Sanjay Murthy, a 1989 batch IAS officer, has been appointed as the new Comptroller and Auditor General of India (CAG) by President Droupadi Murmu succeeding Girish Chandra Murmu.

About the CAG

• The Comptroller and Auditor General (CAG) of India is the apex authority responsible for auditing the accounts of the Central and State Governments.
• It is a constitutional authority established under Article 148 of the Indian Constitution. 
• CAG is  often referred to as the “guardian of public finance,” the CAG ensures accountability and transparency by auditing government expenditures and revenues.
• Dr. B.R. Ambedkar recognized the significance of the CAG as a watchdog of public funds.
  • He emphasized the need for an independent auditor to ensure transparency and accountability in government spending
• Origin of CAG in India: Its roots date back to 1860, when the Accountant General to the Government of India was re-designated as the Auditor General. 

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Constitutional Provisions for the CAG

• Article 148: Deals with the appointment, removal, and service conditions of the CAG.
• Article 149: Specifies duties and powers related to auditing government finances.
• Article 150: Advises the President on the format for government accounts.
• Article 151: Lays down procedures for submitting audit reports to the President or Governor.

Legal Provisions for the CAG (As per the CAG (Duties, Powers, and Conditions of Service) Act, 1971)

• Tenure: Holds office for six years or until 65 years of age, whichever is earlier.
• Resignation: May resign by submitting a letter to the President of India.
• Removal: Can only be removed by the President, following the same procedure as for a Supreme Court judge (impeachment).
• Conditions of Service: Salary, allowances, and service conditions are determined by Parliament.
  • These cannot be altered to the CAG’s disadvantage after appointment.
• Administrative Expenses: Charged to the Consolidated Fund of India, ensuring independence.

Powers and Functions of the CAG

• Audit of Government Accounts: Includes the Consolidated Fund, Contingency Fund, and Public Account at both central and state levels.
• Audit of Revenue and Expenditure: Ensures compliance with rules and proper allocation of funds.
• Audit of Public Entities: Includes government corporations and bodies substantially financed by public funds.
• Advisory Role: Advises on the format of accounts and assists the Finance Commission.
• Submission of Reports: Submits audit reports to Parliament or State Legislatures, highlighting irregularities.
• International Role: Serves as an external auditor for international organizations like WHO and FAO.

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Types of CAG Audit Reports

• Compliance Audits: Verify adherence to laws, rules, and regulations.
  • Focus on procedural correctness and lawful expenditure.
• Performance Audits: Assess the efficiency, effectiveness, and economy of government programs.
  • Highlight gaps between objectives and outcomes.
• Financial Audits: Examine the accuracy and reliability of financial statements.
  • Ensure proper disclosure of public funds.
• Presentation of Reports: Reports are submitted to the President (for central accounts) or Governor (for state accounts).
  • These are tabled in Parliament or State Legislatures and examined by the Public Accounts Committee (PAC) for action and recommendations.

Comparison of CAG of India and CAG of the UK

Limitations of the CAG

• Lack of Enforcement Powers: The CAG can only report irregularities; it cannot enforce corrective action.
• Dependence on Executive: Recommendations rely on legislative and executive actions for implementation.
• Resource Constraints: Shortage of skilled personnel affects the quality and scope of audits.
• Risk of Policy Paralysis: Overzealous audits can sometimes lead to excessive caution in policymaking.

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Way Forward

• Independence: The UK’s National Audit Office (NAO) operates with greater financial and operational autonomy.
• Performance Audits: Focuses not just on financial propriety but also on the value-for-money audits.
• Capacity Building: Strengthening technical skills and resources to enhance audit capabilities.
• Collaboration with Legislature: Proactive engagement with parliamentary committees for more effective implementation of audit findings.

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