What is Local Fund?
Local Fund means any fund for the control or management of which, a local authority is legally entitled and includes the proceeds of any cess, rate, duty or tax which such authority is legally entitled to impose and any property vested in such authority. Local Fund is not a part of Consolidated Fund of the State.
Which are the institutions that fall under the purview of Local Audit Department?
All the 3 universities of HP, HP Board of School Education, H P Marketing Board, Market Committees, Himachal Pradesh Housing & Urban Development Authority, Municipal Corporation at Shimla, all the Municipal Committees / Nagar Panchayats, all Government Colleges/Schools/ ITIs/ Polytechnic Colleges (Fees & Funds and Sanchayika Accounts), Temple Trusts of HP, Languages, Art and Cultural Academy, Shimla, Fish Farmer Development Agency, CM Relief Fund, National Security Relief Funds and District Relief Funds, Director Small Saving H.P and District Small Savings Prize Money, H P Legal Aid Authority, HP Veterinary Council, Ayurvedic & Homeopathy Council etc. fall under the purview of Local Audit Department.
How is the functioning of Local Audit Department different from AG?
Local Audit Department is a unit of Finance Department of Himachal Pradesh which generally conducts the audit of the local funds of the organisations other than government departments whereas Accountant General (AG) is a constitutional body which conducts the audit of all the government departments as well as other autonomous bodies/corporations etc. of the state.
What is a Resident Audit Scheme?
Resident Audit Scheme is a permanent office wherein audit is conducted on pre-audit basis by officers/ officials of the Local Audit Department in the institution itself on day–to-day basis. Both treasury & AG functions are discharged by the Resident Auditors as the institution has no treasury system of its own.
What is Statutory Audit?
Statutory Audit is the audit conducted by this department as per provision contained in the Act/ Statute of the institution.
What is Pre-Audit?
Pre-audit is a pre-scrutiny of expenditure before the same are incurred/ authorized & is conducted with the objective that (i) expenditure are not, upon their face, unreasonable or extravagant; (ii) significant funds are available to enable encumbrance of the order or payment of the voucher; and (iii) there has been compliance with budgetary, civil service, legislative, and legal requirements. It may include an examination of contracts prior to approval and encumbrance, scrutiny of all vouchers before payment, and review of payroll before payment.
What is Post-Audit?
Post audit is post-expenditure audit & is carried out with the following broader objectives in view : (i) financial accountability and legality - the verification of accounting records and review of internal control concerning revenues and expenditures; (ii) performance efficiency - the examination of efficiency and economy with which client institution’s operations are carried out; and (iii) program evaluation – the broad examination of the extent to which program goals are fulfilled.
What is Special Audit?
Special Audit means an audit of accounts pertaining to a specified item or series of items, which requires thorough examination. In public exigencies, special audits of any Govt. Department/Institution which are not under the auditorial jurisdiction of the Local Audit Department can be assigned by the Director, LAD-cum-Examiner Local Fund Accounts to its audit staff provided the request to conduct such audit is received from the Administrative Department of the concerned Department/Institution and audit fees of such special audit shall be determined and charged by Local Audit Department on merit considering the nature of accounts audited and nature of additional services to be provided and it will be the discretion of the Local Audit Department to charge or not to charge any audit fees from the Govt. Department for such special audits.
What is Detailed Audit?
Detailed Audit is an audit of income and expenditure of the institution for the whole year, which is conducted in public exigencies as assigned by the Director, LAD-cum-Examiner Local Fund Accounts.
What is Performance Audit?
A Performance Audit is one, which is not tied to written contracts. Much of the work of the internal auditor is concerned with performance auditing. In order to bring about effective internal control in the client organization, many people must perform specialized control activities. Performance auditing is concerned with determining how well these activities are carried out in the client organization. For instance, comparison of purchase order, invoice and receiving report is essential to exercise proper control over cash disbursements. A review of the performance of this activity is an appropriate performance audit.
What is Audit Calendar?
Audit calendar is a list of institutions to be audited by the department during a financial year. All the Field Officers/Officials are provided the audit calendar at the start of the year and they are required to conduct audit of institutions allotted to them as per audit calendar and strictly adhere to the same.
