Local Fund Audit Department was formed in Travancore in 1942. The Department was reorganized in GPR Dis.29061/56/Fin dated 17/04/57 w.e.f 01/05/1957 and three zones i.e South Zone with H.Q at Thiruvananthapuram, Central Zone with H.Q at Ernakulam and North Zone with H.Q at Kozhikode were formed. The Kerala Local Fund Audit Service was constituted vide G.O (P) No.638/P.D (Rules) dated 03/10/1960. The Kerala Local Fund Audit Subordinate Service was constituted in G.O (P) No.639/PD dated 03/10/1960. The Department was again reorganised in G.O (Ms) No.733/79/Fin dated 13/08/1979 and classified the the department into Head Office, District Offices and Functional Audit Offices from 01/09/1979 and the zonal system was abolished.

The Kerala Local Fund Audit Act, 1994 (Act 14 of 1994) was notified in the notification No.11671/Leg.A2/93/Law dated 11/05/1994(published in Gazette Extra Ordinary No.446 dated 11/05/1994). In G.O (P) No.51/04/Fin dated 22/01/2004, Finance Department has notified the commencement of the LFAD Act with effect from 15/01/1996.

The Kerala Local Fund Audit Rules, 1996 was notified vide G.O (P) No.180/96/Fin dated 09/02/1996 (S.R.O 176/96 published as Extra Ordinary Gazette No.222 dated 12/02/1996)

FUNCTIONS

As per Section 4 of the Kerala Local Fund Audit Act 1994 , the audit of accounts of local authorities and Local funds included in the Schedule to the Act has to be conducted by the Director of Local Fund Audit in the manner provided by or under the Act. The Kerala Local Fund Audit Rules 1996 (B) framed for implementing the provisions in the Act were issued in G.O (P) No.180/96/Fin dt.9.2.1996. The power to issue charge and surcharge certificates for the recovery of losses sustained by the local fund institutions as disclosed in audit is vested with the Director of Local Fund Audit vide Section 16 of the Kerala Local Fund Audit Act 1994 and Rule 20 of the Kerala Local Fund Audit Rules 1996.

 
This Department is well placed to play an important role in ensuring optimum value for money to the State Government. The approach of the Department maximises the benefit from our core audit work, which is designed to assess whether the scarce resources and valuable public money has been spent wisely and properly. As per section 9(1) of the Kerala Local Fund Audit Act 1994, the auditee institutions shall present the annual accounts relating to a financial year within four months from the close of the financial year concerned. But it has come to the notice of the Department that several institutions have not submitted the annual accounts within the statutory time limit. Due to the non-receipt of the annual accounts within the stipulated time and shortage of staff in the Department the target of audit could not be achieved in full. Please see the details of audit of accounts actually done as on 31.10.2001