Para 3.13.19 — MSO

3.13.19 In order to safeguard government’s financial interests in respect of such contingent liabilities, the Accountant General (Audit) concerned should satisfy himself that the accounts of the public body or institution whose loan or loans have been guaranteed by Government are subject to audit by qualified auditors acceptable to

Government. Examination of the books of accounts of such a body or institution would not be in order unless its accounts are otherwise subjected to regular audit by the Comptroller and Auditor General. If, however, any guarantee is discharged by actual payment, the audit of the accounts of the body or institution can be considered subject to the provisions contained in the Act governing the duties, powers and conditions of service of the Comptroller and Auditor General. Scrutiny of the accounts of any Sinking Funds created by such a body or institution in pursuance of a scheme for the liquidation of debt under a statutory provision or otherwise should be directed to ascertaining that:

(a) the scheme of liquidation prescribed as the basis of the Sinking Fund is financially sound and consistent with the principles governing amortisation arrangements discussed earlier in this chapter;

(b) the Fund contains the amount that should have been accumulated if the prescribed scheme had been adhered to in respect of both the amounts to be credited to the Fund and the anticipated interest; and

(c) the investments of the Sinking Fund are sound and are valued at not more than their market price.

Defects in the scheme of liquidation, deficiencies noticed in the Fund, and any unsound investments or unusual depreciation in their market price should be brought prominently to the notice of Government.