For every government entity, accountability to the public is essential. Government audits bring to the limelight the unique problems and constraints faced by the public sector. This is why several companies have a dedicated audit service line to provide specialized audit services to the public sector.

Every year, the government spends millions of rupees in the form of grants, property, interest subsidies, loans, insurance, cooperative agreements, loan guarantees, food commodities and other non-cash assistance which are subject to compliance audit requirements. Auditing provides an independent and  objective assessment of costs, stewardship, and performance of programs and operations.

Government audits include compliance audits (also known as single audits), social audits, internal audits as well as financial statement audits on entities like states, local governments, institutions, not-for-profits, and for-profits. In India, Government Audit is performed by Independent Constitutional Authority, i.e., Comptroller and Auditor General of India (C& AG) who is appointed by the President of India.

Organizations Subject to Government Audit

  • About 1200 Public Commercial Enterprises controlled by the Union or State Governments
  • About 400 non-commercial autonomous bodies that are owned or controlled by the Union or State Government
  • Over 4400 authorities that are substantially financed by Union or State Revenues

Comprehensive Audit of Public Enterprises

There are various areas covered under comprehensive audit which vary from enterprise to enterprise depending on its nature, objectives, and operations. These include but are not limited to investment decisions, organizational effectiveness, capacity utilization, etc.

Some of the problems examined are:

  • Comparison of the project’s overall cost of capital with the approved planned costs
  • Production outputs concerning under-utilisation of the installed capacity
  • Systems of project formulation and implementation
  • Expected rate of return
  • Cost control measures
  • Research and development programs
  • System of repairs and maintenance
  • Adequate purchase policies

Audit Services at MS Associates in Bangalore

Through our consistent audit procedures and state-of-the-art audit tools, we provide our clients in the public sector with high-quality audit services. This holds them accountable for their use of public resources and helps them manage those resources in compliance with laws and regulations. They can easily operate programs that achieve their objectives; and provide services more efficiently, effectively, economically as well as ethically.

Providing an unmatched level of client-service commitment is on the top of the plate with a comprehensive public financial management experience, strong technical and regulatory expertise, and competitive fee structure.

If you are a government company in Bangalore and need assistance with advisory and audit services, click here.

Government Audit vs Statutory Audit

Aspect Government Audit Statutory Audit
Conducted By Comptroller & Auditor General (CAG) or appointed body Independent Chartered Accountant
Focus Compliance, accountability & use of public funds True & fair view of financial statements
Applicability Public sector undertakings, government companies, NGOs funded by govt All registered companies as per Companies Act
Outcome Ensures efficiency, transparency, and compliance with laws Ensures financial accuracy & compliance with accounting standards

Steps in Government Company Audit

  1. Identification of scope and objectives of audit
  2. Collection of financial records & compliance documents
  3. Verification of expenditure, grants, subsidies, and loans
  4. Assessment of internal control systems & governance
  5. Evaluation of efficiency, cost controls & utilization of funds
  6. Preparation of audit report with key findings
  7. Submission of report to stakeholders / CAG for review

Case Study: PSU Audit Outcomes

Example: A Public Sector Undertaking (PSU) in the manufacturing sector was audited for compliance and operational efficiency.

  • Findings: Under-utilisation of installed capacity and weak cost controls
  • Outcome: Recommendations implemented → annual cost savings of ₹12 crore
  • Compliance Fixes: Strengthened internal audit systems and procurement policies

✅ Result: Improved efficiency, reduced wastage, and stronger accountability to public funds.

Government Audit — FAQs

Who conducts government audits?
In India, government audits are conducted by the Comptroller & Auditor General (CAG) of India or audit firms appointed for specific assignments.
What happens in a compliance audit?
A compliance audit checks whether government companies follow laws, grant conditions, and financial rules in managing public resources.
How can private auditors assist government companies?
Private auditors provide specialized expertise, strengthen internal controls, and support government companies in achieving efficiency, transparency, and compliance.
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