There are three broad categories of the State units which are run as commercial undertakings. These are Departmental undertakings statutory corporations and Government companies.
The statutory basis for audit of Departmental Undertakings has been provided under the Constitution of India and Article 149 discussed above provides the necessary powers to the Comptroller and Auditor-General of India.
He is empowered to extend the scope of such audit to conduct a scrutiny of the authority of expenditure and of the regularity and propriety of the business and financial transactions.
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The purpose of this audit is to examine the authority and authenticity of such transactions on the one hand and also of the allocation of expenditure between capital and revenue on the other.
This has to be seen as to how the various assets have been valued and also as to whether the provisions for depreciation, bad debts and other reserves are adequate. The Comptroller and Auditor-General of India also examines and working of these departmental units and submits his report on the weaknesses which he observes in the areas of their operations.
So far as the audit of accounts of statutory corporations is concerned, wide variations exist in the audit provisions from one unit to another. As is well known, each corporation is set up under a distinctive Special Act of the Parliament or of the State Legislature and in most of the cases, the Comptroller and Auditor-General of India has been given the statutory responsibility for audit of their accounts.
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There are a few cases where the professional Chartered Accountants are solely responsible for the audit. Such example is the State Bank of India, Industrial Financial Corporation, Central and State Warehousing Corporations. Life Insurance Corporation, Food Corporation, etc., in which the accounts are audited by the professional Chartered Accountants.