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Name of Participant Mohd. Aarif Khan

Fathers name Javed Ahmed Khan
Date of Birth 03-08-1991
College/University Faculty of Engineering and Technology, Jamia Millia Islamia,
New Delhi-110025
College Identity Card no. 20092905
Graduate program of enrolment B.Tech in Electronics & Communication
(Engineering)
Contact information:
Mailing address G-246, Indralok Colony, Krishna Nagar, Lucknow-226023
Telephone number +91-9582020314, +91-9565256693
Email [email protected]

Role of CAG in Meeting Challenges of Good Governance

Governance, is primarily defined in the Oxford Dictionary, as the act of governing,
implying the practice of order, protocol and systematic organization for the aim of
achieving constructive progress and development for the benefit of the people and the
country, and thus laying down the tools essential for good governance. The
Government is chosen by a general election every 5 years, and in order for the
Government to be unbiased, fair and honest, especially in monetary matters, an office
was created by whom the expenditure affairs of the Government could be scrutinised
by. He would directly be answerable to the President, thus keeping the element of
impartiality in the process.
To meet the challenges of auditing the expenditures and receipts of Central and State
Governments, the office of the Comptroller and Auditor General was established. The
basic structure of the institution was formed by Articles 148, 149, 150 and 151 of the
Constitution of India. He is also responsible for auditing the receipts of the authorities
and bodies substantially financed by the government, besides also being the external
auditor of government-owned companies. To ensure political freedom, the CAG is
appointed by the President, on recommendation of the Prime Minister, and must
subscribe an oath of affirmation according to the form set out for the purpose in the
third Schedule. To further strengthen his position, it has been laid down in the
constitution that the CAG cannot be removed from his office except through a process
of impeachment, similar to the removal of a judge of the Supreme Court. In order to
make the office of the CAG function with independence, all the administrative
expenses of the office, including the salaries, pensions and allowances, are charged
upon the Consolidated Fund of India. The salary and other conditions of service of the
Comptroller and Auditor-General shall be such as may be determined by Parliament
by law and, until they are so determined, shall be as specified in the Second Schedule:
Provided that neither the salary of a Comptroller and Auditor-General nor his rights in
respect of leave of absence, pension or age of retirement shall be varied to his
disadvantage after his appointment.

The Office of the Comptroller and Auditor General of India, as we may see, has been
fashioned to assist and advise the Government in various areas, as prescribed by the
Parliament in matters of accounts, auditing and submitting reports to the Government,
necessary for the functioning and governance of the country. Originally called the
Auditor General of India, by the Government of India Act in 1935, his office was
entrusted with the responsibility for the accounting and auditing of the Government of
India and eleven Provincial Governments, performing his duties and functions through
the Indian Audit and Accounts Department. To aid and assist the CAG in an unbiased
discharge of his duties, his powers, duties and conditions of service are laid down in
the Comptroller and Auditor Generals Act, 1971.
His most important function is to audit all expenditure from the Consolidated Fund of
India of Union, of each State and of each Union Territory having a Legislative
Assembly with the aim to ascertain whether the money shown in the accounts as
having been disbursed, were legally available for and applicable to the service or
purpose to which they have been charged. He also ascertains whether or not the
expenditure conforms to the authority which governs it. This duty is extremely
important as the monetary expenditures and its sources are legally analysed. Its
approval is essential for a clear account of the Government, and for its record to be
free from scams and illegalities. The Office of the CAG thus keeps the Union and
State records in check, a requirement for honest, impartial and fair governance.
Responsible for auditing all transactions of the Union, States and the Union Territories
having a Legislature, relating to Contingency Funds and Public Accounts, the CAG
records and monitors all monetary transfers and transactions of the Government at all
(Union and State) levels. He is also responsible for auditing all trading, manufacturing,
profit and loss accounts and balance sheets and other subsidiary accounts kept in any
Department of the Union or of the State and he must, in each case, report on the
expenditure, transactions and accounts audited by him. His other auditing functions
include the audits of the receipts and expenditures of bodies or authorities substantially
financed from the Union or the State Revenues, grants or loans given to other bodies,
Revenue of the union and State Governments, the accounts of the stores and stock,
Government companies and Corporations (under the Companys Act, 1956 read with

