This document outlines the procedures for central audit conducted by the Audit Office on the accounts and vouchers submitted by State government offices to the Office of the Accountant General. It discusses the objectives of central audit, important source documents that are checked, the responsibilities and approach for conducting the audit, issues that are scrutinized during the audit of vouchers, procedures for auditing sanctions, how audit findings are handled, and the process for pursuing objections.

1. EXAMINATION OF SANCTIONS
INTRODUCTION
CONSEQUENT ON RESTRUCTURING OF THE OFFICES OF THE STATE ACCOUNTANTS
GENERAL WITH EFFECT FROM 1ST MARCH, 1984, THE ACCOUNTS AND ENTITLEMENTS AND
THE AUDIT FUNCTIONS ARE DISCHARGED BY SEPARATE ACCOUNTANTS GENERAL.
CENTRAL AUDIT IS DONE WITHIN THE AUDIT OFFICE THAT AUDITS THE ACCOUNTS
AND VOUCHERS SUBMITTED BY STATE GOVERNMENT OFFICES TO THE OFFICE OF
THE ACCOUNTANT GENERAL (A&E)MONTHLY.
ITS PRIMARY OBJECTIVES ARE TO CHECK WHETHER:-
(i) SANCTIONS HAVE BEEN ACCORDED BY THE RELEVANT COMPETENT
AUTHORITY,
(ii) RULES AND ORDER ISSUED BY GOVERNMENT ITSELF ARE INTRA-VIRES,

2. Contd.
(iii) MONTHLY ACCOUNTS AND RELATED SCHEDULES HAVE BEEN
RECEIVED FROM THE PUBLIC WORKS AND THE FOREST DIVISIONS,
(iv) VOUCHERS ARE IN THE PRESCRIBED FORM AND PREPARED
ACCORDING TO EXTANT RULES,
(v) THE BILLS, VOUCHERS AND ACCOUNTS ARE ARITHMETICALLY
CORRECT AND CONFORM TO RULES AND REGULATIONS, AND
(vi) CONTRACT AGREEMENTS ARE DEFINITE, PRECISE AND BASED ON
STANDARD PRACTICES.

3. Source Documents
SOME IMPORTANT SOURCE DOCUMENTS TO BE CHECKED IN
CENTRAL AUDIT ARE THE FOLLOWING:
(i) CONTINGENT VOUCHERS.
(ii) LIST OF PAYMENTS
(iii) MONTHLY ACCOUNTS OF PUBLIC WORKS AND
FOREST DIVISIONS.
(iv) SCHEDULES AND SCHEDULE DOCKETS
ACCOMPANYING MONTHLY ACCOUNTS.
(v) CONTRACT AGREEMENTS.

4. Contd.
(VI) SANCTIONS TO EXPENDITURE.
(VII) FINANCIAL RULES AND ORDERS AFFECTING EXPENDITURE
AND OTHER TRANSACTIONS ISSUED BY GOVERNMENT.
(VIII) ESTABLISHMENT BILLS AND OTHER BILLS RELATING TO
ENTITLEMENTS OF GOVERNMENT SERVANTS, SUCH AS TRAVELLING
ALLOWANCE, REIMBURSEMENT OF EXPENSES ON MEDICAL
TREATMENT, ADVANCES, ETC.
(IX) CERTIFICATES OF PAYMENTS.
(X) PROFORMA INVOICES.

5. Audit Approach
RESPONSIBILITY FOR AUDIT
1. CENTRAL AUDIT WILL BE CARRIED OUT EVERY MONTH BY CENTRAL AUDIT
PARTIES OF THE AUDIT OFFICE IN THE ACCOUNTS AND ENTITLEMENT OFFICE.
CENTRAL AUDIT SUPPORT SECTIONS IN THE AUDIT OFFICES WILL
COORDINATE AND PURSUE THE WORK OF THE CENTRAL AUDIT PARTIES AND
PERFORM ALL SUPPORT FUNCTIONS, SUCH AS PREPARATION OF AUDIT
PROGRAMMES, AUDIT OF SANCTIONS, ETC., AND DISCHARGE FOLLOW-UP
RESPONSIBILITIES LIKE MAINTENANCE OF OBJECTION BOOKS, SELECTION OF
POTENTIAL MATERIAL FOR AUDIT REPORTS, ETC. GENERALLY, AN AUDIT
OFFICER WILL BE IN CHARGE OF EACH CENTRAL AUDIT SUPPORT SECTION,
WHILE AN ASSISTANT AUDIT OFFICER WILL BE RESPONSIBLE FOR TWO
CENTRAL AUDIT PARTIES.

