Manual of Standing Orders (Audit)

Sl Points Key to point

No.
Central Audit
1. The Accounts and Entitlement functions and the Audit functions are discharged by 1st March 1984
separate Accountants General with effect from
2. Central Audit will be carried out every month by Central Audit Parties of the Audit
Office in the Accounts and Entitlement office.
3. Central Audit Support Sections in the Audit Offices will coordinate and pursue the work CASS Cell
of the Central Audit Parties and perform all support functions, such as preparation of
audit programmes, audit of sanctions, etc., and discharge follow-up responsibilities
4. An Audit Officer will be in charge of each Central Audit Support Section, while an
Assistant Audit Officer will be responsible for two Central Audit Parties.
5. The Monthly Appropriation Accounts and Finance Accounts prepared by the AG (A&E)
should also be checked by the Central Audit Supporting Section.
6. Central Audit may be supplemented by local audit and inspections to such extent as may
be prescribed by the CAG. In cases where the accounting functions have been
departmentalised, the audit will be conducted only locally.
7. Central Audit of vouchers pertaining to a month should be conducted as soon as the
monthly accounts are closed and the posting of the vouchers in the registers
prescribed is completed by the Accounts and Entitlement office.
8. Any departure from this general instruction is permissible only in special circumstances
and with the express sanction of the AG (Audit).
9. Transmission of vouchers from one office to another is likely to result in their being lost
or misplaced. The vouchers should not, therefore, be taken to the office of the AG
(Audit) for the purpose of Central Audit.
10. In case of any doubt or difference of opinion between the AG (AE) and AG (Audit), the
matter should be promptly referred to the CAG for a decision.
11. Pre-check of pay fixation and claims relating thereto, where entrusted to the AG under
any rules or orders, will be the responsibility of the A & E Office.
12. Each member of the Central Audit Party, including the Assistant Audit Officer, will be
individually responsible for the duties entrusted to him.
13. Normally, Auditors should be able to finalise audit memos on their own; however, they
may seek the guidance of the Assistant Audit Officer on important or doubtful
questions.
14. The Assistant Audit Officer should determine the extent of independence to be allowed
to each member of the party with reference to his experience, qualities and capacity
to act independently.
15. Final audit memos will be sent to the Central Audit Support Section only after the
Assistant Audit Officer has vetted them.
16. The Assistant Audit Officer will be responsible for the audit as a whole, guiding the staff
under him and always keeping himself posted with the progress of audit.
17. In respect of payments made in Embassies, Missions, etc. abroad, Audit will not insist
upon the production of receipts if a cash voucher is available or, when payment has
been made by cheque, an acknowledgement of its receipt has been obtained from
the payee.
18. No bills pertaining to pay or any allowance not claimed within one year of its becoming
due (or such other period as may be prescribed in this behalf) should have been
admitted for payment without the sanction of the AG (A & E) in cases where the rules
of the Govt. so prescribe.
19. Payments of money by transfer from the Consolidated Fund to the Public Account NIL Payment
(Deposit Heads, Zila Parshad or Panchayat accounts, etc.) Voucher

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

20. NIL PAYMENT VOUCHER should be scrupulously audited and reviewed every month
and receipt of a certificate that this has been done watched by the Central Audit
Support Sections
21. A consolidated report every month to the Report Section detailing such Nil Payments
effected during the month.
22. All purchases made on proforma invoices and where the materials have not been
received and taken to stock should be audited in detail
23. After audit, the voucher or account concerned should be enfaced with the word
‘Audited’ in RED INK over the initials of the person who conducted the audit.
24. If any objection is taken in audit to a voucher or to any item in a schedule or other
account, a note of the objection should be recorded thereon in red ink in sufficient
detail to make it easily understood.
25. Vouchers and other documents, which were not received with the Monthly Account
should, on receipt subsequently, be audited in the same manner as they should have
been audited had they been received at the stipulated time
26. Non-receipt of voucher, or of its supporting documents, particulars thereof should be
recorded in a suitable register and the subsequent completion of the prescribed audit
checks watched.
27. The Branch Officer should review the pending items in the register every month the BO-Monthly
Group Officer every quarter. GO-Quarterly
28. Cases where a formal audit objection is issued and pursued in respect of a wanting
document need not, however, be entered in this register.
29. Acceptance of certificates of payments in lieu of wanting paid vouchers will be done,
in accordance with the monetary limits prescribed, by the Branch Officer or Group
Officer in the Accounts and Entitlement office
30. Unusual features or malafides related to the non-production of original vouchers
noticed in the course of audit of these certificates should be brought to the notice of
the AG (Audit)
31. Copies of sanctions issued by the Central and State Govt.s and their subordinate
authorities will be received by the Central Audit Support Sections concerned
32. The Central Audit Support Sections shall communicate objections arising out of audit
of sanctions to the departments concerned with copies thereof to the AG (A&E),
33. All sanctions relating to foreign travel received in the Central Audit Support Section
should be entered in a register and copies made available to Central Audit Parties for
arranging audit of the related transactions.
34. The A.C. Bill Register maintained in the Office of the AG (A&E) should be checked in
detail by the Central Audit Parties with reference to the Abstract Contingent Bills and
NDC Bills received from the compilation sections of the A&E Office.
35. The audit enfacement on the voucher should indicate the amount admitted/objected
to in audit.
36. Immediately on completion of audit, the Assistant Audit Officer will undertake the
current review of the audited vouchers to the prescribed extent.
37. He will authenticate the admittance/passing of each voucher by placing his initials or
other distinctive mark below the audit enfacement
38. The extent of review so conducted should also be certified in the Selection Register
39. On completion of the audit and review, the Central Audit Party will forward the
Selection Register, the completion certificate and the audit notes/memos (in triplicate)
to the relevant Central Audit Support Section,
40. The Central Audit Support Section will forward them in convenient batches every
month to the departments concerned, copies thereof also being sent to the AG (A&E).
41. The AG(Audit) will be responsible for watching the systems and procedures for and the
effectiveness of pursuance of objections of an accounting nature, such as non-
availability of D.C. Bills, vouchers or payees’ receipts, errors in the treasury and
divisional accounts, etc.,
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
42. A gist of all important cases dealt with by various sections in these offices should be
circulated among other sections, as and when they arise.
43. A digest of important and interesting cases noticed in audit should also be compiled
half yearly and forwarded to the CAG so as to reach him by the 7th in the months of
January and July every year
Audit of Grants-in-aid
44. Govt. and Heads of Departments are required to furnish to Audit every year detailed
information about the financial assistance given to various institutions, the purpose(s)
for which the assistance was sanctioned and the total expenditure of the institutions.
45. Audit is to be conducted with reference to the original sanction as well as the extent
of and conditions governing the delegation of financial powers
46. All sanctions relating to the grants and the corresponding utilization certificates are to
be checked with reference to the Register of Grants-in-aid and the Grants-in-aid Audit
Register maintained in the office of the AG(A&E) in respect of each department.
47. that the authority sanctioning it is competent to do so by virtue of the powers vested Audit to ensure
in it
48. That the sanction is definite and thus needs no reference either to the sanctioning
authority itself or to any higher authority.
49. the sanction conforms to the pattern of assistance or rules governing such grants-in-
aid as approved by the Finance Ministry
50. the suitability of the institution seeking the grant has been assessed by the sanctioning
authority
51. no grants are sanctioned where there is reasonable doubt or suggestion of corrupt
practices
52. every order sanctioning a grant indicates whether it is recurring or non-recurring in
nature and the object for which it is given and clearly specifies the general and special
conditions, if any,
53. A provision to the effect that the accounts of the grantee institutions shall be open to
inspection by the sanctioning authority/Audit whenever considered necessary
54. Sanctioning authority has obtained audited statements of the accounts of the grantee
institutions
55. Audit should ordinarily accept the expressed or implied certificate of the sanctioning
authority that the prescribed conditions have been fulfilled, but it should utilize any
opportunity available to scrutinize the methods by which the authority satisfied itself
of such fulfilment.
56. Recurring grant- net expenditure arrived at by deducting the estimated receipts from Quantum of
the gross expenditure. grant
57. Capital/non-recurring grant- net expenditure arrived at by deducting the estimated
receipts and any receipts from the disposal of property from the gross expenditure
58. Where no condition is attached to a grant, Audit is in no way concerned with the
manner in which the grant is utilized by the grantee.
59. The sanctioning authority is required to furnish to the AG(A&E) a formal certificate
confirming the proper utilization of the grant from the administrative, technical and
financial points of view.
60. In cases wherein the audit of local authorities and public or quasi-public bodies is
conducted by an officer not subordinate to the CAG, a certificate, based on that
officer’s audit, to the effect that the grants have been utilized on the objects for which
they were sanctioned and in accordance with the conditions attached to them, may be
accepted from the administrative authority concerned.
61. The utilization certificates furnished by the authorities of the administrative Govt. to
the AG(A&E) may be accepted in audit.
62. Ministries and departments of the Central Govt. are not required to furnish utilization
certificates.

