Audit Diwas and Role of CAG 

Syllabus: GS2/ Polity & Governance

Context

• On Audit Diwas (November 16th), the Lok Sabha Speaker said that the Comptroller & Auditor General (CAG) has played a key role in fostering accountability, transparency and good governance in the country.

About the Comptroller & Auditor General (CAG)

• Brief: 
  • It is a constitutional authority responsible for auditing the accounts of the Central and State governments.
  • The Comptroller and Auditor General of India (CAG) is appointed by the President of India by a warrant under his hand and seal.
  • Prior to taking over his/her office, the Comptroller and Auditor General of India (CAG) makes and subscribes to an oath or affirmation before the President of India.
  • The CAG holds office for 6 years or up to the age of 65 years, whichever is earlier.
  • CAG can be removed by the President of India on the same grounds and in the same manner as a judge of the Supreme Court. 
• Constitutional Mandate:
  • Article 148: Establishes the office of the CAG, appointed by the President for 6 years or until 65 years of age. Removal follows the process for Supreme Court judges, ensuring independence.
  • Article 149: Defines the duties and powers of the CAG to audit Union, State, and public corporation accounts, as determined by Parliament.
  • Article 150: Mandates that Union and State accounts are maintained in a format prescribed by the President on the advice of the CAG.
  • Article 151: Requires the CAG’s audit reports to be presented to Parliament or State Legislatures through the President or Governor.

• Functions and Responsibilities: 

• Audit of Government Accounts: The CAG audits the accounts of the Union and State governments and public sector organisations.
  • It includes financial audits, compliance audits, and performance audits.
• Reporting to the Legislature: The CAG submits audit reports to the President or the Governor, who then places them before the Parliament or the State Legislature.
  • These reports highlight any discrepancies or inefficiencies in the use of public funds.
• Advisory Role: The CAG advises the government on financial matters and helps in the formulation of policies to improve financial management and accountability.

CAG: Ensuring Transparency and Fixing Accountability

• Irregularities in Public Projects: The CAG’s reports have unveiled substantial cost escalations and financial mismanagement in major infrastructure projects.
  • For instance, the construction cost of the Dwarka Expressway skyrocketed from ₹18 crore per kilometre to ₹250 crore per kilometre.
  • Such findings have raised questions about the prudence and transparency of project management.
• Misallocation of Funds: The CAG has highlighted the diversion of funds from welfare schemes.
  • In one instance, funds meant for the National Social Assistance Programme (NSAP) were redirected to promote other government schemes, impacting the intended beneficiaries. It has led to calls for stricter adherence to fund allocation guidelines.
• Healthcare Scheme Irregularities: The audit of the Ayushman Bharat—Pradhan Mantri Jan Arogya Yojana (PMJAY) revealed that ₹6.97 crore was disbursed for the treatment of patients who were recorded as deceased.
  • Such discrepancies underscore the need for robust oversight mechanisms to prevent financial irregularities.

Key Concerns

• Increasing Complexity of Audits: As public administration and financial management become more complex, the CAG’s audits must adapt to new forms of corruption and maladministration that are increasingly difficult to detect.
  • It includes auditing public-private partnerships (PPPs) and other innovative financial arrangements that require specialised knowledge and skills.

• Technological Advancements: While the adoption of emerging technologies like artificial intelligence and data analytics can enhance audit processes, it also presents a challenge.
  • The CAG must continuously update its technological capabilities and ensure that its staff are adequately trained to use these tools effectively.
  • It is essential for maintaining the credibility and accuracy of audits in a rapidly evolving digital environment.
• Maintaining Independence: The independence of the CAG is fundamental to its role in promoting accountability.
  • However, there have been concerns about potential attempts to curtail the powers of the CAG, which could compromise its ability to conduct impartial audits.
  • It is essential to safeguard the CAG’s autonomy to ensure that it can operate without undue influence from the executive or other entities.
• Capacity Building: Building and maintaining the capacity of the CAG’s workforce is another significant challenge.
  • It includes not only technical training but also fostering a culture of integrity and professionalism. Continuous professional development and capacity-building initiatives are necessary to equip auditors with the skills needed to tackle emerging challenges effectively.
• Public Perception and Trust: Maintaining public trust in the CAG’s findings is crucial for its effectiveness. Any perception of bias or inefficiency can erode confidence in the institution.
  • The CAG must ensure transparency in its operations and communicate its findings clearly to the public to uphold its reputation.

Way Ahead: Strengthening the CAG

• Adoption of Emerging Technologies: The CAG has proactively adopted emerging technologies, including artificial intelligence, to enhance its audit processes and ensure greater transparency.
  • It is crucial for keeping pace with the dynamic landscape of public administration.
• International Collaboration: The CAG has strengthened its global presence by securing re-elections as the external auditor for several international organisations, such as the World Health Organization and the International Labour Organization.
  • These roles underscore the CAG’s commitment to upholding high standards of professionalism and integrity in audit practices.
  • The CAG has signed multiple Memorandums of Understanding (MoUs) with various countries to collaborate on public sector auditing. It includes recent agreements with Seychelles, Kenya, and Saudi Arabia.
• Institutional Support: There have been calls to provide the CAG with adequate institutional support to discharge its constitutionally enshrined role effectively.
  • Strengthening the CAG involves ensuring its independence and empowering it to conduct comprehensive audits without undue interference.

Source: ET