Audit Objection And Settlement Of Audit Objections 6a324o

Notes 1 AUDIT OBJECTIONS and Settlement of Audit Objections SETTLEMENT OF AUDIT OBJECTIONS Audit objections are the observations which are given by the auditor in the audit report. Whenever any irregularity is noted by the audit in the course of audit the same is noted by the audit in the form of PARAS. When the audit report is printed these paras are sent to the department for compliance. when the department receives the audit paras and they think that the expenditure which has been incurred by the department is according to the rules and regulations then it writes the reply to the auditor about the irregularity. If the audit accepts the plea then the para is settled at that time. There may also be a situation in which audit has penalized any person of the department and orders recovery of the expenditure. if the recovery is made by the department and the plea of audit is accepted. then in this situation the audit objeciton is also settled. But if the audit has identifed an irregularity but the concerned department has turned a deaf year to it and did not pay any attention the same para by the audit goes to PUBLIC S COMMITTEE. The public s committee then takes up its own steps to settle the paras. 79. Every Government servant, entrusted with the duty of making payments on behalf of Government, should attend promptly to all objections and orders communicated to him by the ant General, either direct, or through the Treasury Officer, by letters, audit memoranda, etc. and return the audit memoranda or reply to objections within a fortnight or send letters explaining the cause of delay. NOTE—The fact that some of the objections are still under reference is no reason for keeping back the statement. Such cases can be extracted for subsequent explanation. 80. Under Treasury Rule 31 if a Treasury Officer receives intimation from the ant General that moneys have been incorrectly withdrawn and that a certain sum should be recovered from a drawing officer, he shall effect the recovery without delay and without regard to any correspondence undertaken or contemplated with reference to the retrenchment order; and the drawing officer shall without delay repay the sum, in such manner as the ant General may direct. 81. When the ant General disallows a payment as unauthorized, the Treasury Officer must not only recover the amounts disallowed without listening to any objection or protest, but also refuse to make further payments in future till the ant General authorizes the payment to be resumed. That no warning slip has been received by the Government servant affected, or that, being received, it has been answered, are facts with which the Treasury Officer has no concern.

NOTES—(1) If a Government servant, from whom a recovery is ordered has in the meantime been transferred to another district, the Treasury Officer should without delay on the order of recovery to the other Treasury. (2) Representation and protests against retrenchments ordered by the ant General will not ordinarily be considered by the istrative authorities if submitted later than three months from after the date of receipt of the intimation by the aggrieved Government servant. An istrative authority competent to waive recovery may communicate any representation or protest so received to the ant General who may at his discretion postpone recovery pending a decision on the protest. This provision does not remove from the Treasury Officer the duty of enforcing immediately recovery of a retrenchment order under note (5) below. (3) Recoveries may not ordinarily be made at a rate exceeding one-third of pay unless the Government servant affected has (a) in receiving or drawing the excess, acted contrary to orders or without due justification or (b) taken an advance for a specific purpose, not utilised it for the purpose for which the advance was sanctioned within the prescribed period and failed to refund the outstanding amount within the stipulated date. (4) All retrenchments ordered by the ant General should be noted in the prescribed in paragraph 429 against the name of the officer concerned. The contains columns specifying the nature and amount of over payment and the method by which the overpayment has been adjusted. The entries relating to retrenchments should be inspected by the Treasury Officer in the last week of the month to see that all recoveries are being made properly. (5) A Treasury Officer must not when a retrenchment is ordered enter into any correspondence with either the ant General or the Government servant affected by the retrenchment ; it is his duty simply and promptly to carry out the orders he has received and to leave to the person aggrieved to refer the case to Government through the proper channel. (6) If considered desirable, the recovery of a sum retrenched from a pay bill need only be made from the next pay bill, and of a sum retrenched from a travelling allowance bill from the next payment of travelling allowances, but retrenchments of travelling allowances must be recovered in cash or from pay bills when the Government servant concerned does not within a month present a travelling allowance claim from which they can be recovered. (7) (a) In order to avoid unnecessary expenditure of time and labour on cases of a simple and unimportant character, the Government have authorised the ant General and certain other officers of his office to forego recovery of petty items of expenditure held under objection. (b) Subject to the prescribed limits and conditions, recovery of overpayments discovered during local audits and of Government dues in cases where it is the duty of the Audit to watch recovery, may also be waived by Audit Officers authorised for the purpose.

81-A. Recoveries of overpayments made to a Government servant who has proceeded on leave out of India are, as a rule, not enforced until he returns to duty in India. If in any case however it is considered necessary to ask the High Commissioner for India to make such recoveries the ant General should forward the necessary documents in duplicate to the Government for orders. 81-B. Ordinarily all personal claims are audited finally by the ant General within one year from the date of payment. In cases, however, where payments on of personal claims are placed under objection more than a year after the date on which they are disbursed, the ant General is required to obtain the orders of the Government before demanding recovery of the amount under objection. But if the amount involved does not exceed the prescribed limits and if the Audit Officer authorised for the purpose is satisfied that it was drawn by the Government servant under reasonable belief that he was entitled to it he may waive the recovery of the amount. Notes 2 Audit Objections: Problems and Mitigation Procedures Definition of Audit: Audit includes an examination of the books of s, other documents, stores, assets etc. relating to the receipts and expenditure of government, statutory public authorities and public enterprises with a view to ensuring that rules and orders framed by the competent authority in regard to financial matters have been followed; that sums due have been properly assessed, realized and brought to ; that expenditure has been incurred with due regularity and propriety; that assets have been properly utilized and safeguarded, that public resources have been used economically, efficiently and effectively and that the s truly represent facts.

