Ashna Sisodia is teaching live on Unacademy Plus
Course: The Union (Part V Lesson: CAG Presented by : Ashna Sisodia
Role of CAG 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 audit of expenditure on behalf of the Parliament. Therefore, he is responsible only to the Parliament. The CAG has more freedom with regard to audit of expenditure than with regard to audit of receipts, stores and stock. "Whereas in relation to expenditure he decides the scope of audit and frames his own audit codes and manuals, he has to proceed with the approval of the executive government in relation to rules for the conduct of the other audits. .
Role of CAG . The CAG has 'to ascertain whether money shown in the accounts as having been disbursed was legally available for and applicable to the service or the purpose to which they have been applied or charged and whether the expenditure conforms to the authority that governs it' CAG can also conduct the propriety audit, that is, he can look into the wisdom, faithfulness and economy' of government expenditure and comment on the wastefulness and extravagance of such expenditure . However, unlike the legal and regulatory audit, which is obligatory on the part of the CAG, the propriety audit is discretionary . The secret service expenditure is a limitation on the auditing role of the CAG.CAG cannot call for particulars of expenditure incurred by the executive agencies, but has to accept a certificate from the competent administrative authority that the expenditure has been so incurred under his authority
Role of CAG The Constitution of India visualises the CAG to be Comptroller as well as Auditor General. in practice, the CAG is fulfilling the role of an Auditor-General only and not that of a Comptroller. In other words, 'the CAG has no control over the issue of money from the e In other words 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 totally from the CAG of Britain who has powers of both Comptroller as well as Auditor General. In other words, in Britain, the executive can draw money from the public exchequer only with the approval of the CAG.
CAG & Corporations The role of CAG in the auditing of public corporations is limited. relationship with the public corporations falls into the following three categories: (i) Some corporations are audited totally and directly by the CAG, for example, Damodar Valley Corporation, Oil and Natural Gas Commission, Air India, Indian Airlines Corporation, and others. (ii) Some other corporations are audited by private professional auditors who are appointed by the Central Government in consultation with the CAG. If necessary, the CAG can conduct supplementary audit. The examples are, Central Warehousing Corporation, Industrial Finance Corporation, and others (iii Some other corporations are totally subjected to private audit. In other words, their audit is done exclusively by private professional auditors and the CAG does not come into the picture at all 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 .
CAG & Corporations 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 c es. the recommendations of . 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
CRITICISM His points of criticism of Indian audit are as follows: 1. The function of the CAG in India, is in a large measure, an inheritance from the colonial rule. .2. 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. 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 do.
CRITICISM 4. 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; their prestige is highest with others who do not know much about administration, 5. Auditors know what is auditing, which is not administration; it is a necessary, but a highly pedestrian function with a narrow perspective and a very limited usefulness . 6. A deputy secretary in the department knows more about the problems in his department than the CAG and his entire staff.