Auditing System in

India
Prepared by
Nastia Scherbakova
 Internal Audit
is conducted by an agency or separate
department of the organisation known as
internal audit department. The staff of this
department may or may not have required
professional qualifications.
 Functions of Internal Audit
 to check the adequacy, soundness and adaptability of
the systems of internal controls

 prevent and detect frauds

Internal audit does not possess the same kind of

independence as is available to the external audit,
conducted by the Indian Audit and Accounts
Department.
 Statutory Audit
refers to the audit conducted by the Comptroller and
Auditor General, through the agency of the Indian
Audit and Accounts Department.
Functions of statutory audit:
 to audit all expenditure from the Consolidated Fund
of India of the Union, of each State and of each
Union Territory and to make sure that the money
shown in the accounts were applied according to the
purpose and that the expenditure conforms to the
authority who governs it

 to audit all transactions of the Union and of the states

Three-fold Purpose of Statutory
Audit
An accountancy audit to check the accuracy of
calculations and to see that all payments are
supported by receipted vouchers.

An appropriation audit to check the classification

of expenditure, in order to make sure that the items
have been charged to the proper heads of accounts.

An administrative audit to check that expenditure

has been incurred according to the rules and
regulations
 Comptroller and Auditor General
 is responsible for conducting audit of the accounts of the
Union, states and union territories with legislature.

 is appointed by the President by warrant but can be removed

only by the Parliament.

 cannot accept employment after retirement or dismissal, either

under the Union Government or under the state government.

 certifies the share of the States of the taxes collected by the

Union. He certifies the expenditure incurred by the States on
public expenditure programmes initiated and financed by the
Union and the Union Government.
 is responsible for investigating whether the central
and state governments have followed the norms of
public spending.

 every year submits to the President a detailed report

relating to the central government's accounts,
spending of public money and the performance of
public sector undertakings.
 Purposes of Audit Reports
 They are an aid to administration to ensure that irregularities
are not repeated in future.

 They help the planning process in not conceiving faulty

schemes.

 They give the right signals for mid-course corrections in on-

going schemes.

 They also serve the basis for taking appropriate disciplinary

action by the administrative authorities against the persons
who have caused loss.
 The Comptroller and Auditor General submits three
reports:
a) Audit Report on the Appropriation Accounts,
b) Audit Report on the Finance Accounts
c) Audit Report on the commercial and public sector
enterprises and revenue receipts on Union and state
governments.
 Types of Audit
 Financial audit is the audit conducted by the Indian Audit and
Accounts Department to see whether the administrative action
of the executive is in conformity with prescribed law, financial
rules and procedures.

 Regularity audit consists mainly in checking that the payments

have been authorised and are supported by proper vouchers.

 Receipts audit involves the audit of income-tax and custom

and excise receipts. It is conducted by the Indian Audit and
Accounts Department.

 Performance audit seeks to find out whether the resources

have been used efficiently.