Para 3.13.9 — MSO (Audit)
Original Rule Text
3.13.9 The registers and the broadsheets maintained by the Pay and Accounts and departmental offices should be reviewed in local audit to verify whether:
(i) payment, on the due dates, of the instalments of principal and interest by the loanees is properly monitored;
(ii) penal interest has been levied on overdue instalments;
(iii) loans paid and repaid and the interest remitted have been properly accounted for;
(iv) conditions, if any, prescribed by the sanctioning authority have been fulfilled;
(v) any amount paid has been erroneously treated and credited as repayment of the principal when any sum is due on account of unpaid interest; and
(vi) acknowledgments have been obtained periodically from the debtors in respect of outstanding balances.
Note: In cases where the Public Works Department incurs expenditure on works executed under special orders and such expenditure is treated as a loan, the amounts debitable to several loan accounts will appear in the monthly accounts of the divisional offices and these would be deemed to have been advanced on the last day of the month in which the expenditure appeared in the divisional accounts.
# Revenue advances
What This Means
During local audit, auditors review the loan registers and broadsheets maintained by Pay and Accounts Officers and departmental offices. They check whether loan repayments and interest payments are monitored on due dates, penal interest is charged on overdue instalments, loans are properly accounted for, sanction conditions are fulfilled, interest payments are not wrongly credited as principal, and periodic balance confirmations are obtained from borrowers.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Local audit reviews registers and broadsheets at PAO and departmental offices
- 2Timely monitoring of principal and interest payments by borrowers must be verified
- 3Penal interest must be levied on overdue instalments
- 4Erroneous crediting of interest payments as principal repayment must be detected
- 5Periodic balance acknowledgments must be obtained from debtors
Practical Example
During local audit of a district agriculture office that manages crop loans to farmers, the auditor finds that 15 borrowers have overdue instalments for over 6 months but no penal interest has been charged. Additionally, Rs 2 lakh received from one borrower as interest payment was wrongly credited as principal repayment, understating the outstanding balance. The auditor also notes that balance confirmations have not been obtained from any borrower for two years. All these are raised as audit objections.
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 it important to distinguish between principal and interest payments?▼
What is the purpose of obtaining periodic balance acknowledgments from debtors?▼
How are PWD loans treated differently?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.