CAG

Question 1

Which article of Constitution is concerned with CAG?

Answer 1

Article 148

Question 2

What is the duty and function of CAG in brief?

Answer 2

• Head of indian audit and accounts department
• guardian of public purse and controls entire financial system of country
• duty to uphold Constitution of india and laws of parliament in field of financial administration.
• Ambedkar said that CAG shall be the most important officer under Constitution
• one of the defensive walls of democratic system of government in India(others being supreme court, the election Commission, UPSC)

Question 3

Appointment and term of CAG

Answer 3

• by president
• oath 1.faith on consti. 2.uphold sovereignty and integrity 3.best performance of duties
• holds office for 6 yrs or till 65
• can resign
• removal same as SC judge i.e.can be removed on the basis of resolution passes to that effect by both the houses of parliament with special majority, on the grounds of proved misbehavior or incapacity

Question 4

What are duties and powers of CAG and what is the related article?

Answer 4

• Article 149 authorises parliament to prescribe duties and powers of CAG.
• CAG’s (duties, powers and conditions of service) act, 1971 was enacted->ammended in 1976
• Duties list
  1. audits all accounts related to consolidated fund(Revenues received by the government and expenses made by it, excluding the exceptional items, are part of the Consolidated Fund.)of Union, state, and UT with legislative Assembly
  2. audits expense from contingency fund(reserve of money set aside for unforeseen events) and public accounts(Public Account of India accounts for flows for those transactions where the government is merely acting as a banker.Examples of those are provident funds, small savings and so on. These funds do not belong to the government. They have to be paid back at some time to their rightful owners. Because of this nature of the fund, expenditures from it are not required to be approved by the Parliament.) Of India and each state.
  3. audits all trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept by any department of the central government and the state government.
  4. audits receipts & expenditure of Centre and each state to check if rules are followed or not.
  5. audits bodies and authorities funded by center or state, government companies
  6. transaction of center and state related to debt, sinking fund, deposits, advances, suspense accounts and remittance business
  7. account of any authority when told by president or governor
  8. submits audit report to president who puts it for parliament and for state to governor
  9. certifies net proceeds of any tax or duty(net proceeds means amount the seller receives following the sale of an asset after all costs and expenses are deducted from gross proceeds.)
  10. helps public accounts committee of parliament

Question 5

Name and explain the audit reports given by CAG to president?

Answer 5

3 in total
1.audit report on appropriation accounts (compares the actual expenditure with the expenditure sanctioned by parliament through appropriation act)
2.finance accounts- show the annual receipts and disbursement of Union Government
3.audit report on public undertaking.
President lays these reports before both houses of parliament. After that public accounts committee examines them and reports it’s findings to parliament.

Question 6

Role of CAG?

Answer 6

1. uphold Constitution and laws in field of financial administration
2. accountability of council of ministers to parliament in sphere of financial administration is secured through audit reports of CAG
3. has more freedom with audit of expenditure than audit of audit of receipts, stores and stock.
4. CAG is concerned only at audit stage when expenditure is already taken place.
5. CAG has to ascertain whether money shown in accounts as having been disbursed was legally available for and applicable to service or purpose to which they have been applied or charged and whether expenditure conforms to authority that governs it.
6. CAG can conduct audit to look into wisdom, faithfulness and economy of government expenditure and comment on it. (Discretionary audit)
7. secret Service expenditure is limitation on auditing role of CAG

Question 7

Explain Relationship of CAG with public corporations.

Answer 7

3 categories

1. audited totally by CAG. ex. ONGC, Air India
2. Audited by private professionals appointed by central government in consultation with CAG. If necessary CAG can conduct supplementary audit. Ex. Central warehousing corporation
3. CAG does not come in picture. Ex. LIC, RBI, SBI

Question 8

What is Paul H Appleby’s criticism of office of CAG?

Answer 8

1. Function of CAG is an inheritance from colonial rule
2. cause of widespread paralysing unwillingness to decide and to act
3. parliament has failed to define the function of CAG
4. auditors cannot know much about good administration