Para 3.13.7 — MSO (Audit)
Original Rule Text
What This Means
The government provides loans and advances to various bodies and individuals for developmental and other purposes. Audit plays a critical role by checking that loan sanction conditions are clearly stated, repayment and interest terms are being followed, outstanding balances are reviewed for irregularities, adequate security has been taken, and loans are not given when previous loan funds remain unused. The same rules that apply to grants-in-aid audit also apply to loans from the Consolidated Fund.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Government loans go to public bodies, quasi-public bodies, statutory corporations, companies, and individuals
- 2Sanction orders must clearly state reasons and conditions for each loan
- 3Audit monitors compliance with repayment schedules and interest payment terms
- 4Outstanding loans are reviewed for irregularities, unacknowledged balances, and unrealised amounts
- 5No further loans should be given if previous loan funds are substantially unutilised
Practical Example
A State Government sanctions a Rs 50 crore loan to a municipal corporation for water supply infrastructure. The auditor examines whether the sanction order specifies repayment terms and interest rate, checks that the corporation has been making quarterly repayments on time, verifies that adequate security (such as a charge on the corporation's revenue) was obtained, and confirms that the previous Rs 30 crore loan was fully utilised before this new loan was sanctioned. Finding Rs 10 crore from the old loan still unspent, the auditor raises an objection about the new loan.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What are 'unusual conditions' in a loan sanction that merit special audit scrutiny?▼
Why does the AG communicate confidentially about a debtor's financial position?▼
What does 'mutatis mutandis' mean in the context of grant-in-aid rules applying to loans?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.