An Understanding and Functioning of the Comptroller and Auditor General (CAG) in India
The essence of the Comptroller and Auditor General ( hereinafter referred to as the CAG) of India or the Supreme Audit Institution of India(SAI) lies in the promotion accountability, transparency and good governance through high quality auditing and accounting and to provide independent assurance to the stakeholders, the Legislature, the Executive and the Public, that the public funds are being used efficiently and for the intended purposes. The CAG is established under Article 148 of the Constitution of India and has the power to audit all the receipts and expenditures of the Union Government, State Government, including those of autonomous bodies and corporations substantially financed by the Government.
The roots of CAG lies in the British India. With the Government of India Act, 1858, the first Auditor General of India, Sir Edward Drummond was appointed in the year 1860. However, the independence of the Auditor General came with the Montford Reforms of 1919. The Government of India (Audit and Accounts) Order 1936 defined the duties, power and conditions of service of the Auditor General. The Comptroller and Auditor General (Conditions of Service) Act, 1953 defined the term of office, pension payable and other condition of service of the CAG. The Government of India (Audit and Accounts) Order 1936 and The Comptroller and Auditor General (Conditions of Service) Act, 1953 got repealed after the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 was passed which spoke more elaborately on the duties, power and conditions of service of the CAG. Numerous amendments on the same has taken place on it ever since. Even the Judiciary has played in definite role where it has enumerated on several occasions, the power of CAG with respect to auditing along with the constitutional validity of the same.
PROCESS BY WHICH THE CAG AIMS TO DISCLOSE IRREGULARITIES IN THE IMPLEMENTATION OF THE GOVERNMENT POLICIES AND BUDGET
- The very first step of process starts with the government allocating the budget. Post this allocation and implementation, is where the CAG comes into play to get rid of corruption and various other malpractices in the different machineries of the government during such implementation and to uphold the basic principle of democracy as stated by Abraham Lincoln i.e, of the people, by the people, for the people so that justice is done.
- The Comptroller and Auditor General of India is appointed and draws its power under article 148(3), 149 and 151 of the Indian Constitution. After the CAG is appointed, its major duty as enumerated under section 10 of the Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 which is to compile the accounts of the Union and the States. On the basis of these accounts, the annual accounts are prepared.
- Under section 13 of the Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 , it is the duty of the CAG to audit all the expenditures from the consolidated fund of the Union, States and the UTs having legislative assembly , to audit all the transactions relating to the contingency funds of the Union and the States and finally to audit all the trading, manufacturing, profit and loss accounts and balance sheets and other subsidiary accounts kept in any department of the Union or State. “Government Audit employs different methodologies to achieve its aims and objectives viz. (i) securing executive accountability to Parliament, (ii) providing assurance to Parliament that funds voted by it have been applied for the purpose they were given and, they have been spent wisely as any prudent man will do with his own money, and (iii) provide very useful data to Administration and information on the spending; more importantly, giving independent assessment of the quality of that spending.” This is primarily done by 2 ways, those are either by a field or central audit. The audit functions of the CAG can be classified into (i) Financial Audit; (ii) Compliance Audit; and (iii) Performance Audit. Further section 23 of the act gives power to the CAG to make regulations for carrying into effect the provisions of the said act.
- After these reports are made, under article 151(1) and (2) of the Indian Constitution, the reports are to the submitted to the president or the governor respectively who shall then cause them to be laid before each House of Parliament or the legislature of the State respectively.
- After the reports are received by the parliament, the PAC or the Public Accounts Committee Scrutinizes the appropriation of accounts of the Government of India and the audit report of the CAG (The CAG Report is subjected to scrutiny by both Parliament and PAC and the government can always offer its views on the same). The PAC draws its authority from Rule 308 of the Rules of Procedure and Conduct of Business in Lok Sabha. If any money is spent on excess of the allotted money for that purpose by the House then, the PAC must give its recommendation on the same. To make sure the policy is carried out economically, efficiently and effectively and is not used in a corrupt way, the PAC exists and has the power to receive evidence, the power to send for persons, papers and records.
- Once the PAC reports are presented in the house, Action Taken Reports are to be made out by the ministries and so does the replies of the government.
- If the process goes smoothly, and the government accepts the fault which has been committed and takes it to itself to rectify it, like we see when the CAG disclosed a Rs. 30,000 Cr scam in the audit report of Noida over a period of 10 years, the serving CM, Yogi Adityanath took to rectify it. He stated, “Action is being taken and many people will get exposed if an inquiry is conducted into the power purchase agreements of Samajwadi Party government’s tenure.”
- However, if the process takes a different course and the report is rebutted in the parliament like we see was done in the ‘Coalgate Scam’, where the then Prime Minister, Manmohan Singh rebutted the CAG’s Final Audit Report, the recourse is available to the public at large to rectify the same with the help of a PIL. Like in the Coalgate scam, when the CAG’s final report was tabled in the parliament on August, 2012, it showed a loss of Rs. 1.86 Lakh Crore to the exchequer to which the PM (Manmohan Singh) on August 27th of the same year, rebutted by saying that, “The observations of the CAG are clearly disputable”. Finally, to rectify the same, a PIL, by the name of Manohar Lal Sharma vs. The Principle Secretary & Ors was submitted before the Supreme Court seeking cancellation of 194 coal block allotments.
At the end, it all winds down to only one thing and that is democracy. Article 21 of the UDHR says, “The will of the people shall be the basis of the authority of government.” The entire process by which the CAG works and finally even the redressal of the wrong committed by way of a PIL emanates the essence of democracy. Starting from the very mission of the CAG which stands for “promotion accountability, transparency and good governance” to make sure the budget allocated by the government is properly utilized for the same without corruption and ending with a PIL to bring justice to the people of the nation who elects the government to work for them, the CAG ‘indisputable is an independent constitutional functionary’ which aims to provide a check on the government for the welfare of the people of the nation.
 Mission of SAI, (visited on 23/06/20121, 10:00), available at https://cag.gov.in/en/page-our-vision-mission-values
Developments in Auditing, (visited on 23/06/20121, 12:50), available at https://cag.gov.in/uploads/cag_pdf/thematic_history/chap_4.pdf
 Arun Kumar Agarwal vs. Union of India, (2013) 7 SCC 1.
 Coal Scam: Chronology of Events, The Hindu (visited on 25/6/2021, 18:10), available at https://www.thehindu.com/news/national/coal-scam-chronology-of-events/article6350481.ece
 Manohar Lal Sharma vs. The Principle Secretary & Ors, Writ Petition (Crl.) No. 120 (2012)
 Supra note 6.
 Supra note 3.