Question

Which of the following statements about the CAG’s duties is/are not correct?
i. The CAG audits the accounts of all local bodies without requiring a request from the President or Governor.
ii. The CAG compiles and maintains the accounts of both the Central and state governments.
iii. The CAG acts as a guide, friend, and philosopher to the Public Accounts Committee of Parliament.

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

Answer 1

Answer:

B. i and ii only

Comptroller and Auditor General (CAG) of India

• The CAG is a constitutional authority established under Article 148 of the Indian Constitution.

• He/She is an independent body and is the head of the Indian Audit and Accounts Department.

• The CAG audits the accounts of the Union Government, State Governments, and Union Territories with legislatures.

• Clause (1) of Article 149 states that the CAG shall perform such duties and exercise such powers in relation to the accounts of the Union and of the States as may be prescribed by or under any law made by Parliament.

• Mandatory Audits without Request: The CAG audits the accounts of the following bodies, irrespective of whether a request is made by the President or Governor:

  • All bodies and authorities substantially financed by grants or loans from the Consolidated Fund of India or any State Government's revenue.

  • All companies, corporations, and autonomous bodies whose expenditure has been, to a significant extent, financed by such grants or loans.

  • All government companies and corporations under the Companies Act.

  • Local bodies (Panchayats and Municipalities) are audited by the CAG as per the provisions of the respective state acts and the 73rd and 74th Constitutional Amendments, which mandate the CAG to audit their accounts. This is a key point often tested in competitive exams.

• Compilation and Maintenance of Accounts:

  • Historically, the CAG was responsible for compiling and maintaining the accounts of both the Central and State governments.

  • However, this role was transferred to the Ministry of Finance (at the Centre) and the respective State Finance Departments starting from 1976.

  • Currently, the CAG's primary role is focused on auditing and reporting, not the compilation and maintenance of accounts.

• Role with Public Accounts Committee (PAC):

  • The CAG acts as the 'watchdog of the national purse'.

  • The CAG provides invaluable assistance to the Public Accounts Committee (PAC) of Parliament.

  • The CAG's audit reports form the basis for the PAC's examination of government expenditure.

  • The CAG often appears before the PAC to explain audit findings and is considered a 'guide, friend, and philosopher' to the PAC. This relationship highlights the CAG's crucial role in ensuring accountability.

• Appointment and Removal: The CAG is appointed by the President and can only be removed by the President on an order from both Houses of Parliament on the grounds of proved misbehaviour or incapacity, similar to a Supreme Court judge.

• Independence: The CAG's independence is crucial for the effective functioning of democracy and is protected by constitutional provisions regarding appointment, removal, and service conditions.