AUDIT ACT, 2048  (1991)

 

The following Act was published in the Nepal Gazette, Part II, Vol. 41, Additional Number 47, dated 2048/7/11 (October 28, 1991).

 

 

Act No. 16 of 1991

AN ACT TO PROVIDE FOR AUDIT

 

Preamble

 

            Whereas it is expedient to make necessary provisions on Audit, the Parliament has enacted this Act.

 

1.         Short Title and Commencement

 

            (1)        This Act may be cited as "Audit Act, 1991"

            (2)        This Act shall come into force immediately.

 

2.         Definitions

 

            Unless repugnant to subject or context, in this Act-

 

            (a)        "Government Office" means all government office and courts, including the Supreme Court, Parliament, Abuse of Authority Investigation Commission, Auditor General, Public Service Commission and Offices of other constitutional bodies, and Nepal Army and Nepal Police.

 

            (b)        "Accounts" means the records, ledgers, books etc. maintained under existing laws showing particulars of transactions, and other documents substantiating such transactions.

 

            (c)        "Audit" means examination of the accounts and the analysis and evaluation made on the basis thereof.

 

            (d)        "Corporate Body Wholly Owned by Nepal Government" means a corporate body of which all shares of assets are owned by Nepal Government, or a corporate body of which all shares or assets are owned by the aforesaid corporate body or by such corporate body and Nepal Government. The expression shall also include such corporate body for whom Nepal Government is required to bear full responsibility.

 

            (e)        "Corporate Body Substantially Owned by Nepal Government" means a corporate body whose more than fifty percent shares or assets are owned by Nepal Government.

 

3.         Methods of Audit

 

            (1)        The Auditor General may conduct final audit of the financial activities and other activities relating thereto of the offices, bodies or organisations under its jurisdiction, either in detail or sporadically or in samples, prescribe scope, methodology and timing of audit and present the facts obtained therefrom, make critical comments thereon and submit its reports.

 

            (2)        The Auditor General may, if it deems necessary in course of audit, exercise the following powers -

 

                        (a)        To check at any time the status of the program and project being operated under the grants obtained by Nepal Government and examine documents relating to accounts;

 

                        (b)        To require contractors of government contracts to produce relevant documents or other evidence relating to the contract, which are supposed to be in his possession;

 

                        (c)        To hire services of any expert on the task of audit and, if necessary, engage him under contract with reasonable remuneration.

 

4.         Matters to be audited

 

                        The Auditor General, with due regard to the regularity, economy, efficiency, effectiveness and propriety, shall audit following matters to ascertain whether;

 

            (a)        The amount appropriated in the concerned heads and sub-heads by the Appropriation Act for respective services and tasks have been expended for the specified purposes of designated services or tasks within the approved limit;

 

            (b)        The financial transactions comply with the existing laws and the evidence relating to items of income and expenditure are sufficient;

 

            (c)        The accounts have been maintained in the prescribed forms and such accounts fairly represent the position of the transactions;

 

            (d)        The inventory of government assets is accurate and upto-date, and the arrangement for protection and management of governmental property is adequate;

 

            (e)        The arrangements for internal audit and internal control of cash, kind and other governmental property against any loss, damage and abuse are adequate and if so, are they pursued;

 

            (f)         The accounts of revenue, all other incomes and deposits are correct and the rules relating to evaluation, realisation and methods of book keeping are adequate and if so, are they followed;

 

            (g)        The accounts relating to public debts, security, deposit, Debt Relief Fund and the amounts set aside for debt services and repayment of debts are accurate;

 

            (h)        The accounts of income and expenditure of industrial and business services, and their balance of cash and kind, and the arrangements and rules relating to their financial transactions are adequate and if so, are they observed;

 

            (i)         The organisation, management and job allocation of the office are sufficient and proper and are they operating accordingly;

 

            (j)         Any function is being unnecessarily performed in  duplication by any employee or agency or any essential function is being omitted;

 

            (k)        The available resources, means and assets are properly utilized and the maintenance and preservation thereof against any loss or damage has been properly arranged;

 

            (l)         The progress has been achieved within scheduled time and the quality and quantity of the work is satisfactory;

 

            (m)       The objective and policy of the Office is explicit and the program is delineated conforming to the specified objective and policy;

 

            (n)        The program is being implemented within the limits of approved cost estimate and the proceeds received in comparison to the cost is reasonable;

 

            (o)        The arrangements for maintaining data relating to target, progress and cost are adequate and reliable;

 

5.         Matters to be audited in View of Propriety

 

            (1)        The Auditor General shall audit following matters considering the propriety thereof -

 

                        (a)        On the propriety of any expenditure and its authorization, if in the opinion of the Auditor General such expenditure is a reckless one or is an abuse of national property, whether fixed or current, despite that the expenditure conforms to the authorization, and

 

                        (b)        On the propriety of all authorizations issued in respect of any grant of national property whether fixed or current, or underwriting of any revenue, or any contract, licence or permits relating to mining, forest, water resources, etc. and any other act of abandoning fixed or current assets of the nation.

