CHAPTER 30

AUDIT OF AUTONOMOUS BODIES

30.1 Sizeable expenditure is incurred by the Union and State Governments in the form of Grants and Loans to various bodies and authorities which are engaged in developmental and welfare activities. The efficiency, economy and effectiveness with which the development and welfare programmes are implemented and services provided by them are as much a matter of public concern as in the case of Government agencies and directly administered programmes.

30.2 The powers and duties of the Comptroller and Auditor General of India for audit of the autonomous bodies, are derived from Article 149 of the Constitution of India, which, inter-alia, provides that the Comptroller and Auditor General shall perform such duties and exercise such powers in relation to the accounts of any authority or body, as may be prescribed by or under any law made by Parliament. The term, “by Law” refers to provisions in the Acts of Parliament and the term ‘under law’ refers to the provisions in subordinate legislations having the force of law i.e. rules and regulations framed under powers vested by the parent Acts and declared to have been so framed under such powers.

🆀The powers and duties of the comptroller and Auditor General of India for audit of the autonomous bodies, are derived from which Article of the Constitution of India?

(A) Article 148

(B) Article 149

(D) Article 151

Correct Answer:- Option-(B)

🆀C&AG shall perform such duties and exercise such powers in relation to the accounts of any authority or body, as may be prescribed by or under any law made by Parliament. The term ‘by law' refers to :

(A) Provisions in the Acts of Parliament

(B) Provisions under an Executive Order

(D) None of the above

Correct Answer:- Option-(C)

30.3 The words ‘body’ and ‘authority’, have not been defined either in the Constitution or in the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971. ‘Authority’ has however been interpreted to mean a person or body exercising power or command vested in it by virtue of provisions in the Constitution or Acts passed by Parliament or the State Legislatures. ‘Body’ has been interpreted to mean an aggregate of persons, whether incorporated or unincorporated.

Legal basis

30.4 The duties and powers of the Comptroller and Auditor General in relation to the audit of the autonomous bodies are regulated by Sections 14, 15, 19 and 20 of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 (hereinafter referred to as the Act) framed by Parliament under Article 149 of the Constitution. In addition, there are several other enactments of Parliament, which provide for duties and powers of the Comptroller and Auditor General, in relation to the audit of the accounts of corporations, companies and other autonomous bodies. No law of a State Legislature can cast any duties or confer any powers on the Comptroller and Auditor General or his representatives, Likewise, the duties and powers of the Comptroller and Auditor General prescribed by law made by Parliament cannot be superseded or abridged by or under any law made by any State Legislature.

🆀Which among the following is NOT true in relation to the audit of the accounts of corporations, companies and other autonomous bodies by CAG of India?

(A) No law of a State Legislature can cast any duties or confer any powers on the comptroller and Auditor General or his representatives

(B) The duties and powers of the Comptroller and Auditor General prescribed by law made by parliament cannot be superseded or abridged by or under any law made by any State Legislature

(C) The state Government can give directions to CAG in regard to audit of the accounts of corporations, companies and other autonomous bodies coming under its jurisdiction

(D) All the above

Correct Answer:- Option-(C)

🆀The duties and powers of the Comptroller and Auditor General prescribed by law made by Parliament can be superseded :

(A) By any law made by State Government

(B) By any law made by a Governor of a State

(D) None of the above can supersede

Correct Answer:- Option-(D)

🆀Which among the following is NOT true in relation to the audit of the accounts of corporations, companies and other autonomous bodies by C& AG of India ?