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

63. State Govt. directly incurring expenditure out of Central grants are also not required to
furnish utilization certificates.
64. Where such expenditure is incurred through local bodies or private institutions, the
State Govt. concerned should furnish the necessary utilization certificates
65. No tendency on the part of Govt. to continue disbursing fresh grants to a grantee when Checking of
substantial amounts out of the earlier grants remain unutilised Grant to co-
66. an adequate machinery is available with the executive authorities to maintain a operative
constant watch over the progress of expenditure from the grant, the continued societies,
solvency of the grantee and the safety of the funds provided private
67. developmental schemes are being implemented economically and efficiently and institutions,
producing the results expected of them etc.
68. the extent to which the agency or authority being audited is adequately discharging its
financial responsibilities in relation to the schemes being implemented
69. instances of overpayment, loss, extravagance, avoidable excess or infructuous
expenditure attributable to improper planning, incorrect sequencing of activities,
delays in completion, etc.
70. If the sanctioning authority has not prescribed any time frame for the purpose, the Time-limit for
grant will be spent upon the specified object within a reasonable time, which would utilisation of
normally be a period of one year from the date of issue of the sanction. grant
71. Any portion of the grant not ultimately required for expenditure upon the specified
object will be surrendered.
72. Grants made to non-Govt. or quasi-Govt. bodies or institutions for purchase of assets,
the assets should not, without the Govt.’s prior sanction, be disposed of or utilized for
purposes other than those for which the grants were sanctioned.
73. Audit should be conducted with reference to the names of the beneficiaries in respect Scholarship &
of scholarships and stipend vouchers Stipend
74. the sanctioned scale is not exceeded
75. total amount sanctioned for the scholarships and stipends has not been exceeded
76. scholarships and stipends are drawn only for the period for which they are admissible
in terms of the sanctions
Audit of Deposits
77. Funds are not diverted from the Consolidated Fund and unnecessarily accumulated in Objectives
deposits
78. deposit accounts are opened only when necessary and strictly according to the
prescribed rules and regulations
79. Credits to, withdrawals from and closure of deposit accounts are supported by the
necessary documents and strictly conform to the rules and regulations.
80. (i) Civil Deposits that include revenue deposits, civil court deposits, criminal court Classification of
deposits, etc. (ii) Local Fund Deposits and (iii) Special Deposits Accounts of Govt. deposit
companies, corporations etc.
81. (i) Interest earning and (ii) Non-interest Earning Type of deposit
82. (i) Plus and minus Memoranda (ii) Challans including transfer credits and list of challans Source
(iii) Broadsheets maintained by the AG (A&E) (iv) Deposits Register (v) Authority for documents
opening of Deposit Accounts (vi) Vouchers relating to Corpus Fund (vii) Expenditure
sanctions (viii) PLA maintained at treasuries (ix) VLC report.
83. no monies are received for deposit in the Public Account of the Govt. unless required Issues in audit
or authorised by virtue of any statutory provisions or of general or special orders of the of Deposit
Govt..
84. no item, which could be credited as a revenue receipt or in reduction of ordinary
expenditure of Govt., is credited as a deposit
85. are duly supported by challans and necessary vouchers are available in support of
withdrawals from such deposits.
86. Principles and Rules of audit that govern audit of expenditure apply to disbursement
from deposit account
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
87. An Annual return of transactions of the Govt. relating to revenue and civil and criminal Lapsed Deposit
court deposits is to be rendered to the AG(A&E)
88. The amounts in respect of deposits that have lapsed should be deducted from the plus
and minus memoranda for the month of March.
89. whether the lapsed amounts have been correctly written off in the plus and minus
memoranda for March
90. Deposits lapsing on 31 March each year are transferred to the credit of Govt. under the
Head “0075-Miscellaneous General Service.
91. The annual transfer entry crediting the amount to the Govt. may be made on the basis
of the figure reported by the treasury officers in the March Final or March
Supplementary accounts
92. receipt of the prescribed applications for refund of lapsed deposits and exercise of
necessary checks with reference to the original deposits
93. Personal Deposits Account/Personal Ledger Account are maintained in the treasuries Personal
in the nature of banking accounts. Deposit
94. Ordinarily, Govt. sanctions the opening of a banking deposit account or of a Personal
Ledger Account after consultation with the AG(A&E).
95. Personal Ledger Accounts may also be opened, after prior consultation with the
AG(A&E), in favour of specified Govt. Officers by transferring funds from the
Consolidated Fund of the State for discharging the liabilities of the State Govt. in
respect of execution of various projects, schemes, etc.
96. The corpus of such Personal Ledger Accounts is recouped after incorporating the
expenditure incurred every month and reflected in the monthly accounts in the Civil
Accounts.
97. Except where Personal Deposit Accounts are created by law or rules having the force
of law for discharging liabilities arising out of special enactments, other Personal
Deposit Accounts shall be closed at the end of the financial year by minus debit of the
balance to the relevant service heads in the Consolidated Fund of the State,
98. The Account being opened again in the following year, if necessary, in the usual
manner.
99. If AG (Audit) decides that this audit need not be undertaken by him on the ground that
the money involved belongs to a local fund or a private fund not administered by a
Govt. servant or for any other reason, the Govt. may entrust audit of the initial
accounts to another recognized authority like the Examiner, Local Fund Accounts, or a
qualified auditor.
100. Deposits remaining unclaimed for more than three completed financial years have been
credited to Govt. revenue as having lapsed and the lapse statements sent to the treasury
and the AG(A&E) for adjustment in the accounts.
101. No deposit that has lapsed has been repaid without the authority from the AG(A&E) or
the treasury.
Audit of Borrowings, Loans, Advances, Guarantees, Reserve Funds, Suspense
Transactions and Interest Payments
102. Pay and Accounts Officers and the departmental officers maintain the records relating
to the loans given by the Govt.
103. The departmental officers also maintain the detailed accounts in respect of revenue
advances, permanent advances and advances to individual Govt. servants.
104. Audit of interest payments on the borrowings managed by the Public Debt Offices is
divided between the Audit and Accounts Department and the Public Debt office
concerned.
105. (i) the amount of promissory note is correctly stated in the voucher and Public Debt
(ii) interest due has not been paid twice for the same half year. officer
106. Correctness of interest calculations, income tax deductions and other arithmetical Audit &
computations, the vouchers are subject to regular examination in Audit. Accounts

