Para 6.1.6 — MSO (Audit)
Original Rule Text
6.1.6 Classes of accounts with which Local Audit has to deal are so varied that it is not possible to prescribe any general rules and instructions that may be applicable to all local audits. It should, however, be borne in mind that the essential objective of the accounts of any institution is to present a definite financial picture and that an intelligent audit is not possible unless there is some consideration of the general financial picture as well as investigation of the details of the transactions that lead up to the financial results. Before taking up the audit of any particular institution, the local Audit staff should study the system of accounts and books prescribed to see why they have been prescribed and how far they fulfil the desired end. They should consult the periodical administration reports or other Government publications so as to obtain a correct perspective of the activities of the institution/office and to make their audit both intelligent and useful instead of allowing it to become merely a process of checking registers in a disconnected and mechanical way. Local Audit parties should also scrutinise certified pro forma accounts in institutions such as Agriculture/Horticulture farms where these are maintained.
- Audit Approach
- Demarcation of Duties
What This Means
Since Local Audit deals with a wide variety of accounts across different types of institutions, no single set of rules can cover all situations. Before auditing any institution, the audit team should study the prescribed accounting system to understand its purpose, read administration reports for context, and ensure their audit is intelligent and meaningful — not just mechanical register-checking. They should also check certified pro forma accounts where maintained.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1No universal rules can cover all types of Local Audit due to the variety of accounts
- 2Audit staff must study the prescribed accounting system before beginning
- 3Administration reports and government publications should be consulted for context
- 4Audit must be intelligent and purposeful, not mechanical register-checking
- 5Pro forma accounts in institutions like Agriculture/Horticulture farms must also be scrutinised
Practical Example
Before auditing an agricultural research farm, the Local Audit party reads the farm's annual administration report and studies its prescribed accounting books. They understand why certain registers (like crop production accounts and seed distribution ledgers) are maintained, which helps them identify missing entries and accounting gaps rather than blindly ticking off register entries.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why should audit staff read administration reports before starting audit?▼
What are pro forma accounts mentioned in this rule?▼
Can standard audit checklists be applied uniformly across all Local Audits?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.