ANDHRA PRADESH STATE AUDIT ACT, 1989

9 of 1989

An Act to authorise the Director of State Audit to Audit the Accounts relating to Local Authorities or other Authorities and for matters connected therewith or incidental thereto. Be it enacted by the Legislative Assembly of the State of Andhra Pradesh in the Fortieth Year of the Republic of India as follows:-

Section 1 Short title, extent and commencement

(1) This Act may be called the Andhra Pradesh State Audit Act, 1989.

(2) It extends to the whole of the State of Andhra Pradesh.

(3) It shall be deemed to have come into force on the 7th January, 1989.

Section 2 Definition

In this Act, unless the context otherwise requires-

(a) 'audit' means pre-audit, concurrent audit, post audit, cent per cent audit, resident audit, test audit, special audit and such other examination of accounts as the Government may from time to time, specify;

(b) 'auditor' means the Director of State Audit appointed under Section 3 and includes any other person on whom all or any of the powers of the auditor under this Act, are conferred;

(c) 'cent per cent audit' means a post audit of all the transactions of a particular account of a specified period;

(d) 'Chief Executive Officer' means the Officer or authority vested with powers to administer the fund of Local authority or any other authority specified in the Schedule (hereinafter referred to as other authority) and includes every officer by whatever designation known dealing with such local authority or other authority;

(e) 'Concurrent audit' means a post audit of a day-to-day accounts of a specified period, with a general review of accounts from time to time;

(f) 'Director' means the Director of State Audit appointed under Section 3;

(g) 'fund' means any fund the control and management of which a local authority or other authority is legally entitled to and includes any cess, rate, duty fee or tax leviable by, and any property vested in, such authority;

(h) 'Government' means the State Government of Andhra Pradesh;

(i) 'local authority' means;

(A) a municipal corporation constituted under the law relating to municipal corporation for the time being in force;

(B) a municipal council constituted under the Andhra Pradesh Municipalities Act, 1965,;

(C) a Mandala Praja Parishad, a Zilla Praja Parishad or a Zilla Abhivrudhi Sameeksha Mandali constituted under the Andhra Pradesh Mandala Praja Parishads, Zilla Praja Parishads and Zilla Abhivrudhi Sameeksha Mandals Act, 1986;

(D) a Gram Panchayat or a township constituted under the Andhra Pradesh Gram Panchayats Act, 1964;

(E) A market committee constituted under the Andhra Pradesh (Agricultural Produce and Livestock) Market Act, 1966;

(F) Rashtra Karshaka Parishad, Commodities Federations and Mandal Karshaka Parishads constituted under the Andhra Pradesh Rashtra Karshaka Parishad and Allied Bodies Act, 1988; and

(G) A Zilla Grandhalaya Samstha constituted under the Andhra Pradesh Public Libraries Act, 1960;

(j) 'notification' means a notification published in the Andhra Pradesh Gazette and the word notified' shall be construed accordingly;

(k) 'post audit' means the detailed audit conducted after the transactions are completed;

(l) 'pre audit' means the preliminary audit before receiving the money or arranging the payments;

(m) 'prescribed' means prescribed by rules made under this Act;

(n) 'resident audit' means concurrent or pre-audit of expenditure and review of receipts;

(o) 'schedule' means the Schedule appended to this Act;

(p) 'special Audit' means an audit, of accounts pertaining to a specified item or series of items requiring thorough examination.

(q) 'surcharge' means the amount for which, the auditor in exercise of powers vested in him under this Act, makes a person liable for the loss, waste, misapplication or misappropriation, of any money or other property belonging to any local authority.

Section 3 Appointment of Director

(1) There shall be appointed by the Government a Director of State Audit to be incharge of the audit of the fund of local authorities and other authorities specified in the Schedule in the whole of the State hereinafter referred to as Director' and as many other persons as they consider necessary to exercise the powers and perform the functions of the Director under this Act in relation to such areas as may be specified.

