IX

 CHAPTER IX

REVIEW OF THE BUDGET—I
(Audit Report)

98. (1) Review of the budget forms the last of the four budgetary stages; it completes the financial cycle starts with the preparation of the budget.

 

 🆀 Review of the budget is the..............stage of budgetary cycle.

(A)Second

(B) First 

(C) Last 

(D) Third

Correct Answer:-Option:(C)

  (2) In a parliamentary form of Government, the Executive and the Legislature have well-defined prerogatives and spheres of responsibility. While it is the responsibility of the Executive to formulate demands for money, it is the prerogative of the Legislature to grant the money required for public expenditure. This power to make grants for specific purposes (appropriate) is not, in practice, adequate for controlling expenditure. For legislative control over expenditure to be complete, the Legislature should also have the means to satisfy itself that the appropriations are, in fact, spent by the Executive for the purposes for which they are intended. This is provided by the audit of public accounts by an independent statutory authority—the Comptroller and Auditor General—and the examination of his report by a legislature committee—the Public Accounts Committee or the Committee on Public Undertakings, as the case may be. It is also equally important to have a detailed examination of the estimates presented to the House, and see how best the plans and programmes embodied therein could be executed efficiently and economically. This work has been entrusted to another legislature committee, specially constituted for the purpose—the Estimates Committee.

 

 🆀 Who is the independent statutory authority who audits the public accounts? 

(A) Public Undertakings Committee 

(B) Public Accounts Committee

(C) C & A.G 

(D) Estimates Committee

Correct Answer:-Option:(C) 

  (3) Accordingly, the work of review of the budget may be sub divided into —3

  (i) Audit of accounts by the Accountant General, and preparation and submission of the Audit Report.

  (ii) Scrutiny of the Audit Report by the Public Accounts Committees/Committee on Public Undertakings the Legislature.

(iii) Detailed examination of the Estimates by the Estimates Committee of the Legislature.

The purpose of this chapter is to focus attention on the review by Audit, so far as if affects the working of the departments of Government, and it contains mainly executive instructions for the guidance of the departmental officers. The working of the three legislature committees has been dealt with in Chapter X, XI and XII.

 

 🆀 Review of the budget is done by:

(A) Legislature Committee 

(B) Executive 

(C) Governor

(D) Judiciary 

Correct Answer:-Option:(A)

 🆀 The work of review of budget is subdivided into :

(A) 3 

(B) 10 

(C) 11

(C) 9

Correct Answer:-Option:(A)

AUDIT REPORT

99.  Audit of public accounts by an independent authority is an essential ingredient of legislative control over expenditure. In fact, the financial accountability of the Executive to the Legislature is secured through the Reports of the Comptroller and Auditor General (Audit Reports).

 

 🆀Which independent authority audits Government Accounts of each year? 

(A) Chartered Account 

(B) Comptroller and Auditor General 

(C) Advocate General 

(D) None of the above

Correct Answer:-Option:(B)

🆀 The financial accountability of the Executive to the Legislature is secured through (A) Internal Control System 

(B) Audit Reports of C & AG 

(C) The Financial Inspection Wing 

(D) Vigilance Department 

Correct Answer:-Option:(B)

🆀 Audit of Public Accounts by an independent authority is an essential ingredient of .......................control over expenditure : 

(A) Legislative

(B) Judicial

 (C) Financial

(D) None of the above 

Correct Answer:-Option:(A

100. Draft paragraph.—The Accountant General, acting on behalf of the Comptroller and Auditor General, examines the accounts to ensure that the grants made by the Legislature have been applied in the amounts intended and to the purposes for which they were intended, and that they have been spent according to law, rules, and regulations.

If, in the course of such examination, an irregularity comes to his notice, which, in his opinion, deserves to be mentioned in the Audit Report, he sends a draft of the paragraph proposed for inclusion in the Audit Report to the secretary to Government concerned, by name, for verification of facts. 

