Reorganisation and Strengthening of the Indian Public Audit System – Reforms Overdue

Abstract

The objective of this study is to ascertain whether the Comptroller and Auditor General of India (the Supreme Audit Institution of India) functions as per its given mandate, and whether it requires any reorganisation and further strengthening. There is conflict of interest in keeping the accounts for States and auditing them by CAG, with potential scope to adversely impact the quality of both accounting and auditing. Further, ever since 1976, CAG continues to perform entitlement functions for employees of a majority of States, without any statutory authority, thus incurring irregular expenditure. With the present level of audit coverage, all the auditable units by CAG could not be covered in a way that can provide an assurance as to the completeness and timeliness of audit. The susceptibility of public finance to the political regime, the meagre rate of expenditure (about Rs. 32 for checking of financial transactions worth Rs. 1,00,000), and significant recovery of public money at the instance of audit provide adequate justification for strengthening of audit with more human resources. Thus, reorganisation of the institution of CAG to make it an exclusive audit institution, along with strengthening it (with adequate human resources) would better serve the objective of its creation.