Annexure-I

No. 466 /CA-IV/ 97-2009

Office of the Comptroller & Auditor General of India
9, Deen Dayal Upadhyay Marg,
New Delhi 110002

Dated 8th November 2010

Subject: Minutes of the IInd meeting of the reconstituted Audit Board for central PSUs held
in CAG office on 21st and 22nd October 2010

Kindly refer to the discussions held in the meeting of the Audit Board for central PSUs conducted
on 21st and 22nd October 2010. A copy of the minutes of the meeting is forwarded for information
and necessary action.

Sd/-
(Saroj Punhani)
Member Secretary, Audit Board
Copy forwarded to
1. All the members of the Audit Board
 DAI (C) and Chairman, Audit Board
 Director general (Commercial-I)
 PDCA, MAB-III, New Delhi
 PDCA, MAB Chennai
 Economic Advisor
 Pr. Director (Economic & Service Ministries)
2. DGA (P&T) & All MsAB
3. All Desk officers in HQ
4. Guard file

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 Minutes of the 2nd Meeting of the reconstituted (April 2010) Audit Board for Central
Public Sector Undertakings held in New Delhi on 21 and 22 October 2010
The list of officials who attended the meeting is enclosed as Annexure A.

Introductory remarks
1. The Deputy Comptroller & Auditor General (Commercial) and Chairman, Audit Board
while welcoming the Members Audit Board present at the meeting, stated that the system
of Audit Board Meetings has been structured to bring in more professionalism in our work,
especially to ensure institutional memory of decisions of all Audit Board meetings for
future reference. He re-emphasised the need to move away from individual audit
observations towards systems based audit and theme based audit. He drew attention to
the need for an institutionalised mechanism for monitoring follow up of action points
arising from Audit Board meetings. He communicated to the Board, the CAG’s orders that
our audit findings must be timely and relevant and, to ensure that they are in fact so, all
performance appraisals must be finalised and approved by the CAG within nine months
from the date on which these are taken up. He noted, with great satisfaction, that the
Commercial Audit Wing is the first one in the Department to have prepared a draft five-
year Corporate Plan that is on the agenda for adoption during this meeting. He
complimented Shri Yashwant Thakare and his team of Senior Audit Officers who have
prepared this document so well with its industry sector orientation as also its assurance
based approach. He stressed the great importance of the acquisition of domain
knowledge as a key input into our audit processes and indicated that, henceforth, industry
experts would be invited to speak to us and address this need in every meeting of the
Audit Board.
Item No. 1 To grant leave of absence and apprise of changes in members of Audit
Board
2. Leave of absence was granted to Ms Usha Sankar, Director General (Com-I).
3. Shri M K Biswas, Pr. Director of Commercial Audit and Ex-officio MAB-III, New Delhi and
Shri K Srinivasan, Pr. Director of Commercial Audit and Ex-officio MAB, Chennai were
welcomed on their nomination to the Audit Board from 1 October 2010 to 30 September
2011.
Item No 2 To ratify the minutes of the 1st meeting of reconstituted Audit Board
4. The minutes of the 1st meeting of the Audit Board held in Bangalore on 12 th and 13th July,
2010 were ratified.
Item No 3 Follow-up action on items from the previous Audit Board meetings
5. The members briefed the Audit Board of the actionable points in respect of their offices.
The present status of these and the further action, wherever required, have been indicated
in Annexure B enclosed with these minutes.

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Item No. 4 Review of progress made against targets for financial year 2010-11
4.1 Draft Paras and Thematic Paras
6. Members briefed the Board about the position of thematic paras and draft paras sent to the CAG’s
office vis-a-vis the targets set for them. It was decided that the paras received from the field offices
may be processed without any delay so that the Audit Report relating to compliance observations is
presented in time.
7. The four draft paragraphs included in the DVC Audit Report 2009-10 need to take on board the loss
due to revenue that could have been earned from sale of power had there been no delay in
commissioning of additional capacity – it was agreed that this report must be finalised immediately.

4.2 Pendency in vetting of Action Taken Notes (ATN)

8. The Board was informed that the pendency shown in this agenda item has been cleared. The Board
reiterated that ATNs must be vetted within the 15-day timeframe provided for this purpose. The
Board was informed that, in some cases, there has been delay in movement of these from the CAG’s
office to the field offices. The Board decided that, to avoid such delays, all such documents would,
henceforth, be scanned and sent through e-mail. To strengthen the infrastructure for this purpose in
the CAG’s office, it was decided to install scanners in each Section of the Commercial Audit wing as
also to install one fax machine in the Coordination Section (CA IV).

