Question

Consider the following statements about the CAG’s powers and duties:

(i) The CAG audits the accounts of all government companies as per the provisions of the Companies Act.

(ii) The CAG advises the President on the form in which the accounts of the Centre and states should be maintained, as per Article 150.

(iii) The CAG has the power to decide the extent and manner of audit for any audited entity.

(iv) The CAG compiles and maintains the accounts of both the Central and state governments.

Which of these statement(s) is/are correct?

• A. (i), (ii), and (iii) only
• B. (ii), (iii), and (iv) only
• C. (i), (iii), and (iv) only
• D. (i), (ii), and (iii) only

Answer 1

Answer:

A. (i), (ii), and (iii) only

Comptroller and Auditor General of India (CAG)

• Constitutional Mandate: The CAG is a constitutional authority established under Article 148 of the Indian Constitution. Its primary role is to audit all receipts and expenditures of the Union and State governments, including those of bodies and authorities substantially financed by the government.

• Auditing Government Companies:

  • Statement (i) is correct. The CAG audits the accounts of government companies as mandated by the Companies Act, 2013 (previously the Companies Act, 1956). This includes companies where the government has a significant financial stake.

• Form of Accounts:

  • Statement (ii) is correct. As per Article 150, the CAG advises the President on the form in which the accounts of the Union and States shall be kept. This ensures uniformity and standardization in financial reporting.

• Audit Scope and Manner:

  • Statement (iii) is correct. The CAG has the discretion to determine the extent and manner of audit for any entity under its purview. This allows for flexibility based on the nature and risk associated with different government bodies.

• Compilation and Maintenance of Accounts:

  • Statement (iv) is incorrect. The CAG does not compile and maintain the accounts of the Central and State governments. This responsibility lies with the respective executive departments. The CAG's role is to audit these accounts after they have been compiled. The establishment of separate accounting and auditing functions is a key feature of independent oversight.

• Significance for Competitive Exams: Questions related to the CAG are frequent in exams like UPSC Civil Services, State PSCs, and others. Understanding the CAG's constitutional powers, duties, and its relationship with the executive and legislature is crucial. Pay close attention to the specific articles mentioned and the scope of its audit functions.