Para 3.16.32 — MSO (Audit)
Original Rule Text
3.16.32 The duties of Audit in relation to the allocation of expenditure between Capital and Revenue and in connection with the record of expenditure inside the Revenue Account are briefly as follows:
(i) It should see that commonly accepted accounting or commercial principles are not infringed.
(ii) It should verify that the accounts exhibit the true financial facts.
(iii) It should bring to notice transgression of generally accepted principles of public finance.
It should be remembered that the Controller General of Accounts is ultimately responsible for prescribing the correct classification of expenditure on the advice of the Comptroller and Auditor General.
What This Means
Audit has three key duties regarding the allocation of expenditure between capital and revenue. First, ensure that accepted accounting and commercial principles are not violated. Second, verify that accounts show the true financial position. Third, flag any breaches of generally accepted principles of public finance. The Controller General of Accounts has the ultimate responsibility for correct classification, acting on CAG's advice.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Audit must ensure accepted accounting and commercial principles are not infringed
- 2Accounts must exhibit the true financial facts
- 3Transgression of public finance principles must be brought to notice
- 4The CGA has ultimate responsibility for correct classification on CAG's advice
Practical Example
The audit team reviewing a state's accounts finds that Rs 150 crore in recurring software license fees have been capitalised. They flag this as a violation of accepted accounting principles since licenses are annual subscriptions, not permanent assets. The observation is included in the audit report, and the matter can be escalated to the CGA if the government disagrees.
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 'generally accepted principles of public finance'?▼
Who has the final word on classification disputes?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.