## Audit of Receipts

The CAG audits government receipts (revenue and other receipts) under six key inquiries:

### 1. Correct Assessment, Realisation and Credit

Verify whether revenue and other receipts due to the government are:

Correctly assessed
Correctly realised
Correctly credited to the government by designated authorities

### 2. Adequacy of Regulations and Procedures

Verify whether adequate regulations and procedures have been framed by the department to secure effective check/assessment and correction of cases.

### 3. Actual Compliance with Regulations

Verify whether the regulations and procedures are actually being carried out (not merely framed on paper).

### 4. Checks Against Irregularities

Verify whether adequate checks exist for prompt detection and investigation of irregularities such as:

Double refunds
Forged refunds
Loss of revenue through wilful omission to collect taxes
Negligence in collection or issuance of refunds

### 5. Review of Internal Controls

Review internal controls over:

Demand
Collection
Refunds
Final settlement

### 6. Extent and Quantum of Audit

The extent and quantum of receipt audit is determined by the CAG alone — it is neither negotiable nor open to question by any external authority.

Worked example

### Example 1

The CAG audits a State Commercial Tax Department. He checks whether all registered dealers filed returns (assessment), whether assessed tax was collected (realisation), and whether the amounts reached the State Consolidated Fund (credit). A shortfall at any stage becomes an audit observation.

### Example 2

The CAG discovers that a department issued ₹2 crore in refunds without cross-checking against a blacklist. He reports this under dimension 4 as absence of adequate checks against double/fraudulent refunds.

⚠️ Common exam mistakes

Treating 'audit of receipts' as only verifying collection — it covers assessment, realisation, AND credit (all three steps).
Assuming that if regulations exist, compliance is automatically satisfied — dimension 3 requires verifying actual implementation.
Thinking the CAG's receipt audit scope can be reduced by administrative orders — dimension 6 makes clear it is non-negotiable.

Reference: Section 16 (Audit of receipts); Section 20 (extent of audit) — CAG (DPC) Act, 1971

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