PREFACE

1.    The accounts of Government Companies set up under the provisions of the Companies Act (including Government Insurance Companies and Companies Deemed to be Government Companies as per provisions of the Companies Act, 1956) are audited by the Comptroller and Auditor General of India (CAG) under the provisions of Section 619 of the Companies Act, 1956. The accounts certified by the Statutory Auditors (Chartered Accountants) appointed by CAG under the Companies Act, 1956 are subjected to supplementary or test audit by officers of CAG, based on which the comments of CAG upon the report of the Statutory Auditors or a supplementary report by him may be issued. The Companies Act, 1956 also empowers CAG to issue directions to the Statutory Auditors on the manner in which the Company’s accounts shall be audited.

2.    The statutes governing some Corporations and authorities set up by the Government of India require their accounts to be audited by CAG and reports given by him. In respect of 4 such corporations, viz., Airports Authority of India, National Highways Authority of India, Inland Waterways Authority of India, and Damodar Valley Corporation, relevant statutes designate CAG as their sole auditor. In June 2000, Food Corporations Act, 1964 was amended whereby CAG was made sole auditor for this Corporation also. In respect of another corporation viz., Central Warehousing Corporation, CAG has the right to conduct a supplementary or test audit after audit has been conducted by the Chartered Accountants appointed under the related statute governing the Corporation.

3.    Reports in relation to the accounts of a Government Company or Corporation are submitted to the Government by CAG under the provisions of Section 19-A of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971, as amended in 1984.

4.    Three annual reports on the accounts of the Central Government Companies and Corporations are issued by CAG every year to the Government. These are:

‘Report No. 1 - Review of Accounts’ gives an overall appreciation of the performance of the Companies and Corporations as revealed by their accounts and information obtained in audit excluding State Government PSUs and units like Indian Farmers Fertiliser Cooperative Limited and Krishak Bharti Cooperative Limited which are audited by CAG under section 14 and 20 of CAG’s (DPC) Act, 1971 as amended in 1984.

‘Report No.2 - Comments on Accounts’ contains extracts from the important comments of CAG on the accounts of the Companies and Corporations and a resume of the reports submitted by the Statutory Auditors (Chartered Accountants) on the audit of the Companies in pursuance of the directions issued by CAG.

‘Report No.3 - Transaction Audit Observations’ contains the observations on individual topics of interest noticed in the course of audit of the Companies and Corporations and short reviews on aspects of their working.

5.    Audit Boards are set up under the supervision and control of CAG to undertake comprehensive appraisals of the performance of the Companies and Corporations subject to audit by CAG. Each Audit Board consists of the Chairman (Deputy Comptroller and Auditor General-Commercial), two or three whole-time members of the rank of Principal Directors of Audit under CAG and two technical or other experts in the area of performance of the Company or Corporation who are part-time members of the Audit Board. The part-time members are appointed by the Government of India (in the respective Ministry or Department controlling the Company or Corporation) with the concurrence of CAG. CAG also reviews certain specific aspects of functioning of some PSUs outside the mechanism of the Audit Board. The reports of CAG based on such performance appraisals by the Audit Board and other reviews are issued to the Government as separate reports in addition to the annual reports mentioned in para 4.

6.    Provisions exist in the Acts governing Reserve Bank of India, Export-Import Bank of India, Industrial Reconstruction Bank of India, National Bank for Agricultural and Rural Development and National Housing Bank for the Central Government to appoint CAG, at any time, to examine and report upon their accounts. No such appointment was made during 2000-01.

7.    The accounts of the Central Government Public Sector Undertakings reviewed in this Report cover the accounts for the years 1998-99, 1999-00 and 2000-01 (to the extent received). In respect of PSUs where any particular year’s accounts were not received before 15 October 2001, the figures of the last audited accounts have been adopted. In respect of some PSUs, figures for the previous year might not agree with the corresponding figures shown in the Audit Report- No. 1 of 2001, owing to replacement of provisional figures by audited/revised figures.

8.    All references to ‘Government Companies/ Corporations or PSUs’ in this report may be construed to refer to ‘Central Government Companies/ Corporations’ unless the context thereof suggests otherwise.