Role of CAG in Meeting Challenges of Good Governance

INTRODUCTION: Comptroller and Auditor General of India

The Comptroller and Auditor General (CAG) of India is an authority, established by the Constitution of India, who audits all receipts and expenditure of the Government of India and the state governments including those of bodies and authorities substantially financed by the government. The CAG is also the external auditor of government-owned companies. The reports of the CAG are taken into consideration by the Public Accounts Committees, which are special committees in the Parliament of India and the state legislatures. The CAG of India is also the head of the Indian Audit and Accounts Department. IAAS or Indian Audit and Accounts Service is an Indian Central Government service, free of control from any executive authority, under the Comptroller of Auditor General India. The officers of the Indian Audit and Accounts Department serve in an audit managerial capacity. IAAS is responsible for auditing the accounts of the Union and State governments and public sector organizations, and for maintaining the accounts of State governments. IAAS is the government's financial watchdog, and is a critical element in checks on the government. The current CAG of India is Vinod Rai, who was appointed on 7 January 2008. He is the 11th CAG of India. The essay is divided into seven parts. The first part explains the concept of governance and good governance. The second part shows role of CAG in meeting challenges of good governance. The third part enumerates role of CAG in India Governance. The fourth part depicts how CAG helps in achieving good governance? The fifth part points out its limitations. The sixth part proposes recommendations. Finally, the seventh part concludes.

(I)Governance and Good Governance

What is governance? The exercise of economic, political, and administrative authority to manage a countrys affairs at all levels. It comprises mechanisms, processes, and institutions, through which citizens and groups articulate their interests, exercise their legal rights, meet their obligations, and mediate their differences. UNDP. Simply put governance means: the process of decision-making and the process by which decisions are implemented (or not implemented). Governance can be used in several contexts such as corporate governance, international governance, national governance and local governance. What is Good Governance? Good governance has 8 major characteristics. It is participatory, consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and follows the rule of law. It assures that corruption is minimized, the views of minorities are taken into account and that the voices of the most vulnerable in society are heard in decision-making. It is also responsive to the present and future needs of society.

Figure 1: Characteristics of good governance Participation Participation by both men and women is a key cornerstone of good governance. Participation could be either direct or through legitimate intermediate institutions or representatives. It is important to point out that representative democracy does not necessarily mean that the concerns of the most vulnerable in society would be taken into consideration in decision making. Participation needs to be informed and organized. This means freedom of association and expression on the one hand and an organized civil society on the other hand. Rule of law Good governance requires fair legal frameworks that are enforced impartially. It also requires full protection of human rights, particularly those of minorities. Impartial enforcement of laws requires an independent judiciary and an impartial and incorruptible police force.

Transparency Transparency means that decisions taken and their enforcement are done in a manner that follows rules and regulations. It also means that information is freely available and directly accessible to those who will be affected by such decisions and their enforcement. It also means that enough information is provided and that it is provided in easily understandable forms and media. Responsiveness Good governance requires that institutions and processes try to serve all stakeholders within a reasonable timeframe. Consensus oriented There are several actors and as many view points in a given society. Good governance requires mediation of the different interests in society to reach a broad consensus in society on what is in the best interest of the whole community and how this can be achieved. It also requires a broad and long-term perspective on what is needed for sustainable human development and how to achieve the goals of such development. This can only result from an understanding of the historical, cultural and social contexts of a given society or community. Equity and inclusiveness A societys well being depends on ensuring that all its members feel that they have a stake in it and do not feel excluded from the mainstream of society. This requires all groups, but particularly the most vulnerable, have opportunities to improve or maintain their well being.

Effectiveness and efficiency Good governance means that processes and institutions produce results that meet the needs of society while making the best use of resources at their disposal. The concept of efficiency in the context of good governance also covers the sustainable use of natural resources and the protection of the environment. Accountability Accountability is a key requirement of good governance. Not only governmental institutions but also the private sector and civil society organizations must be accountable to the public and to their institutional stakeholders. Who is accountable to whom varies depending on whether decisions or actions taken are internal or external to an organization or institution. In general an organization or an institution is accountable to those who will be affected by its decisions or actions. Accountability cannot be enforced without transparency and the rule of law.

(II)Role of CAG in Meeting Challenges of Good Governance:

The importance of CAG is easily understood by the following words of B.R. AMBEDAKAR: I am of the opinion that this dignitary or officer (C&AG) is probably the most important officer of the Constitution of India. He is the one man who is going to see that the expenses voted by parliament are not exceeded, or varied from what has been laid down by Parliament in what is called appropriation Act. If this functionary is to carry out the duties- and his duties, I submit are far more important than the duties than the duties of the Judiciary.

Challenges of Good Governance for CAG At the obvious risk of generalization, I would like to refer to criminalization of politics and corruption as major challenges to good governance. Though there are few specific challenges being faced by CAG while assuring good governance: -Denial of timely and complete access to records for audit. While the RTI Act provides for specific penalties for non-production of records/reply in the stipulated period, there is no mechanism for timely production or in the failure to do so, awarding deterrent penalties for non-furnishing or incomplete production of records to CAGs audit. -Audit can be used for tracking policymaking and implementation from the Centre and states to urban local bodies and Panchayati Raj Institutions (PRIs). In recent years, there has been a paradigm shift in the manner in which public funds are generated, expended and managed. About 67 per cent of Central Plan and non-Plan grants have been disbursed directly to implementation agencies like NGOs; developmental funds are directly transferred to urban local bodies; and PRIs and infrastructure projects are substantially financed through public private partnerships. -It is quite disconcerting to come across increased instances of central ministries seeking exclusion from the audit by CAG of new institutions created or being created. Regulators like the TRAI, Petroleum and Natural Gas Regulatory Board etc. have been kept fully or partially out of the audit mandate of CAG through their respective Acts.

