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WORKS AUDIT MANUAL

(Approved in 2008)
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PREFACE

This Manual is issued in accordance with paragraph 58 of the

Comptroller and Auditor General’s MSO (Administration). As several

changes have taken place since the publication of the previous edition in

September 1997, the Manual has now been revised up-to-date.

This Manual is intended for guidance of the members of this office

and embodies various orders affecting Works Audit procedures. The

instructions contained in this Manual are supplementary to the

instructions contained in the various Codes and Manuals issued by

Government and the Comptroller and Auditor General of India.

The staff is expected to be thoroughly conversant with the

procedures laid down in this Manual and ignorance thereof will not be

accepted as a justification for departing from the provisions of the

Manual and to carry out the directions contained therein.

Any suggestion for improvement of the Manual may be addressed

to the Group Officer in charge of Public Works Audit.

Principal Accountant General (Civil Audit)

Place: Chennai
Date:
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INDEX OF THE PUBLIC WORKS AUDIT MANUAL

CHAPTER CHAPTER HEADING PAGE

NO.

1 GENERAL 1

2 PUBLIC WORKS DEPARTMENT OF 30

GOVERNMENT OF TAMIL NADU –
STRUCTURE AND FUNCTIONS

3 PROCEDURE ADOPTED FOR PUBLIC WORKS 46

ACCOUNTS COMPILATION AT PWC
BRANCH OF AG(A&E)

4 CENTRAL AUDIT AT WORKS AUDIT 55

BRANCH

5 LOCAL AUDIT BY WORKS AUDIT PARTIES 116

6 AUDITING STANDARDS AND AUDIT OF 161

FRAUDS
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INDEX

CHAPTER 1

Para No. Gist of the Para Page No.

1.1 DUTIES AND POWERS OF C&AG 4

1.1.1 Provisions of DPC Act 1971 4

1.2 INTEGRATED AUDIT SECTIONS. 5

1.2.1 Reorientation of Central and Local Audit 5

1.2.2 Scope 5

1.2.3 Organisational set up of Audit Department 6

1.2.4 Duties and responsibilities of Audit staff 6

1.2.5 Audit arrangement 8

1.3 CONSTITUTION AND CONTROL 9

1.3.1 Duties of WM (C) Section 9

1.3.2 WM Scheme cell 9

1.3.3 WM DP cell 10

1.3.4 Branch officer 10

1.3.5 Assistant Audit Officer/ Section Officer 12

1.3.6 Sr.Auditor / Auditor 12

1.3.7 Preliminary work of WAD section before 14

commencement of Audit

1.3.8 Preparation of Draft IR 17

1.3.9 Processing of Part II A Para 19

1.3.10 Destruction of records of WAD 20

1.3.11 Important registers 20

1.3.12 Settlement of outstanding objections 25

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CHAPTER 1
GENERAL

1.1 DUTIES AND POWERS OF C & AG

The CAG of India draws his authority from Articles 148 to 150 of the

Constitution of India. The duties, powers and conditions of service are governed by

The Duties, Powers and Conditions of Service Act of CAG of India -1971. The

portions of the Act related to Works Audit are reproduced here.

1.1.1. (a) SECTION 13 (a) OF THE DPC ACT -1971

It shall be the duty of the Comptroller and Auditor General (CAG) 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 money 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.

1.1.1. (b) SECTION -16 OF DPC Act 1971

It shall be the duty of CAG to audit all receipts which are payable into the

Consolidated Fund of India and of each State and of each Union Territory having a

Legislative Assembly and to satisfy himself that the rules and procedures in that

behalf are designed to secure an 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.

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1.2 INTEGRATED AUDIT SECTIONS

1.2.1 RE-ORIENTATION OF CENTRAL & LOCAL AUDIT

A Pilot Project re-orienting the central audit and local audit covering Public

Works and Forest Departments was approved for implementation from 1st April

1987. The objective was to dovetail central and local audits to accomplish the total

audit requirements in as purposeful and effective manner as possible. The central and

local audit of the Divisions and offices are brought within the co-ordinated charge to

perform complementary and supplementary roles.

The various functions relating to Central Audit Parties, Central Audit Support

Sections and the former. W.M (Reports) were reallocated to the newly formed

integrated audit sections (Authority:AG (AU)I/Co-ord.cell/ IV/11-4 /87-88/20

dt. 29.4.87 File W.M. 14-13/87 -88)

1.2.2 SCOPE

1. In central audit, systems audit and scheme audit will be strengthened.

2. Shifting the emphasis of local audit to a properly planned activity oriented audit.

3. Collection of sanctions and data for schemes in separate files and maintaining the
scheme files or portfolios as up-to-date as possible.

4. Providing support facilities to local audit by making available copies of rules,

orders, notifications, instructions for specific tasks for undertaking scrutiny of
sanction orders and for planning, delineating audit scope and requirements.

5. Findings on the scrutiny of sanctions recorded, objections in central audit and the
results of scrutiny of files and records of the Heads of departments as well as at the
Secretariat by the Headquarters staff will be made available to the local audit parties
at the appropriate time.
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6. While editing the Inspection reports the potential paras have to be identified,
processed and factual statements issued to the draft para cell with the specific orders
of the Group Officer.
7. Intensified and comprehensive audit of contracts and agreements under the direct
guidance of the Branch Officer.

1.2.3 ORGANISATIONAL SET UP OF AUDIT DEPARTMENT

There are six Works Audit Departmental sections headed by one SO/AAO

each under the charge of two Audit Officers to conduct central audit of vouchers

obtained from the O/o. Accountant General (A&E) and pursue the Local Audit

Reports obtained from field parties. These sections function under the control and

guidance of WM(C), WM DP Cell and WM (Scheme Cell). There are designated

Works Parties for local audit. All these WAD sections/parties will be under the

overall control of the DAG/ Sr.DAG(WORKS).

The strength of WAD sections is determined in accordance with orders issued

by the CAG of India from time to time.

1.2.4 DUTIES AND RESPONSIBILITES OF THE AUDIT STAFF

With the introduction of integrated audit approach, the responsibilities of each

Auditor/ Section Officer/ Branch Officer got well defined and their response and

extent of accomplishment watched and measured through technical mechanisms like

• Maintenance of objection book by each Auditor

• Intensifying the audit of sanctions and auditing payments against the

sanctions.
• Laying greater emphasis on propriety audit and value for money audit rather
than routine checks.
• Assessment of qualitative and quantitative out-turn of the year and removal of
deficiencies.
• More effective maintenance of the record of points to be seen in local audit
and ensuring that the points so marked for audit during local inspection have
actually been looked into and report received.
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• Insisting on the remarks of Auditors/Sr.Auditors/S.Os/A.A.Os and supervisory

review by Branch Officer to be recorded in the Review Register to be
maintained separately for each unit to facilitate watching the quality of audit
and also for deciding the extent and intensiveness of local audit.
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1.2.5 AUDIT ARRANGEMENT (Para 6.1.7 of MSO (AUDIT) under the

head "Audit Planning")
Early in January each year, plan for the local audit inspection programme for

the ensuing financial year is to be prepared by the W.M (Co-ordination) Section. The

plan is to be based on the availability of the parties for the year. This plan, in the form

of annual programme as approved by the Principal Accountant General (Civil Audit)I

is to be split up into quarterly programmes for the various inspection parties. Copies

of this programme of local audit should be sent to the Administrative Departments

concerned and the Department of Finance in addition to the units proposed to be

audited.

1. All classes of Vouchers (including TA and Establishment vouchers) should be

subjected to central audit as per procedure detailed separately in section 3.2 of this
manual.
2. Audit of Establishment/TA vouchers received from Treasuries will be done by the
integrated audit sections.
3. All bills subjected to central audit will be checked with reference to the
agreements.
4. Audit Officer (Scheme Cell) will communicate the schemes selected to the
integrated audit sections for opening separate scheme files and conducting the study.

5. Activities to be commented upon would come to surface during the pilot study
conducted both centrally and locally and the same would be extended to other offices
or divisions. Here again, the priorities and selective studies would have to be decided
in advance to make the optimum and judicious use of available man power.
6. All the inspection Reports of Forest Divisions / PW Divisions would be issued and
pursued by the FAD/WAD sections concerned with effect from 1.5.1987.
(Authority: AG (Audit) I /Co -ord. Cell /IV / 11-4/ 87 -88/20 Dt. 29.4.87 W.M. File
NO. 14-13/87-88.)
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1.3 CONSTITUTION AND CONTROL

1.3.1 DUTIES OF WM (CO-ORDINATION) SECTION

WM (Co-ordination) section is essentially the co-ordinating section for the
WAD sections in addition to FAD, RA(Highways), RA(TWAD) etc. The main duties
of WM (Co-ordination) section are as below: -

(a) To deal with all questions relating to the organisation of WAD, all correspondence
and questions of general nature arising out of audit or otherwise concerning WAD
sections and to ensure the Co- ordination of work in WAD as a whole.

(b) To issue Works Audit Manual and propose and issue corrections thereon.

(c) To issue Forest Audit Manual and propose and issue corrections thereon.

(d) To finalise the staff requirements for inspection and other audit proposals.

(e) Forecast for inspection and drawing up Tour Programmes of Inspection Parties
and Supervising Officers.

(f) Monitoring of weekly diaries received from the officials of Local Audit Parties.

(g) Submission of the consolidated review on the arrears of work in Works Audit
Branch every month to the Prl.Accountant General (Civil Audit).

(h) To circulate and distribute to the audit sections, general orders, circulars,
corrections to codes and manuals etc.

(i) To deal with orders of cases of general nature or involving interpretation of rules
and papers requiring the opinion of that section marked by Branch Officer through
Group Officer.

1.3.2 WM SCHEME CELL

WM Scheme Cell involves in the selection of schemes, maintenance of
scheme review files, and processing of draft review report of selected schemes. WM
Scheme cell also issues and pursues Inspection Reports pertaining to CMWSSB,
TNHB, TNSCB and CPWD. It also maintains portfolio files of schemes.
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1.3.3 (i) WM DP CELL

WM DP Cell is essentially the Draft Para cell maintaining the Draft Para files,
processing of Part IIA paras after they are initially scrutinised by respective audit
sections and as per the procedure laid down in para 5.2.13 of WAD Manual. It issues
factual statements to the concerned Secretary to Government and feeds Reports
section to process draft paras. It also attends queries on Draft Paras from
Headquarters.

1.3.3 (ii) DIVISION OF WORK IN PRIMARY AUDIT

Since the levels of auditing and supervision are prescribed, there will not be

too many persons checking the same set of transactions. Under Integrated Audit

system there will be primary audit by Auditors/Sr.Ars, SOs/AAOs or by Branch

Officer depending on the amounts of bills /contracts.

Check of vouchers / Primary Primary Audit Supervision Audit

Audit/Supervision audit / Scrutiny
of contracts and sanctions
Upto Rs.1,00,000 Ar./Sr.Ar. SO/AAO

From Rs.1,00,001 to Rs. 5,00,000 SO/AAO BO

Above Rs. 5,00,000 BO --

The quantum of review at supervisory levels of SO/ BO will be decided

locally taking into account the exigencies of audit requirements and the activities of

development schemes proposed to be reviewed.

1.3.4 BRANCH OFFICER (BO)

The Branch Officer is responsible to the Group Officer for the satisfactory

working of the sections under him. His functions are mainly concerned with

discipline, management and supervision. He should be thoroughly well informed of

what is going on in the sections and be in personal touch with the men working under

him. Duties and responsibilities of BO i.e., AO/SAO of WAD sections are

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1. Audit of schemes and sanctions including intensive study of schemes

selected in advance for review
2. Identification of activities to be seen in local audit and collection of
necessary material on the activities for passing on to local audit parties

3. Co-ordination with WM DP Cell for processing Factual Statements

4. Study of deficiencies in the system followed by the executing department
5. Review of vouchers audited by the SOs/AAOs(Rs.1 lakh to 5 lakh)
6. Scrutiny and acceptance of all agreements involving money value of more
than Rs.5,00,000/-
7. Review of sanctions and agreements by the AAOs/SOs up to the value of
Rs.1,00,000/-
8. Suo motu audit of all vouchers over Rs.5 lakh.
9. Processing of Part IIA paras and forwarding them to DP cell with all
necessary key documents

10. Arranging regular visits to the Secretariat and offices of the Heads of
Department as a follow up of the central audit of sanctions, contracts and
vouchers and before taking up the local audit of the Divisions/Offices and
providing data and instructions to the field parties.

11. Editing of Inspection Reports drafted by SO/AAO based on Draft IR

proposed by the LAPs and submitting to DAG(W) for further processing
and approval.

12. Initiating actions to collect additional key documents required to

strengthen the paras in the IR

13. Processing of replies given by the departmental officials and further

processing of paras
14. Other items included in the quantum of audit and areas of responsibility
approved by CAG
15. Any other item of work as may be assigned from time to time.
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1.3.5 SECTION OFFICER /ASSISTANT AUDIT OFFICER

The Section Officer /Assistant Audit Officer (SO/AAO) is personally

responsible to the Branch Officer (BO) in charge for the efficiency of internal

arrangements and expeditious performance of the work of his section as a whole. The

duties and responsibilities are

1. Supervision and co-ordination of audit in the section.

2. Review of the vouchers audited by the Auditor/Sr.Auditors up to the limit of
Rs.1 lakh

3. Review of sanction and agreements up to Rs.1 lakh - examined by Ar/Sr.Ars.

4. Suo motu audit of all sanctions, agreements and vouchers over Rs.1,00,000/- but
less than Rs.5 lakh.
5. Scrutiny of all agreements, sanctions and vouchers involving money value of more
than Rs.5 lakh and submission to AO/Sr.AO for acceptance.
6. Maintenance of central registers and records prescribed in the Manual of
Instructions for Central Audit (MICA) etc.
7. Preparation of various statements, maintenance and closing of Calendar of Returns,
Arrear Reports, Quarterly Arrear Reports etc.
8. Processing of Part IIA paras of Inspection Reports to be sent to WM DP Cell.
9. Other items included in the quantum of audit and areas of responsibility approved
by CAG

1.3.6 AUDITOR /SENIOR AUDITOR

The Auditor/Senior Auditor is primarily responsible for all the works

connected with the completion of audit of the accounts of the Divisions marked for

detailed check, maintenance of portfolio files for schemes - Central, Centrally

sponsored and State plan, issue and pursuance of objection memos with Department.
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The General Unit Auditor will be scrutinising the sanctions of general nature,

offering opinion on cases referred to him and rendering assistance in the study of

procedure and methods.

Recording of objections in the objections book and issue of objection memos

and pursuance with the concerned departments.

Audit of vouchers and monthly accounts according to the quantum prescribed,

processing, issuing and pursuance of Audit Notes and Inspection Reports.

The duties and responsiblities of Auditor /Sr. Ar. are

(Authority: AG(Au} I Co-ord. Cell/Unit IV/ 11-4/87-88/20 dt. 29.4.87)

1. Audit of sanctions.

2. Audit of monthly account and vouchers.

3. Audit of agreements -Scrutiny of and acceptance of agreements involving money

value of less than Rs.1 lakh

4. Collection of data relating to schemes and maintenance of portfolio registers.

5. Maintenance of Objection Books.

6. Issue of Objection memos and pursuance with Divisions/ Departments.

7. Receipt of Inspection Reports from Local Audit Parties, editing and issue to
Divisions and pursuance of the same.

8. Maintenance of relevant registers and records connected with Inspection Reports.

9. Despatch of documents, extracts of Objection Book to LAPs and watching their

return.
10. Maintenance of master files consisting of all important objections and exchange of
correspondence together with sanctions and other supporting materials in respect of
each office/ Division
11. Maintenance of Statistics Register.

12. Maintenance of Register of important points noticed in audit.

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13. Maintenance of Registers of works abandoned and works on which no substantial

expenditure is being incurred for reference to local audit.

14. Maintenance of Register of pending cases.

15. Other items included in the quantum of audit and areas of responsibilities
approved by CAG
16. Maintenance of all other relevant registers and records prescribed in Codes and
Manuals (M ICA, MSO (AUDIT))

17. Any other item of work as may be assigned from time to time.

Preliminary work of WAD section before commencement of audit

1.3.7 SELECTION OF MONTHS AND TRANSMISSION OF ORIGINAL VOUCHERS

OF SELECTED MONTHS TO FIELD AUDIT PARTIES - PROCEDURE.
Headquarters should ensure that the original paid vouchers and foils of paid

cheques for the selected months are made available to the Local Audit Parties for

detailed on-the-spot check.

(CAG circular 265 Audit II/87-88 dt 1.3.89)

Issue of notice of Inspection, despatch of records for inspection and watching

and disposal of Inspection Reports.

In the case of Public Works, the WAD section concerned should send

intimations to the heads of offices concerned. The period of 15 days prescribed in

para 1.09 of OAD Manual (Works) should be regarded as the minimum and normally

20 days notice should be given to the PW Divisions.

WAD sections should collect all the documents required for inspection,

carefully arrange and bundle them in convenient packets and send them at least ten

days before the date fixed for the inspection.

In order to ensure that all documents are sent to the concerned parties in

complete shape and all the documents have been received back on completion of the
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inspection, all WAD sections should open a register in the form prescribed. The

register should be submitted to the BO for review on 20th every month.

The receipt and disposal of Inspection Reports and issue of rejoinders will also

be watched and the progress reported to Group Officer and Pr.AG(CA).

Notice of inspection to Divisional Offices/Head of Offices & intimation and other

documents to Inspection Parties.
As soon as the copies of the programme are communicated by WM, advance

notice of the intended inspection should be sent to Divisional Officers by the

WAD/RA (TWAD)/RA(H) so that the officers could initiate advance action by

issuing instructions to their staff in the Division and subordinate officers to make

available the records to the Inspection Parties.

Simultaneously, or at least a month in advance of the date of commencement

of inspection, action may be taken to collect necessary particulars for selection of sub-

division, work for work analysis and the month of account for detailed check. The

accounts for March/September should preferably be referred to for selection of works

for analysis. The selection should be meaningful, affording and should have scope for

comment (eg., large excesses over estimates, no outlay for long time, prolonged

execution, etc.) Maintenance works should normally be avoided for selection of work

analysis unless the Division is wholly a maintenance Division. Based on the

particulars collected, the sub-division, name of work, the month of account for test-

check etc., should be got selected by Group Officer.

On selection of month, work etc., for analysis, requisition for vouchers/cheque

foils should be sent to AG/A&E.

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A fortnight before the scheduled date of inspection, another notice should be

sent to the Divisional Officers /Heads of Offices concerned requesting them to keep

the specified records etc, in readiness.

Simultaneously, the Inspection Parties should also be supplied with the copies

of the above intimation, documents and preliminary files regarding month of account

and names of the works to be analysed.

These should be sent with a covering letter addressed to the AAO of the

Inspection Party, C/o. The Head of Office concerned to be inspected. On the

envelope, a note may be written for postal authorities to “Await arrival of the

Inspection Party on …………”.

All these items of work should be completed a fortnight before the scheduled

date of commencement of inspection (or at any rate, well before the date of

commencement of inspection.)

In order to ensure that action as above has been properly taken, a register in

two parts in the forms enclosed should be maintained by WAD. It may be closed and

submitted weekly to the Branch officer on every Monday and monthly to Group

Officer on 15th of every month. (A memo of inspection may be pasted in the Register

for this purpose). Due dates may be noted in the Calendar of Returns.

Transmission of vouchers and inspection documents to Local Audit Parties

(Works)

A register should be maintained by WAD while sending vouchers and

documents to LAPs (Works)
i. Date of receipt of intimation of local audit from WM
ii. Date of requisition sent to the office of the AG(A&E)/PAO
iii. Date of receipt of vouchers/documents from Works Compilation/LA
sections etc of AG(A&E)/PAO
iv. Date of despatch of vouchers/documents to LAPs
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v. Date of receipt of vouchers/documents from LAPs after completion of

local audit.
vi. Date of return of vouchers/documents to the sections of the
O/o.the AG(A&E)/PAO.
The register as prescribed should be submitted weekly to the Branch Officers

on every Monday and on the 10th of every month to Group officer.

AG(Au)I/WM/Gl/15-2/84-85/368 dt 17.11.1984

1.3.8 PREPARATION OF DRAFT INSPECTION REPORT

The Inspecting Officer should finalise the draft inspection report and despatch

it to the Central Office on the last day of the inspection of the Division. If the report

is not received within three days from the completion of inspection, the inspecting

officer should be reminded demi-officially. Serious cases of delays should be brought

to the notice of Group Officer/Pr.AG.

The time limit prescribed for the finalisation and despatch of an Inspection

Report is 28 days from the date of the completion of the inspection of the Office as

indicated below:-

1 Receipt of the draft report from the 5 days from the last day of
IO including transits to the section. inspection
2 Disposal of report in the section 6 days
3 Time for scrutiny by the BO 4 days
4 Scrutiny by Group Officer 3 days
5 Time for sending to typing 1 day
6 Time for typing 4 days
7 Time for comparison of report 2 days
8 Getting the fair copy approved by BO 2 days
9 Time for despatch 1 day
28 days

The draft Inspection Reports relating to PWD audit may be sent direct to the

concerned Branch Officers of WAD sections.

WM Co-ordn. /GL/14-11/87-88/34/dt 20.5.87.

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Inspection Report should be drawn up in three parts as indicated below:-

Part I : (a) Introductory
(b) Outstanding objection from the previous reports in brief.
(c) Schedule of persistent irregularities.
Part II: Section A: Irregularities involving recoveries, question of principles or
losses etc., which are likely to materialize into Draft Paras for the
Audit Report.
Section B: Other irregularities, which, though not major, but are
important enough to be brought to the notice of higher authorities
and followed up by the Pr.AG.
Part III: Test Audit Note containing minor irregularities procedural
irregularities in respect of which the Head of office assured to follow
the correct procedure in future should be noted in this schedule.
The results of the scrutiny should be put up in the form given below, the

remarks of the section being indicated briefly in column 2 thereof.

Paragraph of Remarks of Remarks of B.O Orders of Group

the report section Officer
(1) (2) (3) (4)
The Inspection Reports will be scrutinized by the concerned WAD sections

and submitted with the approval of the Branch officer to the Group Officer direct for

his approval.

Inspection Report format - preparation of Test Audit Notes.

The items such as want of estimates, excess over estimates, want of

completion reports, works for which expenditure had not been incurred for the past

few months, routine comments on Schedule of Settlement with Treasuries (SSWT),

Register of Deposits etc., which do not merit inclusion in the Inspection Report

portion are to be included in Test Audit Note (Part III) of the Inspection Report with

effect from August 1987 and issued by the Inspecting Officers on

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the spot and a copy of the Part III should be attached to Inspection Report.

Compliance of the points in the Test Audit Notes should be seen during the next

inspection and suitable comments made in the Test Audit Notes or Inspection Reports

according to the gravity of irregularity or laxity of the department in not rectifying

things. The Inspecting Officers should also discuss all the points with the Heads of

offices and drop routine points which can, in turn be included in the schedule of items

settled on the spot which may be filed along with draft Inspection Reports.

(WM(Co-ordn)/14-11/87-88/Genl/123 dt 10.8.87)
The Inspection Report should be typed in quadruplicate. The first copy will be

issued to the Head of the institution audited and the second copy to his immediate

superior authority. The third copy is office copy and the fourth one is spare copy. The

Group Officer will sign the original report (DIR) both in the forwarding memo and at

the end of body of the draft Inspection Report. The Test Audit Notes may be issued

under the signature of the Inspecting Officer during the local audit.

1.3.9 PROCESSING OF PART IIA PARAS AND OTHER IMPORTANT PARAS IN

THE INSPECTION REPORTS

The paras included in Part II A and other important paras in the Inspection

Reports have to be examined and the paras found fit for processing into factual

statements should be communicated to WM DP cell under the specific orders of the

Group Officer. If necessary, WAD sections should collect needed key documents to

strengthen the para and fullest efforts should be made to analyse the para completely.

Wherever necessary, further details have to be collected by going over to the Heads of

Departments, Secretariat etc., and only after proper examination the paras should be

sent to WM DP cell, in separate cases, with the orders of the Group Officer.
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(Audit-I/WM.Coordn/14-13/87-88/Gl/102/dt21.7.87) read with (AG(AU)I/WM©/14-

13/94-95/180 dt 17.10.94)

Issue of Reminders
The procedure as indicated in the MGP, generally, be followed for the issue of

reminders to audit objections, Inspection Reports etc., In important and urgent cases,

the Branch Officer concerned can, at his discretion, pursue the objections at a higher

level.

1.3.10 DESTRUCTION OF RECORDS OF WAD

The periods of preservation of certain Public Works account records not

detailed in Chapter-X of the MSO (Admn Vol.I) are given in Appendix XI to the

MGP.

Subject Files: The list of subject files for WAD is given in Annexure VI (Para 6.13.1)
to MGP.
All correspondence should strictly be classified among the file numbers given

therein and the letter WM must be prefixed to the file numbers relating to WM

Section. The file number of WAD Sections must be preceded by the name of audit

department and that of the PW Division concerned. Thus WAD-IV case 2-1 of 1979-

80, means that the paper is in WAD IV Case No.1 relating to .the subject 'Inspection

Reports’. '1979-80' denotes the year to which it relates.

1.3.11 IMPORTANT REGISTERS

The rules and orders governing office procedure, laid down in MGP are

applicable to WAD also except in regard to variations authorised in this or other

manuals.

Purport Register
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All documents (except those mentioned below) received in sections must be

entered in the purport register whether they require action or not.

Exceptions: Monthly account and vouchers, account documents and vouchers which

are accompanying monthly accounts.

Maintenance of the purport registers and their periodical closing will be

governed by the instructions in the MGP.

Monthly Reports

Monthly reports as prescribed in Para 7.1.1 of the MGP should be maintained

by WAD and submitted to the Pr. AG (CA) on the prescribed dates.

Returns relating to Inspection Reports to be sent by WAD I to VI

All the returns on functional nature of works audit should be submitted/sent by

each of the sections - WAD I to VI to the respective authority noted against each.
Calendar of Returns
Submission of Calendar of Returns/ Monthly Arrear Report and SOs/AAOs
note book should be regulated with reference to the procedure laid down in MGP.
The common items mentioned in circular AG(Au)I/ITA/2-4/1989-90-9
dt 12.4.91 of ITA section(Annexure) may be written in the calendar of returns as:-
Section 1: Common items
1.1. Annual 1.2 Half Yearly 1.3 Quarterly 1.4 Monthly 1.5Fortnightly 1.6 Weekly
Section 2 : Returns due to other offices.
2.1 Annual 2.2 Half Yearly 2.3 Quarterly 2.4 Monthly
Section 3: Returns due within the office.
3.1. Annual 3.2 Half Yearly 3.3 Quarterly 3.4 Monthly 3.5 Fortnightly 3.6 Weekly
Section 4: Inward returns due to be received in the section from other
sections/officers.
Section 5: Occasional returns.

