Para 2.6.17 — MSO (Audit)
Original Rule Text
2.6.17 While the bulk of the work connected with the audit or check of individual transactions may be left to primary auditors, where appointed, the overall responsibility of Audit for regularity audit cannot be abrogated. Similarly, aspects of economy, efficiency and effectiveness have to be looked into by Audit and the performance or achievements of the institution evaluated have to be looked into by Audit even where primary auditors have been appointed.
# Procedure for taking up audit
What This Means
Even when primary auditors (like chartered accountants or internal auditors) are appointed for an institution, the CAG retains overall responsibility for regularity audit. The CAG cannot delegate away this fundamental responsibility. Additionally, efficiency, economy, effectiveness, and performance evaluations must be conducted by the CAG's own staff, as primary auditors may not cover these aspects. The CAG provides the final layer of accountability.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Overall responsibility for regularity audit cannot be abrogated even with primary auditors in place
- 2Detailed transaction-level work may be left to primary auditors
- 3Economy, efficiency, and effectiveness aspects must be examined by the CAG
- 4Performance evaluation of the institution is the CAG's responsibility
- 5The CAG is the ultimate accountability authority regardless of other audit arrangements
Practical Example
A development finance institution has a reputable CA firm as its primary auditor who thoroughly examines all financial statements and transactions. Despite this, the CAG's audit team conducts a performance audit examining whether the institution's loan disbursements actually reached the intended beneficiaries (effectiveness), whether the administrative costs are proportionate to loan volumes (efficiency), and whether loan recovery rates meet targets (performance). The primary auditor certified the accounts as accurate, but the CAG's performance audit reveals that 30% of loans went to ineligible borrowers.
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 difference between regularity audit and performance audit?▼
Can the CAG hold primary auditors responsible for missed irregularities?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.