IBC Section 223: Accounts and audit

Section 223 of Insolvency and Bankruptcy Code, 2016: Accounts and audit

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) The Board shall maintain proper accounts and other relevant records and prepare an annual statement of accounts in such form as may be prescribed by the Central Government in consultation with the Comptroller and Auditor-General of India.

(2) The accounts of the Board shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and any expenditure incurred in connection with such audit shall be payable by the Board to the Comptroller and Auditor-General of India.

(3) The Comptroller and Auditor-General of India and any other person appointed by him in connection with the audit of the accounts of the Board shall have the same rights and privileges and authority in connection with such audit as the Comptroller and Auditor-General generally has in connection with the audit of the Government accounts and, in particular, shall have the right to demand the production of books, accounts, connected vouchers and other documents and papers and to inspect any of the offices of the Board.

(4) The accounts of the Board as certified by the Comptroller and Auditor-General of India or any other person appointed by him in this behalf together with the audit report thereon shall be forwarded annually to the Central Government and that Government shall cause the same to be laid before each House of Parliament.

Legal Commentary & Landmark Judgments: Section 223

Section 223 mandates the maintenance of comprehensive accounts by the Board and provides for their mandatory annual audit by the Comptroller and Auditor General of India (CAG).

Mandatory CAG Audit: The accounts of the Board must be audited annually by the Comptroller and Auditor General of India at such intervals as may be specified by him.
Production of Records: The Board must make available all accounts, balance sheets, vouchers, and records for CAG inspection; the CAG has the same rights as in government audits.
Laying Before Parliament: The audited accounts certified by the CAG, together with the audit report thereon, must be forwarded annually to the Central Government to be laid before each House of Parliament.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court emphasized that mandatory CAG audit and parliamentary tabling under Section 223 ensure peak institutional transparency and democratic accountability.
Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407: Noted that statutory auditing by the constitutional auditor guarantees public trust in the Board's financial integrity.

Courtroom Practice & Strategic Litigation Guidance:

Internal financial controllers of the Board must reconcile all licensing receipts, examination fees, and expenditure vouchers on a quarterly basis to prepare for the annual CAG statutory audit under Section 223.