Audit Act 2048 1
AUDIT ACT, 2048 (1991)
Date of Authentication and publication:
11 kartik 2048 (October 28, 199l).
1. The Act Amending Some Nepal laws, 2063 2063.6.28 (october 14, 2006)
Act No. 16 of 1991
AN ACT TO PROVIDE FOR AUDIT
Preamble : Whereas it is expedient to make necessary provisions on Audit,
Now, therefore, on the twentieth year of the reign of His Majesty King Birendra Bir
Bikram Shah Dev, the Parliament has enacted this Act.
1. Short Title and Commencement : (1) This Act may be called "Audit
Act 2048 (1991)"
(2) This Act shall come into force immediately.
2. Definitions : Unless the subject or context requires otherwise in this
(a) "Government Office" means all government office and
courts, including the Supreme Court, Parliament,
commission for investigation of Abuse of Authority
Auditor General Public Service Commission and Offices of
other constitutional bodies, and Nepal Army and Nepal
(b) "Accounts" means the records, ledgers books etc.
maintained under prevailing laws showing particulars of
transactions, and other documents substantiating such
(c) "Audit" means examination of the accounts and the analysis
and evaluation made on the basis thereof.
(d) "Corporate body wholly owned by government of Nepal"
means a corporate body whose all shares of assets are
owned by Government of Nepal, or a corporate body whose
all shares or assets are owned by the aforesaid corporate
body or by such corporate body and Government of Nepal
and this expression shall also include such corporate body
for whom Government of Nepal is required to bear full
(e) "Corporate body substantially owned by government of
Nepal" means a corporate body whose more than fifty-
percent shares or assets are owned by Government of
3. Methods of Audit : (1) The Auditor General may conduct final audit of the
financial activities and other activities relating thereto of the offices, bodies
or organizations under its jurisdiction, either in detail or sporadically or a
random basis and present the facts obtained therefrom, make critical
comments thereon and submit its reports.
(2) The Auditor General may. if it deems necessary in course of
audit exercise the following powers -
(a) To check at any time the status of the program and project
being operated under the grants obtained by Government
of Nepal and examine documents relating to accounts;
(b) To require contractors of government contracts to produce
relevant documents or other evidence relating to the
contract, which are supposed to be in his/her possession;
(c) To hire services of any expert on the task of audit and, if
necessary, engage someone under contract with
4. Matters to be audited : The Auditor General, with due regard to the
regularity, economy, efficiency, effectiveness and propriety, shall audit
following matters to ascertain whether:
(a) the amount appropriated in the concerned heads and sub-
heads by the Appropriation Act for respective services
and activities have been expended for the specified
purposes of designated services or activities within the
(b) the financial transactions comply with the existing laws
and the evidence relating to items of income and
expenditure are sufficient;
(c) the accounts have been maintained in the prescribed
forms and such accounts fairly represent the position of
(d) the inventory of government assets is accurate and up to
date and the arrangement for protection and management
of governmental property is adequate;
(e) the arrangements for internal audit and internal control of
cash, kind and other governmental property against any
loss, damage and abuse are adequate and if so, are they
(f) the accounts of revenue, all other incomes and deposits
are correct and the rules relating to evaluation, realization
and methods of book keeping are adequate and if so, are
(g) the accounts relating to public debts, security, deposit,
debt relief fund and the amounts set aside for debt
services and repayment of debts are accurate;
(h) The accounts of income and expenditure of industrial and
business services, and their balance of cash and kind, and
the arrangements and rules relating to their financial
transactions are adequate and if so, are they observed;
(i) The organization, management and job allocation of the
office are sufficient and proper and are that operating
(j) Any function is being unnecessarily performed in
duplication by any employee or agency or any essential
function is being omitted;
(k) The available resources, means and assets are properly
utilized and the maintenance and perspiration thereof
against any loss or damage has been properly arranged;
(l) The progress has been achieved within scheduled time
and the quality and quantity of the work is satisfactory;
(m) The objective and policy of the Office is explicit and the
program is delineated conforming to the specified
objective and policy;
(n) The program is being implemented within the limits of
approved cost estimate and the proceeds received in
comparison to the cost is reasonable;
(o) The arrangements for maintaining data relating to target,
progress and cost are adequate and reliable;
5. Matters to be audited in View of Propriety : (1) The Auditor General
shall audit following matters considering the propriety thereof-
(a) On the propriety of any expenditure and its authorization,
if in the opinion of the Auditor General such expenditure
is a reckless one or is an abuse of national property,
whether movable or immovable, despite that the
expenditure confirms to the authorization, and
(b) On the propriety of all authorizations issued in respect of
any grant of national property whether movable or
immovable, fixed or current, or underwriting of any
revenue, or any contract, license or permits relating to
mining, forest, water resources, etc. and any other act of
abandoning movable or immovable, assets of the nation.