A. Format prescribed for Portfolio Register

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Portfolios are to be maintained in respect of each individual scheme/project

costing Rs.25 lakh and above for Civil side and Rs.50 lakh and above for

National/State Highways and PWD, effective from 1989-90.

Cir.No:AG(AU)I/WM Scheme Cell/14-8/93-94/496 dt 17.11.98

B. Columns provided in the Portfolio Register

1. Separate folio for each scheme with the name of the scheme.

2. The orders of the State Government.

3. Central assistance sanctioned by GOI.

4. Terms and conditions of assistance.

5. Guidelines of GOI.

6. Salient features of the scheme as envisaged in the State Government order.

7. Details of implementation viz, agency to implement the scheme, schedule of

implementation, areas/units/districts to be covered etc., particulars of field

officers, their location and designation of drawing officers.

8. Physical/Financial targets.

9. Points of importance/interest which may arise on account of examination of

the orders sanctioning the schemes/continuance of the schemes.

C. Submission of register to Branch Officers/Group Officers/ECPA-I section

The Portfolio Registers should be submitted to the Branch officers concerned

on the last working day of every month and to the Group Officers concerned on the

last working day of June, September, December and March.

The Audit section shall collect the following details and maintain the register.

1. Head of Account details with sub-account no.

2. Detailed analysis of Budget Estimates for the financial year concerned.

 24

3. The Heads of Account provided with token provisions are to be watched

for eventual sanction. Reasons for carry over of any such scheme with

token provision year after year may be investigated.

4. The actuals in respect of each scheme entered in the Register should be

updated every year after the close of the annual accounts on the basis of

information available in AG(A&E) office.

5. Sanctions file specifically built up for Scheme Review Parties

6. The topics already reviewed for earlier Central/State Audit Reports may

also be indicated, wherever necessary in the Portfolio Register (year-wise)

giving reference to Audit Para number.

(Authority: Cirular No:17/91-92 AG(AU)I/ECPA-I/14-8/91-92/186

dt 7.11.1991)

7. For each Head of Account and wherever more than one scheme is

sanctioned under the same head of account, separate folios may be opened

scheme-wise (Plan or non-Plan). The schemes sanctioned during the

currency of the financial year may also be entered duly indicating the

provision of funds therefor (contingency fund or token provision or

reappropriation).

8. In selection of schemes/programmes for entry in the register, the monetary

criteria fixed may be strictly followed.

E. Half yearly Review by ECPA

The sections should send registers on the last day of June/December for the

half- yearly period ending 30/6 and 31/12.

(Circular 15/92-93 of AG(Au)I/ECPA I/14-8/92-93/102 dt 6.8.1992.)

 25

MAINTENANCE OF REGISTER OF POINTS FOR VERIFICATION DURING NEXT AUDIT

Each unit in WAD Section should maintain a separate register, in the format

suggested in ITA Note dt 20.9.96. and circulated by WM(C) in circular

No. AG( Audit)-I/WM(C)/CON. 1/96/97/245 dt 31.10.96

The format and the procedure for the maintenance and closing is given below for

strict observance.

(i) Format :

Sl.No Date of entry in Office to which Brief description of matter

NAV register the point relates requiring verification in local
audit
1 2 3 4

Ref to file Next audit Ref NO. & date in which Party No & name of
No.& para due in matter was referred to SAO/ AAO to whom
of IR subsequent Audit Party communicated
5 6 7 8

Ref No. & Result of Remarks with dated Final orders of BO/GO
date in verification initials of SO/AAO of
which reply HQ section
received
from LAP
9 10 11 12

(2) A separate register may be maintained for each unit.

(3) A copy of the item noted in the register may be kept in the concerned previous
Inspection Report file.

(4) The register may also be closed fortnightly .i.e. on 15th for the period ending last

day of previous month and again on 20th for the period ending 15th of the month and

submitted to the Branch Officer (i,e. on 15th and 20th). The register may be submitted

to the Group Officer on 8th of each month. The year wise break up details for the

closing balance may also be indicated while closing the register.

 26

(5) While opening a new register, a certificate to the effect that all the pending items
in the previous register have been carried forward should be recorded in the new
register.

1.3.12 PROCEDURE FOR SPEEDY SETTLEMENT OF OUTSTANDING AUDIT

OBJECTIONS AND INSPECTION REPORTS

Suitable instructions/guidelines for the speedy settlement of audit objections

already exist. What is required is strict observance of the existing instructions

contained in the standing guard file by the Ministries/Departments. They are

accordingly requested to review the existing procedure at Joint Secretary’s level to

ensure that strict observance of the instructions contained in the standing guard file by

all concerned and special steps to liquidate the backlog of audit objections/Inspection

Reports.

The Public Accounts Committee in their 169th report have also taken a very

serious view that the Ministries have tried to extenuate the unusual delays in settling a

large number of outstanding audit observations and have desired that responsibility

should be fixed on the concerned drawing/disbursing officer. It has also been

recommended that the outstanding audit objections with details should be shown in

the Audit Reports of the Ministry/Department, Statutory and Autonomous Bodies. It

is requested that necessary action on these recommendations may be taken by the

respective Ministries/Departments concerned and “Action Taken Notes” forwarded to

Lok Sabha Secretariat. (copy of the Lr.F 12(13) F(Co-ordn)/75 dt 27.8.75 from GOI,

MOE, Dept of Expenditure addressed to all Ministries/Departments communicated in

CAG’s circular 53 Audit II/5-87 dt 11.2.87)

 27

Clearance of the objections pending in earlier Inspection Reports

Disposal of previous Inspection Reports is one of the important items of work

allotted to the AAOs. The Branch Officer should also be actively associated in

reviewing the pendency of the items in the old Inspection Reports and also the

proposals of AAO/SOs either for settling the pending items or for their pursuance.

The AAO/SO should take up this item of work with full vigour straight from the

commencement of inspection so that by the time the BO’s supervision commences, he

will be in a position to present his finalized proposals. The Branch officer should also

go through the finalized statement and, where necessary, independently review the

pending items. The statement thus finalized in mutual consultation with BO and

AAO will form the basis for the para in the Inspection Report and the annexure to the

para should be finally got typed. Wherever paras in the previous IR are treated as

settled, the remarks of AAO/BO indicating the basis and support for treating the item

as settled should be available in rough notes. Similarly, if items in IR which are more

than two years old are proposed to be kept pending, the circumstances in which the

items are pending, the efforts made by the Division and the Inspection Party should be

recorded in the rough notes.

(Audit I/WM/CDN/1 dt 2.4.85)

Constituting of State and Departmental Audit and Accounts Committee

A State Audit and Accounts Committee was formed under the Chairmanship
of Chief Secretary to review and oversee the following matters.
1. Progress in disposal of outstanding audit objections.
2. Progress in disposal of pending Inspection Reports.
3. Progress in rendering of accounts to and reconciliation of accounts
with the AG.
4. Progress in adjustments of amounts booked under suspense heads.
5. Any other matters relating to accounts or audit.
 28

6. Working of the Departmental Audit and Accounts Committee with

Secretary to Government of concerned Department as Chairman.
7. Review of draft paras and replies thereto
[GO MS 166 Fin(Audit) dt 5.3.93]

Expeditious settlement of outstanding audit objections and paras of Inspection

reports
With reference to para 2(a) of H.Qrs Lr.800 Audit II/64-89 dt 25.7.90 on the

above subject, certain doubts have been expressed about the time limit upto which

audit objections involving overpayments should be pursued in Audit. The CAG

clarified that the paras of Inspection Reports pertaining to overpayments may be

treated as settled once the department has accepted the objection and recovery has

actually commenced. The cases should be simultaneously noted in the “Register of

Special Points to be looked into at the time of next local audit” to verify during

subsequent local audit that the amount of overpayment has been fully recovered.

(CAG circular 276 Audit II 64-89 dt 25.2.91)

Documents and papers that may be issued under the signature of SO/AAO
The following documents may be signed by the SO/AAO of WAD sections on

behalf of their Branch Officers in charge in addition to those listed in MGP.

1. Call for missing documents in connection with SE/EE agreements.

2. Half margin memo asking if the recovery of a charge objected to in audit has been

effected.

Note1: Requisition for original documents for the purpose of verification with the

copy already received in this office should not be made except under very special

circumstances and with the express approval of the BO in charge of the section.

Generally the examination of such documents should be conducted during the course

of inspection.
 29

Note2: All cases in which the subject is important by itself, or a question of principle

or policy is involved or an interpretation of rules is proposed to be given not in

accordance with the existing practice should be submitted to Pr.AG through the

Group Officer.

Note3: In the case of Inspection Reports, all rejoinders should be got approved by the

Branch Officer, the orders of Group Officer being obtained at the discretion of the

Branch Officer. The final file order, when all the objections are settled, should also

be approved by the Branch Officer.

 30

CHAPTER 2
Para No. Gist of the Para Page No.
2.1 ORGANISATION STRUCTURE OF PWD 30

2.1.1 Introduction 30

2.1.2 Superintending Engineer 34

2.1.3 Executive Engineer 34

2.1.4 Divisional Accountant 35

2.1.5 Sub-Divisional Officers 35

2.2 AN OVERVIEW OF WORKS ACCOUNTS 37

2.2.1 General 37

2.2.2 Advances to contractors 39

2.2.3 Tools and Plant Account 39

2.2.4 Road Metal Account 40

2.2.5 Suspense Heads 40

2.3 RESPONSIBILITY FOR ASSESSMENT & 43

RECOVERY OF REVENUE OR OTHER DUES
RELATING TO PWD

2.3.1 Divisional office 43

2.3.2 Divisional Accountant 43

 31

CHAPTER 2

2.1 ORGANISATION STRUCTURE OF PWD

2.1.1 Introduction: The Public Works Department is one of the oldest and

prestigious Departments of the Government of Tamil Nadu. The PWD is in charge of

formulating and implementing major, medium and minor irrigation schemes,

operation and maintenance of irrigation systems and construction and maintenance of

buildings for State Government Departments and Agencies. The PWD has been

re-organized into two wings viz., Water Resources Organisation and Buildings

Organisation from December 1995. The objective of WRO is to ensure effective

management and distribution of surface and ground water for its optimum utilisation

in a rational and scientific manner to maximize production/productivity of agriculture

and all other water using sectors. The objective of Buildings Organisation is to

ensure cost effective methods of building construction and maintenance by using

modern technology.

(A) WATER RESOURCES ORGANISATION (WRO)

WRO was formed towards effective implementation of the Water Resources

Consolidation Project (WRCP) as a first step through improved functional

specialization.

Under WRO, water management in the State has been decentralised along

river basins and the entire State has been divided into four regions viz., Chennai,

Tiruchirappalli, Pollachi and Madurai. A Basin Manager in the rank of Chief Engineer

heads each basin.

WRO is functioning with the following Chief Engineers:-

(1) Engineer-in-Chief, WRO, Chennai.
 32

(2) Chief Engineer, Plan Formulation, Chennai.

(3) Chief Engineer, Design, Research and Construction Support, Chennai.
(4) Chief Engineer, Operation and Maintenance and Inter-State Water,
Chennai.
(5) Chief Engineer, State Ground and Surface Water Resources Data Centre,
Chennai.
(6) Regional Chief Engineers – Chennai, Madurai, Tiruchirapalli, &
Pollachi @Coimbatore
(7) Chief Engineer & Director, Institute of Water Studies, Taramani, Chennai.
(8) Chief Engineer, Irrigation Management Training Institute , Tiruchirapalli.

(B) BUILDINGS ORGANISATION

The Buildings Organisation has 16 Circles (13 Circles for Civil Works and 3

Circles for Electrical Works) and 52 Divisions (45 Divisions for Civil Works and 7

Divisions for Electrical Works)

(i) The Buildings Organisation of PWD is vested with the responsibility of

planning, designing and construction of public buildings and allied
works including land acquisition in accordance with the needs and
requirements of various Government Departments of the State
Government. Besides, construction and erection of monuments and
memorials are also carried out by this organisation.
(ii) Construction of buildings and other works for the State and Central
Government Undertakings, Corporations such as ESI Corporation,
Universities etc.
(iii) Maintenance of all Government buildings, monuments and memorials
(iv) Maintenance of Inspection Bungalows and Circuit Houses, Raj Bhavan
at Chennai and Udhagamandalam, Secretariat, Government Estate,
MLAs’ Hostel, Judges, Ministers and other VVIP Bungalows
(v) Development works under MLA and MP Local Area Development
Schemes, valuation of buildings referred to by the Judicial and Vigilance
and Anti-corruption Departments, issue of Structural Stability Certificate
for cinema theatres and public buildings and Reasonableness of Rent
Certificate for the private buildings occupied by Government Offices
 33

(vi) Arrangements for VIP & VVIP visits such as stage erection, barricading
arrangements, providing Public Address System and lighting
arrangements.
Buildings Research Station at Taramani, Chennai headed by an Executive

Engineer under the control of Superintending Engineer (Planning and Designs Circle)

renders the following services to the public.

(a) Organising training programmes for engineers and artisans through “PWD
Kattida Maiyam”
(b) Taking up consultancy and construction works on behalf of “PWD
Kattida Maiyam”, producing cost effective construction materials and
elements and marketing them for use in Consultancy Projects.
(c) Undertaking material testing, basic and applied research studies.
(d) Consultation service by inspection of distressed buildings to recommend
renovation and rehabilitation techniques to be adopted to bring them back
to their original condition.
(e) Use of fly ash/pond ash in building construction *
(f) Use of quarry dust as substitute for sand in concrete work *^

* With a view to protect the environment around coal or lignite based thermal power plants
from pollution and also with a view to preserve the natural resources ie., clay which is being
widely used for the manufacture of bricks, Government of India ordered by notifications issued
during 1999 as amended in 2003, that Fly-Ash Bricks should be used in the construction of
buildings, within a radius of 100 km from coal and thermal power plants. Government of India
further ordered that Pond Ash should only be used for reclaiming the low-lying areas, embankment
for road formation etc.
Pursuant to the above orders of Government of India, the Buildings Organisation of
PWD has started using Fly- Ash Bricks/Blocks, in lieu of conventional clay bricks in all the
construction works with effect from 1.5.2004 and accordingly included the item of construction of
masonry using Fly-Ash Bricks in all the estimates and Tender Schedules. Similarly, it had been
decided to use Pond Ash for filling the basement and reclaiming the low lying areas around the
buildings.
 34

*^ Quarry Dust, a waste product obtained while crushing stone, is polluting the environment
around stone/granite quarries causing health hazards to the villagers residing nearby. Further
“sand” a natural resource and an important constituent of building construction is slowly
becoming a rare and costly commodity. Hence, with a view to reduce over exploitation of sand,
reduce the cost of construction and prevent the pollution of environment around the stone/granite
quarries, it is now proposed to replace sand in the concrete works to a tune of 30% by Quarry
Dust. Experiments in this regard are being conducted in the Building Research Station of
Buildings Organisation of PWD.
 35

(c) ARCHITECT WING

An Architect wing is functioning separately under the Chief Architect in the
rank of Chief Engineer. The Architect wing evolves architectural plans for all
Government Buildings constructed by PWD. This wing evolves preliminary
drawings, detailed plans, elevation and cross sections for all new buildings and
provides colour schemes.

2.1.2 SUPERINTENDING ENGINEER

The administrative head of a circle is the Superintending Engineer (SE). He

is responsible to the CE for the administration and general professional control of

Public Works Department officers within his circle.

The SE should review the works in progress periodically and specifically state

in each review whether a revised estimate is necessary and whether the work is

executed economically and, thus, provide technical expertise to the EEs under his

control.

The SE should generally supervise and ensure correct assessment and

realization of revenues under his circle. The SE has powers to inspect works under

his jurisdiction and conduct certain mandatory percentage of check of major works.

(For details refer to the Delegation of Powers)

2.1.3 EXECUTIVE ENGINEER

The head of a Division (either regular or Special Division) is the Executive

Engineer (EE). He is responsible to SE for execution and management of all works

within his Division.

EE is responsible to preserve all the buildings and prevent encroachment on

Government lands under his charge. Further, EE is responsible for the correctness of

the original records of cash and stores, receipts and expenditure and for the
 36

submission of complete accounts and vouchers to AG(A&E) as envisaged in TNPWA

Code.

DIVISIONAL ACCOUNTANT

The Divisional Accountants are posted by AG (A&E) to assist the Divisional

Officers (Executive Engineers) in discharge of their responsibilities. Their cadre is

maintained, operated and controlled by AG (A&E) to ensure the independence of the

Divisional Accountants/Divisional Accounts Officers as far as their functions are

concerned.

The Divisional Accountant is responsible for the correct compilation of the

accounts of the Division. As he is specially trained, he should be able to guide the

Executive Engineer, whenever any doubt arises regarding the application of financial

rules and orders.

As a primary auditor, he is responsible for applying certain preliminary checks

to the initial accounts, vouchers, etc. He should inspect at least once a year, the

accounts, records of Sub-Divisional Officers and check a percentage of the initial

accounts.

2.1.5 SUB -DIVISIONAL OFFICERS

The Division is divided into sub-divisions, which are under the charge of an

Assistant Executive Engineer. He is responsible to the Executive Engineer in charge

of the Division, for the management and execution of works within his sub-division.

He must also prepare and render monthly accounts in respect of the sub-division to

the Division every month in case he has cheque-drawing powers. Each sub-division
 37

is divided into various sections each headed by an Assistant Engineer or Junior

Engineer.

The organization chart of PWD explaining the hierarchy in the Department is

furnished at the end of the manual to facilitate easy reference.

 38

2.2 AN OVER VIEW OF WORKS ACCOUNTS

2.2.1 GENERAL
The Divisional Officer ie., the Executive Engineer of a Division is the

primary disbursing officer who obtains funds required for all disbursements connected

with the execution of works by cheques drawn directly on Civil Treasury or Banking

Treasuries. All departmental receipts collected by him or his subordinate officers are

remitted in lump sum into Government Accounts directly.

The Divisional Officer maintains the initial accounts of all transactions, the

detailed accounts of works, cash and stores and the accounts of works executed by

him.

Public works transactions may be grouped under the following heads:-

i) Expenditure heads - for charges adjustable finally in Divisional accounts.
ii) Revenue Heads - for revenue receipts adjusted in Divisional accounts.
iii) Remittance Heads –PW-I Remittance, PW-II Cheques, PW-III Other
Remittances
iv) Suspense Heads – Purchase Suspense, Stores & Stock Suspense, Workshop
Suspense, Miscellaneous Public Works Suspense
v) Deposit heads – 8443 PW Deposits (Class I to V)
The Divisional Accountant working under the Divisional Officer performs

three-fold functions of an Accountant, an internal checker and a Financial Assistant.

A monthly account of the receipts and disbursements is compiled by the

Divisional Accountant under the supervision of the Divisional Officer and submitted

to AG(A&E), who incorporates the account after certain preliminary checks in the

general accounts of the State.

Initial records upon which the accounts are based are muster rolls,

measurement books and work charged establishment bills.

 39

Main accounts which are kept in addition to those kept in sub-divisions are

contractor’s ledger, register of works and transfer entry book.

Important suspense heads in Divisional accounts are

(i) Materials purchase settlement suspense
(ii) Stock
(iii) Miscellaneous Public Works Advances
(iv) Works shop suspense
(v) Cash settlement suspense (abolished in 1994)
Three classes of non-Government works which the PWD is required to

undertake are (i) Deposit works (ii) Local Loan works and (iii) Takkavi works.

When items like tools & plants, road metal and materials are issued to works

from stores, the concerned work to which these materials are issued are debited and

balance stores, if any, are kept under suspense “Stock”. This is controlled by

numerical accounts as well and the balances are shown both in numerical accounts

and value accounts.

The following important accounts are to be submitted by the Division to

AG(A&E) in addition to the monthly accounts along with their vouchers dockets,

schedules etc:

(i) A supplementary account for March covering all transfer entries and
corrections made in the accounts of the year after the submission of
accounts for March and subsequent sets of supplementary accounts as may
be necessary or authorized by AG/A&E.
(ii) Half yearly register of stock, annual register of tools and plant and account
of interest bearing securities.
(iii) Proforma accounts in the prescribed form for workshops etc to ascertain
financial results of their working.
(iv) Annual certificate of balances:
Certificate 1. Stock
2. Workshop suspense
 40

3. Other suspense accounts & deposits

4. Works accounts
5. Arrears of revenue
These above returns are to be submitted to AG (A&E) within six weeks of the

submission of monthly account for March.

2.2.2 ADVANCES TO CONTRACTORS

(a) Secured advances given on the security of materials brought by the
contractor on the site of work. When the amount is paid, it is entered
under suspense head – contractors secured advances (Works Abstract)
and Contractor’s ledger.
(b) Advance payments for work actually executed but not measured.
Such an advance is made only on the certificate of SDO that not less
than the quantity of works paid for has actually been done. This is
entered under the suspense head “Contractors – Advance payments” in
Works Abstract.
(c) Lump sum advance payment- Make a Hand Receipt in respect of the
bill which is under check in Division but payment of which is likely to
be delayed. Entered under suspense head “Contractors – Other
Transactions” in the Contractor’s ledger.
(d) Petty Advances- Paid in the interest of work up to Rs.50 shown under
Advance /Ledger.
Stores Categories.
1. Stores debited to suspense Stock
2. Stores debited to Final Tools and Plant, Road Metal, Material
heads charged to works

2.2.3 TOOLS AND PLANT ACCOUNTS

Quantity account value is debited to minor head “Machinery and Equipment”

in the case of ordinary tools and plant – required for general use of Division. Special
 41

tools and plant which are required not for general purposes but for a specific work are

debited to the work or project.

Register of Tools and Plant

A consolidated account of receipts, issues and balances is maintained in

SDO’s office. This consists of

Part I Articles in hand

Part II Articles temporarily lent/lent out
Part III Shortages awaiting adjustments

2.2.4 ROAD METAL ACCOUNTS

Quantity Account: All road metal required for the maintenance of a road is

debited to sub head “Repairs construction” under the major head concerned. When

road metal is acquired specifically for the work of construction of a road or other

works, its cost is debited to the estimate for such construction.

Other stores: In the case of other materials, when purchases are made

generally for works, the cost is accounted for under suspense “Stock” and for

materials purchased for a particular work the cost is debited to that “work”.

2.2.5 SUSPENSE HEADS

(a) Within the work:

1. Materials
2. Contractors – Advance payment/ Secured Advance /Other
Transaction
3. Labour
4. Land Acquisition
(b) Out side work:
5. Materials Purchase Settlement Suspense
6. Stock
7. Miscellaneous Public Works Advances
 42

8. Workshop Suspense
9. Cash Settlement Suspense Accounts

2.2.6 NON-GOVERNMENT WORKS

1. Deposit Works: Works undertaken on behalf of a local body or some

other party. Before a deposit work is carried out, the estimated expenditure

is recovered in advance and credited to 8443 – Civil Deposits – PW

Deposits.

2. Local Loan Works: Works executed on behalf of a Municipality, Port

Trust or a Corporation when the cost of work is to form part of loan given

to it by Government for the purpose.

3. Takkavi works: Works of construction or maintenance relating to water

courses. Classified by AG under “8401- Loans” for Agri – other Agri

loans. The Divisional Accounts “8550- Civil Advances other Advance –

Takkavi works Advance”

2.2.7 ISSUE OF MATERIALS

1. Contractor: Materials should be issued in accordance with the

stipulations in the contract at the rates specified therein. If the supply of

materials is not prescribed in the contract, the rate should be charged only

on authority of the Divisional Officer at ‘rate plus storage charges’ or

market rate whichever is higher. No carriage or incidental charges should

be borne by Government in this case.

2. Direct to works: The value of materials debited at prescribed rate to

suspense head “Materials” in the case of major work.

Credit (i) stock – at issue rate of the material issued from stock
 43

(ii) Material Purchase Suspense Accounts - at the rates payable to

supplier or supply Division or Department if they are obtained from
other Division or Department. In addition, a numerical account
known as MAS Account (7F A/c) is to be kept to watch receipt, issue
and balance of materials.
 44

2.3 RESPONSIBILITY FOR ASSESSMENT AND RECOVERY OF

REVENUE AND OTHER DUES

2.3.1 The Divisional Officer is primarily responsible for the correct and prompt

assessment and realization of all revenue and other dues. This responsibility extends

to all the properties in his charge. General responsibility for assessment and recovery

of revenue and other dues includes

i. Sale of miscellaneous properties such as trees, grass etc by public

auction periodically to the best advantage of Government after giving
due publicity.
ii. Sale or proper utlisation of old and fully grown trees on lands in charge
of PWD.
iii. Assessment and collection of all irrigation revenues
iv. Collection of rent in respect of buildings intimated to Treasury Officers
for recovery from pay bills.
v. Assessment and collection of revenue from sale of water for purpose
other than irrigation from all sources, whether in charge of PWD or
Revenue Department.
vi. Collection of all cash in respect of all sales of water for purposes other
than irrigation.

2.3.2 The Divisional Accountant is responsible for promptly reminding the

Divisional Officer, Sub-divisional officers etc for early recovery of the amount due.

The Divisional Officer or other executive officer concerned should be held

responsible for the actual collection of the revenue.

The audit office exercise a complete check in respect of items of which it

becomes cognizant through the accounts submitted to it eg., new buildings or

improvements to existing structures. As regards other items of revenue mentioned in

para (1) above it only

 45

i. watches the realisation of such items of revenue or other dues of which it

becomes cognizant through the accounts or other wise;
ii. test audits during inspection the items of revenue which are regulated by
prescribed scales with a view to ensuring that there are no defects in
system
iii. sees that in respect of deposit works, the percentage dues are correctly
charged
[Paras 4.3.7, 4.3.8 and 4.3.30 of MSO(Audit)]
 46

CHAPTER 3

Para No. Gist of the Para Page No.

