Para 2.3.7 — MSO (Audit)
Original Rule Text
2.3.7 It is the primary responsibility of the departmental authorities to see that all receipts due to Government are correctly and properly assessed, realized and credited to Government account. The most important functions of audit are
(i) to see that adequate regulations and procedures have been framed by the Revenue Department to secure an effective check on assessment, collection and proper allocation of taxes; and
(ii) to satisfy itself by adequate test check that such regulations and procedures are actually being adhered to. Audit should also make such examination as it thinks fit with respect to the correctness of the sums brought to account.
- of arrangements for detection/prevention of frauds and other irregularities
What This Means
The primary responsibility for correctly assessing, realizing, and crediting government revenue lies with the departmental authorities, not with Audit. Audit's main functions in receipt audit are twofold: first, to verify that adequate regulations and procedures exist for effective assessment, collection, and allocation of taxes; and second, to confirm through test checks that these procedures are actually being followed. Audit can also examine whether the amounts recorded in accounts are correct.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Primary responsibility for revenue collection lies with the department, not Audit
- 2Audit verifies that adequate revenue procedures exist
- 3Audit confirms through test checks that procedures are being followed
- 4Audit can examine correctness of amounts brought to account
- 5Two-pronged approach: check the system design AND its actual implementation
Practical Example
The AG office audits the State Mining Department's royalty collection system. First, they review the rules and procedures: are there clear formulae for calculating mining royalties, timelines for raising demands, and processes for detecting unauthorized mining? Second, they test-check 50 mining leases to see if royalties were actually calculated correctly and collected on time. They find that while the rules are sound, 30% of test-checked cases had delayed demand notices.
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 it important that Audit does not assume primary responsibility for revenue collection?▼
What determines how extensive the test check should be?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.