What’s in Today’s Article?

• Background (Context of the Article)
• About CAG (Powers, Responsibilities, Audits, Challenges, Impact, etc.)

Background:

• The Comptroller and Auditor General (CAG) of India has once again taken centre stage amidst a political controversy surrounding its audit report on the high costs of renovation at the former residence and office of Delhi Chief Minister Arvind Kejriwal.
• The report, which highlighted a cost escalation from an initial estimate of ₹7.91 crore to ₹33.66 crore, has become a flashpoint between the political parties ahead of the Delhi Assembly elections.
• However, the CAG’s role transcends political debates, as it serves as a critical institution for auditing and ensuring accountability in governance.

Powers and Responsibilities of the CAG:

• The CAG, as outlined in Articles 148-151 of the Constitution and the CAG (Duties, Powers and Conditions of Service) Act, 1971, is the supreme audit institution of India.
• Appointed by the President, the CAG's primary duties include:
  • Auditing the accounts of the Union and State governments, including public sector undertakings (PSUs).
  • Reviewing compliance with applicable laws, rules, and regulations through compliance audits.
  • Assessing the implementation and effectiveness of government schemes and projects via performance audits.
  • Certifying the financial accounts of governments and PSUs through financial audits.
• Additionally, the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, mandates the CAG to review government compliance with fiscal targets.

Selection and Execution of Audits:

• The CAG follows a meticulous process to select audit subjects:
  • Risk Assessment: Factors like project size, media coverage, and inspection reports influence the selection.
  • International Guidelines: The CAG adheres to standards set by the International Organization of Supreme Audit Institutions (INTOSAI).
  • Audit Plan Approval: The CAG’s office drafts an annual plan, with input from an Audit Advisory Board, which meets biannually.
  • Government or Judicial Recommendations: Specific audits may be requested by courts or governments, such as the Supreme Court’s directive for auditing the Delhi-Noida Direct (DND) Flyover project.
• The audit process begins with an entry conference with the concerned department to outline the scope and methodology. After the audit, an exit conference is held to share preliminary findings.
• Departments are given six weeks to respond to the draft report before it is finalized and submitted to the President or Governor.

Challenges in Tabling Reports:

• While Article 151 of the Constitution mandates that CAG reports be laid before Parliament or state legislatures, it does not specify a time limit.
• This loophole has led to delays, as seen in Delhi, where over a dozen CAG reports—including on issues like air pollution mitigation and liquor supply—remain untabled. Similar delays have been observed in states like West Bengal.
• A CAG report becomes public only when presented in the legislature. Following this, the Public Accounts Committee (PAC) examines the report, seeks government responses, and recommends corrective actions.
• Between 2019 and 2023, the PAC submitted 152 reports to the Lok Sabha, scrutinizing audit findings and government compliance.

Impact of CAG Audits:

• CAG reports play a pivotal role in highlighting financial losses and procedural inefficiencies, often prompting significant policy changes. For instance:
  • The 2010 audit on 2G spectrum allocation exposed massive irregularities, leading to widespread political ramifications and regulatory reforms.
  • A CAG review led to changes in Telangana’s Engineering Procurement Contract (EPC)
• In 2022-23, the CAG approved 172 audit reports, a significant increase from 73 reports in 2018-19, reflecting its growing scrutiny of governance and fiscal accountability.

Conclusion:

• The CAG’s audits are instrumental in ensuring transparency and accountability in governance.
• However, the lack of timely tabling of its reports undermines its potential impact.
• Strengthening mechanisms to expedite the legislative review process, coupled with robust government responses, can enhance the effectiveness of this constitutional body.
• As the guardian of public finances, the CAG remains a cornerstone of India’s democratic framework, with its work extending far beyond political disputes to safeguard the interests of citizens.