Power corrupts; do not let yourselves be entrapped with its pomp and pageantry.

Remember you are in the office to serve the poor. This is what Mahatma Gandhi said to the politicians at the time of independence. ot many politicians and bureaucrats remember this valuable suggestion today. !espite of all the considerable developments and achievements which "ndia has made in the recent past# the world still considers "ndia to be in a sad state. The reason being the wide gap between the poor and the rich in the nation. $n one hand where some people move around in flashy cars# some others don%t even have slippers to move around with. &here some people dine in ' star lounges everyday# some others don%t have enough money to be able to feed themselves a single meal. These disparities e(isting in the country are an obstacle to "ndia%s development and progress. $ne ma)or cause which has led the country to this present scenario is corruption. *orruption is a social evil which has victimi+ed the common man the most. !emocracy# good governance and modernity cannot be imported or imposed from outside a country. , well balanced and inclusive approach based on certain standards and ideals# is essential for the proper governance of any country. To understand the role of *,G in good governance# we will first have to understand what *,G is and what type of worcarried out by the *,G. .inance# ,ccounts and ,udit are as old as history itself. /istory is evident that good accounts and audit organi+ation e(isted in ancient "ndia. 0autilya in his famous ,rthashastra gave an elaborate account of the accounting system that e(isted in the Mauryan period. "n the Mauryan policy# the final authority# in the matter of .inance# was the 0ing; one of whose daily duties was to attend to the accounts of receipts and e(penditure. 1ach Minister was responsible for the finance of his department and each department had its own accountant# treasurer and others. 2imilarly# Gupta rulers introduced more elaborate and orderly system of accounts and audit during their rule. ,lthough the ancient and medieval administrations established coherent accounts and audit organi+ations# it failed# during the period of later Mughals. 2ubse3uently# it was the 4ritish who introduced a proper system of accounting and auditing. "n 56'6# when the 1ast "ndia *ompany7s administration was ta-en over by the *rown# a complementary post of ,ccountant8General at the "ndian office was created to prepare the accounts of the e(penditures incurred in 1ngland. "n 569:# both accounting and auditing functions were amalgamated and were handed over to the ,ccountant8General

of the Government of "ndia who was also -nown as 7,uditor General7. /owever# the statutory recognition of the ,uditor General came in 5;5;# with the introduction of *onstitutional Reforms. /e was made independent of the Government of "ndia and was appointed by the 2ecretary of 2tate and held office as the administrative head of the "ndian ,udit !epartment. The Government of "ndia ,ct 5;<' gave further recognition to the importance and status of this office. Thereafter# his appointment was made by the crown and the conditions of his service were also determined by /is Ma)esty8in8*ouncil. /is duties and powers were prescribed by rules made under the order of /is Ma)esty8in8*ouncil. /e could be removed from office only in the same manner and on the same grounds# as a =udge of the .ederal *ourt. The Comptroller and Auditor General of India >
The *omptroller and ,uditor General ?*,G@ of "ndia is

an authority# established by the *onstitution of "ndia# who audits all receipts and e(penditure of the Government of "ndia and the state governments# including those of bodies and authorities substantially financed by the government. The *,G is also the e(ternal auditor of government8owned companies. The reports of the *,G are ta-en into consideration by the Public ,ccounts *ommittees# which are special committees in the Parliament of "ndia and the state legislatures. *,G is also the head of "ndian ,udit and ,ccountant 2ervice. /e is appointed by President. /e can hold his office for 9 years or up to age of 9' years. /e can give resignation at any time or can be impeached by President through Parliament resolution with special ma)ority. The importance of *,G can be understood by the following words of 4aba 2aheb ,mbed-ar> " am of the opinion that this dignitary or officer ?*,G@ is probably the most important officer of the *onstitution of "ndia. /e is the one man who is going to see that the e(penses voted by parliament are not e(ceeded# or varied from what has been laid down by Parliament in what is called appropriation ,ct. "f this functionary is to carry out the duties8 and his duties# " submit are far more important than the duties than the duties of the =udiciary. The organi+ations sub)ect to the audit of the *omptroller and ,uditor General of "ndia are >8 A ,ll the Bnion and 2tate Government departments and offices

