Chapter 44: COMPTROLLER AND AUDITOR GENERAL OF INDIA
Another pivotal office in the Government of India is that of
Comptroller and Auditor-General who controls the entire financial system of
the country-at the Union as well as State levels.
As observed by Ambedkar, the Comptroller and Auditor-General of
India shall be the most important officer under the Constitution of India
for, he is to be the guardian of the public purse and it is his duty to see that
not a farthing is spent out of the Consolidated Fund of India or of a State
without the authority of the appropriate Legislature.
In short, he shall be the
impartial head of the audit and accounts system of India.
In order to
discharge this duty properly, it is highly essential that this office should be
independent of any control of the Executive.
He is thus excepted from the general rule that all civil servants of the
Union hold their office at the pleasure of the President
His salary and conditions of service shall be statutory (i.e., as laid
down by Parliament by law) and shall not be liable to variation to his
disadvantages during his term of office. Under this power, Parliament has
enacted the Comptroller and Audnor-General's (Conditions of Service) Act,
The Comptroller and Auditor-General shall perform such duties and exercise such powers In relation to the accounts of the
Union and of the States as may be prescribed by
Parliament, In exercise of this power, Parliament has enacted the
Comptroller and Auditor-General's (Duties, Powers and Conditions of Service) Act, 1971, which. as amended in 1976, relieves him of his pre Constitution
duty to compile the accounts of the Union; and the States may
enact similar legislation with the prior approval of the President,-to
separate accounts from audit also at the State level, and to relieve the
Comptroller and Auditor-General of his responsibility in the matter of
preparation of accounts, either of the States or of the Union.
The duty of preparing the accounts was a relic of the Government of India Act. 1935, which has no
precedent in the British system, under which the
accounts are prepared, not by the Comptroller and
Auditor-General, but by the respective Departments.
The legislation to
separate the function of preparation or accounts from the Comptroller and
Auditor-General of India, thus, brings this office at par with that of his British
counterpart in one respect,
But there still remains another fundamental point of difference. Though
the designation of his office indicates that be is to function both as
Comptroller and Auditor, our Comptroller and Auditor-General is so far
exercising the functions only of an Auditor.
In the exercise of his functions
as Comptroller, the English Comptroller and Auditor-General controls the
receipt and issue of public money and his duty is to see that the whole of the
public revenue Is lodged in the account of Exchequer at the Bank of
England and that nothing is paid out of that account without legal authority.
The Treasury cannot, accordingly obtain any money from the public
Exchequer without a specific authority from the Comptroller, and, this be
issues on being satisfied that there is proper legal authority for the
This system of control over issues of the public money not only
prevents withdrawal for an unauthorised purpose but also prevents
expenditure in excess of the grants made by Parliament
In India, the Comptroller and Auditor-General has no such control
over the issue of money from the Consolidated Fund and many Departments
are authorised to draw money by Issuing cheques without specific authority
from the Comptroller and Auditor-General, who is concerend only at the
audit stage when the expenditure has already taken place.
This system is a
relic of the past, for, under the Government of India Acts, even the
designation 'Comptroller' was not there and the functions of the Auditor General
were ostensibly confined to audit.
After the commencement of the
Constitution, it was thought desirable that our Comptroller and Auditor General
should also have the control over issues as in England, particularly
for ensuring that "the grants voted and appropriations made by Parliament
are not exceeded".
But no action has as yet been taken to introduce the
system of Exchequer Control over issues as It has been found that the entire
system of accounts and financial control shall have to be overhauled before
the control can be centralised at the hands of the Comptroller and Auditor-
The first is whether in exercising his function of audit, the
Comptroller and Auditor-General has the jurisdiction to comment on
extravagance and suggest economy, apart from the legal authority for a
The orthodox view is that when a statute confers
power or discretion upon an authority to sanction expenditure, the function
of audit comprehends a scrutiny of the propriety of the exercise of such
power in particular cases having regard to the interests of economy, besides
But the Govemment Departments resent on the ground that such
interference is incompatible with their responsibility for the administration.
In this view, the Departments are supported by academicians such as
Appleby, according to whom the question of economy is inseparably
connected with the efficiency of the administration and that, having no
responsibility for the administration, the Comptroller and Auditor-General
or his staff has no competence on the question of economy
Another question is whether the audit of the Comptroller and
Auditor-General should be extended to industrial and commercial under-
takings carried on by the Govemment through private limited companies,
who are governed by the Articles of their Association, or to statutory public
corporations or undertakings which are governed by statute.
