 per annum.
Note: The Financial powers of departments of Government, Heads of Departments, Controlling Officers and Disbursing officers have been enhanced vide Punjab Government notification No. 2/2/88/2FCD/4802 dated 19-5-1988
234
ANNEXURE-II
(Referred to in para 8 43(A)
Remittances to and withdrawal from treasury
Procedure regarding the remittance to treasury and withdrawal therefrom
The question of adopting a suitable procedure regarding the reconciliation of
departmental figures of remittances to the Treasury and withdrawals there from has
been engaging the attention of Government for some time past, The main defect in the
present procedure contained in rule 2.2 of the Punjab Financial Rules, Volume I, is
that it does not provide for the system of monthly reconciliation of departmental
figures with the Treasury Figures. The absence of the system of monthly
reconciliation is likely to result in certain discrepancies remaining unreconciled for an
indefinite period and frauds remaining undetected. In order to obviate these defects it
has been decided as under:-
Remittances to Treasury.
(a) A Remittances Book should be maintained in Form STR 6 as laid down in
subparagraph 3 below rule 2.8 of the Subsidiary treasury Rules. (Specimen
appended).
(b) Rule 2.2(v) of the Punjab Financial Rules, Volume I, further lays down that
the Head of Office is required to compare the Treasury Officers or Banks` receipts on
the Challan of his Pass-Book with the entry in the Cash Book before attesting it and
satisfy himself that the amount has actually been credited into the Treasury or the
Bank. With a view to facilitating this comparison, the challans duly receipted by
Treasury should either be pasted in the Remittance Book against the relevant entries
or filed in separate files every month, in case their number is very large.
(c) At the end of every month the Head of Offices should prepare a consolidated
receipt in the prescribed form, as per specimen appended and forward the same to the
Treasury Officer for signatures so as to reach the latter by the 22nd of the following
month.
235
(d) Immediately on receipt of the consolidated receipt, it would be the duty of the
Treasury Officer to compare the entries made therein with those of the Register of
Receipts in Form T.A.-2 maintained by him in respect of that particular office under
Article 35 of the Account Code, Volume II. The Treasury Officer will then send
back by the 5th, the Consolidated Receipt to the Head of the Office concerned after
affixing his signatures thereon, in token of acceptance or pointing out the
discrepancies, if any.
(e) The Consolidated Receipt when received back from the Treasury should be
filed under the orders of the Head of Office after the discrepancies, if any, have been
reconciled.
Withdrawals from the Treasury
It has been noticed that the present procedure regarding the withdrawals from
the Treasury as outlined in rule 12.3(3) of the Punjab Budget Manual (4th Edition) is
defective in following respects:-
(i) It does not prescribe the maintenance of a Register by a Head of Office for
record and reference, at any particular time of the number and the amount of the bills
sent to the Treasury for encashment.
(ii) The absence of such a register renders it difficult to watch the receipt book of
such bills from the Treasury.
(iii) It cannot also be ascertained at any particular time whether the amounts
received from the Treasury have actually been disbursed or not.
In order to improve upon the present procedure it has been decided as follows:-
(a) A Bill Register in the form as per specimen appended should be maintained by
all Heads of Offices who are authorised to draw money from the Treasury on bills
signed by them. The register should be reviewed monthly by the gazetted officer in
charge of the Cash Branch, if any, or by the Head of Office himself. This register will
enable the Head of the Office to keep a complete watch over the bills from the time
they are sent to the Treasury for encashment to the time the amounts received from
the Treasury are finally disbursed.
(b) At the end of the month, a certificate in the following form should be prepared
by the head of the Office and sent to the Treasury Officer for his signatures so as to
reach the latter by the 22nd of the following month.
236
“I hereby certify that the total withdrawals from the Treasury on bills drawn
by Shri
.Officer incharge during amount Rs (in words) “.
Dated:
Treasury Officer
Note:- It has been brought to the notice of Government that it had not been possible
for the Treasury Officers to verify the certificates independently in the absence of
details of drawals by the Drawing Officers and that the procedure, detailed in the
above-mentioned letter is not being complied by most of the Departments. In order to
enable the Treasury Officers to issue the certificate it has been decided that the details
of the bills drawn by the Drawing Officers during a month should be furnished by
them along with the certificate to the Treasury Officer. The said clause may be
considered to have been modified to this extent.
It is further emphasized that the procedure laid down in the reference quoted
above should be followed strictly as there are possibilities of certain withdrawals not
finding place in the Cash-Book if such a certificate is no t obtained by Drawing
Officers.
(No. 1628-FRI-60/5336, dated 15th June, 1960).
(c) Immediately on receipt of the certificate referred to above, it will be the duty
of the Treasury Officer to compare the entries made therein with those of the Register
of Expenditure in Form T.A. -3, maintained by him in respect of that particular office
under Article 35 of the Account Code, Volume - II. The Treasury Officer will then
send back the certificate to the Head of the Office concerned duly signed pointing out
the discrepancies, if any, so as to reach the latter by the 5th of the month.
d) The certificate on receipt from the Treasury will be filed under the orders of
the Head of the office after the discrepancies pointed out therein have been
reconciled.
(No. 2731-FR-56/753, dated 23rd August, 1956.)
Note:- The bill register should be preserved for a period of five years.
(No. 11050-6-FRI-65/719, dated 27th/28th January, 1965).
237
Treasury Remittance Book
Office of the _____________________________________
date of Remittance __________________________________
Rupees Amount in words
Paise _______________________________________________________________ Signature of the Treasurer or
other person designated to attach second signatures for sums under ‘Rs 500 received by transfer in account.
_______________________________________________________________
Signature of Treasury Accountant _________________________________________
Signature of the Treasury Officer for sums not less than Rs 500
_______________________________________________________________
No. And date of the Treasury Challan
______________________________________________________________
Remarks
consolidated Treasury Receipt ________________________
_________________________________ Treasury __________________________
_____________________________________________________________________
the sum of rupees* ____________________________________________________
Received from the Officer- incharge _______________________________________
for credit to Government account during ___________________________________
____________________________19 ______________________________________
rupees**
Dated the ____________________ Treasury
Officer _____________________________________________________________
*In words
** In figures
Bill Register of the office of ________________________________________
Amount disbursed in
1. Bill number and date.
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2. Particulars of the bill.
3. Pay of Establishment.
4. Compensatory allowance.
5. House-rent and other allowances.
6. Travelling allowance.
7. Gross amount.
8. Deductions.
9. Net amount.
10. Dated initials of the gazetted officer signing the bill
11. Date of presentation at the Treasury.
12. Amount assessed by the Treasury, Amount of the bill detailed heads of account etc.
13. Date of signing acknowledgment with initials of the officer signing the bill
14. Date of receipt form the treasury.
15. Date of entry in the cash-book.
16. Initials of Gazetted officer incharge of the cash.
17. Month of encashment.
18. 2nd Month
19. 3rd month.
Reference to bill NO. ____________ and date in which balance has been
short drawn.
Remarks.
Discontinuance of the issue of Reserve Bank of India Government Drafts-Payment of Government Cheques
17.2 Rule 11.8 of Punjab Financial Rules, Volume I, provides for the issue of a
special kind of draft by the Reserve bank and its agencies (including Treasury
agencies) for remittance on Government accounts. These drafts on Government
accounts are as provided in Rules 4.121 of Subsidiary Treasury Rules, Punjab,
Volume I, not transferable are only payable to, or on the receipt of, the person name
therein as the payee or to his lawful agent. This absolute ban on the transferability of
239
such drafts on Government account, it has been observed, causes serious hardships to
the payees in the matter of obtaining payment. Besides although from the point of
view of the issuing and encashing offices the transactions relating to Reserve Bank
drafts and drafts on Government Account are in no way different yet the offices of the
Reserve Bank and its agencies are required to maintain separate records for the two
types of remittances, in view of the differential character of the instruments.
2. In the circumstances and with a view to facilitating expeditious disposal of the
growing volume of work in connection with the issue and encashment of remittances
at the Office of the Reserve Bank and its agencies, it has been decided on the analogy
of Government of India that the existing practice of issuing a special kind of drafts for
remittances on Government account be discontinued and that all remittances whether
on behalf of Banks and Public or Government Departments, shall be made by means
of Bank drafts with immediate effect.
3. Further, in obtaining such drafts for remittance of moneys on Government
accounts and also issuing cheques on Government account, the following instructions
should be observed by all officers of the Government:-
(a) Payment on account of inter-departmental or inter-governmental dues.
The issuing office should be requested to cross all such drafts, if drawn on an
office of the Reserve Bank or any of its agencies other than a treasury agency, with
the words “account payee” between the crossing and, if drawn on a treasury agency,
to superscribe the drafts with the words “account Government-not payable in cash"
without any crossing. For cheques also, the same procedure should be observed:-
(b) When the amounts of the drafts are required by Officers of the Government to
enable them to make disbursement, in cash on behalf of Government, e.g, pay and
allowances of non gazetted staff, contingent expenditure, permanent advance, etc.
Cheques and drafts, the amount of which are payable to Officers of the
Government to enable them to make disbursement of pay and allowance of non
gazetted staff, contingent expenditure, etc., on behalf of Government shall not be
crossed but shall in, either case, bear the superscription ‘not transferable’ and shall be
issued in favour of the Government Officer concerned, by designation, the word
‘only’ being added after the designation of the Payee Officer on the cheque or draft.
For this purpose, every Government Officer, when applying for a draft, must add the
word `only` after the name of the Payee in the application for the drafts, so that the
240
issuing office may prepare the draft accordingly. It shall not, however, be permissible
for any Government Officer himself to add the word `Only` after the name of Payee
of the draft in case in which the Issuing Office for any reason fails to add the word
themselves:-
(c) Payments of Personal claims of an individual (Whether a Government
employee or not), a firm, or a company, a statutory body, etc.
All cheques and drafts in payment of such claim shall be issued invariably
with the addition of words `or order` after the name of the payee on the cheque or
draft. Such cheques or drafts, if drawn on an office of the Reserve Bank of India or
any of its agencies other than a treasury agency, shall be crossed with the words
“&Co.” Between the crossing unless the Payee specifically asked for an open
cheque/draft, in which case they need not be crossed.
4. In connection with the payment of Government cheques, the offices of the
Reserve Bank of India and its agencies are required to maintain the specimen
signatures of a good number of Government employees, viz., Payee disbursing
officers as well as the Officers authorised to act on their behalf and their messengers.
The specimen signatures of Government employees are maintained by the Bank with
a view to ensure proper identification of the payee concerned for smooth functioning
at the counters of the Bank. It is necessary that the Bank should not be burdened with
the maintenance of the specimen signature of an unnecessarily large number of
persons. It has accordingly been decided that the specimen signatures of the payee
disbursing officers or such other officers, as may be authorized to act on their behalf
in terms of the provisions of Note (I) below rule 4.7 of Subsidiary Treasury Rules,
Punjab, Volume I, will only be kept on record by the Bank and its agencies and those
of the messengers sent for the collection of cheques would not be maintained by them.
For this purpose when a disbursing Officer authorises a Subordinate Officer to
endorse cheques for and on his behalf, a copy of the authority issued in favour of the
subordinate officer, duly authenticated by the payee-disbursing officer, may be sent to
the Bank on which the cheque is drawn for its record. The practice of transmitting the
specimen signatures of messenger to them should, however, be discontinued.
5. Further, for purpose of encashing these cheques, the payee officer should
either himself give the discharge ‘Received contents’ by endorsement on the back of
the cheques or the officer duly authorized by him should do so, and in the latter case
the officer concerned should sign for and on behalf of the payee-officer (by
241
designation). Since these cheques might not be collected by the officer endorsing the
cheques in person and the services of a messenger or representative might be availed
of for obtaining the payment, the messenger or representative should be specially and
separately authorised to receive payment by a letter signed by him indicating the full
particulars of the cheques and furnishing in that letter the specimen signature of the
messenger or representative as the case may be, duly attested by him.
(NO.50(4)FR-66/768, dated the 19th November, 1966.)
242
ANNEXURE-III
(Referred to in para 8 52(A)
A list of instructions contained in Government of India, Ministry of Finance Circular
F.52(a)-EV/60 dated 27th June, 1960 and other orders.
1. Accounting system
i.) The detailed Provident Fund Ledger Accounts of Class IV should be
maintained in bound ledgers of Form ATM-75 (Form-I) which should be machine
numbered.
ii.) The Head of the Office or any gazetted Officer nominated by him should
initial the Provident Fund Accounts monthly in order to ensure that the amount of
subscription deducted, refund of advance and temporary and final withdrawals are
posted correctly. The entries for withdrawal should be signed by the gazetted officer
at the time of signing the bills for withdrawals.
iii.) A schedule of G.P. Fund deduction should be compiled each month by the
Drawing Officers for posting the ledger accounts and signed by the drawing officer
after ensuring that the total of the deduction as per schedule agrees with the deduction
made in the bills. In respect of payment a consolidated record should be maintained
for arriving at the monthly total.
iv.) Each Head of Office, should maintain a broad-sheet in Form No. II prescribed
in Government of India circular referred to above in which entries should be posted
direct from the ledgers and not from schedules or vouchers. The broadsheet should be
closed and submitted to Head of Office by 5th of the following month and reviewed
by the Head of Office on the following day with a view to verify that the amount as
booked in the broad-sheet agree with that of the total of the certificates of deduction
attached with pay bills, and payments during the month. The totals of the debits and
credits as worked out in the broad-sheet should be communicated to the Head of the
Department by the Head of Office.
2. ADMISSION NOMINATION
i.) All Permanent employees and temporary employees other than re-employed
pensioners, in continuous service for more than one year alone are to be admitted to
the Fund.
243
ii.) Each person admitted to the Fund should be assigned an account number with
a prefix indicating distinctly the office to which the subscriber belongs.
iii.) The nominations received, should be checked with a view to ensure that in the
case of persons having a family the nomination is made only in favour of members of
his family as defined in the G.P.F Rules, and nominations should be in one of the
prescribed forms appropriate to the subscriber.
iv.) The member who has no family at the time of the first nomination is made
should make another nomination as soon as he acquires family.
v.) The specification of death as a contingency in the penultimate column of the
form of nomination is not proper contingencies such as insanity, divorce etc., only can
be specified by the subscriber.
vi.) If at the time of making nomination the subscriber has only one member of
the family and the alternate nominee is a person other than a member of his family,
the nomination should provide that the right conferred upon the alternative nominee
shall become invalid in the event of subsequent acquiring by other member of family.
vii.) Appropriate arrangements should be made for safe custody of nominations in
the personal custody of Head of Office under lock and key.
2. TEMPORARY ADVANCES AND PART WITHDRAWALS
All applications for temporary withdrawals and advances as well for
subscription to the insurance premia should be scrutinised with a view to see that the
permissions granted are according to the rules and sanction was accorded by the
competent authority. In respect of withdrawals for subscription of insurance premium,
the Head of the Office should satisfy himself by verification with the receipts that the
withdrawals were utilised for the purpose for which they were made.
3. INTEREST
Interest should be calculated with the help of authorised ready reckoners by
the Heads of Offices and entered in the ledger accounts and broadsheet.
4 FINAL PAYMENT
i.) The final withdrawal is permissible on the provisions of Rule 20.30.31 of
G.P.F. Rules.
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ii.) An application should be obtained in Form VIII-A of B appended to the
Government of India circular as soon as the event has occurred necessitating final
payment of G.P.F. credits.
iii.) Final payments should be made after thorough scrutiny of accounts of the
subscriber with particular reference to any temporary advance or withdrawals already
made with extra care over transactions within last 3 years before the year in which
the withdrawal is made.
iv.) After scrutiny, account should be closed after allowing interest upto the end
of the month proceeding that in which the payment is made or up to the end of the
sixth month after the month in which such amounts becomes payable, whichever of
these period be less under the G.P.F. Rules.
v.) The money should be paid to the subscriber, if he is alive. If the subscriber is
not alive, and a valid nomination subsists the payment should be made to the
nominee or nominees where the subscriber is not alive and no valid nomination
subsists the payment should be made to the claimant eligible under Rule 31(1) (b) or
31 (ii) of the G.P.F. Rules.
vi.) In case the insurance policy was subscribed from G.P. Fund steps should be
made to re-assign simultaneously the policy and return it to subscriber.
5. MISCELLANEOUS
i) A general index register should be kept by the Head of Office in Form III
(ATM-65) and stock account of policies financed from G.P.F. should be kept in From
No. V.
ii) Where a subscriber is transferred from one office to another, his account is
also required to be transferred alongwith the L.P.C. to the new head of office,
supported by a statement showing opening balance at the beginning of the year,
deductions and withdrawals during various months and the closing balance on the
date of transfer. A copy of the accounts should also be sent simultaneously to the
Head of the Department.
iii) A monthly return should be submitted by the Head of Offices/Heads of
departments concerned in Form IV.
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iv) At the end of the year, the Head of Office should prepare a statement in Form
VIII (ATM-80) showing the balance at the credit of the subscriber and forward the
same to the subscriber and get their acceptance.
The Government of India, Ministry of Finance, vide their memo
No.24011/2/75/75-EV(B) dated 24th February, 1975 introduced the system of
Passbooks in respect of Group 'D' employees in all the Central Government Offices
with effect from the financial year 1974-75. The Scheme will be operated as follows:
a) The Passbook will be got printed locally be each Ministry/Department in
exercise of the powers delegated to it.
b) Initially the Passbook will be supplied free of cost.
c) Every Class IV employee, who is already subscribing to GPF will be provided
with the Pass-book which at the time of its supply will indicate the balance at
the credit, as on 31st March of the proceeding financial year.
d) Every new Class IV employees will be provided with the Passbook at the end
of the financial year, during which he commences contribution to the G.P.F.
e) In case a subscriber loses his Passbook and asks for a copy thereof, he may be
charged an amount equivalent to twice the cost of Passbook.
f) At the end of each year, the Head of the office will obtain the Passbooks of the
employees for completion and return.
g) When an employee is transferred to another Ministry/Department, the Head of
Office will obtain the Passbook, from the employee, complete it and record the
following endorsement therein and thereafter return the Passbook to him.
The G.P.F. account has been transferred to Ministry/Department of
______________________________________vide his Ministry/Department letter
No. ______________ dated ____________.
h) Every subscriber is expected to satisfy himself as to the correctness of the
entries made in the Passbook and bring to the notice of errors, if any, within
three months. The ledger folio of the subscriber, if desired by him, will be
made available for inspection.
246
During local inspection it should be seen, besides the above mentioned points,
that-
(a) the Passbooks have been supplied to all the subscribers.
(b) that adequate safeguards are enforced to record the authenticity of the entries
in Passbooks.
(c) that the Passbooks are being sent for by the accounts Office to help in tracing
missing credits/debits in the Provident Fund Account.
d) that the entries in the Passbooks tally with the Provident Fund Accounts
maintained by the Department.
e) that there is a systematic or periodical reconciliation of the entries in the
Passbook with the Provident Fund Accounts maintained.
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ANNEXURE-IV
(Refereed to in Para 8.52)(a)
No.64-OSD(F)-78/17507
From
The Commissioner for Finance and Secretary to Government, Punjab Finance
department.
To
All Heads of Departments,
Registrar, Punjab and Haryana High Court,
Commissioners of Division
District and Sessions judges,
Deputy Commissioners in the Punjab,
All treasury Officers including Treasury Officer
Chandigarh (Punjab) and Assistant Treasury Officers, Punjab.
Dated Chandigarh, the 19th May, 1978.
Subject:- Taking over of G.P. Fund Account of Class IV Employees of Punjab
Government.
Sir,
I am directed to address you on this subject and to state that under the existing
arrangements the General Provident Fund Accounts of Class lV employees of the
Punjab Government are maintained by the Accountant General, Punjab.
As a measure of Administrative Reforms, the Governor of Punjab is pleased to decide
that with effect from Ist April, 1978 (i.e subscription deducted from the pay for the
month of March, 1978) the work connected with the maintenance of accounts of all
Class IV employees of the Punjab Government (including existing subscribers) shall
be transferred to the Heads of the offices concerned (Drawing and Disbursing
Officers) who will thereafter be responsible for their correct maintenance. The
accounts of the subscribers alongwith the connected documents will be transferred to
them by the A.G. Punjab, completed up to the month of 31st March 1978. A copy of
the scheme is enclosed. The procedure to be observed at various stages and
248
instructions to be followed by the Drawing and Disbursing Officers and Heads of
Department is explained therein. It may be studied thoroughly so that no doubt is left
in its enforcement.
2. In this connection, it should be clearly understood that:-
i) The term `Accounts Officer` has been used in various paragraphs of the
Scheme Since, for the present the work of only Class IV employees is being
transferred, this term will continue to have been same meaning as heretofore
viz, the term ‘Accounts Officer’ wherever it occurs in the scheme connotes the
Accounts Officer of the Office of Accountant General, Punjab,
ii) Similarly, the term `Audit Officer` has also been used in para 3 and sub-para
2,3, 4 of para 18 of the scheme. This term means Accounts Officer of the
Office of the Accountant General, Punjab, who is entrusted with the function
of audit Drawing and Disbursing Officers, Heads of Offices of the State
Government will only be maintaining the detailed accounts of G.P. Fund,
Class-IV employees and the Accounts Officer of the A.G. Punjab will
continue to conduct the audit.
iii) For the introduction of this scheme, a new sub-head under the minor head
‘GPF’ below the major/sub-major head ‘8005 State Provident Fund-A-Civil’
indicating separate detailed head for each department may be opened as
explained in Para 14 of the scheme. This Head of Account should read as
under:-
8005-State Provident Fund-A. Civil (a)-General Provident Fund-I-GPF Class
IV employees (Name of the Department would be indicated such as Education,
Agriculture, etc.
iv) In the new Scheme various ledgers and forms have been prescribed.
Accordingly, the Controller of the Printing and Stationery Department is being
requested separately to make them available for use in your office so that they become
available to the Drawing and Disbursing Officers for the purpose of implementing
this Scheme.
v) On taking over of this work, a complete and consolidated list of all Class IV
employees working in the offices under your control showing (the old and new)
G.P.Fund Accounts numbers including symbolic letters, may be supplied to the
249
Accountant General, Punjab, to enable him to close their accounts and forward them
to the Heads of Offices (Drawing and Disbursing Officers) through their Head of
Department. This will facilitate the transfer of this work from the A.G.`s office to the
Departmental Authorities.
vi) Para 3 of the scheme provides, inter alia, that on the transfer of this work the
Head of Departments will allot fresh numbers to the old subscribers in accordance
with the procedure laid down. Assigning of accounts numbers is an important work
and as such it should be entrusted to a responsible officer under the Head of the
Department; either it should be given to the Accounts Officer of his office wherever
he is available or to the Administrative Officer or to any other responsible officer who
may be dealing with the Establishment work. In any case, the work of numbering the
accounts should remain centralised in the office of the Head of Department and in no
case should this responsibility be passed on to the lower level, namely head of office
etc. The accounts number of the accounts received from the office of the Accountant
General, Punjab, should be assigned new account number, with a prefix class IV
indicating distinctly the office to which the subscribers belongs. Similarly the new
subscribers may also be allotted a new G.P. Fund account number with symbolic
letter. All such numbers allotted will also be prefixed with the word and figure “Class
IV’ as in the case of old subscribers. e.g. Class-Sect.-(Pb) (Sr. No. Such as 737, 738,
etc). Class IV-FCR-(Pb) (Sr. No. Such as 363, etc.) Class IV-Edu-(Pb) (Sr. No. Such
as 177 etc) Class IV-D.C. Gurdaspur (Pb) (Sr. No. Such as 868, etc.)
vii) Nomination papers in respect of G.P. Fund accounts are important documents.
As such, they should be kept in safe custody of responsible officers. As in clause (v)
above, wherever the Accounts Officers under the Heads of Departments are available,
this responsibility may be given to the Establishment Officers/Administrative Officers
failing all this a responsible officer of the Head of Department may be entrusted with
the task of keeping the nomination papers in the safe custody. These papers may be
included in the list of documents to be handed and taken over at the time of transfer of
the incumbent from one place to the other:
3. As, after the introduction of the new system, the A.G. Punjab will not accept
any responsibility for any loss which may accrue to the subscribers due to any
possible missing entries or to the State Government due to wrong entries made in the
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accounts-whether deliberately or owing to inadvertence. You are requested to ensure
strict compliance of these instructions.
4. It is requested that Class IV Government employees working under you
should be apprised of the new scheme and they may be advised to apply to you for the
assignment of a new G.P. Fund number along with the symbolic letter and also
transfer of their accounts from the office of the Accountant General, Punjab, to their
own department. On the basis of this data, the list mentioned in para 2(v) may be
prepared meticulously and supplied to the Accountant General, Punjab.
5. Spare printed copies of the Scheme are available in the Finance Department
(O.S.D.) (F)’s Section and may be collected according to your needs, by deputing
special messenger and sending a written requisition indicating the total number of
copies required and supplying a list of the D.D.Os to whom these copies are to be
sent.
6. This receipt of this communication may please be acknowledged
Yours faithfully,
Sd/- Deputy Secretary (F)
Finance for Commissioner for Finance and Secretary to Government, Punjab,
Finance Department.
No. 64-OSD(F)-78/17508, dated Chandigarh, the 19th May, 1978.
A copy with a copy of its enclosures, is forwarded to the Accountant-General, Punjab, for information and necessary action with reference to his letter No. Fds I/A.S. 55/V Volume. IV/77-78/283, dated the 6th May, 1978.
Sd/- Officer on special duty (F)
for Commissioner for Finance and Secretary to Government, Punjab,
Finance Department.
251
No. 64-OSD(F)-78/17509, dated Chandigarh, the 19th May, 1978.
A copy with two copies of the scheme is forwarded to:-
Ministry of Finance, Department of Expenditure (Special)(i) The Deputy Director
(Special Section), Government of India (Section), New Delhi in continuation of
Punjab Government , Finance Department letter No. 62-OSD(F)-78/10779, dated 24th
April, 1978.
ii) The Comptroller and Auditor General of India, Bahadur Shah Road, Zafar
Marg, New Delhi in continuance of Punjab Government Finance Department
Endorsement No. 62-OSD(F)-78-10780, dated 24th April, 1978.
iii) The Controller-General of Civil Accounts, Government of India, Ministry of
Finance, New Delhi, with reference to his letter No. S-14019/1/78/T(A/cs)851, dated
the 27th April, 1978 for information and necessary action.
Sd/- Officer on Special Duty(F),
for Commissioner for Finance and Secretary to Government ,
Punjab, Finance Department.
A copy, alongwith a copy of the scheme is forwarded to all the financial Commissioners and Administrative Secretaries to the Government of Punjab for information and necessary action.
Sd/- Officer on Special Duty(F),
for Commissioner for Finance and Secretary to Government ,
Punjab, Finance Department.
252
To
All the Financial Commissioners and
Administrative Secretaries to the Government of Punjab.
U.O. No. 64-OSD(F)78, dated Chandigarh the 19th May, 1978.
Maintenance of General Provident Fund Accounts of Class IV Employees of Punjab Government by Heads of Offices (Drawing and Disbursing Officers).
The detailed P.F. Ledger Accounts should be maintained by the Heads of
Offices (Drawing Officers) in Form P.F. 9 (enclosed). The Accounts should be kept
in bound ledgers which will be machine-numbered. The particulars of policies
financed from the General Provident fund and the sanctions for the withdrawals etc.
should also be noted in this ledger. The Head of the Office or a Gazetted Officer
nominated by him should initial the Provident Fund Accounts monthly in order to
ensure that the amount of subscription deducted, refund of advance and temporary
and final withdrawals are posted correctly. He should also initial the entries in the
ledger accounts when signing bills for withdrawals from the Provident Fund.
2.(I) Each month the Drawing Officer will prepare a schedule of General Provident
Fund deductions for posting the ledger accounts maintained by them. They will sign
the schedule at the time of signing the Establishment Bills after comparing each item
with the amount deducted and also the total in Schedule with the total deduction
shown in the Pay Bills. The schedule of G.P.F. deductions will not be enclosed to the
Pay Bills, but instead a certificate will be attached to the Pay Bills, indicating total
amount deducted as General Provident Fund subscriptions and refund of withdrawals.
In respect of payments a consolidated record should be maintained for arriving at the
monthly total.
2. A broadsheet in Form P.F. 10 (enclosed) should be maintained by each Head
of Office. All deposits and withdrawals posted in a ledger should also be posted in
the broadsheet. The broadsheet should be posted direct from the ledgers and not from
the schedules or vouchers. Each broadsheet in respect of deposits and withdrawals
during a month should be closed on or before the 5th of the following month, i.e
broadsheet for April, should be closed on or before the 5th of May and submitted to
the Head of Office for review on the following day. The Head of Office shall verify
that the amount as booked in the broadsheet, agrees with that of the total of the
certificate of deductions attached to the pay bills and the payments made during the
253
month. The totals of the debits and credits, as worked out in the broadsheet, should
be communicated to the Head of Department (Para 8).
3. In order to ensure that uniformity is maintained all round and no difference
occurs at the time of reconciliation of Departmental figures with those of Accounts
Officers, it is clarified that the broadsheet for April means (i) the recoveries from pay
bills cashed in April irrespective of the month to which the pay may pertain and (ii)
payments on account of General Provident Fund made in April. Consequently, the
broadsheet, for the month of April is required to be closed on or before the 5th of
May, and should be sent by the Drawing Officer to the Head of Department in the
same month.
3(1) On receipt of an application in the prescribed form for admission to the Fund,
the Head of the office will test the eligibility of the new subscriber under the G.P.
Fund Rules, and assign the Account No. to him, with a prefix indicating distinctly the
office to which the subscriber belongs. All permanent employees and temporary
employees other than, re-employed pensioners in continuous service for more than
one year may alone be admitted to the Fund. The nomination will be kept by the
Head of office instead of by the Audit Officer. The nomination, when received must
be scrutinised carefully with reference to the provisions of the G.P. Fund Rules and
should be in one of the prescribed forms appropriate to the subscriber. It should be
primarily seen that if at the time of making a nomination, the subscriber has a family,
the nomination shall not be in favour of any person or persons other than members of
his family as defined in the G.P. Fund Rules. Particular care should also be given to
the following points, while scrutinising the nomination forms:-
a) The examination of each form should be carried out in detail with reference to
each entry made therein.
b) The specification of death as a contingency in the penultimate column of the
forms of nomination is not proper, Only contingencies, such as insanity,
divorce, etc. Can be filled in.
c) The additional remarks in the forms of nomination providing for guardianship
of a minor nominee are invalid and should not be accepted.
d) If at the time of making the nomination on the subscriber has only one
member of the family and, therefore, the alternate nominee (last column of the
254
nomination form) is a person other than a member of his family, the
nomination should provide that the right conferred upon the alternate nominee
shall become invalid in the event of his subsequently acquiring other members
of family.
(2) Appropriate arrangements should be made for the safe custody of the
nominations, and these should be kept under lock and key in the personal
custody of the Head of the Office or a Gazetted Officer nominated by him
after making entries in the ledger as well as the General Index Register Form
P.F. 11 which should be attested by the Head of the Office (Drawing Officer).
An acknowledgment in Form P.F. 12 (enclosed) should be given to the
subscriber as soon as the nomination is accepted.
(3) All Government employees may be advised that it should be in the interest of
their nominees if they would preserve copies to the nominations made by them
and of the related notices and acknowledgments either in their personal
custody or in a safe deposit along with their other important personal
documents, etc. Where they may be expected to come in to possession of the
beneficiaries in the event of their death.
(4) As regards the nomination forms already lying in the A.G.`s office, these will
be transferred by the A.G., Punjab to the Heads of Offices/Drawing and
Disbursing officers, through the Head of Department concerned who will be
responsible for their proper maintenance. They will allot fresh numbers to old
subscribers in accordance with the procedure laid down. If the audit office
requires a list of such old subscribers having been assigned fresh numbers, it
will be supplied to him by the said authorities.
All applications for temporary advance and part withdrawals from the G.P.
fund as well as for payments of insurance premia will, as at present, be scrutinised by
the Heads of the Offices and sanctions, accorded in so far as they are competent to so;
otherwise the sanction will be accorded by the Heads of Departments themselves.
The Heads of the Departments will also scrutinise and sanction the advances for
special reasons. Actual payment will be made by the Heads of offices, where the
Class IV employees are actually serving on the sanctions issued by themselves or by
the Heads of Departments as the case may be.
255
5. Where Life Insurance policies are financed from General Provident Fund, the
Head of the Office should require the subscriber to produce receipts in order to satisfy
himself that the amount withdrawn from General Provident Fund for payment of
premia had been utilised for that purpose. The Head of Office should scrutinise the
receipts and make necessary endorsements on them to the effect that no abatement of
Income Tax will be admissible. A policy will be reassigned on its maturity or earlier
on the death of the subscriber or otherwise as provided in rule 13.21 and 13.22 of (the
Punjab General Provident Fund Rules) Punjab C.S.R Vol.II and handed over to the
subscriber or the claimant entitle to receive it. The Life Insurance Policies at present
financed out of G.P. Fund shall be transferred to Head of Department who will pass
on these documents to Drawing and Disbursing Officers/heads of Offices for safe
custody.
6. The Heads of offices will also maintain the General Index register of General
Provident Fund Accounts in Form P.F. 11 (enclosed). The stock register of Policies
Financed from G.P. Fund will also be maintained by them in Form P.F. 13 (enclosed).
In future fresh life insurance policies. If any, shall/also be kept in safe custody of the
Heads of Offices.
7. If any Class IV employee is transferred from one office to another, his account
will be transferred along with the last pay certificate to the new Head of office with a
statement showing the opening balance at the beginning of the year, deductions and
withdrawals during the various months and the closing balance on the date of transfer.
A copy of the statement in duplicate should also be furnished by him to the Head of
the Department for noting and onward transmission of one copy to the Accounts
Officer concerned. A copy of the subscriber Ledger Account together with his
nomination form in original and the insurance policy or policies (if any) should also
be forwarded to the new Head of Office. Any sum withdrawn under the fund rules
and which remains to be recovered should also be communicated to the new Head of
Office.
8. Each drawing officer should send every month to his Head of Department, the
total of debits and credits under the following column in form P.F. 14 l(enclosed):
(i) Credit on account of subscription;
(ii) Credit on account of refund of advance;
256
(iii) Total Credit;
(iv) Debits on account of withdrawals.
From the information received from the Heads of Offices under him, the Head
of the Department should maintain a register in Form P.F. 18 (enclosed) for collecting
the totals in respect of each month for communication to the Accounts Officer
quarterly.
9. Each Head of Department should intimate quarterly in Form P.F. 19
(enclosed) the total credits and debits for each month to the Accounts Officer showing
the figures for each Head of Office under him Major Headwise and Treasurywise to
enable the figures appear in respect of credits and debits in the broadsheet maintained
in the Accounts Office to be agreed with the corresponding figures intimated by the
Heads of Departments. The Heads of Departments should also furnish to the
Accounts Officer an annual statement in Form P.F. 20 (enclosed) showing the total
credits and debits during the year Major Headwise and the total balance at the close of
the year and get these confirmed by the Accounts Officer.
10(1) Interest for each year will be calculated with the help of ready-reckoners by
the Heads of Offices and entered in the Ledger Accounts as well as in the Broad-
sheet. The statement of interest thus consolidate the statements received from all
Drawing Officers under his control will then be forwarded to the Head of Department
who will control and send the consolidated statement to the Accounts Office where
the necessary transfer entry will be prepared for incorporation in the accounts.
(2) At the time of sending the annual statement to the Accounts officer, a
certificate should be furnished by the Head of Department to the effect that the
balance shown in the annual statement agrees with the aggregate of balances arrived
at after squaring of broadsheets maintained by various disbursing officers and that the
balance in individual account have been communicated to the subscribers and
accepted by them.
(3) The statement of interest which is required to be furnished by the Head of
Department to the Accounts Officer should also show the figures `Head of Office-
wise.
(4) A Head of Department may also have offices in more than one audit circle. It
is, therefore, necessary that the register and statements to be maintained by him
257
should be according to audit circles. All the Heads of Departments should furnish the
statements to the Accounts Officers concerned as soon as possible after interest for
each year has been credited in the Provident Fund Accounts of Class IV employees
but not later than 31st May.
11.(1) At the end of each year the Head of Office will prepare statements in Form
P.F. 15 (enclosed) showing the balance at the credit of the subscribers and forward the
same to the individual subscribers for acceptance of their balances.
(2) Missing credits/debits-while reconciling the figures with the Treasury Officers
each month, the Drawing &Disbursing Officer may also reconcile the figures of
credits and debits of G.P. Fund, However, if there is any such missing credit/debit, the
discrepancy shall be removed by following the undermentioned procedure, namely:
(a) The department will supply the details of missing credits, viz., the name of
drawing and disbursing officer, head of account, name of the treasury, voucher no.
and date, amount of deductions and that total amount of the schedule in which it is
included.
(b) The Accountant General’s office will verify and make necessary pairing after
adjustment in accounts.
(c) On hearing from Accountant General’s office, the department will post the
credits in the ledger cards.
(d) From the date of take over, the responsibility for the missing credits will be
that of the Department.
12. Final Payments -- The Provident Fund money at the credit of the subscriber
becomes payable on the fulfillment of the provision of the Punjab G.P.F. Rules 13.28
and 13.29 of Punjab. C.S.R., Vol.II The amounts become payable, when a
Government employee retires or, on his application, when he proceeds on leave
preparatory to retirement or when he dies. As soon as such an event occurs the Head
of the Office should proceed to obtain an application containing the requisite
information in form P.F. 16 or 17 (enclosed). The account of the subscriber should be
thoroughly checked; particular care being taken of any temporary advances and any
other final withdrawals etc. taken during the last one year. Care should be taken to
258
ensure that no objection is raised by audit during local inspection in respect of the
subscriber remains unsettled. The account should be scrutinised by the Heads of
Offices generally as a whole and in particular all the entries of debits/ credits and
interest made in the last 3 years before the year in which the payment is to be made
should be carefully checked. After verification in the manner indicated above the
account should be brought up-to-date allowing interest upto the end of the month
proceeding that in which the payment is made or up to the end of sixth month after the
month in which such amount become payable whichever of these periods be less
under the Punjab General Provident Fund rules and instructions and the amount
should be paid to the subscriber, if alive. Where the subscriber is not alive and a valid
nomination exists, the payment should be made to the nominee or nominees. Where
the subscriber is not alive and no valid nomination also exists, the payment should be
made to the family members/other claimants who may be eligible to receive payment
under the Punjab G.P.F. rules. In case the subscriber was financing an insurance
policy from his G.P. Fund, steps should simultaneously be taken under rules to re-
assign it and return it to the subscriber.
13. When a Class IV employee is promoted to a post in Class III and the Head of
the Office is in a position to certify that there are reasonable prospects of the
employee continuing in the Class III for at least one year the balance in the G.P. Fund
Account of the subscriber should be transfe rred to the Accounts Officer concerned
immediately who will then commence maintaining these accounts in his office.
14(I) In cases where it is not possible to certify to the above effect (para13) the
G.P.F. account of such persons during the period of one year will have to be treated as
if it relates to Class IV Government employees and maintained by the Head of Office,
and should be transferred to the Accounts Officer after the employees has rendered
one years continuous service in Class III post. Consequently, during this period,
whether the pay of the subscriber is drawn on a separate bill or is drawn alongwith
other Class III employees, the G.P.F deductions of such subscribers may be classified
as adjustable under Head ‘8005-State Provident Fund-A-Civil--(a)General Provident
Fund-I-GPF-Class IV employee * (Name of Department).
259
(2) In both the cases (paras 13 and 14) only a certificate of deductions as per form
P.F. 21 (enclosed) should be attached with the pay bill and the schedule retained by
the Head of Office for posting the ledger accounts in his office.
15. The following procedure shall be followed in the matter of recovery and
adjustment of G.P.F. subscriptions paid by Class IV employees while on foreign
service or on deputation to other State Government.
(a) Employees on Foreign Service:
The foreign employer shall remit the amount of G.P.F. subscriptions recovered
from a Class IV employee to the Head of his parent office by cheque or by demand
draft in his favour together with a schedule of G.P. Fund deduction in Form S.T.R.
17. Separate cheques or demand draft shall be sent in respect of each head of office.
The Head of Office shall continue to maintain the G.P.F. accounts of the employees in
his capacity as an Account Officer. He shall keep the G.P.F. Schedule received from
the foreign employer for record in his office and send the draft or cheque together
with a certificate of G.P.F. deduction as in the case of other Class IV employees to the
Treasury Officer for adjustment. He should thereafter follow the procedure
prescribed heretofore. The Drawing and Disbursing Officer will observe all the
instructions contained in F.D`s letter No. 2731-FR-56/753, dated 23rd August, 1956
read with letter No. 11050-6LFR-I-65/719, dated 27/28th January, 1966 (contained in
Chapter XVII of F.D. Manual 1977 Edition-copy enclosed), in regard to the
maintenance of Remittance Register. As soon as the entries recorded therein are
authenticated by the Treasury Officers the Drawing and Disbursing Officer will make
an entry of the receipt of subscription.
(b) Employees on deputation to other State Governments:
The drawing and disbursing Officer concerned will remit the amount of
General Provident Fund deducted through crossed Payee A/lC Bank Draft in favour of
the lending Department who will pass on the credit to the Drawing and Disbursing
Officer concerned for being credited in the account of the subscriber concerned under
the appropriate head through Treasury Challan and complete the subscribers account
in accordance with the preceding paragraph.
260
16. The G.P. Fund accounts should in all cases of deputation or temporary transfer
be transferred to the new office irrespective of whether or not the transfer is from one
Department to another Department and whether or not it involves a change of
Account Circle. Accordingly, the accounts will be maintained at the place where the
deductions are made, and their correctness ensured, In all cases of transfer the
procedure land down in para 7 should be followed with the followings modifications:-
(a) Cases of transfer not involving change of Account Circle-If the transfer is
from one Department to another, the copy of the statement of accounts should be sent
to both the Heads of Departments (old and new). Transferring Department will make
a deduct-entry for the amount transferred in its accounts whereas the transferee Head
of Department will make in addition to that effect in its consolidated statement.
