The Comptroller and Auditor General of India
The Constitution of India 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. He is the guardian of the public purse and controls the entire financial system of the country at both the levels- the centre and state. His duty is to uphold the Constitution of India and the laws of Parliament in the field of financial administration.
CAG helps the parliament/state legislatures hold their respective governments accountable. He is one of the bulwarks of the democratic system of government in India; the others being the SC, the ECI and the UPSC. It is for these reasons Dr. B R Ambedkar said that the CAG shall be the most important Officer under the Constitution of India and his duties are far more important than the duties of even the judiciary.
A Brief History
The role of the CAG evolved in British India with Lord Canning initiating a major administrative drive before the Mutiny of 1857. In May 1858, for the first time, a separate department was set up with an Accountant General, who was responsible for accounting and auditing the financial transactions under the East India Company. After Mutiny, the British Crown took over and passed the Government of India Act 1858. This laid the foundation stone of Imperial Audit. Sir Edward Drummond took charge in 1860 as the first Auditor General and the term 'Comptroller and Auditor General of India' was first used in 1884. Under the Montford Reforms of 1919, the Auditor General became independent of the government. The Government of India Act 1935 strengthened the position of the Auditor General by providing for Provincial Auditors General in a federal set-up.
Why Comptroller?
In the 15th century, the word Controller developed the alternate spelling Comptroller as a result of an association between the first part of the word, cont, and an unrelated word count and its variant, compt. Many people pronounce comptroller like controller but both are acceptable. But the word Comptroller has a different meaning-someone who maintains and audits business. Comptrollers are controllers but controllers are not comptrollers.
Constitutional provisions
Art. 148 broadly speaks of the CAG, his appointment, oath and conditions of service
Art. 149 broadly speaks of the Duties and Powers of the CAG
Art. 150 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.
Art. 151 Audit Reports - 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.
The reports of the Comptroller and Auditor-General of India relating to the accounts of a State shall be submitted to the Governor of the State, who shall cause them to be laid before the Legislature of the State.
Independence of the Institution of CAG
For effective functioning of this important institution of the CAG it is paramount to ensure independence. There are several provisions enshrined in the Constitution to safeguard CAG’s independence
1. He is appointed by the President by a warrant under his hand and seal and his oath of office requires him to uphold the Constitution of India and the laws made there-under
2. He is provided with a security of tenure and can be removed by the President only in accordance with the procedure mentioned in the Constitution (same as a judge of SC)
3. He is not eligible for further office, either under the Government of India or of any state, after he ceases to hold his office
4. His salary and other service conditions though determined by the Parliament cannot be varied to his disadvantage after appointment
5. His administrative powers and the conditions of service of persons serving in the Indian Audit and Accounts Department shall be prescribed by the President only after consulting him.
6. The administrative expenses of the office of CAG, including all salaries, allowances and pensions of persons serving in that office are charged upon the Consolidated Fund of India and are not subject to the vote of Parliament.
Duties and Powers of the CAG
Sources of the Audit Mandate of CAG
Constitution- The existence and mandate of the Comptroller and Auditor General of India emanates from Articles 148 to 151 of the Constitution. Article 149 stipulates the Duties and Powers of the Comptroller and Auditor General
Statute- DPC Act, 1971 (Duties, Powers and Conditions of Service Act) lays down the general principles of Government accounting and the broad principles in regard to audit of receipts and expenditure
Regulations- Regulations on Audit and accounts as framed and notified in the official Gazette .
Scope of audit Within the audit mandate, the Comptroller and Auditor General is the sole authority to decide the scope and extent of audit to be conducted by him or on his behalf
Duties
He audits the accounts related to all expenditure from the Consolidated Fund of India, Consolidated Fund of
each state and UT having a legislative assembly
He 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
He 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.