Which are the institutions that are exempt from audit fees?
The government of Himachal Pradesh has exempted HP University, Summerhill, Shimla, Dr. Y. S. Parmar University of Horticulture & Forestry, Nauni, Solan, Chaudhary Shrawan Kumar University of Agriculture, Palampur from payment of audit fees.
To which authority a request may be moved for conduct audit of one’s institution?
If you want to get the accounts of your institution audited from Local Audit Department you can write to Director-cum- Examiner, Local Fund Accounts, Block No. 38, SDA Complex, H.P. Shimla-171009.
Have you prescribed any proforma for Receipt Book Stock Account?
The proforma for Receipt Book Stock Account is as under:
Proforma for Receipt Books Stock Account:
Date of receipt of Receipt Books
No. of Receipt Books received
Sr.No. of the Receipt Books
No. of forms in the Receipt Book referred to in Col.No.3
Signature of the custodian of Receipt Book
Signature of the officer attesting the entry made in the Stock Register
Date of issue of Receipt Books for use.
Sr. No. of the Receipt Book issued for use.
Signature of the official to whom issued.
Date of return of Receipt Books after use
Period during which the receipt book has been used
Signature of the officer attesting the entry made in the Stock Register
What are the steps departments should take to avoid embezzlement of receipt?
1.Receipt Book Stock Register should be maintained properly as per proforma suggested above.
2. Only Machine Numbered receipts should be used.
3. Cashier should be made to count all the receipts in a receipt book before starting using the same so that missing folio, if any could be detected at the inception itself & certificate to that effect should be got recorded from DDO on the cover of Receipt Book itself.
4. No cutting unless duly attested should normally be allowed on the receipts.
5. Cashier should be made to record all the receipts in the Cash Book/ Subsidiary Cash Book as the case may be on a daily basis quoting therein all the particulars of receipts viz. Date of Receipt, Book No., Receipt No., From whom received, Receipt On account of etc.
6. All the cancelled receipts should be got countersigned from DDO & both the copies thereof should invariably be retained in record besides recording the same in Cash Book.
7. All the amount collected should be deposited into the bank / treasury on a daily basis.
8. DDO should also verify the totals of the Cash Book before authenticating balances in the same.
9. All receipts deposited into the bank/ treasury should be reconciled at regular intervals.
What are the key area for conducting the audit of stores & stock?
Audit of Accounts of Store and Stock - Key areas of audit scrutiny
Audit of purchase of stores
The following aspects relating to purchases of stores should be examined in audit:
(i) Purchases should have been properly sanctioned and made in the most economical manner in accordance with the rules, regulations and orders issued in this regard. Audit must see that the purchases have been made taking into account the workload of the organization and that the requirements have been assessed on a realistic basis and funds are available for the procurement. It is also to be seen that the stores procured are of approved quality and specifications. Stores of required specifications covered under the rate contract entered into by the Controller of Stores or any other approved rate contract should have been purchased under the rate contracts. The system of open competitive tender should be adopted for purchases from suppliers, the purchase being made only from the lowest tenderer unless there are recorded reasons for not doing so.
(ii) The rates paid should correspond to those agreed to in the relevant contracts or agreement.
(iii) The officer/official responsible for approving and receiving purchases should furnish certificates of quality and quantity before payments are made.
(iv) Purchase orders should not have been split up so as to avoid the necessity for inviting quotations and obtaining the requisite sanction of higher authority.
(v) The stipulated terms and conditions should conform to various codal provisions and orders issued from time to time.
(vi) Necessary precautions should have been taken to safeguard government interest in cases involving advance payments for supply of stores in terms of the contracts and orders issued from time to time.
Audit of custody and issue of stores
As regards custody and issue of stores, it has to be seen in audit whether :
(i) A particular official has been responsible for the custody of stores and whether the stores have been physically verified regularly to guard against any loss, pilferage.
(ii) Discrepancies, if any, between the book balances and the ground balances have been reconciled properly.