Simultaneously, copies of the ‘Draft Paragraph’ are endorsed to the Finance Secretary and the Head of the Department concerned. This is to ensure that the irregularity commented upon the officers who will have to appear as witnesses before the Public Accounts Committee* when the Audit Report is taken up for consideration by the Committee. It is, therefore, the duty of the officer who receives the Draft Paragraph to see that the reply to the Accountant General, after verification of facts, is sent only after obtaining his approval so that the facts mentioned in the Audit Para will not be challenged when the Audit report is examined by the Committee.

 

🆀 When an irregularity is noticed by Accountant General (Audit), while examining the accounts of a department, what is sent first to the Secretary of the Department ?

(A) Show cause notice

(B) Audit report

(C) Warning slip

(D) Draft paragraph 

Correct Answer:-Option:(D)

🆀 Who is conducting audit of Consolidated Fund of the State Government 

(A) Finance Secretary 

(B) Accountant General 

(C)Director of Local Kerala State Audit Department

(D) Chief Secretary 

Correct Answer:-Option:(B)

🆀 The draft paragraphs sent by the Accountant General to the Secretary to Government concerned should be verified and results communicated to the Accountant General. 

(A) Within six weeks

(B) Within four weeks 

(C) Within eight weeks 

(D) Within three weeks

Correct Answer:-Option:(A)

🆀 In each State who acts on behalf of CAG ?

(A)Governor

(B) Auditor General 

(C) Chief Minister

(D) Accountant General 

Correct Answer:-Option:(D)

100(1) Verification of facts and furnishing reply.—The facts mentioned in the Draft Paragraph should be carefully verified, and *The term “Public Accounts Committee”, wherever used in this chapter, means the Committee on Public Undertakings also.

🆀 Committee on Public Accounts is one of the :

(A) Subject Committees 

(B) Privilege Committees

(C) Legislature Committees 

(D) None of the above 

Correct Answer:-Option:(C)

The result of verification communicated to the Accountant General within six weeks from the date of its receipt. Before sending a reply, the officers concerned should collect all the facts which have a direct or indirect bearing on the irregularity commented upon in the Draft Paragraph, and examine whether the Audit Para gives a true account of the alleged irregularity or lapse. (Usually, the files or reference mentioned in the ‘Key to the Para’ will contain the facts of the case). If the Draft Paragraph needs to be modified to bring out the facts of the case, the modification deemed necessary should be suggested in the reply. The reply should be communicated demiofficially by the officer to whom the Draft Paragraph was addressed by the Accountant General. This is to ensure that the reply is sent by the proper authority, after careful examination of all the aspects of the case. In case the final reply to the Draft Paragraph cannot be sent within the prescribed time-limit (six weeks), an interim reply should be sent to the Accountant General by the same officer, indicating the date by which the final reply could be sent. In any case, the final reply should be sent within three months from the date of receipt of the Draft Paragraph.

(2) Facts noticed after finalisation.—Facts coming to the notice of the Secretariat or the Department after the Draft Paragraph has been finalised by the Audit should also be reported to the Accountant General, for due verification and posting the Public Accounts Committee with up-to¬date information at the time the case is taken by for consideration by the Committee.

102. Verification to ensure that facts agree.—It is not necessary that contents or the language of the Draft Paragraph should be specifically agreed to. Nor is it necessary to reach prior agreement on what is to be mentioned in the Audit Report. However, it is desirable that there is no dispute regarding the facts of the case, based on which the Accountant General is free to draw his own conclusion and express his own opinions. This does not preclude a Secretary to Government from taking up with the Accountant General the desirability of mentioning a particular case in the Audit Report.

103. Mentioning names.—The name of the department or organisation connected with an irregularity may be mentioned in the Draft Paragraph, except when criminal proceedings have been initiated against an official for alleged fraud or misappropriation, and mentioning the name of the department or orgainisation may give a clue to his identity. The names of private firms will not be mentioned, if the facts of the case are/are likely to the subject-matter of litigation, etc. The names of individuals and officials will, likewise, be avoided; only the designation of the officials concerned will be indicated. Where, however, a name has been mentioned in the Audit Paragraph and Government consider this undesirable, the matter should be brought to the notice of Audit well in time.

