Article 148 provides for an independent office of the Comptroller and Auditor General of India (CAG). He is the head of the Indian Audit and Accounts Department. He acts as a guardian of the public purse and controls the entire financial system of the country at both the Centre and the state levels. He primarily works to uphold the Constitution of India and laws of Parliament in the terms of financial administration.
- CAG is appointed by the President. He affirms his oath to the President before joining the office.
- Tenure – six years or until the age of 65 years.
- He can resign anytime by giving his resignation to the President and can be removed only on the grounds as that of the judge of the SC. His powers, salary and allowances are similar to that of the judge of SC.
- Independence of his office is maintained through.
a) Security of tenure
b) Ban after retirement
c) Fixed service condition
d) The conditions of the service of other people appointed in Indian Audit and Accounts Department h decided by the President after consulting the CAG.
e) Expenses are charged on the Consolidated Fund of India
f) No minister can represent the CAG in Parliament (both Houses) and no minister can be called upon to take any responsibility for any actions done by him.
➼ Duties and Powers of CAG:
- Article 149 of Constitution gives authority to the Parliament to specify the duties and powers of the CAG in relation to the accounts of the Union and of the states and of any other governmental body. Therefore, the Parliament enacted the CAGs (Duties, Powers and Conditions of Service) act, 1971. An amendment was done in 1976 to separate accounts from audit in the Central government.
- Parliament laid down following duties and functions of the CAG:
- To make rules for carrying out the provisions relating to the maintenance of accounts.
- To make regulations for carrying out the provisions relating to the scope and extent of audit, including laying down for the guidance of government departments, general principles of government accounting and broad principles in regard to the audit of receipts and expenditure.
- To requisition of all records of the auditee departments or organizations.
- To access computer systems of the auditees and to download and use electronic data if necessary.
- To review the development of computer systems of auditees and suggest or enforce controls.
- To approve the appointment of external auditors engaged by auditees for meeting any statutory requirements, but only with reference to the government companies.
- To supervise and regulate external auditors’ work under the Indian Companies Act.
- To dispense with, when circumstances so warrant, any part of the detailed audit of any account or class of transactions and to apply such limited check in relation to such accounts or transactions as he may determine.
- As per the Act of 1971, the jurisdiction of the CAG extends to:
- All the Union and state government departments, including departmental commercial undertakings such as the Indian Railways, and Post and telecommunications.
- Public commercial enterprises controlled by the Union and state governments i.e., government companies and corporations.
- Non- commercial autonomous bodies and authorities owned or controlled by the Union or states.
- Authorities and bodies substantially financed from Union or state revenues.
- Companies where the equity participation by government is 51 per cent or more.
- Any authority or body, not being a foreign state or international organization, which gets grant or loan for any specific purpose from the Consolidated Fund of India or of a state or union territory having a legislative assembly.
- Audit of all receipts which are payable into the Consolidated Fund of India or State or union territory having a legislative assembly.
- Audit of regulatory bodies such as Telecom Regulatory Authority of India (TRAI), Central Electricity Regulatory Commission (CERC), State Electricity Regulatory Commissions (SERCs), and Insurance Regulatory Authority and Development Authority. However, the role of audit of regulatory authorities is at present confined only to the extent of certifications of their accounts, as audit scrutiny over regulatory functions is still somewhat nebulous.
The CAG submits three audit reports to the President – audit report on appropriation accounts, audit report on finance accounts, and audit report on public undertakings. The President lays these reports before both the Houses of Parliament. After this, the Public Accounts Committee examines them and reports its findings to the Parliament. The appropriation accounts compare the actual expenditure with the expenditure sanctioned by the Parliament through the Appropriation Act, while the finance accounts show the annual receipts and disbursements of the Union government.
Note: In 1968, an Audit Board was established as a part of the office of CAG to associate outside specialists and experts to handle the technical aspects of audit of specialized enterprises like engineering, iron and steel, chemicals and so on. This board was established on the recommendations of the Administrative Reforms Commission of India. It consists of a Chairman and two members appointed by the CAG. Audit Advisory Board: Provides suggestions on matters relating to audit, including coverage, scope and prioritization of audits together with suggestions regarding audit approaches and techniques within the framework of the Constitution and statutory mandate of the Comptroller & Auditor General of India. The members of the Audit Advisory Board will function in an honorary capacity. It consists of CAG as the Chairman and external and internal members in the board. It was first set up in 2011 by then CAG Vinod Rai in 2011.
➼ Significance and Role of CAG:
- To uphold the provisions of Constitution and laws of Parliament with respect to financial administration.
- Accountability of Executive is possible by the Parliament (via debates, deliberations and parliamentary committees) due to the audit reports of the CAG.
- CAG is an agent of the Parliament and conducts audit of expenditure on behalf of the Parliament. Therefore, he is responsible only to the Parliament.
- The CAG is responsible to ascertain whether money shown in the accounts as having been disbursed was legally available for and applicable to the service or the purpose to which they have been applied or charged and whether the expenditure conforms to the authority that governs it.
- However, CAG’s power is limited with respect to secret service expenditure.
- The CAG only works as an Auditor General in real terms and not as the Comptroller (like in case of Britain) i.e., permission of CAG is not required to take money out of the Consolidated fund of India by the executive. Executive has to only take approval of the Parliament (legislature).