Audit

1. Definition and Aims of Audit

Audit refers to the systematic examination, evaluation, and verification of government property, expenditures, store accounts, and equipment maintenance in the Bangladesh Navy (BN) conducted by competent audit authorities. These authorities hold the statutory power to examine all supporting documentation related to state funds and assets.

  • Primary Aims:

    • Assist and improve institutional management operations.

    • Identify operational and financial limitations, resolving issues in strict accordance with rules and regulations.

    • Ensure optimal utilization and conservation of state assets.

    • Guarantee financial transparency, integrity, and accountability of all personnel involved.

2. Audit Authorities

  1. Directorate of Audit Defence Services (DADS):

    • Conducts statutory audits of the Armed Forces under the Ministry of Defence (MOD).

    • Operates under the administrative control of the Comptroller and Auditor General (CAG).

    • Manned by officers from the Bangladesh Civil Service (BCS) Audit and Accounts cadre, along with departmental staff officers.

  2. Naval Local Audit Office (NLAO):

    • Functions under the Senior Finance Controller (Navy) [SFC(N)].

    • Responsible for local audits of public accounts, ledgers, stores, and receipt and issue vouchers on behalf of SFC(N).

  3. Controller General Defence Finance (CGDF):

    • Functions under the administrative supervision of the Defence Secretary.

    • Oversees audit, payment, and accounting for pay, allowances, pensions, and miscellaneous charges.

    • Audits cash and store accounts maintained across units and formations via Local Audit Offices.

3. Classification of Audits

  1. Internal Audit:

    • Unit Level: Carried out quarterly by internal officers detailed by the Commanding Officer (CO) or Area Commander. For units with fewer than four officers, the Area Commander convenes a designated audit committee.

    • Scope: Audits non-public funds, stores, and essential documents. Submits findings, audit forms, and balance sheets to the respective authority.

    • Public Accounts: NLAO audits public funds, stores, vouchers, and ledgers. Minor objections are settled directly with NLAO, whereas major financial irregularities are referred to SFC(N).

  2. External / Statutory / Test Audit:

    • Organized by the CAG and executed through the Directorate General Defence Audit (DGDA) / DADS.

    • Audits all public expenditures, ledgers, receipt/issue vouchers, and raises formal audit observations.

    • Subcategories:

      • Annual Audit: Evaluates the preceding year's public fund operations, store purchases, maintenance, fuel utilization, and overall asset management.

      • Special Audit: Constituted upon specific directives of the CAG to scrutinize targeted areas (e.g., land management, store preservation, vehicle utilization, or cash collections).

4. Preparation and Preventative Measures

To prevent audit objections, Drawing and Disbursing Officers (DDOs) and Officers-in-Charge (OICs) must maintain strict regulatory compliance:

  • Ensure all disbursements, vouchers, and transactions align with entitlements and Financial Regulations (FR).

  • Conduct thorough internal pre-audits of bills, ledgers, and accounts prior to presenting them to external teams.

  • Secure formal administrative approval from Naval Headquarters (NHQ) to approach the Competent Financial Authority (CFA) for regularizing discrepancies.

  • Require accounting officers to master the Audit Manual, Audit Code, Financial Regulations, and relevant Fleet Orders (FOs).

  • Collect required documentation (e.g., VAT and TAX challans/receipts) for local procurement and record all permanent/semi-permanent items in store ledgers.

5. Audit Conduct: Do's and Don'ts
Do's

  • Cooperate fully with the audit team and assign experienced personnel to facilitate inquiries.

  • Adhere to preparation schedules post-audit: 03 days for Self-Accounting Ships, 02 days for Non-Self-Accounting Ships.

  • Present authentic registers, authority letters, and Genforms to resolve queries on the spot.

  • Submit structured, unambiguous replies strictly based on relevant service rules.

  • Forward discussion outcomes and rough objections immediately to NHQ (DPP&A).

  • Submit formal replies to Local Test Audit Reports (LTAR) within 07 days:

    • Part 1 objections: Forward to NHQ (DPP&A) with Annex "B" in duplicate.

    • Advance audit objections: Forward to NHQ (DPP&A) in triplicate.

    • Part 2 objections: Forward directly to DADS with an information copy to NHQ (DPP&A).

Don'ts

  • Do not argue, guess, speculate, or fabricate explanations.

  • Do not provide open-ended or superfluous answers; answer only the specific question asked.

  • Do not produce unrequested files or bring extraneous records into the audit room.

  • Do not give ambiguous evasions (e.g., "To be informed later" or "I was not posted here at the time").

  • Do not sign written sworn affidavits.

6. Processing Audit Observations

Local Test Audit Reports (LTAR) issued by DADS categorize observations into three phases:

  • 1st Phase (Major Financial Irregularities): Units must submit formal replies along with remarks from NHQ to DGDA within 28 days.

  • 2nd Phase (Minor Financial Irregularities): Units forward explanations directly to DGDA.

  • 3rd Phase (Procedural Observations): Written replies are not required, but corrective measures must be implemented and retained for the subsequent audit cycle.

Escalation from Advance Para to Draft Para

  • Objections involving theft, fraud, loss, damage, or major financial irregularities are initially placed in the Advance Para.

  • If a unit fails to provide satisfactory replies within 28 days, DGDA issues a formal notice to the MOD. After a 10-day buffer period, if MOD fails to provide clearance within 06 weeks, the observation is escalated to a Draft Para.

  • The Draft Para is submitted to the CAG for onward presentation to the Public Accounts Committee (PAC) of the National Parliament.

7. Administrative Oversight and Documentation

  • NHQ Audit Cell (DPP&A): Monitors audit positions, compiles unit replies, provides official naval remarks to DGDA/MOD, and ensures regulatory compliance.

  • Audit Register & Audit File: Maintained on a yearly basis by all ships and shore establishments to record all LTARs, correspondence, and inspection entries.

  • Quarterly Returns: Units must submit the updated status of all outstanding audit objections to NHQ (DPP&A) in accordance with BNLR Serial 311.