Para 3.5.20 — MSO (Audit)
Original Rule Text
3.5.20 In view of large amounts disbursed as grants-in-aid in connection with developmental schemes by the Central as well as State Governments to co-operative societies, private institutions, etc., it has become an important function of Audit to watch:
(i) that there is no tendency on the part of Government to continue disbursing fresh grants to a grantee when substantial amounts out of the earlier grants remain unutilised;
(ii) that an adequate machinery is available with the executive authorities to maintain a constant watch over the progress of expenditure from the grant, the continued solvency of the grantee and the safety of the funds provided;
(iii) whether the intended developmental schemes are being implemented economically and efficiently and producing the results expected of them;
(iv) the extent to which the agency or authority being audited is adequately discharging its financial responsibilities in relation to the schemes being implemented; and
(v) whether there are instances of overpayment, loss, extravagance, avoidable excess or infructuous expenditure attributable to improper planning, incorrect sequencing of activities, delays in completion, etc.
What This Means
Given the large sums disbursed as grants-in-aid for development schemes, audit has five important monitoring functions: watching for fresh grants being given when earlier grants remain unspent, checking that adequate machinery exists to track spending and grantee solvency, examining whether schemes are implemented economically and achieving expected results, assessing the grantee's financial management capacity, and identifying overpayments, waste, poor planning, and infructuous expenditure.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Watch for new grants being released while previous grants remain unspent
- 2Verify adequate executive machinery exists to monitor grant utilization and grantee solvency
- 3Assess whether developmental schemes achieve intended results economically and efficiently
- 4Evaluate the grantee's discharge of financial responsibilities
- 5Identify overpayment, waste, poor planning, incorrect sequencing, and delays causing losses
Practical Example
Audit discovers that a cooperative society received Rs. 2 crore in 2024 for a dairy development scheme but spent only Rs. 40 lakh. Despite this, the ministry sanctioned another Rs. 1.5 crore in 2025. The audit report highlights both the failure to utilize earlier grants and the premature release of fresh funds, along with the absence of any monitoring mechanism to track the society's progress.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is 'infructuous expenditure' in the context of grants?▼
Why should audit check the grantee's solvency?▼
What does 'incorrect sequencing of activities' mean?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.