He 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
Functions
He audits all transactions of the Central and state governments related to debt, sinking funds, deposits, advances, suspense accounts and remittance business
He audits the accounts of any other authority when requested by the President or Governor e.g. Local bodies
He advises the President with regard to prescription of the form in which the accounts of the Centre and states shall be kept
He submits 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
He submits his audit reports relating to the accounts of a State to the Governor, who shall, in turn, place them before the state legislature
He ascertains and certifies the net proceeds of any tax or duty and his certificate is final on the matter
He acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament
He compiles and maintains the accounts of state governments. In 1976, he was relieved of his responsibilities with regard to the compilation and maintenance of accounts of the Central government due to separation of accounts from audit
He submits 3 audit reports to the President- audit report on appropriation accounts, audit report on finance accounts and audit report on public undertakings
There are the following limitations on the powers of CAG
Its report is post-facto i.e. after the expenditure is incurred and has only prospective value in improving systems and procedures
Secret service expenditure is outside the purview of the CAG and he cannot call for particulars of expenditure incurred by the executive agencies, but has to accept a certificate from the competent administrative authority that the expenditure has been so incurred
Since the legislation, the government has increased its participation with the private sector through the PPT (public-private-transfer) and BOT (build-own-transfer) model. However the rules have not undergone a significant change and CAG does not have the power to audit PPP (Public Private Partnership) investments.
There is no provision for auditing of funds that are given to an NGO and elected local bodies. Today when NGOs have become a conduit for a multitude of government schemes.
CAG presently does not have the full authority to audit the PRIs and ULBs. In most states, the Examiners functioning under the Finance Department audit the accounts of local bodies.
DRDAs (District Rural Development Authority) today are managing large sums of money for rural development yet they also are outside the purview of CAG audits
In light of the above limitations and changes in the Indian polity such as increasing role of civil society and NGOs, liberalisation of the economy, PPP mode of investments the DPC Act, 1971 must be reviewed to bring in greater accountability and transparency in every sphere that touches public life. CAG’s work should go beyond the question of whether government funds are being spent appropriately to ask whether programs and policies are meeting their objectives and the needs of society
The Constitution of India 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. He is the guardian of the public purse and controls the entire financial system of the country at both the levels- the centre and state. His duty is to uphold the Constitution of India and the laws of Parliament in the field of financial administration.
CAG helps the parliament/state legislatures hold their respective governments accountable. He is one of the bulwarks of the democratic system of government in India; the others being the SC, the ECI and the UPSC. It is for these reasons Dr. B R Ambedkar said that the CAG shall be the most important Officer under the Constitution of India and his duties are far more important than the duties of even the judiciary.
A Brief History
The role of the CAG evolved in British India with Lord Canning initiating a major administrative drive before the Mutiny of 1857. In May 1858, for the first time, a separate department was set up with an Accountant General, who was responsible for accounting and auditing the financial transactions under the East India Company. After Mutiny, the British Crown took over and passed the Government of India Act 1858. This laid the foundation stone of Imperial Audit. Sir Edward Drummond took charge in 1860 as the first Auditor General and the term 'Comptroller and Auditor General of India' was first used in 1884. Under the Montford Reforms of 1919, the Auditor General became independent of the government. The Government of India Act 1935 strengthened the position of the Auditor General by providing for Provincial Auditors General in a federal set-up.
Why Comptroller?
In the 15th century, the word Controller developed the alternate spelling Comptroller as a result of an association between the first part of the word, cont, and an unrelated word count and its variant, compt. Many people pronounce comptroller like controller but both are acceptable. But the word Comptroller has a different meaning-someone who maintains and audits business. Comptrollers are controllers but controllers are not comptrollers.
Constitutional provisions
Art. 148 broadly speaks of the CAG, his appointment, oath and conditions of service
Art. 149 broadly speaks of the Duties and Powers of the CAG
Art. 150 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.
Art. 151 Audit Reports - 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.
The reports of the Comptroller and Auditor-General of India relating to the accounts of a State shall be submitted to the Governor of the State, who shall cause them to be laid before the Legislature of the State.
