CAG & Railway Audit in details

Comptroller and Auditor-General of India and Railway Audit

Comptroller and Auditor-General of India  (C&AG) is constitutional functionary, primarily entrusted with the responsibility to audit the accounts and related activities of the three tiers of Government – Federal, Provincial and Local; the State owned public sector commercial enterprises; and autonomous bodies financed by the Federal and Provincial Governments. C&AG reports are laid before the Parliament and Legislatures of the Provinces. The reports of the CAG are taken into consideration by the Public Accounts Committees.

 

Constitutional  Body

C&AG enjoys the same status as a judge of Supreme Court of India. It is the Supreme Audit Institution of India.

As per Chapter V, Part V, Article 148, C&AG appointed by the President and shall only be removed from office in like manner and on the like grounds as a Judge of the Supreme Court.

The C&AG shall not be eligible for further office under the Government after he has ceased to hold his office.

The administrative expenses of the office of the C&AG, including all salaries, allowances and pensions payable to or in respect of persons serving in that office, shall be treated as charged expenditure.

 

Duties (Articles 149-151)

-C&AG shall perform such duties and exercise such powers in relation to the accounts of the Union and of the States and of any other authority or body authorised by Parliament.

-The accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the Comptroller and Auditor-General of India, prescribe.

-The reports of the C&AG Comptroller and Auditor-General of India relating to the accounts of the Union shall be submitted to the President/Governor, who shall cause them to be laid before each House of Parliament/ State Legislature.

As per Part 12, Article 279 of the Constitution,  the C&AG  shall ascertain and certify the "net proceeds" of any tax or duty collected by the Government of India but which are assigned partly or in full to the States. (Eg., Passenger tax collected by railways)

C&AG’s oath of office requires him to uphold the Constitution and the laws and to discharge his duties without fear or favour, affection or ill-will. The Constitution safeguards the independence and freedom of the Comptroller and Auditor General in a variety of ways (removal, not to hold office of profit, charged expenditure etc.)

Apart from the Constitutional provisions, Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971  also provides for the powers of C&AG.

Audit has an adversarial function.

The CAG is also the head of the Indian Audit and Accounts Department, the affairs of which are managed by officers of Indian Audit and Accounts Service.

 

Objectives

-To strive to be a global leader and initiator of national and international best practices in public sector auditing and accounting and recognised for independent, credible, balanced and timely reporting on public finance and governance.

-To  promote accountability, transparency and good governance through high quality auditing and accounting and provide independent assurance to the Legislature, the Executive and the Public, that public funds are being used efficiently and for the intended purposes.

 

Importance/Responsible for

-Compilation of accounts of the Union and States from the initial and subsidiary accounts rendered to Audit and Accounts offices.

-Keeping accounts as maybe necessary.

C&AG duties shall include audit of all-

- Expenditure from the Consolidated Fund of India to ascertain whether moneys shown in the accounts as having been disbursed were legally available and they are applicable to the purpose for which they have been applied or charged.

- Expenditure conforms to the authority which governs it.

- Transactions related to Contingency Fund and Public Accounts

- Trading, Manufacturing, Profit & Loss account and Balance Sheets & Subsidiary accounts.

- Transactions related to Stores

- Receipts which are payable into the Consolidated Fund of India and satisfy itself that the rules and procedures are designed to secure an effective check on computation, collection and allocation.

And, report on the receipts, expenditure, stores, transactions or accounts so audited.

 

Union government will consult C&AG and issue instructions regarding

-the manner in which the initial records and subsidiary accounts shall be kept (by the accounts and executive departments).

-the manner in which stores accounts and stocks shall be kept

-the duties and responsibilities relieved from C&AG of compiling or keeping accounts

-any other matter prescribed by rules

           

Any change in rules pertaining to C&AG shall be laid before Parliament each house while it is in session for a total period of 30 days (in one or two or more successive sessions) agreed to by  both the houses, before made into rule.

 

Methodology

Scope and extent of audit  in regard to receipt & expenditure is left to the discretion of C&AG.

Inspection of office of accounts or other offices responsible for keeping of initial and subsidiary accounts; inspect books, papers and documents; and put question or make observations to the in-charge.

The offices shall afford all facilities for inspection and comply with the requisition of information or records in complete form and with reasonable expedition.

Organisational Structure

C&AG is assisted by Dy. CAGs, Addl. Dy. C&AGs and at field level DGs,Pr.AGs etc.

 

Railway Audit

 

Objective

To ensure

-that the system of accounts adopted and used in the Accounts Department of the Railways is suitable 

-that the check by the internal check mechanism is sufficient,

-that the accounts are maintained and the checks applied with accuracy, and

-that arrangements exist in the Railways Accounts offices to ensure attention to the financial interests of Railways.

 

Methodology

This object is secured by

-a test check applied to the vouchers and connected accounts records of the Accounts Department and

- inspections carried out on the spot of initial records and documents in the offices in which the transactions originate.