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

107. After the AG(Audit) has audited the vouchers, the AG(A&E) forwards these to the
Public Debt Office.
108. The Union can raise money by borrowing upon the security of the Consolidated Fund Article 292
of India within such limits, if any, as may from time to time be fixed by an Act of
Parliament.
109. a State may borrow within the territory of India upon the security of the Consolidated Article 293
Fund of the State within such limits, if any, as may from time to time be fixed by an Act
of the Legislature of the State
110. a State may not, without the consent of the Govt. of India, raise any loan if any part of
a loan made to the State by the Govt. of India is still outstanding or if that Govt. has
guaranteed the repayment of any loan.
111. A State Govt. may also obtain loans from the Govt. of India subject to such conditions
as may be laid down by or under any law made by Parliament.
112. The Accountants General (A&E) maintain the detailed accounts of such loans and also
arrange for payment of the principal and interest whenever due.
113. Borrowings of a Govt. are so regulated as not to exceed the limits, Key points in
114. Compliance to the conditions imposed by the Govt. of India audit of
115. proceeds from borrowings have been properly brought to account and have been borrowing
expended only on the objects for which the loans were raised
116. Borrowed moneys may properly be applied in accordance with the sound principles of
public finance.
117. adequate arrangements have been made for amortisation of the debt
118. Amortisation arrangements in respect of loans availed of for unproductive purposes
may be related to some extent to their maturity period and also to the likelihood of an
increase in unproductive debt.
119. Objective of the borrowing rather than to the actual currency of the loan should be
considered for amortisation arrangement
120. The period should be comparatively short in cases where (i) the loan is intended for an Shorter period
unproductive purpose, expenditure on which should more appropriately be met from of amortisation
revenues (ii) the life of the assets created by utilising the loan is comparatively short and
(iii) the extent of borrowings for such unproductive purposes is likely to increase rapidly.
121. Where a material asset is created, the amortisation period should never exceed its life.
122. In respect of productive assets, the rate of amortisation should be related to the life of
the revenue-producing asset for the creation of which the debt was incurred.
123. Where the net earning power of an asset substantially exceeds the interest on the Prudent to
debt, it may not be necessary to insist upon amortisation. have
124. Where depreciation or renewal reserves are constituted for the replacement of assets amortisation in
created from loan funds, amortisation is often omitted altogether or its rate scaled even in these
down. cases
125. In the case of borrowings to finance loans to cultivators and others, the actual
recoveries of principal may be sufficient for debt repayment if used for that purpose,
provided all losses are written off to revenue.
126. The responsibility for the audit of transactions connected with the Debt Redemption
Scheme of the Union Govt. or of any such scheme adopted by State Govt. devolves on
the IAAD.
127. where the Accountants General (A&E) maintain such detailed accounts, subsidiary loan
registers are also maintained by them for advising the loanees about the instalments
of principal and interest falling due periodically and for watching their remittance. S
128. After departmentalisation of accounts, the Pay and Accounts Officers maintain similar
subsidiary registers in respect of loans the detailed accounts of which are maintained
by them.
129. The Accountants General (A&E) and the Pay and Accounts Officers also maintain
suitable broadsheets in respect of loans accounted for in their books.

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

130. In the case of loans granted by Govt. of India to the State Govt., besides maintaining
detailed accounts, the State AG (A&E) also arrange for payment of the instalments of
principal and interest through RBI due to the Govt. of India.
131. (i) Payment of principal and interest on due date by loanee Audit of Loan
(ii) penal interest has been levied on overdue instalments Broadsheet
(iii) loans paid and repaid including interest properly accounted for
(iv) Conditions, if any, imposed by the sanctioning authority are adhered to
(v) any amount paid has been erroneously treated and credited as repayment of the
principal when any sum is due on account of unpaid interest
(vi) Periodical acknowledgments from the debtors for outstanding balances.
132. Any expenditure on loan work in PWD would be deemed to have been advanced on
the last day of the month in which the expenditure appeared in the divisional accounts.
133. Takavi Advance is a Revenue Advance.
134. Advances that are normally granted to officers who are required to make payments Permanent
before they can obtain the necessary funds by drawing proper bills. Advance
135. Accountants General (A&E) or Pay and Accounts Officers in the case of departments
having separated accounts organisations maintain a Register of Permanent Advances
136. A guard file is also maintained to keep acknowledgements obtained from the actual
incumbents holding the permanent advances
137. In April every year fresh acknowledgements for the advances held on 31st March are
obtained.
138. Permanent advances should be sanctioned only for a subordinate office and not for
the office of the sanctioning officer
139. Permanent advance sanctioned should not be more than what is absolutely necessary
and is based on the average monthly contingent expenditure in a year;
140. AG (A&E) or the PAOs maintain detailed accounts of loans and advances granted to Advance to
Govt. servants that are recoverable in not less than sixty instalments Govt. servants
141. The departmental officers themselves maintain detailed accounts of other short-term
loans and advances.
142. AG (A&E) or the PAOs maintain detailed accounts of short-term loans and advances
granted to gazetted officers when they are also responsible for regulating their
entitlements.
143. Construction of houses, purchase of conveyances, etc. Specific loan
Heads
144. Travelling allowance, advances of pay on transfer, advances for contesting law suits, Final Head
145. When there are no governing statutory provisions or instruments, proper authority for
the investment should be demanded. This principle also applies to the investment of
cash balances of the Union or any of the State Govt..
146. the ceilings prescribed by the Legislature are not exceeded Key audit point
147. Any general or special orders of the Govt. concerned prescribing the levy of a in Guarantee
commission for giving guarantees are duly observed; and
148. A sound system in place to maintain proper records of the guarantees given along with
their terms and conditions.
149. It is also necessary that the total amount of such guarantees as well as the amount
involved in guarantees, if any, invoked during the year are mentioned in the Audit
Report on the accounts of the Union or the State Govt. concerned, as the case may be.
150. The accounts of the public body or institution whose loan or loans have been guaranteed
by Govt. are subject to audit by qualified auditors acceptable to Govt..
151. Examination of the books of accounts of such a body or institution would not be in
order unless its accounts are otherwise subjected to regular audit by the Comptroller
and Auditor General.
152. the scheme of liquidation prescribed as the basis of the Sinking Fund is financially
sound and consistent with the principles governing amortisation arrangements

