CAG Reports and Their Significance in India

February 26, 2025

The Comptroller and Auditor General of India (CAG) has gained attention recently due to the tabling of 14 pending reports on the previous Aam Aadmi Party (AAP) government in Delhi. Among these reports is one concerning the scrapped excise policy, which estimated a loss of ₹2,002 crore to the Delhi government. The CAG serves as the supreme audit body in India, responsible for overseeing government accounts and ensuring fiscal accountability.

Powers and Duties of the CAG

The CAG is appointed by the President of India under Articles 148 to 151 of the Constitution. The CAG’s Duties, Powers and Conditions of Service Act, 1971, outlines its responsibilities. The CAG conducts audits for both central and state governments and maintains state government accounts. It also oversees pension authorisations for state employees and manages General Provident Fund accounts.

Types of Audits Conducted by the CAG

The CAG performs three main types of audits:

Compliance Audit – Evaluates adherence to laws and regulations.
Performance Audit – Assesses the implementation of government schemes.
Financial Audit – Certifies government accounts and Public Sector Undertakings

Selection of Audit Subjects

The CAG selects audit subjects through a risk assessment process. This includes evaluating project sizes, media coverage, and past inspection reports. The CAG consults guidelines from the International Organization of Supreme Audit Institutions (INTOSAI) and prepares an annual audit plan. An Audit Advisory Board suggests topics and methodologies, while the government or courts can also recommend audits.

Process After Subject Selection

Once a subject is chosen, the CAG holds an entry conference with the relevant department. This conference outlines the audit plans, methodology, and timeline. After the audit, an exit conference is conducted to discuss findings. The CAG shares a draft report with the audited department, which must respond within six weeks. The final report is submitted to the government and laid before the legislature.

Tabling of CAG Reports

Article 151 mandates that CAG reports be laid in Parliament or state legislatures, but lacks a specified timeline. This often leads to delays in tabling reports. For instance, the previous Delhi government did not present several CAG reports in the Assembly, despite some being submitted to the Lieutenant Governor four years prior.

Impact of CAG Reports

CAG reports can influence government policies and procedures. They highlight financial losses and provide recommendations for reforms. For example, a CAG audit led the Telangana government to amend its Engineering Procurement Contract mode. The CAG prepared 172 audit reports in the 2022-23 financial year, a notable increase from previous years.

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