CHAPTER 15
FUNCTIONS
AND SPIRIT OF AUDIT
15.1 Audit forms an indispensable part of the
financial system and is one of the important organs necessary to ensure the
sound functioning of a Parliamentary democracy. It is the main instrument to
secure accountability of the Executive to the Legislature.
Audit assists the Parliament/Legislature in exercising its financial control over the Executive to ensure that funds voted by the Parliament/Legislature have been utilized for the purpose intended, and that the funds authorized to be raised through taxation and other measures have been assessed, collected and credited to Government properly. It checks the compliance, by the various authorities, with the rules and orders issued by the Executive Government and thus secures accountability on the part of each authority subordinate to the one immediately above in the hierarchy of delegation.
Audit assists the Parliament/Legislature in exercising its financial control over the Executive to ensure that funds voted by the Parliament/Legislature have been utilized for the purpose intended, and that the funds authorized to be raised through taxation and other measures have been assessed, collected and credited to Government properly. It checks the compliance, by the various authorities, with the rules and orders issued by the Executive Government and thus secures accountability on the part of each authority subordinate to the one immediately above in the hierarchy of delegation.
15.2 The primary function of Audit is to verify
the accuracy and completeness of accounts, to secure that all revenue and
receipts collected are brought to account under the proper head, that all
expenditure and disbursements are authorized, vouched and correctly classified
and that the final account represents a complete and true statement of the
financial transactions it purports to exhibit. Its broad aim is to safeguard the
financial interest of the tax payer.
15.3 It is the first principle of Government
audit to recognize the clear distinction between auditorial and administrative
functions. It is the function of the Executive Government to make financial
rules and orders and of the subordinates of the Executive Government to apply
these rules and orders. It is the function of Audit to verify that financial
rules and orders satisfy the provisions of law and are otherwise free from
audit objection and that these rules and orders are properly applied. It is not
the function of audit to prescribe what such rules and orders shall be or to
interfere with their administrative applications.
15.4 The Executive Government is responsible for
enforcing economy in the expenditure of public moneys. It is the duty of Audit
to bring to notice through its reports wastefulness in public administration
and in fructuous expenditure.
പൊതു പണത്തിന്റെ ചെലവിൽ സമ്പദ്വ്യവസ്ഥ നടപ്പിലാക്കുന്നതിനുള്ള ഉത്തരവാദിത്തം എക്സിക്യൂട്ടീവ് സർക്കാരിനാണ്. പൊതുഭരണത്തിലും ഫലപ്രദമായ ചെലവിലുമുള്ള പാഴ്വാക്കുകളെ അതിന്റെ റിപ്പോർട്ടുകളിലൂടെ ശ്രദ്ധയിൽപ്പെടുത്തേണ്ടത് ഓഡിറ്റിന്റെ കടമയാണ്.
Spirit of Audit
15.5 Although it is the duty of Audit to
ascertain that the prescribed rules and orders are obeyed, it is not to be
understood that the mere application of these rules and orders in their
minutest detail by it self serves the purpose of audit. The fundamental object
of audit is to secure real value for the tax payer’s money.
15.6 For such a purpose it is necessary, of
course, that rules of procedure should be laid down; but, if such rules are to
be regarded as ends in themselves and not merely as means to an end, the
inevitable tendency will be for Audit to insist rigidly on relatively petty matters
and thus to frustrate the real object of audit. For it is clear that if much
time and trouble is occupied and friction possibly engendered over expenditure
of a very trifling character in regard to which there has been only a technical
as opposed to a substantial irregularity, the Government and consequently the
tax payers will be the losers. That is, it is better often to pass some not
fully regularized expenditure of a trifling amount than to embark on a lengthy
controversy in respect of it. Undue insistence on trifling errors and technical
irregularities should, whenever possible be avoided and more time and attention
devoted to the investigation of really important and substantial irregularities
with the object not only of securing rectification of the particular
irregularity but, also of ensuring regularity and propriety in similar cases
for the future. At the same time, it must be borne in mind that failure to
appreciate the significance of what appears to be a trifling irregularity may
lead to failure to decoder an important fraud or defalcation. An Auditor must
develop an instinct for assessing the importance of an individual irregularity.
Objectivity and independence are the two essential qualities an auditor should
possess, and they should be complementary in manifestation.
