Comptroller and Auditor General of India (CAG)

The Comptroller and Auditor General of India (CAG), a constitutional body, stands as a bulwark of financial oversight and accountability. By serving as the guardian of the public purse, it safeguards the interests of the citizens and upholds the principles of good governance. This article of NEXT IAS aims to study in detail the Comptroller and Auditor General of India (CAG), including its constitutional mandate, composition, powers, functions, challenges faced by it, and other related aspects.

About the Comptroller and Auditor General of India (CAG)

• The Comptroller and Auditor General (CAG) is an independent authority established by the Constitution of India to audit the receipts and expenditures of the Central Government, State Governments, and other bodies that receive funding from the Government.
  • Since it is established directly under the provisions of the Constitution, it is a Constitutional Body.
• The CAG is an All-India body in the sense that it controls the entire financial system of the country at both the Central and the State levels.
• The CAG heads the Indian Audit & Accounts Department and acts as the Guardian of the Public Purse.

Constitutional Provisions related to the Comptroller and Auditor General of India (CAG)

Article 148 to Article 151 of the Constitution of India deal with the provisions related to the Comptroller and Auditor General of India (CAG).

Article No.	Subject Matter
Article 148	Comptroller and Auditor-General of India
Article 149	Duties and powers of the Comptroller and Auditor-General (CAG)
Article 150	Form of accounts of the Union and the States
Article 151	Audit Reports

Appointment of the Comptroller and Auditor General of India (CAG)

The Comptroller and Auditor General of India (CAG) is appointed by the President of India by a warrant under his hand and seal.

Oath and Affirmations of the Comptroller and Auditor General of India (CAG)

Prior to taking over his/her officer, the Comptroller and Auditor General of India (CAG) makes and subscribes to an oath or affirmation before the President of India:

• to bear true faith and allegiance to the Constitution of India,
• to uphold the sovereignty and integrity of India,
• to duly and faithfully and to the best of his ability, knowledge, and judgment perform the duties of his office without fear or favor, affection or ill-will,
• to uphold the Constitution and the laws.

Term of Comptroller and Auditor General of India (CAG)

As per the Comptroller and Auditor General of India (Duties, Powers, and Conditions of Service) Act of 1971, the CAG holds office for 6 years or up to the age of 65 years, whichever is earlier.

Resignation of Comptroller and Auditor General of India (CAG)

The Comptroller and Auditor General of India (CAG) can resign at any time from his office by addressing the resignation letter to the President of India.

Removal of CAG

The Comptroller and Auditor General of India (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. Thus, he/she can be removed by the President based on a resolution passed to that effect by both Houses of Parliament with a special majority, either on the grounds of proved misbehavior or incapacity.

Roles and Duties of CAG

• To uphold the Constitution of India and the laws of Parliament in the field of financial administration.
  • This is the reason, that B.R. Ambedkar has called the CAG as one of the most important officers under the Constitution of India.
• The CAG has been envisaged as one of the four bulwarks of the democratic system of Government.
• To secure the accountability of the Executive to the Parliament in the sphere of financial administration through its audit reports.
• It acts as an agent of Parliament and conducts audits of expenditures on behalf of the Parliament.
  • Therefore, he/she is responsible only to the Parliament.

Functions of Comptroller and Auditor General of India (CAG)

Constitutional Provisions

The Constitution of India has prescribed the following functions for the CAG:

Article 150	He advises the President with regard to the prescription of the form in which the accounts of the Centre and the states shall be kept.
Article 151	He submits audit reports relating to the accounts of the Centre to the President, who shall, in turn, place them before both Houses of Parliament.
Article 151	He submits the audit reports relating to the accounts of a State to the Governor, who shall, in turn, place them before the State Legislature.
Article 279	He ascertains and certifies the net proceeds of any tax or duty. CAG’s certificate in this regard is final.

Legal Provisions

Article 149 of the Constitution of India authorizes the Parliament to prescribe the duties and powers of the Comptroller and Auditor General of India (CAG). Accordingly, the Parliament enacted the Comptroller and Auditor General of India (Duties, Powers, and Conditions of Service) Act of 1971.

