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Applicability of CAG’s (DPC) Act on EA

Applicability of CAG’s (DPC) Act on EA. Section 13 of the Act- CAG has power to audit the expenditure spent from the consolidated Fund – Central, State, UT. Audit of both plan funds – Non plan funds. Audit of sanction, Audit of Regularity, Audit of propriety and ECPA Audit types of Audit.

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Applicability of CAG’s (DPC) Act on EA

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  1. Applicability of CAG’s (DPC) Act on EA • Section 13 of the Act- • CAG has power to audit the expenditure spent from the consolidated Fund – Central, State, UT. • Audit of both plan funds – Non plan funds. • Audit of sanction, Audit of Regularity, Audit of propriety and ECPA Audit types of Audit. RTI Mumbai/DAY 1/Slide 1.2.3

  2. Audit of Trading, Profit and Loss Account, Balance Sheet – Proforma Accounts. • Audit of sanction – plan sanction, Authority. • Budget allocation to be audited. • Project wise allocation under Major/Minor head of expenditure of Environmental issue. • Drawal of Money – Excess/Saving. • For excess – Regularizations, For saving justification. • Appropriation Audit. RTI Mumbai/DAY 1/Slide 1.2.3

  3. Audit of Rules and Orders. • Verification of authority – Money is spent by persons competent to spend. • Money is legally available for spending by authorities for Environmental issues. • Proper Sanction from Competent authority is obtained before spending. RTI Mumbai/DAY 1/Slide 1.2.3

  4. Propriety Audit – The need analysis of any environmental issue • Project feasibility study. • Study to be based on Scientific reasoning • The project is in accordance with the environmental policy of the Govt. • Rate of Return (Pollution abatement) or (Pollution Prevention) is achieved. • The targeted benefits have been enjoyed by the target group. RTI Mumbai/DAY 1/Slide 1.2.3

  5. ECPA Audit - Performance Audit • 3EES – Economy,Efficiency and Effectiveness. • Environmental Auditing is the fourth ‘E’. • Project/ Programme implementation Review. • Covers a wide range of objectives/Criteria • Objective: To evaluate a project/ Programme for economic, efficient and effective implementation. RTI Mumbai/DAY 1/Slide 1.2.3

  6. The programme should be implemented at the least cost. • Maximum or targeted out put at the minimum input. • Nugatory/extra expenditure/avoidable expenditure to be avoided. • ‘Canons of financial propriety’ in Government spending. • Wastages of Money to be avoided by the executive. • Benefits targeted (pollution control or reduction of contamination of water /purification of air etc) to be achieved. RTI Mumbai/DAY 1/Slide 1.2.3

  7. Timely implementation of the project • Time overrun, cost overrun. • Non achievement of target. • Fixing of targets to be in accordance with the Environmental policy. • Targets to be in accordance with International accords signed by the country. • Responsibility centre/Accountability centres for a timely implementation, achievement of targets etc. RTI Mumbai/DAY 1/Slide 1.2.3

  8. SAI to ascertain the Internal Control of the entity. • SAI to rely upon the internal control mechanism. • SAI to verify the Performance indicators. • Performance indicators to be measurable. for eg:- -Control of greenhouse gas emission. - Reduction of CO2, SO2 etc. - Control of vehicular pollution. - Maintenance of Noise level at certain specified areas – schools, courts, Industries etc. RTI Mumbai/DAY 1/Slide 1.2.3

  9. SAI to audit the CPM/PERT charts etc to measure the extent of implementation. • SAI to measure the physical targets, financial targets. • SAI to audit the inventory level/ wastage etc. • SAI to assess the authorities and their competence. RTI Mumbai/DAY 1/Slide 1.2.3

  10. In case the programme/project being implemented through Non-Governmental agencies,SAI to see: • That there is clear understanding about the scope and extent of allotment of issues for environmental implementation. • The understanding/contract/MOU is foolproof and protects the financial interest of the state/Govt. • There is adequate security available in case of default. • Proper, valid agreement has been entered into. RTI Mumbai/DAY 1/Slide 1.2.3

