Consequent to restructuring of Central and State Audit offices w.e.f 21.5.2020, the audit arrangement of the State Governments in the Indian Audit and Accounts Department has been revised.

The office of the Principal Accountant General (Audit-II), Karnataka, Bangalore has been entrusted with the work of auditing the departments falling under various clusters in Karnataka, as detailed under functions of each group. The office also audits the Commercial undertakings & Autonomous Bodies covered under the Administrative control of various departments of Government of Karnataka.

Audit, Audit Plan and Audit Process


The Office conducts Audit of three types viz.

  • Compliance/Regularity Audit
  • Financial Attest Audit
  • Performance Audit

Compliance/Regularity Audit is conducted at two levels. Centralised Sample Audit of accounts of various departments as received from the Treasury (sample based on stratified random sampling). Field level audit is conducted by Audit Parties visiting the primary disbursing/collecting units and auditing primary records. In this audit, the emphasis is on the compliance with the rules and regulations formulated by the legislature.

In Financial Attest Audit, the office expresses an opinion in the form of certificate on the accounts rendered by the State Government in respect of externally aided projects (World Bank, Asian Development Bank and other Foreign Agencies) and Centrally Assisted/Aided projects.

In Performance Audit, the office takes up a scheme or an activity implemented by a department. This would involve analyzing records from Secretariat level (conceptualization) to field levels (implementing agency). A comprehensive analysis of the entire activity/scheme is taken up to ascertain the level of achievement of the objectives of the scheme or activity with suitable recommendations.

Audit Plan

An annual audit plan is drawn up every year based on a risk assessment of the auditee unit carried out on the following parameters:

  • Financial materiality
  • Inherent risk
  • Control risk

After assessment of the risks associated with the unit, the auditee units are divided into 4 categories viz., annual, biennial, triennial and others. These units are planned for audit based on the periodicity by drawing up quarterly tour programmes of audit parties for field visits.

The office also identifies schemes, functions and activities implemented by each department on the above parameters and each wing takes up performance audit of one or two schemes or activities of the department after factoring in man power resources at disposal.

Audit Process

A central audit team carries out test check of accounts and vouchers received from the treasuries wherein compliance to general financial rules and departmental codes. The results of such audit tests are communicated to the department in the form of audit notes.

At field level the primary records from which the auditee units render vouchers to treasury are subjected to test check on sampling method wherein accounts of two months are selected based on financial materiality. All the primary accounts viz., store accounts, manufacture accounts etc. are also subjected to audit scrutiny.

After field audit, audit comments in draft form are received in headquarters sections of the office which are further vetted for accuracy and correctness of the comments. This inspection or local audit reports are then issued to the auditee unit after duly endorsing a copy to the controlling office for information under the signature of Deputy Accountant General for compliance. At each stage the department or the auditee unit is given every opportunity to state its position on the audit comments.

The above processes are followed even when a performance audit of any scheme is taken up for audit scrutiny. The Secretary to Government is invited for an entry conference at the outset and results of audit are discussed in an exit conference.

Based on the replies of the department/auditee unit, the audit comments are treated either settled or noted for further follow up. Important comments are included in an Audit Report published at the end of every year which is submitted to the Governor for placing before the legislature.

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