Getting to know the abc of CAG
Ramaswamy R. Iyer Share · Comment (53) · print · T+
PTI A journalist reads a copy of the report of Comptroller and Auditor
General (CAG) on 2G spectrum allocation, which was tabled in
Parliament House in New Delhi on November 16, 2010. File photo
Many of the criticisms of the CAG are based on ignorance,
misperception and elementary error, and it seems necessary to put
matters in the right perspective.
For some time now, there has been a stream of criticism aimed at the
Comptroller and Auditor General. There has been a series of media
‘reports' and even editorials questioning the accuracy, motivation and
propriety of the CAG's reports. Many of the criticisms of the CAG are
based on ignorance, misperception and elementary error (leaving
dubious motivations aside) and it seems necessary to put matters in
the right perspective.
The CAG is the institution through which the accountability of the
government and other public authorities — all those who spend public
funds — to Parliament and State Legislatures and through them to the
people is ensured. Accountability is not the same thing as accounting,
though the latter may be a part of the former; the word
‘accountability' really means answerability. We are of course talking
about financial answerability. The Executive is answerable to
Parliament and to the people for all its decisions, but that
answerability is enforced through the CAG where it involves finance
and accounts.
If we understand accountability to mean answerability, much of the
confusion disappears. Vouching expenditures and rendering accounts are
of course important: Parliament votes funds to the Executive and those
funds have to be accounted for. However, answerability is more than
that: it also means exercising prudence, avoiding waste, not incurring
infructuous expenditure, showing results for moneys spent, and
achieving those results at least cost. If the CAG is our prime
accountability-ensuring institution, that institution must go into all
these matters.
If the CAG were ‘merely' an auditor, why should Dr. B.R. Ambedkar,
during the debates in the Constituent Assembly, describe the CAG as
the most important functionary in the Constitution, more important
than even the judiciary? Again, if the CAG was meant to be merely an
auditor, why did the Constitution prescribe for this functionary an
oath identical with that prescribed for the Chief Justice and Judges
of the Supreme Court, including the words “I will uphold the
Constitution and the laws” while a Minister of the Union swears or
solemnly affirms only that he will act “in accordance with the
Constitution”? Those who try to belittle the importance of the
institution and limit its functions must really ask themselves these
two crucial questions.
Should the CAG question policy decisions? The answer that immediately
suggests itself would be “No”, but consider the following hypothetical
cases: (i) the financial implications of a policy were not gone into
at all before the decision was made; (ii) the assessment of financial
implications was quite clearly wrong; (iii) the numbers were correct
but the reasoning behind the decision was specious or fallacious; or
(iv) the financial implications in fact turn out to be far higher than
the assessment on which the decision was made. In such cases, would it
not be within the CAG's mandate, would it not in fact be the CAG's
duty as the instrument of accountability, to comment on such a policy?
Further, if the CAG is bound by his (or her) oath of office to uphold
the Constitution, can he (she) refrain from commenting on something
that prima facie seems unconstitutional? If the government were to
formulate a scheme or policy that selectively confers benefits from
public funds on an individual or group to the exclusion of others on
no stated grounds, or on grounds which seem questionable, would it not
be the CAG's duty to point this out?
If the above understanding is correct, then the various activities
that the CAG has been undertaking, such as propriety audit,
performance evaluations, and so on, are clearly well within his ambit,
as different modalities of ensuring accountability. Moreover, there
are two other grounds for this understanding: century-old traditions,
and international consensus.
Even during British rule there was an Auditor General, and traditions
of the independence and objectivity of that office were fairly strong.
Gradations of audit were recognised proceeding from simple vouching
and expenditure audit through regularity audit, audit of
authorisation, audit of the sanctions themselves, and propriety audit,
to what used to be called ‘Higher Audit'. After the constitution, the
CAGs have been following that tradition and adding some technical and
methodological innovations.
Internationally, there are Auditors General, Comptrollers General,
Audit Commissions, and other forms of what are known as Supreme Audit
Institutions (SAIs) not only in democratic countries, but even in
authoritarian systems. In India, the CAG is the SAI. There are
professional organisations such as the International Association of
Supreme Audit Institutions (INTOSAI) and the Asian counterpart
(ASOSAI) in which the Indian SAI plays an important part, and is held
in high esteem. The relevant point in the present context is that the
Indian CAG has not stretched the audit function beyond the functions
performed by other SAIs.
For instance, the National Audit Office of the U.K. has published,
among others, reports on: Information and Communications Technology in
Government: Landscape Review; Delivering Regulatory Reform; Assessing
the Impact of Proposed New Policies; and so on. Some of the reports of
the U.S. Government Accountability Office include those on: The U.S.