(2) The powers to be exercised and functions to be performed by the Director shall be such as may be prescribed.

(3) The Director shall exercise general control and superintendence over the officers of the State Audit Department in the performance of their functions under this Act or the rules made thereunder.

(4) Notwithstanding anything in sub-section (1), the Director of Local Fund Audit functioning before the commencement of this Act, shall continue to be such Director and functions as such until a new Director is appointed under sub-section (1) and the Department known as the Local Fund Audit Department' prior to the commencement of this Act, shall hereinafter be known as the State Audit Department'.

Section 4 Audit of accounts

Notwithstanding anything in any other law for the time being in force but without prejudice to the powers and functions of the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971, it shall be lawful for the Director to conduct an audit in respect of any local authority or any other authority specified in the Schedule in the manner provided by or under this Act, and to recover the cost of audit in respect of such authorities as may be specified by the Government, by order subject to such rules as may be made in this behalf.

Section 5 Presentation of Accounts for audit

Every Chief Executive Officer shall present or cause to be presented for audit all the accounts of the fund which he administers annually within such period in such form and in such manner as may be prescribed.

Section 6 Production of documents and attendance of persons for audit

(1) For the purpose of any audit under this Act an auditor may-

(a) require the Chief Executive Officer concerned in writing the production, at the head office of the local authority or other authority of such receipts, vouchers, statements, returns, correspondence, notes or any other documents in relation to the accounts as he may think fit;

(c) in the event of an explanation being required from the Chief Executive Officer, invite such officer in writing specifying the points on which his explanation is required to meet him at the head office of such officer; or

(d) exercise such other powers as may be prescribed.

(2) The auditor may fix a reasonable period of not less than three days for the purpose of compliance of the provisions of sub-section (1).

(3) The auditor shall give the local authority or other authority not less than one weeks notice in writing of the date on which he proposes to commence the audit:

Provided that for special reasons to be recorded in writing the auditor may give a shorter notice than a week or commence a special or detailed audit on the authority of the Government or the Director without such notice.

Section 7 Furnishing of audit report

The Director shall, as soon as practicable after the completion of audit prepare a report on the accounts audited and examined by him and send such report to the concerned local authority or other authority in such manner, as may be prescribed.

Section 8 Contents of audit report

The audit report shall contain a statement of-

(a) every payment which appears to him to be contrary to law;

(b) the amount of any deficiency, waste or loss which appears to have been caused by the gross negligence or misconduct of any person in the performance of his duties;

(c) the amount of any sum received ought to have been accounted but is not brought into account by any person; and

(d) any material impropriety or irregularity which he may observe in the expenditure or in the recovery of money due.

Section 9 Procedure to be followed after furnishing the report

(1) On receipt of the audit report under Section 8, the Chief Executive Officer shall remedy any defect or irregularity which may have been pointed out in the report and shall place the audit report, together with a statement of action taken or proposed to be taken thereon and an explanation in regard thereto before a meeting of the concerned local authority or other authority specially convened for the purpose within a period of two months from the date of receipt of the audit report. He shall also within one month of the said meeting, send to the Director a report of his having remedied the defects or irregularities, if any pointed out in the audit report or shall, within the said period, supply the Director any further explanation in regard to such defects or irregularities as the local authority or other authority may wish to give-

(3) Nothing in this section or in Section 8 shall preclude the Director at any time from bringing to the notice of the Government for such action as he may consider necessary any information which appears to him to support a presumption of criminal misappropriation or fraud or which in his opinion deserves special attention or immediate investigation.

Section 10 Director to surcharge illegal payment or loss caused by gross negligence or misconduct

(1) The Director may disallow every item of expenditure incurred contrary to law and surcharge the same on the person incurring or authorising the incurring of, such expenditure, and may charge against any person responsible thereof the amount of any deficiency, loss or unprofitable outlay occasioned by the negligence or misconduct of that person or of any sum which ought to have been accounted but is not brought into account by that person and shall, in every such case, certify the amount due from such person.

