Para 6.1.14 — MSO (Audit)
Original Rule Text
6.1.14 Risk assessment methodologies and techniques need considerable strengthening and an appropriate programme for risk assessment should be developed. The following could be some of the risk indicators:
(i) Expenditure trends.
(ii) Persistent and unexplained excess drawals.
(iii) Unadjusted account bills.
(iv) Transfers to Personal Ledger Accounts.
(v) Large purchases.
(vi) Delivery under programmes not being susceptible to verification.
(vii) Leakage of revenue.
(viii) Lack of attention to serious audit objections,
(ix) Weaknesses in internal control mechanisms.
# Creation of Data Bank
What This Means
This paragraph calls for strengthening risk assessment methodologies in audit planning and lists nine key risk indicators that auditors should watch for. These include unusual expenditure trends, persistent excess drawals, unadjusted account bills, large transfers to PL accounts, major purchases, unverifiable programme deliveries, revenue leakage, ignored audit objections, and weak internal controls. These indicators help prioritize which entities and areas need the most urgent audit attention.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Risk assessment methodologies need to be developed and strengthened for audit planning
- 2Nine specific risk indicators are listed for identifying high-risk entities
- 3Expenditure trends and persistent excess drawals signal potential misuse
- 4Transfers to Personal Ledger Accounts and large purchases are high-risk areas
- 5Programme deliveries not susceptible to verification pose accountability risks
- 6Weak internal controls and ignored audit objections indicate systemic problems
Practical Example
During audit planning, a risk analyst reviews data for 200 DDOs and flags 15 as high-risk based on three indicators: the PWD division shows persistent excess drawals over four quarters, a Social Welfare office has Rs 12 crore in unadjusted account bills, and a Health Department unit has ignored serious audit objections for three consecutive years. These 15 offices are prioritized for early inspection in the annual plan.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Are these nine risk indicators exhaustive?▼
How is risk assessment practically implemented in audit offices?▼
What does 'delivery under programmes not being susceptible to verification' mean?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.