Statutory Institutions/Commissions: Comptroller and Auditor General

Comptroller and Auditor General (CAG) is the protector of the national activities. The Comptroller and Auditor General of India is an authority, recognized by the Constitution under Constitution of India/Part V - Chapter V/Sub-part 7B/Article 148, who audits all receipts and expenditure of the Government of India and the state governments, including those of bodies and authorities substantially financed by the government. It is one of the important offices of India. The CAG is also the external auditor of Government-owned corporations and conducts supplementary audit of government companies, i.e., any non-banking/ non-insurance company in which Union Government has an equity share of at least 51 per cent or subsidiary companies of existing government companies. The reports of the CAG are taken into consideration by the Public Accounts Committees and Committees on Public Undertakings, 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 (S.L. Goel, 2002).

With respect of the functions of CAG, Dr. Ambedkar stated that, "The Comptroller and Auditor General of India shall be the most important officer under the Constitution of India. He is to be the guardian of the public purse and it is his duty to see that not a farthing is spent out of the Consolidated Fund of India or of a State without the authority of the appropriate legislature."

Articles 148 to 151 of the Indian constitution creates and regulates the office of Comptroller and Auditor General of India. Dr. D.D. Basu considers the office of the Comptroller and Auditor General as "pivotal" to the control of entire financial system of the country. Dr. Ambedkar felt that the Comptroller and Auditor General of India is responsible and important officer under the constitution of India.

The constitution of India has introduced the British system of responsible government. The substance of responsibility is that the executive i.e. the Prime Minister and the Cabinet remains answerable for all their activities to the popularly elected chamber of the legislature. The responsibility becomes empty unless financial activities of the government are subject to parliamentary inspection. For this, it is imperative that there should be an independent authority to investigate and scrutinize the financial transactions of the government. With this object in view, the Government of India Act of 1935, made the Auditor General of India irremovable except "in like manner and on like grounds as a judge of the Federal Court." The office of the Comptroller and Auditor General is an adaptation of the office of the Auditor General under the Act of 1935 (S.L. Goel, 2002).

Vision, mission and core values of CAG:

Vision: The vision of SAI India represents what we aspire to become: We strive to be a global leader and initiator of national and international best practices in public sector auditing and accounting and recognised for independent, credible, balanced and timely reporting on public finance and governance.

Mission: mission of CAG enunciates our current role and describes what we are doing today: Mandated by the Constitution of India, we promote accountability, transparency and good governance through high quality auditing and accounting and provide independent assurance to our stakeholders, the Legislature, the Executive and the Public, that public funds are being used efficiently and for the intended purposes.

Core values: Core values of CAG are the guiding beacons for all that we do and give us the benchmarks for assessing our performance, Independence, Objectivity, Integrity, Reliability, Professional Excellence, Transparency, Positive Approach (www.cag.gov.in).

Comptroller and Auditor General observes that neither the union government nor the government of any state spends any money from the consolidated fund without legislative appropriation. Since he is the neutral head of the audit and accounts system of India, it is essential that he should be independent of executive control.

To maintain independence, it has been provided that though appointed by the President; he does not hold office during the pleasure of the President like other officers of the union government. He may be removed from office through a process of accusation. His salary and allowances cannot be varied to his disadvantage during his tenure of service. The President of India is authorized to appoint for a tenure of 6 years. His salary is equal to that of a Supreme Court Judge. He holds the position of a secretary to the government of India. The salary and allowances of the Comptroller and Auditor General together with those of his staff are charged on the revenue of India and are non-votable in the Parliament.

Service Conditions of the Comptroller and Auditor General:

1. Though chosen by the President, the comptroller and Auditor General may be removed only on an address from both houses of Parliament, on the ground of Proved Misbehaviour or incapacity.
2. His salary and conditions of service are statutory (i.e., as laid down by the Parliament by Law) and are not subject to variation to his disadvantages during his term of office.
3. He is exempted from the general rule that all civil servants of the union hold their office at the pleasure of the president.
4. The term of office is six year. His age of retirement is 65 years. He may resign his office at any time by writing a letter to the president. He may be removed by impeachment by the Parliament.
5. His salary shall be equal to that of a judge of the Supreme Court.
6. After retirement, he is eligible to an annual pension.
7. In other matters, his conditions of service are determined by the rules applicable to a member of I. A.S. holding the rank of a Secretary to Government of India.
8. He is not eligible for further office either under the Government of India or under any state government after he ceases to hold his office (S.L. Goel, 2002).

