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All about CAG

What is CAG?

The Comptroller and Auditor General is a 150-year-old institution with a mission to “promote accountability, transparency and good governance through auditing and accounting” of public funds. Its role is to ensure public funds are being used “efficiently and for the intended purposes”. In effect, it means CAG can look into accounts and performance records of all ministries, departments, government-funded agencies and companies.

Why the audits?

To bring out discrepancies, wasteful expenditure and non-performance of any ministry, project, agency or company that has been funded with public money. While the traditional focus had been on audit of government expenditure, the trend lately has been on the outcome of such expenditure.

Who controls CAG?

CAG has evolved as an institution since it was set up by the British government in 1850, with Sir Edmund Drummond taking over as the first Auditor General of India on November 16 that year. Today its duties, powers and roles are mandated by Parliament through the CAG (Duties, Powers and Conditions of Service) Act, 1971. The Act includes a mechanism designed to keep the office independent of any government influence. It authorises CAG to inspect government files and records and mandates it to submit reports to the President, who introduces them to Parliament.

What kind of reports does it file?

CAG brings out “performance audits”, as it did for the Commonwealth Games, where it analyses the efficiency of a government project, agency or service and whether it has used its allocations properly. It also brings out “compliance audits” on whether rules were followed in transactions with public funds.

How far is its reach?

CAG has access to most government accounts, but certain agencies like R&AW, IB and NTRO are not within its automatic ambit. The government can, however, allow CAG to audit these agencies under a strict secrecy clause but these findings are not made public. Strategic projects of the armed forces are not audited by the normal process either.

Who are the auditors?

The CAG is appointed by the President for a term of six years on the recommendations of the Prime Minister. There are no guidelines for the appointment of a CAG and the Supreme Court has also upheld the powers of the legislature to appoint a CAG of its choice. However, once appointed, a CAG cannot be removed expect by impeachment; his powers, salary or pension cannot be tampered with by the government. The CAG exercises his mandate through officers of the Indian Audit and Accounts Department (IAAS) which is a civil services cadre. CAG as an institution has over 600 officers who carry out audits across various fields. IAAS officers are trained at the National Academy of Administration and get specialised training at the National Academy of Audit and Accounts and the National Institute of Financial Management.

How does CAG decide what to audit?

CAG audits government departments, PSUs and institutions that benefit from substantial government grants. CAG is meant to be a “validation agency” for all government expense. While individual departments choose their own yearly targets that are considered to be in public interest, an Audit Advisory Board guides the functioning of the institution and suggests fields of interest. The board has a variety of members with experience in different fields like governance, defence and financial institutions. The current board includes social activist Shabana Azmi as a member. Officials say that generally, issues of public interest are given high priority and news reports are keenly followed by decision makers.

What has changed?

By its own admission, CAG had been traditionally fixated with extracting “petty faults in government functioning”. Now, the CAG has moved beyond the micro level. “Today, we bring to bear a holistic approach focusing on the macro picture. Our attempt is to present the audit report at the earliest so that mid-course corrections can be undertaken. The mindset is positive so as to make recommendations for improvement,”CAG said in a recent speech. This new approach has its followers but there is also criticism from many quarters about CAG overreaching its mandate and taking up a preaching role. Many in power argue that the institution needs to continue focus on auditing accounts and refrain from making recommendations as it has little administrative expertise.

What difference do CAG reports make?

CAG or its reports have no powers to penalise or punish. While bringing out discrepancies in public light itself can be a deterrent for offenders, CAG reports are looked into by the Public Accounts Committee (PAC) of Parliament that has the power to discuss specific cases and make recommendations to the government for action. In many cases, however, investigating agencies have taken information from CAG reports to press charges.

Who audits the auditor?

The CAG being the supreme audit authority of the country, it is not easy to find an auditor for him. To monitor itself, the CAG has set up a mechanism with its teams auditing each other. For example, auditors for Andhra Pradesh would audit the functioning of the Maharashtra team. In the case of the head office, which incurs major expenses, an arrangement has been made for audit by the supreme audit authority of another country. This year, for example, the audit agency of Australia will look into all accounts of the head office in Delhi.


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