 

            (2)        The Auditor General may not include in his report minor items of discrepancy and other  items deemed by him as insignificant in view of their propriety which were observed during the audit of income and expenditures.

 

6.         Audit of Corporate Bodies Wholly Owned by Nepal Government

 

            (1)        Notwithstanding anything contained in the existing laws, the audit of the corporate bodies wholly owned by Nepal Government shall be audited by the Auditor General pursuant to this Act.

 

            (2)        If the Auditor General is constrained by time and resources to audit the corporate bodies wholly owned by Nepal Government pursuant to Sub-section (1), he may appoint professional auditors according to the existing laws as his assistants. While appointing auditor as such, he shall give priority to the Nepali citizens.

 

            (3)        The auditors appointed pursuant to Sub-section (2) shall act under the direction, supervision and control of the Auditor General.

           

            (4)        The powers, functions, duties and responsibilities of the auditors appointed pursuant to Sub-section (2) and the procedures to be followed by them in course of audit and provisions relating to their report shall be as prescribed by the Auditor General.

 

            (5)        The remuneration to be paid by the concerned organisation to the auditors appointed pursuant to Sub-section (2) shall be prescribed by the Auditor General keeping in view the volume of financial transactions, status of accounts, number of branches and sub-branches, work load and work progress of the concerned organisation.

 

7.         Audit of Corporate Bodies Substantially Owned by Nepal Government

 

            (1)        The audit of the corporate bodies substantially owned by Nepal Government shall be done in accordance with the existing laws relating to such body.

 

            (2)        Notwithstanding anything contained in Sub-section (1), the Auditor General shall be consulted while appointing an auditor for auditing of the corporate bodies substantially owned by Nepal Government.

 

            (3)        The procedures to be followed while consulting the Auditor General for appointing auditors  pursuant to Sub-section (2) and on matters of principles of audit to be followed by the auditors during their audit shall be as prescribed by the Auditor General.

 

            (4)        The concerned organisation shall deliver at the Office of the Auditor General a copy of the report submitted by the auditor appointed in consultation with the Auditor General pursuant to Sub-section (2).

 

            (5)        The Auditor General may issue directives to the concerned organisation in respect of the irregularities observed in the report received pursuant to Sub-section (4) and it shall be the duty of concerned organisation to abide by such directives.

 

8.         Annual Report of the Auditor General

 

                        The Auditor General shall submit his/her annual audit report, including his/her critical comments and recommendations thereon, to the President on the final audit of Government Offices and other offices and organisation prescribed by existing laws, which are subject to audit by the Auditor General.

 

                        Provided that the Auditor General may submit at any time a report to the President if he/she deems necessary to take immediate action against any loss or damage already happened or impending upon fixed and current national assets.

 

9. *     

 

10.       Powers to issue Directives by the Auditor General

 

                        The Auditor General may, subject to the Interim Constitution of Nepal, 2007 and the existing laws, issue directives  to the  concerned Government Offices, and Corporate Bodies wholly or substantially owned by Nepal Government, from time to time to make proper arrangements on matters of accounts and to maintain regularity therein. It shall be the duty of the concerned offices or organisations to abide by such directives.

 

11.       Powers to Frame Rules

 

                        Nepal Government may, in consultation with the Auditor General, frame Rules for the implementation of this Act.

 

 

 

12.       Action to be taken Against Irregularities

 

                        Necessary legal action shall be taken in respect of the faults and irregularities observed during the audit of income and expenditure and other financial matters of Nepal Government, according to the existing laws.

 

13.       Repeal and Savings

 

            (1)        Audit Act, 1961 is here by repealed.

 

            (2)        Accounts to be audited under the Audit Act. 1961 shall be audited according to this Act.

 

 

 

* Note: Repealed by Civil Service (Second Amendment) Act, 2007.