Para 7.3.12 — MSO (Audit)
Original Rule Text
7.3.12 Reviews on Government Companies/Corporations would generally deal with the following:
(a) Important changes introduced in the functioning of the concerns.
(b) Important foreign collaboration agreements concluded by the concerns.
(c) Targets set in different spheres of activities, such as production, sales, trading, consultancy, etc. and actual achievements thereagainst.
(d) Cost of production of articles manufactured in relation to market prices.
(f) Pricing policies.
(g) Policies in regard to borrowings.
(h) Financial results of the concerns along with comments on the economics and efficiency of their functioning. Comments on their performance in relation to private undertakings involved in identical activities are also included wherever possible.
(i) Financial irregularities, other points of interest, etc.
These reviews may also include a brief reference to the important points mentioned in the comments issued by the Comptroller and Auditor General under Section 619(4) of the Companies Act, 1956, or the Supplementary Reports submitted by the Company Auditors under the directions issued by him.
What This Means
Reviews of Government Companies and Corporations conducted by the Audit Board typically cover key areas such as operational changes, foreign collaborations, performance against targets (production, sales, etc.), cost versus market prices, pricing policies, borrowing policies, overall financial results with comments on efficiency, and any financial irregularities. These reviews may also reference important points from the CAG's comments issued under Section 619(4) of the Companies Act.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Reviews cover operational changes, foreign collaborations, and target vs. actual performance
- 2Cost of production relative to market prices and pricing policies are examined
- 3Borrowing policies and overall financial results are assessed
- 4Comparison with private sector undertakings in the same field is included where possible
- 5Financial irregularities and CAG's comments under Section 619(4) may be referenced
Practical Example
The Audit Board reviews a government pharmaceutical company. They find that production targets were met only 60%, the cost of manufacturing was 30% higher than market rates for equivalent drugs, and the company had entered into a foreign collaboration agreement with unfavourable royalty terms. These findings, along with a comparison to a private pharmaceutical company's efficiency metrics, are compiled into the review report.
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 Section 619(4) of the Companies Act?▼
Why compare with private sector undertakings?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.