Types of Audit: (a) Financial Statement Audits: A financial statement audit is the examination of the financial statements of an audited entity with the primary objective of expressing an opinion on whether the financial statements truly present the expenditures and receipts in

the case of s prepared on cash basis (Government s). In the case of accrual s the opinion shall be whether financial statements present a fair and true picture of the financial position, results of operations, and cash flows.

(b) Regularity or Compliance Audits: A regularity or compliance audit is an examination of the management of expenditures and receipts, and financial statements and transactions of the audited entity to determine whether the entity has complied with specific applicable laws, rules, regulations, procedures, etc. that apply to it. (c) Performance Audits: A performance audit or value-for-money audit is an objective and systematic examination of a public sector organization’s program, activity, function, or management systems and procedures to provide an assessment of whether the entity in the pursuit of predetermined goals has achieved economy, efficiency and effectiveness in the utilization of its resources (the 3 Es). Management of Audit: 

Audit Planning

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Audit Execution

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Audit Reporting

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Audit Follow-up Constitutional and Legislative Authority:

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Articles 127-132 of the Constitution: Constitutional Provisions of authority

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Comptroller & Auditor General (Additional Functions) Act-1974

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Comptroller & Auditor General (Additional Functions) (Amendment) Act-1975

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Comptroller & Auditor General (Additional Functions) (Amendment) Ordinance 1983 Audit Observations:

1. Ordinary Audit Observations

2. Serious Financial Irregularities Advance Para and Draft Para : 

Advance Para: Serious financial irregularities (SFIs) which are sent to the Ministry for reply are called Advance Paras.

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Draft Para: When no reply is sent or the reply is not helpful to resolve the observations then the Advance Para is developed into draft Para for incorporation in the report of the Auditor General. Different Process of settlement of audit observations:

1. a) Spot disposal during audit: 

Audit observations can be settled during audit when query is issued and when necessary rectification is done by the auditee.

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Audit observations can be settled during seen and discussion meeting on the last day of the audit by providing necessary reply along with required information covering, recovery, adjustment rectification of errors or irregularities.

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b) Disposal in headquarter:

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Audit observations can be settled through broadsheet reply. Broadsheet reply can be sent to audit directorate in respect of both ordinary audit observations and serious financial irregularity.

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c) Disposal in the Meeting:

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Audit observations can be settled through the holding of bi- lateral and tri-partite meeting. Bi- lateral meeting takes place between the audit directorate and the auditee. Tri-partite meeting is attended by representative from the Ministry, Audit directorate and the auditee.

1. d) Disposal by the Public s Committee (PAC):

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Public s Committee scrutinizes the appropriation s and the annual finance s of the government.

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Public s committee scrutinizes CAG’s Audit reports. Audit experience in the field audit : The actual experience of audit while undertaking field audit are as follows:

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Audit is not looked upon as an aid to management

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Auditee is generally uninterested in the work of the auditor

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Financial statement is not prepared on time by the auditee

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Financial statement is not prepared correctly

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Cash book is not maintained properly

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Delay in producing required vouchers, s, and relevant documents by the auditee affects the progress of audit work

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Record keeping is not audit friendly

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Response to audit query is not immediate, detailed, and well documented. Sometimes reply is not given at all.

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Discussion on Local Audit Report (LAR) takes place on the last day of audit program. Experience shows that in many cases auditee does not want to discuss the report in detail.

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Instead of substantial answer to the Local Audit Report (LAR), the auditee responds by saying that reply would be given in due course

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Recurrence of similar type of irregularities

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Correct information is not furnished to the audit party regarding the number of outstanding paras in respect of the Organization.

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Sometimes s personnel are not well conversant with necessary rules and regulations

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Physical verification is not encouraged

Problems regarding settlement of audit observations: Audited: 

Broadsheet reply is not given on time and is not given properly. Sometimes it is not ed by necessary documents.

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Similar reply is repeated over and over

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Actions are not taken against those responsible for irregularities

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istrative and post facto sanction is not given

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Write off method is not resorted to

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Verified treasury chalan is not provided

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Corrective measures are not taken

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In case of DPA expenditure, statement of expenditure is not obtained from the development partner

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Delay in sending minutes of bilateral and tri-partite meeting

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Lack of initiative on the part of Project Director to arrange bi-lateral meeting

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For serious Financial irregularities (SFIs) broad sheet reply is not given from the ministry in time

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Department sends reply on SFIs directly, not through the Ministry

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Minutes of the tri-partite meeting is sent by the Department not by the Ministry which is the acceptable system

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Audit Directorate

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Delay in taking action on the minutes of bilateral and tri-partite meeting

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Delay in the disposal of broadsheet reply received from the Ministry and the Department

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Delay in conducting physical verification following recommendations of bi-lateral and tripartite meeting

Streamlining the process of settlement of audit observations: 

Broadsheet reply received form Department and Ministry should be reviewed by the audit Directorate without delay

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The list of audit observations should be updated project wise and year wise

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List of audit observations should be reconciled

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Bi-lateral and tri-partite meeting should be organized on a regular basis

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Minutes of bi-lateral and tri-partite meeting should be sent to audit Directorate within three days

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Audit Directorate should respond to minutes of the meeting within three days

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Project Director should arrange bi-lateral meeting when the audit team is conducting audit

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Crash program should be taken with proper explanation and ed by appropriate evidence

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Broadsheet reply should be given with proper explanation and ed by appropriate evidence

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For SFIs, broadsheet reply should be given by the Ministry on every occasion.