45. Comptroller and Auditor General of India (CAG) Flashcards

0
Q

Appointment and term of the CAG:

A

The CAG is appointed by the President of India by a warrant under his hand and seal.

The CAG, before taking over the office, makes and subscribes before president an oath or affirmation:

  • to bear truth, 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 favour, affection or I’ll-will; and
  • to uphold the constitution and the laws.

He holds office for the period of 6yrs or upto the age of 65yrs, whichever is earlier.

He can resign any time from his office by addressing the resignation letter to the president .

He can be removed by the president on the same grounds and manner as the judge of the Supreme Court i.e. By the resolution passed to that effect from both the houses of the parliament with the special majority, either on the ground of proved misbehaviour or incapacity.

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1
Q

Short note on Comptroller and Auditor General of India:

A

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.

He is the GUARDIAN OF THE PUBLIC PURSE and controls the entire financial system of the country at both levels–centre and states.

His duty is to uphold the Constitution of India and Laws of Parliament in the field of financial administration.

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2
Q

What are the provisions made by the constitution to safeguard and ensure the independence of the CAG:

A
  1. SECURITY of TENURE:
    He can be removed by the president only in accordance by the procedure mentioned by the constitution. Thus he does not hold the office till the pleasure of the president, though He is appointed by him.
  2. NO REAPPOINTMENT:
    He is not eligible for further office, either under govt of India or of any state, after he ceases to hold his office.
  3. His salary and other service conditions are determined by the parliament. But its equal to the salary of the judge of the Supreme Court.
  4. 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.
  5. All the expenses on the CONSOLIDATED FUND OF INDIA. Thus they are NOT SUBJECT TO THE VOTE OF PARLIAMENT.
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3
Q

What are the duties and powers of the CAG?

A

The Constitution (Article 149) authorises the Parliament to prescribe the duties and powers of the CAG in relation to the accounts of the Union and the states and of any other authority or body. Accordingly, the Parliament enacted the CAG’s (Duties, Powers and Conditions of Service) act, 1971. This Act was amended in 1976 to separate the accounts from audits in the central govt.

The duties and functions of the CAG as laid down by the Parliament and the Constitution are:

  1. He audits the accounts related to all EXPENDITURE FROM THE CONSOLIDATED FUND OF INDIA/STATES/UTs having legislative assembly.
  2. He audits all EXPENDITURE FROM, THE CONTINGENCY FUND OF INDIA/STATES/and PUBLIC ACCOUNTS OF BOTH.
  3. He audits all TRADING, MANUFACTURING, PROFIT AND LOSS ACCOUNTS, BALANCE SHEETS and other subsidiary accounts kept by any department of the central/state governments.
  4. He audits the RECEIPTS and EXPENDITURE of the CENTRE/STATES. Also,
    - ALL THE BODIES AND AUTHORITIES SUBSTANTIALLY FINANCED FROM THE CENTRE/STATE REVENUES.
    - GOVT COMPANIES.
    - CORPORATIONS and BODIES, when so required by the related laws.
    - and any other authority when requested by the President or Governor
  5. He advises the President with regard to prescription of the form in which the accounts of the centre/states shall be kept. (Article 150)
  6. He submits his audit reports relating to the accounts of the centre to President, who shall, in turn, place them before both the houses of the parliament. (Article 151)
  7. He submits his audit reports relating to the accounts of the states to Governor, who shall, in turn place them before the state legislature. (Article 151)
  8. He ASCERTAINS AND CERTIFIES THE NET PROCEEDS OF ANY TAX OR DUTY (Article 279). HIS CERTIFICATE OS FINAL. (* ‘Net proceeds’ means the proceeds of a tax or duty minus the cost of collection.
  9. He ACTS AS A FRIEND/PHILOSOPHER/GUIDE of the PUBLIC ACCOUNTS COMMITTEE OF THE PARLIAMENT.
  10. He COMPILES AND MAINTAINS THE ACCOUNTS OF THE STATE GOVERNMENTS.

The CAG submits 3 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 the houses of the parliament. After this, Public Accounts Committee examines them and reports its findings to the parliament.

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4
Q

What is the role of CAG?

