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

March 22, 2024 431 0

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)

Article
  • Article 148 to 151, Part V
  • Head of the Indian Audit and Accounts Department.
  • “Guardian of the public purse” and controls the entire financial system of the country at both levels: the Centre and the state.
  • Comptroller and Auditor General (CAG) is a unitary feature of the Indian constitution.
Appointment By President by a warrant under his hand and seal
Qualification Qualification is not prescribed by the Constitution.
Members Single-member body.
Tenure and Salary
  • 6 years or age of 65 years, whichever is earlier.
  • Not eligible for further appointment in GOI or State
  • Salary and Service conditions are determined by the Parliament.
  • Salary equal to judge of the SC.
Resignation To the President
Removal Procedure
  • Removal in the same manner and on the same grounds as a judge of the Supreme Court i.e. removed by the president on the basis of a resolution passed by both Houses of Parliament with a special majority, only on the ground of proved misbehaviour or incapacity.
  • He does not hold office during the pleasure of the President.
Other Aspects
  • Consultation with the Comptroller and Auditor General (CAG): Conditions of service of persons serving in the Indian Audit and Accounts Department and the administrative powers of the CAG are prescribed by the president.
  • CAG acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament.
  • Comptroller and Auditor General (CAG) is an agent of the Parliament and conducts audits of expenditures on behalf of the Parliament. He is responsible only to the Parliament.
  • CAG submits three audit reports: to the President– 
  • Audit report on appropriation accounts.
  • Audit report on finance accounts.
  • Audit report on public undertakings.
  • The President lays these reports before both the Houses of Parliament. After this, the Public Accounts Committee examines them and reports its findings to the Parliament.
Limitations
  • Secret service expenditure is a limitation on the auditing role of the CAG
  • No control over the issue of money from the consolidated fund, as CAG is limited to the audit stage only.
  • Britain’s Model of CAG: The executive can draw money from the public exchequer only with the approval of the 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.
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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.
Related Articles 
PMO & Cabinet Secretariat Indian Fundamental Duties
Uniform Civil Code in India Directive Principles of State Policy in India
Indian Citizenship Act Collective and Individual Ministerial Responsibility in India’s Parliamentary System

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 Final Result – CIVIL SERVICES EXAMINATION, 2023.   Udaan-Prelims Wallah ( Static ) booklets 2024 released both in english and hindi : Download from Here!     Download UPSC Mains 2023 Question Papers PDF  Free Initiative links -1) Download Prahaar 3.0 for Mains Current Affairs PDF both in English and Hindi 2) Daily Main Answer Writing  , 3) Daily Current Affairs , Editorial Analysis and quiz ,  4) PDF Downloads  UPSC Prelims 2023 Trend Analysis cut-off and answer key

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Quick Revise Now !
UDAAN PRELIMS WALLAH
Comprehensive coverage with a concise format
Integration of PYQ within the booklet
Designed as per recent trends of Prelims questions
हिंदी में भी उपलब्ध

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