classification of Government receipts and expenditure and for an accounting system capable of giving

information about functions, programmes and schemes rather than departments and offices and to
some extent about costs rather than direct expenditure. Simultaneously, there was an urgent need for a
performance budgeting system and a management information system. The first of these much needed
reforms, namely, the functional system of classification, came into effect from 1st April 1974. While
performance budget concepts were also introduced early enough, well designed management
information systems in the Ministries of the Government of India were developed, somewhat haltingly,
much later and have even now not taken full root. The next reform was the departmentalisation of
accounts in the Central Government in 1976. The integration of the responsibility for keeping accounts
as part of the executive functions of the Central Ministries and departments must be regarded as a step,
still incomplete, in enabling the Comptroller and Auditor General to devote more resources to audit
function. Audit has evolved over the years into a wide spectrum of activities. At the infrared end,
chronologically the earliest end, is what may be crudely described as vigilance audit, concerned
essentially with prevention of frauds connected with state revenue and expenditure reference to which
can be found in Kautilya’s Arthashastra. At the ultraviolet end, which is also the ultra-modern end, there
is audit of economy, efficiency and effectiveness. While the first two concepts are more or less self-
evident, audit of effectiveness may be summed up as a process which verifies the extent to which the
declared objectives of a programme or a project have been achieved. In between the two ends of the
spectrum stand regularity audit and propriety audit. To conduct all these audits, a variety of
methodologies and techniques had to be developed and this is a field in which the Indian Audit
Department has done pioneering work. The present book has been out of print for long, but because of
the quick changes and reforms that were being made in the systems over the last two decades or so,
every attempt to update it and issue a new edition ran into the problem of rapid obsolescence. At the
moment of writing this Preface the waves of reform are somewhat quiescent and the present has been
considered an opportune occasion to bring out a new edition. Since the issue of the fourth edition, the
Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act 1971 has been passed
by Parliament