WELCOME

AUDIT OF VOUCHERS
 AUDIT
M EAN IN G OF AU D IT
 a systematic and independent examination of data,
statement, records, operations and performance of
an enterprise for stated purpose

 ‘an instrument of financial control’ as per the

definition given in the book ‘An introduction to
Indian Govt. Accounts and Audit.

 examination of books, statements, vouchers by a

properly qualified person on the of proper evidence
to express his opinion as to the truth and fairness
of assertions in statements, financial accounts.
 AIMS OF AUDIT
 To safeguard the financial interest of the
tax payer,
 To assist Parliament or State / union
Territory having Legislative Assembly and

 To Watch that various authorities of the

State act in regard to all financial matters in
accordance with the Constitution and the
laws of Parliament and appropriate
Legislatures and the rules and orders
issued thereunder.

The right of independent criticism is inherent in

the auditorial functions.
 AUDIT EVIDENCE
 In ordinary parlance evidence is a
statement of witness or testimony of the
related event.

 Principal source of evidence for Audit

Conclusions will be the records of the
auditee organization.

 ‘Audit conclusions’ should be drawn

based on sufficient, competent and
relevant evidence
AUDIT OF EXPENDITURE

Section 13 of the C&AG’s (DPC) Act, 1971

enjoins upon the C&AG to audit all accounts,
transactions and expenditure incurred from
consolidated fund, Contingency fund and Public
Account of the union, of the States and of the UTs
having legislative assemblies and to report on the
expenditure, transactions and accounts so
audited by him.
 TYPES OF AUDIT

Types of Audit

Propriety ECPA or value

Audit against Regularity
Audit for money
provision of Audit
(VFM) Audit
funds

Audit System
against Audit
Sanctions
Audit against regularity
. Audit against regularity consists in verifying
that the expenditure conforms to the relevant
provisions of the constitution and of the Laws and
Rules made there under

 The expenditure is also in accordance

with the financial rules, regulations and
orders issued by competent authority.

 Audit is to bring to the notice of the

competent authority any expenditure
incurred is not as per rules and orders.

 Audit to ensure that rules and regulations

are observed not merely in the letter but
also in the spirit
Audit against sanctions to expenditure

Each of item of expenditure should be covered by

the sanction of the authority competent to sanction it.

 audit should ensure that the authority

sanctioning it is competent to do so
 the sanction should be definite (i.e. free from
ambiguity)
 period of currency of sanction should be
watched in audit
 Audit against Propriety
Propriety Audit extends beyond the formality of the
expenditure to its wisdom, faithfulness and economy. No
precise rules can be laid down for regulating the course of
audit against propriety. However, the following general
principles are recognized as ‘Standards of Financial Propriety.

 the expenditure should not be prima facie more

than the occasion demands

 no authority should exercise its power of

sanctioning to pass an order which will directly or
indirectly t its own advantage.

 Public moneys should not be utilized for the benefit

of a particular person or section of the community
(There are some exceptions)

 The amount of allowances should be regulated

that the allowances are not on the whole sources
of profit to the recipients.
 ECPA (or) VFMA
Three basic elements
Economy : minimizing the cost of
resources acquired or used having
regard to quality

Efficiency : relationship between the output

of goods or services or other results
and the resources used to produced to
them

Effectiveness : relationship between the intended

results and the actual
results of a scheme, project or
programme.
AUDIT AGAINST PROVISION OF FUNDS
 no moneys of the consolidated fund shall be appropriated
exception accordance with law and for the purposes and
in the manner provided in the constitution.

 expenditure met from the co respective consolidated fund

on or after 1st April of a financial year should be as per
Appropriation Act passed in Parliament / Legislative
Assembly as the case may be.

 advances from respective contingency fund can be drawn

for meeting unforeseen expenditure pending authorization
of such expenditure by Parliament / Legislature when a
need arises during a financial year for supplementary or
additional expenditure upon some new service not
Contemplated in the AFS (budget) for that year, funds will
have to be got authorized by appropriate Legislature
before incurring such expenditure.

