Audit of Stores and Stocks

Audit of the accounts of stores and stocks has been developed as a part of expenditure audit with
reference to the duties and responsibilities entrusted to C&AG. Audit is conducted to ascertain whether
the Regulations governing purchase, receipt, and issue, custody, sale and stock taking of stores are
well - devised and properly carried out. The aim is also to bring to the notice of the government any deficiencies in quantities of stores held or any defects in the system of control. The audit of purchase of
stores is conducted in the same manner as audit of expenditure, namely, that these are properly
sanctioned, made economical and in accordance with the Rules for purchase laid down by the
competent authority. The auditor has to ensure that the prices paid are reasonable and are in
agreement with those shown in the contract for the supply of stores, and that the certificates of quality
and quantity are furnished by the inspecting and receiving units. Cases of uneconomical purchase of
stores and losses attributable to defective or inferior quality of stores are specifically brought by the
audit. Accounts of receipts, issues and balances are checked regarding accuracy, correctness and
reasonableness of balances in stocks with particular reference to the specified norms for level of
consumption of stock holding.

Audit of Receipts

The audit of receipts is neither all pervasive or as old as audit of expenditure but has come to stay in
some countries. Such an audit provides for checking; (i) whether all revenues or other debts due to
government have been correctly assessed, realised and credit to government account by the
designated authorities; (ii) whether adequate regulations and procedures have been framed by the
department/agency concerned to secure an effective check on assessment, collection and proper
allocation of cases; (iii) whether such regulations and procedures are actually being carried out; (iv)
whether adequate checks are imposed to ensure the prompt detection and investigation of irregularities,
double refunds, fraudulent or forged refund vouchers or other loss of revenue through fraud or wilful
omission or negligence to levy or collect taxes or to issue refunds; and (v) review of systems and
procedures to see that the internal procedures adequately secure correct and regular accounting of
demands collection and refunds and pursuant of dues up to final settlement and to suggest
improvement. The basic principle of audit of receipts is that it is more important to look at the general
than on the particular, though individual cases of assessment, demand, collection, refund, etc. are
important within the area of test check. A review of the judicial decisions taken by tax authorities is done
to judge the effectiveness of the assessment procedure.