Para 2.6.2 — MSO (Audit)
Original Rule Text
2.6.2 Under Sub-section (3) of Section 19 of the Act, the Governor of a State or the Administrator of a Union Territory having a Legislative Assembly can entrust, in public interest, the audit of the accounts of a corporation established by law made by the State/Union Territory Legislature to the Comptroller and Auditor General after prior consultation with him and after giving reasonable opportunity to the corporation to make representation with regard to the proposal for such audit. This Sub-section does not provide for settlement of terms and conditions but it is in the mutual interest of the Government and the autonomous bodies that the terms and conditions are settled in respect of audit as in the case of audit under Section 20(1) of the Act (see paragraph 2.6.8 below). It is to be noted that audit of a corporation established by a State or Union Territory law and not of a corporation established under a State or Union Territory law can be entrusted to the Comptroller and Auditor General under Section 19(3) of the Act. Section 19-A of the Act, inserted by the Amendment Act of 1984, makes it obligatory for the Comptroller and Auditor General to submit his reports relating to the accounts of a Government company or a corporation subject to audit under Section 19 to the Government
What This Means
Under Section 19(3) of the DPC Act, the Governor or UT Administrator can entrust audit of state/UT legislature-established corporations to the CAG, but only after consulting the CAG and giving the corporation a chance to object. While the law does not require formal terms and conditions, it is recommended that they be settled mutually. Section 19-A (added in 1984) makes it mandatory for the CAG to submit audit reports to the government, which must then table them before the Legislature. Importantly, only corporations established 'by' (not 'under') a state law can be audited under this provision.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Governor/UT Administrator can entrust state corporation audit to CAG under Section 19(3)
- 2Prior consultation with CAG and opportunity for corporation to represent are mandatory
- 3Settling terms and conditions is recommended though not legally required
- 4Section 19-A (1984 amendment) mandates CAG report submission and legislative tabling
- 5Only corporations established 'by' a state law qualify -- not those established 'under' a state law
Practical Example
A state industrial corporation established by a State Legislature Act is proposed for CAG audit. The Governor consults the CAG, and the corporation is given an opportunity to present its case. After entrustment, the terms are settled: audit will cover three years of accounts, the CAG's team will have full access to records, and the audit report will be submitted within six months. The CAG's report, once submitted to the state government under Section 19-A, must be placed before the State Legislature for scrutiny.
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 'established by' and 'established under' a law?▼
What did the 1984 amendment (Section 19-A) change?▼
Can the corporation negotiate the scope of CAG audit?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.