HPAS/Allied Mains 2022 Answer Writing Challenge Day 99 : Model Answer

Question: While legal and regulatory audit powers are important, the power of propriety audit given to the CAG makes the institution an important bulwark of democracy. Explain (8 Marks)

Answer:

Introduction

Under Article 148 of part V, the Constitution had provided for an independent office of Comptroller and Auditor General (CAG) of India. CAG’s office is highly significant and acts as guardian of the public’s purse while acting as the head of the Indian Audit and Accounts Department, thus CAG is considered as one of the bulwarks of the democratic system in India.

Body

 Article 149 of the Constitution authorises the Parliament to prescribe the duties and powers of CAG in relation to the accounts of union and states and of any other authority or body. Accordingly, the Parliament enacted the CAG’s (Duties, Powers and conditions of service) Act, 1971. It was amended in 1976 to separate accounts from audit in central government. However, for state Governments both the Audit and Accounts are managed by the CAG.

Nature of Auditing undertaken by CAG

While fulfilling his constitutional obligations, the CAG examines various aspects of government’s expenditure. Audit done by CAG broadly classified as:

• Legal and Regulatory Auditing: Audit against provision of funds to ascertain whether the money shown as expenditure in accounts were authorised for the purpose for which they were spent. Along with this it also ascertains that money authorised for a particular purpose, whether the purpose they have been applied or charged and whether the expenditure conforms to the authority that governs it. Thus through this CAG examines that expenditure made was in conformity with the laws and regulations this CAG ensures that allocation of resources are utilised effectively. But it does not delve into wisdom with which expenditure incurred.

• Proprietary Auditing: It extends beyond the mere formality of scrutinizing the expenditure to its wisdom, and looks at the fidelity and economy of government expenditure, and comments on the wastefulness and opulence of such expenditure.
• Proprietary audits examine the regularity, probity, economy, efficiency and effectiveness of expenditure incurred and report on cases of failure of compliance with laws, rules and regulations, waste, mismanagement, other irregularities and frauds and corruption.
• Whereas legal and regulatory auditing is limited only to conventional accounting and it does not consider the outcome of expenditure made.

For Eg – The CAG has played an important role in ensuring financial accountability of executives to the Parliament. Recent report of CAG on 2G spectrum sale and allocation of coal blocks has played an important role by highlighting systemic weaknesses.

• Propriety auditing lets CAG question the wisdom behind expenditure, policy decisions , etc holds government accountable and upholds the constitution in financial administration. Thus it evaluates the value for money of the output and outcome so the CAG acting as bulwark of democracy.
• However propriety audit is discretionary whereas the legal and regulatory audit power is obligatory on the part of the CAG.

To realise the potential of CAG and to strengthen its propriety auditing Ex CAG Vinod Rai had suggested few measures such as:

• CAG Act of 1971 should be amended to keep pace with the changes in governance.
• A collegium type mechanism to choose a new CAG on the lines of selecting a Chief Vigilance

Commissioner (CVC). Implementation of these recommendations make CAG powerful and thus government function with more transparency and accountability.

Conclusion

1. R Ambedkar in constituent assembly for CAG said “I am of the opinion that this dignitary or officer is probably the most important officer in the Constitution of India. He is the one man who is going to see that the expenses voted by Parliament are not exceeded, or varied from what has been laid down by Parliament in the Appropriation Act.” Thus, propriety auditing makes CAG a bulwark of Indian democracy.