Explanation :- It shall not be open to any person whose negligence or misconduct has caused or contributed to any such deficiency or loss, to contend that notwithstanding his negligence or misconduct the deficiency or loss would not have occurred, but for the negligence or misconduct or some other person.

(2) The Director shall state in writing the reasons for his decision in respect of every disallowance, surcharge or charge and a copy of such decision shall be served on the person against whom it is made in the manner laid down for the service of summons in the Code of Civil Procedure, 1908.

(4) Where an application is made to the court under Clause (a) of sub-section

(3), the Director shall be the sole respondent thereto, and the applicant shall not make either the Government or any other person a party to the proceedings.

(5) From the decision of the court under Clause (a) of sub-section (3), an appeal shall lie to the High Court.

(6) Every sum certified by the Director to be due from a person under this Act shall be paid by such person to the local authority or the other authority as the case may be within sixty days after the date of service on him of the decision of the Director unless within that time such person has made an application to the court or an appeal to the Government against the decision, and such sum, if not so paid, or such sum as the Court or the Government declare to be due, shall be recoverable as if it were an arrear of land revenue.

Section 11 Director to submit audit and review report

(1) The Director shall submit annually a Consolidated Audit and Review Report on the accounts of the local authorities, or other authorities in such form and in such manner as may be prescribed and furnish the same to the Government.

(2) The amount Consolidated Audit and Review Report in respect of local authorities shall be laid on the table of the Legislative Assembly.

Section 12 Penalties

(2) No prosecution for any offence punishable under this Act shall be instituted except with the previous sanction of the Director.

(3) Before issuing such sanction under sub-section (2), the Director shall give a reasonable opportunity to the person against whom the proceedings are to be instituted, to show cause why the sanction for such prosecution shall not be given.

(4) No court inferior to that of a Magistrate of the First Class shall try any offence punishable under this Act.

Section 13 Officers and employees of the State Audit Department to be public Servants, Central Act 45 of 1860

The Director or any other Person appointed to exercise any of the powers or perform any of the functions under this Act shall be deemed to be a public servant within the meaning of Section 21 of the Indian Penal Code, 1860.

Section 14 Protection of action taken in good faith

No suit, prosecution or other legal proceedings shall be instituted against the Director or any person acting under the provisions of this Act for anything which is in good faith done or intended to be done under this Act or under the rules made thereunder.

Section 15 Amendment of the Schedule

The Government may by notification and for reasons to be recorded therein, add any other authorities to or omit any such authority from the Schedule and on the publication of such notification such authority shall be deemed to be included in, or as the case may be, omitted from the schedule.

Section 16 Power to make rules

(1) The Government may by notification, make rules for carrying out all or any of the purposes of this Act.

(2) Every rule made under this Act shall immediately after it is made be laid before the Legislative Assembly of the State, if it is in session and if it is not in session, in the session immediately following for a total period of fourteen days which may be comprised in one session or in two successive sessions, and if, before the expiration of the session in which it is so laid or the session immediately following the Legislative Assembly agrees in making any modification in the rule or in the annulment of the rule, the rule shall, from the date on which the modification or annulment is notified, have effect only in such modified form or shall stand annulled as the case may be so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.

Section 17 Repeal of Ordinance 1 of 1989

The Andhra Pradesh State Audit Ordinance, 1989 is hereby repealed.

SCHEDULE 1 THE SCHEDULE

THE SCHEDULE

See Section 2(0)

1. All Hindu Religious and Charitable Endowments and Institutions.

2. Tirumala Tirupathi Devastanams.

3. Andhra Pradesh Wakf Board.

4. An University established or incorporated by State enactment.

5. Andhra Pradesh Housing Board

6. Integrated Tribal Development Agency and Tribal Welfare Engineering Division

7. An Urban Development Authority constituted under the Andhra Pradesh Urban (Development) Act,1975

8. District Rural Development Agencies

9. A Society for Training and Employment Promotion in the State.

10. Co-operative Societies registered or deemed to be registered under the Andhra Pradesh Co-operative Societies Act, 1964

