Audit of government entities

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Chapter 13 Audit of Different Type of

Entities

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Legal Framework and Comptroller & Auditor General

The Constitution of India contains specific provisions regarding the appointment, salary and duties and powers of the
C&AG.
Appointment
The President of India shall appoint CAG.
Removal or resignation
● He can be removed from the office only on the ground of proven misbehavior or incapacity.
● Moreover, he can be removed from office only when each house of parliament decides to do so by a
majority of at least two third of members present and voting.
Remuneration
● The parliament is competent to make laws to determine salary and other conditions of service.
● The Comptroller & Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 passed in
pursuance of the provisions of the Constitution lays down a fixed tenure of the office prescribing that he shall
be paid a salary which is e
qual to the s
alary of the J udge of the S
upreme C
ourt thereby further
strengthening his independence.
Duties and Power

Article 149 states that the C&AG shall perform such duties and exercise such powers in relation to the accounts of the
Union and of the States and of any other authority or body as may be prescribed by or under any law made by the
Parliament.
The Comptroller & Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 defines these functions and
powers in detail.
Article 150 of the Constitution provides that the accounts of the Union and of the States shall be kept in such form as
the President may on the advice of the C&AG prescribe.
Reporting Procedures
Article 151 of the Indian Constitution states that the C&AG shall report on the accounts of the Union and of each of the
States to the President or the Governor concern and the report to be laid before the legislatures.
The reports should not only be presented to the legislatures but thereafter also publicised adequately in order to
create a proper climate of public opinion for taking remedial action where necessary, on the findings of the Auditor
General.

also be given.

Study Plan
We will study the audit of following items in Government for CA Intermediate
1. Expenditure audit
2. Audit of Receipts
3. Audit of Stores
Expenditure Audit
Expenditure Audit The auditor examines the fulfillment of conditions for incurring government expenditure. It
involves examination of following:—
1. Audit of rules and orders
2. Audit of sanctions
3. Audit against provision of funds
4. Propriety audit
5. Performance audit
Audit of Rules and Orders/Audit of Regularity and Legality

( ख़चा Constitution, law CAG और higher authority क़े हसाब े होना चा हए) ये चेक करने के लए auditor को कुछ चीज़ क
Sound knowledge होनी चा हए)
1. Its objective is to ensure whether the expenditure is in accordance with:

○ Relevant provisions of the C onstitution and of the l aws and r ules.
○ The rules, regulations issued by CAG.
○ The orders of, or rules made by, any higher authority.
2. In this connection, auditor should have sound knowledge of rules and orders w.r.t. Following:
○ The powers to incur and sanction expenditure from the Consolidated Fund/ contingency fund of India
/ State;
○ The m ode of p
resentation of claims against government, withdrawing moneys from the
Consolidated Fund, Contingency Fund and the financial rules prescribing the procedure to be followed
by government; and (HOW CLAIMS ARE PRESENTED & HOW MONEY IS WITHDRAWAN)
○ Regulating the c onditions of s
ervice, pay and allowances, and pensions of government servants.
Audit of Sanctions
(हर ख़चा sanctioned होना चा हए है , और sanction proper authority से होना चा हए )
Its objective is to ensure whether the expenditure is:

1. Properly covered by a s anction, either general or special.
2. Sanctioned by authority, which is authorized to do so.
Thus auditor should consider following
● He should have k nowledge of the s anctioning p
owers of various authorities.
● He should examine whether all sanctions are adequately noted in the prescribed register.

also be given.

