Compliance Audit is an assessment as to whether the provisions of the applicable laws, rules and regulations made there under and various orders and instructions issued by the competent authority are being complied with. This audit by its very nature promotes accountability, good governance and transparency as it is concerned with reporting deviations, identifying system weaknesses and assessing propriety.

While conducting audit, the audit team issues preliminary Audit Note and obtain replies from the management. Based on the replies, the Inspection Report (Part II A & II B) is finalized. Potential IR Paras further developed as Factual statement, Potential Draft Para and Draft Para to be included in the Audit Report of the Union Government (Commercial) of the Comptroller & Auditor General of India. Before finalising the Draft Paras, replies of the Management at different stages are considered and incorporated in the Audit Report. The Draft paras are further developed for system improvement through ATNs and discussed by the Committee on Public Undertakings (COPU). The Audit Report approved by the CAG of India is placed in both the houses of the Parliament and further monitored by this office and reported to COPU through Action Taken Notes (ATNs).

The audit of Bodies and Authorities is governed by the provisions of section 14, 15, 19(2), 19(3) and 20 of the DPC Act, 1971.

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