Constitutional Arrangements

Regulation on Audit & Accounts

Follow up to results of Audit

Chapter-12

141.     Maintenance of record of audit observations and recommendations by audit and auditable entity and adequate oversight by the Government

Each audit office and auditable entity shall maintain proper record relating to audit observations and recommendations with a view to monitor action taken and maintain follow-up. The Government shall also establish and implement systems and procedures that ensure adequate, constructive and timely action on audit observations and recommendations communicated by audit.

142.     Intimation of major irregularities to the Government and the head of department       and furnishing of reports therefrom

            (1) The Accountant General (Audit) shall intimate every instance of major irregularity detected    in Audit through a Special Management Letter to the Secretary to Government of the concerned department with a copy to the Head of the Department at the earliest possible from the time the instance comes to notice in audit. The Accountant General (Audit) shall also intimate every such instance to the Comptroller and Auditor General in the manner prescribed.

            (2) On intimation of the major irregularity by Accountant General (Audit), the       Government shall undertake prima facie verification of facts and send to Accountant General (Audit) a preliminary report confirming or denying the facts within three weeks of  receipt of intimation from him.

            (3) Where the fact of major irregularity is not denied by the Government in the      preliminary report, the Government shall further send a detailed report to the    Accountant General (Audit) within two months of preliminary report inter alia  indicating the remedial action taken to prevent recurrence and action taken against those responsible for the lapse.

            (4) Reporting of major irregularities to Government should be done only after due             verification with reference to supporting evidence and as far as possible after    considering the views of the auditable entity. Care needs to be taken to ensure that only major irregularities are reported in this manner.

143.     Follow up action on systemic faults or high risks pointed out by Audit

Where Audit points out systemic faults or identifies high risks, the department should  take appropriate action to address these faults and mitigate the risks so identified.

144.     Intimation of follow up action taken by the department

The department shall furnish to Audit, within six months of the close of each financial      year, an annual statement containing the details of follow up action taken on audit observations, including recoveries, in respect of accepted paragraphs           included in the audit reports laid before Parliament or Legislature till the end of that  financial year.

145.     Establishment of audit committees and their constitution

            (1) Government shall establish audit committees for the purpose of monitoring and            ensuring compliance and settlement of pending audit observations. Each committee so         established shall comprise of a representative each from the administrative department,    Audit and a nominee from the Finance Department besides the head of the department of  the auditable entity. Minutes of the meetings of the audit committee shall be recorded.

            (2) In the case of Central Government establishments located in the States, the Ministry    may nominate a State level audit committee in consultation with Accountant General  (Audit) for settlement of audit observations.

146.     Annual public statement regarding pending audit observations

Each Head of Department shall make the following information available on the Department/Ministry website, regularly updated in the first quarter of each year.

            (a) Number and gist of audit observations/paragraphs included in the Audit Report(s) of   the             Comptroller and Auditor General for the previous year;

            (b) Number and gist of major irregularities intimated by Accountant General (Audit) during the previous year;

            (c) Action taken by the Department on (a) and (b) above; and

            (d) Number of audit    observation set communicated in draft audit reports/inspection        reports (refer regulation 136) issued during the previous year and gist of   observations with substantial money value and those with serious internal control lapses.

147.     Forwarding copies of audit report for laying before legislature

            (1) An officer authorised by the Comptroller and Auditor General shall send copies of the            audit report duly signed by the Comptroller and Auditor General to the Secretary to the             Government, Ministry of Finance or Finance Department as the case may be, who  shall take prompt action for the submission of the audit report to the President or the Governor or the Administrator for further action and for the presentation of the report in  Parliament or the State or Union Territory Legislature. Copies of the audit reports  under  section 19A of the Act shall be sent to the Secretary of the Ministry or department  concerned or the Administrator of a Union Territory having Legislative Assembly, who shall  take prompt action for laying the same in the Parliament or the legislature of the State or  Union Territory.

            (2) An signed copy of the audit report shall simultaneously be sent to the Secretary to the President of India or the Governor of the State or Union Territory having Legislative     Assembly or the Administrator of the Union Territory, as the case may be, informing    him of requisite copies having been sent to the Ministry/Department of Finance.

148.     Forwarding copies of audit report to Secretary to Government after presentation

The Accountant General (Audit) shall send copies of the audit report to the Secretary  to Government of the concerned department after the presentation of the report in Parliament or the legislature, as the case may be.

