# Audit of Government Receipts

## Overview

Audit of receipts is neither all-pervasive nor as old as audit of expenditure but has come to stay in some countries. It focuses on ensuring that all government revenues are correctly assessed, collected, and credited to the government account.

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## What Audit of Receipts Checks

### 1. Correct Assessment, Realisation, and Credit

Whether all revenues or other debts due to the government have been correctly assessed, realised, and credited to the government account by the designated authorities.

### 2. Adequacy of Regulations and Procedures

Whether adequate regulations and procedures have been framed by the department/agency to secure effective checks on:

Assessment
Collection
Proper allocation of cases

### 3. Compliance with Procedures

Whether such regulations and procedures are actually being carried out in practice (not just on paper).

### 4. Adequacy of Internal Checks

Whether adequate checks are imposed to ensure prompt detection and investigation of:

Irregularities
Double refunds
Fraudulent or forged refund vouchers
Loss of revenue through fraud, wilful omission, or negligence in levying/collecting taxes or issuing refunds

### 5. Systems Review and Improvement

Review of systems and procedures to verify that internal procedures adequately secure:

Correct and regular accounting of demands, collections, and refunds
Pursuit of dues up to final settlement
Suggestions for improvement where systems are deficient

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## Institutional Mechanism for Receipts Audit

The extent and quantum of audit required under each category are determined by the C&AG — these are neither negotiable nor questioned.

Three-tier mechanism:

Tier	Role
Auditor	Primary check
Supervisor	Test check
Group Leader	Control and direction

Worked example

### Example 1

Scenario: During audit of a State Government's tax department, the auditor finds that refunds of ₹15 lakhs were issued to a contractor but original tax payment records are missing. A similar refund was also issued to the same contractor twice in the same financial year. Identify the relevant aspects of receipts audit.

Analysis:

The double refund triggers the check under Point 4 — detection of double refunds and fraudulent/forged refund vouchers
Missing records suggest inadequate internal procedures — Point 5 (systems review) is also relevant
The auditor should investigate for possible fraud or wilful omission

Conclusion: Both Point 4 (detection of double refunds/fraud) and Point 5 (review of systems and procedures) of receipts audit are triggered. The matter should be escalated through the three-tier mechanism: primary check → supervisor test check → group leader direction.

⚠️ Common exam mistakes

Assuming audit of receipts is as comprehensive and universal as expenditure audit — the source material explicitly notes it is 'neither all-pervasive nor as old as audit of expenditure'.
Thinking the extent and quantum of receipts audit is negotiable or determined by the auditee — it is determined solely by C&AG and is neither negotiable nor questioned.
Forgetting the three-tier institutional mechanism: primary check (auditor) → test check (supervisor) → control and direction (group leader).
Limiting receipts audit to checking whether taxes were collected — it also covers regulations/procedures, internal controls, and systems review for improvement.

Reference:

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