Audit should ensure that the expenditure

incurred falls within the scope of a Grant or an
Appropriation.
 SYSTEM AUDIT

Organization and systems governin

authorization, recording, accounting and

internal controls are analyzed and standards

of quality and performance evaluated in

Systems Audit

.
.
VOUCHERS
VOUCHER – Meaning

A voucher may be defined as any

document which evidences a transaction or an
entry in a book of account. It may be in the form
of a money receipt including a paid bill, invoice,
cash memo, agreement or contract and so on.
Drawing and Disbursing Officers have to
present bills at the Treasuries/Pay and Accounts
Offices in the prescribed form for drawal of
money from Government Account. When such
bills are paid, they become vouchers
Contents of vouchers
A Voucher should contain the following
particulars:
i. Nature of claim

ii. Gross and net claim of the DDO

iii. Sanction order of the competent

authority

iv. ‘Pay Order’ of the Treasury Officer/PAO

v. Allocation of charges against

appropriation

vi. Head of account

vii. Obligatory deduction to be made

 REQUIREMENTS OF A VOUCHER
Basic requirements to be seen in the Audit of vouchers

In the course of detailed audit of vouchers, the following requirements should be verified.

• the vouchers are in the prescribed form, duly receipted and are in original.

• the sub-vouchers contain dates of payment.

• vouchers are numbered with reference to the Schedule of List of Payments(LOPs)

etc

• the details work up to the totals and the totals are in words as well as in figures

• the pay orders are signed by the Treasury Officers/PAOs

• the vouchers are stamped ‘paid’

• there are no erasures/overwriting and all alterations in the total are attested by the
Drawing Officer.
Basic requirements to be seen in the Audit of vouchers (contd)

 Unless otherwise provided in the rules of

Government, stamps are affixed to all vouchers
whose net amount is in excess of Rs.5000/-

 Payment is not made on a voucher or order

signed by a subordinate instead of head of the
office himself.

 Copies of sanctions are certified the competent

authority

 If a voucher has been paid by transfer, it is

stamped as having been so paid, the head of
account to which the amount is noted on it.

 Deductions towards GPF; Income-tax etc have

been made wherever applicable

 Due procedures/orders in force have been

followed in purchase of ‘stores’

 Certificate of payments received in lieu of lost

vouchers or payee’s receipt are audited in the
same manner as the original vouchers even if
they are not selected for ‘audit’.
.
TYPES OF VOUCHERS
TYPES OF
VOUCHERS

LOANS&
ADVANCES
ESTABLISHMENT CONTINGENT GRANT-IN-
Vrs (INCLUDING
Vrs AID Vrs
REFUNDS)
VrS
AUDIT OF ESTABLISHMENT VOUCHERS
The system of establishment audit consists essentially
of the following components.
i) Audit of sanctions to establishment, check of
classification of expenditure on such
establishment and audit of general or specific
sanctions to pay and allowances.
ii) Number audit or audit against sanctioned
strength of the establishment
iii) Nominal audit or check of correctness of pay
and allowances drawn in the Vouchers
iv) Check of initial records maintained in
departmental offices
v) The admissibility of pay and allowances
drawn for each individual should be checked
completely. Cases of increments sanctioned to
the members of establishment and cases of
fixation on promotion or reversion during the
period covered by local audit should also be test
checked.
Audit of Establishment vouchers – Pay Bills

The audit should verify the following in respect of pay bills:

a) that the title of the government servant to the pay drawn

by him is correct
b) that the arithmetical calculations of the bill are correct
c) that where revised pay is drawn, pay fixation statement
is attached and the pay fixed is according to rules
d) that a Last Pay Certificate is furnished for Government
Servants transferred from another establishment
e) that the pay and allowances for leave have correctly
claimed
f) that health certificate is furnished in the cases of
Government servants appointed for the first time
Audit of Establishment vouchers – Pay Bills
(Contd

g) that the increment drawn is supported by an increment

certificate the number of persons for whom pay/leave salary
has been drawn does not exceed the sanctioned strength
h) that the special pay and personal pay claimed are
admissible and that the various allowances are admissible
and correctly claimed.
i) that no pay has been admitted for a Government servant
beyond the date of his attaining the age of superannuation
or on the expiry of service sanctioned by the competent
authority
j) that income tax and other recoveries have been effected
as per the extant rules .
 Audit of Establishment vouchers -
reimbursement of medical expenditure:

In scrutinizing the reimbursement of

medical bills, it should be verified that the

claims are as per rules and orders of

Government and they are duly supported

by proper certificates, receipts and

vouchers.
Audit of establishment vouchers – TA / LTC bills

Audit should look into the following in respect of TA/LTC

Bills
i) The journey was necessary and authorized by
general or special orders of the competent
authority.
ii) The journey was actually performed.
iii) The journey was performed as expeditiously as
possible
iv) The amount had been correctly drawn with
reference to the rates and general conditions in
force
Audit of establishment vouchers – TA / LTC bills
(contd)
v) no claim in respect of the journey had been
submitted previously
vi) countersignature of the Controlling Officer is
necessary in majority of the cases
vii) the LTC is claimed for family members as
defined in the rules

It should be ensured that Controlling Officers

properly exercise the scrutiny entrusted to them under
the rules of the Government in relation to these bills.
The pay shown in the TA/LTC Bills should be checked
with reference to the pay bills in cases where the
amount of allowance is dependent on pay.
Payment of Leave Salary

It should be seen in audit whether

 the leave salary of a non-gazetted government
servant is drawn over the signature of the head of
his office

 a declaration has been obtained from the

government servant to the effect that he was not
employed either under Government or a private
employer or any local body.

 the drawing officer concerned has furnished a

certificate on the leave salary bill to the effect that
the claimant was not employed anywhere

 all the conditions prescribed by the Government

have been fully complied with
 AUDIT OF CONTINGENT VOUCHERS

TYPES OF CONTINGENCIES

Scale Regulated Countersigned Fully Vouched

Contract contingencies Special Contingencies
Contingencies Contingencies Contingencies
Types of Contingencies - Meaning
The actual classification of contingent charges is
determined by the orders of the Government
concerned. However, all contingencies fall into one or
the other of the following five categories:
i) Contract Contingencies: Contingent charges met
from a lump sum grant placed at the disposal of a
disbursing officer for expenditure, at his discretion, on
certain specified objects.
ii) Scale Regulated Contingencies: Contingent
charges regulated by scale laid down by the
competent authority.
iii) Special Contingencies: Contingent charges
whether recurring or non-recurring, which cannot be
incurred without special sanction of a superior
authority.
Types of Contingencies – Meaning (contd)
iv.) Countersigned Contingencies: Contingent charges
which require the approval and countersignature of a
superior authority before they can be admitted as
legitimate expenditure. Countersignature is ordinarily
obtained after the bills are paid but, in rare cases, it is
necessary before payment.
v.) Fully Vouched Contingencies: Contingent charges
which require neither special sanction nor
countersignature, but may be incurred by the Disbursing
Officer on his own authority subject to the necessity of
accounting for them.
The responsibility for the effective control of contingent
expenditure rests primarily upon the heads of offices and
departments. The Audit Office merely examines the fulfillment
of that responsibility by auditing such expenditure, the extent
of which varies greatly with the different categories of
contingent charges
Checks to be exercised on all contingent
vouchers
1. The expenditure should be proper charge against
the Grant or appropriation has received necessary
sanction and has been incurred by a Government
Servant competent to incur it.
2. Certificates required under financial rules of the
Government have been furnished.
3. The rates are not apparently extravagant.
4. The standards of financial propriety are properly
observed
5. The bill is in the proper form and the classification is
correctly recorded thereon.
6. If the expenditure in March is unusually large, it does
not lead to irregularity.
Audit of sub-vouchers and payees receipts:
The financial rules of Government prescribe

the monetary limits of sub-vouchers and payee’s

receipts which are to be retained by the Drawing

and Disbursing Officer and the Countersigning

Officer. Other sub-vouchers and payee’s receipts

are to be attached to the contingent bills presented

at the treasuries. The supporting sub-vouchers

contain details of the charges included in the

contingent bill and they have to be checked in audit

to establish that the amounts drawn in the are in

order. The payee’s receipt is the proof of payment.