Independence of the Institution of CAG
For effective functioning of this important institution of the CAG it is paramount to ensure independence. There are several provisions enshrined in the Constitution to safeguard CAG’s independence
1. He is appointed by the President by a warrant under his hand and seal and his oath of office requires him to uphold the Constitution of India and the laws made there-under
2. He is provided with a security of tenure and can be removed by the President only in accordance with the procedure mentioned in the Constitution (same as a judge of SC)
3. He is not eligible for further office, either under the Government of India or of any state, after he ceases to hold his office
4. His salary and other service conditions though determined by the Parliament cannot be varied to his disadvantage after appointment
5. His administrative powers and the conditions of service of persons serving in the Indian Audit and Accounts Department shall be prescribed by the President only after consulting him.
6. The administrative expenses of the office of CAG, including all salaries, allowances and pensions of persons serving in that office are charged upon the Consolidated Fund of India and are not subject to the vote of Parliament.
Duties and Powers of the CAG
Sources of the Audit Mandate of CAG
Constitution- The existence and mandate of the Comptroller and Auditor General of India emanates from Articles 148 to 151 of the Constitution. Article 149 stipulates the Duties and Powers of the Comptroller and Auditor General
Statute- DPC Act, 1971 (Duties, Powers and Conditions of Service Act) lays down the general principles of Government accounting and the broad principles in regard to audit of receipts and expenditure
Regulations- Regulations on Audit and accounts as framed and notified in the official Gazette .
Scope of audit Within the audit mandate, the Comptroller and Auditor General is the sole authority to decide the scope and extent of audit to be conducted by him or on his behalf
Duties
He audits the accounts related to all expenditure from the Consolidated Fund of India, Consolidated Fund of
each state and UT having a legislative assembly
He 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
He 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.
He 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
Functions
He audits all transactions of the Central and state governments related to debt, sinking funds, deposits, advances, suspense accounts and remittance business
He audits the accounts of any other authority when requested by the President or Governor e.g. Local bodies
He advises the President with regard to prescription of the form in which the accounts of the Centre and states shall be kept
He submits 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
He submits his audit reports relating to the accounts of a State to the Governor, who shall, in turn, place them before the state legislature
He ascertains and certifies the net proceeds of any tax or duty and his certificate is final on the matter
He acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament
He compiles and maintains the accounts of state governments. In 1976, he was relieved of his responsibilities with regard to the compilation and maintenance of accounts of the Central government due to separation of accounts from audit
He submits 3 audit reports to the President- audit report on appropriation accounts, audit report on finance accounts and audit report on public undertakings
There are the following limitations on the powers of CAG
Its report is post-facto i.e. after the expenditure is incurred and has only prospective value in improving systems and procedures
Secret service expenditure is outside the purview of the CAG and he cannot call for particulars of expenditure incurred by the executive agencies, but has to accept a certificate from the competent administrative authority that the expenditure has been so incurred
Since the legislation, the government has increased its participation with the private sector through the PPT (public-private-transfer) and BOT (build-own-transfer) model. However the rules have not undergone a significant change and CAG does not have the power to audit PPP (Public Private Partnership) investments.
There is no provision for auditing of funds that are given to an NGO and elected local bodies. Today when NGOs have become a conduit for a multitude of government schemes.
CAG presently does not have the full authority to audit the PRIs and ULBs. In most states, the Examiners functioning under the Finance Department audit the accounts of local bodies.
DRDAs (District Rural Development Authority) today are managing large sums of money for rural development yet they also are outside the purview of CAG audits
In light of the above limitations and changes in the Indian polity such as increasing role of civil society and NGOs, liberalisation of the economy, PPP mode of investments the DPC Act, 1971 must be reviewed to bring in greater accountability and transparency in every sphere that touches public life. CAG’s work should go beyond the question of whether government funds are being spent appropriately to ask whether programs and policies are meeting their objectives and the needs of society
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