(b) Cases of transfer involving change of Account Circle-The transfer of account
should be effected in the same manner as in cases mentioned at (a) above. On receipt
of the copy of the Accounts Statement from the Head of the Department, the
Accounts Officer will after making necessary entries in the Broadsheet of Provident
Fund accounts of Class IV employees pass on the credit/debit to the other Accounts
Officer concerned through the Major Head “M-Remittances-(b) Inter Governmental
Adjustments-893-Inter State Suspense Account”. The subscribers new head of
Department should also send a copy of the Accounts Statement to the new Accounts
Officer to enable him to watch the receipt of credit.
17. No authority from the Accountant General for withdrawal of moneys for
payments to subscribers from their respective G.P.F. account will be necessary (as the
G.P.F accounts of Class IV employees will no longer be maintained by the A.G.).
18(1) Under the provisions of Rule 13.3(2) of Punjab C.S.R., Vol.II (Punjab General
Provident Fund Rules), the accumulations in the Fund, of which payment have not
been taken within six months, after they become payable, are required to be
transferred to “Deposits” at the end of the year and treated under the ordinary rules
relating to deposits.
(2) It has been decided that the Departmental Offices, who have been entrusted
with the work of the maintenance of the General Provident Fund accounts of Class IV
employees should furnish to the Audit Officer a list giving full particulars of the
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subscribers and the amount to be transferred to Deposits, including interest payable
under the rules by the 15th of April each year, to enable the Audit Officer concerned
to effect the necessary adjustment in March Final accounts However, in the case of
Class IV employees the accumulations in the fund of which payment has not been
taken within three years after they become payable, are in modification of rule 13.3(2)
ibid, allowed to be transferred to `Deposits` and treated under the ordinary rules
relating to deposits.
(3) In cases where no amount is required to be transferred in a particular year, the
Departmental Officers should send a nil statement to the Audit Officers.
(4) Payments on account of refund of unclaimed deposits will be authorised by the
Audit Officer concerned after ascertaining that the amount was originally received
and credited to deposits and that the claimant’s identity and title to the money have
been certified by Departmental Officer who maintained the G.P.F. account of the
Class IV employee concerned.
19. These instructions should not be treated as exhaustive and drawing officers
should make themselves familiar with the G.P.F. Rules for the correct maintenance of
the accounts.
20. The Provident Fund Accounts maintained by Heads of Offices will be checked
cent per cent by Audit during the local inspections of the offices.
21. If some clarification is required in respect of any point of doubt, or any
difficulties arise in the course of maintenance of accounts by the Heads of Offices,
they should contact the Accounts Officer concerned for guidance.
(Copy of Chapter 17th of F.D. Manual 1977 Edition).
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CHAPTER – IX
AUDIT OF GRANTS/LOANS UNDER SECTION 14, 15 & 20OF CAG’S (D.P. & C.S.) ACT, 1971
G.I.A. SECTION
9.1 A special section viz. Grants- in-aid has been created for the implementation of
the provision of the C.A.G.` D.P.&C.S) Act, 1971, consisting of one Audit
Officer/Senior Audit Officer and two Section Officers./Asstt.Audit Officers. The
section coordinates all work and activities arising in connection with the
implementation of the provision of the said Act.
9.2 Soon after the close of each financial year, the Accountant General should ask
various Departments of the State Government to furnish a list of the bodies or
authorities to which grants or loans were paid by them including grants or loans paid
by offices subordinates to them, during the preceding financial year. Information
should be extracted about loans and grants sanctioned by Government/Departments to
bodies or authorities situated in the audit jurisdiction of other Accountants General
and statement containing particulars of sanctions to bodies or authorities within the
audit jurisdiction of other Accountants General should be sent half yearly by the end
of June and December to the Accountant General within whose jurisdiction the body
or authority is situated.
9.3 An institution-wise Register should be kept centrally containing all
information about grants or loans sanctioned and paid by the Central Government or
the State Government or any Union Territory having a Legislative Assembly to all
authorities or bodies. The register should also contain information regarding the
unspent balance, if any, of loans and grants in previous years together with the grants
and loans paid during the year and the expenditure for that year.
9.4 In all cases in which the grant and/or loan given to the body or authority in a
financial year, including unutilised balances carried forward from previous year is not
less than Rs 25 lakh and the amount of such grant or loan is not less than 75 per cent
of the total expenditure of that body or authority. The Department of the State
Government should be asked to send to this Office the annual accounts of the
concerned body or authority for the relevant year. On receipt of necessary extracts
from the Principal Director, Central Revenue/Principal Director of Audit, Economic
and Service Ministries, in respect of grants/loans paid by the Central Government to
bodies or authorities situated within the audit jurisdiction of his office the concerned
263
Ministry/Department of the Central Government should directly be asked to send to
this office the annual accounts of the body or authority for the relevant year.
9.5 (a) On the basis of information collected, a review should be conducted
and a list should be drawn up of the bodies or authorities the audit of the accounts of
which are required to be undertaken under Section 14 of the Act. Simultaneously, the
concerned Departments of the State Government as well as the concerned
Ministry/Department of the Central Government in regard to the grants or loans given
by the Central Government should be asked to notify the bodies or authorities that
their accounts would be audited by this office under Section 14 and for this purpose
books of accounts should be made available and necessary facilities provided for
audit.
(Para 15 and Annexure to C.A.G.’s letter No. 149/TA.1/50.60-Volume-II, dated 2nd
March 1974).
Audit under Section 14 of the C.A.G.’s (D.P.&C.S) Act, 1971.
9.6 The criteria that should be followed for deciding whether audit of a body or
authority should be undertaken under Section 14 of the C.A.G.’s Act, 1971, is laid
down in the following paragraph:-
1) Where any body or authority is substantially financed by grants or loans from
the consolidated Fund of India or of any State or of any Union Territory
having a legislative Assembly, the C.A.G. of India, subject to the provisions of
any law for the time being in force applicable to the body or authority, as the
case may be, audit all receipts and expenditure of that body or authority and to
report on the receipts and expenditure audited by him.
Note: Where the grant or loan to a body or authority from the Consolidated Fund of
India, or any State or of Union Territory having a Legislative Assembly in a financial
year is not less than rupees twenty five lakh and the amount of such grant or loan is
not less than seventy five per cent of the total expenditure of that body, such body or
authority shall be deemed to be substantially financed by such grants or loans.
2) Notwithstanding anything contained in Sub Section (1), the C.A.G. may with
the previous approval of the President or the Governor of a State or the
Administrator of a Union Territory having a Legislative Assembly, audit all
receipts and expenditure of any body or authority where the grants or loans in
a financial year is not less than rupees one crore.
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3) Where the receipts and expenditure of any body or authority are by virtue of
the fulfillment of the conditions specified in (1) & (2) above, he shall
continue to aud it the receipts & expenditure of that body or authority for a
further period of 2 years notwithstanding that the conditions specified in (1)
&(2) above are not fulfilled during any of the two subsequent years.
Scope of Audit
9.7 (a) Comptroller and Auditor General has discretion to determine the scope
and extent of audit under Section 14 of C.A.G.’s (D.P.&C.S) Act, 1971. In audit the
accounts of the authorities or bodies under Section 14, the principle and instructions
for audit of Government transactions should generally be applied, having regard to the
nature of the transactions of the authority or body, its objectives and other relevant
factors. The normal procedure for raising and pursuance of objections raised in local
audit should be followed. After completing the audit of the body or authority,
Inspection Report should be sent to the Government in the concerned Department
endorsing a copy simultaneously to the body or authority whose accounts are audited
under Section 14.
(Para 11 of C.A.G.’s letter No. 149-TA-1/50-60/Vol-II, dated 2nd March, 1974)
(b) The usual quantum of test check applied to other items like the checking of the
Service Books, Balance sheets, Profit and Loss Accounts etc. should also be applied
in these cases. Besides a test check of pay fixation cases of officers to the extent of
50 per cent may also be conducted. Any particular point arising in the course of audit
may be settled at Headquarters or referred to the G.I.A. Section for further
examination.
(G.I.A. Special Section letter No. 233-35, dated 9th July, 1974).
(c) Any audit arrangement, extent envisaged for the Body or Authority under the
appropriate law governing that Body or Authority will co-exist with the C.A.G.’s
Audit under Section 14.
(Para 4 of C.A.G’s letter No. 149-TA-1/50-60/Vol-II, dated 2nd March, 1974)
Note: Audit of Punjab Agricultural University is being conducted under Section 14
of the C.A.G.’s (D.P. & C.S.) Act, 1971 and not as sole auditors like World Bank
aided projects and therefore, the accounts are not to be certified.
Arrangement of Audit under Section 14 before certification of Accounts.
9.8 In respect of Local Bodies, namely, Zila Parishads, Panchayat Samities,
Municipal Corporations, Municipalities, etc coming under the purview of Section 14
265
of Act 1971, the Accountant General can undertake the audit of accounts of some of
the local Bodies the audit of which has been completed by Examiner, Local Fund
Accounts. In case of other Local Bodies in respect of which the audit by the
Examiner Local Fund Accounts is in arrears, Accountant General may undertake the
audit under Section 14, if the same is considered necessary and expedient.
(Para 5 of C.A.G.’s letter No. 762-TA/37-74, Vol-II, dated 5th September, 1974)
9.9 The Accountant General has been pleased to decide that as a matter of
prudence, we may defer our audit of the accounts of a body/authority selected under
Section 14 till the audit by the usual auditor is completed but it should not cross the
limits of “necessity and expediency”. In other words, it may not be postponed beyond
a period when the due date of its completion and incorporation of its results in the
audit report in which it is due to be incorporated cannot be adhered to. In the latter
case, we may go ahead with our audit under Section 14 without waiting for the audit
by the usual auditors of the concerned body/authority. If felt necessary, suitable
comments about the delay in audit by the usual auditors can be included in the
Inspection Reports.
(GIA Special Section’s letter No. GIA-Spl-Section/Policy/75-76/IV/380, Dated 12th
August, 1975)
9.10 (a) It is normally desirable to await the audit of any body or authority
being completed and the accounts, duly certified by the Auditors of the body or
authority are available, before audit under Section 14 is undertaken by the Accountant
General as the accounts so certified can form a better basis for examination, of
applicability of Section 14 rather than an uncertified account. If however, there are
specific reasons in any case where it is considered essential that audit under Section
14 should be conducted before the accounts are certified, the specific reasons therefor
should be recorded with Accountant General’s approval before audit is undertaken.
Mere delay in certification of accounts by the Auditors appointed for the purpose,
cannot be the only reason for taking up audit under Section 14.
(b) In all such cases, it is necessary to ensure that audit so conducted is sufficient
to certify the accounts, if called upon to do so, though it is not necessary that accounts
should actually be certified by the Department. Further the report issued should
specifically indicate whether the Auditors appointed have not completed the audit or
no Auditors have been appointed as the case may be.
(C.A.G.’s circular letter No. 967-TA-1(RGL)142-78, dated 30th September, 1978)
266
(c) It has been decided that audit under Section 14 should not be delayed merely
because of the fact that the audit by its regular Auditors is in arrears. The institutions
attracting Section 14 come under scrutiny of Audit Department only once in 3 to 4
years. During this period, the Examiner or the regular Auditor is likely to have
completed his audit for at least one year and his results of audit would be available.
In any event, if it is seen that audit of any institution is in arrears for a long period, say
3 to 4 years or even more, the matter may be taken up demi-officially with the
Finance Secretary about the delay in the audit of the accounts of the institution by its
regular Auditor/Examiner, Local Funds Accounts. The Accountant General should
however, carry out the audit under Section 14 and mention the delay in the Audit
Report also.
Further, if in any State, audit by the Examiner of any class of institutions
which are in receipt of substantial assistance from Government is found to be in
arrears, the Accountant General may consider suggesting a Draft Para for the Audit
Report.
(C.A.G.’s circular letter No. 438-TA-I(RGL)/142-76, dated 19th May, 1980)
Audit of the Accounts of Small Farmers Development Agencies/Marginal Farmers and Agricultural Labourers Agencies situated in various States under
Section 14
9.11 (a) It has been decided that the audit of the accounts of small Farmers
Development Agencies, Marginal Farmers and Agricultural Labourers Agencies
situated in West Bengal, Orissa, Assam, Meghalaya, Arunachal Pradesh, Nagaland,
Manupur, Tripura, Sikkim, Gujrat, Maharashtra and Delhi will be conducted by the
Principal Director of Audit, Economic and Service Ministries and the audit of these
Agencies in other places will be conducted by the concerned State Accountant
General.
(b) Since the grants to these agencies are released by Government of India, the
Principal Director of Audit, Economic and Service Ministries will act as the
co-ordinating authority for audit of all these institutions and may issue such general
and specific instructions for conducting audit of these institutions to the various
Accountants General, as may be necessary.
9.12 (a) Since these Agencies are in receipt of considerable financial assistance
from the Government it is necessary that the audit is organised effectively. The
results of audit may be communicated to the Government of India and the
267
Organisation concerned and a copy of the report sent to the Principal Director of
Audit, Economic and Service Ministries as well. If the material as a result of audit is
considered such that it can figure in the Audit Report, suitable draft paragraphs may
be proposed and sent to Government, C.A.G. and the Principal Director of Audit,
Economic and Service Ministries. The Principal Director of Audit, Economic and
Service Ministries will collect the material received from the several State
Accountants General and his own office and propose a comprehensive paragraph for
inclusion in the Audit Report.
(C.A.G.’s letter No. 894-TA-I(RGL)81-76, dated 15th September, 1978 received with GIA special Section letter No. GIA-Spl-Section/Pal-XI/78-79/928 dated 3rd October, 1978)
(b) Government of India, Ministry of Rural Reconstruction have intimated that
from the year 1979-80, the Central Sector Schemes for small Farmers Development
Agencies and Integrated Rural Development Programme are being financed jointly by
the Central Government and the State Government concerned on 50:50 basis. It is
therefore, desirable that the State Government should also get a copy of Inspection
Report simultaneously so as to enable them to keep a watch on the performance of the
Agency Report. As such it should be ensured that besides sending copies of the
Inspection Report to the Ministry of Rural Reconstruction and S.F.D.A./I.R.D.P.
concerned, one copy of the Inspection Report of these units is also simultaneously
sent to the Agricultural Production Commissioners/ Secretary Incharge of Agriculture
of the State Government/Union Territories concerned so that the State
Government/Union Territory is also kept in the picture.
(C.A.G.’s circular letter No. 630-TA-I/81-76, dated 5th July, 1980).
9.13 The Principal Director of Audit, Economic & Service Ministries has supplied
the following information to this office for taking up audit of the accounts of Small
Farmers Development Agencies and marginal Farmers and Agricultural Agencies
located in Punjab.
1. Time Allotment for each Unit under Audit.
5/6 days per Agency per year.
2. Periodicity of Audit Yearly
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3. Year from which audit is to be taken and number of Agencies to be audited which are under Audit control of this office.
(1) SFDA, Amritsar from 1975-76 onwards. (2) MFAL, Ropar from 1975-76 onwards. (3) SFDA, Patiala from 1975-76 onwards. (4) MFAL, Hoshiarpur from 1975-76 onwards (5) MFAL, Jalandhar from 1975-76 onwards
Audit is to be conducted under Section 14 of the C.A.G. of India (DP & CS) Act,
1971.
(A.G.C.W.M., New Delhi letter No. OAD(C)/II/21/2/Vol III/77-78/1041 dated 16th November, 1978)
Guide lines for conducting Audit under section 14.
9.14 Audit under section 14 is of all receipts and expenditure i.e. a total audit that
would cover not merely accounting or other deficiencies and irregularities, but would
go into the efficiency of implementation of programme and activities, raising of
resources, the financial position, the impact of the organisation or lack of it, etc. some
of the points to be kept in view while conducting audit under section 14 are given
below:-
(i) Whether the organisation has a plan of action drawn up to meet its objectives.
Whether plans are drawn out in adequate detail for the objectives to be achieved,
whether the execution had been as per plan, if not, how and where the planning or
execution has gone astray thereby delaying or even nullifying the objectives to be
achieved for increasing the costs of such achievement.
(ii) Whether the body/authority has adequate financial control over budgeting.
Are financial powers wisely exercised? Has it tapped its own sources of income
adequately and has it taken steps to demand and realise its dues and to pursue cases
through proper channels.
(iii) whether the schemes entrusted to or taken up by the body/authority for
execution with or without government aid are planned properly with an assured
source of finance to back them up, that execution proceeds on prescribed lines with
due regard to changes necessitated by practical consideration from time to time, that a
periodical assessment of the progress is conducted to locate draw-backs and to
remedy the same.
(iv) Whether the objective of the scheme has always been kept in view, that benefit
as planned has been accruing and the intended beneficiaries take due advantage of the
benefits conferred by the scheme.
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(v) Whether the body/authority has carried out its activities and has been fulfilling
the objectives for which it exists and is substantially financed by Government.
(vi) Whether the body/ authority carries out its activities with due regard to
economy in expenditure and accepted norms of financial propriety.
(vii) Whether the revenue yielding schemes executed in past do yield the expected
return and that they are not neglected and are properly maintained to produce the
required results.
(viii) Whether schemes of research nature are duly planned and executed as per
plan, they have adequate personnel of required caliber to man for the required period
without interruption or frequent change of personnel, whether period of research is
extended with due regard to progress made and whether there is consequential waste
of public fund. Whether a stage or goal is set for closure of research schemes and
research is directed to the object in view.
(ix) Whether training schemes have a specific purpose and are directed to that
purpose and whether achievement of the objective is watched and reviewed from time
to time.
(x) Whether the results of research are examined, considered and decision
taken/implemented.
(xi) Whether the accounting and stores records are properly maintained and the
financial and other rules and procedures are observed in letter and spirit.
(Para 2 of CAG’s confidential D.O. letter No. 520-Rep-(c)/136-76, dated15th/18th June,1976)
Keeping on Record copies of Accounts of Bodies/Authorities Audited
9 15 Since the audit under Section 14 of any Body/authority is with reference to its
accounts, it is needless to say that the auditor shall keep as a part of his records, a
copy of the accounts audited by him. If in any case, the institution concerned does not
possess a spare copy, it is necessary to have one prepared at the time of audit and
attach the same to the records of the audit done.
In addition, since the application of Section 14 depends on extent of
Government grant/loan, a statement of such grants/loans including unutilised
grants/loans carried over from past periods may be obtained and kept on records so
that the application of Section 14 would be clear with reference to such statements
and the audited accounts.
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Suitable instructions in this regard may be issued to all audit parties and before
approving the Inspection Reports, compliance of these instructions watched by the
Main Office.
(CAG’s letter No. 694-TA-1/74/76, dated 7th August, 1976).
Audit under Section 15 of CAG’s Act, 1971.
GENERAL
9.16 Section 15 of the C.A.G.’s (D.P.&C.S.) Act, 1971 refers to the duties and
powers of the Comptroller and Auditor General in respect of grants or loans given for
any specific purpose to any authority or body not falling within the ambit of Section
14. Audit of Grants and Loans has necessarily to start from the sanctioning authorities
and the Principles of audit and expenditure will generally apply to this audit.
9.17 (a) Section 15(1) has two parts. The first part imposes statutory
responsibility on the Audit Department to scrutinise the procedures by which the
authority sanctioning a grant or loan for any specific purpose to any authority or body
from the Consolidated Fund of India or any of State or of any U.T. having a
Legislative Assembly satisfied itself as to the fulfillment of the conditions subject to
which grants or loans are given.
(Para 2of the CAG’s letter No. 214-TA/36-74,dated 25th March 1974).
(b) The second part of section 15(1)subject to the proviso there under and subject
to what is stated in section 15(2)gives the C.A.G. the right of access to the books and
account of the authority or body in receipt of such grants or loans where the CAG has
this right in terms of section 15, it can be exercised by him at his discretion in other
words, it is not obligatory that the books of authorities or bodies, the books and
accounts of which are open to audit by the Audit Department, must necessarily be
scrutinised.
(Para 4of CAG’s letter No.215-TA/36-74,dated 25th March 1974).
9.18 The Inspecting officers of the local audit parties auditing authorities or bodies
which sanction grants/loans, shall after examining the accounts of the authorities/
bodies where available in the office of the grant/ loan sanctioning authority send
separate reports to Inspection Civil wing Headquarters giving their recommendations
regarding selection of recipient bodies and authorities whose local audit may be taken
up under the provisions of Section 15(1) of the C.A.G.’s Act, 1971. The inspection
civil Wing will forward the Report to G.I.A. Section. The GIA Section will examine
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all such reports recommending access to the books of bodies or authorities and make a
judicious selection taking into account inter alia the magnitude of the grant or loan
and any peculiar or unusual condition attaching to such grants/and or loan and subject
to the proviso under Section 15(1).
(Para 4 of CAG’s letter no. 214-TA-I/357-74, dated 25th March, 1974).
9.19 (a) In CAG’s letter No. 214-TA-I/35-74, dated 25th March 1974, detailed
instructions were given on the scope of audit under Section 15 of CAG’s (DP&CS)
Act, 1971 and, inter alia, the instructions were that:-
(1) It is the statutory duty of the C.A.G. to scrutinise the procedure whereby the
sanctioning authorities satisfy themselves as to the fulfillment of the conditions
subject to which the grants or loans are given;
(2) As it is not obligatory to scrutinise the books of all authorities/bodies the
books of which are open for such inspection with regard to Section 15(2), the
Accountant General may select a few institutions to begin with; and
(3) Important points arising out of examination conducted under Section 15(1) of
the books and accounts of selected bodies or authorities may be reported to the
Headquarters.
The reports received from the Accountant General in this regard have been
examined and it is noticed that generally selection of bodies/authorities has been
confined to a small number and certain Accountants General have not conducted
examination of accounts of any unit at all. While some Accountants General have
prescribed certain monetary limits, no such limit seems to have been prescribed by
others. With due regard to the information furnished by the Accountants General and
the material so far reported in the Audit Reports, the question of issue of further
guidelines for audit under Section 15 and the necessity or otherwise for fixing
monetary limits for examination of records of recipient institutions of grants/loans
have been examined.
(b) It has been decided that no monetary limit criteria need be prescribed for
selecting the institutions for check up of records in terms of section 15. Depending on
the points noticed during the scrutiny of the records of the sanctioning authorities, the
decision has to be taken whether the records of recipient body or authority are to be
272
gone into. For this purpose the Accountants General may issue suitable guidelines to
their field parties.
(c) (I) While scrutinising the records of sanctioning authorities in terms of section
15,the Accountant General may besides any other point they may deem fit to check,
have in mind inter alia the points mentioned below:-
Has the sanctioning authority prescribed clear cut procedure for satisfying
itself that the grants and loans sanctioned are being utilised for the purpose for which
they have been given and whether all the conditions of such grants and loans are
being fulfilled.
(II) Such procedures may provide for:-
(i) submission of periodical progress reports.
(ii) submission of audited statement of accounts.
(iii) Inspection of the Grantee institutions.
(iv) If so, are these reports being received/inspection done.
(v) Are the reports reviewed when received and by whom and what action is taken
thereon?
(vi) Has any irregularity been noticed during inspection ?what action is taken on
such irregularities?
(vii) A register of grants- in-aid is to be maintained to watch the receipt of
utilisation certificates. Is the register being maintained correctly and is it being
reviewed and at what level?
(viii) Is a register of assets created out of grants (equipment and buildings) being
maintained? How is it ensured that these assets are being put to intended use?
Are there any instances of diversion or sale of assets ?If so, what action has
been taken in such cases?
(ix) What action, if any, is being taken in regard to obtaining utilisation certificates
where not received, being in cash or by adjustment from other grants.
(x) Has any legal action been taken against the defaulting grantees? Are
subsequent grants also being paid despite such defaults?
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(xi) In regard to loans what is the position regarding repayment? Is there any
arrangement by which it could be ensured that even after repayment of the
loans the asset is utilised for the purpose for which it is given?
(xii) Are all conditions stipulated in the sanction to grant- in-aid, fulfilled? How is it
being ascertained that the general objective of a scheme of grant- in-aid is
being fulfilled? For instance a scheme of grant- in aid may be intended to
promote adult literacy or Sanskrit. Is there any report or assessment by which
the authorities review from time to time the actual achievements? Is such an
achievement reasonably proportionate to the effort and expenditure involved?
(xiii) Such a review could be usefully made over a period of years. For instance, if a
scheme of grants- in-aid for promotion of sports has operated for 10 years at
the end of which there has been very little achievement, this could be
commented upon though it may not exclusively be related to procedure.
(xiv) There may also be defects in the sanction or in the scheme itself which may
militate against an effective procedure to check the purpose for which the
grant is utilised. Such deficiencies in the sanction or the scheme should also be
examined.
(CAG’s letter No. 1090-TA.I (BGL)-76-75-II, dated 22nd December, 1976)
SCOPE OF AUDIT
9.20 (a) The audit of grants or loans for specific purposes should begin with a
scrutiny of sanctions issued by the competent authorities. It should be seen that:-
(i) They are competent to sanction the loans or grants, and
(ii) While doing so, the financial rules governing them have been followed.
(b) The second step will be to see whether the grant or loan has been utilised by
the recipient body or authority for the purpose for which it is sanctioned. The
financial rules of the central, state and union Territory Governments make the
sanctioning authorities or disbursing authorities responsible for satisfying themselves
about the fulfillment of conditions attaching to the grant or loan and furnishing to the
Audit Officer certificates of utilisation within a prescribed period. To make the audit
of grants or loans for specific purpose effective ,the first part of section 15(1)of
CAG’s (D.P.&C.S) Act, 1971, provides for scrutiny by audit of the procedure
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followed by the sanctioning authorities in regard to proper utilisation of grants or
loans and fulfillment of conditions attached to them. In exercising this part of check it
will be necessary for audit to study the procedure prescribed for the sanctioning
authorities to satisfy themselves regarding proper utilisation of loans/grants and to
check up whether they are following the prescribed procedure and whether the
procedures themselves are not deficient in any respect. Factors like the amount of
grants /loans sanctioned, existence of prescribed procedural instructions, existence of
efficient internal audit and administrative inspection systems in the departments for an
effective control over the proper utilisation of grants and loans are to be looked into in
this connection. In the light of this examination, decision to undertake the actual
scrutiny of the books and accounts of parties or authorities receiving grants/loans for
specific purpose may be taken. During the scrutiny of the procedures followed by the
sanctioning authorities, the accounts and audit arrangements existing in the recipient
body or authority should be ascertained.
(c) Unless proper arrangements in these respects exist and the accounts of the said
body or authority stand audited by its usual auditors for the period in question; local
scrutiny of its books and accounts may have to be deferred as a matter of prudence till
such audit is got completed by the recipient body or authority. The absence of or
deficiency in such arrangements and the consequent delay in Audit scrutiny by this
office of the books and accounts should be mentioned in a separate paragraph in the
chapters on “Grants and Loans” of the annual Audit Report.
(Para 1 of Annexure to C.A.G’s letter No 214-TA/36-74, dated 25 the March 1974)
9.21 In certain states, besides Government, subordinate authorities are also
empowered to sanction grants or loans to different bodies or authorities, copies of
sanction of which are not received in audit although the sanction of grant or loan
implies an outgo from the consolidated Fund. In many cases there may not be any
formal sanction but mere counter-signature on bills signifying such sanction. There
may be cases where sanctions accorded by subordinate authorities are not sent in
advance to audit, but copies of the sanctions are attached to the bills of small amounts,
in such cases it may perhaps be impracticable to keep a complete record in the register
of grants and loans.
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In regard to such cases, when local audit is undertaken of the offices of the
sanctioning authorities, the Inspecting Officer should scrutinise the records relating to
sanctions issued by them and report the amount of grants or loans sanctioned together
with relevant particulars regarding the recipient bodies or authorities to the G.I.A.
Section to determine whether the books and accounts of a particular recipient body or
authority be scrutinised locally.
(Para 2 of Annexure to C.A.G.’s letter No. 214-TA-36-74, dated 25th March, 1974)
9.22 The question whether a body or authority established by a State or Union
Territory Government would constitute a ‘corporation’ within the meaning of section
19(3) and whether the audit of such a corporation could be undertaken under section
14 of C.A.G.’s (D.P.&C.S.) Act, 1971 has been considered in consultation with the
Ministry of Law and Justice.
It has been held that a body corporate established by a State or Union Territory
Legislature, having perpetual succession with a common seal, with the power to
acquire and dispose of property, contracting obligations and of suing and being sued
in its corporate name would be treated as a corporation. It should be noted in this
connections that corporations established by law by the Legislature of the State or the
Union Territory, as the case may be, which come within the purview of section 19(3)
of the Act, but those established under the law will not come within the purview of
that Section. Section 15(2) of C.A.G.’s (D.P.&C.S.) Act, 1971 however, refers to
corporations established by or under the law. Accordingly, all corporations
established by or under the law of Parliament or the Legislature of the State or of
Union Territory with a Legislative Assemly will come within the purview of Section
15(2) of the Act.
(Para 3 of C.A.G.’s letter No. 762-TA-I/37-74, Vol-II, dated 5th September, 1974)
9.23 The Ministry of Law and Justice have further clarified that a body or authority
referred to in Section 14 or 15(1) of C.A.G.’s (D.P.&C.S.) Act, 1971 can include a
corporation established by law made by the Legislature of a State or Union Territory
with Legislative Assembly. It follows that it will be in order to take up audit under
section 14 of the Act, of corporations established by the Legislature of the State or the
Union Territory with Legislative Assembly, as the case may be, which come within
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the purview of Section 19(3) of the Act, if the conditions stipulated in Section 14 are
satisfied.
(Para 4 of C.A.G.’s letter No. 762-TA-I/37-74, Vol-II dated 5th September, 1974)
9.24 In the case of “Corporation” if the law by or under which such corporation has
been established provides for the audit of its accounts by an agency other than the
Comptroller and Auditor General, the right of access to its books and accounts is not
available to him unless specifically authorised by the President or the Governor of a
State or the Administrator of a relevant Union Territory under Section 15(2).
(Para 10 of C.A.G.’s letter No. 214-TA.1/359-74, dated 25th March, 1974)
9.25 ‘Specific purpose’ grant or loan will include grant to cover deficit but not
general purpose grant or loan without any condition. If any doubt arises from a
reading of the sanction letter as to whether a grant or loan is for a specific purpose,
Government Department’s file leading to the issue of the relevant sanction should be
consulted.
(Para 11 of C.A.G.’s letter No. 214-TA.1/359-74, dated 25th March, 1974)
9.26 The scrutiny of the procedure by which the sanctioning authority satisfies
itself as to the fulfillment of the conditions, subject to which the grants or loans for
specified purposes were given to Municipalities, Municipal Corporation, District
Boards, Universities, Co-operative Societies and Panchayati Raj Institutions, may be
conducted in respect of these corporations in the office of the sanctioning authority.
The books and accounts of the corporation will not however, be open for local audit
by the Accountant General, if the law by or under which such corporations have been
established provides for the audit of their accounts by an agency other than the
Comptroller and Auditor General. In other words, in regard to corporations
established by or under law made by Parliament or State Legislature, the scrutiny will
have to be confined to the records available in the office of the sanc tioning authority
subject to proviso below section 15(1) of C.A.G.’s (D.P.&C.S.) Act, 1971 unless the
audit of the accounts of the corporations vests in Comptroller and Auditor General
under section 14 or section 19(3) of C.A.G.’s Act, 1971 or any other law made by
Parliament in which case local audit of the books and accounts of the corporations can
be undertaken by the Accountant General.
(C.A.G.’s letter No. 908-TA.I/87-74, dated Ist November, 1974)
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Grants-in-aid pertains to the year of its drawal
9.27 As per Accountant General’s orders a grant sanctioned and drawn in a
particular year is to be taken as pertaining to the year in which it is drawn by the state
Government. The small time- lag in the remittance of the grant to the recipient body is
to be ignored, since government itself treats the grant as pertaining to the year of its
drawal. These guidelines may be kept in view by the Audit parties, while conducting
audits under section 15 of the C.A.G.’s (D.P.&C.S) Act, 1971(G.I.A special Section
letter No. GIA-Section/IR and Secretariat 15/IV/533 dated 12th August, 1978)
Specific purpose grants /loans to Government Companies and other organisations under audit of the commercial wing
9.28 Section 15(1)of C.A.G.’s (D.P.&C.S) Act, 1971 imposes a statutory
responsibility on the Audit Department to scrutiniise the procedures by which the
authority sanctioning a grant or loan for any specific purpose to any authority or body
from the consolidated Fund satisfies as to the fulfillment of the conditions and for this
purpose the C.A.G. has been given right to access to the books and accounts of the
authority or body, subject to provisions in section 15 (2) ibid.
In this regard, the question relating to examination of records of Government
companies and other corporations for which C.A.G .is the auditor for purposes of
scrutiny under section 15(1) has been examined. It has been decided that for the
purpose of audit of such grants/loans, the Audit Officer of the Ministry/Department
sanctioning the grants may keep the Audit Officer of the
Government/company/corporation concerned informed of the results of his scrutiny in
sanctioning authority’s office. The examination of the records of the Government
Company/Corporation will be conducted by the Audit Officers conducting the normal
audit of that body. The results of audit will be communicated by the Audit Officer of
the Government Company/Corporation to the Audit Officer of the
Ministry/Department for incorporation in the Civil Audit Report and pursuance of the
objections, if any, noticed with the sanctioning authority concerned.
(C.A.G.’s letter No. 349-TA, 1/160-75, dated 24th April, 1976)
9.29 (a) As at present, if in the course of audit of sanctions of grants/loans in
the offices of sanctioning authorities, some points concerning assistance paid to
Government Companies/Corporations under Statutory audit of other audit offices are
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noticed by G.I.A. Section, the wing conducting this audit, these may please be
brought to the notice of the concerned audit officer and the receipt of results of audit
watched.
(b) In case where the statutory audit of Government Companies/corporations is
conducted by the Commercial Wing, any points noticed by Inspection Civil Wing in
the course of sanction audit which need to be investigated further in the course of
audit of books and accounts of companies/corporations may be brought to the notice
of the Commercial Wing by the Civil Inspection Wing. It is, however, not necessary
that the Commercial Wing should communicate the important audit points to
Inspection Civil Wing for incorporation in the Audit Report. Rather, in accordance
with the existing procedure, the Commercial Wing may process such important points
noticed during the course of audit of books and accounts of these
companies/corporations direct for the Civil Audit Report, the material in regard to
scrutiny of sanctions being continued to be processed by the Civil Wing.
(c) Another effect of these instructions will be that the Commercial Wing would
have to prepare two sets of observations, one pertaining to grants/loans paid to
companies/corporations made under section 15(1) for incorporation in the Civil Audit
Report and the other set of observations in respect of the usual audit conducted under
section 19 of the new Audit Act for the Commercial Audit Report. For allocating
observations relating to Section 15, Commercial Wing may follow the instructions
relating to scope of audit of accounts of bodies/authorities under section 15(1) given
in C.A.G.’s circular letter of 25th March, 1974 and allied instructions brought to their
notice from time to time.
(d) Commercial Wing may also ensure that the above instructions in regard to
audit of books and accounts of recipient bodies are complied with in local audit.
Accountant General has desired that there should be close co-operation between
Inspection Civil Wing and Commercial Wing in this matter.
(G.I.A. Special Cell letter No. GIA-Spl-Cell Policy and /76-77/VI/373-78, dated 29th June, 1976)
Audit of Accounts of Co-operative Societies
9.30 The Co-operative Societies represent corporations established under law made
by the Legislature of the State or the Union Territory, as the case may be, and as such
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they would attract the provisions of Section 15(2) of C.A.G.’s (D.P.&C.S.) Act, 1971.
Accordingly, local audit of co-operative societies established under law made by the
Legislature of a state or of a union Territory cannot be undertaken by the Indian Audit
and Account Department except where Comptroller and Auditor General is authorised
to undertake the audit of these societies by the Governor of a state or the
Administrator of a union Territory, having a Legislative Assembly under the
provisions of section 15(2) of the Act, as provision exists in the state Laws for audit
of accounts of the co-operative societies, by the Registrar of Co-operative Societies,
or an Audit officer authorised by him in this behalf by general or special orders. In the
circumstances, the present practice of superimposed audit of co-operative societies
may be discont inued. In cases, however, in which the co-operative society comes
under the purview of section 14 of C.A.G.’s (D.P.&C.S)Act,1971the audit of the
accounts may be undertaken in accordance with the instructions in this regard.
(C.A.G’s letter No. 528-TA. 1/25-74, dated 24th June, 1975)
9.31 As only the instructions for super- imposed audit have now been withdrawn, it
may be noted that the instructions given for review of accounts of co-operative
societies, wherein Government have made substantial investments in the form of
share capital, loan, grant etc. either in central audit or in the offices of the Registrar of
co-operative societies and allied offices are still operative and the review may be
continued to be conducted. It is also brought to notice that the Accountants General
are not precluded from proposing appropriate comments in the Audit Report as a
result of scrutiny of these records in the office of the sanctioning authorities.
Necessary action for such examination may be undertaken and the feasibility of
reporting results of such examination given due consideration. The relevant material
in this regard (including the statistical information on such investments in co-
operative societies)may be proposed for inclusion in the chapter on ‘Financial
Assistance to Local Bodies
(C.A.G.’s letter No. 1245-TA. 1/25-74.Vol-I,dated 29th December, 1975).
Audit of the Punjab State Co-operative Supply and Marketing Federation
9.32 Audit in respect of the Punjab State Co-operative Supply and Marketing
Federation may be confined to the records of the sanctioning authorities under Section
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13 and 15, including scrutiny of the audited accounts of the Society and the reports of
the Auditors thereon.
In case any point relating to the assistance paid to Markfed comes to notice in
audit of sanction in the office of sanctioning authorities, these may be particularly
brought to the notice of Commercial Wing and G.I.A. Section.
(C.A.G. letter No. 400-TA.1/25-74-1, dated 11th May, 1976 and G.I.A. Special Cell endorsement No. GIA-Spl. Cell/74-77/20(2)/300-303, dated 7th June, 1976).
Audit under Section 20 of C.A.G.’s (D.P.&C.S.) Act, 1971)
9.33 With the promulgation of the C.A.G.’s (D.P.&C.S.) Act, 1971 the practice of
undertaking audit on ‘consent’ basis ceases and audit to be undertaken by the C.A.G.
has to be under one or the other section of this Act or any other parliamentary
enactment.
(Para 12 of CAG’s letter No. 149-TA.1/50-69 Vol-II, dated 2nd March, 1974)
Quantum of Audit
9.34 (a) The quantum of audit under section 20 generally depends on the
efficacy of the internal check available in any organisation. The minimum check
should be exercised to ensure that the accounts represent a true and fair picture of the
Organisation. The quantum of audit to be applied to different accounts/records has
been prescribed by the Comptroller and Auditor General of India in his secret letter
No. 1076-TA.1(RGL) 26-78, dated 7th November, 1978. In respect of
records/documents for which no quantum is prescribed the same may be determined
locally.
(b) However, where it is necessary to decrease/increase the quantum, suitable
justification therefore should be available on record for the increase allowed. In cases
where audit of selected periods/records reveals serious irregularities, there will be no
objection to increase the quantum on the spot and to have it approved later.
Since audit of Organisation is conducted locally by the Section Officers/
Assistant Audit Officers under adequate supervision, it is not necessary to prescribe
separate, quantum for Auditors, Sr. Auditors and Inspecting Officers. The work has
to be organised in such a way that the team as a whole is responsible for the audit and
certification of accounts. In respect of each record a general scrutiny is required to
ensure tha t it does not reveal any abnormal feature.
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Audit of Accounts of Central School Organisation (Kendriya Vidyalaya Sanghathan) under Section 20
9.35 The audit of all receipts and expenditure of the Kendriya Vidyalaya
Sanghathan and the schools controlled and administered by it, including those whose
expenditure is reimbursed by different public undertakings will be conducted by the
Audit Department. The audit will cover besides receipts and expenditure, the pupils
Fund of the School as well.
(A.G.C.R.’s letter No. OAD.1/12-8/74-75/275 dated 26th May, 1975)
Recovery of the cost of audit of bodies and authorities under
C.A.G.’s(D.P.&C.S)Act, 1971
9.36 The rules regulating the incidence of expenditure involved in audit of the
accounts of bodies and authorities conducted by the I.A. and A.D. have been laid
down in section VIII of Appendix 3 of Account code, Volume I. The question
whether these rules of incidence require any modification consequent upon
promulgation of C.A.G.’s (D.P.&C.S) Act, 1971 has been under consideration for
some time. It has been decided that the present rules of incidence should be continued
to be followed in regard to audit of the accounts of bodies and authorities, including
Corporation, in so far as audit under Section 14,15 and 19 of C.A.G.’s (D.P.&C.S)
Act, 1971,is concerned. Accordingly, the cost of audit of bodies and authorities
including corporations, will be recoverable in all cases in which audit is undertaken
by the Comptroller and Auditor General, or any officer under him as the sole auditor.
In cases in which the audit of the accounts of the body or authority is conducted by
another agency and audit by Comptroller and Auditor General or an officer under him
represents second or superimposed audit undertaken under Section 14,15 and 19,as
the case may be, the cost of such second or superimposed audit need not be recovered
from the body or authority concerned. As regard audit under Section 20, the same is
required to be undertaken on such terms and conditions as may be agreed upon
between Comptroller and Auditor General and the concerned Government. One of the
terms to be settled in this regard would relate to the recovery of the cost of audit of the
body or authority to be entrusted under Section 20 of 1971 Act. The recovery of cost
of audit in these cases will, therefore, be regulated by the agreement that will be
arrived at in each case. These cases should, therefore, be referred to the Headquarters
for finalisation of the terms and conditions under which the audit of the body or
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authority concerned may be undertaken including the question whether the cost of
audit should be recovered or not. All pending cases may be dealt with accordingly.
