Answer:

The Constitution of India, under Article 148, provides for an independent office of the Comptroller and Auditor General of India (CAG). CAG is the head of the Indian Audit and Accounts Department and the guardian of the public purse and controls the entire country's entire financial system. He is one of the bulwarks of India's democratic system of government.

Powers and functions of CAG:

1. Expenditure Audits: CAG audits the accounts related to all expenditures from the Consolidated Fund, Contingency Fund and the Public Account of India, each state and union territory having a Legislative Assembly.
2. Government Transactions: It audits all transactions of the Central and state governments related to debt, sinking funds, deposits, advances, suspense accounts and remittance business.
3. Financial Oversight: CAG audits the receipts and expenditures of 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.
4. Special Audits: It also audits receipts, stock accounts and others, with the approval of the President or when required by the President.
5. Authority Audits: It audits the accounts of any other authority if requested by the President or Governor, for example - the audit of local bodies.
6. Accounting Guidance: It advises the President about the prescription of the form to keep the accounts of the Centre and the states.
7. Parliament's Agent: It is an agent of the Parliament and conducts an audit of expenditure on its

Responsibilities of the CAG:

1. Constitutional and Legal Oversight: The CAG upholds the Constitution of India and the laws of Parliament in the field of financial administration.
2. Audit Reporting: He is responsible for submitting his three audit reports (an audit report on appropriation accounts, an audit report on finance accounts, and an audit report on public undertakings) relating to the accounts of the Centre to the President and relating to the accounts of the state to the governor.
3. Expenditure Scrutiny: CAG is responsible for looking into government expenditure and its wisdom, faithfulness and economy.

Challenges faced by CAG:

1. Lack of timely submission of audit reports due to various reasons, such as non-cooperation from the audited entities, procedural hurdles, political interference, etc. This affects the timeliness and relevance of the audit findings and recommendations.
2. Limited scope of audit: There are many public-private partnerships, autonomous bodies, trusts, societies, etc. that are involved in delivering public services or utilizing public resources, but are outside the purview of the CAG.
3. Lack of follow-up action: There is no mechanism to ensure that the audited entities take corrective action on the audit observations and recommendations.

The CAG has been successful in exposing several cases of irregularities, mismanagement, corruption and fraud in various sectors and departments. Some of the notable examples are the 2G spectrum scam, the coal block allocation scam, the Commonwealth Games scam etc. The CAG audit reports enable the Parliament to hold the executive accountable in financial administration.