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WHAT IS AUDIT?
Audit is the independent objective assessment by the Governance on the assessment of Governments systems and practices, against criteria.
CONSTITUTIONAL PROVISION
Audit report of the Comptroller General of India means a report of the CAG of India under Article 151 of the Constitution of India.
objective of the audit are to ensure legality, regularity, economy, efficiency and effectiveness of financial management and public administration mainly through assessment as to:
1.
Whether the financial statements are properly prepared, are complete in all respects and are presented with adequate disclosures (financial audit);
2.
Whether the provisions of the Constitution, the applicable laws, rules and regulations made thereunder and various orders and instructions issued by competent authority are being complied with (compliance audit); and
3.
The extent to which an activity, programme or organization operates economically, efficiently and effectively (performance audit).
As per the CAG Act all audits undertaken by the CAG, or on his behalf, shall be as per the Constitution of India and the Act. These regulations, standing orders, guidelines and practice notes issued by the CAG shall guide the conduct of such audits.
WHAT IS PRE-AUDIT?
WHAT IS PRE-AUDIT?
Pre-audit is an upfront auditing procedure and the examination of documents supporting a transaction or series of transactions before these are paid for and recorded.
.Continued
WHAT IS PRE-AUDIT?
Pre-audit operates to:- determine that the proposed expenditure is in compliance with appropriation law and other specific statutory authority and regulations - assure that sufficient funds are available
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WHAT IS PRE-AUDIT?
- initially determine that the transaction is not illegal, irregular, extravagant, excessive, unconscionable or unnecessary - determine that the transaction is approved by proper authority and supported by authentic underlying evidences.
Accounting in the books of the Government ; and Monitoring, control and reporting as prescribed in Government rules.
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The orders shall cite reference to the authority by way of rules, regulations etc.
CONFUSION GALORE
The question here is whether a sanction concurred by IFA can be objected in audit by PCDA
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AREAS OF CONCERN-CONTD
Broadly, payments can be categorised as under: - Payment related to personal claims. - Payment related to stores etc. - Payment related to imprest accounts. Further, payments can be from revenue head or capital head
AREAS OF CONCERN-CONTD
Some Case References INMARAST Bills. Communication system provided to ships, submarines during sailing. INMARAST leased line facility provided by TATA TELE Services for 77 terminals for 24 X 7 usage on global beam 64 E.
AREAS OF CONCERN-CONTD
Facility provided for IN Ships for communication between command headquarters and ships on sailing through satellite. The rate charged by the service provider is on higher side compared with normal landline and mobiles ( Pulse rate for each second is Rs.5.10)
AREAS OF CONCERN-CONTD
It is observed from the bills that majority of calls (90%) are on account of private calls to mobiles, residential phones etc.
It is also observed that calls are also being made to foreign countries to private numbers. The monthly expenditure for some of the months is as under: .
AREAS OF CONCERN-CONTD
Mar 2012 ---------Apr 2012 ---------May 2012 ---------June 2012 ----------July 2012 ---------Aug. 2012 ---------Sep. 2012 ----------Oct. 2012 ----------Nov 2012 ----------Dec. 2012 ----------Total ----------Rs. 36.67 cr. Rs. 22.20 cr. Rs. 32.60 cr. Rs. 34.32 cr. Rs. 28.84 cr. Rs. 17.16 cr. Rs. 16.59 cr. Rs. 11.56 cr. Rs. 9.57 cr. Rs. 11.02 cr. Rs. 220 cr.
AREAS OF CONCERN-CONTD
Payment of Overtime to industrial employees The practice of paying unlimited overtime to industrial employees of Naval Dockyard and other establishment has been successfully stopped by insisting on observance of allowance in accordance with Factories Act, 1948. Matter was raised up to Secretary (Ministry of Defense) but the stand taken by PCDA, Navy was accepted ultimately, resulting in saving of crores of Rupees.
AREAS OF CONCERN-CONTD
Payment of Overtime to industrial employees The anomalous situation of wrongly interpreting the rule for years has been corrected but it is a matter of concern that such wrong practices continue in total violation of laid down provisions despite the Draft Para raised by Test Audit Authorities. Open violation of rules and regulations shall not be allowed under any pretext. Either the rule be modified or practice should not be allowed to continue.
AREAS OF CONCERN-CONTD
Payment recommended for PSU like HSL/GRSE where case of extension for delivery period pending with MoD Repair and Refit bills received from PSUs for payment and recommended by units without valid delivery period extension for the contract concluded by the Ministry creates confusing situation where payments are insisted though case for approval of extension pending with Ministries for months/years.
AREAS OF CONCERN-CONTD
Various critical components including main engine of interceptor boat differ from the Maker name mentioned in the Contract. 4 Boats since have been supplied. Whether to agree for release of further payment as and then next 4 boats are delivered in another few months time.
AREAS OF CONCERN-CONTD
Main Engine of Interceptor Boat Contract for construction of 36 Interceptor Boats at a cost of Rs.976.95 crores was concluded between Govt. of India (Ministry of Defence) and M/s Larsen & Toubro Ltd., Mumbai. The build specifications were laid down for important and critical equipments and the Makers name and Module number are specified in Appendix III of the Contract.
AREAS OF CONCERN-CONTD
Procurement of 4 KA 31 Helicopter Engine for 22.61 crores Views of the participants are solicited on course of action to be adopted for 4 Helicopter Engines for KA 31 have been received by Navy. The copy of the Government of Sanction dated 25th of March 2011 is in next slide.
CONTD
Sanction appears to be in order. Yet the payment has not been released so far. Reason: Procurement has been through High seas Sales. Under which Clause of DPM, the payment can be released. CBI has asked for the papers and details.
DHARTI DREDGING
AREAS OF CONCERN-CONTD
Innumerable examples of irregularities of nature brought out above. Another case, in which sovriegn function of carrying out inspection test of submarine has been outsourced to private vendor by submarine overseas team (SOT) in prestigious P-75 Project (Scorpion Submarine).
AREAS OF CONCERN-CONTD
Outsourced vendor is also supplier of stores item to MDL, who is constructing the submarine. Conflict of Interest.
WAY FORWARD
Defense Audit Tribunal - To cater to the matters involving litigation pertaining to payments of all types which are objected in Audit. Whistleblower programmes on the lines of Practice Followed in the Department of Defence (US)