Para 17.7 — CAM
Original Rule Text
17.7 CHECKING OF RECEIPTS
17.7.1. The Departmental authorities are primarily responsible to ensure that all revenues or dues to Government are correctly and properly assessed, realized and credited to Government account. IA shall conduct mandatory checks to see whether the Department has effective processes and checks on collection and accounting of all revenue receipts and refunds, and that they are followed correctly. The nature of checks exercised by the Departmental authorities for the following shall also be ascertained:
(i) checks for ensuring prompt detection and investigation of irregularities
(ii) leakage or loss due to double refunds
(iii) refunds with reference to fraudulent and forged vouchers/challans and
(iv) other types of omissions or commissions in the process of levy/collection of taxes or their refunds.
17.7.2. In the audit relating to revenue receipts, the IA Party should ensure the following by such test checks as may be considered necessary:
(a) That the demands are raised promptly in the manner required by the Law or Act of Parliament and that no amount due to Government is left outstanding in its books without sufficient reasons;
(b) That the collection and refunds are accounted for regularly and properly under the appropriate heads of account and that no sums are credited to Government by debit to any suspense head. The credit must follow and not precede actual realization;
(c) That proper safeguards exist against wilful omission or negligence in the levy or collection of taxes and in arranging refunds, wherever due;
(d) That double refunds, fraudulent or forged refund orders or other revenue losses through fraud, default or mistake are promptly brought to light and investigated; and
(e) That all revenue receipts collected by departmental officers are promptly remitted to the bank or the PAO as the case may be, and that reconciliation between their books of records and those booked in Government accounts based on receipted challans are carried out, in accordance with the procedure laid down.
Note: Bank audit would form a major part of the audit of revenue department audit wherein the functioning of collecting banks is to be assessed over the parameters and functioning as defined by RBI and O/o CGA from time to time. This will include matters relating to collection methods, settlement time period with RBI and reporting to PAOs. These aspects should also be covered in the IA Manual of the Department concerned.
What This Means
Internal Audit must conduct mandatory checks on the department's revenue collection and accounting processes. The IA party verifies that demands are raised promptly as required by law, collections and refunds are correctly classified under proper heads of account, safeguards exist against tax evasion or negligence in collection, and double/fraudulent refunds are detected. All departmental revenue collections must be promptly remitted to the bank or PAO, and reconciliation between departmental records and government accounts must be verified. Bank audit is a major component, covering collection methods, settlement timelines, and reporting to PAOs.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1IA must check that revenue demands are raised promptly and no amounts are left outstanding without sufficient reason
- 2Collections and refunds must be under correct heads of account — no credits to suspense heads allowed
- 3Credit must follow (not precede) actual realization of revenue
- 4Safeguards against double refunds, fraudulent refund orders, and revenue losses must exist and be effective
- 5Bank audit is a major part of revenue department IA — covering collection methods, settlement timelines, and reporting compliance
Practical Example
An IA party auditing a customs office checks 50 random refund cases. They find two cases where refund cheques were issued but the original duty challans could not be traced — a potential double refund risk. They also discover that Rs 15 lakh in revenue receipts collected by a departmental officer last quarter were remitted to the bank only after a 45-day delay. Both findings are documented with recommendations: (1) mandatory challan verification before refund approval, (2) weekly remittance compliance monitoring by the controlling officer.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why is bank audit important for revenue departments?▼
What does 'credit must follow, not precede, actual realization' mean?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.