3.1 IMPORTANT FUNCTIONS OF WORKS BRANCH OF 46

AG(A&E)

3.1.1 Important functions of PWC branch 46

3.1.2 Public Works Accounts compilation 48

 47

CHAPTER 3

3.1 IMPORTANT FUNCTIONS OF WORKS BRANCH OF AG (A&E)

3.1.1 IMPORTANT FUNCTIONS OF PWC BRANCH

1(a) BRIEF OUTLINE ON THE IMPORTANT WORKS CARRIED OUT

AT PWC BRANCH
The Works Compilation Branch of AG(A&E) functions under the control of

DAG(Accounts). There are six sections namely PWC-I to PWC VI each headed by

an AAO/SO with overall supervision by an SAO/ AO.

2. The monthly accounts, schedules, schedule of documents and vouchers

received in the office of AG(A&E) (PWC Branch) are subjected to a preliminary

check in that office in accordance with the instructions contained in M.S.O (A&E)

The various important functions allocated to each of these sections are as

follows:
(a) PWC-I
i) Maintaining Register of Receipts and Charges of TNPW and Civil
offices acting as PW disbursers
ii) Compiling small accounts consisting of PW accounts of TNPW
Divisions
iii) Maintaining Consolidated Abstracts of Receipts and Charges of
PW Divisional Accounts
iv) Preparing Appropriation Accounts relating to PWD(State) in
addition to Rural works etc.,
v) Maintaining P.W. Contingency Fund and Appropriation Audit
Register
vi) Maintaining the “Reconciliation Register” for reconciling
Departmental figures with AG’s figures.

(b)PWC-II
i) Functions as works compilation consolidation section;
ii) Consolidates Monthly Arrear Report of P.W. Branch

iii) Compiles annual financial schedules and administrative accounts

and all annual return relating to Irrigation Projects
 48

iv) Prepares statement 3 showing the financial results of irrigation

projects for inclusion in the Finance Accounts;
v) Deals with orders of cases of general nature or involving
interpretation of rules
vi) Examines papers requiring the opinion of that section marked by
AOs through DAG(Accounts)

(c) PWC-III
i) Collects debit vouchers and credit schedules in support of debits
and credits under suspense heads and Departmental Adjusting
Accounts and furnishes them to DC sections for adjustment
ii) Maintains Broad sheets in respect of 8782 I Remittance (State);
II cheques (State); III OR (a) item adjusted by Civil Deposits
iii) Deposits 8443 Civil Deposits Accounts (state) and 8658 suspense
CSSA
iv) Receives from LA 6 section a consolidated Treasury-wise
statement of accounts booked under I Remittances and II Cheques.
v) Also takes up direct reconciliation of PW and Treasury figures in
cases where Schedules of settlement with treasuries (SSWT) have
not been received
vi) Watches ultimate clearance of SSWT in addition to taking up of
review of outstanding items.

(d) PWC IV, V & VI

i) Receipt of accounts from PW Divisions
ii) Prepares list of wanting vouchers
iii) Maintains a register to watch receipt of monthly accounts sent to
Audit (WAD section) on requisition
iv) Also watches that in the cases of closure or merger of Divisions,
the balances are transferred to the successor Divisions and
exhibited in their accounts.
v) Issues authorization to Divisional Officers to draw cheques in one
or more district treasuries within his jurisdiction.
vi) On completion of check of accounts of Division, records a
certificate to that effect;
 49

vii) Posting of Works Register and checking of schedule of Works

expenditure with the relevant schedule Dockets.

3.1.2 PUBLIC WORKS ACCOUNTS COMPILATION METHODOLOGY

In PWC IV, V and VI sections, the monthly accounts of Public Works

Divisions are received between 10th and 15th of every month. If the same are not

received on 16th of succeeding month, telegrams, phone calls are made invariably to

the Divisional Officers/SEs to expedite the despatch of monthly accounts/vouchers. If

the same are not received before the due date in spite of reminders, the accounts are

excluded from the monthly compilation for that month under the orders of AG. If the

exclusion of accounts continues with the same Division, the same should be reported

upon in the Annual Review of the working of PW Divisions and the matter of delay

brought to the notice of Government.

On receipt of the monthly accounts, the following checks are exercised by the

Accountants of PWC IV, V & VI initially before the same is handed over to

compilation section for booking:

i) Whether accounts are received in complete shape with all supporting

schedules and vouchers?
ii) Whether schedules attached with monthly accounts are in proper form?

iii) Whether the figures shown in the receipt side & disbursement side tally
with the totals of the items concerned appearing in various schedules?
iv) Whether the classification noted in the schedules as well as in the monthly
accounts are correct?
v) Whether the opening cash balance agrees with the closing cash balance of
previous month and that the figure “Cash balance diminished/increased” is
equal to the difference between opening and closing cash balance?
vii) Whether the monthly accounts are duly signed both by the DA/DAO and
by the Divisional Officer?
On completion of preliminary checks exercised by the Accountants in PWC

IV, V & VI, the accounts are entered in the Accountants’ Note Book of the respective
 50

units and handed over to the clerk of PWC-I section for booking. The transactions in

respect of all divisional accounts are recorded separately in 1) Detail book for Public

Works Receipts 2) Detail book for Public Works Charges.

The totals under each head for the month along with grand total are to be

arrived at. The Major head totals are taken to Monthly Civil Accounts and forwarded

to Book I section for incorporating the same in the Detail Book of the Book section.

Then the details of classified Abstracts in respect of Public Works transactions

are prepared in respect of the following which are similar to other “Departmental

classified Abstracts”-

i) Revenue Receipts

ii) Receipts & Recoveries on Capital Account

iii) Refunds of revenue classified under Major, Minor, Sub and Detailed
heads.
iv) Other expenditure transactions classified under major and minor heads
and other heads of accounts as are declared to be units of
appropriation.
v) Debt head(including remittance) transactions (under Major, Minor,
Sub heads)
vi) After transferring the PW figures (small accounts) to Book section,
subsidiary accounts relating to various major heads are prepared and
transmitted to DC-III section in respect of major heads operated by
them. In VLC, the small accounts & subsidiary accounts are generated
simultaneously after the classified abstract booking is completed by
PWC compilation section.
Reconciliation certificates from the controlling offices are also watched by the

compilation section. Errors in classification detected during the accounting year,

necessary transfer entry is also proposed on ascertaining budget provision allotted to

the respective heads of accounts.

The entire process of compilation of PW Accounts and its merger with the

State Civil Accounts is pictorially explained at the end of this manual..

 51

Note on compilation procedure adopted after the introduction of computers

After the introduction of computers and the VLC package the following

methods are involved in the Accounting procedure.

Console operators of PWC-I section, after completing the booking portion of

the Divisional accounts, hand over to the Data Processor of VLC for final

authorisation. After the figures are authorized, the same would be automatically

generated to Civil accounts in Book sections and concerned DC sections by way of

small accounts and the respective Detail Books are filled in with the works figures as

Civil Accounts are generated Major-head-wise only and not as per the sub-accounts

maintained at DC/PW sections.

 52

CHAPTER 4
Para No. Gist of the Para Page No.

4.1 PROGRAMME & PROCEDURE OF AUDIT 55

4.1.1 Audit of PW transactions 55

4.1.2 Programme for audit of Divisional Accountants 55

4.1.3 Procedure for taking up Audit 56

4.1.4 Submission of vouchers by Divisions to AG 56

4.1.5 Current review of Audit 57

4.1.6 Quantum of Audit and areas of responsibility 58

4.1.7 Completion of Audit- certification 60

4.1.8 Questionnaire for Audit 64

4.2 GUIDELINES FOR CONDUCTING CENTRAL AUDIT 71

4.2.1 First & Final bills 71

4.2.2 Final Bills 72

4.2.3 Running Account Bill 73

4.2.4 Hand Receipts 73

4.2.5 Transfer Entry Orders 74

4.3 GUIDELINES FOR CONDUCTING CENTRAL AUDIT

75
(WORKS ESTABLISHMENT)

4.3.1 Establishment Audit Procedure 75

4.3.2 House Rent Allowance 76

 53

4.3.3 City Compensatory Allowance 78

4.3.4 Dearness Allowance 78

4.3.5 Training Allowance 79

4.3.6 Personal Pay 79

4.3.7 Subsistence Allowance 80

4.3.8 Leave Travel Concession 81

4.3.9 Fixed Travelling Allowance 82

4.3.10 Travelling Allowance 82

4.3.11 Transfer Travelling Allowance 86

4.3.12 General Provident Fund 88

4.4 AUDIT PRINCIPLES 92

4.4.1 General 92

4.4.2 Waiving of objections 92

4.4.3 Persistent disregard of rules 93

4.5 AUDIT NOTES 95

4.5.1 Format 95

4.5.2 Correspondence 96

4.5.3 Maintenance of Objection Book 97

4.5.4 Money value of objections 98

4.5.5 Overlapping of objections 98

 54

4.5.6 Objections to insufficient sanctions 98

4.5.7 Clearance of objections 98

4.5.8 Watch over objection and special reports 99

4.5.9 Formation of master files for each office / Division 99

4.5.10 Statistical sampling technique 100

4.6 AUDIT OF SANCTIONS 101

4.6.1 Scrutiny and review of sanctions 101

4.6.2 Audit against sanctioned expenditure 101

4.6.3 Sanction to projects 102

4.6.4 Lapse of sanction 103

4.7 AUDIT OF CONTRACTS 105

4.7.1 General 105

4.7.2 Types of contract 105

4.7.3 Scrutiny and acceptance of contracts and agreements 106

4.7.4 Audit of agreements 106

4.7.5 Sanction of contracts 107

4.7.6 Splitting up of fabrication work 107

4.8 AUDIT OF RECEIPTS AND ACCOUNTS OF STORES 108

AND STOCK

4.8.1 General 108

4.8.2 Stores and stock 108

 55

4.8.3 Stock account 109

4.8.4 Tools and Plant in PW 109

4.8.5 Accounts of sale 110

4.8.6 Revised procedure for stores transaction 110

 56

CHAPTER 4

AUDIT OF ACCOUNTS – CENTRAL AUDIT

4.1 PROGRAMME AND PROCEDURE OF AUDIT

4.1.1 AUDIT OF P.W. TRANSACTIONS

The audit of Public Works transactions should be conducted in accordance

with the instructions and procedures laid down in the Manual of Departmental Audit

sections. The special procedures applicable to each class of transactions are set out in

the relevant chapters of the CAG’s MSO (AUDIT) with due regard to the relevant

rules in the Public Works Departmental code and the financial rules of the

Government concerned.

(a) The primary functions of audit are to ensure correctness of the accounts and

regularity and propriety of individual transactions. While observing financial

rules and orders, more rigid literal enforcement of such rules and orders

should be avoided, lest, it would result in wholly unintelligent audit.

(b) As a general rule, instances of trifling errors and trivial irregularities should be

avoided and more time and attention devoted to investigation of really

important and substantial irregularities.

4.1.2 PROGRAMME OF CENTRAL AUDIT

A programme for audit of the accounts of the Divisions should be drawn up by

the section and got approved by the Branch Officer before 20th of every month. It

should be seen, in particular, that all the accounts are completely audited by the 6th of

the second succeeding month to which the accounts relate, and a certificate of

completion of audit submitted to the Principal Accountant General on the 10th

following.
 57

The classification of vouchers should be carefully scrutinized and checked

with the cash accounts in respect of vouchers selected for audit.

Quantum of audit to be conducted is indicated in the relevant Memorandum of

Instructions of the Comptroller and Auditor General.

A record of vouchers selected for audit (percentage audit) should be

maintained in Form No: SMI 1-3, the orders of selection being written by the Branch

Officer. The AAO/SO has to certify and report to the Branch Officer that all the

vouchers selected for audit have been duly audited.

4.1.3 PROCEDURE FOR TAKING UP AUDIT

The audit should be taken up immediately on completion of accounting work

in the office of the AG(A&E) every month. The Senior Auditor/Auditor of WAD

section should examine the schedules, schedule dockets, vouchers, etc., received in

support of the Monthly accounts and audit them in detail in accordance with the

instructions prescribed. Audit of the schedules and vouchers assigned to AAO/SO

will be conducted by him. Like-wise, audit of the vouchers need not wait for

completion of posting in Works Registers by Accounts office. In cases where posting

is lagging behind, the position should be brought to the notice of AG(A&E).

(Para 4.2.5 of MSO Audit)

4.1.4 SUBMISSION OF VOUCHERS BY DIVISIONS TO AG

Monetary limit for submission of vouchers with the monthly accounts of PW

Department to AG was enhanced from Rs.250 to Rs.1000 with following exceptions

viz.,

(a) First & Final bill of works.

(b) Running account bills of works

 58

(c)Running account and final bills of works, which have to be submitted with

the monthly accounts irrespective of the amount.

4.1.5 CURRENT REVIEW OF AUDIT

The vouchers received with the monthly accounts and audited by the Sr.Ar/Ar

should be reviewed to the extent prescribed in para 4.2.7 & 4.2.8 of MSO Audit by

the AAO. During his review, the AAO should see the requirements of audit against

propriety and the efficiency audit are kept in mind. The Sr.Ar/Ar should be able to

finalise the audit memos on his own, but on important or doubtful matters, he may

seek the guidance of AAO. The AAO should examine the audit notes prepared by

Sr.Ar/Ar and satisfy himself that the objections raised are in order. He should review

and edit them and add value to it from his experience.

(Para 4.2.7 & 4.2.8 of MSO Audit)

CURRENT REVIEW OF AUDIT BY THE AAO/SO AND BO

The extent of review of vouchers by AAO/SO and Branch Officer are detailed

in the Secret Memorandum of Instructions issued by this office (vide para 28 & 29)

and Memorandum of Inspection regarding the extent of audit issued by CAG

(vide paras 16&17). However, the quantum of audit and areas of responsibility

stipulated in the annexure on integrated audit should strictly be adhered to.

 59

4.1.6 QUANTUM OF AUDIT AND AREAS OF RESPONSIBILITY

-WORKS AUDIT DEPARTMENT

Items Of work Extent Auditor AAO/SO A.O

1 2 3 4 5
1 Check of monthly Selected Full Full Important
accounts of a Division Division of objections
the month to be seen
2 Scrutiny of schedule of General Full Supervisory Supervisory
rates
3 Audit of schedule of Selected Full Supervisory Supervisory
works expenditure Division of
the month
4 Audit of Schedule of “ “ “ “
Revenue
5 Audit of Schedule of “ “ “ “
hire charges
6 Audit of Stores & “ “ “ “
Stock
7 Audit of Schedule of “ “ “ “
deposits
8 Audit of Schedule of “ “ “ “
Deposit works
9 Audit of Schedule of “ “ “ “
MPWA
10 Audit of Schedule of “ “ “ “
Settlement with
Treasury
11 Audit of schedule of Schedule of CSSA presently stands abolished
CSSA
12 Audit of all Bills of Selected
Contractors -F&F and Division of
running account the month
Bills
Upto Rs.1 lakh Full Supervisory Supervisory
Beyond Rs.1 lakh and - Full Supervisory
less than Rs.5 lakh
Rs.5 lakh & above - - Full
13 Audit of Stores Bills
DGSD bills and Reg. As in item 12 above
Credit note
14 Audit of Completion Full Supervisory Supervisory
Reports
15 Audit of Land
As in the case of item 12 above
Acquisition Vouchers
 60

Items Of work Extent Auditor AAO/SO A.O

1 2 3 4 5
16 Audit of Contractor's Full Supervisory Supervisory
Ledger
17 Audit of Schedule Full Supervisory Supervisory
dockets including
percentage recovery
18 Audit of Contracts and
Agreements
Upto Rs.1 lakh Full Supervisory Supervisory
Beyond Rs.1 lakh and
- Full Supervisory
less than Rs.5 lakh
Rs.5 lakh & above - - Full
19 Review of prorata Full Full Supervisory
distribution of Estt. &
T& P charges
20 Editing I.R. paras of Full Full Full(To be
the assigned Division submitted to
DAG/
Sr.DAG)
21 Processing of Part IIA - Full Full
paras to be sent to DP
Cell
22 Audit of all sanctions
to Expenditure
Less than Rs.1 lakh Full Supervisory
Rs.1 lakh & above but - Full Supervisory
less than Rs.5 lakh
Rs.5 lakh & above - - Full

23 Opinion Cases Full Full Full

24 Portfolio of Schemes Full Full Full
including maintainance
of Register of Schemes
26 Statistics Register Full Full Supervisory
27 Maintenance of Every Division General Full Supervisory
Registers for selection to be audited Unit
of Divisions for audit twice in a year
28 Obtaining list of Full Supervisory Supervisory
abandoned works or
works on which no
substantial expenditure
is being incurred
Note: 1. Full: Signifies 100 % scrutiny /audit and total responsibility.
2. Supervisory: Signifies that the Supervisory Officer will oversee the work and
generally scrutinise the work of the auditor.
 61

4.1.7 CERTIFICATE REGARDING COMPLETION OF AUDIT

In order to enable the Group Officer to keep himself posted with the facts of

completion of audit and review, a report should be submitted to the Group Officer

every month on 15th of second succeeding month to which the accounts relate, in a

separate register, wherein the Sr.Ars/Ars./AAO/SO and BO concerned should record

necessary certificate regarding completion of audit and review of the accounts of the

Division. The form of certificate to be given by the Sr.Ar/Ar/AAO/SO and B.O is

indicated below:

(A) CERTIFICATE TO BE RECORDED BY THE SR.AR/AR

1) Certified that the vouchers selected for audit have been audited with reference

to agreements/ work orders. The following agreements / work orders have not

been received in audit and have been called for.

1.)…….
2.) …….
3.) …….

2) Where the works are approved by the Divisional Officer/Sub-divisional

Officer, I have checked the rates from the schedule of rates as contemplated in

Para 4.3.32 of MSO (Audit ).

3) The objections with monetary value have been registered in the Objection

Book and the balances totalled and progressive totals brought up-to-date.

4) All wanting schedules have been noted in the Register prescribed and

necessary action to call for them has been taken.

5) In respect of the following vouchers, the linking up of subsequent running

account bills with earlier ones could not be done on account of non-receipt of

voucher(s) in which the previous payment(s) was made or due to incorrect

reference to the previous payments.

62
 63

(B) CERTIFICATE TO BE GIVEN BY THE AAO/SO

1) Certified that all the accounts allocated to his section have been audited in

accordance with the rules and Audit Notes (AN) issued.

2) Certified that I have fully reviewed all the vouchers which are marked for

review and generally examined the other vouchers also and ensured that there

was nothing irregular or peculiar on the face of them

3) Certified that I have checked classification of all vouchers

4) Certified that no cases of expenditure on New Service not contemplated in the

annual budget were noticed during the review or certified that cases of

expenditure on "New Service" were noticed during the course of review and

necessary action had been taken thereon.

(C) CERTIFICATE TO BE GIVEN BY BO

The following certificate should be furnished by the Branch Officer in the

Voucher Register in verification of the correctness of the audit and review and

certificates furnished by the AAO/SO/Sr Ar/Ar.

Certified that I have reviewed all vouchers to the extent prescribed in the

integrated audit system and also percentage of vouchers audited by the Sr.Ar/Ar and

reviewed by the AAO/SO, besides a general scrutiny of the monthly accounts and

supporting schedules. Certified that I have checked classification of all other

vouchers to the extent prescribed in integrated audit system. I have generally

examined the other vouchers and satisfied myself that they have been audited by the

Sr.Ar/Ar and reviewed by the AAO/SO to the extent marked and bear necessary

enfacement and that there was nothing irregular or peculiar on the face of them.
 64

(D) COMPLETION OF AUDIT

After the audit and review is over the AAO/SO should sign the pass order

recorded by the Sr.Ar/Ar on the monthly account. A certificate of completion of audit

and review as well as copies of Audit Notes have to be prepared and the Audit Notes/

Memos shall be sent to the offices concerned, with a copy to AG(A&E).


4.1.8 QUESTIONNAIRE FOR AUDIT
1. Monthly Account of
Divisional Officers
Certificate of Cash Balance
March Accounts - Closing
Cash Balance
March Accounts - Part II
Schedule of settlement
2. Schedule of Revenue
65
Three volumes viz., (i)Divisional accounts (ii)Vouchers and
dockets in r/o works expenditure and (iii)Establishment
vouchers are to be received from PWC section (item 3 being
received from DC IV section directly) in respect of every
marked month. However, March accounts are received in
three parts, such as initial accounts, final accounts &
supplementary accounts which have to be checked and
audited at WAD sections.
a) Whether examined with "Memo of Miscellaneous Cash
Receipts paid into Treasuries”?
b) Is there any deviation from rules?
c) Whether details of receipts shown on the reverse tally with
those noted in the schedule of revenue realized?
a) Whether supported by original reports of all disbursing
officers including a certificate of the Divisional officer to the
effect that he has obtained and retained in his office an
acknowledgment in respect of each item of imprest or
temporary advance shown in the Cash balance reports of the
Division for 31st March? .
b) Whether the balances certified therein are equal, in the
aggregate to the closing cash balance shown in the monthly
accounts?
a) Whether a statement of number and amount of cheques
issued during the whole month and during the last five
working days of the month is attached to the SSWT ?
b) Whether this statement indicates any unusual or serious
rush of payments towards the end of the month?
c) Whether the causes and effects of the rush and hurried
payment are to be investigated?
The amount of revenue brought into cash account needs to
be accompanied by proper schedules, head-of-account-wise.
a) Whether any amounts are credited to realised revenues
before they are actually realised?
b) Whether amounts shown under "Recoveries of
expenditure" are actually creditable to the heads and are
traceable in schedule docket of percentage recoveries?
c) Whether receipts representing the sale proceeds of stores
or other property of transfer values are supported by survey
Report and Sale accounts (i.e.)
i) Whether the disposals have been authorised by competent
authority?
 66

ii) Whether full value has been accounted for or if there is

loss, was it sanctioned by competent authority?

d) i) Whether all refunds have been authorised by competent

authority?

ii) If a court order is complied with whether the original

Court order accompanies refund schedule?

iii) Whether suitable note explaining the amount refunded

has been recorded against the original receipt entry?

3. Schedule of Works a) Whether references in which it was sent are given in the
Expenditure gives the details cases where expenditure appears for the first time?
of expenditure incurred during
the month, during the year, b) Whether action is taken by the Division for regularisation
estimate amount of each of excess over estimate / allotment?
work, agreement number and
year for each work. The total c) Whether action is taken by the Division for fixation or
of this schedule (under revision of license fee for residential buildings shown as
column 5) should have been completed?
taken to classified abstract
under the respective Head of d) Whether the prescribed certificate is recorded by Divl
Account. The check of the Accountant when it is not necessary (Note 1 Art 211 A code
schedule of works Vol. 111) for submission?
expenditure should disclose
whether any expenditure has e) Whether the schedule of works expenditure (Form 63) is
been incurred without enclosed for each Head of Account separately?
sanction or in excess of
sanction. If the expenditure
incurred is for a maintenance
work, the estimate sanctioned
should be of the current year.
Suitable Audit note could be
issued if any deviation is
noticed.
Column 3 of the Schedule of
works expenditure gives the
schedule Docket no. with
which the necessary vouchers
are enclosed. (Note: No
docket would be enclosed in
r/o vouchers less than
Rs.1000/- But necessary “No
Docket” certificate should
have been furnished.
4. Schedule of Deposit works a) Whether cash receipt is verified with memo of receipts?

5. Schedule of debits/credits
to remittances.
6. Schedule of Settlement
with Treasuries
7. Cash Settlement Suspense
Account
8. Stock, stores, purchase
accounts
Note: It should be appreciated
that all payments irrespective
of the amount are entered in
M book by the concerned JE
or AE and therefore check for
the reference to M Book no,
Page no, quoted in respect of
all the vouchers.
67
b) Whether excess expenditure is charged to MPWA and
relevant entries made in the Schedule of MPWA?
c) Whether particulars of all unaffected deposit works are
shown in Part II of the Schedule?
d) When the works are shown as completed, whether action
is taken to refund the excess deposit or realise the excess
expenditure?
e) If any report of progress of expenditure accompanies this
Schedule, whether verification is done?
a) Whether provisionally accepted responding items indicate
any deviation from rule?
b) Whether totals in the Schedule are supported by necessary
details in SSWT and agree with line 2?
a) Whether difference as per line 5 agrees with details of
difference under both parts?
b) Whether the difference is 'nil' at the end of the year?
c) Whether effective action is taken by the Divisional Officer
to clear the differences?
a) Whether entries of credits are compared with "Memo of
Cash Receipts”?
b) Whether the claims are settled within ten days as
prescribed?
c) Whether the balance is 'nil' at the end of the year?
In respect of purchase bills
a) Whether the vouchers give the details of name of work,
estimate sanction numbers (Divisional DR, Circle CR),
Measurement Book page number and necessary certificates
that the quantities purchased were taken to log book/ stock
account as the case may be?
b) Whether all the vouchers have a pass order given by EE or
AEE as the case may be?
c) Whether the pass order is given for the gross amount and
pay order for net amount and payment details like cheque
number, date, CB voucher number and the month have been
stated?
 68

d) Whether all payments by cheque were made only after

obtaining an advanced stamped receipt from the payee?

e) Whether all the vouchers are original and not duplicate or

Xerox copies?

f) Whether other relevant certificates such as ‘ payment not

made already’ were furnished by JE/AEE or Executive
Engineer?

a) Schedule of Debit to stock a) Whether items in Part II agree with relevant items in
SDTs, consolidated contingent bill etc. and remaining issue
traced from several accounts as indicated in part I?

b) Whether closing balances exceed the sanctioned limit of

stock?

9. Schedule of MPWA a) Whether March and September schedules are supported

by items outstanding for six months?

b) Whether action is taken by Divisional Offices for their

clearance?

c) Whether a special check is exercised in respect of items

indicating a disregard of any financial rule or losses,
retrenchment orders awaiting adjustment?

10. Schedule of Deposits a) Whether debits are adjusted to the extent of corresponding
credits and there is any minus balance?

b) Whether the certificate at the front of the Schedule has

been recorded correctly in respect of items converted into
any form of interest bearing securities?

c) Whether lapsed deposits have been credited to

Government account when the schedule for March A/c is
checked?

d) Whether debits / credits are compared with concerned

schedule vouchers and memos of cash receipts?

e) Whether necessary details are given in the Schedule of

works in respect of deposits for work to be done?

