CAGs Cannot Be Cheer Leaders
Very recently, India’s national auditor has said the government should not expect it to be a cheerleader for all of its actions. Comptroller & Auditor General Vinod Rai took the opportunity of addressing his senior officers on Monday to say “we cannot do the role of cheerleaders. We strive to provide objective feedback on the functioning of the various departments of the government”.
Rai also came down heavily on what he claimed were attempts to influence the auditors saying this vitiated against global norms laid down by the United Nations.
The UN “recognises (CAG) can accomplish tasks objectively and effectively only if (it is) independent of the audited entity and protected against audit influence”.
The remarks are significant as Rai and his team has been under attack from the UPA government for a series of unflattering audit reports that has put it on the mat including those on telecom, coal, oil and gas in the past two years.
Let’s know a few basics about CAG
The Comptroller and Auditor General (CAG) of India is an authority, established by the Constitution of India. Under Chapter V of the Indian Constitution, CAG audits all receipts and expenditure of the Government of India and the state governments, including those of bodies and authorities substantially financed by the government. The CAG is also the external auditor of government-owned companies. The reports of the CAG are taken into consideration by the Public Accounts Committees, which are special committees in the Parliament of India and the state legislatures. The CAG of India is also the head of the Indian Audit and Accounts Department, which has more than 55,000 employees across the country.
The current CAG of India is Vinod Rai, who was appointed on 7 January 2008. He is the 11th CAG of India.
CAG's Role
The Comptroller & Auditor General of India plays a key role in the functioning of the financial committees of Parliament and the State Legislatures. He has come to be recognized as a 'friend, philosopher and guide' of the Committee. His Reports generally form the basis of the Committees' working, although they are not precluded from examining issues not brought out in his Reports. He scrutinizes the notes which the Ministries submit to the Committees and helps the Committees to check the correctness submit to the Committees and helps the Committees to check the correctness of facts and figures in their draft reports.
The Financial Committees present their Report to the Parliament/ State Legislature with their observations and recommendations. The various Ministries / Department of the Government are required to inform the Committees of the action taken by them on the recommendations of the Committees (which are generally accepted) and the Committees present Action Taken Reports to Parliament / Legislature.
In respect of those cases in Audit Reports, which could not be discussed in detail by the Committees, written answers are obtained from the Department / Ministry concerned and are sometimes incorporated in the Reports presented to the Parliament / State Legislature. This ensures that the audit Reports are not taken lightly by the Government, even if the entire report is not deliberated upon by the Committee.
UNION AUDIT REPORTS
The Union Audit Reports of the Comptroller and Auditor General of India, contain the findings of transaction audit and performance audit in the areas of:
a. Civil Audit
b. Audit of Autonomous Bodies
c. Defense Services
d. Railways
e. Receipts of the Government
f. Central Commercial
The Audit of the CAG is bifurcated into two streams namely Performance Audit and Regularity (Compliance) Audit.
While audit of the Civil Departments, Railways and Defense are conducted as per the direct mandate in the constitution and relevant provisions of the DPC Act, the Commercial Audit is conducted under the provisions of Company Act. Autonomous Bodies are audited as per the mandate in the act establishing the body.
The reports of the CAG are deliberated upon by the Public Accounts Committee (PAC) of the parliament, save the commercial reports which are examined by the Committee on Public Undertakings (COPU).
Nature of Audit
While fulfilling his Constitutional obligations, the Comptroller & Auditor General examines various aspects of Government expenditure. The audit done by C&A G is broadly classified into Regularity Audit and Performance Audit.
What is Regularity Audit?
It is an audit against provision of funds to ascertain whether the moneys shown as expenditure in the Accounts were authorised for the purpose for which they were spent; against rules and regulation to see that the expenditure incurred was in conformity with the laws, rules and regulations framed to regulate the procedure for expending public money and whether expenditure on every item was done with the approval of the competent authority in the Government for expending the public money.
What is Propriety Audit?
This extends beyond scrutinising the mere formality of expenditure to it wisdom and economy and to bring to light cases of improper expenditure or waste of public money.
While conducting the audit of receipts of the Central and State Governments, the Comptroller & Auditor General satisfies himself that the rules and procedures ensure that assessment, collection and allocation of revenue are done in accordance with the law and there is no leakage of revenue which legally should come to Government.
What is Performance Audit? It focuses on whether Government programmes have achieved the desired objectives at lowest cost and given the intended benefits.
In conclusion:
The CAG is an official mandated by the Constitution to act as a watchdog on government finances and its functioning. By auditing the accounts of bodies at various levels of government he plays an essential role in making the government more transparent and accountable to the legislature as well as civil society.
Regards
Pooja Agarwal
CA, MBA, BCom (H)
CAclubindia
