ROLE OF CAG IN MEETING CHALLENGES OF GOOD GOVERNANCE

In 1858, When the East India Company's administration was taken over by the Crown, a complementary post of Acco ntant!"eneral at the India office was created to prepare the acco nts of the e#pendit re inc rred in En$land% &im ltaneo sly, an independent A ditor was appointed by the Crown for the a dit of these acco nts% 'his arran$ement was, however, short lived% In 18(), both acco ntin$ and a ditin$ f nctions were amal$amated and placed in char$e of the Acco ntant!"eneral to the "overnment of India, who was desi$nated as 'A ditor "eneral'% 'he stat tory reco$nition of the A ditor "eneral came in 1*1*, with the introd ction of Constit tional +eforms% ,e was made independent of the "overnment of India and was appointed by the &ecretary of &tate and held office as the administrative head of the Indian A dit -epartment% - rin$ his .a/esty's pleas re, the "overnment of India Act 1*05 $ave f rther reco$nition to the importance and stat s of this office%After independence the same was incorporated in the Constit tion of India as a separate body to look after the acco nt and the a dit of the "overnment% 'he term comptroller evolved in the 15th cent ry thro $h a blend of the .iddle En$lish co ntreroller 1someone who checks a copy of a scroll, from the 2rench contrero le 3co nter!roll, scroll copy34 and the 2rench compte 13an acco nt34, th s creatin$ a title for a comptroller who speciali5es in checkin$ financial led$ers% 'he Comptroller and A ditor "eneral 1CA"4 of India is an a thority, established by the Constit tion of India, who a dits all receipts and e#pendit re of the "overnment of India and the state $overnments, incl din$ those of bodies and a thorities s bstantially financed by the $overnment% 'he CA" is also the e#ternal a ditor of $overnment!owned companies% 'he reports of the CA" are taken into consideration by the 6 blic Acco nts Committees, which are special committees in the 6arliament of India and the state le$islat res% 'he CA" of India is also the head of the Indian A dits and Acco nts &ervice, which has over 58,))) employees across the co ntry% CA" is head of Indian A dit and Acco ntant &ervice% ,e is appointed by 6resident% ,e

can hold his office for ( years or p to a$e of (5 years% ,e can $ive resi$nation at any time or can be impeached by 6resident thro $h 6arliament resol tion with special ma/ority% 7aba &aheb Ambedkar had considered the CA" instit tion as one of the most important in the co ntry% 'he importance of CA" is easily nderstood by the followin$ words of 7A7A &A,E7 A.7E-A8A+9 :I am of the opinion that this di$nitary or officer 1C;A"4 is probably the most important officer of the Constit tion of India% ,e is the one man who is $oin$ to see that the e#penses voted by parliament are not e#ceeded, or varied from what has been laid down by 6arliament in what is called appropriation Act% If this f nctionary is to carry o t the d ties! and his d ties, I s bmit are far more important than the d ties than the d ties of the < diciary%= Workin$ system of CA" in Indian $overnment Accordin$ to article 151, CA" represent a dit report to the president or $overnor before p t reports on parliament or state le$islat res respectively% 'o be$in with, when the a dit take place, d rin$ the co rse of inspection of vario s or$ani5ation, >I?&6EC'I@? +E6@+'> of each nit are prepared and sent to them, abo t AB))) reports sent every year% And their pro$ress also watches% 'he reports s bmitted to parliament of president contain two parts9 1%A dit report on appropriation acco nts C this show that the money $ranted by the le$islat re for vario s $rants or p rpose is properly sed or not% B% A dit report on the financial report C shows ann al receipts and e#pendit re d rin$ the year% 'he a dit report in brief contain a narration of cases involvin$ financial irre$ larities, losses, fra ds, wastef l e#pendit re and savin$ etc% the hi$h profile cases like B" spectr m, CW" and AA-A+&, has come on li$ht with the help of these CA" reports% "overnor of 7hopal +ameshwar 'hak r said that the CA" has an important role to play in establishin$ $ood $overnance% ,e said that enco ra$in$ for $ood $overnance thro $h D alitative a dit is the mission of the Comptroller and A ditor "eneral 1CA"4% 'he

