OVERVIEW

I. Comments on Accounts of Public Sector Undertakings

The number of Central Government Companies including Deemed Government Companies and Corporations for which accounts for 2000-2001 were received for audit under the Statutes governing the concerned Corporation or for supplementary audit under Section 619 (4) of the Companies Act, 1956 and in respect of which comments issued was as follows:-

	Government Companies	Deemed Government Companies	Corporations	Total
a) Total number of Central Government Companies/ Corporations	276	86	6	368
b) No. of Companies/ Corporations where.accounts were received (upto 31 October 2001)	221	61	5	287
c) No. of Companies/ Corporations the accounts of which were selected or test checked.	192	49	5	246
d) No. of Companies/ Corporations the accounts of which were revised as a result of test check and consequently no comments were issued.	13	1	0	14
e) No. of Companies/ Corporations the accounts of which were partly revised and comments were issued.	5	0	0	5
f) No. of Companies/ Corporations on the accounts of which supplementary audit comments were issued.	70	8	2	80
g) No. of Companies/ Corporations on the accounts of which no supplementary comments were issued.	83	38	0	121
h) No. of Companies/ Corporations where audit of accounts was in progress (as of 31 October 2001)	21	2	3	26

II. Revision of Profit or Loss in Accounts:

As a result of the test audit of the accounts of Government Companies and Deemed Government Companies by the Comptroller and Auditor General of India under Section 619(4) of the Companies Act, 1956 and consequent revision of their accounts by some of the Companies, the impact on profit/loss shown in the accounts for 2000-2001 was as follows:

(Rupees in crore)

	No. of Companies	Net Effect
i) Increase in Profit	5	(+) 3.80
ii) Decrease in Profit	8	(-) 37.84
iii)Increase in Loss	3	(-) 19.14
iv)Decrease in Loss	2	(+) 1.83

[Paragraph 1.1(A)]

III. Nature of Comments

The comments issued by the Comptroller and Auditor General of India on the accounts of the Public Sector Undertakings (PSUs) audited under Companies Act, 1956 were of the following nature.

(i) On Balance Sheet

Aggregate value of assets as on 31 March 2001 was overstated by Rs.95.98 crore in 15 PSUs and understated by Rs.19.37 crore in 5 PSUs. Similarly liabilities were understated by Rs.1075.48 crore in 25 PSUs and overstated by Rs.18.44 crore in 5 PSUs.

[Paragraph 1.1-B (a)(i& ii)]

(ii) On Profit or Loss

(a) Had all the 44 PSUs whose accounts were test checked and were reflected in this report revised their accounts on the basis of comments made by CAG, aggregate profit for 2000-2001 would have come down by Rs.814.22 crore in 21 PSUs and would have increased by Rs. 26.96 crore in 7 PSUs (excluding Navratna PSUs). Similarly, loss for 2000-2001 would have been increased by Rs.336.49 crore in 15 PSUs and decreased by Rs.7.75 crore in one PSU.

[Paragraph 1.1-B (a)(iii& iv)]

(b) The accounts of all the 11 ‘Navratna’ PSUs were test checked. As a result of test check, aggregate value of assets as on 31 March 2001 was over-stated by Rs.395.99 crore in 3 PSUs and under-stated by Rs. 4.78 crore in one PSU. Similarly, liabilities were under-stated by Rs. 1954.22 crore in 5 PSUs and over-stated by Rs. 2.34 crore in one PSU. The comments of CAG on the PSUs brought out over-statement of profit by Rs.596.40 crore in 10 PSUs and under-statement of loss by Rs. 1303.80 crore in one PSU i.e. Steel Authority of India Limited (SAIL). The overall variance arising in the profit of 10 Navratna (SAIL excluded) as a result of CAG’s comments was 2.50 per cent. In the case of SAIL percentage variation in loss as a result of CAG’s comments was 178.93 per cent.

[Paragraph 1.1-B (b)(i) & (ii)]

(iii) Significant findings reported by Statutory Auditors while certifying accounts of PSUs

[Paragraph 1.4]

(iv) On Capital Erosion

In 7 PSUs, the accounts of which were also test checked, the paid-up-capital as on 31 March 2001 had been fully eroded by the accumulated losses.

[Paragraphs 1.3.18, 1.3.20, 1.3.23, 1.3.24, 1.3.45, 1.3.53 and 1.3.54]

(v) On Inventory

In 9 PSUs (Indian Petrochemicals Corporation Limited, Madras Fertilizers Limited, Bharat Electronics Limited, Hindustan Aeronautics Limited, Bridge & Roof Co. (India) Limited, Scooter India Limited, Bharat Coking Coal Limited, Indian Oil Corporation Limited and Cotton Corporation of India Limited) inventory of raw material, stores, spares and finished goods as on 31 March 2001 was abnormally high as compared to total consumption/sales during the year.

[Paragraph 1.3.3, 1.3.6, 1.3.12, 1.3.13, 1.3.19, 1.3.27, 1.3.31,1.3.41 and 1.3.51 ]

IV. Reports by Statutory Auditors

Some of the salient points raised by the Statutory Auditors in pursuance of the directions issued by the Comptroller and Auditor General of India under Section 619(3) (a) of the Companies Act, 1956 were of the following nature:-

(i) Inadequacy or ineffectiveness in the system of financial control and accounts, non-reconciliation of books and deficiencies in the maintenance of asset registers were noticed. Some of the accounting policies of the companies were not in conformity with the Accounting Standards of the Institute of Chartered Accountants of India.

[Paragraph 2.1 & 2.2]

(ii) Debts were outstanding for 3 years or more and there was increase in Sundry debtors and doubtful debts.

[Paragaraph 2.2]

(iii) There were cases of non-payment of loan instalments, interest and penal interest by PSUs due on Government loans.

[Paragraph 2.3]

(iv) Excess inventory, surplus or obsolete stores and spares, non-fixation of maximum and minimum levels of stock holdings and non-fixation of economic order quantity were also noticed.

[Paragraph 2.4 & Annexure-III]

(v) Deficiencies in cost control system were also found.

[Paragraph 2.5]

(vi) Internal Audit system was not commensurate with the size and nature of business of PSUs.

[Paragraph 2.6]

(vii) Audit Committee in certain PSUs was not in existence.

[Paragraph 2.7 & Annexure-IV]

(viii) Segment-wise profit and loss statements were not prepared.