School of Law Mitali Srivastava 2023 24 Powers and Functions of the CAG

Summary

The video series explores the Controller and Auditor General of India's (CAG) critical role in ensuring financial accountability and efficiency. The CAG, empowered by the 1971 Act, acts as a custodian of financial narratives and conducts forensic audits. It scrutinizes financial activities from Union to state levels, ensuring compliance and financial integrity. The series delves into the audit process, including performance and system audits, and highlights the CAG's reports' significance in government decision-making. It also discusses the crucial oversight by committees like the Public Accounts Committee, emphasizing their joint role in maintaining financial norms and transparency.

Takeaways

• 📚 The Controller and Auditor General of India (CAG) plays a crucial role in upholding financial accountability and efficiency.
• 🏛️ The CAG's duties are categorized into maintaining accounts and conducting audits, serving as the custodian of financial narratives.
• 📜 The CAG derives its authority from the Controller and Auditor General's Duties, Powers and Conditions of Service Act of 1971.
• 🔍 The CAG has the power to scrutinize any office of accounts, from the Union to the states, and to summon accounts books, papers, and documents for review.
• 🗣️ Section 18 of the 1971 Act mandates the provision of facilities for CAG's inspection and compliance with requests for information.
• 📊 Audits conducted by the CAG include regularity, propriety, efficiency, performance, and system audits, ensuring a comprehensive examination of financial activities.
• 📝 The CAG compiles findings into comprehensive reports, which are formally presented to the government through Section 198 of the Act.
• 🔍 Performance audits evaluate economic use of resources, efficiency in optimization, and effectiveness in achieving program objectives.
• 🏢 Three key committees ensure financial accountability: the Estimates Committee, the Public Accounts Committee, and the Committee on Public Undertakings.
• 🛡️ These committees scrutinize expenditures, ensure funds are used as intended, and maintain adherence to financial norms and rules.

Q & A

What is the primary role of the Controller and Auditor General (CAG) of India?

The primary role of the CAG is to uphold financial accountability and efficiency within the expansive realm of responsibilities, which includes the compilation and preservation of accounts, and conducting a forensic examination into the intricacies that sustain the financial pulse of the nation.

From which Act does the CAG derive its authority?

The CAG derives its authority from the Controller and Auditor General's Duties, Powers and Conditions of Service Act of 1971.

What are the two overarching categories of duties that the CAG shoulders?

The two overarching categories of duties are the meticulous compilation and preservation of accounts, and the crucial art of audit, which includes a forensic examination into the financial aspects of the nation.

What does the CAG do with the accounts books, papers, and documents it summons?

The CAG scrutinizes the accounts books, papers, and documents for meticulous examination, poses queries, articulates observations, and engages in a substantive financial dialogue with the individuals in charge of these offices.

What is the significance of Section 18 of the 1971 Act?

Section 18 of the 1971 Act is significant as it mandates not only the provision of facilities for the CAG's inspection but also compliance with requests for information in a comprehensive format and with expedited efficiency.

What are the specific sections of the Act that govern audits?

The specific sections governing audits are Section 13 to 21, 23, and 24 of the Act.

What does the CAG's audit process entail?

The CAG's audit process entails a comprehensive examination that includes audits against provisions of funds, regularity audits, propriety audits, efficiency audits, performance audits, and system audits.

How are the findings from the CAG's audit process presented?

The CAG compiles all findings into a comprehensive report, which is then formally presented to the government through the provisions outlined in Section 198 of the Controller and Auditor General's Duties, Powers and Conditions of Service Act, 1971.

What are the key components evaluated in a performance audit?

The key components evaluated in a performance audit include economy, efficiency, and effectiveness, which assess the acquisition, holding, and use of resources; optimization of resource use; and goal attainment, respectively.

What is the role of the three committees in ensuring financial accountability?