11. Andhra Pradesh Employees Welfare Fund

12. All Private Engineering Colleges receiving grant-in-aid from the Government

13. All Aided Colleges and Schools other than Government Colleges and Schools

14. All Polytechnics, receiving aid from the Government

15. Aided Women Hostels and other Institutions other than Government under the Women Welfare Department

16. Telugu and Urdu Academies

17. Ravindra Bharathi

18. All Official Receivers

19. Parakala Seshavatharam Andhra Pradesh State Chamber of Panchayati Raj

20. All District Chambers of Panchayati Raj

21. Medical Lending Libraries at Visakhapatnam, East Godavari, Guntur, Chittoor, Kurnool and Warangal Districts

22. District Sailors and Soldiers Board at East Godavari, West Godavari, Krishna, Guntur, Nellore, Chittoor, Anantapur, Cuddapah, Kurnool and Rangareddy Districts.

23. T.B. Sanitorium in Chittoor District

24. Prize Endowments in East Godavari, Chittoor and Anantapur Dists.

25. N.C.C. Trophy, Anantapur

26. District Leprosy Fund, Anantapur

27. Andhra Pradesh Medical Council, Hyderabad

28. Andhra Pradesh Medical Pharmacy Council, Hyderabad

29. Andhra Pradesh Residential Educational Institutions Society, Hyderabad

30. Official Trustee, Hyderabad

31. Andhra Pradesh Bhoodana Yagna Board, Hyderabad

32. Aradhana Magazine.

33. Andhra Pradesh State Council of Higher Education.

34. Andhra Pradesh Dental Council.

RULE:

ANDHRA PRADESH STATE AUDIT RULES, 2000

In exercise of the powers conferred by sub-section (1) of Section 16 of the Andhra Pradesh State Audit Act, 1989 (Act No.9 of 1989), the Governor of Andhra Pradesh hereby makes the following Rules

Rule 1 Short title and commencement

(1) These Rules may be called the Andhra Pradesh State Audit Rules, 2000.

(2) These Rules shall come into force at once.

Rule 2 Definitions

xxxxx

Rule 3 Powers and functions of the Director

(1) The Director shall, in addition to the powers vested in him under the Act, and the rules made thereunder, exercise the powers and perform the functions of the Head of the Department under the various Rules, Codes and Orders of the Government.

(2) The Director may inspect the accounts of Local Authorities and other Authorities specified in the Schedule.

(3) The Director may condone the audit of accounts of any Local Authority or other Authority, where the audit is not possible due to loss of records on account of floods, fire and theft and other natural calamities in consultation with the Heads of Administrative Departments of the Local Authorities or other Authorities concerned.

(5) The Director may call for all the files including the files relating to confidential nature which are not produced to auditors, by the Chief Executive Officer and deal with them in accordance with the standing instructions for the handling and custody of such documents issued from time to time in this regard.

(6) In respect of non-notified Gram Panchayats and other authorities of smaller transactions, and where the individual audit or group basis audit to such authority by an Auditor for audit is not considered desirable or feasible in terms of time spent on transits etc., the Director may through his Subordinate Staff organise to conduct the audit of the said authorities on Group basis, at Mandal Headquarters or at such other places as specified. The responsibility for making available the records at Mandal Headquarters or at the specified places, shall continue to rest with the Chief Executive Authority concerned. The Authority or the Authorities having the administrative control over the said local or other authorities shall take all necessary measures to ensure production of all records as desired by the auditors.

(7) If any difficulty arises in enforcing the various provisions of these rules, unless they require orders from the Government, the same can be clarified by the Director.

Rule 4 Procedure for conduct of Audit

(2) The Director may with permission of Government change the type of audit of any local authority or other authorities.

(3) The Director may arrange concurrent audit of the institutions working under the Tirumala Tirupathi Devasthanams in addition to Post-Audit in consultation with the Chief Executive Officer, Tirumala Tirupathi Devasthanams.