  11. pollution Control Boards( PCBs) are regulatory bodies. • They regulate environmental issues created by Governmental working as well as working of non-governmental bodies. It is seen in audit that: • PCBs have got adequate data regarding environmental issues. • PCBs survey polluting industries for pollution control. • They issue regular consent letters for commencement of industries/ continuance of activities. • They collect water cess and other receipts regularly. RTI Mumbai/DAY 1/Slide 1.2.3

  12. They survey the polluting industries and levy penalty if the fixed norms are violated • ‘Polluter pays’ – System/Concept is introduced/ enforced. • They report to the Government the State of affairs. • Their reports to be in alignment with national Environmental policy. RTI Mumbai/DAY 1/Slide 1.2.3

  13. Afforestation is an Environmental activity. • Forest degradation to be stopped by Forest Departments. • They have to enforce Forest Act. • Forests to be protected from human attack. • Wild animals to be protected . • Forest Audit/Review of the working of forest Development Corporations – Perforamne Audit. RTI Mumbai/DAY 1/Slide 1.2.3

  14. Environmental activities involve collection of revenue – Cess and fees etc. • Section 16 – Receipts audit of CAG’s DPC Act. • To verify that receipts/revenues are assessed, collected and credited. • Receipts collected in time or not. • Delay in collection results in bad debts/write off. • Assessment short falls – Loss of revenue. • Fraud/embezzlement of revenue. • Levy of fees/cess – rationality – sustaienance. • Concept of sustainable Development. • Not only environment but also economic/Social development to take place. RTI Mumbai/DAY 1/Slide 1.2.3

  15. Environmental issues are dealt with by Govt Deptts, Autonomous bodies/Govt Companies/ Statutory Corporations. • Section 19 of the CAG’s Act: • Autonomous bodies/ Companies/Statutory corporations prepare financial statements. • Certification Audit – Financial Audit. • Concept of Environmental assets/liabilities. • Accounting standards to be evolved. RTI Mumbai/DAY 1/Slide 1.2.3

  16. Creation Environmental assets/ own funds/ grants/subsidy etc. • Accounting treatment. • Concept of Cash accounting – Limitations. • Concept of accrual accounting – Takes care of not only period of1 year but more than 1 year. • Cash accounting – cash flow. RTI Mumbai/DAY 1/Slide 1.2.3

  17. Environmental liability- • Liability towards compliance of Law. • Liability towards International accords. • Liquidations/ non-liquidation of liabilities. • Liability towards non-compliance-penalty. • Value of liability – adequacy or otherwise. • Whether liability is bearable. RTI Mumbai/DAY 1/Slide 1.2.3

  18. Disclosure: • Not only accounting of assets and liabilities but also contingent liabilities. • Disclosure – Accounting Standards. Companies Act provisions- • Statutory corporations – Act provisions under which such bodies function. • Relationship with the provisions of Act and the environmental issue. RTI Mumbai/DAY 1/Slide 1.2.3

  19. Autonomous Bodies CAG’s DPC Act. • Consent audit. • Major financial implications – Bodies like Industrial Development Corporation, Housing Boards, Metro politan Region Dev. authority/ Sewerage Board, water Authority etc. undertake activities affecting environment • All have environmental issues to be dealt with. • Construction to be ecofriendly. • Construction issue – Deforestation, tree felling dust rising, pollution of air etc. • Afforestation – Major expenditure, its effectiveness RTI Mumbai/DAY 1/Slide 1.2.3

  20. Major financial implications for audit under section 20- certification Audit. • Balance to be verified and audited environmental perspective. • Litigation on account of environmental issues. • Non allotment of land due to Forest clearance. • All environmental issues to be seen in the audit under Section 20. RTI Mumbai/DAY 1/Slide 1.2.3

  21. SAI to take up audit with an environmental perspective. • Highlight lack of development due to environmental issues. • Sustainable Development Concept to be kept in mind. • Objection only on developmental side may be detrimental to eco systems. • Reporting to be moderate. RTI Mumbai/DAY 1/Slide 1.2.3

  22. Environmental auditing can be done: • throughso many important sections of CAG’s DPC Act. • Incase of units getting Government grants sections 14/15 of CAG’s DPC Act apply. • Reporting to be moderate if the objection obstructs environmental promotion. RTI Mumbai/DAY 1/Slide 1.2.3

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