Revision as of 04:54, 16 April 2022

Role and responsibilities of the CAG

A 2022 backgrounder

Sushmita Choudhury & Rajesh Sharma, April 8, 2022: The Times of India

The national auditor has just been hauled up for tardiness. A parliamentary panel has reportedly called representatives of the Comptroller and Auditor General (CAG) for a briefing on the "unreasonable" delay in tabling annual reports and audited accounts of various autonomous bodies.


The Committee on Papers Laid on the Table of Lok Sabha, which is chaired by Bahujan Samaj Party’s Ritesh Pandey, met CAG officials on April 4 to understand the causes for the delays and possible solutions to fix them. 
The committee is constituted every year to examine the reasons for unreasonable delays in the laying of annual reports and audited accounts of various autonomous bodies, public undertakings, commissions, organisations and ministries/departments and others under the administrative control of the government.

While examining various ministries and departments that had not laid their papers within this deadline, the committee heard many representatives claim that the audit by the CAG sometimes takes longer than the stipulated time, causing the delay in their respective submissions.

Sources in the committee say that this may be the first time that a House panel other than the Public Accounts Committee (PAC) will have a formal discussion with the CAG.

Role and responsibilities of the CAG A key responsibility of the CAG is to provide legislators — and, in turn, to the citizens — with independent assurance on the way the Union and state governments use funds. Hence, experts point out that the CAG’s audit reports are meant to fulfil an important Constitutional requirement and they can’t be relevant if they are not timely.

The Committee on Papers Laid on the Table of the House recommended in its First Report back in the 1970s that after the close of the accounting year, every autonomous body should complete its accounts within a period of three months and make them available for audit. The panel further recommended that the audited accounts by the CAG must be laid before Parliament within nine months of the close of the accounting year, or by December 31 of the following financial year.

However, a 2014 report by the Centre for Budget and Governance Accountability (CBGA), a Delhi-based think tank, had interviewed various stakeholders to gauge the relevancy of the CAG’s audits, and found that delayed availability of CAG reports in the public domain was a regular feature.

“In some cases, the delay in submission of audit reports in the State Assemblies has been to the extent of a couple of years. It may be noted here that the final reports of the CAG are made available to the public only when they are laid on the floor of Parliament or State Legislature,” says the report titled “Reporting in Public Interest: Value and Impact of CAG’s Audits”.

Scale of the problem

An analysis of CAG audit reports presented in Parliament shows that the percentage of reports seeing a delay of over 90 days had dipped from 25% in 2014 to 4% in 2016. But the two following years saw a sharp uptick to 26% and 47%, respectively.

“During 2020-21, we examined 4,002 accounts of Union and state governments, PSUs…and other entities, and issued an audit certificate for each account. 1,947 audit certificates were issued within the prescribed time frame,” the CAG notes in its latest-available Performance Activity Report (2020-21). The corollary is that 51% of the certificates were handed out past the deadline.

Who’s to blame?

According to the CAG, “ the delays in certification of accounts were on account of receipt of incomplete accounts; revision of accounts; late receipt of accounts; procedural delays; delays due to non-receipt of records for verification of accounts and non-settlement of observations; delays in receipt of replies to audit observations; longer time taken in discussion with management on critical issues and bunching of accounts.” The pandemic has also been cited as a contributing factor.

Of the over 400 central autonomous bodies under various ministries, only 8% submit their reports for audit on time, the CAG reportedly informed the Committee on Papers Laid on the Table during the scheduled briefing.

Former legislators interviewed in the CBGA report claimed that post-audit paras — basically any question, suggestion, omission or irregularity flagged-off by the national auditor, which demands compliance — the autonomous bodies and departments take a long time to submit action-taken notes.

“Mostly there is undue delay and by the time decisions are taken, it becomes a futile exercise,” the report added. Put differently, the CAG is little more than a paper tiger, especially since the report also mentions that “over 80% of CAG reports are not acted upon”.

The number of bodies furnishing their accounts after the due date steadily reduced from 51% in 2010-11 to 41% in 2016-17. But 2017-18 — the most recent data available — saw a small uptick to 46.5%.

The report had pointed out that a huge number of audit reports could be “one of the reasons for the inability of the Parliamentary/ legislative committees to take up all reports for discussion and follow up action”. In 2010-11 alone, the CAG presented 221 reports of performance audits. So the stakeholders at the time, including legislators, former CAG officials and policy analysts, recommended that the CAG should produce fewer reports.

But that does not seem to have helped much. The CAG’s output had seen a sharp dip in 2017-18 and 2018-19. Over the course of these two financial years, the CAG prepared 171 audit reports in total, which is less than the volume for a single year in some of the previous years. Yet, as of March 31, 2019, over 105 reports were reportedly yet to be tabled.

Brickbats aplenty

And all this makes the CAG a convenient target. Last March, Congress leader Rahul Gandhi put the spotlight on this issue, tweeting the word "CAGed" along with a table that showed the time taken by the CAG to prepare reports since 2011-12.

Gandhi did not mention the source of the table, which claims that under the Congress government not a single CAG report was finalised later than 18 months of the relevant financial year but the BJP’s tenure has not only seen delays of over two years but also growing pendencies.

