Comptroller & Auditor General of India - Part 2

COMPTROLLER AND AUDITOR GENERAL OF INDIA - PART 2

Role:
•    The role of CAG is to uphold the Constitution of India and the laws of Parliament in the field of financial administration.
•    The accountability of the executive (i.e., council of ministers) to the Parliament in the sphere of financial administration is secured through audit reports of the CAG.
•    The CAG is an agent of the Parliament and conducts audit of expenditure on behalf of the Parliament.
•    Therefore, he is responsible only to the Parliament.
•    The CAG has more freedom with regard to audit of expenditure than with regard to audit of receipts, stores and stock.
•    Whereas in relation to expenditure he decides the scope of audit and frames his own audit codes and manuals, he has to proceed with the approval of the executive government in relation to rules for the conduct of the other audits.
•    The CAG has ‘to ascertain whether money shown in the accounts as having been disbursed was legally available for and applicable to the service or the purpose to which they have been applied or charged and whether the expenditure conforms to the authority that governs it‘.
•    In addition to this legal and regulatory audit, the CAG can also  conduct  the propriety audit, that  is, he can look into the ‗wisdom, faithfulness and economy‘ of government expenditure and comment on the wastefulness and extravagance of such expenditure.
•    However, unlike the legal and regulatory audit, which is obligatory on the part of the CAG, the propriety audit is discretionary.
•    The secret service expenditure is a limitation on the auditing role of the CAG. In this regard, the CAG 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 under his authority.
•    The Constitution of India visualises the CAG to be Comptroller as well as Auditor General. However, in practice, the CAG is fulfilling  the  role  of  an  Auditor-General  only  and  not  that of a Comptroller.
•    In other words, ‗the CAG has no control over the issue of money from the consolidated fund and many departments are authorised to draw money by issuing cheques without specific authority from the CAG, who is concerned only at the audit stage when the expenditure has already taken place‘.
•    In this respect, the CAG of India differs totally from the CAG of Britain who has powers of  both Comptroller as well as Auditor General.
•    In other words, in Britain, the executive can draw money from the public exchequer only with the approval of the CAG.

CAG and Corporations:
•    The role of CAG in the auditing of public corporations is limited. Broadly speaking, his relationship with the public corporations falls into the following three categories:
      (i)    Some corporations are audited totally and directly by the CAG, for example, Damodar Valley Corporation, Oil and Natural Gas Commission, Air India, Indian Airlines Corporation, and others.
      (ii)    Some other corporations are audited by private professional auditors who are appointed  by  the Central Government in consultation with the CAG. If necessary, the CAG can conduct supplementary audit. The examples are, Central Warehousing Corporation, Industrial Finance Corporation, and others.
       (iii)    Some other corporations are totally subjected to private audit. In other words, their audit is done exclusively by private professional auditors and the CAG does not come into the  picture at all. They submit their annual reports and accounts directly to the Parliament. Examples of  such corporations are Life Insurance Corporation of India, Reserve Bank of India, State Bank  of India, Food Corporation of India, and others.
•    The role of the CAG in the auditing of Government companies is also limited.
•    They are audited by private auditors who are appointed by the Government on the advise of the CAG.
•    The CAG can also undertake supplementary audit or test audit of such companies.
•    In 1968, an Audit Board was established as a part of the office of CAG to associate outside specialists and experts to handle the technical aspects of audit of specialised enterprises like engineering, iron and steel, chemicals and so on.
•    This board was established on the recommendations of  the Administrative  Reforms Commission of India.
•    It consists of a Chairman and two members appointed by the CAG.

Important Facts to remember:
CAG is appointed by the President
1.    Tenure
       a.    6 Years or 65 Year of age
2.    He can resign by writing to the President of India,
3.    He can be removed from office on the same manner as the Judge of the supreme court.
4.    From Article 148 to 151 in Part V (5) of the constitution deals with the various provisions for the Comptroller and Auditor General of India.
5.    Article 148 - Office of the CAG.
6.    Article 149 - Parliament to Prescribe duties and powers of the CAG.
7.    Article 150 - Form of accounts of the union and of the States
8.    Article 151 - Audit reports.
9.    Other Provisions
       a.    Article 279 - Calculation of Net proceeds.
       b.    Third Schedule - Oath of CAG
       c.    Sixth Schedule - Audit of accounts of the District and regional councils as mentioned in the Sixth schedule
10.    Audit Board
      a.    It was established in 1968 on the recommendations of the Administrative reforms committee.
        b.    Composition: Chairman and 2 Members
       c.    It is a part of the office of CAG to accommodate specialists and experts from outside.
11.    In 1976, CAG is relieved from the responsibility of maintenance of accounts of central government.