The stand-off between the Government auditor and operator of the KG-D6 block, Reliance Industries Ltd, on the scope of the audit — financial or performance — seems to have ended.
The Comptroller and Auditor General of India (CAG) on Thursday resumed its audit of block expenses for three years starting 2008-09. The audit will be done according to the production sharing contract.
This means it will be only a financial audit and not a performance audit — an issue that had become a bone of contention between the auditor and the contractor.
RIL had agreed to the second round of CAG audit for the D6 block for 2008-09 to 2011-12 only after it was informed that it would be done according to the production sharing contract.
However, the difference between the contractor and the auditor re-surfaced once the auditing started.
The issue was resolved after the Petroleum and Natural Gas Ministry stepped in as arbitrator.
Propriety of expenses
A production sharing contract is signed between a contractor and the Government to carry out hydrocarbon exploration and production work.
Once the Ministry had convinced the Government auditor, it had communicated this to Reliance Industries.
It had asked whether it will be a financial audit or performance audit, and whether the CAG is the auditor and RIL the auditee.
The contractor had also said any questions by the auditor should be restricted to deviations from the production sharing contract.
According to reports, the CAG too has said it was not planning to do a performance audit but only wanted to examine the propriety of expenses incurred.