Syllabus: GS2/ Polity and Governance
Context
- The Comptroller and Auditor General of India (CAG) is set to launch an AI-powered Large Language Model (LLM) to improve efficiency and consistency in public auditing.
Imperative for Digital Auditing
- Public auditing faces growing volume and complexity of government transactions, which makes traditional, field-heavy audits time consuming and less scalable.
- Many government systems now produce rich digital records; without automated analysis, large datasets remain under-used for oversight.
- Remote and hybrid audits can reduce logistics costs and enable auditors to focus field visits on genuinely high-risk issues.
| Large Language Models (LLMs) – A large language model (LLM) is a type of artificial intelligence (AI) algorithm that uses deep learning techniques and massively large data sets to understand, summarize, generate and predict new content. – Deep learning involves the probabilistic analysis of unstructured data, which eventually enables the deep learning model to recognize distinctions between pieces of content without human intervention. – It helps to understand how characters, words, and sentences function together. |
Advantages of an AI-Enabled Audit System
- Improved efficiency: Automated analysis of large datasets will shorten time spent on routine evidence gathering and document preparation.
- Greater consistency: The LLM can surface precedent and standard approaches from decades of inspection reports, reducing variation across audit teams.
- Enhanced risk detection: Pattern recognition and anomaly detection will help target high-risk transactions and programmes more accurately.
- Wider audit coverage: Remote and hybrid methods permit audit offices to cover more auditees without proportional increases in staff travel.
- Faster feedback and resolution: A unified digital portal will enable auditees to respond promptly and track the status of audit observations.
Prior Initiatives
- Remote audit pilots across receipts and expenditure domains, including data-led GST audits and Telangana’s remote compliance audit for the Stamps & Registration Department.
- Hybrid audit demonstration in Public Works by PAG (Audit), Haryana.
- Paperless PRI certification through West Bengal’s Virtual Audit System integrated with AuditOnline.
- CAG-Connect portal to provide nearly 10 lakh auditee entities with a unified digital interface.
What are the Challenges?
- Variable digital maturity: Many departments and local bodies lack standardised, high-quality data.
- Data security and privacy risks: Handling sensitive financial and personal data creates cybersecurity and legal concerns.
- AI reliability and explainability: LLMs can produce incorrect outputs and lack transparent reasoning.
- Institutional and legal constraints: Rules governing access to certain government databases may vary across states.
Way Ahead
- Institutionalise human oversight: Mandate human review of all AI-generated findings and adopt explainable AI practices.
- Continuous evaluation: Conduct periodic model audits, performance reviews and stakeholder feedback loops.
- Standardise data and APIs: Establish common data formats and secure APIs for seamless access to state and central systems.
| 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. |
Source: TH
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