The three committees - the Estimates Committee, the Public Accounts Committee, and the Committee on Public Undertakings - play a crucial role in ensuring financial accountability by scrutinizing expenditures, ensuring funds were available and applicable to designated services, and adhering to financial propriety and economy.

How does the CAG's work contribute to effective governance?

The CAG's work contributes to effective governance by providing a road map for improvement through performance audits, ensuring transparency, and adherence to financial norms, which in turn safeguards financial integrity.

Outlines

00:00

📊 Role of CAG in Financial Accountability

The Controller and Auditor General of India (CAG) plays a pivotal role in upholding financial accountability and efficiency. The CAG's responsibilities are categorized into two main areas: maintaining financial records and conducting audits. The CAG is the custodian of financial narratives and is also tasked with auditing the financial pulse of the nation. The CAG's authority is derived from the Controller and Auditor General's Duties, Powers and Conditions of Service Act of 1971. It has the power to scrutinize any office of accounts, from the Union to the states, and can summon accounts, books, papers, and documents for detailed examination. The CAG can also requisition information to ensure completeness in the financial narrative. Section 18 of the 1971 Act emphasizes the provision of facilities for CAG's inspection and compliance with requests for information. The audit process includes various types of audits such as regularity, propriety, efficiency, and system audits. The findings are compiled into comprehensive reports presented to the government through Section 198 of the Act.

05:00

🔍 Performance Audit and Financial Accountability Committees

Performance audits evaluate the economics, efficiency, and effectiveness of resource utilization and program objectives. They are not just examinations but also provide a roadmap for improvement and effective governance. The financial accountability of the executive is ensured by three key committees: the Estimates Committee, the Public Accounts Committee, and the Committee on Public Undertakings. These committees scrutinize expenditures to ensure funds were legally available and applicable to designated services. They also check if expenditures conform to governing authorities and adhere to financial propriety and economy. The Public Accounts Committee (PAC) plays a crucial role in upholding financial accountability by scrutinizing appropriation accounts and CAG reports. The Committee on Public Undertakings (COPU) focuses on public undertakings, examining their reports and accounts to ensure adherence to sound business principles and commercial practices. These committees are integral to safeguarding financial integrity and supporting the CAG's operations.

Keywords

💡Controller and Auditor General (CAG)

The Controller and Auditor General (CAG) of India is a constitutional authority responsible for auditing all receipts and expenditure of the Government of India and the state governments. In the video, CAG is portrayed as the custodian of financial narratives, ensuring financial accountability and efficiency. The CAG's role is to scrutinize financial records and report on the government's financial management, as highlighted by the script's mention of the CAG's duties and powers under the Act of 1971.

💡Financial Accountability

Financial accountability refers to the obligation of individuals or organizations to account for the use of resources entrusted to them. In the context of the video, the CAG plays a pivotal role in upholding financial accountability by auditing government expenditures and ensuring that funds are used efficiently and for their intended purposes. The script emphasizes this through the discussion of the CAG's authority to summon accounts books, papers, and documents for scrutiny.

💡Efficiency

Efficiency in the video script pertains to the optimal use of resources to achieve the desired output. It is a key component of performance audits conducted by the CAG, where it is assessed whether available financial, human, physical, and information resources are used in a way that maximizes output or minimizes input. The script illustrates this by discussing the various types of audits, including efficiency audits, which aim to ensure that public funds are utilized in the most effective manner.

💡Performance Audit

A performance audit, as mentioned in the script, is a systematic examination of a program, activity, or function as a basis for evaluating efficiency, effectiveness, economy, and operational improvements. The CAG conducts performance audits to assess whether resources are being used economically, efficiently, and effectively. The script provides an example of how performance audits are not just examinations but are also a means to seek improvement and provide a roadmap for effective governance.

💡Consolidated Fund of India

The Consolidated Fund of India is a fund into which all revenues received by the Government of India are deposited. The script specifies that the CAG has the responsibility of auditing all disbursements originating from this fund. This highlights the CAG's role in ensuring that the government's financial transactions are legitimate and in accordance with the law.

