CAG`S DPC ACT 1971

Wilson Antony
Learning Objective

 In the previous sessions we have

discussed the salient features of
Performance Auditing, Performance
Audit Cycle, difference between
Performance Audit and Regularity Audit.
 In this session we will discuss CAG`s
DPC Act 1971 and the Auditing
Standards of CAG
CAG’s (DPC) Act, 1971
 Introductory.
 Art. 149 & 151 Of Constitution of India
deal with Functions of CAG.
 Up to 1971 CAG continued to perform
functions as per India (Audit and
Accounts ) Order 1936 as adapted by
the India (Provisional Constitution)
Order 1947
 The Comptroller and Auditor General
(Conditions of Service) Act 1953,(21
of 1953) .
CAG’s Duties

 I ) Compilation and keeping of

accounts and audit
 Provisions relating to Sns 13 to 20, 23
& 24 pertain to AUDIT
 Sn 13 of the Act relates to audit of all
expenditure out of Consolidated Fund
of India , all States and UTI
Audit Of Expenditure includes

 Audit against provision of Funds

 Regularity Audit
 Propriety Audit
 Efficiency cum performance audit
CAG’s (DPC) Act, 1971

 Section 10 (1): CAG shall be

responsible for compiling the
accounts of the Union and of each
State from the initial and subsidiary
accounts rendered to the audit and
accounts offices under his control by
treasuries,offices or departments
responsible for keeping of such
accounts
CAG’s (DPC) Act, 1971

 Section 11: Shall prepare and submit

accounts to the President or Governor
of a State or Administrator of the Union
territory having a Legislative assembly.
 Section 12: Shall give information and
render assistance to the Union
Govt/State Govt/Union territories having
Legislative Assemblies in the preparation
of their annual financial statements.
CAG’s (DPC) Act, 1971

 Provisions relating to Sns 13 to 20 23

& 24 pertain to AUDIT
 Sn 13 :It shall be the duty of CAG to
audit of all expenditure from the
Consolidated Fund of India , each
State and UTI and to ascertain
whether the moneys shown in the
accounts as having been disbursed
were legally available for
CAG’s (DPC) Act, 1971

 Section 14: Audit of receipts and

expenditure of bodies or authorities
substantially financed from
Consolidated fund of India or States,
UTI
 ( loan not less than 25 lakhs and is
not less than 75 percent of the total
expenditure )
 14(2) & 14 (3)
DPC Act Cont….

 Sn .15 -Audit of grants or loans given

for any specific purpose from the
consolidated fund to any body or
authority not being a foreign body
 CAG to satisfy that the loan or grant
given satisfies the conditions
attached to the granting of such
assistance
DPC Act Cont..

 Audit Report contains the totality of

the accounts.
 There fore , audit of not only
expenditure but also receipts shall be
included
 Sn 16 deals with the receipts of
Union, states
DPC Act Cont...

 Sn 17 deals with transactions of

Stores and Stock of Department of
Union and States,UTI.
Audit of Govt. Companies

 Section 619 of the Act prescribes

the details of Audit of Govt.
Companies.
 Govt Company is defined in Section
617 of The Companies Act, 1956.
 Sn.619(2) of the Companies Act-
Appointment of auditors of Govt.
Companies
Audit of Govt. Companies
Cont...
 Sn. 619(3) - CAG shall direct the
manner in which account shall be
audited
 Sn. 619(4) - CAG has power to
comment upon or supplement the
audit report of CAs
 Sn. 619(5)- CAG’S comments shall be
placed before the AGM at the same
time and in the same manner
Audit of Statutory
Corporations
 Established by Parliament
 CAG shall audit the accounts of such
corporations in accordance with the
provisions contained in their Acts.
 Established by States

 Sn. 19(3) of DPC Act enables the

States to request the CAG to audit
their accounts
 Only Parliament has the power to
direct CAG to audit the accounts.
Others have to request
Sn.20 of DPC Act

 Deals with audit of accounts of

certain bodies or authorities not
covered in earlier sections.
 Govt. shall consult the CAG for
undertaking the audit.
 Terms and conditions shall also be
settled between Govt. and CAG.
Cont...

Section 16-
 It shall be the duty of CAG to Audit
not only the expenditure but the
receipts also. Section 16 deals with
the audit of receipts. It specifies that
the executive has to make safeguards
to assess , collect and remit the
revenues of the Union and the states
Cont...

 Section 17-
 CAG shall have authority to audit the
accounts of Stores and stock of the
Union and of the States. This is dealt
with in Section 17 of the CAG’s DPC
Act.
Cont….

 Section 18-
 CAG shall have authority to inspect
any Office of accounts under the
control of union or State. For this
books and records can be called for
where he wants.
 Any information can be called for by
him or his representatives.
Cont...

 Miscellaneous Sections-
 CAG can delegate power to exercise
his power by subordinates except the
power of submission of CAG’s Report
to the Parliament or State Legislature.
 Section 21
Cont...

