Section 24 of The Comptroller and Auditor-Generals Duties Powers and Conditions of Service Act 1971

Section 24 of The Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971

Power to dispense with detailed audit

Original Text

24. Power to dispense with detailed audit.—The Comptroller and Auditor-General is hereby authorised to dispense with, when circumstances so warrant, any part of detailed audit of any accounts or class of transactions and to apply such limited check in relation to such accounts or transactions as he may determine.

Visual Summary

CAG’s Authority

Exclusive power to decide on the extent of the audit.

Dispense Detail

Can skip 100% detailed audit if circumstances warrant.

Limited Check

Applies sampling or test audits instead of full verification.

Summary

Section 24 grants the Comptroller and Auditor-General (CAG) the administrative flexibility to manage the vast volume of government accounts. It recognizes that a detailed, line-by-line audit of every single transaction is often impractical. Therefore, the Act empowers the CAG to perform “limited checks” (essentially test audits or random sampling) whenever he determines that the circumstances justify such an approach, ensuring efficiency without compromising overall oversight.

Key Takeaways

Discretionary Power: The power to dispense with a detailed audit lies solely with the CAG.
Limited Check: The section legally validates the concept of “Test Audit” or statistical sampling in government auditing.
Universal Application: This power applies to any accounts or class of transactions under the CAG’s purview.

Key Analysis

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Legislative Intent: The phrase “when circumstances so warrant” indicates that this is not a blanket exemption from duty. It is a strategic tool to be used when the volume of transactions is too high for a 100% check, or when internal controls are deemed robust enough to rely on sampling.
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Subjective Satisfaction: The words “as he may determine” provide the CAG with subjective satisfaction. The courts generally do not interfere with the administrative discretion of the CAG regarding how an audit is conducted (detailed vs. limited).
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Modern Auditing Standards: This section aligns the 1971 Act with modern international auditing standards (ISSAIs), which advocate for risk-based auditing and sampling rather than checking every voucher.

Key Ingredients

Authority: Must be the Comptroller and Auditor-General.
Condition: Circumstances must warrant the dispensation.
Action: Dispense with detailed audit.
Substitute: Apply a limited check (sample audit).

Related Provisions

Practical Illustrations

Example 1: High Volume Transactions
A government department processes 50,000 travel allowance claims annually. Instead of auditing every single claim (Detailed Audit), the CAG decides to audit 10% of the claims selected randomly (Limited Check) to detect systemic errors.

Example 2: Low Risk Areas
For a department with a history of clean accounts and strong internal controls, the CAG may dispense with a detailed voucher audit and instead perform a high-level review of the financial statements.

Process Flowchart

CAG Assesses Accounts

Do circumstances warrant detailed audit?

Yes

Apply Limited Check

Perform Detailed Audit

Finalize Audit Report

Practice Questions

Q1: Under Section 24, who has the authority to dispense with a detailed audit?

A. The President of India
B. The Finance Minister
C. The Comptroller and Auditor-General
D. The Public Accounts Committee

View Correct Answer

Correct Answer: C. The Comptroller and Auditor-General
Reasoning: Section 24 explicitly authorizes the CAG to dispense with detailed audits when circumstances warrant.

Q2: What alternative does Section 24 provide when a detailed audit is dispensed with?

A. No audit is required
B. Apply a limited check
C. Outsource the audit to private firms
D. Delay the audit to next year

View Correct Answer

Correct Answer: B. Apply a limited check
Reasoning: The Act states the CAG may “apply such limited check in relation to such accounts or transactions as he may determine.”

Q3: The power under Section 24 applies to which of the following?

A. Only State Government accounts
B. Only Union Government accounts
C. Any accounts or class of transactions
D. Only commercial undertakings

View Correct Answer

Correct Answer: C. Any accounts or class of transactions
Reasoning: The text explicitly mentions “any accounts or class of transactions.”

Frequently Asked Questions

Does Section 24 allow the CAG to skip auditing entirely?

No. The section only allows the dispensation of a “detailed audit” (100% check). The CAG must still apply a “limited check” (sampling) to ensure accountability.

What determines if a detailed audit should be dispensed with?

It is based on the subjective satisfaction of the CAG “when circumstances so warrant.” This usually involves factors like the volume of transactions, the reliability of internal controls, and risk assessment.

Can the Government order the CAG to perform a limited check?

No. The discretion lies entirely with the Comptroller and Auditor-General. The Executive cannot dictate the scope or method of the audit.

Conclusion

Section 24 is a pragmatic provision that balances statutory duty with administrative feasibility. By authorizing the use of sampling and limited checks, it enables the CAG to effectively audit the colossal financial transactions of the Union and States without being bogged down by the impossibility of a 100% detailed verification, thereby modernizing the audit process.