Para 2.6.4 — MSO (Audit)
Original Rule Text
2.6.4 Under Sub-section (1) of Section 14 of the Act, it is obligatory for the Comptroller and Auditor General to audit all receipts and expenditure of any body or authority and to report thereon, if the body or authority has been substantially financed by grants or loans from the Consolidated Fund of India, or of any State or Union Territory having a Legislative Assembly. A body or authority is deemed to be so financed if the amount of grant or/and loan to it in a financial year is not less than Rs 25 lakhs and is also not less than 75 per cent of its total expenditure in that year. Audit under this Section is subject to the provisions of any law applicable to the body or authority, and will co-exist with and complement the audit arrangements, if any, that may be specified in such law.
What This Means
Under Section 14(1), the CAG is required to audit any body or authority that is 'substantially financed' by government grants or loans from the Consolidated Fund. A body is considered substantially financed if its government grant/loan in a financial year is at least Rs 25 lakhs AND at least 75% of its total expenditure. This audit runs alongside any other audit mechanism the body may already have under its own legislation.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1CAG audit under Section 14(1) is mandatory (not discretionary) for substantially financed bodies
- 2Threshold: grant/loan >= Rs 25 lakhs AND >= 75% of total expenditure in that year
- 3Both conditions must be satisfied simultaneously
- 4This audit coexists with any other audit arrangements under the body's own Act
- 5Applies to bodies financed from Consolidated Fund of India or any State/UT with Legislature
Practical Example
A District Rural Development Agency has total expenditure of Rs 40 lakhs in a year, of which Rs 35 lakhs comes as a government grant. Since the grant (Rs 35 lakhs) exceeds Rs 25 lakhs AND constitutes 87.5% of total expenditure (above the 75% threshold), the agency automatically falls under CAG audit under Section 14(1). The agency's own internal auditor continues to function alongside the CAG 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 if the grant is Rs 30 lakhs but only 60% of total expenditure?▼
Does 'substantially financed' include loans as well as grants?▼
Can the body refuse CAG audit under Section 14(1)?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.