A key constitutional post in India is that of the Comptroller and Auditor General (CAG). The President of India appoints CAGs. They are responsible for auditing government finances and ensuring transparency and accountability in government.

CAG is also responsible for auditing public sector undertakings, local authorities, and autonomous bodies that receive government funding. This article examines the role of the CAG in ensuring accountability and transparency in governance and how it contributes to India’s overall development. Read more about the Comptroller And Auditor General Of India. 

The CAG’s Role in Ensuring Accountability

As part of its responsibilities, the CAG audits government accounts and ensures that public funds are utilised appropriately. In addition, the CAG is responsible for ensuring that all financial transactions are transparent and accountable. Vakilsearch can indirectly contribute to the CAG’s role in ensuring accountability. The CAG conducts financial and performance audits of various government agencies to ensure that public funds are used effectively and efficiently. The CAG’s audits are comprehensive and examine the audited agencies’ accounting practices, financial statements, and systems and procedures. Parliament reviews the CAG’s reports and takes appropriate action based on the findings. Vakilsearch has highly skilled Chartered Accountants who can efficiently manage your accounting and bookkeeping needs.

The CAG’s Role in Ensuring Transparency

To ensure transparency in governance, the CAG plays a significant role. As a result of the CAG’s audits, irregularities or discrepancies in the government’s financial transactions are brought to light, leading to increased transparency in the government’s operations. CAG reports also highlight areas where the government needs to improve its financial management practices, thereby enhancing transparency and accountability. Audits conducted by the CAG assist in identifying areas of financial mismanagement, corruption, or fraud. As a result of the CAG’s reports, the government can take corrective action that will improve the overall functioning of the government. Further promoting governance transparency, the CAG can investigate any suspected irregularities or corruption in government departments.

Functions of the CAG of India

• The Constitution authorises Parliament to prescribe the duties and powers of the CAG in relation to the accounts of the Union, States, and other bodies (Article 149).
• The CAG Duties, Powers, and Conditions of Service (DPC) Act was passed in 1971 and amended in 1976 to separate accounts from audits in the Government of India.

The Constitution specifies the following duties and functions of the CAG:

• • Auditing expenditure from the Consolidated Fund of India, states, and union territories with Legislative Assemblies.
  • Auditing expenditures from Contingency Fund of India, the Public Account of India, and those of states.
  • Auditing trading, manufacturing, profit and loss accounts, balance sheets, and subsidiary accounts of Central and state departments.
  • Auditing receipts and expenditures of governments to ensure effective checks on revenue assessment, collection, and allocation.
  • Auditing bodies and authorities substantially financed from Central or state revenues, government companies, and other corporations as required by law.
  • Auditing debt-related transactions, sinking funds, deposits, advances, suspense accounts, and remittance business.
  • Auditing accounts of any other authority as requested by the President or Governor.
  • Advising the President on accounts of Centre and states (Article 150).
  • Submitting audit reports on accounts of Central Government and state governments to the President/Governor, who shall place them before Parliament or the state legislature (Article 151).
  • Certifying the net proceeds of any tax or duty (Article 279).
  • Guiding the Public Accounts Committee of Parliament and maintaining accounts of state governments.
  • Submitting three audit reports to the President: Appropriation Accounts, Finance Accounts, and Public Undertakings.

Powers of the Comptroller and Auditor General of India

• The CAG is appointed by the President of India and can only be removed from office in the same way as a Judge of the Supreme Court
• The person appointed to this office must take an oath of office before the President or another appointed representative.
• The CAG’s salary, service conditions, leaves of absence, pension, and retirement age are determined by the Parliament of India and are specified in the Second Schedule. These cannot be modified to the disadvantage of the incumbent during their tenure
• The CAG cannot hold any further office after their tenure, either in the Government of India or any State Government
• The powers and functions of the CAG are subject to the provisions of the Indian Constitution, Acts of Parliament, and service conditions for the Indian Audits and Accounts Department. The President prescribes the rules governing these in consultation with the incumbent
• The expenses related to the administration of the CAG’s office, including allowances, salaries, and pensions, are charged to the Consolidated Fund of India
• The CAG is appointed for a period of 6 years or until they reach the age of 65, whichever comes earlier.

