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Advanced Auditing

Notes provisions of Section of 21 of the CAG’s DPC Act, 1971. Under the directions given by the
Comptroller and Auditor General of India, the Accountants General and other offices and
establishments of the Indian Audit and Accounts Department perform such duties and functions
as are imposed on or undertaken by the CAG under the provisions of the Constitution of India,
or of any law made by Parliament.

10.1 Government Auditing: An Introduction

Audit forms an indispensable part of the financial administration and is one of the important
organs necessary to ensure the sound functioning of a Parliamentary Democracy. It is the main
instrument to secure accountability of the Executive to the Legislature. Audit assists Parliament/
Legislature in exercising its financial control over the Executive, to ensure that funds voted by
the Parliament/Legislature have been utilized for the purpose intended and the funds authorized
to be raised through taxation and other measures have been assessed, collected and credited to
the Government properly.
The primary function of audit is to verify the accuracy and completeness of accounts to secure
that all revenue and receipts collected are brought to account under the proper head, that all
expenditure and disbursements are authorized, vouched and correctly classified and the final
account represents a complete and a true statement of the financial transactions it purports to
exhibit. It is the function of audit to verify that financial rules and orders satisfy the provisions
of Law and or otherwise free audit objections and the rules & orders are properly applied.

10.1.1 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.

The objective of Government auditing is that of systematic, professional and independent
examination of financial, administrative and other operations of a public entity made subsequently
to their execution for the purpose of evaluating and verifying them, presenting a report containing
explanatory comments on audit findings together with conclusions and recommendations for
future actions by the responsible officials and in the case of examination of financial statements,
expressing the appropriate professional opinion regarding the fairness of the presentation.
Following are the main objectives of government accounting:

1. To record financial transactions of revenues and expenditures related to the government
organizations.
2. To avoid the excess expenditures beyond the limit of the budget approved by the
government.
3. To make expenditures according to the appropriate act, rules and legal provisions of the
government.
4. To provide reliable financial data and information about the operation of public fund.
5. To prevent misappropriation of government properties by maintaining the systematic
records of cash and store items.
6. To facilitate for making auditing of the books of accounts.
7. To help for preparing different financial statements and reports.

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