(4) Where it is found necessary on account of special circumstances, the Director may arrange special audit of the accounts of the local authority and other authorities specified in the Schedule to the Act.

(5) The Director may also arrange pre-audit of the local authority or other authorities with the permission of Government.

(6) The Director shall arrange to complete the Audit of accounts of local authority and other authorities, after receipt of accounts and related records, in a reasonable time not exceeding two years from the date of receipt of accounts and records. If the audit could not be completed within the said period, he shall report forthwith to the Government in Finance Department, explaining the reasons and the circumstances therefor.

Rule 5 Preparation and furnishing Accounts

(1) Every Chief Executive Officer shall prepare an annual account in the form prescribed, under the respective Acts, Rules, Statutes or any other order of the Government and where such form is not prescribed in respect of any local authority or other authority, in the form prescribed by the Director and send a copy of it to the auditor authorised by the Director.

(2) A copy of the Annual Account referred to in sub-rule (1) shall be sent within the time specified, under the respective Acts or Rules or Statutes and where a time-limit is not specified in respect of any Local Authority or other Authority, it shall be submitted by 31st of May of the succeeding Financial Year.

(3) The failure on the part of any Chief Executive Officer to produce the accounts for Audit within the time stipulated in accordance with the provisions of the Acts or Rules or to get audit completed without following the procedure, amounts to negligence and punishable under Section 12 of the Act.

(4) The Government shall have the right to impose a cut or withhold the release of grants, if the Local authority or other authorities fails to submit their accounts for audit or fail to submit their Utilisation Certificates without valid reasons.      

Rule 6 Production of Records to Audit

(1) The auditor shall give notice to the Authority before the commencement of audit. During the course of audit, the auditor may indicate in writing the nature or information and the kind of documents, registers and records which are necessary or the explanation for the purpose of audit, through a half margin letter. The person or the authority to whom such requisition is made shall comply with the requirements.

(2) The persons who are being addressed with the half margin letters shall be either the persons who are having custody or control of the information called for and accountable to it or he must be the Chief Executive Authority.

(3) The person or persons called upon to furnish the information by the Auditor shall sign the letter issued by the Auditor in token of having acknowledged the same.

(4) Any person who fails to comply with any requisition under this rule shall be punishable under Section 12 of the Act.

Rule 7 Submission, Approval and issue of audit reports

(1) The Director may authorise any of his or her subordinates to prepare a report on the accounts audited, registers, examined and to send such report after approval, to the concerned local authority or other authorities.

(3) Every auditor who completes the audit shall submit the report to the authority as specified in sub-rule (2). Where the Institution is reviewed with reference to the said report, the reviewing authority shall submit the report after the completion of the review. The responsibility for submission of the report shall therefore lie on the reviewing authority wherever such review is conducted.

(6) The Director before issue of orders under the proviso to sub-rule (5), shall take into account such factors which throw light on the circumstances under which an auditor was unable to submit the reports and where the non-submission was reasonable to be considered he may consider postponing to a reasonable time for the issue of such orders, and in the most deserving cases and keeping in view the public interest also, he shall pass such orders.

(7) Where the period of audit has been treated as non-duty under sub-rule (5) and where an Auditor applied for sanction of leave to which he is entitled, he may be sanctioned with such leave following the leave rules or the Fundamental Rules by which such Auditor or Auditors are governed.

(9) Failure to conduct audit and submit audit report within the stipulated time shall be construed as wilful absence from duty and shall be dealt with in accordance with the provisions of F.R. 18.

Rule 8 Follow up Action on Audit Reports and Settlement of Objections

(1) On receipt of the audit report the Chief Executive Officer concerned shall submit, a report within a period of two months from the date of receipt of the audit report rectifying all the defects pointed out in the report and within four months from the date of receipt of Special letter mentioned in sub-rule (9) of Rule 7, a report of having rectified the defects pointed out in the said audit report and in the Special letter, to the officer who issued the Audit Report and the Special letter.