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

153. the Fund contains the amount that should have been accumulated if the prescribed Sinking fund for
scheme had been adhered to in respect of both the amounts to be credited to the Fund debt
and the anticipated interest liquidation
154. the investments of the Sinking Fund are sound and are valued at not more than their
market price.
155. Reserve Funds are located in SECTOR J under Public Account
156. (i) Reserve Fund Bearing Interest (ii) Reserve Fund Not Bearing Interest Types of
Reserve
157. All transactions as are ultimately removed either by payment or recovery in cash or by Suspense Head
book adjustments are recorded under
158. the use of suspense heads for provisional adjustment of transactions that are
ultimately adjustable under ordinary revenue and service heads should be avoided as
far as possible.
159. the unadjusted balances under these heads continue to represent bonafide assets or Key points
liabilities of Govt. capable of being realised or settled, as the case may be
160. satisfactory action towards such realisation or settlement is being taken by the officers
responsible
161. All balances under suspense heads must be reviewed at short intervals, ensuring that no
item remains unadjusted longer than is reasonably necessary to bring about its clearance
in the ordinary course with due regard to the rules applicable to each case.
162. Loans obtained from autonomous institutions like the LIC of India, National
Cooperative Development Corporation, NABARD, etc. are managed by the
departmental officers of Govt..
163. The Public Debt offices of the Reserve Bank of India manage the open market
borrowings of Govt. (other than Treasury Bills).
164. the amount entered in the Interest voucher as the half-yearly interest in fact
represents one half year’s interest due on the amount of the loan mentioned in each
promissory note
Audit of Remittance Transactions
165. Transactions are not booked to the final heads of account but are taken to merely Remittance
adjusting heads.
166. Their clearance may be by payment in cash or by book adjustment under the relevant
service or revenue heads of account
167. the debits and credits have been cleared respectively by corresponding credits and debits
within the same or in another audit circle
168. to scrutinize the balances from month to month in order to ensure their early clearance
169. In regard to vouchers relating to Remittance Accounts (Settlement Account), the Audit Adjusting office
Officer of the adjusting department is responsible for auditing the charge audit to ensure
170. (i) it is a proper charge against a work, office or other expenditure unit under his audit;
and (ii) it has been duly sanctioned.
171. Some the cases where audit of charges is conducted by an Audit Officer other than the
one responsible for the adjustment of the charge
172. Charges incurred in the Navy, Civil, Public Audit Officers of the respective Defence
Works, Railways, P&T and other departments Account Office
departments on account of a Field Service
Force
173. Military Engineering Service, Indian Air AG(Audit) who audits the accounts of the Regional CDA
Force, Indian Navy and Army Factories. Public
174. Railways, P&T Department and AG(Audit) who audits the accounts of the Respective
Archaeological Department Public Account Officer
175. Payments of commuted value of AG(Audit) in whose jurisdiction the AG (AE)
pensions/Pensionary charges on behalf of payment is made concerned
other Govt.

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

176. Transit pay of a Govt. servant lent to AG(Audit) in respect of the lending Govt. AG (AE)
another Govt. on reversion to the lending borrowing Govt
Govt.
177. Besides the cash remittances made by departmental officers rendering compiled Cash
accounts, cash remittances take place between treasuries and also between treasuries remittance
and currency chests.
178. Every entry of ‘remittance into’ or ‘withdrawal from’ accounted for by an account
rendering unit has to be cleared by a corresponding opposite entry in the accounts of
the unit receiving the remittance or permitting the withdrawal
179. The AG (A&E) maintains necessary broadsheets for watching the clearance of
remittances relating to the PW and Forest Departments, departmental commercial
undertakings, State Excise Officers, etc. that render compiled accounts to him.
180. A Remittance Check Register for checking cash remittances between treasuries inter se
and remittances between treasuries and currency chests is also kept
181. Currency transfers in the non-banking treasuries and sub-treasuries in the UT of
Lakshadweep are treated as transactions of the Union Govt. and separate Central
Remittance Check Registers are maintained
182. The unadjusted debits and credits worked out every month in the registers are carried
forward to the next month with complete details.
183. The office of the AG(A&E) ensures that there is a voucher for each entry relating to RBI Remittance
Reserve Bank of India Remittances in the schedules of payments
184. the total of the issues and payment as reported by the treasuries in the daily schedules
is credited and debited to RBI respectively.
185. the net receipts or payments for the month under the head ‘RBI Remittances’ for the
whole account circle as worked out in the Detail Book agree with the corresponding
adjustment for the month made by the RBI against the balance of the Govt. concerned.
186. The responsibility for verifying the encashment of individual telegraphic transfers and
drafts against the corresponding drawings rests with the Reserve Bank of India, Central
Accounts Section, Nagpur.
Appropriation Audit
187. The responsibility for watching the progress of expenditure against a Grant or
Appropriation devolves on the Executive, which is ultimately responsible for restricting
the expenditure within the Grant or Appropriation.
188. The progress of expenditure against each unit of appropriation and against each Grant
or Appropriation is watched by the Accounts officer of the department or by the AG
(A&E) as the case may be
189. An Appropriation Audit Registers is maintained and warning slips are issued to the
departmental officers wherever necessary.
190. money expended has been applied to the services and purposes that the Grants and Audit objective
Appropriations were intended to provide
191. the expenditure against each Grant or Appropriation is within the amounts authorised
by the Legislature
192. the orders of allotment of funds and re-appropriation orders conform to the rules and
regulations.
193. (i) Orders of allotment &re-appropriation (ii) Appropriation Accounts of earlier years Source
(iii) Appropriation Audit Registers (iv) AC Bill Register of DDO (v) Monthly Financial documents
Report by DDO to Controlling Officer (vi) Reconciliation Register at AG (AE) (vii)
Monthly statement of expenditure submitted by Admin Department to Finance
Department
194. The Appropriation Audit Wing of each Audit Office will conduct Appropriation Audit
every month as soon as intimation is received from the A&E office about the closure of
the accounts for the month and availability of the Monthly Civil Accounts
195. amounts re-appropriated are not intended for meeting expenditure on a ‘New Service’ Key points
or a ‘New Instrument of Service’
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
196. no amount has been re-appropriated from one Grant or Appropriation to another
Grant or Appropriation
197. no amount has been re-appropriated from the ‘Charged’ Section to the ‘Voted’ Section
and vice versa
198. no amount has been re-appropriated from Revenue to Capital and vice versa
199. Funds provided under ‘Plan’ heads have not been re-appropriated to ‘Non-Plan’ heads
without the previous consent of the Finance Ministry/ Department.
200. Comments on unnecessary and injudicious re-appropriation of funds and surrender of
funds should be incorporated in Chapter II of the Audit Report.
201. The Accountants General (Audit) should also conduct a comprehensive review of the
budgetary procedures followed and the expenditure control exercised in respect of
FIVE TO TEN Grants every year.
202. The AG should also examine independently the reasons for excesses and savings in at
least two departments where substantial excess expenditure or savings might have
taken place and frame appropriate comments based on the results of the examination.
Certification of Finance Accounts and Appropriation Accounts
203. to prepare and submit accounts to the President, Governors of States and Section 11 of
Administrators of Union Territories having Legislative Assemblies DPC Act
204. Relieving the CAG from preparation and submission of accounts by President and
Governor with previous approval of the President after consultation with the CAG
205. The CAG has been relieved from the responsibility for the preparation of Finance Goa & UT
Accounts of the Union Govt. and State Govt. of Pondicherry
206. The CAG continues the responsibility of the accounts submission to the
President/Governor/Administrator
207. Annual accounts (Finance Accounts) of the Union Govt. as a whole including Railways, CGA & C/s by
Defence, Post and Telecommunication is prepared by Sec MoF (DoE)
208. The Union Govt. Appropriation Accounts (Civil) are prepared and signed by the Secretary, MoF
Controller General of Accounts and countersigned by the (Dep of Exp)
209. The Appropriation Accounts of the Departments of P&T are prepared separately by the
respective Departments and signed by Member (Finance), Postal Service
Board/Telecommunication and Secretary of respective department
210. Appropriation Accounts pertaining to Railways shall be prepared and signed by Chairman is ex-
Financial Commissioner & Chairman of Railway Board officio Pr. Sec.
211. Appropriation Accounts pertaining to Defence shall be prepared and signed by
Financial Advisor, Defence Services and Secretary, Ministry of Defence
212. The AG (A&E) concerned prepare the annual accounts (including Appropriation
Accounts) in respect of State Govt. other than the State Govt. of Goa.
213. Accounts relating to the State Government of Goa and the Union Territory Government Respective
of Pondicherry are prepared by the State/Union Territory Government. Finance Dept.
214. The AG (Audit)/Principal Director of Audit concerned are required to audit the annual
accounts prepared by these authorities before submission to the Comptroller and
Auditor General for certification
215. To avoid delay in submission of accounts, monthly preparation and check of
Appropriation Accounts has been introduced in order to form the basis of the final
accounts sufficiently in advance.
216. A similar procedure may be evolved locally by mutual consultation between the AG
(A&E) and AG (Audit) and between the AG (Audit) and other accounting authorities
who compile the accounts of the State Govt. of Goa and UT Pondicherry
217. Audit should not suo moto add or modify what has been stated in the Accounts, but
may include comments in the Audit Report if so required
218. The Accountant General (A&E) has the ultimate responsibility for finalising the Finance
Accounts and Appropriation Accounts of the States and UT Governments, other than
those relating to State of Goa and Union Territory of Pondicherry

