Comptroller and Auditor General (CAG) in India: Provisions, Powers & Functions

Introduction

The Comptroller and Auditor General (CAG) is an independent constitutional authority responsible for auditing the accounts of the government of India and state governments. Established under Article 148 of the Indian Constitution, the Comptroller and Auditor General (CAG) acts as a watchdog, ensuring transparency and accountability in the management of public funds. It reports directly to Parliament or the state legislatures, highlighting financial irregularities and inefficiencies in government spending, thereby promoting good governance and fiscal discipline.

Constitutional Provisions of Comptroller and Auditor General (CAG)

Powers and Functions of Comptroller and Auditor General (CAG)

The Constitution (Article 149) authorizes the Parliament to prescribe the duties and powers of the CAG in relation to the accounts of the Union and of the states and of any other authority or body. Accordingly, the Parliament enacted the CAG (Duties, Powers and Conditions of Service) Act, 1971.

• Accounts-related to all expenditures from the Consolidated Fund of (India, state and union territory having a Legislative Assembly); Contingency Fund of India and states, and the Public Account of India and states.
• Audits all trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts of the centre and state.
• Audits receipts and expenditures of the Centre and each state and the following:
  • All bodies and authorities substantially financed from the Central or state revenues;
  • Government companies; and
  • Other corporations and bodies, when so required by related laws.
• Scope of Auditing: All transactions of the Central and state governments related to debt, sinking funds,  deposits, advances, suspense accounts and remittance business. 
• Audits receipts, stock accounts and others, with the approval of the President, or when required by the President.
• Accounts of any other authority when requested by the President or Governor. For example, the audit of local bodies.
• Account Formulation: Advises the President about the prescription of the form in which the accounts of the Centre and the states shall be kept (Article 150).
• Submission of Audit Reports: Audit reports relating to the accounts of the Centre submitted to the President, who shall, in turn, place them before both Houses of Parliament (Article 151).
• State Audit Reports: Audit reports relating to the accounts of a state to the governor, who shall, in turn, place them before the state Legislature (Article 151).
• Certify the net proceeds of any tax or duty (Article 279). His certificate is final. The ‘net proceeds’ means the proceeds of a tax or a duty minus the cost of collection.
• He/she acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament. 
• State Audit Reports: He/she compiles and maintains the accounts of state governments. 
• No Compilation and Maintenance of Accounts of the Central Government: In 1976, he/she was relieved of his/her responsibilities about the compilation and maintenance of accounts of the Central Government due to the separation of accounts from audit, that is, departmentalisation of accounts.

Comptroller and Auditor General (CAG) and Audit Corporations

Comptroller and Auditor General (CAG)’s relationship with the public corporations falls into the following three categories:

• Audited Directly by the Comptroller and Auditor General (CAG): Damodar Valley Corporation, Oil and Natural Gas Commission, Air India, Indian Airlines Corporation, and others
• Audit in Consultation with the CAG: Central Warehousing Corporation, Industrial Finance Corporation, and others, CAG is empowered to conduct supplementary audits.
• Totally Private Audit: Life Insurance Corporation of India, Reserve Bank of India, State Bank of India, Food Corporation of India, and others, Private professional auditors exclusively conduct their audits, with no involvement of the CAG

Auditing of Government Companies:

• Audit is done by private auditors, appointed by the Government upon the recommendation of the CAG. The CAG has the authority to conduct supplementary or test audits of such companies.

Independence of Comptroller and Auditor General (CAG)

• Security of Tenure: He can be removed by the president only in accordance with the procedure mentioned in the Constitution.
• Not Eligible: for further office either under the GoI or of any state.
• Service Conditions: Determined by Parliament and CAG cannot be varied. 
• The Comptroller and Auditor General (CAG)’s salary, leave, pension, and retirement age cannot be changed to their detriment after appointment.
• Prescription of Service Conditions: The President, after consulting the Comptroller and Auditor General, prescribes the service conditions for personnel in the Indian Audit and Accounts Department, as well as the administrative powers of the CAG.
• Administrative Expenses of the Office of the CAG: It is charged on Consolidated Fund of India, it includes  all salaries, allowances and pensions of persons serving in that office.
• Ministerial Representation and Accountability: Ministers cannot represent the CAG in Parliament, and they cannot be held responsible for actions taken by the CAG.

Conclusion

• The Comptroller and Auditor General (CAG) serves as a crucial pillar of transparency and accountability in government operations. 
• With its independent auditing role, the Comptroller and Auditor General (CAG) ensures the efficient and responsible use of public funds while safeguarding against financial irregularities. 
• Its constitutional mandate, coupled with its impartiality and oversight, plays a vital role in upholding the principles of good governance and fiscal discipline in India.