including the "ndian Railways and Posts and Telecommunications. A ,bout 5':: public commercial enterprises controlled by the Bnion and 2tate governments# i.e. government companies and corporations. A ,round C:: non8commercial autonomous bodies and authorities owned or controlled by the Bnion or the 2tates. A $ver CC:: authorities and bodies substantially financed from Bnion or 2tate revenues. There is a special arrangement for the audit of companies where the e3uity participation by Government is '5 percent or more. The primary auditors of these companies are *hartered ,ccountants# appointed by the *omptroller and ,uditor General of "ndia# who gives the directions to the auditors on the manner in which the audit should be conducted by them. The *omptroller and ,uditor General of "ndia is also empowered to comment upon the audit reports of the primary auditors. "n addition# the *omptroller and ,uditor General of "ndia conducts a test audit of the accounts of such companies and reports the results of his audit to Parliament and 2tate Degislatures. Nature of Audit &hile fulfilling his *onstitutional obligations# the *omptroller E ,uditor General e(amines various aspects of Government e(penditure. The audit done by *,G is broadly classified into Regularity ,udit and Performance ,udit. Regularity Audit ?*ompliance@ A ,udit against provision of funds to ascertain whether the moneys shown as e(penditure in the ,ccounts were authori+ed for the purpose for which they were spent. A ,udit against rules and regulation to see that the e(penditure incurred was in conformity with the laws# rules and regulations framed to regulate the procedure for e(pending public money. A ,udit of sanctions to e(penditure to see that every item of e(penditure was done with the approval of the competent authority in the Government for e(pending the public money. A Propriety ,udit which e(tends beyond scrutini+ing the mere formality of e(penditure to it wisdom and economy and to bring to light cases of improper e(penditure or waste of public money. A &hile conducting the audit of receipts of the *entral and 2tate Governments# the *omptroller E ,uditor General satisfies himself that the rules and procedures ensure that assessment# collection and allocation of revenue are done in accordance with the law and there is no lea-age of revenue

which legally should come to Government. Performance Audit Performance audit is done to see that Government programmes have achieved the desired ob)ectives at lowest cost and given the intended benefits. .or a complete list of Performance ,ppraisals since 5;6< Regularity Audit ?.inancial@ "n regularity ?financial@ audit and in other types of audit when applicable# auditors should analyse the financial statements to establish whether acceptable accounting standards for financial reporting and disclosure are complied with. ,nalysis of financial statements should be performed to such a degree that a rational basis is obtained to e(press an opinion on financial statements. Action on Audit Reports The scrutiny of the ,nnual ,ccounts and the ,udit Reports thereon by the Parliament as a whole would be an arduous tas-# considering their diverse and specialised nature# besides imposing e(cessive demands on the limited time available to the Parliament for discussion of issues of national importance. Therefore the Parliament and the 2tate Degislatures have# for this purpose# constituted speciali+ed *ommittees li-e the Public ,ccounts *ommittee ?P,*@ and the *ommittee on Public Bnderta-ings ?*$PB@# to which these audit Reports and ,nnual ,ccounts automatically stand referred. The *omptroller E ,uditor General audits the accounts and submits his Report to Parliament F 2tate Degislature which are automatically remitted to the Public ,ccounts *ommittee ?P,*@ F *ommittee on Public Bnderta-ings ?*$PB@. Public Accounts Committee The Public ,ccounts *ommittee satisfies itself>8
That the money ?shown in the accounts@ was disbursed

legally on the service or purpose to which they were applied. That the e(penditure was authori+ed. "t is also the duty of the P,* to e(amine the statement of accounts of autonomous and semi8autonomous bodies# the audit of which is conducted by the *omptroller E ,uditor General either under the directions of the President or by a 2tatute of Parliament.

Committee on Public Undertakings The *ommittee on Public Bnderta-ings e(ercises the same financial control on the public sector underta-ings as the Public ,ccounts *ommittee e(ercises over the functioning of the Government !epartments. The functions of the *ommittee are>8 To e(amine the reports and accounts of public underta-ings. To e(amine the reports of the *omptroller E ,uditor General on public underta-ings. To e(amine the efficiency of public underta-ings and to see whether they are being managed in accordance with sound business principles and prudent commercial practices. The e(amination of public enterprises by the *ommittee ta-es the form of comprehensive appraisal or evaluation of performance of the underta-ing. "t involves a thorough e(amination# including evaluation of the policies# programmes and financial wor-ing of the underta-ing. The ob)ective of the .inancial *ommittees# in doing so# is not to focus only on the individual irregularity# but on the defects in the system which led to such irregularity# and the need for correction of such systems and procedures. CAG'sRole The *omptroller E ,uditor General of "ndia plays a -ey role in the functioning of the financial committees of Parliament and the 2tate Degislatures. /e has come to be recogni+ed as a 7friend# philosopher and guide7 of the *ommittee. /is Reports generally form the basis of the *ommittees7 wor-ing# although they are not precluded from e(amining issues not brought out in his Reports. /e scrutini+es the notes which the Ministries submit to the *ommittees and helps the *ommittees to chec- the correctness submit to the *ommittees and helps the *ommittees to chec- the correctness of facts and figures in their draft reports. The .inancial *ommittees present their Report to the ParliamentF 2tate Degislature with their observations and recommendations. The various Ministries F !epartment of the Government are re3uired to inform the *ommittees of the action ta-en by them on the recommendations of the *ommittees ?which are generally accepted@ and the *ommittees present ,ction Ta-en Reports to Parliament F Degislature. "n respect of those cases in ,udit Reports# which could not be discussed in detail by the *ommittees# written answers are obtained from the !epartment F Ministry concerned and are

