A suitable CAG

As the tenure of the incumbent draws to a close,let’s debate the institution’s structure and powers

Written by Ratna Viswanathan | Published: May 2, 2013 3:51:10 am

As the tenure of the incumbent draws to a close,let’s debate the institution’s structure and powers

It is time for the selection of a new comptroller and auditor general as the tenure of the incumbent draws to a close on May 22. Traditionally,the CAG has been an unseen agency,churning out audit report after audit report on every department supported by government funds every year. The last time the CAG was in the news in a visible way was when the report on the procurement of the Bofors gun hit the headlines. Every CAG report is a meticulous and factual assessment of expenditure and performance. Facts do not become part of the reports unless they are validated at an appropriate level by the department under review. Unfortunately,only those reports hit the headlines where the focus is driven by motives other than that of governance. With the kind of attention that the CAG’s report on the Commonwealth Games and the auctioning of 2G spectrum has managed to garner,the position of the CAG has come under fire,not least from the executive,which has tended to question the basis of the office,the model of the institution and the efficacy of the facts in the reports. The CAG,by virtue of being an unitary authority in a federal structure,constitutionally is the singular head of a hierarchical audit authority. This is in line with the Westminster model of Parliament we have adopted.

This singularity has consistently threatened successive governments,leading to attempts to dilute the role of the CAG. In 1976,the separation of Union government accounts from audit at the ministry level led to the creation of the civil accounts cadre. The CAG ceased to control this cadre and this was brought under the secretary (expenditure) in the ministry of finance. The then CAG,Gyan Prakash,was the last audit and accounts service officer to hold that position. For reasons best known to the then prime minister,the CAG was appointed from within the IAS and it has remained that way since. What such a move hoped to achieve is hard to say. But successive CAGs have proved that the impartiality envisaged for the position in the Constitution has been the protagonist of the piece.

A lot has been said about the merits of the institution of the CAG being set up as a collegium structure driven by the perception of too much wherewithal resting with a single individual. There have been comparisons made with the chief election commissioner. However,while Article 148 of the Constitution states clearly that there shall be a CAG who shall be appointed by the president,Article 324 states that the “Election Commission shall consist of the chief election commissioner and such number of other election commissioners,if any,as the president may from time to time fix”. This underlines the difference of spirit behind creation of these two positions. They play distinct roles. One facilitates a defined procedure of governance while the other exercises a broad oversight function on all aspects of governance and use of government money to ensure financial probity. But,successively,the position has been challenged.

The proposal for a multi-member audit board was proposed by the Justice M.N. Venkatachaliah Committee set up to review the working of the Constitution in 2001. The department’s reply to this stated that the existing Indian model was successful in 34 Commonwealth countries. The application of mind at several levels before the CAG finally signs off on an audit report ensured a rational and balanced approach. The executive is given ample opportunity to respond to audit reports and their replies play a significant role in the finalisation. This was communicated to the committee by the then CAG,V.K. Shunglu,and accepted by them. The issue came up again when the CAG’s report in the wake of the Commonwealth Games fiasco tread on too many toes and the report on the auctioning of 2G spectrum caused many red faces. Ironically,the Shunglu Committee recommended a collegium structure and ascribed the delay in the CAG’s audit of the Games as a reason for irregularities in procurement. The department reiterated its stand by furnishing Shunglu’s own reply stating that considering the system already in place,there was no need for a collegial decision on audit findings. In this melee,the government’s discomfort with the CAG was evident. The mandate of the CAG came under question.

This brings us to the debate on whether the CAG has the mandate to question policy,or whether his job is to merely look at compliance of systems. As policy and systems are a cause and effect construct,the outcome of policy on systems is open to question. The CAG has the wherewithal to analyse both. There is a tendency within the executive to justify action by arguing that means justify the end. If that be so,why define financial propriety and put in place a system of oversight? It is not a process that can be applied selectively. And who will define what process is ethical and what is not? In a country like India,with a sizeable and well informed middle class,having a fair and transparent audit is in the interest of credible governance. The larger question is if the role of the CAG is only one of attesting public expenditure,or if it extends to assisting those engaged in governance.

Governance is not just the remit of the government. In today’s social milieu,it extends to a mature and active civil society,the media and citizens,who seek answers to systemic failure and lack of financial probity in government expenditure by holding governments to account. The Constitution clearly envisaged the office of the CAG as one independent of the executive to enable the CAG to exercise independent oversight on government expenditure. Consequently,the CAG plays as large a role in ensuring governance as any other administrative agency. His role could not have been envisaged by the framers of the Constitution as one of merely an accountant to the government. The auditor’s role is to assess systems and performance and the value of the money spent on this. Viewing the CAG’s role as adversarial is self-defeating.

One aspect open to question is the process of selection of the CAG. To strengthen the independence of the office,there is a need to put in place clear guidelines and criteria for selection. At the moment,there are no clear parameters. The only obvious criteria seem to be that the candidate needs to be an officer of the level of secretary to the Union government and from the IAS. There is no apparent reason as to why it cannot be an officer from the audit and accounts department.

Unless there is a clear process of selection,the appointment is open to question. This compromises the perception of independence. Currently,there is neither transparency nor clarity. Impartiality being crucial to this role,there is a need to define the selection process to establish this impartiality.

A thought to dwell on is whether there is a need to consider other models of supreme audit institutions. In some countries,there are commissions of audit. In others,like France and Mexico,there are courts of audit. The audit courts are vested with quasi-judicial and punitive powers. Is that a model we want for ourselves? A debate on the model most suitable would be worthwhile in the run-up to the selection of the next CAG.

The writer,a 1987 batch Indian Audit and Accounts Service officer,left government service in 2008 and now works in the development sector

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