Comptroller and Auditor General of India (CAG)

Syllabus: GS2/ Polity and Governance

Context

• The Comptroller and Auditor General of India (CAG) gained political attention after its report on the renovation costs of the office and residence of former Delhi Chief Minister.
  • The CAG plays a critical role in ensuring financial accountability and transparency in India’s governance system. 

Comptroller and Auditor General of India (CAG)

• The CAG is the supreme audit authority of India, responsible for auditing government accounts and ensuring accountability in public finance management. 
• Articles 148 to 151 of the Indian Constitution provide the framework for the appointment, duties, and reporting structure of the CAG. 
• The Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971, determines the CAG’s service conditions and prescribes the duties and powers of their office. 

Historical background

• The role of CAG evolved in British India and the Government of India Act 1858 paved the way for appointment of the first Auditor General, Sir Edward Drummond in 1860. 
• 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 and the Government of India Order 1936 provided for the conditions of services of the Auditor General.

Duties and responsibilities of CAG

• Audits expenditure from the Consolidated Fund of India, states, and union territories with Legislative Assemblies.
• Audits expenditure from the Contingency Fund and Public Account of India and those of the states.
• Audits transactions related to debt, sinking funds, deposits, advances, suspense accounts, and remittance business with Presidential approval.
• Audits accounts of any authority if requested by the President or Governor.

Audits Reports Submitted by CAG to the President of India

• Comptroller and Auditor General (CAG) of India submits three audit reports to the President of India (Article 151).
  • Audit report on appropriation accounts: This report shows how the legislature-granted money was allocated to different heads of expenditure and grants. It also verifies if the money was spent for the intended purpose.
  • Audit report on finance accounts: This report shows the annual receipts and expenditures of the country.
  • Audit report on public undertakings: This report covers the finances and expenditures of various Public Sector Undertakings (PSUs).
• After receiving the reports, the President lays them before both houses of Parliament. The Public Accounts Committee (PAC) then examines the reports and submits its findings to Parliament.

Impact of CAG Reports

• CAG reports often highlight financial losses and procedural lapses, influencing policy changes and accountability measures. 
• Example: 2010 report on the allocation of 2G spectrum licenses, which led to significant policy reforms.

Concluding remarks

• CAG’s audits and recommendations have led to significant policy corrections in the past, emphasizing the importance of an empowered and independent audit authority in a democracy.

Source: IE