Analysis: CAG and its Multifaceted Role

CAG is a constitutional office under article 148 and is appointed by the President of India by warrant under his hand for a period of 6 years or up to age of 65 years.

Removal of CGS is as difficult and similar to removal of a Supreme Court Judge. The conditions and services of CAG are prescribed by Parliament via CAG (conditions and services) act 1953 as amended in 1971. Allowances and pensions payable to or in respect of persons in that office are charged upon the Consolidated Fund of India (CFI). A CAG shall not be eligible for any office under the GOI post-retirement. It is because of these conditions of independence given to CAG’s office, the report of CAG are given due respect and made as reference.

Functions of CAG

It is the CAG who suggests the account keeping of union and state with the approval of president. It exercises power in relation to account of union and state or any other enterprise funded by GOI as may be prescribed by law made by parliament. The CAG reports to the president and governors regarding the accounts of union and state respectively. The president presents report to the parliament. In 1976 the accounting is separated from auditing form the CAG’s duty. Now accounting is done by other agencies.

Powers of CAG regarding audit

It audits all expenditure and receipts from consolidated fund of India and of the states and union territories. It audits all balance sheets of other subsidiary account kept in department stores and stocks of all the government offices. It audits the accounts of all government companies act setup under the companies act 1956 also includes the central government corporation. It also audits authorities and body substantially funded by the CFI and account of those authorities which are not funded by government, at the request of president and governor or CAG’s own initiative. The CAG submits its report to the president and the governors in two parts – the appropriation account audit report and report on finance accounts. The audit reports after being presented in the parliament is handed over to the public accounts committee, which further scrutinizes the public account where the CAG assists the committee. Criticism

The key points towards criticism of CAG are as follows:

• Overreach, particularly when audit widens its domain and meticulously attempts to check the efficiency and cost effectiveness, though it is in tune with the spirit of constitution to go beyond just regulatory auditing.
• CAG’s reports are sometimes unduly negative and focused on fault-finding. It does not recognize the practical constraints the government authorities face while operating. It dampens the risk taking capability and tendency to take new initiative, because of such fear. It discourages officers from taking decisions which leads to a tendency of shifting responsibility.
• The reporting of CAG creates an impression of intention to show the administration in bad light. Also the administration-auditor dichotomy and lack of cooperation is another challenge that proves to be a hurdle. Critics point out that auditing should be done on a positive note, not only of criticism but to educate.
• It should suggest the needed changes to delve constructively to the problems.

Analysis: CAG has breached its basic responsibilities?

In last half decade with rampant corruption unearthed one after another, major contradictions have aroused among political leadership for CAG breaching its responsibilities. However, while coming to any conclusion, few factors must be counted in. Firstly, regarding the 2G scam, the dubious 2008 allocation at a time when demand far exceeded supply was an unexplained question and hence it was CAG’s well indicated duty to point it out. Same was with coal block allocation. Secondly, any audit report makes observations on efficiency and loss. When there is a loss to exchequer due to dubious allocation of natural resources, it is expected that CAG would perform its duty as Guardian of public exchequer fairly. It was CAG’s feat that successive government tried to make allocation as transparent as possible. Fourthly, it was alleged that CAG has no authority or right to comment on the policy of the government; but unfortunately makers of such claims don’t understand the mandate given to CAG, which is to identify if there is any lapse. Thus, CAG was right in its account upholding the right spirit and freedom of the deemed constitutional position.

Relation between CAG and PAC

Public Accounts Committee (PAC) is a standing committee of Parliament created under GOI Act, 1919. PAC examines the three CAG reports – audit report on appropriation accounts, audit report on finance accounts, and audit report on public sector undertakings – submitted by CAG to president, who makes them be laid in parliament. PAC examines these reports for both technical irregularity and also economy, propriety and prudence. CAG assists PAC in examination of these reports. Hoiwever, work of both CAG and PAC is ex post facto unlike Estimates Committee whose work is ex ante.

Nevertheless, there is a close working relationship between CAG and PAC to secure accountability of executive in financial administration. We note here that before tenure of Vinod Rai, the CAG was treated more or less as an appendage of PAC. It was only during his tenure that CAG asserted its authority above of being an appendage. He brought scathing audit reports on 2G spectrum allocation, commonwealth games, coal block allocation etc. and exposed politician-corporate nexus through these reports. He also brought about the “Noddy Books”, which were simple / miniature version of the CAG reports accessible and understandable to the common man.

Should CAG be made accountable to Parliament?

It was reported in media that PAC may recommend amendment of the CAG (Services and Conditions) Act to make it accountable to parliament. It may lead to a situation when parliament controlled by majority of a single ruling party, prevents the audit of some dubious transactions. Needless to say, that this tempering with the office of CAG should not happen. Any such move would though need constitutional amendment but would curtail the independence of the CAG and is not in favour of public. It is the duty of both executive and legislature to uphold the CAG’s ambit.

Are there any suggestions to prevent overreach?

All it is needed, the article 149 can be amended to explicitly indicate scope of CAG’s responsibility. Similarly, the Audit Act, can be amplified to make things clearer. Nothing should be done which dilutes the independence of the office of CAG.