Para 2.5.4 — MSO (Audit)
Original Rule Text
2.5.4 Under Section 19(1) of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971, audit of the accounts of Government companies is to be conducted by the Comptroller and Auditor General in accordance with the provisions of the Companies Act, 1956.
- Deemed Government Companies
What This Means
Under Section 19(1) of the CAG's DPC Act, 1971, the audit of government company accounts must be conducted by the CAG in accordance with the provisions of the Companies Act, 1956. This establishes the legal basis for the CAG's jurisdiction over government companies and ensures that the audit follows the framework laid down in company law rather than government audit rules alone.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Section 19(1) of the DPC Act, 1971 is the legal basis for CAG audit of government companies
- 2Audit must be conducted in accordance with the Companies Act, 1956
- 3This creates a dual framework -- CAG authority under the DPC Act plus Companies Act procedures
- 4The provision applies to all government companies as defined in the Companies Act
Practical Example
A government company management argues that since they are a 'company' under the Companies Act, only ICAI-appointed auditors should audit them, not the CAG. The CAG's office responds by citing Section 19(1) of the DPC Act, 1971, which specifically mandates that the CAG shall conduct the audit of government company accounts -- but in accordance with the Companies Act provisions, meaning through statutory auditors appointed by the CAG plus supplementary audit.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is the DPC Act?▼
Why does the audit have to follow the Companies Act provisions?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.