(iii) Appropriate and effective follow-up action has been taken on reports of physical verification of stores for making good any losses, shortages, etc. and to fix responsibility therefore.
(iv) Adequate storage facilities are available and precautionary measures have been taken to protect stores from damage and undue deterioration.
(v) Efforts have been made to transfer surplus stores to other departments where these could be utilized.
(vi) A report on surplus stores that could not be so transferred as well as on obsolete and unserviceable stores, specifying the reasons for so declaring them, has been promptly sent to the competent authority for facilitating their disposal.
(vii) All issues of stores are supported by proper indents and have been approved by the competent authority and acknowledged by the intended recipients; and
(viii) Officers entrusted with custody of stores or holding charge of stores have furnished the security prescribed in terms of the instructions issued from time to time by the competent authority.
Audit of write-off/disposal of stores
Irregularities in the disposal of public stores are equivalent to illegal appropriation of public funds, and an audit of money expended on purchase of stores cannot, by itself, be complete unless the disposal of stores is also audited in order to ascertain the final application of the money. In auditing the disposal or write-off of stores, the following should be kept in view :
(i) The competent authority should have accorded sanctions for write-off of stores. Any deficiencies in the systems requiring attention should be brought to the notice of higher authority.
(ii) Maintenance and accountal of unserviceable stores that cannot be utilized by the department responsible for their custody involve waste of labour and space. Retention of stores in excess of probable requirements in the immediate future may also result in loss through deterioration. It should, therefore, be seen that measures are taken to survey and segregate surplus, unserviceable and obsolete stores and to consider their disposal in accordance with the procedures prescribed in this regard.
(iii) Stores are generally, procured by the department, for their own use and not for sale. However, when it becomes necessary to sell some surplus stores, this is generally done on receipt of payments in advance against Proforma invoice, though sales on credit may be unavoidable occasionally. In such cases, the sale proceeds against credit sales remaining unrealized for considerable periods should, therefore, be analyzed and commented upon.
Audit of stores management
Stores in many cases result in capital remaining locked up for long periods, this may not be justified unless essential. In order to ensure this and effect economies, appropriate stock limits for different categories of stores should have been fixed. Audit may, therefore, see that this has been done and that balances in stock do not exceed the prescribed limit. Audit should also scrutinize cases of purchase of stores without actual need or in excess of requirement, resulting in accumulation of idle stock and consequential loss to the organization. Similarly audit may look out for cases of purchases less than the actual requirement that might have affected adversely the work and resulted in subsequent procurement at additional cost. It may also be examined whether there has been rush of expenditure on procurement at the close of the financial year or fictitious booking merely with a view to utilizing the budget grants.
Audit of stores records
Audit should ascertain whether :
(i) All stores were examined, on receipt and while accepting delivery, to determine their condition and to ensure that they were of the approved quality, make and specifications and the quantities conformed to those agreed upon.
(ii) The stores have been taken on stock and entered in the stock register; goods received sheets and bin cards.
(iii) The previous stock balances have been correctly worked out, carried forward and authenticated by a responsible officer.
(iv) Stock registers; bin cards have been maintained chronologically based on receipts and issues.
Have you prescribed any check lists in r/o Pay Bills/ TA Claims / Medical Reimbursement bills / Contingent Bills / Work Bills as would be helpful to auditors while conducting the audit of various institutions?
Suggestive check lists are as under:
Suggestive Check List for Audit of Pay Bills
(i) Whether there is sanction of competent authority for all the posts.
(ii) Whether there is sanction of competent authority for newly created/upgraded posts during the year.
(iii) Whether character and antecedents certificates of newly appointed employees have been got verified from the competent authority.
(iv) Whether medical certificates have been duly furnished on the first appointment.
(v) Whether scales of pay and pay drawn by each incumbent are correct.
(vi) Whether leave is sanctioned by the competent authority and leave granted in accordance with rules in force and leave account register and entries in the service books are correctly maintained
(vii) Whether allowances drawn in accordance with orders of Government.
(viii) Whether increment certificate is attached and due date of increment and pay after increase are correct and Annual increment register with service books are correctly maintained.
