Page 292 - DCOM204_AUDITING_THEORY

Auditing Theory

Notes fit. Such comments or supplementary report shall be placed before the annual general meeting
along with the audit report.
Where the Central Government is a member of the Government company it shall cause an
annual report on the working and affairs of the company to be prepared and laid before both
Houses of Parliament along with the audit report and the comment, if any, of the Comptroller
and Auditor general or India. The report shall be prepared within 3 months of the annual
general meeting. Where the State Government is also a member, the report shall also be laid
before the state legislature. But where the Central Government in not a member of the
Government company, the State Government concerned shall cause the above documents
prepared and laid before the state legislature.

Task Elaborate with example laws governing the audit of Government companies.
Identify its scope.
The Companies’ Amendment Act 1974 has enlarged the concept of Government company for the
purposes of audit. Section 619-B has been inserted and it provides that the provisions of section
619 for the purposes of audit shall apply to a company in which at least 51% of the paid up share
capital is held by the one or more the following or any combination thereof:
1. The Central Government and one or more Government companies;
2. Any State Government or governments and one or more Government companies;

3. The Central Government, one or more State Governments and one or more Government
companies;
4. The Central Government and one or more corporations owned or controlled by the Central
Government;
5. The Central Government, one or more State Governments and one or more corporations
owned or controlled by the Central Government;
6. One or more corporations owned or controlled by the Central Government or any State
Government;

7. More than one Government company.

Notes The Central Government may by notification in the Official Gazette direct that any
of the provisions of the Act (except the above noted provisions) shall not apply to any
Government company or shall apply with such exceptions, modifications and adaptations
as may be specified in the notification. A copy of every such notification shall be laid in
draft before both Houses of the Parliament for a period of not less than 30 days while they
are in session. Since the said period of 30 days cannot, sometimes be completed in one
session, section 620 has been amended by the Companies’ Amendment Act, 1977 to permit
the period of 30 days to be completed in one session or in two or more successive sessions.

14.2.1 Objectives of Government Audit

The concept, content and scope of Government audit have developed in tune with the political,
social and economic development of the country. It aims to ensure accountability of the executive
in respect of public revenue and expenditure. Initially government auditing in India is primarily
expenditure oriented. Gradually, audit of receipt tax and non tax is taken up.

286 LOVELY PROFESSIONAL UNIVERSITY