4.3 Timely issue of Accounts Comments/supplementary Audit reports

9. Some Members stated that delay in finalisation of comments was mainly due to delay in receipt of
replies from the management. The Board drew the attention of all Members to the existing
instructions dated 29 March 2006, which clearly stipulate that we need not wait for the receipt of
replies.

Review of system of supplementary audit including three-phase audit

10. MAB Hyderabad made a presentation on ‘frequency of supplementary audit and system of three
phase audit’.
11. He drew attention to the fact that:
a. The existing norms for selection of PSUs for supplementary audit of their Annual
accounts have not been revised since 2006 though turnover has increased by 50
per cent;
b. The allocation of resources for supplementary audit (about 20 per cent of total
resources or 25 per cent of field audit resources) is disproportionately large given
the fact that this audit is in addition to the audit of annual accounts by the statutory
auditors for these companies that are appointed by us;
c. Companies with minimum risk impact get selected for audit – this also leads to sub
optimal utilisation of resources and
d. The need for CAG’s office approval of all comments on accounts leads to delay in
the issue of these, especially those of low risk impact companies.
12 a The Board agreed that there is a very strong case for reducing the frequency and number of
supplementary audits. After due deliberation it was decided that the requirement of the CAG’s
oversight role vis-a-vis CPSUs would be discharged just as effectively as it is now if we carry out
supplementary audit each year of all companies whose turnover is Rs 5,000 crore or more as also all
companies whose paid up capital is Rs 500 or more. This will ensure coverage, in supplementary
audit, of 94.31% of the total turnover of CPSUs as also 92.16% of the total paid up capital invested in
CPSUs. It was also agreed that the norm should be automatically revised upward every two years to

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 match with the rise in turnover and paid up capital. It was noted that this proposal would require
the approval of the CAG.
12 b It was also agreed that the present cycle in which we carry out a supplementary audit of every single
company over a period of four years be revised to ten years. Thus the companies that are not on the
list for annual supplementary audit as per the revised norm could, henceforth be covered in
supplementary audit over a period of ten years. However, in cases where an individual MAB feels
that there is a need to carry out supplementary audit of any such company earlier than ten years for
any good reason, he or she shall be free to do so. This would also require approval of the CAG.
13. The presentation also made out a case against three phase audit in terms of “dilution” of the
responsibility of the statutory auditors. The Board, however, noted that three-phase audit has been
greatly appreciated by the CPSUs as a big step in the direction of adding value and being an “aid to
management” in as much as it enables corrections to accounts at the instance of the CAG as also in
ensuring timely issue of annual accounts. As such, three-phase audit, especially in respect of listed
PSUs, will continue.

4.4. Material for Audit Report for Financial Reporting

14. MAB Chennai informed the Board about receipt of data/information from field audit offices and
status of the draft Audit Report on Financial Reporting. Members agreed to send the summarised
financial results data in respect of remaining PSUs to MAB Chennai by 25 th October 2010. MAB
Chennai, in turn, promised to send the draft report to the CAG’s office by 4 th November 2010. He
also agreed to send the chapters already drafted to the CAG’s office immediately to enable Hindi
translation.

Item No. 5 Review of progress made against ongoing Performance Audits

5.1 Draft performance audit reports which were received in the CAG’s office on
or before 15th September 2010
15. It was noted that performance audit reports on “Corporate Social Responsibility activities
undertaken by SAIL and RINL”, “Joint venture operations of ONGC Videsh Limited” and “Capacity
addition programme of NTPC Limited” have been approved and issued to the Ministries and should
be tabled in Parliament in its winter session.
16. DAI (C) drew attention to the NTPC Performance Audit report as a good model in terms of
substantive issues, significant findings and due diligence in the audit process. It was decided that the
draft review be circulated to all the Memebers Audit Board. It was also agreed that, henceforth, all
draft performance audit reports as well as thematic studies should, after approval of the CAG’s
office, be circulated to all Members Audit Board for information.
17. It was noted that the review on Financial Performance-NACIL is under finalization in the CAG’s office
and is likely to be submitted to the CAG by 29 th October 2010.
18. It was noted that the review on ‘Functioning of FCI and its impact on food subsidy’ had to be
dropped as it lacked any significant findings vis-a-vis the FCI. The MAB IV Delhi, however, proposed
reconsideration after taking into consideration the total picture that emerges after examination of
FCI and the Ministry of Consumer Affairs taken together. This was agreed to.
19. ‘Procurement activities in SAIL’ – CAG’s office observations have been intimated to the MAB Ranchi
and the modified version would be submitted by the MAB by 31 st October 2010.
20. ‘CSR of PSUs in Coal Sector’ – the draft performance audit report is to be revised based on the
approved performance audit report on ‘CSR-Steel sector’ and resubmitted by MAB II Kolkata by 10 th
November 2010.
5.2 Progress in respect of remaining 10 performance reviews