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

219. He is also responsible for getting these accounts checked (both at intervening and final
stages) by the Internal Test Audit Wing and the AG (Audit) and submitting the finalised
Accounts as well as the printed copies with the prescribed audit certificates, to the CAG
220. The AG (Audit) will furnish him the prescribed audit certificates in respect of the
Finance Accounts and Appropriation Accounts in the forms prescribed for being
submitted to the CAG while forwarding the printed copies for signature.
221. At draft stage the Principal Director of Audit (Central), Mumbai Goa
222. At draft stage the Accountant General (Audit), Tamil Nadu, UT Pondicherry
223. If, the suggestions of Audit are not accepted, such audit comments, as may be
necessary, will be incorporated by the PAD/AG in the Audit Report.
224. The Accounts as finalised will be signed by the Finance Secretary and countersigned by
the Chief Secretary to the State/Union Territory Government.
225. The PDA (Central), Mumbai/ AG (Audit), Tamil Nadu, will forward the printed copies of
the Accounts along with the prescribed audit certificates for signature of the CAG
226. the heads of account shown in the Accounts in consonant with LMMH Finance
227. any anomalies or obvious mistakes of classification Account check
228. wide variations between the revised estimates and the actual expenditure have been
properly examined to ensure that there has been no serious misclassification of
expenditure
229. per contra adjustments have been carried out correctly in all cases
230. Abnormal transactions of receipts, disbursements or balances have been investigated
and rectified or properly explained by foot notes.
231. The balances under Debt, Deposit, Suspense and Remittances, etc. should be
particularly reviewed in detail.
232. the OB agree with the CB shown in previous year’s accounts;
233. he adverse balances have been adequately explained
234. amounts shown against the minor head “Writes off from heads of account closing to
balance” under the major head “8680 - Miscellaneous Government Account” are
covered by sanctions issued by the CAG/CGA/other accounting authorities
235. the entire balance under “under the major head “8782” and 8675 has been transferred 8675-RBI
to “8999 - Cash Balance - Deposits with Reserve Bank” Deposits
236. the balance under “Deposits with Reserve Bank” agrees with the balance Finance
communicated by the Bank and, if not, the difference has been properly explained Account check
237. the figures tally with those contained in the Appropriation Accounts
238. the figures exhibited in the summarised statements agree with those in the detailed
statements
239. Advances drawn from the Contingency Fund and their subsequent recoupment should
be carefully watched so as to ensure that they are properly accounted for and there is
no omission.
240. the sub-heads have been grouped separately in the ‘Revenue’ and ‘Capital’ Sections Appropriation
and ‘charged’ and ‘voted’ figures have been shown distinctly Account check
241. the original provisions, supplementary provisions and amounts re-appropriated or
surrendered have been exhibited correctly
242. gross figures of expenditure have been adopted in cases where recoveries by debit to
heads of account under a different Grant/Appropriation are adjusted in reduction of
expenditure
243. excesses and savings have been explained in all cases according to the monetary limits
prescribed and wanting information, if any, has been called for;
244. the grant-wise details of estimates and actual recoveries adjusted in reduction of
expenditure have been prepared correctly;
245. In cases where provisional adjustments have been made due to non-availability of
correct figures before the closure of the accounts for the year, it should be verified
whether the competent authority's sanction has been obtained for such adjustment

