The CAG report says that the off-budget borrowings of the kind availed by the KIIFB are adding to the debt burden of the Kerala government.
The recent Supreme Court judgment on the procurement of the Rafale fighter aircraft, citing the Comptroller and Auditor General of India (CAG)’s report on redacted pricing of the fighter jet deal and subsequent controversy about the stolen files and photocopies have highlighted the role of the Supreme Audit Institution of India (SAI) in public discourse. Besides resorting to the issue of redactive pricing for the Rafale procurement deal, instead of providing comprehensive and complete comparative pricing analysis, one substantial question arises before the nation ~ What are the constitutional mandates, duties and powers of CAG to fight against corruption?
The constitutional provisions relating to the CAG are mentioned in four Articles ~148 to 151. Article 148 deals with the appointment of CAG by the President and safeguards his position and service conditions by stating that ‘he shall only be removed from office in like manner and on like grounds as a Judge of the Supreme Court’. His salary and other conditions of service shall be determined by Parliament and shall be protected. It is explicitly stated that the CAG ‘shall not be eligible for further office either under the Government of India or under the Government of any State after he has ceased to hold his office’.
The CAG’s (Duties, Powers and Conditions of Service) Act, 1971 with amendments 1976, 1984, 1987 and 1994 specify the CAG’s duties and powers pertaining to government accounts, audit of receipts and expenditures of three tiers of the governments at the union, states and urban and rural local bodies. CAG duties include audit of public companies, autonomous bodies, regulatory bodies and other public entities, where there is a specific legislative provision to make CAG audit mandatory in the acts by which these bodies were created.
The regulations on audit and accounts issued by CAG in 2007 with amendments notified in 2010 and 2013 explain the scope and extent of audit, guiding principles, auditing standards, types of audits, audit planning, execution, process, techniques, methodology, procedures, reporting and follow-up actions. A few judgments affirm the powers of the CAG to conduct performance audit, time, scope and extent of audit, duty of CAG regarding examination of expenditure, audit of revenue of telecom companies etc.
The Constitutional provisions, CAG’s (DPC) Act, regulations and judgments do not state explicitly the CAG’s responsibility to fight against corruption. The CAG performs such ‘duties and exercise such powers in relation to the accounts of the Union and of the States and of any other authority or body as may be prescribed by or under any law made by Parliament’. He conducts audit of the entire receipts and expenditure of the three-tier government architecture and submits the reports to be laid before the legislature.
While performing his duties, the CAG acts as the financial ‘watchdog’ and exercises oversight functions over the receipts and expenditure to and from the public exchequer. The main objective of the CAG reports is to truthfully report to the legislature to help it exercise effective parliamentary oversight and control over the executive’s accountability and use of resources as per the laws and rules of the land. CAG is mandated to report to the legislature to ensure that tax payers’ money voted by Parliament is spent as per financial rules and the standards of financial propriety.
CAG’s constitutional mandate thus aims to facilitate the legislative scrutiny, oversight providing critical inputs, insight, details of implementation of projects with reference to intended targets, outputs and outcome. The reports contain recommendations combined with data, facts, tables, figures and analysis to facilitate legislative oversight, control and public accountability over the executive’s functioning in letter and spirit.
CAG’s reports have since independence exposed varied genres of political, financial, bureaucratic and corporate scandals. Some of the recent ones cover different spheres of government activities. They range from fodder, allocation of 2G Spectrum, coal blocks, D-6, scams relating to Commonwealth games, arms deal, food, health, housing, banks, construction of infrastructural projects, procurement and centrally sponsored schemes, various socioeconomic and educational projects and programmes, defence, and land deal scams of the three tiers of the government ~ central, states and urban/ rural local bodies.
