Public audit is a vital instrument of ensuring supremacy of Parliament over executive and enforcing public accountability. Public audit institutions developed over time to help legislatures to implement the power of the purse.
This power had two essential elements: the granting of the moneys and supervision of the expenditure. State audit in its present form was introduced first time in Great Britain as an integral part of parliamentary control over national finance with the enactment of Exchequer and Audit Department Act in 1866.
The Act required all departments for the first time, to produce annual accounts known as appropriation accounts. The Act also established the position of Comptroller and Auditor General (C&AG) and an Exchequer and Audit department to provide the supportive staff from within the civil service.
The results of C&AG’s investigations were considered by a dedicated parliamentary committee called the Committee on Public Accounts, thus establishing a circle of parliamentary financial control.
The system of Government accounting and auditing and the organisational structure of the Indian Audit and Accounts Department (IAAD) as it exists today in our country is the legacy of British Raj and is more or less patterned on British model.
The IAAD has a history dating back to 1858 when the East India Company administration was taken over by the British Government and an Auditor General of India, who looked after both audit and accounts functions, was appointed.
The introduction of constitutional reforms in 1919 brought about statutory recognition to the Auditor General. The Government of India Act 1935 gave further recognition to the importance and status of the Auditor General.
Constitutional and statutory mandate
The Indian Constitution gave special status to Comptroller & Auditor General (C&AG) as laid down in Articles 148 to 152. The C&AG’s Act, 1971 regulates the duties, powers and conditions of service of the Comptroller and Auditor General.
Sections 13, 16 and 17 of Act give authority to C&AG to audit all expenditure from and receipt into the Consolidated Fund of India and the State. Sections 14, 15, and 20 of the Act authorizes C&AG to audit the receipts and expenditure of bodies or authorities substantially financed by loans or grants from Union or State or Union Territory. Article 151 of the Constitution prescribes that Audit Reports on the accounts of Union and the States be submitted to Parliament /State Legislature.
Extracts from the Constitution of India (Articles 148 to 151)
(1)There shall be a Comptroller and Auditor-General of India who shall be appointed by the President by warrant under his hand and seal and shall only be removed from office in like manner and on like grounds as a Judge of the Supreme Court.
(2) Every person appointed to be the Comptroller and Auditor-General of India shall, before he enters upon his office, make and subscribe before the President or some as person appointed in that behalf by him, an oath or affirmation according to the form set out for the purpose in the Third Schedule.
(3) The salary and other conditions of service of the Comptroller and Auditor-General shall be such as may be determined by Parliament by law and, until they are so determined, shall be as specified in the Second Schedule:
Provided that neither the salary of a Comptroller and Auditor-General nor his rights in respect of leave of absence, pension or age of retirement shall be varied to his disadvantage after his appointment.
(4) The Comptroller and Auditor-General shall not be eligible for further office either under the Government of India or under the Government of any State after he has ceased to hold his office.
(5) Subject to the provisions of this Constitution and of any law made by parliament, the conditions of service of persons serving in the Indian Audit and Accounts Department and the administrative powers of the Comptroller and Auditor-General shall be such as may be prescribed by rules made by the President after consultation with the Comptroller and Auditor-General.
(6) The administrative expenses of the office of the Comptroller and Auditor-General including all salaries, allowances and pensions payable to or in respect of persons serving in that office, shall be charged upon the Consolidated Fund of India.
Art. 149. Duties and Powers of the Comptroller and Auditor-General : 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 and of any other authority or body as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, shall perform such duties and exercise such powers in relation to the accounts of the Union and of the States as were conferred on or exercisable by the Auditor-General of India immediately before the commencement of this Constitution in relation to the accounts of the Dominion of India and of the provinces respectively.
Art. 150. Form of Accounts of the Union and of the States: The accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the Comptroller and Auditor-General of India, prescribe.
Art. 151. Audit Reports
(1) The reports of the Comptroller and Auditor-General of India relating to the accounts of the Union shall be submitted to the president, who shall cause them to be laid before each House of Parliament.
(2) The reports of the Comptroller and Auditor-General of India relating to the accounts of a State shall be submitted to the Governor of the State, who shall cause them to be laid before the Legislature of the State.
During last three decades, the appointment of C&AG has always been mired with controversy from the time the Constitution came into being in 1950, the four C&AG’s appointed to the post, were senior members of the Indian Audit & Accounts Service. However from 1978 onwards the last four incumbents are from the Indian Administrative Service (IAS).
The appointment of C&AG who do not possess the requisite background of auditing and accounting has been subject of severe criticism by Chairman of the Public Accounts Committee, press, public spirited men, Officers and Staff association of the Audit department.
The Indian Constitution does not lay down qualification for the post of C&AG nor the manner of his selection. However the matter was discussed during the Constituent Assembly debates held in May 1949.
From the debates it seems that framers of the Constitution’s intention was that a person who had sufficient knowledge of finance and accounting systems and had practical experience of the work of Finance department and had worked as Accountant General would only be appointed However, in practice this assurance has not been honored by successive governments.
The C&AG is the head of the Indian Audit and Accounts Department. The office of the C&AG directs controls and monitors the activities of the various offices of the department and is responsible for development of organisational objectives and policies, auditing standards and systems, laying down policies for management of manpower and final approval of the Audit report. For carrying on these responsibilities, field formations exist for each specific area of auditing and accounting.
The offices of IAAD are spread throughout the country. There are 34 Union Government Audit Offices headed by Director General/ Principal Director of Audit and 60 State Accounts and Audit offices headed by Principal Accountant General and Accountant General.
There are 60000 personnel in the IAAD with about 500 Group A officers belonging to the Indian Audit and Accounts Service (IA&AS).The total budget of the IAAD is around Rs 846 crores, bulk of which constitutes expenditure on pay and allowances of the staff.
Appointment of comptroller and auditor general
The most important instrument of accountability, the Comptroller and Auditor General of India has a dual role to perform – firstly as an agency to function on behalf of the Legislature to ensure that the Executive complies with the various laws, passed by the Legislature in letter and spirit, and secondly, on behalf of the Executive to ensure compliance by subordinate authorities with the rules and orders issued by it.
The Comptroller & Auditor General, as the head of the Indian Audit and Accounts Department, is thus neither a part of the Legislature nor the Executive but is an officer created by the Constitution to see that diverse authorities act in regard to all financial matters in accordance with the Constitution, and the laws and rules framed there under. There are several provisions enshrined in the Constitution to safeguard his independent function:-
» He is appointed by the President of India by warrant under his hand and seal and his oath of office requires him to uphold the Constitution of India and the laws made thereunder.
» He can be removed from office only on grounds of proven misbehavior or incapacity after an address by both Houses of Parliament supported by a two-thirds majority.
» His salary and conditions of service cannot be varied to his disadvantage after appointment.
» He shall not be eligible for further office under the Government of India or of any State after retirement.
» His administrative powers and the conditions of service of persons serving in the Indian Audit and Accounts Department shall be prescribed by rules made by the President only after consulting him.
» The administrative expenses of his office are charged upon the Consolidated Fund of India and are not subject to being voted by Parliament.
The legal basis for the auditoria functions of the Comptroller & Auditor General of India is provided by the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971. Although
India has a federal setup, the Constitution provides for a unitary audit by the Comptroller & Auditor General, who conducts audit of the accounts of both the Union and State Governments.