Para 3.5.12 — MSO

3.5.12 It frequently happens, however, that the power of sanctioning grants is delegated to subordinate authorities subject to the prior fulfilment of certain conditions by the grantees. Thus, grants may be made to educational institutions which attain specified standards in respect of number of scholars, methods of instruction, etc. In such cases, if the order sanctioning the grant quotes the relevant rules, Audit should ordinarily accept the expressed or implied certificate of the sanctioning authority that the prescribed conditions have been fulfilled, but it should utilize any opportunity available to scrutinize the methods by which the authority satisfied itself of such fulfilment. In addition, a test audit should be applied, where possible, to verify the fulfilment of the conditions in individual cases.

(i) The test audit suggested in this rule can most conveniently be done in the office of the sanctioning authority where all the necessary records will be available. The precise method by which the check will be exercised for different categories of grants-in-aid may be settled by the Accountant General in consultation with the Comptroller and Auditor General and detailed in the relevant Office Manual.

(ii) On the question of regulation of the quantum of the grants-in-aid to State Governments for developmental schemes after taking into account the miscellaneous receipts accruing from such schemes, the Central Government have decided as follows:

(a) Where recurring grants-in-aid are given, the quantum of such grants should be based on the net expenditure arrived at by deducting the estimated receipts from the gross expenditure.

(b) In respect of grants-in-aid of a capital nature (e.g. non-recurring grant for the construction of a building or acquisition of a machinery), not only the elements of possible receipts that would accrue to the State Government should be taken into account in determining the quantum of the grants, but any receipts from the disposal of property constructed or acquired by utilizing

While conducting the test audit in the office of the sanctioning authority, it should be examined whether these instructions and similar instructions, if any, issued by the State Government have been complied with.

(iii) Governments often stipulate that, before a grant is paid, the sanctioning authorities under its control should, as far as possible, obtain audited statements of the accounts of the grantee institutions in order to establish that the grant is justified by their financial position and also to ensure that any previous grant was spent for the purpose for which it was intended. Audit should verify that the sanctioning authorities duly adhere to the stipulation.

(iv) Audit should ordinarily accept statements made by the responsible technical officers on purely technical matters.