 

Responsible for

- scrutinising the adequacy and suitability of all instructions governing compilation of the accounts of Railways and the internal check procedures in the form of codes, manuals, instructions etc.

- satisfy itself that such instructions are consistent with the relevant statutory rules and facilitate conduct of an effective audit thereof.

- scrutinising the Railway portion of the Finance Accounts including Annual Review of Balances Compiled by the Railway.

- examining the Appropriation Accounts prepared by the Railway for certifying their accuracy and

-preparing the Audit Report

 

Responsible for audit of

(i)                  Financial sanctions accorded.

(ii)                Allocation of estimates sanctioned.

(iii)              General orders issued by Board, GM etc.

(iv)              Sanctions pertaining to local traffic and those relating to interchange traffic

(v)                Tenders invited and accepted.

(vi)              Accounts maintained in railway offices.

 

Types of Audit

Railway audit is generally classified as Accountancy Audit, Administrative Audit and Appropriation Audit.

 

Cost of Railway Audit

-is borne by Railways and debited to Major Head 3001

-expenditure of O/o Dy.C&AG is treated as charged expenditure as per Article 112 (3) of the Constitution.

 

Communications from Audit

Audit Objections:

 Ordinarily, the results of Statutory Audit are communicated through –

-Special Letters of more important and serious irregularities discovered in the course of audit and accounts of departmental offices and station records

-Audit Notes (Part I&II) dealing  irregularities noticed as result of check on the records of Accounts department

-Inspection Reports (Part I&II) showing the results of audit of initial records of Executive offices and stations

 

Higher Audit:

Regularity Audit/ Compliance Audit

Proprietary Audit

 

Holding Entry/Exit Conferences

Draft Para/ Thematic study Reports

Provisional Para

Audit Para (in Audit Report-Railways)

 

Disposal of Audit Objections:  

All Audit objections should be promptly attended to by Accounts Officer concerned.  Some Audit objections may relate to such matters which can be dispersed by the Accounts Officer himself and some other objections may require a reference to the Executive Department for elucidating the remarks. 

 

Suitable bi-partite meetings should be held with Executives and Accounts and ensure timely replies (initial remarks as well as replies to Audit rejoinders) to Audit objections.  In this connection, it is important to highlight that objections of lower level may get converted into higher Audit  Paras in case suitable and prompt replies are not sent to Audit in time. 

 

After replying the Audit objection, Accounts Officer should organise tri-partite meetings with Audit, Executive and himself to sort out the issues and explain the point of view of Railways and thereafter to follow-up the closure of the Audit objections.

 

Monthly, Quarterly and Half Yearly Arrear Report is submitted to higher authorities by the Accounts Officers indicating number of Audit objections category-wise, year-wise etc. Besides, the Audit Objections are to be closely monitored in POMs at Divisional level and at AGM level in Head quarters for their expeditious replies and further follow up.

If expenditure is continued even after Audit objection, the same can be done provisionally and held under objection.

Mistakes in accounts disclosed by Audit (equally applicable for mistakes detected in internal check) shall be dealt as per the provisions of para 922-A.

 

Disposal of Draft Para/Study reports

 

Draft para is a higher form of Audit observation which requires attention, timely and prompt action from the GM/PHoD of Department concerned and time envisaged is six weeks within which the Draft Para to be replied duly vetted by Finance and personally approved by GM. While replying, following methodology to be scrupulously followed:

 

·         History of the case together with all documents cited in the Draft para.

·         Sentence-wise remarks are to be framed meticulously.

·         Chronological summary of the case where undue delay has taken place in replying draft para.

·         Administration’s contention on Audit objection

·         Remedial /corrective action proposed for system improvement

·         Disciplinary aspects of the case, if any where lapses on the part of individuals are involved.

 

Similar care and promptitude is expected at all levels while dealing with Provisional para (to be replied in 2 weeks of its receipt), Audit Para etc. If the reply not furnished by the railways and/or the reply furnished by railways is found not satisfactory, C&AG opines that it is a fit case to include the same as an Audit Para in Audit Report,  a Provisional Para will be issued at Board level. On receipt of the PP from Board, a reply from Railway should be furnished sentence-wise to Board with the personal approval of GM, duly vetted by Finance.

If the reply furnished by railways is not satisfactory, Audit may finally include it as an Audit Para in the Audit Report of Railways and table it before Parliament, generally in the Budget session. Audit Report is scrutinised by Public Accounts Committee and PAC will be assisted by C&AG in scrutiny of Audit paras and Appropriation Accounts. PAC recommendations may be considered by the Ministry.

Any delay in replying Special Letters/Part-I AIRs and in following up for their closure would lead to conversion of same into higher levels of objections like DP, PP, Audit Para etc.

 

Action Taken Note/Report

On inclusion of Audit Para in the Audit Report, Railways are required to submit an Action Taken Note in the prescribed proforma to Railway Board. A few Audit Paras may be examined by Public Accounts Committee and personal examination at Board/Zonal level Officers will be conducted, if needed.

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