Para 3.16.34 — MSO (Audit)
Original Rule Text
3.16.34 In cases where it is decided to write down capital, it is the duty of Audit to satisfy itself that such writing down is approved by the competent authority for valid reasons and is in accordance with commonly accepted principles both of commercial accounting and Government financial control. Where necessary, the writing down of capital should also be mentioned in the Audit Report.
- G. Transactions pertaining to Reserves and Reserve Funds
What This Means
When the government decides to write down capital (reduce the recorded value of capital assets), audit must verify that the write-down has been approved by the competent authority for valid reasons and follows accepted commercial and government accounting principles. If significant, the capital write-down should also be reported in the Audit Report.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Writing down capital requires approval from competent authority
- 2The write-down must be for valid reasons and follow accepted accounting principles
- 3Both commercial accounting and government financial control principles apply
- 4Significant capital write-downs should be mentioned in the Audit Report
Practical Example
A state electricity board wants to write down Rs 200 crore from the capital value of an old thermal power plant that is being decommissioned. The audit team verifies that the write-down has been sanctioned by the Finance Department, that the plant genuinely has no remaining useful value, and that the accounting treatment follows accepted principles. The write-down is noted in the Audit Report for the Legislature's attention.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What does 'writing down capital' mean?▼
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This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.