Para 3.13.28 — MSO (Audit)
Original Rule Text
3.13.28 During audit of interest vouchers relating to borrowings from institutions like the Life Insurance Corporation of India, National Cooperative Development Corporation and other financial institutions, it should be seen that the payments are covered by sanctions accorded by a competent authority. The correctness of the amounts sanctioned should be verified during local audit of the records in the office of the authority responsible for maintaining the detailed accounts of the loan.
- Chapter–14
- Audit of Remittance Transactions
# Audit objectives and scope
What This Means
When auditing interest payments on loans borrowed from institutions like LIC, NCDC, and other financial bodies, the auditor must verify that these payments are covered by proper sanctions from a competent authority. The correctness of the sanctioned amounts is verified during local audit of the office that maintains the detailed loan accounts.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Interest payments on institutional loans (LIC, NCDC, etc.) must be covered by proper sanctions
- 2Sanctions must be from a competent authority
- 3Correctness of sanctioned amounts is verified during local audit
- 4Local audit focuses on the office responsible for maintaining detailed loan accounts
Practical Example
A State Government pays Rs 15 crore as annual interest on a loan from LIC for a housing scheme. The auditor first checks that the interest payment was sanctioned by the Finance Department (the competent authority). Later, during local audit of the Housing Department (which maintains the detailed loan accounts), the auditor verifies that the Rs 15 crore is correctly computed based on the outstanding principal, the agreed interest rate, and the loan terms.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why is a sanction from a competent authority required for interest payments?▼
What is verified during local audit versus central audit?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.