The functions of the Comptroller and Auditor General of India (CAG) as laid down under the act are as follows:

• He/she audits the accounts related to all expenditures from the Consolidated Fund of India, the Consolidated Fund of each State, and the Consolidated Fund of each UT having a Legislative Assembly.
• He/she audits all transactions relating to the Contingency Fund of India, Public Account of India as well as the Contingency Fund of each State and the Public Account of each State.
• He/she audits all trading, manufacturing, profit and loss accounts, balance sheets, and other subsidiary accounts kept by any department of Central Government and State Governments.
• He/she audits the receipts and expenditures of all bodies and authorities substantially financed from the Central or State revenues.
• He/she audits the accounts of all bodies and authorities receiving grants and loans from the Central and State Governments for specific purposes.
• He/she audits all receipts of the Centre and States and ensures that the rules and procedures in this regard are designed to secure an effective check on the assessment, collection, and proper allocation of revenue.
• He/she audits the accounts of all stores and stock kept in all the offices and departments of the Central and State Governments.
• He/she audits the accounts of all Government Companies in accordance with the provisions of the Companies Act.
• He/she audits the accounts of all Corporations whose statutes provide for audit by him.
• He/she audits the accounts of any other body or authority when requested by the President or Governor.
  • For example, he/she may be asked to conduct an audit of local bodies.
• He/she acts as a guide, friend, and philosopher of the Public Accounts Committee of the Parliament.
• He/she compiles and maintains the accounts of State Governments.
  • Prior to 1976, the CAG used to compile and maintain the accounts of the Central Government as well. However, in 1976, he/she was relieved of this responsibility due to the separation of accounts from audit.

Powers of Comptroller and Auditor General of India (CAG)

In connection with the performance of his/her audit duties, the Comptroller and Auditor General of India (CAG) has the following powers:

• To inspect any office or department which is subject to his audit.
• To examine all transactions and question the person in charge of the office or department.
• To call for any records, papers, and documents from any audited entity.
• To decide the extent and manner of the audit.

Reports of Comptroller and Auditor General of India (CAG)

The Comptroller and Auditor General of India (CAG) submits three Audit Reports to the President:

• Audit Report on Appropriation Accounts
  • Appropriation Accounts compare the actual expenditure with the expenditure sanctioned by Parliament through the Appropriation Act.
• Audit Report on Finance Accounts
  • Finance Accounts show the annual receipts and disbursements of the Union Government.
• Audit Report on Public Undertakings

The President lays these reports before both Houses of Parliament. The Public Accounts Committee, then, examines these reports and reports its findings to the Parliament of India.

Types of Audits Conducted by the Comptroller and Auditor General of India (CAG)

The Comptroller and Auditor General of India (CAG) conducts various types of audits to ensure financial accountability and transparency in government expenditures. Here are the prominent types of audits conducted by the CAG:

Type of Audit	Definition	Remarks
Legal and Regulatory Audit	It ascertains whether money shown in the accounts as having been disbursed was legally available for and applicable to the service or purpose to which they have been applied or charged and whether the expenditure conforms to the authority that governs it.	This is obligatory on the CAG.
Propriety Audit	It looks into the wisdom, faithfulness, and economy of government expenditure and comments on the wastefulness and extravagance of such expenditure.	This is discretionary on the CAG.
Performance Audit	It looks into the economy, efficiency, and effectiveness in the receipt and application of public funds. It is a comprehensive appraisal of the progress and efficiency of the execution of development programs.	This is desirable, but not mandatory.

Comptroller – a Misnomer in India

• The Constitution of India visualizes the CAG to be a Comptroller as well as an Auditor General. However, in actual practice, the CAG of India is fulfilling the role of an Auditor-General only and not that of a Comptroller.
  • This is because the CAG of India has no control over the issue of money from the Consolidated Fund as many departments are authorized to draw money by issuing cheques without specific authority from the CAG. The role of the CAG of India comes into play only at the audit stage when the expenditure has already taken place.
• In this respect, the CAG of India differs totally from the GAG of Britain.
  • The CAG of Britain has powers of both the Comptroller as well as the Auditor General as the Executive of Britain can draw money from the public exchequer only with the approval of the CAG.

The CAG of India vs the CAG of Britain

Parameters	CAG of India	CAG of Britain
Role	The CAG of India performs the role of an Auditor General only and not that of a Comptroller.	The CAG of Britain has the power of both the Comptroller as well as Auditor General.
Audit Approach	The CAG of India audits the accounts after the expenditure is committed i.e., ex post facto.	In the United Kingdom (UK), no money can be drawn from the public exchequer without the approval of the CAG of the UK.
Parliamentary Role	The CAG of India is not a Member of the Parliament.	The CAG of Britain is a Member of the House of Commons.

