Understanding the Role and Influence of the Comptroller and Auditor General of India

Table of Contents☰

What’s in today’s article?

Background
Powers and Responsibilities of the CAG
Selection and Execution of Audits
Challenges in Tabling Reports
Impact of CAG Audits
Conclusion

Background

The Comptroller and Auditor General (CAG) of India has once again taken centre stage amidst a political controversy surrounding its audit report on the high costs of renovation at the former residence and office of Delhi Chief Minister Arvind Kejriwal.
The report, which highlighted a cost escalation from an initial estimate of ₹7.91 crore to ₹33.66 crore, has become a flashpoint between the BJP and the Aam Aadmi Party (AAP) ahead of the Delhi Assembly elections.
However, the CAG’s role transcends political debates, as it serves as a critical institution for auditing and ensuring accountability in governance.

Powers and Responsibilities of the CAG

The CAG, as outlined in Articles 148-151 of the Constitution and the CAG (Duties, Powers and Conditions of Service) Act, 1971, is the supreme audit institution of India.
Appointed by the President, the CAG’s primary duties include:
- Auditing the accounts of the Union and State governments, including public sector undertakings (PSUs).
- Reviewing compliance with applicable laws, rules, and regulations through compliance audits.
- Assessing the implementation and effectiveness of government schemes and projects via performance audits.
- Certifying the financial accounts of governments and PSUs through financial audits.
Additionally, the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, mandates the CAG to review government compliance with fiscal targets.

Selection and Execution of Audits

The CAG follows a meticulous process to select audit subjects:
- Risk Assessment: Factors like project size, media coverage, and inspection reports influence the selection.
- International Guidelines: The CAG adheres to standards set by the International Organization of Supreme Audit Institutions (INTOSAI).
- Audit Plan Approval: The CAG’s office drafts an annual plan, with input from an Audit Advisory Board, which meets biannually.
- Government or Judicial Recommendations: Specific audits may be requested by courts or governments, such as the Supreme Court’s directive for auditing the Delhi-Noida Direct (DND) Flyover project.
The audit process begins with an entry conference with the concerned department to outline the scope and methodology. After the audit, an exit conference is held to share preliminary findings.
Departments are given six weeks to respond to the draft report before it is finalized and submitted to the President or Governor.

Challenges in Tabling Reports

While Article 151 of the Constitution mandates that CAG reports be laid before Parliament or state legislatures, it does not specify a time limit.
This loophole has led to delays, as seen in Delhi, where over a dozen CAG reports—including on issues like air pollution mitigation and liquor supply—remain untabled. Similar delays have been observed in states like West Bengal.
A CAG report becomes public only when presented in the legislature. Following this, the Public Accounts Committee (PAC) examines the report, seeks government responses, and recommends corrective actions.
Between 2019 and 2023, the PAC submitted 152 reports to the Lok Sabha, scrutinizing audit findings and government compliance.

Impact of CAG Audits

CAG reports play a pivotal role in highlighting financial losses and procedural inefficiencies, often prompting significant policy changes. For instance:
- The 2010 audit on 2G spectrum allocation exposed massive irregularities, leading to widespread political ramifications and regulatory reforms.
- A CAG review led to changes in Telangana’s Engineering Procurement Contract (EPC) framework.
In 2022-23, the CAG approved 172 audit reports, a significant increase from 73 reports in 2018-19, reflecting its growing scrutiny of governance and fiscal accountability.

Conclusion

The CAG’s audits are instrumental in ensuring transparency and accountability in governance.
However, the lack of timely tabling of its reports undermines its potential impact.
Strengthening mechanisms to expedite the legislative review process, coupled with robust government responses, can enhance the effectiveness of this constitutional body.
As the guardian of public finances, the CAG remains a cornerstone of India’s democratic framework, with its work extending far beyond political disputes to safeguard the interests of citizens.

Q1. What is the difference between Auditing & Investigation?

The main difference between audit and investigation is that an audit is a systematic examination of financial statements to ensure accuracy and compliance, while investigation is a thorough inquiry into a specific matter to uncover facts and identify potential wrongdoing.