In the backdrop of the ongoing heated debate on the Comptroller and Auditor General (CAG)’s report on the 2G spectrum allocation, it seems many of the apprehensions could arise due to limited appreciation in the public mind about the audit process per se and the functioning of the national auditor. It would not be inappropriate at this juncture to look at the role and functions assigned to the CAG by the Constitution.
In fact, the 2G audit report is one of the 100-odd reports produced by the CAG in the last year. In the preparation of all its reports, the institution takes meticulous care by giving adequate opportunity to the organisation audited at different stages, from the initial field audits till the finalisation of the report, to respond to the findings and recommendations of the report. However, only a few reports get wide publicity and are subject to deliberations by the government, the opposition parties, the media and the intelligentsia.
Since the CAG’s audit domain extends to all the receipts and expenditure of the Union, states and Union Territories, public enterprises, autonomous bodies and authorities substantially financed by the government, the institution is mandated to audit all of them. According to Constitutional provisions, the CAG is required to submit his reports to be laid on the table of Parliament and state legislatures for examination by their committees. The committees then make recommendations to the government for taking appropriate corrective and preventive actions.
Though the Indian Constitution makers created the office of the CAG on a pattern more or less identical to that of the UK, an important distinction was that in India the CAG was not made an officer of Parliament but of the Constitution, unlike his UK counterpart. The CAG in India is constitutionally obligated to apprise Parliament and states legislatures that the moneys granted by them have been spent by the executive “with wisdom, faithfulness and economy” and also the accounts of receipts reveal no serious irregularity.
Of the three financial committees of Parliament – the Public Accounts Committee (PAC), the Committee on Public Undertakings (COPU) and the Estimates Committee – the Estimates Committee comes at the stage of proposals and the CAG has no connection with it. The CAG used to be called in the UK as “the probing spear head”, “acting hand”, “its guide, philosopher and friend”. He was sometimes described as “the official blood hound” in the committee’s service, because he “beats the bush and starts the hare; the committee runs it down and the Treasury breaks it up”.
In India, the CAG has always been functioning as a watchdog rather than a blood hound. He assists the parliamentary committees with due diligence and prepares a detailed memorandum of important points mentioned in the audit report for circulation to the chairman and other committee members. The committee meets informally before its formal meeting to examine the witnesses. The CAG representatives assist it by providing documentary evidence and adding further questions during the examination to assist the committee in examining the witnesses. The CAG sits on the right side of the chairman and consultations go on between him and the chairman throughout the meeting. In the UK, the CAG is required to sit opposite to the Treasury officials and is allowed to intervene in the deliberation only when specifically asked by the chairman.
The draft reports of the committee are informally sent to the CAG for verification of facts and further comments if any. The CAG’s presence is recorded in the proceedings of the committee. Being an adjunct of the parliamentary committees, the relationship of the PAC, COPU and the CAG remains complementary and mutually dependent and is kept beyond the realms of any partisan lineage. He is, therefore, treated as a friend, philosopher and guide to assist technically the committees in discharging their arduous responsibilities. His relationship with the committees is unequivocally objective and purposeful; ensuring that audit critique is objective, impartial, and free from fear or favour, but never irresponsible or obstructive or partisan.
The audit process for CAG’s report making is an elaborate exercise. First, the audit plan is prepared on the basis of a risk-based-assessment, following the best benchmarked international practices. While conducting an organisation’s performance audit, the audit team communicates its intent, objectives, scope, methodology, approach and evidence-gathering techniques in the entry conference with detailed presentation. The team issues its preliminary observations, obtains the organisation’s response and modifies audit findings. Then it issues an Inspection Report to the senior management of the audited entity, specifically urging for replies within a limited time frame. If the response is not forthcoming, the report is issued to the department or the administrative ministry, once again seeking its intervention and response. The report is finalised after undertaking the entire stringent gamut of verification of findings and amendments on the basis of entity’s response. The audit team also conducts an exit conference in which it apprises the organisation of its findings and obtains the response of the entity and its administrative ministry, if any. This drill is invariably adhered to giving abundant opportunity to the audited entity to reply to the contention of the audit report before finally processing it as the CAG’s report to be placed in Parliament.
The most challenging and critical issue encountered by an auditor in a parliamentary democracy like India is that the audit reports are seldom given due importance and attention except for the exceptional ones that deal with issues of enormous value to the interested stakeholders including the media. Though the CAG’s reports discuss significant themes concerning the general public, due to constraints of time and sheer volume of reports, the committees are able to examine only a few selected ones in detail. Unless the reports are deliberated threadbare to find out the root causes of inadequate performance, below the prescribed parameters and timely remedial and preventive actions are taken to avert it, the systemic and procedural lapses will keep cropping up. This will defeat the very purpose of a CAG report in a parliamentary democracy.
