CHAPTER 23
AUDIT OF GRANTS-IN-AID
23.1 Grants-in-aid are final payments in the nature of donation or subscription to the grantees. The following paragraphs apply to the audit of the grants-in-aid made by Government to another Government, Body. Institution, concern or individual. They do not apply to Statutory grants-in-aid to State Governments etc. which are charged on the Consolidated Fund of India under certain specific provisions of the Constitution (for example Article 275).
Authority
23.2 Sections 15(1) and (2) of the Comptroller
and Auditor General (Duties, Powers and Conditions of Service) Act, 1971,
describe the functions of the Comptroller and Auditor General in the case of
grants or loans given to any body or authority for specific purpose. This
section has two parts. The first part imposes a statutory responsibility on the
Comptroller and Auditor General of India to scrutinize the procedures by which
the sanctioning authority satisfies itself as to the fulfilment of the
conditions subject to which such grants or loans are given. The second part
gives him the right of access to the books and accounts of the authority or
body in receipt of such grants or loans. These are subject to the following:
(i) the authority or body is not a foreign State
or international Organization;
(ii) the President/Governor/Administrator
concerned may, in public interest, by order, relieve the Comptroller and Auditor
General after consultation with him, from making any such scrutiny in respect
of any body or authority.
(iii) The right of access to the books and
accounts of any corporation where the law establishing it (or the rules and
regulations framed under that law) provides for audit by an agency other than
the Comptroller and Auditor General of India, is available only if authorized
by the President or the Governor or the Administrator, as the case may be. Such
authorization is made after prior consultation with the Comptroller and Auditor
General and after giving the concerned corporation a reasonable opportunity of
making representation with regard to the proposal.
Audit
23.3 Audit can be applied (i) to the original
grant itself, and (ii) to the expenditure which is subsequently incurred from
it by the grantee.
23.4 Audit of the grant itself is conducted
according to the general principles and rules laid down for the audit of
expenditure from the Consolidated fund.
23.5 The extent of the audit of the expenditure
incurred from a grant-in-aid by the grantee depends on whether the grant is
conditional or unconditional. Where no conditions are attached to a grant,
Audit is in no way concerned with the manner in which the grant is utilized by
the grantee.
Where
conditions are attached to the utilization of the grant, these usually take the
shape of specification of the particular objects on which, or the time within
which, the money must be spent. Whatever the nature of the conditions, Audit
has to see that they are fulfilled.
23.6 Unless it is otherwise ruled by Government, every grant made for
a specified object is subject to the implied conditions:
(i) that the grant will be spent upon that
object within a reasonable time, if no time limit has been fixed by the
sanctioning authority; and
(ii) any portion of the amount which is not
ultimately required for expenditure upon that object will be surrendered.
Audit scrutiny, when applied, should pay due
attention to these points.
23.7 When recurring grants-in-aid are made to an
institution, Audit will as far as possible verify that the grantee continues to
function as such institution and that the circumstances in recognition of which
the grant was sanctioned still continue to exist.
23.8 In respect of grants to non-government or
quasi-Government bodies or institutions, the Central Government have decided
that where assets are to be acquired wholly or substantially out of
Government’s grants it should be laid down that assets should not without the
prior sanction of the Government, be disposed of or utilized for purposes other
than those for which the grants are sanctioned. The Audit Officer has,
therefore, to watch compliance with these rules, or any similar rules issued by
State Government in this behalf.
23.9 It is an important function of Audit to
watch:
(1) that there is no tendency on the part of
Government to go on disbursing fresh grants to a grantee when substantial
amounts out of the earlier grants remain unutilised by him; and
(2) that the Executive Authorities have adequate
machinery to keep a continual watch over the progress of expenditure from the
grant and on the continued solvency of the grantee and the safety of the funds
entrusted to him.
Audit should also try to ascertain how far the
overall objectives of the major schemes for which grants-in-aid are disbursed
by the Central and State Governments can be said to have been attained and that
there is no wasteful expenditure.