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

246. The basis of adjustment of interest on Provident Fund in Government account by the
Accountant General (A&E) should be verified while checking the Appropriation
Accounts and any case of defective budgeting in the ‘Interest Appropriation’ should be
reported to the Headquarters Office.
247. The form in which the accounts of the Union and of the States shall be kept is to be Article 150
prescribed by the President on the advice of the Comptroller and Auditor General.
248. This function is exercised, on behalf of the President of India, by the Controller General
of Accounts, Ministry of Finance (Department of Expenditure).
249. The List of Major and Minor Heads of Account of Central and States-Receipts and
Disbursements maintained by the CGA, on the advice of the CAG
250. The Comptroller and Auditor General in his capacity as auditor of the accounts of
Government is responsible for securing that entry of financial transactions in the
accounts conforms to such forms, rules and directions.
251. The opening of sub-heads and detailed heads of in the accounts of the State and Union 258/239 (i)
Territory Governments have been delegated by the President under Article respectively
252. Similar delegation to Railways, P&T and Defence within the extent prescribed by the
CGA in consultation with the CAG
253. The power to tender advice to the State/Union Territory Government in this matter 21 of DPC Act
has similarly been delegated to the Accountant General (A&E) concerned by the
Comptroller and Auditor General in terms of Section
254. The principle of classification of transactions in Govt. Accounts is the function, Function/Prog./
programme, scheme or activity to which the transaction relates, rather than the Scheme/
department in which the expenditure or receipt occurs. Activity
255. The term "form of accounts" covers also the principles of classification and thus the
ultimate responsibility for prescribing the correct classification of the transaction rests
on the CGA.
256. In determining the classification of doubtful items, if an AG does not agree with the
opinion of the Govt., he should refer the matter to the CAG for consideration and taking
up the case with the CGA, where ever necessary.
257. Capital expenditure is incurred either for increasing concrete assets of material and Capital
permanent character or reducing recurring liabilities. Expenditure
258. Revenue expenditure is the current expenditure of Government on its day to day Revenue
functions and services. Expenditure
259. The rules governing allocation between capital and revenue expenditure may be
prescribed by the President on the advice of the CAG
260. All charges for the first construction and equipment of a project as well as charges for Capital
intermediate maintenance of the work while not yet opened for service should be Accounts
borne by the
261. All charges for maintenance subsequent to opening the project and all working Revenue
expenses thereafter shall be borne by Accounts
262. In the case of works of renewal and replacement which partake both of a capital and
revenue nature, such expenditure should be borne by Both Capital and Revenue in
accordance with rule extant on the subject
263. Depreciation to the property is borne by Revenue Accounts
264. Expenditure on account of reparation of damage caused by extraordinary calamities
such as flood, fire, earthquake, enemy action, should be charged to Capital or Revenue
or both as decided by the Government.
265. Capital receipts in so far as they relate to expenditure previously debited to Capital In reduction of
heads, accruing during the process of construction of a project, should be accounted capital
for expenditure.
266. Capital receipts after opening of the project shall be treated as Capital and shall not be
taken to revenue account except under a special rule or order of Government

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

267. Where a Depreciation or Renewals Reserve Fund is established for renewing assets of Both Capital
any commercial department or undertaking, the expenditure on renewals and A/c & Dep/
replacements should be borne by Renewal Fund
268. In theory, it is legitimate to make capital bear the charges for interest on money Interest on
borrowed to finance the construction of a new project before the project becomes Capital
revenue earning.
269. The charge of interest to capital in Govt. accounts is justified only when there would
be undue disturbance in the Govt.’s budgetary position by taking interest to revenue
270. The writing back of capitalised interest should be the first charge on any capital receipts
or surplus revenues derived from a project when commissioned.
271. (i) Surplus Revenue (ii) Borrowings specific or general (iii) Sources other than revenue Source of
and borrowings (accumulated balances) capital finance
272. the capital expenditure met from sources other than revenue being described as outlay Capital outlay
financed outside the Revenue Account
273. Expenditure of a capital nature met from revenue is accounted for under the
appropriate major head within the Revenue Account, as any other expenditure of a
revenue nature.
274. The Govt. of India and State Govt. have decided that ordinarily expenditure of a capital
nature will not be debited to a capital head outside the Revenue Account except in the
case of new works where the cost of individual work is below ₹1 lakh and work form
part of the scheme having a continuity of purpose, time and space is below ₹ 5 lakhs
275. the objects for which the money is wanted are so urgent and vital that the expenditure Loan funds on
can be neither avoided, postponed nor distributed over a series of years, unproductive
276. the amount is too great to be met from current revenues purposes.
277. The CGA is ultimately responsible for prescribing the correct classification of
expenditure on the advice of the CAG
278. By allotment of sums from the Consolidated Fund of India or of a State or UT Creation of
279. From grants or contributions made by other Governments or outside agencies, Reserve Fund
280. A grant to the Union, State or UT Govt. by another Govt. should be treated as ordinary
revenue of the recipient Govt. irrespective of whether the grantor Govt. retains control
over the expenditure from the grant or not
281. A grant from an outside agency to the Union or a State or a UT Govt. made without
reserving control over the expenditure therefrom should also be treated as ordinary
revenue of Govt.
282. Where the outside agencies retain control over the execution of schemes/projects, the
grants-in-aid received from such agencies and the expenditure on the scheme/project
will be accounted for under a deposit head opened for the purpose.
283. Seven signatory copies and one ordinary copy of the printed Accounts duly signed by
the CGA and countersigned by the Secretary, MoF (DoE) are sent by the former to the
DGA, CR, who forwards them for signature of the CGA, with the requisite certificate.
Audit of World Bank and other Externally Assisted Projects
284. The World Bank has accepted, the CAG to be an independent auditor for the purposes
of certification of accounts issue of audit certificates in respect of projects being
executed in India with World Bank financial assistance.
285. (i) Staff appraisal reports (ii) loan agreement (iii) monthly account or financial Source
statements and supporting vouchers (iv) quality control reports (v) comments of World documents
Bank.
286. (i) Loan/Development Credit Agreement (ii) Staff appraisal report (SAR) (iii) Statement Document for
of expenditure (SOE) (iv) Supporting vouchers (v) Reconciliation statement (vi) Audit
Inspection report of local/central audit for inclusion of any serious financial certificate
irregularities pointed out in audit.
287. A detailed explanation and assessment of the financial management system and any Staff Appraisal
additional requirements for the particular project Report

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

288. It addresses the design of the project accounts, procedures required for consolidating
reporting from various sub-projects, the use of SOEs, and any other activities required
to assure accountability.
289. It outlines the format for project reporting, including the audited and unaudited
financial statements required, and their frequency.
290. The procedure under which borrower periodically requests withdrawal of loan Statement of
proceeds through submission of a statement indicating expenditures for certain items Expenditure
referred to in the loan agreements. (SOE)
291. The SOEs are not accompanies by supporting documentation. Implicit in the SOE
submission by the borrower is the adequacy and veracity of documentation,
maintained by the borrower, which supports the disbursements.
292. All objections raised during local audit should also be mentioned in the Audit Certificate
(Proforma as per Annexure) duly signed by Group Officer.
293. SOE should reach the Accountant General (Audit) by 31st July following the close of
financial year.
294. Implementing agency is to obtain, reconciled and verified SOE from Accountant
General (A&E) so that Audit certificate could be issued in time.
295. Audit Certificate should be issued in printed revised proforma and on printed
letterhead and should include irregularities noticed during audit
296. After the closure of every financial year; the audit certificate shall be issued within 9
months or earlier as required under the Project/Loan Agreement
297. Audit certificate should be issued to project implementing authority under intimation
to Ministry of Finance (Department of Economic Affairs).
298. The Audit Certificates in respect of projects executed by Government Companies are
issued by CAs who are statutory auditors of the companies and not by the CAG who
conducts only a supplementary audit in such cases under the Companies Act.
299. (i) Sanctioning and releasing an amount of expenditure in advance. Ways WB gives
(ii) Reimbursement of claim (adopted in India aid
300. The interest rate on the Bank loans ranges between 3 to 5 % and compensation for risk
services is between 1 to 1.5%. Loans are repayable over 15 to 20 years with grace period
of 3 to 5 years.
301. Nationals/bidder of Non-WB member countries should be disqualified from bidding
from contracts intended to be financed wholly or in part from Bank loans
302. (i) release of SD to the agencies Eligible for
(ii) Mobilisation advance reimbursement
(iii) IT/sales tax recovered from contractor for civil work but not for supplies
(iv) Foreign exchange freight charges
(v) Insurance premiums paid in foreign exchange
(vi) All payment to consultants are made in accordance with contract provisions
303. (i) Amount recovered towards security deposit (SD) Not-Eligible for
(ii) Secured advance paid reimbursement
(iii) Local transportation charges
(iv) Self-insurance and premium paid in local currency are ineligible unless explicitly
provided in the loan agreement.
(v) Income tax and other duties paid to the consultant are not reimbursable unless
specifically provided in the contract.
304. It is advisable to draft Audit Inspection Report paras identifying specifically that the
project/work/ scheme is aided by World Bank/External Agency where the
implementing agency is executing other work besides World Bank aided works.
Environment Audit
305. Development without destruction of the environment and without foreclosing the Sustainable
options for future needs. Development