11. Accounts of - Interest a) Whether the schedule for March accompanied by an

Bearing Securities Account of Interest bearing securities?

b) Whether all deposits converted into interest bearing as


12. Annual Certification of
Balances
13. Audit of Receipts/issue
of Tools & Plants and
Special Tools & Plants
14. Schedule Dockets
The Auditor should take up
the verification of the
Schedule Docket serial
number wise. The Schedule
Dockets will be available with
the voucher bundle. The
Schedule Docket gives an
account of expenditure
incurred in r/o each voucher
enclosed. Schedule Docket is
prepared work-wise and also
69
shown in the Deposit schedule in the year, have been brought
to accounts?
c) Whether return or re-transfer of securities to depositors
are supported by proper acknowledgments?
d) Whether necessary certificates of the DO or SDO have
been obtained in respect of balances at the close of the year?
a) Whether within six weeks of the submission of the March
Accounts, a consolidated certificate in respect of
balances other than cash has been received?
(ACB) Form 97 PWD VI -96
b) Certificate 1: Whether closing balances are reconciled
with stock accounts?
c) Whether unusually high or excess balances of stock or
sanctioned limits of stock reserves are brought to the notice
of AG for such action as he may consider necessary?
d) Certificates 2&3: Whether these certificates are reconciled
with the relevant schedules and their corrections verified?
e) Certificate 6: Whether CSSA has been reconciled with
the Broad sheet?
f) Whether special enquiry has been made in respect of large
balances?
To be done in local audit.
In addition, in the case of Special Tools and Plant whether
the numerical account accompanies the monthly account of
the Division and checked in Central audit with reference to
voucher or account pertaining to the charge?
Para 4.3.31 to 4.3.35 MSO (Audit)
a) Whether contra entries in respect of all Transfer Entries
have been verified?
b) Whether particulars of cash refunds tallied with "Memo of
cash receipts" and do not indicate any irregularity?
c) As in 2(c) against schedule of Revenue Realised.
 70

Head of account wise. It

further gives the details of the
estimate amount of work,
estimate sanction details such
as DR number, CR number
etc., The expenditure shown
in the Docket is only with
respect to that month in
respect of that particular
work.
Page 2 of the Schedule
Docket gives particulars like
number of each voucher (ie.,
CB Vr No.) and amount.
Schedule Docket will also
give details about TEOs, if
that particular work is affected
by any transfer of expenditure
from one work to another.
The total of each Schedule
Docket should be verified
with the schedule of works
expenditure under the
particular Schedule Docket
number. After this the auditor
should take up the scrutiny of
individual vouchers.
15. Schedule Docket of a) Whether the charges shown under "Establishment",
percentage recoveries "Tools and Plant" and "Accounts and Audit" are calculated
correctly in accordance with the rules?

b) Whether in the expenditure schedule the total of the above

items has been debited correctly in the account of each
work?

c) Whether credits under the head brought to account of the

Classified Abstract of expenditure or in the relevant
Schedule of Expenditure?

16. Schedule of Rates The District wise schedules of rates are to be examined to
highlight any unusual item included afresh or abnormal
increase in rates as compared to the previous year.

17. Scrutiny of the list of Self explanatory

abandoned works or works
on which there has been no
outlay for six months and
the result thereof.
 71

18. Audit of vouchers Refer to sec 4.2

relating to works
expenditure
19. Purchase Bills Please refer to item (8) - stock, stores and purchase accounts.
 72

4.2 GUIDELINES FOR CONDUCTING CENTRAL AUDIT

Work Bills: There are three major types of work bills

I. First and Final bill (K2/LS)

II. Running account bill

III. Final Bill

4.2.1 CHECK OF FIRST AND FINAL BILL

This bill is prepared when one single payment is made for the work done and

as per agreement entered with the contractor. The First and Final bill should

basically give the following details:

I. Name of the contractor

II. Agreement number

III. Estimate amount

IV. Cash Book Voucher Number

V. The total value of work done

An endorsement for the ledgerisation and certificates like work completed in

all respects and no recovery was due from the contractor should have been

furnished.

In respect of payments made at sub-division level, it should be ensured that

the First and Final bill was checked by the Division. Scrutiny and pass order of the

bill should be made at the Division and payment only made at the sub-division

level.
 73

Scrutiny of the bill

1) The bill amount should be arithmetically accurate; agree when total

quantity is multiplied with the rate per unit
2) The voucher should have the reference of M Book and page No. item wise
3) There should have been an acknowledgement for the gross amount by the
payee/contractor
4) The memo of payment should be taken up to see whether mandatory
deductions like IT, Surcharge on IT, ST and Surcharge on ST have been
made at the rates applicable as on date.
5) The voucher should also give details of measurement by the AE/JE and
check measurement by the EE /AEE with relevant reference to M Book
page No.
6) Subject to availability of agreements with the Auditors in the section, the
rate per unit quantity may also be verified for accuracy.

4.2.2 CHECK OF FINAL BILL (LS)

1) The bill has to be in the prescribed form and should contain all the relevant
details such as agreement number, name of the work etc.,
2) The first part of the bill (account of work Executed) gives details
regarding the value of agreement, value of work actually executed, value
of works not executed and value of items that were measured and paid for.
The value of items omitted in different items of work as shown in the
comparative statement should tally with the details in part I.
3) The total value of work done should not exceed the value of lump sum
contract. In cases of deviation it should be seen whether necessary
supplementary agreements etc. were drawn and references furnished.
4) In the second part of Final bill, it should be seen that certificates by both
the contractor and bill preparing officers along with details like dates of
measurements, dates of super check measurements and references to pages
of M book in respect of this particular work are furnished.

5) Third part of this form “Memorandum of payments” gives details of

deductions made before arriving at the final payment to be made to the
contractor. The deductions to be made outside the head of account of the
relevant work are IT, SC and ST.

6) Regarding the withheld amount, 2.5% of the value of work done out of 5%
already withheld through previous part bills is released to the contractor
through a Hand Receipt after six months from the date of completion of
work. The remaining 2.5% is released after a further period of six months
period after getting an indemnity bond which is retained at the Division.
There should be an endorsement regarding ledgerisation and payment
along with cheque details and contractor’s signature for the gross amount.
 74

7) The bill also should give the date of commencement of work, date of
measurement, check measurement etc.,
8) If the agreement is available in the section, checks on the above aspects
should be carried out with the copy of the agreement
9) Finally, audit has to satisfy whether all the conditions were adhered to by
the Division before making final payment.

4.2.3 RUNNING ACCOUNT BILL

Lump sum part bills (Running Account Bill) have only two parts viz.,

i) Account of work done

ii) Certificates.

Scrutiny of Running Account Bill

1) If any Fine had been levied for delay in completion of work it should come
under ‘H’. Fine for bad work should appear under ’G’.

2) Important certificates such as further work in progress, engagement of

technical persons as per agreement, certificate that no recovery is pending
and the cement and sand utilised are of good quality are to be seen.

Note: In cases where cement and steel were issued departmentally, check whether the
value of USR (Unstamped Receipt) had been deducted and necessary cement
and steel adequacy calculations are furnished. Had there been any free issues
to the contractors, details of such free issues should be furnished in the bill
(i.e., certificates regarding 7F Issues and Receipts)

4.2.4 HAND RECEIPTS

Payments on Hand Receipt are made in most of the cases when no

prescribed forms are required to be used. The Hand Receipt should give all

the details such as name of work, head of account, estimate number (DR/CR

number), estimate amount, M book reference number, cheque number,

amount, CB Vr. number and the purpose for which payment had been made.
 75

Certificate to the effect that the bill had not been paid previously should be

made in the hand receipt.

If it is not a payment of advance it should be supported by claimant’s

bill, with appropriate-stamped acknowledgement or advance stamped receipt.

4.2.5 TRANSFER ENTRY ORDERS (TEO)

This relates to expenditure debited to a work through a TEO

expenditure withdrawn from another work or suspense heads like

Miscellaneous PWA, stock, purchases. TEOs should give complete details

regarding (i)from where the expenditure stands transferred

(ii) the reason for proposing TEO along with the details like estimate number

and DR number in respect of both the works and (iii) page reference to work

register. If TEO involves value of materials transferred from one work to

another it should be supported by “7F Issue and Receipts” statement. It should

have been approved by Divisional/Executive Engineer.

 76

4.3 GUIDELINES FOR CONDUCTING CENTRAL AUDIT

(WORKS ESTABLISHMENT)

4.3.1 ESTABLISHMENT AUDIT PROCEDURE

The system of establishment audit consists essentially of the following

functions.
(a) Audit of sanctions to establishment, check of classification of expenditure on such
establishment and audit of general or specific sanctions to pay and allowances.
(b) Number audit against sanctioned strength of the establishment.
(c) Nominal audit or check of correctness of pay and allowances drawn in the
vouchers
Audit mentioned in (a) above should be conducted in central audit with
reference to various Government orders on the subject. Important points (including
sanction for establishment etc,) should be recorded in a separate register and produced
to Local Audit Parties for detailed check whenever required.
Central audit of Establishment vouchers will be limited, (besides checking
arithmetic calculations) to a general scrutiny to ensure that they are in the prescribed
form and complete in all respects.
Audit mentioned in (b) and (c) above should be conducted, in local audit along
with cash books, office copies of establishment bills, acquaintance rolls, treasury bill
books, service books leave accounts, etc, kept in departmental offices.
Note:- A ready reckoner for conducting central audit of establishment
vouchers along with various allowances with their rates etc., as of date are given
hereunder. The Headquarters sections may keep updating these particulars as and
when they are changed.
 77

4.3.2 ESTABLISHMENT VOUCHERS

Allowances payable to State Government Employees

HOUSE RENT ALLOWANCE (HRA)

Pay ====> Basic Pay + Special pay

a) HRA is admissible with effect from 1-4-1998 at the following rates as per
G.OMs.No.162, Finance, dated 13.4.98

Madurai and places around them at a

Grade 1(b) Cities of Coimbatore and

Places in Grade II and places around

Grade 1(a) Chennai City and places

distance not exceeding 16 Km from

around the city at a distance not
exceeding 32 Km from the city

8Km from town limits

Unclassified places
Places in Grade III
the city limits
Pay Range

limits.
S. No

1 Up to 2849 250 150 120 80 60

2 2850 – 3599 280 200 150 100 70
3 3600 - 4399 340 250 180 120 80
4 4400 - 4999 400 300 220 150 90
5 5000 - 5699 500 360 270 190 100
6 5700 - 6399 600 420 320 230 110
7 6400 - 7399 700 480 380 280 120
8 7400 - 7799 800 550 440 330 130
9 7800 - 8599 900 620 500 380 140
10 8600 - 9299 1000 690 560 430 150
11 9300 –10499 1100 740 620 450 160
12 10500 - 10799 1200 800 680 500 170
13 10800 - 11299 1300 850 700 500 180
14 11300 - 11599 1400 900 700 500 190
15 11600 - 11899 1450 900 700 500 200
16 11900 - 13499 1500 900 700 500 200
17 13500 and above 1600 900 700 500 200
 78

b) HRA is admissible in lieu of rent free quarters, at the following rates, w.e.f. 1.4.98

H.R.A to be admissible in lieu of rent free quarters shall be as shown below. (effective
from 1.4.98) – G.O. Ms. No 162 Finance dated 13.4.98.

Madurai and places around them at a

Grade 1(b) Cities of Coimbatore and

Nagercoil, Erode, Uthagamandalam,

Kanchipuram, Vellore, Dharmapuri,

Grade II (b). Places other than those

Grade 1(a) Chennai City and places

distance not exceeding 16 Km from

around the city at a distance not
exceeding 32 Km from the city

Salem, Cuddalore, Thanjavur,

Grade II(a) Head Quartests

Trichirappalli, Tiruneilve,

mentioned in Column (4)

Unclassified places.
Places in Grade III
and Pudukkottai.
the city limits
Pay Range
Serial No

limits.
1 Up to 2849 330 230 200 170 130 100
2 2850 – 3599 360 280 230 200 150 110
3 3600 - 4399 420 330 260 230 170 120
4 4400 - 4999 480 380 300 270 200 130
5 5000 - 5699 580 440 350 320 240 140
6 5700 - 6399 680 500 400 370 280 150
7 6400 - 7399 780 560 460 430 330 160
8 7400 - 7799 880 630 520 490 380 170
9 7800 - 8599 980 700 580 550 430 180
10 8600 - 9299 1080 770 640 610 480 190
11 9300 –10499 1180 820 700 670 500 200
12 10500 - 10799 1280 880 760 730 550 210
13 10800 - 11299 1380 930 780 750 550 220
14 11300 - 11599 1480 980 780 750 550 230
15 11600 - 11899 1530 980 780 780 550 240
16 11900 - 13499 1580 980 780 780 550 240
17 13500 and above 1680 980 780 780 550 240

c) Rent recovery shall be made at the following rates, from those occupying Government
Quarters.
The rent from the employees occupying Government quarters shall be recovered at
the following rates (effective from 1.4.98) G.O. Ms.No. 162 Finance dt. 13.4.98.
Pay range Grade – I(a) Grade – II Grade – III Other places
Grade – I(b)
3200-5464 1.5% 1.5% 1% 1%
5465-9999 3% 3% 3% 2%
10000 and above 4% 4% 4% 3%

Note: No rent recovery is made for pay range up to Rs.3199/-

 79

4.3.3 CITY COMPENSATORY ALLOWANCE (CCA)

Pay ===> Basic Pay + Special Pay

CCA is admissible at the following rates as per G.O. Ms. No.162 Finance dt. 13.4.98

Sl.No. Pay range Chennai city and areas around Cities of Coimbatore,
at a distance not exceeding 32 Madurai, Salem, and
km. from the city limit Trichy and areas around
them not exceeding 16
kms from the city limit.
Rs. Rs.
1 Below 3000 90 45
2 3000-4499 125 65
3 4500-5999 200 100
4 6000 and above 300 180

Note: HRA & CCA are not allowed if the period of leave exceeds 180 days. (FR 44)

4.3.4 DEARNESS ALLOWANCE

Pay ====> Basic Pay + PP

G.O.No. and Date Effect From Upto Above Rs.3500

Rs.3500
1. 162 Finance dt. 13.04.98 1.7.96 4%
2. 162 Finance dt. 13.04.98 1.1.97 8% There is no
3. 162 Finance dt. 13.04.98 1.7.97 13% Slab system
4. 180 Finance dt.21.4.98 1.1.98 16% All employees
5. 580 Finance dt. 7.10.98 1.7.98 22% are eligible
6. 217 Finance dt.20.5.99 1.1.99 32% for the same
7. 440 Finance dt.8.10.99 1.7.99 37% Rate of D.A.
8. 257 Finance dt.6.6.2000 1.1.2000 38%
9. 522 Finance dt.14.11.2000 1.7.2000 41%
10. 188 Finance dt.1.1.2001 1.1.2001 43%
1.7.2001 45%
1.1.2002
1.7.2002 49%
1.1.2003
1.7.2003 52%
1.2.2004 55%
67%
 80

4.3.5 TRAINING ALLOWANCE

10% of the Revised scale, w.e.f.1.9.98 as per G.O.Ms.No.499, Finance, dt.15.9.98

TA allowed during training period :

Where the period of training exceeds 91 days, the Government servant shall be paid
at TTA rates. (Transfer Travelling Allowance)

Authority: Rule 106(a) as amended in G.O.Ms.No.748 Finance Dt.20.9.92 (w.e.f. 1.10.92)

4.3.6 PERSONAL PAY (5%)

Authority: G.O.Ms.No.497 Finance Dt.15.9.98 read with Government Lr.No.73411/PC

II/98-1 Finance dt.28.9.98.

Admissible to the following categories of employees, in the ordinary scale, selection

grade and special grade.

Time scale of pay

Ordinary grade Selection grade Special grade
Record Clerk/ 2610-60-3150-65- 2750-70-3800-75- 3050-75-3950-80-
Forest watcher 3540 4400 4590
Driver 3050-75-3950-80- 4000-100-6000 4300-100-6000
4590
Jr.Asst./Typist 3200-85-4900 4000-100-6000 4300-100-6000
Assistant 4000-100-6000 5000-150-8000 5500-175-9000
Forester 5000-150-8000 5500-175-9000 6500-200-10500
Note:-
1) 5% PP is not admissible beyond the scale of Rs.5500-9000
2) The rate is 5% on the Basic Pay of the individual, as on 1.9.98
3) The PP is granted as one time measure. This will not increase due to sanction of
increment /promotion. (G.O.Ms.No.664 Finance dt.24.8.92)
4) This 5% PP is not included in pay for the purpose of Travelling Allowance.
(Government Lr.No.29198/PC/93-1 Finance Dt.30.3.93)
5) PP will not be stopped due to reversion. (Government Lr.No.106614/PC/92-1
Finance dt.30.9.92)
6) Those who are promoted on or after 1.9.98 are not eligible for 5% PP
(Government Lr.No.38877/PC/2000-01 Finance Dt.30.8.2000)

PP to Superintendent: (5%)

Authority:G.O.Ms.No.538 Finance (CMPC) Dept. dt.27.11.2000.

Original Pattern Revised Pattern

Time Scale of pay 5500-175-9000 5700-175-9200 (stoppage of 5% PP &

+ 5% PP as on 1.9.98 recovery of 5% PP already paid w.e.f
1.9.98)

Exemption: Authority: Government Lr.No.90514/CMPC/dt.12.1.2001

 81

1) In respect of employees who are already promoted to any other higher post and if
the pay already fixed based on the pay + PP is higher than the pay now regulated
as per the revised scales ordered in G.O.No.538 dt.27.11.2000, their cases need
not be reopened.
2) In respect of employees already retired from service, the pension fixed based on
higher pay + PP already drawn, the case need not be reopened.

4.3.7 SUBSISTENCE ALLOWANCE DURING SUSPENSION (FR 53)

Rate for Basic Pay :- For the first 6 months, it shall be 50% of pay drawn by him prior
to his suspension. Beyond this, it may be increased from 50% but not exceeding 75% of pay
from the commencement of 7th month suspension, provided the continuance of suspension is
not directly attributable on the part of the delinquent. Likewise, the allowance may be
decreased from 50% but not less than 25% of pay from the commencement of 7th month of
suspension if the suspension is prolonged for reasons directly attributable to the suspended
employee.

Note: The subsistence allowance once decreased may be increased after 12 months to the
extent not exceeding 50% of the subsistence allowance being drawn.
Rate for HRA & CCA:-Based on the basic pay of the suspended employee, drawn prior to his
suspension.
Note: HRA & CCA are allowed at the rates admissible in the place where the officer
is ordered to stay/reside during suspension. If the Headquarters is changed on own
request, the HRA shall be at the rate drawn by him in the old Headquarters .

Rate for DA:- DA shall be paid with reference to the subsistence allowance drawn and not
on the Basic Pay. Any increase in DA shall be allowed, provided rates are calculated on the
subsistence allowance.
Upto 6 months Above 6 months

(a) 50% of basic pay last drawn 75% of basic pay last drawn
Proportionate % of DA on (a) above Proportionate % of DA on (a) above
HRA & CCA in full HRA & CCA in full

Other allowances:
Medical allowance/Cash allowance are not admissible during suspension.
 82

Certificates to be furnished:-
(a) The officer under suspension should certify that he continues to meet the
above expenses.
(b) Subsistence allowance shall be paid monthly subject to the condition of
furnishing a certificate to the effect that the officer is not employed
anywhere.
(c) The payment of subsistence allowance is also subject to the condition that the
officer resides in the Headquarters fixed by the competent authority.

Recoveries during suspension

Compulsory Optional Discretion by the Not to be deducted.

Head of office
Income tax, Rent, Co-op.societies, Recoveries of GPF subscription,
Loans & advances Refund of GPF over payment can Court attachment, loss
due to Government advance be effected at the to Government for
discretion of the which the officer is
officer responsible.

Note:-
1. GPF advance and part-final withdrawal are eligible during suspension
2. GPF temporary advance can be sanctioned, subject to subscriber’s written
consent for effecting recovery from the subsistence allowance
3. Any excess amount paid over and above the eligible limit cannot be
recovered; but shall be waived. (FR 53)

4.3.8 LEAVE TRAVEL CONCESSION

(i) Distance must be more than 160 Kms, but not exceeding 400 Kms from their
place of work (G.O.Ms.No.113 Finance dt.7.10.89)
(ii) Minimum 2 years service must have been completed.
(iii) LTC can be availed of during EL or CL or compensatory off or holidays
coupled with CL or Restricted Holidays. But this concession shall be availed
only after the leave is sanctioned. (Govt Lr.no 156467/All I/88. Fin dt 10.2.89
& G.O. Ms. No 862 Fin dt 11.9.86)
(iv) Block year 1997-2000; 2001-04 and so on. In the above Block Year, the
employee may also choose one way for a block of two years.
(G.O.Ms.No.561 Finance dt.10.6.85)
 83

(v) Journey should only be performed either by train or by bus run by State
Transport Undertakings. (G.O Ms No 561 Finance dt 10.6.85)
(vi) Bus or train ticket No. should be noted in the LTC claim.

Time Limit: Claim shall be preferred within one month from the date of completion of
return journey.
Advance ceiling: Amount of advance shall be limited to 4/5th of estimated amount of the
proposed trip. (G.O Ms No 407 Finance dt 15.6.81 & Govt Lr.No
147382/Au.I/83 Fin dt 24.4.84)

4.3.9 FIXED TRAVELLING ALLOWANCE (TA RULE 13)

FTA is a fixed monthly amount granted to a Government Servant who is required to

tour within a specified area for not less than a given period in each week, month, quarter, half
year as the case may be. The allowance is not eligible during leave or joining time.
Rates:-
Designation Time Scale of pay (Ordinary) Amount of FTA
Ranger 6500-200-10500 Rs.560/- p.m.
Forester 5000-150-8000 Rs.200/- p.m.
Forest Guard 2750-70-3800-75-4400 Rs.130/- p.m.
Forest Watcher 2610-60-3150-65-3540 Rs.100/- p.m.

4.3.10 TRAVELLING ALLOWANCE [FR 9(32)]

T.A. is an allowance granted to an officer to compensate the cost of journey including

incidentals and the cost of boarding and lodging expenses incurred by him during the tours
undertaken for official purposes, where distance is more than 8 km from Headquarters.

Time limit for

Submission of claim: Within 3 months from the completion of journey
Passing the bills: a) Bills should be passed and sent to Treasury within 15 days of receipt
of claim provided funds are available (Art.52 of TNPC Vol.I)
b) If no funds are available, the countersigning authorities should certify
that the delay is due to want of funds in the budget. (Government
Lr.No.316/All./2000-01 Financedt.19.6.2001)
Advance: Not exceeding 75% of probable expenditure (train fare may be excluded & given
100% advance of such amount of train fare).
 84

Note: Advance should be adjusted within 3 months; otherwise, the pending advance will
be recovered together with 2.5% interest from the 4th month pay (G.O Ms.No 798
Finance dt. 22.12.82).

For the purpose of TA, Day means a block of 24 hours of absence and a calendar day.
Ceiling:
20% of Basic Pay G.O. Ms No 444 Finance dt 3.8.98
1. Exemption: Drivers, Heads of Dept., Collectors, State touring officers, audit parties
who have to tour throughout the State and in respect of journeys undertaken outside
the jurisdiction for training. (Government Memo.No.1361 Finance(Au-I)742 dated
30.11.74).
2. Monthly ceiling of 20% shall be increased for those who perform journeys in
class I & II special tracks by 50% & 33 1/3 % respectively.
3. In respect of those whose Headquarters is Chennai and who has to proceed on
tour to various districts regularly, train/bus/air fare should be excluded for
computing the ceiling (Government Lr.No.103001/All-1/90 Financedt.12.12.90)
4. Enhancement of 20% ceiling:-
a) In respect of officers having Monthly ceiling shall be 25% of basic
jurisdiction over more than one district pay
b) In respect of officers having Monthly ceiling shall be 27% of basic
jurisdiction over more than 2 districts pay
(Government Lr.No.89715/All/2000-01 Finance Dt.17.4.2001)

Daily Allowance:
Period Daily allowance allowed
0-6 hours 30% of DA
6.01 to 12 hours 70% of DA
12.01 hours to 24 hours 100% of DA.
 85

Rates and daily allowance – Flat Rate – Mileage Rate.

Air journey – Rail journey – flat rate and mileage

Grade Pay range DA rates Flat Rate Mileage rate

At Chennai Other (when vehicle is
places not used)
I Rs.10,000 100 Rs.10 Rs.5 Rs.1.30
and
II. Rs.5000- 75 Rs.10 Rs.5 Rs.0.80
9999
III Rs.3050- 50 Rs.5 Rs.3 Rs.0.65
4999
IV Rs.0-3049 40 Rs.5 Rs.3 Rs.0.65
N.A. * As per G.O.Ms.No.444 Finance dt.31.8.98 and Government
Hariharan’s Lr.No.38912/PC-II/98-1 Finance dt.11.6.98, Daily Allowance will be
table doubled at Chennai.

Air journey – Rail journey

Grade Pay Range Air and Rail eligibility

Rs.15,000 and Air/Air conditioned first class by Rail within or
above outside the State
Rs.10,000 – Air journey outside the State
14,999
I class or Air conditioned second class by rail for
journey within or outside the State
II. Rs.5000-9999 First Class by Rail
III Rs.3050-4999 Second class by Rail
IV Rs.0-3049 Second class by Rail
N.A. *As per G.O.Ms.No.444 Finance dt.31.8.98 and Government
Hariharan’s Lr.No.38912/PC-II/98-1 Finance dt.11.6.98, Daily Allowance will be
table doubled at Chennai
 86

Rates for Boarding and Lodging

(G.O.No.393 Finance dt.23.8.2000, G.O. M.S.No.444 Finance dt.31.8.98 and Government

Lr.No.74111/DA/2000-01Finance dt.11.10.2000)

Pay Delhi, Mumbai, Kolkatta

Chennai and other State States and other Union
headquarters Territories
Lodging Boarding Tamilnadu Lodging Boarding Private Lodging Boarding Private
charges charges Illam & charges charges guest charges charges guest
private house house
guest (Boarding (Boarding
house & &
(Boarding lodging lodging
& charges) charges)
Lodging)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
10000 1125 146.25 200 550 146.25 200 175 97.50 100
and
above
5000- 750 117.00 150 375 117.00 150 100 78.00 75
9999
3050- 550 78.00 100 275 78.00 100 75 58.50 50
4999
Upto 275 58.50 80 175 58.50 80 50 39.00 40
3049

Notes: Rates are subject to increase by 50% & 33 1/3% for performance /halt in Class I
locality and Class II locality respectively.
Ceiling: Upto 60 days, fully Daily Allowance is admissible. From 61st day, it shall be
treated as transfer and TTA is allowed.

