• The Constitution of India (Article 148) provides for an independent office of the Comptroller and Auditor General of India (CAG).
• He is the head of the Indian Audit and Accounts Department and is one of the bulwarks of the democratic system of government in India
• He is the guardian of the public purse and controls the entire financial system of the country at both the levels–the Centre and the state.
• His duty is to uphold the Constitution of India and laws of Parliament in the field of financial administration.

Constitutional Provisions for Office of CAG

• Article 148broadly deals with the CAG appointment, oath and conditions of service.
• Article 149deals with Duties and Powers of the Comptroller and Auditor-General of India.
• Article 150says that the accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the CAG, prescribe.
• Article 151says that the reports of the Comptroller and Auditor-General of India relating to the accounts of the Union shall be submitted to the president, who shall cause them to be laid before each House of Parliament.
• Article 279–Calculation of “net proceeds” is ascertained and certified by the Comptroller and Auditor-General of India, whose certificate is final

Appointment, Term & Removal

• The CAG is appointed by the President of India by a warrant under his hand and seal.
• The CAG holds office for a period of six years or up to the age of 65years, whichever is earlier.
• He can resign any time from his office by addressing the resignation letter to the president.
• He can also be removed by the president on same grounds and in the same manner as a judge of the Supreme Court. In other words, he can be removed by the president on the basis of a resolution passed to that effect by both the Houses of Parliament with special majority, either on the ground of proved misbehaviour or incapacity.

Independence.

The Constitution has made the following provisions to safeguard and ensure the independence of CAG:

• He is provided with the security of tenure and can be removed by the president only in accordance with the procedure mentioned in the Constitution. Thus, he does not

hold his office till the pleasure of the president, though he is appointed by him.

• He is not eligible for further office, either under the Government of India or of any state, after he ceases to hold his office.
• His salary and other service conditions are determined by the Parliament. His salary 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 administrative expenses of the office of the CAG, including all salaries, allowances and pensions of persons serving in that office are charged upon the Consolidated Fund of India and are not subject to the vote of Parliament.
• No minister can represent the CAG in Parliament (both Houses) and no minister can be called upon to take any responsibility for any actions done by him.

Duties of CAG

• CAG audits the accounts related to all expenditure from the Consolidated Fund of India, Consolidated Fund of each state and UT having a legislative assembly.
• CAG audits all expenditure from the Contingency Fund of India and the Public Account of India as well as the Contingency Fund and Public Account of each state.
• CAG audits all trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept by any department of the Central Government and the state governments.
• CAG audits the receipts and expenditure of all bodies and authorities substantially financed from the Central or State revenues; government companies; other corporations and bodies, when so required by related laws.
• He ascertains and certifies the net proceeds of any tax or duty and his certificate is final on the matter.

Reports:

• He submits his audit reports relating to the accounts of the Centre and State to the President and Governor,who shall, in turn, place them before both the houses of Parliament and the state legislature respectively.
• He submits 3 audit reports to the President:audit report on appropriation accounts, audit report on finance accounts and audit report on public undertakings.

CAG and PAC:

• He acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament.
• Three CAG reports i.e. audit report on appropriation accounts, audit report on finance accounts and audit report on public sector undertakings are examined by PAC.
• CAG also assists the committee in its deliberations by preparing a list of the most urgent matters which deserve the attention of the PAC.
• He also helps in making the actions of the committee clear to the witnesses and in making the action of the government clear to the committee.
• CAG position is sometimes one of interpreter and translator, explaining the officials’ views to the politicians and vice-versa.
• The responsibility of the CAG does not end here. He has to watch whether the corrective action suggested by him has been taken or not. In cases whether it has not been taken, he reports the matter to the PAC which will take up the matter.

Issues in office of CAG:

No laid down criteria:

• Independence can be ensured if there is a well laid out criteria for this. Such criteria would include required qualifications which an individual should possess to be appointed as CAG and also a procedure through which selection should be made. The procedure must be transparent.