6. Contd.
2. A Central Audit Support Section will be responsible for the audit of vouchers in
the Loan, Book, Deposit and Account Current Sections in the Accounts Office. With a
view to ensuring control over unauthorised and excess expenditure and to enabling
the State Administration to exercise adequate control over their Annual budget, the
Monthly Appropriation Accounts and Finance Accounts prepared by the Accountant
General (A&E) should also be checked by the Central Audit Supporting Section. This
should be included in the Annual Audit Plan of Audit Offices.

7. Contd.
3. CENTRAL AUDIT MAY BE SUPPLEMENTED BY LOCAL AUDIT AND
INSPECTIONS TO SUCH EXTENT AS MAY BE PRESCRIBED BY THE COMPTROLLER
AND AUDITOR GENERAL. HOWEVER, IN CASES WHERE THE ACCOUNTING
FUNCTIONS HAVE BEEN DEPARTMENTALISED, THE AUDIT WILL BE CONDUCTED
ONLY LOCALLY

8. Issues for audit scrutiny
ADHERENCE TO THE FOLLOWING REQUIREMENTS SHOULD BE VERIFIED IN THE
COURSE OF DETAILED AUDIT OF VOUCHERS IN SUPPORT OF PAYMENTS:
i. THE VOUCHERS SHOULD BE IN THE PRESCRIBED FORM, IN ORIGINAL AND
DULY ACKNOWLEDGED BY THE PAYEES IN TOKEN OF RECEIPT. A BRIEF
ABSTRACT SHOULD BE INCLUDED IN THE AUTHORISED OFFICIAL
LANGUAGE UNDER THE SIGNATURE OF THE DRAWING OFFICER ON ALL
VOUCHERS PREPARED IN ANY OTHER LANGUAGE, AND THE SIGNATURES,
IF NOT IN THE AUTHORISED SCRIPT, SHOULD BE TRANSLITERATED. SUB-
VOUCHERS, IF ANY, SHOULD CONTAIN NOTES OF THE DATES OF
PAYMENT.

9. Contd.
II. VOUCHERS SHOULD BE NUMBERED WITH REFERENCE TO THE SCHEDULE
OF LIST OF PAYMENTS, SCHEDULE DOCKETS OR OTHER ACCOUNTS, AS THE
CASE MAY BE.
III. INDIVIDUAL AMOUNTS DETAILED IN THE VOUCHERS SHOULD ADD UP TO
THE TOTALS AND THE TOTALS INDICATED BOTH IN WORDS AND IN
FIGURES.
IV. THE VOUCHERS SHOULD BEAR A PAY ORDER SIGNED BY THE TREASURY
OFFICER WHERE THE VOUCHERS ARE ENCASHED AT TREASURIES, OR BY
THE CONCERNED DISBURSING OFFICER IN OTHER CASES. IN PARTICULAR,
IN CASES WHERE THE PAYMENT IS MADE AT A BANK, THE VOUCHER
SHOULD CONTAIN THE PAY ORDER OF THE AUTHORISED GOVERNMENT
OFFICER, WHERE REQUIRED UNDER THE RULES.

10. contd.
(V) STAMPS BEARING THE LEGEND ‘PAID’ SHOULD HAVE BEEN AFFIXED ON
THE
VOUCHERS.
(VI) THERE SHOULD BE NO ERASURES ON THE VOUCHERS AND THE OFFICER
CONCERNED SHOULD HAVE ATTESTED INDIVIDUALLY ALL CORRECTIONS AND
ALTERATIONS ON EVERY OCCASION THAT THEY WERE MADE.
(VII) UNLESS OTHERWISE PROVIDED IN THE RULES OF GOVERNMENT, STAMPS
SHOULD HAVE BEEN AFFIXED TO ALL VOUCHERS INVOLVING A NET PAYMENT
IN EXCESS OF RS.500, THE STAMPS BEING PUNCHED.
NOTE: IN RESPECT OF PAYMENTS MADE IN EMBASSIES, MISSIONS, ETC.
ABROAD, AUDIT WILL NOT INSIST UPON THE PRODUCTION OF RECEIPTS IF A
CASH VOUCHER IS AVAILABLE OR, WHEN PAYMENT HAS BEEN MADE BY
CHEQUE, AN ACKNOWLEDGEMENT OF ITS RECEIPT HAS BEEN OBTAINED FROM
THE PAYEE.

