General Provisions relating to Audit
The provisions relating to Audit are embodied in Sections 13 to 21, 23 and 24 of the Comptroller and Auditor General (Duties, Powers & Conditions of Service) Act 1971.
Section 13 of the Act empowers the Comptroller and Auditor General to audit all expenditure from consolidated fund of India, of each State and each Union Territory having legislative assembly. The Audit of expenditure is comprehensive and includes:
- Audit against provision of funds.
- Regulatory Audit.
- Propriety Audit.
- Efficiency Cum performance or value for money audit.
- System Audit.
The completeness and accuracy of accounts is examined in audit to verify that there is proper voucher or proof of payments. Audit against provision of funds is aimed at ascertaining whether the moneys shown in the accounts s having been disbursed, were legally available for and applicable to the service or purpose to which they had been applied or charged.
The objective of regularity audit is to see whether the expenditure conforms to the authority, which governs it. Propriety audit is directed towards examining the propriety of executive action beyond the formality of expenditure to its wisdom, faithfulness and economy, and bringing to notice cases of waste, losses and extravagant expenditure.
Efficiency-cum-performance or value for money audit is a comprehensive appraisal of the progress and efficiency of the execution of development and other programmes and schemes wherein an assessment is made as to whether these are executed economically and whether they are producing the results expected of them.
In systems audit, organisation and systems governing authorisation, recording, accounting and internal controls are analysed and standards of quality and performance evaluated.
Section 13 of the Act requires the Comptroller and Auditor General to audit all transactions of the Union, of the States and of the Union Territories having a Legislative Assembly, relating to the Contingency Funds and Public Accounts and to audit all trading, manufacturing, profit and loss accounts and balance sheet and other subsidiary accounts kept in any department of the Union or of a State or a Union Territory.
This Section also enjoins on the Comptroller and Auditor General the duty to report on the accounts, expenditure or transactions so audited by him.
- Audit of Grants and Loans to various Bodies and Authorities
Expenditure incurred by Governments from their Consolidated Fund often takes the form of grants and loans to various bodies and authorities. Under Section 13 of the Act, it is the responsibility of the Comptroller and Auditor General to audit such expenditure. Audit in this case is, however, restricted to the records available in Government offices and is directed towards:
i. Examining the admissibility of the grant or loan and the adequacy of sanction; and
ii. Verifying the fulfillment of the conditions governing the grants and loans and the utilization for the purposes for which they were intended. The Act has made provisions in Sections 14 and 15 for the audit of the accounts of authorities and bodies receiving financial assistance in the form of grants or/and loans from the Government of India or a State or Union Territory, subject to certain conditions and criteria specified in those Sections.
- Audit of Receipts
Section 16 of the Act provides for audit by the Comptroller and Auditor General of all receipts which are payable into the Consolidated Fund of India and of each State and of each Union Territory having a Legislative Assembly.
It also requires him 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.
- Audit of Stores and Stock
Section 17 of the Act vests in the Comptroller and Auditor General the authority to audit and report on the accounts of the stores and stock kept in any office or department of the Union or a State or a Union Territory.
- Audit of Government Companies
Section 19 of the Act deals with the duties and powers of the Comptroller and Auditor General in relation to the audit of the accounts of Government Companies and Corporations. These duties and powers are to be performed and exercised under Sub-sections (1) and (2) of Section 19:
i. in the case of Government Companies, in accordance with the provisions of the Companies Act, 1956 contained in Sections 617 and 619 thereof; and
ii. in the case other Corporations set up by or under law made by the Parliament, in accordance with provisions of the respective Legislations.
However, the position of a Corporation established by a law made by the Legislature of a State or of a Union Territory is different. Under the Constitution, only Parliament can prescribe by law the duties and powers of the Comptroller and Auditor General.
Sub-section (3) of Section 19 of the Act provides that audit of Corporation established by law by the Legislature of a State or Union Territory can be entrusted to the Comptroller and Auditor General in the public interest by the Governor of the State or the Administrator of the Union Territory concerned after consultation with the Comptroller and Auditor General and after giving a reasonable opportunity to the concerned Corporation to make representations in respect of the proposal for such audit.
Under Section 19A of the Act, the reports of the Comptroller and Auditor General in relation to the accounts of a Government Company or a Corporation audited under Section 19 are to be submitted to the Government or Governments concerned for being laid before the Parliament/legislature.
- Submission of Audit Reports
Article 151 of the Constitution requires the Comptroller and Auditor General to submit reports relating to the accounts of the Union and of a State to the President or the Governor of the State as the case may be for being placed before Parliament/Legislature of a State.
Similar provision exists in Section in Section 49 of the Government of Union Territories Act, 1963, for submission of the reports of the Comptroller and Auditor General in relation to the accounts of a Union Territory having a Legislative Assembly to the Administrator of the Union Territory for being laid before Legislature.
These reports relate to the totality of the accounts of the Union, a State or a Union Territory, as the case may be, and cover not only its expenditure but its receipts as well.