(A)No law of a State Legislature can cast any duties or confer any powers on the Comptroller and Auditor General or his representatives

(B) The duties and powers of the Comptroller and Auditor General prescribed by law made by Parliament cannot be superseded by any State Legislature

(C) The State Government can give directions to C&AG in regard to audit to the accounts of corporations, companies and other autonomous bodies coming under its jurisdiction

(D) All of the above

Correct Answer:- Option-(C)

🆀The duties and powers of C & AG in relation to the audit of autonomous bodies are regulated by Sections...of (DPC) Act, 1971 framed under Article 149 of the Constitution of India

(A) 10 and 11

(B) 14,15, 19 and 20

(D) 8,9 and 10

Correct Answer:- Option-(B) 14,15, 19 and 20

Audit of bodies and authorities substantially financed

30.5 Section 14 (1) of the Act provides that the Comptroller and Auditor General of India shall audit all receipts and expenditure of any body or authority that is “substantially financed” by grants and loans from the Consolidated Fund of India or of any State or any Union Territory having a Legislative Assembly, to the extent of not less than Rs. 25 lakhs and not less than 75% of the total expenditure of the body or authority in a financial year. Where the latter condition is not fulfilled but grants or loans are not less than Rupees one crore, the Comptroller and Auditor General of India may audit under Section 14 (2) with the previous approval of the President or Governor or Administrator as the case may be. Section 14 (3) provides for continuance of the audit under Sections 14 (1) and (2) for the two subsequent years even if the conditions are not fulfilled in those years. The audit will be subject to the provisions of any law, for the time being in force, applicable to the body or authority. This is to be interpreted to mean that the audit by the Comptroller and Auditor General of India will co-exist with and complement the audit arrangements under the law applicable.

Audit of grants or loans given to other bodies or authorities

30.6 Section 15 of the Act describes 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 imposes a statutory responsibility on the CAG 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 & 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 that 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 CAG and after giving the concerned corporation a reasonable opportunity of making representation with regard to the proposal).

🆀The functions of the Comptroller and Auditor General in the case of audit of grants or loans given to any body or authority for 31 specific purpose describes in which Section of the C & AG's (DPC) Act,1971.

(A) Section 14 of the Act

(B) Section 15 of the Act

(D) Section 20 of the Act

Correct Answer:- Option-(B)

Audit of Corporations established by law made by Legislatures

30.7 Section 19 (3) of the Act provides for entrustment of audit of State Corporations established by law to the Comptroller and Auditor General of India in public interest, after prior consultation with him, and after giving a reasonable opportunity to the Corporation to make representations with regard to the proposal for such audit. The audit of Government Companies and Statutory Corporation which are operating on commercial lines is dealt with in Chapter 31.

🆀Section............. of the C & AG’s (DPC) Act, 1971 provides for entrustment of audit of State Corporations established by law to the C& AG in public interest, after prior consultation with him.

(A) 10

(B) 15

(D) 18

Correct Answer:- Option-(C)

Audit of other bodies or authorities

30.8 Audit of other bodies or authorities which is not entrusted to the Comptroller and Auditor General of India by or under any law made by Parliament can be entrusted to him in public interest by the President or the Governor or the Administrator, as the case may be, under Section 20 of the Act after prior consultation with him or on his request on such terms and conditions as may be agreed upon between him and the concerned Government and after giving reasonable opportunity to the concerned body or authority to make representation with regard to the proposal for such audit.

🆀Under which section of CAG's DPC Act 1971, the President or the Governor or the Administrator, as the case may be, after prior consultation with the comptroller and Auditor General of India may entrust the Audit of bodies or authorities which is not entrusted to by or under any law made by Parliament can be entrusted to him in public interest?

(A) Section 15

(B) Section 19

(D) Section 20

Correct Answer:- Option-(D)

🆀What is the authority of the C&AG to take up the audit of accounts of bodies or authorities entrusted to him by the President / Governor ?

(A) Section 21 of the DPC Act

(B) Section 20 of the DPC Act

(D) Section 29 of the DPC Act

Correct Answer:- Option- (B)

30.9 Under the terms and conditions agreed upon the Comptroller & Auditor General may suggest appointment of a primary auditor to conduct the audit on his behalf and on the basis of directions or guidelines issued by him subject to a test check by him. The Comptroller and Auditor General or any other person appointed by him in connection with the audit will have the same rights, privileges and authority as the Comptroller and Auditor General has in connection with the audit of Government Accounts. The results of the audit will be communicated to the Governing Body and to the Government concerned. The Comptroller and Auditor General has also the right to report to the Legislature or the Parliament as the case may be at his discretion.

