Regulation 44 — Audit Regulations 2020
Original Rule Text
44. Broad framework of Compliance Audit
(1) Compliance audit is carried out in accordance with the Auditing Standards, Compliance auditing guidelines and other relevant orders issued by the Comptroller and Auditor General.
(2) Compliance auditing is concerned with
(a) regularity (adherence to formal criteria such as provisions of the Constitution of India, relevant laws, rules, regulations, orders, instructions and agreements etc)
Regulations on Audit and Accounts 2020 35
(b) propriety (observance of the general principles, governing sound financial management and the conduct of public officials).
(3) Compliance audit also involves examination of the rules, regulations, orders, transactions and instructions themselves for their legality, adequacy, transparency, propriety and prudence and effectiveness that is whether these are:
What This Means
Compliance audit checks whether government activities, transactions, and financial operations comply with all applicable laws, rules, regulations, orders, and instructions. It has two dimensions: regularity (adherence to formal legal criteria) and propriety (observance of principles of sound financial management). Beyond checking compliance by entities, it also examines whether the rules themselves are adequate, transparent, legally valid, and effective. When compliance audit is part of a performance audit, non-compliance is analyzed as a factor affecting economy, efficiency, and effectiveness.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Two dimensions: regularity (formal compliance with laws/rules) and propriety (sound financial management principles)
- 2Conducted per CAG's Auditing Standards and Compliance Auditing Guidelines
- 3Goes beyond checking compliance — also examines whether rules themselves are adequate and effective
- 4Rules are tested for legality (intra vires), adequacy, transparency, propriety, and implementation effectiveness
- 5When part of performance audit, non-compliance is analyzed as a cause or consequence of performance issues
Practical Example
The CAG conducts a compliance audit of a State government's land allotment system. The audit checks: (i) Were individual allotments made per prescribed rules (regularity)? (ii) Were decisions prudent and free from favoritism (propriety)? (iii) Are the allotment rules themselves adequate — do they have sufficient safeguards against undervaluation and misuse (adequacy of rules under Regulation 44(3)(b))? The audit finds the rules lack competitive bidding provisions, which is reported as an inadequacy.
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 the difference between regularity and propriety in compliance audit?▼
Can the CAG question whether government rules themselves are adequate?▼
How does compliance audit relate to performance audit?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.