The role and duties of the Comptroller and Auditor General are elaborated 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 audits the account of the union government and reports to the President. The annual report relating to the accounts of the Central Government is submitted to the President.
The President lays the report before both the Houses of the Parliament for consideration.
It is the duty of the CAG to ensure that proper approval 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.
The CAG has no power to audit secret service expenditure as declared by the Government or the Parliament. He has to be satisfied only by the certificate given by the competent authority.
The CAG is actually performing the role of the Auditor General and not of the Comptroller, as he has no control over withdrawal of Money from the Consolidated Fund, but only has the power to audit after the expenditure is done.
CAG and Corporations
The organisations subject to the audit of the CAG are:-
- All the Union and State Government departments including the Indian Railways, Defence and Posts and Telecommunications.
- About 1500 public commercial enterprises controlled by the Union and State governments, i.e. government companies and corporations.
- Around 400 non-commercial autonomous bodies and authorities owned or controlled by the Union or the States.
- Bodies and authorities substantially financed from Union some of the local bodies and Panchayati Raj Institutions which are critical grass root agencies for implementation of developmental programmes and delivery of services.
- All the Union and State Government departments, including departmental commercial undertakings such as the Indian Railways, Posts and Telecommunications.
- Public commercial enterprises controlled by the Union and the State Governments- ie. Government companies and corporations.
- Non-commercial autonomous bodies and authorities owned or controlled by the Union or the States.
- Authorities and bodies substantially financed from Union or State Revenues.
- Companies where the equity participation by Government is 51 per cent or more.
- Any authority or body, not being a foreign state or international organisation, which get any grant or loan for any specific purpose from the Consolidated Fund of India or of any State or any Union territory having a Legislative Assembly.
- Audit of all receipts which are payable into the Consolidated Fund of India and each of State and each of Union territory having a Legislative Assembly.
- Audit of the Regulatory bodies such as Telecom Regulatory Authority of India (TRAI), Central Electricity Regulatory Commission (CERC), State Electricity Regulatory Commissions (SERCs) and Insurance Regulatory Authority and Development Authority. However, role of audit of the Regulatory Authorities are at present confined only to the extent of certifications of their accounts as audit scrutiny over regulatory functions is still somewhat nebulous.
The role of the CAG as an auditor has been criticized by Dean Paul Appleby to the extent that he finds the office irrelevant and even harmful. His ruthless criticism of Indian audit blames the CAG as a primary course of a widespread and paralyzing unwillingness to decide and to act.
Dean Appleby maintains “Auditors do not know and cannot be expected to know very much about good administration; their prestige is the highest with those who do not know much about administration”. In his judgement, “auditing is necessary but is a highly pedestrian function with a narrow perspective and very limited usefulness. The Comptroller’s reports are mere substitutions of hindsight for the kind of judgement possible and necessary and proper at the time of action”.
The Dean questions: “What special competence for appraising objectives and appraising administrative performance in general has the Comptroller and Auditor-General? What is Cabinet for, what is Prime Minister for, what is Parliament for, what are the individual Ministers for, what is Secretariat for, and what is a bureaucracy for?” He concludes, “Nothing could be more calculated to stop the plan in its tracks to undermine responsible government and to establish government of by and for auditors.”
This indictment of the Comptroller and Auditor-General of India is total and unqualified. In a democracy of the size of India, based on audit suffrage the role of audit cannot be dismissed as mere post-mortem work. He may be ‘flogging a dead horse’ but the Public Accounts Committee and Parliament cannot control public expenditure unless an independent expert agency comes to their rescue. The CAG office may be an inheritance from the colonial rule, but should know much about good administration.