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‘Implementation of projects for production of Euro-III compliant fuels by Hindustan Petroleum
Corporation Limited’ - MAB-II Mumbai
21. The MAB, after incorporating the material received from MAB I Delhi on EIL, would finally
consolidate the performance audit on receipt of material from MAB-Hyderabad. The draft PA would
be issued to the Management with a copy to the CAG’s office by 15 th November 2010.
‘Performance of Terminals and Depots of Indian Oil Corporation Limited’
22. MAB-II New Delhi would send the PA report to the CAG’s office by 31 st October 2010.
‘Management of vessels in Shipping Corporation of India’
23. MAB I Mumbai indicated that Policy papers relating to Shipping have been collected from Ministry in
co-ordination with PD (ESM) and the draft performance audit report would be submitted to the
CAG’s office by 29th October 2010.
‘Performance Audit on Procurement system in Bharat Electronics Limited’
24. MAB Bangalore stated that the review has been issued to the Management and a copy has been sent
to the CAG’s office.
‘Production and Sale of iron ore in NMDC Limited’
25 MAB Hyderabad informed that the draft performance audit report would be submitted to the CAG’s
office by 29th October 2010.
‘Import and sale of pulses under price stabilization scheme by trading PSUs (MMTC, STC and PEC)-MAB-I
ND and PD (ESM)’
26 It was decided that MAB I Delhi, after incorporating the material received from PD (ESM) and
observations of the CAG’s office, would send the report by 31 st October 2010.
‘Fixation of incidental charges on procurement of food grains’ by FCI
27 MAB IV Delhi would, after incorporating management’s reply, send the report to the CAG’s office by
30th November 2010.
‘Revival schemes of sick CPSEs’
28. The Board decided that each supporting MAB would send the report relating to their offices to MAB
IV Delhi by 15th November 2010 and the latter would send the consolidated draft report to the CAG’s
office by 15th December 2010.

‘Physical verification of stock in Food Corporation of India’

29 MAB IV Delhi indicated that his office has received a reference from the concerned
Ministry requesting his participation in physical verification of stock of FCI. The MAB, in
his response to the Ministry, has intimated that his office would study the efficacy of the
existing system of physical verification of stock in FCI and, based on the audit findings, a
decision would be taken regarding the scope of the study covering inter alia, all the
concerned agencies, viz., Central Warehousing Corporation, State Warehousing
corporations, other State agencies and private millers who hold the stock on behalf of FCI.
This would be done in association with PD (ESM).
‘Operational performance and achievement of its objectives in MTNL’
30. The guidelines are under process for approval in the CAG’s office.
Item No. 6 Session by Experts (1)-IFRS
31. Shri S Santhanakrishnan, Managing partner PKF Sridhar & Santhanam, shared his understanding
on IFR Standards and issues related with their implementation with the members of the Board. The
Board requested his association for training of our officers.
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Item No. 7 Approval of Corporate Plan (2011-12 to 2015-16) of Central
Commercial
32. Sector wise Corporate Plan of Central Commercial Wing for the years 2011-12 to 2015-16 was
prepared and circulated to all the Members for their response. Based on the discussion, following
decisions emerged:
(i) It was noted with great satisfaction that the Corporate Plan covers all
substantive areas of operations of PSUs. This will help ensure that
performance audit and thematic studies will, taken together over five years,
provide an assurance on the functioning of the PSUs in the each sector and
feed into our “true and fair view” assertion. It was noted that this process could
lead to positive as well as negative findings and both categories of findings must
be reported in the interest of ensuring balanced reporting.
(ii) Since the Annual Audit Plans shall necessarily be based on the approved Corporate Plan, there
shall, henceforth, be no targets for draft paragraphs. As such, draft paragraphs will, at best, be
an incidental by-product of the audit process and could be processed according to their
significance. The Board also noted that the Corporate Plan points in the direction of
minimising the deployment of resources for transaction audit.
(iii) Some Members Audit Board had reservations in respect of the some of the topics included in
the Corporate Plan. It was clarified that neither the Corporate Plan nor the annual plans are
“cast-in-stone”. The Corporate Plan is a baseline document laying down the overall intent of
the Commercial Audit Wing over the next five years including the broad areas of audit scrutiny.
Members Audit Board will have the flexibility, in each year’s audit plan, of either adding to or
removing any topic for performance appraisal or thematic study. The changes could be
necessitated by the need to focus audit attention in a new area of topicality as also on the
availability of professional human resources. It was also noted that all Plans, and this includes
our Corporate Plan, are dynamic documents that must change to suit changing circumstances
and requirements.
(iv) It was noted with concern that the professional manpower available to MAB I Mumbai is
inadequate given the number of performance and thematic studies that she is expected to
carry out. It was, accordingly, decided that her office would be provided with three additional
Audit Officers and six additional Assistant Audit Officers. It was also decided that, as a measure
towards decreasing her workload, audit of the Cotton corporation of India be transferred to
MAB IV Delhi.
(v) At the behest of PD (ESM), it was decided to include a thematic study on ‘Rural electrification
schemes’ during 2011-12 in the Corporate Plan.
(vi) At the instance of MAB-Chennai, it was decided that following topics be included in the
Corporate Plan:
a. Logistics in petroleum sector,
b. Investment in Insurance Companies, and
c. More IT audits.
33. After due deliberation and after taking into consideration all the issues and
clarifications mentioned above, the draft Corporate Plan was unanimously adopted for
implementation by the Commercial Audit Wing during 2011-16. It was decided that the final
document would, after making the changes mentioned in the sub paragraphs above and adding the
requisite sentences clarifying grey areas, be notified within a week from the date of this Audit
Board meeting.

