Article 148 of the Constitution of India provides for an independent office of the Comptroller and Auditor General of India, popularly known as the CAG of India. The CAG is the head of the Indian Audit and Accounts Department and the guardian of the public purse.
The CAG controls the entire financial system of the country (both of the Centre and States). He is empowered to audit all receipts and expenditures of the Government of India and State Governments, including those of authorities and bodies substantially financed by the Government. The CAG has to uphold the Indian Constitution and the laws of Parliament in matters of financial administration.
Appointment of the CAG of India
- The President of India appoints the Comptroller and Auditor General (CAG) by a warrant under his hand and seal.
- Before taking over his office, the CAG makes and subscribers before the President an oath or affirmation:
- To bear true faith and allegiance to the Constitution of India;
- To uphold the sovereignty and integrity of India;
- To duly and faithfully and to the best of his ability, knowledge, judgement performs the duties of his office without fear or favour, affection or ill-will;
- To uphold the Constitution and the laws.
Term of office of the CAG
The CAG holds the office for a period of six years or up to the age of 65 years, whichever is earlier. He can resign any time from his office by addressing the resignation letter (in his own handwriting) to the President of India.
Removal of CAG
The President of India can remove the CAG on the same grounds and in the same manner as a judge of the Supreme Court of India. In other words, the President can remove the CAG based on a resolution passed to that effect by both the Houses of Parliament with the special majority, either on the ground of proven misbehaviour or incapacity.
Constitutional Provisions related to the CAG
- Article 148 of the Indian Constitution broadly deals with the office of the Comptroller and Auditor General of India, CAG appointment, oath, and service conditions.
- Article 149 of the Constitution of Indian deals with the duties and powers of the Comptroller and Auditor General of India.
- Article 150 of the Constitution deals with the form of accounts of the Union and the States. Under Article 150, the accounts of the Union and the States shall be kept in such form as the President may, on the advice of the Comptroller and Auditor General of India, prescribe.
- Article 151 of the Constitution deals with Audit Reports. Article 151 laid out that:
- The reports of the CAG relating to the accounts of the Union shall be submitted to the President of India, who shall further place them before both Houses of Parliament.
- The reports of the Comptroller and Auditor General of India relating to the accounts of a State shall be submitted to the Governor of that State, who shall further place them before the Legislature of State.
- Article 279 of the Indian Constitution deals with the Calculation of the “net proceeds”, etc. Article 279 laid out that the Calculation of the net proceeds shall be ascertained and certified by the Comptroller and Auditor General of India, whose certificate is final.
- Second Schedule: The Second Schedule of the Indian Constitution contains the provision related to the salary, allowances of the Comptroller and Auditor General of India.
- As specified in the Second Schedule of the Constitution, neither the salary of a Comptroller and Auditor General nor his rights in respect of leave of absence, pension, or the age of retirement shall be varied to his disadvantage after his appointment.
- Third Schedule: Section IV of the Third Schedule of the Indian Constitution prescribes the form of oath or affirmation to be made by the Judges of the Supreme Court of India and the Comptroller and Auditor General of India at the time of assumption of office.
- Sixth Schedule: According to the Sixth Schedule of the Constitution of India, the accounts of the District Council or the Regional Council shall be kept in such form as the Comptroller and Auditor General of India may, with the approval of the President, prescribe.
- In addition, the accounts of the District and Regional Councils shall be audited in such manner as CAG may think fit, and the reports of the CAG relating to such accounts shall be submitted to the Governor who shall cause them to be laid before the Council.
Independence of CAG
To safeguard and ensure the independence of CAG, the Constitution of Indian has made the following provisions:
- The CAG is provided with the security of Tenure. He can be removed by the President only in accordance with the procedure mentioned in the Indian Constitution. Therefore, he does not hold his office till the pleasure of the President.
- The Parliament determines the salary of CAG and his other service conditions. His salary is equal to that of a judge of the Supreme Court of India.
- His salary, and service conditions, leave of absence, pension, or retirement age cannot be altered to his disadvantage after his appointment.
- The CAG is not eligible to hold any further office (either under the Government of India or of any State Government) once he retires/resigns as a CAG.
- The service conditions of the persons serving in the Indian Audit & Accounts Department and the administrative powers of the CAG are prescribed by the President after consultation with the CAG.
- The administrative expenses of the office of CAG, including all salaries, allowances, and pensions of persons serving in that office, are charged upon the Consolidated Fund of India. Therefore, they are not subjected to the vote of Parliament.
- No minister can represent the CAG in the both Houses of Parliament, and no minister can be called upon to take any responsibility for any actions done by him.
Duties and Powers of the CAG
Article 149 of the Constitution authorises the Indian Parliament to prescribe the duties and powers of the Comptroller and Auditor General of India related to the accounts of the Union and the States and any other authority or body.
Accordingly, Parliament enacted the Comptroller and Auditor General’s (Duties, Powers, and Conditions of Service) Act 1971. However, this 1971 Act was amended in 1976 that relieved the CAG from the accounting functions.
- CAG derives its audit mandate from different sources like:
- Constitutional provisions.
- The Comptroller and Auditor General’s (Duties, Powers, and Conditions of Service) Act of 1971.
- Important Judgements.
- Instructions of Government of India.
- Regulation on Audit & Accounts 2007.
Following are the duties and functions of the Comptroller and Auditor General laid down by the Parliament and Constitution of India:
- The CAG audits the accounts related to all expenditure from the Consolidated Fund of India, Consolidated Fund of each State, and Consolidated Fund of each union territory having a Legislative Assembly.
- The CAG audits all expenditure from the Contingency Fund of India & the Public Account of India and the Constituency Fund of each State & the Public Account of each State.
- CAG audit all the trading, manufacturing, profit & loss accounts, balance sheets, and other subsidy accounts kept by any department of the Central Government and the State Governments.
- He audits the receipts and expenditure of the Centre and each State to assure himself that the rules and procedures on that behalf are designed to secure an effective check on the assessment, collection, and proper allocation of revenue.
- The CAG audits the receipts and expenditure of the following:
- All bodies and authorities substantially financed from the Central or State revenues;
- Government companies;
- Other corporations and bodies, when so required by related laws.
- The CAG audits the accounts of any other authority when requested by the President or Governor, like the audit of local bodies.
- CAG audits all transactions of the Central and State governments related to debt, deposits, advances, sinking funds, suspense accounts and remittance business. He also audits the receipt, stock accounts and others, with approval of the President or when required by the President.
- Under Article 150, the CAG advises the President in regard to the prescription of the form in which the accounts of the Centre and the State shall be kept.
- Under Article 151, the CAG submits his audit reports relating to the accounts of the Centre to the President of India, who shall, in turn, place them before the both Houses of Parliament.
- Similarly, he submits his audits reports relating to the accounts of a State to the Governor of that State, who shall, in turn, place them before the State Legislature.
- The CAG also act as a guide, friend, and philosopher of the Public Account Committee of the Parliament.
- The CAG compiles and maintains the accounts of the State governments. However, in 1976, he was relieved of his responsibilities in regard to the compilation and maintenance of Accounts of the Central Government due to the departmentalisation of accounts (i.e., separation of Accounts from the audit).