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Regulations on Audit and Accounts 2020
171 rules • Comptroller and Auditor General of India • 2020
Regulations framed by the CAG under Section 23 of the CAG DPC Act, governing audit mandate, scope, procedures, and reporting for Union, States, and Government companies.
General
Regulation 1This regulation formally names these rules as the 'Regulations on Audit and Accounts (Amendments) 2020' and defines who must follow them. They apply to all...Regulation 2This regulation defines 41 key terms used throughout the Regulations on Audit and Accounts 2020. It establishes precise meanings for foundational concepts ...Regulation 3The CAG's audit mandate comes directly from the Constitution of India and the DPC Act, 1971. The CAG is the sole constitutional authority responsible for a...Regulation 4The CAG's audit has seven broad objectives: to examine the legality (is it lawful?), validity (is it genuine?), regularity (does it follow rules?), proprie...Regulation 5The CAG conducts three main types of audit: Financial Audit (examining whether financial statements are properly prepared, complete, and present a true and...Regulation 6All audits by the CAG must be conducted within a defined framework that starts with the Constitution of India and the DPC Act. Beyond these foundational do...Regulation 7The CAG has complete authority to determine the scope and extent of any audit. This includes deciding what to audit, how deeply to audit, which units to co...Regulation 8The CAG has broad authority under Section 18 of the DPC Act to conduct audits. This includes the power to inspect any government office's accounts, require...Regulation 9The government (Executive) cannot tell the CAG what to audit, how to audit, or what findings to report. The CAG's audit mandate is fully independent under ...Regulation 10Auditors should generally not join management committees that make executive decisions on matters like staff, administration, budgets, or projects. If an e...Regulation 11The CAG advises the government on accounting standards, policies, and the format of financial statements. This advisory role is especially important under ...Regulation 12The CAG can use the work of internal auditors, other auditors, and external experts when relevant. External agencies or experts with specialized skills may...Regulation 13The CAG or an authorized officer can undertake a special audit of any programme, project, or organization within the audit jurisdiction, based on a governm...Regulation 14When a special audit is conducted (typically ordered for specific concerns or irregularities), the AG (Audit) must report its results to the Secretary of t...Regulation 15The general or common regulations in the CAG's Regulations on Audit and Accounts 2020 apply across all types of audits and accounts work. If a specific cha...Regulation 16Audits increasingly operate in an IT environment as governments digitize their operations and service delivery. Auditing in an IT environment has two aspec...Regulation 17This regulation provides a comprehensive framework for auditing IT systems. An IT audit examines whether IT systems meet organizational goals, safeguard in...Regulation 18Audit teams can use IT tools, data analytics, and big data techniques to support their audit work. This includes analyzing data from the auditable entity —...Regulation 19The auditable entity (any government office or body being audited) must provide complete and timely access to all data, information, documents, and IT syst...Regulation 20Audit teams must maintain the confidentiality of classified documents (confidential, secret, top secret) and Personally Identifiable Information (PII) obta...Regulation 21When an auditable entity fails to provide requested data, information, or documents, the audit office must immediately escalate the matter to the controlli...Regulation 22The CAG has full authority under Sections 13 and 16 of the DPC Act to audit all expenditure from the Consolidated Fund and all government receipts (both ta...Regulation 23The CAG's audit of expenditure and receipts extends beyond core government departments to any body or authority prescribed by Parliament or State Legislatu...Regulation 24The CAG's audit of receipts and expenditure includes examining the integrity of the data, information, and documents that the government used as the basis ...Regulation 25Audit of government expenditure verifies that proper systems and procedures are in place for spending public money. Key checks include: availability of bud...Regulation 26Government departments must send copies of all re-appropriation and surrender-of-funds orders to both the audit office and the accounts office as soon as t...Regulation 27When government departments issue orders to re-appropriate funds (transfer money between budget heads) or surrender unspent funds, those orders must clearl...Regulation 28Government departments must provide explanations to the audit office and accounts office for any significant excess spending or shortfall in expenditure un...Regulation 29Government departments must proactively send or make available to both the Audit Office and the Accounts Office copies of all rules, regulations, and gener...Regulation 30When government departments revise rules or codes that have financial, accounting, or auditing implications, they should, wherever possible, refer these re...Regulation 31Government departments and the agency compiling accounts must supply specific categories of information to the audit office. This includes explanations for...Regulation 32Audit of government receipts involves a comprehensive examination of the systems, rules, and procedures governing revenue collection. This covers 16 areas ...Regulation 33Auditable entities must provide the CAG complete access to all IT systems used for budgeting, accounting, procurement, and financial management — including...Regulation 34The CAG has the right to access comprehensive, consolidated, and granular information related to revenue administration — including assessment, collection,...Regulation 35Under Section 17 of the DPC Act, the CAG has the authority to audit and report on stores and stock maintained in any government office or department of the...Regulation 36Audit of stores and stock verifies that proper systems exist