Question

With reference to the CAG’s role in financial oversight, consider the following statements: Which of the following statements are correct?

1. i. The CAG audits all transactions related to the Contingency Fund of India and the Public Account of India.
2. ii. The CAG audits the accounts of government companies as per the Companies Act.
3. iii. The CAG has no role in auditing local bodies unless requested by the President or Governor.
4. iv. The CAG’s audit reports are directly binding on the audited entities to implement corrective measures.

• A. ii, iv
• B. ii, iii
• C. All
• D. i, ii, iii

Answer 1

Answer:

D. i, ii, iii

Comptroller and Auditor General (CAG)

• Constitutional Mandate: The CAG is an independent constitutional authority established under Article 148 of the Indian Constitution.

• Audit of Contingency Fund and Public Account:

  • The CAG audits all transactions related to the Contingency Fund of India.

  • The CAG audits all transactions related to the Public Account of India. This includes funds held by the government in trust, such as provident funds, postal savings, etc.

• Audit of Government Companies:

  • As per the provisions of the Companies Act, 2013 (and previous acts), the CAG audits the accounts of government companies.

  • The CAG also has the power to conduct supplementary audits of government companies.

• Audit of Local Bodies:

  • While the CAG's primary role is auditing central and state government accounts, it can also audit the accounts of local bodies.

  • This audit is performed when requested by the President (for Union territories) or the Governor (for states), or when it is deemed necessary for proper accountability.

• Nature of Audit Reports:

  • The CAG's audit reports are submitted to the President or the Governor, who then causes them to be laid before Parliament or the State Legislature, respectively.

  • These reports are advisory in nature and are not directly binding on the audited entities for immediate implementation of corrective measures.

  • The Public Accounts Committee (PAC) and Committee on Public Undertakings (COPU) in Parliament and similar committees in state legislatures examine these reports and recommend actions.

• Key Functions: The CAG audits government receipts and expenditure to ensure they are in accordance with the law, rules, and objectives of the spending. This ensures accountability and transparency in public finance.