AUDIT OF VOUCHERS FOR THE MONTH OF
MARCH

Central Audit of vouchers fro the month of March

requires special attention. Expenditure during this

month is found to be generally heavy in relation to

other months because of the tendency to incur

substantial expenditure towards the close of the

financial year to avoid lapse of budget grants. In the

result, internal controls in the departments and

treasuries may be slack giving rise to irregularities

and deviations from prescribed procedures

Audit of vouchers for supply of ‘Stores’
The points to be seen while auditing the vouchers
for the supply of ‘stores’ are as follows:
i) The purchase of stores is made in
accordance with the instructions contained in
the financial rules.
ii) The purchase of stores has been sanctioned
by the competent authority
iii) The rates charged agree with the rates in the
relevant contracts.
iv) Where the contract stipulate inspection in
stages, the inspection certificate is furnished
with the bills.
Audit of vouchers for supply of ‘Stores’(Contd)
The claim for railway freight, insurance charges etc. is
duly supported by each receipts irrespective of their
amounts.
v) When the contract stipulate different prices for
different periods, the dateof dispatch/delivery
of stores should be checked independently.
vi) Where advance payment is made, suitable
deduction has been made from the bill for the
balance amount based on the note of
discrepancies or deficiencies recorded by the
consignee in his receipt certificate supported
by the payment.
vii) The stores have been delivered within the
delivery period or the late delivery, if any has
been regulated by the competent authority.
Audit of Scholarships
While auditing scholarship vouchers, it
should be seen that
a) the sanctioned scale is not exceeded

b) there is no excess over the amount

sanctioned for the scholarships

c) the scholarships are drawn only for the

period fro which it was sanctioned.

d) necessary certificate showing that the

prescribed conditions have been fulfilled are

furnished along with the bills.

Permanent Advance – Audit of
Sanctions to Permanent Advance should be audited to
see that
a. the advances are sanctioned by the
competent authority
b. the advance sanctioned is not for the
sanctioning officer’s office but for a
subordinate office
c. the amount sanctioned does not exceed the
limit fixed by Government for any office or for
the sanctioning authority.
d. the advance sanctioned is not larger than is
absolutely necessary and the advances are
not multiplied unnecessarily
Refunds of revenue – Audit of
Audit should see that
i. the refunds have been made under
sufficient authority.
ii. they are supported by duly receipted
vouchers in proper form
iii. the vouchers contain a certificate that
the refund has been noted against
the original credit in the departmental
account.
iv. the vouchers should also contain the
signature of the treasury officer in token
of verifying the original credit in the
Treasury records.
 Audit of Grant – in - aid
In view of the large amounts disbursed as grants-
in-aid in connection with developmental schemes by
the Central as well as State Governments to Co-
operative Societies, private institutions etc; it has
become an important function of Audit to watch
i. that there is no disbursement of fresh
grants to a grantee when there is a
substantial unutilized grants.

ii. that an adequate machinery is available to

constant watch over the
progress of expenditure from the grant and the
safety of the funds provided
Audit of Grant – in – aid (contd)
iii. whether the intended developmental
schemes are being implemented
economically and efficiently and
producing the results expected of
them.
iv. the extent to which the agency or
authority being audited is
adequately discharging its financial
responsibilities in relation to the
schemes being implemented and
v. whether there are instances of
overpayment, loss, extravagance,
avoidable excess or infructuous
expenditure, delays in completion
etc.
 PENSION AUDIT
The Chief objectives of audit of pensions are to

verify that the qualifying conditions governing the

grant of pension are fulfilled and the amount of

pension sanctioned and drawn is correct. Pension

vouchers are not required to be audited in Central

Audit. Such vouchers are to be checked during

inspection of treasuries/banks.
 CHECK OF
CLASSIFICATION
Five / Six tier concept of classification

Five / Six tier concept of classification structure had been introduced to ensure item –
wise control of expenditure
1. SECTOR : Grouping of series of Governmental functions
broadly

A) General services (Defence, Police, General Administration)

B) Social community services (of the development functions like Education,

Public Health, Medical, housing etc)

C) Economic services (functions relating to Agriculture, Industry, Power etc.)

D) Grants – in – aid and contributions (Transfer of resources from centre to

foreign Govts, Centre to states and compensation and assignments to Local Bodies
and Panchayat Raj Institutions)
CLASSIFICATION (contd)
2. Major heads:- (comprising Sub – Major heads wherever
necessary)
- To indicate broad FUNCTIONS of a particular
department of a Government such as Agriculture, Education,
Housing etc.

3. Minor heads:
- To denote the various PROGRAMMES under
each function or major head
CLASSIFICATION (contd)
4. Sub – heads :-
-To denote the SCHEMES for development
expenditure or organisations for non – development
expenditure under each programme or minor head.

