Audit Para

Audit Para

The Audit department is free to mention in the Audit Report any matter which it

may like, in discharge of its statutory duties, to bring to the notice of Parliament.

The financial irregularities may be on account of the following cases:

a) Cases on which the audit department feels doubtful as to the adequacy of

the action taken by individual railways and therefore considers action or

cognizance of the Railway Board is necessary; and

b) Matters which can be adequately be dealt with only by the Railway Board,

e.g. regarding routine of the through traffic and general policy.

In the cases, the railway audit officer (Director of Audit) have to forward the

copies of factual statements so converted into Draft Para along with original

correspondence with the comments of executives, to the General Manager by name

endorsing copies by name to FA&CAO, concerned Principal Heads of the department

and Executive Director (Accounts), Railway Board.

Immediately on the receipt of the Draft Para, the FA&CAO will address the

concerned Principal Heads of Department, indicating the prescribed time table laid

down for disposal of Draft Para.

The Railway Administration proposed reply is compiled in the form of

sentence-wise remarks in juxta-position. The reply duly approved by the General

Manager has to be sent to the Railway Board within a total period of 6 weeks. The

Associated Accounts Officer should assist and involve himself in framing the replies

and factually verify the contents. The final reply as approved by the Railway Board

should be given within 8 weeks.

The proposed reply to the Draft Para should invariably be supplemented by the

additional information as detailed below:

a) History of the case with copies of relevant records no given in the Draft Para.

b) A chronological summary of delays occurred.

c) Remedial action called for or taken to avoid similar irregularities in Future.

d) Disciplinary aspects where individual lapses have been brought to light.

The final reply to Director of Audit and to Railway Board should be issued

under the signature of General Manager. If Railway Administration find on through

examination of Draft Para that some material modification are required in respect of

factual portion of the proposed para, before final reply it should be settled by personal

discussion at top level between AGM, FA&CAO and concerned HOD with Director of

Audit in order that protracted correspondence may be avoided and the facts may be

presented correctly and impartially.

The relevant papers etc. should also, be placed at the disposal of Director of

Audit even at the initial stages, of the examination of Draft Para. A copy of accepted

Draft Para should also be sent to Railway Board, together with such supplementary

information as the Board should have in their possession to enable them to place the

point of view of Railway Administration before the Public Accounts Committee.

If para deals with the question of accounts procedure of contains comments on

the efficiency of the Accounts Office, a copy thereof, together with FA&CAO’s view

and explanation s should be sent to Railway Board.

FA&CAO should, in giving replies to the communications to the Director of

Audit act in close collaboration with the Administrative Authorities concerned, so that

the information given to audit may be an authoritative statement of facts on behalf of

the Railway Administration, and there may be no possibility of any dispute at a later

stage.

Audit in Indian Railways

 Audit is a constitutional function (Articles 149-151).

 The authority empowered to spend public money is answerable to the

Parliament.

 A check is needed to ensure proper utilization of the fund to ensure that it

serves the purpose. This check is known as Audit.

 Railways Audit was separated from Accounts in 1929.

 Scope and extent of Audit is determined by C&AG.

Functions of Audit

 Audit of all expenditure from Consolidated Fund of India

 Audit of all Receipts into Consolidated Fund of India

 Audit of all transactions relating to Contingency Fund & Public Account

 Audit of all Trading, Manufacturing, P&L Account, Balance Sheets and other

subsidiary accounts

 Audit of all accounts of Stores & stocks held

 Report on the transactions so audited

In Railways Auditing is done by two means viz. Internal and external Auditing.

Internal Audit

Internal Auditing is done by Accounts department of Railways. It is done for the

purpose of giving financial advice, to consider proposals involving finance, to

maintain accounts, and to formulate Railway Budget. In the process records are

scrutinized, Stores and tools & Plants are verified, executive orders involving finance

are verified, and traffic earnings and accounts are checked to avoid loss of revenue.

External Audit

The Controller & Auditor General of India (CAG) controls External Auditing. All

expenditures incurred from consolidated fund of India are subjected to External

Auditing. The Director of Railway Audit of Railway Board assisted by Chief Audit

Officers, Divisional Audit Officers, are responsible for the external auditing in

Railways. It is a post-audit and in the process the records and accounts are

scrutinized.

Functions:

 Auditing sanctions involving finance.

 Auditing Rules and General orders involving finance.

 Auditing Tender documents involving finance.

 Auditing Accounts maintained by Account Department.

 Inspection of Record and Vouchers.

 Auditing estimates prepare for projects.

 Checking internal audit mechanism and to ensure the accounting system

adopted is suitable and adequate for its purpose.

Methodology of Audit

 Test check of vouchers

 Inspection of offices

 Check of financial sanctions

 Check of all orders/sanctions issued by GM & other officers

 Check of all receipts and payments & accounts Check of tenders & Contracts

 Check of procedures and systems

Communication from Audit:

 Specific Reports- related to more important and serious irregularities noticed.

 Audit Notes-on irregularities related to Account Branch in Part- I and II.

 Inspection Reports- on irregularities related to Executives and Stations in

Part- I and II.

 Petty Objections.

Disposal of Audit Reports:

 Audit reports should be promptly attended to and reply sent. Audit Note Part-

II, Inspection Report Part-II are closed at Account level. Audit Note Part-I and

Inspection report Part-I are to be replied to Audit through the Accounts office.

Special letters and Notes or Objections or Factual Statement

These relate to important cases noticed during regular audit and inspections meriting

inclusion in the Audit Report to the CAG. Prompt action at higher levels is called for

in these cases. Failure to do so will lead to inclusion to a Draft Para in the Audit

Report to CAG. Draft Para is a serious report of Audit and reply to be sent within 8 weeks by the Executive and Accounts covering the following aspects:

 History of the case with copies of relevant records.

 Sentence-wise remarks.

 Chronological summary of the case where there is an unusual delay.

 Remedial action taken and

 Disciplinary action taken or proposed on the individual lapses referred.

The audit done by C&AG is broadly classified into

 Regularity Audit - Relates to provision of funds, Rules and regulations

and Sanction of expenditure

 Propriety Audit - Propriety Audit also looks at wisdom and economy of any

expenditure and brings to light cases of improper expenditure or waste of

public money.

 Performance Audit - To ensure that Government programmes have

achieved the desired objectives at lowest cost and given the intended

benefits.

Conclusion:

The audit report of CAG is and considered by the Public Accounts Committee and

presented to the Parliament. So Audit Reports are given prompt attention.