CAGs Act, 1971) , where equity participation is 51% or more and to audit all
accounts of other authorities and bodies as per their statute or upon request by the
Governor of a State or the Administrator of a Union Territory having a Legislative
Assembly. Thus, as we may see, the Office of the Comptroller and Auditor General of
India has been accorded with the responsibility to looking into the records and receipts
of the Government, hence meeting the greatest challenge of governance, that is, of
monitoring the Government in power and its expenditures. Only an honest
Government can be expected to run a country in a fair and scrupulous manner. With
regard to the companies, partly owned by the Government, the primary auditors of
these corporations are the Chartered Accountants appointed by the Union Government
on advice of the CAG. It is also the CAG, who directs the Chartered Accountants to
audit in a particular manner. Furthermore, he has been accorded the power to comment
and supplement the reports of the Primary Auditors and provide the reports to the
Parliament and State Legislatures, the audit of the accounts of such companies. The
organizations subject to the audit of the CAG are about 1500 public commercial
enterprises, 400 non commercial autonomous bodies and about 4400 authorities
substantially financed by the Union or State revenues. A special feature of the audit of
such Public Sector Undertakings and Government companies is the periodic
comprehensive appraisal of their working by the Audit Boards, constituted by the
CAG. The sectors in which the CAG and his Auditing Office, may carry audits and
report in the Parliament, are the Civil, Autonomous Bodies, Scientific Departments,
Defence Services, Railways, Post and Telecommunications, Commercial and Direct
and Indirect Taxes, hence covering the major fields of the Government. The reports
presented to the State Legislature are Civil, Revenue and Commercial. In order to
ensure the accountability of the executive of the Government Companies and
Corporations to the Parliament and the State Legislature, the CAGs Act, 1971,
envisages that the CAG of India shall have the powers to conduct audits of the
accounts of aforesaid organizations. However the Companies Act, 1956 empowers the
CAG to appoint or re-appoint the auditors of a Government Company and direct the
manner in which the audit is to be conducted.

To aid, assist and carry out the work of the Comptroller and Auditor General of India,
the institution of Indian Audits and Accounts Office was created with the CAG of
India as its head. The Indian Audit and Accounts Service (IAAS) is a Central
Government service, free from control from any executive authority, solely
answerable to the CAG of India. The officers of the Indian Audit and Accounts
Department serve in an audit managerial capacity. IAAS is responsible for auditing the
accounts of the Union and State governments and public sector organizations, and for
maintaining the accounts of State governments. IAAS is the government's financial
watchdog, and is a critical element in checks on the government. With a view to
maintain high quality audits, the Comptroller and Auditor General of India has
promulgated the Auditing Standards, that prescribes the standards of professional
conduct of the staff and the officers of the Indian Audit and Accounts Department,
both in terms of professional competence and ethics, besides prescribing the principles
of the entire spectrum of audits. The Auditing Standards also lay down a quality
assurance system within the institution, and the steps and procedures to be followed by
the auditors in conducting and managing their audit work and the framework for
reporting the result of an audit. To assist in the process and meet the challenges of
auditing, the CAG of India has issued three Manuals of Standing Orders (MSOs).
They are namely MSO (Audit), MSO (Accounts and MSO (Administration). MSO
(Audit) primarily deals with the general principles and procedures for audits and the
preparation of the subsequent audit reports. It provides detailed instructions for the
various types of audits, such as audits of expenditure, receipts, stores and stock,
commercial accounts etcetera. It also contains supplementary instructions for
certification, compliance and performance audits. MSO (Accounts) deals with the
general principles and procedures for the classification of transactions between capital
and revenue, procedure of accounting of loans and advances, public works, forests,
pensions etcetera, besides form and content the monthly accounts of the Finance and
Appropriation Accounts. MSO (Administration) consists of organisational setup and
service matters, various cadres within the Department, recruitment rules, promotional
examinations and financial and administrative powers of the subordinate offices
among others.

