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CAG Explained WritingLaw.com ! COMPTROLLER AND AUDITOR GENERAL OF INDIA (CAG) The Constitution of India provides for an independent office of the CAG. He is the head of the Indian audit and accounts department. He is the guardian of the public purse and controls financial system of the country both at central level and state level. He is one of the strongest wall of the democratic system like that of Supreme Court, Election Commission of India (ECA) and the Union Public Service Commission (UPSC) Background The role of CAG evolved in British India with Lord Canning. In 1858 for the first time a separate department was set up for auditing and accounting transactions under the East India Company. Sir Edward Drummond in 1860 took charge as first Auditor General and the term 'Comptroller and Auditor General of India' was first time used in 1884. Constitutional Provisions Part V, Chapter V of Constitution of India talks about Comptroller and Auditor-General of India. Article 148 speaks of the CAG, his appointment, oath of his service. Article 149 broadly speaks of the duties and powers of the CAG. Article 150 - The accounts of the Union and of states shall be kept in sUch form as the president may prescribe on the advise of the CAG. Article 151 - The reports of the CAG relating to Union shall be submitted to the president. The reports of the CAG relating to state shall be submitted to the Governor. FUNCTIONS OF CAG 1. He audits all transactions of the Central and State Governments related to debts, deposits, funds etc. 2. He audits the accounts of any other authority when requested by the President or Governor. Example- Local bodies. 3. He advises the President with regard to the prescription of the form as to how the records of Centre and State shall be kept. 4. He submits his report relating to Centre to the President, who then places it before both houses of Parliament. 5. He submits his report relating to State to the Governor, who then places them before State Legislature. 6. He ascertains and certifies the net proceeds of any tax or duty and his certificate is final on the matter. 7. He submits three audit reports to the President: a. Audit report on appropriation accounts. b. Audit report on finance accounts. c. Audit report on public undertakings. ROLE OF CAG 1. The CAG is an agent of the Parliament and conducts audits of expenditure on behalf of the Parliament. Therefore he is responsible only to the Parliament. 2. The CAG has to ascertain whether the money spent were authorised for the purpose for which they were spent. 3. He focuses on whether expenditure made is in public interest or not. 4. The role of CAG in the auditing of public corporations is limited. 5. Some corporations are audited directly by the CAG. For example- ONGC, Air India and others. 6. Some corporations are audited by private professional auditors who are appointed by the Central Government in consultation with CAG. If necessary there may be supplementary audit by CAG. 7. The role of the CAG in the auditing of Government Companies is also limited. They are audited by private auditors who are appointed by the Central Government on the advise of the CAG. Audit Board, 1968 In 1968 an Audit Board was established as a part of the office of CAG to associate with outside specialists and experts to handle technical aspects of audit. Board was established on the recommendation of Administration Reforms Commission of India. Recent Issues Mode of Appointment The selection process is entirely internal to the Government as to what criteria is applied and how names are shortlisted. Presently there is a lack of clarity. Recent Example Two PILs have also been filed in Supreme Court against the former Defence Secretary Shashi Kant Sharma as CAG (2014-17). His appointment is thus being questioned in the context of conflict of interest and also that it goes against code of ethics of auditors. Recommendation There is a need to frame a transparent selection procedure based on definite criteria. A selection committee may be appointed in this regard. Current CAG • The Current CAG is Rajiv Mehrishi. • Rajiv Mehrishi was elected as Vice Chairman of United Nations Panel of External Auditors at its annual meeting held in New York. • V Narahari Rao was the first Indian Civil Servant who served as CAG. Read more Law Notes Important Bare Acts Take free law Practice Test Download Bare Act and Previous Year Question paper PDF.
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