FAQ's

The office of the CAG of India has an internal inspection wing which periodically inspects the audit and accounts offices in the country, to ensure whether they have adequate administrative and technical controls and they are effectively complied with. In addition to this, the CAG has a system of Peer Review, i.e. review of work done by an entity by another entity of a similar standing. The Peer Review of the audit offices is done by heads of other similar audit offices. It seeks to ensure that the audit work is planned effectively, executed efficiently and that the audit product meets the benchmarks of the organization and the needs of stakeholders

The office of the CAG in New Delhi directs, monitors and controls all activities connected with audit, accounts and entitlement functions of the IA&AD. At the field level, there are various offices, such as: Offices of the Accountants General (Audit) in every State responsible for the audit. Offices of the Accountants General (A&E) for the compilation of State accounts and carrying out the entitlement functions. Principal Directors of Audit responsible for the audit of the Union activities including all Civil Ministries and Departments, Defence, Railways, Posts, and Communications. Offices of the Member Audit Board entrusted with the audit of Central Public Sector undertakings. Overseas offices for auditing the Indian Missions abroad.

The CAG is assisted by the Indian Audit and Accounts Department (IA&AD) to discharge his constitutional role. At the top and middle managerial level of the IA&AD, there are Indian Audit and Accounts Service (IA&AS) officers. They are either directly recruited through the Civil Services examination conducted by the UPSC or inducted by promotion from Group B (supervisory staff). There are subordinate cadres consist of gazetted supervisory cadre (Group A) of Senior Audit Officers and Assistant Audit Officers (Group B) and a support staff cadre (Group C).

The CAG and his officials play a key role in the functioning of PAC/COPU/LB Committee of the State Legislatures. His Reports generally form the basis of the Committees' working. CAG or his officials assist the Committee members in the selection of audit paragraphs for in-depth examination. He scrutinizes the notes which the departments submit to the Committees, helps the Committees to check the veracity of the submissions made to them and also helps them to check the correctness of facts and figures in their draft reports.

The reports of the CAG are submitted to the President in case of the Union and to the Governor in case of the State who in turn cause them to be tabled before the House. Once tabled in the House, the Reports stand permanently referred to the Central and State Standing Committees on Public Accounts (PAC)/Committees on Public Undertakings (COPU). These specialised committees have been constituted to facilitate timely and intensive scrutiny of the Annual Accounts and the Audit Reports thereon. The Committees select those findings and recommendations from our reports that they judge to be the most critical to the public interest and arrange for hearings on them. We provide technical assistance to the Committees in this task. At the hearings of the Committees, the executive can be called to account for their actions/inactions. Based on their Examination, the Committees prepare and submit their reports to the Legislature that summarise the Committee's hearings, the action taken by the executive and include recommendations to improve administrative practices and procedures.

Major audit findings arising out of audit inspections are processed as draft paragraphs for inclusion in the CAG’s Audit Reports to be placed before the Legislature. The audit offices send the proposed draft paragraphs to the concerned Head of the Departments of State Government by name for sending the replies of the Government within a period of six weeks. The replies of the Government are taken into consideration before finalising the draft audit paragraphs. In cases where the replies are satisfactory, the draft paragraphs are not included in the Audit Reports.

The replies received from the auditees in response to the Inspection Reports are examined in the audit offices and if found satisfactory, the observations are settled. Periodical reminders are issued by the audit offices regarding outstanding Inspection Reports/ observations. The audit observations are also discussed and settled during Audit Committee meetings between audit personnel and the representatives of the auditees. At the time of the next audit too, the audit observations that remain unsettled are reviewed by the audit parties. In sum, the audit observations contained in the IR are pursued till their final settlement.

The results of an audit inspection are formally communicated in a report known as an Inspection Report to the officer-in-charge of the concerned auditee unit with a request to submit written replies on the audit findings within a stipulated time period.

An Audit Plan is an annual programme of audit, which specifies the units and schemes/programmes to be audited during the ensuing financial year, based on the availability of audit resources during the year. Every year, each audit office frame a formal Audit Plan, based on detailed risk analysis, with reference to the quantum of expenditure, level of internal controls, past audit findings, media reports, schemes undertaken by the departments and other parameters. The plan identifies the auditee units proposed to be taken up for audit and allocation of audit resources. The aims of the Audit Plan are to: provide reasonable assurance to the stakeholders that all reasonable risks have been covered while deciding the audit priorities; prioritise the audit assignments to cover the mandatory and high-risk areas/sectors (departments, programmes/schemes/projects etc) with special emphasis on current issues and thrust areas; improve the quality of audit by providing adequate supervision and guidance using the services of experts, if considered necessary; pay special attention to new and emerging challenges to audit, attributable to changes in the auditee environment.