(C.A.G.’s letter No. 13-TA-I/28-73, dated 9 th January, 1975)
Issuing of Inspection Reports
9.37 (a) The normal procedure for raising and pursuance of objections raised in
local audit should be followed. After completing the audit of the body or authority
under Section 14, a copy of the inspection Report should be sent to the Government in
the concerned Department, endorsing a copy simultaneously to the body or authority
whose accounts are audited under Section 14 of C.A.G.’s (D.P.&C.S) Act, 1971.
(b) It should be borne in mind that though the Accountant General’s scrutiny
under Section 15, is of the accounts books and records of selected bodies or
authorities, any question arising from such examination, had better be directed to the
sanctioning authorities for elucidation or comments. Moreover, the relevant
Inspection Report should be issued to the sanctioning authorities and not to the
recipient institutions. However, care should be taken to ensure that facts and
assumptions on which comments are based are correct and for this purpose facts
should be confirmed by the sanctioning authorities or the recipient institutions
concerned, depending on the circumstances of each case.
(Para 6 of C.A.G.’s letter No. 214-TA-1/357-74, dated 25th March, 1974)
(c) Where audit of a body or authority is undertaken under Section 20(1) of the
C.A.G.’s (D.P.&C.S.) Act, 1971, the results of audit should be communicated to the
Governing Body of Council, who shall submit a copy of the Inspection Report
alongwith its observations to the Ministry/ Department of Government of India and to
the Council. A copy of the Inspection Report should also be forwarded direct to the
concerned Ministry/ Department of the Government of India.
Drafting of Inspection Report
9.38 (a) The following instructions should be observed by the local audit
parties for drafting of Audit and Inspection Reports:-
(i) The Audit and Inspection Reports on the accounts of Bodies/Authorities
receiving Grants/Loans are to be issued to the State Government. As such
these should be well drafted and written in clear and concise manner.
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(ii) For processing the material for the Audit Report, the objections should be
properly documented and got confirmed from the Department by issuing audit
memos.
(iii) The words “seen, discussed and facts verified” should be written by the Head
of Office before putting his signature and not by the Section Officer/ Assistant
Audit Officer/ Inspecting Officer.
(iv) The audit Note should be so drafted that it should clearly indicate the years
audited, the important items of Receipts and Expenditure and also how Section
14 is attracted. Where annual accounts are certified by the Chartered
Accountants or Examiner, Local Fund Accounts, this should be indicated. As
audit under Section 14 is an audit of all Receipts and Expenditure, the para
should generally cover all major items of receipts and expenditure
commenting on the State of accounts, budget and internal control, stock
accounts and verification, etc. Also wherever feasible the programme of the
organisation should be assessed for efficiency and economy, highlighting
lapses in procedure and systems, lack of impact etc. The above information is
necessary for commenting the results of audit in the Audit Report.
(C.A.G.’s letter No. 13-TA-1/28-73, dated 9th January, 1975)
(b) Audit parties conducting the audit of Bodies/Authorities may suitably include
the following information in the Inspection Reports:-
(i) Figures of Grants/Loans received by the Body/Authority from the
State/Central/U.T. having Legislature during the financial year.
(ii) Unspent balance of the previous years Grants/Loans.
(iii) Total expenditure of the year from all sources. The details of the in-
admissible items of the expenditure like deposit in the bank accounts, etc.,
may be distinctly given.
(iv) Details of Grants/Loans given, if any, by the Body/Authority (under audit) to
other bodies/authorities comments whether such Grants/Loans were given in
pursuance of the instructions of the original sanctioning authority and how
proper utilisation of such Grants/Loans was ensured by the direct recipient
Body/Authority.
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(v) Any discrepancy(ies) noticed by the audit parties in figures of Grants/Loans
and total expenditure received from Headquarters may be explained in the
Memos forwarding the Inspection Reports.
(GIA Special Cell letter No. GIA-Spl-Cell Policy/75-76/1/27-32, dated 23rd April, 1975)
(c) The following documents should be furnished with the Audit and Inspection
Report:-
(i) Forwarding letter with which Audit and Inspection Report is issued.
(ii) Title sheet of audit and Inspection Report.
(iii) A statement showing the following information. It should also suitably be
commented upon in the Audit and Inspection Report:-
Sr. No.
Sanctioning Authority
No. & date of sanction
Amount of Grant/ Loan
Amount drawn
Previous balance, if any
Total Amount utilized within the stipulated period
Balance Amount refunded
Amount for which UCs sent
Amount for which UCs awaited
Remarks, if any
1 2 3 4 5 6 7 8 9 10 11 12 13
(d) Internal control system in Autonomous Bodies –evaluation thereof.
(i) Internal control is a management tool use to provide reasonable assurance that
management's objectives viz. Reliability of financial reporting, Effectiveness
and efficiency of operations, Compliance with applicable laws and regulations
etc. are being achieved. While conducting the audit, the auditor should
appraise the internal control in force before he plans out the detailed audit
programme. C&AG has desired that as a part of our audit of Autonomous
Bodies, we are required to make an assessment of the effectiveness of the
internal control arrangements in the Autonomous Bodies. Though the
responsibility for the adequacy and effectiveness of the internal control
structure rests with management of respective Autonomous Bodies, the
responsibility of reviewing the internal control system including internal audit
lies on us as we are the sole auditors. Appraisal of internal controls enables
the auditor to restrict his detailed examination in areas where internal control
is satisfactory and extends it in areas where internal control is weak. With
weak internal controls and limited audit coverage, many things could go
wrong.
285
(ii) Evaluation of internal control can be made in a number of ways but the most
effective and common method is through internal control questionnaire. In
general the control areas can be :
Policies and procedures
Scope and independence of internal audit
Receipt and disbursement of cash
Mixing of funds (Plan/Non-plan)
Purchase/custody of investments/securities
Accounting and receipt of interest on investments/Securities
Fixed assets/Vulnerable assets
Receipt and receivables
Disbursements/Payables
Payrolls/Loans and advances to the individuals
Bank balances/Bank Reconciliation
Man power analysis
(iii) For the purpose of evaluation of internal control detailed guidelines for
internal control standards issued by INTOSAI and an internal control
questionnaire issued by the Institute of Chartered Accountants of India may be
kept in view. The purpose of these documents is to provide an illustration of
the questionnaire method of evaluating internal control. A standard form of
questions may not be suitable to all Autonomous Bodies. Individual variations
may have to be made to suit specific circumstances and activity of
Autonomous Bodies.
(iv) All Heads of the Departments must ensure that internal controls of
Autonomous Bodies are evaluated and a brief note on this matter shall be
invariably sent along with the draft SAR to Headquarters. Serious
shortcomings in the internal control system must also find place in the SAR.
CAG letter No. 77-Rep(AB)/63-2004 dated 05-04-2004
(e) It is essential that annual accounts are approved by the authority competent to
do so as per provisions of Rules/Bye Laws applicable to the organization before the
audit is taken up. It may be ensured that:-
(i) in every case of sole audit under Section 19 (2)/ 19 (3)/ 20 (1) of the CAG's
(DPC) Act, 1971 matter of approval of accounts is examined by the field audit offices
286
with reference to Rules/Bye-Laws applicable to the organisation and need there of is
brought to the notice of the management.
(ii) field offices do not entertain/take up audit before the accounts are approved by
the competent authority of the autonomous body and annual accounts duly approved
by the competent authority of the Autonomous Bodies are only accepted before the
audit is commenced.
(iii) copy of Resolution/Minutes of the authority approving the accounts are
invariably obtained along with the annual accounts at the commencement of audit. A
copy of the minutes approving the accounts may also be sent to Headquarters along
with SAR.
(iv) in cases where accounts are revised during/after audit, the revised account
should again be approved by authority which had earlier approved the annual
accounts before these are submitted to audit.
CAG letter No. 44-Rep(AB)/150-2000 dated 08-03-2002
Certificates to be furnished with Audit and Inspection Reports under Sections 14 and 15 of C.A.G.’s Act, 1971
9.39 The following certificates may be furnished with the Audit and Inspection
Reports under Section 14 and 15:-
(i) Certified that no case of grants- in-aid for specific purpose to an individual or a
firm came to notice during the course of audit.
(ii) Certified that no case of Grants/Loans for non-specific purpose came to notice
during audit.
(iii) Certified that statement showing scope and extent applied to audit under
Sections 14 and 15 has been attached.
(iv) Certified that figures of Grants/Loans and expenditure there against has
suitably been depicted in the Inspection Report as per G.I.A. Cell letter No.
GIA Spl. Cell/Policy 75-76/27-32, dated 23rd April, 1975.
(v) Certified that the statement in Annexure “A” has been prepared and suitably
commented in the Audit and Inspection Report.
(vi) Certified that the time allotment is adequate/inadequate, in case the time
allotment was inadequate detailed reasons in this regard may be given.
287
(vii) Certified that the audit of the accounts of the Body/Authority was completed
by its usual auditors before taking up audit under Sections 14 and 15.
(viii) Certified that a certified copy of the annual accounts of the body has been
obtained and placed in the Audit and Inspection Report.
Pursuance of Inspection Reports
9.40 A case has come to notice in which draft paragraph proposed for the Audit
Report had been deleted by Headquarters as the comment thereon was not based on a
valid premise. The connected paragraph(s) in the Inspection Report continued to be
pursued by the field office concerned with the administrative authority concerned.
Pursuance of paragraphs in Inspection Reports in such cases could lead to
embarrassment at times. It is, therefore, requested that all cases of draft paragraph
deleted by Headquarters should be reviewed by the Accountant General in the light of
the remarks of the Headquarters with a view to considering whether the connected
paragraphs in the original Inspection Reports should be pursued or not.
(CAG’s letter No. 516-Rep/126-77, dated 25 th June, 1977received with Appropriation Section D.O. No. Appn. (R) 1/-1-5/Inst-IV/200-01, dated 8 th July, 1977).
Reporting of results of Audit under Sections 14 and 15
9.41 (a) Though section 15 does not specifically provide for reporting in the
C.A.G.’s Reports, on the result of audit of loans/ grants for specific purpose, since
expenditure out of the consolidated Funds is involved, reporting thereon will be
within the purview of Section 13 of the Act.
(b) Important irregularities noticed during the scrutiny of procedures in the office
of the sanctioning authorities and/ or scrutiny of records of the recipient bodies or
authorities may also come to be featured in the Audit Report distinctly and separately
in a chapter on Grants/Loans given by Government. In this chapter, the important
points arising out of the audit under Section 14 and those arising out of the scrutiny
under Section 15(1) should be distinctly brought out in separate paragraphs.
(c) In regard to grants/loans to bodies or authorities, not coming under the scope
of Section 14 and also not coming under Section 15(1) due to non-mention of any
specific purpose in the sanctions, such items should be listed out and mentioned
distinctly in separate paragraph of this chapter, so as to bring to the notice of the
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Legislature the number of such cases and quantum of money involved that remain
unaudited by the Indian Audit Department, though it constitutes expenditure out of
Government Funds.
(Para 12 of C.A.G.’s letter No. 214-TA/36-74, dated 25th March, 1974)
9.42 The paras under Section 14 should clearly indicate the years audited, the
important items of receipts and expenditure, and also how Section 14 is attracted.
Where annual accounts are certified by Chartered Accountants or Examiner local fund
Accounts, this should be indicated. As audit under Section 14 is an audit of all
receipts and expenditure, the para should generally cover all major items of receipts
and expenditure besides commenting on the state of accounts, budget and internal
control, stock accounts and verification, etc. Also wherever feasible the programme of
the organisation should be assessed for efficiency and economy, highlighting lapses in
procedures and systems, lack of impact, etc.
(Para 3 of C.A.G.’s confidential D.O. letter No. 883-Rep/141-76, dated 9th September, 1976)
9.43 The Chapter on Financial Assistance should also include a review of the
results of examination of the accounts of co-operative societies conducted in the
offices of sanctioning authorities (Registrars of co operative Societies). Such a review
could reveal inadequacies in existing procedure, non-observance of prescribed
procedure, slow progress in certain schemes etc. The extent of achievements in co-
operative sector on certain schemes entrusted to them for implementation could also
be critically studied. The material to be presented in the Audit Report in this regard
can be preceded by brief outlines of the number of co-operative societies, funds
employed, membership, profitability of the movement, information on dormant
societies, extent of arrears in audit etc.
(Para 5 of C.A.G.’s confidential D.O. letter No. 883-Rep/141-76, dated 9 th September, 1976)
9.44 There may also be some other significant point worth including in the State
Audit Report in respect of institutions which do not attract Sections 14 or 15, but
which are under our audit under erstwhile “Consent” arrangement. Only significant
points should be mentioned in regard to such organisation. The question of including
paras pertaining to these organisations will have to be considered in the light of the
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significances of the issues involved as, in any case, a separate Audit Reports is being
issued in respect of most of these institutions.
(Para 6 of C.A.G.’s confidential D.O. letter No.883-Rep/141-76, dated 9 th September, 1976)
9.45 The two points indicated below are to be dealt with as follows:
(i) Where more than one Government are rendering financial assistance to a
body, in whose report will the material be included?
(ii) In respect of bodies financed by the Central Government and audit conducted
by the State Accountants General will the State Accountant General directly process
the material with the Central Government or will it be done by the Principal Director
of Audit, Central Revenue/Principal Director of Audit, Economic & Service
Ministries.
The general principle guiding us for reporting is that those who vote the
money should know how the money that was voted has been spent. Accordingly, our
comment, should appear in the reports of the Government that finance a body.
However, the Accountant General auditing the body should exercise his best
judgment to decide, with due regard to the magnitude of grants, loans given by
various Governments, objects of such assistance, control exercised by the respective
Governments, nature of objections raised in relation to the assistance given by various
Governments etc., the reports in which the material should appear and process the
case further by sending copies of reports to the concerned Accountants General for
further processing in their respective reports. If the body is ,however, located in one
State and is financed both by the State and Central Government, normally the para
will appear in the State Report. If however, the Accountant General feels that the
matter is worth mentioning in the Central Report also, there is no objection for State
Accountant General finalizing the para in consultation with the Government (State
and Central ) and forwarding the same to the Principal Director of Audit, Central
Revenue/Principal Director of Audit, Economic & Service Ministries for inclusion in
the Audit Report. (C.A.G.’s letter No. 1102-TA-1/I49-73dated 25 th November, 1975)
9.46 (a) Since audit of autonomous bodies is entrusted to the C.A.G. in public
interest, it is necessary that the audit of their accounts is directed to see that the
objective of the organisation is achieved, that the expenditure incurred to achieve the
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objective is reasonable, that there has not been wastage of funds placed at their
disposal etc. For this purpose, an efficiency cum performance audit should be
conducted periodically and material incorporated in the Separate Audit Report. Where
the points are considered significant enough to be specifically brought out in the
conventional Audit Report as well there is no objection for suitable mention being
made in the Audit Report.
The accounts should be certified as representing a true and fair picture of the
affairs in the form mentioned below as communicated vide CAG letter No. 89
Rep(AB)/91-2003 dated 27-04-2004:
AUDIT CERTIFICATE
I have examined the Manufacturing & Trading Account, Profit and Loss
Account for the year ending 31st March ______ and Balance Sheet as on 31st March
______ of the ______________________________________. I have obtained all the
information and explanations that I have required, except record of commercial units
as mentioned in the para ______of the appended Audit Report which inter-alia
contains the following major audit observations.
§ Non-maintenance of its accounts in the prescribe format (para ____ )
§ Non-maintenance of ledger accounts and compilation of annual accounts
on the basis of the figures available in Store ledgers and Cash book. (para
____ )
§ Cash shortage of Rs __________ (para ____ )
§ In correct depiction of liabilities Rs __________ (para ____ )
§ In correct depiction of assets Rs __________ (para ____ )
§ Less depiction of receipts (Rs __________) from _____________ (para
____ )
§ Difference in rebate (Rs __________) receivable from ____________
(para ____ )
§ Non-furnishing of utilisation certificates in respect of grants released
during _________ to _________ (Rs _________) (para _________)
§ Preparation of accounts of single entry system. (para _________)
I certify, as a result of my audit, that in my opinion these accounts are not properly
drawn up so as to exhibit a true and fair view of the state of affairs of the Board
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according to the best of information and explanations given to me and as shown by
the books of the organization.
AUDIT CERTIFICATE
I have examined the Revenue Accounts for the year ended 31 March _____
and the Balance Sheet as at 31 March _______ of the ______________ including
Receipt and Payment Account and Income and Expenditure Account for the year
ended 31 March ____ and the Balance Sheet as at 31 March ______ of
_____________. I have obtained all the information and explanations that I have
required, except
Supporting documents for figures included in the accounts for Rs _______ as
mentioned in paragraph _____ of the appended Audit Report
and subject to the appended Audit Report which inter alia contains the
following major audit observations,
i. Rs ______ sales tax liability not disclosed (para ____ )
ii. Rs ______ demand for Electricity charges, raised by State Electricity Board,
not disclosed (para ______ )
iii. Rs ______ revenue expenditure capitalized, thereby increasing the surplus in
the Revenue Account (para ______ )
iv. Rs ______ normal interest on defaulted principal of Government of India loan
not provided (para ______ )
v. The difference of Rs ______ in the cash balance had not been reconciled
(para ______)
vi. The block assets remained in excess by Rs ______ due to additional of
notional interest (para ______)
vii. Rs ______ was appropriated to Pension Fund instead of charging it to
revenue account, to show a higher net surplus, (para ______ )
I certify, as a result of my audit, that in my opinion these accounts and Balance Sheet
are properly drawn up so as to exhibit a true and fair view of the state of affairs of
_____________________ according to the best of information and explanations given
to me and as shown by the books of the organization.
CONFIDENTIAL
AUDIT CERTIFICATE
I have examined the Receipts and Payments account, the Income and
Expenditure Account for the year ending 31st March _____ and the Balance Sheet as
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on 31st March _____ of _________________________. I have obtained all the
information and explanations that I have required and subject to the clarifications
furnished in note to and forming part of accounts and observations in the appended
Audit Report which inter-alia contains the following major audit observations.
1. Cash Balances of Rs _____ in the three set of accounts Nazul Account I & II and
General Development Accounts remained un-identified and non-verifiable due to
maintenance of only one cash book. (para _____)
2. Appearing of minus Cash & bank balances of Rs _____ (para _____).
3. Closing value of property amounting to Rs _____ and Rs _____ could not be
verified due to non-availability of details and connected records. (para _____).
4. Value of built up and under construction flats/shops of Rs _____ could not be
verified for want of proper records. (para _____)
5. Stock of general development accounts depicted a minus balance of Rs _____.
(para _____).
6. Value of land and works amounting to Rs _____ could not be verified since the
value of each land was not exhibited in the register. (para _____).
7. Income and Expenditure accounts and Balance Sheet in respect of Nazul-II
account not prepared. (para _____).
8. Details of land acquired scheme wise with year wise break up under Nazul-II
account not maintained. (para _____).
I am of the opinion that these accounts and Balance Sheet cannot be said to
exhibit a true and fair view of the state of affairs of ______________ as shown by the
books of the organization.
AUDIT CERTIFICATE
I have examined the Receipts and Payments Account only for the year ending
31 March _____ of the ____________________ based on the information and
explanations furnished to me and records produced for verification and observations
in the appended Audit Report which inter-alia contains the following major audit
observations:
1. Non-preparation of Income and Expenditure Accounts and Balance Sheet
(Para _____)
2. Non-assessment of Assets and liabilities of the State Government (Para _____)
3. Minus balances of Stock Rs _____ (Para _____ ).
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4. Non-deposit/Non remittance of GPF/CPF/Income Tax recoveries made from
employees Rs _____ (Para _____ ).
5. Non-accountal/short exhibition of revenue collected (Para _____ ).
6. Non-reconciliation of bank account with its cash book (Para _____ ).
7. Non-refund/not obtaining of sanction for carry forward of unspent grants
Rs _____ (Para _____ ).
8. Non-furnishing/submission of utilisation certificate to audit (Para _____ ).
I certify, as a result of my audit, that these accounts are not properly drawn up
so as to exhibit a true and fair view of the state of affairs of the
____________________ as shown by the books of the organization.
b) In every case, the certificate of audit must be signed by the Accountant
General and a separate Audit Report compiled and issued. The separate Audit Reports
in cases where they are to be placed before Parliament/State Legislature, should be
sent to C.A.G.’s office for prior approval before issue. There is, however, no
objection to issue a draft report to the organisation/Govt., in the first instance giving
reasonable time for reply and to finalise the report based on replies of the
organisation/Govt. In such cases it is necessary to ensure that any delay in reply does
not adversely affect timely certification of accounts and as such, for this purpose, a
working arrangement can be brought about in consultation with the
organisation/Govt. concerned.
c) In respect of every audit, it is not the case, that point of objection is worthy of
mention in the separate Audit Report and there are quite a good number of minor
objections which have to be pursued by other means. In respect of such cases the
objection can be incorporated in an inspection report and compliance watched during
the next inspection. In respect of all such cases where objections are pending for a
long time, an omnibus para may be included in the separate Audit Report indicating
number of reports and paragraphs pending and money value of objections involved. It
is necessary for the Audit office to compile and maintain an upto date record relating
to various organisations under audit. These may include:-
(i) The constitution of the autonomous body.
(ii) The rules and regulations framed by Government and the autonomous body.
(iii) Orders connected with administrative and financial powers at various levels.
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(iv) Copies of annual reports of the body as compiled/presented to Government/
Legislature etc.
(v) Copies of reports of various committees relating to the functioning of the
body.
(vi) Copies of the final audit report and accounts as presented to
Government/Governing Body, minutes of adoption of the accounts and
reports, etc.
A complete set of record relating to (i), (ii), (iii) and (iv) should also be made
available to Comptroller and Auditor General’s office in respect of all cases, where
reports are sent to C.AG’s office for approval.
(C.A.G.’s letter No. 1076-TA I (RGL)/26-78 dated. 7.11.1978 read with letter No. 2093-TAI (RGL)/26-78 dated 30.11.79)
In all cases where, the accounts are received by the autonomous bodies, as a result of
audit comments, there should be indication to this effect either in the Audit Report or
in the accounts by way of a ‘Note’ by the organisation concerned. Further if the
impact of the revision is substantial, a suitable mention thereof should be made in the
Audit Report accompanying the Audit certificate.
(C.A.G.’s letter No. 66-106-Rep (AB)/26-92 dated 21.2.1992)
9.47 (a) On receipt of replies of the autonomous bodies to the separate Audit
reports and observations of C.A.G.’s office on the draft report, the finalised separate
Audit Report is required to be issued to Govt. and autonomous bodies with a copy of
the Accounts duly certified. Though most of the audited Accounts and Audit Reports
are being placed as such before Parliament/State Legislatures by the Government,
cases have come to the notice wherein the autonomous body prepares a reply for the
finalised Audit Report also and the documents placed before Parliament consist of not
only the Audit Report, but also the replies of the autonomous body to the points raised
in the Audit Report. The matter as to whether the procedure of supply of the replies to
the separate Audit Report which are not vetted by the Accountant General/ Director of
Audit concerned can be continued has come up for consideration in this contest. It has
been decided that in case the autonomous body wants to inform the Parliament/State
Legislature, the action which has been taken on the Audit Report, there should be no
objection for supply of replies to the separate Audit Reports, as part of the documents
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to be placed before Parliament/State Legislature. If on the other hand the autonomous
body, in its reply disputes the facts recorded in the separate Audit Report or gives
certain additional facts not earlier brought to the notice of audit it is necessary for the
autonomous body to have the reply duly vetted by audit before it is incorporated in
the documents to be placed before Parliament.
In view of above decision every case where the document placed before Parliament in
respect of the autonomous body includes the reply to the audit report it may be duly
scrutinised by audit office and in case it is felt that the reply should have been vetted
by audit office, the requirement may be brought to the notice of the Govt.
/Organisation under intimation to C.A.G.’s office.
b) The replies of the organisation are to be duly incorporated in the separate
Audit Report. If the reply is not relevant to the point of objection raised, there should
be no objection, if they are not duly incorporated but the autonomous body should be
duly kept informed of the position. In all other cases, it is necessary that the finalised
Audit Report incorporates replies of the body adequately and then issues the report to
Government, and the autonomous body. If such replies as furnished to audit are
subsequently brought to the notice of Parliament/ State Legislature it can give rise to a
piquant situation and such a contingency will have to be avoided.
(C.A.G.’s letter No. 575-Rep (c)/ 316-81 dated 2.4.1982)
Certificate of accounts of autonomous Bodies and State Legislature and laying of certified Accounts on the table of Parliament/State Legislature
9.48 Though the responsibility for placing the certified accounts with Audit Report
on the table of Parliament vest in the concerned Ministry/Department of Government,
still it seems proper for Audit to satisfy that the audited accounts, Audit Certificate
and the Audit Report as placed before Parliament are complete in all respects and are
the same as issued to government by Audit. The Principal Audit officer concerned in
each case should, therefore, examine as soon as a copy of the report as placed before
Parliament, is received from the Ministry concerned, whether the aud ited accounts as
presented is complete in all respects, including the Audit Certificate and the Report
appended thereto. Discrepancies, if any, should be specifically brought to notice of
the concerned Department in Government of India under intimation to C.A.G.
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Further, at the time of despatch of Audit Report with certified accounts of an
autonomous body for any year to Government, if a Principal Audit officer has not
received information on the placing of the certified accounts with the Audit Report for
the previous year before Parliament, he should specifically call for the information in
the forwarding letter of the Audit Report.
(C.A.G.’s circular letter No. 625-Rep (c)300-77.dated 18 th April, 1979)
Laying of audited accounts and separate audit reports of Central/State Autonomous Bodies before Parliament/State Legislature(s)
9.49 As per instructions issued in this office circular letter No. 173-Rep (AB)27-
84(I) dated 10-9-1999 a proforma showing progress of audit, etc. is required to be sent
along with the draft/final separate audit report. It has, however, been observed that
generally all the columns are not dully filled in and, in particular, information about
dates of presentation of previous audit reports before Parliament/State Legislature is
not always indicated in the proforma sent along with the draft/final separate audit
report. As such, in the absence of this information it is not possible to ascertain if the
audited accounts/separate audit reports on autonomous body concerned have been
placed before the Parliament/Legislature.
It may please be ensured that while forwarding draft/final separate audit report
to this office, requisite information is invariably indicated in the proforma. In cases,
where information about presentation of audited accounts/separate audit reports
before Parliament/State Legislature is not readily available with the autonomous body
concerned, this matter should be pursued with the administrative ministry concerned
at regular intervals.
(CAG letter No. 42-Rep (AB)/23-2003 dated 3-2-2003)
Improvement in quality and contents of Separate Audit Reports (SARs) and Certification of annual accounts of Central/State autonomous bodies
whose audited accounts are placed before the Parliament/Legislatures.
9.50 (a) Instructions have been issued in this office circulars No. 1471-Rep
(C)/58-82 dated 25-10-1982, D.O. No. 364-Audit. II/72-90 dated 17-3-1992, 52-
Rep(AB)/20-86 dated 25-2-1993, and 2-Rep(AB)/293-97 dated 16-1-98 on various
matters relating to preparations of SARs. It has, however been observed that the
instructions issued earlier are not being properly followed by some of the field offices
and the draft SARs sent by field audit offices warrant substantial
improvement/modification. The instructions contained in these orders and the
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provisions of Manual of Instructions for Audit of Autonomous Bodies may please be
followed carefully. In future, following aspects may be specifically kept in view at the
time of preparation of draft SARs on the annual accounts of Central/State autonomous
bodies.
(1) Accounting policies: Organisations may be advised to append to annual
accounts 'Significant Accounting Policies' and 'Notes to Accounts'. The former can
indicate 'significant accounting policies' e.g. items if any accounted for on cash basis,
fixed assets and inventory valuation, etc. In the notes to Accounts non-applicability
of Income Tax on the surplus of the organisation, exemption from statutory
enactments, treatment of contingent liabilities etc. may have to be indicated. Such
disclosures by the Autonomous Bodies will introduce transparency in accounts. The
Accounts are read and certified only on the basis and parameters of such disclosures
and they form part of the accounts certified by us. Therefore, any shortcoming in
these aspects may however be commented in the SAR.
(2) Transactions under Plan and Non-Plan: Transactions need to be examined to
ensure that there is no mixing up of 'Plan' and 'Non-Plan' in any inflow or outflow and
if there be, suitable comments should be made in SAR. If 'Plan' and 'Non-Plan' are
not separately depicted in the accounts, a separate schedule for the bifurcation for
revenue and capital and 'plan' and 'non-plan' items may be insisted upon. If the
organisation is not able to exhibit such important data distinctly under major
activities/heads, it should be commented upon in the SAR.
(3) Minus balances shown in the accounts require careful probe in audit. They
sometimes foretell serious irregularities. Reasons for each minus balance should be
examined and commented upon.
(4) Suspense heads: The extent of amount in suspense heads and their relevance to
the accuracy in accounts in as mush as Suspense Accounts dilute the accuracy may be
examined and commented in the SARs.
(5) Fund Accounts: If fund accounts for different purposes are found in the
autonomous body, then the relevant transactions of each fund being accounted for in
the respective fund should be checked in audit. Mixing up of funds should be
commented upon in the SAR and audit of each fund account should be done
specifically to assess the accuracy of each fund account.
(6) Depreciation on capital assets: Even though in autonomous bodies there is no
concept of 'profit', it is the duty of audit while certifying the accounts, which includes
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the balance sheet, to mention the status of the assets in the context of depreciation due
to usage, obsolescence etc. Depreciation is not necessarily a charge on profits. They
can be provided for either actually out of surplus generated by the autonomous bodies,
as in the case of revenue earning Port Trusts, or be deducted from the value of assets
of non-revenue earning organisations so as to provide a true and fair view of the
assets of the autonomous bodies. Continued exhibition of assets at book value despite
obsolescence, reduced value with corresponding capital entry gives a totally wrong
picture about the assets of the organisation. It is, therefore, essential and desirable
that in supersession of instructions issued in 1982, in all such cases where the
accounts indicate value on original cost, suitable comments should be made in the
SAR wherever applicable on the following lines:
"The asset accounts depict book value of acquisition and do not exclude
obsolescent, unusable, irreparable and condemned assets and also do not take into
account depreciation with corresponding reduction of capital account. Therefore, the
capital and asset accounts are overstated accordingly thereby not giving the correct
picture."
If, however, the organisation indicates in the "Notes to Accounts" that the
depreciation for the assets has not been provided for and quantified the amount no
comment need be made by Audit on this point. It may, however, be ensured that the
condition of the assets vis-à-vis the valuation is verified and a specific certificate from
the organisations should be obtained that they are not holding any obsolete or
unusable assets which should be cross checked with reference to corroborating
records during the audit and comments included where necessary.
(7) Accountal of transactions on accrual/cash basis and exhibition in Balance
sheet: The system of accounting is required to be on accrual basis so that Income and
Expenditure Account and Balance Sheet make a meaningful depiction of the true and
fair view of financial position of the organisation. If any deviation is made from this
basic principle, unless it is properly spelt out in the "Accounting Policies" or "Notes
to Accounts", SAR should always have clear comment of this aspect in respect of all
such items. The Autonomous Bodies should be advised to adhere to accrual principle
for all transactions with only rare justified exceptions clearly revealed.
(8) Cross checking of accounts with schedules: It has to be ensured in audit that
all the schedules referred to in the accounts are correctly drawn up and figures shown
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there in tally with the accounts figures, as the schedules form part of the accounts
certified by Audit.
(9) Bank reconciliation: As also required in this office circular No. 52 Rep
(AB)/20-86 dated 25-2-1993, it has to be ensured that comments about arrears in bank
reconciliation highlighting possibilities of misappropriation and frauds and the risks
involved due to non-reconciliation/delays in reconciliation and the procedural
deficiencies and lapses are highlighted in the SARs. Wherever warranted SAR should
contain a clear comment that the bank/cash balances as revealed in the books of
account could not be verified in Audit due to such non-reconciliation.
(10) Revision of accounts: In all cases where accounts are revised at the instance of
audit, suitable comments about the impact of such revision may be made in the SARs
as required in this office circular dated 16-1-1998 provided the substantial revision
was effected due to our audit scrutiny.
(11) Register of assets: These should be carefully checked in the context of earlier
comments on this subject and certification on physical verification of assets insisted
upon so that non-availability of such certificates is commented upon in SAR.
(12) Concise and brief comments: As the SARs are required to contain only
"Comments on Accounts", it should be ensured that the comments to be included in
the SARs are concise and brief with a clear statement about impact on account of each
comment as a result of deficient procedure/accounting followed. The SAR should
convey only final comment and should not read like as an Inspection Report or draft
para. The SAR should always say the resultant under/over statement of head
concerned and the impact on surplus/deficit/assets/liabilities in exact amounts.
(13) Unspent Grants: It is necessary that the organisations draw a distinction
between annual maintenance/revenue grants and grants for specific/capital purposes.
The unspent grants refundable/repayable to Government/other agencies, as may be
required under the conditions stipulated in the grants, are in fact distinctly shown as
"returnable" in the liability side of the Balance Sheet of the Autonomous Bodies.
Non-depiction of such unspent balances in the Balance Sheet should be commented in
the SAR.
(14) Realisation of income due to the organisation: It is necessary that income
realised by an organization is accounted for as income in the Receipt and Payment
Account/Income and Expenditure Account and is not allowed to be kept in a separate
fund/account.
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(15) Completeness in accounts: It should be ensured in audit that the accounts to be
certified are complete in every respect and in cases where the accounts are
voluminous, the organsiations should be asked to suitably consolidate and index the
annual accounts so that possibility of any accounts remaining out of the purview of
audit is avoided. In order to ensure completeness and meaningful exhibition, all the
three accounts, namely 'Receipts & Payment Account', 'Income and Expenditure
Account' and 'Balance Sheet' with supporting schedules, 'Significant Accounting
Policies' and 'Notes to Accounts'' should come as a set to the audit to enable the
auditor to check and certify these accounts. Incidentally figures should be reduced to
a maximum of 5 digits for easy comprehens ion.
(16) One of the main shortfalls in ensuring utilization of grants/loans for such
purposes for which the grants/loans are given to Autonomous Bodies is non
production of such certificates to the Ministry/Department/Government. While on
one hand the accounts are purported to have accommodated such expenditure on
revenue and capital heads and are certified by audit on the other hand. Audit also list
out that such certificates are yet to be received. This is like absence of physical
verification certificate for assets exhibited in Accounts certified. Therefore in future a
distinct comment should be made in SARs that the assets/expenditure as exhibited in
the current and previous year(s) accounts are not supported by utilisation certificates
for the specific amounts for which certificates are yet to be furnished to the
Government.
It may please be ensured that these aspects are kept in view during the
certification of accounts of Autonomous Bodies.
Revision of the provisions of the AB Manual for the above wherever
necessary would be issued in due course and these instructions may please be
followed properly with immediate effect.
(CAG letter No. 111-Rep (AB)/49-99 dated 31-5-1999)
(b) It has been observed that comments are not arranged in the order of annual
accounts (Balance Sheet, Income and Expenditure Account and Receipt and Payments
Accounts, Notes on Accounts etc.). Comments are also not linkable with the
respective heads of accounts under objection.
It is essential that the above mentioned instructions issued are strictly
complied with and SARs are prepared in a uniform manner. Further, it is essential
that SARs should not contain any value for money/transaction audit issues.
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A format of SAR and a few sample "Comments" are enclosed for information
and guidance. It should be ensured that comments included in SARs are linkable with
the respective accounting heads shown in the annual accounts/schedules. Comments
framed should be specific and pointed and impact of such comments on the account
should be clearly indicated alongwith a key-working.
(CAG letter No. 40-Rep (AB)/91-2003 dated 25-2-2004)
Format of Separate Audit Report
Introduction
(Setting up of Autonomous Body, audit mandate and Grants/Loans received during the year).
Comments to be included need not be comparative statements but should be concise
and brief with a clear statement about impact on accounts of each comment as a result
of deficient procedure/accounting practice followed. Comments should be pointed
and indicate in exact amounts the resultant under/overstatement of head concerned
and the impact on income/expenditure/Excess of Income/Expenditure over
Expenditure/ Income as well as on assets/liabilities.
Audit comments on accounts can be included as sub-paras at one place under this para
depending upon defects noticed and the sub-paras may be arranged suitably one after
another in the order of Form of Annual Accounts being certified under the heads
Balance Sheet (Liabilities and Assets), Income and Expenditure Account, Receipt and
Payments Account as illustrated below.
COMMENTS ON ACCOUNTS
2. Balance Sheet
2.1 LIABILTIES: Deficiencies noticed against various heads may be commented in
short sub-paras.
2.2 ASSETS: Deficiencies noticed against various heads may be commented in short
sub-paras.
3. INCOME & EXPENDITURE ACCOUNT
3.1 EXPENDITURE: Deficiencies noticed against various heads may be commented
in short sub-paras.
3.2 INCOME: Deficiencies noticed against various heads may be commented in short
sub-paras.
3.3 Excess of Income/Expenditure over Expenditure/Income:
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4. RECEIPT & PAYMENT ACCOUNT
4.1 RECEIPTS
4.2 PAYMENTS
5. GENERAL
ACCOUNTING POLICIES & NOTES TO ACCOUNTS.
Brief comments about deficiencies noticed in accounting policies, notes on accounts,
suitable disclosures not given on matters concerning accounts may be included.
6. EFFECT OF AUDIT COMMENTS ON ACCOUNTS
The net impact of the comments given in preceding paras is that assets as on _______ were understated/overstated by Rs _____________ lakh, liabilities understated/overstated by Rs ___________ lakh, and Excess of Income/Expenditure over Expenditure/Income for the year was understated/overstated by Rs __________ lakh.
7. Lack of response (If replies to draft SAR are not received within the stipulated period.)
Pr. AG/AG/PDA/DGA
Place: Dated:
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CHAPTER – X
EFFICIENCY-CUM PERFORMANCE AUDIT
Introduction
10.1 Efficiency-cum-performance Audit is a technique of audit adopted to assess
and evaluate the economy, efficiency and effectiveness of developmental
schemes/projects/ organisations. Economy means operation at the lowest possible cost
(2) Efficiency is effective out-put without unnecessary waste of resources including
adherence to time schedule and (3) Effectiveness is achieving programmed objectives
and goals and ensuring that intended benefits arise in real terms. The Auditor has to
review the working of the project/ Schemes/ organizations entirely in terms of their
goals, objectives etc., to see how far the expected results have been achieved from the
use of available resources of money men and material. The Audit embraces both
financial and social aspects. The financial aspects would be to see that (1) the agency
maintains an effective control over its income, expenditure, assets and obligation (2)
the agency is responsible for its resources, obligations and operation and (3) that the
agency reports include specific, true and useful data. The social aspects to be seen are
how far (1) the goals/targets set have been achieved and (2) the intended benefits to
the community/area have accrued. In view of its all embracing nature this type of
audit is also known as Economy, Efficiency and Effective audit (Three E`s).
However, detailed guidelines have been separately published by the Comptroller and
Auditor General on 14-5-2004 under the heading "Performance Auditing Guidelines"
which may be kept in view while conducting efficiency cum performance audit.
Nature of Audit
10.2 The audit envisages a comprehensive review of the project/scheme/activity to
ascertain:
(i) How far the physical and financial targets have been achieved;
(ii) How far the social and economic objectives have been realized;
(iii)Whether the operations are conducted economically;
(iv) Whether there are any case of overpayment, loss, extravagance, avoidable
excess or infructuous expenditure due to improper planning, delay in
completion of Projects, over staffing, over capitalisation, unsound pricing
policy etc.;
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(v) Whether the utilisation of resources is in accordance with the projected outlays
and if not, the reasons therefor.
10.3 Selection of the Scheme:
10.3 (a) The selection of the selected Project/Scheme is to be planned well and
carried on in an effective manner.
b) Active co-operation of the concerned departments and their proper
appreciation of the task taken up by audit is essential for meaningful review. As such
a pre-review discussion is held with the departmental authorities soliciting suggestion
regarding areas/aspects to be taken up for study and assistance in making available the
records and data.
c) A study of the Sectt. and Directorate
Office files, supplemented by a test check in a few selected offices may give an idea
whether any significant matters are likely to emerge from the review of a programme
or a scheme. It would be advisable to involve the supervisory officers concerned in
the process of selection
(CAG's D.O. No.413-Rep 67-73 dated 13-2-75)
Process of Review
10.4 The various phases of the scheme/reviews can be broadly categorised as
under:
(i) Preliminary study of the selected Projects/Schemes.
(ii) Development of Audit Plan.
(iii)Review Proper
(iv) Drafting of the Review Report.
10.5 While making selection of programme/schemes for conducting review, certain
significant programmes undertaken by the State Government should be selected
sufficiently in advance. Our scrutiny should go deep into the heart of the matter and
discover what is there on the ground. Analysis should be penetrating and
comprehensive and coverage of a programme should be extensive enough so that
dependable conclusion can be drawn. Background material should be given and
supporting facilitates required for the success of a programme should be borne in
mind. If there are any important organisational weakness, they may also deserve to be
mentioned.
(C.A.G.’s D.O. letter No. 488-Rep/61-73, dated 13th March, 1973).
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Preliminary study
10.6 Preliminary study of the selected schemes is an essential part of the review.
The objective is to have a comprehensive insight into the broad picture obtained at the
time of initial selection to locate areas/aspects requiring in-depth examination of Acts,
Rules and Regulations, budget and Plan documents. Performance budget of the
department, Progress reports, administrative reports, periodical appraisals, report of
the departmental officers and external nominated agencies, if any, like working/study
groups of Planning Commission, Public Accounts Committee, Estimates Committee,
Bureau of Public Enterprises etc. would provide the necessary background material
about the scheme, its aims and objectives, financial targets and actual expenditure, the
agencies executing the scheme, etc.