15.7 The prescribed checks should, therefore, be
observed in the spirit and not in the letter as opposed to the spirit. As a
rule, trifling matters which are of no consequence to the finances of the
Government should not be given much attention. To save time and trouble over
petty sums, Audit Officers have been given powers by the Government of India to
waive petty objections and these powers should be exercised freely but with
discretion.
Procedure for Audit Scrutiny
15.8 Audit done by the Comptroller and Auditor
General is in the nature of sample tests with varying quantum of audit for
different types of transactions. It is almost entirely posts audit. It is done
(i) centrally at the location of the field offices of the Indian Audit and
Accounts Department, through examination of accounts, vouchers, and other
papers and documents received by them and (ii) locally which is known as local
audit or inspection, at the site of the offices of the departments of
Governments or authorities and bodies through examination of their accounts,
books, papers and other documents. The latter audit is done through
establishing branch offices known as concurrent residential audit offices, or/
and through local audit by sending peripatetic parties at periodical intervals.
Central and local audit play a complementary role to each other. In determining
the nature and extent of audit, cognisance is taken of the effectiveness of the
internal audit system obtaining in the departments or agencies of Government
and authorities and bodies.
15.9 In the course of scrutiny of accounts and
transactions of Government, Audit is entitled to make such queries and
observations and to call for such accounts, books documents, vouchers, returns
and explanations in relation to them, as it may consider necessary in the
interest of proper discharge of its duties. All queries and observations shall
be couched in a courteous and impersonal language. Audit should confine itself
to calling upon the Executive to furnish any necessary information and in cases
of difficulty, it should confer with the Executive as to the best means of
obtaining the evidence which it requires.
15.10 In the scrutiny of accounts and vouchers
the following procedure should be observed. The actual person performing the
original audit, who will be usually basic level auditor, must apply the rules
strictly. It cannot be expected that these basic level auditors who perform the
detailed audit will have the judgment or breadth of view necessary to exercise
the discretionary powers mentioned in the preceding paragraph. But once the
detailed audit has been carried out strictly and every infraction of rule
brought to light, it will be for the competent Audit Officer to exercise the
discretion vested in him by Government and to determine the cases in which the
objections which might be raised under the strict letter of the law can be
waived. If the objection is of such a nature that it cannot be waived, it will
be the duty of the Audit Officer to press it firmly but in courteous and
impersonal language. In carrying out this audit, the audit officer should
remember that exceptional cases may arise in which it is desirable to relax
formalities which would be followed strictly in ordinary cases; but the circumstances
must be really exceptional before rules are relaxed, and even then the
relaxation must be of formalities rather than of essentials.
15.11 Audit depends for its effective value on
its right and duty to report results to the proper authority so that appropriate
action may be taken to rectify the irregularity or impropriety, where possible,
or to prevent a recurrence of it. It is in the treatment of result of audit
that the auditorial function demands the highest qualities of understanding
balanced judgment and sense of proportion.
Audit as an aid to Government
15.12 Audit is one of the instruments of
financial control. It is, therefore, the duty of the Audit Officer to provide
Government with all possible assistance within the sphere of his functions in
financial matters. His normal attitude is the critical one, but the duty of
criticism must not be developed to exclude the constructive faculty or
constructive help. For example, when the Audit Officer is to inspect an office,
he should not only point out mistakes but also indicate how they may be
rectified and in future avoided; he should also suggest improvements in the
system. He must educate as well as investigate.
15.13 The scrutiny of departmental files, paper
and documents enables audit to know the background of the transactions and to
have a better appreciation of the situation for considering if any objection
has to be raised; thus, making available to audit freely the papers and
documents demanded by audit helps both Audit and Administration in the matter
of raising and settlement of objections.
The roles of Audit and Administration
are really complementary to each other.
ഓഡിറ്റിന്റെയും അഡ്മിനിസ്ട്രേഷന്റെയും റോളുകൾ പരസ്പരം ശരിക്കും പൂരകമാണ്.
The aim and purpose of both are the
same viz. to see that the departments keep to the path of financial rectitude
and that the resources of the state are efficiently utilized with due regard to
consideration of economy and financial propriety. It thus hardly needs any
emphasis that the relationship between Audit and Administration the matter of
obtaining information, papers and other documents for the purpose of audit
should be cordial. It will greatly improve the relationship between Audit and
the Administration and tone up the functional efficiency of Administration if
audit objections are taken in the proper spirit and perspective and attended to
promptly.