Regulation 70 — Audit Regulations 2020
Original Rule Text
70. Scope of test audit by the Comptroller and Auditor General
As per Section 143(7) of the Companies Act, 2013, the Comptroller and Auditor General may, in case of any company covered under sub-section (5) or sub-section (7) of Section 139 of the Companies Act, 2013, if he considers necessary, by an order, cause test audit to be conducted of the accounts of such company and the provisions of section 19A of the Comptroller and Auditor General 's (DPC) Act, 1971, shall apply to the report of such test audit.
Thus, in addition to the supplementary audit of annual accounts of a Government company or any other company, the Comptroller and Auditor General may conduct test audits during the year. These audits may be compliance audits (covering transactions entered into by the company with a view to examining their regularity, propriety, probity) or performance audits (covering economy, efficiency and effectiveness). The scope of test audit may extend to more than one financial year. The audit shall be conducted in accordance with the Regulations in the relevant chapters.
What This Means
In 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 Act, 2013. Test audits can be compliance audits (checking regularity, propriety, and probity of transactions) or performance audits (examining economy, efficiency, and effectiveness). These audits can span multiple financial years and must follow the relevant chapter-specific Regulations.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1CAG can order test audits of government companies under Section 143(7) Companies Act
- 2Test audits are separate from and in addition to supplementary audits
- 3Can be compliance audits (regularity, propriety, probity) or performance audits (economy, efficiency, effectiveness)
- 4May cover more than one financial year
- 5Section 19A of the DPC Act applies to test audit reports
- 6Audit must follow the relevant chapter-specific Regulations
Practical Example
The CAG orders a test audit of NHPC Ltd focusing on the construction of three hydroelectric projects over FY 2022-25. This is a performance audit examining whether the projects were completed economically and efficiently, whether cost and time overruns were justified, and whether the expected generation capacity was achieved. The audit team follows performance audit regulations and reports findings under Section 19A.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
How is test audit different from supplementary audit?▼
Can a company refuse test audit?▼
What triggers a test audit?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.