While conducting review of a project, it is necessary to understand the nature
of the Project right from the stage it is conceived. During the preliminary study, it
should be seen:
i) Whether adequate survey have been made before launching the Project;
ii) Whether Proper feasibility reports were prepared;
iii) Whether there is a detailed Project report and if there are any deviations
why they have taken place;
iv) Whether the specifications/performance of the various items of
equipment’s are properly matched avoiding large idle capacity in any one
of them;
v) Whether there are proper procedures for inventory control and material
management;
vi) What contracting systems have been laid down
vii) What are the operational problems and how they are got over;
viii) Whether the Project is functioning as it should be.
Report to Headquarters Office based on preliminary study
10.7 On the basis of preliminary studies conducted, a report should be prepared by
ECPA section on each scheme in the performa prescribed by the Comptroller and
Auditor General of India as indicated below:
1. Name of the programme/scheme.
2. Objective (s) of the programme/scheme.
3. Brief description.
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4. How long in operation and whether the period is considered sufficient to
attempt audit evaluation.
5. Where operated (name of districts, number of units etc.)
6. Expenditure till date (revenue and capital expenditure to be indicated
separately).
7. Year wise (for the last 4-5 years).
(i) Receipts
(ii) Plan Outlay (in lakhs of rupees)
(iii)Budget provision
(iv) Expenditure
8. Nature of accounts maintained at the units.
9. Whether declared commercial?
10. Agency/Agencies through which the programme/scheme handled and whether
records of such agencies are auditable under Comptroller and Auditor
General’s (DP&CS) Act, 1971.
11. Number of districts/units proposed to be covered in test cheek;
12. Preliminary audit findings;
13. Points likely to be covered by Review;
14. Whether the subject was covered in any earlier draft/printed audit report, and
if so, PAC’s recommendations and action taken thereon.
This report together with any other scheme considered useful should be
forwarded to the Headquarters office in January every year for their approval of the
schemes and the general approach and perspectives suggested for examination.
(CAG’s letter No. 510-Rep/141-76 dated 22.6.77).
(b) In order to improve the quality of the Audit Report, it has been decided
that proposals for the State Level review for comments in the Audit Reports of
individual states may be sent to Comptroller and Auditor General of India, for
approval. However, it is not necessary to send any background material as being sent
in the proforma prescribed vide CAG’s D.O. letter No. 510-Rep/141-76 dated
22.6.77.
(AG’s General Circular No. 03-R(S)/1998 No. 253-Rep (s)/183-86 dated 7.3.1988).
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Development of Audit Plan
10.8 After the preliminary review is conducted and its results are received, a
specific plan of audit is chalked out in advance for investigation, marking out the
offices/field units to be visited and overall strategy for collecting relevant data, and
the time allotment for completing the review. Necessary format and questionnaire are
also prepared for collection of important data relating to the various aspects of the
scheme not only from offices or units proposed to be visited but also from other units
for being made use of for consolidation and processing while framing the review.
Manpower Planning for carrying out the detailed review is equally important.
Review
10.9 The approach of audit should be systematic, methodical, logical and rational.
The review always commences with an in-depth study of the files in the offices of the
concerned Administrative Department and other Heads of Departments. While
scrutinizing the records, it has to be seen whether:-
(i) Objectives of the Project/Scheme/Organization have been clearly defined and are
in conformity with the policies and decision of Government.
(ii) Programmes have been drawn up in accordance with these objectives and are
being implemented by specific and well defined procedures.
(iii) A good monitoring/management information system exists for collecting reliable
data and progress reports on implementation of the policies and programmes and
whether the data is effectively utilised to improve organisation or remedy
deficiencies with utmost speed.
(iv) Proper in built control mechanisms in the prescribed system exist to have an
effective control over various areas of implementation to check leakage’s, losses,
avoidable and wasteful expenditure etc.
(v) Specified performance indicators exist; if not, the procedure followed or
yardstick/norm prescribed to assess the performance of the Project/scheme have to
be ascertained and their validity determined.
10.10 The approach which in fact is a system audit, will give necessary idea and
guidance for further studies, probes in the field units. The formats and questionnaires
prepared for collection of detailed information from base level offices should be
reviewed on the basis of studies conducted and modified, if necessary. The next stage
is carrying out the studies and collecting information from the selected field units.
The examination and audit scrutiny of selected samples of transactions and study
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should be thorough and complete without the need for a second visit to the same
office. In order to have reasonable audit findings, it is necessary that sample size
taken up for detailed check in audit is adequate and is fairly representative of the
whole. Also, it is useful to discuss details of the project/scheme with the officers of
the institutions visited, for eliciting maximum information.
Besides instructions issued by the CAG from time to time as reproduced below may
also be kept in view while selection of topic preparation of pilot study/guidelines etc.
Step-1
Scrutinize the Plan documents and find out which are the schemes which have
been allotted maximum priority in terms of (a) targeting (b) funding (c) impact. This
would identify for you not only the schemes which are merely bulky financially but
which are, in terms of policy and implication, more important. In other words, the
selection has to be based on the application of the criteria of targetting, funding and
impact so that audit effort is directed more meaningfully at an area of concern.
For carrying out the above scrutiny, please follow a 3 stage approach: (a)
locate sectors where maximum plan fund allocations are made; (b) locate within that
schemes/programmes which have been in operation for more than 3 years and in
particular which have not been reviewed during the last 5 years; (c) relate the located
area to the pre-budget survey, the Finance Minister's Budget Speech and issues of
particular significance arising out of the debates in the Legislative Assembly and the
Reports of the Public Accounts Committees. If you feel the links are not obvious, do
not discard the process. For instance, if you look at the proceedings of the legislative
Assembly or for that matter read the proceeding of the Public Accounts Committee,
there would be a large number of irregularities relating to schemes and programmes
which have been articulated but which have been lost sight of by both planners and
executives. Do not get upset that you have to do a kind of work you generally do not
do or assume that you already know. It is worthwhile to go through the drill. Please
also remember that you to keep a record of all that you did. Remember that at the end
of scrutiny at each stage, you are to categorically record your findings either
supporting or rejecting your initial selection. The idea basically is that your ideas
should be tested for their strength and discarded for their weakness. A well
administered project is a weak subject, while a poorly administered project is a strong
subject for Audit Review.
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Step-2
Two or three topics that emerge as the likely topics for review would now be
before you for selecting the one or two which you consider feasible within the
resources available to you. In judging their relative importance, the following criteria
may be adopted:
(a) Is the scheme or the programme addressing an important development
issue involving large number of people or is it only expenditure
oriented in terms of acquisition of assets. If the expenditure is large
because of acquisition of assets then that would deserve separate
treatment and may not exactly be a subject fit for a performance
review.
(b) The factor of vulnerability of a programme or of a scheme is high if it
is spread over a large area, with a widespread delivery network and
without a focal point for monitoring. That would deserve better
attention than a scheme or a programme which is concentrated or in
project based and is systematically monitored. That is basic risk
analysis.
(c) The auditee entities in a programme or scheme must have been audited
in the normal course of audit. It would be worthwhile to obtain the
Inspection Reports relating to the audit units to see what kind of
irregularities have been persistent in addition to those which either
remain in reserve or have been passed into the Audit Report without
the action having been taken. In fact, that would be a risk indicator in
relation to the operation of a scheme or programme.
(d) Look at the internal control system of the schemes projected for
review. The scheme or the programme with the poorer internal control
system would deserve stronger audit attention.
(e) Output projection has been adopted as one of the ways for justifying
the undertaking of the projects. We can also apply this for selection of
a topic. By output projection we mean anticipating in advance what
system of audit would be capable of bringing out audit comments. An
area where the audit need is more is evidently a better subject for
scrutiny.
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Step-3
You have now in hand either one or two topics selected by adopting the
criteria outlined above. How do you know that you can undertake this review? It is
not enough to select a good topic. It is even more essential to assess the feasibility of
the review in terms of man-power, expertise and quality of inputs at your disposal and
cost you can afford. In a way step-3 is the most critical step and invariably we
overlook this step in our anxiety to deliver as per target. Step-3 involves many short
steps as detailed below:-
(i) Arriving at a comprehensive idea of the nature of the subject and the
processes it involves. For instance if it is a building project, it is
expertise in public works that we need. If it is health project or health
scheme good understanding of the health policy and the delivery
system would be needed or for that matter if it is a modernization
project involving high degree of technical expertise, then perhaps
technical inputs would be needed for which external technical support
would be essential.
(ii) Once you know what is the nature of the subject, you have to look at
the manpower at your disposal and see if suitable personnel do exist
for undertaking this work or whether they would need to pass through
a short duration training to be able to carry out the audit review.
(iii) Estimate the time at your disposal and decide if conventional
deployment would be enough to keep to a time frame.
(iv) Estimate the cost in terms of man-power parameters and see how best
the cost would be justified in terms of the area of scrutiny.
Step-4
Once you have found that one or two topics can be handled with the resources
at your disposal then the stage comes for consolidating the inputs and taking a fresh
look at the topics selected. The following elements are required to be consulted; (1)
Previous Audit Reports/Inspection Reports; (ii) Government views, policy
articulations, budget speeches, etc., (iii) Annual Reports of the agencies involved; (iv)
Evaluation reports, expert audit findings, if any, reports of the Legislature including
the Committees; and (v) Priorities of the Government in terms of policy. By re-
examining the initial assumptions in the light of additional information gained, you
complete the cycle of theoretical understanding here.
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Step-5
After the inputs are consolidated, and the theoretical assumptions are
established, a small pilot study may be run. The pilot study must necessarily be
directed at locating the performance indicators because that would be the basis on
which the entire review eventually would be judged. It is not unusual to find,
particularly in the social sector programmes and schemes which have multiple
performance perceptions, that indicators are dovetailed into each other. Your task
would be to isolate critical strands that go to establish performance levels. It would
be interesting if by way of preparing yourself for the future ahead, you organize a
small workshop in 'Finding Performance Indicators' with your officers. I assure you
that the exercise would be worthwhile. As you know, Performance Indicators are not
a set of universal standards. These change with the nature and objective of the
scheme or programme. These are tools in the hands of evaluator and must be arrived
at by careful application of a set of testing measures which would translate into
specific approaches, depending on the subject under review. These testing measures
are : (a) the element that makes the most critical difference, for instance 'access' in the
case of education and 'reach' in the case of health care (b) the element that impacts the
most on outcome, for instance 'delivery' in social sector programmes, and 'operational
efficiency in projects.
The pilot exercise should be at best for 20 days. The unit for Pilot Study
should be pre selected on the basis of proximity, availability of records and criticality.
The pilot audit party should get clear direction in regard to its mandate. Pilot audit by
definition is a test sample which is intended to discover the key parameters. So it is
always advisable to fit a pilot study with controlled measures. For controlled
measures the quality of personnel would have to be reliable. The audit should
commence after a prior discussion with responsible authorities and macro-dimensions
should always be kept in view while looking into details. The idea is not to conduct a
complete routine audit but to test the possibilities for larger projections that exist.
Findings of the pilot party should be structured on a different format from the
conventional Inspection Report. It should outline the elements of preponderance and
the elements of risk inherent in the scheme or programme so that a reasonable guess
could be made as to the feasibility of a longer and more definite study.
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Step-6
Now you have the selected topic in your hand and you have to move into
strategy planning for launching the review. That is a separate subject and I would be
writing to you about that later.
(CAG letter D.O. No.1208-Rep(S)/270-2003 dated 15-9-2003)
How to do a Pilot Study?
A pilot study has been recommended for the selection of a suitable topic but
this deserves separate treatment. Elsewhere the expression exploratory case study is
used in place of pilot study. Pilot audit can be defined as a brief examination of a
clutch of decisions, events, transactions or items of work in order to identify the key
questions for a fuller and subsequent review of a programme or activity. The overall
approach in the pilot audit is one of theory building rather than theory testing. This
means that the exploration is left completely open to allow a free flow of information
but it should be remembered that the pilot study or exploratory audit which would
eventually lead to the selection of an activity or programme for review, should be
handled by comparatively more efficient officers with demonstrated ability of wider
cognitive abilities. The steps are as follows:
Step-1 Locate the manpower base from which the pilot auditors would be taken. Do
not look for lateral support.
Step-2 Invite the teams for a general discussion and identify special interests,
aptitudes, backgrounds and handicaps.
Step-3 Call the team for an intensive discussion on the activity profile or programme
details as available on record.
Step-4 On the basis of available record select a unit or two for pilot audit. Give the
pilot team a list of key players, major decisions of the recorded output of the
activity. Also clarify that if the subject is inter-departmental, then
occasionally cross referencing with supporting department may be required.
Step-5 Before pilot audit is taken up arrange for a preliminary discussion with the
programme manager and take his advice, if any, for looking into specific
areas.
Step-6 Pilot audit should begin with a list of outputs first. The idea is to go down
from product to processes, from processes to decisions and decisions to policy.
This is a moving in the reverse of the way the programme or activity was
carried out. This can be demonstrated, as below:
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Step-7 During Pilot audit do not ask the auditee to furnish information in a pre-
designed proforma. Read the text and to avoid bias, relate key data to support
data, eliminate misleading data, highlight inconsistencies and provide a list of
documents consulted while retaining copies. The method of triangulation i.e.
collecting evidence from at least two different sources to converge at a
conclusion is the standard method by the National Audit Office in the West for
minimizing risk.
Step-8 At the end of the pilot audit give an analysis of the procedure, analysis of data
in time series, if possible, and give a cause effect analysis, which is often
called paradigm model or programme logic model. This should show what
action led to what consequences. There is no need to get into a complex
modeling of any kind; simple statement relating Government decisions,
processes and products for a few major areas would be just about adequate.
Step-9 Pilot audit report is not an inspection report. It should be drafted differently
keeping in view of the fact that the findings of the pilot audit would eventually
go to establish or discard the subject for review. In other words it is a
suitability test for which the theoretical, and if possible, a logical sequential
framework for investigation is being explored through pilot audit. The pilot
audit report should at least contain the following three information:
(i) Nature of administrative arrangement for carrying out the activity and
programme and observable mismatches therein;
Normal movement of
activity
Policy
Decision
Process
Product
Pilot audit
Product
Process
Decision
Policy
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(ii) A statement of vulnerable areas and how these can influence work
practice, delivery channels and output;
(iii) A short analysis of the gaps perceived between policy goals and
implementation arrangements.
How to prepare guidelines for the review?
There is no fixed format for preparing guidelines for reviews as each subject
would in a way dictate its own guidelines but guideline must necessarily, irrespective
of the subject, contain the following elements:
(a) Policy background showing the source document, government's own
estimation of the outcomes and perceived failures;
(b) Volume, method and techniques of funding, in time series, if possible.
This may include in certain cases lateral funding support arrangements
and funds sharing principles;
(c) Criteria for selection of samples;
(d) A list of laws, rules and regulations, if relevant, showing the critical
provisions which have a bearing on the implementation of the
programme or enforcement of some of the provisions;
(e) A list of performance indicators by which the programme or the
activity would be evaluated. The broad performance indicators
visualized at the time of selection of topic might have undergone a
change on the basis of results of pilot audit;
(f) A list of vulnerable arrears estimates on the basis of concrete evidence
produced by pilot audit and overall impulses gathered from outside;
(g) A set of clear instructions on the quality of evidencing;
(h) An outline of the reporting format.
(CAG letter D.O. No.1336-Rep(S)/270-2003 dated 15-10-2003)
How to build audit strategy for field audit?
Strategy is a plan designed to achieve a particular long-term aim. In the case
of audit review the long-term aim is to get a text of audit funding that provides an
assessment of the entity review. In simpler terms a strategy would mean (a) How to
approach the review subject and the auditee unit given the constraints of access,
sensitivity, if any, and perceived risk factors. (b) How to deploy and disperse skill
available effectively, efficiently and economically (c) How to guide the process to
satisfactory conclusion.
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There are many ways of devising strategies, some very complex models have
also been constructed for strategic plan but no single model can anticipate the features
of a programme or the level of skill available. Ultimately, the strategy would have to
be devised on a judgmental matrix supported by a set of concrete indicators derived
from experience. So a strategic plan for review would at least involve the following
steps:
� Determine the size and number of audit party and identify the audit personnel
with a clear understanding of the quality of skill available.
� Determine the timing of and stage of mobilization including the number of
days of deployment.
� Expose the party personnel thoroughly to the guidelines. Develop a
questionnaire of critical queries to be made during audit, in consultation with
party personnel. Outline the supervisory arrangement making space for two
critical interventions one midterm, other prior to conclusion of audit.
� Outline the monitoring procedure. While the entire procedure could be
explained to the party personnel, the programme and the principal stockholder
(AG/PD) can always keep a few monitoring parameters to themselves for
random control.
� Clearly indicate the outputs expected and what link these would bear to the
outcomes.
How to look for evidence?
When a review party commences work, it is before it the auditee unit with an
array of records maintained by it. It would be essential for an audit party to first of all
know what records are maintained in which form. A list of records be got prepared
on the first day itself, thereafter, records can be classified into 3 categories. The first
category would be all scheme related papers, documents reports and returns. In the
second category would remain communications addressed by and to the programme
implementers including grievances. In the third category the records of
establishment, which can throw out some information relating deployment,
supervision and logistics.
While looking at the 1st category documents, keep it in mind with internal
minutes and file noting constitute what the NAO of UK calls the D-structure.
Minutes of meeting are often subject to post rationalization. A result of this is that
what apparently appears to be the case may not be so. This often signalled by
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disproportionate attention given to the views of some individuals and seemingly a
high degree of conscientious. It may be worthwhile in this situation to look for
corroborating documentary evidence by adopting triangulating process. Triangulating
process incidentally means nothing more than to separate streams of evidence
converging and leading to the same conclusion.
Evidence may be found in official letters of attempts to shift responsibility
from one area of an organisation to the other. Further explorations of the motives for
doing this can go to a greater depth to the textual information gathered and provide
insight into the incentives and disincentives at place.
Use of silence of hidden versions of internal memos conveys messages not
only about the statistics of such documents but also about the reporting structure of
the organisation and informal means that are used to disseminate the information.
The use of dense, opaque and tentative language should prompt the auditor to
look for the connections underneath.
There are two main forms for text where evidence can be sought. Historical
texts containing secondary data and real time texts. Secondary data are compilations
of information received from programme managers or outside agents. Real time texts
are replies furnished to the audit memoranda or texts produced by third parties for the
purpose of investigation. All these provide evidence both directly and indirectly.
Direct evidence is when these are available in useable form. Indirect evidence is
where auditor must establish a connection by relating different data for arriving at a
conclusion. Sometimes a photograph or a joint inspection memo signed by the
auditor and the auditee can also constitute a valuable evidence. In more developed
countries they have developed system of interpretation of language, moods, gestures
of the auditee employees to find a way for locating access to evidence. Even
observation notes are kept. They carry out postal interviews, telephone interviews,
group interviews, interviews with expert panel and brain storming sessions as
techniques for finding evidence itself or at least an access to evidence. Adoption of
these methods call for high degree of skill and sophistication in the management of
public space. Further this is a highly contested space and it would not be advisable to
go head long into these practices. But the essential lesson is that audit is not merely
confined to records, valuable access into the mind of an agency or organisation can be
found by closely watching the behaviour, language, movement and style of the
principal actors in an auditee organisation. Perhaps many of our better auditors are
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already doing this without theorizing it. What is needed is a general awareness of the
environment where the review is being conducted.
All evidences can be categorized into 4 types: physical, oral, documentary and
analytical. The following risks may be kept in mind while evaluating evidence of
these categories.
v Evidence based on single source, this may impact on liability, validity and
sufficiency.
v Oral evidence not supportable by documentation or observation, this can
impede reliability.
v Evidence is outdated and does not reflect change and hence not relevant.
v Source of evidence has a vested interest as outcome would reduce reliability.
v Samples collected are not representative; this can affect relevance, validity and
sufficiency.
v Evidence may be related to an isolated occurrence, this may affect validity and
sufficiency.
v Evidence is incomplete to the extent it does not demonstrate either the cause
or the effect, this should affect reliability and sufficiency.
v Evidence is conflicting, this would affect reliability.
In summary, the evidential process should include (a) An Examination of
characteristics of data required, (b) Collection of data relevant to the achievement of
audit objective, (c) Collection of data based on the audit criteria outline in the work
plan, (d) Collection of data which is not only sufficient but persuasive enough to
logical support the analysis, observations, conclusions and recommendations.
How to analyse data?
A mass of data without a context or without a frame of reference could be of
no consequence. But the complex methods of the data analysis demand statistical
expertise of an order which may not be available to review managers. While the
review managers and auditors are encouraged to acquire statistical techniques for
analysing data, it should be possible to keep in mind the following parameters for
basic data analysis.
v Once data are collected, convert data queries on the basis of which data were
collected into data opportunities. This can be done by simply reformulating
the questions. For instance, if data were obtained, to give quantum of benefits
given to 5 categories of beneficiaries during a period of 3 years then analysis
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could extend to (a) comparison between years in terms of volume and category
of beneficiaries, (b) inter-category comparison, (c) volume-category link, (d)
trend deviations.
v Tabulating data is an easy option but providing a speaking table of data is
difficult. Converting a mass of information into a data table means only
organising data in a form. It is important to decide the form on the basis of
critical questions sought to be answered by the review. It should be clearly
recognised that in audit reviews the range of data is neither as numerous nor as
proliferating as in the case of a survey. So if the principal data elements are in
order it should be possible to construct fairly indicative tables. No table
should be left alone. The tabulated information would have to be commented
upon. These comments can cover the following areas: (a) quality,
completeness, and reliability (b) inferences. A problem general faced is that
once data are found to be incomplete the inferences no longer remain reliable
and exercise becomes useless. To cope with this problem, data source should
be checked carefully and preferably a trial check be carried out to establish
authenticity. In regard to missing data, values can be instituted if a reliable
indication is available. Inference is again a complex subject. A theoretical
result of fundamental principles for statistical inference is the central limit
theorem. We would not apply that kind of sophistication unless there is a
large sample to be handled but it would be worthwhile if you prepare yourself
with techniques of its application. The simple formula for measuring evidence
is to be able to collect data in line with the requirement and interpret this not
selectively but comprehensively with reference to the objectives of the activity
or programme.
How to select a sample?
There are many methods of selection of a sample and all methods are not
applicable to all cases. Find below a table of 9 most common methods with definition
uses and limitations:
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Method Definition Uses limitations Cluster sampling
Units in the population can often be found in geographical groups or clusters e.g. Schools, households, etc.
§ Quicker, easier and cheaper than other forms of random sampling.
§ Does not require complete population information.
§ Useful for face-to-face interviews.
§ Works best when each cluster can be regarded as a microcosm of the population.
§ Larger sampling error than other forms of random sampling.
§ If cluster are not small it can become expensive
§ A larger sample size may be needed to compensate for greater sampling error.
Convenience sampling
Using those who are willing to volunteer or cases which are presented to you as a sample
§ Readily available § The larger the group, the
more information is gathered.
§ Sample results cannot be extrapolated to give population results.
§ May be prone to volunteer bias.
Judgement sampling
Based on deliberate choice and excludes any random process.
§ Normal application is for small samples from a population that is well understood and there is a clear method for picking the samp le.
§ Is used to provide illustrative examples or case studies
§ It is prone to bias. § The sample is small
and can lead to credibility problems.
§ Sample results cannot be extrapolated to give population results.
Multi-stage sampling
The sample is drawn in two or more stages (e.g. A selection of offices at the first stage and a selection of claimants at the second stages).
§ Usually the most efficient and practical way to carry out large surveys of the public.
§ complex calculations of the estimates and associated precision.
Probability proportional to size
Samples are drawn in proportion to their size giving a higher chance of selection to the larger items (e.g. The more claimants at an office the higher the office's chance of selection).
§ Where you want each element (e.g. Claimants at an office to have a equal chance of selection rather than each
§ Selection rather than each sampling unit (e.g. Offices).
§ Can be expensive to get the information to draw the sample
§ Only appropriate if you are interested in the elements.
Quota sampling
The aim is to obtain a sample that is representative of the population. The population is stratified by important variables and the required quota is obtained from each stratum.
§ It is quick way of obtaining a sample.
§ It can be fairly cheap. § If there is no sampling frame
it may be the lonely way forward.
§ Additional information may improve the credibility of the results.
§ Not random so stronger possibility of bias.
§ Good knowledge of population characteristics is essential.
§ Estimates of the sampling error and confidence limits probably can't be calculated.
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Method Definition Uses limitations Simple random sampling
Ensures every member of the population has an equal chance of selection.
§ Produces defensible estimates of the population and sampling error.
§ Simple sample design and interpretation.
§ Need complete and accurate population listing.
§ May not be practicable if a country wide sample would involve lots of audit visits.
Stratified sampling
The population is sub-divided into homogeneous groups, for example regions, size or type of establishment.
§ Ensures units from each main group are included and may therefore be more reliably representative.
§ Should reduce the error due to sampling.
§ Selecting the sample is more complex and requires good population information.
§ The estimates involve complex calculations.
Systematic sampling
After randomly selecting a starting point in the population between 1 and n, every nth unit is selected, where n equals the population size divided by the sample size.
§ Easier to extract the sample than simple random.
§ Ensures cases are spread across the population.
§ Can be costly and timely consuming if the sample is not conveniently located.
§ Can't be sued where there is periodicity in the population.
Each method has certain limitations. Conventionally, we have been using
judgement sampling and our conclusions have over the years suffered from the
limitations, which flow from the use of that method. The Headquarters office of the
CAG is in the process of developing appropriate sampling methods for different kinds
of studies but before that comes through it would not be impossible to use some of the
methods in combination to arrest the limitations of the judgement method. We have
in some recent reviews adopted some combinations and these have helped. For
instance, in the review of disease control programme we used cluster and judgement
sampling in combination. Elsewhere, we adopted added the probability method. In
some social sector reviews involving direct delivery of benefits we used the
combination of quota, random and systematic sampling methods without explicitly
saying so. We have not used systematic sampling or multi-stage sampling generally.
It is true that sampling methods are statistically loaded but the complexity of
statistical methods arise mostly out of our unfamiliarity with the models or constructs
used by statisticians for capturing a wide range of variables in a single matrix. In due
course, our officers too would acquire statistical modeling skills but as we wait for
that to happen, we could perhaps use a large quantity of statistical information
available with the Government to select our samples by using 2, 3 or 4 methods in
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combination. The most essential requirements for deciding the sampling method
would be the following:
§ Profile of beneficiaries
§ Geographical distribution with class or community strata
§ Concentration, preponderance or endemicity features
§ Area wise allocative priorities
For instance if we know that the beneficiaries of a programme are mainly
distributed in four districts or a deficiency is preponderant in six districts or a
particular area is endemic or a particular class of people inhabit specific location then
it would not be difficult to select the samples inline with the delivery of programme
objectives. Where however, a scheme addresses all citizens, equally distributed along
all delivery points, then search would have to be made for other indicators along the
lines of resource application, institutional arrangement and local failures. The idea is
to go through a detailed exercise justifying the basis of selection of units of study that
would be capable of leading to specific conclusions and recommendations. The risks
of extrapolation can be substantially reduced by providing the justification for
selection.
(CAG letter D.O. No.1357-Rep(S)/270-2003 dated 21-10-2003)
How to examine outputs and outcomes?
Output – outcome binary is critical to the comprehension of the ultimate
impact of a scheme or programme. we have conventionally concentrated on output
analysis by way of analyzing the performance of a scheme or programme in terms of
fulfillment of physical and financial targets. There are any number of cases where the
physical and financial targets have been substantially met, thereby pre-empting the
audit conclusion excepting that the programme has been a success. As a matter of
fact, an analysis of the reasons of failures of a number of reviews planned would show
that sufficient material was not available for critical audit comment. But could it not
be that physical targets have been achieved only on paper presented as desirable
outputs but the real benefits in terms of outcome have not accrued to the
beneficiaries? Could it not be that only some intermediate outcomes have
materialized but the end outcomes are nowhere in sight? These questions bring us to
the subtle distinction between outputs and outcomes. Simply defined, outputs are
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goods and services produced or works completed or expenses made and outcomes are
the consequences these goods, services or works produced. You can yourself list out
a set of outputs and a set of outcomes in respect of each performance audit you
undertake.
For any programme there will be a range of factors, which influence the
outputs and outcomes. Many will be intangible and unmeasureable but for any audit
review, which attempts to examine outputs and outcomes, you ought to be at least
aware of them to be able to investigate them, if necessary. One NAO document
identifies these factors as both external and internal. Details of these would give you
an idea of the range of possibilities for examination that exists even in our own case.
Internal factors
� Economic: Inputs, Staffing, Finance, Buildings
� Organisational: Management structure, Skill base, Procedures
� Behavioural: Motivation of staff, Incentives, Moral
� Technological: IT Support, Telecommunications
� Legal: Statutory framework, Regulations
External factors
� Economic: Macro, Micro and Industrial Economics
� Infrastructure and Environment: Transport, Communication, Wider
Technology
� Nature of beneficiaries: Media, Consumer Interest and Pressure Groups
� Legislature: Public Opinion, Devolution of resources and powers
It would be seen from these factors that the range of analysis of outputs and
outcomes is by no means a play of figures. It should be possible to analyse the
outputs and outcomes by first locating the factors and then by analysing them.
Attempt a factorization of any scheme in hand and you would find there are evidences
which can, if not wholly, at least substantially, influence the outputs and outcomes.
For measuring the outputs and outcomes the first requirement is that the key
information relating to outputs and outcomes are reliable. Often consistent and clear
reports of performance, results or progress are not available. Should that be the end
of the matter? Should we not in such a situation attempt a verification of the reporting
process itself to show how exactly the information have been compiled? How exactly
the compiled information has been rendered unreliable? Assuming for a moment that
the reliability of the reported output is questionable, the question would arise as to
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whether it would in any way be useful to proceed to measure the outcomes. There is
an interesting possibility here. It is possible to question the output on the basis of
outcomes. For instance, an electrification project which was designed to bring
electricity to all homes has been declared completed on paper and 5 – 10 Electrical
Sub divisions in different areas of the state, picked up for scrut iny, showed that there
has been increase in the consumption of electricity as power have not been drawn due
to lack of no domestic connection. Here the outcome itself has shown that the outputs
had no impact. Could it be that the output compiled was unreliable or could it be that
the design of the project itself is a faulty in as much as it did not take into account
connectivity to the end users? Similar analysis can be done in respect of all schemes
seeking to deliver services or benefits to an end user. There would be of course areas
where there would be a host of interdependencies due to which a straight movement
from output to outcome and outcome to output would not be possible. These are
situations where the external factors would have to be considered for a fairer view.
For instance a bridge has been constructed while the road work is incomplete or a
family welfare centre has been established but the local people do not attend because
of a social taboo or because the location is disadvantageous.
Some key indicators for successful outputs and outcomes can be adopted by
audit for scrutiny:
(i) How clearly have the outputs and outcomes been defined?
It is common knowledge that in most projects, programme or scheme
documents are either non-existent, very nebulously articulated or only output centred
with a broad policy declaration in regard to outcomes. This should be taken as a
deficiency in documentation and highlighted.
(ii) Is there adequate planning for the outputs and outcomes?
Inadequate planning invariably leads to poor use of resources, missed
deadlines and wasted expenditure. We do highlight instances of this nature.
Comment on inadequate planning that could have led to these consequences.
Departmental planning rarely concerns itself with threats and opportunities in the
programme. In other words inadequate planning is the result of insufficient vision
and indifference to risks and opportunities.
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(iii) Are the resources allocated adequate and have these flown in a manner helpful for the desired outputs and outcomes?
We have been generally doing this analysis quite well but our efforts are often
not completely in line with Resource Accounting Techniques which some of the
developed countries use. What they do is take a single matrix of the resources
including financial resources linking the various objectives in a single focus. We
have been commenting on manpower, finances, skill levels and investment in
infrastructure separately and only linking them occasionally. This could perhaps
change by focusing on resources in a single accounting matrix showing how flow of
resources or inadequacy of resources could have led to lesser deployment, lower skill,
greater non-accountability, lesser visibility and poorer delivery.
(iv) Is there a coordinated approach involving all the players?
No scheme, project or programme in a study could be the exclusive play
ground of the department concerned. There are other players too. In the schemes and
projects worked out, such interfaces or interpenetrations are rarely worked out. No
department is prepared to give away the privilege of exclusivity for taking credit.
This would be evident from the reading of any poorly prepared scheme documents. It
would be worthwhile to identify, even if this is not done in the scheme document, the
other players who could influence the output and outcome of a scheme or project and
a worthwhile audit comment would emerge if we can show that there was a flaw in
the project designed in not taking into account of the existing potential or available
infrastructure controlled by another department. In the reviews of all Poverty
Alleviation Programmes comments on quality of interdependencies, interpenetrations
and interfaces would provide valuable indicators on failure of coordination.
(v) Have the beneficiaries been clearly identified?
It is surprising but true that many schemes in social sector have failed because
the beneficiaries have been very broadly identified without the necessary
significations which could establish beneficiaries status. There is also another
scenario in which the beneficiary status is not mapped clearly for utilisation of a
benefit intended to be delivered. An instance is energy efficiency projects aimed
specially at low income group household who are unable to afford many energy
efficiency measures. Audit scrutiny could bring out the mismatches, the opacities and
normative failures in the identifications of the end users or the beneficiaries.
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(vi) Has the project considered the unintended effects?
This is one area where most of our projects are deficient. In developed
countries a project for industrialisation for instance would invariably cover its impact
on ecology and environment. We too have the mandatory requirement of
environmental clearance for setting up industries. But despite the theoretical
underpinnings being in place, the grass root level implementations manifested in
terms of destabilisation are not clearly addressed in the projects implemented. How
does audit address these issues? Appears difficult but a few indicators like increasing
health risks unintended economic inequities, social imbalances resulting from the
implementation of a project could be kept in view if case studies are available. We
are yet to develop counter factual studies to measure the impact and outcome of a
project, nor can auditors do it by themselves but available studies can be used in
making some observations supported by evidence.
(vii) Are the outputs and outcomes measurable?
There is a management saying that a thing that cannot be measured cannot be
managed. Audit could see if firstly the quantitative targets are set on a reliable basis
and secondly if these are relatable to specific time-frames and thirdly if reporting
measures for communicating progress are in place.
(viii) Are the outputs and outcomes sustainable?
Sustainable outputs imply not only the continuity of the measures delivered,
but also their natural link formation with other coordinates and their automatic
replicability. In a way, the social product is more than a product, it is more often seen
as capacity. Similarly, sustainable outcomes imply that the long term impacts of
programme measures are kept in place for as long as needed by productively linking
these to the systems. Sometimes outputs degenerate or dwindle due to weak links
with supporting structures or coordinates. The outcome similarly could suffer due to
qualitative changes in the environment, need-redefinition or inherent weaknesses in
need perception. Simple instances of a crumbling building due to lack of maintenance
or an unusable road due to lack of repair represent outcomes or outputs that could not
be sustained. While doing performance audit, you may therefore book into the
following:
◊ Link with coordinates & supporting structures
◊ Changes in needs
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◊ Risks to outcomes and outputs
(Dy. CAG letter D.O. No.1361-Rep(S)/270-2003 dated 23-10-2003)
Drafting of Report
10.11 Drafting of the Review Report is the final stage of the review. The data
collected or obtained from departmental offices and unit offices are consolidated and
collected for interpretation and detailed analysis. The Review Report should be
drafted after careful, detailed and analytical discussion of the findings of
investigations made during the review. Taking into account, the consolidated data,
the results of preliminary study and mid-course study of the programmes and remedial
measures taken, if any, the review is drafted for approval. All verifications of facts in
draft audit paragraphs and reviews, including verification by reference to by
documents should be done by the Group Officers on whom will rest the responsibility
for verification of facts. (Conclusions No. 10 of the Conference of the Accountants
General (Audit) - July 1993).
While achievements of the Project, authorities should be given due place in
the review reports, the shortcomings like non-observance of time schedule and cost
estimates, over capitalisation, large over-head expenditure, over staffing, idle
personnel, work loading, delay in construction of Projects resulting in increase in
expenditure, absence of trained man-power, plants operating below rated capacity,
excessive inventories, absence of sound pricing policy, unauthorized occupation of
government lands, idle plant and equipment, leakage of revenue, over payments,
losses due to pilferage’s or non-observance of proper procedures, improper avoidable
or infructuous expenditure etc. are to be highlighted in the review.
10.12 In attempting the reviews, the emphasis should be on quality rather than on
lengthy narration. More stress should be on analysis of strength and weaknesses of
the organisation. The report should be so balanced that among other things, points
from financial audit as well as achievements of social objectives aspects of the
scheme are highlighted. In order to bring about uniformity in the style of reporting
“Style Guide” for Audit Reports has been issued by the CAG of India vide No. 138-
Audit (AP)/6-2003 dated 29-9-2003 for adoption which seek to encourage the use of
plain simple English -, short words, short sentences and short paragraphs.
After the review report is written up, it is to be forwarded to the Head of the
Department and on receipt of reply, their comments replies are embodied in the
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review or the review is revised wherever found necessary in the light of the reply. To
expedite replies it is desirable that self contained parts of the review are issued
immediately after drafting and the material discussed with the departmental
authorities at appropriate level.
10.13 The lay-out for a review may be:
i) Introduction giving description of the scheme/project.
ii) Scope of audit.
iii) Organisational set up.
iv) Highlights..
v) Finance resources and expenditure.
vi) Targets-Physical and financial.
vii) Use of financial assistance/resources.
viii) Utilisation of materials/equipments.
ix) Utilisation of man power.
x) Components of the scheme goals, achievements, shortfalls.
xi) Inventory.
xii) Operational costs-variable, fixed.
xiii) Assets and their use.
xiv) Social objectives-achievements and shortfalls.
xv) Monitoring and Evaluation.
10.14 a) The review Section and Review Parties sanctioned in Inspection Civil
Wing for ‘on the spot’ study of the records, reports etc. will act in close liaison and
where necessary, an exchange of staff may be made for short intervals. Such co-
ordinated action will facilitate collection of information and conduct of investigation
locally.
b) Review Section will prepare detailed questionnaires indicating the broad
outlines of examination of various schemes selected for Efficiency-cum-performance
Audit and submit the same to Efficiency-cum-Performance Audit Section for approval
by the Pr. Accountant-General. On receipt of approval, Review Section, shall arrange
detailed review of the schemes by deputing Review Parties.
Review Parties
10.15 A register showing the progress towards collection of information and
conduct of investigation of schemes locally shall be maintained by Review Section in
Inspection Civil Wing showing the following particulars:-
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i) Serial no. of Scheme.’
ii) Particulars of the Scheme reviewed by the “ECPA Section”.
iii) Date of receipt of questionnaire in Inspection Civil Wing.
iv) Section/Party to which questionnaire made over for action
v) Date on which scheme/questionnaire sent to the Section Officer/Asstt.
Audit Officer of Review Party for local audit.
vi) Date of taking up the audit of the scheme by the Review Party.
vii) Date of completion of audit by the Review party.
viii) Date of receipt of review note from the Review party.
ix) Date of submission of the Review to the Group Officer (Inspection Civil).
x) Date of approval by the Group Officer (I-C).
xi) Date of submission of Draft Para/Critical Review by the Review party.
xii) Date of approval of the Draft Para/critical Review by the Group Officer
(Inspection Civil).
10.16 This progress report will be submitted to the Pr. Accountant General
through E.C.P.A. Section on the last day of each month for review. For keeping a
proper watch over the questionnaires received from the E.C.P.A. Section all such
questionnaires after they are seen by the Group Officer (Inspection Civil) will be
received by the Review Section, who after keeping a note in the progress Register will
pass on the same immediately to the Review Party concerned for suitable action. The
Draft Paras/Critical Reviews for inclusion in the Audit Report(s) will also be prepared
by the Party and sent to the Group Officer (Inspection Civil) as soon as particular
audit is over.
The Review Party will submit a statement in the following form to
Review Section on the 5th of each month for incorporating the progress of audit of
schemes in the Progress Register.
FORM OF STATEMENT TO BE FURNISHED BY THE REVIEW PARTY (on the 5th of each month)
A-Statement in respect of schemes the Audit of which has been completed during the
month.
Sr. No.
Name of the party
Particulars of the schemes
Date of audit
Whether Dra ft para or not
When inspection report/Draft para sent
to Review Section
Remark
1. 2. 3. 4. 5. 6. 7.
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B- Statement in respect of schemes under audit
Sr. No. Name of party
Particulars of the
scheme
When audit was taken
up
When Audit is likely to
be concluded
Remarks
1. 2. 3. 4. 5. 6.
C-Statement in respect of schemes the Audit of which is still to be taken up
Sr. No.
Name of the party
Particulars of the schemes
When received by the party from the head quarters office.
When Audit is likely to be taken up
Remarks
1. 2. 3. 4. 5. 6.
Abstract
1. Progressive total no. of Schemes audit of which has been completed with
particulars of the scheme.
2. Total number of schemes under Audit as per (B) above.
3. Total no. of schemes the audit of which is still to be taken up as per (C) above.
4. Total no. of schemes received by Review Section (Inspection Civil Wing)
during the month with full particulars of the schemes.
(CAG’s letter No. 265-BRS/NGE.II/109-61, dated 12th July, 1962)
Collection of the material
10.17 (a) Local audit, of Programmes/schemes selected for review by the
Pr. Accountant-General, is conducted by the Review party of the Inspection Civil
Wing. Local audit of Programmes/schemes should include an intelligent scrutiny of
departmental files, etc. and should be directed so as to detect and keep a collective
record of serious and unjustified/excesses over estimates, extensive delays,
infructuous expenditure and losses, etc. due to insufficiency as well as of any
shortfalls noticed in the achievement of the physical targets, returns, or final objects
envisaged by the scheme. It is essential that expenditure incurred on different
schemes should be examined in Audit to ascertain whether (a) Such schemes are
being executed and the ir operations conducted economically and (b) they are
producing results expected of them.
