Question

Consider the following statements regarding the CAG’s role in financial oversight:

Statement I: The CAG audits transactions related to the Contingency Fund of India.

Statement II: The CAG audits bodies substantially financed by central or state revenues.

Statement III: The CAG has no role in auditing state public accounts.

Which of the following is correct?

• A. Only I and II are correct.
• B. Only II and III are correct.
• C. I, II, and III are correct.
• D. Only I and III are correct.

Answer 1

Answer:

A. Only I and II are correct.

Role of the Comptroller and Auditor General (CAG) in Financial Oversight

• The Comptroller and Auditor General (CAG) of India is a constitutional authority established under Article 148 of the Constitution.
• Statement I: Auditing the Contingency Fund of India
  • The CAG audits all expenditures from the Contingency Fund of India.
  • The Contingency Fund of India is an imprest fund established under Article 267(1) of the Constitution, placed at the disposal of the President to meet unforeseen expenditure pending legislative sanction.
  • While the Parliamentary Committee on Public Accounts scrutinizes the CAG's reports on the Contingency Fund, the CAG's audit itself is a crucial part of financial accountability.
• Statement II: Auditing Centrally/State Financed Bodies
  • The CAG audits government companies, corporations, and other bodies that are substantially financed from the Central or State revenues, or by way of grants or loans from the Consolidated Fund of India or State.
  • This ensures financial propriety in organizations that utilize public funds, even if they are not directly government departments.
  • Examples include public sector undertakings (PSUs) and autonomous bodies receiving significant government funding.
• Statement III: CAG's Role in Auditing State Public Accounts
  • This statement is incorrect.
  • The CAG audits the accounts of both the Central government and the State governments.
  • The CAG prepares audit reports relating to the accounts of the States and submits them to the Governor of the State, who causes them to be laid before the State Legislature.
  • This is mandated by Article 151 of the Constitution.
• Conclusion: Based on the constitutional and statutory functions of the CAG, statements I and II accurately describe its role in financial oversight, while statement III is factually incorrect.