Another important role performed by the Comptroller & Auditor General of India is
the compilation of accounts of the State Governments and in many states, regulation
and authorisation of entitlements such as provident fund and pensionary benefits of
State Government employees. On the directions of the Comptroller and Auditor
General, the officers of IA&AS are required to acquire and possess not only the
professional skills of an accountant and auditor but also to develop administrative
competence to manage the staff of the Indian Audit & Accounts Department which has
a strength of over 60,000 personnel. Their job requirements include scrutiny of
intricate contracts, understanding of tax and revenue laws, assessing the financial
health of commercial corporations, grasping for instance the complexities of oil
exploration or the working of an atomic power plant and comprehensively reviewing
the effectiveness of implementation of country-wise schemes for rural development,
health services, education etc. IA&AS officers also go abroad to conduct embassy
audit i.e. audit of Embassies and High Commissions of India situated all over the
world.
The audits of the CAG of India, in order to maintain governance and a sense of
honesty in the working of the country, are bifurcated into two major streams. They are
Regularity Audit (compliance) and the Performance Audit. They are, in objective, to
check the expenditures of the Government. The Regularity Audit is the audit against
the provision of funds to ascertain whether the money and expenditure shown was in
conformity with the laws and regulations, since it is the question of proper handling
and flow of public money, one of the greatest challenges to proper governance. A
Performance Audit is carried out to ascertain if the Government programmes have
achieved their desired objectives with the minimum cost and given the intended
benefits. The reports of the CAG are taken into consideration by the Public Accounts
Committees, which are special committees in the Parliament and State Legislatures to
scrutinise the Annual Accounts and Audit Reports. The Committee on Public
Undertakings exercises the same financial control on the public sector undertakings as
the Public Accounts Committee exercises over the functioning of the Government
Departments. The CAG of India has come to be recognised as a 'friend, philosopher
and guide' of the Committee. His Reports generally form the basis of the Committees'

working, although they are not precluded from examining issues not brought out in his
Reports. He scrutinises the notes which the Ministries submit to the Committees and
helps the Committees to check the correctness of facts and figures in their draft
reports. To further broad-base the input for audit planning an advisory board has been
setup under the chairmanship of the Comptroller and Auditor General of India, which
consists of eminent persons from diverse fields.
The Accounts Offices are responsible for the compilation of accounts of the State
Governments, preparation of their annual accounts and the Union Territories with a
legislative assembly. They also render accounting information and assistance to the
State Governments. The Training establishments are iCISA and NAAA (National
Academy of Audits and Accounts), headed by Director Generals, besides Regional
Training Institutes. These institutes provide training to the selected candidates, by
means of a national exam conducted by the UPSC. They teach the professional skills
required of an accountant and auditor, besides also help in developing the needed
administrative competence to manage and run the staff of the Indian Audit & Accounts
Department. The Office of the CAG also brings out several journals, such as Revenue
Audit Journal, Grassroots-e-journal of local bodies, Audit Bulletin, Journal of
Management and Training, PursuIT. These journals are available to the common man
by means of the CAGs website.
As we may see, from Parliamentary sessions to blaring headlines on a television set,
the Audit and Accounts Committee has been rendering commendable public service
and has upheld its responsibility of keeping in-check, commercial extravagances and
Fund money waste, by analysing them in a legal light, and has unravelled many a case
of monetary fraud. Some of the famous reports which led the Government of India and
the States in political turmoil were: The 2G Spectrum scam, The Bofors scam, The
Fodder scam, The CWG scam and etcetera, to name a few. A performance review of
many central schemes has led to reform at many levels in various governments. The
biggest advantage which the IA & AS officers have is that of independence from the
political executive. The biggest drawback however, remains that the parliamentary
committees are not abreast with the expertise and hence the reports are not well

understood, not in the manner they should have been, which often leads to its partial
implementation.
In the words of Dr. Ambedkar, who speaks in regard of the CAG as being, ...the most
important officer in the Constitution of India. He is the one man, who is going to see
that the expenses voted by the Parliament are not exceeded or varied from what has
been laid down by the Parliament in what is called the Appropriation Act., the
Comptroller and Auditor General of India is truly the symbol of righteousness and
honesty, and plays a critical role in tackling the challenges to good governance, which
start from analysing the Union and State expenditure of public money, in accordance
with the Constitution, an essential duty entrusted to him. Transparency emerges due to
his accounts and reports, key ingredients of government accountability and just
governance. In a world marred with fraud, scams and corruption, which are challenges
to peace and national prosperity, the work of auditing and accounting addresses the
key issues underlying the act of proper governance. Today, after 150 years of the
institution of the Office of the CAG, his work sums up the spirit of the visionaries who
had helped create an independent country, run by and for its own people in a manner
befitting values of the Indian culture, as he continuously strives in building this nation
into a more prosperous India, a better India.