CAG – Constitutional Provision Highlights

• Article 148 of the Constitution deals with the appointment, oath, and conditions of service of the CAG.
• Article 149 outlines the Duties and Powers of the Comptroller and Auditor-General of India.
• Article 150 specifies that the accounts of the Union and States shall be kept in the form prescribed by the President on the advice of the CAG.
• Article 151 states that the reports of the CAG relating to the accounts of the Union shall be submitted to the President and laid before each House of Parliament.
• Article 279 empowers the CAG to ascertain and certify the “net proceeds,” and the certificate issued by CAG is final.
• The Third Schedule of the Constitution prescribes the form of oath or affirmation made by the Supreme Court Judges and the CAG when assuming office.
• The 6th Schedule specifies that the accounts of the District Council or Regional Council shall be kept in the form prescribed by the CAG, with the approval of the President. The reports relating to such accounts shall be submitted to the Governor, who shall cause them to be laid before the Council.

Certain privileges and powers have been granted for this office to perform its duties effectively. The following are the major powers of the CAG of India:

• An audit can be conducted by the Comptroller and Auditor General or his staff at any office of an organisation he is auditing. He and his staff can question the administration about various aspects of government transactions. After examining the transactions, the CAG may withdraw his objections or incorporate them into his report for Parliament if he finds them serious.
• To enable the office to carry out this function smoothly, he has complete access to all financial records, including books, papers, and documents. He is permitted to request relevant information from any individual or organisation. It is his legal right to request information and accounts, as affirmed by the order issued by the Government of India in 1936 to enforce the 1935 Act.

As part of the present provision, he is provided free access to files and information, a practice that has been ongoing since the 1950s. In 1954, however, the central government implemented a modification in which, if secret documents were involved, they must be sent to the CAG by name and returned upon completion of the work.

Duties of CAG

According to Articles 148, 149, 150 and 151 of the Constitution of India, the following is a brief description of the functions and powers of this office:

• As provided in Article 149, the Comptroller and Auditor General has the following duties and powers in relation to the accounts of the Union of India and the states as well as other bodies or authorities as may be prescribed by law.
• In accordance with Article 150, the Union of India and the States shall keep accounts in the form prescribed by the President, with the approval of the Union.
• The CAG is required to report the state or union accounts to the President or the governors of the states. As Article 279(i) of the Constitution specified, the CAG must also determine and certify the net proceeds of any taxes or duties referred to in Chapter I of Part XII. In addition to these constitutional provisions and the Duties Powers and Conditions of Service Act of 1971, it is also necessary to note that, prior to 1976, the CAG had a two-fold role, accounting and auditing.

The CAG’s Role in Promoting Good Governance

• The CAG upholds provisions of the Indian Constitution and laws enacted by the Parliament in financial administration.
• The office is responsible to and is an agent of the Parliament and conducts audits of expenditures on its behalf.
• The CAG ensures the accountability of the executive to the Parliament in the sphere of financial administration through CAG reports.
• The CAG ascertains whether money disbursed was legally available for and applicable to the service or purpose to which it was applied or charged and whether the expenditure conforms to the authority that governs it.
• The office can perform a discretionary propriety audit, which looks into the wisdom, faithfulness, and economy of government expenditure.
• The secret service expenditure is a limitation on the auditing role of the CAG.
• The CAG’s powers regarding audits are provided for in the Comptroller and Auditor General of India (Duties, Powers and Conditions of Service) Act, 1971.
• The CAG can audit all receipts and expenditures from the Consolidated Fund of India and of the states and union territories, all transactions relating to the Contingency Funds and Public Accounts, all trading, manufacturing, profit and loss accounts, and balance sheets and other subsidiary accounts kept in any department, all stores and stock of all government offices or departments, accounts of all government companies set up under the Indian Companies Act, 1956, accounts of all central government corporations whose Acts provide for audit by the CAG, accounts of all authorities and bodies substantially funded from the Consolidated Fund, and accounts of any authority, even though not substantially funded by the government, at either the request of the Governor/President or at the CAG’s own initiative.

