This article is authored by Dhawal Srivastava, a law student at the Rajiv Gandhi National University of Law. In this article, the authority of the Comptroller and Auditor General of India has been discussed elaborately.

Introduction

In a democracy like India, accountability of the ruling class is an important aspect of polity and governance. For ensuring the same, the Constitution of India has given the authority to institutional frameworks such as an independent Judiciary, Vigilance bodies and a Supreme Audit Institution or SAI. The Supreme Audit Institution is constituted by the Comptroller and Auditor General of India (CAG) and the Indian Audit and Accounts Department (IAAD) which functions under his charge. The office of CAG has been mandated by the Indian Constitution to be the auditors of the nation and, thus, an agent for maintaining answerability. 

Comptroller and Auditor General of India

Described as the “most important officer in the Constitution of India” by Dr Bhimrao Ambedkar, the Comptroller and Auditor General of India (CAG) is an independent authority established under Article 148 of the Indian Constitution. CAG of India or the “Guardian of the Public Purse” is essentially vested with the responsibility of inspecting and auditing all the expenditure and receipts of both the Central and the State Governments as well as of those organizations or bodies which are significantly funded by the government.

History of CAG in India

Pre-Independence Era (Before 1947)

The modern-day role of the Comptroller and Auditor General of India has developed through the practice and traditions that were followed during colonial British India. Sir Edward Drummond was appointed as the first Auditor General of India in November 1860 and his authority derived from the Government of India Act, 1858. After a few more years, the Montford Reforms of 1919 made the office of CAG independent from the sovereign. The powers of CAG were reinforced by the Government of India Act, 1935 by provisioning for Provincial Auditor-Generals in the federal setup of British India. The Government of India (Audit and Accounts) Order, 1936 laid down the conditions of service of the Auditor General, and also defined his duties and powers concerning audits and reports.

Post-Independence Era (After 1947)

This setup remained unchanged till the time of independence and the establishment of constitutional democracy in the country after which the Comptroller and Auditor General got constitutionalised. Eight years after the conception of the Constitution, the jurisdiction of the CAG was extended to Jammu and Kashmir in 1958. An important development in the history of the CAG regime happened in the year 1971 when the Central Government enacted the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, which made the office responsible for accounting and auditing of both the Central and the State governments in pursuance of the quasi-federal nature of the country. However, in 1976, the CAG was relieved from its accounting functions. Since the 1990s, there has been a positive development and modernization of the office which has been kept on its toes due to the rampant and increasing corruption scenario in the country. The CAG has audited and probed some of the most contentious corruption scandals in the history of modern India.

Appointment and Removal of CAG

Article 148 of the Constitution deals with the appointment, removal, oath and conditions of service of the CAG. 

Appointment of Comptroller and Auditor General

• The CAG is appointed by the President of India by warrant under his hand and seal. 
• The tenure of the office stands for six years or a retirement age of sixty-five years, whichever comes first. 
• The salary and other conditions of the CAG’s services shall be specified in the Second Schedule of the Constitution until determined by the Parliament. 
• His salary and rights shall not be varied to his disadvantage after his appointment to the office.
• Moreover, the determination of the service of persons working in the IAAD (Indian Audit and Accounts Department) as well as the administrative powers of the CAG shall be done by the President upon consultation with the CAG and shall be prescribed in rules.
• The administrative expenses of the CAG which incorporate salaries, allowances and pensions are charged from the Consolidated Fund of India (Article 266 of the Constitution).

Removal or Expiry of Term of the Comptroller and Auditor General

• CAG can be removed from his office by the President on the grounds of proven misbehaviour or incapacity on an address by Parliament in the manner provided in clause (4) of Article 124 of the Indian Constitution.
• Article 124(4) prescribes the conditions for removal of judges of the Supreme Court; a Presidential order passed after an address by the Parliament supported by a total membership majority of the House and two-thirds of members present and voting. 
• However, this can only be executed after sufficient proceedings of investigation and proof. 
• After the retirement or resignation from his office, he is no longer eligible for any jobs or offices under the Central or State Governments.

Other Constitutional provisions

Besides Article 148, the other articles that are associated with the authority of CAG are as follows: 

• Article 149 of the Constitution lays down the duties and power of the Comptroller and Auditor General of India.
• Article 150 says the President of India shall prescribe to the CAG the form in which the accounts of the Union and the States shall be maintained and kept.
• Article 151 directs the Comptroller and Auditor General to submit the accounting reports of the Union and the States to the President of India, who thereafter, shall cause them to be presented before each House of Parliament.
• Article 279 stipulates the final authority of the CAG with regard to the ascertainment and certification of the calculation of net proceeds as final.
• Section IV of the Third Schedule of the Constitution lays down the form of oath or affirmation for both the Judges of the Supreme Court as well as the Comptroller and Auditor General of India.
• The Sixth Schedule of the Constitution vests the responsibility of prescribing, with the approval of the President, the accounts of District Council or Regional Council by the CAG. Additionally, the auditing of their accounts are done in a manner as the CAG shall deem fit and the reports of the audit shall be presented to the State Governors, who shall present them to the Council.

