SECTION–IV Public Works Audit
Chapter–1
Scope of Audit
Audit Objectives and Scope
4.1.1 The main objectives of Public Works Audit are to see that:
(i) initial accounts, vouchers etc. have been received in a complete state;
(ii) all sums received/paid have been credited/debited to the proper heads of account;
(iii) all charges are covered by sanctions and allotments;
(iv) all vouchers and accounts are properly prepared, arithmetically correct, and are correctly classified; and
(v) claims admitted for payment are valid according to the rates sanctioned by the competent authority.
Source documents
4.1.2 The following are the source documents to be checked at different stages of Works Audit:
(i) Monthly accounts including schedules and schedule dockets.
(ii) Vouchers.
(iii) Cash and stock accounts.
(iv) Sanctions.
(v) Estimates of works.
(vi) Computed tenders.
(vii) Works Register.
(viii) Transfer transactions of sub-divisions and divisions.
Stages of Works Audit
4.1.3 The following four stages are involved in checking works transactions:
(i) Preliminary internal check by the Divisional Accountant in the Divisional Office.
(ii) Check in the Office of the Accountant General (A&E) and Pay and Accounts Offices.
(iii) Central Audit in the Office of the Accountant General (Audit).
(iv) Test Audit during periodical inspection of the Divisional Office.
Preliminary Internal Check
4.1.4 Charged with the responsibility of applying certain preliminary checks on the initial accounts, vouchers, etc., the Divisional Accountant is responsible for examining the accounts returns of Sub-Divisional Officers to see that:
(i) these have been received in a complete state;
(ii) all sums receivable have been duly realized and credited to the proper head of account, and also to the appropriate personal account, if any, of the contractor, employee or other individual;
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(iii) the charges are covered by proper sanctions and allotments and are supported by complete vouchers setting forth the claims and the acknowledgements of the payees legally entitled to receive the sums paid;
(iv) vouchers and accounts are properly prepared in all respects in accordance with rules and are arithmetically correct;
(v) all charges are correctly classified, those debitable to the personal account of a contractor, employee or other individual being recorded as such in a prescribed account; and
(vi) claims admitted for payment are valid and in order on the basis of rates sanctioned by the competent authority and of acts (e.g., quantities of work done, supplies made, service rendered, etc.) certified by authorized Government Servants.
Note: It is not necessary that the Divisional Accountant should personally check the arithmetical accuracy of all vouchers and accounts. He is, however, responsible for ensuring that a cent per cent check is exercised efficiently under his supervision.
4.1.5 The Divisional Accountant should exercise a similar check from day to day upon:
(i) transactions recorded directly in the accounts of the Divisional Office; and
(ii) bills and vouchers in respect of charges of sub-divisions submitted to the Divisional Officer for approval, the checks being exercised before the payment is made by the Sub-Divisional Officer concerned.
The cash and stock accounts of the entire division as well as all transfer transactions
should also be scrutinised by the Divisional Accountant before they are included in the
Monthly Account and connected registers and schedules.
4.1.6 The Divisional Accountant should ensure the following:
(i) Every payment is so recorded and a receipt for it so obtained that a second claim against Government on the same account is impossible; if it represents a refund of a sum previously received by Government, the amount paid is correctly refundable to the payee.
(ii) Expenditure, which is within the competence of the Divisional Officer to sanction or regularize, is not incurred, as a matter of course, under the orders of subordinate disbursing officers without his knowledge; all such items of expenditure should at once be brought to the notice of the Divisional Officer and his orders obtained and placed on record.
(iii) Subordinate officers do not exceed the financial powers delegated to them either by the Divisional Officer or a higher authority.
(iv) Allotments made by the Divisional Officer for individual works out of the lump sum provision made available to him for a group of works are not exceeded and expenditure against such individual allotments is adequately monitored.
(v) In cases where two or more disbursing officers have to operate simultaneously against a single sanction, orders of the Divisional Officer are obtained placing specific restrictions on the extent to which each such officer could enter into monetary transactions. Similar orders of the Head
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of the Circle or the appropriate higher authority should be obtained if the disbursing officers of two or more divisions are involved in operating against a single sanction. It may be advisable in such cases to provide for separate working estimates or other sanctions to cover the transactions of each officer and, for the purpose of bringing the expenditure to account, these should be treated as far as possible as independent transactions pertaining to the same group of works or the same project. If, however, this is not possible, special arrangements must be made for checking the total expenditure against the sanction.
(vi) Works expenditure is checked with reference to the estimates in order to ensure that the charges have been incurred only in pursuance of the objects intended in the estimates. In the case of works expenditure on which is recorded by sub-heads (e.g. expenditure on brick work), the Divisional Accountant is responsible for checking the expenditure on each sub-head with the estimated quantity or work to be done, the sanctioned rate and the total sanctioned cost so that he may bring to notice all deviations from the sanctioned estimate.
(vii) The authorized gross expenditure on a work is not exceeded without the orders of the competent authority and any surplus recoveries of expenditure are not utilized towards such additional expenditure; savings on account of abandonment of parts of a work, as evidenced by the quantities of the work executed or otherwise, are not utilized towards an unauthorized object.
(viii) Recoveries of expenditure are watched in order to bring to the Divisional Officer’s notice all marked deviations from the provision for such credits in the estimates of works and his orders thereon are obtained.