Postal service (“Mail Trends Highlight Need to Fundamentally Change
Business Model”); Aviation Safety (“Status of FAA's Actions to Oversee
the Safety of Composite Airplanes”); Electronic Waste: Strengthening
the Role of the Federal Government in Encouraging Recycling and Reuse;
and so on. Having regard to those examples, it can hardly be said that
the CAG of India has been guilty of over-reach.
In the CAG's report on the 2G case, the notional loss figure of Rs.
176000 crore has been much criticised. The report in fact makes it
clear that it is difficult to arrive at a firm figure of loss,
calculates it in three different ways through different methods, and
makes no claim that any of the figures is definitive. However, the
media delight in reporting that the CAG's figures have been questioned
by various people, and a Cabinet Minister immortalised himself by
claiming that there was zero loss.
That leads us to the relationship between the CAG and the Public
Accounts Committee (PAC) and the Committee on Public Undertakings
(COPU). The CAG finalises his reports after taking the government's
and PEs' responses to his initial queries and observations and his
draft reports, signs them, and submits them to the President of India,
who causes them to be laid before Parliament. They are then taken up
by the PAC and COPU. It is not the Reports that are under examination
but the Ministries and other government offices and PEs, on the basis
of those Reports. The CAG assists and advises the parliamentary
committees in that examination.
Unlike the CAG of the U.K. (an officer of Parliament) or the CG of the
U.S. (a part of the Legislative Branch), the Indian CAG is not an
officer of Parliament, but an independent constitutional functionary.
The reason for this is that the CAG is CAG for the Union as well as
the States, which is a unique feature of the Indian quasi-federal
system.
Finally, we come to the question of publicity. The CAG's reports have
suffered from too little and not too much publicity. One of the major
weaknesses of the Indian system is that very few of the CAG's reports
are widely known, and that not all of them get discussed in
Parliament. Some years ago, press conferences began to be held after
the Audit Reports were placed before Parliament, and that practice
continues. This is not a new departure introduced by the present CAG.
If the CAG is to become more effective as an institution for the
enforcement of accountability, it is necessary that Audit Reports be
more widely known and discussed. The people have a right to know their
contents. If, as a result of the CWG and the 2G controversies, the CAG
and his reports are now better known than before, that is a very good
development. If the present CAG manages to enhance the effectiveness
of this constitutional institution, the country would owe a debt of
gratitude to him.
Ramaswamy R. Iyer Share · Comment (53) · print · T+
PTI A journalist reads a copy of the report of Comptroller and Auditor
General (CAG) on 2G spectrum allocation, which was tabled in
Parliament House in New Delhi on November 16, 2010. File photo
Many of the criticisms of the CAG are based on ignorance,
misperception and elementary error, and it seems necessary to put
matters in the right perspective.
For some time now, there has been a stream of criticism aimed at the
Comptroller and Auditor General. There has been a series of media
‘reports' and even editorials questioning the accuracy, motivation and
propriety of the CAG's reports. Many of the criticisms of the CAG are
based on ignorance, misperception and elementary error (leaving
dubious motivations aside) and it seems necessary to put matters in
the right perspective.
The CAG is the institution through which the accountability of the
government and other public authorities — all those who spend public
funds — to Parliament and State Legislatures and through them to the
people is ensured. Accountability is not the same thing as accounting,
though the latter may be a part of the former; the word
‘accountability' really means answerability. We are of course talking
about financial answerability. The Executive is answerable to
Parliament and to the people for all its decisions, but that
answerability is enforced through the CAG where it involves finance
and accounts.
If we understand accountability to mean answerability, much of the
confusion disappears. Vouching expenditures and rendering accounts are
of course important: Parliament votes funds to the Executive and those
funds have to be accounted for. However, answerability is more than
that: it also means exercising prudence, avoiding waste, not incurring
infructuous expenditure, showing results for moneys spent, and
achieving those results at least cost. If the CAG is our prime
accountability-ensuring institution, that institution must go into all
these matters.
If the CAG were ‘merely' an auditor, why should Dr. B.R. Ambedkar,
during the debates in the Constituent Assembly, describe the CAG as
the most important functionary in the Constitution, more important
than even the judiciary? Again, if the CAG was meant to be merely an
auditor, why did the Constitution prescribe for this functionary an
oath identical with that prescribed for the Chief Justice and Judges
of the Supreme Court, including the words “I will uphold the
Constitution and the laws” while a Minister of the Union swears or
solemnly affirms only that he will act “in accordance with the
Constitution”? Those who try to belittle the importance of the
institution and limit its functions must really ask themselves these
two crucial questions.