Even the Centre has been accused of influencing the CAG. In 2018, 60 retired bureaucrats wrote to the CAG expressing concern over the "unconscionable" and "unwarranted delay" in bringing out the audit reports on demonetisation and the Rafale deal so as to not "embarrass" the Modi government till the general elections concluded.

The letter added that in contrast, the CAG's audit reports on the 2G, Coal, Adarsh, Commonwealth Games scams had influenced public perception of the then UPA government's actions. The national auditor at the time had remained tight-lipped on the issue but subsequently sources told TOI that the CAG was yet to hold the exit conference with the defence ministry, a mandatory procedure before finalisation of the report and hence the delay.

Policy analysts, legislators and social activists alike have long pointed out that the CAG is not able to adequately perform its mandated role due to the lack of accountability of the executive branch. Norms and penalties imposed on autonomous bodies to ensure stricter adherence to deadlines and compliance with follow-up actions requested by the CAG would be a start towards figuring out a solution.

Sources: CAG, PTI, CBGA

Defence reports

2016, 2017: CAG stops putting them online

Pradeep Thakur, Why CAG stopped putting defence reports online, December 19, 2018: The Times of India

Some Reports ‘Censored’ Last Year On Def Ministry Request

The federal auditor’s much awaited report on the Rs 59,000 crore Rafale deal, when it comes, is unlikely to be available online as the auditor had instructed its officers last year to desist from the normal practice of uploading defence reports on its website for public consumption.

Seven defence reports were submitted in Parliament since October 2017, five in the last monsoon session, but none of these are available on the auditor’s website, unlike CAG reports on other subjects. All CAG reports, however, must be submitted to Parliament and so are public documents. The unavailability of the online version will restrict their access. The CAG is yet to finalise its report on the Rafale deal, a inter-governmental agreement signed with France in 2016 to acquire 36 fighters in flyaway condition to boost India’s defence against China and Pakistan.

The auditor is likely to present a comprehensive report on all recent defence acquisitions rather than a standalone report on Rafale, sources said. The observations on Rafale will be summarised into a chapter, they added. The CAG is yet to hold exit conference with the defence ministry, a mandatory procedure before the report is finalised. The process will be completed some time in January.

Around October last year, the auditor had issued an internal directive to its defence wing to remove a few paragraphs from some of its past reports and remove all references available online, including press releases issued on the subject. Simultaneously, no new reports on defence were uploaded on its website.

The deleted paragraphs were from audit reports on India-China border roads, ammunition management, functioning of Army Aviation Corps and shortfall in availability of BMP (infantry armoured) vehicles in the Army.

A CAG officer had then told TOI these reports were taken down at the “request of the defence ministry, owing to their sensitivity”. Among the reports pulled down from the CAG website was a performance audit relating to Indo-China border roads. The report was tabled in Parliament in March 2017 and was widely reported after the federal auditor said at least six roads (197 km), out of the ones examined by the CAG, were not fit to run specialised vehicles.

The deleted paragraphs were from audit reports on India-China border roads, ammunition management, functioning of Army Aviation Corps and shortfall in availability of BMP vehicles in the Army

Pending cases

2016

The Times of India, Sep 07 2016

Pradeep Thakur & Rajeev Deshpande

Bofors report PAC's oldest `pending' file

Some 27 years after the Comptroller and Auditor General's (CAG) politically explosive report on the Bofors gun purchase indicted the Rajiv Gandhi government and set the stage for a famous opposition victory in 1989, it remains the oldest “pending“ report with the Parliament's Public Accounts Committee (PAC).

The scandal over kickbacks in the deal continues to await closure as the defence ministry is yet to submit its `action taken notes (ATNs)' on the national auditor censuring the cost of the Swedish artillery gun and the manner in which its competitors were disadvantanged.

The PAC is Parliament's oversight mechanism to keep a check on all government expenditure and is assisted by the CAG through its audit reports. Innocuously titled `report mber 2 on the contracts with number 2 on the contracts with Bofors for purchase and licence prodcuction of 155 mm gun system and counter trade', the CAG's report is still hanging fire, a PAC sub-committee led by BJD MP Bhartruhari Mahtab found. The final audit comments were finalised in 2009, a decade after the Bofors report was prepared and around the time UPA-2 assumed office.

The Bofors report was part of more than 800 ATNs pending with several ministries as of July 31, 2016, a PAC report said. The Central Board of Direct Taxes (CBDT) leads all departments with the highest number of 198 pending ATNs, followed by the defence ministry with 163 and the railways with 100.

Apart from India's first defence scandal that claimed a government, more recent scams examined by the CAG such as procurement of Tatra trucks and the Adarsh housing society scandal remain stuck in the innards of the defence ministry awaiting ATNs.

The CAG's Kargil war report of 2001, a review of procurement during Operation Vijay, is also pending with the PAC. The auditor had raised points of financial impropriety in defence contracts worth over Rs 2,000 crore.

The CBDT has failed to file at least 198 ATNs and most of them relate to incorrect allowance of business expenditure to builders, developers and prominent business houses resulting in loss to the exchequer.

The PAC had taken up for review several CAG reports pointing out substandard work in laying of lines and in land acquisition among others.