Comptroller and Auditor General of India (CAG)

Introduction

  • In accordance with the Indian Constitution, the CAG is an independent authority.
  • He serves as the chief Guardian of the Public Treasury and the head of the Indian audit and accounts department.
  • It serves as a mechanism for ensuring that the government and other public authorities—all those who spend public money—are accountable to the state legislatures and, through them, to the general public.
  • The current CAG of India is Shri Girish Chandra Murmu.

What led to the establishment of the CAG Office?

  • In 1858, the British took over administrative control of India from the East India Company, and the Office of the Accountant General was established. The first Auditor General was appointed in 1860 by Sir Edward Drummond.
  • After some restructuring, the Auditor General of India later became the Auditor and Accountant General to the Government of India.
  • The title was changed from Comptroller General of Accounts to Comptroller and Auditor General of India in 1866 and 1884, respectively.
  • The position of Auditor General was given statutory support by the Government of India Act of 1919, making it independent of the executive branch.
  • By establishing Provincial Auditors General in a federal structure, the Government of India Act of 1935 strengthened the position of the Auditor General even further.
  • The act provided a brief summary of the Auditor General of India's responsibilities and information on the appointment and service procedures.
  • The detailed accounting and auditing responsibilities of the auditor general were laid out in the Accounts and Audits Order of 1936.
  • Until 1947, when India attained independence, this arrangement remained the same. Following independence, the 1949 Indian Constitution's Article 148 mandated the appointment of a Comptroller and Auditor General by the country's President.
    • Jammu and Kashmir came under the purview of the CAG in 1958.
  • The Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971, was passed by the federal government in 1971. Because of the act, CAG is now in charge of central and state government accounting and auditing.
  • CAG was relieved of its accounting duties in 1976.
  • Since the 1990s, CAG has rapidly modernized and computerized. Due to the pervasiveness of Indian corruption, it has remained vigilant, audited, and investigated some of the worst and most contentious corruption scandals in Indian history.

What provisions of the Constitution apply to the CAG?

  • The appointment of the CAG, the oath, and the terms of service are all covered in Article 148.
  • The duties and authority of India's Comptroller and Auditor General are covered in Article 149.
  • According to Article 150, the President may prescribe a format for the Union and State accounts based on advice from the CAG.
  • According to Article 151, the President is responsible for ordering each House of Parliament to see the reports that the Comptroller and Auditor-General of India have prepared regarding the Union's financial statements.
    • The Governor of the State is responsible for ordering that the reports from the Comptroller and Auditor-General of India regarding the accounts of a State be laid before the State Legislature.
  • In accordance with Article 279, the Comptroller and Auditor-General of India determines and certifies the calculation of "net proceeds," and their declaration is binding.
  • The form of the oath or affirmation that Supreme Court judges and the Comptroller and Auditor-General of India must take when taking office is outlined in Section IV of the Third Schedule of the Indian Constitution.
  • According to the sixth schedule, the District Council or Regional Council should continue to exist in the manner specified by the CAG with the President's consent. Additionally, the accounts of these bodies are audited in the manner that CAG may deem appropriate, and the reports about such accounts must be submitted to the Governor. He will arrange for them to be laid before the Council.

What Distinctions Exist Between the CAGs in Britain and India?

  • In India, the CAG only has the authority of an Auditor General and not a Comptroller, whereas, in Britain, it also has that of a Comptroller and an Auditor General.
  • In India, the CAG performs an ex post facto audit of the accounts after the expenditure has been made. No funds may be taken from the public coffers in the UK without the CAG's consent.
  • Unlike in Britain, where CAG is a member of the Commons, CAG is not a member of the Indian Parliament.

How impartially does the Office of CAG conduct its business?

  • The Constitution contains several clauses that protect CAG's independence.
  • With a tenure of 6 years or until they reach age 65, whichever comes first, CAG is appointed by the President via warrant bearing his hand and seal.
  • Only in accordance with the Constitution's specified process, which is the same as the process for removing a Supreme Court judge, can the President remove the CAG.
  • Once he retires or resigns as a CAG, he is not eligible to hold any office under the Government of India or of any state.
  • The Supreme Court, the Election Commission, and the UPSC are the other three pillars of India's democratic system of government.
  • The CAG cannot be represented in Parliament by a minister.
  • After the appointment, his salary and other service requirements cannot be changed in a way that is disadvantageous to him.
  • The President only prescribes his administrative powers and the terms of employment for those working for the Indian Audit and Accounts Department after consulting him.
  • The Consolidated Fund of India, which is not subject to vote, is used to pay for all administrative costs associated with the CAG office, including all salaries, allowances, and pensions.

What are the roles and authority of CAG?

