Regulation 42 — Audit Regulations 2020
Original Rule Text
42. Verifications to be done during audit of grants-in-aid and loans Audit of Government assistance in form of grants-in-aid or loans shall be conducted to verify whether systems and procedures are in place and are being complied with for: (1) clear enunciation of purpose for the sanction of the Government assistance; (2) proper and transparent identification and selection of persons, bodies and authorities for Government assistance with reference to their antecedents, absorptive capacity, financial position, systems and management practices; (3) determination of amount of assistance and its timely release; (4) proper accounting of assistance by the grantee or the loanee, including maintenance of accounts in such form as may be prescribed; (5) ensuring the fulfillment of conditions of Government assistance; (6) monitoring and ensuring the economical, efficient and effective end use of assistance including achieving the objectives of assistance; (7) refund to the Government of any unutilized source; and (8) in the case of loans, their repayment as prescribed and recovery of interest including penal interest according to applicable conditions.
Regulations on Audit and Accounts 2020
Chapter 6 Broad Framework for Financial, Compliance and Performance Audit
What This Means
Audit of government grants-in-aid and loans verifies that proper systems and procedures exist for every stage: clearly stating the purpose of the assistance, transparently selecting recipients based on their capacity and financial position, determining and timely releasing the amount, proper accounting by the grantee/loanee, monitoring compliance with conditions, verifying economical and effective end-use, ensuring refund of unutilized amounts, and — for loans — checking repayment and interest recovery including penal interest.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Purpose of assistance must be clearly stated in the sanction order
- 2Recipient selection must be transparent with checks on antecedents, capacity, and financial position
- 3Amount must be determined properly and released on time
- 4Grantee/loanee must maintain accounts in prescribed form
- 5End-use must be economical, efficient, and achieve the objectives of the assistance
- 6Unutilized funds must be refunded to the government
- 7For loans: repayment schedule, interest recovery, and penal interest must be enforced
Practical Example
The Ministry of Textiles sanctions a Rs 2 crore grant to an NGO for skill development of weavers. The CAG audit under Regulation 42 checks: (i) Was the NGO selected transparently based on its track record and capacity? (ii) Were funds released on time? (iii) Did the NGO maintain proper accounts? (iv) Were the conditions of the grant (training 500 weavers) actually fulfilled? (v) Was the unutilized balance of Rs 30 lakh refunded?
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Does audit check the financial health of the organization receiving the grant?▼
What if the grantee does not maintain proper accounts?▼
Does the government recover penal interest on delayed loan repayments?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.