Central Idea

• In 2023, only 18 audits prepared by the Comptroller and Auditor General (CAG) were tabled in the Indian Parliament, continuing a trend of decreasing numbers in recent years.

Comptroller and Auditor General (CAG)

• Constitutional Office: The Comptroller and Auditor General of India (CAG) is an independent constitutional authority responsible for overseeing financial administration in India.
• Key Responsibilities: As the head of the Indian Audit and Accounts Department, the CAG is the guardian of the public purse, monitoring the financial system at both central and state levels.

History of the Office of CAG

• Origins in British India: The role of the CAG evolved with administrative reforms initiated by Lord Canning before the Mutiny of 1857.
• Establishment and Evolution: The office was formalized under the Government of India Act 1858, with Sir Edward Drummond becoming the first Auditor General in 1860. The title ‘Comptroller and Auditor General of India’ was first used in 1884.
• Independence and Strengthening: The Montford Reforms of 1919 and the Government of India Act 1935 further solidified the CAG’s independence and role in a federal setup.

Constitutional Provisions Related to CAG

• Articles Governing CAG: The Constitution outlines the CAG’s appointment, duties, and powers in Articles 148 to 151.
• Duties and Powers: The CAG is responsible for auditing all government accounts and advising on financial matters.
• Audit Reports: The CAG submits audit reports on Union accounts to the President and on state accounts to respective Governors.

Types of Audits Performed by CAG

• Regulatory Audit: Ensures authorized and rule-compliant expenditure.
• Supplementary Audit: Conducted in PSUs for detecting financial leakages.
• Propriety Audit: Focuses on the public interest and proper expenditure.
• Efficiency Audit: Assesses optimal utilization of investments.
• Performance Audit: Evaluates government programs for effectiveness.
• Environmental Audit: Addresses issues related to conservation and environmental management.

Independence of the CAG

• Constitutional Safeguards: The CAG’s independence is protected by various constitutional provisions, including security of tenure, ineligibility for further government office, and non-varying service conditions.
• Financial Autonomy: The CAG’s administrative expenses are charged upon the Consolidated Fund of India, ensuring financial independence.

Audit Mandate Sources

• Constitutional Basis: Articles 148 to 151 of the Constitution.
• Statutory Framework: The Duties, Powers and Conditions of Service Act, 1971.
• Regulations: Audit and accounts regulations as notified.

Duties and Functions of the CAG

• Audit Responsibilities: CAG audits all government accounts, including the Consolidated Fund, Contingency Fund, and Public Account.
• Advisory Role: Advises on financial matters and assists parliamentary committees.
• Reporting: Submits audit reports to the President and state Governors.

Limitations on the Powers of CAG

• Post-Facto Reporting: Audits are conducted after expenditures have occurred.
• Exclusions: Certain expenditures like secret service expenses are outside CAG’s purview.
• Challenges with PPP Investments: Limited authority to audit public-private partnerships.
• Limited Audit of NGOs and Local Bodies: No provision for auditing funds given to NGOs and elected local bodies.
• Document Accessibility Issues: Challenges in obtaining necessary documents for audits.
• Appointment Process: The selection process for CAG lacks external transparency.
• Undefined Audit Scope: The term ‘audit’ is not explicitly defined in the Constitution or CAG Act.

CAG Audits over the Years

• Recent Trends: Between 2019 and 2023, an average of 22 reports were tabled annually, a significant decrease from the 40 reports tabled on average between 2014 and 2018.
• Peak and Decline: The number of reports peaked in 2015 with 53 audits but has since declined, with four of the past six years seeing 20 or fewer reports tabled.

Factors Contributing to the Decline

• Staffing and Budget Cuts: The decline in the number of CAG reports tabled in Parliament coincides with reductions in staff strength and budget allocations for the CAG.
• Budget Allocation: In the fiscal year 2023-24, the allocation for the Indian Audit and Accounts Department constituted only 0.13% of the Union Budget.

Conclusion

• Impact on Oversight and Transparency: The reduction in the number of CAG audits tabled in Parliament could have implications for governmental oversight and transparency.
• Need for Adequate Resources: Ensuring the CAG is adequately staffed and funded is crucial for maintaining effective audit practices and upholding the accountability of government operations.

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