State Financial Corporations Act, 1951
(1) The affairs of the Financial Corporation shall be audited by auditors duly qualified to act as auditors of companies under sub-section (1) of section 226 of the Companies Act, 1956 (1 of 1956), who shall be appointed by the State Government in consultation with the Comptroller and Auditor General of India and the Financial Corporation shall pay to the auditors so appointed such remuneration as the State Government may fix.
(2) Every auditor shall be supplied with a copy of the annual balance sheet of the Financial Corporation, and it shall be his duty to examine it, together with the accounts and vouchers relating thereto, and every Auditor shall have a list delivered to him of all books kept by the Financial Corporation and shall at all reasonable times have access to the books, accounts and other documents of the Financial Corporation and may in relation to such accounts examine any Director or officer of the Financial Corporation.
(3) The auditor shall make a report to the shareholders upon the annual balance sheet and accounts, and in every such report they shall state whether in their opinion the balance sheet is a full and fair balance sheet containing all necessary particulars and properly drawn up so as to exhibit a true and correct view of the State of affairs of the Financial Corporation, and in case they had called for any explanation or information from the Board, whether it has been given and whether it is satisfactory.
(4) The State Government may, in consultation with the Comptroller and Auditor General of India, at any time issue directions to the auditor requiring them to report to it upon the adequacy of measures taken by the Financial Corporation for the protection of its shareholders and creditors or upon the sufficiency of their procedure in auditing the affairs of the Financial Corporation and may enlarge or extend the scope of the audit or direct that a different procedure in audit be adopted, or direct that any other examination be made by the auditors, if in its opinion public interest so requires.
(5) The Financial Corporation shall send a copy of every report of the auditors to the Comptroller and Auditor General of India at least one month before it is placed before the shareholders.
(6) Notwithstanding anything contained in the preceding sub-sections, the Comptroller and Auditor General of India may, either of his own motion or on a request received in this behalf from a State Government, undertake such audit and at such times as he may consider necessary:
PROVIDED that where the State Government is required to make any payment on account of the guarantee given by it under section 6 or section 7 or section 8, as the case may be, such audit shall be undertaken by the Comptroller and Auditor General of India.
(7) Every audit report under sub-section (6) shall be forwarded to the State Government and the government shall cause the same to be laid before the legislature of the State.