Rates when boarding & lodging are given free of cost (G.O.Ms.No.748 Financedt.22.9.92)

a) If both boarding & lodging are given free 1/4th of DA

b) If free boarding is given 1/2 of DA
c) If free lodging is given 3/4 of DA

Bus journey
(a) If the journey is performed by bus the officer may claim the actual bus fare
irrespective of grades. In addition to bus fare, he may claim reservation
charges, if any paid by him. Further he is allowed incidental charges (if the
distance exceeds 160 kms)
(b) The actual cost of bus journey either by express/ordinary service between two
points shall be allowed irrespective of the route. He may be allowed cost
 87

even by a longer route, provided the journey is continuous and tickets are
produced. (G.O. Ms.No.1054 Finance dt 5.10.78)

Mileage Allowance:- This is an allowance granted to an officer who performs journey by car
or motorcycle or scooter, being calculated at the rate per km. (ceiling–upto 320 Kms.)
(G.O.Ms.No.390 Finance dt.23.8.2000)

Mode of transport Amount (Rs./ km)

Motor car 5
Motor cycle /moped 2.25

4.3.11 TRANSFER TRAVELLING ALLOWANCE

The distance between the old and the new station should be more than 8 kms. If it is 8
kms or less than 8 kms it shall not be considered as transfer and no T.T.A. is eligible because
it does not require change of residence in the public interest. [Notes under Rule 69 (a)]

Admissible charges
An employee on transfer is eligible to get reimbursement of the following
expenditure, provided that he had actually incurred them (subject to the eligibility):
(a) Rail/bus/air fare for self and family
(b) Incidental charges to Government servant alone at both ends, if the journey is
performed by rail/bus/air
(c) Daily allowance for self and each member of the family minimum one DA.
Children below 12 years are eligible for half DA.
(d) Cost of transporting house-hold articles (personal effects).
(e) Lump sum grant to meet the contingent expenses incurred to transport house-hold
articles
(f) Train/bus fare by second class or by the lowest class for personal servants and
driver and no DA is allowed.
(g) Cost of shifting the conveyance (car or motor bike or scooter) to the new station
provided the distance between the old and the new station exceeds 130 km.

Family - T.A. Rule 2(iv)

Family for the purpose of T.T.A. includes the following members:
(a) Wife (only one wife)
(b) Children
 88

(c) Adopted children (son or daughter)

(d) Step children (son or daughter)
(e) Married daughter not placed under husband’s protection and fully dependent
(f) Widowed daughter fully dependent.
(g) A husband fully dependent on the woman employee
(h) Father and mother fully dependent
Adopted father and mother or step-father or step-mother shall not be treated as
members of the family.

Grades of the family members (Note 2 under TA Rule 76): The grades of the
members of the family shall be determined with reference to the grade to which the
employee belongs.

Personal effects: A certificate to the effect that the personal effects were actually in
possession of the employee at the time of receipt of transfer orders shall be furnished.

Note:
(i) Personal effects should be carried by rail. (If transferred by road, the claim shall
be restricted to goods rate by the shortest railway route).
(ii) If personal effects are transported between places unconnected by rail, then he
shall be allowed 3 mileage for each kilometer so covered at the following rates:-

Grade Time Scale Mileage Rate/Km.

I Above Rs.10,000 1.30
II Rs.5500-10,000 0.80
III Rs.2610-5500 0.65
IV Below Rs.2610 0.65

Mileage allowance for family

When the officer has to travel between places unconnected by rail or public

conveyance, he shall be paid mileage rates as shown in the table depending on

number of family members accompanying him. [Rule 72(i)(a)(2) and G.O.Ms.No.69

Finance dt.30.1.86]
 89

Grades No. of family members accompanying the officer

Grade Mileage For self Self + upto 3 Self + 4 Self + 2 Self +3 and
rate only and above above
I 1.50 3.00 4.50 6.00 -- --
II 0.90 1.80 2.70 3.60 -- --
III 0.75 1.50 -- -- 2.25 3.00
IV 0.75 1.50 -- -- 2.25 3.00

An explanation: (a) If more than four members accompany the officer, the rate shall be as
indicated in Col.5 or as the case may be.
(b) The rate shown is per Km. Hence the allowance shall be calculated based on the distance
covered. If the Grade-I officer along with two members of his family covers 10 km. between
places unconnected by rail or by public conveyance, he will, as per rates shown in Col(4), get
Rs.4.50 x 10 km = Rs.45.00

Certificate to be furnished in the T.T.A. bill

The following certificates (whichever is applicable) should be furnished in the T.T.A. bill.
It is certified that
(1) The members for whom T.A. is claimed are fully dependent on me.
(2) The expenditure towards train fare, etc. were actually incurred by me.
(3) The personal effects were actually in my possession at the time of receipt of
transfer orders.
(4) The expenditure towards transportation of personal effects was actually
incurred by me.
(5) The personal servants and driver or cleaner for whom T.T.A. is claimed were in
my employment at the time of receipt of transfer orders.
(6) The conveyance for which claim has been preferred is maintained in good
operative condition.
(7) The distance for which flat charges have been claimed is not less than 1/2km.

4.3.12 GENERAL PROVIDENT FUND

(a) All officers whether temporary or permanent are eligible to join this fund on
completion of six months of service. Rule 4(1)
(b) Re-employed officers may subscribe to the fund at their options. Rule 4(2)
 90

Rates: The rates of monthly subscription shall be as detailed below – G.O. Ms. No.579
Finance Dt. 7.10.98 (Pay means pay, special pay, D.A and personal pay)
Pay Subscription Pay Subscription
3000-3200 360 8001-8500 960
3201-3500 385 8501-9000 1020
3501-3800 420 9001-10000 1080
3801-4100 455 10001-11000 1200
4101-4400 490 11001-12000 1320
4401-4700 530 12001-14000 1440
4701-5000 565 14001-16000 1680
5001-5500 600 16001-18000 1920
5501-6000 660 18001-20000 2160
6001-6500 720 20001-22000 2400
6501-7000 780 22001-24000 2640
7001-7500 840 24001-26000 2880
7501-8000 900 26001-28000 3120

The subscription can be increased on any two occasions in a year by the employee.
However, decrease shall be allowed only in the month of March subject to the minimum
prescribed. – G.O. Ms. No.701 Finance dt.31.8.95.
Temporary advance: G.O.Ms.No.579 Finance dt.7.10.98
Temporary advance may be drawn for the following purposes or reasons.

Reason/purpose Rule
1. Ailment, Delivery, Medical Expenses to self and family members. Rule 14(1) (a) (i)
2. To meet the cost of higher education of the subscriber and his Rule 14(1) (a) (i)
dependents
3. To pay obligatory which by customary usage the applicant has to Rule 14(1) (a) (iii)
conduct in connection with marriages, funerals, betrothal, shradh
ceremony etc. and or other ceremonies
4. To meet the cost of legal proceedings instituted by the subscriber for Rule 14(1) (a) (iv)
indicating his position in regard to any allegations made against him in
respect of any act done or purporting to be done by him in the discharge
of his official duty.
5. To meet the cost of his defence where the subscriber is prosecuted by Rule 14(1) (a) (v)
Government in any court of law.
6. To purchase television, video cassette recorder, video cassette player, G.O.Ms.No.247
washing machine, cooking range, geyser and computer Finance dt. 12.5.97
7. To book a car/motor bike/scooter/moped etc. to be recovered in 36 G.O. Ms. No.1040
instalments in the case of officers who may fall short of the minimum Finance dt.
service of 15 years by a period of not more than six months. 22.12.83
Note:- Between 2 temporary advances, there should be a gap of six months from the
date of order (not from the date of payment)
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Partfinal withdrawal is allowed for the following reasons, to those employees who
have completed 15 years of service.

1. For children’s Education abroad, professional or technical, academic etc. (also

education see G.O. Ms. No.36 Finance dt.27.1.81)
2. Medical expenses Medical expenses of self and dependent family members.
3. To acquire To acquire property prior to six months of retirement. Rule
property 15(a)(g) (Now 90% of the available credit may be drawn without
assigning any reason within one year of the retirement. Hence this
provision has no relevance).
4. To purchase To purchase television, video cassette recorder, video cassette
house-hold articles player, washing machine, cooling range, geyser and computer –
G.O. Ms.No.247 Finance dt.12.5.97
5. To meet legal To meet the cost of legal proceedings instituted by or against the
expenses subscriber, any member of his family or the dependent (G.O. Ms.
No.798 Finance dt. 22.7.80)
To meet the cost of subscriber’s defence where he engages a legal
practitioner to defend himself in an enquiry in respect of any
alleged official misconduct on his part (G.O. Ms. No.798 Finance
dt. 22.7.80)
6. For house To pay instalment other than monthly instalment, for site or a
construction purpose house or flat constructed through the State Housing Board or a
15 years need not be House Building Co-operative Society or similar agencies
completed provided the withdrawal on each occasion does not exceed the
(G.O. Ms. No.56 limit specified in Rule 15 B – G.O. Ms. No. 56, Finance dt. 4.2.81
Finance dt. 04.3.81) For construction of a house, upto Rs.2,50,000 or 75 times of pay
whichever is less – G.O. Ms. No.33 Finance dt. 21.1.92 (Now the
HBA is increased to Rs.6,00,000 and the subscribers are also
tempted to subscribe more to get income tax relief. More funds
are now available at the credit. Hence the ceiling for this purpose
should be removed to enable the subscriber to draw money and to
create an asset. Author)
To renew the existing house or the house owned by the wife or
husband - G.O. Ms. No.461 Finance dt. 21.7.82
To construct a house on the plot owned by the spouse - G.O. Ms.
No.900 Finance dt.17.10.82
To enlarge living accommodation of the house owned by the
spouse - G.O. Ms. No.900 Finance dt.17.10.82
7. To purchase motor 25 years of service should have been completed or less than five
car years left for retirement. G.O. Ms. No.590 Finance dt.15.7.83
To repay a Government loan obtained to purchase a car - G.O.
Ms. No.590 Finance dt.15.7.83
The withdrawal shall be allowed only once - G.O. Ms. No.590
Finance dt.15.7.83
To book a motor car - G.O. Ms. No.1040 Finance dt.22.12.83
8. To purchase motor Officer should have completed 15 years of
cycle/scooter/moped service (including broken period) or 10
etc. years left for retirement. G.O. Ms. No.1040
Finance dt.22.12.83 (The pay indicated is
old. Three pay commissions had come. The
ceiling in pay should be changed – Author)
.
 92

9. To meet extensive Should have completed 28 years of service or who have less than
repairs or overhauling three years to retire.
of motor car Not less than five years should have lapsed since the purchase of
– Rule 15E car.
Allowed only once during the service.
10. To convert An employee may convert pending temporary advance into a
pending temporary part-final withdrawal – Rule 15(c)
advance

Quantum:- The amount should not exceed 50% of the available credit. For special reasons
upto 60 %.
 93

4.4 AUDIT PRINCIPLES

4.4.1 GENERAL
In auditing the accounts of expenditure and of receipts, an auditor should bear
in mind that audit should be conducted on broad principles. The prescribed checks
should be observed in spirit and not merely in letter as opposed to the spirit.
While auditing financial irregularity of any transaction or document, the
following points should be considered :-
1. Whether it infringes any of the standards of financial propriety.
2. Whether the point is strictly enjoined either in the codes or local orders from which
no systematic or intentional deviations can be recognised without special sanction.
3. If the answer to the above point is found to be in the negative, the defect will
generally be of a trivial nature it need not therefore, be included in the objection book.

4.4.2 WAIVING OF OBJECTIONS.

There is sometimes an impression that para 7.1.13 of MSO(Audit) can relate

only to such objections to which money value can be given [see para 7.1.33 of MSO
(Audit)]. There may be cases where the money value would not be recorded in
accordance with Para 7.1.34 of MSO(Audit) but to which para 7.1.13 MSO(Audit)
may be made applicable. For example it is not necessary to record money value where
enquiries and remarks are made on doubtful points but still there may be definite
amount at stake. If the case and the amount fall with in para 7.1.13. of MSO(Audit)
auditors should make necessary proposals for waiving.
As it is desirable that the discretion allowed by para 7.1.13 of MSO(Audit)
should be freely exercised, it may be explained that the article would apply to

1. Errors of calculations in vouchers, assessment of rents and percentage calculations

2. Want of Vouchers and
3. Irrecoverable amounts outstanding in the suspense accounts or in the ledger or in
the schedule of rents, buildings and lands.

With regard to (1) the particulars of objections should be noted in the register
and the register submitted to the B.O in charge with concerned documents. The
officer will pass necessary order if he is empowered to do so or record his
 94

recommendation for the orders of Group Officer. The fact that the amount has been
written-off should be intimated to the Divisional Officer through the Audit Note.
(2) Sometimes it happens that, signature of one or two payees is missing in
acquaintance rolls. Inquiry may first be made whether the receipts are easily available
or obtainable and if not the Divisional Officer should state whether he is of the
opinion that the amounts have been correctly paid to the parties concerned. If the
replies are sufficient, the objections may be waived and the fact recorded in the
register. In other cases, the above inquiry should be made only after the voucher has
been called for twice, once in the Audit Note and the second in the rejoinder.
Certificate of payments need be called for only in respect of vouchers for sums
exceeding Rs.50/-
(3) In the case of amounts of Rs.50/- and below, inquiry should first be made as to
how the amounts have become irrecoverable. If the explanations are clear and no fault
could be attached to the executive, the facts may be recorded in the register.
Otherwise the Divisional Officer should be requested to forward his remarks through
the Superintending Engineer.
The Government have authorised the Accountant General and Group Officer
to waive audit objections relating to excess expenditure on completed works upto
Rs.250/- and Rs.100/- respectively.
Note: The CAG has agreed to this arrangement as a permanent measure.

Trivial objection or objections waived under Para 7.1.13 of MSO(Audit)

should not be included in the .objection book vide Para 7.1.24 of MSO(Audit).
Objection waived under Para 7.1.13 Clause (1) of MSO(Audit) need not be recorded
in the waiver register. The sanction of SO/Group officer/AG for the waiver should be
obtained on the bills or other documents or on the office copies of the Inspection
Report as the case may be.

4.4.3 PERSISTENT DISREGARD OF THE RULES

This office should bring to the notice of superior authority concerned by
means of special report any persistent disregard of the rules, especially if it seems to
indicate or is likely to lead to fraud.
The following principles should also be observed in the matter of enforcing
responsibility for the accuracy and regularity of the accounts of executive officers.
 95

In the case of ordinary inaccuracies of carelessness in the preparation of bills

etc., not only should objections be followed up and disposed of but auditors should
watch which office is particularly careless or pays no attention to the directions or
repeats mistakes and draw the attention of the Head of the Office to the state of affairs
through a special letter in which care should be taken to substantiate the charges of
carelessness and inaccuracy with sufficient evidence. A letter of this kind would
create a very good impact rather than the ordinary routine objections or other
prescribed statements. If no impact is produced by such a letter, then the matter
should be carried to higher authority.
 96

4.5 AUDIT NOTES

4.5.1 FORMAT

The objections noticed during the course of audit of monthly accounts and
connected documents are to be communicated to the Departmental Officers in the
form of Audit Notes. This is prepared in two parts.
Part 1- should include:

i) all objections relating to want of sanction for excess over financial

sanction where such sanction is required in addition to technical sanction
and
ii) in respect of works included in Part I of the Works Registers maintained
by the Accountant General (A&E ) objections for want of, or excess over,
sanctioned estimates/allotments where regularisation has been delayed for
over 6 months and for want of, or excess over, administrative approval.
Part II includes all other objections whether relating to substances of the accounts on
the score of deviation from financial rules, or of standards of financial propriety or
miscellaneous remarks, observations and enquiries on minor matters and objections to
the form of accounts and vouchers.
In the Audit Note, a distinction should be observed between (1) remarks and
observations indicating errors of omission or commission, on the part of the
Divisional Accountant, in the compilation or preliminary examination of accounts and
(2) points relating to the substance of the transactions brought to account.

Filing of Audit Notes

After the Divisional accounts of the month have been audited, the auditor
concerned should have the Audit Note and objection statements etc., stitched
subsequently after disposal on their receipt back from the Divisions. The schedule
dockets, vouchers and monthly accounts are also arranged in proper order and
retained in AG(A&E) office. Pending Audit Notes should be filed in separate case
covers for each month. The rejoinders and the connected correspondence should also
be tagged with the concerned original Audit Notes and kept pending till all the points
 97

are finally settled. The orders of Branch Officer should then be obtained for filing the
Audit Note along with the connected papers with the monthly accounts concerned.

4.5.2 CORRESPONDENCE
Any correspondence with the Divisional Officer on points connected with or
arising out of monthly accounts needs to be made only in very special cases, to be
approved by the Branch Officer.
It is necessary that the Audit Notes should contain only important objections.
Routine and trivial objections may be raised by special letters when there is a
persistent disregard of rules or procedure.
Objections of similar or identical nature should be grouped together.
Corrections in the accounts may be advised by correction statements half margins.
The following type of minor objections should be dealt with as follows:-
(a) Routine objections should not be recorded in the Audit Note but entered in a
separate register. If the same objections persist for 3 months they should be recorded
in the Audit Notes and pursued.
1) Amount of bills for Rs.1001/- and less not expressed in words.
2) Lack of dated signature in Part II and Part III of the Bills.
3) Lack of particulars regarding the mode of payment to contractor, when the
contractor’s acknowledgment is after the date of issue of the cheque.
4) Lack of sale account and survey report when the amount involved is small
5) Lack of contra reference to TE, credits and debits, if it could be traced by
audit.
6) Want of agreement number in the bill when the agreements are not required to
be sent to audit.
7) Lack of reference to deposits made by the contractors in the case of running
account bills in which 5% deduction is not with held
8) Lack of particulars for the minus expenditure in the schedule docket if the
nature of the minus expenditure could not be easily ascertained.
9) Delay in payment of contractor's bills for three months or less.
b) Lack of reference to recorded measurements need not be mentioned in the Audit
Note, provided there is clear indication that measurements have been taken.
 98

c) Amount of bills for over Rs.100/- not expressed in words. The objections should
be raised and pursued.
d) Lack of reasons for corrections in the quantity of work if they are due to check
measurements. If the corrections in the quantities of work done are attested by the
Sub-Divisional Officer or check measuring officer, objection need not be raised.
e) Lack of reasons for allowing part-rates in the bills if it is ensured that part-rates
are either admissible or not intended to be an aid to the contractor. In such case,
the objection need not be raised.
f) Lack of information regarding the record of materials and 7F accounts - the
objections need not be raised.
In the Audit Note, brevity and clarity are essential and a reference to the rules
must be made wherever possible. Audit Notes and objections statement should be
very carefully scrutinised by the SOs/AAOs and BOs so that unnecessary routine
objections may not be included therein. Important items of expenditure for want of
excess over estimates or appropriations which will eventually require the sanction of
Government should be reported to the Authority by special letters.
Without Group Officer’s approval, instructions should not be given in an
Audit Note except in strict accordance with the rules.
The Audit Note on return to this office from the Divisions must be disposed
of, any entries requiring action or information from other sections being dealt with
and initiated accordingly by those sections and any items needing action during
inspection of the Divisions will be entered after the approval of Branch Officer in the
register of points for verification during inspection. The remarks against other items
will usually be accepted, corrected, checked and filed, note put up, rejoinder,
objection and so on according to the nature of items. Any systematic disregard of the
return of Audit Notes should be brought specially to notice of Group Officer.

4.5.3 MAINTENANCE OF OBJECTION BOOKS IN CENTRAL AUDIT

In order to watch objections arising out of local Inspection and Central audit,
statement of objection books should be maintained. The objection Book should be
closed on 15th of second following month to which the account relates. An objection
statement as prescribed in Form 5 MSO Audit and an objection book as prescribed in
Form 6 MSO Audit should be maintained.
 99

4.5.4 MONEY VALUE OF OBJECTIONS

Money value should be recorded in respect of objections of the classes

enumerated below or similar objections.
(i) Lack of Voucher's sub -Vouchers and payees receipts.
(ii) Lack of sanction to advances, loans and to special charges
(iii) Lack of any other specific sanction required by rule.
(iv) Overpayments and short recoveries.
(v) Delays in recovery of sums due to Government, if not recovered within a
reasonable period, which may be prescribed locally in respect of each classes of debt.
(vi) Expenditure placed under objection on grounds of financial propriety .
(vii) Lack of allotment and excess over allotment, etc..,
[Para 7.1.33 of MSO(AUDIT)]

4.5.5 OVERLAPPING OF OBJECTIONS.

When two or more objections are raised in respect of a single transaction

relating to a work they are to be booked separately, as if they relate to different works

so as to avoid overlapping when projecting statistics of money value objections

[Para 7.1.35 of MSO (Audit)]

4.5.6 OBJECTIONS TO INSUFFICIENT SANCTIONS

A record of objections on irregular sanctions should be kept in a special
register in Form MSO (Audit)-7. A separate Register should ordinarily be maintained
to record such objections of Administrative Departments/ Ministries / Government.
The objection statement should be neatly written up and forwarded to the
Division concerned over the signature of the Branch Officer for return with replies
within a fortnight. The objection book is maintained for recording the entries made in
the objection statement.

4.5.7 CLEARANCE OF OBJECTIONS

Objections should be settled as soon as necessary reply from the appropriate
authorities with proper sanction, voucher or document is received or when the audited
amounts show that the expenditure under objection is adjusted or recovered.
 100

Note1: Whenever an objection is erroneously raised and then withdrawn or is cleared

before the despatch of the Audit Note, it will be shown as minus entry under “Amount
placed Under Objection”. This also applies to objections originally raised under one
head but which require transfer to some other head.
It should however be seen that no objection involving infringement of the
financial rules are omitted.
Note 2: A write back or reduction of expenditure placed under objection (made either
to correct previous misclassification made by the Divisional Works Officer concerned
or to bring to account sale proceeds of surplus materials sold) should be shown as a
plus figure in the column: “mount cleared" and not as minus figure under “Amount
placed under objection" -Vide also Para 4.4.16 of MSO(Audit).
A minus entry in column" Amount placed under objection" is necessary only
in cases where an error in raising the initial audit objection needs correction.

4.5.8 WATCH OVER OBJECTIONS & SPECIAL REPORTS

An auditor should, without waiting for the issue of Audit Note, initiate
immediate action in regard to any irregular or excess outlay of a serious nature which
may be discovered in the course of his audit of the monthly accounts in order that a
special report of such items may be made by letter, vide also para 7.1.7 of
MSO(Audit).

4.5.9 FORMATION OF MASTER FILES FOR EACH OFFICE / DIVISION

Sr.Auditors/Auditors should maintain Master Files consisting of all important
objections, sanctions etc., relating to the office/ Division dealt with by them. This
master file is one of the most important documents to be maintained in the WAD
Sections and proper maintenance of the files by all the units has to be ensured. It is
suggested that a facing sheet may be attached to each master file which should
indicate, inter-alia, the following information.
1. Sanctions etc., relating to the Office/Division received and audited with results
thereof (page numbers in the file to be indicated).
2. Follow up of the central audit of these sanctions with scrutiny of the relevant files
in the offices of the Heads of the Departments and Secretariat (page numbers in the
files to be indicated)
 101

3. Transmission of the points so noticed (vide 1 and 2 above) to the local audit parties
taking up local audit of the Office/Division (details of the dates of local audit, dates
on which the points were communicated to be indicated).
4. Further details collected by the local audit parties (page numbers in the files to be
indicated.)
5. Part IIA paras and other important paras in the local audit reports of the Office/
Division (Copies to be filed in this file and page numbers to be indicated).
6. Development of Part IIA paras and other important paras into Factual Notes and
Draft Paragraphs (to be ascertained from DP Cell and indicated in the facing sheet).
The intention is that the master files for each Office/Division should indicate
all audit events of importance of the Office/Division.

4.5.10 USE OF STATISTICAL SAMPLING TECHNIQUE IN THE AUDIT OF

VOUCHERS
WAD Sections may open a register with suitable column and list out the
irregularities of the same type and watch the frequency and submit it for scrutiny as
and when required by WM (C).
Statistical Sampling Technique is a more scientific method of selection of
sample used both in central and local audit. Use of statistical sampling in auditing
Public Works and Works Accounts is much easier if the vouchers are received
division wise. This would only require listing out the possible irregularities, their
frequency of occurrence, the standard deviation and the degree of precision required
at a given and acceptable confidence level. As far as possible, statistical sampling
method should be adopted in central and local audit.
 102

4.6 AUDIT OF SANCTIONS

4.6.1 SCRUTINY OF SANCTIONS

The general principles regarding audit of sanctions to expenditure laid

down in Para 2.2.35 to 2.2.38 of the MSO(Audit) as also the detailed instructions

in this regard in Chapter 11 of Manual of the .Departmental Audit Sections should

be borne in mind.

Review of sanctions
Para 2.2.33 of MSO(Audit) lays down that sanctions with a long period of

currency as well as sanction of a permanent nature should be reviewed periodically

and the Administrative Authority concerned should be invited to review the sanction

if necessary.

4.6.2 AUDIT OF SANCTIONS TO EXPENDITURE

One of the important functions of Audit in relation to audit of

expenditure is to see that each item of expenditure is covered by sanction of

the authority competent to sanction it. In the audit of sanctions to expenditure

from the point of view of competency of sanctioning authority, the principles

laid down in para 2.2.28 of MSO(Audit) should be observed. Besides, the

scrutiny of sanctions should include the following points

i) Whether the expenditure is a legitimate charge on the provision from

which it is proposed to be met

ii) Whether the expenditure conforms to the statutory provisions as well as the
relevant financial rules, regulations and orders.
iii) Whether it fulfils the standards of financial propriety; and

iv) Whether in case of sanctions to new schemes of expenditure, a satisfactory

procedure of accounting has been evolved and the detailed cost and time
 103

schedules, physical targets and other objects of expenditure are duly laid

down by the sanctioning authority.

It is imperative that utmost care and caution should be devoted to the work

connected with audit of sanctions to expenditure, as once a sanction has been accepted

in audit, expenditure may have to be passed against it for a length of time. The office

entitled to receive a separate copy of an order sanctioning expenditure, or of a

sanction which is otherwise to be enforced in audit, from the authority competent to

accord the sanction.

4.6.3 AUDIT OF SANCTION TO PROJECTS

The term 'Project” is generally applied to a large work consisting of several

parts of smaller works or groups and Para-111 of Madras Public Works Department

Code prohibits officers from carrying out a work in portions. Splitting a

work/purchase in portions is also prohibited as the aggregate cost would exceed the

sanction limit of sanctioning authority. A special mention may be made to ensure

that the sanction is not being accorded piecemeal for the purpose of bringing the

amount within the powers of the sanctioning authority. Therefore, to prevent abuse

of the powers by sanctioning authorities, special scrutiny must always be exercised

to ensure that sanctions are not accorded piecemeal.