The audit mandate for CAG comes from a variety of sources, including

  • Important Judgments
  • Instructions of Government of India
  • Regulations on Audit & Accounts-2007
  • Constitution (Articles 148 to 151)
  • The Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971
  • The Consolidated Fund of India, each state's Consolidated Fund, and UTs with legislative assemblies all have their accounts audited by the CAG.
  • In addition to each state's Contingency Fund and Public Account, he audits all expenditures from the Contingency Fund and Public Account of India.
  • He examines all financial records kept by any department of the federal government and state governments, including balance sheets, profit and loss accounts, and other subsidiary accounts.
  • When relevant laws require, he audits the revenue and expenditure of all bodies and authorities primarily supported by Central or State revenues, government corporations, and other corporations and bodies.
  • When the President or Governor requests it, he audits the books of any other authority, such as local bodies.
  • In regards to the prescription of the format in which the accounts of the Center and States shall be kept, he counsels the President.
  • He delivers his audit reports for the Center's financial records to the President, who will then present them to both houses of Parliament.
  • Concerning a State's accounts, he submits his audit reports to the Governor, who then presents them to the state legislature.
  • The Parliament's Public Accounts Committee views CAG as a mentor, friend, and philosopher.

What does the Public Accounts Committee (PAC) stand for?

  • The GOI Act of 1919 established the Parliamentary Standing Committee, known as PAC.
  • The PACs at the state and federal levels receive reports from the CAG audit.
  • PAC reviews three CAG reports, including the audit reports on public sector undertakings, finance accounts, and appropriation accounts.
  • The CAG submits these reports to the President at the central level, who orders that they be laid before Parliament.
  • By compiling a list of the issues that need the PAC's attention the most immediately, CAG aids the committee in its deliberations.
  • Furthermore, he assists in making the committee's actions and the government's actions clear to the committee so that the witnesses understand them.
  • The role of the CAG can occasionally be that of an interpreter and translator, explaining the officials' viewpoints to the politicians and vice versa.
  • The CAG is still accountable for more things. He must monitor whether or not the corrective action he suggested has been implemented. If action has not been taken, he reports the situation to the PAC, which will take action.

What Obstacles Face the CAG's Effective Operation?

  • As corruption and bad administration become more prevalent, audits are becoming more challenging.
  • In addition to their long-standing responsibility of closely monitoring the Central and State governments, CAG is currently auditing several public-private partnerships (PPP) projects.
  • The CAG of India has unexpectedly found itself in the middle of previously unheard-of opportunities and challenges in this situation.
  • There are no requirements or procedures for the appointment of the CAG in the Constitution or the statute.
  • As a result, the executive now has sole authority to choose who will serve as the CAG. This contravenes universally accepted international best practices.
  • The CAG has the right to inspect any government facility and request relevant accounts, but records requests are frequently turned down.
  • Furthermore, crucial records are frequently and excessively delayed in providing to the auditors after the audit program to prevent a meaningful audit of those records.
  • Auditors should have priority access to records within seven days, just like citizens do under the RTI Act of 2005. If they do not, heads of departments should be obligated to explain what delayed them.
  • The need for total independence of the CAG and making it a part of the PAC, like in the UK and Australia, was discussed at an all-Indian conference of PACs of Parliament and State/Union Territories legislatures in 2015.
  • As a result, the CAG Act needed to be amended to reflect the requirement for prior consultation with the Chairman, PAC, before the appointment of the CAG.
  • Even though the Indian Constitution grants the CAG a six-year term, the age limit of 65 has recently been shortening the actual terms of succeeding CAGs.
  • Due to a lack of leadership continuity and knowledge loss, shorter tenure is a barrier to the independent and proper functioning of the institution.
  • Internationally, the UK's CAG and the US's Comptroller General terms are 10 and 15 years, respectively.
  • The officers and staff of the IA&AD perform the work of auditing the accounts of the Union and the States. In contrast to the UK's National Audit Office, however, the work of IA&AD in India has not received official recognition.
  • The IA&AD will have a more significant impact and produce better results if it is recognized as a statutory body with powers delegated to lower functionaries in accordance with the IT Act. This will enhance auditing quality and lend credibility to IA&AD officers and staff work.
  • Due to inflated loss estimates or excessive numbers, some of CAG's audits in recent years have come under fire.
  • CAG should abide by strict regulations to ensure that external factors do not compromise the integrity of audits to refute these accusations.

What changes did Vinod Rai (a former CAG) propose?

  • Bring all PPPs, Panchayati Raj Institutions, and government-funded organizations under the purview of the CAG.
  • To keep up with the advancements in governance, the CAG Act of 1971 needs to be updated.
  • A collegium-style selection process for the new CAG, similar to how the Chief Vigilance Commissioner (CVC) is chosen.
  • There are significant changes in how public goods and government funding are utilized, from PPPs to climate change. In light of this, CAG must alter its auditing procedures.
  • The CAG must get ready to audit issues like the Goods and Services Tax and implement the Sustainable Development Goals.
  • The CAG released a Big Data management policy in 2016 and opened a Centre for Data Management and Analytics in Delhi due to the Big Data revolution. 
  • The 2017 Commonwealth Auditors General Conference was held at CAG of India. The conference's two themes were utilizing technology in public and environmental audits. The conference fostered partnerships between Commonwealth nations to develop public auditing capacity.
  • The fact that CAG could audit the UN headquarters, which involves numerous complex operations, demonstrates the reliability of Indian CAG.