A review on implementation of National AIDS control programme in Nagaland for the period from 1993-94 to 1995-96 was featured in Audit Paragraph 3.9 of Report of the Comptroller and Auditor General of India on Government of Nagaland (Civil) for the fiscal 1995-96. The implementation of the programme during 1996-97 to 2000-2001 was reviewed in Audit during June-August 2001 by test check of the records of the Programme Officer AIDS cell, DHS, PD, NSACS, all 3 Blood Banks and ZBTC covering 68 per cent of the expenditure incurred on the programme. The performance audit revealed that the implementation of the programme suffered a set back due to the absence of a comprehensive policy, programme mismanagement, centralised financing and absence of accountability that resulted in excess reporting of expenditure, large scale misuse of funds through diversion and advance payments, non monitoring of the financial and physical performance of substantially financed Non-Governmental Organisations and non-initiation of remedial measures through monitoring and evaluation of performance of the implementing agencies. Resultant effect was that the State against achievement of target for HIV/AIDS infection rate below 1 per cent of adult population, had registered incidence rate of 2.52 per cent of the population marginally covered.