Audit against Rules and Orders (Audit against Regularity)

288. General. One of the main functions of Audit, as described in Chap- ter 14, is to see, that expenditure conforms to the relevant provisions of the Constitution and of the Laws and Rules made thereunder and is also in accord- ance with the financial rules, regulations and orders issued by a competent authority either in pursuance of any provisions of the Constitution or of the Laws and Rules made thereunder or in virtue of powers formally delegated to it by a higher authority. In regard to directions which are of a financial or quasi-financial character issued by the President to a State, the Comptroller and Auditor General has a right to watch in audit their due compliance and bring to notice any cases in which he considers that they have been infringed.

289. The financial rules, regulations and orders against which audit is con- ducted fall mainly under the following categories:-

(i) rules and orders regulating the powers to sanction and incur expendi- ture from the Consolidated Fund of India or of a State, and the Contingency Fund of India or of a State, if such a Fund is estab- lished;

(ii) rules and orders dealing with the mode of presentation of claims against Government and of withdrawal of moneys from the Consoli- dated Funds, Contingency Fund (if established) and Public Ac- count of the Government of India and of the States, and in general, the financial rules prescribing the detailed procedure to be followed by Government servants in dealing with Government transactions; and

(iii) rules and orders regulating the pay, allowances pensions and other conditions of service of Government servants.

290. The work of Audit in relation to regularity of expenditure is of a quasi-judicial character. It involves the interpretation of the Constitution, Statutes, rules and orders with reference to the case-law of previous decisions and precedence. The Comptroller and Auditor General has not, however, save in the case of rules made by himself, the final power of interpretation: this re- sides in the authority specified in the Constitution or the Authority which is the author of the rule or order so long as the interpretation is not against the orders of a Superior Authority or contrary to any established financial principle or rule. Instructions relating to interpretation by Audit of rules, orders, etc., are contained in paragraphs 295 to 298.

291. Objects of Audit. In applying the check against the financial rules, regulations and orders the Audit Officer has to see that all payments which he is required to audit are effected according to the procedure laid down by the competent authority regulating the mode of transactions, and also that they conform with the conditions governing the pay and allowances, etc., of the various services and posts where such payments are involved. The main objectsof this check, besides those described in clauses (b), (c) and (d) of paragraph 26, are to ensure :-

(a) that the claims are made in accordance with the rules and in the proper form;

(b) that all prescribed preliminaries to expenditure are observed, for example, proper estimates are framed and approved by competent authority for works expenditure, a health certificate is obtained, where necessary, before disbursement of pay to a Government ser- vant, etc.;

(c) that the rules regulating the method of payment have been duly observed by the disbursement officer; and

(d) that the rates paid for work done or supplies made are in accordance with any scale or schedule prescribed by competent authority.

292. Scrutiny of Rules and Orders. As the audit of expenditure is to be conducted against the financial rules, regulations and orders, it is essential that the rules, regulations and orders themselves should be subjected to examination. The examination consists in seeing-

(i) that the rules, regulations and orders are not inconsistent with any provisions of the Constitution or of any Laws made thereunder;

(ii) that they are consistent with the essential requirements of audit and accounts as determined by the Comptroller and Auditor General;

(iii) that they do not conflict with the orders of, or rules made by, any higher authority; and

(iv) that, in cases in which they have not been separately approved by a competent authority, the issuing authority possesses the necessary rule-making power.

In applying the second of these checks the principle to be observed is that the discretion vested in authorities empowered to make rules is not to be fettered unnecessary merely because difficulty may arise in the application of the neces- sary audit checks or in the maintenance of proper accounts. If the audit and accounts procedure can be amended without loss of efficiency or extra expense, the rule should be accepted and the procedure amended accordingly.

In applying the third check, the guiding principles enunciated in clauses (i), (ii) and (iii) of paragraph 262 should be observed.

293. All orders of delegation of financial authority have to be scrutinised carefully as, once the orders are accepted, audit of sanctions as well as of expenditure or other transactions may be conducted against them for an inde- finite length of time.

In the case of delegations of powers to the Comptroller and Auditor Gene- ral, no scrutiny by an Audit Officer is necessary as such delegations are made after consultation with the Comptroller and Auditor General.294. Rules and orders issued by the Comptroller and Auditor General him- self are not subject to the scrutiny of any officer subordinate to him. (See also paragraph 261).

295. Interpretation of the Constitution, Statutes, Rules and Orders.-As stated in paragraph 290 the Comptroller and Auditor General does not possess the final power of interpretation of the Constitution, the Statutes and of the rules made and orders issued by the Executive Government. Interpretation by Audit should be based on the plain meaning of the Article of the Constitution, Section of the Statutes, rule or order except where this is inconsistent with another Article, Section, rule or order; in such a case the inconsistency should be referred to the competent authority for resolution or removal. In no case must interpretation by Audit ever verge on legislation. It is, however, the duty of Audit to bring to the notice of the competent authority any expenditure which does not seem to be covered by the terms of the Article, Section, rule or order quoted as justifying it, and which has been incurred by placing upon the Article, Section, rule or order an interpretation which may seem to it not to be a natural, plain, or reasonable interpretation. In the case of regulations framed by a department of Government, audit will accept what the depart- ment considers to be the correct interpretation of its own regulations, provided that such interpretation is not opposed to the ruling of any superior authority, or contrary to any established financial principle, or rule. Such discretionary power of interpretation does not, however, give a department a free hand to interpret its rules to suit particular cases in other than a natural or reasonable manner. So long as a rule or regulation remains unamended the department is bound by it. Rules should be carefully adhered to, and where in practice it is found that some discretion is necessary in the application of a rule, such discretion should be provided for in terms with respect to that rule.

296. In the application of rules to concrete cases an Audit Officer may find-

(1) that the application of the rule both in letter and in spirit is clear in such cases it is for him to give his decision if there are special reasons which in any case render the decision inequitable, it is for the administrative authorities and not for the Audit Officer to move in the matter;

(2) that, even though he is confident as to the correct interpretation of the rules, he may think that the wording might be improved: in that event he should give his decisión and should suggest a revi- sion to remove the apparent discrepancy between the spirit and the letter of rule, or between two conflicting rules.

(3) that there is a real difficulty in interpretation and that he cannot decide how to apply the rules to that case; in that event he should refer the matter to the competent authorities for a decision.297. The intention of a rule made by Government can be ascertained authoritatively only by reference to the discussions leading up to the framing of the rule, that is, to the files of Government. Such files may be obtained by Audit Officers, but if they cannot be made available the intention of the rule must be ascertained as nearly as possible from the records of the Audit office in which this or similar rules have been discussed.

298. The following two points should be kept in mind in interpretating orders-

(a) the order of a sanctioning authority must generally be interpreted in terms of the communication in which the application for sanction was made, and

(b) the word “etc.” in an order covers only similar cases of a like nature and not instances where there is a difference.