Appointment Issue:

• The current practice adopted for the appointment of the CAG is that the Cabinet Secretary prepares a shortlist for the finance minister who then submits it before the prime minister
• The prime minister recommends one name from that list to the president. If the president approves the same, the appointment of the CAG is made by warrant under the hand and seal of the president
• Such a procedure is faulty as there are chances for conflict of interest

Dilution of Accountability:

• The CAG is an auditor to the government of India, which is headed by the prime minister
• If the head of the auditee is to select an individual for auditing his organisation, there is a danger of some ‘pliable’ person becoming the CAG and it may dilute the accountability

Delays and Reduction in CAG Reports:

• There has been delays and pendency of Comptroller and Auditor General (CAG) reports with critics terming it as “CAGed”.
• The total number of CAG reports relating to central government ministries and departments came down from 55 in 2015 to just 14 in 2020, a fall of nearly 75 per cent, as per a recent reply to a Right To Information (RTI) application.

Know this

• CAG of India only performed the role of an Auditor General and not of a Comptroller but in Britain it has the power of both Comptroller as well as Auditor General.
• In India the CAG audits the accounts after the expenditure is committed i.e. ex post facto. In UK no money can be drawn from the public exchequer without the approval of the CAG.
• In India, CAG is not a member of the parliament while in Britain; CAG is a member of house of the Commons.

Reforms Needed.

Ensuring Independence:

• Internationally, most countries have enacted laws putting in certain qualifications and also the process of appointment of the head of their Supreme Audit Institution, so that he works independently and is not under the influence of the Executive, whose performance he is required to evaluate and provide audit opinion on achievement of the objectives.
• The Exchequer and Audit Act of the United Kingdom, as amended in 1983 provides that the CAG will be jointly selected by the Prime Minister and Chairman of the Committee of Public Accounts and thereafter ratified by the House of Commons

Transparency in Appointment:

• In India, to bring about transparency and objectivity in the selection process of the CAG, an institutional mechanism needs to be put in place
• A list may be prepared of persons possessing such qualifications. Thereafter, a high-level committee may examine the personalities and recommend to the president a panel of three names out of which one can be appointed

Curbing Delays:

• Just like the citizen’s right to get the information within a month under RTI Act 2005, auditors should be provided access to records on priority basis within seven days, failing which, heads of departments should be required to explain the circumstances that caused the delay.

Reforms suggested by Vinod Rai (former CAG)

• Bring all private-public partnerships (PPPs), Panchayati Raj Institutions and government-funded societies, within the ambit of the CAG.
• CAG Act of 1971 should be amended to keep pace with the changes in governance.
• A collegium type mechanism to choose a new CAG on the lines of selecting a Chief Vigilance Commissioner (CVC).

Steps improving efficiency of CAG:

• In the wake of the Big Data revolution, CAG came out with a Big Data management policy in 2016 and also established a Centre for Data Management and Analytics in Delhi which is a welcome step.
• In 2017, CAG of India hosted the Commonwealth Auditors General Conference. Leveraging technology in public audit and environment audit were the two themes of the conference. Conference helped in fostering partnerships amongst Commonwealth countries for capacity development in public audit.
• CAG successfully audited the UN headquarters which involves multifarious and complex operations; it shows the credibility of Indian CAG.

Conclusion

• CAG helps the parliament/state legislatures hold their respective governments accountable and hence reforms in office of CAG is of utmost importance.
• He is one of the bulwarks of the democratic system of government in India and truly the most important office in Constitution of India as conveyed by B.R Ambedkar.

“I am of the opinion that this dignitary or officer is probably the most important officer in the Constitution of India. He is the one man who is going to see that the expenses voted by Parliament are not exceeded, or varied from what has been laid down by Parliament in the Appropriation Act.” —Dr. B.R Ambedkar.