(ix) Claims included in bills presented directly at treasuries by the Divisional Officer are examined; service books and leave accounts of subordinates are maintained in accordance with rules and the admissibility of leave applied for by subordinates is verified before the competent authority decides upon their leave applications. In all cases of doubt, however, he should advise the Divisional Officer to consult the Accountant General.
(x) Muster rolls and petty vouchers which are not submitted to the office of the Accountant General (A&E) or the Pay and Accounts Officer are checked in detail.
(xi) Satisfactory and efficient arrangements exist for checking computed tenders and the comparative statement of tenders correctly incorporates the totals as checked on the individual tenders. The Divisional Accountant should also personally undertake a sufficient test check of the computed and checked tenders to satisfy himself reasonably that the checking has been properly done.
(xii) The rules and orders in force are duly observed in respect of all the transactions of the division. If the Divisional Accountant considers that any transaction or order affecting receipts or expenditure is such as would be challenged by the Accountant General if the latter were to apply the preliminary internal check, it is his duty to bring this fact to the notice of
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the Divisional Officer with a statement of his reasons and to obtain the orders of that officer. It will then be his duty to comply with these orders; if, however, he has been overruled and is not satisfied with the decision, he should at the same time make a brief note of the case in the Register of the Divisional Accountant’s Objections (Form MSO (Audit)-2) and submit the register to the Divisional Officer so that he may have an opportunity to either accept the Divisional Accountant’s advice on reconsideration and order action accordingly, or to record, for the information of the Accountant General, his reasons for disregarding that advice. An objection entered in this register should not be considered as finally disposed of until it has been reviewed by the Accountant General (Audit), for whose inspection the register should be available at all times.
The Divisional Accountant may also be required by the Divisional Officer to undertake, on his behalf, such other scrutiny of the accounts of the receipts and disbursements of subordinate officers falling within his own powers of sanction as he may consider necessary.
4.1.7 The results of the examination of accounts and vouchers received from Sub- Divisional Officers should be intimated to them in all cases where it is necessary to obtain further information or documents such as accounts, vouchers, certificates, etc. or to direct them to correct the relevant official records or avoid the recurrence of any irregularity. The procedure to be observed in this regard may be prescribed by the Divisional Officer. The records connected with the results of this examination should be retained for inspection by the Accountant General (Audit).
4.1.8 The Divisional Accountant is further required to inspect periodically, under the orders of the Divisional Officer, the accounts records of sub-divisional offices to check a percentage of the initial accounts. While reporting the defects noticed to the Divisional Officer for his orders, the Divisional Accountant will be responsible for personally explaining the procedural defects and deficiencies to the Sub-Divisional Officers and their staff and for providing necessary instructions to them. The results of these inspections should also be placed on record for the information of the Accountant General (Audit); serious financial irregularities should however be reported promptly for his information though these might have been set right under the orders of the competent authority. All cases of defalcation or losses of public money, stores or other property, which require to be reported to the Pay and Accounts Officer/ Accountant General (A&E) and the Accountant General (Audit) under the financial rules of the Governments concerned, should be immediately reported to them.
Checks by the Accountant General (A&E)/Pay and Accounts Officer
4.1.9 The monthly accounts, schedules, schedule dockets and vouchers received in the office of the Accountant General (A&E) are subjected to a preliminary check in that office in accordance with the instructions contained in Volume-I of the Manual of Standing Orders (Accounts and Entitlements). Where under the departmentalized system of accounts the monthly accounts are rendered to the Pay and Accounts Officer, this check is conducted by the Pay and Accounts Office in accordance with the instructions in the departmental manual.
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Central Audit
A. General Checks
4.1.10 Central audit of works expenditure should be conducted in accordance with the general principles and rules laid down in this publication. Due regard should, however, be paid to the financial rules and orders of the Government concerned. The main points with reference to which the audit should be undertaken are the following:
(i) sufficiency of the authority for incurring the expenditure;
(ii) accuracy of classification of the charges against the works, persons, services and heads of account concerned;
(iii) proof of payment to the correct individual (i.e. through the existence of a properly receipted voucher for all payments, where necessary); and
(iv) observance of standards of financial propriety.
Note: Where the Divisional Accountant employed on conducting the preliminary internal check in a Divisional Office is a member of the establishment of the Accountant General (A&E) and is posted by him to the Divisional Office, the Audit Office is responsible for seeing that the duties entrusted to the Divisional Accountant are performed efficiently. General supervision of the work of the Divisional Accountant is, therefore, an important function of the Audit Office.
4.2.6 As far as possible, Section Officers and Assistant Audit Officers selected for posting in the Works Audit Branch should be those who have had adequate training as a Divisional Accountant.
6.2.8 Where administration of the cadre of Divisional Accountants is vested in the Indian Audit and Accounts Department, the Inspecting Officer should submit to the Accountant General (A&E), through the Accountant General (Audit), a confidential report, in his own handwriting, on the work and conduct of the Divisional Accountant, as judged mainly by the quality of the work done by him and the results of the audit checks applied by him during the entire period covered by the inspection. No opinion on the work of the Divisional Accountant should be expressed in the Inspection Report.
Note: The Inspecting Officer should form an opinion on the Divisional Accountant’s knowledge of the rules and procedures relating to audit and accounts and ensure that the Divisional Accountant’s personal copies of the codes and other books of reference are up to date.
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