The Audit Trail - CBEC Explains
THE above Circular explains the great Audit Journey:
It all starts with the visit of a few Audit officers from the office of the CAG.
(i) Half Margin: Half margin/audit memo is issued to the Superintendent of the Range during the course of audit on points noticed by CERA. The half margin is to be replied to immediately and in any case before the end of the audit of Range/ Division/Commissionerate concerned. It is called Half Margin, because the margin is half the paper. The paper (actually belonging to the assessee) is folded into two halves vertically; the objection is written on the right side leaving a half margin for the department to reply. Normally at this stage, the reply of the department is, "issue will be examined and detailed reply submitted.")
(ii) Local Audit Report (LAR): LAR containing audit paragraphs is generally issued by the headquarters of the local CAG Office to the Assistant/Deputy Commissioner generally within one month of the completion of the audit by the headquarters of the Director General or Principal Director of Audit. The Assistant/Deputy Commissioner is expected to reply to the LAR within thirty days.
(iii) Statement of Facts (SoF): SoF is issued to the jurisdictional Commissioner/Addl. Commissioner on the major audit observations which may feature in Audit Reports. It has been decided that SoF shall be replied within six weeks where the audit objection is not contested. Where the audit objection is contested and the amount of duty involved in the audit objection is rupees fifty lakhs or less, SoF shall be replied with the approval of the Commissioner and for audit objections involving higher amounts of duty, SoF shall be replied with the approval of the Chief Commissioner. Detailed reasons for contesting the audit objection should be recorded in the file quoting relevant case-laws and circulars, if any.
(iv) Draft Audit Para (DAP): Potential audit paragraphs considered fit for inclusion in the Audit Report are issued by the CAG officer to the Ministry (CBEC) as DAPs. CBEC is expected to reply to DAP within four weeks of its receipt.
(v) Audit Paragraphs: CAG's office, after considering the reply of the CBEC may convert a DAP into Audit Paragraph. Audit Paragraphs are periodically compiled and are submitted by the office of CAG to the Parliament in the form of a report called Audit Report. CBEC is expected to furnish an Action Taken Note on each of the paragraphs in the Audit Report, The ATNs received are examined by the office of CAG and duly vetted ATNs are submitted to the PAC. The process of submission of ATN, due vetting and submission to PAC is expected to be completed within four months of submission of Audit Report.
What happens after that? Board has not explained.
CBEC Circular No. 1023/11/2016-CX, Dated: April 8, 2016