An Audit Report contains the final, fully corroborated audit findings. These may have been accepted by the department and/ or are proved factually and are material enough to be placed before the Legislature. The objective of our audit is to bring about improvement in the management and conduct of the government's activities and programmes. We seek to determine the nature of the inadequacies identified, whether they are isolated or recurring. We want not only to stimulate corrective action but to ensure that the lapse does not occur again. We make appropriate, informed and implementable recommendations to improve systems, procedure and processes.

The Audit Reports of the CAG submitted to the Parliament and State Legislatures consist of compliance and performance audit reports covering revenue collection and expenditure of Government, Separate Audit Reports on the functioning of certain autonomous bodies as provided by legislation, Reports on the Financial position of Central and State Governments and reports on the adherence to the Appropriation Acts passed by Parliament and Legislatures. The CAG also submits the certified Annual Accounts of the States, known as the Finance and Appropriation Accounts, to the State Legislatures.

Depending upon the objective of the audit, we classify audits by CAG into: 1. Compliance Audit focuses on whether a particular subject matter is in compliance with the criteria. Compliance auditing is performed by assessing whether activities, financial transactions and information are, in all material aspects, in compliance with the applicable authorities which include the Constitution, Acts, Laws, rules and regulations, budgetary resolutions, policy, contracts, agreements, established codes, sanctions, supply orders, agreed terms or the general principles governing sound public sector financial management and the conduct of public officials. 2. Financial Attest Audit focuses on determining whether an entity’s financial information is presented in accordance with the applicable financial reporting and regulatory framework. This is accomplished by obtaining sufficient and appropriate audit evidence to enable the auditor to express an opinion as to whether the financial information is free from material misstatement due to fraud or error. 3. Performance Audit focuses on whether interventions, programs and institutions are performing in accordance with the principles of economy, efficiency and effectiveness and whether there is room for improvement. Performance is examined against suitable criteria and the causes of deviations from those criteria or other problems are analysed. The aim is to answer key audit questions and to provide recommendations for improvement. Apart from these traditional audits, we have successfully done a number of audits of Information Technology (IT) Systems and on Environmental issues.

All the Union and State Government departments, government companies and corporations, autonomous bodies and authorities owned or controlled by the Union or the States, Bodies and authorities substantially financed from Union some of the local bodies and Panchayati Raj Institutions which are critical grass root agencies for implementation of developmental programmes and delivery of services.

In order to carry out his wide audit mandate in an unfettered manner the Act provides for: Power to inspect any office or organisation subject to his audit. Power to examine all transactions and question the executive. Power to call for any records, papers, documents from any audited entity. Power to decide the extent and manner of the audit.

As envisaged in Article 149 of the Constitution, the Parliament enacted detailed legislation called the CAG’s Duties, Powers and Conditions Act in 1971 which describes his mandate and puts almost every spending, revenue collecting or aid/grant receiving unit of the Government (the Centre and the States) under his audit domain. His duties are to audit and report upon: All receipts into and expenditure from the Consolidated Fund of the Union and State Governments. All transactions relating to the Emergency expenses (called Contingency Funds) and relating to the monies of the public held by the Government in Public Accounts at Central as well as State levels. All trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept in any Government department. All stores and stock accounts of all Government offices and departments. Accounts of all Government companies and Corporations. Accounts of all autonomous bodies and authorities receiving Government money. Accounts of anybody or authority on request of the President/Governor or on his own initiative. The Act also provides for the compilation of accounts of the State Governments from the subsidiary accounts maintained by the State Governments.

The Constitution enables the independent and unbiased nature of audit by the CAG by providing for: His appointment by the President of India Special procedure for removal (like a Supreme Court Judge) Salary and expenses Charged (not Voted) to the Consolidated Fund of India Disallowing his holding any other Government office after his term expires

The Comptroller and Auditor General of India (CAG) and the Indian Audit and Accounts Department (IAAD) functioning under the Constitution of India, constitute the Supreme Audit Institution (SAI) of India. The Constitution of India has mandated us as the auditors to the nation. We are thus an instrument for ensuring accountability. Articles 149-151 of the Constitution prescribe the unique role of the CAG.