CAG acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament. CAG along with its mandatory regulatory and compliance audit performs the performance as well as efficiency audit to question executive’s wisdom and economy in order to identify cases of improper expenditure and waste of public money.
Issues in Relationship:
- CAG Report is not tabled by PAC in Parliament after action taken on those reports within stipulated time.
- The lack of technical expertise hinders the PAC’s examinations.
- The duration of 1 year hinders in gaining experience.
- It is up to the PAC that which report should be tabled in the Parliament.
- While the PAC cannot finalise any report without consensus, the lack of consensus has frequently seen controversy over the role of the Chairman.
- Its recommendations are only advisory in nature and are not binding on the ministry of the day.
Recent Observation by the CAG in the field of Financial Accountability:
- Centre -State Issues: Cess which was supposed to check GST shortfalls have been retained by the central government as highlighted by CAG.
- Defence Offset Policy: CAG has observed Dassault, the French manufacturer of Rafale has not fulfilled its offset commitment to transfer technology to India as the part of the 2016 contract for 36 combat jets.
- The PAC of Karnataka State legislative assembly asked CAG to audit into the purchase of COVID 19 equipment under State Disaster Response Fund. Thus CAG has issued an order creating a new vertical-Health, welfare, and rural development.
- In the wake of the Big Data revolution, CAG came out with a Big Data management policy in 2016 and also established a Centre for Data Management and Analytics in Delhi. This is a welcome step.
- In 2017, CAG of India hosted the Commonwealth Auditors General Conference. Leveraging technology in public audit and environment audit were the two themes of the conference. Conference helped in fostering partnerships amongst Commonwealth countries for capacity development in public audit.
Issues of Auditing system
There are numerous instances of chief ministers and other senior state functionaries trying to intimidate the AG when he has brought out uncomfortable facts during the course of an audit. He/ she has no protection of the law against unwarranted attacks.
- In many states, the PAC meets just a few times in a year and bulk of the audit reports get relegated as records without any action.
- There are huge ‘excess expenditure’ and ‘over-budgeted grants’ which remain unregularised for years, sometimes decades, in blatant violation of Article 205(b) of the Constitution.
- Large numbers of autonomous bodies, which are funded or controlled by the central or state governments deliberately evade CAG audit. A typical case is of Noida, Greater Noida and Yamuna Expressway authorities, who have been refusing to subject themselves to audit by CAG.
Best Model in the World:
- In Commonwealth countries such as Australia and Canada which have a federal structure, there are separate auditor generals for the central government and provinces, enjoying legal status with wide-ranging powers. In the USA, there are separate auditor generals for all the states, responsible to state legislatures.
- Continental European countries such as France, Germany, Italy, Belgium and Austria have a system of audit courts. These courts are equipped with wide powers and can order recovery of illegally spent money from public officials.
- In Germany and Japan, private companies in which the government has invested substantially can be audited by the Supreme Audit Institution (SAI), irrespective of majority holding, but not so in India.