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(b) In regard to (a) above some of the broad lines of examination will be to
ascertain:-
i) Whether technical estimates or detailed programme and cost schedules are
being framed and that the same are adhered to, if not, whether there are
adequate reasons for excesses, delays etc. or whether these are occasioned by
insufficient handling, wastes, etc. or due to indifferent preparation of original
estimates.
ii) Whether there have been any serious avoidable delays (due to inefficient
handling, planning and co-ordination of the work) in the progress of works or
schemes resulting in increase in the total cost of the scheme or any loss of
revenue due to delayed execution or holding up of other connected schemes.
iii) Whether there has been any wasteful expenditure including that resulting
from lack of co-ordination amongst the several aspects of the scheme, such as
staff having been engaged a long time before the procurement of machinery
required for running a centre or vice versa.
iv) Whether there has been any waste due to some of the facilitates (e.g.
buildings, equipment, staff etc. on which expenditure has been incurred under
the scheme proving unnecessary or going unutilised.
v) Whether there have been any serious or recurring losses.
vi) Whether the performance/cost compares well with the results obtained in
respect of similar scheme in other fields in the public sector.
vii) Whether the expenditure incurred conforms to the relevant provisions of the
Act, Constitution and Laws made thereunder.
viii) To what extent the broad and general principles of financial propriety and
high standard of public finance morality are kept in view in incurring
expenditure on such schemes.
10.18 In order to examine in audit as to how far a particular activity is producing
results expected of it, it would be necessary inter alia to ascertain:
i) how far physical targets e.g. completion of certain construction works,
setting up of certain organisations, centres, etc. have been achieved within
the estimated time.
ii) How far any returns, which were anticipated are actually accruing.
iii) How far the final purpose or objects of the expenditure have been achieved
e.g. in the case of irrigation projects it should be ascertained if the estimated
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supply of water for irrigation purposes and power has actually become
available as a result of the completion of the projects and whether their
actual utilisation is to the extent anticipated. Similarly, whether the
anticipated number of persons are being trained up every year in a technical
centre and getting absorbed in the trade concerned to the extent anticipated.
10.19 To supplement the results of local audit, the administrative authorities may be
asked to furnish annually, till the completion of the scheme, a review of the actual
working of the scheme during each year mentioning inter-alia any major excesses
over estimates and any serious delays along with justification therefor, as well as the
extent to which the physical targets, returns and final objects visualized were
achieved. Some other sources which may prove to be helpful in conducting the
‘Efficiency Audit’ would be the Programme Evaluation Reports of the administrative
departments of Government or any reports of a Committee appointed by the
Legislature.
10.20 In examining the information collected on the above lines, attention should be
directed to cases where the interest of the tax payers was adversely affected due to in-
efficient planning and execution of a scheme or project. Audit Officers should
however, be careful to avoid offering even implied criticism in cases where although
the original anticipations have not been realised, there are no plausible indications of
inefficiency or waste on the part of the administrative authorities as for example,
where excesses over original estimates of expenditure were occasioned by
unanticipated rise in cost of materials new or unforeseen items of work discovered as
the work progressed or delays and lesser yield of revenue were caused by
circumstances which could not have been reasonably anticipated.
10.21 The emphasis in regard to the material proposed to be included in the Audit
Report should be on quality rather than on quantity and on analysis rather than mere
narration. The thrust of the paragraphs and reviews should come out clearly and
whatever is stated in the Audit Report should be in impersonal language and
supported by facts and figures Performance reviews of schemes and project should
receive greater emphasis. All reviews would require supervision at the level of the
Group Officer.
(A.G’s d.o. letter No. App/R/I/1-5/Inst. /IV/570 dated 22 September 1976.
10.22 Some of the draft paragraphs, more particularly reviews, might be understood
better if supporting maps, charts, sketches, etc. having proper authenticity are given at
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appropriate places. This may be kept in view while submitting draft paragraphs. It
would of course be necessary to keep in view the point that if maps, etc. are to be
printed it would need clearance from the concerned authorities.
(C.A.G.’s letter No. 720-Rep.202-77, dated 2nd September, 1977).
10.23 Reviews and paragraphs should be more concise unnecessary descriptive
material should be cut out and the facts stated should be brought out in sharp focus
with adequate thrust. There seems to be a mistaken impression that the audit report is
a record of achievement by audit. It is not necessary or desirable to highlight all the
achievements of audit in the Audit Report. Only matters of Public importance should
be incorporated in the Audit Reports.
(C.A.G.’s d.o. NO. 621-Rep/125-79, dated 4th May, 1979)
10.24 The following steps should be taken for improving the quality of reviews to be
incorporated in the Audit Reports:-
(a) Before setting out to review a scheme or programme, opportunity should be
taken to discuss the various aspects of the scheme/programme with the Head
of the Department concerned so as to decide on the audit approach to the
review.
(b) Group Officer entrusted with the supervision of the audit teams conducting the
review should personally visit the places where the schemes/programmes are
being executed. Apart from providing first hand knowledge and information
such visits would facilitate clearer understanding of the scope of the scheme
and better appreciation of the methods of execution.
(c) There is absence of comments in the audit Reports on the social aspects in
implementation of scheme and programme. There is often no indication in the
appraisals about the social and other objectives/benefits anticipated and
achieved. It is, n o doubt, difficult to quantify social benefits but attempts may
be made to ascertain to what extent this has been achieved at least in
schemes/projects which specifically mention such social benefits as one of the
aims to be realised.
(C.A.G.’s d.o. No. 734-Rep/k73-78-III, dated 28th May, 1979).
Data Bank
10.25 Portfolio in respect of each scheme which is susceptible of performance
appraisal, is required to be built up to contain complete details of the programme its
objectives, financial and physical targets, performance stated etc. by Portfolio section
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in particular should be fed to Efficiency-cum-Performance Audit when the audit of
the scheme is taken up.
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Audit of World Bank and other Externally Assisted Projects
Audit objectives and scope
10.26 Audit is responsible for reporting to the funding agency whether the
implementing agencies have carried out expenditure on the scheme in accordance
with the pattern specified in the staff appraisal report relating to the schemes and
terms of such assistance and Government of India instructions and to identify matters
relating to inadequacies in systems and control, cases of fraud or presumptive fraud,
wasteful expenditure, failure of administration to take corrective action on
recommendations contained in earlier report.
Source documents
10.27 Staff appraisal reports, loan agreement, monthly account or financial
statements and supporting vouchers, contracts relating to work, methods adopted for
procurement, transfer entries, estimates of a work to identify any inadmissible items
from the rate analysis of a particular work, quality control reports, comments of
World Bank.
Documents essential for Audit Certification
10.28 Following documents are essential for scrutiny and issue of audit certificate.
(i) Loan/Development Credit Agreement.
(ii) Staff appraisal report.
(iii) Statement of expenditure (SOE)
(iv) Supporting vouchers
(v) Reconciliation statement
(vi) Inspection report of local/central audit for inclusion of any serious
financial irregularities pointed out in audit.
Audit approach
10.29 Local audit is to look into eligibility of contractor, investment decision and
implementations, methods adopted in selecting contractors, review of viability of the
project, review of the project management system to ensure that the work is properly
and effectively supervised and executed and that there is accountability throughout
the various stages of the project.
For some payments of miscellaneous nature, e.g. remittance vouchers,
cheques, discount vouchers etc. nothing more than a minimum audit can be prescribed
generally, this minimum consists in verifying that there is a sufficient voucher for the
payment and that there is sufficient authority for making it.
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Issue of Audit Certificate
10.30 While issuing audit certificate, it should be ensured that the expenditure is
incurred for the purpose it is meant and conforms to the procedure and terms and
conditions of agreement and Government of India's instructions. All objections raised
during local audit should also be mentioned in the Audit Certificate (Proforma as per
Annexure) duly signed by Group Officer.
As per existing instructions issued by Ministry of Finance (Department of
Economic Affairs), SOE should reach the Accountant General (Audit) by 31st July
following the close of financial year. Implementing agency is to obtain, reconciled
and verified SOE from Accountant General (A&E) so that Audit Certificate could be
issued in time. There should be proper interaction between the Audit and Accounts
and Entitlement office to avoid unnecessary delay.
The irregularities noticed during audit should be indicated in brief with Audit
Certificate. Audit Certificate should be issued in printed revised proforma and on
printed letter head appended as Annexure to this section.
After the closure of every financial year, the audit certificate shall be issued
within 9 months or earlier as required under the Project/Loans Agreement i.e.
certificate should be issued any time after receipt of SOE. The issue of the Audit
Certificates is delayed mainly due to non-receipt of SOE's from the project
implementing authorities and there is a general tendency to shift the responsibility for
delay on Audit. To overcome this problem, timely and prompt action by taking up the
matter with the Finance Secretary of the state should be initiated. Audit certificate
should be issued to project implementing authority under intimation to Ministry of
Finance (Department of Economic Affairs).
Main points to be checked in Different Audit Areas
10.31 The agreements for loan/development credit entered into by the International
Bank for Reconstruction and Development and International Development
Association with the Government of India for financing development projects to be
implemented by departments of the Central Government, States Governments, Public
Sector Undertakings and Autonomous Bodies, etc. include specific covenants for
Accounts and Audit. These covenants inter alia provide that the Government of the
Project entity shall, (a) maintain records and accounts adequate to reflect, in
accordance with sound accounting practices, the operations, resources and
expenditures in respect of the Project, (b) have the records and accounts of the project
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for each fiscal year audited in accordance with appropriate auditing principles
consistently applied by independent auditors acceptable to the Bank, (c) furnish to the
bank within 9 months or earlier of the close of the financial year a certified copy of
the report of audit referred to in the paragraph at (b) by said auditors, of such scope
and in such detail as the Bank shall have reasonably requested, and (d) for all
expenditures in respect of withdrawals made on the basis of Statement of Expenditure
(without documentation), furnish the report of audit referred to in this paragraph as
containing a separate opinion by the independent auditors as to whether the
Statements of Expenditure together with the procedures and internal controls involved
in their preparation, can be relied upon in support of such withdrawals.
The World Bank has accepted, after going through the accounting and auditing
arrangements in India, that the system ensured a satisfactory degree of financial
discipline and, accordingly, accepted the Comptroller and Auditor General of India to
be an independent auditor for the purposes of certification of accounts issue of audit
certificates in respect of projects being executed in India with World Bank financial
assistance. The standard audit covenant in the loan agreements, in respect of projects
executed by Government Departments and Corporations, the audit of which vests with
the Comptroller and Auditor General, is met by the Accountants General (Audit) by
furnishing to the project authorities for onward transmission to the Bank, an
integrated audit certificate within 9 months or earlier of the close of the financial year
in the prescribed form (Annexure) based on irregularities noticed in Central Audit as
well as Local audit in relation to the accounts of these projects.
The annual accounts to be certified are the annual expenditure statements in
respect of projects executed by Government Departments and the Accounts that are
certified by Comptroller and Auditor General as sole auditors in respect of projects
executed by other bodies and authorities. If any further details are required by the
World Bank, these are to be furnished by the project authorities. The integrated Audit
Certificate is considered adequate for the purposes of the World Bank and it would
not be necessary for the Bank to await the all- inclusive Audit Report of the
Comptroller and Auditor General submitted to the respective legislatures. As the
Audit Certificate is not to be published and is in the nature of a document exchanged
between the clients and the Bank, the Certificate should indicate, in brief, the amounts
held under objection in relation to wanting vouchers, D.C. bills, sanctions etc. and
misclassification, defalcation, over payments etc. that come to notice.
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The Audit Certificates in respect of projects executed by Government
Companies are issued by Chartered Accountants who are statutory auditors of the
companies and not by Comptroller and Auditor General who conducts only a
supplementary audit in such cases under the Companies Act, 1956.
The World Bank gives aid in two ways :
(i) Sanctioning and releasing an amount of expenditure in advance.
(ii) Reimbursement of claim.
In India, reimbursement of claim system is adopted. The interest rate on the
Bank loans ranges between 3 to 5 % and compensation for risk services is between 1
to 1.5 %. Loans are repayable over 15 to 20 years with grace period of 3 to 5 years.
Project decision and implementation
10.32 The responsibility of identification, determination of feasibility of projects, its
execution and administration rests with the borrower. However, an appraisal is
carried out by the Bank with the assistance of the borrower to examine the economic,
financial and technical requirement of the project which provides a basis for decision
to support with a loan. The staff Appraisal Report (SAR) includes a detailed
explanation and assessment of the financial management system and any additional
requirements for the particular project. It addresses the design of the project accounts,
procedures required for consolidating reporting from various sub projects, the use of
SOEs, and any other activities required to assure accountability. This will be
especially important when the project involves several agencies and the methodology
for consolidating total project expenses is not clear. The SAR also outlines the format
for project reporting, including the audited and unaudited financial statements
required, and their frequency. An agreement is drawn between borrower and Bank
defining project, specifying programme to be followed to achieve its objective and
schedule of items to be financed by Bank, the arrangement for disbursement of the
proceeds of the loans are made after its approval by the Board of Directors.
The lending agency requires that the proceeds of any loan are used only for the
purpose for which loan was granted with due attention to consideration of economy,
efficiency and effectiveness without any political or non-economic influences.
Audit of implementing agencies
10.33 Funds from Bank loan may be disbursed only on account of expenditure for
goods and services provided by nationals of, and produced in or supplied from, Bank
member countries. Under this policy, nationals of other countries or bidder offering
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goods and services from other countries should be disqualified from bidding from
contracts intended to be financed wholly or in part from Bank loans.
The expenditure should be incurred as per terms and conditions of the World
Bank which inter-alia requires :
(i) Utilisation of loan for the purpose projected and sanctioned for
(ii) Consideration of economy and efficiency, extra avoidable expenditure
may therefore be objectionable for reimbursement from World Bank
Loan. Cost over run due to non-completion of work in stipulated time
may also be disputable claim for reimbursement from the Bank.
(iii) Non denial of pre-qualification to a firm for reasons unrelated to its
capacity to supply the goods/services in question except if the
borrower country commercial relation with that country to which that
firm relates provided the bank is satisfied that such exclusion does not
preclude effective competition.
(iv) Award of any contract is required to be strictly in accordance with loan
agreement or guidelines.
(v) Implementing agency not agreeing to any material modification or
waiver of the terms and conditions of contract or extension of the
stipulated time of performance which would effect the contract
inconsistent with the provision of loan agreement.
(vi) Procurement of goods and services inconsistent with agreed procedure.
Observance of all the above conditions can be scrutinized and suitably
commented upon by the local audit party, and the amount objected on any of the
above conditions can be objected by Accountant General (Audit) for certification of
Statement of Expenditure (SOE) for the sake of reimbursement.
The items, which qualify or do not qualify for reimbursement are as follows :
(i) Amount recovered towards security deposit (SD) is not eligible.
However, release of SD to the agencies is claimable.
(ii) Secured advance paid on material is not reimbursable.
(iii) Mobilization advance paid to the agency is reimbursable.
(iv) Income taxes/sales tax recovered from contractor is claimable for civil
work but not for supplies.
(v) Foreign exchange freight charges are eligible for reimbursement.
(vi) Local transportation charges are not reimbursable.
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(vii) Insurance premiums paid in foreign exchange are eligible for Bank
financing; self insurance and premium paid in local currency are
ineligible unless explicitly provided in the loan agreement.
(viii) The Bank does not finance custom duties and other taxes imposed by
borrowing country.
(ix) All payment to consultants are made in accordance with contract
provisions which normally specify currencies and mode of payment.
(x) Income tax and other duties paid to the consultant are not reimbursable
unless specifically provided in the contract.
The above points are to be kept in mind for audit certification for
reimbursement and are to be pointed out during Central and Local audit.
In civil offices the expenditure is met by drawing funds on AC bills. The
admissible expenditure will be the expenditure supported by DC bills. The SOE
therefore, needs to be scrutinized with a reference to the report of AC/DC bills
received in Accounts and Entitlement office.
Audit Certificate
10.34 Where SOE procedure is used for loan disbursement, the SOE should be
integrated to become a part of project financial statement.
Under the SOE, procedure, the borrower periodically requests withdrawal of
loan proceeds through submission of a statement indicating expenditures for certain
items referred to in the loan agreements. The SOE procedure simplifies and
accelerates the Bank's loan disbursement process by eliminating the requirement for
bank staff to review supporting documentation for many a small expenditures prior to
authorising disbursements. The SOEs are not accompanies by supporting
documentation. Implicit in the SOE submission by the borrower is the adequacy and
veracity of documentation, maintained by the borrower, which supports the
disbursements.
During local audit, it is necessary to obtain a listing of all SOEs submitted
during the period under review and for each expenditure perform the following
(i) Evaluate the adequacy of the supporting documentation which should
normally include one or more of the following :
(a) procurement documents (Bid documents, invitation, evaluation,
award)
(b) purchase contract
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(c) purchase order
(d) letter of credit
(e) supplier's invoice and certification of origin
(f) shipping or import documents and inspection certificates
(g) contractor's invoices or certificates
(h) other evidence of receipt of goods or services
(i) force account records
(j) recurrent cost records
(k) authorization for payment
(l) evidence of payment/bank statements
(m) accounting records of approvals, disbursements, and balances
available
(n) evidence that refunds have been made by suppliers and
corresponding adjustments made in subsequent applications in
instances where goods have been returned.
(ii) Ascertain the expenditure was properly authorised and approved.
(iii) Verify that the expenditure is eligible for bank disbursement under the
loan agreements. Ineligible expenditures would include;
(a) duplicate invoices;
(b) payments made in advance of receipt of good or delivery of
services, unless these payments are consistent with contract
provisions and are established commercial practice;
(c) payments that should have been made under normal disbursement
procedures with full documentation (e.g. payments against
contracts subject to the Bank's prior review, or payments against
contracts with values exceeding defined SOE limits); and
(d) payments for items that are not procured in accordance with the
legal agreements, such as
− payments for items from countries that are not eligible under the
Bank's Procurement Guidelines;
− payments for items not specified in the procurement;
− payments made prior to loan signing or before the eligible date
specified for retroactive financing;
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− payments for items on the negative list or not on the positive list
(for adjustment operation lending).
(iv) Verify the mathematical accuracy of the SOE.
(v) Agree the percentage used to determine the Bank's share of the total
disbursement to the loan agreements. Verify that the proper amount
was requested for reimbursement.
(vi) Summarise the results of the work performed on a summary form.
(vii) Notify borrower of all instances of negative findings.
It is advisable to draft Audit Inspection Report paras identifying specifically
that the project/work/scheme is aided by World Bank/External Agency where the
implementing agency is executing other work besides World Bank aided works.
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Systems Audit
Introduction
10.35 A system is an orderly arrangement of separate but interdependent and
interacting activities and related procedures which implements and facilitates the
performance of the functions of an organisation.
The concept of System Audit is that if an in-depth analysis of the mechanics of
a system reveals that it is designed with appropriate controls, checks and balances to
safeguard against errors, frauds, etc. Audit can reasonably assume, without the
necessity of undertaking a detailed examination of the individual events or
transactions, that the results produced by the system would be fairly accurate.
Evaluation of the efficiency and effectiveness of any system will, however, require
sample testing of its actual working. Systems Audit thus serves also as an effective
aid to management.
General principles
10.36 The general principles governing Systems Audit are as follows :
(i) In order to locate the deficiencies in any system, it is necessary to
check the chain of movements in each procedure forming part of the
operational or financial activity. Since a long chain of movements
causes delay, the necessity for each link in a chain should be analysed
and unnecessary links identified.
(ii) Similarly, procedures that have in built delays should be examined
with a view to ascertaining how best they can be streamlined. Causes
of departures from or special relaxations of the prescribed procedures
should be analysed. The analysis will indicate where the system and
its linkages are getting extended or overloaded and how the resultant
strains may be eliminated.
(iii) It has also to be examined whether action on important points has been
initiated at sufficiently high levels of the hierarchy so as to produce
meaningful results.
(iv) In addition, procedures and/or records which appear to be redundant or
superfluous should be identified for elimination.
Source documents
10.37 The important source documents that will form the basis of audit scrutiny to
evaluate the adequacy of systems are the following:
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(i) Organisational Chart
(ii) Procedural Manuals.
(iii) Delegation of Powers Rules.
(iv) Departmental Accounts Manual.
(v) Accounting Policies and procedures.
(vi) Budgeting Policies and Procedures.
(vii) Performance Budget.
(viii) Work Plans.
(ix) Technical manual relating to quality specifications.
(x) Internal Audit Reports.
Main stages of systems audit
10.38 The main stages of Systems Audit are (i) organizational analysis; (ii) analysis
of system of authorisation and recording; (iii) analysis of system of accounting; (iv)
examination of the system of internal control; (v) evaluation of the standards of
quality and performance; (vi) examination of the adequacy of internal audit; and (vii)
review and evaluation of the system as a whole. The manner in which these processes
are applied in the context of a government entity is indicated in the following
paragraphs.
Organisational analysis
10.39 The first step will be to find out the basic objective or activity of the entity.
Thereafter, the organizational pattern of the entity as indicated in its organisational
chart and procedural manuals should be studied to make sure that a clear and logical
plan of organizational functions that establishes clear lines of authority and
responsibility for financial and operational activities keeping in view the entity's basic
objective or activity is available. A flow chart could be prepared in order to examine
whether:
(i) the units are functionally segregated to ensure professional, functional
and/or technical specialization and to achieve functional independence
for purposes of internal management control;
(ii) proper distribution and clear demarcation of functional responsibilities
exist among the personnel working in the entity;
(iii) the entity's staffing pattern conform to norms or standards prescribed
for the purpose and has the approval of the competent authority;
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(iv) the financial functions are separated from other administrative
functions;
(v) the employees within the financial unit responsible for the custody of
financial or material resources are separate from those who record
transactions, maintain accounting records and prepare financial reports;
(vi) the financial powers of each authority of the unit and its
responsibilities have been clearly defined and are updated to depict the
correct position at any given point in time;
(vii) checks and balances have been integrated into transactions in such a
manner as to ensure added reliability without increasing costs or
creating new positions or new operating units;
(viii) there is an effective system of follow-up to determine whether
assignments are properly carried out;
(ix) the organizational units are designed to obtain maximum effectiveness
at the minimum cost;
(x) staff requirements are reviewed from time to time keeping in view
changes in the entity's functions and relevant factors;
(xi) posts remain vacant for long periods affecting adversely the entity's
functioning; and
(xii) there is any overstaffing with reference to the entity's functional
responsibilities.
Analysis of system of authorization and recording
10.40 This involves examination of the system of authorisation of transactions and
operations and the related procedures and records prescribed for the purpose. It has to
be verified whether the powers for initiation of operations and transactions and their
approval and execution are clearly delegated in writing by the competent authority
and whether an adequate system with necessary checks and balances exists to ensure
that the delegated powers are exercised satisfactorily. It should be ensured that the
forms and procedures provide for the authorization and review of transactions prior to
their being entered in the accounts and that the forms and procedures are so designed
as to include provision for proper authorization of all operations and transactions with
the record of the authorization serving to establish accountability for the action taken.
It has also to be seen that the system provides for procedures to ensure that:
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(i) all approved transaction documents serve as source documents for
accounting entries; and
(ii) all cash and materials received in the entity are immediately accounted
for.
Analysis of system of accounting
10.41 This requires a study of the departmental accounts manual, relevant orders,
circulars, etc. including the prevailing policies and procedures. A flow chart may be
prepared to depict various stages in the process. It may be examined to see whether:
(i) the accounts records provide for compilation of transactions according
to the budgetary classification;
(ii) an effective method of budgetary control, including a machinery for
the prompt reporting and analysis of variations between the budgetary
allotments and expenditure, is available;
(iii) the accounting system provides for well designed documents and
forms for control purposes as well as for conducting operations;
(iv) the accounting records maintained for resources and operations are
informative, clear and generally adequate;
(v) controls exist to safeguard against errors and irregularities in
operational and financial data; and
(vi) the accounting system is adequate, conforms to the generally accepted
accounting principles and includes such forms and records as are
absolutely necessary to ensure sound accounting and financial
reporting.
Examination of system of internal control
10.42 It should be examined whether each organizational unit in the entity is
adopting sound practices so as to ensure proper internal control. These include the
provision of locked store rooms with access restricted only to authorized persons,
arrangements for surprise physical verification of cash, bank reconciliation by
independent personnel, pre-check of payments, institution of checks to see that
transactions are properly authorised, dual custody of valuable negotiable assets,
independent periodical verification of the existence of recorded material resources,
etc. It should also be seen whether the system provides for departmental enquiry into
all cases of shortage, loss, theft and embezzlement.
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Evaluation of standards of quality and performance
10.43 It should be examined whether a proper system exists for evaluating the
quality and performance with reference to the standards prescribed for the purpose.
Performance budgets, work plans, technical manuals, etc. should also be studied to
ascertain the standards prescribed. The standards of quality and performance
achieved by the management should then be listed out and compared with those
prescribed and the results evaluated.
Examination of the system of internal audit
10.44 It should be ascertained whether an internal audit system has been introduced
in the entity and, if so, whether the unit responsible is completely independent of the
operating unit. The prevalent system of internal audit should also be examined to
verify whether it provides for an objective, timely, systematic and professional
examination of financial, administrative and other operations subsequent to their
execution for the purpose of their evaluation and verification and whether the system
is geared to ensure prompt and adequate follow-up corrective action on the internal
audit reports.
Review and evaluation
10.45 The review and evaluation should not be based entirely on the replies to audit
observations, procedural manuals or flow charts prepared by the entity. The Auditor
should independently determine how the operations and transactions are actually
processed by testing, through actual observation, a few selected representative
transactions or operations. He should evaluate tentatively the effectiveness of the
procedures and controls in operation and identify the strengths and weaknesses in key
control points. The tentative evaluation in areas of weakness should be confirmed by
testing additional operations and transactions. Procedural manuals relating to areas
confirmed as being weak should be reviewed to determine whether the procedures are
inadequate or whether, though adequate, were not being properly applied.
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Manpower Audit
Introduction
10.46 The concept and main stages of systems audit have been discussed in the
preceding chapter. As indicated therein, the probe during organizational analysis
should extend to examining whether proper distribution and clear demarcation of
functional responsibilities exist among the personnel working in the entity and
whether its staffing pattern conforms to the norms and standards prescribed for the
purpose and has the competent authority's approval. During this probe, it may also be
necessary to examine how far the norms adopted for assessing manpower
requirements are realistic and how far the available manpower is utilized efficiently
and effectively without any overlap of duties and responsibilities.
The scope of a system-based manpower audit and the nature of examination
that can be undertaken are discussed in the subsequent paragraphs. The guidelines
contained therein are aimed at streamlining the systems and procedures regulating
control of manpower resources and to bring out suitable reforms where necessary.
These are, however, not to be taken as comprehensive and must be adapted to suit
local conditions. The spirit behind the systems audit of manpower is to suggest
positive measures for the optimum utilisation of the available human resources and to
bring about organizational efficiency.
Audit approach
10.47 Human resource management processes and practices vary considerably
across departments, depending upon their size and mandate, the nature of their
programmes, their strategic and operational planning processes, the management
philosophy, the work environment, their stability, the degree of centralization, and so
on. Accordingly, auditors should tailor their audit approach after gaining an
understanding of the entity, its operations and its human resource management
systems and practices. The approach varies considerably from entity to entity and
may involve examination of all aspects of human resource management within a
department or within a branch or programme of the department.
The system-based manpower audit in the office of each cadre controlling
authority will have to be supplemented by test check in its subordinate offices to
evaluate the efficiency and effectiveness of the actual functioning of the system.
Apart from assessing the availability of proper safeguards to ensure avoidance of
overlap of functions and close coordination and their adequacy, this test check will
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also include nominal audit and other prescribed checks of establishment expenditure.
All the audit findings should be studied and integrated to make an overall assessment
of the operational efficiency and effectiveness of the systems.
The responsibility for devising and following sound systems for determination
of manpower requirements, their regulation and their efficient and effective utilisation
rests primarily with the cadre controlling authorities. Audit should ascertain whether
the existing systems are adequate and whether they function effectively, and not only
indicate the deficiencies in the system but also, as far as possible, the directions of
improvement based on well-considered suggestions.
Systems audit of manpower controls will involve examination of a number of
aspects but mainly the following:
(i) the job analysis, job description and job specification for various
categories of posts;
(ii) methods and principles adopted for assessment of manpower
requirements;
(iii) norms/standards adopted for computation of requirements;
(iv) allocation and actual deployment of manpower resources;
(v) control systems available for monitoring the efficient and effective
utilisation of human resources; and
(vi) training and development of human resources.
System-based manpower audit will ordinarily be undertaken once in three
years in each cadre controlling office.
Source documents
10.48 The documents to be examined in the course of audit will include, inter alia:
(i) Government instructions on procedures for computing manpower
requirements, recruitment of personnel to different posts and the pay
scales and other terms and conditions relating to the posts;
(ii) files relating to assessment of manpower requirements;
(iii) registers of sanctioned strength;
(iv) statements of actual men-in-position;
(v) duty allocation registers;
(vi) office manuals describing duties and responsibilities of various posts;
(vii) delegation of powers;
(viii) registers and bills relating to establishment expenditure, etc.
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The computerized data base prepared by the A&E office from the payrolls of
State Government employees can also be used effectively for manpower audit. This
will provide comprehensive and integrated information about the manpower profile of
the department as a whole and its cost.
Issues for audit scrutiny
Job analysis, description and specification
10.49 Job analysis is an analytical examination of a work assignment. It is the
process of collecting information about, and analysing, duties, responsibilities and the
conditions of work involved in the job, its inter-relationship with other work
assignments and the qualifications necessary for its performance. Based on the job
analysis, a written statement is prepared outlining the specific duties, responsibilities
and organizational relationship that constitute a given job and the conditions of work
involved in, and the qualification necessary for, performing the job. This statement is
called job description. The job specification is prepared thereafter and is primarily
intended for emphasizing and detailing the personal characteristics required for
satisfactory performance of the job.
Efficient personnel management requires that an organisation's current and
future manpower needs should be determined in terms of both quantity and quality.
While the qualitative requirements are assessed through various methods of work
measurement in the context of perspective organizational planning, the performance
requirements and personal qualifications are assessed through job analysis and
recorded in job descriptions and job specifications. Job analysis and job description
are the essential prerequisites for job evaluation and for comparing the relative worth
of the factors of a job with those of other jobs in the same organisation and similar
jobs in other organisations.
A job description can provide a good and reliable check list for performance
appraisal. In its absence, the tendency will be to substitute subjective judgement for
verifiable observation of facts. Job description can also be used to stimulate and
direct self-appraisal and self-development.
The techniques of job analysis, job description and job specification are
extensively used in manpower planning and development for specifying the nature
and requirements of a job or a group of jobs, selection and placement of personnel and
for job evaluation. These techniques are also very useful in identifying and assessing
the training needs of different categories of personnel and in formulating the
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objectives and design of a training programme. They are helpful in setting standards
of performance and orienting and motivating employees towards achievement of such
standards.
It is thus imperative that proper systems should exist for maintenance of job
descriptions and job specifications for various categories of posts in each department
based on an analytical examination of each category. It should be examined during
audit that:
(i) arrangements for applying these techniques are sound and effectively
managed;
(ii) job descriptions and job specifications are maintained up to date and
correspond accurately to current job requirements, and all jobs are
periodically reviewed with a view to revising their descriptions and
specifications in conformity with the changes in organizational
objectives, job content and job context;
(iii) job descriptions and job specifications are precise and clear so as not to
give room for any ambiguity or misconstruction; and
(iv) there is no overlapping of duties and responsibilities assigned to
different jobs.
Assessment of manpower requirements
10.50 Manpower requirements are forecast on the basis of :
(i) opinions of different supervisory or controlling officers within the
department; or
(ii) projection of past trends using statistical techniques like extrapolation,
regression, correlation, etc.; or
(iii) standard formulae devised with reference to the results of work study,
job descriptions, specifications, etc.; or
(iv) measures of productivity.
The last method is, in many circumstances, the most difficult to apply. In
conditions peculiar to Government, the third alternative is generally followed. Where
there is no standard formula, the past experience and trends as well as othe r ad hoc
principles form the basis for estimating manpower requirements. The manpower
estimates take into account not only the current needs of the department but also its
expansion programmes, the demands for which are fully supported by substantive
evidence of need. One other important factor in assessing manpower requirements is
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the translation of the numerical estimates into financial (cash) estimates bringing out
the cost implications. Procedures for this purpose are generally prescribed for the
guidance of estimating authorities. Individual controlling officers within the
department who prepare the estimates in this manner forward them to the cadre
controlling authorities concerned. The latter closely scrutinize them so as to be
satisfied about their correctness before according approval. These estimates form the
basis for issue of formal sanctions and for regulation and control of manpower.
The following should be examined in auditing the systems for forecasting
manpower requirements:
(i) The extent to which the projections of manpower requirements
correspond to the numbers, levels and skills of personnel required for
the objectives set forth and the work load based on those objectives.
(ii) The continued relevance and appropriateness for the department of the
objectives in question. In case these have ceased to be so, and, if there
be any changes in the organisational structure of the department or in
its policies, it should be examined whether the manpower forecasts and
estimates reflect suitable reductions after taking into account the
changes.
(iii) The evidence, such as workload at current levels, additional posts for
future expansion programmes, etc., available to support the forecasts
and their reliability.
(iv) Extent to which the standard formulae prescribed for different
processes of work have been applied in the computation of manpower
requirements; and, in case standard formulae have not been evolved,
the reasonableness and fairness of the principles adopted for
computation.
(v) Adequacy of the departmental procedures and formulae for manpower
forecasts.
(vi) Arrangements, if any, for periodical review by an independent agency
like the Staff Inspection Unit of the accuracy and adequacy of the
standard formulae devised for computation of manpower needs like
Staff Inspection Unit and timeliness and adequacy of the follow-up
action taken for revision of the formulae where necessary.
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(vii) Extent to which introduction of computers, electronic data processing,
photocopying machines, and similar technological improvements have
made a difference to the standards and forecasting of manpower
requirements.
(viii) Soundness of the procedures prescribed for translating manpower
estimates into cash estimates.
(ix) Role of specified officers assigned the responsibility of approving
estimates of manpower requirements and the extent to which this
responsibility was actually discharged.
Allocation and regulation of manpower resources
10.51 Two aspects are important in the allocation and regulation of manpower
resources. These are supply forecasting and financial constraints. In calculating the
actual availability against the demand, the manpower available in the beginning of the
year, losses on account of various types of wastages attributable to normal retirement,
natural attrition, discharge from service, resignation, transfers and promotions, etc and
recruitment during the year are taken into account. The broad principles followed for
calculating different wastage elements are as follows:
(i) Normal retirement: This depends on the government policies in force
from time to time and can be estimated for the forecast period from the
personnel records and by an analysis of the age profile of the
employees.
(ii) Natural attrition: Wastage due to natural causes represents loss of
personnel resulting from death, disability or illness. This can be
computed based on past experience and the age profile and general
health of the employees.
(iii) Discharge from service: This refers to loss of personnel as a result of
discharge or dismissal from service. Only previous experience can
provide a guideline for estimating this type of wastage.
(iv) Voluntary wastage: Another type of wastage is the loss of personnel as
a result of their resigning or retiring voluntarily. The reasons, such as
conditions of work, morale, job satisfaction, opportunities in the
department and elsewhere, will vary widely from department to
department. Here again, past experience and future trends, as far as
these can be foreseen, will form the basis of determination.
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(v) Transfers and promotions: These are taken into account in arriving at
the overall estimate of wastage and reflect the extent to which
particular occupational and hierarchy groups are lost to other
occupations as a result of lateral or vertical movement in the hierarchy.
By careful use of techniques like succession system analysis, transfer
analysis, etc., it will be possible to predict the proportion of employees
in different categories who are likely to be promoted or transferred in
the future.
A comparison of the final figure of availability computed in the manner
described above with the demand as found justified will indicate the shortfall, if any,
in manpower supply. Sometimes, due to financial constraints, it may not be possible
to provide manpower to the extent of the demand found justified. In such cases, the
cadre controlling authority may have to apply appropriate cuts before formally issuing
sanctions allocating manpower to different units. In certain other cases, retention of a
reserve to meet possible unforeseen requirements may be considered necessary and
cuts may have to be imposed for that purpose.
In analyzing the system of allocation and regulation of manpower resources, it
should be examined whether;
(i) changes in work load that have taken place since the preparation of the
initial estimates have been taken into account while allocating the
manpower resources;
(ii) the demand and supply aspects are properly integrated in distributing
the available resources;
(iii) the system of supply forecasting is non-existent or deficient, or proper
policies relating to means of supply like recruitment and promotion are
lacking with all the attendant adverse consequences in cases where the
allocation of manpower resources is insufficient in relation to the
demand;
(iv) the cuts imposed in allocations have a proper basis and take care of the
priorities laid down for regulation of manpower resources;
(v) the reductions made in the manpower estimates have been
correspondingly reflected in the cash estimates and vice versa; and
(vi) sound procedures have been prescribed for engaging substitutes on a
casual basis or for payment of additional remuneration like overtime
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allowance or honorarium to tide over shortfalls in availability of
manpower resources.
Besides, the manner in which (a) the actual deployment of the manpower
resources compares with the allocations made; and (b) the reserves, if any, retained
while distributing are ultimately utilized should also be examined.
Norms/standards adopted for computation of requirements
10.52 Work measurement is a vital necessity for the efficient functioning of any
department or organisation. It forms the basis for comparison or control of the
organisation's capacity, efficiency, economy or relative accomplishment, and involves
the following broad steps.
(i) selection of a specific work for study;
(ii) compilation of relevant information in regard to nature of personnel
and of their duties and responsibilities, working conditions, the
sequence of actual performance of various items in the total range of
work and individual elements in each component, etc.;
(iii) critical examination of the recorded work breakdown, after separating
unnecessary, avoidable and non productive elements, to ascertain the
best method of doing the work;
(iv) assessment of the time involved in each necessary element with
reference to the most appropriate technique for the situation;
(v) determination of time allowances to cater to the requirement of
relaxation, personal needs, contingencies, etc., and
(vi) computation of the standard time required for each operation which
will include the measured time and permissible time allowances.
Time estimates or work norms are devised for various elements, operations or
jobs in a department or organisations by applying the techniques of time study,
synthetic data, analytical estimating, activity or work sampling, etc.
Timely study involves the cataloguing of various steps involved in a job
together with the different elements in each of them and measuring the time required
for performing each such element of the job. The effective speed of operation of the
worker is assessed in relation to the concept of the rate corresponding to the standard
pace of working or in other words the normal speed of working that one develops
through long practice. Generally, each element is rated during its performance before
the time is recorded without regard to the preceding or succeeding elements. The
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observed times are then converted into 'basic times’. Allowances for relaxation,
personal needs and contingencies are then added as a percentage of the basic times,
since precise measurement thereof would be uneconomical owing to their infrequent
or irregular occurrence, to arrive at the standard times for different elements.
The technique of synthesis of elemental standard times is applied to jobs or
parts thereof, comprising elements which frequently recur in other jobs and have been
correctly measured under identical conditions from direct time studies.
The technique of analytical estimating is used for measurement of work
comprising wholly or partly of non–repetitive elements. The job is broken down in
detail into its different elements and each element is assigned a time value based on
standard performance, this time value in the case of repetitive elements may be
derived from fresh time study data or available synthetic data in the absence of such
data, estimated time values may be developed on the basis of accepted practices.
Activity or work sampling is the process of drawing inferences and
establishing frames of reference from a random sample of the total activity of
machines or men observed during a period of time. It is a process of drawing
inferences or general conclusions about a mass or aggregate of similar items based
upon the careful study of a smaller number of items drawn from the mass called the
sample. The inferences or conclusions are based on the assumption that what is true
of the sample is true of the whole.
Individual departments or organizations have to select appropriate work
measurement techniques and prescribe time estimates or work norms for different
types of jobs. An independent agency called the Staff Inspection Unit is generally
constituted not only to prescribe norms but also in periodically review the actual
functioning of offices to ensure that:
(i) manpower sanctioned for a particular purpose is utilized for that very
purpose;
(ii) redundant and profitless activities are eliminated; and
(iii) work methods are simplified so as to effect economies in manpower
without sacrificing efficiency.
In auditing the system relating to work norms and the working of the Staff
Inspection Unit, the following questions would be of relevance:
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(i) Are the techniques followed for formulating the time estimates
appropriate having regard to the work environment and conditions
obtaining in the particular department?
(ii) Have there been any material variations in the job content or job
context since the formulation of the estimates as a consequence of
which the estimates have become outdated necessitating their revision
and, if so, was timely action taken in this regard?
(iii) Are there, in actual fact, functions or jobs that cannot be subjected to
work measurement necessitating the adoption of ad hoc methods?
(iv) Is the Staff Inspection Unit independent of the control of the time
management?
(v) Are the staff inspector selected from a wide enough field so that there
is a mix of both executive and technical officers?
(vi) Have the staff inspection programmes taken into account views
expressed by the manpower branch, O&M branch and other review
bodies?
(vii) Is a cyclical pattern of inspections followed so as to cove r all important
units within a specified period?
(viii) Has the planned cycle of inspection been achieved?
(ix) Are the omissions, if any, to inspect certain sections, branches or
grades of staff in order?
(x) Are all individual offices of departments having a large number of
local offices in the field inspected? On the other hand, if the inspection
is confined to a sample of offices, can this sample be justified
statistically?
(xi) Are adequate arrangements available for monitoring the
implementation of the recommendations of the staff Inspection Unit?
(xii) Has a reasonable schedule of implementation been agreed to in
consultation with the management?
(xiii) Are instances of failure to implement the schedule reported to the
senior management?
(xiv) Are conflicts, if any, between the Staff Inspection Unit and the
management referred to a senior level for objective decisions?