Acceptance of sanctions

All sanctions to expenditure should be recorded under the Branch Officer’s

initials with the certificate 'sanctions audited and accepted’. The sanctions and orders

issued with the concurrence of CAG, require no further audit check.

[Para 20.7 of Introduction to A&A]

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4.6.4 LAPSE OF SANCTION

A sanction for any fresh charge accorded by Government or an authority

subordinate to Government lapses if it has not been acted upon for one year unless it

is separately renewed with certain exceptions under Article 50 of Tamil Nadu

Financial Code Volume I.

The sanctions for loans will lapse at the close of the financial year and sanction

to an estimate for a work (other than ordinary annual repairs) will lapse after five

years. If the work has not been started, sanction to an estimate for ordinary annual

repairs to a road and building will lapse at the close of the financial year.

All sanctions whether of Government of India or of the State Government or

of any authority subordinate to them should be carefully scrutinised to see (i) that the
authority is competent to issue the sanction and (ii) that the terms of the sanction are
definite.

Where a sanction is dealt with independently by different auditors, each

auditor must comply separately with this rule unless in particular cases, the A.A.O/SO
of the section concerned has ordered some other procedure suitable for the particular
occasion. No sanction which has been submitted to this office for scrutiny before it is
issued need be re-audited unless there is some specific reason for it. In such cases, the
A.A.O/S.O of the section concerned should endorse on the sanction 'in order'. Where
a proposed sanction has been referred to this office officially, it is necessary to ensure
when the sanction is finally received, that it is strictly in accordance with the
proposals accepted by this office and in this case also necessary endorsement should
be made by the A.A.O./S.O. on the face of the sanction.

Note(i):Application for copies of any letters from the Heads of Departments read in

Government Proceedings which may be required in this office to understand the scope

of sanction and to facilitate higher audit investigation should be made to Government.

 105

Note (ii):In the case of Irrigation Projects, Government had agreed to furnish
'Abstract of estimates' along with copies of the orders according Administrative
approval to the scheme. This should be utilised for maintaining Project Estimates
Register and auditing sanctions to working estimates against the provisions under
main and sub heads of the Project.
 106

4.7 AUDIT OF CONTRACTS

4.7.1 GENERAL

Purchase of stores, execution of work etc., are often done by contract.

For this purpose, Government enters into Contract or an agreement in writing

with the person or body/agency concerned. Such a document contains, inter-

alia, stipulations as to the quantity and price of stores to be supplied or

work to be executed and the time within which it is to be completed. As a

general rule such contracts should be concluded only after competitive tenders

have been invited in the most public manner as possible. The general principles

applicable to contracts are contained in Article 51 of TNFC Volume I.

4.7.2 TYPES OF CONTRACTS

Audit of contracts, whether the contracts are placed by Central Purchase

Agency or by departments, generally fall under the following heads:
i) Audit of contracts and agreements by themselves and with reference to
indents and tenders.

ii) Audit of payments of contractors bills against contracts, purchase- orders

and agreements

iii) Audit of accounting of stores, equipments etc, purchased against such

contracts by the consignee

The main types of cases that may be examined in local audit are ; —
a) Acceptances of tender including rate/running contracts, supply orders.
b) Amendments against acceptances of tenders etc.
c) Contracts on firms not originating from India
d) Timber purchase orders.

e) Office orders etc, issued by Purchase Organisation on the subject of Sales

Tax, Excise duty etc

f) Disposal Contracts.
 107

g) Arbitration case, etc.

It is obligatory on the part of each and every department of the

Central/State/Union Territory Governments to procure stores which are borne on

the 'rate contracts’ entered into by the Director General of Supplies and

Disposals(DGS&D) either through that Directorate or direct from the firm

concerned (in case of Direct Demanding authorities). Failure to avail the benefit of

these rate contracts and making local purchases at higher rates, by splitting the

procurements to keep them within the financial powers delegated to the

officers for local purchase or under some other pretexts results in

avoidable extra expenditure to Government. Such cases need to be pointed out in

the course of audit of the accounts of the offices/departments. In case the

irregularity is persistent or of high magnitude, it should be proposed for mention

in Audit Report.

4.7.3 SCRUTINY AND ACCEPTANCE OF CONTRACTS AND AGREEMENTS

All contract documents received in audit should be scrutinized and evidence

of the preliminary scrutiny and their acceptance by the persons responsible should be
mentioned. A record should, therefore, be made on the contract documents or files
concerned to the effect “scrutinised by and accepted by" and should be signed
by the concerned Auditors/Sr.Auditors/S.Os/AAOs/B.Os and then filed.

4.7.4 AUDIT OF AGREEMENTS

Contracts of Rs.5 lakh and above received in audit, should, after scrutiny in
the concerned WAD Section, be put up to the Branch Officer for further scrutiny
and acceptance. This will be recorded for audit for payments. In the Integrated
Audit System, the agreements concluded by the Executive-Engineers of various
PW Divisions are also called for and scrutinised at various levels. Scrutiny and
acceptance of agreements involving money value of less than Rs.1 lakh has to be
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done by the Sr.Auditor/Auditor. Review of agreements over Rs.1 lakh but less
than Rs.5 lakh has to be done by AAO/SO and scrutiny and acceptance of
agreements involving money value of more than Rs.5 lakh has to be covered by
Branch Officer.

4.7.5 AUDIT OF SANCTIONS TO CONTRACTS

The contracts or agreements for works or supplies made communicated to

this office by the authorities higher than the Divisional Officer should be

scrutinised with reference to the instructions given in Paras 3.7.1 to 3.7.6 of the

MSO(Audit). In the case of lumpsum contracts, arithmetical check should also

be exercised to see that the total amount of the contract is correct. After scrutiny,

all contracts and agreements should be submitted to Branch Officer in charge

of the Section with the enfacement ‘Audited and noted in Audit Register’. Each

contract or agreement together with supplemental slips received if any, relating

thereto should be filed in a separate file to facilitate check with paid bills.

4.7.6 SPLITTING UP OF WORKS - DELEGATION OF POWERS TO TENDER

ACCEPTING AUTHORITIES

According to the orders issued in G.O.Ms.No.805 PWD dt 7.6.1976, in

building works, the works relating to foundation, super-structure, sanitary and

water supply arrangements and electrical instalation can be treated as independent

parts and separate estimates prepared and executed accordingly for the purpose of

convenience and expeditious execution.

The fabrication work such as manufacture, supply and erection of steel trusses,

windows, doors, gates, rolling shutters, collapsible gates, aluminium windows etc.,

may be segregated from the civil works at the time of first call of tender itself and

entrusted to TANSI, other SSI units and other private agencies, calling for

separate tenders for fabrication work alone.

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4.8 AUDIT OF RECEIPTS AND ACCOUNTS OF STORES & STOCKS

4.8.1 GENERAL

In conducting the audit of receipts and stores and stock, the instructions in

Chapter 4 and 5, Section II of MSO(Audit) should be kept in view. For conduct of

audit of receipts detailed rules are available as Regulation 1 and for conduct of audit

of stores and stocks detailed rules are available as Regulation 8 in Appendix 9 to

TNFC Volume-II. Which may be referred to. Consequent on the introduction of

simplified accounting procedure, most of the checks can be raised only during local

audit.

Receipts
It is primarily the responsibility of the Divisional Officer to see that all

revenue or other debts due to Government which have to be brought to account are

correctly and promptly assessed, realised and credited to the Government account.

Audit office should see that all revenue and other receipts of which it has cognisance

(either through any entries in the Government accounts or otherwise) are brought to

account by the Divisional Officer. In cases where separate revenue accounts of

projects are to be kept, the receipts relating to each project are kept distinct.

4.8.2 STORES AND STOCK

The Audit Department does not audit the account of stores and stock kept in

any office or department as a matter of course except in so far as it forms part of its

duty in relation to the audit of subsidiary account of Government commercial

undertakings undertaken with the approval or under the orders of the Government.

Audit should, however, scrutinise all sanctions to write-off of stores accorded by

competent authorities and bring to the notice of the Government any defect of system

which appear to require attention.

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4.8.3 STOCK ACCOUNT

In checking this schedule, the “Detailed Account of Issues” should be

examined first and “Issue to works etc.,” should be agreed with the relevant entries in

all the schedule dockets of the month and the remaining issues traced from the several

accounts as indicated in the form. Part I should be checked subsequently. It should

then be seen that the closing balance of stock excluding any items of sub heads,

“Manufacture” which are not chargeable against the ‘sanctioned reserve limit of

stock’ does not exceed that limit. [Para 4.3.23 of MSO(Audit)]

4.8.4 TOOLS AND PLANT IN PUBLIC WORKS DEPARTMENT

The monthly account of heavy plant and machinery in respect of Project

Division in PWD Form I and II should be checked to see that

a) all new supplies obtained on payment, whether by purchase or by transfer from

other divisions, departments etc. had been brought on to this account.

b) except in the case of articles lent or sent out temporarily, there is a formal

acknowledgement, a survey report on a sale account as the case may be in support of

each case,

c) except in cases in which(1) issues are made free of cost under proper authority or

(2) a write-off without any recovery of cost has been duly authorised, the transfer

value or the sale proceeds, as the case may be, of each issue had been duly brought to

account.

d) in all cases of write off sanctioned by competent authority the orders passed by it as

to the disposal of stores have been fully complied with, and

e) all issues to other Divisions in the same circle of audit, intimation of which have

been received in the Audit Office, have been brought in their accounts of Receipt of

Tools and Plant.

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4.8.5 ACCOUNT OF SALES

Sale accounts need not be called for sale of grass, fruits and dead trees for

which no survey reports are prepared.

Audit section should see that every sale account submitted to this office bears

the signature of the officer competent to approve the sale.

4.8.6 REVISED PROCEDURE FOR STORES TRANSACTIONS ON CPWD -

ADOPTION BY STATE PWD
Under the existing procedure, the cost of stores purchased but not paid for in a

month in which they are received is adjusted in the accounts of PWD Division by

debit to the account of the work if they have been purchased for specific works, or to

the sub-head “stock” of the Major/Minor head “2059 Public Works-Suspense” if they

have been procured for stock purposes, with contra credit to another sub-head

“purchases” of Major/Minor head”2059-PW suspense”.

The sub-head “purchase” is debited when payment of cost of stores is actually

made. The sub-head “stock” is credited when stores are issued for utilisation on a

work or issued to another PW Division again for stock purposes. The debits under

two sub-heads “purchases” and stock do not get netted with the credits under these

heads as the latter are exhibited in the budget as recoveries below the line, budgeting

is done on a gross basis. In view of the practical difficulties, the following revised

procedure is prescribed.

1. The operation of sub head “Purchases” under the Minor head ‘suspense’ of

Major head ‘2059 Public Works’ shall be dispensed with. Instead, the cost of stores

not paid for in the same month in which they were received shall be accounted

through a new suspense Minor head “materials purchase settlement suspense account”
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under 8658 suspense accounts. This suspense Minor head will be cleared when the

supplies received are actually paid for.

2. While placing indents on the Central Stores Divisions/other Divisions, the

Divisions requiring the stores shall indicate prominently on the indent itself, whether

the stores are required for specific works or for stock purposes.

3. The existing procedure of debiting the cost of the stores supplied by it to a

Division debiting 8658 Suspense CSSA and crediting to the head 2059 - PW suspense

stock has since been dispensed with and the materials transfer from one divison to

another division will be done only on cash and carry basis under Inter Divisional

transaction wef. 18.4.1994.

Authority: GO MS no:63, Finance (LC) Dept, dt 18.4.1994.

4. In the accounts of the Division receiving the stores, the cost of stores shall be

debited to ‘2059 Public works suspense stock” depending upon whether the stores

have been acquired for works/stock purposes with a per contra credit to the head “

8658 -Suspense Accounts- Materials Purchase Settlement Suspense Account’ if the

stores received have not been paid for in the same month. The latter head will be

cleared when cost of stores is actually paid to the Division supplying stores.

5. Unclaimed balances for more than three completed account years under

suspense sub-head “Material Purchase Settlement Suspense Accounts” would be

credited to revenue as hitherto was being done in respect of balances remaining

outstanding for more than 3 years under the suspense sub-head “purchase” as per

provisions of A code.

6. With a view to avoid budgeting difficulties on account of the adoption of the

new system of stores accounting, it has been decided that Central Stores Division will

prepare their budget on the basis of their requirement as at present. The working
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division will, however, prepare their budget for stock in two parts viz., (i) direct

purchases and (ii) by indenting on Stores Divisions. The revised procedure was

brought into force from the financial year 1987-88. (Letter AG(A&E) PWC /2/Gl/83

dt 7.1.1987 to Commissioner & Secretary to Government , PWD)

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CHAPTER V

LOCAL AUDIT BY WORKS AUDIT PARTIES

Para No. Gist of the Para Page No.

5.1 INTRODUCTION 116

5.1.1 Objective 116

5.1.2 Extent of Audit 116

5.1.3 Administrative matters 117

5.2 INSPECTION 123

5.2.1 Broad outline 123

5.2.2 Transfer entries 124

5.2.3 Cash book 124

5.3 RECEIPTS 126

5.4 PAYMENTS 128

5.5 SCHEDULE OF SETTLEMENT WITH 130

TREASURIES

5.6 ACQUITTANCE ROLLS 133

5.6.1 Establishment Bills & service Books 133

5.7 Budget Allotment 136

5.8 Other important points 137

5.8.1 Register of contingencies 137

5.8.2 Vehicles 138

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5.8.3 Charge papers 138

5.8.4 Divisional Accountant’s objection book 138

5.8.5 Inspection by Superintending Engineer 139

5.8.6 Register of Inspection Reports & Audit observations 139

5.8.7 Miscellaneous Registers 139

5.9 TENDERS 140

5.9.1 Procedures 140

5.9.2 Agreements 141

5.9.3 Contractors Ledger 142

5.9.4 Work Abstract 142

5.9.5 Register of Miscellaneous PW Advance 143

5.9.6 Register of Deposits 143

5.9.7 Register of Advance for supply 143

5.9.8 Cash settlement suspense 144

(i) Outward

(ii) Inward

5.9.9 Register of works 145

5.9.10 Measurement books 145

5.9.11 Material at site account & Annual Closing 146

Balance certificate

5.9.12 Nominal Muster Roll 147

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5.9.13 Schedule of rates 147

5.9.14 Register of arbitration and court cases 147

5.9.15 Land acquisition 148

5.9.16 Register of Revenue 149

5.9.17 Value for Money Audit 149

5.9.18 Work files 149

5.9.19 Tools and Plant 149

5.9.20 Survey Reports of Obsolete Items 150

5.10 WORKS ANALYSIS 151

5.11 AUDIT OF EXTERNALLY AIDED PROJECTS 155

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CHAPTER 5

LOCAL AUDIT BY WORKS AUDIT PARTIES

5.1 INTRODUCTION

5.1.1 OBJECTIVE

Audit Parties should be conversant with the provisions in CAG’s DPC Act,

MSO(Technical), auditing standards, manuals of Audit Department/Works Audit

Department/ Forest Audit Department, various codes, rules, manuals, technical books,

circulars, office orders and other instructions issued from time to time. The

guidelines stated herein are intended to assist the Audit Parties to conduct audit in a

better manner. These serve as a general guide to raise audit observations on various

records. Actual audit observations may be based on what is done and what ought to

have been done. The guidelines meant for audit of PWD can be made use of mutatis

mutandis for the audit of other offices also.

Inspection and Local audit

The primary object of inspection is to see that the initial accounts from which

the accounts submitted to AG were compiled, were maintained properly and in the

prescribed form and that the financial rules and orders were observed. Local audit

means test audit of the accounts, registers, vouchers, files and other documents kept in

the departmental offices in sufficient detail to verify the accuracy and completeness of

the accounts and documents. Thus, in the case of PWD which render compiled

accounts to AG, both inspection and local audit are conducted.

5.1.2. EXTENT OF AUDIT

The extent of audit to be conducted should always be kept confidential. The

selections should be so made that the Departmental officers do not get any hint about

the percentage of check exercised. More number of documents than the required
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percentage should be called for and suitable selection should be made to the

prescribed extent. When any serious irregularity or fraud is noticed the extent of audit

is to be enlarged so that the irregularity could be highlighted in a more magnified

manner. When 100 percent or increased percentage of audit is considered necessary in

view of very serious irregularities noticed and more number of days are necessary, the

Group Officer should be contacted in advance and advice taken.

The period of accounts to be audited is from the last audit to the end of the

month preceding the month in which current audit is taken up. If it is the first audit,

the accounts are to be audited from inception to the extent prescribed. A general

scrutiny of the records for the entire period covered by audit should be made. Detailed

check is to be made to the extent prescribed in the Secret Memorandum of audit.

Thorough scrutiny of the records of the selected months should be conducted. The

verification of accuracy of totals is a must for the selected months.

5.1.3 ADMINISTRATIVE MATTERS

The members of the Party should work as a team. They should follow the

programme strictly. For short period of absence of any member no substitute or

extension of time should be asked for. If, however, there is a long vacancy advance

intimation should be given to the Group Officer and advice obtained. The Party

should not cut short or extend or alter the programmes on its own. Whenever any

deviation in programme is considered necessary (in rare cases only) WM/C should be

contacted promptly with proper justification. The weekly diaries, events statement,

acquittance for money received, applications for tour advances, final T.A. claims, etc.,

should be sent promptly on the prescribed dates. The weekly diary should indicate the

time of working hours and nature of records scrutinised on each working day. The

diary should be attested by the Audit Officer on each day of supervision. If the Audit
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Officer is not there on any date, the senior A.A.O/S.O. should attest the diary of the

Sr. Auditor/Auditor. All the records received from HQ should be gone through as

soon as they are received and kept safely. Action required on them should be taken

without omission. All the documents should be returned to HQ promptly. Care

should be taken that no document is lost in transit or left behind in any office. The

allocation of work among the Party members should be made by the senior member of

the Party as soon as the audit is taken up. In making the allocation the instructions

issued from the W.M (Co-ordination) section from time to time should be noted. If

there is any vacancy in the number of Party members, suitable reallocation of work

should be made so that no item of work is left unscrutinised. On the last day of audit

each member should sign the list of works allocated to him in token of having

scrutinised the documents and the list should be forwarded to Central Audit section

with the forwarding note to the draft Inspection Report.

The draft Inspection Report should be prepared and completed on the last day

of audit. The forwarding note should be filled up completely. The pages should be

numbered and cross references should be made. As far as possible, reply to the Audit

slip should be kept below the slips.

In respect of lengthy annexures, at least four copies should be attached. One

copy is to be attached at the appropriate place in the draft I.R. with indication that

three spare copies are sent in a separate folder or attached at the end.

For important rules and orders quoted in the draft I.R., attested copies should

be enclosed, wherever necessary:

For Part IIA paras, spare copies with copies of key documents should be sent

in a separate folder.
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The changes occurred in the Division/sub divisions, during the period covered

by audit should be stated clearly in Part IA. The duration of audit (i.e., the dates of

audit) should also be mentioned under Part IA.

Part IB -Outstanding paras of previous I.R.s should contain correct details.

The Party can only recommend the settlement of outstanding paras. The final

settlement is, however, effected by the Central Audit Section. Hence, the paras

proposed for settlement by the Party should not be excluded from Part I B of the draft

I.R. The exclusion will be done by Central Audit section after taking action on the

recommendations of the Party.

Part IC should contain the “persistent irregularities”. Whenever references are

made in Part IIA or IIB that the irregularities pointed out in the previous audit still

persist, the items should be noted under Part I C also.

Part IIA should contain only major irregularities which are likely to be

processed as draft paragraphs or which deserve special attention by Government or

Head of the Department or which point out serious lacuna in procedure/rules or which

contains audit points which can be applied in other offices and a consolidated para

could be attempted for Audit Report. The names of the originator of the para should

be mentioned in the margin. If it was carried over from previous I.Rs that fact should

be stated in the margin.

All other important irregularities should be included in Part II B. Mention of

mere introductory and statistical details should be avoided in paras. Instead they

should be supported by audit observations on specific items falling within the

category. Paras in the nature of eliciting information/details/records should be

avoided. In case the department did not provide details/records/information within the

period of audit, it may be specifically mentioned in a separate para under part IIB.
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Audit points already dropped by Central Audit sections in earlier I.R.s should not be

revived and included in the current Inspection Report. If, however, the revival is

considered necessary the reasons therefor should be mentioned invariably on the

margin of the current para.

A copy of Part III - Test Audit Notes- should be issued locally with

instructions to the Division to take necessary action and furnish replies to the Central

Audit section and to show the action taken during the next audit for verification. All

points which are not controversial or which do not require the defect to be brought to

the notice of higher officers should be included only in Part III- T.A.N. Part III may

also contain a list of minor deficiencies where department has agreed to set right the

defects.

The report is to be drafted in courteous and simple language. The tone of the

report should not offend the reader. The purpose of audit is to tell the facts and figures

without fear or favour and not to offend the departmental officers. The paras in the

Report should be grouped in an orderly manner.

To the extent possible, on the first day of audit itself, all the documents

required should be called for. The list of Audit slips issued should contain the dated

acknowledgement of the authorised Divisional staff for the receipt of the Audit slip.

The Audit slips should be issued in a continuous process instead of rushing up

towards the end of audit. They should contain the date of issue. Indication should be

made on the margin of the slip- whether it is taken to Part IIA or Part IIB or Part III or

dropped.

The Audit slips are issued calling for documents, information and clarification.

Care should be taken to avoid issuing directions to the department at this stage
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through the Audit slips. The results of audit are communicated through Part II - I.R.

and Part III- T.A.N. after scrutiny of replies received to the Audit slips.

It is likely that defects would exist in the maintenance of various records by

the Divisions. Audit slips should invariably be issued bringing to the notice of the

Heads of the office all the defects for clarification. Minor defects may, when

investigated, bring to light serious irregularities. There had been cases where erasures

and over writings in Treasury Bills Book investigated intelligently by the Audit

Parties had brought to light defalcation of money. Hence the tendency to issue no

Audit slips or to issue only minimum number of Audit slips/nil report should be

avoided. When there is a long delay in receipt of intimation from HQ about the

selected month/sub-division/work, etc the selection may be made locally by the

Senior member of the Party (the power is to be exercised only on rare occasions in an

intelligent manner) and post approval of Group Officer should be sought for while

forwarding the draft Inspection Report. When documents like previous IRs,

statements of audit observations, accounts and vouchers of selected months, etc., have

not been received from the HQ, the documents available in the Division should be

obtained and scrutinized.

The draft I.R. should be discussed with the Head of the Office and his

signature should be obtained in token of discussion and verification of facts and

figures. He may be permitted to record his views at the end of the paras. The Party's

further remarks on his views should also be added thereafter.

The replies to the outstanding paras of previous I.R.s and outstanding audit

observations should be obtained from the Division and the action taken should be

verified with the records and Party's recommendations should be furnished to Central

Audit Section for final action. The special points communicated for local verification
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should be attended to sincerely and specific remarks should be made. Wherever

necessary, comments may be included in the current I.R.

All applicable field audit standards, reporting standards and auditing standards

of IAAD 2002 should invariably be followed in local audit and draft IRs. While

preparing draft IR, guidelines given in style guide have to be followed.

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5.2 INSPECTION

The Audit Party may try to find the answers to the following questions
whenever applicable.

5.2.1 BROAD OUTLINE

Inspection of records relating to monthly accounts

1) Whether the monthly accounts of the selected month had been compiled
correctly?
2) Whether the various figures in the monthly accounts were traceable in the
respective ledgers, registers etc?
3) Whether the totals of various records for the selected months were correct and
have been carried over to the accounts correctly?
4) Whether vouchers, cheques, etc., received from Central Audit section were
checked with the records kept in the Division and their genuineness and
correctness ensured?
5) Whether the vouchers paid from treasury and cheques were verified with
Treasury records also?
6) Whether the arrangement for custody of cash is adequate? Whether the cash
box has been embedded?
7) Whether the duplicate keys have been entrusted to Treasury Officer for safe
custody and they have been obtained, verified and returned periodically at the
time of change of incumbency of Divisional Officers?
8) Whether all sub divisional accounts have been incorporated?
9) Whether March (supplementary) adjustment have been made correctly and
without omission?
10) Whether the classifications noted in the selected month transactions was
correct?
11) Whether allocation between revenue and capital heads was correct?
12) Whether expenditure to be incurred out of advances from the Contingency
Fund had been debited correctly and the expenditure incurred did not exceed
the amount of advance?
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13) Whether in the above mentioned case, further expenditure after the date of
recoupment of the Contingency Fund advance is not continued by debiting to
the Contingency Fund?
14) Whether separate subsidiary accounts have been kept in respect of schemes
assisted by World Bank, etc.?

5.2.2 TRANSFER ENTRIES

1) Whether transfer entries have been approved by competent authority and they
contain details for the amounts adjusted?
2) Whether the reasons for the transfer entries have been recorded in adequate
detail and they are acceptable?
3) Whether transfer entries have been made to reverse adjustments made in the
past without justification?
4) Whether value of materials has been transferred to works, without physical
transfer or without the necessity for the work?
5) Whether attempt has been made to conceal frauds by effecting transfer
entries?

5.2.3 CASH BOOK

1) Whether the cash book is maintained in the prescribed printed form?

2) Whether pages have been machine numbered and certificate of count of leaves
recorded on the front page?
3) Whether all the leaves are available for the period covered by audit?
4) Whether the entries have been attested by the officer in charge of cash book?
5) Whether cash book is closed daily and payment and receipt sides are
balanced?
6) Whether closing balance of previous day has been correctly brought forward
as opening balance of the next day?
7) Whether CBR numbers were noted for each transaction?
8) Whether bill or receipt-wise (CBR item) details have been recorded?
9) Whether cash balance has been periodically verified and certificate recorded?
10) Whether total of the entries has been certified by a person other than the writer
of the cash book?
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11) Whether there are too many or unattested corrections and over writings? (An
intelligent scrutiny should be made to see whether these are bonafide)
12) Whether the totals of the transactions of selected months have been
independently verified during audit?
13) Whether cash was retained unnecessarily for a long period without prompt
remittance into Treasury or disbursement to parties?
14) Whether salaries etc remaining undisbursed for over 3 months remitted into
Treasury or short drawn in subsequent bills?
15) Whether balance was written at the end of month?
16) Whether imprests /temporary advances relating to earlier periods have been
settled and the balances were indicated against the names of the officers
holding them?
17) Whether certificates of possessing the balances have been obtained from the
Officers concerned to ensure their responsibility for the amounts?
18) Whether cash book entries for the whole period of audit have been generally
scrutinised and a list of important and peculiar items of transactions has been
taken and relevant files called for to examine in detail?
19) Whether classification for receipts/payments were correctly noted?
20) Whether Cash Book, Undisbursed Pay Register, etc., were correctly
maintained?
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5.3 RECEIPTS

1) Whether there is a stock register for receipt books?

