Accounts and audit – APPSC Paper I notes

Core facts

Chapter VII (Ss.57–64): budget, accounts and audit. S.57 budget; S.58–64 accounts and audit; Chapter VIII (finance) begins at S.65.
S.58(1): the Executive Officer keeps regular accounts of all receipts and payments for each financial year, in the form the Commissioner specifies.
Three audit slabs (S.58(2)), by the S.65 income of the immediately preceding financial year:

Annual income	Kind of audit	Done by
Above ₹25 lakh	Concurrent audit (as and when transactions happen)	Agency named by Government under S.63
₹2 lakh up to ₹25 lakh	Once a year (shorter intervals if the Commissioner directs)	Agency under S.63
Below ₹2 lakh	Once a year	Officer subordinate to the Assistant Commissioner

Old limits (before Act 33 of 2007, from 3-1-2008): concurrent audit above ₹1 lakh; the ₹2 lakh line was ₹5,000.
Who gets the audit report (S.59):

Section 6 class	Report sent to
6(a), 6(d), 6(e)	Commissioner
6(b)	Deputy Commissioner
6(c)	Assistant Commissioner

Section map of the chapter:

Section	Subject
58	Accounts and audit; the three slabs
59	Authority to whom the audit report is submitted
60	Contents of the audit report
61	Rectification of defects disclosed in audit; surcharge
62	Defects found by the Commissioner himself
63	Agency for audit (named by Government)
64	Duty of trustee and staff to assist the auditor

Audit fee: 1½% of annual income (S.65(4)), credited with the contribution to the Endowments Administration Fund (S.69(2)(a)(iii)).
TTD (S.117): accounts kept by the Financial Adviser and Chief Accounts Officer; audited once a year (or oftener if Government directs) by an auditor appointed by the Government, who reports to the Government.

Explained

What the auditor must point out (S.60).

Illegal, irregular or improper expenditure.
Failure to bring to account money or property due to the institution.
Loss or waste of money or property caused by negligence, misconduct, misapplication, collusion, fraud, breach of trust or misappropriation by the trustee or anyone else.
S.60(2): any other particulars that are prescribed or that the Commissioner, DC or AC directs.
The report looks back at past transactions; proposals for the next budget are not its business (that is S.57).
S.59 covers a report on a financial year, a shorter period, or any single transaction or series.

Rectification and surcharge (S.61).

Step	Sub-section	Rule
Report to EO	61(1)	Commissioner, DC or AC sends the report to the EO; the EO must rectify the defects and report back
Commissioner's cases	61(2)	For reports received under S.59(i) (6(a), 6(d), 6(e)) the Commissioner enquires, issues show cause, then orders payment
DC/AC cases	61(3)	For 6(b) and 6(c), the DC or AC finds the default and informs the Commissioner, who issues show cause and orders payment
Communicating	61(4)	Order with reasons sent by registered post
Wilful delay	61(6)	If the person is disposing of or removing property: security or conditional attachment

A surcharge is an order that the trustee or other person pays personally, not from institution funds, the money spent illegally or the value of property lost, within the time fixed in the order.
Only the Commissioner passes a surcharge order; the DC and AC only report the default.
A loss beyond the trustee's control is not a ground; negligence, misconduct, fraud or misappropriation is.

Commissioner's own action (S.62). "Without prejudice to S.61" (that is, in addition to it), the Commissioner, on his own motion or on the report of a DC, AC or any other officer, after enquiry and a chance to make a representation, may:

order conditional attachment of the person's property;
institute criminal proceedings;
call for the audit report and order payment.

Duty to help the auditor (S.64). The trustee, and every officer, servant and agent under him and anyone connected with management, must produce the accounts, correspondence, plans, money and other property and give all information the auditor needs.

Recovery as land revenue (S.148).

S.148(1): an unpaid surcharge is recovered by the RDO or Deputy Commissioner in whose area the person's property lies, on the Commissioner's request, as arrears of land revenue, and paid to the institution.
S.148(2): unpaid contribution and other dues to Government are recovered the same way from the institution.
S.148(3): a notice gives 15 days to pay; then the amount with costs is recovered as land revenue.
S.148(4): arrears due to Government are first taken from the tasdik or other allowances Government pays the institution.
S.148(5): no action against temples, tanks, festival grounds, idols, vahanams, jewels and articles used in worship and processions.
S.148(6): instead of a sale, a receiver may be appointed to collect the property's income until the arrears are paid.

Audit-linked income rule. Recoveries made at the instance of audit are not income when computing annual income under S.65 (Explanation 1(j)); they only restore money already lost.

Common traps

✗ "The trustee keeps the accounts." ✓ The Executive Officer does (S.58(1)); the trustee submits the budget (S.57).
✗ "Concurrent audit applies at ₹25 lakh exactly." ✓ Income must exceed ₹25 lakh; at exactly ₹25 lakh it is the yearly audit.
✗ "Concurrent audit starts above ₹1 lakh." ✓ That was the pre-2007 limit; now above ₹25 lakh.
✗ "The Commissioner names the audit agency." ✓ The Government does (S.63).
✗ "6(e) audit reports go to the Deputy Commissioner." ✓ 6(a), 6(d), 6(e) → Commissioner (S.59(i)).
✗ "The Deputy Commissioner can order a surcharge." ✓ Only the Commissioner; the DC or AC reports to him.
✗ "A surcharge is paid from temple funds." ✓ The defaulter pays personally.
✗ "Surcharge must be paid within 15 days of the order." ✓ Within the time fixed in the order; 15 days is the S.148 recovery notice.
✗ "Section 60 deals with rectification." ✓ S.60 = contents of the report; S.61 = rectification.
✗ "Recovery can extend to a temple's vahanams and jewels." ✓ Barred by S.148(5).

Quick revision

Chapter VII = Ss.57–64; S.58 accounts kept by the EO in the Commissioner's form.
Above ₹25 lakh: concurrent audit; ₹2 lakh–₹25 lakh: yearly; below ₹2 lakh: officer under AC.
S.63: Government names the audit agency (for the first two slabs).
S.59: 6(a), 6(d), 6(e) → Commissioner; 6(b) → DC; 6(c) → AC.
S.60: illegal spending, failure to recover, loss by fraud or negligence.
S.61: EO rectifies; only the Commissioner surcharges after show cause; registered post.
S.62: Commissioner suo motu: attachment, criminal case, payment order.
S.64: trustee and staff must help the auditor.
S.148: land revenue arrears via RDO/DC; 15-day notice; idols, jewels, vahanams exempt.
TTD S.117: FA and CAO keeps accounts; Government's auditor, yearly.

Go deeper: Deeper (beyond what APPSC Paper I usually asks)

Deeper Advanced

S.61 vs S.62. S.61 starts from an audit report and follows a fixed route (EO rectifies, Commissioner surcharges). S.62 lets the Commissioner act on any information, and adds attachment and prosecution.
S.61(5): a surcharge order does not bar a civil suit for accounts against the person, except as far as the order has become final.
TTD's auditor's fee is paid first from the Consolidated Fund and recovered from TTD funds (S.117(4)); the Financial Adviser and his staff must give the auditor every help (S.117(3)).

Medha AI writes its own notes and checks them against the sources listed. Medha AI is an independent preparation service. It is not affiliated with, endorsed by or connected to APPSC, TSPSC, MPSC, UPSC or any other commission or government body.

10.1.3 Accounts and audit

Download this PDF

Core facts

Explained

Common traps

Quick revision

Deeper Advanced