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Control of manpower
10.53 The systems enumerated above require to be properly coordinated and
controlled to achieve maximum efficiency and effectiveness in the working of the
department or organisation. With this end in view, there should be a separate branch
or section under each cadre controlling authority for coordinating and controlling
departmental manpower. The role and duties of this branch should be clearly defined
and it should, as far as possible, be independent from the line management with a
direct reporting responsibility to the cadre controlling authority itself.
Functions of control and coordination can be exercised in different ways. One
method is through the introduction of a management information system for which
appropriate returns have to be prescribed. Another method is by means of
administrative inspection of different offices under the jurisdiction of the cadre
controlling authority. In certain situations a combination of both these systems may
have to be adopted.
In auditing manpower control systems, it should be examined whether:
(i) there exists a separate branch or section for coordinating and
controlling departmental manpower with a clear demarcation of its role
and responsibilities;
(ii) the returns prescribed for obtaining information on various aspects
concerning manpower are adequate to the needs and they are properly
made use of;
(iii) the manpower branch critically examines all demands for manpower
taking into account the work norms, the recommendations of the O&M
Unit, the Staff Inspection Unit, etc.;
(iv) there is a sound system of evaluating requests for additional manpower
after the original demands have been approved;
(v) the utilisation of manpower resources is monitored;
(vi) work procedures are examined by the O&M unit with a view to
streamlining and bringing them in tune with the changing
circumstances;
(vii) there are adequate arrangements for monitoring performance;
(viii) steps have been taken to provide training so as to impart to the staff the
latest information and techniques relevant for their job requirements;
and
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(ix) arrangements exist to correlate the utilisation of manpower resources
with achievements of targets and goals.
Training of manpower
10.54 In evaluating an organisation's performance, it may be determined whether:
(i) short-term and long-term training plans were formulated and training
courses designed only after assessing the needs;
(ii) programmes developed for training of personnel are job and
development oriented;
(iii) the training function is balanced and cost effective;
(iv) an inventory of personnel trained in various disciplines is maintained
so as to ensure the optimum use of the training imparted to them; and
(v) the organisation has a system for a periodical review and revision of
training courses through classroom evaluation, evaluation by
participants and post-training evaluation.
Use of computerized data base
10.55 As mentioned earlier, the computerized data base prepared by the A&E office
from the payrolls of State Government employees can be used effectively for
manpower audit. For instance, comparison of the data relating to the sanctioned
strength in various cadres in a department with that relating to the ‘men- in-position’
will facilitate the scale audit of the department in its entirety. It will also be possible
to examine whether the approved staffing pattern for different cadres has been
adhered to and whether the staffing pattern itself is commensurate with the
department's mandate, objectives and programmes. This would lead to an
examination of the adequacy, appropriateness and relevance of the control
mechanisms in place to ensure that the prescribed staffing pattern and other human
resources management policies are followed.
Based on an examination of the data base, at least twenty five per cent of the
major and medium drawing and disbursing officers should be selected for voucher
audit and the scrutiny of service records during local audit according to the
instructions in this regard contained in this Manual. The results of central audit of
vouchers may also be suitably used for scrutiny of the service records in the field.
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Audit of Computerised Systems
Introduction
10.56 Following the significant advances in the field of information technology (IT),
Government organisations have become increasingly dependent on computerized
information systems to conduct their operations and to process, maintain, and report
essential information. As a consequence, the reliability of the computerized data and
of the systems that process, maintain and report these data is a major concern to audit.
IT Auditors evaluate the reliability of computer-generated data supporting financial
statements and analyse specific programmes and their outcome. In addition, they
examine the adequacy of controls in information systems and related operations to
ensure system effectiveness.
IT Audit is the process of collection and evaluation of evidence to determine
whether a computer system has been designed to maintain data integrity, safeguard
assets, allow the effective realization of organizational goals, and ensure efficient
utilization of resources. Data integrity relates to the accuracy and completeness of
information as well as to its validity in accordance with the norms. An effective
information system leads the organization to achieve its objectives and an efficient
information system uses minimum resources for this purpose. While evaluating the
effectiveness of any system, the IT Auditor must be aware of the characteristics of the
users of the information system and the decision-making environment in the auditee
organisation.
Use of computer facilities has brought about radically different methods of
processing, recording and controlling information and has resulted in many previously
separated functions being combined. Consequently, the potential for material systems
errors has greatly increased at a considerable cost to the organisation for instance, the
highly repetitive nature of many computer applications implies that even small errors
remaining undetected may lead to large losses. An error in the calculation of income
tax to be deducted from employees remuneration will not recur in each case in a
manual system, but once this error is introduced in a computerized system, it will
affect each case. A bank may suffer huge losses on account of an error in rounding
off to the next rupee instead of to the nearest rupee. The financial implications of
such recurring or repetitive errors could, in the final analysis, be very substantial.
This makes it imperative for the auditor to test the invisible processes, and to identify
the vulnerabilities in a computer information system.
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Controls in a Computer System
10.57 Controls in a computer information system reflect the policies, procedures,
practices and organizational structures designed to provide reasonable assurance that
the intended objectives will be achieved. They ensure effectiveness and efficiency of
operations, reliability of financial reporting and compliance with the rules and
regulations. However, computer systems are efficient and achieve results accurately
and at great speed only if they function in the manner they are designed to and such
controls as are provided are effective. It is, therefore, important for the Auditor to
verify that not only adequate controls exist, but that they also function effectively.
Such controls should also be commensurate with the risk assessed so as to reduce the
impact of identified risks to acceptable levels.
Information system controls are broadly classified into two categories, namely
General Controls and Application Controls. General controls include controls over
data centre operations, system software acquisition and maintenance, access security,
and application system development and maintenance. They create the environment
in which the application systems and application controls operate. Example include
IT policies, standards, and guidelines pertaining to IT security and information
protection, application software development and change controls, segregation of
duties, service continuity planning, IT project management, etc.
Application controls pertain to specific computer applications. They include
controls that help to ensure the proper authorization, completeness, accuracy, and
validity of transactions, maintenance, and other types of data input. Examples include
system edit checks of the format of entered data to help prevent possible invalid
inputs, system enforced transaction controls that prevent users from performing
transactions that are not part of their normal duties, and the creation of detailed
reports and transaction control totals that can be balanced by various units to the
source data to ensure that all transactions have been posted completely and accurately.
Significance of controls
10.58 Presence of controls in a computerized system is significant from the audit
point of view because the system may allow, in their absence, duplication of inputs or
processing, or conceal or make invisible some of the processes. Controls also provide
safeguards against data loss attributable to damage to or corruption of files,
manipulation of data, power failures or fluctuations, viruses, computer abuses, etc.
Absence of audit trails would also make it difficult to ensure the efficient and
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effective functioning of a computerized system for an auditor. Besides, in
organizations where computer systems are operated, on contract, by outside agencies
that employ their own standards and controls, absence of controls will also make the
system vulnerable to remote and unauthorised access.
Objectives of Computer Controls
10.59 The objectives of controls do not change with the introduction of computers.
Instead, it is the control techniques that change with many of the manual controls
being computerized and new technical computer controls being added to achieve the
same objectives. Typical control objectives within a government data processing
function aim to ensure:
(i) the provision of effective organisational control over functions related
to data processing by clearly defining organisational objectives;
(ii) effective management control over development of data processing
resources in conformity with organisational objectives;
(iii) adoption of practices related to data processing activities in accordance
with statutory requirements and prescribed administrative procedures;
(iv) adherence to policies, standards and procedures in respect of all data
processing functions; and
(v) efficiency and effectiveness of the data processing systems geared
towards achievement of the desired objectives.
Audit objectives and scope
10.60 The basic objectives of the audit of computerized systems include an
evaluation of:
(i) the acquisition and installation of the computer and computer systems;
(ii) system effectiveness;
(iii) system economy and efficiency and data integrity;
(iv) system security; and
(v) compliance of system related activities with applicable laws,
regulations and guidelines.
The above objectives can be achieved by reviewing:
(i) the acquisition of the computer facilities;
(ii) whether the computer-based systems incorporate adequate procedural
controls that are not invalidated by subsequent amendments;
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(iii) the adequacy of controls governing development and maintenance of
computerized systems;
(iv) the adequacy of administrative and organizational controls to ensure
safe and expedient day-to-day operations; and
(v) the use of resources to appraise and report on waste, extravagance and
inconvenient administration or poor value of money.
An auditor has to always bear in mind that he has to exercise an independent
judgement on the capability of the system to cater to the intended objectives-efficient
and adequate disposal.
Preliminary evaluation
10.61 The first step in audit should be a preliminary evaluation of the computer
systems covering:
(i) the manner in which the computer function is organized;
(ii) the use of computer hardware and software;
(iii) the applications processed by the computer and their relative
significance to the organisation; and
(iv) the methods and procedures prescribed for implementation of new
applications or revision of existing applications.
In the course of the preliminary evaluation, the auditor should ascertain the
level of control awareness in the auditee organisation and existence (or non-existence)
of control standards. The preliminary evaluation should identify inter alia potential
key controls and any serious weaknesses in these controls. The auditor should
examine whether each control objective has been achieved and; if not, he should
assess the significance of and risk involved in the deficiencies observed.
Audit methodology
10.62 After completing the preliminary evaluation of the computer systems, the
auditor has to decide whether it would be more appropriate to adopt the system-based
audit approach or the direct substantive testing approach. The aspects to be borne in
mind in arriving at the decision are the following:
(i) results of the preliminary evaluation;
(ii) extent to which reliance can be placed on any work carried out by the
internal audit wing of the auditee organisations;
(iii) nature of any constraints, such as the absence of any audit trail, and the
practicability of testing;
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It has also to be borne in mind that effective compliance testing of key
computer controls may be difficult necessitating the use of large samples to test each
control.
A. Direct Substantive Testing
If the direct substantive testing approach is chosen, a sample of transactions
should be selected and tested. The results of the preliminary evaluation will be
particularly of assistance in this context because it would have:
i) enabled an overall assessment of the control environment and
identified any serious weaknesses that should be raised with the
auditee;
ii) afforded sufficient familiarity with the system to facilitate selection of
appropriate transactions for testing and their efficient substantiation;
and
iii) provided sufficient information to determine the initial requirement for
any Computer Assisted Audit Techniques (CAATs).
B. Systems-based Audit
In adopting the system-based audit approach, it will be necessary to examine
aspects relating to the regularity, economy, efficiency and effectiveness of the system
besides evaluating data integrity, and data security. These are explained below:
i) System effectiveness is measured by determining whether the system
performs the intended functions and whether the users are able to
obtain the requisite information in the right form and at the right time.
ii) A system is economical and efficient if it uses the minimum number of
information resources to achieve the output required by the users. This
will involve optimization of the use of system resources-hardware,
software, personnel and money.
iii) System activities can be considered to be regular if they comply with
all applicable laws, rules, policies, guidelines, etc.
iv) Achievement of data integrity implies that the internal controls must be
adequate to ensure that errors are not introduced when entering,
communicating, processing, storing or reporting data.
v) In order to ensure data security, the data system resources, like other
assets, must be sufficiently protected against theft, waste, frauds,
unauthorized use and natural disasters.
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The key controls for ensuring the above will have to be identified, recorded,
evaluated and compliance tested. The results of the preliminary evaluation would be
of assistance in this context as well because the evaluation would have brought to
light system deficiencies, major weaknesses and areas requiring greater, in-depth
study. Identification of key controls would also depend on the experience gained by
the auditor in the course of audit of similar installations.
Compliance testing of controls in computer systems and programmes is
difficult and complicated as their operation is automatic, invisible and not fully
evidenced since the exceptions alone are normally evidenced. Detailed manual
testing of these controls is rarely cost effective, however, a possible alternative
approach would be to resort to CAATs. For example, either test data or audit
software may be used to test a control designed to ensure that payments exceeding a
certain value are not made. Audit software can be used in this context to interrogate
the entire payments file to identify payments in excess of the specified value. If no
such cases are revealed, the auditor has some assurance that no such payment was
made. This is a negative assurance since it is possible that no invalid data was in fact
presented to the system and, therefore, the control in question was never invoked.
However, if the interrogation is applied to the entire year's transactions, it achieves the
main audit objective in that no excess payments will have been made in the period.
Even when test packs or interrogation techniques are used, the auditor should examine
the procedures for dealing with exception or error reports in order to ensure that
invalid transactions are corrected and re-input for processing.
Audit techniques
10.63 IT audit techniques refer to the use of computers, including software, as a tool
to independently test computer data of interest to Audit. The following are some of
the well established techniques:
i) Collection and processing of a set of test data that reflect all variants of
the data and errors which can arise in an application system at different
times.
ii) Use of integrated test facilities, built into the system by the auditee, to
assist the auditor in his requirements, as one of the users of the system.
iii) Simulation of the auditee's application programs using audit software
to verify the results of processing.
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iv) Periodical review of programme listings in order to verify that the
programmes have not been altered unauthorizedly.
v) Use of either commercial software or programmes developed in house
to interrogate and retrieve data applying selection criteria and to
perform calculations.
vi) Extraction of data samples from the database/files of the auditee, using
sampling techniques, for post analysis and review. The sampling
technique to be employed is determined by the nature of data and type
of analysis required.
Computer audit techniques are employed for:
i) independent verification of ledger balances and control totals;
ii) re-calculation of critical computerized calculations to verify their
correctness;
iii) range checks to verify the efficient functioning of computer based
controls and test for exception conditions;
iv) testing the validity of data stored in the master file;
v) detection of data abuse/frauds; and
vi) substantive testing with large volumes of data which is difficult, if not
impossible, in a manual audit process.
The employment of a particular computer audit technique employed depends
on:
i) the type of application system under review;
ii) the extent of testing required;
iii) the availability of resources in terms of computer facilities and the
level of EDP skills among the audit staff; and
iv) volume of data and availability of printed information.
Where the volume of data is small and adequate printed information is
available to carry out a meaningful clerical audit, it will not be necessary to employ
computer techniques, which are costly and time consuming. To elaborate further, the
auditor should break up his project of application system audit into three stages. In
the first stage, he will carry out the examination of audit trails, intermediate printouts
as required, system logs and operational controls. If the auditor feels, as a result of
audit in the first stage, that the adequacy of controls requires further verification he
can resort to compliance testing in the second stage using the test deck method and
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integrated test facilities with resident audit programs. If the compliance testing
exposes some control weaknesses, substantive testing may be resorted to in the third
and final stage using retrieval software packages that are available commercially or
simulation techniques with audit software.
At present, many data-based management systems also have built- in query and
report writer facilities. Unstructured queries on the data files are also possible in
some advanced systems. These utilities could be profitably employed for audit
purposes. The auditor will be able to obtain the relevant information from the
auditee's computer centre.
The distinct advantages of retrieval packages over other methods are that these
enable cent percent review of data, and ensure accuracy of processing and effective
use of the auditor's time in analysing the results of interrogation. Use of retrieval
software will, however, always remain a problem area primarily because of the
multitude of hardware and software systems in use in various departments, requiring
expertise in several programming languages.
Issues for audit scrutiny
Audit of Acquisition
10.64 Generally the acquisition of computer facilities involves the following stages:
i) Definition of computer policy and strategy based on an evaluation of
organizational requirements and the ways and means of satisfying
them.
ii) Establishment of the need.
iii) A through examination and evaluation of the alternative courses of
action available.
iv) Precise specification of the requirements and delineation of existing
and future applications, hardware, software, modes of operations,
conditions of supply, etc.
v) Evaluation of alternative sources of supply and selection of the most
appropriate source(s).
vi) Physical acquisition of the facilities and the systems.
Often these stages tend to overlap or merge imperceptibly into one another.
Acquisitions of computer facilities may include:
i) acquisition of hardware involving
(a) the setting-up of a completely new installation;
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(b) enhancement of the central processor;
(c) enhancement of peripherals;
(d) addition/replacement of a specific equipment; and
(e) introduction of several small computers.
ii) acquisition of software involving
(a) general software associated with changes in hardware,
including the introduction of a new operating system;
(b) specific purpose software; and
(c) 'off the shelf' application software.
The auditor has to review the adequacy of the administrative procedures and
controls used by the auditee organisation when considering and deciding upon the
acquisition of computer facilities. For this purpose, he has to ascertain whether:
i) a sound administrative structure is available to enable a proper analysis
of the requirements of computer facilities.
ii) the acquisition procedures are effective in facilitating the formulation
of a viable computing policy and strategy; and
iii) the processes of evaluation and selection ensure that the requirements
of the organisation are met in the most effective and efficient manner.
The auditor should direct his attention to an examination of the following:
i) EDP policy and strategic plan;
ii) administrative structure;
iii) feasibility study/project report containing proposals, costs and benefits;
equipment selection;
iv) justification for hardware and software;
v) installation of equipment and adequacy of testing; and
vi) post-implementation review and costs.
The Feasibility Report should include a clear statement of the objectives,
details of the existing arrangements, alternative solutions considered and the proposed
solutions, financial implications and schedule of implementation. The following
points should be borne in mind in respect of equipment selection;
i) The requirements for acquisition, enhancement or replacement of
computing facilities and the specifications should be stated concisely
and precisely as they form the basis for potential suppliers.
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ii) The technical as well as commercial aspects of the proposal should be
evaluated according to standard contracting procedures.
iii) Procurement action should be initiated only after ensuring that the
suppliers offer conforms to the required specifications. This should be
done by taking into account inter alia the following:
(a) technology options available at the time of procurement;
(b) useful life of the asset;
(c) incidental costs which could eventually be of sufficient
magnitude, besides the hardware and software costs; and
(d) future development plans of the potential suppliers in terms of
expendability, upgrading, etc.
Audit of Systems Development
10.65 Since the underlying purpose of acquisition and development (designing,
building or modifying) is the same, the audit concerns relating to acquisition, viz.,
planning, requirements definition, analysis of alternatives and justification for the
selected approach, are equally important in the review of systems development.
Broadly, stated the audit objective of system development controls is to ascertain that
procedures are adequate to ensure that the development results in well-documented
computer systems incorporating adequate controls and meeting the defined user
requirements in an efficient manner.
It will also be necessary to examine the system testing and data transfer
procedures in view of the following:
i) Inadequate testing of the system prior to commencement of line
operations may result in the operation of a system not capable of
correctly processing and recording transactions.
ii) Adoption of inappropriate or inadequate data transfer procedures may
result in the relevant records being transferred inaccurately and
incompletely from an existing system to a new one.
Where systems development is entrusted to contractors, the contract and its
management become important audit concerns. It should be ensured that the vendor
provides complete documentation along with the source code. Further, the terms and
conditions, such as rights over the source code, provisions for modifications/updating
in future, etc. should be examined. The penal provisions may also be examined in
cases of non-delivery of the agreed upon services or non-adherence to the stipulated
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time schedules. It may also be ascertained whether any of the objectives envisaged
could not be realised because of belated delivery of the software.
Categories of Systems Development Audit
10.66 Systems development audit can be categorized into the following three general
classes:
i) Monitoring Audit: The auditor evaluates the project throughout the
process to determine whether the development is proceeding
effectively and ascertains whether milestones are being met,
expenditure rates are as predicted, high quality documentation is being
written, the software conforms to established technical standards and
tests are being conducted as scheduled or evaluated as planned.
ii) Design review audit: Its objective is to determine whether the
preliminary and detailed designs accurately reflect the functional data
and systems specifications, and incorporate adequate internal controls.
iii) Post-implementation audit: This is performed three to six months after
the system becomes operational and serves to evaluate whether the
system meets requirements, is cost-effective and generally provides
benefits predicted in the project planning documents.
Association of audit in systems development
10.67 The ultimate responsibility for incorporating internal controls and an adequate
trail into computer-based systems must rest with the auditee organisation. It is,
therefore, not necessary for the auditor to provide, as a matter of policy, any
consultancy advice on developing systems. Nonetheless, audit should be aware of all
developments that are likely to have a significant impact on the audit processes. At an
early stage in the design process of a new system, the auditor should consider
providing the auditee organisation specific comments on:
i) internal controls in the light of weaknesses identified in the existing
system;
ii) audit needs such as data retention or retrieval facilities and audit trail
requirements; and
iii) any other requirement to facilitate his audit, or improve its efficiency
and effectiveness.
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Main points to be checked by audit
10.68 While the auditor should be cautious enough not to be drawn into
unproductive involvement in systems development, he should nevertheless examine
whether:
i) a published standard methodology is being used for designing and
developing systems;
ii) there is a common understanding by all parties-users, systems analysts,
management and auditors of the basic structure of both manual and
computer processing activities, as well as of the concepts and needs for
control and of the applicable control techniques;
iii) the IT applications development is authorized by the user, the steering
committee or the management;
iv) the systems development work was preceded by a feasibility study to
determine the most appropriate solutions to standard problems;
v) there is adequate cross referencing between (a) content and format of
preliminary studies; (b) feasibility studies; (c) system specifications;
and (d) programme coding;
vi) project management techniques, such as the stipulation of project
decision milestones, time and cost estimates, etc., are applied in
systems development work to facilitate monitoring of the against
estimates;
vii) programming standards using modular structured methodology are
being adhered to in coding and
viii) existing in-house or externally available application packages were
considered before deciding upon new in-house application
development.
Audit of Operation and Maintenance
General Controls
10.69 The auditor has to review the internal controls which are essential for proper
operation and maintenance. Some of the operation and maintenance controls fall in
the category of general controls (also referred to as environmental controls) relating to
the entire gamut of computer facilities. The overall audit objective in reviewing the
general controls is to ensure that the controls and procedures are adequate to provide
secure, effective and efficient day-to-day operation of the computer facilities. The
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controls and procedures that together constitute the general controls are discussed in
the succeeding paragraphs.
Organizational controls
10.70 These controls ensure that (i) there is judicious separation of duties to reduce
the risk of employee fraud or sabotage by limiting the scope of authority of any
individual; (ii) there are comprehensive written standards; and (iii) access to and use
of computer terminals is properly authorized. These high level controls are important
as they influence the effectiveness of any lower level controls which operate within
accounting applications. Unless the management follows appropriate IT policies and
standards, it is unlikely that other controls will be sufficiently strong to support a
controls-reliant audit approach. An assessment of the high level IT policies, strategies
and procedures will provide the auditor with a reasonably reliable indication as to the
existence and effectiveness of any lower level detailed controls.
Segregation of duties
10.71 The auditor should verify whether duties amongst the staff operating the
computer system are adequately and effectively segregated so as to substantially
reduce the risk of error and fraud. Poor segregation could lead to any one person,
with control over a computer function, making an error or committing a fraud without
it being detected and to the adoption of inappropriate working practices. Evidence of
separation of duties can be gained by obtaining copies of job descriptions,
organization charts and observing the activities of IT staff. Where computer systems
use security profiles to enforce separation of duties, the auditor should review on
screen displays or printouts of employees security profiles in relation to their
functional responsibilities.
In any major IT System, the following duties should be adequately segregated:
� System design and programming.
� System support.
� Routine IT operations and administration.
� System security.
� Database administration.
Physical Access Control
10.72 Physical access controls include the environmental controls which operate
across the entire IT environment and affect all underlying computer applications.
These controls are designed to protect the computer hardware and software from
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damage, theft and unauthorized access. Access controls can operate at various levels,
for example, from restricting access to the client's site to installing key locks on
individual personal computers. Restricting physical access to the IT systems reduces
the risk of unauthorised persons altering the financ ial information. The auditor should
make a quick assessment of the physical access controls and their adequacy.
Authorisation Control
10.73 This helps verify the identify and authority of the person desiring to attempt a
procedure or an operation. This control is exercised through the use of passwords,
signatures, smart cards, cryptographic systems, etc. Such controls ensure that only
authorized persons have access to the system for the purpose of entering and/or
altering transactions, obtaining information, etc.
Logical Access control
10.74 Logical access controls are provided to protect the financial applications and
underlying data files from unauthorized access, amendment or deletion. Logical
access controls can exist at the installation as well as application levels. Controls
within the general IT environment restrict access to the operating system, system
resources and applications, whilst the application level controls restrict user activities
within individual applications.
These controls can also be used to restrict the use of powerful systems utilities,
such as file editors. Logical access controls are often used with physical access
controls to reduce the risk of the program and data files being amended
unauthorisedly. The importance of logical access controls is increased where physical
access controls are less effective, as for instance, when computer systems make use of
communication networks such as Local Area and Wide Area Networks (LANs and
WANs). The existence of adequate logical access security is particularly important
where a client makes use of wide area networks and global facilities such as the
Internet.
The most common form of logical access control is login identifiers (ids)
followed by password authentication. For passwords to be effective there must be
appropriate password policies and procedures, which are known to all staff and are
adhered to. Menu restrictions can be effective in controlling access to applications
and system utilities. Systems may be able to control access by identifying each
individual user through their unique login ids and then having a pre-defined profile of
authorised menus for each. The IT Auditor should consider how easy it would be for
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users to 'break out' of the menu system and gain unauthorised access to the operating
system or other applications. Some computer systems may be able to control user
access to applications and data files by using file permissions. These ensure that only
those users with the appropriate access rights can read, write, delete or execute files.
Operation and File Controls
10.75 These controls are meant to ensure that the computer and computer files are
safeguarded from unauthorized access, loss or theft. Controls relating to reception,
conversion and processing of data and distribution of the final output promote the
completeness and reliability of these operations and safeguard against the
unauthorised processing of data or programmes. File controls and procedures
adequately safeguard files and software against loss, misuse, theft, damage,
unauthorized disclosure and accidental or deliberate corruption. As the computer
provides a means of holding, assessing and amending information, it is imperative
that its use is controlled. There should be a definite schedule of work that is
authorised to run on it and restrictions should be placed on the number and type of
staff allowed access to it. Computer files are also records of an organisation that
require to be properly safeguarded.
Change Management Controls
10.76 Change management controls are used to ensure that amendments to a
computer system are properly authorised, tested, accepted and documented. Poor
change controls could result in accidental or malicious changes to the software and
data. Poorly designed changes could alter financial information and remove audit
trails. Audit should ensure that a new or amended computer system is thoroughly
tested by its end users before live use. Financial systems rarely remain static and are
frequently changed, amended or updated. These regular changes may be necessary to
improve efficiency, functionality or remove programming faults ('bugs').
Audit should emphasise that auditee organisations which update their
computer systems should have appropriate change management and configuration
management controls. Configuration management procedures relate to the control of
IT assets (i.e. hardware, software, documentation and communications) and the
subsequent update of records, while change management relates to the authorisation,
impact assessment, asset update, testing and implementation of changes. Risks can be
reduced by appropriate change management controls. These controls should ensure
that all system and program amendments are satisfactorily justified, authorised,
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documented and tested and that an adequate audit trial of the changes is maintained.
All change procedures should be documented.
These controls should ensure that program and file amendments are
authorised, logged and monitored. The ability to introduce new programs should be
limited to authorised change control staff who are independent of computer
programmers and staff who input transactions or maintain standing data.
Network Communication Security Controls
10.77 Network communication security controls are important where LANs/WANs
or web-enabled systems are in use. Some important aspects to be covered by these
controls are as follows:
(i) Appropriate techniques should be used to protect all sensitive
information in the network.
(ii) Critical network devices such as routers, switches and modems should
be protected from physical damage.
(iii) The network configuration and inventories should be documented and
maintained.
(iv) Prior authorization of the Network Administrator should be obtained
for making any changes to the network configuration.
(v) The changes made in the network configuration should be documented.
The threat and risk assessment of the network after changes in the
network configuration should be reviewed.
(vi) The network operation should be monitored for any security
irregularity. A formal procedure should be in place for identifying and
resolving security problems.
(vii) Physical access to communications and network sites should be
controlled and restricted.
(viii) Communication and network systems should be controlled and
restricted to authorised individuals.
(ix) Network diagnostic tools, e.g., spectrum analyser, protocol analyser,
etc. should be used on a need basis.
(x) Intelligent devices known generally as 'Firewalls' should be used to
isolate an organisation's data network from any externa l network.
Firewall devices should also be used to limit network connectivity
from unauthorized use. Networks that operate at varying security
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levels should be isolated from each other by appropriate firewalls. The
internal network of the organisation should be physically and logically
isolated from the internet and any other external connection by a
firewall. All firewalls should be subjected to thorough test for
vulnerability prior to being put to use and at least half-yearly
thereafter. All web servers for access by Internet users should be
isolated from other data and host servers.
(xi) Organisations should establish procedures for allowing connectivity of
their computer network or computer system to any outside computer
system or networks. The permission to connect to other networks and
computer systems should be approved by the Network Administrator
and documented. All unused connections and network segments
should be disconnected from active networks. The computer
system/personal computer or outside terminal accessing an
organisation's host system must adhere to the general system security
and access control guidelines. The suitability of new
hardware/software, particularly the protocol compatibility, should be
assessed before connecting them to the organisation's network. As far
as possible, no internet access should be allowed to the database and
file servers or to servers hosting sensitive data. The level of protection
for communication and network resources should be commensurate
with the criticality and sensitivity of the data transmitted.
(xii) Each organisation should designate a properly trained 'Network
Administrator' who will be responsible for the operation, monitoring
security and functioning of the network. Appropriate follow-up of any
unusual activity or pattern of access on the computer network should
be investigated promptly by the Network Administrator. The system
must include a mechanism for altering him of possible breaches in
security, such as unauthorized access, virus infection and hacking.
Secure Network Management Systems should be implemented to
monitor functioning of the computer network. Broadcast of network
traffic should be minimized. Only authorised and legal software
should be used on the network.
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Service Continuity Planning
10.78 The auditor should ensure that there are adequate plans and arrangements to
resume processing in the event of failure of computer operations. The degree of
continuity planning will depend on the size of the IT department and the dependence
on computer processing. A significant and prolonged loss of IT capability in a
mission critical system may increase the risk of the financial statements being
unavailable or materially misstated. Disaster recovery planning for IT facilities
should be treated as one element of an organisation's overall service or business
continuity plan.
The extent of disaster recovery planning and the detailed measures required
will vary considerably. Organisations with large IT departments, with mainframe
computers and complex communication networks may require comprehensive, up-to-
date recovery plans which incorporate standby facilities at alternative sites.
Disaster recovery plans should be documented, periodically tested and updated
as necessary. Untested plans may be satisfactory on paper but may fail when put into
practice. Testing will reveal deficiencies and allow amendments to be made. The
importance of adequate documentation is increased where significant reliance is
placed only on a few key members of the IT department. The loss of key personnel,
perhaps due to the same reasons the computers were disrupted, may adversely affect
an organisation's ability to resume operations within a reasonable timeframe.
Back-up copies of systems software, financial applications and underlying
data files should be taken regularly. Back-ups should be cycled through a number of
generations by, for example, using daily, weekly, monthly and quarterly tapes. They
should be stored, together with a copy of the disaster recovery plan and systems
documentation, in an off-site fire-safe. Where micro-computers are used, in addition
to mini or mainframe computers, the auditor should ensure that there are also
procedures for the backing-up of financial data stored on local hard disks.
Important points to be checked in audit
10.79 In reviewing general controls, the following aspects points should be covered:
(i) Availability of all hardware equipment, including computer, ancillary
and terminal equipment in use should be verified with reference to a
list of hardware obtained from the auditee organisation indicating the
model, performance details, etc.
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(ii) An up-to-date organisational chart should be obtained and examined to
determine the manner in which the computer fits into the overall
organization.
(iii) An up-to-date chart indicating the deployment of personnel of the
computer department and their relative responsibilities and authorities
should be reviewed to note any changes.
(iv) Similarly changes, if any, in the job specifications (role definition) for
senior computer personnel and supervisors of the ancillary section
should be noted.
(v) Details of standards and norms fixed for each of the functions, such as
data control, data preparation, system operation, etc. should be
obtained and adherence thereto verified with reference to the
following:
(a) computer utilisation per shift in terms of the Central Processing
Unit (CPU) and peripheral use;
(b) key depressions per shift per data entry operator and error
allowance;
(c) document standards and controls-batching, balancing and
sequencing; and
(d) run-to-run controls maintained by system operators.
(vi) It should be verified, through a test check, whether manuals are
maintained and kept up-to-date specifying the control procedures and
whether they are enforced in practice.
(vii) Availability of the following terminal controls to protect data and
system integrity should be verified:
(a) physical access controls to terminal rooms;
(b) software controls through password protection and user
directories;
(c) logging of terminal activities by all users.
(viii) Details of security measures, both physical and system, should be
obtained for examining the following:
(a) adequacy of protection of hardware and software against risk of
fire (fire prevention measures and fire fighting arrangements);
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(b) arrangements for maintenance of hardware and system
software;
(c) provision of air conditioning and protective measures against
possible radiation, vibrations, etc.;
(d) availability of measures to ensure system security in the event
of possible industrial action or malicious action by
programmers, operators and input-output staff attributable to
discontent among the operating staff,
(e) adequacy of security awareness and training provided to all
employees;
(f) adequacy of emergency shut-down procedures in case of power
failures;
(g) deficiencies, if any, in the arrangements for safe custody of
software and data files and type library;
(h) adequacy of back-up files, including offsite storage;
(i) adequacy of control over operator access to program files and
data;
(j) availability of procedures and contingency plans for
reconstructing files in the event of loss or disk/tape errors;
(k) availability of computer equipment back-up through the use of
compatible equipment at other dispersed sites;
(l) restriction of access to the computer room by personnel other
than system operators and hardware engineers; and
(m) insurance of the installation to cover possible risks.
Application Controls
10.80 Application controls are particular to an application and may have a direct
impact on the processing of individual transactions. These controls are used to
provide assurance, primarily to the management, that all transactions are valid,
authorized and recorded. Since application controls are closely related to individual
transactions, it is easier to appreciate why testing the controls will provide the auditor
with audit assurance in regard to the accuracy of a particular account balance. For
example, testing the controls in a payroll application would provide assurance about
the correctness of the payroll figure in a client's accounts.
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Before attempting an evaluation of application controls, it will be necessary
for an auditor to secure a reasonable understanding of the system. For this purpose, a
brief description of the application should be prepared indicating (i) the major
transactions; (ii) the transaction flow and main output; (iii) the major files maintained;
and (iv) approximate figures for transaction volumes.
Application Control requirements may be divided into the following:
(i) Documentation standards
(ii) Input controls
(iii) Processing controls
(iv) Output controls
(v) Master/Standing Data File controls
(vi) Audit requirements
Documentation Standards
10.81 Documentation standards ensure that adequate and up-to-date system
documentation is maintained. Careful updating of documentation is also important.
The auditor will find documentation helpful as an aid to understanding the system but
he must be careful to ensure that it is up-to-date before using it. There should be
appropriate standards in the auditee organization to ensure that:
(i) system documentation is sufficiently comprehensive;
(ii) documentation is updated to reflect system amendments; and
(iii) a back-up copy of the documentation is available.
Without good documentation, it will be difficult to assure that controls will
operate on a continuous basis and there will also be a greater likelihood of errors.
Good application documentation reduces the risk of users making mistakes or
exceeding their authorities. Review of a comprehensive, up-to-date documentation
should aid the auditor in gaining an understanding of how each application operates,
and may also help in identifying particular audit risks.
Documentation should include the following:
i) a system overview;
ii) user requirements specification;
iii) program descriptions and listings;
iv) input/output descriptions;
v) file contents descriptions;
vi) user manuals; and
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vii) desk instructions.
Input Controls
10.82 The objective of input controls is to ensure that the procedures and controls
reasonably guarantee that (i) the data received for processing are genuine, complete,
not previously processed, accurate and properly authorized; and (ii) the data have
been entered accurately and without duplication. Input control is extremely important
because the most important source of error or fraud in computerized systems is
incorrect or fraudulent input. Controls over input are vital to the integrity of the
system.
In evaluating input controls, the auditor should ensure that:
i) all prime inputs, including changes to standing data, have been
appropriately authorised;
ii) the ability to enter data from a terminal is adequately restricted and
controlled in respect of on- line systems;
iii) there are methods to prevent and detect duplicate processing of a
source document;
iv) all authorised inputs have been submitted or, in an on- line system,
transmitted; and
v) there are procedures for ensuring correction and resubmission of
rejected data.
The controls outlines above may be invalidated if it is possible to by-pass
them by entering or altering data from outside the application. There should be
automatic application integrity checks that would detect and report on any external
changes to data, such as unauthorised changes made by personnel in computer
operations on the underlying transaction database. The results of the installation
review should be reexamined to ensure that the use of system amendment facilities,
such as editors, is properly controlled.
Data Transmission Controls
10.83 These controls are built into IT Applications to ensure that data transmitted
over local or wide area networks are valid, accurate and comple te. Organizations
using networks should ensure that there are adequate controls to reduce, to an
acceptable level, the risk of data loss, addition of unauthorized transactions and data
corruption. Some computer systems are connected to either local or wide area
networks (LANs or WANs), which permit them to receive and send data from remote
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locations. The more common data transmission media include telephone wires,
coaxial cables, infrared beams, optical fibres and radio waves.
Applications which transmit information across networks may be subject to
the following risks:
i) Data may be intercepted and altered either during transmission or
during storage at intermediate sites.
ii) Unauthorised data may be introduced into the transaction stream using
the communication connections.
iii) Data may be corrupted during transmission.
The integrity of transmitted data may be compromised through
communication faults. The auditor should ensure that there are adequate controls in
place, either within the network system, or the financial applications, to detect
corrupted data. The network's communication protocol, i.e. the predetermined rules
that determine the format and meaning of transmitted data, may incorporate automatic
error detection and correction facilities. It is fairly easy to intercept transmitted data
on most local and wide area networks. Inadequate network protection increases the
risk of unauthorized data amendment, deletion and duplication. There are a number
of controls that may be used to address these problems. For instance, digital
signatures may be used to verify that the transaction originated from an authorized
user and that its contents are intact. Similarly, data encryption techniques may be
used to prevent the interception and alteration of transactions.
Processing Controls
10.84 Processing controls ensure complete and accurate processing of input and
generated data. This objective is achieved by providing controls for:
i) adequately validating input and generated data;
ii) processing correct files;
iii) detecting and rejecting errors during processing and referring them
back to the originators for re-processing;
iv) proper transfer of data from one processing stage to another; and
v) verifying, during or after processing, the control totals established prior
to processing.
The objectives of processing controls are to ensure that (i) the processing of
transactions is accurate and complete; (ii) the transactions are unique without any
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duplication; (iii) all transactions are valid; (iv) the computer processes are susceptible
to audit.
Processing controls within a computer application should ensure that only
valid data and program files are used, that processing is complete and accurate and
that processed data has been written to the correct files. Assurance that processing
has been accurate and complete may be gained from performing a reconciliation of
totals derived from input transactions to changes in data files maintained by the
process. The auditor should ensure that there are controls to detect the incomplete or
inaccurate processing of input data.
Application processes may perform further validation of transactions by
checking data for duplication and consistency with other information held by other
parts of the system. The process should check the integrity of data which it maintains
by using, for instance, check sums derived from the data. The aim of such controls is
to detect external amendments to data due to system failure or use of system
amendment facilities such as editors.
Computerized financial systems should maintain a log of the transactions
processed. The transaction log, which may be referred to as the audit trail file, should
contain sufficient information to identify the source of each transaction. In batch
processing environments, errors detected during processing should be brought to the
attention of users. Rejected batches should be logged and referred back to the
originator. On- line systems should incorporate controls to monitor and report on
unprocessed or uncleared transactions, such as part paid invoices. There should be
procedures that permit identification and review of all uncleared transactions of a
certain specified vintage.
Output controls
10.85 These controls are incorporated to ensure that the computer output is
complete, accurate and correctly distributed. It may be noted that weakness in
processing may sometimes be compensated by strong controls over output. A well
controlled system for input and processing is likely to be completely undermined if
the output is uncontrolled. Reconciliation carried out at the end of the output stage
can provide considerable assurance over the completeness and accuracy of earlier
stages in the complete cycle.
Output controls ensure that all output is:
i) produced and distributed on time;
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ii) fully reconciled with pre- input control parameters;
iii) physically controlled at all times, depending on the confidentiality of
the document; and
iv) errors and exceptions are properly investigated and acted upon.
The completeness and integrity of output reports depends on restricting the
ability to amend outputs and incorporating completeness checks such as page
numbers and check sums.
Computer output should be regular and scheduled. Users are more likely to
detect missing output if they expect to receive it on a regular basis. This can still be
achieved where the subject of computer reports is erratic, such as exception reporting,
by the production of all reports.
Output files should be protected to reduce the risk of unauthorised
amendment. Possible motivations for amending compute output include covering up
unauthorized processing or manipulating undesirable financial results. Unprotected
output files within a bill paying system could be exploited by altering the cheque or
pay order amounts and payee details. A combination of physical and logical controls
may be used to protect the integrity of the computer output.
Output from one IT system may form the input to another system, before
finally being reflected in the financial systems. For example, the output from a feeder
system such as payroll could be transferred, as input, to the general ledger. Where
this is the case, the auditor should look for controls to ensure that the outputs are
accurately transferred from one processing stage to the next. A further example
would be where the output from a trial balance is used as the input for a word
processing or spreadsheet package, which then reformats the data to produce the
financial statements.
Master/Standing Data File Controls
10.86 Master/Standing Data File controls are meant for ensuring the integrity and
accuracy of the master files and standing data. Accuracy of data contained in master
and standing files is of vital importance to the auditor. Information stored in master
and standing data files is usually critical to the processing and reporting of financial
data. Information on master files can affect many related financial transactions and so
must be adequately protected. These controls have to ensure that:
(i) amendments to standing data are properly authorised and controlled;
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(ii) integrity of master and standing files is verified by checking control
totals and periodic reconciliation with independently held records;
(iii) special amendment facilities are properly recorded and their use
controlled by management authorization and subsequent review; and
(iv) physical and logical access to application data files are restricted and
controlled.
Audit requirements
10.87 Audit requirements have to be provided to ensure that the system can be
audited in an effective and efficient manner. Audit trail has to be maintained to
enable tracing of an item from the input stage through to its final destination and the
break up of a result into its constituent parts. Auditors may have to use audit software
or test data for the efficient execution of their audit. They have, therefore, to make
reasonable requests for the access to copies of system data files, report generators and
processing time.