Thus, while performing his constitutional responsibilities, CAG plays a vital role to help deter, detect, and take remedial and preventive action. It helps prevent public sector corruption and provide good governance. The nature of SAIs’ work relating to checking and verifying the public accounts, assessing regulatory compliance with reference to laws and rules, financial propriety standards and guidelines enables the national auditor to contribute substantially to anti-corruption efforts. CAG inputs provide critical insights for investigation into other law enforcement and anti-corruption agencies. SAI’s mandate is to discharge professional, independent and judicial auditing without fear or favour to ensure compliance of applicable regulations, financial propriety, critical evaluation of performance of multifarious government projects, programmes and schemes with reference to policy, planning, targets, milestones and planned output and outcome. While performing the mandated duties, the CAG highlights deficiencies in internal controls, segregation of powers, defective planning, implementation and inadequate monitoring. CAG reports red-flag deviations from rules, nonconformity to laid-down procedures and the anomalous nature of transactions supported with irrefutable evidence.
When the CAG’s reports are submitted to the people’s representatives on behalf of the citizens pointing to the omissions, commissions and nonconformity to mandatory laws, rules of the executive, the constitutional watchdog serves the nation in fighting against corruption. Its constitutional mandate, duties and responsibilities have been questioned and the Supreme Court has clarified the national auditor’s duties in various judgments.
The reports become credible, authentic and reliable source material for legislative committees, courts, anticorruption and investigating agencies such as the Central Vigilance Commission, Central Bureau of Investigation, Chief Information Commissioner, Enforcement Directorate. AntiCorruption Bureau, Transparency International, Financial Intelligence Unit, authorities under the Administrative Law to control corruption, and the media under various Acts and regulations including IPC, CRPC, FEMA, the Right to Information Act and the Citizen Charters. The explicit mandate of CAG of India as a supreme audit institution (SAI) of the country is undoubtedly to oversee the entire gamut of public revenue and expenditure to ensure financial prudence and propriety.
The Comptroller and Auditor General is not a bloodhound. He is always referred to as a constitutional watchdog. There is of course an inherent systemic issue when a committed bureaucrat is appointed as CAG. He might then tend to become an extra loyal lapdog. There can be criticism of his views if these are a bit lopsided, biased or compromised, in showing and seeking more affection rather than being restless, and conscientious in barking like a watchdog to alarm financial wrongdoings and white collar crimes. If robust audit is undertaken, and the CAG is given adequate powers to execute his mandate, and the reports are crafted judiciously and are available to the legislature for scrutiny in a time-barred manner, and the implementation of recommendations are given on top priority in a well-structured follow up audit process, the level of public corruption can be substantially mitigated. These innovative changes will ensure putting the nation’s engine of economic growth and development on a planned trajectory to the destination.
The SAI’s role is thus obvious in the crusade against corruption. Focussed and intense capacity building, skills in the use of audit software solutions and correct orientation can enhance the anticorruption knowledge, capabilities and expertise of public auditors. The Comptroller and Auditor General’s role as a watchdog over the country’s financial integrity must be established. He has the unequivocal mandate to assess whether public funds are utilised economically, efficiently, effectively, equitably, ethically and in conformity with applicable laws and regulations and sustainable environmental concerns.
Compliance Audit scrutinises comprehensively conformity to laws and rules in providing service delivery and project execution. Financial audit examines the budget, books of accounts and other relevant records to make an assertion regarding the true and fair nature of the financial statements or financial health of the entity. Performance audit can go further to evaluate the performance of a project or organization or a sector with reference to the policy, planning, vision, mission, budgeted outlay, specific measurable qualitative and quantitative parameters, targets, milestones and outcome. Performance audit is all embracing taking into its fold all types of audit, the methodology, techniques, proceedings and process including audit of information communication technology, ICT application in e-governance, fraud audit.
A robust CAG audit process is both bottom up and top down driven, synergising and energising the entire audit organization in the audit drill. The audit process becomes vertically, horizontally and diagonally integrand.
(The writer is a former DG in the office of CAG. Views are personal)
(To be concluded)