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Item No. 8 IFRS: Checklist and briefing about Training
34. It was noted that the three day training for 16 Group Officers at NAAA, Shimla through resource
persons drawn from the ICAI was a great success. It was agreed that, to help ensure effective audit
in the new environment, there is a need to train all the remaining Group Officers in charge of
commercial audit in the offices of the Accountants General as also of the Members Audit Board
within the next two months or so. We also need to ensure that all Senior Audit Officers, Audit
Officers and Assistant Audit Officers of the Commercial Wing be trained and prepared for audit vis-
a-vis the IFR Standards. It was noted with satisfaction that quite a number of SRAOs, AOs and
AAOs have already been trained along with Accounts and Finance professionals of some of the
CPSUs that have organised such training already.
35. Taking into account the requirements as also the extent to which these have already been met, it
was decided that the following actions be taken in parallel.
i. Obtain information from all MAB offices about the number of officers already trained.
ii. Organise training of the remaining Group Officers.
iii. Organise training of remaining Audit Officers – the MAB offices are free to use resource
persons from the local chapters of the ICAI.

Item No. 9 Study papers

36. It was noted with satisfaction that all the 25 study papers undertaken by all offices of Members
Audit Board have been received in the CAG’s Office. It was agreed that review of these papers in
the CAG’s office needs to be expedited. Thereafter, these should be peer-reviewed by industry
experts other than auditors as this would greatly add to the value of these papers. It was also
noted with great satisfaction that a Knowledge management desk has already been established in
the CAG’s office with two Senior Audit Officers to begin with – this is an important first step
towards the management and updating of knowledge relevant to our audits. Each Member Audit
Board may also like to consider earmarking officers for this purpose.

Item No. 10 Follow up on Reorganisation of Commercial Wing

37. MAB-IV New Delhi informed the Board that records of certain companies which were transferred
to them from MAB III, New Delhi are yet to be received in their office. The Board directed all the
concerned MAB office to complete the task of transferring the records etc. This would be reviewed
and the implementation of reorganization would be followed up in CAG’s office.
Item No. 11 Any other matter with the permission of the chair
38. PD (ESM) agreed that, in cases where his office is unable to provide adequate manpower for
examination of Ministry papers, he would facilitate access to such records to the concerned MAB
office audit team.
39. DGA (P&T) informed the Board of the fact that his offices are located all over the country and have
adequate resources to take up additional workload. The Board decided to consider giving
additional work to DGA (P&T).
40. It was decided that capacity building initiatives of the offices of the Members Audit Board should
not, normally require prior approval of the CAG’s Office unless these involve expenditure that
requires additional budgetary support. However, CAG’s office must, invariably, be informed of
such training courses so that the CAG’s office is aware of the state of capacity building. This will
enable the CAG’s office to share good models with other MAB offices as also be able to enable
officers from the CAG’s office as also other MAB offices to participate in such training courses.
Item No. 12 Session by experts (2)-power sector
40. Dr. Pramod Deo, Chairman, CERC, shared his experiences with the members on the latest
developments in the power sector, areas of concern and significant issues from auditor’s point of
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 view. The Board appreciated the knowledge and insight provided to the members. Copies of Dr.
Deo’s presentation have been emailed to all MsAB.
The actionable points arising out of the decisions taken in the meeting are enclosed as Annexure-C.
The meeting ended with a vote of thanks to the chair.