11. Contd.
(VIII) NO PAYMENT SHOULD HAVE BEEN MADE ON A VOUCHER OR ORDER
SIGNED BY A SUBORDINATE INSTEAD OF THE HEAD OF THE OFFICE HIMSELF
OR ON A VOUCHER OR ORDER ON WHICH ONLY A FACSIMILE SIGNATURE HAS
BEEN STAMPED/AFFIXED. THE SANCTIONING AUTHORITY OFFICER OR A
GAZETTED GOVERNMENT SERVANT DULY AUTHORISED FOR THE PURPOSE
SHOULD HAVE ALSO CERTIFIED ALL COPIES OF SANCTIONS.
NOTE: A SEPARATE SANCTION NEED NOT BE INSISTED UPON IN RESPECT OF
CHARGES FOR WHICH A SPECIAL SANCTION IS NECESSARY UNDER THE RULES
IF THE BILL OR VOUCHER ON WHICH THE MONEY IS DRAWN IS SIGNED OR
COUNTERSIGNED, EITHER BEFORE OR AFTER THE MONEY IS DRAWN, BY THE
AUTHORITY COMPETENT TO SANCTION THE EXPENDITURE. HOWEVER,
CHARGES OF THE KIND IN QUESTION MAY NOT BE INCLUDED IN THE SAME
BILL ALONG WITH OTHER ITEMS FOR WHICH A SPECIAL SANCTION IS NOT
NECESSARY.
(IX) WHEREVER PRESCRIBED, AGREEMENT SHOULD HAVE BEEN EFFECTED
BETWEEN TWO DIFFERENT DOCUMENTS.
NOTE: THE AUDITOR SHOULD ALSO NOTE, UNDER HIS INITIALS, ON BOTH THE

12. Contd.
(X) A TREASURY VOUCHER PAID BY TRANSFER SHOULD BE STAMPED AS HAVING
BEEN SO PAID; THE HEAD OF ACCOUNT TO WHICH IT HAS BEEN CREDITED
SHOULD ALSO HAVE BEEN NOTED ON THE VOUCHER.
NOTE: IN THE COURSE OF AUDIT, THE RELEVANT CREDIT SHOULD BE TRACED IN
THE CASH ACCOUNT WHENEVER POSSIBLE.
(XI) DEDUCTIONS ON ACCOUNT OF SUBSCRIPTIONS TO PROVIDENT FUND AND
INCOME TAX SHOULD HAVE BEEN MADE WHEREVER APPLICABLE.
NOTE: THE AUDIT OFFICER IS NOT RESPONSIBLE FOR CHECKING THE
CORRECTNESS OF THE INCOME TAX DEDUCTIONS IN INDIVIDUAL BILLS.
HOWEVER, WHENEVER SUCH BILLS ARE SUBJECTED TO HIS SCRUTINY IN THE
COURSE OF AUDIT, HE SHOULD ALWAYS VERIFY THAT DEDUCTIONS ON ACCOUNT
OF INCOME TAX HAVE NOT BEEN OVERLOOKED IN CASES WHERE THESE SHOULD
CLEARLY HAVE BEEN MADE.

13. Contd.
(XII)NO BILLS PERTAINING TO PAY OR ANY ALLOWANCE NOT CLAIMED WITHIN
ONE
YEAR OF ITS BECOMING DUE (OR SUCH OTHER PERIOD AS MAY BE
PRESCRIBED IN
THIS BEHALF) SHOULD HAVE BEEN ADMITTED FOR PAYMENT WITHOUT THE
SANCTION OF THE ACCOUNTANT GENERAL (A & E) IN CASES WHERE THE
RULES OF
THE GOVERNMENT SO PRESCRIBE.
(XIII) STORES SHOULD HAVE BEEN PURCHASED THROUGH THE PURCHASE
ORGANIZATION OF THE MINISTRY OF SUPPLY OF THE CENTRAL GOVERNMENT
WHEN THIS IS REQUIRED BY THE ORDERS OF THE GOVERNMENT AND
PAYMENT FOR SUCH STORES SHOULD HAVE ALSO BEEN MADE BY THAT
MINISTRY’S PAY AND ACCOUNTS
OFFICE, EXCEPT WHEN THE AMOUNT INVOLVED IS LESS THAN A RUPEE.

