Regulation 23 — The CAG's audit of expenditure and receipts extend
Original Rule Text
# 23. Scope of Audit of Expenditure and Receipts to extend to any Body or Authority, prescribed by or under any law made by Parliament/ Legislature.
(1) In accordance with Section 13 read with Section 16, the expression ‘to audit all transactions’ so also ‘audit of all receipts’, payable into Consolidated Fund of India and of the States, takes into account the audit by Comptroller and Auditor General of accounts of the Union and of the State and of any other authority or body, as may be prescribed by or under any law made by the Parliament or State Legislature. Powers of the Comptroller and Auditor General, under Article 149 of the Constitution read with the Act, include but are not restricted only to that body or authority which satisfies the test of Article 12 of the Constitution of India.
(2) The scope outlined in (1) above extends to audit of all transactions which Union and State have entered into which has a nexus with Consolidated Fund, for example when receipts have direct connection with Revenue Sharing.
(3) Audit of receipts under Section 16 of the Act, read with Article 266 of the Constitution of India covers both revenue and capital receipts (including disinvestment receipts, borrowings etc) and within revenue receipts, both tax and non-tax receipts.
(4) Non-tax receipts would include charge payable by entities to the Government for obtaining the right to use natural resources, and for the right to set up and/or operate and maintain public assets and utilities and generate revenues from the same. Such charges could be in the forms such as license fees, usage charges (periodic, upfront or one time), royalty, premium, revenue share, production share, profit share of a combination of these.
(5) To that extent, Comptroller and Auditor General shall have the right of access to the books of accounts of the service providers for the purpose of examining all the receipts to ascertain whether the Government is getting its due share by way of fees or charges due to it legitimately, by way of Revenue Sharing. (‘for example the license fee received by the Department of Telecommunications so also the Radio spectrum charges while granting the
Regulations on Audit and Accounts 2020 24
privilege to deal with the spectrum by the licensees is a “revenue received by the Government” within the meaning of Article 266 i.e. ‘a receipt payable into the Consolidated Fund of India’ within the meaning of Section 16 of the Act.’) (6) All orders relating to grant of land, assignment of revenue or concession, grant, lease or license of mineral or forest rights or a right of water power, or any easement or privilege in respect of any such concession or which in any way involve relinquishment of revenue shall come within the purview of Audit as they have important financial implications. The audit of such sanctions by the Government shall be conducted from the point of view of both, regularity and propriety.
What This Means
The CAG's audit of expenditure and receipts extends beyond core government departments to any body or authority prescribed by Parliament or State Legislature. This includes audit of all transactions connected to the Consolidated Fund — for example, revenue-sharing arrangements. For receipts, it covers both revenue and capital receipts including tax revenue, non-tax revenue (license fees, royalties, revenue shares), disinvestment proceeds, and borrowings. The CAG has the right to access the books of accounts of service providers to verify the government is receiving its legitimate share.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1CAG's audit extends to any body or authority prescribed by law, not just those under Article 12
- 2Covers all transactions with a nexus to the Consolidated Fund, including revenue-sharing arrangements
- 3Receipt audit covers both capital receipts (disinvestment, borrowings) and revenue receipts (tax + non-tax)
- 4Non-tax receipts include license fees, royalty, premium, usage charges, revenue/production/profit shares
- 5CAG can access books of service providers to verify government's rightful share of revenue
- 6Orders involving land grants, mineral rights, forest rights, or revenue relinquishment are within audit purview
Practical Example
The CAG conducts an audit of spectrum allocation by the Department of Telecommunications. Under Regulation 23(5), the audit team accesses the financial records of telecom operators to verify that the license fees and spectrum usage charges paid to the government match what is legitimately due under the revenue-sharing arrangement. This was the basis for landmark audit reports like the 2G spectrum allocation audit.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Can the CAG audit private companies that have revenue-sharing arrangements with the government?▼
Does audit of receipts cover only income tax and GST?▼
Are land grants and mineral rights concessions subject to CAG audit?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.