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Annexure A
List of officers who attended the 2nd meeting of the reconstituted Audit Board on 21 st and 22nd October
2010
Shri Sunil Verma Chairman
Ms. Saroj Punhani Member Secretary
Shri M K Biswas Member
Shri K Srinivasan Member
Ms. Anuradha Balaram Member

Shri R P Singh, DGA-P&T Invitee

Shri Birendra Kumar, PDCA & Ex-officio MAB Invitee
Shri Onkar Nath, PDCA & Ex-officio MAB Invitee
Shri K R Sriram, PD-ESM Invitee
Shri Sarit Jafa, PDCA & Ex-officio MAB Invitée
Shri Rakesh Mohan, PDCA & Ex-officio MAB Invitee
Ms. Ila Singh, PDCA & Ex-officio MAB Invitee
Shri Yashwant Narayan Thakare, PDCA & Ex-officio MAB Invitee
Ms. Nandana Munshi, PDCA & Ex-officio MAB Invitee
Ms. Naina A Kumar, PDCA & Ex-officio MAB Invitee
Shri C H Kharshiing, PDCA & Ex-officio MAB Invitee
Shri S K Jaipuriyar, PDCA & Ex-officio MAB Invitee
Ms. Alka R Bhardwaj, PDCA & Ex-officio MAB Invitee

List of Group Officers who attended the meeting:

Shri L. Hangsing Director
Shri Siddhartha Bondade Dy. Director
Shri Dinesh Kumar Shrivastava Dy. Director
Ms. Roopal Prakash Addl. Director
Shri Gulam Din Dy. Director
Shri Joginder Singh Dy. Director
Shri S.K. Rathi Dy. Director
Shri Vidyavart Pipli Dy. Director

SAOs/AOs/AAOs from the CAG’s Office and field offices who were present to assist the Audit Board.
Shri Ranjit Majumdar, SAO CAG’s Office
Shri U P S Sisodia, SAO CAG’s Office
Ms. Vatsala Ramakrishnan, SAO CAG’s Office
Shri Desh Raj Verma, SAO CAG’s Office
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Shri V.B. Relan, SAO CAG’s Office
Shri J.J. Arya, SAO CAG’s Office
Shri Harash Kapur, SAO CAG’s Office
Shri Mahesh Gupta, SAO CAG’s Office
Shri S.K. Kohli, SAO CAG’s Office
Shri Y S Chauhan, SAO CAG’s Office
Smt. Preethy Narayanan, AO CAG’s Office
Shri Anoop Tandon, AO CAG’s Office
Ms. Tripta Khanna, AAO CAG’s Office
Shri D. S. Pathania, AAO CAG’s Office
Shri Tilak Raj, AAO CAG’s Office
Ms.Sweety Goyal, AAO CAG’s Office
Ms. Nirmala, SAO DG A (P&T)
Ms. Sangeeta Purswani, SAO DG A (P&T)
Shri Anil Kumar, SAO MAB-I, New Delhi
Shri K.S. Kaushik, SAO MAB-IV New Delhi
Shri Pradeep Kumar, SAO MAB-IV New Delhi
Shri P.K. Mittal, SAO MAB-IV, New Delhi
Shri Neeraj Mohan, SAO MAB-IV, New Delhi
Shri Anirudh Mehta, AAO MAB-IV, New Delhi

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Annexure B
Item No 3– Follow-up action on items from the previous Audit Board meetings

Each MAB briefed the Audit Board of the actionable point against his office.
Agenda item Action point Action by Target date
of first
meeting of
the
reconstituted
Audit Board
Item No 2 Thematic para by MAB-II, MAB II, Refer Annexure “C”
Kolkata on ‘Motor own damage Kolkata item no.3.
portfolio in National Insurance
Company’ be restricted to the
units under the audit jurisdiction
of MAB-II, Kolkata.

Guidelines forwarded to the MAB Action completed.

other MsAB having the audit of Chennai,
units of National Insurance MAB I,
Company may be reviewed to Mumbai
add value to the same. and MAB-
II, New
Delhi
Item No 3 Revival Schemes for sick PSUs All MsAB Refer Annexure “C”
- Approach & Guidelines- sl. no.8 of item 5.2.
Details regarding the PSU
selected for the review and the
modifications, if any, required in
the guidelines to be intimated
to MAB-IV New Delhi
Draft review should be finalised MAB-IV
and submitted to HQ. New Delhi
Item No 4(iii) Management of vessels in MAB I
Shipping Corporation of India- Mumbai, Refer Annexure “C”
Policy framework of the PD (ESM) sl. no.3 of item 5.2.
Government in regard to SCI
was to be examined in
coordination with PD (ESM).
Review after incorporating MAB-I,
Management’s reply to be Mumbai
submitted to HQ.

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Item No. 4(iv) Implementation of projects for MAB-I, Refer Annexure “C”
production of Euro-III compliant New Delhi sl. no.1 of item 5.2.
fuels by Hindustan Petroleum
Corporation Limited including
role of EIL as project
consultant.