Constitutional Provisions Ensuring Independence of CAG

The Constitution of India has made the following provisions to safeguard and ensure the independence of the Comptroller and Auditor General (CAG) of India:

• The Comptroller and Auditor General of India (CAG) has the security of tenure.
  • He can be removed by the President only in accordance with the procedure mentioned in the Constitution.
• After the expiry of tenure as the CAG, he/she is not eligible for further office, either under the Government of India or any State.
• The salary and other service conditions of the CAG are determined by the Parliament.
  • According to the Comptroller and Auditor General of India (Duties, Powers and Conditions of Service) Act of 1971, the salary of the CAG is equal to that of a Judge of the Supreme Court.
• Neither his salary nor his rights in respect of leave of absence, pension, or age of retirement can be altered to his disadvantage after his appointment.
• The conditions of service of persons serving in the Indian Audit and Accounts Department and administrative powers of the CAG are prescribed by the President after consultation with the CAG itself.
• The administrative expenses including all salaries, allowances, and pensions of persons of the office of CAG are charged upon Consolidated Fund of India.
  • Thus, they are not subject to the vote of Parliament.

Limitations of CAG

• Post-facto Role: The CAG of India has no control over the issuance of money from the public purse. Its role is limited to doing post-facto auditing of expenditures already made.
  • This limits its role as the bulwark of financial accountability.
• Limitations w.r.t. Inventory: CAG has more freedom w.r.t. audit of expenditure than w.r.t. audit of receipts, stores, and stock. In relation to expenditure, he/she decides the scope of the audit and frames his own audit codes and manuals. Whereas, in relation to other audits, he has to proceed with the approval of the executive.
• Limitations w.r.t. Certain Expenditures: The CAG has a limited role w.r.t. auditing Secret Service expenditures. In this regard, CAG cannot call for particulars of expenditure incurred by executive agencies and rather has to accept a certificate from the competent administrative authority.
• Limitations w.r.t. Certain Organizations: The role of CAG in auditing public corporations and government companies is also limited.

Challenges of CAG

• Limited Knowledge of Administration – Auditors do not know and cannot be expected to know very much about good administration. This leads to a narrow perspective and a very limited usefulness of CAG audits.
• Increasing Complexity of Audits – Audits face rising complexity due to evolving forms of corruption and maladministration, posing challenges in effectively identifying and addressing such issues.
• Expanding Responsibilities of CAG – Besides its traditional responsibility of overseeing the Central and State governments, the CAG now also examines various public-private partnership (PPP) projects, broadening its scope and responsibilities.
• Fear of Biased Appointments – There is no clear criteria or procedure in the Constitution or the Statutes for the appointment of the CAG, leaving the executive branch with sole discretion in appointing a person of their choice. This creates a fear of biased appointments.
• Practical Challenges – While the CAG holds the authority to inspect government offices and request necessary accounts for auditing purposes, the practical implementation often faces many obstacles such as delay in obtaining necessary documents, lack of cooperation from the government officials, complexity in detecting corruption, and maladministration in the offices, etc.
• Delayed Access to Records – Crucial documents are frequently withheld until the conclusion of audit programs, impeding the auditors’ ability to conduct thorough and timely examinations.
• Tenure Limitations – Though the Constitution provides for a six-year term, the imposition of a retirement age of 65 shortens the effective tenure of successive CAGs. This hampers institutional continuity and expertise.
• Allegations of Biased Auditing – Recent CAG audits have faced criticism for inflated loss estimates or unrealistic figures, underscoring the importance of stringent adherence to audit standards to maintain integrity and credibility.

Suggested Measures

• A collegium-type mechanism for the appointment of the CAG can be established to ensure independence and meritocracy in the selection process of the CAG.
• The CAG Act of 1971 should be amended appropriately to align its provisions with contemporary governance practices and challenges.
• Capacity building through professional training w.r.t. emerging issues that are critical such as Sustainable Development Goals and the Goods and Services Tax (GST), etc.
• To improve transparency and efficiency, auditors should be granted priority access to records within seven days, with department heads required to provide explanations for any delays.
• All Private-Public Partnerships (PPPs), Panchayati Raj Institutions, and government-funded societies should be brought under the audit purview of the CAG ensuring greater transparency and accountability in these institutions.

Conclusion

In conclusion, the Comptroller and Auditor General (CAG) of India stands as a crucial pillar of financial transparency and accountability. As India continues on its path of economic development and social progress, the role of the CAG of India will continue to remain indispensable. Taking the necessary steps to address the limitations and challenges faced by it will go a long way in fostering good governance in India.

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