2) Whether all blank receipt books have been entered therein as soon as they
were received, quoting reference to the letter?
3) Whether the letter forwarding the blank receipt books was verified and correct
accounting of blank books ensured?
4) Whether dates of bringing into use and completion of use were noted correctly
in the stock register?
5) Whether all blank receipt books in stock were produced and verified and they
were kept in safe custody?
6) Whether issue of receipt books within the office bears acknowledgement of
the officer concerned and issues to other offices were supported by proper
acknowledgement of the Head of the other Office or other empowered
Officer?
7) Whether the balances were physically verified and certified during changes of
incumbencies of the posts concerned?
8) Whether receipt books were in printed forms, machine numbered and
certificate of count of pages was recorded?
9) Whether counterfoils of all receipt books used during the period covered by
Audit were produced and they were in order on general scrutiny (for selected
months, pages should be counted) and no original receipts which were to be
issued to parties have been retained in the office?
10) Whether the Receipts have been signed by the competent officer?
11) Whether amounts have been written in words and figures correctly and there
were no unattested corrections, erasures or overwritings?
12) Whether details as per receipts were traced in the cash book on the relevant
date?
13) When a receipt was cancelled, whether both counterfoil and original receipt
were available and they bore cancellation entries?
14) Whether demand drafts/cheques received were taken as, receipts on the date of
receipt itself and their final disposals were watched through Register of
valuables or in other prescribed manner?
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15) Whether self cheques were taken in the Receipt side of the cash books on the
date of drawal itself?
16) Whether bills drawn from treasuries as per Treasury Bills Book were taken as
receipts on respective dates?
17) Whether there were overwritings, corrections, erasures, etc., in the Treasury
Bills Book?
18) Whether more than one Treasury Bills Book was maintained to draw bills
from a treasury, if so, whether the approval of the competent authority for that
purpose was shown and the necessity was satisfied?
19) Whether adequate scrutiny was made on the bills audited and returned by the
Treasury?
20) Whether deductions from bills towards receipt heads have been taken in
receipt side of the cash book?
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5.4 PAYMENTS

1) Whether each entry in the cash book for selected months was traced in
vouchers, acquittance rolls or other records to verify actual payment on the
relevant date?
2) When aggregate figure is noted in cash book whether the total of individual
disbursements has been verified?
3) When payment was made for major purchases, was register of stocks verified
in proof of having taken to stock?
4) Whether any sub-voucher required to be sent to A.G. has been kept in the
office?
5) Whether all sub vouchers not required to be sent to A.G. have been cancelled
preventing their fraudulent use?
6) Whether remittances into treasuries were supported by proper challans?
7) Whether the cheque and cash columns were correctly posted?
8) Whether the register of cheques and source of receipt of cheques were
verified?
9) Whether intimation to Treasury had been given whenever new cheque books
was brought into use?
10) Whether counterfoils of all used cheque books and all unused/incomplete
cheque books were produced?
11) Whether the cheque leaves have been machine numbered and certificate of
count of leaves recorded?
12) Whether all the leaves were available in the books used during the selected
months?
13) Whether cheques had been signed{counterfoils initialled) by the delegated
Officer?
14) For cancelled cheques, whether both counterfoils and original cheque leaves
were available and they bore cancellation entries?
15) Whether amounts have been written in figures and words in
cheque/counterfoils and are correct?
16) Whether cheque books in use/still to be used are kept in safe custody?
17) Whether the cheques bore the entry for crossed cheques/Account payee
wherever required?
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18) When a single cheque was issued for two or more items, whether the total has
been verified?
19) Whether deductions have been made from bills and gross figure has been
noted as expenditure?
20) Whether the deductions have been taken in receipt side noting relevant head of
account?
21) Whether self cheques have been taken in receipt side as cash?
22) Whether D.D./Cheques received from others were promptly sent to Treasury
for collection and entered in the Cash book on the dates of sending to
Treasury? (actual collection is to be watched through Register of valuables or
S.S.W.T.)
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5.5 SCHEDULE OF SETTLEMENT WITH TREASURIES

1) Whether the register of remittances (classification was also to be shown

against each item) and the register of cheques drawn were maintained?
2) Whether opening balances in the schedules were verified with the c1osing
balances of previous month?
3) Whether the amount shown in the SSWT as 'Remitted into treasury' agreed
with the total amount accounted as "PWI Remittances" in the Register/ Cash
Book/Monthly account?
4) Whether individual item-wise details have been obtained from Treasury in
respect of the figure 'Amount accounted by Treasury' and the certificate bore
the signature and seal of Treasury Officer?
5) Whether amount shown in the SSWT as cheques drawn, agreed with the
details of cheques drawn in the register of cheques drawn and as per cash
book/accounts?
6) Whether the amount relating to 'Cheques paid by Treasury' was supported by a
list containing cheque number, amount and date of payment and also bearing
the signature and seal of Treasury Officer?
7) Whether pairing of individual items of receipt/cheque properly done with
reference to Division lists and Treasury lists? (The independent pairing is to be
done by the Party for selected months)
8) Whether only the unpaired items were taken to explain the closing
differences?
9) When a remittance was made by D.D/Cheque, and the amount credited by
Treasury was for net amount after deduction of collection charges, whether
suitable adjustments made in the Division accounts and necessary action taken
to realize collection charges from the parties?
10) Whether any cheque was paid by Treasury without revalidation when the
period of validity of the cheque had expired?
11) Whether adequate action has been taken by the Division in respect of closing
balance details?
12) When amounts accounted for in Division as “Remittances into Treasury” were
not reflected in the Treasury list of Remittances in the same month or next
 132

month, whether the original challans have been verified to ensure correctness
of remittance?
13) Whether the Division had taken action with Treasury to ascertain details of
credits appearing in Treasury but not in Division and necessary adjustments
were carried out early?
14) Whether in respect of cheques accounted for in Treasury list but not in
Division, the cheque number, etc., were available and the cheques related to
the Division?
15) While conducting treasury verification, in addition to the list of remittances
copied from the Division for the selected months, the details of items shown
under closing balance in the latest S.S.W.T. were also copied and verified with
treasury records (when the items are not traceable in the daily scroll of cashier
for the relevant date, the matter is serious and should be investigated in detail.
If however, they could be traced in cashier’s scroll and not in the subsidiary
Register for I Remittance, there could be a case of misclassification which
should be pointed out)
16) In respect of cheques encashed and included in Treasury list, but not appearing
in the list of cheques drawn by the Division, whether the details were copied
and verified with treasury records? (Intelligent scrutiny is to be made with
reference to Treasury records to find out the name of the drawing officer by
whom the cheque book containing the particular leaf was being used, etc. to
verify whether there was a case of drawal of fraudulent cheque or only
misclassification in treasury)
17) Whether remittances to heads other than I B remittances were also detailed
from the Divisional records and verified with Treasury records? (Sales tax,
III Remittances, etc., will come under this category)
18) Whether SSWT has been prepared monthly and without arrears?
19) Whether the Division has made frequent visits to Treasury for prompt
reconciliation and the officer visiting the Treasury was not the same person
who was dealing with the Register of Remittances etc. in the Division Office?
20) Whether the total of outstanding items foreclosing balances verified
independently by the Audit Party for selected months and for the latest
SSWT?
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21) Generally, the Divisional staff themselves prepare the lists of

remittances/cheques drawn from the Treasury registers and get the signature
and seal of Treasury Officer and treat them at CTR/CTP. Whether it was
ensured for selected months from Treasury records that the lists were correct?
22) Whether the entries (audited and passed) in the Treasury Bills Book for the
selected month were verified in the Treasury records?
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5.6 ACQUITTANCE ROLLS

1) When separate Register is maintained, whether entries have been verified with
those in the bills for selected months?
2) Whether total was verified independently for selected months?
3) Whether each item bore dated acknowledgement (stamped wherever
necessary)?
4) Whether the date-wise disbursements agreed with cash book postings?
5) When payment was made to an endorsee, whether proper order has been taken
and proper acknowledgement in figures and words has been obtained?
6) Whether certificate of disbursement to the persons entitled to receive the
amount, has been recorded in acquittance rolls?
7) Whether there were cases of erasures/overwritings leading to suspicion?
8) When payments have been made by money orders, whether payees’
acknowledgements had been obtained and filed?

5.6.1 ESTABLISHMENT BILLS AND SERVICE BOOKS (S.B)

1) Whether salary has been drawn only for the sanctioned strength of the staff?
2) Whether the names of the persons for whom salary had been drawn appear in
the register of Service Books?
3) Whether all the Service Books noted in the Register of Service Books were
produced?
4) When any S.B was not produced, whether proof of having sent it to any other
office was produced?
5) Whether the pay noted in the bills was verified from the entries in the Service
Books?
6) Whether correctness of drawal of DA, HRA, etc., in the bills had been
verified?
7) Whether total of the bills had been verified?
8) Whether recoveries noted in various registers were checked with the entries in
pay bills and postings in the Registers were up-to-date?
9) When advances were drawn, whether notings had been made in the Register
for recoveries to watch adjustments?
10) Whether deduction of Income Tax had been correctly done?
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11) Whether various claims in the bills were correct with reference to the rules and
orders?
12) Whether all Service Books of persons retiring within five years and the
prescribed percentage of other Service Books in Divisions and all the other
Service Books of the selected sub-divisions were scrutinised and list of
Service Books checked has been prepared?
13) Whether entry regarding dates of birth was certified as verified with reference
to authentic record and not altered without the orders of competent authority
and adequate proof?
14) When date of birth was originally noted in local era, whether conversion to
A.D. era was correctly done?
15) Whether it was verified that no officer was retained in service beyond his
attaining the age of superannuation?
16) Whether the Service Books have been periodically shown to the incumbents
and their signatures obtained in the prescribed columns?
17) Whether quinquennial attestations had been done?
18) Whether account numbers and the fact of having obtained nomination for
GPF/DCRG/FP etc., has been noted in the Service Book?
19) Whether entries relating to service had continuity? If there was any break, was
it explained properly?
20) Whether pay scales have been written in full and are correct?
21) Whether event for a fresh entry was noted such as increment, promotions etc?
22) Whether sanction of increment has been correctly done?
23) Whether events like completion of probation, passing tests crossing EB, etc.,
noted?
24) Whether leave accounts have been maintained?
25) Whether postings in leave account against sanction of leave has been verified?
26) Whether pay has been correctly computed?
27) Whether period of leave as seen from Attendance Register has been verified in
the Service Book?
28) Whether pay fixation has been correctly done and details entered in the S.B.?
29) Whether option statements are attached?
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30) When recoveries of excess pay had been made, whether notings had been
made in the Service Book?
31) Whether the certificate that entries had been verified with pay bills,
acquittance rolls, leave account etc., had been recorded periodically in the SB?
32) Whether Register of pay slips was correctly maintained and entries therein
had been checked with pay slips issued by AG? Whether bills had been
prepared accordingly?
33) Whether LPCs issued had been correctly prepared and all recoveries due have
been noted therein?
34) Whether recoveries had been noted in the Register for recoveries with
reference to LPCs received from other offices?
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5. 7 REGISTER OF BUDGET ALLOTMENTS

1) Whether the Register of budget allotments was maintained and the details
were supported by reference to allotments?
2) Whether progressive expenditure had been noted and flow of expenditure
watched periodically under various heads of accounts?
3) Whether timely action had been taken to get additional funds or to surrender
surplus funds?
4) Whether rush of expenditure was there? Whether any effort was taken to avoid
it?
5) Whether Register of liabilities has been maintained and the liabilities also
were taken into account to watch availability of funds?
6) Whether abnormally large variations between allotments and actuals were
investigated?
7) Whether details for charged appropriation and expenditure therefrom had been
separately kept?
 138

5.8 OTHER IMPORTANT POINTS

5.8.1 REGISTER OF CONTINGENCIES

1) Whether Register of contingencies was maintained in the prescribed form

with detailed head-wise particulars?
2) Whether allotments had been noted at the top and availability of funds verified
wherever bills were drawn?
3) Whether office copies of all the contingent bills were produced ?
4) Whether cases of major items were scrutinised in detail with reference to stock
registers, issue registers, etc?
5) When more than one copy of invoice was obtained for purchases etc., whether
precaution had been taken to mark the duplicate, triplicate copies, etc suitably
to prevent fraudulent use?
6) Whether stock certificates have been recorded on invoices?
7) When Sales Tax had been paid for purchases, whether admissibility and
correctness under Sales Tax law has been verified?
8) Whether only the concessional rate, not exceeding Sales Tax available for
Government purchases had been paid?
9) Whether D.Forms have been issued for Government purchases and
concessional rate of CST availed?
10) Whether any payment had been made towards additional Sales Tax? (which
based on turnover liability has to be borne by the dealers only)
11) For purchase of petrol, spares, etc, whether cross check was made with entries
in log books of vehicles?
12) Whether purchases of books, furniture etc., have been verified with the stock
register for books, furniture etc.?
13) Whether the purchase of service stamp has accounted for in the Stamp
account?
14) Whether payment of rent, etc., for buildings hired for various offices, verified
with fixed charges register, etc.?
 139

5.8.2 VEHICLES
1) Whether the Register of vehicles had been maintained with full details of
vehicles -purchase, renewals, repairs, transfer to other offices, etc?
2) Whether the log book was maintained in the prescribed form and entries were
made and attested by concerned officers?
3) Whether purpose of journey, route of journey, kilometer readings etc., have
been entered and whether the readings appear to be reasonably correct?
4) Whether tested mileage has been noted?
5) Whether details of purchase of petrol/diesel have been entered, monthly
closing done and consumption of petrol/diesel with tested mileage has been
compared?
6) Whether for non-official or for other uses, hire charges have been recovered?
7) Whether the vehicle has been retained for unreasonably long period for repairs
etc.?
8) Whether all the vehicles supplied to the office were actually necessary for the
office and were put to optimum use?
9) Whether there were cases of theft, accident, loss etc., of vehicles? Whether
appropriate action was taken thereon?
10) Whether there were cases of idle wages of crew or idleness of vehicles for
want of crew?

5.8.3 CHARGE PAPERS

1) Whether charge paper of section heads/Sub Division Heads/Divisional

Accountants/ Divisional Officers relating to the changes in incumbency during
the period of audit were produced and scrutinised?
2) Whether shortage of cash or stores and other special irregularities mentioned
in the charge papers were examined with relevant records?

5.8.4 DIVISIONAL ACCOUNTANT’S OBJECTION BOOK

1) Whether the book was maintained and closed regularly?

2) Whether entries, if any, in the register were scrutinized and discussed with the
Divisional Accountant and the Divisional Officer?
3) Whether a note sent to Deputy Accountant General on the entries in the
register?
 140

4) Whether all the sub divisions have been inspected by the Divisional
Officer/Divisional Accountant annually?
5) Whether the reports of their inspection were perused and important points
therein examined in detail?

5.8.5 INSPECTION OF DIVISION BY SUPERINTENDING ENGINEER

1) Whether the Superintending Engineer had inspected the Division annually?

2) Whether his report was perused and important observations thoroughly
examined?

5.8.6 REGISTER OF INSPECTION REPORTS AND AUDIT OBSERVATIONS

1) Whether the Division has maintained a Register to note the details of paras in
the Inspection Report issued by the Accountant General and their settlement
and to watch expeditious action?
2) Whether audit notes and audit observations issued by Central Audit Sections
of AG have been entered in separate register and prompt action taken by the
Division?
3) Whether discussion was made with the Divisional Officer on the long
outstanding audit points and necessity for early settlement stressed?
4) Whether the Division has produced the file relating to Part III - Test Audit
Notes and action taken on them was satisfactory?

5.8.7 MISCELLANEOUS REGISTERS

Whether the various miscellaneous registers were scrutinized? eg. Stamp

account, Register of stationery articles, forms, library books, Trunk call register,
Register of fixed charges, Register of land and properties, Register for non-
Government deductions etc
 141

5. 9 TENDERS
5.9.1 PROCEDURES

1) Whether the entries in the Tender Register were made by the Divisional
officer himself?
2) Whether details of number of tender schedules prepared and sold and
certificate for destruction of unsold schedules have been recorded?
3) Whether details of tender received have been noted and only those tenderers
who had purchased tender schedules have quoted?
4) Whether reasons for non-acceptance of lowest tender recorded?
5) Whether any negotiation was made after opening the tender and was it with
the lowest(L1) or any other tenderer?
6) Whether signatures of tenderers present at the time of opening of tenders have
been obtained?
7) Whether the cost of tender form realized was correct?
8) Whether the cost of tender forms sold in a month was verified with PW II
Other Remittances(OR) schedules received from treasury regarding their
actual credit in treasury accounts and PW III OR head cleared periodically by
crediting Revenue head?
9) In respect of special cases and where lowest tender has not been accepted
whether the files were called for and scrutinized in detail?
10) Whether the tabulation of tenders has been made correctly and calculations
were correct?
11) Whether EMD obtained was correct and in the authorized form?
12) Whether there was long delay in finalizing tenders?
13) Whether there were serious consequences owing to the delay in finalising
tenders?
14) Whether the list of Registered tenderers was maintained and fees have been
collected regularly?
15) Whether tender notices and conditions were prepared in the prescribed form?
16) Whether tender conditions contained any ambiguity or lacuna or error?
17) Whether tenders have been called for and accepted by the competent
authority?
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18) Whether tender notices were published and given publicity as ordered by
Government from time to time?
19) Whether sufficient time was allowed to quote tender?
20) Whether extension of time granted to give tenders was given adequate
publicity?
21) Whether conditions regarding Sales Tax, Excise duty etc., had been stated
beyond ambiguity?
22) Whether issue rates of materials and hire charges of equipments supplied
departmentally have been mentioned beyond ambiguity?
23) Whether the issue rates include storage charge?
24) Whether recovery at separate rates for bitumen supplied in bulk and in drums
had been specified?
25) Whether reference to quarries had been correctly indicated?
26) In the case of earth work, whether the method of measurement of quantity of
work done was correctly stated?
27) Whether various conditions stipulated in Tender notice conform with the
standing orders/rules like Tamil Nadu Building Practice, MOT specifications,
Departmental Manuals etc.?
28) Whether tender conditions stipulate payment only after inspection and
measurement by department?
29) Whether various provisions contained in the Tender Transparency Act / Rules
were followed?
30) In the case of tenders/quotations for departmental sale whether conditions
regarding recovery of Sales Tax and Income Tax wherever applicable had
been specified and actually realised?
31) In cases where tenderers had backed out after receipt of acceptance notice,
whether the EMD had been forfeited and further penal action, if any
necessary, had been taken?

5.9.2 AGREEMENTS
1) Whether a Register of Agreements is maintained, noting serially the
agreements executed at Divisional / Higher level?
 143

2) Whether the agreements had been entered into in the proper form, signed on
all pages and have been kept in safe custody?
3) Whether the details in the agreement schedule had been correctly taken from
the selected tenders?
4) Whether the reasons for supplementary agreements had been examined?
5) Whether deviations from the agreement conditions had been approved by the
authority who executed the original agreement?
6) Whether conditions regarding deduction of Income Tax (and Surcharge
thereon) incorporated and recoveries made correctly?
7) Whether the wordings in the Agreement had been correctly made and as per
the prescribed form?
8) Whether conditions regarding appointment of technical Assistants had been
incorporated according to the Government Orders (Qualification, number or
same T.A for more than one work, etc.)?
9) Whether Security Deposit had been obtained and is it in the approved Form?
10) Whether fresh conditions other than those in the Tender Notice have been
included, if so, the effect thereof was scrutinised?

5.9.3 CONTRACTORS LEDGER

1) Whether the ledger was maintained up-to-date?
2) Whether postings had been made promptly and correctly?
3) Whether totals were correct?
4) Whether there was delay in recovery of dues from contractors; if so, whether
reasons had been analysed in major cases?

5.9.4 WORKS ABSTRACT

1) Whether the works abstract was maintained up-to-date in all cases?
2) Whether the value of materials noted in the works abstract tallied with the
figure in Materials-at-site account?
3) Whether the amount under Contractors Suspense agreed with the figure in
Contractor's ledger?
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5.9.5 REGISTER OF MISCELLANEOUS PW ADVANCE

1) Whether the amount had been taken under the head only under proper
authority?
2) Whether follow up action was taken promptly to clear the items?
3) Whether the files of a few major cases were called for and scrutinised in
detail?
4) Whether there was any indication of attempt to hide/fraud by transfer of
amounts to this head?

5.9.6 REGISTER OF DEPOSITS

1) Whether the deposits had been correctly categorized under the heads?
2) Whether the securities had been kept in safe custody?
3) Whether the securities were produced for verification and found correct?
4) Whether the securities had been pledged in favour of the Divisional Officer?
5) Whether matured securities had been retained without renewal or encashment?
6) Whether EMD had been kept under deposit head for long period? (A few
major cases may be analysed)
7) Whether the minus balances under deposits were analysed?
8) Whether action had been taken to debit the excess expenditure on works over
the deposits received to MPWA to watch recovery of additional funds?
9) Whether refund of security deposit had been made only after observing
formalities?
10) Whether items to be lapsed were still held under Miscellaneous deposits?
11) Whether major cases under Miscellaneous deposits were analysed to see that
the head was not operated to circumvent rules?
12) Whether any work creating an asset which belonged to Government, was
routed through deposits instead of through the Consolidated Fund?

5.9.7 REGISTER OF ADVANCES FOR SUPPLIES

1) Whether advances had been made only as per rules and under proper orders?
2) Whether proper security had been obtained, wherever necessary?
 145

3) Whether levy of interest had been specified and interest was collected,
wherever prescribed?
4) Whether there were delays in receipt of supplies and in adjustment even after
receipt of supplies?
5) Whether adequate action had been taken by the Division to get supplies or
refund of advance (and interest) promptly?
6) In the case of supply of cement, Cement Controller had issued instructions that
for supplies not made within sixty days, interest at 14% per annum should be
paid by the suppliers on the advances received - Whether the interest had been
collected in delayed supplies?
7) Whether a few major outstanding cases were analysed in detail by the Party?

5.9.8 CASH SETTLEMENT SUSPENSE

A. Outward.
1) Whether advices had been sent promptly to the Divisions concerned and
acknowledgements obtained?
2) Whether clearance had been watched effectively?
3) When there was delay in getting payment, whether the Division had ensured
that the responding Divisions have accepted the debits and that there was
delay in payment only for want of funds?
4) Whether lists of major cases outstanding had been prepared and forwarded to
Centra1 Audit section with full details (Separate list to be sent for each.
responding Division) for arranging cross verification in the responding
Division?
5) Whether lists of outstanding had been prepared and carried by the Party for
verification when they take up the audit of the responding Divisions, when
their future programme included the Division?
6) Whether a few major cases were analysed to see that there was no fraud?

B Inward
1) Whether all the items received had been entered in the Register?
2) Whether correctness of the debits had been verified and accepted by the
Division?
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3) Whether the delay in responding debit was due to acceptable grounds?

4) Whether the lists received from Main Office for cross verification were
verified with the inward accounts to see that the debit raised by the originating
Division was not fraudulent or this Division has not omitted to enter the
inward items?
NB: This facility has been abolished since 1994.

5.9.9 REGISTER OF WORKS

1) Whether separate Registers were maintained for major works and minor
works?
2) Whether all works had been entered and postings were made up-to-date?
3) Whether postings for selected months were checked with other relevant
records?
4) Whether reference to sanction and amount of sanction has been noted?
5) Whether expenditure incurred was within the sanctioned amount?
6) Whether in respect of works-in-progress, there was continuity in postings?
7) In respect of cases where there were no postings for several months, whether
the cases were scrutinised to see that the work had been completed or the work
abandoned/held in abeyance/ not progressing for any reasons?
8) In respect of completed works, whether action had been taken to prepare
completion reports?
9) What was the position regarding delay in preparing completion reports?
10) Whether forfeiture of EMD, SD etc., had been ordered and credits taken
wherever necessary, when works had been terminated?
11) Whether there was locking up of capital in view of slow progress of work and
a list of such cases had been prepared with details for a comment in the
Inspection Report?

5.9.10 MEASUREMENT BOOKS

1) Whether the stock register of M Books has been maintained?
2) Whether completed M Books were promptly obtained, reviewed and
recorded?
 147

3) Whether the M Book entries contained over-writings/erasures/corrections in

measurements?
4) Whether cross reference to bills, cheques, etc. had been made in M Books for
passed bills?
5) Whether previous payments made had been correctly deducted from up-to-
date bills?
6) Whether paid items had been scored off by diagonal lines?
7) Whether signature of contractor had been taken in token of correctness of
measurements recorded?
8) Whether there had been check measurements by the Assistant Executive
Engineer/Executive Engineer to the extent prescribed?
9) Whether date of check measurement preceded the date of measurement?
10) Whether the items of work were written in full and the measurements recorded
indicated that all the components had been executed?
11) Whether dismantled materials had been taken to account and disposed of
properly?
12) Whether the instructions printed on the M Books had been followed by the
officers?

5.9.11 MATERIALS AT SITE (MAS) ACCOUNTS AND ANNUAL CLOSING

BALANCE CERTIFICATES
1) Whether MAS Accounts had been prepared for major works and up-to-date
entries had been made?
2) Whether postings had been test checked from issue registers, daily sheets,
invoices, transfer entries, stock accounts, USRs etc.?
3) Whether the materials mentioned in the agreement only had been supplied to
contractors?
4) Whether there was surplus issue of materials?
5) Whether recovery for materials issued to contractors had been promptly
effected?
6) Whether proper storage facilities were there?
7) Whether periodical physical counting of materials had been done by
authorised officers?
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8) Whether Annual Closing Balance Certificates had been prepared by the

Division and sent to Accountant General?
9) Whether the above mentioned statement was prepared correctly with reference
to sub division statements?
10) Whether the statement showed quantity-wise details for book balance and
physically verified balance?
11) Whether for shortage in quantity action was taken to fix responsibility?
12) When the physical balance was more than book balance, were the cases
analysed to investigate the difference?
13) Whether the reasons for the difference in value between book balance and
physically verified balance were properly explained?
14) When the physically verified quantity and value noted there against did not
tally, whether the cases were examined in detail?

