Question

With reference to the duties of the CAG, consider the following statements:

i. The CAG audits all transactions related to the Contingency Fund of India and the Public Account of India.
ii. The CAG has the authority to audit the accounts of private companies not financed by the government.
iii. The CAG advises the President on the form in which the accounts of the Centre and States shall be kept.
iv. The CAG submits audit reports on state accounts directly to the state legislature.

Which of the statements given above are correct?

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

Answer 1

Answer:

A. Only (i and iii)

Comptroller and Auditor General of India (CAG)

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

• Audit Scope:

  • The CAG audits all expenditures from the Consolidated Fund of India and the States, and the Contingency Fund of India and the States, and the Public Account of India and the States. Statement (i) is correct.

  • The CAG audits government companies, corporations, and even private bodies or entities receiving government grants or loans, but only to the extent of the funds provided by the government. The CAG does not have the authority to audit private companies that are not financed by the government. Statement (ii) is incorrect.

• Form of Accounts: The CAG advises the President on the form in which the accounts of the Union and the States are to be kept. This role is crucial for maintaining uniformity and clarity in financial reporting. Statement (iii) is correct.

• Reporting Mechanism:

  • The CAG submits audit reports on the accounts of the Union to the President, who then causes them to be laid before Parliament.

  • The CAG submits audit reports on the accounts of a State to the Governor of the State, who then causes them to be laid before the State Legislature. Statement (iv) is incorrect as reports are submitted to the Governor, not directly to the legislature.

• Other Responsibilities: The CAG also audits receipts of the government and checks all trading, manufacturing, profit and loss accounts and balance sheets kept by any department of the Union or State government.

• Independence: The CAG is removed from office in the same manner and on the same grounds as a judge of the Supreme Court, ensuring their independence from the executive.