104.  Watching the disposal of Draft Paragraph.—In order to ensure the prompt disposal of Draft Paragraphs, Secretaries to Government and the Heads of Departments should maintain a separate register to note the date of receipt of the Paragraphs and the date of sending the reply. A senior officer (who, in the case of the Secretariat, should be one not below the rank of a Deputy Secretary) should be declared as responsible for watching the prompt disposal of Draft Paragraphs. He should personally verify on the first working day of every month, the register maintained for the purpose. It should be borne in mind that if a final reply is not sent within the prescribed time-limit (six weeks), the Paragraph, as prepared by Audit, will be treated as final and incorporated in the Audit Report. Situations necessitating the challenging of facts mentioned in the Audit Para should not arise at a later stage on any account, particularly owing to the default of the departments to apprise the Accountant General of the correct position at the time of verification of the Draft Paragraph.

105.  Files required by Audit.—The files required by Audit for the preparation of Draft Paragraphs should be readily made available. If the contents of a file or any part of it is ‘secret’, the file may be sent to the Accountant General by name, specifying this fact. The Accountant General will then deal with it is accordance with the standing instruction for the handling and custody of such documents.

106. Rectification of defects etc., commented upon in the Audit Para.—Normally, it has to be presumed that a Draft Paragraph forwarded to the Secretary to Government, for verification, will find a place in the Audit Report. The Secretary to Government and the Head of Department will have to appear as witnesses before the Public Accounts Committee, when the para in question is taken up for examination by the committee. There will normally be a time-lag of six to twelve months between the date on which the Draft Paragraph is forwarded by the Accountant General, for verification, and the date on which the para is taken up for consideration by the Committee. One of the questions which the Committee generally puts to the witness in whether at least after receipt of the Draft Paragraph, the irregularity commented upon in the Audit Para has been rectified, (wherever possible), adequate steps have been taken to check the recurrence of such irregularities, and, in cases of loss caused to Government, necessary action has been taken against those responsible. Hence, the Secretary to Government and the Head of Department should, on receipt of a Draft Paragraph, examine, inter alia, the following aspects, and take suitable remedial measures immediately:—

  (i) Whether the irregularity was caused by the negligence or culpability of any Government official. (If so, suitable action should be initiated against him.)

  (ii) Whether there was lack of proper instructions or defect in the organisational set-up. (If so, steps should be taken to rectify such defects.)

(iii) Whether there was any loss to Government. (If so, responsibility for the loss should be fixed, and steps taken to make good the same.)

(iv) Whether the irregularity was due to lack of proper supervision or ambiguity of rules. (If so, steps should be taken to enforce adequate supervision or to amend the rules.)

In short, all possible ways should be thought of to check the recurrence of the irregularity, and make amends for the wrong done.

107. Draft Paragraphs relating to State Undertakings.—The Draft Paragraphs relating to statutory Boards/Corporations, such as the Kerala State Electricity Board and the Kerala State Road Transport Corporation. Government Companies, and Government Commercial Undertakings will also be forwarded by the Accountant General to the Secretary to Government concerned, by name. Copies of these Draft Paragraphs will be endorsed simultaneously to the Finance Secretary to Government and the Chairman/Managing Director of the Undertaking concerned. The procedure laid down in the preceding paragraphs for the disposal of Draft Paragraphs will apply to such cases also.

TEXT BOOK INDEX -CHAPTER VIII		Paras
Audit—
	accounts to be audited by Comptroller and Auditor General	6, 98(2), 99
	files required by Audit to be readily made available	105
Audit Report—
	examination by Public Accounts Committee	6, 98, 108
Budget Estimates—
	examination by Estimates Committee	6, 98(2), 109
Draft Paragraphs—
	purpose explained	100
	verification of facts and furnishing reply	101(1)
	facts noticed after finalisation of	101(2)
	verification to ensure that facts agree	102
	mentioning names in	103
	watching the disposal of	104
	files required by Audit for the preparation of	105
	rectification of defects, etc. commented upon in	106
	relating to State Undertakings	107
Legislature—
	to be satisfied as regards spending of budget grant	6, 98(2)
Public Accounts Committee		6, 98, 108
Review of the budget—
	purpose explained	98(2)
	work sub-divided	98(3)