 Section 22
 Central Govt. in consultation with The
CAG may make rules for maintaining
the accounts
Cont...

 CAG can make regulations for

carrying for audit of expenditure and
receipts. He can decide about the
extent and scope of audit .
 Section 23
Cont...

 Section 24
 CAG can dispense with any part of
detailed audit of any accounts or
class of transactions and to apply
such limited checks as he may deem
fit.
Contd...

 and applicable to the service to which

they have been applied and whether the
expenditure conforms to the authority
which governs it. (General provisions
relating to audit)
CAG’s (DPC) Act, 1971

 Section15:Audit of grants or loans

given for any specific purpose from
the consolidated fund to any body or
authority not being a foreign body
 CAG to satisfy that the loan or grant
given satisfies the conditions
attached to the granting of such
assistance
CAG’s (DPC) Act, 1971..

 Audit Report contains the totality of

the accounts.
 There fore , audit of not only
expenditure but also receipts shall be
include
CAG’s (DPC) Act, 1971

 Section 16: It shall be the duty of CAG

to audit all receipts which are payable
to the Consolidated fund of India and
of each State and of each UT and to
satisfy himself that the rules and
procedures are designed to secure an
effective check on the assessment
,collection and proper allocation of
revenue
 CAG’s (DPC) Act, 1971
 Section 17: CAG shall have the authority to
audit and report on the accounts of stores
and stock kept in any office or department
of the Union or of a State.
 Section 18: CAG shall have authority to
 Inspect any office of accounts under the
control of the Union or of State
 Require documents relevant to the
transaction related to the audit to such
place as he may appoint for his inspection
CAG’s (DPC) Act, 1971

 To put such questions or make such

observations and to call for
information
 The person in charge of the auditee
organisation shall afford all facilities
for such inspection and comply with
requests for information with
reasonable expedition
 CAG’s (DPC) Act, 1971
 Section 19 (1): Audit of Govt Companies and
Corporations
 Govt Company is defined in Sn. 617 of The
Companies Act, 1956.
 Government Company means any Company
in which not less than fifty-one percent of the (
paid up share capital) is held by the Central
Government or by any State Governments
 Audit of Govt. Companies

 Sn.6 19 of the Act prescribes the details of

Audit of Govt. Companies.
 Sn.619(2) of the Companies Act-
Appointment of auditors of Govt.
Companies by Central Govt. on the advice
of CAG
Audit of Govt. Companies
Cont...
 Sn. 619(3) - CAG shall have power:
 To direct the manner in which accounts
shall be audited by the auditor appointed
 To conduct a supplementary or test audit
of the company`s accounts by such
persons as he may authorise in this behalf
Audit of Govt. Companies
Cont...
 Sn. 619(4) - CAG shall have the right
to comment upon or supplement the
audit report of CAs
 Sn. 619(5)- CAG’S comments shall be
placed before the AGM at the same
time and in the same manner as the
audit report”
CAG’s (DPC) Act, 1971
Audit of Statutory Corporations

 Established by or under law

made by parliament
 Section 19 (2): The duties of CAG in
relation to the audit of the accounts
of corporations established by or
under law made by parliament shall
be performed by him in accordance
with the provisions contained in their
Acts.
CAG’s (DPC) Act, 1971
Audit of Statutory Corporations

 Established by or under law made by

the legislature of the State or of the
UT
 Sn. 19(3) of DPC Act enables the States to
request the CAG to audit their accounts
 Only Parliament has the power to direct
CAG to audit the accounts. Others have to
request
CAG’s (DPC) Act, 1971

 Section 20 (1): Govt. shall request CAG

for undertaking the audit of accounts of
certain bodies or authorities not
covered in earlier sections.
 Section 20(2): CAG may propose to the
Govt to authorise him to undertake the
audit of any body or authority where
substantial amount has been advanced
CAG’s (DPC) Act, 1971

 Section 20(3): The audits referred

above shall not be entrusted to CAG
except where the Govt is satisfied that it
is expedient to do so in the public
interest and except after giving a
reasonable opportunity to the concerned
authority to make a representation
CAG’s (DPC) Act, 1971

 Miscellaneous Sections-
 Section 21: CAG can delegate power
to exercise his power by subordinates
except the power of submission of
CAG’s Report to the Parliament or
State Legislature
CAG’s (DPC) Act, 1971

 Section 22
 Central Govt. in consultation with The
CAG may make rules for maintaining
the accounts
CAG’s (DPC) Act, 1971

 Section 23 : CAG can make

regulations for carrying for audit of
expenditure and receipts. He can
decide about the extent and scope of
audit .
CAG’s (DPC) Act, 1971

 Section 24: CAG can dispense with

any part of detailed audit of any
accounts or class of transactions and
to apply such limited checks as he
may deem fit.