for the entire lifecycle: establishing the need for procurement, assessing quantity requiremen...Regulation 37Audit has the right to physically inspect stores and investigate store balances as part of its audit checks. If any discrepancies are found between physica...Regulation 38Beyond stores and stock, the CAG's audit authority extends to all other assets and liabilities of the Union, States, and Union Territories. Under Section 1...Regulation 39The same broad principles that govern other types of government audit also apply to the audit of assets and liabilities. This means the standards of regula...Regulation 40The audit of government assets and liabilities is subject to any additional general or special orders that the CAG may issue from time to time. This gives ...Regulation 41Audit of grants-in-aid and loans is essentially an extension of expenditure audit, so all the broad principles of expenditure audit apply to it. In additio...Regulation 42Audit of government grants-in-aid and loans verifies that proper systems and procedures exist for every stage: clearly stating the purpose of the assistanc...Regulation 43Financial audit of the government involves the CAG examining and certifying two key sets of accounts: the Finance Accounts (showing receipts, disbursements...Regulation 44Compliance audit checks whether government activities, transactions, and financial operations comply with all applicable laws, rules, regulations, orders, ...Regulation 45Performance audit evaluates government programs and operations against three principles: Economy (minimizing input costs — getting resources at the right q...Regulation 46Government departments and heads of entities are responsible for developing measurable objectives and performance indicators for their programs and operati...Regulation 47While reviewing government performance against stated objectives, the CAG can critically examine whether the performance indicators and measurable objectiv...Regulation 48Performance audit requires a high level of interaction between the audit team and the auditable entity throughout the process — from selecting the subject ...Regulation 49Before starting detailed performance audit work, the Accountant General (Audit) must hold an entry conference with the Secretary to Government of the conce...Regulation 50The Secretary to Government of the concerned Ministry or Department must nominate a sufficiently senior officer to serve as the coordination point between ...Regulation 51After completing a performance audit, the Accountant General (Audit) must hold an exit conference with the Secretary to Government of the concerned departm...Regulation 52The Secretary to Government of the concerned Ministry or Department must provide a formal reply to the draft performance audit report within the time speci...Regulation 53The CAG's audit powers over government companies are exercised according to the Companies Act, 2013. This means the CAG follows the same legal framework th...Regulation 54When auditing government companies or other companies, the auditor must follow all applicable accounting and auditing standards. This includes Accounting S...Regulation 55Whenever a new government company is formed, or an existing company becomes or ceases to be a government company, the concerned administrative ministry or ...Regulation 56In addition to the ministry's obligation under Regulation 55, the government company itself must also inform the CAG about its formation within one month. ...Regulation 57The CAG appoints statutory auditors for government companies under Sections 139(5) and 139(7) of the Companies Act, 2013. The auditor is selected through a...Regulation 58Since the CAG appoints the statutory auditor, the CAG also has the power to terminate that appointment before the normal tenure ends. This power comes from...Regulation 59If a statutory auditor is found to have committed serious irregularities in professional duties, the CAG can debar that auditor from being appointed as aud...Regulation 60The statutory auditor's job is to form and express an opinion on the annual accounts of a government company. However, the responsibility for preparing tho...Regulation 61The CAG has authority to direct how the statutory auditor should audit a government company's accounts. The statutory auditor must submit a copy of their a...Regulation 62The statutory auditor must maintain proper working papers that document all important audit work. These working papers should provide evidence that the aud...Regulation 63After completing the audit, the statutory auditor must prepare their audit report under the Companies Act, 2013 and submit a copy to the Accountant General...Regulation 64When the statutory auditor submits the audit report, they must also forward to the Accountant General (Audit) any communication they have sent to the compa...Regulation 65This regulation lists six specific responsibilities of the statutory auditor towards the Accountant General (Audit). The auditor must be available for disc...Regulation 66A government company must provide its board-adopted and auditor-certified annual accounts (Balance Sheet, Profit & Loss, and other statutory documents) to ...Regulation 67A government company must promptly provide all books of accounts, vouchers, data, information, and other documents that the Accountant General (Audit) offi...Regulation 68The statutory auditor bears primary responsibility for the audit opinion on company accounts. The CAG's supplementary audit is essentially a quality contro...Regulation 69After the supplementary audit, only significant and material observations are issued as formal CAG comments under the Companies Act, 2013. Before issuing t...Regulation 70In addition to supplementary audit, the CAG can order test audits of government companies at any time during the year under Section 143(7) of the Companies...Regulation 71The CAG has established a permanent Audit Board for central public sector undertakings (CPSUs) in consultation with the Government of India. The Audit Boar...Regulation 72The Audit Board is chaired by the Deputy Comptroller and Auditor General (Commercial) and includes senior officers from the Indian Audit and Accounts Depar...Regulation 73The Audit Board operates in an advisory and recommendatory role only. It does not have executive or binding authority. Its