5.9.12 NOMINAL MUSTER ROLLS

1) Whether NMR appointments were authorised?
2) Whether payments were made only according to Rules?
3) Whether acquittances had been taken and prescribed certificates had been
recorded?

5.9.13 SCHEDULE OF RATES.

1) Whether the items indicate any ambiguity?
2) Whether for new items and new rates data had been scrutinised?
3) Whether the rates in a district/circle vary abnormally from those in other
districts/circles?
4) Whether payments for extra items and supplementary had been made at the
rates calculated from the S R?

5.9.14 REGISTER OF ARBITRATION AND COURT CASES.

1) Whether the registers were maintained with up-to-date details?
2) Whether prompt action had been taken to file counter
petitions/affidavits/appeals etc.?
3) Whether there was settlement of cases?
4) Whether action had been taken to vacate stay, etc. wherever necessary?
 149

5) Whether there were consequences in view of long pendency of

arbitration/court cases?
6) Whether action had been taken to settle matters out of court, wherever
possible?
7) Whether proper liaison was being made with Advocate General to see to see
that the cases were properly and promptly handled?
8) In the cases where department had won, whether prompt action was taken to
realise Government dues?
9) Whether interest was paid due to delay in making payment in accordance with
the decisions of the Arbitrator/Court?
10) Whether payments made in satisfaction of arbitration award/Court decision
were accounted as charged expenditure?

5.9.15 LAND ACQUISITION

1) Whether register of land to be acquired had been maintained?
2) Whether revenue authorities had been promptly addressed to acquire land?
3) Whether any work had been taken up where land acquisition would be
difficult or impossible?
4) Whether details of land acquired had been noted in the Register of land and
properties?
5) Whether there were cases of surplus or unnecessary acquisition of land?
6) Whether the works were seriously affected due to delay in land acquisition?
7) Whether cost had been paid correctly?
8) Whether land award statements had been scrutinized?
9) Whether payment had been made according to the new procedure prescribed
by Government in 1987?
10) Whether advances made to revenue authorities previously and pending
payment due to delay in award for land acquisition had been obtained back
and credited to Consolidated Fund?
11) Whether there were cases of payment of interest due to delay in making
payment for compensation?
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5.9.16 REGISTER OF REVENUE

1) Whether proper registers had been maintained to watch prompt
demand/col1ection of revenue?
2) Whether demands were raised promptly and collections made?
3) Whether the demands were raised correctly?
4) Whether proper action was taken to collect the arrears with interest/penalty, if
any?
5) Whether write-off/remissions of revenue were ordered by the competent
authority and reasons were acceptable?

5.9.17 VALUE FOR MONEY AUDIT

1) Whether economy, efficiency and effectiveness had been verified?
2) Whether the schemes were properly monitored at different levels?
3) Whether progress reports were sent regularly and whether they indicated the
correct picture?
4) Whether any appraisals had been made by the department or by other agencies
and copies thereof were scrutinized?

5.9.18 WORK FILES

1) Whether a few work files were called for and examined in genera1?
2) Whether the audit notes of the Divisional Accountants had been perused and
action taken thereon verified?
3) Whether there were cases of works awarded to higher bidders/ abandonments/
major deviations/ object not achieved/major defects reported/ public
complaints etc?

5.9.19 TOOLS AND PLANT ACCOUNT

1) Whether this was kept in three parts?
2) Whether entries for the equipment purchased as seen from the accounts,
vouchers etc., had been traced in the T & P Account?
3) Whether prompt action had been taken in respect of shortages?
4) Whether obsolete items had been listed and action taken for disposal?
5) Whether there were cases of equipments declared as obsolete within a short
period of their procurement?
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6) When equipments are transferred to other Divisions, whether

acknowledgements are obtained and action taken promptly to get them back?
7) Whether hire charges had been realised as per rules and orders?
8) Whether equipments had remained idle for long periods?

5.9.20 SURVEY REPORTS OF OBSOLETE ITEMS

1) Whether only really obsolete items had been surveyed and reported?
2) Whether upset price was fixed by competent officer and value fetched was
reasonable?
3) Whether adequate publicity was given for the disposal?
4) Whether disposal was ordered/conducted/accepted by competent officers?
5) Whether items declared obsolete had their age?
Note: The questions mentioned above are indicative only. The Party should ensure
completeness while auditing and satisfy itself that the executives had adhered to all
the latest circulars/orders/instructions/manuals/codes/rules/acts applicable.
 152

5.10.1 WORK ANALYSIS

The documents to be seen are
1) Project/Investigation Report
2) Proposal sent for sanction
3) Administrative sanction
4) Technical sanction
5) Data for technical sanction
6) Correctness of estimates
7) Action taken for 1and acquisition
8) Action taken to procure materials
9) Availability of funds
10) Invitation of tenders, adequacy of publicity etc.
11) Tabulation of tenders
12) Acceptance of tenders
13) Execution of agreement
14) Stipulation for completion
15) Provisions for levy of penalty
16) Conditions for supply of materials
17) Measurement books, measurements and check measurements
18) Verification of previous payments
19) Recovery of cost of materials/Sales Tax/Income Tax etc.
20) EMD and S D
21) Advances and their adjustments
22) Progress of work and progress reports
23) Supplemental agreements and their data
24) Unintended benefits to contractor
25) Promptness in recording measurements/payments of bills to contractors
26) Accounting of stores
27) Transfer entries
28) Contractors ledger
29) MAS accounts.
30) Works abstracts
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31) Works register

32) Completion reports
33) Departmental executions
34) NMR, CLR etc.
35) Tools and Plant
36) Special staff appointed
37) Appointment of technical assistant by contractor.
38) Disposal of surplus materials etc.
39) Scrutiny of bills paid with agreement schedules etc.
40) Abnormal variations from sanctioned estimates.
41) Revenue realised
42) Abandonment of works
43) Idle outlay and idle equipment
44) Achievements and utility of the work done
45) Efficiency, economy and effectiveness
46) System audit and manpower audit.
47) Arbitration/court cases
48) Audit Notes of DA
49) Technical books on the subject
50) Execution of work and actual expenditure incurred
51) Inspection Notes of Chief Engineer/Superintending Engineer etc.
52) Arithmetical accuracy of transactions
53) Monetary evaluation
54) Audit Report paras in earlier years or in other States on the subject for
reference

5.10.2 WORK ANALYSIS - METHODOLOGY

Important high value works executed (either completed or on-going) during
the audit period should invariably be scrutinized in depth with reference to all
concerned documents right from the investigation to completion reports. A detailed
note on each of the work analysed should be placed in the Audit file. The analysis
should cover the following points:-
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1. Acceptance of necessity:
(a) A brief of the proposed work, the present mode how the requirement is
being met, the difficulties/disadvantages faced now and how the new proposal
will enhance economy, efficiency and effectiveness.
(b) The competent authority who accepted the necessity and the reasons
justifications for the acceptance.
2. Administrative approval/sanction:
Details of administrative approval, (viz) number and date inter-alia stating
approving authority and his competency, estimated cost, probable period of
completion etc.
3. Technical sanction:
Details of technical sanction and date, inter-alia stating the sanctioning
authority and its competency, amount of technical sanction, comparative study
of technically sanctioned work with those administratively sanctioned etc. It
should be ensured that the technical sanction will contain only those works
that find a place in the administrative approval.
4. Provision of Funds:
The funding pattern for the work (viz. the source of finance and its flow) may
be stated. If the work is to be funded obtaining loan from external agencies
(i.e. other than Government), the flow of funds should synchronise with
progress of work and current requirements. Obtaining funds from external
agencies in advance of the requirement may result in locking up of funds and
avoidable payment of interest, which should be avoided.
5. Land acquisition:
Land acquisition and clearance of encroachment, if any, if required for the
work may be done before the award of contract for the smooth progress of
work.
6. Tendering of work and conclusion of contracts:
All procedures required in conclusion of contracts should be looked into.
Points like number of tenderers, re-tendering and the reasons therefor, award
of contract, amount, period of contract, payment terms etc., should be brought
out clearly. Only technically sanctioned work should be tendered. Economy,
 155

efficiency and effectiveness should be ensured while awarding the contracts.

Payment of advance to contractors and its nature, provision of materials, etc.,
may also be looked into in the narration.
7. Operation of Contracts:
All aspects relating to the work stipulated, period of completion, payment
terms, cost escalation etc., be looked into in detail and analysed. Extension of
time (EOT), if any, may be critically examined and justified with reasons
therefor to ensure avoidance of escalation payments.
8. Progress of work and payments to contractors:
Payments to contractors are to be made with reference to the value of work
done. For this, the work done in terms of quantity as entered in the M.Books
may be examined in detail with reference to the quantity of work ordered. The
work done in terms of quantity may be transcribed in terms of value of work
done with reference to the contract rates. The contractor’s ledger and the
abstract of payments be correlated with the M.Books. Any variation in
quantities of work done in M.Books when compared to the quanity of work
ordered should be investigated and justified.
9. Physical Completion:
The completion of work as per contractual terms be ensured.
10. Financial completion:
Financial completion should be ensured soon after physical completion of
work.
11. Handing-over of the facility to the user’s satisfaction be ensured.
12. Aspects regarding arbitration, Court cases, recovery of liquidated damages
etc., may also be analysed critically and commented.
13. The audit comments on the analysis of the work should be clearly stated, if
there are no comments, that fact should be clearly stated.
The note on the analysis of the work should be signed by the
AAO/SO/SAO/AO, who carried out the analysis. The SAO/AO should check the
correctness of the fact stated therein and counter-sign the analytical note to ensure
accountability.
 156

5.11.1 GUIDELINES FOR THE CONDUCT OF AUDIT IN RESPECT OF WORLD

BANK ASSISTED PROJECTS
The following guidelines are issued to Local Audit Parties for checking
statement of expenditure(SOE) and conducting local audit in regard to the World
Bank assisted projects

1. The LAP should be conversant with the Project agreement available with the
Project Authority. The project agreement is a document signed with the World Bank
by the Ministry of Finance. The Parties should therefore carefully go through the
conditions stipulated in the agreement and ensure that they are strictly followed by the
implementing authorities.
2. The primary responsibility of the Audit Party rests in checking the statement of
expenditure furnished by the project authorities and to ascertain that the individual
expenditures, which comprise the SOE totals, are fully supported, properly
authorized, and are eligible under the loan agreement appropriately accounted for.
3. For the purpose of achieving the above, it is desirable that the Audit Party would
insist on the Project Authority to furnish the SOE in the format attached hereto with
the new circular based on previous SOE for 1992-93.
4. Objections raised as a result of proprietary audit need not be included in the report
sent by the Party according to the guidelines issued by the Headquarters for the issue
of audit certificate as the irregularities that are likely to find place in Audit Report are
not generally disclosed since the audit certificate is only 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, DC Bills, sanctions,
misclassification, defalcation, over-payment etc. that comes to notice.
5. While certifying SOEs which are limited to reimbursement of Expenditure by the
Bank without documentation each application number and amount are to be indicated.
6. At present the annual accounts and SOEs are received by AG (A&E) for
certification. These accounts are required to be reconciled by the project authorities
with the book figures of A. G. (A&E) .The LAP should therefore enquire and get it
recorded to that effect whether such reconciliation has been done with AG (A&E) by
the Department and, if not, record the reason in the report.
7. The Audit Certificate is finalised by Head-Quarters section based on the
information received from the Party as well as the reconciliation certificate issued by
 157

A.G (A&E). The Parties should, therefore, furnish information, documents etc. in full
support of the comments raised by them on the SOE. All comments should be
supported by Audit slips issued to the department and their replies thereon.
8. The objections raised should be clear, brief and to the point without any ambiguity.
The SOE should be properly certified by the Inspecting Officer.
The parties may keep the above instructions in mind while scrutinising the
SOE for purpose of issue of Audit. Certificate.
 158

General Circular No.11 -Audit II/9

No.896 -Audit II/51-91
OFFRICE OF THE COMPTROLLER AND AUDITOR GENERAL F INDIA,
10. BAHADURSHAH ZAFFAR MARG ,
NEW DELHI -1l.0 002.
DATED 25 July 1991
To
Al1 Principal Accountants General (Audit)/
Accountants General (A)
All principal Accountants General (A&E) /
Accountant General (A&E) Sr. Deputy
Accountant General (A&E )
All Directors General of Audit/
Principal Directors of Audit.

Subject :- Issue of audit certificates in respect of World

Bank Assisted Projects.
Sir..
The system of certification of accounts by A.G. (.A&E) and issue of audit
certificates by A.G. (Audit) was studied in detail as per directives of the Comptroller
and Auditor General of India. Based on this the following modifications are made in
the existing procedure circulated vide this Office Circular :No.711- Audit II/93-B6
dated 12th hay 1987.

1. While the list of World Bank Aided Projects I were under execution by the Project
authorities/Government departments etc. under the audit jurisdiction of the
Accountant General will be intimated by the Head- quarters from time to time, the
A.G. (Audit) is advised to obtain the details of agreements terms of loans, conditions
'etc.; either directly from the Department of Economic affairs. Government of India,.
New Delhi or from the local project authorities.
2. At present the annual accounts/SOE are received by the Accountants General
(A&F~) for certification. Till these are reconciled with the departmental accounts and
certified by the A.G. (A&E), the A.G. (Audit) is not in a position to pre-organise his
audit for the purpose of issue of audit certificates. This also contributes to the delay in
issue of audit certificate.
To obviate this it has been decided that in future the State Government/project
authorities may be requested to furnish copies of annual accounts/statement of
expenditure simultaneously both Accountant General (A&E) and Accountant General
 159

(Audit) .On receipt of these. While A. G. (A&E) may continue with a process of
reconciliation of figures and certification of figures based on the accounts maintained
by him~ the .A.G. (Audit) should plan for test check of units under the
project/departments so that as soon as the certified accounts figure are available to
issue audit certificates. the project authorities do not send separate copies to A G.
(Audi t ) .the A G. (A&E) may provide a copy of the accounts (SOEs) as soon as he
receives it to A G. (Audi t) till the system is adopted by all the project
authorities/Government departments..
3. It is seen that the World Bank Projects are not separately identifiable in the budget
or these are spread over a grants or is mixed up with other centrally sponsored
scheme. This results in A.G. (A&E) not being able to separately identify project-wise
expenditure and certify that the problem is acute in case of expenditure incurred on
'Direction' and 'Headquarters' which are booked in lumpsum in the budget but are
distributed to schemes by the project authorities when they submit the SOEs. Keeping
these facts in view. A.G. (A&E) while certifying the annual accounts/SOE should
clearly indicate the correct position of the figures shown by the figures shown by the
departmental authorities.
4. Instructions already exist that the local Projects sl1ould be given priority. However.
It is seen the offices this is not being done systematically. While the World Bank
projects are to be covered during of DDOs/project authorities during the course of the
year. Wherever necessary the audit may also be programmed specifically to cover
World Bank projects whenever they do not fall in the normal course of audit cycle.
Not only the project implementing authorities but also the field units should be
covered so that the audit certificate issue is based on test check of transactions in the
field.
5 While the format of certificate has already been circulated in the letter dt.12th May
1987 It is seen that the audit observations are being incorporated in different manner
by different offices. Similarly the present audit certificate specifically provides for
mention of application number and the amount which is not being indicated by some
of the field offices. On no account, Inspection Reports or photo copies of Inspection
Reports are to be enclosed as audit comments. These are to be drafted properly and
incorporated along with the certificate wherever necessary.
 160

6. The format of audit certificate should be strictly followed and there should be no
deviation.
These are to be issued to the project authorities and only intimation should be sent to
the Department of Economic Affairs Ministry of Finance.
7. The Government of India disallows any amount objected to by us and to that extent
the reimbursement to the project authorities to ti1e State Government is reduced. In
view of this we had heavy responsibility in properly auditing and certifying the
figures. This may be brought to the notice of all concerned so that adequate attention
is paid at the time of test check of accounts and audit in the field offices.
8. In case any further clarification is required kindly write to us early.
9. Hindi version will follow

Yours faithfully.
Sd/-
( S. LAKSHMI1NARAYANAN)
Pr. Director (Audit)
/ / True Copy / /
 161

CHAPTER 6

6.1 Auditing Standards 161

6.2 Fraud Awareness Auditing 164

 162

CHAPTER 6

6.1 AUDITING STANDARDS AND AUDIT OF FRAUDS

Auditing Standards prescribe the norms of basic principles and practices

which Government Auditors are expected to follow. The standards have to be

supplemented by the guidelines contained in the Manuals of Standing Order and other

Manuals governing the work in the Indian Audit and Accounts Department. These

are not in any way to affect the constitutional and legal provisions governing the

duties and powers of the Comptroller and Auditor General of India. The standards

may require modification, from time to time, in the light of professional developments

and changes in the legal framework.

1. Audit Mandate
This includes audit of
• receipts and expenditure from the Consolidated Fund of India and of
the States and Union Territories;
• transactions relating to the Contingency Funds and Public Accounts;
• trading, manufacturing, profit and loss accounts, balance sheets and
other subsidiary accounts kept in any Government department;
• stores and stock kept in Government offices or departments;
• Government Companies as per the provisions of the Companies Act,
1956;
• Corporations established by or under laws made by Parliament in
accordance with the provisions of the respective legislations;
• authorities and bodies substantially financed from the Consolidated
funds;
• any body or authority, even though not substantially financed from the
Consolidated fund, the audit of which may be entrusted to CAG and
• grants and loans given by Government to bodies and authorities for
specific purposes.
 163

2. Audit Objectives
The broad aim of Audit is to safeguard the financial interest of the State and to

uphold and promote public accountability and sound and economical financial

management practices.

3. Scope of Audit
The term “Audit” includes both Regulatory Audit and Performance Audit. In

pursuance of the Constitutional responsibility, CAG is empowered to decide the

nature, scope, extent and quantum of audit including the form and content of the audit

reports in respect of audit to be conducted by him or on his behalf.

4. Basic Postulates
As already mentioned Auditing standards prescribe the norms of basic

principles and practices which the Auditors are expected to follow in the conduct of

audit. The Auditor must exercise due care and concern in complying with the

Auditing standards.

The Auditor should maintain independence which ensures that audit findings

are impartial and viewed as such. Auditors should not allow any situation that might

lead to questioning of their independence. The right of independent evaluation is

inherent in the Audit function. The independence of SAI (CAG of India) is

guaranteed by the provisions of the Constitution and the laws.

Information about an auditee acquired during the course of Auditor’s work

must not be used for purposes outside the scope of audit and formation of an opinion

or in reporting not in accordance with the Auditor’s responsibility. It is essential that

Audit officials maintain confidentiality regarding audit matters and the information

arising from audit task.

 164

5. Auditing standards can be broadly grouped under three categories:

General standards,

Operational standards
Reporting standards
General standards define the basic professional needs of the Auditors, the

need for him to be aware of his responsibilities and develop necessary skills and tools

to discharge his duties and the quality assurance mechanism so that the Audit

assignment is performed in an orderly, economic and efficient manner for the stated,

planned and defined objectives.

Operational standards establish the criteria or overall framework for the

purposeful, systematic and balanced steps or actions that the audit organizations and

the Auditor have to follow in conducting or managing audit work. These steps or

action represent the rules of research that the Auditor, as a seeker of audit evidence,

implements to achieve a specific result.

Reporting standards set down the framework for reporting the results of audit

concisely, with accuracy, objectivity and clarity and in a constructive manner and for

appropriate follow up action.

(For a detailed reading please refer to “ Auditing Standards” Issued by the Auditing
Standards Committee at the XIV Congress of INTOSAI in 1992 in Washington, DC,
USA as amended by the XV Congress of INTOSAI in 1995 in Cairo, Egypt.)
 165

6.2 FRAUD AWARENESS AUDITING

Redrafted from “ASOSAI Guidelines for dealing with fraud and

Corruption” approved during the IX ASOSAI Assembly, October 20-26, 2003,
Philippines.

Introduction
This chapter serves as an introduction to fraud and the steps necessary to make

Auditors aware of fraud possibilities and the requirements to fulfill their professional

responsibilities with regard to fraud.

Definitions related to Fraud

Certain acts and devices that involve financial frauds are referred to as white-

collar crime. Fraud consists of knowingly making a misrepresentation of facts with

the intent of inducing someone to believe the falsehood and act upon it and thus suffer

a loss or damage. Some examples of fraud and related activities are employee fraud,

embezzlement, defalcation, management fraud, fraudulent financial reporting, errors,

inequalities, direct-effect illegal acts.

Characteristics of Fraudsters
They are people who hold high executive positions, are respected, trusted

employees, have access to large amounts of money, have power to give orders, can

override controls, and “look like” almost everybody.

The Art of Fraud Awareness Auditing

Fraud awareness auditing involves familiarity with the human element,

organizational behaviour, knowledge of common fraud schemes, evidence and its

sources, standards of proof and sensibility to red flags.

 166

Differences between the audit approach of financial auditors and fraud

examiners
Financial Auditors
1. Follow a Program/Procedural approach
2. Make note of errors and omissions.
3. Assess control risk in general and
specific terms to design other audit
procedures.
4. Use a concept of materiality that is
higher than fraud examiners consider
pursuing.
5. Perform audits based on theories of
financial accounting and auditing
6. Use inductive reasoning.
Fraud Examiners
Follow a mind-set of sensibility to the
unusual and non-standard.
Focus on exception, oddities and
patterns of conduct.
Think like a crook to imagine how ways/
controls could be subverted.
Think of cumulative materiality
Perform examinations based on theory of
behavioral motive, opportunity, and
integrity.
Use deductive reasoning.

Generally accepted Government Auditing standards

The basic Government audit requirements are to know the applicable laws and

regulations, design the audit to detect abuse or illegal acts, and report to the proper

level of authority.

Auditors and Investigators’ responsibilities

The audit standards of external audits, internal audits, Government audits and

fraud examiners explain the responsibilities for errors, frauds and illegal acts.

External Auditors’ responsibilities

(a) Auditors are required to understand fraud, assess fraud risks, plan audits to
provide reasonable assurance of detecting material management fraud and
employee fraud that could have a material effect on financial statements and
report findings to next higher level of management.
 167

(b) Illegal acts by clients: Auditors have responsibility to find out illegal acts
relating to financial statements and activities leading individual and
cumulative loss.
(c) Auditing accounting estimates Auditors are responsible for evaluating the
reasonableness of managements estimates.

Role of Auditors as Fraud Examiners

They look for error signals and some clue for fraud occurrence and begin with

a prediction that fraud may have occurred. They are interested in the weaknesses of

internal controls and analyse their impact and think materiality as a cumulative

amount.

Conditions that make fraud possible/ even easy

Motive is a pressure experienced by a person and unshareable with friends or

confidants. Psychotic motivation is characterized by a habitual criminal who steals

for the sake of stealing. Egocentric motivation is based on the desire for more

personal prestige. People with ideological motivation think their cause is morally

superior and justifies making someone else a victim. Economic motivation is

represented by a need for money.

Opportunity is an open door for solving the unshareable problem in secret by

violating a trust which leads to fraud.

Lack of Integrity: Integrity is the ability to act in accordance with the highest

moral and ethical values all the time. Lack of integrity permits motive and

opportunity to take form as fraud.

Fraud Prevention
Auditors shoulder responsibility of fraud prevention by detecting the slightest

error signal and probing in depth. A constant and consistent effort to look for error
 168

signals and analyzing it thoroughly will lead to a situation where executives will be

sensitive to audit.

Fraud Detection
Fraud consist of the fraud act itself, conversion of assets to the fraudsters use

and the cover-up.

Red Flags
Red flags indicate unusual change in procedures and practices without valid

reasons or authority. Any such changes may reveal red flags of potential fraud and

cover-up. The cover-up can often be detected through unusual items in the

accounting records. Management frauds (fraudulent financial reporting) often affect

the financial statements. Fraud and creative accounting may cause financial

statements to be materially misleading by (a) overstating revenues and assets,

(b) understating expenses and liabilities and (c) giving disclosures that are misleading.

Certain conditions may exist that would suggest a potential for management fraud.

Internal Control
Authorisation, record keeping, custody and reconciliation are the four

functions that should be separated for good internal control. A person acting alone or

in a conspiracy may perform two or more internal control functions to commit a

fraud.

Schemes and Detection Procedures

The format for fraud case analysis and the related audit approach includes
I : Case situation II: Audit approach
a) Problem – nature of fraud a) Objective of audit
b) Method of fraud b) Control
c) Paper trail c) Test of control
d) Amount of fraud d) Audit of balances
e) Discovery summary
 169

Content of common Documents

Auditors should examine and be familiar with such documents as (a)

information on a desk (b) information on a blank statement and (c) valid social

security numbers.

Sources of information
Auditors should be familiar with Public records and ways to get at (a) general

business sources (b) business and asset identification sources and (c) Central and State

Governments and other funding agencies.

For detailed information the original guidelines may be perused.

 170

References :
1. CAG’s M.S.O (AUDIT ) First Edition 1991

2. CAG’s M.S.O (A&E )/Vol.I/EDN/ May 1990

3. Memorandum of Instructions regarding the Extent of

Audit – Second Edition

4. Auditing standards : IA&AD 2002

5. Style Guide for Audit Reports issued by CAG

6. Works Audit Manual 1997 – 5th Edition

7. MANUAL OF WORKS COMPILATION 1997 issued by

PWC branch of O/O.A.G.(A&E)/TN /1997

8. Tamil Nadu Public Works ‘A’ Code – 1986 2nd Edition

9. Tamil Nadu Public Works ‘D’ Code – 1986 3rd Edition

10. POLICY NOTE OF PUBLIC WORKS DEPARTMENT

OF GOVERNMENT OF TAMIL NADU 2005-06

11. PERFORMANCE BUDGET OF PW DEPARTMENT

OF GOVERNMENT OF TAMIL NADU 2004-05

12. TAMIL NADU BUILDING PRACTICES

VOL.I -1983-85
 171

13. TAMIL NADU PUBLIC WORKS BUILDING

PRACTICES VOL.2- 1988

14. STANDARD SCHEDULE OF RATES

15. TAMIL NADU DETAILED STANDARD

SPECIFICATIONS

16. STANDARD DATA BOOK OF PUBLIC WORKS

DEPARTMENT /GOVERNMENT OF
TAMILNADU/1987

17. TECHNICAL OFFICERS’ GUIDE (2004) ISSUED BY

TAMILNADU DRAUGHTS MAN ASSOCIATION.
 172

NOTES OF AMENDMENTS

SL CHAPTER SECTION SUBJECT AMENDED

NO. IN(Ref. and
Authority / File
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NOTES OF AMENDMENTS

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