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Reliance Industries agrees to CAG audit: Oil Secretary

April 03, 2013 20:54 IST

Reliance Industries has agreed to a Comptroller and Auditor General (CAG) audit of its pending on KG-D6 fields and issues over scope and extent of its scrutiny have been resolved, Oil Secretary Vivek Rae said on Wednesday.

"The audit issue has been resolved and that's a big step forward, that we will now get CAG to do the audit for the last 3-4 years and if there are issues, the company can react and remedial action can be taken," he told reporters at the sidelines of a CII Annual General Meeting (AGM).

"We've sent the letter (to Reliance), hopefully in a day or two they will confirm to us that they've agreed to it," he added.

The CAG had at the end of its first sitting with RIL in January suspended the audit of spending on the flagging KG-D6 block following differences with RIL over scope and extent of the scrutiny.

On Tuesday, Rae said, "The audit will happen. We are pretty clear about that. We are making all efforts to see that CAG is able to perform its duty."

RIL had previously stated that CAG cannot contractually perform a performance audit on it and Production Sharing Contract (PSC) only provides for a government appointed auditor to verify reasonableness of all charges and credits.

CAG too has now stated that it is not planning to a do a performance audit of the company but only wants to examine

"propriety" of expenses made.

For doing that, CAG wants the discretion for records to be requisitioned to be vested with the government or its auditor (CAG).

"Whatever records are sought will have to be made available," Rae had said on March 24, adding once the issue of scope of audit is resolved there should be no issues about records being made available.

CAG had on March 12 written to the Oil Ministry that its audit of KG-D6 "would be financial and propriety audit" and the purpose of such scrutiny was to ensure that "the government's financial interests have been safeguarded.”

This followed Oil Ministry writing to CAG saying the official auditor was being requested to undertake the audit of KG-D6 for 2008-09 to 2011-12 under Section 20 of the C&AG (DPC) Act, 1971.

Stating that such audit should be a financial scrutiny, the Ministry told CAG that the provisions of PSC provide for a government appointed auditor inspecting and auditing all records and documents supporting costs, expenses, receipts and income.

CAG has said it was in agreement with this scope of audit provided the ministry agreed with it on the issue of requisition of records and access.

The auditor said that its six-member audit team was at premises of RIL in Navi Mumbai from January 9 to January 31 during which they issued 40 requisitions calling for information and records. However, RIL provided only a few records.

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