(Sample Material) Gist of IIPA Journal: Role of Comptroller and Auditor General in India V.K. Shunglu

(Sample Material) Gist of Important Articles from IIPA Journal

Topic: Role of Comptroller and Auditor General in India V.K. Shunglu

ROLE OF CAG

Evolution of Audit

As the nascent Indian Republic emerged from a law and order state left by the colonial masters to a welfare state dedicated to development of the people, CAG’s role evolved to meet the needs of time. In the 60s there was a shift from the regularity and financial audit; efficiency-cum-performance audit was evolved to evaluate the returns earned on financial and social capital invested by the state. This branch of audit is being further developed with inputs from international auditing practices in recent years and with introduction of computerised techniques of auditing. In the 90s, the plethora of frauds and serious irregularities at the higher levels of Central and provincial governments have raised the public expectation that audit should critically examine and report on the frauds and subversions of the systems leading to huge loss of public funds. Thus, alongside the traditional financial and performance audit, CAG’s organisation is also taking up audit of investigative nature. Some recent audits have exposed high level corruption in the government and has helped the criminal investigation agencies.

CAG and Accounts of the States

‘The CAG’s (DPC) Act, 1971 made a provision empowering the President to relieve the CAG from the responsibility to maintain any class of accounts after consultation with the CAG. From 1978, the CAG was relieved of the duty of maintaining the accounts of the Union Government. The accounts of the state governments, continues to be compiled by the CAG.

It is now increasingly recognised that compilation of accounts by CAG provides the state governments an option to have their accounts prepared without any cost and in time ‘inspite of the geographical and logistical dispersion of the units of administration. This arrangement also provides a safeguard against manipulation of accounts, and lack of adequate disclosure by the accounts keeping organisations due to the uniform accounting policy and standards followed by CAG’s organisation throughout the country. Unfortunately, in some states, the drawing and disbursing offices and the treasuries, where the initial accounts are maintained, delay the accounts or send incomplete, accounts to the Accountant General’s office which delays the compilation of accounts. As a result sometimes it was not possible for CAG’s organisation to keep the state government adequately and timely apprised of the progress of expenditure against the budget provision. A case in point is the huge excess drawal over budget provision for successive years by the Animal Husbandry Department of Government of Bihar remaining undetected during the “fodder scam”. The treasury accounts in Bihar were delayed for years together and it needed constant persuasion by the CAG and his institution to update the accounts. Only when accounts in successive years were compiled in quick succession, the magnitude of the excess drawals by the Animal Husbandry Department could be clearly known.

Role of CAG as Auditor of the Nation

As an auditor of the transactions and accounts of the Central and provincial government, CAG acts as the watchdog and conscience keeper of the nation. The results of audit serve the twin purpose of enforcing accountability of the executive to the legislature and providing an independent and informed critique of the administrative practices and implementation of the developmental schemes and programmes.

The massive transfer of funds from the Central Government to the provincial governments and from both these governments to the autonomous bodies and also to the local bodies in the current years outside the Planning Commission’s dispensations has presented a new challenge to CAG’s auditing responsibility. The funding of the myriad government companies and statutory corporations by the Central and state governments also required an appropriate auditing strategy which was duly evolved by CAG’s organisation. CAG’s Reports on civil expenditure, both of the Union Government and the State governments contain, not only instances of isolated irregularities, but also comprehensive reviews of various socio-economic development programmes undertaken by the Union/state governments. Few such schemes recently reviewed are the Employment Assurance Scheme and the Scheme of Special Central Assistance to Special Component Plan for Scheduled Castes. Important findings on overlapping schemes, insufficient allocation of funds, unreliable database, misuse of schematic benefits, etc., have been systematically highlighted in the audit reviews.

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