The Local Fund Audit Department was established in the year 1942 vide Govt Order No. F1/3721/Fin dated 08.05.1942 to conduct the audit of local bodies and Universities in the erstwhile Princely State of Travancore and started functioning from 14.05.1942 independent of the Accountant General and under the administartive control of Finance Department of the Government.Initially two group offices was established at Kottayam and Trivandrum by dividing the Municipalities in the State to Northern and Southern group for conducting the audit but as the work considerably increased with the entrustment of the audit of accounts of Trivandrum Corporation ,Travancore University as well as Village Panchayats & Village Unions, Government sanctioned the formation of a new District Office at Quilon vide GO No.F1-388 dated 12.01.1948 .Consequent on integration of Travancore & Cochin into United States of Travancore Cochin w.e.f 01.07.1949, A Central Office was established to function as Headquarters at Thiruvananthapuram and with the enactment of the Travancore – Cochin Panchayat Act 1950,the audit of accounts of Panchayats and Municipalities of the former Cochin State were entrusted to the Department.
Following the reorganisation of the States and transfer of Malabar Area from Madras to Kerala State wef 01.11.1956 ,the reorganisation of the department was inevitable as the institutions under the purview of audit of the Examiner of Local Fund Accounts including Local Bodies and H.R & C E institutions, Madras was transferred to the audit control of LFAD, Kerala and consequently the entire state was divided into three zones namely South Zone with Headquaters at Trivandrum, Central Zone with Headquaters at Ernakulam and North Zone with Headquaters at Calicut. Shri K Govinda Pillai, B.A, B L (Former ELFA of Travancore State) was appointed as the First Examiner of Local Fund Accounts of Kerala State in Govt Order No. Fin (e) 1-33742/56 dated 01.11.1956. He was also appointed as the Treasurer of Charitable Endowments under Section 3(i) of the Charitable Endowment Act 1890 . In the year 1958 , the ELFA was appointed auditor of Travancore Cochin Devaswom Boards by the Honourable Hight Court of Kerala and vide GO (MS) 200/59/Fin dated 27.04.1959 two seperate offices were formed at Trivandrum and Cochin Devaswom Boards respectively.
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 the year 1979 vide G.O (Ms) No.733/79/Fin dated 13/08/1979 and classified into three units namely Head Office, District Offices and Functional Audit Offices from 01/09/1979 and subsequently the zonal system was abolished. Subsequently the audit of various institutions such as Development Authorities, Devaswom Boards, H.R.Es, Funds, Universities etc were brought under the control of ELFA.
The 73 rd and 74 th Amendments of the Indian Constitution, passed in 1993, devolved a significant amount of power to the Panchayat Raj Institutions (PRI) and Nagarapalika Institutions in the matter of local self-government and recognized them as “institutions of self-government. In the matter of maintenance of their accounts and audit, the States were required to make necessary provisions by law. In response to that requirement the Kerala state legislature has passed the Kerala Local Fund Audit Act, 1994 (“the Act”) which was notified vide the notification No.11671/Leg.A2/93/Law dated 11/05/1994 and vide the G.O (P) No.77/96/Fin dated 10/01/1996, the Finance Department has notified the commencement of the LFAD Act with effect from 15/01/1996. Through this Act, the Designation of the Examiner of Local Fund Accounts was redesignated as the Director of Local Fund Audit Department.The Kerala Local Fund Audit Rules, 1996 (“the Rules”) were 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).
The post of Joint Examiner, Deputy Examiner/District Examiner, Inspector was redesignated to Joint Director, Deputy Director(HG), Deputy Director and Audit Officer respectively vide GO(P) 424/99/Fin dated 10.02.1999.The Committee on Local Fund Accounts was constituted in the year 2003 to monitor the Consolidated Audit Report issued by the Department in notification no.27/Leg.2/2002/Leg by inserting R.261 (G) in the Rules & Procedures and conduct of business in the Kerala Legislative Assembly.The Local Fund Audit Department was renamed as Kerala State Audit Department (KSAD) vide GO (Ms) No.24/15/Fin dated 14-1-2015 and GO (Ms) No. 103/15/Fin dated 28.2.2015.
KSAD has 56 sub-offices spread across the State. Out of these, 14 offices are District Offices located at each district headquarters. Remaining 42 sub-offices are located at various places (mostly these are situated inside an auditee institution). There are 39 sub-offices which are functioning as concurrent offices, performing concurrent audit at various auditee institutions. KSAD has currently 1,155 employees, including law officer from law department of Government
As per the recommendations of the Technical Committee constituted based on the IT policy of the State, The modernisation and computerisation of the department was initiated in the year 2008. The Head office as well as sub offices are provided with state of the art furnishings and office automation machines like Desk Top computers, Laptops, Printers ,Scanners and high end photocopiers. In the year 2012 as part of modernization, increasing efficiency of the Department and ensuring timeliness and correctness of Audit Reports the Department had developed and implemented a software application – Audit Information Management System-AIMS. Presently all the pre audit processes, audit execution and post audit processes are being carried out throught AIMS software.The Audit Reports of LSGIs and Universities are generated automatically from the software and issued online to the Auditee Institutions. The software application has been hosted online on a State Data Center Web server and Auditee Institutions are given seperate unique login facility.The Charitable Endowments maintained by the Director was also automated online by the implimentation of Charitable Endowment Management System(CEMS) in the year 2019.
Over the years Kerala State Audit Department has developed into a competent, well equipped, well trained, modernized Department. The department staff has been provided with adequate technical training & proficiency to perform audit in various types of institutions including LSGIs,Universities and other Grant-in-Aid institutions. The Department is maintaining independence, in fact and appearance, in mental attitude in all matters related to the audit. The Department has the range of skills and experience necessary for effective discharge of the audit mandate. The Department is equipped with the full range of up-to-date audit methodologies. The Department at present also exercises due professional care during the performance of the audit and the preparation of the report in a transparent manner.