OFFICE OF THE PRINCIPAL DIRECTOR OF COMMERCIAL
AUDIT, CHENNAI
INDIAN OIL BHAVAN, LEVEL II, 139, NUNGAMBAKKAM HIGH
ROAD, CHENNAI – 600 034.
Audit Note:1 Date: 24.01.2024
Sub: Internal Audit non- conducting of Pay & Accounts Officer (MSME) Chennai.
Internal audit is an independent management function, which involves a continuous
and critical appraisal of the functioning of an entity with a view to suggest improvements
thereto and provide value addition and strengthen the overall governance mechanism of the
entity, including the entity's strategic risk management and internal control system. Internal
auditors can carry out their job in a more focused manner by directing their efforts in the
areas where there is a greater risk, thereby enhancing the overall efficiency of the process and
adding greater value to the entity.
As per internal audit work manual of Controller General of Accounts (CGA), the
frequency of internal audit should be done at least once a year.
The Internal Audit of Pay & Accounts Officer (MSME) Chennai is conducted by the internal
audit wing, Principal Accounts Officer, Ministry of Industry, New Delhi. During verification
of records, it was observed that Internal Audit has not been conducted for Pay & Accounts
Officer (MSME) Chennai from 01.04.2015 onwards. Which is almost 9 years and it is against
the working manual of Controller General of Accounts. CAG’s Audit should always be
preceded by internal audit. This shows weakness in the Internal Control system of the
department.
The reasons for not conducting internal audit during audit period may be intimated to audit.
Reply may be furnished within two days from the receipt.
Senior Audit Officer
Government Audit
To
The Senior Accounts Officer,
Pay and Accounts Office (MSME), 65/1, GST Road,
Guindy, Chennai - 600032
OFFICE OF THE PRINCIPAL DIRECTOR OF COMMERCIAL
AUDIT, CHENNAI
INDIAN OIL BHAVAN, LEVEL II, 139, NUNGAMBAKKAM HIGH
ROAD, CHENNAI – 600 034.
Audit Note:2 Date: 24.01.2024
Sub: Non-deduction of TDS on GST and TDS of Rs.41,280 from remuneration paid on
account of salary to the contractual employees and its deposits by the DDO for filing
GSTR7.
As per circular no. 65/39/2018 DOR and letter no. S.31011/11/11/2018-ST-I- Dor
dated.14th September 2018 under section of the CGST act 2017 for deduction of tax by the
Government Agencies Viz Pay & Accounts Officer (MSME) Chennai or any other person to
be notified in this regard, from the payment made or credited to the supplier (deductee) of
taxable goods or services or both, where the total value of such supply, under a contract,
exceeds two lakh and fifty thousand rupees. The amount deducted as tax under this section
shall be paid to the Government by deductor within ten days after the end of the month in
which such deduction is made along with a return in FORM GSTR -7 and as per IT act
section 194c, at any time the payment made to the contractor
exceeds Rs. 75000 in a fiscal year TDS will be deducted at the
rate of 2% from the payment.
Name of Contractor Year Amount paid to Contractual Non-deduction of Non-deduction
Employees Yearly TDS on GST @2% of TDS @2%
M/s SAARA System 2019-20 5,16,000 10320 10320
M/s SAARA System 2020-21 5,16,000 10320 10320
20640 20640
On the scrutiny of records/files/bills relating to PAO, MSME office outsourced two
Data Entry Operators from M/s SAARA System initially for a period 1.04.2019 to
31.03.2020 and the contract was extended subsequently for the period up to 30.06.2022 at the
fixed rate of Rs. 21500 per month per person for contractual employees. It has been observed
that payment was made to both Data Entry Operators of Rs. 5,16,000 yearly. Which was
more than 2.5 lakh per annum but the recovery of TDS at the rate of 2% on GST and TDS at
the rate of 2% had not been deducted as per IT Act and the proper records for filling GSTR7
has not been maintained by the DDO, Pay & Accounts Officer (MSME) Chennai which is
violation of the Ministry of Finance circular no. 65/39/2018 DOR and letter no.
S.31011/11/11/2018-ST-I- Dor dated 14th September 2018 under section of the CGST act
2017 and section 194c.
Reasons non-compliance of the order/guidelines issued by the Ministry of Finance may be
furnished to audit.
Senior Audit Officer
Government Audit
To
The Senior Accounts Officer,
Pay and Accounts Office (MSME), 65/1, GST Road,
Guindy, Chennai - 600032