Review after incorporating MAB-II,

management’s reply to be Mumbai
submitted to HQ.
Item No 5 Submit modified draft review on MAB, Approved and
CSR by SAIL and RINL Ranchi issued to Ministry.
Find out if PSUs in their audit All MsAB Refer Annexure “C”
jurisdiction have a CSR policy item 3.
and if not, to persuade them to
Item No. 6 notify policy guidelines on CSR.

Corporate Social Responsibility MAB-II, Refer Annexure “C”

in Coal Sector PSUs - to Kolkata sl. no. ii of item 5.1.
complete the review based on
the suggestions of the Board in
Item No. 6 respect of review on CSR in
steel PSUs and also include a
comparative analysis of all the
subsidiaries of Coal India
Limited.
Item No 9 Material for the Audit Report on All MsAB Refer Annexure “C”
Financial Reporting by Central item 4.4.
Public Sector Undertakings
-forward suggestions on
revision in structure, if any, to
MAB, Chennai 
Send draft report to CAG’s MAB
office Chennai
Send advance copy of draft MAB
report to CAG’s office to enable Chennai
immediate Hindi translation
MAB Chennai will create and MAB, Refer Annexure “C”
Item No 10 (a) host a web-based interface that Chennai item 3.
will enable all Commercial audit
offices to upload Summarised
Financial Reporting data
directly.

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 MAB Chennai responsible for MAB,
establishment and Chennai
management and operation of
a PSU Data centre will
undertake the following tasks:-
Create a website to host a
database of PSUs;
Provide menu driven access to
all MAB offices for data entry;
Create viewable and printable
reports - general as well as
interactive;
To begin with, database for
central PSUs for five years may
be created - table structure
may be sent to HQ within a
month.
Subsequently state PSUs data
may be added

Item No 10 Issue to AAI management the MAB Refer Annexure “C”

(b) – Any draft study report on the Chennai item 3.
other item with ‘Expansion of Chennai airport -
the permission Transitional plans & impact on
of the Chair passengers’

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Annexure C
Actionable items of the 2nd Audit Board meeting
Agenda item Action point Action by Target date
Item No. 3 – Submit thematic study on ‘Motor MAB-II, Kolkata 30th Nov 2010
Follow-up action on own damage portfolio in National
items from the Insurance Company’ to CAG’s office
previous Audit (item no. 2 of previous Audit board
Board meetings meeting)
Look into all the PSUs under their All MsAB A report on the CSR
audit jurisdiction to see whether activities in the PSUs
PSUs have a CSR policy and if not, under their Audit
the PSUs may be persuaded to jurisdiction to be
notify policy guidelines on CSR (Item submitted to CAG’s
no.6 of previous Audit board office by 30th
meeting) November 2010.
MAB Chennai will create and host a MAB, Chennai CAG’s office may be
web-based interface that will enable appraised of the status
all Commercial audit offices to by 30/31 of every
upload Summarised Financial month.
Reporting data directly. (Item No 10
(a) for previous Audit Board
meeting)
Draft study report on the ‘Expansion MAB Chennai Draft report to be
of Chennai airport- Transitional issued to the
plans & impact on passengers’ to Management and
HQ. (Item No 10 (b) for previous Ministry.
Audit Board meeting)
Item No. 4 – 4.1 Draft Paras and Thematic Paras Director General The paras received
Review of progress (Com-I) from field offices to be
made against processed without any
targets for financial delay.
year 2010-11

In respect of DVC report, it was Director General The report should be

desired that revenue loss due to (Com-I) finalised immediately.
delay in capacity expansion etc

4.3 Timely issue of Accounts Director General Revised norms taking

Comments/supplementary Audit (Com-II) the Rs.500 crore and
reports. above paid up capital
or turnover of Rs.
5000/- crore and above
for selection of PSUs
for annual
supplementary audit.
4.4. Material for Audit Report for All MsAB Send SFR data of
Financial Reporting remaining PSUs to
MAB-Chennai by
25.10.2010.

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 MAB-Chennai Send the draft report
by 4 November 2010 to
CAG’s office
5.1 (i) Draft performance audit Director General NTPC PA report to be
reports which were received in (Com-II) circulated to all the
Hqrs on or before 15 September MsAB.
2010
(ii) CSR of the PSUs in Coal Sector MAB-II, Kolkata Draft PA report on
‘CSR-coal sector’ to be
submitted to CAG’s
office by 10 November
2010.
(iii) Functioning of FCI and its impact MAB-IV, ND Discuss the review with
on food subsidy-dropped by hqrs. CAG’s office
(iv) Procurement activities in SAIL MAB Ranchi The PA to be revised in
view of the CAG’s
office observations and
submit by 31st
October,2010.
5.2 Progress in respect of remaining
10 Performance Audits
1. Implementation of projects for MAB-II, Mumbai The PA report to be
production of Euro-III compliant submitted by 15
fuels by Hindustan Petroleum November 2010.
Corporation Limited
2.Performance of Terminals and MAB-II New Delhi The PA report to be
Depots of Indian Oil Corporation submitted by end of
Limited-MAB-II New Delhi 31st October, 2010.
3.Management of vessels in MAB-I Mumbai PA report to be
Shipping Corporation of India- submitted by 29
October 2010 to CAG’s
office.
5. Production and Sale of iron ore in MAB- Hyderabad PA to be sent to CAG’s
NMDC Limited office by 29 October
2010.
6. Import and sale of pulses under MAB-I New Delhi in consolidated report to
price stabilization scheme by trading consultation with be submitted the to
PSUs (MMTC, STC and PEC)- PD (ESM) CAG’s office by 31st
October 2010.

