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Public Audit: A Powerful Instrument Turned Blunt

Public Audit: A Powerful Instrument Turned Blunt Meeta Rajivlochan This refreshing book on the audit and accounts bureaucracy points out that there is a strong need to re- orient the business of audit in government. Public audit is the one instrument by which Parliament can hold the executive accountable. It points out serious problems both in the manner in which audit is done and what is done about the recommendations in the audit reports. But the enormous centralisation in the work of the office of the Comptroller and Auditor General (CAG) has rendered this instrument largely ineffective. The CAG has to put his signature to some 20 reports of the central government and about 65 to 70 reports of the state governments every year. In addition, he has to certify the finance and appropriation accounts of the union government, 28 state governments and all the union territories before they are placed in the respective houses. It is not possible for the CAG to go through the details of these reports. As a result audit is done in a very perfunctory fashion.

Public Audit: A Powerful Instrument Turned Blunt

Meeta Rajivlochan

p erformance evaluation teams. The strength of the officer cadre is very limited. One of the most important recommendations made by Mathur is that the CAG should be converted from being a babu-oriented d epartment to a lean, thin officer-oriented professional outfit. The department should

T
his refreshing book on the audit and accounts bureaucracy points out that there is a strong need to reorient the business of audit in government. Public audit is the one instrument by which Parliament can hold the executive accountable. It points out serious problems both in the manner in which audit is done and what is done about the recommendations in the audit reports.

But the enormous centralisation in the work of the office of the Comptroller and Auditor General (CAG) has rendered this instrument largely ineffective. The CAG has to put his signature to some 20 reports of the central government and about 65 to 70 reports of the state governments every year. In addition, he has to certify the finance and appropriation accounts of the union government, 28 state governments and all the union territories before they are placed in the respective houses. It is not possible for the CAG to go through the details of these reports. As a result audit is done in a very perfunctory fashion.

Lack of Systems Approach

More important than the growing overload of work in the office of the CAG is the manner in which this task is performed. Auditors in offices everywhere remain bogged down with trivialities. For instance, out of the 58 paras of the Transaction A udit Report Civil of 2005, which covers the audit of expenditure incurred by all civil ministries, the book points out that only one para deals with a substantive matter (sale of the Centaur Hotel). All the others dealt with individual irregularities such as the appointment of a driver in the Indian High Commission in Singapore, purchase of a colour photo copier by the police training college and excess release of grant to a non-governmental organisation which was later adjusted.

Economic & Political Weekly

EPW
APRIL 18, 2009

book review

Government Accountability and Public Audit, Re-engineering the Comptroller and Auditor General of India by B P Mathur (New Delhi: Uppal Publishing House), 2007; pp 328, Rs 495.

There is a complete absence of a systems approach, and hardly any suggestions by auditors for improving financial management and control systems. The very large volume of audit reports implies that few in positions of authority are able to find time to read the reports in detail. No wonder there is little effort made to rectify the anomalies in the system that the auditors point out. In the event only a handful of journalists out to point out the financial evils perpetrated by the government, end up reading some of the reports and use the audit findings to publicly criticise the government.

Quality Improvement

Mathur points out that it would be possible for the Public Accounts Committee to examine all the reports of the CAG, if the volume of the reports were to be reduced and their quality improved with only matters of critical importance being included in the reports. Other countries are able to do this quite effectively. In Britain, for e xample, the Public Accounts Committee examines all the subjects included in the report of their CAG.

Improving the quality of these reports is, in turn, dependent upon improving the quality of the audit staff. At present, the staffing pattern of the audit offices depends heavily on poorly trained clerical staff. The majority of the work is done by section

o fficers who are not trained in modern methods or equipped with analytical tools needed for the task. Senior officers of the level of director only perform a supervisory role and rarely work full time with

vol xliv no 16

do away with the practice of using group C staff for audit work. Instead, staff for a udit work should be recruited only at the level of the subordinate accounts services. For jobs like performance audit, the s ervices of experts should be hired for short-term consultancy assignments.

Quasi-Judicial Powers

Mathur also argues for more teeth to the office of the CAG. This would involve, firstly, equipping the CAG with quasi-judicial powers to summon officials before it to produce the relevant records and give evidence on oath and where loss of public money is established require them to make good the loss. This is the case in Japan, China, South Korea, New Zealand, Germany and France. At present the office of the CAG is content to produce voluminous reports pointing out losses. They feel that once their report is submitted, their job is over. Never have they made any attempt to arm themselves with legal powers. This “live and let live” attitude or what Mathur calls the “soft state” approach, has serious consequences for the state of governance in the country.

Mathur suggests that the office of CAG should be considered part of the legislature on whose behalf it functions rather than the present situation where it is deemed to be part of the executive branch of the government. In the United States, for instance, the General Accounting Office (GAO) which is the coterminous office for the Indian CAG, initially straddled both the legislature and the executive. Then in 1985, the US Supreme Court ruled that GAO is a legislative agency and since then there has been a sea change in the functioning of this office in the US. Until the 1970s, only about 10% of the GAO’s reports responded to requests from Congress. However, in the 1980s, more than 80% of the GAO’s resources were used in responding to Congressional requests. In the UK too,

BOOK REVIEW

since 1983, the CAG has been made a member of the House of Commons.

Decentralisation

To reduce the workload on the system and make it effective, Mathur suggests that the office of the CAG needs to be decentralised and that independent wings of this body need to be constituted at the level of the states. Presently, the accountant general, who is responsible for auditing the finances of the states, also functions as a s ubordinate office of the CAG. However, the

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-accountant general enjoys no constitutional and legal status, so he is unable to deal e ffectively with the Public Accounts Committee of the legislature or take up critical issues with the state government. Mathur points out that the original draft of the Constitution made by the Drafting Committee did contain a provision for an auditor general for the states but this provision was done away with on the recommendations of the expert committee which r easoned that many states may not choose to exercise the option of appointing a

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-s eparate auditor general and that auditing and accounting could become one entity under the authority of the CAG. To strengthen audit mechanisms, this situation needs to be remedied. The book suggests that the accountant general’s post be given the same status as a judge of the high court.

The book is very well written and insightful. However, one does wish that the author had provided more by way of case studies to reinforce the points that he makes.

Email: meeta29@hotmail.com

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APRIL 18, 2009 vol xliv no 16

EPW
Economic & Political Weekly

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