(III)Role of CAG in Indian Governance:-

Major Functions of CAG 1. To prescribe, with the approval of president, the form in which the accounts of union and states are to be kept 2. To perform such duties and exercise such powers in relations to accounts of union or states or any other body, as many prescribed by any law made by parliament. 3. To report the president or governor of the state on the account of country or state. The CAG as Auditor General;It plays double role, firstly it check the extend of application by the government servants ,of rules and regulations issued on behalf of the administration and secondly it ensure ,on behalf of the legislature, that the actions of the government have been in accordance with the views and the requirements of the legislature The purpose of audit is to offer financial criticism and its value lie in its report pointing out there some impropriety of certain transaction and so the suitable action rectify it. According to Herbert Britain What one department is publically pilloried for today all other departments will try to avoid tomorrow

Audit of Revenue:C&AG after some initial resistance on the part of revenue department was able to extend its dimension to audit of revenues which includes audit of tax assessment such as Income tax, Central Excise and Customs, Sales tax etc. The audit of receipts has helped bringing considerable revenue for the government by pointing out cases of under assessment of tax, and also assisted in better functioning of tax administration machinery by pointing out lacunae or loopholes in the Act/ Rules and deficiencies in the functioning of tax administration.

Audit of Commercial Enterprises:The audit of government companies was brought within the purview of C&AGs audit at the insistence of then CAG by introducing a suitable provision in the Companies Act 1956, although there were initial attempts to exclude his jurisdiction. Thus, while Chartered Accountants are required to certify Annual Accounts of government companies, C&AG has been granted right to conduct supplementary audit.

Audit of Public Sector Undertakings: Under Section 619 of the Companies Act, 1956, the auditor (statutory auditor) of a CAG conducts the audit of accounts of the companies. On the basis of supplementary and it conducted thereafter, the CAG issues comments upon or supplements the Audit Report of the statutory auditor.

(IV)How CAG helps in achieving good governance?

The role of audit report is very important as transparency and accountability are being established in different sectors of the country through it, the CAGB. Good governance has eight major characteristics. These characteristics coincide with Mission, Vision and Core values of CAG. This could be better explained using examples: - Participation: to understand contemporary concerns about the developmental interaction undertaken by the government, they have increased, and institutionalized their interaction with public and civil society for providing inputs for audit prioritization and benchmarks for evaluation. They have built synergies with social audit groups and other stakeholders. - Transparency: generally the reports of government agencies are lengthy and technical, which makes them opaque for general public. But CAG office has made out reports more concurrent and reader friendly. A reader now has the option to go through our full reports or get a birds eye view of their findings through the slim booklets and brochures prepared by them. Responsiveness: While reporting audit findings they highlight the good practices and innovations of the executive and make constructive recommendations for midcourse corrective action in respect of deficiencies pointed out.

(V)Limitations
In spite of the various safeguards provided by the Constitution to maintain the independence of Comptroller and Auditor General from the Executive and Parliament, his/ her independence appears to be limited by four factors viz., (a) restraint of the Executive on his/ her budgetary autonomy (b) block of control overstaff (c) indirect accountability to the Finance Ministry of the Union and the Finance Department of the State Government for handling accounting duties (d) absence of direct access to Parliament (unlike the Attorney General) in defence of his/ her official conduct, if and when questioned on the floors of Parliament.

(VI)Recommendations
In this case CAG (Duties, Powers and Conditions of services) Act, 1971 is the mould and if CAG exceeds the boundaries set by the mould (the Act), then it would be ultra vires. If CAG has to be effective in discharging its responsibilities and has to play an important role in promoting good governance, wider powers of access to information would be necessary at par with other prominent democracies in the world.

(VII)Conclusion
To conclude, notwithstanding these limitations, the Comptroller and Auditor General plays a unique role in Indian democracy, by upholding the Constitution and the laws in the field of financial administration. CAG office can access any office under government of India. But CAGs access to secret service is limited. Now a day we feel that that is too be audited by CAG. Huge amounts are stolen in 2G, CWG, arms deals etc. As we know India is a developing country, it requires huge investments in infrastructure. So there should have appropriate measures to protect our money. And our government must make reforms to achieve the objectives of establishing CAG.

BIBLOGRAPHY PRIMARY SOURCES AUTHORITIES: CONSTITUTION OF INDIA. THE COMPTROLLER AND AUDITOR- GENERALS (DUTIES, POWER AND CONDITIONS OF SEVICE) ACT, 1971.

SECONDARY SOURCES ARTICLES/PAPERS: Auditing for Good Governance: Facilitating Foresight by A.K. Awasthi and Vani Sriram. Auditing for Good Governance: Oversight and Insight by P.K Kataria and Subir Mallick. www.wakeupcall.org/administration_in_india/india_superpower.php http://www.cag.gov.in/html/unionaudit.htm www.cag.gov.in/html/unionaudit.htm http://www.unescap.org/pdd/prs/ProjectActivities/Ongoing/gg/governance. asp http://www.wikipedia.org/