recommendations guide the CAG's ...Regulation 74Audit Board meetings can be held with whatever members are available — there is no minimum quorum requirement. This ensures the Board's work is not delayed...Regulation 75The Audit Board has the flexibility to limit its involvement to just recommending topics for performance audit. Once topics are selected, the actual audit ...Regulation 76When the Audit Board decides to guide a performance audit beyond just selecting the topic, it holds meetings at two key stages. First, it meets to consider...Regulation 77When the Audit Board meets to review the draft audit report (the second meeting under Regulation 76), representatives from both the company and the concern...Regulation 78The performance audit regulations that apply to central PSUs (through the Audit Board framework) also apply to state public sector undertakings and enterpr...Regulation 79The results of CAG's audit of government companies can be included in the CAG's audit report that is laid before Parliament or the state legislature. Howev...Regulation 80The CAG's audit reports on government companies and other companies are submitted to the concerned government under Section 19A of the DPC Act. The governm...Regulation 81The responsibility for settling audit observations in inspection reports lies with the company's management for both central and state PSUs. If a large num...Regulation 82The CAG's authority to audit bodies and authorities (other than government offices and companies) comes from specific sections of the DPC Act — Sections 14...Regulation 83This regulation defines two important terms: 'authority' and 'body.' An 'authority' is a person or body exercising power vested by the Constitution or law....Regulation 84The same powers that the CAG has under Section 18 of the DPC Act for auditing government departments also apply to bodies and authorities under CAG's audit...Regulation 85Bodies and authorities under CAG audit must make their approved accounts available for audit according to the time schedule prescribed by their governing l...Regulation 86Section 14 of the DPC Act gives CAG authority to audit bodies and authorities that receive substantial government financial assistance. The audit is trigge...Regulation 87Government departments and officers who sanction grants or loans to any body or authority have three obligations: they must send a copy of each sanction le...Regulation 88Governments and Heads of Departments that sanction grants or loans must send an annual statement to the audit office by the end of July each year. This sta...Regulation 89This regulation clarifies how to calculate the total government assistance for determining whether a body meets the audit threshold under Section 14. Grant...Regulation 90When the CAG audits a body or authority that receives substantial government funding, the audit covers both its receipts (income) and expenditure (spending...Regulation 91After auditing a body that receives substantial government funding, the audit office must send the inspection report to both the body's chief executive and...Regulation 92When the government gives a grant or loan from the Consolidated Fund for a specific purpose, the CAG has the right to check whether the sanctioning authori...Regulation 93The CAG can access the books and accounts of any body that received a government grant or loan for a specific purpose, provided reasonable prior notice is ...Regulation 94After the CAG scrutinizes how a government department verified that grant or loan conditions were met (under Section 15), the results must be communicated ...Regulation 95When Parliament creates a corporation through legislation (like ONGC, SAIL, etc.), the CAG's audit duties and powers for that corporation are governed by t...Regulation 96The audit of corporations created by Parliament is conducted following these CAG Regulations — but only to the extent that the corporation's own enabling l...Regulation 97Every corporation audited by the CAG must proactively send copies of its board meeting agenda notes and minutes to the Accountant General (Audit). If the c...Regulation 98When the CAG is the sole auditor of a corporation, the financial audit follows CAG's own auditing standards. The audit must verify four things: compliance ...Regulation 99Beyond financial audit, the CAG can also conduct compliance audit and performance audit of corporations. Compliance audit checks whether transactions are l...Regulation 100The audit certificate issued by the CAG for a corporation's accounts can include observations, qualifications, or conditions based on the specific circumst...Regulation 101After completing the financial audit of a corporation, the audit office must send a draft separate audit report to the corporation's CEO. This draft report...Regulation 102The corporation's CEO (and the government, if they received a copy) must reply to the draft separate audit report within two weeks from the date it was iss...Regulation 103Before finalising the audit certificate and the separate audit report, the audit office must consider the replies received from the corporation and the gov...Regulation 104After the audit certificate and the separate audit report are finalised, the Accountant General (Audit) must send them to the Secretary of the concerned go...Regulation 105The CEO must present the audit certificate and separate audit report to the corporation's governing body (board of directors) and inform the AG (Audit) of ...Regulation 106For audits other than financial audit — such as compliance audits and performance audits — the results are reported through the CAG's audit reports laid be...Regulation 107The corporation's management is responsible for settling (resolving) outstanding audit observations. If a large number of observations from inspection repo...Regulation 108For central corporations where the CAG has constituted an Audit Board, or where a primary auditor is appointed under the relevant Act, the regulations in C...Regulation 109Under Section 19(3) of the CAG's Act, the Governor of a State or UT Administrator can request the CAG to audit a corporation set up by state/UT law, if the...Regulation 110Under Section 20 of the CAG's Act, the audit of bodies or authorities not already under the CAG's audit can be entrusted to the CAG by the President, Gover...