(ix) Whether there is sanction of competent authority for drawl of special pay/allowance.
(x) Whether investigation sanction for payment of time barred arrear claim has been obtained.
(xi) Whether rents due on allotted Government accommodation has been deducted.
(xii) Whether any post, position and assignment created by the Universities have been approved by the State Government
(xiii) Whether pay drawn in respect of staff employed on fixed pay during the year is correct.
(xiv) Whether all pay fixation cases and pension cases of the employees are scrutinized.
(xv) Whether or not percentage of total expenditure incurred on the establishment of the staff against the total income of the institution are extravagant.
Suggestive Check List for Audit of Traveling Allowance Bills
(i) Whether T.A. bill is preferred within a year from the date of journey.
(ii) Whether rates of D.A., mileage, rail or bus fares are correct.
(iii) Whether bill is countersigned by the competent authority.
(iv) Whether the required certificates are furnished by the claimant.
- Whether transfer is in public interest or at request in the case of scrutiny of transfer travel allowance bill
(vi) Whether TA check register has been maintained.
(vii) Whether there is budget provision for Traveling Allowance head.
Suggestive Check List for Audit of Medical Reimbursement Bills
(i) Whether bill is preferred within three months from the date of completion of treatment.
(ii) Whether the charges of only admissible medicines/tests are reimbursed to the claimant.
(iii) Whether the cash memos of medicines/tests and essentiality certificate are verified/countersigned by the medical officer.
(iv) Whether the medical bills in case of indoor patients are countersigned by the medical superintendent.
(v) Whether the permission of Director Health Services of the State has been obtained for treatment outside the State.
(vi) Whether medical reimbursements are allowed to either husband or wife in case both spouses are employed and requisite certificate to this effect has been obtained from the DDO of respective organization where other spouse is serving.
(vii) Whether medical reimbursement check register has been maintained.
(viii) Whether medical bills are signed by DDO and countersigned by the controlling officer of the claimant.
(ix) Whether medical reimbursement are allowed only for recognized hospitals where treatment is not taken from Govt. hospital or necessary permission of competent authority is obtained in case treatment is taken in emergent cases from private hospitals as per rules/instructions.
(x) Whether there is budget provision for Medical Reimbursement head.
Suggestive Check List for Audit of Contingent Bills
(i) Whether expenditure is authorized.
(ii) Whether there is sanction of competent authority and whether it is within prescribed limit.
(iii) Whether quotations or tenders are called for after due publicity of tender notice.
(iv) Whether earnest money is paid by the tenderers.
(v) Whether lowest tender is accepted by the competent authority and if not whether reasons for not accepting lowest tender are recorded and sanction of next higher authority as required under rules is obtained.
(vi) Whether sub-vouchers are enclosed and are duly cancelled.
(vii) Whether necessary agreement is carried out.
(viii) Whether stock entry is recorded duly mentioning the page number of stock register.
(ix) Whether telephone, electricity and other office expenses register are correctly maintained.
(x) Whether the Log Books/ Repair and maintenance /Unserviceable Part registers of the vehicles are correctly maintained.
(xi) Whether the Property Register of the organization is maintained.
(xii) Whether there is budget provision for Office Expenses head.
Suggestive Check List for Audit of Work Bills
(i) Whether the expenditure on the work is permissible.
(ii) Whether the estimate is prepared and duly sanctioned administratively and technically.
(iii) Whether estimate is prepared with reference to current schedule of rates and whether the competent authority sanctions deviations, if any.
(iv) Whether the site on which the work is proposed to be executed belongs to the client organization.
(v) Whether vide publicity is given to the tender notice as required under rules.
(vi) Whether prescribed earnest money is deposited by the tenderer.
(vii) Whether comparative statement is prepared correctly.
(viii) Whether lowest tender is accepted by the competent authority and if not whether reasons for not accepting lowest tender are recorded and sanction of next higher authority as required under rules is obtained.
(ix) Whether necessary agreement has been enacted and executed.
(x) Whether measurements are recorded by the competent authority.
