Table of Contents
THE CONTEXT: India today stands as the world’s largest democracy, a diverse society with a vibrant political landscape. The Comptroller and Auditor General of India (CAG) plays a crucial role in this democratic framework by ensuring transparency, accountability, and financial integrity in Government’s functioning.
MORE ON THE NEWS:
- There was a shortage of competent accountants willing to work in local governments, especially in the lower tiers located in remote places.
- In this respect, CAG in collaboration with the Institute of Chartered Accountants of India has envisaged a set of online courses to create a pool of accountants intended to be available at local level, competent to prepare urban and rural local government accounts.
- Registration for these courses will commence on November 16, 2023, on Audit Diwas.
- Educational qualifications for eligibility have been prescribed at such level that these certified/ qualified accountants should be available for service on periodic contracts at reasonable cost to local bodies.
OFFICE OF COMPTROLLER AND AUDITOR GENERAL OF INDIA (CAG)
- The Constitution of India (Article 148) provides for an independent office of the Comptroller and Auditor General of India (CAG).
- He is the head of the Indian Audit and Accounts Department and is one of the bulwarks of the democratic system of Government in India.
- He is the guardian of the public purse and controls the entire financial system of the country at both the levels i.e the Centre and the state.
- His duty is to uphold the Constitution of India and laws of Parliament in the field of financial administration.
APPOINTMENT AND REMOVAL
- The CAG is appointed by the President of India by a warrant under his hand and seal.
- The CAG holds office for a period of six years or up to the age of 65 years, whichever is earlier.
- He can resign any time from his office by addressing the resignation letter to the president.
- He can also be removed by the president on the same grounds and in the same manner as a judge of the Supreme Court.
- In other words, he can be removed by the president on the basis of a resolution passed to that effect by both the Houses of Parliament with special majority, either on the ground of proved misbehaviour or incapacity.
CONSTITUTIONAL PROVISIONS FOR THE OFFICE OF CAG
- Article 148 broadly deals with the CAG appointment, oath and conditions of service.
- Article 149 deals with Duties and Powers of the Comptroller and Auditor-General of India.
- Article 150 says that the accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the CAG, prescribe.
- Article 151 says that the reports of the Comptroller and Auditor-General of India relating to the accounts of the Union shall be submitted to the president, who shall cause them to be laid before each House of Parliament.
- Article 279 states that calculation of “net proceeds” is ascertained and certified by the Comptroller and Auditor-General of India, whose certificate is final.
FUNCTIONS OF COMPTROLLER AND AUDITOR GENERAL OF INDIA (CAG)
- CAG audits the accounts related to all expenditure from the Consolidated Fund of India, Consolidated Fund of each state and UT having a legislative assembly.
- CAG audits all expenditure from the Contingency Fund of India and the Public Account of India as well as the Contingency Fund and Public Account of each state.
- CAG audits all trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept by any department of the Central Government and the state governments.
- CAG audits the receipts and expenditure of all bodies and authorities substantially financed from the Central or State revenues; government companies; other corporations and bodies, when so required by related laws.
- He ascertains and certifies the net proceeds of any tax or duty, and his certificate is final on the matter.
- He submits his audit reports relating to the accounts of the Centre and State to the President and Governor, who shall, in turn, place them before both the houses of Parliament and the state legislature respectively.
- He submits 3 audit reports to the President: Audit report on appropriation accounts, audit report on finance accounts and audit report on public undertakings.
SIGNIFICANCE OF THE OFFICE OF COMPTROLLER AND AUDITOR GENERAL OF INDIA (CAG)
- CAG helps maintain the separation of powers between legislature and executive by ensuring that the Government’s financial activities align with legislative intentions.
- Through its audit findings and recommendations, the CAG promotes good governance practices and helps governments streamline their operations, reduce inefficiencies, and adhere to financial discipline.
- Auditing the achievements of sustainable development goals is integrated in all audit work of CAG. Also, as a member of the UN Board of Auditors, CAG of India took up the audit of SDGs as a cross-cutting theme in the UN Audit in 2017.