"overnor said that the CA" is playin$ the role of fo ndation pillar for fi#in$ responsibility in democratic system% &hri +ameshwar 'hak r was addressin$ a f nction or$ani5ed to celebrate 15)th anniversary of CA"% 'he "overnor said that the CA" is an independent and constit tional instit tion% 'hro $h this instit tion the Indian Constit tion ens res that the ta# money of the people is spent fr itf lly and is sed effectively for those works for which it was sanctioned% 'he chief $ est for the day also stressed on the importance of this office and said that CA" is like an arm of parliament with re$ard to p blic acco nt and it>s an inte$ral part of democratic set p% 'his body f nctions independently as a brid$e between the e#ec tive and le$islative% ,e also added that the 6AC is workin$ actively for the benefit of the people% CA" plays vital role in $ood $overnance, both in central and state and maintains the acco ntability of the "overnment .a/or f nction of CA"9! 1%'o prescribe, with the approval of president, the form in which the acco nts of nion and states are to be kept B%'o perform s ch d ties and e#ercise s ch powers in relations to acco nts of nion or states or any other body , as many prescribed by any law made by parliament% 0% 'o report the president or $overnor of the state on the acco nt of co ntry or state% +@EE of Comptroller ; A ditor "eneral 9 ! 'o enhance acco ntability of the e#ec tive to the 6arliament and &tate Ee$islat res by carryin$ o t a dits in the p blic sector and providin$ acco ntin$ services in the states in accordance with the Constit tion of India and Eaws as well as best international practices% ! Where entr sted, to provide technical $ idance and s pport to local bodies incl din$ 6anchayati +a/ Instit tion to enhance their acco ntability% 'he Comptroller ; A ditor "eneral of India plays a key role in the f nctionin$ of the financial committees of 6arliament and the &tate Ee$islat res% ,e has come to be reco$ni5ed as a 'friend, philosopher and $ ide' of the Committee% ,is +eports $enerally

form the basis of the Committees' workin$, altho $h they are not precl ded from e#aminin$ iss es not bro $ht o t in his +eports% ,e scr tini5es the notes which the .inistries s bmit to the Committees and helps the Committees to check the correctness s bmit to the Committees and helps the Committees to check the correctness of facts and fi$ res in their draft reports% 'he 2inancial Committees present their +eport to the 6arliamentF &tate Ee$islat re with their observations and recommendations% 'he vario s .inistries F -epartment of the "overnment are reD ired to inform the Committees of the action taken by them on the recommendations of the Committees 1which are $enerally accepted4 and the Committees present Action 'aken +eports to 6arliament F Ee$islat re% In respect of those cases in A dit +eports, which co ld not be disc ssed in detail by the Committees, written answers are obtained from the -epartment F .inistry concerned and are sometimes incorporated in the +eports presented to the 6arliament F &tate Ee$islat re% 'his ens res that the a dit +eports are not taken li$htly by the "overnment, even if the entire report is not deliberated pon by the Committee% - ties and 6owers of the Comptroller and A ditor!"eneral 'he Comptroller and A ditor!"eneral shall perform s ch d ties and e#ercise s ch powers in relation to the acco nts of the Gnion and of the &tates and of any other a thority or body as may be prescribed by or nder any law made by 6arliament and, ntil provision in that behalf is so made, shall perform s ch d ties and e#ercise s ch powers in relation to the acco nts of the Gnion and of the &tates as were conferred on or e#ercisable by the A ditor!"eneral of India immediately before the commencement of this Constit tion in relation to the acco nts of the -ominion of India and of the provinces respectively% 'he or$ani5ations s b/ect to the a dit of the Comptroller and A ditor "eneral of India are9 ! H All the Gnion and &tate "overnment departments and offices incl din$ the Indian +ailways and 6osts and 'elecomm nications% H Abo t 15)) p blic commercial enterprises controlled by the Gnion and &tate $overnments, i%e% $overnment companies and corporations%

