Comptroller and Auditor General of India

Comptroller and Auditor General of India is an independent authority under Article 148 of the Constitution of India. He is the Head of Indian Audit and Accounts. He is the guardian of the public purse and supervises the whole financial system of the country at both the Central and state levels. The CAG is one of the bulwarks of the democratic system of Government in India with the others being the Supreme Court, the Election Commission, and the Union Public Service Commission.

Comptroller and Auditor General

• Article 148 of the Indian Constitution establishes an independent office of the Comptroller and Auditor General of India (CAG).
• The President of India appoints the Comptroller and Auditor General by a warrant under his hand and seal.
• He is the head of the Indian Audit and Accounts Department and one of the foundations of India’s democratic government system.
• Comptroller and Auditor General is the guardian of the public purse and oversees the whole financial system of the country at both the federal and state levels.
• His responsibility is to enforce the Indian Constitution and Parliamentary legislation governing financial management.

Appointment and Term

• The CAG is appointed by the President of India by a warrant under his hand and seal.
• Before taking over the office, the CAG makes and subscribed before the President an oath or affirmation
• Tenure: The CAG holds office for a period of six years or up to the age of 65 years, whichever is earlier.
• Resignation and Removal: He/she can resign any time from his office by addressing the resignation letter to the President and can also be removed by the President on the same grounds and in the same manner as a Judge of the Supreme Court.
• That is, he can be removed by the President on the basis of a resolution passed to the effect by both the Houses of Parliament with the special majority, either on the ground of proved misbehavior or incapacity.

Independence

To safeguard and ensure the independence of CAG, the Constitution has made the following provisions:

• Security of Tenure: He/she is provided with the security of tenure and can be removed by the president only in accordance with the procedure mentioned in the Constitution.
• That is, even though CAG is appointed by the President, he/she holds the office till the pleasure of the President.
• The CAG is not eligible for further office, either under the Government of India or of any state, after he/she ceases to hold the office.
• Salary and Allowance: The Parliament determines the salary and other service conditions of the CAG. His/her salary is equal to that of a judge of the Supreme Court.
• Neither the CAG’s salary nor the rights in respect of leave of absence, pension, or the age of retirement can be altered pointing to his/her disadvantage after the appointment.
• The administrative expenses including all salaries, allowances, and pensions of persons serving in the office of the CAG, are charged upon the Consolidated Fund of India, which means they are not subject to the vote of Parliament.
• Consultation: The conditions of service of persons serving in the Indian Audit and Accounts Department as well as the administrative powers of the CAG are prescribed by the President after consultation with the CAG.
• Also, CAG cannot be represented by any minister in both the houses of the Parliament and no minister can be called upon to take any responsibility for any actions done by the CAG.

Duties and Powers

• Article 149 of the Constitution authorizes the Parliament to prescribe the duties and powers of the CAG in relation to the accounts of the Union and of the states and of any other authority or body.
• In accordance with that, the CAG’s (Duties, Powers and Conditions of Service) Act, 1971 was enacted by the Parliament.

The duties and functions of the CAG as laid down by the Parliament and the Constitution are:

• To audit the accounts related to all expenditure from the Consolidated Fund of India, consolidated fund of each state, and consolidated fund of each union territory with a Legislative Assembly.
• To audit all expenditure from the Contingency Fund of India and the Public Account of India and also the contingency fund of each state and the public account of each state.
• To audit all trading, manufacturing, profit and loss accounts, balance sheets, and other subsidiary accounts kept by any department of the Central Government and state governments.
• To audit the receipts and expenditure of the Centre and each state.
• To audit 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.
• To audit all transactions of the Central and state governments related to debt, sinking funds, deposits, advances, suspense accounts, and remittance business. He also audits receipts, stock accounts, and others, with approval of the President, or when required by the President.
• To audit the accounts of any other authority (For example, the audit of local bodies) when requested by the President or Governor.

Other Duties and Powers

• Article 150- To advise the President with regard to the prescription of the form in which the accounts of the Centre and the states shall be kept.
• Article 151- To submit his audit reports relating to the accounts of the Centre to the President, who shall, in turn, place them before both the Houses of Parliament and also to submit audit reports relating to the accounts of a State to the Governor, who shall, in turn, place them before the state legislature.
• Article 279- To ascertain and certify the net proceeds ( the proceeds of a tax or a duty minus the cost of collection) of any tax or duty and the CAG’s certification will be final.
• To compile and maintain the accounts of state governments (audit, that is, departmentalization of accounts).

Reports by CAG

• The audit report on appropriation accounts, audit report on financial accounts, and audit report on public undertakings are the three audit reports submitted by CAG to the President, which the President lays before both the Houses of Parliament.
• The actual expenditure with the expenditure sanctioned by the Parliament through the Appropriation Act is compared by the appropriation accounts while the annual receipts and disbursements of the Union government are shown in the financial accounts.
• The Public Accounts Committee examines the CAG’s reports and points out its findings to the Parliament.

Role of Comptroller and Auditor General

• Financial Administration: The role of CAG is to uphold the Constitution of India and the laws of Parliament in the field of financial administration.
• Uphold the Accountability: The audit reports of the CAG secure the accountability in the sphere of financial administration of the executive, that is council of ministers, to the Parliament.
• Agent of Parliament: The CAG is responsible only to the Parliament because he acts as an agent of the Parliament and conducts audits of expenditure on behalf of the Parliament.
• The CAG has more freedom with regard to the audit of expenditure than with regard to the audit of receipts, stores, and stock.
• The CAG can look into the wisdom, faithfulness, and economy of government expenditure and comment on the wastefulness and extravagance of such expenditure through propriety audit. But, the propriety audit is discretionary in nature.

Comptroller and Auditor General and Corporations

The role of CAG in the auditing of public corporations is limited and his/her relationship with the public corporations falls into the following three categories:

• Some corporations are audited totally and directly by the CAG such as the Damodar Valley Corporation, Oil and Natural Gas Commission, Air India, Indian Airlines Corporation, and others.
• Some corporations are audited by private professional auditors, appointed by the Central Government in consultation with the CAG. The CAG can also conduct a supplementary audit, if necessary. Examples are Central Warehousing Corporation, Industrial Finance Corporation, and others.
• Some corporations are totally subjected to private audits (audit is done exclusively by private professional auditors and the CAG does not have any role) and submit their annual reports and accounts directly to the Parliament. The Life Insurance Corporation of India, Reserve Bank of India, State Bank of India, Food Corporation of India, and others belong to this category.
• The role of the CAG in the auditing of Government companies is also limited which are audited by private auditors, appointed by the Government on the advice of the CAG.

Problems Faced

• Since the CAG has no control over the issue of money from the consolidated fund and many departments are authorized to draw money by issuing cheques without specific authority from the CAG, he/she is just fulfilling the role of an Auditor-General only and not that of a Comptroller.
• Lack of decentralization of duties: Audit reports of the state governments being made in regional languages creates an added problem of translation and of understanding the original reports. It overburdens the duties of the office, making the auditory system less efficient and audits hardly being presented on time.
• Appointment of the CAG: The appointment procedure of the CAG is dubious such that the involvement of the executive in the CAG’s appointment is hugely problematic as he/she is supposed to audit the executive.