Should the CAG question policy decisions? The answer that immediately
suggests itself would be “No”, but consider the following hypothetical
cases: (i) the financial implications of a policy were not gone into
at all before the decision was made; (ii) the assessment of financial
implications was quite clearly wrong; (iii) the numbers were correct
but the reasoning behind the decision was specious or fallacious; or
(iv) the financial implications in fact turn out to be far higher than
the assessment on which the decision was made. In such cases, would it
not be within the CAG's mandate, would it not in fact be the CAG's
duty as the instrument of accountability, to comment on such a policy?
Further, if the CAG is bound by his (or her) oath of office to uphold
the Constitution, can he (she) refrain from commenting on something
that prima facie seems unconstitutional? If the government were to
formulate a scheme or policy that selectively confers benefits from
public funds on an individual or group to the exclusion of others on
no stated grounds, or on grounds which seem questionable, would it not
be the CAG's duty to point this out?
If the above understanding is correct, then the various activities
that the CAG has been undertaking, such as propriety audit,
performance evaluations, and so on, are clearly well within his ambit,
as different modalities of ensuring accountability. Moreover, there
are two other grounds for this understanding: century-old traditions,
and international consensus.
Even during British rule there was an Auditor General, and traditions
of the independence and objectivity of that office were fairly strong.
Gradations of audit were recognised proceeding from simple vouching
and expenditure audit through regularity audit, audit of
authorisation, audit of the sanctions themselves, and propriety audit,
to what used to be called ‘Higher Audit'. After the constitution, the
CAGs have been following that tradition and adding some technical and
methodological innovations.
Internationally, there are Auditors General, Comptrollers General,
Audit Commissions, and other forms of what are known as Supreme Audit
Institutions (SAIs) not only in democratic countries, but even in
authoritarian systems. In India, the CAG is the SAI. There are
professional organisations such as the International Association of
Supreme Audit Institutions (INTOSAI) and the Asian counterpart
(ASOSAI) in which the Indian SAI plays an important part, and is held
in high esteem. The relevant point in the present context is that the
Indian CAG has not stretched the audit function beyond the functions
performed by other SAIs.
For instance, the National Audit Office of the U.K. has published,
among others, reports on: Information and Communications Technology in
Government: Landscape Review; Delivering Regulatory Reform; Assessing
the Impact of Proposed New Policies; and so on. Some of the reports of
the U.S. Government Accountability Office include those on: The U.S.
Postal service (“Mail Trends Highlight Need to Fundamentally Change
Business Model”); Aviation Safety (“Status of FAA's Actions to Oversee
the Safety of Composite Airplanes”); Electronic Waste: Strengthening
the Role of the Federal Government in Encouraging Recycling and Reuse;
and so on. Having regard to those examples, it can hardly be said that
the CAG of India has been guilty of over-reach.
In the CAG's report on the 2G case, the notional loss figure of Rs.
176000 crore has been much criticised. The report in fact makes it
clear that it is difficult to arrive at a firm figure of loss,
calculates it in three different ways through different methods, and
makes no claim that any of the figures is definitive. However, the
media delight in reporting that the CAG's figures have been questioned
by various people, and a Cabinet Minister immortalised himself by
claiming that there was zero loss.
That leads us to the relationship between the CAG and the Public
Accounts Committee (PAC) and the Committee on Public Undertakings
(COPU). The CAG finalises his reports after taking the government's
and PEs' responses to his initial queries and observations and his
draft reports, signs them, and submits them to the President of India,
who causes them to be laid before Parliament. They are then taken up
by the PAC and COPU. It is not the Reports that are under examination
but the Ministries and other government offices and PEs, on the basis
of those Reports. The CAG assists and advises the parliamentary
committees in that examination.
Unlike the CAG of the U.K. (an officer of Parliament) or the CG of the
U.S. (a part of the Legislative Branch), the Indian CAG is not an
officer of Parliament, but an independent constitutional functionary.
The reason for this is that the CAG is CAG for the Union as well as
the States, which is a unique feature of the Indian quasi-federal
system.
Finally, we come to the question of publicity. The CAG's reports have
suffered from too little and not too much publicity. One of the major
weaknesses of the Indian system is that very few of the CAG's reports
are widely known, and that not all of them get discussed in
Parliament. Some years ago, press conferences began to be held after
the Audit Reports were placed before Parliament, and that practice
continues. This is not a new departure introduced by the present CAG.
If the CAG is to become more effective as an institution for the
enforcement of accountability, it is necessary that Audit Reports be
more widely known and discussed. The people have a right to know their
contents. If, as a result of the CWG and the 2G controversies, the CAG
and his reports are now better known than before, that is a very good
development. If the present CAG manages to enhance the effectiveness
of this constitutional institution, the country would owe a debt of
gratitude to him.
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