CAG Reports

An audit report briefly discusses financial irregularities, losses, frauds, wasteful expenditures, and the accuracy of budgeting control of expenditures, savings, etc. In addition to providing audit paras criticising the public expenditures of departments, the CAG staff also conducts detailed discussions with senior staff of each department concerned following the event. The finalised ‘paras’ are then brought before the Parliament, where the parliamentary committee that deals with the affairs of a particular ministry or department disposes of each ‘para’.

The form of the audit reports is constantly under review and has gone through periodic changes. No matter what the format, the objective remains the same: to prevent money loss. They highlight transactions that have yet to prove financially viable. In light of the report’s focus on omissions, each department must be careful, as the report may result in adverse and undesirable publicity.

Procedure for Preparation and Submission of an Audit Report by the Comptroller and Auditor General

An audit report is prepared and submitted by the Comptroller and Auditor General according to the following procedure:

• First of all, when the audit is conducted, during the course of the inspection of the various organisations, inspection reports are prepared for each unit/organisation and copies are sent to each organisation. The Annual Audit Reports include the most important aspects of these Inspection Reports. They are asked to take corrective action, and their progress is also monitored. About 72,000 inspection reports are sent each year.
• CAG countersigns the audit reports before they are presented to the President.
• Upon submission to the legislature, the legislature, in turn, hands them over to the relevant parliamentary committee for examination.
  • All departmental reports, including Railways, Post and Telegraph, and other departmental undertakings, are presented to the Public Accounts Committee (PAC).
  • Corporate and company reports are submitted to the Committee on Public Undertakings (COPU).

As of 1989, the CAG has published an Annual Activity Report of each department in order to evaluate the overall functioning of the department and to provide information to all those interested in the functioning of the department. A comprehensive and true picture of the current state of affairs is provided by it, and it also assists in planning for the future.

Structure of CAG’S Office

The head of the Indian Audit and Accounts Department is the Comptroller and Auditor General of India, who is assisted by five Deputy Comptroller and Auditors General of India. One of the deputies is also the chairman of the Audit Board. Below the Deputy, CAG are four Additional Deputy Comptroller and Auditors General of India. There are also Directors General, Principal Directors, and Directors/Deputy Directors. One Director acts as Secretary to the CAG. At the regional level, there are Accountants General who act as agents of the CAG in performing their responsibilities at the state level.

How Indian CAG is Different from British CAG

There are three main differences between the Indian CAG and the British CAG:

1. The Indian CAG only acts as an Auditor General, while the British CAG has the power to act as both Comptroller and Auditor General.
2. In India, the CAG conducts audits after the expenditure has been made, while in the UK, money can only be withdrawn from the public treasury with the CAG’s approval.
3. The Indian CAG is not a member of Parliament, while the British CAG is a member of the House of Commons.

List of Comptroller & Auditor General of India

Name	Term
V. Narahari Rao	1948 -1954
A.K Chanda	1954 -1960
A.K Roy	1960 -1966
S. Ranganathan	1966 -1972
A.Bakshi	1972 -1978
Gian Prakash	1978 -1984
T.N Chaturvedi	1984 -1990
C.G Somiah	1990 -1996
V.K Shunglu	1996 – 2002
V. N. Kaul	2002 – 2008
Vinod Rai	2008 – 2013
Shashi Kant Sharma	2013 – 2017
Rajiv Mehrishi	2017 – Aug 2020
Girish Chandra Murmu	Present

Conclusion

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