Before considering the audit requirements for a system being developed, the
auditor should have a knowledge of the currently existing system and should keep in
mind the following:
(i) weakness in the current system affecting the audit approach;
(ii) features in the existing system, which are relied on to provide an
effective audit, that should be retained in the new system; and
(iii) additional facilities, not currently provided, which would assist the
audit of the new system.
Important points to be checked
10.88 Audit of an operational application system involves verification of the
input/output controls, processing controls and the audit trail. Testimonial evidence
may be obtained in the course of audit by means of the following questionnaire to
arrive at a reasonable conclusion in regard to the availability of controls and their
adequacy:
(i) Are the data processed genuine, complete and accurate and not
provisional?
(ii) Is the expected out put is produced and distributed on time?
(iii) Do the application programs process data as intended and accurately?
(iv) Is a complete audit trail available for tracing back a transaction from
the final result to the initial input?
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(v) Are the data and changes thereto authorised by appropriate authorities
both in the user and computer departments?
(vi) Are schedules for receipt of input data maintained and what is the
extent of compliance?
(vii) Is there a preliminary check on input data to ensure completeness?
(viii) Are output records test-checked prior to their distribution to the user
department and is the output produced in accordance with a prescribed
schedule?
Further, it should also be examined, whether the application system provides
for the following programme controls:
(a) Controls to check for missing/duplicate transactions. Examples are (i)
checks for ensuring continuity of goods invoice numbers issued by a
station and locating missing numbers; and (ii) checks to ensure that
more than one subscription is not accounted for in the same month in
respect of a Provident Fund subscriber.
(b) Controls on rejected items to be retained under computer suspense.
For instance, the monthly treasury transactions should be rejected if
they do not have valid heads of account as given in the budget master
and such rejected items kept under suspense. Similarly, in the absence
of balances, issue notes in a stores accounting system should be
rejected.
(c) Input validation for data purification. These are alpha-numeric checks
to ensure conformity with data types. For instance, the personal
identity number should always be numeric or, depending upon system
requirements, the station name field could be represented only by
alphabets.
(d) Limit/range checks. Some examples are checks to ensure that the
transaction type in a financial accounting system (expressed in terms of
rupees) does not have values less than 1 or greater than 6; or the
maximum basic pay does not exceed Rs 9,000 per month or the code
for treasury alone for any State does not have values in excess of two
digits.
(e) Overflow checks. To illustrate, if the field length for withdrawal/
advances in a computerized Provident Fund system is only five digits
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and there is a valid debit transaction with six digits, the high order digit
would get truncated and only five digits of the debit will be recorded.
This mistake will remain undetected in the absence of overflow
checks. Similarly, if the filed length is inadequate, transactions
involving arithmetical calculations could be incorrectly recorded.
(f) Controls should be available to ensure that certain mandatory fields,
such as the leave type code in a leave accounting system, or the field
representing the nature of expenditure in a treasury transaction, are not
left blank.
(g) Check digits. In a pay roll system, the account number, which is a
control field to identify an employee, has a built- in check digit. The
program works out the check digit on the basis of the account number
input and verifies the correctness of the check digit given. If the check
digits do not tally, it can be concluded that the account number has
been wrongly entered. Similarly, the station code in the freight
accounting system in the Railways has a check digit to detect entry of
an incorrect code.
(h) Compatibility checks. For example, if the transaction in a financial
accounting system relates to official receipts, the amount cannot
normally have a negative value.
(i) Exception condition checks. If the amount column in a treasury
transaction for a month has a value greater than the budget for a
quarter, this would apparently represent and exceptional situation on
that could be detected by these checks.
(j) Total for a batch/lot. For example, the batch total for a major head
under a treasury is worked out on the computer and tallied with the
total given in the schedule of payments/receipts for that batch in order
to ensure complete accounting of transactions in a batch.
(k) Record totals and summaries for reconciliation. When a goods basic
tape is created in a freight accounting system, it gives the total number
of records, which should tally with the total number of invoices input.
Audit Trail
10.89 The objective of the audit trail is to obtain sufficient evidence in regard to the
reliability and integrity of the application system. To achieve this, the audit trial
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should contain enough information to allow the management, the auditor and the user
to (i) recreate processing action; (ii) verify summary totals; and (iii) trace the sources
of intentional and unintentional errors.
The audit trail should include the following information:
(i) System information including start up time, stop time, restarts,
recovery etc.
(ii) Transaction information in respect of database applications, including
input items which change the database, control totals and rejected
items.
(iii) Communication information, including terminal log-on/off, password
use, security violations, network changes and transmission statistics,
which would be of relevance to transaction processing or TP
applications.
In a computer system, the audit trail may not always be apparent as in a
manual system since data are often retained in magnetic media and output is limited to
a small number of total items processed, with reports produced only on exception
basis. The general procedure is to first investigate control totals and run-to-run totals
within the whole system and then to check and substantiate the audit trail by limited
checking through records and files or by taking intermediate printouts of audit
interest. If the design of the computer system does not provide for adequate audit
trail, this should be brought out in the audit review, highlighting control weaknesses
or lack of controls in the system. Apart from errors that might creep into the sys tem,
there is possibility of frauds, which might occur due to undetected control
weaknesses.
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Internal Audit
Introduction
10.90 It is a matter of great importance to verify whether the various processes of
audit are being correctly followed by different sections of the Audit Office. This
responsibility should ordinarily be entrusted to an independent Internal Test Audit
(ITA) Section. The main objectives of internal audit is to check the work done by
various branches and sections of the office with a view to ascertaining the extent to
which they are (i) following the prescribed procedural rules and regulations; (ii)
maintaining various registers that have been prescribed; (iii) submitting various
returns on the due date, and (iv) generally functioning as efficient units of the office.
The Internal Audit Section should also check the quality of audit conducted and
comment specifically on this aspect in its reports so that suitable measures may be
initiated to improve the quality of work where necessary.
The ITA Section is not intended to do original work and should not be saddled
with such work. Its functions are analogous to those of the Principal Director of
Inspection. It can usefully supplement the work of the Principal Director of
Inspection and also serve as a liaison between him and the Audit Office in pursuing
the objections raised by him till their final settlement and issuing instructions to
ensure that the irregularities pointed out by him do no recur.
Arrangements for Internal Audit
10.91 The ITA Section should be a small one consisting of carefully hand-picked
personnel who, by their knowledge and experience, will be competent to scrutinize
intelligently the work done in various sections of the office and can detect not only
defects and irregularities but also suggest improvements in procedure and measures
that should be taken to improve the quality of audit. The Section should be under the
direct charge of the Accountant General or one of his deputies. It should not,
however, function as a substitute for the Branch Officers and Group Officers through
whom the Accountant General normally exercises control over his office. While test
check of the work of other sections will be the main duty of the Section, special
problems, such as clearance of accumulated objections, may be referred to the Section
by the Head of the office, if he considers this necessary.
This section should get the deficiencies noticed during test check rectified on
the spot by providing suitable guidance to the staff and ensure that its size and staff
strength are not allowed to increase. As far as practicable, inspection reports prepared
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by the Section containing the results of test check should be submitted to the
Accountant General for his information so that he may have an expert's appreciation
of the technical efficiency of various units of his office, though disposal of the reports
may be watched by a Deputy Accountant General. Important points on which orders
of the Accountant General are necessary should be submitted to him. Common
defects noticed in a group of sections should be circulated periodically through
appropriate office orders so that they may be guarded against in future. It is the duty
of the Internal Audit Section to see that the defects noticed are remedied by the
sections concerned and that these do not recur.
The following items of work may be entrusted to the ITA Section of Audit
offices:
(i) Scrutiny of audit and review conducted by the Central Audit Parties
and Central Audit Support Sections.
(ii) Checking of maintenance of portfolio files.
(iii) Scrutiny of the adequacy or otherwise of the existing arrangements for
audit and review.
(iv) Verification of correctness of audit fees computed by different section
for audit of accounts of certain authorities or bodies under Section 20
of the Act.
(v) Test check of records of receipt, approval, issue and pursuance of
Inspection Reports with a view to ascertaining whether there was any
laxity at any stage.
(vi) Test check of Sections, Resident Audit Offices and Branch Offices.
(vii) Monitoring of the implementation of important office orders issued
from time to time.
(viii) Investigation of important arrears.
(ix) Half-yearly review of cash book.
(x) Test checks of service books of personnel.
(xi) Scrutiny of the list of personnel staff who would be completing 30
years of service or attaining 55 years of age.
(xii) Independent scrutiny of details in support of Budget Proposals of
different Wings.
(xiii) Check of statistics of regular, temporary and casual temporary staff.
390
(xiv) Check of rosters maintained for reservation of vacancies for candidates
belonging to scheduled Castes and Tribes.
(xv) Check of list of candidates appearing in SOG Examination in terms of
paragraph 9.2.3 of the Manual of Standing Orders (Administrative),
Volume I.
(xvi) Check of Honorarium and Overtime claims.
(xvii) Check of Gradation list.
(xviii) Review of complaints addressed to the Comptroller and Auditor
General.
(xix) Review of Calendar of Returns.
(xx) Liaison between the Principal Director of Inspection and the Sections
during the former's inspection of the office.
(xxi) Investigation of procedural omissions, irregularities and audit lapses
brought to notice by the Principal Director of Inspection.
(xxii) Submission of half-yearly appraisal report of the work done by the ITA
Section to the Principal Director of Inspection.
The list is only illustrative and, subject to the principles enunciated in
paragraphs supra, does not in any way fetter the discretion of the Accountant General
to allot to the Section any other special work that he may consider necessary.
391
Use of VLC data in Audit
Audit with VLC
10.92 The activities in the audit offices can broadly be categorized as :
Central audit
� audit of accounts
� audit of vouchers
� audit of entitlements
� audit of sanctions
Field audit
� Audit planning
� Local audit and scheme reviews
Certification audit
� certification of projects and schemes
� certification of Finance and Appropriation accounts
In the VLC system, data from vouchers are being captured to facilitate compilation.
The software also provides for generation of various reports. In respect of Forest and
Public Works Departments, as compiled accounts are received, the VLC system does
not provide for capture of data from individual vouchers.
A study of the data inputs from VLC and output reports provided for in VLC reveal
that the audit checks could be categorized as follows :
a) Part I – Audit checks which could be done directly with the data captured and
reports generated as already provided for in the VLC system
b) Part II – Audit checks which could be exercised with the data captured but with
provisions to be incorporated for additional reports generation.
c) Part III – Audit checks which could be done through the VLC system if additional
data are captured and reports, generated.
Part I & II have been prepared wherever provisions exist for data capture in A&E
offices. Audit checks are required to be carried out on a percentage basis. However,
in respect of (a) & (b) above, checks could be exercised in respect of all vouchers.
Exception reports, listing vouchers, which do not fulfill the audit requirements, can be
generated and subjected to detailed scrutiny. The percentages fixed in the Manual for
Central audit (MICA) will become largely redundant. If all the vouchers conform to
the prescribed requirements, there would be no necessity for further scrutiny. If a
large number of vouchers do not conform, the quantum of vouchers to be taken for
392
detailed audit check can be limited to the prescribed percentages in MICA. The
selection of vouchers can be done using sampling techniques through computer.
For (c), however, checks would have to be done on selected vouchers only, as there is
no provision for data capture in the VLC exercise. While it should be possible to
incorporate some of these in the VLC exercise, most of the additional data will have
to be captured in the central audit wing of the audit offices, after provision is made in
the software for capturing them.
In those cases, where checks could be carried out only on selected vouchers,
preparation of standards screens for audit on the computer is suggested. Such an audit
on the computer screens would then provide a permanent record of the audit checks
exercised and the results of audit.
In some cases, certain audit checks could be dispensed with after audit with VLC is
introduced, as such checks would be in built in the VLC system and procedures.
All these checks would, however, have to be done manually in the first year of
implementation to ensure that there will be no problem if these checks are dispensed
with altogether.
The entire exercise in this paper has been done keeping in view the provisions in
MSO (Audit), MICA, MSO (A&E) and various instructions issued by headquarters
office.
The VLC procedures would, thus, necessitate modification of audit procedures in
some areas. In some other areas, VLC would facilitate the audit process by enabling
checks through the computer. In many areas, VLC would provide additional inputs
for the audit checks and procedures carried out in the audit offices. Audit in VLC
environment will, thus, necessitate modifications in the manuals. The use of VLC in
each of the areas of audit mentioned in the first paragraph is discussed below.
Use of VLC in Central Audit
Audit of accounts
10.93 The checks conducted by audit offices include classification check, head of
account check, check of Departmental Adjusting Accounts (DAA), Transfer Entries
(TE) etc., along with scrutiny and review of various broad sheets. The audit of
accounts comprises check of the following sections in the accounts office :
a) Compilation sections
b) Account current section
c) Loans and Deposit sections
393
d) Book section
In accordance with the instructions of headquarters, the accounts check is conducted
by CASS section on a monthly basis. The annual Finance and Appropriation
Accounts are subject to additional checks by the Reports section.
The VLC modules relevant to these areas are treasury compilation public works and
forest book, budget and appropriation, loan and deposits, account current and
reconciliation.
Audit of vouchers
10.94 The CAP sections attend to this work.
Some standard checks have to be exercised on all vouchers selected for audit, such as
that they are in prescribed form, are in original, have the same number as in list of
payment, they bear a pay order etc. Some of these checks are exercised while
conducting accounts check also.
The vouchers received in the accounts office broadly fall into the categories viz.
establishment vouchers, TA and medical bills, advances, contingencies, contractors
and supplies bills, running account bill and grant- in-aid vouchers. Within these
categories, there are refund vouchers, arrears payment vouchers, AC/DC bills and nil
payment vouchers.
If the VLC system ensures arithmetical check, that the DDO's signature is there on the
voucher, etc., such checks could be exercised on all the vouchers and an error report,
indicating deviations from the requirement, generated.
In other cases, only the vouchers selected for audit could be subjected to the required
checks.
Further, when selected vouchers have to be subjected to audit checks, computer
screens could be used for audit. These screens would, in a standardized format,
indicate all checks to be carried out on different types of vouchers (pay, TA, etc.).
This exercise would aid in the foreign travel audit. The TA bills, which support
foreign travel, can be flagged separately. Once a voucher is audited in such a manner,
a record of audit done and the results of audit would be available for all test checked
vouchers.
In the case of works and forest vouchers, data would have to be captured from the
vouchers selected for audit in the audit office. Wherever it is desirable to capture
information on a particular parameter from all vouchers, the same would also have to
be done in the audit offices.
394
Audit of entitlement work
10.95 The CAP sections attend to this work.
The VLC work does not have any impact on the check of entitlement work.
However, the check of related vouchers would be facilitated wherever and to the
extent entitlement work is done on the computer. Maintenance of PF accounts and
pension authorization work is computerized in most A&E offices. Check of pension
and PF vouchers (also PF contribution) could be done by linking them to the
corresponding cases through simple identification parameters, which would facilitate
speedy check through the computer itself, of such vouchers.
Audit of sanctions
10.96 This work is attended to in CASS sections. Information in VLC does not
directly affect this audit. however, linking up of vouchers related to a sanction with
the sanction concerned would be facilitated through VLC and follow up of
transactions flowing out of a sanction would be made easier. For this purpose,
maintenance of database for sanctions already prescribed in existing instructions,
would be essential. All parameters fo r audit of sanctions viz. budget provision,
authority for the sanction, rate, quantity etc. or any other relevant field should be
provided for in the database.
Further, sanctions received in CASS sections could be compared with sanctions
received with the vouchers and all variations followed up.
Similar exercise for creation of databases would have to be done for all Government
orders, contracts, agreements, rate contracts, DGSD rates etc. In addition, database on
schedule of rates in PWD would be essentia l.
Identification of DDOs who purchase on a centralized rate contract as also of those
who receive supplies through centralized purchasing arrangements and creating
databases for the same would be essential. This would facilitate comparison of
purchases and rates of similar items over time and across DDOs.
CASS sections are also required to maintain portfolio files on central, Centrally
Sponsored and State Plan Schemes. VLC would facilitate maintenance of information
of expenditure, releases amounts spent and purpose of the expenditure, unspent
amounts etc. for these schemes.
In addition, databases for pay scales, sanction to establishment, sanctioned strength of
establishment etc. should be maintained so that audit of establishment vouchers is
facilitated. This would also a help in manpower audit.
395
Use of VLC in field audit
Audit planning
10.97 The details of audit requirements, inputs, additional inputs and reports
suggested in respect of field audit are available in the VLC system.
This work is attended to in OAD headquarters section in the audit office.
Audit planning would be of two categories – for annual audit and for reviews.
DDO – wise information on various parameters like monthly expenditure pattern,
expenditure on contingencies, AC bills pending, position of PD accounts etc. would
help in selection of DDOs for audit. reports could be generated to give information
on erratic expenditure, rush of expenditure, erratic purchases, heavy purchases,
quality and quantity of purchases, rates paid, supplier information, etc. Auditee wise
information on sanctions, contracts etc. would also be an important input for audit
planning. This information would, in addition to assisting audit planning, also be an
important input for developing thrust and focal areas for audit prior to commencement
of audit.
Similarly for audit planning of reviews, DDO-wise, scheme wise data on expenditure,
unspent balance, etc. from VLC would be useful. Information relevant for
determining departments for vertical review could also be extracted from VLC. This
would include DDO-wise expenditure, excess or savings at DDO level, etc.
Data from vouchers on transfer of money from the consolidated fund of the state to
Autonomous Bodies, substantially financed by Government in the form of loans and
grants, will help the audit offices in deciding the institutions for audit under section 14
and 15 of the CAG's (DPC) Act. The specific purpose loan or grant can be identified
in conjunction with the databases on GOs/sanctions.
Local audit and scheme reviews
10.98 Information from the VLC system like expenditure profile of the DDOs,
details of purchases, the staff position in the DDO, amounts transferred to PD
accounts, etc. can be sent to the audit parties which could serve as directions for
further audit scrutiny.
The VLC data can be used to generate scheme wise details. A provision for mapping
schemes across major heads is to be made in the VLC system in order to draw
expenditure details for various schemes. DDO wise, scheme wise expenditure can be
generated, which will be useful in selection of sample DDOs for detailed study in
scheme reviews.
396
It will also be useful to capture the prescribed pattern of releases of the central and
state Governments in respect of central, shared and state schemes. This, when studied
with the actual releases, will highlight delays, if any, and the quantum of unused
balances. A master file of the salient features of the plan schemes can be created and
a link established between the plan schemes and the budget of each year.
Use of VLC in Certification Audit
10.99 The details of Audit requirement, inputs, additional inputs and reports
suggested in respect of Certification Audit are available in the VLC system.
1. Certification of Finance and Appropriation Accounts
The Report section in the audit office attends to this work. Most of the audit checks
envisaged in MSO (Audit) in respect of Finance and Appropriation Accounts can be
dispensed with, as these checks are in-built in the VLC system. The information on
Finance and Appropriation Accounts from VLC system can be used for the
preparation of Chapters I & II of the Civil Audit Report. This also requires materials
on a number of different macro parameters for the state's finances. A number of
financial indicators are now required to be commented upon in these chapters and
these indicators can be derived from information available in the VLC system.
Similarly, various ratios which are required to be worked out and incorporated in
Chapter I and II of the Audit Report, can also be generated from the information
already available in the VLC system. In addition various tables like
1. Summarized Financial Position of Government
2. Abstracts of Receipts and Disbursement for the year
3. Source and Application of funds
4. The tables on
Consolidate Fund
Revenue Receipts
Tax Revenue
Non-Tax Revenue
State's share of Union taxes and duties and Grants- in-aid from Central
Government.
Revenue Expenditure
Sectoral Expenditure
Interest Payments
Financial assistance to Local bodies and others
397
Loans and advances by the State Government
Capital expenditure
Sectoral Capital Expenditure
Investments and returns
Fiscal Deficit
Public Debt
Internal Debt
Loans and Advances from Central Government
Other Liabilities
Ways and Means Advances and overdrafts
that are required to be included in these chapters can be prescribed as report formats
and generated straight away. Comments on reconciliation, AC/DC bills, nil payment
vouchers, transfer to public account, transfer to PDA etc. can be made with case based
on the information extracted from VLC system.
2. Certification of Externally aided projects as well as Central and Centrally Sponsored Schemes
Audit certificates are issued for externally aided projects as well as for
Centrally Sponsored Schemes by CASS section in the audit offices. This would also
be facilitated by the VLC section as scheme wise expenditure figures would be
available. These could be linked with the SOE’s (Statement of Expenditure), the
related local audit reports and the accounts comments of A.G. (A&E) for issue of
audit certificates.
Implementation of VLC in Audit Offices
In the first stage, as Headquarters have earmarked 5 terminals for Audit
Offices, 5 officials can be trained thoroughly on the VLC system. These 5 officials
would initially generate output reports for further audit by the members of
CAP/CASS sections, other Headquarters sections and field audit parties. Output
reports, which would aid in audit checks, would be generated with the data already
captured in VLC.
In the second stage, over a period of 6 months, the Audit Offices can train the
entire CAP/CASS sections in order to equip them with the expertise to access screens
on the terminals and audit through computers. This would entail additional input
capture and auditing through computer screens, in addition to generation of output
398
reports which would aid Central and Local Audit. Headquarters, in the meantime,
have to plan for creating the necessary infrastructure.
In respect of public works and forest departments, Central Audit is done 100%
for monthly accounts and the schedules received along with the accounts. Central
Audit is done on a percentage basis in respect of vouchers. As the data in respect of
public works and forest departments have to be captured in Audit Offices,
implementation is possible only in the second stage.
Transmission of Data
It is suggested that the terminals given for Audit Offices can be connected to
the server in the Accounts offices so that data can be accessed directly, output
generated and audited. Data already captured in VLC will, therefore be readily
available and additional inputs can be captured in the audit offices for audit purposes.
Only those vouchers which need to be physically audited as a result of initial
audit through the computer and are selected for audit using sampling techniques on
the computer, would have to be moved from the Accounts office to Audit office. The
present practice of sending all the vouchers and accounts to the central audit group of
the Audit office from the A&E office would undergo change to this extent.
Training requirements
In the first stage, the officials of CAP/CASS section, Headquarters sections of
Civil and Works Audit wings and Report sections would have to be trained on 'basic
computer awareness'. As suggested in the above para, a group of 5 identified officials
can be trained intensively on the VLC package, ORACLE and UNIX in the first stage
itself. In the second stage, all the officials of CAP/CASS group, Report Sections and
Headquarter sections of the Civil and Works Audit wings would have to be trained on
the VLC package also.
Besides annexures to the paper titled "Audit Requirements existing facilities in
the VLC software received with CAG letter dated 17-7-02 may be kept in view.
(CAG letter No. 1367-EDP/78-99 dated 17-7-02)
399
APPENDIX-I
List of registers and forms etc., used in the Inspection Civil............................... .
A-Resisters
Sr. No.
Description of Register Remarks
1 2 3 1. Audit Fee Register SY-338 2. Check Register of weekly Diaries of Auditors SY-325 3. Register of amounts under objection waived or written off
under Para 7.1.16 of M.S.O. (Audit) SY-265
4. Register of undisposed (pending)cases SY-22 5. Diary or Register of official and Un-official Receipts SY-318-A 6. Transit Registers for letters transferred to other Sections SY-314 7. Diary of official and un-official issues (for letters and
audit notes) SY-318
8. Register of cases SY-225 9. Diary of Travelling Allowance Bills SY-318-A 10. Register of Travelling Allowance Bills SY-329-A 11. Calendar of Returns (a separate register for returns
relating to administration) SY-264
12. Casual Leave Register SY-257-B 13. Dictionary of References SY-256 14. Register of Defalcations SY-17 15. Six-monthly Register SY-286 16. Half Margin Register SY-308 17. Register of books in Head Office Manuscript 18. Register of correction slips to the Office Manual -do- 19. Register of events necessitating arrangements in the
various orders of the office. -do-
20. Register of Form -do- 21. Register of serious financial irregularities Form 286-A 22. Objection Book M.S.O. (Audit)10,
M.S.O. (Audit) 12, M.S.O. (Audit) 13
23 Register for watching the Receipts and Issue of Inspection Reports
Form OAI
24. Progress Register of settlement of Inspection Reports OA2. 25. Register of Service Stamps (Custodian) Manuscript 26 Appropriation Material Register -do- 27. Memorandum Book of special points to be brought to the
notice of the D.A.G. (Inspection) at the time of Inspection -do-
400
28. Note Book for watching important points Manuscript (Separate Books kept by the Section officer/AAO of each Assistant)
29. Register showing touring done by officers OA-3 30. Register showing offices on the local Audit Programme OA-4 31. Register regarding supply of Comptroller and Auditor
General Memo regarding extent of audit to field parties and correction slips thereto.
Manuscript.
401
B-FORMS
Serial No. Description of Register Remarks 1 2 3
1. Draft Letter Forms SY-5 2. Weekly Diary abstract of auditors SY-325 3. Half Margin requisition of auditors SY 332-A 4. Statement showing irregularities, omissions in accounts
and registers (other than the payment and adjustment vouchers) with instructions and suggestions for future guidance
SY-325
5. Objection statement SY-327 6. List of unsettled objections SY-348 7. Circle Tour Programme SY-332 8. Audit intimation to the offices proposed to be audited SY-330 9. Intimation to higher authorities regarding audit of an
institution SY-341
10. Departure and arrival report of Auditors SY-342 11. Reminder to Auditors regarding Draft Audit Notes SY-323 12. Reminder regarding annotated copies SY-337 13. Intimation of commencement of Audit OA-5 14. Forwarding Memorandum of Draft audit notes OA-6 15. Forwarding Memorandum of Test Audit Notes OA-7 16. Title Sheet OA-8 17. Certificates of State of work existing on the last day
(Headquarters) OA-9
18. Monthly progress Report in respect of Audit Notes, letter and Memoranda of Circles
OA-10
402
FORM NO. O.A.-1 Register for watching the Receipt and Issue or Inspection Reports
Sr. No.
Name of Office
inspected
Names of Inspecting Officers and staff
Date upto which the a/c is now
audited
Date of Audit
Date of receipt
Date of submission to A.O./Sr.A.O./ Group Officer
Date of approval
From To Draft Inspection
Report
Test Audit Notes
1 2 3 4 5 6 7 8
403
FORM NO.O.A.-4 Statement showing offices on the Local Audit
Serial No.
Partiuclars of Audit
Periodicity Time Allotment in terms of single
Auditor
Last audited upto
Authority under which audit is included in the
Programme
Remarks
1 2 3 4 5 6 7
404
Form No. O.A. 3 Statement showing Units Inspected and No. Of days on Tour
Name
of Officer
April, 19
May, 19
Up to May, 19 June, 19 Upto June, 19 July, 19
Units Days Units Days Units Days Units Days Units Days Units Days 1 2 3 4 5 6 7 8 9 10 11 12 13
405
Date on which sent
for type Date of return type Date of issue Reference to
progress Register Remarks
Inspection Report Test Audit Note 9 10 11 12 13
406
FORM NO.OA-2 Progress Register of Settlement of Inspection Reports
Sr. No. Name of the
Unit inspected
Item No. of the Register of inspection
Reports
Date of completion of
Audit
No. and date under which report was
issued
Due date of receipt of
reply
No. and date of reminders
etc.
Date of receipt of Ist
reply.
1 2 3 4 5 6 7 8
407
FORM NO. -O.A.3(Contd.) Statement showing Units inspected and No. Of days on Tour
Up to July, 19 August, 19 Upto August 19
Units Days Units Days Units Days 14 15 16 17 18 19
408
Date of issue of further
Audit remarks Further correspondence Date of closure of
Inspection Report Remarks
Date of receipt of further replies
Date of issue of further remarks or reminders
Herein individual No. of the paras
outstanding after six months of the issue of report should be given
and circled as and when finally settled
9 10 11 12
409
FORM NO. O.A.3 (Contd.)
September 19 Upto September 19 October, 19 Up to October, 19 November, 19 Upto November, 19 Units days Units days Units days Units days Units days Units days
20 21 22 23 24 25 26 27 28 29 30 31
December 19 Upto December 19 January 19 Up to January 19 February, 19 Upto February, 19 Units days Units days Units days Units days Units days Units days
32 33 34 35 36 37 38 39 40 41 42 43
March 19 Upto March 19 Remarks Units days Units days
44 45 46 47 48
410
FORM No. O.A. 5
Intimation of Commencement of Audit
The Audit of _________________________ for the period
has been commenced by me on .
Please Note.’
Month for the Test Audit
Remarks, if any.
Section Officer/A.A.O
FORM No. O.A. 6
OFFICE OF THE PRINCIPAL ACCOUNTANT-GENERAL (AUDIT) PUNJAB,CHANDIGARH
No. Insp, Civil/ Dated the
To
The
‘
Sir,
I am to enclose an inspection report relating to the audit of the accounts of your
office for the period from to and to request
that an annotated copy of the same showing action taken against each para may kindly be
sent to this office within four weeks of the receipt of the same.
Yours faithfully,
Audit Officer/Sr. Audit Officer.
Enclosure:- Audit Note
No. Insp. Civil/ dated the
Copy, alongwith a spare signed copy, of the Inspection Report forwarded to :
(1)
(2)
(3)
411
(4)
(5)
for information and necessary action
Audit Officer/Sr. Audit Officer
412
FORM No. O.A. 7
OFFICE OF THE PRINCIPAL ACCOUNTANT GENERAL (AUDIT) PUNJAB, CHANDIGARH
No. Inspection Civil/ Chandigarh
To ____________________
____________________
Sir,
I am to forward herewith a Test Audit Note in connection with the recent
audit of the ___________________ accounts in advance of the Audit Note for action in
the manner prescribed in Punjab Government Finance Department letter No. 22828 (Fin.
General), dated 8th July 1931, read with Punjab Government Finance Department letter
No.28298 (Fin. General) dated 16th September, 1931 and to request the favour of your
signing and returning the attached acknowledgement.
Yours faithfully,
Sr. Audit Officer/ Audit Officer (IC-I)
ACKNOWLEDGEMENT
From ________________________
________________________
To
The Pr. Accountant General (Audit) Punjab Inspection Civil Wing Chandigarh
Sir, I am to acknowledge the receipt of test audit note in connection with
recent audit of the ______________ accounts.
Forwarded with your memorandum No.
Number of objections _______ Number of sheets _________
Yours faithfully,
413
FORM NO. O.A.-8
INSPECTION CIVIL WING
TITLE SHEET OF AUDIT AND INSPECTION NOTE
Name of Circle _____________________
1. Name of Account
2. Name and designation of the officer incharge of the accounts and period for
which he held the charge.
3. Period of last audit and by whom audited.
4. Period of present audit.
5. Date of commencement of audit
6. Date of completion of audit
7. Whether preliminary observation slips was issued? If so, the date of issue of last
batch of slips.
8. Date of receipt of replies to above.
9. Time allowed _______________ days
10. Time taken ______________ days
11. Reference to orders sanctioning extension, if any
12. Name of months selected for detailed audit.
13. Whether all the documents required for audit were produced by the head of office.
14. Whether the system of accounts and the prescribed codes or rules and the
periodical administration reports and any other Government publications
containing the accounts of income and expenditure, store account, balance sheet
etc. of the institution were studied by the staff.
15. Whether the prescribed checks were exercised and to the prescribed percentage.
16. Whether documents (extract treasury list of payments, list of unsettled Central
audit objections etc.) and special points requiring local scrutiny required from the
Central office were called for and were also received in time and due replies have
been sent to the Audit Units concerned direct.
17. Place at which report is drafted.
18. Whether a list of unsettled objections is being sent
19. Due Date of the submission of audit note.
414
20. Actual date of submission of audit note.
21. Paragraphs fit for inclusion in the Register of Serious Irregularities.
22. Paras fit for inclusion in the dictionary of references and Register of important
and interesting cases.
23. Paragraphs earmarked/un-remarked for keeping in the objection book.
24. Audit fee, if any, recoverable or to be taken into account in proforma in the
accounts.
25. Suggestions, if any, for the Amendment of Manual of Inspection Civil Wing.
26. Suggestions, if any, for the Amendment of any account rule or the prescribed
audit procedure.
27. Name of the Auditors.
28. Name of the Inspecting Officer who supervised the inspection.
29. Additional remarks, if any.
30. Certified that the audit and inspection note has been seen and discussed by the
Departmental Authorities concerned and a certificate to this effect has been
recorded on the Inspection Note.
31. Certified that the credits for the receipts pertaining to the months of __________
in the cash book have been verified direct from the books of the treasury.
32. Certified that the bills paid by the Treasury for the month of __________ have
been traced into the cash book and other relevant registers by reference to the
treasury schedule of payments.
Camp :
No. __________ Date __________
Section Officer/Asstt. Audit Officer
415
Statement/Showing the Disposal of Old Objections
Period Opening Balance Disposed of Closing Balance
Item of
objection
statement
Paragraph
of Audit
Note
Item of
objection
statement
Paragraph
of Audit
Note
Item of
objection
statement
Paragraph
of Audit
Note.
Details of time taken in Audit
Dates Party of Auditors No. Of days.
1. 2. 3.
FOR USE IN THE HEAD OFFICE
1. Entered in the programme Register on page ________ Item No. ________.
2. Entered in the Progress Register on page ________ Item No. ________
3. Certified that I have verified the time taken with reference to the weekly diaries and
the orders of the Gazetted Officers sanctioning extension of times, if any.
4. Report submitted in time/delay by ________ days.
5. Remarks, if any _________________________________________________
Signature of the Sr. Auditor
Signature of the Section Officer/Asstt. Audit Officer
Orders of the Audit Officer/Sr. Audit Officer
(Authority D.A.G. (OAD) orders, dated 13th October, 1958, in file No. OA/I/Misc./58-59).
416
FORM No. O.A.-9
Name of the Section Officer/AAO ______________________
Certificate of State of work existing on the last day of ______________________ to be
sent by Inspection Civil Headquarters Section by the evening 3rd of every month.
Sr. No.
Work Progress Remarks
1. Correspondence Have all the letters received in the section up to the 15th of the last month been disposed of? If not, how many are outstanding. The No. and dates of letters outstanding be separately shown and the reasons for the delay in their disposal clearly set-forth. The outstanding letters from the Government of India, Punjab Government and the Comptroller and Auditor-General should be distinctly specified.
2. Disposal of replies to audit notes
Have the replies to audit notes received up to the 15th of the last month been disposed of.
3. Un-official correspondence
Have all un-official references received in office more than a week ago been disposed of? If not, how many are outstanding.
4. Reminders of outstanding letters
Have all reminders to letters, unofficials etc., due during month issued?
5. Audit Total audit work during __________________ to _________________ No. of Accounts _______________________ No. _______________________ Days Total done up to_________________ A/cs _______________________ days In addition to this _________ days work has been completed out of the accounts in addition, on but not accounted for in this month pending the final completion of the audit. Besides this _________ days work has been put.
6. Issue of Audit Notes
Have the audit notes for account audited a month ago been issued? 1.No. of audit notes awaited from the Section Officers/A.A.O. 2.No. of audit notes pending with the(Sr. Auditor) 3.No. of audit notes pending with the Audit Officer 4.No. of Audit Notes pending with the typist. 5.No. of Inspection Reports not issued within one month of date of completion of audit with explanation
417
thereto. 6.No. of paras outstanding on _____________ 7.No. of paras settled during the month of ________ . 8.No. of Audit Note copies outstanding.
7. Returns Have all the returns due for the month been submitted on due dates? If not, the delay in each case may be explained.
8. Inspection reports outstanding for more than 6 months No. of paras of the Inspection Reports outstanding for more than 6 months. Money value of six months old objection book items.
9. Sectional Returns
Were all the sectional returns besides these special mentioned above submitted on due date?
10. Drafter letters Were drafts issued, received, from routine within one week of their entry in the despatch register?
11. Destruction of records
Have the records due for destruction been destroyed this year?
12. Sectional books and books supplied at concession rates
Have all the correction slips received up to the 15th been posted by all concerned including the auditors employed at moffasil in relevant books?
13. Filling Work Is the filling papers which have been disposed of upto 15th of the last month completed?
14. Examination of Registers in the section
Have the various registers in the section been examined periodically and whether they are maintained properly?
15. Audit notes, diaries and monthly reports from the auditors?
Were the audit notes, diaries and monthly reports received from the auditors on due dates? If not, was the delay explained to the satisfaction of the G.O.?
16. Inward Memoranda
Has all the memoranda received in the section upto the 15th been replied to? If not, how many are still outstanding?
418
17. Receipts of annotated copies of audit notes which were issued one month ago
(i)Have all such annotated copies of audit notes been received? If not, the number of annotated copies still awaited may be entered below? (ii)Have necessary reminders been issued in the case of such copies as are awaited?
18. Other arrears Whether there are other arrears in the section? If so, the particulars should be stated.
19. External Arrears
20. Internal Arrears.
The reports should be in handwriting of the Section Officer/Assistant Audit
Officer incharge and the certificate below should be given by him after satisfying himself
that the reports given above are correct.
“It is certified to the best of my knowledge and belief, that with the exception of
the arrears detailed and explained in the statement the work is upto date. I have satisfied
myself that this report is complete and accurate in respect of all items for which the
section is responsible. I have scrutinized the explanatory and other remarks in particular
and have no comments to offer”.
Audit Officer/Sr. Audit Officer
Inspection Civil Wing
419
FORM NO. O.A.10
Monthly Progress Report in respect of Audit Notes Letters, Memoranda for the
month of ______________________
I(a) Total number of accounts done up to the last report.
(B) Total No. of accounts done during the month up to
(c) Total No. of Audit notes sent to the Head Office upto the end of last month.
(d) Audit Notes sent during the month.
(e) Number of Audit Notes of Accounts under audit before the 23rd of the month, still due
for submission with detail and reference to D.A.G. (Inspection Civil) orders
extending the time allowed.
II.(a) Total number of letters, memoranda, etc., received from Head Office up to the
end of month.
(b) Total number returned with reply.
(c) Balance in hand with detail.
(d) Number of objection statements fair copies of which have not been despatched.
(I) It is certified to the best of my knowledge and belief that work is upto date.
(2) Certified also that the correction slips received from the Head Office have
been duly pasted in the respective books both by myself and my assistants.
Dated _______________
No. ______________
(Section Officer/AAO)
(Inspection Civil Wing)
421
NAME OF SECTION OFFICER/ASSISTANT AUDIT OFFICER
Progress of work done upto ____________
Sr. No. Name of Circle
Total No. of accounts at the
end of last month
No. of accounts
added during the month
No. of accounts the
audit of which is given up during the
month
Total no. of accounts
No. of days allotted as per
last report
Increase in the No. of days
i.e. extension etc.
1 2 3 4 5 6 7 8 Total
422
Decrease in the No. of days i.e
savings etc.
Total No. of days
Done upto Balance
No. of A/C No. of days No. of
completed accounts
No. of accounts in
hand
For the completed accounts
For the audit in hand
No. of accounts
No. of accounts in
hand .
No. of days. Remarks
9 10 11 12 13
Name of Accounts
done during the month
Time taken during the month
1.Total work done upto ________ out of day programme as per Col. No. II
Available working days upto 31st March days
2. Total work done for the special audit of total. Deduct Work done as per last report of work done during the month
Available working days upto 10th April, If the Auditor expects to finish or what assistance is required.
Working days during the month. Loss Explanation for the loss (i)Due to transit (ii)Other reasons
Camp ________ Dated _________
Section Officer/Asstt. Audit Officer Inspection Civil Wing (HQ)
423
INSPECTION CIVIL WING
TITLE SHEET OF AUDIT AND INSPECTION NOTE
1. Name of Audit 2. Period of Audit 3. Date of commencement of audit 4. Date of completion of audit 5. Date of last batch of objection statement 6. Date of receipt of replies to the above 7. Time allowed ____________ days.. 8. Time taken ____________ days. 9. Reference to orders sanctioning extension of time if any. 10. Selected month. 11. Place at which report is drafted 12. Whether a list of unsettled objections enclosed. 13. Paragraphs fit for inclusion in the register of serious irregularities. 14. Paragraphs earmarked for keeping in O.Book. 15. Name of the Sr. Auditor. 16. Whether a list of objections pertaining to central audit was called for 17. Due date of submission of the audit note 18. Actual date of submission’ 19. Remarks, if any 20. Name of audit officer who supervised the inspection
Certified that the audit and inspection note has been seen and discussed by the departmental authorities concerned and a certificate to this effect has been recorded on the audit and inspection note, itself.
Asstt. Audit Officer
A/Note page Rough Sheet Page
No. Inspection (C)Audit Party Dated:
Forwarded in original to Shri.____________________________________
Audit Officer(Vetting Section), O/O the Pr. A.G. (Audit)Punjab, Chandigarh.
Asstt. Audit Officer.
424
ANNEXURE ‘A’
1. Certified that totals of cash book selected month (Payment side and receipt side)
have been checked by Sh._________________ a member of the Party to the extent of
100% under my supervision.
Signature of the person who checked the totals of cash books.
Asstt. Audit Officer
2. Certified that receipt side of cash book for the selected month have been checked
with counter foil and receipt book to the extent of 100%.
Signature of the person in token of check
Asstt. Audit Officer
3. Certified that NTC with S/Books and pay bills have been conducted by
Sh.____________ for the selected month.
Signature Asst. Audit Officer.
4. Certified that the service books and leave A/Cs to the extent prescribed & have
been checked in accordance with instructions contained in letter No._________ and an
audit information in prescribed form recorded in S.Book under full details. The results of
check have been incorporated in the Audit Note.
5. Certified that total No. of pensionable personnel whose service books are required
to be checked in the O/O the _______________________ are out of _________ service
books.
Signature of Sr. Auditor
Asstt. Audit Officer.
6. Certified that withdrawals in r/o selected months was checked with reference to
the treasury/ATO Schedule/records.