14. Audit of Sanctions
I. COPIES OF SANCTIONS ISSUED BY THE CENTRAL AND STATE GOVERNMENTS AND THEIR
SUBORDINATE AUTHORITIES WILL BE RECEIVED BY THE CENTRAL AUDIT SUPPORT SECTIONS
CONCERNED WHERE THEY WILL BE EXAMINED IN ACCORDANCE WITH THE RELEVANT
INSTRUCTIONS IN
THIS MANUAL BEFORE ADMISSION IN AUDIT. THE ACCOUNTANT GENERAL (AUDIT) WILL MAKE
ARRANGEMENTS FOR THE RECEIPT, SCRUTINY AND PROCESSING OF SANCTIONS AND
MAINTENANCE OF
FILES/FOLDERS IN A REGULAR AND SYSTEMATIC MANNER. THE CENTRAL AUDIT SUPPORT
SECTIONS
SHALL COMMUNICATE OBJECTIONS ARISING OUT OF AUDIT OF SANCTIONS TO THE
DEPARTMENTS
CONCERNED WITH COPIES THEREOF TO THE ACCOUNTANT GENERAL (A&E), AND CLOSELY
WATCH
THEIR SETTLEMENT.

15. Contd.
2. THERE SHOULD BE CLOSE COORDINATION BETWEEN EACH CENTRAL
AUDIT SUPPORT SECTION AND THE RELATED CENTRAL AUDIT PARTIES. THE
RESULTS OF SCRUTINY OF ALL SANCTIONS SHOULD BE MADE READILY
AVAILABLE TO THE LATTER BEFORE THE CENTRAL AUDIT OF THE RELEVANT
TRANSACTIONS TAKES PLACE. IT IS THE DUTY OF THE CONCERNED CENTRAL
AUDIT SUPPORT SECTION TO SUPPLY THE RELEVANT SANCTION FILES ALONG
WITH IMPORTANT POINTS TO THE CENTRAL AUDIT PARTIES. SUITABLE
PROCEDURES FOR ENSURING THIS SHOULD BE EVOLVED BY THE
ACCOUNTANT GENERAL (AUDIT).
3. ALL SANCTIONS RELATING TO FOREIGN TRAVEL RECEIVED IN THE CENTRAL
AUDIT SUPPORT SECTION SHOULD BE ENTERED IN A REGISTER AND COPIES
MADE AVAILABLE TO CENTRAL AUDIT PARTIES FOR ARRANGING AUDIT OF THE
RELATED TRANSACTIONS.

16. Audit findings
ON COMPLETION OF THE AUDIT AND REVIEW, THE CENTRAL AUDIT PARTY
WILL FORWARD THE SELECTION REGISTER, THE COMPLETION CERTIFICATE
AND THE AUDIT NOTES/MEMOS (IN TRIPLICATE) TO THE RELEVANT CENTRAL
AUDIT SUPPORT SECTION, WHICH WILL THEREAFTER DEAL WITH THE AUDIT
NOTES/MEMOS AND ALL SUBSEQUENT CORRESPONDENCE. AFTER SCRUTINY
AND EDITING, WHERE NECESSARY, OF THE AUDIT NOTES/MEMOS, THE
CENTRAL AUDIT SUPPORT SECTION WILL FORWARD THE IN CONVENIENT
BATCHES EVERY MONTH TO THE DEPARTMENTS CONCERNED, COPIES
THEREOF ALSO BEING SENT TO THE ACCOUNTANT GENERAL (A&E).

17. Pursuance of Objections
THE ACCOUNTANT GENERAL (AUDIT) WILL BE RESPONSIBLE FOR WATCHING
THE SYSTEMS AND PROCEDURES FOR AND THE EFFECTIVENESS OF
PURSUANCE OF OBJECTIONS OF AN ACCOUNTING NATURE, SUCH AS NON-
AVAILABILITY OF D.C. BILLS, VOUCHERS OR PAYEES’ RECEIPTS, ERRORS IN THE
TREASURY AND DIVISIONAL ACCOUNTS, ETC., THAT ARE REQUIRED TO BE
WATCHED BY THE ACCOUNTANT GENERAL (A&E). HE WILL AUDIT TO THE
PRESCRIBED EXTENT THESE WANTING DOCUMENTS AS AND WHEN THEY ARE
RECEIVED