Page 293 - CA Inter Audit PARAM

CA Ravi Taori
Reporting upon the strengths and weaknesses of systems of financial control;

Expenditure
Reporting upon whether value is being fully received on money spent; and

FST
Reporting on the fairness of the content and presentation of financial statements;

Frauds or Errors
Detection and prevention of error, fraud and misuse of resources.

QNO Audit of Local Bodies-Audit programme Old Course -- (P16M/M16M/M16E/N23M)
GA.50 Bhaskar CNO - GA.300 New Course – (SM25)
State the background of Local Bodies. Draft an audit programme for conducting audit of accounts of a Local
Body.
OR
Local Fund Audit Wing of a State of a State Government has appointed you to audit the accounts of one of
the Local body governed by it. As an auditor, what will be your reporting areas?
Answer ➢ Background of Local Bodies:
A municipality can be defined as a unit of local self-government in an urban area.
By the term ‘local self-government’ is ordinarily understood the administration of a locality
– a village, a town, a city or any other area smaller than a state – by a body representing the
local inhabitants, possessing fairly large autonomy, raising at least a part of its revenue
through local taxation and spending its income on services which are regarded as local and,
therefore, distinct from state and central services.
Municipal government in India covers five distinct types of urban local authorities, viz., the
municipal corporations, the municipal councils, the notified area committees, the town area
committees and the cantonment committees.

➢ Audit Programme
The Local Fund Audit Wing of the State Govt. is generally in-charge of the audit of municipal
accounts. Sometimes bigger municipal corporations e.g. Delhi, Mumbai etc. have power to
appoint their own auditors for regular external audit. So, the auditor should ensure his
appointment.

(Same as Objectives)
The auditor while auditing the local bodies should report on the fairness of the contents and
presentation of financial statements, the strengths, and weaknesses of system of financial
control, the adherence to legal and/or administrative requirements; whether value is being
fully received on money spent. His objective should be to detect errors and fraud and misuse
of resources.

(Audit against rules & regulation)
The auditor should ensure that the expenditure incurred conforms to the relevant
provisions of the law and is in accordance with the financial rules and regulations framed
by the competent authority.

(Audit of Sanctions)
He should ensure that all types of sanctions, either special or general, accorded by the
competent authority.

(Audit against provision of funds)
He should ensure that there is a provision of funds and the expenditure is incurred from the
provision and the same has been authorized by the competent authority.

(Proprietary Audit & Performance Audit)
The auditor should check that the different schemes, programmes and projects, where large
financial expenditure has been incurred, are running economically and getting the expected
results.

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