sometimes incorporated in the Reports presented to the Parliament F 2tate Degislature. This ensures that the audit Reports are not ta-en lightly by the Government# even if the entire report is not deliberated upon by the *ommittee. 2ome ma)or functions of the *,G are>8
To prescribe# with the approval of president# the form in

which the accounts of union and states are to be -ept. To perform such duties and e(ercise such powers in relations to accounts of union or states or another body # as many prescribed by any law made by the parliament. To report the president or governor of the state on the account of country or state. The CAG as Auditor General ! The primary purpose of audit is to ensure that the money has been utili+ed for the purpose for which the grants were made by the parliament and thus this audit is an important instrument in the control of public e(penditure. "t -eeps a chec- on the application of rules and regulations by the government servants# issued on behalf of the administration and secondly it ensures# on behalf of the legislature# that the actions of these public servants have been in accordance with the views and the re3uirements of the legislature. Audit of Re"enue >8 *,G after some initial resistance on the part of revenue department was able to e(tend its dimension to audit of revenues which includes audit of ta( assessment such as "ncome ta(# *entral 1(cise and *ustoms# 2ales ta( etc. The audit of receipts has helped bringing considerable revenue for the government by pointing out cases of under assessment of ta(# and also assisted in better functioning of ta( administration machinery by pointing out lacunae or loopholes in the ,ctF Rules and deficiencies in the functioning of ta( administration. Audit of Commercial #nterprises ! The audit of government companies was brought within the purview of *,G%s audit at the insistence of then *,G by introducing a suitable provision in the *ompanies ,ct 5;'9# although there were initial attempts to e(clude his )urisdiction. Thus# while *hartered ,ccountants are re3uired to certify ,nnual ,ccounts of government companies# *,G has been granted right to conduct supplementary audit.

Audit of Public $ector Undertakings >8 Bnder 2ection 95; of the *ompanies ,ct# 5;'9# the auditor ?statutory auditor@ of a government company including deemed government company# appointed by the *,G conducts the audit of accounts of the companies. $n the basis of supplementary audit conducted thereafter# the *,G issues comments upon or supplements the ,udit Report of the statutory auditor. Audit of Autonomous %odies >8 , large number of bodies setup# especially in the field of education and development li-e ""Ms# these bodies are audited by the *,G. !uring the last five years# *,G has conducted performance audits of many -ey socioeconomic programmes of the Government of "ndia# for instance8 ational Rural 1mployment Guarantee 2cheme ? R1G2@# ational Rural /ealth Mission? R/M@# 2arva 2hi-sha ,bhiyan ?22,@# Mid day Meals 2cheme# ,ccelerated Rural &ater 2upply Programme ?,R&2P@# and Pradhan Mantri Gram 2adaGo)ana ?PMG2G@. *,G%s audits have also covered several niche areas of public interest li-e *onsumer Protection ,ct# &aste Management and Police Moderni+ation 2cheme etc. *,G%s audit of Government departments# offices# and agencies in the 2tates# dealing with implementation of Government schemes# also touches upon the performance of schemes or their components at various levels of the audit process. *,G%s audit is an e(ternal audit on behalf of the ta( payers. The Bnion and 2tate Degislatures# through their respective legislative committees on public accounts and public underta-ings# discuss the matters brought out in *,G%s audit reports and ma-e recommendations to the e(ecutive for appropriate management action. "n a broad theoretical sense# therefore# *,G%s audit itself is a social audit. Get# in its commonly perceived sense# *,G audit remains a Government process largely confined to Government officials and Government auditors. &imitations "n spite of the various safeguards provided by the *onstitution to maintain the independence of *omptroller and ,uditor General from the 1(ecutive and Parliament# hisF her independence appears to be limited by four factors vi+.#

 restraint of the 1(ecutive on hisF her budgetary

autonomy bloc- of control overstaff indirect accountability to the .inance Ministry of the Bnion and the .inance !epartment of the 2tate Government for handling accounting duties# and absence of direct access to Parliament ?unli-e the ,ttorney General@ in defence of hisF her official conduct# if and when 3uestioned on the floors of Parliament. To conclude# notwithstanding these limitations# the *omptroller and ,uditor General plays a uni3ue role in the "ndian democracy# by upholding the *onstitution and the laws in the field of financial administration. /eF2he is neither an officer of Parliament nor a functionary of Government. /eF 2he is one of the most important officers of the constitution.