(xi) Whether test checks of measurements are carried out by higher authorities as required under rules.
(xii) Whether pre-measurements are recorded of cutting/clearance work and steel used for R.C.C.
(xiii) Whether amount due to contractor is correctly arrived at with reference to the agreed rates and quantities as per recorded and checked measurements.
(xiv) Whether cost of material supplied departmentally if any is recovered in the bill.
(xv) Whether material used in the work is as per requirement as per consumption factor data.
(xvi) Whether material if any supplied to contractor in excess of requirements have been returned by the contractor and entered in the stock register/bin card.
(xvii) Whether double charges is recovered in respect of unused materials not returned by the contractor.
(xviii) Whether dues if any towards supply of necessary services to the contractor by the department for carrying out work is recovered.
(xix) Whether N.M.Rs. are correctly prepared duly notifying certificates of payment and alternative certificates are furnished by competent authority.
(xx) In the case of departmental execution whether materials purchased are properly accounted for and unused taken to stock register.
- Whether expenditure incurred is within estimate.
- Whether sufficient security as per rates approved by the Government have been taken from the contractor for due fulfillment of contract.
- Whether the measurement of work done have been accepted by the contractor.
- Whether the quantity and value of work done since previous running bill have been correctly shown.
- Whether the signature of the contractor as noted in his receipt on the foot of ‘Memorandum of payment made’ tally with that appearing at the foot of the bill.
(xxvi) Whether revised estimates or completion report is prepared and approved by competent authority.
(xxvii) Whether buildings are entered in the register of immovable property.
What is the procedure for settlement of audit paras?
The client organisations can get their audit paras settled by presenting the annotated replies viz-a-viz steps / remedial measures taken by them before the audit parties during the course of ensuing audit. All the audit parties have been specifically instructed to address the needs of the client institutions in this regard. The representative of client organisations can also visit the office of Director, Local Audit Department, Block No. 38, SDA Complex, HP Shimla-9 for settlement of audit paras after seeking prior appointment.
What are the rates of audit fees?
The audit fees are charged by the department in the following manner:—
Resident Audit Schemes: - Audit fee is charged in case of Resident Audit Schemes (except three universities) as per provisions contained in F.R 127.
For conducting the audit of other institutions the audit fees is charged in the following manner:—
(a) Educational Institutions
(i) Sr. Secondary Schools and High Schools
Audit Fees is charged @ Rs. 4000/- per institution for one year of audit. In case the funds of the school are less than 1.00 lac P.A. the audit fee will be charged @ Rs.2000/- per year audit.
Audit fee @ of Rs.7000/- for one year audit. In case the funds of the college including sanchayika collection is less then Rs. 2 lacs P.A. the audit fee will be charged @ Rs. 4000/- for one year audit.
(b) Temple Trusts
Actual Cost on account of establishment charges subject to maximum of 0.5% of the total expenditure of the temple concerned will be charged and establishment charges shall be calculated @ Rs. 600/- per Section Officer and @ Rs. 500/- per Junior Auditor per day and it shall not include the period of leave and gazzetted holiday and Sunday.
Actual cost of establishment charges shall be charged which shall be calculated @ Rs. 600/- per Section Officer and Rs. 500/- per Junior Auditor per day and it shall not include the period of leave and gazzetted holiday and Sunday.
(d) Marketing Board
Audit fee is charged in Marketing Board as per provisions contained in F.R 127.
(e) Market Committees
Audit fees will be charged @ 0.5% of the expenditure.
(f) Miscellaneous Institutions
To charge the actual cost of audit in terms of establishment charges for a maximum period of 8 days per institution per annum and establishment charges shall be charged which shall be calculated @ Rs. 600/- per Section Officer and Rs. 500/- per Junior Auditor per day and it shall not include the period of leave and gazzetted holiday and Sunday. In case of C.M Relief Fund audit fees shall be charged @ 0.25% of actual cost which shall be calculated in the manner explained above.
Note.—The newly recruited Junior Auditors are given three months training. No audit fee is charged during the period for the work undertaken by Junior Auditors during training period.