The role and duties of the Comptroller and Auditor General:

These are expounded by an act of the Parliament passed in 1971. An amendment of this act in 1976 has relieved him from preparing the accounts of the government.

The Comptroller and Auditor General audit the account of the union government and report to the President. The annual report relating to the accounts of the Central Government is submitted to the President. The President lay the report before both the Houses of the Parliament for consideration.

It is the responsibility of the CAG to guarantee that proper authorisation of the Parliament has been taken prior to spending the public money from the Consolidated Fund of India. He reports on all expenditures from the Consolidated Fund as well as from the Contingency Fund.

He also audits and reports on the trade and manufacture by government departments. Accounts of Public Corporations are also audited by him.

Major functions are as follows:

1. - To audit and report on all expenditure from the Consolidated Fund of India and of each state and Union Territory, having a Legislative Assembly as to whether such expenditure has been in accordance with law.
2. - To audit and report on all expenditure from the Contingency Fund and public accounts of the Union and of the States.
3. - To audit and report on all trading, manufacturing, Profit and Loss Accounts, etc., kept by any department of the Union or a State.
4. - To audit and report on the accounts of government companies and other corporations when required by law.

His reports relating to the accounts of the Union are submitted to the president and the government concerned. These reports are placed before the parliament and state legislatures. Further, the reports of the state shall be submitted to the governor of the state who shall cause them to be laid before the legislature of the state (S.L. Goel, 2002).

The audit reports laid before the parliament are in two parts:

1. Finance accounts, giving a picture of the entire receipts and expenditure of the government, and
2. Appropriate accounts in which are given details of the amount sanctioned in the appropriation Act or acts and the amount actually spent under each grant.

Audits conducted by CAG:

Compliance Audit: Compliance Audit is a transaction Audit in which particular transactions of an entity for a specific financial year is chosen for investigation for e.g. a purchase made by a medical officer, a contract made by the public works division for building a road or Tax assessment by an Assessment Officer.

Financial Attest Audit: It is a "supplementary audit" with the primary auditor usually being a chartered Accountant. It is used to certify how far the accounts are true and fair i.e. whether the financial statements are properly prepared, complete in all respects and are presented with adequate disclosures.

Performance Audit: The Performance Audits are seek to establish at what cost and to what degree the policies, programme and projects are working. In addition to all the financial audit checks, it evaluates whether a scheme or activity deploys effective means to achieve its intended socio economic objectives.

Basically, Comptroller and Auditor General submits three audit reports to the President -

1. Audit report on appropriation accounts.
2. Audit report on finance accounts.
3. Audit report on public undertakings.

The President lays these reports before both houses of Parliament. After this, the Public Accounts Committee examines them and reports its findings to the Parliament.

Comptroller and Auditor General is a representative of the Parliament and conducts audit of expenditure on behalf of the Parliament. Therefore, he is responsible only to the Parliament.

The CAG brings out a number of Audit Reports relating to Union Government and the State

Governments. The broad categories of Reports being brought out by the CAG are as follows:

Union Government State Government:

1. - Civil
2. - Autonomous Bodies Receipts
3. - Scientific Departments Commercial
4. - Post & Telecommunications
5. - Defence
6. - Railways
7. - Indirect Taxes
8. - Direct Taxes

State Government:

1. - Civil
2. - Receipt
3. - Commercial

The functioning of the Comptroller and Auditor General in India is gripped under several criticisms. In India, the emphasis is on audit rather than on control of expenditures. In England, the government departments require authorization from the Comptroller. Thus whenever money is withdrawn for expenditure, the Comptroller is satisfied that there is legal authority for the expenditure. In India, the Comptroller and Auditor General starts its activity at the audit stage after the expenditures have already been made. Some critics also question the wisdom of commenting on extravagance of the government by the Comptroller and Auditor General (Basu, 2010).

Structure of CAG:

The CAG discharges his responsibilities and functions through the Indian Audit and Accounts Department. The office of the CAG directs, monitors and controls the activities of different offices of the Department and is responsible for development of organisational objectives and policies, auditing standards and systems, laying down policies for management of manpower and material resources of the Department and final processing and approval of the Audit Reports to be laid before the Parliament and the State Legislatures.