Comptroller and Auditor General (CAG)

11 Nov Comptroller and Auditor General (CAG)

This article covers “Daily Current Affairs” and the topic details “  Comptroller and Auditor General (CAG)”. This topic has relevance in the Polity and Governance section of the UPSC CSE exam.

For Prelims:

Constitutional Provisions?

For Mains:

GS 2: Polity and Governance

Emerging Importance of the Office of CAG?

Issues Arising from the Functioning of CAG?

Way Forward?

Why in the news?

As Indian democracy has evolved, the significance of the Comptroller and Auditor General (CAG) has heightened, playing a crucial role in advancing good governance and protecting the interests of the people.

Constitutional Provisions:

• Article 148: Specifies that the Comptroller and Auditor General of India (CAG) shall be appointed by the President through a warrant under his hand and seal.
• Article 149: Grants powers to the CAG for auditing accounts related to government accounts, recognized as part of the Basic Structure of the Constitution in the case of Association of Unified Tele Services Providers v. Union of India.
• Article 150: Defines the form of accounts for the Union and States.
• Article 151: Mandates the submission of audit reports related to Union accounts by the CAG to the President.

Emerging Importance of the Office of CAG:

• Ensuring Transparency and Accountability: The CAG plays a pivotal role in a democratic framework by ensuring transparency, accountability, and professional integrity in the government’s functioning.
• Separation of Powers: Helps maintain the separation of powers between the legislature and the executive by ensuring alignment between the government’s financial activities and its legislative intentions.
• Promoting Good Governance: Through audit findings and recommendations, the CAG promotes good governance practices, contributing to streamlined government operations.
• Efficiency Enhancement: By enforcing financial discipline, the CAG reduces inefficiency within the executive, fostering better resource utilization.
• Contribution to Sustainable Development Goals: Collaborating with international agencies like the UN, the CAG audits and assesses the performance of Sustainable Development Goals.
• Capacity Building and Support: Provides handholding and capacity-building for state-level auditors and local fund auditors, offering technical guidance and support in audit planning and methodologies.

Issues Arising from the Functioning of CAG:

• Selection and Appointment Issues:

• • • Executive Monopoly: The appointment process lacks specific criteria, leading to an executive monopoly, where the Cabinet Secretary shortlists candidates submitted to the Prime Minister via the Finance Minister.
    • Conflict of Interest: The executive’s control over appointments raises concerns about a conflict of interest, particularly when the CAG audits the government headed by the Prime Minister.
    • Inter-Services Conflict: The dominance of IAS officers in appointments raises questions of whether IAAS officers should have a more substantial presence.

• Performance Audit Limitations:

• • • Competence Concerns: Doubts exist about the CAG’s ability to conduct performance audits effectively.
    • Judicial Limitation: The Supreme Court has ruled in Arun Kumar Agrawal v Union of India that the CAG cannot question the merits of the State government’s policy objectives.

• Procedural Challenges:

• • • Post-facto Analysis: Audit reports provide post-facto analysis, offering prospective value for improving future systems and procedures.
    • Lack of Focused Findings: Findings, often presented as scattered observations, create media attention without addressing micro-level issues in departmental functioning.
    • Unaddressed Systemic Issues: While known problems are identified, systemic issues in public organizations remain unaddressed.

• Audit Perceived as Policing Mechanism:

• • Government Indifference: Poor response from the government to external audits reduces the effectiveness of the CAG’s role.
  • Delayed Report Presentation: Delays in tabling finance reports before Parliament deprive the legislature of crucial information before the budget session.
  • Reduced Output: The substantial reduction in the number of audit reports prepared by the CAG raises concerns about its output.

Way Forward:

• Reforming the Appointment Process:

• • • International Best Practices: Adopting best practices from countries like the UK, USA, and Canada for the appointment of the CAG.
    • Search Committee: Establishing a search committee comprising the Prime Minister, Home Minister, and Leader of Opposition for recommendations.

• Enlarging the Scope of Audit:

• • • Inclusion of Panchayati Raj Institutions: Bringing Panchayati Raj Institutions and State-funded societies under the ambit of CAG audit.

• Empowering the CAG:

• • • Liability Powers: Providing CAG with the power to demand liability for losses from the government and other parties, akin to the setup in New Zealand.
    • Amending CAG Act 1971: Amending the CAG Act 1971 to include the pre-audit of defense expenditure exceeding ₹3000 Crores and granting State Auditors General the status of High Court Judges.

• Improving Accessibility and Responsiveness:

• • RTI-like Time Limit: Establishing a time limit, similar to RTI, for auditors to access records promptly.
  • Accountability for Delay: Requiring heads of departments to explain delays in providing access to records.

These recommendations aim to enhance the effectiveness, transparency, and independence of the CAG, ensuring its continued significance in upholding financial accountability and good governance in India.

Source:CAG of India writes: As our democracy matures, my role is becoming more vital | The Indian Express

Q.1 Consider the following articles of the Constitution:

• Article 148

1. Article 151
2. Article 226
3. Article 74

How many of the above statement/s is/are correct?

(a) Only one 

(b) Only two 

(c) Only three 

(d) All four

ANSWER: B

Q.2 The appointment method and the extensive powers vested in the Comptroller and Auditor General (CAG) underscore the crucial role this office plays in governance. Elaborate on the significance of these aspects in defining the CAG’s role and responsibilities. (2018)

rishabh