SUPPLEMENTRY & TEST Audit #AuditBoard AuditArrearsCommittee | Audit of Govt. Co. | Ch-7 (part-2)

The supplementary audit is conducted by the CAG (Comptroller and Auditor General) to review the work of statutory auditors and ensure the quality control of financial audits of government companies. The CAG reviews selected accounting records and the statutory auditor's report and opinion, issuing comments on significant observations.

Test audits are conducted by the CAG under Section 19 of the Companies Act to examine the economy, efficiency, effectiveness, and regularity of transactions. These audits can be either compliance audits or performance audits and may extend beyond one financial year. Unlike supplementary audits (which focus on financial audits), test audits delve into the performance and compliance aspects of a company.

The Audit Board is a permanent body established by the CAG in consultation with the Government of India. Its primary role is to conduct performance audits of Central Public Sector Undertakings (CPSUs), focusing on thematic and general issues like economy, efficiency, and effectiveness. The Commercial Deputy CAG chairs the board, with senior officers from the Indian Audit & Accounts Department as members. The administrative ministry can appoint technical experts as special invitees. The board provides advice and recommendations for performance audits but the actual auditing is performed by the AG (Accountant General) Audit.

Meetings of the Audit Board are held to guide performance audits, set audit objectives, guidelines, and methodologies, and consider draft audit reports for recommendations and finalization. These meetings are conducted with available members without a quorum requirement and involve representatives from the company and concerned departments, including the CEO and secretary, as there are no separate exit conferences.

Central and State Public Sector Enterprises constitute Audit Arrears Committees, comprising senior officers, to settle audit observations that have been outstanding for more than two years. The management of these companies is responsible for resolving these observations, and the concerned government ensures the effective functioning of these committees.