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Comptroller and Auditor General of India

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 26-Jun-2024

Introduction 

  • The comptroller and Auditor General of India (CAG) is a constitutional functionary whose role is to audit the income and expenditure of the Governments, Government bodies and the State-run corporations.   
  • The vision of CAG is to continue to provide independent and credible assurance on public resources and be a global leader in public sector auditing.   

What is Comptroller and Auditor General? 

  • Articles 148-151 contained in Chapter V of Part V of the Constitution of India, 1950 (COI) contains provision in relation to Comptroller and Auditor General of India (CAG). 
  • It is the Supreme Audit Institution of India.  
  • The mission of CAG is to promote accountability, transparency and good governance through high quality auditing and accounting and provide independent and timely assurance to the Legislature, the Public and the Executive, that public funds are being collected and used effectively and efficiently. 

What are Constitutional Provisions in Relation to CAG? 

  • Article 148: Comptroller and Auditor General of India 
  • Article 149: Duties and Powers of CAG 
  • Article 150: Form of Accounts of Union and of States 
  • Article 151: Audit Reports 
  • Article 279: Calculation of “net proceeds” 

What is the Background of CAG? 

  • Originally called the Accountant General to the Government of India in 1858. In 1860 it was designated as the Auditor General of India. 
  • Under Section 166 of Government of India Act, 1935 the Auditor General of India was appointed by His Majesty. 
  • V. Narahari Rao (1948-54) was the first CAG in the independent India. 
  • First person to hold this position before independence was Hon. Edmund Drummond (1860-62). 

What are Appointment and Conditions of Service? 

  • Article 148(1) of COI provides that the CAG shall be appointed by the President. 
  • As per Article 148(3) of COI the salary and other conditions of service of the Comptroller and Auditor-General shall be such as may be determined by Parliament by law and, until they are so determined, shall be as specified in the Second Schedule. 
  • Article 148 (4) provides that once CAG ceases to be in office he is ineligible to be appointed in any office under the Government.  
  • Article 148 (5) provides that subject to the provisions of this Constitution and of any law made by Parliament, the conditions of service of persons serving in the Indian Audit and Accounts Department and the administrative powers of the Comptroller and Auditor-General shall be such as may be prescribed by rules made by the President after consultation with the Comptroller and Auditor-General. 
  • The administrative expenses of the office of the Comptroller and Auditor-General, including all salaries, allowances and pensions payable to or in respect of persons serving in that office, shall be charged upon the Consolidated Fund of India. 

What is Procedure for Removal of CAG? 

  • As per Article 148(1) of the COI, the CAG shall be removed in the same manner and on the same grounds as the judge of a Supreme Court.  
  • Article 124(4) of COI provides proved misbehavior or incapacity to be grounds of removal of Supreme Court judge. The procedure is that the resolution should be passed by an order of President supported by a majority of total membership of the house and the majority of not less than two third of the members present and voting.  

What are the Powers and duties of CAG? 

  • As per Article 149 of COI the CAG shall perform such functions and duties as prescribed by or under the law made by the Parliament. 
  • The Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 (DPC Act) is the law governing the same.   
  • Chapter III of the DPC Act provides for the duties and powers of Comptroller and Auditor General of India. 
  • Section 10 of DPC Act provides that Comptroller and the Auditor General shall be responsible for compiling accounts of Union and State. 
  • Section 11 of DPC Act provides that CAG shall prepare and submit accounts to the President, Governors of State and the Administrators of Union Territories having Legislative Assembly. 
  • Section 12 of DPC Act provides that the CAG shall give information and render assistance to Union and States. 
  • Section 13 of the Act provides that it shall be the duty of CAG to : 
    • to audit all expenditure from the Consolidated Fund of India and of each State and of each Union territory having a Legislative Assembly and to ascertain whether the moneys shown in the accounts as having been disbursed were legally available for and applicable to the service or purpose to which they have been applied or charged and whether the expenditure conforms to the authority which governs it. 
    • to audit all transactions of the Union and of the States relating to Contingency Funds and Public Accounts; 
    • to audit all trading, manufacturing, profit and loss accounts and balance-sheets and other subsidiary accounts kept in any department of the Union or of a State; and in each case to report on the expenditure, transactions or accounts so audited by him. 

What are the important judgments in relation to CAG?    

  • Arvind Gupta v. Union of India (2013) 
    • The Supreme Court held that the CAG's functions to carry out examination into economy, efficiency and effectiveness with which the Government has used its resources, is in-built in the 1971 Act.  
    • The Court observed no unconstitutionality in the Regulations of Audit and Accounts, 2007 framed under the CAG (DPC)Act, 1971 empowering the CAG to conduct performance audit.   
  • Reghunath Kelkar v. Union of India (2009) 
    • In this case decided by the High Court of Bombay, an allegation was made about the failure of the CAG to conduct a comprehensive audit.  
    • The Court considered scope of Section 23 of the CAG (DPC) Act. The Court observed that the time, scope and extent of audit are all matter which fall within the jurisdiction of the CAG and is not a matter on which Court ought to tread. 
  • National Dairy Development Boards v. CAG of India (2010) 
    • In this case decided by the Delhi High Court, the powers of the CAG to conduct audit under section 14, 15 and 19 of the CAG (DPC) Act was considered.  
    • The Petitioner challenged the authority of the CAG to invoke and exercise the powers under Section 14 (2) of the 1971 Act to conduct audit of accounts of the National Dairy Development Board (NDDB) which is governed by its own Act viz. NDDB  Act, 1987, and which has a provision of overriding effect to the NDDB Act over any other law.  
  • Arun Kumar Aggarwal v. Union of India (2013) 
    • In this case the Supreme Court considered whether a CAG Audit Report by itself can be accepted by the Court to grant relief or as a basis for initiating action.  
    • The Court held that CAG's Report is always subject to scrutiny by the Parliament and it is for the Parliament to decide whether after receiving the report to make its comments on the CAG's report. 
  • Shri S. Subramaniam Balaji v. the Government of Tamil Nadu and others (2013) 
    • The Court held in this case that Article 148 has created a Constitutional functionary in the form of CAG of India.  
    • CAG examines the propriety, legality and validity of all expenses incurred by the Government and exercises effective control over the Government accounts. 
  • Association of Unified Tele Services Providers & Others v. Union Of India (2014) 
    • It provides for power of CAG to audit the revenue of telecom companies.