Asstt.Audit Officer.
7. Certificate to be attached with the audit note:
Certified that the amount deposited into treasury/banks as shown in the books of
the o/o the ______________________ for the selected months and such other items as
425
came to the notice during the general review of accounts for the period from _____to
________ as a result of disposed off old and current audit objections were duly certified
by member of audit party with reference to the records of treasury or sub/treasury/bank
concerned and kept which have been commented upon the relevant inspection records.
Asstt. Audit Officer.
Certified that the time allotment for this unit was adequate or inadequate.’
Notes:- Incase the time allotment is considered in adequate it may be justified supported
by facts and figures.
III: Certificate to check up records.
Certified that the records were checked and re-checked in accordance with the
rules instructions issued from time to time and the irregularities noticed have been
brought out in the Audit and Inspection report or test audit got settled at spot.
Asstt. Audit Officer
10, Certified that records of G.I.S. have been checked by Sh. __________ Sr. Auditor
under my supervision.
Asstt. Audit Officer Signature of Sr. Auditor
11. Certified that records of G.P.F. accounts have been checked under my supervision
by Sh. _______________
Asstt. Audit Officer. Sr. Auditor
12. Certified that store/stock register have been checked under my supervision by
Sh _____________.
Asstt. Audit Officer Sr. Auditor
13. Certified that records of CDS scheme are checked and no balance are lying un/disbursed in the O/O the ___________________________.
Asstt. Audit Officer. Sr. Auditor
426
ANNEXURE TO PART I INTRODUCION TO THE AUDIT INSPECTION NOTE.
1. Whether Vrs, & other documents for the selected months have been received from
the Headquarters and duly checked.
2. Details for each cadres of Estt. in the office sanctioned strength and men in
position and reasons for variation.
3. Name and designation of the cadre controlling authority. Head of the office and
deptt.
4. Whether all the relevant records were produced to audit, if not whether the matter
was brought to the notice of the head of office/department.
5. Whether replies to the old inspection reports were attended to by the Deptt.
Authority and discussed. If not, whether the matter was brought to the notice of the head
of office/Department.
6. (a) Whether stores and stock account have been checked as required.
(b) Whether annual physical verification is being conducted.
(c) Nos. of para(s) of audit and Inspection report containing detailed comments on
the subject.
ASSTT. AUDIT OFFICER
CAMP AT
Regarding other certificates:-
1. Expenditure at page
2. Sanctioned strength at page
3. Closing balance at page
4. Auditable record at page
5. duty list at page’
6. List of settled paras at page
427
OFFICE OF THE PRINCIPAL ACCOUNTANT GENERAL (AUDIT) PUNJAB CHANDIGARH
No. Insp(C)/AU- /29/ Dated
To
____________________________ ____________________________ ____________________________ Sir,
I enclose a local audit and inspection report relating to the audit of your office
under the head __________________ for the period __________ to ______ and to
request that an annotated reply showing action taken against each para may please be sent
to this office within one month from the date of issue.
Yours faithfully,
Audit Officer.
Encl:-Audit and Inspection Report.
A copy alongwith spare signed copy of this audit and inspection report forwarded
to :-
1.
2.
3.
4.
for information and necessary action.
Audit Officer
428
APPENDIX-II
Destruction of records
The records of the Inspection Civil Wing are prescribed for the period shown
below:-
1. Spare copies of Government orders Permanently.
2. Un-official reference -do-
3. Correspondence with the offices
inspected on audit report
5 years
4. Auditor’s Objections statements 3 years, provided all the objection
contained therein have been settled.
5. Spare copies of audit reports 3 years
6. Weekly diary of auditors 3 years
7. Manuscript copies of audit reports To be destroyed on the issue of the next
report.
8. File of miscellaneous papers 3 years.
Note:- A clerk is specially deputed every year for weeding out the old records. The list
of all such records as are weeded out is approved by the Group Officer (I-C) before these
are destroyed.
429
Appendix-III
Calendar of Returns
Part A-For Inspection Civil
Sr. No.
Name of Return Whom due Due Date Rule Remarks
1. 2. 3. 4. 5. 6. Section-I
1. Initial Annual Programme for the next year to be drawn up for supply to FD and Admn. Deptts/Ministry concerned for suggestions etc.
Finance Department
15/1 Comptroller and Auditor General letter No. 571-Admn.I/58-59-II dated. 14.3.58.
The units will submit this report to Headquarters on Ist. January. Each year.
2. Final Annual Programme for the next year (after incorporating the suggestions of the FD or other deptts./Ministries if any).
Finance Deptt. 1/4 CAG’s letter No. 975-3A/41-64 dated. 21.7.69
-do-
3. Information regarding staff requirement for the next year programme: (i)Regular (ii) On adhoc basis
Admn/CAG C.A.G.
June every year May each year
AO’s orders dated. 24/3/69 File Pb/l/69-70 CAG’s letter No. 1766/B/18378 dated. 24.6.78
Each unit will submit the staff requirement on the basis of work load on 31/5 of each year. -Do- on 31/3 of each year.
430
Section-II
Weekly
1. C.O.R. B.O. 5th
12th
18th
25th
Accountant General’s orders
dated. 26.1.68
2. Ordinary Diary B.O Every
Tuesday
Para 3.10 of OAD Manual
3. Urgent/CAG’s
Diary
B.O. -do- -do-
4. Report of Type B.O -do- -do
5. AG’s Diary
letters one week
due
Secy to
Pr. A.G.
Every Friday -do-
6. Transit Register B.O. Every
Tuesday
TM/11/70-71/1290 dated.
10.6.61
7. Movement
Register
B.O Every
Monday
Admn/71/DT. 17.5.88
431
FORTHNIGHTLY
1. Urgent Diary Deputy
Accountant
General
2nd, 4th
Tuesday
3.19 of OAD Manual
2. Ordinary Diary -do- -do -do-
3. Half Margin BO 1st, 15th each
month
Item 5 of Appendix IV
of OAD Manual
MONTHLY
1. Report regarding vouchers/documents requisitioned by the outside agencies.
B.O. 15th of each month.
TM/9-8/69-70/2084 dated. 4.4.69
2. Register of correction slips
Deputy Accountant General
10th of each month
Para 3.25 of OAD Manual
3. Statement of Audit Note not issued by the end of month.
Pr. Accountant General
10th of each month
DAG’s order No. OA/C/MC/2670 dated. 21/3/65
4. Memo of selection of month during local audit.
1 Audit Units
2 CASS
10th of each month
4.15 OAD Manual Two months preceding to the month related for audit
5. SOs/AAOs Note Book
B.O. 5th of each month
6. Register of copies called for
B.O. 5th of each month
T.M.II/IC/7/309 dated. 25.9.61
7. Auditors Note Book to watch special points (each Auditor)
B.O. 5th of each month
--
8. Monthly Statement of Arrear
Control Section
10th of each month
A.G.’s order dated. 8.3.61
9. Register of cases B.O. 20th of each month
A.G.’s order dated. 8.3.61
432
10. Copy despatch B.O. 5th of each month
Para 3.6. of OAD Manual
11. Report of overhauling of seats of auditors
B.O. 2nd of each month
Para 5.31of OAD Manual
12. Cases for inclusion in dictionary of reference.
B.O. 10th of each month
OA/MTM/11/1-Insp/ 1077 dated. 7.7.54
13. Development of cases previously referred to C.&A.G.
Control Section
5th of each month
Para 3.6 of OAD (M)
14. Inventory Register B.O. 7th of each month
TM/1-25/1690 dated 17.7.58
15. Attendance Register with certificate of closing of leave a/cs.
B.O. 3rd of each month
-
16. Report of outstanding diary letters (ordinary, urgent, Comptroller and Auditor General complaint & Bill Diary)
Control Section
Last Tuesday
TM/9-27/61-67/591 dated 21/6/82
17. Report on the return due to Comptroller and Auditor General in the previous month and submitted (to be prepared in the following proforma)
1.Sr.No.
2.Name of return
3.particulars of return
4.Due date.
5.Remarks/reasons for delay
Secretary to A.G.
5th of each month
D.O. No.AG/PR/383 dated 17.9.63
433
18. C.O.R. D.A.G. 25th of each month
TM.I/71-72/111/285 dated 1/72
19. Incumbency Register of AAO/ SO/Adr/Clerk
Admn. I 5th of each month
Admn. I/75-76/4693 dated. 6/12/75.
20. Disciplinary cases under CCS/CCA Rules
-do- 5th of each month
Admn.I/Discy cases/5694-5700 dated 22.9.79
21. Implementation of posting and transfer orders.
-do- 10th of each month
Admn. I/411 dated 7.1.80
22. Movement Register Sr.DAG Last working day of month
Admn I/71 dated 17.5.80
23. Register of keeping watch over defects pointed out by Director of Inspection.
B.O. 10th of each month
TM-I/lI-1/38/ 49/Inspection 5960 dated 10.3.60
24. Progress Report on the printing of revised manual (C)
B.O 10th of each month
Sr. DAG(I.C) No. OA/6/80-81/109-13 dated 30/5/81
25. Lists of cases who have been transferred from OAD(C) but have not returned the brief cases to Headquarters.
Welfare 15th of each month
Sr. Deputy Accountant General (Admn) orders dated 14.5.82
QUARTERLY
1. Review of correction slips for posting
A.G 15/4, 15/7, 15/10, 15/1
TM-II/60-57/256 dated 2.3.56
434
2. Consolidated certificate of possession of secret memorandum of instructions
A.O. Admn. III
10/4,10/7, 10/10,10/1
OAl/1-53/Memo-I/5064/ 21.3.60
3. Report regarding quarterly audit bulletins.
Admn /Control
10/4,10/7 10/10,10/1
AdmnII/686/6701/ 5.4.68
4. Report regarding vouchers/documents requisitioned by outside agencies.
A.G. 20/1,20/4, 20/7,20/10
TM/II/71-72/367 dated 5.6.71
5. Quarterly arrear report
AG/ Control 5/4,5/7, 5/10,5/1
TMI/70-71/Vol.-11/1714 dated 9.9.70
6. Quarterly progress report in the use of Hindi for official work
Hindi cell 10/4,10/7, 10/10,10/1
TM-I/9-32/75-76/10-15 dated 1.4.76
7. Material for quarterly DO from Accountant General to Comptroller and Auditor General giving a critical personal appreciation of the state of work in the office
Secy to Accountant General
10/1,10/4, 10/7,10/10
Accountant General D.O. No. AG/PA/134 dated 8.1.79
8. Register for keeping watch on defects pointed out by the Director of Inspection
Deputy Accountant General
15/4, 15/7, 15/10, 15/1
TM I/11-1/Inspection/ 59-60/3134 dated 10-3-60
9. Quarterly Report for completion of Audit preparation of forecast of local audit
Deputy Accountant General
15/4,15/7, 15/10,15/1
AG’s order dated. 18/10/82 on file 82-83.
10 Quarterly progress report of each para of Inspection report conducted by the Director of Audit.
Control Section
15/10,15/1, 15/4,15/7
D.O.No.ITA-1/1-3/II/Ins 83-84/369-76 dated. 5.9.83
11. Progress Report on printing/Revision of manuals
-do- 15/4 15/7 15/10 15/1
DAG(I.C)order vide CS No. 15 dated. 22.5.85.
435
Monthly
1. Register of cases D.A.G. 1/6, 1/2 Para 3.6 of OAD Manual
2. Progress of Hindi Teaching Scheme
Hindi Cell 30/6, 30/12 OO No. A 55 dated. 3.5.58
Annual Returns
1. Consolidated statements of omissions in the maintenance of Register of objections by Admn. Deptt. (Received from AAO/SO(F)
Control section
15/4 TM-I/12-1/1300 dated 25.9.61
2. Sectional furniture inventory.
Admn. III 15/4
3. Stock verification report Admn. III 15/6 OO 3/56 dated 3.7.46
4. Report on completion of C.Rolls
Admn. I 25/4 O/O B/213 dated. 16.8.51
5 Statistics to serve as fair index to the volume of work in I.C. Wing.
Control Section
31/7 O/O 159 dated 7.11.68
6. Information regarding number of civil offices/institutions Test Audited during the course of year and comments on the results of such audit.
App(A) 1/7 -
7. Preparation of budget estimates/revised estimate for the year.
Admn I 5/6 0/0 A/9 March 1971
436
8. Information regarding expost facto sanction accorded other than of normal rules and cases in which Government have refused to accord ex post facto sanction.
Control Section
5/7 EPA/286/1-179 dated. 22.5.70
9. Report regarding maintenance of records of good/bad work done by employees, issue of merit certificates etc. In recognition of outstanding work done.
Deputy Accountant General
1/4
10. Preparation of Annual forecast for local audit inspection on the basis of MPRs
A.G. 10/1 Accountant General’s orders dated. 15.10.82 (File No. OA/C/I-/CAG/82-83
11. System Audit CAG 30/6 CAG No.692/OM/7/81 dated. 5.8.82
12. Lists of officials who have completed three years and five years on one seat and section
Admn.I Sept. Admn3/list/49/6467-71 dated. 10.12.76
13. Cases of doubtful new services.
App(R) 20/7 O/O10 dated. 10.5.60
14. Cases of incorrect budgeting
App(R) 20/7 -do-
437
Section-III
All returns of a permanent or recurring nature due either from outside Authority or from other
sections of the office.
Quarterly
1. Certificate of possession
of secret memorandum of
instructions regarding
extent of audit.
From all
audit units
1/4
1/7
1/10
1/1
Item No. 1 of
OAD(C)
Manual
2. Report of letters to the
Chief Secretary.
regarding non receipt of
1st replies.
From all
units
1/4/
1/7
1/10
1/1
3. Report of letter to the
Chief Secy. regarding
non compliance of old
outstanding audit
objections (more than six
months old) by various
departments.
-do- 1/4
1/7
1/10
1/1
HALF YEARLY
1. Report regarding sending statement of
audit objections for the period 30 March
to 30 Sept. next in addition to the types of
paras indicating serious irregularities or
otherwise important, mentioning special
notice of the Government with brief
synopsis of irregularities & implications)
of their non settlement.
-do- 15/6/
15/12
438
PART B C.O.R. for Audit Units
Section-I (External)
MONTHLY
1. D.O. letters to all
the heads of
Deptt. with copy
endorsed to
Secretary. to
Government
Punjab in the
Admn. Deptt. by
name indicating
the detail of
inspection reports
for which initial
reply has not been
received.
Heads of
Deptt/Admn.
Secretary.
Finance/
Department
OAD (HQ)
5th of each
month
A.G.’s orders
dated.
3.10.81
This
return
should be
sent direct
by AOs to
the Deptts.
concerned
by 5th of
each
month.
QUARTERLY
1. Details regarding non submission of first replies to the Inspection report which have not been received even within six months of their issue.
Chief Secy. OAD(C) Hq
1/4 1/7 1/10 1/1
CAG’s letter No. 733 Rep/53-80 dated. 23.4.80
This return should be sent to OAD(C) Headquarters on 1/4, 1/7, 1/10, 1/1 for onward submission of the same to Comptroller and Auditor General when required.
2. Details regarding non compliance of old outstanding audit objections (more than 6 months old) by various deptts.
Chief Secy/OAD (C) Hq
1/4 1/7 1/10 1/1
CAG’s Letter no. 733 Rep/53-80 dated. 23.4.80
-do-
439
Six monthly
1. Statements of outstanding items of Inspection reports in respect of various Central Government offices under the Ministries including banks.
Admn Deptt/ Ministry
31/7 31/l
CAG’s letter No. 333/36363-68 dated 1.3.71
The units dealing with controlling deptt. may send this return to deptts. concerned.
2. Statement of outstanding paras to Admn Deptt. Ministries D.O. under the signature of Deputy Accountant General with a copy to AG/Control
Admn Secy 31/7 31/l
-do- -do-
3. Statement of Audit objections for the period 30th March to 30th September next in the light of paras indicating serious irregularities or otherwise deptt. Meriting special notice of Government with brief synopsis of irregularities. Implementation of their non settlement.
Admn. Secretary. With copy to OAD(HQ)
5/6 5/12
- All units will send the report to Admn. Secys direct with a copy to Headquarters for consolidation and submission to FD and A.G. control section.
440
Yearly
1. Initial Annual programmes for the next year to be drawn up for supply to F.D. and Administrative Deptt./Ministries concerned for suggestions etc.
Admn. Deptt/ Ministry with copy to OAD (HQ)
1st January
CAG’s letter No. 571-AdmnI/ 58-59-II dated. 14.3.58
The report should be sent to concerned Admn. Deptts. A copy be sent to Headquarters for consolidation and onward transmission to FD each year.
2. Final Annual Programme for the next year (After incorporating the suggestions of the FD or other Deptts/ Ministry, if any.)
-do- 15/3 CAG letter 975-111A/41-64 dated. 21.7.69
-do-
3. List of new Government offices to be called for from the deptt. Particularly education department
Deptt. concerned
30th April
O/O No. OA/NC/QR/l-66/118/29 dated. 12.2.64
The concerned unit will call for this information from the deptt. Concerned for entering in MPRs.
4. Information regarding staff requirement for the next year Programme
The units will supply the requirement of staff to OAD(HQ) on 31/5 each year for consolidation and submission to CAG.
(i)Regular OAD(HQ) 31/5 AO’s order dated. 24.3.69 file P 4/I/69-70
(ii)On adhoc basis -do- 3/3 CAG’s orders 1766/B/18378 dated. 24/6/78
5. Lists of departments who prepared store accounts where the value of storage exceeds 5 lakhs. Reply to be called from Admn deptt. for getting the same audited and incorporation of suitable comments in all state and report (c)
31st July each year
Sr. Deputy Accountant General order dated. 18.3.74.
- The replies is to be submitted to A.O. Incharge of the Unit.
441
SECTION-III
WEEKLY RETURNS
1. C.O.R. B.O. 5th,12th 18th,25th
AG’s orders dt. 26 1.88
2. Ordinary Report B.O. Every Tuesday
Para 3.19 of OAD Manual
3. Urgent/CAG Diary B.O -do- -do- 4. Audit Note Diary
Report -do- -do- Sr. DAG’s
order dated. 28.11.80
5. Bill Diary -do- -do- Para 3.19 of OAD Manual
6. Weekly Diary Report of field parties.
-do- -do- -do-
7. AG’s letter; over one week
OAD(HQ) Every Tuesday
Para (3.19) of OAD Manual
8. Transit Register B.O. -do- TM-11/70-71/1290 dated. 10/6/61
9. Movement Register
B.O -do- AdmnI/71 dated. 17.5.80
FORTHNIGHTLY
1. Urgent Diary DAG Second fourth Tuesday
Para (3.19) of OAD Manual
2. Ordinary Diary -do- -do- -do- 3. Half Margin -do- Ist, 15th of
each month. -
MONTHLY RETURNS
1. Report regarding Audit Notes not issued by the end of month.
OAD(HQ) 5th of each month
DAG’s letter No. OAD/C/NC/2-670 dated 21/3/65
2. Register of special points to be brought to the notice of inspection officer.
DAG 5th of each month
Para 3.2 of OAD Manual
3. AAO/SO’s Note Book
B.O. 5th of each month
4. Register of copies called for
B.O. 5th of each month
TM-II/IC/7/30 dated. 25.9.61
442
5. Progress Register of Auditors
B.O 15th of each month
C.S.2
6. Programme Register of Auditors
B.O. 1st of each month
C.S.2
7. Special Note Book to watch special points (each Adr.)
B.O. 5th of each month
-
8. Register of important and interesting cases.
DAG(IC) 10th of each month
OE Ist/18.10.80
9. Register of items waived off
DAG(IC) 5th of each month
Para 4.40 of OAD Manual
10. Register of serious irregularities.
B.O. 5th of each month
AG’s orders dated. 8.3.61
11. Register of Draft Paras
B.O 5th of each month
-do-
12. Monthly statement of arrear
OAD(HQ) 5th of each month
-do-
13. Register of cases. B.O. 20th of each month
-do-
14. Copy despatch Register Report
B.O. 5th of each month
Para 3.6 of OAD Manual
15. Report of over hauling of seats of auditors.
B.O. 2nd of each month
Para 5.3 of OAD Manual
16. Suggestion for improvement on Audit
B.O. 10th of each month
-
17. OB/Six Monthly Register
B.O 24th of each month
Para 3.6 of OAD (PI)
18. Inventory Register B.O. 7th of each month
TM/1-25/1990 dated. 17.7.58
19. Review of progress/ programme Register
B.O. 1st of each month
O/O No. CW/1/6 dated 16.9.58
20. Tour Programme of officers in OAD(C)
Deputy Accountant General
7th of each month
Sr. DAG’s orders dated. 23.6.60
21. Register of cases of failure of audit
Control section
5th of each month
TM I/217/58-59 dated. 17.5.58
443
22. Attendance register with certificate of closing of Leave Account.
B.O. 3rd of each month
-
23. Monthly Reports to be received from AAO/SOs in the field
B.O. 2nd of each month
Para 4.10 of OAD Manual
24. Reports of outstanding letters (Ordinary, Urgent, Comptroller and Auditor General, Bill Diary
OAD(HQ) Last Tuesday TM/9-27/61-67/591 dt. 21.6.62
The units will send the report to Headquarters for consolidation and submission to Pr. Accountant General control sections.
25. Register of suspended audit
B.O. 22nd -do-
26. Defects noticed in drafting of A/Notes
DAG(IC) 5th Sr. Deputy Accountant General orders dated. 25/5/62
27. Transit Register Control Section
Last Tuesday TM-II/10-71/1290 dated. 23/8/61
28. C.O.R. DAG(IC) 25th - 29. Register of calling
of vouchers etc. From AG(A/cs) for supply to field parties.
B.O. 5th O.O.No. 19 dated. 15/11/84
30. Incumbency Register
B.O. 5th Admn/75-76/4693 dated 6/12/75
31. Regarding suggestions of method of organising the local audit of long duration/important audit to be reviewed.
DAG/AG 10th CAG’s D.O No. 673-TA/IID/TA/75 5.8.76
444
32. EL certificates of parties
Admn.III 5th O.O. Admn 12/94 dated. 16.9.89
33. Movement Registers Deputy Accountant General
Last working day of month
Admn/I-71 dated. 17.5.80
34. TA Bill Register Deputy Accountant General
5th -
35. Report regarding vouchers/documents requisitioned by the outside agencies
OAD(HQ) 10th TM/9-8/69-70 2084 dated. 4.11.69.
Outstanding Returns
1. Personal claim of staff bill diary
DAG(IC) 15/4, 15/7, 15/10, 15/1
Sr. DAG’s order 12/10/57
2. Review of programme register (MPR)
-do- 1/4, 1/7, 1/10, 1/1
NCW 1/156 dated. 19.9.58
3. Consolidated report on review of Registers of DP/Financial irregularities.
OAD (HQ) 15/4, 15/7, 15/10, 15/1
TM 15/Misc/ 5455/2947 dated 29.10.59
This units will send this report to Headquarters for consolidation & submission to Accountant General Control (Report)
4. Closing of OB/Six monthly
DAG(IC) 20/4, 20/7, 20/10, 20/1
Deputy Accountant General order dated 12/2/57
5. Register of serious irregularities
-do- 10/4, 10/7, 10/10, 10/1
DA/MW/T/29/l/52 dated. 29.4.65
6. Quarterly Arrear Report
OAD(HQ) 1/4, 1/7, 1/10, 1/1
TM/1/70-71 1714 dated 9/9/70
7. Quarterly Report of vouchers not supplied by AG(A/Cs) to field parties.
Control Section
5/4, 5/7, 5/10, 5/1
OA/PU/I/Misc/258 dated. 9/71
445
8. Quarterly report regarding complaint of delay in settlement of personal claims.
Control Section
20/1, 20/4, 20/7, 20/10
O/O TM/Misc./ 74-75/965 dated. 20.7.74
9. Quarterly progress OAD/report in use of Hindi for official work
OAD/HQ 5/4, 5/7, 5/10, 5/1
TM-I-32/75-76/10-15 dated. 5.4.76
10. Quarterly review after completion of Audit preparation of forecast of local audit.
do 10/7, 10/10, 10/1, 10/4
AG Circular dated. 18.10.82
The unit will send this report to Headquarters for consolidation and submission to A.G.
11. Quarterly progress report of each para of the inspection report conducted by the Director of Inspection
OAD (HQ) 1/10, 1/1, 1/4, 1/7
OO No. ITA-I/I-3/VII/Insp./ 83-84/369-76 dated. 5.9.83
12. Register of History Sheet of staff in each Unit (Field)
Deputy Accountant General (IC)
5/4, 5/7, 5/10, 5/1
DAG’s order dated. 4/6/65
13. Register of Try. Month for local audit
do 10/4, 10/7, 10/10, 10/1
O.O. No. 19 dated. 15/11/84
14. Progress Register of Auditors
do do CS No. 14 dated. 31/1/85
MONTHLY
1. Register of cases Sr. Deputy Accountant General
1/6 1/12
Para 3.6 of OAD (Headquarters)
2. Submission of statement (half yearly of leave other than casual leave availed of
OAD (HQ) 10/7 10/1
Admn IV/ Leave/75-76/762
446
Annual Returns
1. Statement of omission in the maintenance of register of objections (Headquarter) by Admn. Department (Received from AAO/SO (F))
OAD(HQ) 10/4 TM/I-12-I/1360 dated. 25.9.61
2. Review of time allotment of various Audits
-do- After 3 years onwards
3. Sectional Inventory of furniture
-do- 15th April
4. Stock verification of furniture
-do- O/O B-56 dated. 3.7.46
5. Proposal for change in periodicity and quantum of Audit in respect of any account
DAG (IC) 15/12
6. Statistics to serve as fair index to the volume of work in Inspection Civil Wing
OAD (HQ) 15/7 O/O No. 159 dated. 7/11/68
7. Audit of NCC Campus to be arranged
APPR (R) 20/7 O.O/3-36 dated. 16.6.92
8. Cases of doubtful new services
OAD (HQ) 10/7 O.O. D/10 dated. 10/5/60
9. Information regarding number of civil offices and institutions test audited during the course of year and comments on the result of such audit. .
-do- 15/7 -
10. Local audit of Central & State Schemes to be provided to Audit parties
DAG(IC) 15/7 Deputy Accountant General orders dated. 1/9/67 (file 1-12)
447
11. Information regarding expost facto sanction accorded in other than of normal rules and cases on which Government have refused to accord ex post facto sanction.
OAD(HQ) 30/6 EPA/286/1-179 dated 22.5.70 (file 1-70)
12. Information regarding the preparation of synopsis/statement of store accounts for inclusion in Central Audit report (Central Department) (IC)
Sr. DAG (IC)
30/6 DAG’S order dated 30/12/70 File OA./Pb/0-4
13. Report regarding maintenance of record of good/bad work done by the employees. Issue of merit certificates in recognition of outstanding work done.
-do- 1/4 -
14. Preparation of (Annual) forecast for local audit/inspection on the basis of MPRS
OAD(HQ) 31/12 AG’s order dated. 15/10/82 File OAD/IC/1-4/CAG 82-93
15. System Audit OAD(HQ) 15.6 CAG’s letter No. 692/OM/7-81 dt. 5.8.82
16. List of officials who have completed three years and five years on one seat and section
-do- 30.9 AdmnIII/49/6467-7 dt. 10.12.76
448
Additional item of COR grant - in -Aid
Section I
Annual
1. Material for consolidated Audit Report of the Central Schools Organisation.
DACR 31st August Letter DO OA/C/I-149/77-78/1267-69 dated. 24.2.78
2. Statement of Audit fee recoverable from Central Sections.
DACR 31/5 DAG’s orders dated Nil
3. Audit of PIC’s in the State (Project implementation Committee)
DACR 31/12 DA/I-37/75-78 dated. 22/12/78 (File GIA)
4. (I) Audit of NIS Patiala to be conducted.
Comptroller and Auditor General
1/8 AG’s orders dated. 9.4.81
(II) Submission of Separate Audit and Inspection report in respect of NIS Patiala
Comptroller and Auditor General
1/11 -do-
5. Audit of state Social Welfare Board
DACR 31/l2 DO No. DA/l-37/75-78/708-10 dated. 22.12.78
6. Submission of Report regarding review of Walkf Board Pb, at Ambala Cantt.
As and when review is done during local audit
GOI MO No. 1-1(29)-B(AC)/83 CAG’s U.O. No. 64-TA-I(R)/l73 dated. 6/83
7. Pepsu Transport Township Development Board, Rajpura.
-do- CAG No. TA I/RGI/131-75 dated. 6.9.79
Annual
1. Completion report regarding local audit of grants in aid.
AAO/SO 1/3 OO CA/NCW-I 30-12/3726 dated. 18/l1/57
449
Six-monthly-Returns
1. Register of selection of Books to be checked by S.O./AAO
A.O. Admn. III.
1/6 1/12
O/lO 12 dated 21.10.76
2. Progress made in relation to audit under section 14.15 separately Central and State Grant requisite material furnished to GIA Section for compilation and submission to C.A.G.
C.A.G. 15/4, 15/7 GIA Section/POL XI/78-79/1944 dated. 16.10.78.
Section II
Quarterly
1. Register of Books (Library)
B.O. 5th of each month
TM-11/107/ 35-90 dated. 25.9.79
2. Progress Register of GIA
B.O. 10th Sr. DAG’s orders dated. 12/3/77
3. Register of Audit fee
BO/DAG 5th -
Six Monthly - Returns
1. Physical verification notes issued under section 14,15
DAG (IC) 15/4 Sr. Deputy Accountant General orders dated. 2/77
2. Review of daily rates for audit fee of non Government funds rates to be got approved within 2 months of revision of pay etc. Necessary revision of rates to be got approved.
Comptroller and Auditor General
As and when rates are revised.
Comptroller and Auditor General letter No. 2338/ Admn/ 13786 dated. 5/9/82
450
Half Yearly
1. Programme made in respect of audit of GIA.
AAO/SO 1/10, 1/4 OO CA/NCWI/ 30-12/3726 dated. 18.11.59.
451
APPENDIX-IV
Instructions issued by the Comptroller and Auditor-General of India for the calculations of the daily rates of fees for the recovery of cost of audit of accounts of
Non-Government funds.
------------------
1. Copy of Comptroller and Auditor-General of India’s letter No. 2338-Admn. 1/378-61, dated 5th September, 1962.
Subject: Simplification of the method of calculation of working out daily rates of audit fees for the recovery of cost of audit of accounts of non-Government funds.
I am to invite a reference to this office circular letter No. T. 47-Admn. I/48-37,
dated 28th April, 1937, laying down the present method of calculating daily rates of audit
fees. This method involves elaborate calculations entailing much labour and time and the
rates sanctioned after such complicated calculations remain in force only for a period of
two years after which the whole process has to be repeated. As the rate arrived at is on
the basis of emoluments drawn by staff actually employed in O.A.D. on a particular day,
the daily rate thus calculated not also represent the actual cost during the entire period of
two years for which it remains current..
2. ‘The question of evolving a similar and more realistic and practicable
method of calculation has accordingly been under consideration and it has now been
decided with the concurrence of the Government of India that the calculation of daily
rates of audit fees for recovery of the cost of audit of accounts of non-Government funds
should in future be done on the following lines:-
i) Direct Charges’ may be calculated on the basis of average cost of
particular post or posts involved plus the appropriate allowances instead of
pay and allowances of the staff actually engaged on the work of a
particular day.
ii) ‘Indirect Charges’ may be taken as constituting 125 per cent of the direct
charges calculated according to the above method.
iii) The figure relating to number of days in a year which is to be adopted for
working out the daily rate will continue to be determined by the
Accountant-General, as is being done at present.
452
3. The application of the simplified method of calculation indicated above has been
illustrated in the statement enclosed. It should, however, be understood that the figures
appearing in this statement are merely illustrative.
4. The statements of calculation of daily rates of audit fees should be sent to this
office by the 31st January, so that the daily rates of audit fees to be effective with effect
from 1st April, onwards may be approved sufficiently in advance. The necessary
approval will be given by this office, and the sanction of the Government of India will
not be necessary. The rates so approved will remain forces until further orders or until
there is a revision of any scale of pay or compensatory allowance or the method of
calculating average cost is changed, in which case revised rates should be got approved
by this office.
II. Letter No. 2497-Admn. 1/378-61 from the Comptroller and Auditor-General of India, New Delhi, dated the 20th September, 1962.
To.
All Civil Accountant-General, The Director of Commercial Audit and the Director of Audit, Food, Rehabilitation, Supply Commerce, Steel and Mines, New Delhi.
Subject: Simplification of the method of calculation for working out daily rates of audit fees for the recovery of cost of audit of accounts of non-Government funds.
Sir,
In continuation of this office circular letter No. 2338-Admn. 1-378-61, dated 5th
September 1962 on the subject indicated above, I am to forward herewith a revised
statement illustrating the calculation of daily rates of audit fees which may please be
substituted for the statement enclosed therewith.
Statement illustrating the calculation of daily rate of audit fees for the audit of accounts
of non-Government funds.
Monthly cost of (i) Senior Auditor Rupees Average cost 392 Comp. Allowances 10
453
H. Rent Allowances 15 Total 417 (ii) Junior Auditor Rupees Average cost 225 Dearness Allowances 20 Comp. Allowances 10 H. Rent Allowances 15 Total 270 (iii) Class-IV Servant Rupees Average cost 80 Dearness Allowances 10 Comp. Allowances 5 H. Rent Allowances 10 Total 105 Annual cost of : 1 Senior Auditor = Rs. 417x12=Rs.5,004 2. Junior Auditor = Rs. 270x12=Rs.3,240 3. Class IV Servant = Rs. 105x12=Rs.1,260
(A) A party of 1 Sr. Auditor , 1 Junior Auditor and 1 Class IV servants = Rs. 792 x 12 = Rs 9504
(B) A party of I Sr. Adrs 2 Junior Adrs. and one class IV servant = Rs 792 + Rs 270 = Rs 1062 x 12=Rs 12744
Part-II, Indirect Charges according to composition of the party.
Add 125 per cent of Rs. 9504 as shown at ‘A’ above = Rs 11,880
Add 125 per cent of Rs. 12,744 as shown at (B) above = Rs 15,930
Part-III. Total of Direct and Indirect Charges party-wise.
A party of 1 Senior Auditor, 1 Junior Auditor and 1 Class IV Servant.
Direct cost = 9,504 Indirect cost = 11,880 Total 21,384
A party of 1 Senior Auditor, 2 Junior Auditors and I class IV Servant.
Direct charges = 12,744 Indirect charges = 15,930 Total 28,674
Part-IV Daily rates of Audit Fee on party basis
454
For party of 1 Senior Auditor, 1 Junior Auditor and 1 Class IV Servant = 21384 @226
= (Rs.77.48 or Rs 77) * Indicate total amount of direct and Indirect charges.
@ Indicates number of working days in a year.
For a party of 1 Senior Auditor, 2 Junior Auditors and 1 Class IV Servant.
Rs. 28,674 =(Rs. 103.89 or Rs. 104) 276
Daily rates after rounding off to nearest multiple of Rs. 5.
For a party of :
Rupees Senior Auditor, Junior Auditor, Class IV Servant 75 Senior Auditor, Junior Auditor, Class IV Servant 105
Note:- Daily rates of audit fee in respect of each post where required may also be worked out on a similar basis. The daily rates in respect of the post of Senior Auditor is worked out below by way of illustration:-
Rupees Monthly cost of I Senior Auditor = 417 Annual cost of I Senior Auditor = 417x12=5,004 Direct Charges = 5,004 Add interest charges i.e. 125 per cent of direct charges = 6,255 Total of Direct and Indirect Charges = 11,259 Daily rate of audit fee for one Senior Auditor = 11,259
= 276 Rs. 40.79 or Rs. 41
Daily rate after rounding off to the nearest multiple of Rs. 5 = Rs 40
The allowance for casual leave, holidays and transit day is already made in
assuming at the number of working days in a year and thus in the rate of audit fees
recoverable for the audit of non-Government funds. The audit fee will, therefore have to
be recovered only for personnel of the party on duty. No recovery should be made for a
person on casual leave and for holidays, etc.
(Authority-CAG’s U.O. No. 3164-Tech. Admn. I/96-64, dated 7th November, 1964).
III. Copy of Comptroller and Auditor-General of India office memorandum No. 65/Tech. I(A)/33-65-Vo..II, dated 4th January, 1969.
Subject:- Delegation of powers to Heads of Department in the Indian Audit and Accounts Department-Sanction of daily rates of audit fee for the recovery of cost of audit of non-Government funds.
455
In exercise of the powers vested in him, vide item No. VII of the Annexure
attached to the Government of India, Ministry of Finance (Department of Expenditure)
letter No. F.3(4)/ESI/67, dated 6th June, 1967, the Comptroller an Auditor-General of
India is pleased to re-delegate the powers of sanction of daily rates of audit fee for the
recovery of cost of audit of non-Government funds, delegated to him in the Ministry of
Finance, Department of Economics Affairs, letter No.1-(27)-2/62, dated 28th May, 1965,
the Heads of Departments in the Indian Audit and Accounts Department with effect from
the revision of daily rates of Audit fees due on 1st September, 1968 subject to the
following conditions:
i) The direct charges should be calculated on the basis of average cost of the posts involved, and
ii) The indirect charges should be computed at 125 per cent of the direct charges.
2. Detailed instructions for the calculation of audit fees are being issued separately
in letter No. 64-TA. I(A)/33-65 Vol.-II, dated 4th January, 1969 for the guidance of the
Heads of Departments.
Copy of letter No. 64-Tech.Admn.1(A)/32-65-Vol. II, dated 4th January, 1969 from office of the Comptroller and Auditor-General of India, New Delhi addressed to All the Accountants General and others.
Subject: Instructions for the calculation of the daily rates of audit fees.
Sir,
I am to invite a reference to this office memo No. 65-TA-I(A)/33-65-Vo.II dated
4th January, 1969 delegating the powers of sanction of daily rates of audit fee to Heads of
Department in the I.A.&A.D. with affect from the revision of rates due from 1st
September, 1968. As mentioned in para 2, thereof, the following instructions are laid
down in regards to the calculation of daily rates of audit fee:-
i) The daily rates of audit fees should be calculated in accordance with the
instructions contained in this office circular letter No. 2338-Admn.1/278-61, dated 5th
September, 1962 read with letter No. 2497-Admn.1/278-61, dated 20th September, 1968.
The Direct Cost’ should be calculated in respect of only non-gazetted posts of the
peripatetic audit parties and the daily rates of audit fees should be rounded of in multiple
of Rs. 5 as illustrated in the statement of calculation attached with the above mentioned
letters.
456
ii) The average cost of the posts should be worked out from time to time with the
revision of scales etc. In accordance with the formula laid down in the Government of
India orders below F.R. 9(31). At present, the correct average cost of the various posts is
as under:-
Rupees
S.A.S. .. 435.02
S.G.A. .. 299.68
U.D.C. .. 220.44
Class-IV .. 80.08
iii) The daily rates of audit fees should be worked out and approved by the Heads of
the Departments concerned within two months of the revision of the rates of pay and
allowances necessitating the revision of the rates. Immediately after the rates are revised
and approved, a copy thereof should be sent to this office to see that there are no wide
disparities in the rates approved in different offices. A note to this affect should be kept
in the calendar of Returns of the Section entrusted with the work of revision of these
rates.
iv) The accuracy of the daily rates of audit fees so calculated should be checked
independently by the internal Test Audit Section of the concerned office before, the rates
are approved by the Heads of the Department. An indication to this effect may be given
in the letter communicating rates to this office.
v) The accuracy of the daily rates of audit fees approved in each office should be got
checked by the Director of Inspection at the time of inspection of that office and a report
to this effect sent to this office after the inspection is over.
vi) The cost of Gazetted supervision is included in 125 per cent ‘Indirect Charges’
calculated on ‘Direct Charges’ of the non gazetted posts and no separate audit fees in
respect of gazetted supervision of the audit party should be recovered.
Copy of letter No. 13-TA, I/28-73, dated 9th January 1975 from the Comptroller and Auditor-General of India, New Delhi to All Civil Accountants General and offices subordinate to them.
Subject: Recovery of the cost of audit of bodies and authorities under C.A.G’s (DP&C) Act, 1971.
457
The rules regulating the incidence of expenditure involved in audit of the accounts of
bodies and authorities conducted by the I.A&A.D have been laid down in the Section
VIII of Appendix 3 of Account code volume I. The question whether these rules of
incidence require any modification consequent upon promulgation of CAG’s (DP&C).
Act, 1971 has been under consideration for some time. It has been decided that the
present rules of incidence should be continued to be followed in regard to audit of the
accounts of bodies and authorities including corporations, in so far as audit under
Sections 14,15 and 19 of the C.A.G’s (D.P.&C.) Act, 1971 is concerned. Accordingly
the cost of audit of bodies and authorities, including corporations, will be recoverable in
all cases in which audit is undertaken by the Comptroller and Auditor General or any
office under him as the sole Auditor. In cases in which the audit of the accounts of the
body or authority is conducted by another agency and audit by Comptroller and Auditor-
General or an officer under him represents second or superimposed audit undertaken
under Section 14, 15 and 19 as the case may be, the cost of such second or superimposed
audit need not be recovered from the body or authority concerned, As regards audit under
Section 20 the same is required to be undertaken on such terms and conditions as may be
agreed upon between Comptroller and Auditor-General and the concerned Government.
One of the terms to be settled in this regard would relate to the recovery of the cost of
audit of the body or authority to be entrusted under Section 20 of 1971 Act. The recovery
of the cost of audit in theses cases, will, therefore, be regulated by the agreement that will
be arrived at in each case. These cases should, therefore, be referred to this office for
finalisation of the terms and conditions under which the audit of the body or authority
concerned may be undertaken, including the question whether the cost of audit should be
recovered or not.
2. The receipt of this letter may kindly be acknowledged. All pending cases may be
dealt with accordingly.
Sr. Audit officer