Super-imposed audits

30.10 Normally Comptroller and Auditor General is the sole-auditor in respect of audits entrusted to him under sections 19 (3) and 20 and in such cases he conducts the audit as an Auditor of the body or authority concerned and on behalf of the Government concerned. However, there are several other bodies or authorities e.g. Societies registered under the Societies Registration Act, 1860 or Co-operative Societies in respect of which the relevant Acts/ Rules provide for their audit by Chartered Accountants. In such cases, where the Government consider it necessary, to safeguard its financial interest, the audit of the concerned bodies or authorities is also entrusted to the Comptroller and Auditor General which is in addition to the audit by the Chartered Accountants who conduct the audit in accordance with the relevant Acts/Rules of the autonomous body. Such audits are called ‘super-imposed audit’.

🆀'Super imposed audit' of Bodies/Authorities are the audit conducted by :

(A) The chartered Accountants

(B) The internal auditors

(D) Audit by more than one agency

Correct Answer:- Option-(C)

Scope and nature of audit of autonomous bodies

30.11 Audit of an autonomous body in Public interest cannot be considered complete merely by a certification that the accounts present a true and fair picture of the working and state of affairs of the body. It is essential, in all such cases, to go beyond the stage of certification of annual accounts and to probe into aspects relating to propriety, efficiency, performance etc. in relation to the utilization of the resources available to them. The audit by Comptroller and Auditor General is primarily on behalf of the Government and the Legislature concerned. Incidentally it may satisfy the requirements of the law governing the bodies and authorities audited. These include compliance with the bye-laws. The scope of audit is to be determined by the Comptroller and Auditor General. It has been held that inherent in the powers of the Comptroller and Auditor General is his right to have a performance evaluation carrying out examinations into economy, efficiency and effectiveness with which any department, authority or other body has used its resources in discharging its functions. The audit of autonomous bodies is mainly in the nature of this evaluation.

🆀Audit of an autonomous body interested to C&AG in public interest can be considered complete by :
(A) Certification of accounts
(B) Preparation of a report
(C) Scrutiny of figures and format of the accounts
(D) Performance valuation, examining its economy, efficiency and effectiveness with which the Body has used its resources
Correct Answer:- Option-(D)

Separate Audit Reports

30.12 Under Article 151 of the Constitution the reports of the Comptroller and Auditor General relating to the accounts of Government are to be submitted to the President or the Governor or the Administrator who causes them to be laid before Parliament or the Legislature as the case may be. Section 14 authorizes the Comptroller and Auditor General to report on the receipts and expenditure of the bodies or authorities audited by him. The reporting has to be viewed in the context of the provisions of Article 151 of the Constitution. Thus no separate report is contemplated. However, under Section 19 (A), the Reports of Comptroller and Auditor General in relation to the accounts of Corporations are to be submitted to Government who causes them to be laid before the Legislature. Thus there has to be a separate report on each Corporation audit under Section 19 whether Comptroller and Auditor General is the sole auditor or not. Section 20 makes no mention of the reports of Comptroller and Auditor General. It is, however, regulated by the terms and conditions whereunder provision has been made for report to Legislature. The issue of separate audit report will be decided by the requirement of the law governing the bodies or authorities audited under this section and by the fact whether Comptroller and Auditor General is sole auditor or not. Further, where Comptroller and Auditor General is the sole auditor and the law requires certification of accounts, the laying of the audit reports before the Legislature will be governed by the law or the directions of the appropriate committee of Legislature concerned. Whether there is a separate Audit or not, Comptroller and Auditor General can include his comments in the Reports presented under Article 151 of the Constitution.

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CHAPTER 30

AUDIT OF AUTONOMOUS BODIES

Legal basis

Audit of grants or loans given to other bodies or authorities

Audit of other bodies or authorities

Super-imposed audits

Scope and nature of audit of autonomous bodies