7. Fixation of incidental charges on MAB-IV ND PA report to be

procurement of food grains by FCI- submitted to CAG’s
office by 30th
November, 2010.
8. Revival schemes of sick CPSEs- Each supporting Supporting MsAB to
MsAB send the report
relating to their offices
to MAB-IV by 15
and

Page 15 of 22
 MAB-IV ND-
(Coordinating MAB)

November 2010 and

MAB-IV to submit the
draft report after
9. Physical verification of stock in MAB-IV ND Guidelines to be
Food Corporation of India - prepared and sent to
the CAG’s office.
10. Operational performance and DG A (P&T) Guidelines to be
achievement of its objectives in discussed with the DGA
MTNL (P&T).
Item No. 7 – To carry out the modifications based Director General Revised Corporate plan
Approval of on the suggestion of the MsAB and (Com-II) to be submitted for
Corporate Plan decisions taken in the Audit board approval by 29th
(2011-12 to 2015- and put up for approval and get the October, 2010.
16) of Central approved copy printed for
Commercial circulation.

To increase the staff strength of Director General To be submitted by 31st

MAB-I Mumbai by 03 AOs and 06 (Com-II) October, 2010.
AAOs.

Item No. 8 – IFRS: Obtain information from all MAB Each MsAB To be submitted by 15
Checklist and offices about the number of officers and Director November, 2010.
briefing about already trained. General (Com-II)
Training

Director General 31 December, 2010.

Organise training of the remaining (Com-II)
Group Officers

Each MsAB for their The progress in this

Organise training of remaining Audit
SAOs/AOs/AAOs regard is to be
Officers – the MAB offices are free
intimated to CAG’s
to use resource persons from the
office on the 5th of
local chapters of the ICAI
every month.
Item No. 10 – Complete the task of transferring Director General To be monitored every
Follow up on Re- the records etc. to the transferee (Com-II) month.
organisation of MAB early
Commercial Wing

Transfer of Cotton Corporation of Director General Proposal to be

India to MAB-IV, New Delhi (Com-II) submitted by 31st
October, 2010.
Item No. 11 – Any Additional work to be allotted to the Director General Proposal to be
other item office of the DGA (P&T) (Com-II) submitted by 31st
October, 2010.

Page 16 of 22
Page 17 of 22
 Annexure-II

Following 25 study papers were undertaken by MsAB offices and officers at Hqrs on different topics with an
idea to document the Knowledge gained by Group Officers/ MsAB and officers of commercial Audit wing of
the auditee’s operations and its functioning. The Study papers were to be submitted to HQ by 30 April,
2010. The position of receipt of the study papers is given below. These papers are being reviewed in HQ for
possible value addition.

Sr. Name of the Topic of the study paper Date of receipt

No MAB/Officer in Hqrs.

1. MAB-Bangalore Corporate Governance (May also take help of MAB-Ranchi) 15/07/10

2. MAB- Chennai Pricing mechanism in power sector 02/06/10

3. MAB-Hyderabad Mining Sector (excluding coal) 03/06/10

4. MAB-I, Kolkata Upkeep and maintenance of power plants (both hydel and 16/08/10
thermal)

5. MAB-II, Kolkata Coal Sector 09/08/10

6. MAB-I, Mumbai 1. Insurance sector 07/07/10

7. 2. Fertilizer pricing mechanism 07/07/10

8 MAB-II, Mumbai Pricing mechanism in Oil Sector (including pricing by 01/05/10

upstream companies)

9. MAB-I, New Delhi Aviation Sector 11/06/10

10. MAB-II, New Delhi Pricing mechanism in Gas Sector 10/05/10

11. MAB-III, New Delhi Power Sector (Should include power sector reforms) 10/05/10

12. MAB-IV, New Delhi 1. Food Security 18/06/10

13. 2. Disinvestment policy of GOI 18/06/10

14. MAB-Ranchi Steel Sector: Development, legislation, role of public and 21/05/10
private sectors, demand-supply scenario and prospects

