The army, however, contested the loss of Rs 100 crore in procurements and insisted that no rules have been violated.
The defence ministry had ordered the Controller of Defence Accounts (CDA) to audit expenses made by the army commanders under their special financial powers of up to Rs 125 crore to procure urgently-required items for troops.
Taking a strong view of the financial mismanagement under its departments, defence minister A K Antony has decided to impose strict checks and balances on expenditure made under special financial powers by all officials under the ministry having such authority.
The audit report has assessed 55 transactions made by the commands between the period 2009-11 when present Army Chief Gen Bikram Singh was heading the Kolkata-based Eastern Command.
The report suggests that certain equipment, including Chinese communication equipment, has been purchased from grey market.
Mismanagement in milk procurement in Northern Command has also been suggested by the report.
It also mentions the procurement of binoculars by the Eastern Command from a foreign vendor when the same were available at lower prices in the Indian market.
Ministry officials said efforts are being made by the defence minister to streamline the entire financial management system of all the departments under the ministry.
The ministry is putting in place checks and balances especially in organisations where no such measures existed. The steps are likely to include appointment of auditors for ensuring that all rules and regulations in financial management are observed and followed.
A budget of around Rs 125 crore and Rs 50 crore for army commanders of Northern and Eastern Commands respectively and Rs 10 crore each to other four commands, has been provided for meeting the requirements of these unforeseen situations, the report suggested.
The internal audit report said there was a loss of around Rs 30 crore in procurement of special packaged milk in
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