5. Detailed heads:
- To indicate the specific OBJECTS of expenditure such as
salaries, travel expenses etc.

6. Sub – detailed heads:-

- To indicate the break – up details under the detailed
heads, wherever, travel expenses.
CLASSIFICATION (contd)
Six – tier classification - Example 2202

First Tier Sector Services Social and community

Second Tier Major Head 2202 Education

Sub – Major Head 01 Elementary Education

Third Tier Minor Head 101 Government Primary

Fourth Tier Group Sub – Head Scheme in the schools five year Plan
II state Plan
Sub – Head JB Additional enrolment of pupils of the
age group 11 – 14

Fifth Tier Detailed head 01 salaries

Sixth Tier Sub – Detailed head (1) Pay

(3) Medical charges
(4)Other Allowances
CLASSIFICATION (contd)
Coding pattern of classification

Major Head :Four digit code (e.g:0401, 2401, 4401, 6401)

- First digit indicates whether the Major Head is
a Receipt Head or Revenue expenditure head or
Capital expenditure head or Loan Head.

If the first digit is “0” or “1 ” Revenue Receipt

If the first digit is “2” or “3” Revenue expenditure
If the first digit is “4” or “5” Capital expenditure
If the first digit is “6” or “7” Loan Head
If the first digit is 8 Contingency Fund and Public A/c
CLASSIFICATION (contd)
Coding Pattern – Sub – Major Heads

Sub – Major head: Two digit code

Sub – major heads are opened under a major head to record

those transactions which are of a distinct nature and are of
sufficient importance to be recorded exclusively, but at the
same time allied to the function of the major head.
E.g:
Major Head : 2202 – Education
Sub – Major Head : 01 Elementary Education (or)
02 Secondary Education (or)
03University and Higher Education

Where there is no sub – major head the numerics “00” will be

used as a dummy, treating the major head, as a sub – major
head.
CLASSIFICATION (contd)
Coding pattern – Minor Head:

Classification upto this (i.e upto minor head) level is common

to Central and State Governments.

Minor Head: Three digit code (as prescribed in the Budget code)

(e.g) Under major head “2202 Education “ and sub – major head
01 elementary Education – the minor heads
are
001 Direction and Administration
101 Govt. Primary Schools
101 Inspection etc.

Group sub – heads under minor heads are as under:

I - Non – plan
II - State Plan
III - Centrally sponsored
V - Schemes financed by Autonomous Bodies
VI - Schemes shared equally between State and
Centre
CLASSIFICATION (contd)
Coding pattern – Sub heads:-

Under the Group sub heads, will figure sub – heads

which indicate schemes and occasionally the administrative
set up in the case of non - plan expenditure.

Sub – heads : Two digit capital alphabet

codes

Group – Sub – heads Budget Code Blocks of Alphabet

Code

Non - Plan I AA to IZ
State – Plan II JA to RA
Centrally sponsored III SA to TZ
Schemed financed by V ZA to ZZ
Autonomous Bodies

Schemes shared equally VI UZ to YZ

between State and centre
CLASSIFICATION (contd)
Coding pattern – Detailed head:

Detailed Head : Two digit numeric code

- There are standard detailed head which are
normally common to all departments

Code No. Description

Examples : 01 Salaries
02 Wages
03 Dearner allowance
04 Travel expense
05 Office expenses
06 Rent, Rates and Taxes

21 Motor Vehicles (1) Purchases

(2) Maintenance
 CLASSIFICATION (contd)
Divisions of Public Account

Major items are grouped under the following Sectors:-

(I) : Small savings, provident Funds etc

Comprise receipts and payments
(J) : Reserve Funds
(Other than those falling and
(K) : Deposits and Advances Debt heads pertaining to the
Consolidated Fund) in respect
which Govt. act as a Banker

(L) : Suspense and miscellaneous

Comprise adjusting heads
(M) :Remittances
COMPLETION OF AUDIT
After completion of audit, the voucher

should be enfaced in red ink with the word

‘Audited’ over the initials of the person who

conducted the audit.

Objection taken in audit should be

recorded on the voucher in red ink in

sufficient fullness to make it readily

understood.
 THE END

THANK YOU ALL

BY A. VADIVEL