It was rightly
contended by a former Comptroller and Auditor-General that inasmuch as
money is issued out of the Consolidated Fund of India to invest in these
companies and corporations on behalf of the Government, the audit of such
companies must necessarily be a light and responsibility of the Comptroller
While, at present, the Comptroller and Auditor General
can have no such power unless the Articles of Association of such
companies or the governing statutes provide for audit by the Comptroller
The result is that the report of the Comptroller and
Auditor-General does not include the results of the scrutiny of the accounts
of these corporations and the Public-Accounts Committee or Parliament
have little material for controlling these important bodies, spending public
On behalf of the Government, however, this extension of the
function of the Comptroller and Auditor-General has been resisted on the
ground that the Comptroller and Auditor-General lacks the business or
industrial experience which is essential for examining the accounts of these
enterprises and that the application of the conventional machinery of the
Comptroller and Auditor-General is likely to paralyse these enterprises
which are indispensable for national development.
As has Just been stated, this defect has been partially remedied by the
Act of 1971 which enjoins the Comptroller and Auditor-General to audit
and report on the receipts and expenditure of 'Government companies' and
other bodies which are 'substantially financed' from the Union or State
revenues, irrespective of any specific legislation in this behalf.
Created under article
148 of the constitution. He is the head of accounts and
audit department. He
controls financial administration of centre and states.
He is appointed by the
president and hold office for 6 years or till age of 65.
He can be removed by
president on same grounds and manner as SC judge.
He can resign by writing to
president. He is responsible only to parliament. He enjoys
power to frame rules
and decide scope for audit of expenditure but audits
related to other sectors
need approval of executive government.
Legal and regulatory
audit is mandatorily conducted by CAG but propriety
faithfulness and economy’ of expense] is discretionary.
With regard to expense
of secret service the CAG can’t call for particulars of
expenditure but has to
accept the certification from the competent administrative
expense has been incurred under him.
Though the constitution visualises him as
a comptroller but in practice he is just the auditor
He has security of
tenure, his salary and conditions of service are
determined by parliament. He
is ineligible for appointment under Govt of India or state
after ceasing to
hold office. All expense of office is charged on the
consolidated fund of India.
No minister can
represent CAG in parliament nor can any minister be called
responsibility for his actions.
Powers and duties:
These are mentioned in
the act of parliament and constitution.
audits the accounts related to all expenditure from the
Consolidated Fund of India, Consolidated fund of
each state and consolidated fund of each union territory
having a Legislative Assembly.
2. He audits all
expenditure from the Contingency Fund of India and the
Public Account of India as well as the
contingency fund of each state and the public account of
3. He audits all
trading, manufacturing, profit and loss accounts, balance
sheets and other subsidiary accounts
kept by any department of the Central Government and state
4. He audits the
receipts and expenditure of the Centre and each state to
satisfy himself that
the Rules and procedures
in that behalf are designed to secure an effective check
on the Assessment, collection
and proper allocation of revenue.
5. He audits the
receipts and expenditure of the following:
(a) All bodies and
authorities substantially financed from the Central or
(c) Other corporations
and bodies, when so required by related laws.
6. He audits all
transactions of the Central and state governments related
to debt, sinking
funds, Deposits, advances,
suspense accounts and remittance business. He also audits
receipts, stock accounts and others,
with approval of the President, or when required by the
7. He audits the
accounts of any other authority when requested by the
President or Governor. For example, the audit
of local bodies.
8. He advises the
President with regard to prescription of the form in which
the accounts of the Centre and the states
shall be kept (Article 150).
9. He submits his
audit reports relating to the accounts of the Centre to
President, who shall,
in turn; place them
before both the Houses of Parliament (Article 151).
10. He submits his
audit reports relating to the accounts of a state to
governor, who shall, in
turn, place them before the
state legislature (Article 151).
11. He ascertains and
certifies the net proceeds of any tax or duty (Article
279). His certificate is final. The ‘net
proceeds’ means the proceeds of a tax or a duty minus the
cost of collection.
12. He acts as a
guide, friend and philosopher of the Public Accounts
Committee of the Parliament.
13. He compiles and
maintains the accounts of state governments. In 1976, he
was relieved of his responsibilities with
regard to the compilation and maintenance of accounts of
the Central Government due to the
separation of accounts from audit, that is,
departmentalisation of Accounts.
CAG submits three
audit reports to the president who tables them to the
house – appropriation
account, finance account and public undertaking. The
public accounts committee
examines them and submits a report to the house. The
report of audit of public undertakings is submitted to
the public undertakings committee.
With regards to
auditing of accounts of Government companies and
corporations CAG has limited
role they are fully audited by it OR government appoints
private auditors for
them in consultation with CAG, here CAG conducts
supplementary audit OR the
private auditors audit the accounts and no role of CAG
partnerships (PPPs), Panchayti Raj Institutions and
government funds outside the ambit of the CAG.
The amendment further
proposes to enhance CAG’s powers to access information
under the Audit Act.
Documents demanded by CAG officials have often been denied
65 percent of
government spending does not come under the scrutiny of
CAG needs to be a
multi member body elected by a collegiums consisting of
CAG audits often lead
to slow decision making as they create fear of persecution
Also CAG mostly does post mortem work.
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