Functions & powers 

The main functions and powers of the Comptroller and Auditor General are derived from various sources, namely the Constitution of India, The Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act of 1971, landmark judicial decisions, instructions of the Government of India (GoI) and Regulations on Audit & Accounts of 2007. However, before discussing these functions, it is important to understand the meaning of the term ‘audit’.

What is a Government Audit?

An audit is an official supervision and inspection by an independent authority of the financial accounts and expenditure of any organization. The Government Audit is a necessary exercise for the smooth functioning of the country’s economy as it ensures control on parliamentary finances, keeps a check on the spendings by the executive bodies and ascertains that the expenditure and budget allocation is within the allotted amount and parliamentary sanctions. CAG does just the same. Auditing helps in keeping the executive within the control and scrutiny of the parliament.

The functions of the CAG are discussed below: 

• The CAG is authorised to audit the accounts and expenditures from the Consolidated Fund of India, and of States and those Union Territories which have legislative assemblies. He also audits all expenditures from the Contingency Fund of India (Article 267) and Public Account of India (Clause 2 of Article 266) as well as those of the states.
• All the departments of the Central, as well as State Governments, are required to get their trading, manufacturing, profit and loss accounts, balance sheets and other ancillary accounts audited by the CAG.
• CAG also audits the receipts and expenditure of all those bodies, organizations, institutions and authorities which are substantially funded by the Central as well as State governments. Even government companies, corporations or any companies (with equity participation of the government with more than 51% of the total) get their accounts and expenditure audited by the Comptroller and Auditor General. 
• On request from the President or Governor, CAG also audits the reports of the local bodies.
• His advisory power includes advising the President with regards to the prescription of the form in which the accounts of the Union and States should be maintained.
• The audit reports with regards to matters related to the Central Government are submitted by the CAG to the President, who then presents them to both the Houses of Parliament.
• The audit reports with regards to matters related to the State Governments are submitted by the CAG to the respective state Governors, who then present them to the state legislature.
• The Comptroller and Auditor General also work in the capacity of an ally, advisor and philosopher of the Public Accounts Committee of the Parliament. 

How does CAG perform these functions?

The CAG is assisted by experts of the Indian Audit and Accounts Department (IA&AD) for discharging his functions. The officers of IA&AD are directly inducted after the qualification of the Union Public Services Commission or UPSC Examination or by the promotion of the Group-B officers, also known as supervisory staff. There are subordinate cadres, namely Group B or gazetted supervisory cadre of Senior Audit or Accounts officers, Audit officers and Assistant Audit Officers and Group C or support staff cadre. 

Main audit reports

The audit reports of the CAG can be classified into the following four headings as discussed below: 

1. CAG Local Bodies Audit Reports: The CAG Local Bodies Audit Report is prepared by the State Accountant Generals of every state of Union of India and is sent to CAG for approval. After this procedure is completed, the local bodies Audit Reports are subsequently categorized into two groups, namely “Tabled in the Legislature” and “Issued to the State Government”.
2. CAG State Audit Reports: After the Accountant General audits the expenditures and accounts of a state from the Consolidated Fund of that state, the Comptroller and Auditor General then submits the findings of the report to the state legislature. The norm that is followed is the presentation of the reports during the budget season wherein the audit findings of the previous financial year are presented. At the state level, in a way similar to the Central level, the audit is conducted in two streams, which are Performance Audit and Regularity Audit. Nonetheless, in the majority of the cases, the reports of both of these audits are presented simultaneously.
3. CAG Union Audit Reports: The Union Audit Report is prepared by Comptroller and Auditor General of India and is primarily focused on presenting the findings of the transactional and performance audit in the following areas: 

• Civil Audit
• Audit of Autonomous Bodies
• Defence Services
• Railways
• Government Receipts
• Central Commercial

The CAG Union Audit Report incorporates the audit performed under two categories namely, Performance Audit and Regularity (Compliance) Audit.

4. CAG Audit of Government-owned Corporations: The Comptroller and Auditor General of India are also vested with the power of auditing the corporations owned by the government, central or state, and also conducting the supplementary audit of those firms in which the Union Government have more than 51% equity shares.

Conclusion

Despite having such importance in the parliamentary setup of a democracy like India, the institution of the Comptroller and Auditor General of India has, time and again, suffered due to the less general public awareness about the significance of this authority. A major fallacy that exists in modern-day polity is the less popularity of many CAG reports and the fact that not all of these reports are deliberated upon in the Parliament. 

To expedite the efficiency of the Comptroller and Auditor General of India as a constitutional officer charged with the responsibility of maintaining and upholding the accountability and liability of the ones in power, it is important to popularize the audit reports released by the CAG and open up opportunities for more general public discussion about them. Controversies like the Commonwealth Games, 2G Spectrum and Rafale Deal brought forth the importance of CAG reports in a democracy like India and helped ignite public discourse.

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