💡Audit Process

The audit process, as described in the video, involves a comprehensive examination of financial records. It includes various types of audits such as regularity audits, propriety audits, efficiency audits, and system audits. The script elaborates on this process, emphasizing the CAG's meticulous approach to compiling findings into comprehensive reports that are presented to the government.

💡Legislative Framework

The legislative framework refers to the set of laws, rules, and regulations that govern a particular area of activity. In the video, the script discusses the legislative framework governing financial accountability, particularly the Controller and Auditor General's duties, powers, and conditions of service as outlined in the Act of 1971. This framework provides the legal basis for the CAG's role in ensuring transparency and adherence to financial norms.

💡Committees

The script mentions three key committees that play a role in financial accountability: the Estimates Committee, the Public Accounts Committee, and the Committee on Public Undertakings. These committees are part of the legislative framework and work to ensure transparency and adherence to financial norms. They dissect the executive's expenditures and ensure that funds were used appropriately and in accordance with the rules of financial propriety and economy.

💡Economical

In the context of the video, being economical refers to the prudent and cost-effective use of resources. It is one of the components evaluated in a performance audit, where the CAG assesses whether resources, including human, financial, and material resources, have been acquired, held, and used in an economical manner. The script uses this term to emphasize the importance of ensuring that public funds are utilized reasonably.

💡Effectiveness

Effectiveness, as discussed in the script, is about whether a program or activity has achieved its objectives. It involves assessing whether the immediate outputs and ultimate impact align with the intended goals. In the context of performance audits conducted by the CAG, effectiveness is a measure of how well the government's initiatives and programs are achieving their intended outcomes, which is crucial for evaluating the success of government policies.

Highlights

Introduction to the role of Controller and Auditor General (CAG) in upholding financial accountability and efficiency.

CAG's dual responsibilities: compilation and preservation of accounts, and conducting audits.

CAG's authority derived from the Controller and Auditor General's Duties, Powers and Conditions of Service Act of 1971.

CAG's role as a hands-on inspector with the power to scrutinize any office of accounts.

CAG's ability to summon accounts books, papers, and documents for scrutiny.

CAG's dynamic discourse with individuals in charge of financial offices.

CAG's power to requisition information for a complete financial narrative.

Section 18 of the 1971 Act mandating provision of facilities for CAG's inspection and compliance with information requests.

Detailed audit process including regularity, propriety, efficiency, and system audits.

CAG's responsibility to audit all disbursements from the Consolidated Fund of India.

Compilation of audit findings into comprehensive reports presented to the government.

Performance audit components: economics, efficiency, and effectiveness.

Performance audits as a quest for improvement and providing a roadmap for governance.

Role of committees in ensuring financial accountability and adherence to norms.

The Estimates Committee's role in scrutinizing executive expenditures.

The Public Accounts Committee's focus on ensuring funds were legally available and applicable.

The Committee on Public Undertakings' examination of public undertakings' reports and accounts.

Committees' collective role in safeguarding financial integrity and supporting CAG's operations.

Conclusion on the powers of the CAG through the Controller and Auditor General's Act of 1971.