(2) The Auditor General may not include in the report minor
items of discrepancy and other items deemed as insignificant in view of their
property which were observed during the audit of income and expenditure.
6. Audit of Corporate Bodies Wholly Owned by Government of Nepal :
(1) Notwithstanding anything contained in the existing laws, the audit of the
corporate bodies wholly owned by Government of Nepal shall be audited by
the Auditor General pursuant to this Act.
(2) If the Auditor General is constrained by time and resources
to audit the corporate bodies wholly owned by Government of Nepal
pursuant to Sub-section (1) he/she may appoint license holder auditors under
the prevailing laws an assistant. While appointing auditor as such, he/she
shall give priority to the Nepali citizen.
(3) The auditor appointed pursuant to Sub-section (2) shall
act under the direction, supervision and control of the Auditor General.
(4) The powers, functions, duties and responsibilities of the
auditors appointed pursuant to Sub-section (2) and the procedures to be
followed by them in course audit and provisions relating to their report shall
be as prescribed by the Auditor General.
(5) The remuneration to be paid by the concerned organisation
to the auditors appointed pursuant to Sub-section (2) shall be fixed by the
Auditor General keeping in view the volume of financial transactions, status
of accounts, number of branches and sub-branches, work load and work
progress of the concerned organization.
7. Audit of Corporate Bodies Substantially Owned by Government of
Nepal : (1) The audit of the corporate bodies substantially owned by
Government of Nepal shall be done in accordance with the prevailing laws
relating to such body.
(2) Notwithstanding anything contained in Sub-section (1), the
Auditor General shall be consulted while appointing an auditor for auditing
of the corporate bodies substantially owned by Government of Nepal.
(3) The procedures to be followed while consulting the Auditor
General for appointing auditors pursuant to Sub-section (2) and on matters to
principles of audit to be followed by the auditors during their audit shall be
as prescribed by the Auditor General.
(4) The concerned organization shall deliver at the Office of
the Auditor General a copy of the report submitted by the auditor appointed
in consultation with the Auditor General pursuant to Sub-section (2).
(5) The Auditor General may issue directives to the concerned
organization in respect of the irregularities observed in the report received
pursuant to Sub-section (4) and it shall be the duty of concerned organization
to abide by such directives.
♣8. Annual Report of the Auditor General : The Auditor General shall
submit its annual audit report, including his/her comments and opinions
thereon, to president on the final audit of Government Offices and other
offices and organization prescribed by prevailing laws, which are subject to
audit by the Auditor General.
Provided that the Auditor General may submit a report if he deems necessary
at any time to take immediate action against any loss or damage already
happened or impending upon to the national assets.
(3) president shall forward the Report received pursuant to Sub-
section (1) to the legislative -parliament .
9. Recruitment of Officers and Employees and Condition of Services :
(1) There shall be officers and employees as approved from time to time by
Government of Nepal in order to assist the Auditor General in the
performance of his/her duties. The number of such employees shall not be
reduced without the approval of the Auditor General.
(2) A separate cadre of officers and employees in the Office of the
Auditor General shall be constituted. The recruitment and other conditions of
services of the officers and employees within the cadre shall be as prescribed
in the Rules to be framed under this Act.
10. Powers to issue Directives by the Auditor General : The Auditor
General may, subject to the Constitution of the Kingdom of Nepal, 1990 and
the prevailing laws, issue directives to the concerned Government Offices,
♣ Amended by The Act Amending Some Nepal laws, 2063
and Corporate Bodies wholly or substantially owned by Government of
Nepal, from time to time to make proper arrangements on matters of
accounts and to maintain regularity therein. It shall be the duty of the
concerned offices or organizations to abide by such directives.
11. Powers to Frame Rules : Government of Nepal may in consultation with
the Auditor General, frame Rules for the implementation of this Act.
12. Action to be taken Against Irregularities : Necessary legal action shall
be taken in respect of the faults and irregularities observed during the audit
of income and expenditure and other financial matters of Government of
Nepal, according to the prevailing laws.
13. Repeal and Savings
(1) Audit Act, 2018 is here by repealed.
(2) Accounts to be audited under the Audit Act. 2018 shall be audited
according to this Act.