Comptroller and Auditor General of India (CAG)

26/12/2021 0 By indiafreenotes

The Comptroller and Auditor General of India is the Constitutional Authority in India, established under Article 148 of the Constitution of India. He is empowered to Audit all receipts and expenditure of the Government of India and the State Governments, including those of autonomous bodies and corporations substantially financed by the Government. The CAG is also the statutory auditor of Government-owned corporations and conducts supplementary audit of government companies in which the Government has an equity share of at least 51 per cent or subsidiary companies of existing government companies. The reports of the CAG are laid before the Parliament/Legislatures and are being taken up for discussion by the Public Accounts Committees (PACs) and Committees on Public Undertakings (COPUs), which are special committees in the Parliament of India and the state legislatures. The CAG is also the head of the Indian Audit and Accounts Department, the affairs of which are managed by officers of Indian Audit and Accounts Service, and has 43,576 employees across the country (as on 01.03.2020).

In 1971, the central government enacted the Comptroller and Auditor General of India (Duties, Powers, and Conditions of Service) Act, 1971. In 1976, CAG was relieved from accounting functions.

Articles 148–151 of the Constitution of India deal with the institution of the CAG of India.

Duties of the CAG

As per the provisions of the constitution, the CAG’s (DPC) (Duties, Powers and Conditions of Service) Act, 1971 was enacted. As per the various provisions, the duties of the CAG include the audit of:

  • Receipts and expenditure from the Consolidated Fund of India and of the State and Union Territory having legislative assembly.
  • Trading, manufacturing, profit and loss accounts and balance sheets, and other subsidiary accounts kept in any Government department; Accounts of stores and stock kept in Government offices or departments.
  • Government companies as per the provisions of the Companies Act, 2013.
  • Corporations established by or under laws made by Parliament in accordance with the provisions of the respective legislation.
  • Authorities and bodies substantially financed from the Consolidated Funds of the Union and State Governments. Anybody or authority even though not substantially financed from the Consolidated Fund, the audit of which may be entrusted to the CAG.
  • Grants and loans given by Government to bodies and authorities for specific purposes.
  • Entrusted audits e.g. those of Panchayati Raj Institutions and Urban Local Bodies under Technical Guidance & Support (TGS).

Scope of audits

Audit of government accounts (including the accounts of the state governments) in India is entrusted to the CAG of India who is empowered to audit all expenditure from the Consolidated Fund of the union or state governments, whether incurred within India or outside, all revenue into the Consolidated Funds and all transactions relating to the Public Account and the Contingency Funds of the Union and the states. Specifically, audits include:

  • Transactions relating to debt, deposits, remittances, Trading, and manufacturing.
  • Profit and loss accounts and balance sheets kept under the order of the President or Governors.
  • Receipts and stock accounts. CAG also audits the books of accounts of the government companies as per Companies Act.

In addition, the CAG also executes performance and compliance audits of various functions and departments of the government. Recently, the CAG as a part of thematic review on “Introduction of New Trains” is deputing an auditors’ team on selected trains, originating and terminating at Sealdah and Howrah stations, to assess the necessity of their introduction. In a path-breaking judgement, the Supreme Court of India ruled that the CAG General could audit private firms in revenue-share deals with government.

Roles of CAG

  • The CAG has to ascertain whether the money spent was authorised for the purpose for which they were spent.
  • The CAG is an agent of the Parliament and conducts audits of expenditure on behalf of the Parliament. Therefore, he is responsible only to the Parliament.
  • He focuses on whether the expenditure made is in the public interest or not.
  • Some corporations are audited directly by the CAG. For example, ONGC, Air India, and others.
  • The role of CAG in the auditing of public corporations is limited.
  • 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 Central Government on the advice of the CAG.
  • Some corporations are audited by private professional auditors who are appointed by the Central Government in consultation with CAG. If necessary, there may be a supplementary audit by CAG.