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

306. the environmental appraisal and impact assessment procedures in the Central Extent & Scope
Government for developmental activities of environment
307. the extent of compliance with the related Government legislation and regulations audit
308. the effectiveness of waste minimisation and pollution control programmes and
programmes for the conservation and utilisation of energy, water and other natural
resources like flora, fauna, wild life, etc.
309. Examination of the environmental policies and initiatives of Government and of the
measures taken to respect its international commitments in this sphere.
310. Examination of various international agreements with a view to ascertaining whether
the country’s interests have been adequately safeguarded by these accords
311. To identify and evaluate the potential beneficial as well as adverse impact of Objectives of
development projects on the environmental and ecological systems. EIA
312. The Ministry of Environment and Forests has made EIA mandatory in a Notification
issued in January 1994 and amended in May 1994 in respect of twenty-nine specified
categories of developmental activities
313. (i) Feasibility Reports (ii) site clearance (iii) 'No Objection' certificates from the State Audit of EIA
Pollution Control Boards (SPCBs) and other local authorities (iv) Environment Impact procedures
Assessment (EIA) Reports (v) Environment Management Plans (vi) Risk Analysis and
Emergency Preparedness Plans (vii) Rehabilitation Plans where required (viii) Minutes
of meetings of Expert Appraisal Committees in the Ministry & site visiting report (ix)
Reports on public hearings (x) Adherence to prescribed time schedule (xi)
Recommendations along with conditions of Appraisal Committees
314. On commissioning of the projects, the project entities are required to submit half- EIA Notification
yearly reports of compliance with the conditions stipulated in the environmental
clearances.
315. Six Regional Offices of the Ministry located at Bangalore, Bhopal, Bhubhaneshwar,
Chandigarh, Lucknow and Shillong also undertake post-project monitoring of the
cleared projects.
316. Cases of non-compliance with the conditions subject to which environmental
clearances are accorded are brought to the notice of the SPCB concerned
317. The Forest (Conservation) Act, 1980, as amended from time to time, checks the Forestry
indiscriminate diversion of forest land for purposes unrelated to forestry.
318. The State and UT Govt are required to submit formal proposals received by them from
various investors and project entities to the Ministry, if these involve the diversion of
more than 20 hectares of forest land.
319. Proposals involving diversion of forest land of area between 5 and 20 hectares are to
be processed by the Regional Chief Conservator of Forests concerned in consultation
with a State Advisory Group
320. Proposals involving diversion of forest land of up to 5 hectares can be decided by the
Regional Chief Conservator of Forests concerned under his delegated powers
321. The Joint Forest Management enunciated in National Forest Policy, 1988, envisaging
the involvement of the local populace in the development and protection of degraded
forests, along with catering to their subsistence needs
322. Audit scrutiny in relation to activities for the preservation of wild life would extend to Wildlife
the enforcement of the Wildlife (Protection) Act, 1972 through regional offices at
Kolkata, Chennai, Delhi and Mumbai with the assistance of the State Wildlife
Departments.
323. The surveys of flora are conducted by the Botanical Survey of India, with its Environment
headquarters at Kolkata and its nine circle/field offices. Survey
324. the Zoological Survey of India, with its headquarters at Kolkata and sixteen regional
stations located throughout the country, undertakes surveys and exploration of fauna
in different ecosystems and conservation areas

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

325. The Forest Survey of India, with its headquarters at Dehra Dun and four zonal offices
at Bangalore, Kolkata, Nagpur and Shimla, is entrusted with the responsibility for the
survey of forest resources in the country.
326. An Environment Information System (ENVIS) has been established in the Ministry with ENVIS
centres located all over the country with the objectives of information collection,
storage and dissemination to the user groups concerned in the fields of environment
and wildlife and associated spheres.
Systems Audit
327. A system is an orderly arrangement of separate but interdependent and interacting
activities and related procedures which implements and facilitates the performance of
the functions of an organisation.
328. By system audit, Audit can reasonably assume, without the necessity of undertaking a
detailed examination of the individual events or transactions, that the results produced
by the system would be fairly accurate.
329. To check the chain of movements in each procedure forming part of the operational or General
financial activity (System) Principles
330. Indicate where the system and its linkages are getting extended or overloaded and how
the resultant strains may be eliminated (Procedure)
331. Whether action on important points has been initiated at sufficiently high levels of the
hierarchy so as to produce meaningful results.
332. Procedures and/or records which appear to be redundant or superfluous should be
identified for elimination.
333. (i) Organisational Chart (ii) Procedural & Technical Manuals (iii) Delegation of Powers Source
Rules (iv) Departmental Accounts Manual (v) Accounting Policies and Procedures (vi) documents
Budgeting Policies and Procedures (vii) Performance Budget (viii) Work Plans (ix)
Internal Audit Report
334. Organisational analysis >> analysis of system of authorisation and recording >> analysis Main Stages of
of system of accounting >> examination of the system of internal control >> evaluation system Audit
of the standards of quality and performance >> examination of the adequacy of
internal audit and >> review and evaluation of the system as a whole.
Miscellaneous
335. To verify that stores received in the workshop are properly brought to account and that Workshop
the issue of stores against work orders is properly controlled. Accounts
336. In the case of manufacturing operations, the cost of manufacture in the workshop
compared with the prices of similar articles outside.
337. The proforma accounts of the workshops should be scrutinised to verify that they
represent an accurate and complete record of all the financial transactions directly or
indirectly affecting their activities.
338. the refunds have been made under sufficient authority and are supported by duly Refund of
receipted vouchers in proper form Revenue
339. Refund vouchers shall contain a certificate that the refund has been noted against the
original credit in the departmental account duly signed by Treasury or Sub-Treasury
Officer in token of their having verified the original credit
340. The CAG to ascertain and certify the net proceeds in a financial year of any tax or duty Article 279 (1)
or of any part of any tax or duty, in or attributable to any area.
341. The net proceeds of taxes on income other than agricultural income to be assigned to Article 270 (2)
the States in any financial year will be determined in accordance with the terms of the
Distribution of Revenue Orders issued from time to time.
342. All charges of collection of Direct Taxes are, in the first instance, booked under ‘2020-
Collection of Taxes on Income and Expenditure’.
343. At the end of the year, shares of these charges relating to other taxes are worked out
as prescribed in LMMH Heads of Account and transferred to the respective heads of
accounts.

