Comptroller and Auditor-General of India (Articles 148–151)

At a Glance

• What it is Guardian of the public purse; head of the Indian Audit and Accounts Department
• Article Article 148 (duties: 149; accounts: 150; reports: 151)
• Term Six years or age 65
• Removal Same as a Supreme Court judge
• Exam link UPSC Prelims, Polity: Constitutional Bodies

Where Does It Fit?

This is the fourth topic of the category on Constitutional Bodies. Article 148 provides an independent office of the Comptroller and Auditor-General of India. Dr. B.R. Ambedkar said the CAG shall be the most important officer under the Constitution. He or she is one of the bulwarks of the democratic system, the others being the Supreme Court, the Election Commission and the UPSC.

Appointment, Term and Removal

The CAG is appointed by the President by warrant under his hand and seal. Before taking office he or she subscribes an oath before the President to bear true faith and allegiance to the Constitution, uphold the sovereignty and integrity of India, perform the duties without fear or favour, affection or ill-will, and uphold the Constitution and laws. The CAG holds office for six years or up to the age of 65, whichever is earlier, and may resign to the President. Removal is by the President on the same grounds and in the same manner as a Supreme Court judge, that is, on a resolution of both Houses by special majority for proved misbehaviour or incapacity.

Independence

1. Security of tenure: removal only by the constitutional procedure.
2. No further office under the Government of India or any state after ceasing to hold office.
3. Salary and service conditions determined by Parliament; by the Act, the salary equals that of a Supreme Court judge.
4. Neither the salary nor the rights in respect of leave, pension or age of retirement can be altered to the disadvantage after appointment.
5. Service conditions of persons in the Indian Audit and Accounts Department and the CAG’s administrative powers are prescribed by the President after consultation with the CAG.
6. Administrative expenses, including salaries and pensions of the office, are charged on the Consolidated Fund of India and not subject to vote.

Duties and Powers

Article 149 authorises Parliament to prescribe the duties and powers of the CAG, and Parliament enacted the CAG’s (Duties, Powers and Conditions of Service) Act, 1971. As laid down, the CAG audits all expenditure from the Consolidated Fund of India, of each state and of each Union territory with a Legislative Assembly; transactions of the Contingency Fund and Public Account; trading, manufacturing, profit and loss accounts and balance sheets of departments; receipts and expenditure of bodies substantially financed from public revenues; grants and loans to bodies for specific purposes; receipts of the Centre and states; stores and stock; accounts of Government companies under the Companies Act and of Corporations whose statutes provide for his audit; and any other body when requested by the President or Governor, for example local bodies.

He advises the President on the form of accounts of the Centre and states (Article 150), submits audit reports on the Centre’s accounts to the President for placing before Parliament and on a state’s accounts to the Governor (Article 151), certifies the net proceeds of any tax or duty (Article 279), acts as guide, friend and philosopher of the Public Accounts Committee, and compiles and maintains accounts of state governments. In 1976 he was relieved of compilation of Central accounts due to the separation of accounts from audit. For audit he can inspect any office, examine transactions, call for records and decide the extent and manner of audit.

Role, Types of Audit and Limits

The CAG submits three audit reports to the President: on appropriation accounts, on finance accounts and on public undertakings. The Public Accounts Committee then examines them and reports to Parliament. Legal and regulatory audit, which checks that moneys disbursed were legally available and applied to the purpose, is obligatory. Propriety audit, which examines the wisdom, faithfulness and economy of expenditure, is discretionary. A 2006 Office Memorandum of the Ministry of Finance clarified that performance audit, of economy, efficiency and effectiveness in receipt and application of public funds, falls within the CAG’s scope.

Although the Constitution visualises a Comptroller as well as Auditor-General, in practice the CAG acts as Auditor-General only. Many departments draw money without his authority and he is concerned only at the audit stage, after expenditure has been incurred.

CAG and Public Corporations

The CAG’s role with public corporations falls into three categories: some are audited totally and directly by the CAG; some are audited by private professional auditors appointed by the Central government in consultation with the CAG, who can conduct supplementary audit; and some are subject totally to private audit, in which the CAG does not come into the picture and their reports go directly to Parliament. Government companies are audited by private auditors appointed on the advice of the CAG, who can also undertake supplementary or test audit.

Criticism and Challenges

Paul H. Appleby, in two reports on Indian administration (1953 and 1956), criticised the CAG, saying the function was an inheritance from colonial rule, that auditing had a repressive and negative influence, and recommended abolition of the office. The Second Administrative Reforms Commission (2005-2009) listed challenges: only 15-20 of the 1,000 to 1,500 paras in CAG reports each year are examined in detail by the Public Accounts Committee; Action Taken Notes are largely formal; State PACs have a huge pendency, some 10 to 20 years old; audit is post facto and findings may come too late; findings rest on documents and files with practically no physical verification; reports are seen as negative and fault-finding; the auditor-auditee relationship is not always harmonious; there is poor informed media coverage and inspection reports are not in the public domain; internal and external audit lack synergy; and there is rarely any audit of grants and loans to NGOs.

Why Is This Topic Important?

• Frequently asked Independence and duties are standard
• Mains angle ARC-II challenges and Appleby criticism
• Link to PAC Audit reports feed parliamentary accountability

What Came Next?

The next topic covers the Attorney-General for India and the Advocate-General for the State.

Key People and Terms

• Appropriation accounts Actual spending versus Parliament sanction
• Propriety audit Wisdom and economy of expenditure
• Performance audit Economy, efficiency and effectiveness
• Net proceeds Tax proceeds minus collection cost
• Public Accounts Committee Examines CAG reports

Exam Corner

Mains Angle

Questions on this topic usually ask about the role of the CAG and its effectiveness. Use these points to add depth.

• Accountability Executive answerable to Parliament
• Types of audit Legal, propriety, performance
• Limitations Post-facto, secret service expenditure
• ARC-II view Challenges to effectiveness