H Aro nd I)) non!commercial a tonomo s bodies and a thorities owned or controlled by the Gnion or the &tates% H @ver II)) a thorities and bodies s bstantially financed from Gnion or &tate reven es A dit of "overnment Companies 1Commercial A dit49 'here is a special arran$ement for the a dit of companies where the eD ity participation by "overnment is 51 percent or more% 'he primary a ditors of these companies are Chartered Acco ntants, appointed by the Comptroller and A ditor "eneral of India, who $ives the directions to the a ditors on the manner in which the a dit sho ld be cond cted by them% 'he Comptroller and A ditor "eneral of India is also empowered to comment pon the a dit reports of the primary a ditors% In addition, the Comptroller and A ditor "eneral of India cond cts a test a dit of the acco nts of s ch companies and reports the res lts of his a dit to 6arliament and &tate Ee$islat res% ?at re of A dit9 ! While f lfillin$ his Constit tional obli$ations, the Comptroller ; A ditor "eneral e#amines vario s aspects of "overnment e#pendit re% 'he a dit done by C;A " is broadly classified into +e$ larity A dit and 6erformance A dit% +e$ larity A dit 1Compliance49 H A dit a$ainst provision of f nds to ascertain whether the moneys shown as e#pendit re in the Acco nts were a thori5ed for the p rpose for which they were spent% H A dit a$ainst r les and re$ lation to see that the e#pendit re inc rred was in conformity with the laws, r les and re$ lations framed to re$ late the proced re for e#pendin$ p blic money% H A dit of sanctions to e#pendit re to see that every item of e#pendit re was done with the approval of the competent a thority in the "overnment for e#pendin$ the p blic money% H 6ropriety A dit which e#tends beyond scr tini5in$ the mere formality of e#pendit re to it wisdom and economy and to brin$ to li$ht cases of improper e#pendit re or waste of p blic money% H While cond ctin$ the a dit of receipts of the Central and &tate "overnments, the

Comptroller ; A ditor "eneral satisfies himself that the r les and proced res ens re that assessment, collection and allocation of reven e are done in accordance with the law and there is no leaka$e of reven e which le$ally sho ld come to "overnment% 6erformance A dit9 6erformance a dit is done to see whether the "overnment pro$rammes have achieved the desired ob/ectives at lowest cost and $iven the intended benefits% +e$ larity A dit 12inancial49 In re$ larity 1financial4 a dit and in other types of a dit when applicable, a ditors sho ld analyse the financial statements to establish whether acceptable acco ntin$ standards for financial reportin$ and disclos re are complied with% Analysis of financial statements sho ld be performed to s ch a de$ree that a rational basis is obtained to e#press an opinion on financial statements% Action on A dit +eports9 ! 'he scr tiny of the Ann al Acco nts and the A dit +eports thereon by the 6arliament as a whole wo ld be an ard o s task, considerin$ their diverse and speciali5ed nat re, besides imposin$ e#cessive demands on the limited time available to the 6arliament for disc ssion of iss es of national importance% 'herefore the 6arliament and the &tate Ee$islat res have, for this p rpose, constit ted speciali5ed Committees like the 6 blic Acco nts Committee 16AC4 and the Committee on 6 blic Gndertakin$s 1C@6G4, to which these a dit +eports and Ann al Acco nts a tomatically stand referred% 'he 6 blic Acco nts Committee satisfies itself9! a% that the moneys 1shown in the acco nts4 were disb rsed le$ally on the service or p rpose to which they were applied% b% that the e#pendit re was a thori5ed% c% that re!appropriation i%e% distrib tion of f nds% It is also the d ty of the 6AC to e#amine the statement of acco nts of a tonomo s and semi!a tonomo s bodies, the a dit of which is cond cted by the Comptroller ; A ditor