Transcripts

dear students hello welcome back to the

video series on controller and auditor

general of India as we move further in

the topic we will be unveiling the

pivotal role of CAG in upholding

Financial accountability and

efficiency within the expansive REM of

responsibilities the CAG shoulders

duties that bifurcate into two over

arcing categories firstly there is the

meticulous compilation and preservation

of accounts portraying the CAG as the

custodian of financial narratives

simultaneously the CAG undertakes a

crucial art of audit a forensic

examination into the intricacies that

sustain the financial pulse of the

nation CAG derives its Authority from

the controller and auditor General's

duties powers and conditions of Service

Act of

1971 in the pursuit of its duties the

CAG transcends the role of a distant

overseer assuming the character of a

handson inspector vested with the power

to scrutinize any office of accounts

spanning from Union to the states the

CAG possesses the authority to summon

the protagonist of its Financial

narratives comprising accounts books

papers and documents for meticulous

scrutiny however this Authority extends

beyond the mere perusal of documents it

encompasses a dynamic discourse the CAG

is empowered to pose queries articulate

observations and engage in a substantive

Financial dialogue with the individuals

in charge of these offices Additionally

the CAG can requisition information

mirroring the act of soliciting missing

pieces in a financial puzzle thereby

guaranteeing completeness in the

financial narrative moving on to section

18 of the 1971 act this provision

assumes prominence by elucidating a

reciprocal facet in this financial

engagement section 18 not only mandates

the provision of facilities for the

cag's inspection but also enjoins

compliances with requests for

information in a comprehensive format

and with expedited

efficiency let us delve into the

intricacies of the Audits and insightful

exploration into the regulatory

framework the specific Provisions

governing audits are meticulously

delineated in section 13 to 21 23 and 24

of the ACT section 13 in particular

confers upon the controller and auditor

general the pivotal responsibility of

auditing all dispersements originating

from the Consolidated fund of India the

audit process however is far from

straightforward it entails a

comprehensive

examination this encompasses audits

against provisions of funds regularity

audits propriety audits efficiency come

performance Audits and system audits

following this exhaustive audit process

the CAG meticulously compiles all

findings into a comprehensive report

these reports narrating the financial

Narrative of the government companies or

corporations find their formal

presentation to the government through

the provisions outlined in section

198 of the controller and auditor

General's duties powers and conditions

of Service Act

1971 now let's break down the components

evaluated in a performance audit

economics is like assessing a strategic

chess move they scrutinize whether

resource ources be it human Financial

material have been acquired held and

used

economically it's about ensuring that

public funds are utilized

reasonably efficiency on the other hand

is all about optimization it dels into

whether the available Financial human

physical and information resources are

used in a way that maximizes output for

a given set of inputs or minimizes input

for a given output Effectiveness takes

us into the REM of goal attainment it

assesses whether a program or activity

has achieved its objectives this

involves distinguishing between

immediate outputs and ultimate impact in

a sense performance audits are not just

examinations they are a quest for

improvement providing a road map for

Effective and efficient

governance furthermore let's navigate

through the intricate web of financial

accountability and the pivotal role

played by committees ensuring

transparency and adherance to financial

Norms in the legislative framework the

financial accountability of the

executive is a well orchestrated

Symphony conducted by by three

committees the estimates committee the

Public Accounts committee and the

Committee on Public undertakings the

pack and the copu meticulously dissect

the executives expenditures and ensures

that dispersed funds were both available

and applicable to the designated

Services they scrutinize whether

expenditures align with the governing

Authority

and adhere to the rules of financial

propriety and economy let's break down

the role of the Committees individually

the pack assumes a pivotal role in

upholding Financial

accountability its scrutiny of

appropriation accounts and CAG reports

involved ensuring that dispersed funds

were legally available and applicable to

the designated service or purpose the

committee meticulously ass assesses

whether expenditures conform to

governing authorities and if

reappropriations adhere to prescribed

Provisions the copu with laser focus on

public undertakings examines their

reports and accounts it gauges the

autonomy and efficiencies of these

entities ensuring adherence to sound

business principles and prudent

commercial practices Additionally the

copu exercises the functions vested in

the pack and the estimate committees

concerning public undertakings in this

intricate dance of oversight these

committees play a crucial role in

safeguarding financial integrity and the

cag's meticulous scrutiny ensuring a

robust foundation for their operations

thus from this segment we understood

that in India the controller and auditor

general wields Powers through controller

and auditor General's Act of

1971 I hope you learned more about the

duties and functions of the CAG and the

role of the Committees therein we'll see

you in the future video thank you