CAG PERFORMANCE AUDIT ETHICS

Some of the recent criticisms in the media, on the reports of the
Comptroller and Auditor General of India (CAG) to Parliament seem to
be arising out of limited perception of the mandate, responsibilities,
and jurisdiction of the supreme audit institution of the country. The
institution of the CAG is created by the Constitution in order to
assist Parliament in ensuring parliamentary supremacy over the
Executive.

The Constitution and the CAG's Duties, Powers and Conditions of
Service Act (DPC Act) elaborate the CAG's duties, powers, and
jurisdiction with regard to the accounting and auditing functions of
the entire receipts and expenditure of the government, comprising the
union, states and all union territories of the country.

THREE FRAMEWORKS

Unlike the financial auditor or a mere book keeper, the constitutional
auditor basically deploys three distinct audit frameworks for auditing
the entire gamut of receipts and expenditure at the Central, State and
Union Territory levels.

Domain of audit of the CAG encompasses all ministries, departments,
subordinate offices, autonomous bodies, and organizations, societies
which receive substantial public funds in grants or loans,
departmental undertakings and central and state public enterprises in
the country.


The CAG has also been conducting three types of audits — Financial
Audit, Compliance Audit and Performance Audit — and meticulously uses
the benchmarked best practices prevalent in the international comity
of audit professionals to capture the totality of transactions, rather
than limiting it to verification of arithmetical accuracy and
certifying the accounts. Performance audit commences with entry
conference, and ends with exit conference with the auditee
organisation. It is primarily intended to evaluate the value for money
of the output and outcome.

The performance auditor uses all available audit techniques, tools and
methodology, including statistical sampling and computer-aided audit
tools, for evidence gathering, and data drilling and analysis.

Besides assessing the results on the basis of value for money based on
criteria of economy, efficiency and effectiveness, the performance
auditor uses equity and ethics in his auditing framework, because
ethics in management of public funds becomes indispensable for public
accountability.

Also infringement of standards of equity and ethics impinges on the
achievement of results and adversely affects the outcome.

Ethical and equity parameters make the performance auditor duty bound
to analyse the outcome of the project, modus operandi of
implementation and ethical and equity implications in outreaching the
beneficiaries intended, in compliance with the laid-down policy
framework and applicable laws, regulations and procedures.

Though the auditor is not mandated to discuss the merits and demerits
of a programme, his systematic analysis of implementation of a project
gives enormous insight to the policymakers to review and improve the
systems and procedures for better effectiveness by learning valuable
lessons from experience.