Pre-Audit
Scrutiny of pay bills, contingent bills, and works expenditure before payment is made. Catches errors and irregularities at the source.
Functions
Internal Audit
Independent internal audit of all defence organisations under the Ministry of Defence.
- 10
- Organisations audited
- 8+
- Defence organisations
- IC-RM
- Risk-based audit framework
Charter
Mandate and Charter
The Defence Accounts Department, headed by the Controller General of Defence Accounts, is mandated to carry out internal audit of all expenditure and receipts besides accounting and payment functions. Secretary (Defence Finance)/FA(DS) functions in the dual capacity of representative of Ministry of Finance in the field of Defence Expenditure and as Chief Accounting Officer for the Defence Services, discharging this responsibility through the CGDA. Controller General of Defence Accounts as chief of Internal Audit and SD(F)/FA(DS) as Chief Accounting Officer support Defence Secretary in discharge of his role and responsibility as Chief Accounting Authority of MoD.
The work of Internal Audit is carried out through the network of PCsDA/CsDA. This mandate for audit in the Defence Accounts Department is derived from the Military Finance Department in India, which was working under the Crown. The mandate includes audit of sanctions accorded by all authorities lower than Government of India including Services Headquarters. The audit of each sanction is carried out by PCDA/CDA before payments are released. While doing audit of sanction, it is verified that the sanction has been accorded by the competent authority, financial concurrence obtained wherever required, budget is available under the relevant head of account, and procurement is done at a reasonable rate.
Principles of Audit
The broad and general principles on the basis of which audit by the Defence Accounts Department is conducted over Defence receipts and expenditure are laid down in the Defence Audit Code. The primary function of audit is to verify the accuracy and completeness of accounts, to secure that all receipts are brought to account under the proper head, that all expenditure and disbursements are authorised, vouched and correctly classified, and that the final account represents a complete and true statement of the financial transactions it purports to exhibit.
Conduct of Internal Audit
Detailed instructions on audit and inspection of Stores and Public Fund Accounts of all Defence units and formations are contained in Local Audit Manuals for the Army, Navy, and Air Force. Percentage checks and periodicity of audit have been prescribed with reference to risk perception as per the IC-RM framework. The instructions are periodically reviewed with reference to risk assessment and mitigation of risks in the prescribed procedures.
Internal Audit is carried out primarily by the Principal Controllers and Controllers of Defence Accounts through the Zonal/Area Accounts Offices, Local Audit Officers (LAOs), and Regional Audit Officers (RAOs) working under them. The internal audit of Ordnance Factories and Ordnance Factory Board is conducted by the Chief Internal Auditor (OF) located at Kolkata.
Audit Findings and Reporting
Audit conclusions and findings relating to serious irregularities are submitted to the SD(F)/FA(DS) and Defence Secretary in the form of Internal Audit Reports. Follow-up action is taken by the concerned PCsDA/CsDA. The result of internal audit of all Defence establishments is reflected in the Annual Audit Certificate rendered by CGDA for inclusion in the Appropriation Accounts, which are countersigned by C&AG and placed in Parliament.
Organisations Audited
Coverage
Scope of Audit
Post-Audit
Audit of cash and store accounts after transactions are completed. Verifies that expenditure was properly sanctioned and within authorised limits.
Performance cum Efficiency Audit
Conducted with Raksha Mantri's approval, currently for Defence Works in MES and BRO. Carried out by CGDA. This is not a fault-finding exercise — it is aimed at identifying systemic improvements in processes and expenditure efficiency.
Risk-based Audit (IC-RM Framework): Risk-based audit is conducted as per the IC-RM framework with percentage checks and periodicity of audit prescribed with reference to risk perception. This ensures audit resources are focused on areas of highest risk and materiality.
Classification
Types of Audit
(a) Compliance Audit
Examines the transactions relating to expenditure, receipts, assets and liabilities of Government for compliance with the rules and regulations, orders and instructions issued by the Competent Authority either in pursuance of the laws or by virtue of the powers formally delegated to it by a superior authority.
(b) Audit against Provision of Funds
Ascertains whether the expenditure was incurred for authorised purpose and that the budget provision exists under the relevant head of account.
(c) Audit against Rules and Regulations
Verifies that expenditure incurred was in conformity with rules and orders, which involves interpretation of the rules/orders. The auditor's duty stops with bringing to the notice of the competent authority any action that is, in their opinion, contrary to the rules/orders on the subject.
(d) Audit of Sanctions
Verifies that every item of expenditure was incurred with the approval of the competent authority in the Government for expending public money.
(e) Propriety Audit
Extends beyond scrutinising the mere formality of expenditure to its wisdom and economy, bringing to light cases of improper expenditure or waste of public money. It is an essential and inherent function of audit to bring to light not only clear and obvious irregularities but also every matter which appears to involve improper expenditure or waste of public money or stores.
(f) Performance cum Efficiency Audit
Conducted with Raksha Mantri's approval by CGDA. Currently being carried out for Defence Works in MES and BRO. This is a comprehensive review aimed at bringing systemic improvements in processes, economy, and efficiency in the use of resources.
Workflow
Audit Process
Inspection of unit
Inspection Report issued
Unit responds
Compliance verified
Para settled or escalated
Output
Product of Internal Audit
Inspection Reports
Issued after each audit visit. Contains observations, paras, and recommendations for the audited unit.
Draft Audit Paras
Significant findings that warrant attention of higher authorities. Forwarded to Controller office for compliance.
Performance cum Efficiency Audit Reports
Reports on systemic improvements identified during audit of Defence Works. Forwarded to MoD where warranted.
Audit of SPARSH and Digital Systems: With the department's digital transformation, audit now covers IT systems, data integrity of SPARSH pension records, and digital payment controls. Systems audit is an increasingly important function.