20 - (1)
Regulation 111This regulation lays out seven specific conditions under which audit is entrusted to the CAG under Section 20(1). Key conditions include: the CAG must agre...Regulation 112When the Union Government (including Union Territories without a legislative assembly) wants to entrust the audit of a body or authority to the CAG, the pr...Regulation 113When a State Government or a Union Territory with a legislative assembly wants to entrust the audit of a body or authority to the CAG, the proposal must be...Regulation 114The formal letter entrusting audit to the CAG must be issued in the name of the President, Governor, or UT Administrator — not in the name of a Secretary o...Regulation 115Audits conducted under Section 19(3) or Section 20 of the CAG's Act must follow the relevant laws and any terms and conditions agreed between the CAG and t...Regulation 116The procedures laid out in Section (d) of this Chapter — covering audit of central corporations — also apply (with necessary modifications) to state-law co...Regulation 117Under Articles 243J and 243Z of the Constitution, state legislatures can make laws governing how Panchayati Raj institutions (PRIs) and urban local bodies ...Regulation 118The CAG can audit Panchayati Raj institutions and urban local bodies under Section 14 of the Act when these bodies receive grants or loans from the Consoli...Regulation 119The CAG has prescribed model forms for how Panchayati Raj institutions and urban local bodies should maintain their accounts and prepare their budgets. The...Regulation 120This regulation details the Technical Guidance and Support (TGS) arrangement where the CAG provides oversight and quality assurance for audit of local bodi...Regulation 121Unless specifically provided otherwise, the AG (Audit)'s test-check audits under TGS (Regulation 120, paragraph 5) do not include certification of the acco...Regulation 122Even though the Local Fund Auditor is responsible for following up on the AG's inspection report findings under TGS, the AG (Audit) must independently ensu...Regulation 123The AG (Audit) must send an Annual Technical Inspection Report (ATIR) to the concerned Government Secretary by the end of June each year. This report cover...Regulation 124When audit findings on Panchayati Raj institutions and urban local bodies are significant enough to be included in the CAG's formal audit report and placed...Regulation 125This regulation establishes the authority and purpose of the CAG's Auditing Standards. These standards set professional norms for all audit engagements — c...Regulation 126This regulation identifies the four core elements of public sector auditing as defined in the CAG's Auditing Standards. These are: the three parties involv...Regulation 127This regulation outlines two categories of auditing principles. General principles — including ethics, independence, professional judgment, due care, skept...Regulation 128Every audit office must maintain an updated list of all entities within its audit jurisdiction. Government departments must inform the audit office of any ...Regulation 129Audit planning operates at two levels: identifying audit assignments as part of annual and longer-term plans, and planning individual audit assignments in ...Regulation 130The audit office must give sufficient advance notice to the entity being audited, stating the likely duration, scope, objectives, and team composition. The...Regulation 131The head of the audited office must provide appropriate and reasonable office space and amenities to the audit team for their work. The facilities should b...Regulation 132As soon as audit work begins, the audit team leader or supervisory officer must hold an entry meeting with the head of the audited office. This meeting sho...Regulation 133During audit, audit requisitions and queries can be issued by any member of the audit team, but formal audit observations require approval from the team le...Regulation 134The head of the audited entity must ensure that replies to audit queries and observations are to-the-point, factually correct with reference to records, an...Regulation 135At the end of an audit, the audit team leader must hold a closing meeting with the officer in charge of the audited entity. During this meeting, both sides...Regulation 136At the conclusion of an audit, the audit team communicates its findings in specific forms depending on the type of audit conducted. For financial audits, t...Regulation 137When the AG (Audit) prepares a draft audit report or draft paragraph, it must be sent to the concerned Secretary to Government by name, giving a specified ...Regulation 138When a government department receives a draft audit report or paragraph, the Secretary must acknowledge receipt immediately and send the government's writt...Regulation 139After a draft audit report or paragraph has been finalized for inclusion in the CAG's audit report, the AG (Audit) must send copies of the finalized versio...Regulation 140The Comptroller and Auditor General has the sole authority to decide the form, content, and timing of audit reports. This means the CAG determines what goe...Regulation 141Both the audit office and the audited entity are required to maintain