- CAG engagement with citizens at various stages of audit encompasses:
- An Audit Advisory Board, including external domain experts
- Stakeholders’ meetings workshops
- Beneficiary surveys during audits
- Using the results of social audit to aid CAG’s audit
- Laying of audit reports in Parliament, state legislature and also uploading them on our website for information of citizens.
AUDIT OF LOCAL BODIES:
The 73rd and 74th Constitutional amendments marked a quantum leap in India’s democratic set-up, as they created tiers of self-governance below the level of states.
- The Parliament passed the National Rural Employment Guarantee Act, whereby Gram Sabhas were required to conduct regular social audits of all projects taken up under the scheme within the Gram Panchayat. Social audit is an interesting tool for facilitating citizen oversight.
- The Ministry of Rural Development in consultation with the C&AG office notified the Mahatma Gandhi National Rural Employment Audit of Scheme Rules in 2011.
- The rules envisaged social audit units in each state as well as the audit process for social audit and follow-up action. The ambit of social audit has been significantly enlarged since.
- The primary audit of the accounts of local governments and issue of audit certificates is done by local fund auditors designated by state governments.
- Empowering PRIs and urban local bodies and municipalities envisions people’s participation in the process of planning, decision-making, implementation and delivery of a set of functions to be devolved to local governments by state legislatures.
- Recently, an international centre for local governance has been envisaged for recognition of local self-governance. It will serve as a centre of excellence for capacity building of local government auditors, both nationally and internationally. It will serve as a knowledge centre and think-tank, addressing capacity building for stakeholders at grass-roots level across the nation.
- Over the years, CAG has issued numerous manuals/ guidance, forming the bedrock of auditing and accounting by local governments. Annual Technical Inspection Reports (ATIR) are issued by CAG’s state audit offices entrusted with Technical Guidance and Support (TGS).
- The primary focus of CAG’s local government audit is an assessment of how well the delivery of the services pertaining to devolved functions have reached the last mile or the grassroots, through the efforts of the local governments.
THE WAY FORWARD:
- Citizen engagement in audit: Citizen engagement guides audit in identifying high-risk areas of possible mismanagement and inefficiencies in governance, thereby improving focus and effectiveness. To effectively discharge the responsibility, it is important for audit to actively work in sync with citizens, appreciating their concerns and feedback.
- Handholding of local bodies by CAG: The 11th Finance Commission recommended CAG to improve local governance by capacity building of state local fund auditors in Audit Planning and Audit Methodologies, through Technical Guidance and Support (TGS).
- Curbing delays: There should be a time limit assigned for audits performed by CAG. Auditors should be provided access to records on priority basis on an urgent basis.
- Leveraging technology: There is a need for harnessing technology and digital solutions that can make audit’s citizen engagement more effective and efficient. Digital reports with interactive data visualisation tools lead to better understanding and appreciation of our audit products.
As India’s democracy matures, the CAG’s role becomes even more vital in promoting good governance and safeguarding the people’s interests. To upheld democracy and accountability, mechanisms of CAG must be robust and citizen engagement must be active and informed.
PREVIOUS YEAR QUESTIONS
Q.1 The Comptroller and Auditor General (CAG) has a very vital role to play.” Explain how this is reflected in the method and terms of his appointment, as well as the range of powers he can exercise. (2018)
Q.2 The exercise of CAG’s powers in relation to the accounts of the Union and the States is derived from Article 149 of the Indian Constitution. Discuss whether an audit of the Government’s policy implementation could amount to overstepping its own (CAG) jurisdiction. (2016)
MAINS PRACTICE QUESTIONS
Q.1 Discuss the role of the Comptroller and Auditor General (CAG) in establishing accountability of the Government to the people.
Q.2 Examine the role of the Comptroller and Auditor General (CAG) for ensuring the financial accountability of local governments in India.Spread the Word