(2) On receipt of the report from the Chief Executive Officer, the Director or Authority authorised by him for the purpose, shall take up a further examination of the report under clauses (a), (b) and (c) of sub-section (2) of Section 9 of the Act.

(3) The Director may under clause (d) of sub-section (2) of Section 9 of the Act condone any objection wherein the compliance of which is not possible due to loss of records connected with its disposal due to any natural calamity.

(4) The Director, if he considered that any case which appears to support a presumption of criminal misappropriation of fraud deserving special attention or immediate investigation, he shall bring to the notice of the Government for such action as they consider necessary.

Rule 9 Initiating Surcharge Proceedings, Appeal and the Recovery

(6) Where an application is made in the Court under clause (b) of sub-rule (5) or an appeal made under clause (d) ibid, the authority who issued the Surcharge under clause (a) or as the case may be under clause (b) of sub-rule (1) shall be the sole respondent thereto, and the applicant shall not make either the Government or any other person a party to the proceedings.

(7) Notwithstanding the requirement under the first and second proviso to sub-rule (9) of Rule 7, that the Special letter or letters be sent by registered post with Acknowledgement due, the Surchargee shall not be appealed under sub-rule (5), on the ground that the said letter or letters were not received by him nor acknowledged by him. It shall however be open for him to contest or appeal on the contents of the Surcharge Certificate so received by him with reference to the objections or objections copy of which has already been available in the Audit Report sent to the Chief Executive Authority concerned under sub-rule (9) of Rule 7. However in case a copy of the objection on which Surcharge was served, is required to be supplied, the authority who issued the Surcharge shall forthwith supply such copy.

(8) Every sum certified by the Director or other authority subordinate to him, to be due from a person under these rules shall be paid by such person in the nearest Government treasury or in the office of the Local Authority or other Authority as the case may be within sixty days after the date of service on him of the Surcharge Certificate issued by the Director or other Authority subordinate to him and unless within that time such person has made an application or an appeal to the authorities mentioned in sub-rule (5), against the Surcharge Certificate, such sum, if not paid, or such sum as the said authorities declare to be due, shall be recoverable as if it were arrear of land revenue.

(9) All payments within the meaning of sub-rule (8) shall be reported to the authority who issued the Surcharge Certificate, by the Chief Executive Authority or the Surchargee soon after such payments are made. Copies of all Surcharge Certificates on which no action has been taken for recovery under sub-rule (8) shall be communicated to the District Collector concerned, by the surcharge issuing authority, for initiating action for recovery as if they were the arrears of land revenue, the Collector, shall send the particulars of the said recovery to the said Surcharge issuing authority. The District Collector shall designate field level officers concerned of Local authorities or other Authorities for filing Execution Petitions and attending to other matters related thereto.

Rule 10 Furnishing of Audit Reports

The Director shall submit annually a consolidated Audit report and review report on the accounts of the Local authorities or other authorities in such form and in such manner as he thinks fit or as may be prescribed by the Government and furnish the same to the Government.

Rule 11 Preservation of Audit Reports

Audit Reports issued to the Chief Executive Authorities, are the records of permanent nature, unless orders have been issued by the Director for destruction. The entire responsibility for their preservation shall rest with the auditors in charge of the audit of the Local authorities or other authorities under the supervision of the officer immediately superior to them. Auditors or authorities who found guilty of violation of this rule shall suitably be dealt with under the relevant provisions of the law or the rules.

Rule 12 Saving

Consequent on framing of these Rules, the matters relating to audit, settlement of audit objections, surcharge and disallowance covered in any provisions of the rules and the Acts of the Local Authorities or other Authorities, shall to the extent they are not consistent with these rules and the Act, be deemed to have ceased to be in force from the date of coming into force of these Rules, and all orders, rules, amendments or enactments proposed to be made and bearing on the provisions of the Act and these rules, shall be made only in consultation with the Government in Finance Department.