proper records of all audit observations and recommendations so that follow-up action...Regulation 142When audit detects a major irregularity, the AG (Audit) must immediately inform the Secretary of the concerned department through a Special Management Lett...Regulation 143When audit identifies systemic faults (recurring problems in processes or systems) or high risks in a department's operations, the department is obligated ...Regulation 144Every government department must submit an annual statement to audit detailing the follow-up action taken on audit observations, including any financial re...Regulation 145The government must establish audit committees to monitor and ensure that pending audit observations are complied with and settled. Each committee must inc...Regulation 146Every Head of Department must publish specific audit-related information on their Ministry/Department website, updated annually in the first quarter of eac...Regulation 147An officer authorized by the CAG sends signed copies of the audit report to the Secretary, Ministry of Finance (or Finance Department for states), who must...Regulation 148After the audit report is presented in the legislature, the AG (Audit) sends copies to the Secretary of each concerned department. The Secretary must then ...Regulation 150In jurisdictions where the PAC/COPU or the government wants the CAG to vet Action Taken Notes (ATNs), a detailed procedure applies. The department sends tw...Regulation 151The government is duty-bound to establish and enforce reliable systems and procedures — with clearly defined roles and responsibilities at all levels — to ...Regulation 152When government departments are delayed in responding to audit communications, the AG (Audit) reports these delays to higher authorities: the Secretary (Ex...Regulation 153Audit evidence is the data, information, and documents that auditors rely upon to arrive at their findings and conclusions. It includes any information use...Regulation 155The audit team decides what type, form, and extent of data, information, and documents are needed for audit tests and evidence — the auditable entity canno...Regulation 156Audit evidence can take many forms — it is not limited to paper documents. Acceptable forms include electronic and paper transaction records, written and e...Regulation 157Audit can use a wide range of methods and technologies to collect and evaluate evidence. Traditional methods include physical inspection, observation, inqu...Regulation 158When audit requires it, the auditable entity must attest (authenticate/certify) the data, information, and documents that are kept in physical or manual fo...Regulation 159Audit can require the auditable entity to conduct physical verification of its stores, inventory, stocks, assets, capital works (including works in progres...Regulation 160The CAG's duties and powers regarding the accounts of the Union and State Governments are derived from the Constitution of India (Articles 149 and 150) and...Regulation 161This regulation elaborates on the constitutional provisions underlying the CAG's accounting role. Under Article 149, the CAG performs duties prescribed by ...Regulation 162This regulation details the CAG's statutory responsibilities for accounts. Under Section 10 of the CAG's Act, the CAG compiles accounts of the Union and St...Regulation 163The Government Accounting Rules, 1990 serve as the general principles of government accounting as authorized by Section 23 of the CAG's Act. All government...Regulation 164This regulation covers the detailed rules for maintaining and submitting accounts across different types of government entities. Treasuries and public work...Regulation 165The Government Accounting Standards Advisory Board (GASAB), set up in the CAG's office with government support, formulates accounting and financial reporti...Regulation 166The government must ensure that all primary accounting units (treasuries, drawing officers, etc.) submit accounting information on time and that the inform...Regulation 167Any authority exercised by the Accountant General (Audit) or the Accountant General (Accounts and Entitlement) under these regulations can also be exercise...Regulation 168These Regulations on Audit and Accounts 2020 do not apply to any international audit or accounts assignments that the CAG takes up. This means that when th...Regulation 169The CAG has the authority to issue general orders, special orders, and guidelines to implement and operationalize the provisions of these regulations. This...Regulation 170The CAG issues various types of orders and guidelines to fulfill the audit mandate. These are classified into three categories: standing orders, guidelines...Regulation 171If any doubt arises about the meaning or interpretation of any provision in these Regulations, the CAG's decision on that interpretation is final and bindi...Regulation 172The CAG has the power to modify any part of these Regulations or even the whole set of Regulations. Additionally, the CAG can relax (waive or create except...Regulation 173All existing standing orders, guidelines, and practice notes issued by the CAG before the 2020 Regulations came into effect will continue to remain valid u...