● For petty expenditure, the signature of the competent authority on a bill can be regarded as a sanction.
Audit against provision of funds

Its objective is to ensure whether the expenditure
● Is made for the p urpose for which the grant and appropriation has been provided.
● Does not exceed the appropriation made.
Propriety Audit(M.imp)
● The Propriety audit is to check the expenditure in accordance with financial wisdom and uprightness.
● It is to check to bring out the improper, avoidable, expenditure even though such expenditure has been
incurred in conformity with the existing rules and regulations.
● A transaction may satisfy all the requirements of regularity audit in so far as the various formalities
regarding rules and regulations are concerned but may still be highly wasteful.
● It is not audit of sanction or against rules.
● It is a qualitative, opinion-based expression of auditor's findings.
According to propriety audit, the auditor examines the cases of improper or wasteful expenditure even though
the expenditure has been incurred as per the existing rules and regulations.
In this regards, the following main points should be kept for consideration:
● The expenditure should not be prima facie more than what the occasion demands. Public money should be
spent by the officers, as of their own with utmost diligence and care.
● No order for sanction of expenditure should be made by an authority which results in gains directly or
indirectly to that authority
● Public m
oneys should not be utilised for the benefit of a particular person or section of the community
unless
○ the amount of expenditure involved is insignificant; or
○ a claim for the amount could be enforced in a Court of law; or
○ the expenditure is in pursuance of a recognized policy or custom; and
● The cost of administering should not eat off the benefits of the expenditure.
Performance audit / Full Scope Audit

● Here, auditor tries to ensure that government programmes have achieved the objectives at the lowest cost and
given the intended benefits. (Achieved Objectives, Lowest Cost, Intended Benefits)
● This involves that the various programmes, schemes and projects where large financial expenditure has been
incurred are being run economically and are yielding results expected of them.
● Includes efficiency, economy and effectiveness audit.
● It seeks to identify opportunities for greater economy and effectiveness.

also be given.

Audit of Stores and Stocks

● Auditor should ascertain whether the internal controls over purchase, receipt, and issue of stores are well
designed and properly carried out during the year.
● He should bring to the notice of the government any deficiencies in the system of control.
● The audit of purchase of stores is conducted in the same manner as audit of expenditure.
● The auditor has to ensure that the prices paid are reasonable.
● Cases of uneconomical purchase of stores and losses due to defective or inferior quality of stores are
specifically examined.
● The certificates of quality and quantity given by expert should be examined.

● Any excess or idle stocks should be specifically mentioned in the report.
● Auditor should ensure their existence by attending physical verification of stock.
● The valuation of the stocks is also examined properly.
Audit of Receipts
The government audit also covers receipts payable in to the Consolidated Fund of India and of each State/Union
Territory. The auditor examines whether: —
● Internal checks are imposed for prompt detection and investigation of irregularities. .
● Internal procedures adequately ensure proper accounting of demands collection.
● There is effective check on assessment, collection and proper allocation of revenue.
● Such regulations and procedures are actually being carried out.
● All revenues have been correctly assessed, realized and credited to the government account.
● There is no leakage of revenue.


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Chapter 13 Audit of Different Type of

Legal Framework and Comptroller & Auditor General

Duties and Power

Audit of Rules and Orders/Audit of Regularity and Legality

1. Its objective is to ensure whether the expenditure is in accordance with:

Its objective is to ensure whether the expenditure is:

Audit against provision of funds

Performance audit / Full Scope Audit

Audit of Stores and Stocks

● The certificates of quality and quantity given by expert should be examined.

You might also like

Audit of government entities

Uploaded by

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Original Description:

Original Title

Copyright

Available Formats

Share this document

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Is this content inappropriate?

Copyright:

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Audit of government entities

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Copyright:

Available Formats

These notes are ​NOT FOR SALE. ​ These notes are incomplete without our videos.

Chapter 13 Audit of Different Type of

Legal Framework and Comptroller & Auditor General

Duties and Power

Audit of Rules and Orders/Audit of Regularity and Legality

1. Its objective is to ensure whether the expenditure is in accordance with:

Its objective is to ensure whether the expenditure is:

Audit against provision of funds

Performance audit / Full Scope Audit

Audit of Stores and Stocks

● The certificates of ​quality and quantity​ given by expert should be examined.

You might also like

These notes are NOT FOR SALE. These notes are incomplete without our videos.

● The certificates of quality and quantity given by expert should be examined.