"eneral either nder the directions of the 6resident or by a &tat te of 6arliament% 'he Committee on 6 blic Gndertakin$s e#ercises the same financial control on the p blic sector ndertakin$s as the 6 blic Acco nts Committee e#ercises over the f nctionin$ of the "overnment -epartments% 'he f nctions of the Committee are9! a% to e#amine the reports and acco nts of p blic ndertakin$s% b% to e#amine the reports of the Comptroller ; A ditor "eneral on p blic ndertakin$s% c% to e#amine the efficiency of p blic ndertakin$s and to see whether they are bein$ mana$ed in accordance with so nd b siness principles and pr dent commercial practices% 'he e#amination of p blic enterprises by the Committee takes the form of comprehensive appraisal or eval ation of performance of the ndertakin$% It involves a thoro $h e#amination, incl din$ eval ation of the policies, pro$rammes and financial workin$ of the ndertakin$% 'he ob/ective of the 2inancial Committees, in doin$ so, is not to foc s only on the individ al irre$ larity, b t on the defects in the system which led to s ch irre$ larity, and the need for correction of s ch systems and proced res% Gnion A dit +eports9 'he Gnion A dit +eports of the Comptroller and A ditor "eneral of India, contain the findin$s of transaction a dit and performance a dit in the areas of9 H Civil A dit H A dit of A tonomo s 7odies H -efense &ervices H +ailways H +eceipts of the "overnment H Central Commercial Challen$es9 ! In the present era of liberali5ation, many diffic lt financial iss es are comin$ to s rface and it is a challen$e to the CA" to a dit these iss es% ,opef lly CA" will accept this

challen$e and will be s ccessf l in their mission% C;A" is meant to find the black spots of and lapses in the $overnance of any "overnment or$ani5ation and to report to the 6resident of India pon which the 6 blic Acco nts Committee of the 6arliament takes action by s mmonin$ the heads of the concerned "overnment -epartment to e#plain their position% .oreover, the role of C;A" is limited to the appropriation of the p blic money, mis se of financial dele$ations, improper p blic e#pendit re etc%, b t not abo t $ood $overnance% 'he CA" is nable to access relevant records for a dit% It has no remedy a$ainst e#ec tive inaction% .akin$ a dit work as a catalyst for $ood $overnance wo ld reD ire reforms in the CA"'s stat tory powers 'he recent report of the Comptroller and A ditor "eneral of India 1CA"4 on the iss e of spectr m allocations by -epartment of 'elecomm nications has created a storm% 'he CA" report has worked o t the pres mptive loss at +s% 1%A( lakh crore to the E#cheD er, on allocation of spectr m licenses to 10A applicants% 'he report hi$hli$hts nd e haste in receivin$ and processin$ applications, arbitrarily decidin$ the c t!off date, awardin$ licenses on the basis of first!come!first!served basis in B))8 at the B))1 rate, and i$norin$ the advice of the .inistry of Comm nications and Information 'echnolo$y, .inistry of Eaw and 6.@% 'he CA" report, as well as the fact that the instit tion completed 15) years on ?ovember 1(, is occasion to reflect on its role and the roadblocks to its f nctionin$% 'he 6rime .inister complimented the CA" for servin$ as an independent, competent and credible a dit instit tion% In her ina $ ral address, the 6resident of India emphasi5ed that p blic acco ntability and probity are essential for rootin$ o t corr ption, and a dit can emer$e as a key instr ment of $ood $overnance% 'ransformin$ the a dit instit tion as a catalyst for $ood $overnance reD ires certain

reforms in the stat tory powers of the CA"% At present, even to $et the relevant records for a dit is increasin$ly becomin$ a serio s challen$e% While the Constit tion has nder$one more than 1)) amendments and several stat tes have been completely overha led, the law on a dit and acco ntin$ of p blic money has remained practically static over the last I) years or so% A dit!related stat tes in the G8, 2rance, A stralia, Canada and &o th Africa have nder$one s bstantial chan$es to keep pace with the chan$in$ times% In many respects, enforceability of the CA"'s ri$ht to information is weaker than that of an ordinary citi5en nder the +'I Act% -eliberate delay, non!prod ction of records or incomplete prod ction of records can be tackled only by introd cin$ the reD isite penal provision in the Act% CA" reports are not placed in 6arliament or state le$islat res for periods lon$ eno $h to facilitate disc ssion% As a conseD ence, the E#ec tive does not take the necessary remedial action% 'he CA" has no remedy a$ainst s ch delays%