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

344. To arrive at the divisible amount, of which States will receive their prescribed Divisible
percentage share, it is necessary to deduct from ‘Taxes on Income’ the proceeds of Amount of tax
taxes on Union emoluments.
345. In determining the amount to be retained by the Union Government under this head,
due regard must be paid to the cost of collection.
346. This cost should be assumed to be proportionate to the yield, after deducting refunds.
347. A further deduction has to be made on account of the proceeds attributable to Union
Territories at such percentage,
348. The net proceeds of other taxes and duties levied under Articles 269 and 272 of the
Constitution will be calculated with reference to the actual gross receipts realised
during a financial year reduced by refunds and cost of collection as is determined by
the CAG either on an actual basis or on a proportionate basis
349. The whole or a part of the net proceeds of certain Union Excise Duties other than Duties Article 272
of Excise on Medicinal and Toilet Preparations may be assigned to the States under the
law made by Parliament in this behalf.
350. For computing the net proceeds of Union Excise Duties, it is necessary to ascertain the
net realisation, i.e. gross revenue less refunds, drawbacks, etc., and to deduct
therefrom the cost of collection consisting of direct and indirect charges.
351. For purposes of certification, the audited figures relating to the tax heads are to be
furnished in the prescribed formats by the DGA, CR to the CAG, after getting the figures
accounted for by the Zonal Accounts Offices and Central Excise Collectorates checked
by the respective Accountants General (Audit).
352. The procedures for auditing discounts on stamps vary from State to State. Discount on
353. In some States, the discount is entered in a schedule against each item of sale, and the Stamp
vendor signs a receipt on the schedule itself or separately, the rate of discount
applicable usually being certified by the treasury officer.
354. In some States, the discount is entered in a schedule against each item of sale, and the
vendor signs a receipt on the schedule itself or separately, the rate of discount
applicable usually being certified by the treasury officer.
355. departments cannot sanction Grants of land, assignment of revenue and other
concessions involving relinquishment of revenue, without prior consultation with the
Finance Ministry/Department,
356. All sanctions accorded to such grants, assignments, etc. are required to be
communicated to Audit by the Government concerned for scrutiny.
357. The assistance in respect of State Plan schemes takes the form of Block Grants and Block Grant
loans that are related to the total outlay allotted for the State Plan as a whole by the
Planning Commission without linkage with the individual schemes except to the extent
of certain earmarked categories
358. Besides the Plan assistance, the State and Union Territory Governments also receive
assistance in the form of loans and/or grants from different Ministries of the
Government of India for meeting certain items of non-Plan expenditure
359. After the accounts of the year are closed, the AG (A&E) will prepare Statements of
Expenditure for the grants in question, indicating therein the items placed under
objection by him, and furnish these to the AG (Audit) for audit and certification.
360. The Central Audit Support Section should audit the statements received from the A&E
office and forward certified copies of the statements to the Ministry of Finance, the
administrative ministries concerned, and the State/UT Govt concerned,
361. The AG (Audit) shall prepare, in consultation with the AG (A&E), an action plan for
segregating the actual expenditure under the Central Plan, Centrally Sponsored and
State Plan schemes financed out of central assistance and arrange their audit
immediately on closure of the accounts of the year.
362. While certifying the expenditure, objections of a routine nature such as non-availability
of some vouchers, absence of budget allotment, non-availability of sanction, etc, which
would not affect the Central assistance may be ignored.

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

363. the amounts drawn in abstract bills for which detailed bills have not been submitted
should be excluded
364. any item of expenditure found to be clearly ineligible for Central assistance should not
be included
365. any point of doubt in regard to eligibility for Central assistance should be got clarified
from the administrative ministry concerned
366. Loans and grants given to local bodies and autonomous bodies may be treated as final
expenditure
367. Whenever expenditure is not identifiable for the purpose of certification as per records
of the AG General (A&E) should be furnished leaving it to the Ministry of Finance to call
for such further information as may be necessary from the State/UT Govt.
368. In cases where the audit certificate is issued before the local audit is undertaken, it
should be specifically brought out that the certificate is issued subject to local audit in
due course
369. A quarterly progress report indicating the number of schemes for which certificates are
to be issued and the progress made in the certification of accounts from time to time
should be forwarded by the AG (Audit) to the Office of the CAG by the first week of the
month following the quarter to which the report relates
370. The information should be furnished year-wise and separately for each category of Plan
schemes.
371. The report for the quarter ending March should be accompanied by a list of schemes
for which the audit certificate could not be issued.
Internal Audit
372. (i) Adherence to prescribed procedural rules and regulations (ii) maintaining various Objective of
registers that have been prescribed (iii) submitting various returns on the due date and ITA to verify
(iv) generally functioning as efficient units of the office.
373. Also the quality of audit conducted and comment specifically on this aspect in its
reports
374. The ITA Section is not intended to do original work and should not be saddled with such
work. Its functions are analogous to those of the Principal Director of Inspection.
375. The ITA Section should be a small one consisting of carefully hand-picked experienced
and knowledgeable personnel
376. The Section should be under the direct charge of the Accountant General or one of his
deputies
377. Report of ITA should be submitted to the AG for his information so that he may have
an expert’s appreciation of the technical efficiency of various units of his office, though
disposal of the reports may be watched by a DAG
Various
378. Audit of Provident Fund by AG(Audit) is limited only to the concurrent scrutiny in
central audit of the paid vouchers in the A&E Office in accordance with the quantum
prescribed in this regard.
379. In States where maintenance of Provident Fund Accounts of their employees has been
taken over by the State Govt. and entrusted to the departments, the accounts are
subject to test check during local audit by the AG(Audit) to the extent prescribed.
380. Audit of Provident Fund vouchers relating to these accounts received in the A&E Office
is limited to sanctions only.
381. (i) Preliminary internal check by the Divisional Accountant in the Divisional Office. Stage of works
(ii) Check in the Office of the AG (A&E) and Pay and Accounts Offices. audit
(iii) Central Audit in the Office of the Accountant General (Audit).
(iv) Test Audit during periodical inspection of the Divisional Office.
382. It is not necessary that the Divisional Accountant should personally check the
arithmetical accuracy of all vouchers and accounts. He is, however, responsible for
ensuring that a cent per cent check is exercised efficiently under his supervision

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)

383. Muster rolls and petty vouchers which are not submitted to the office of the AG
(A&E) or the PAO are checked in detail by DA

Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)