149.     Preparation of action taken note for submission to PAC or COPU

The Secretary to Government of the concerned department shall cause preparation of self explanatory action taken note(s) on the audit paragraph(s) relating to his department, that are included in the audit report, for submission to the Public Accounts Committee/Committee on Public Undertakings. In each case, the self explanatory action taken note shall carry the approval of the Secretary and state:

            (1) whether a written reply on the draft audit paragraph was sent to the Accountant           General (Audit) and if not, the reasons for not doing so;

            (2) whether the facts and figures stated in the audit paragraph are acceptable and if not, the             reasons for not pointing this out when the draft paragraph was received by the Secretary;

            (3) the circumstances in which the loss, failure, infructuous expenditure, etc. as pointed     out       in the audit paragraph occurred; whether due to (a) deficiency in the existing system       including the system of internal control, (b) failure to follow the systems and            procedures, or (c) failure of individuals including individuals at supervisory levels;

            (4) the action taken to fix responsibility on the individual(s) responsible for the loss,          failure, infructuous expenditure, etc; and the likely time frame within which such action    is expected to be completed;

            (5) the current status of recovery of any amount due to Government as pointed out in the       audit paragraph;

            (6) the action taken or proposed to be taken on the suggestions and recommendations  made in the audit paragraph;

            (7) the result of review of similar other cases, and the action taken;

            (8) the remedial action taken or proposed to be taken to avoid occurrence of similar cases in future, to streamline the systems and to remove system deficiencies, if any; and

            (9) such other information as may have been prescribed by the Public Accounts             Committee/Committee on Public Undertakings.

150.     Vetting of action taken notes and responses on the recommendations of  PAC/COPU by Accountant General (Audit)

In the Union, the States and the Union Territories having legislative assembly where legislative committees or the Government desire the Comptroller and Auditor General to vet the action taken notes and the responses of the Government on their         commendations of the Public Accounts Committee/Committee on Public Undertakings, the following procedure shall apply:

            (1) The Secretary to Government of the concerned department shall send two copies of     the       draft self-explanatory action taken note to the Accountant General (Audit) for vetting along      with the relevant files and documents based upon which the explanatory note has been         formulated, properly referenced and linked. This shall be done within such period of time as             may be decided consistent with the requirements of the time-schedule for the submission of       the self-explanatory action taken notes prescribed by the Public Accounts Committee/   Committee on Public Undertakings.

            (2) The Accountant General (Audit) shall return the self-explanatory action taken note to the             Secretary duly vetted as soon as possible but not later than one month. Subject to any       requirements that may have been prescribed by the Public Accounts Committee/Committee        on Public Undertakings, the vetting comments of the Accountant General  (Audit) may include suggestions for further course of action.

            (3) The Secretary shall send the requisite number of copies of the vetted note, as    prescribed        by the Public Accounts Committee/Committee on Public Undertakings, to      the secretariat of         the Public Accounts Committee/Committee on Public Undertakings in accordance with         the       time schedule prescribed by the latter and also forward a copy each to Ministry of            Finance or       Finance Department as the case may be, and the Accountant General (Audit).

            (4) On receipt of the recommendations of the Public Accounts Committee/ Committee      on             Public Undertakings, the Secretary shall initiate action to prepare the Government’s           response by way of action taken note for submission to the respective Committee within           such period and in such form as the Public Accounts Committee/ Committee on Public        Undertakings may prescribe.

            (5) The Government’s response on the recommendations of the Public Accounts    Committee/ Committee on Public Undertakings shall be sent to the Accountant General            (Audit) for vetting before its submission to the respective Committee with the relevant     files and documents properly referenced and linked. The vetting comments of the Accountant General (Audit) shall be duly reflected in the response that may be sent to             the       Public Accounts Committee/Committee on Public Undertakings

151.     Duty of Government for systems and procedures to ensure timely response

It shall be the duty of the Government to establish and enforce adequate and reliable systems and procedures, clearly defining inter alia the roles and responsibilities at all levels that ensure that (i) the replies to the draft paragraphs, (ii) the self-explanatory action taken notes on matters included in the audit reports and (iii) the action taken notes on the recommendations of the Public Accounts Committee/Committee on Public Undertakings are sent to the appropriate authorities within the time limit prescribed in each case.

152.     Reporting of cases of delay to Government

The Accountant General (Audit) will report cases of delay to Secretary (Expenditure), Ministry of Finance in the case of the Union Government and to the Chief Secretary in the case of a State Government and to the Administrator in case of a Union Territory     having a legislative assembly. Cases of delay may also be appropriately commented upon in the audit report.

(Source: Regulations on Audit and Accounts 2020)