A

The role of CAG is to UPHOLD THE CONSTITUTION OF INDIA AND THE LAWS OF PARLIAMENT IN THE FIELD OF FINANCIAL ADMINISTRATION.

The accountability of the executive (i.e. Council of ministers) to the Parliament in the sphere of financial administration is secured through audit reports of the CAG.

The CAG is an AGENT OF THE PARLIAMENT and CONDUCTS AUDITS OF EXPENDITURE ON BEHALF OF THE PARLIAMENT. Therefore he is responsible only to the Parliament.

It has to ASCERTAIN THE APPROPRIATENESS, LEGALITY, AND AUTHORITY OF THE MONEY SPENT BY THE GOVT.

Along with the legal and regulatory audit, It can also look into and comment on the ‘wisdom, faithfulness and economy’ of the govt expenditure. This audit is known as the PROPRIETARY AUDIT and is discretionary.

SECRET SERVICE EXPENDITURE IS A LIMITATION ON THE ROLE OF THE CAG. In this regard it has to accept a certificate from the competent administrative authority that the expenditure has been so incurred under his authority.

Though constitution of India has visualised CAG to be Comptroller (controller) as well as Auditor General. However, in practice, the CAG is fulfilling the role of Auditor-General only and NOT that of Comptroller.
i.e. It has NO CONTROL OVER THE MONEY SPENT FROM THE CONSOLIDATED FUND AND MANY DEPARTMENTS ARE AUTHORISED TO DRAW MONEY BY ISSUING CHEQUES WITHOUT SPECIFIC AUTHORITY FROM THE CAG (who is concerned only at the audit stage when the expenditure has already taken place)

In this respect the CAG of India differs from the CAG of Britain who has both the spheres. i.e. The executives can only draw money from public exchequer only with the approval of the CAG.

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5
Q

What is the role of CAG in auditing public corporations?

A

The role of CAG in auditing of the public corporations is limited, broadly it falls into following three categories:

  1. SOME corporations are AUDITED TOTALLY AND DIRECTLY by the CAG, for example, Damodar Valley Corporation, Oil and Natural Gas Corporation, Air India, Indian Airlines Corporations etc.
  2. SOME other corporations are audited INDIRECTLY i.e. by private professional auditors who are appointed by the Central Government in consultation with the CAG. If necessary CAG can conduct supplementary audit. Examples are Central Warehousing Corporation, Industrial Finance Corporation etc.
  3. Some other corporations are totally subjected to private audit. They submit their annual reports and accounts directly to the Parliament. Examples of such corporations are Life Insurance Corporation of India,
    Reserve Bank of India, State Bank of India, Food Corporation of India, and others.

The role of the CAG in the auditing of Government companies is also limited. They are audited by private auditors who are appointed by the
Government on the advise of the CAG. The CAG can also undertake supplementary audit or test audit of such companies.

In 1968, an Audit Board was established as a part of the office of CAG to associate outside specialists and experts to handle the technical aspects of audit of specialised enterprises like engineering, iron and steel, chemicals and so on. This board was established on the recommendations of the Administrative Reforms Commission of India. It consists of a Chairman and two members appointed by the CAG.

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6
Q

What are Appleby’s criticisms of CAG?

A

Paul H Appleby, in his two reports on Indian Administration, was very critical of the role of CAG, His points of criticism of Indian audit are as follows:

  1. REMNANT OF BRITISH RAJ:
    The function of the CAG in India, is in a large measure, an inheritance from the colonial rule.
  2. NEGATIVE INFLUENCE:
    The CAG is today a primary cause of widespread and paralysing unwillingness to decide and to act. Auditing has a repressive and negative influence.
  3. NOT WELL DEFINED FUNCTION:
    The Parliament has a greatly exaggerated notion of the importance of auditing to Parliamentary responsibility, and so has failed to define the
    functions of the CAG as the Constitution contemplated it would be.
  4. NOT IMPORTANT:
    The CAG’s function is not really a very important one. Auditors do not know and cannot be expected to know very much about good administration. A deputy secretary in the department knows more about the problems in his department than the CAG and his entire staff.
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