Audit Act, 2075

Audit Act, 2075

Section 3 Entity to be audited by Auditor General (AG)
Following entity shall be audited by the Auditor General: -

Corporate body wholly owned Body to be

Government Office
(CBWO) by 3 govt. audited by
AG IAW
• Office of President, VP, Provincial chief It means a corporate body whose all
federal law
• Federal parliament, provincial share or assets are owned by
assembly, provincial govt. • 3 govt.
• Court (Supreme & other), office of • by another corporate body Note: - 3
Attorney general wholly owned by 3 govt. govt. means
• by combination of them GoN,
• Constitutional bodies & their office
Provincial &
• Nepal Army, Nepal Police, Armed It also includes such a corporate Local level
Police Force body for which 3 govt. is required to govt.
bear full responsibility.
• All govt. office of 3 govt.

The responsible officials of above bodies shall

• provide accounts of incomes & expenditures & F/S, &
• have the final audit thereof performed by the Auditor General.

Section 10
1. AG may appoint licensed auditor as a assistant to perform the audit of CBWO by 3 govt.
2. Such auditor shall act under direction, supervision & control of AG.
3. Functions, Duties, Powers & Right of such auditor procedure to be followed during audit shall be
- as per this act, or
- if not prescribed in act, as prescribed by AG
4. Remuneration to be fixed by AG, considering
- Volume of transaction
- Status of accounts
- No. of branches & sub-branches
- Work load & work progress of the concerned organisation

Section 11 Audit of corporate Body

1. Corporate bodies may, after consulting AG, have its account audited by appointing auditor.
2. Concerned corporate body shall submit a copy of audit report (issued by appointed auditor) to OAG.
3. AG may issue directives to concerned organ & auditor in respect of the error observed in the
report, and
• it shall be their duty to abide such directions.
• Concerned corporate Body shall submit the details of implementation progress of such
direction within time prescribed by AG.
15.1
 Corporate Laws – CAP -III

4. Corporate body means

• a corporate body whose more than 50 % shares/assets are owned by 3 govt. and
• also include a corporate body whose more than 50 % shares are owned by another corporate
body.

Section 20 Audit of Local Level

1. Each local level shall have its accounts audited by AG.
2. AG may, after completing audit, may issue individual audit reports.
3. Concerned local level shall submit the report issued by AG to their assembly (Village Assembly or
Municipal Assembly as the case may be), and
• have such report discussed at such assembly.

Section 4 Method of Audit

AG may conduct
• final audit of the financial transaction & other activities of entities of Sec. 3 or units under such
entities
• either in detail or sporadically or a random basis, and
• present the facts obtained therefrom, make critical comments thereon & submit its reports.
Types of Audits

Sec. 5 Financial & Sec. 7 Subsidy & Grant

Miscellaneous audit
Along with the financial audit,
AG may conduct the
• IT Audit
• Performance Audit
• Gender audit
• Environmental Audit
• Miscellaneous Audit
of the entities of Sec. 3(1)
- by giving due regards to the
regularity, economy,
efficiency, effectiveness,
propriety & other essential
aspects.
Sec. 6 Con-current Audit
Audit
AG may conduct concurrent AG may conduct audit of
audit of the entities of sec. 3(1) the any subsidy & grant
• before completing fiscal • to be received by 3
Year, or govt.
• after completing • to be provided
transaction from 3 govt. as per
federal law
AG shall submit such audit
report to the concerned entities
& publish the report.
Sec. 19(6) Special Audit
If it appears that
• a significant loss & damage has been caused to any movable
or immovable national property, or
• such a loss & damage may occur if immediate action is not
taken
AG may audit such transactions at any time & submit a report to
the President/Chief of the Province (such report to be made
public)

15.2
 Audit Act, 2075

Section 8 Matters to be Audited by Auditor General:

AG shall audit following matters by considering regularity, economy, efficiency, effectiveness,
propriety & other essential aspects: -

1. Whether amount appropriated in concerned heads & sub-heads by Appropriation/other Act

• have been expended for the specified purposes,
2. Whether the accounts is maintained in the prescribed forms &
• whether such accounts fairly represent the position of transactions,
3. Whether the accounts of the followings fund are maintained properly: -
• Federal, provincial & local level Reserve Fund,
• Federal/Provincial Emergency Fund, &
• Other government Fund
4. Whether F/S depict the true picture of financial transactions for the period,
5. Whether there is sufficient evidence to prove income & expenditures in different heads,
6. Whether the expenditures has been authorized from the authorized person,
7. Whether the incurred liability has been paid in time,
8. Whether the optimum utilization of resources & assets is made,
9. Whether the proper records of government assets have been maintained,
10. Whether the proper preservation & maintenance of govt.’s assets have been done to avoid loss,
11. Whether the proper system of accounting exists for the recording of
• government loan or investment, &
• interest paid or received, or
• dividend received from such loan or investment,
12. Whether there is sufficient legal provisions & control to avoid misuse of expenditures,
13. Whether there is sufficient internal control system,
14. Whether the internal audit has been carried out effectively &
• if carried effectively, whether remarks of report has been implemented,
15. Whether amount to be deposited in govt.’s fund is ascertained, deposited & recorded as per law,
• whether effort has been taken to prevent revenue leakage,
16. Whether there is sound & effective organizational structure, management & work division, &
• whether operation & management has been carried out accordingly,
17. Whether the monitoring has been done as per prevailing laws &
• the findings of monitoring report has been implemented,
18. Whether effort has been taken
• to convert financial transactions, records & reports to MIS
19. Whether settlement work has been carried out in time.
20. Whether reconciliation has been done in time.

