Government's "shadowy" control led to erosion of the Board's credibility, CAG said.
The CBI is currently probing the 'Vyapam scam', a massive admission and recruitment racket which came to light a few years ago and rocked the state's politics.
"The appointments of director and controller were made through systemic subversion of rules, resulting in undue favours to certain individual," CAG's report for 2016, tabled in the state Assembly today, said.
Accountant General Sourabh K Mallick said that as per the report, the state government "ostensibly" distanced itself from Board, but still maintained "administrative control".
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This "shadowy control" led to a situation where there was "severe erosion in credibility of examination conducted by the Board", CAG report said.
The Board was set up in 1982 for entrance tests for medical, engineering, agriculture colleges, and polytechnics.
The CAG also faulted the government for giving the Board the responsibility of recruitment for government jobs. "A primary function of the government to ensure free and fair recruitments to its own services...Was jettisoned in favour of an institution (Vyapam), which was neither statutory, nor independent," it said.