15. Shri R. Mazumader System of appointment of statutory auditors, CAG’s role and 07/05/10
disciplinary mechanism.
Shri Rajesh Rajpal

16. Shri D.R. Verma CAG’s comments on accounts and its impact. 15/07/10

17. Shri R.K. Yadav 1. Standard setting mechanism (both Accounting & Auditing) 14/05/10
with special reference to IFRS.
Ms. Sweety Goyal
18. 2. New Company Bill and its impact on CAG’s Audit. 15/07/10

19. Shri V.B. Relan Standard format for profile of a PSU 01/06/10

Page 18 of 22
20. Shri Mahesh Gupta 1. Role of DPE & Administrative Ministries towards PSUs 01/08/10

21 2. Categorisation of PSUs into ratnas

22. Shri S.K.Kohli Inventory of major recommendations of COPU and system 10/08/10
improvement through Audit (w.r.t. Audit Reports of 5 years
Shri Y.S. Chauhan upto 2009).
Shri Ajay Sharma (The work to be shared by three officials. They will also go
Shri Harash Kapur through ATNs)

23. Ms Preethy CAG’s Audit Reports, Discussion by COPU, ATNs etc: System, 06/08/10
Narayanan, procedures and practices.

Ms. Tripta Khanna

24. Shri Anoop Tandon Audit provisions in respect of PSUs in some developed and September 2010
developing countries.

25 Shri Tilak Raj Computerisation in major PSUs (Details may be obtained 29/07/10
from iCISA & field Offices) and Audit by CAG

Page 19 of 22
 Annexure-III
NO CA IV/9-2007

2 February 2010

To,

            DGA (P&T)             

            All PDsCA

Subject: Targets of Draft Paras for Audit Report (Commercial) of 2011.

Sir/Madam,

I am to invite a reference to the Minutes of the Meeting of the Audit Board for Central PSUs held
on 23rd December 2009 which was circulated vide this office letter no 02/ CA IV/97-2009 dated
4th January 2009. As already communicated, the Chairman had expressed concern with the
flow of material.  As part of the discussion on quality of material for audit reports, the
desirability of fixing a minimum money value for Draft paras was debated.  Chairman had
observed that, while a minimum money value may be fixed for material to be sent by MAB
offices, it would be more appropriate to go by importance and materiality while deciding
which paras to include in the Audit Report.  Given the fact that the Audit Report is a means
of drawing the attention of the Parliament to significant shortcomings, the material that
goes into such a report must be the most significant and important out of all the material
proposed by the MsAB.  Moreover, since the media also takes a keen interest in the matters
being reported through the CAG’s Audit Reports, there is a need to be much more selective
in deciding what we include in these Reports so as to ensure focus and maximize the
probability of impact vis-à-vis the Government and the public.

Chairman also emphasized the need to move towards thematic DPs as these focus attention
on improvement or correction of systemic shortcomings that could lead to long-term
improvements.  For this the  MsAB were asked to ensure utilisation of more manpower on
thematic DPs as part of ‘Performance Audit’.

It is, therefore, requested that above points may please be kept in view while sending the draft
paras for next year Audit Reports. The draft paras sent for Audit Reports should highlight
instances of fraud, waste, mismanagement etc. Efforts should also be made to focus on the

Page 20 of 22
systemic faults and major issues of efficacy of control and governance as already requested for
in this Office letter dated 9/11.1.2007.  Wherever possible, the issues should be examined
comprehensively with emphasis on system deficiencies and persistent or pervasive shortcomings.

The DG/MAB-wise targets for printing of paras in Audit Reports of 2011 are enclosed. These have
been fixed taking into account the significance of the PSUs under audit of each MAB. The target
number of paras should be issued to the Ministry and sent to the Headquarters by September
2010. It should be ensured that reply to Headquarters observations on draft paras are invariably
sent within a period of three weeks.

Yours faithfully,

Sd/-

(Y N Thakare)

Principal Director (Commercial)

Encl:   As Above

Page 21 of 22
Targets of DPs for Audit Report for the year 2010-11

Sl Name of the field office Total DPs including No of

no thematic DPs
thematic paras

1. DGA(P&T) 12 6
2. MAB-I, New Delhi 8 4
3. MAB-II, New Delhi 15 8
4. MAB-III, New Delhi 15 8
5. MAB-IV, New Delhi 10 5
6. MAB-I, Mumbai 13 7
7. MAB-II, Mumbai 15 8
8. MAB-I, Kolkata 8 4
9. MAB-II, Kolkata 6 3
10. MAB, Ranchi 8 4
11. MAB, Bangalore 8 4
12. MAB, Hyderabad 5 3
13. MAB, Chennai 6 3

Page 22 of 22