15.3
 Corporate Laws – CAP -III

Section 8 Matters to be Audited by Auditor General:

AG shall audit following matters considering the propriety thereof: -

On the propriety of any Body to be audited by AG

On the propriety of all
expenditure & its IAW federal law
authorizations issued in respect of
authorization,
If it is seen that such • any grant of national property • public construction,
expenditure is a reckless (Movable+Immovable), • repair and maintenance,
one or is an abuse of • fixed or current, or underwriting
national property, • procurement & supply,
of any revenue, or
• contract relating to
• any contract, license or permits consultancy service,
despite having relating to mining, forest, water
authorization. resources, etc. & • service contract,
• any other act of abandoning any • public expenditure and
national property. mobilization of
resources.
AG may examine
• whether officials under his jurisdiction has borne financial accountability on the basis of
acceptable principles of audit.
AG may not include in the report
• minor items of discrepancy &
• other items deemed as insignificant in view of their propriety.

Section 12 Power of the Auditor General to Examine or Demand Documents:

1. AG may ask the responsible officer of the entities of sec. 3(1)
• to submit documents relating to accounts &
• seek information relating to it from the concerned officer at any time.
2. AG may exercise the following powers if necessary: -
a. To examine at any time the status of program & project being operated under the grants of
3 govt. &
• accounts related to such program & project.
b. To require contractors of government contracts
• to produce relevant documents relating to contract, which are supposed to be in
his/her possession, &
• to require to submit additional documents to determine revenue in relation to the
revenue audit,
c. To require to submit documents relating entities partially owned by 3 govt. & NGO & INGO
3. AG shall have access to MIS of the entities of sec. 3(1) relating to operation of transactions, keeping
of accounts, record management or information distribution.

15.4
 Audit Act, 2075

Section 19 Annual Report

1. AG shall include following matters in its annual audit report to be submitted to President IAW
article 294 of Constitution of Nepal 2072.

a. Particulars of b. Major c. Implementation status of d. Other

work performed by summaries audit report & reforms to be necessary
AG during the year observed by AG made in future items
2. AG may issue audit reports along with the recommendation to the entity of sec. 3(1) after
completion of audits.
Auditor may also issue a following report: -
• IT, Performance, Gender, Environment & Concurrent audit of such entity.
3. AG may prepare individual annual report as to the functions of each Province & submit it to the
Chief of the concerned Province.
• Such annual report shall be submitted Provincial Assembly through the Chief Minister
4. Report submitted by Auditor General as per this Section shall be made public.
5. Special audit related provision – see in type of audits

Section 21 Implementation of the audit report

1. It shall be the duty of the concerned responsible official
• to implement the audit report issued by AG
2. To ensure whether remarks of audit report have been improved & the suggestions have been
implemented, AG may
• obtain the report of activities carried out & explanation from audited body
• specify the period for implementation,
• make re-examination, &
• give necessary direction on the matter to the concerned body,
Section 22 To take action on irregularities
Concerned body shall take action, as per the law,

• on the errors & irregularities found

• during the audit of [income, expenditure, other amounts] of the GON, Provincial/Local
Government.
Section 24 Power of the Auditor General to give direction
1. Subject to the Constitution & this act, AG may give direction to
• Concerned body to make provision relating to account, or to maintain regularity therein,
• Concerned regulatory body as to audit related matters.
2. AG may give direction to the auditors appointed under this Act for audit of govt. office & corporate
body In relation to
• the matters to be audited, matters to be included in report & matters included in report.
3. It shall be the duty of such office & such official to comply such direction.

15.5
 Corporate Laws – CAP -III

Section 25 Power to write for action

1. AG may write to concerned body for any action including departmental action against any
official/person who: -
❶ does not conduct the audit as per act,
❷ does not provide F/S & accounts to auditor u/s 10 & 11
❸ does not give information & necessary documents u/s 12,
❹ does not maintain accounts in approved format u/s 23,
❺ make obstruction the audit functions,
❻ violate this act & rules.
2. If a request is received, concerned body shall, without delay, take action against such person &
inform such to OAG
Miscellaneous Provisions
1. u/s 13, AG may collect fee from entities he has audited (& such fee to be credited to federal
consolidation fund)
2. u/s 14, AG may make provision of review of audit or peer review on periodic basis to ensure quality
of audit performed.
[except above, no review of audit may be made by any person]
3. u/s 15, AG may obtain expert service & request 3 govt. to depute any of its expert & (if so, such
govt. entity shall depute accordingly)
4. u/s 16, employee of OAG not personally liable for any damage or any other kind of error
- that has resulted from any act of audit performed in good faith as per standard, policies,
directive, audit plan.
5. U/s 17, AG may maintain records of audit files, working paper & other documents via electronic
means.
6. u/s 18, AG may establish office in federal level & province level (organ structure – to be approved
from GoN on recommendation of AG)
7. u/s 23, Accounts of Govt. Office shall be maintained in the format approved by AG
• It shall be duty of the Office of Comptroller General to get the such format approved, &
enforce, or cause to be enforced it.
8. u/s 27, AG may delegate his power to any official of his office.
9. u/s 26, AG may reward to the best performer employee selected from amongst the employees of
office of AG (worked at federal & provincial level)

15.6