Demystifying the CAG

As the air turns balmy, and the festive season is ushered in, there is an upcoming annual celebration marked across the country, and yet not so well known — Audit Diwas on November 16, commemorating appointment of the first Auditor General of India in 1860. With adoption of the Constitution of India, the Comptroller and Auditor General of India (CAG) evolved into the cornerstone of public financial accountability.

Heading the Supreme Audit Institution of India (SAI India), CAG is mandated by the Constitution to audit accounts of the Union and State Governments and their entities. Committed to promoting accountability, transparency and good governance, CAG provides independent assurance to the stakeholders, the Legislature, Executive and public, that public funds are used efficiently and for intended purposes.

SAI India is spread over 137 field offices and conducts audit of all receipts and expenditures of government.

CAG conducts three types of audit. Financial audits help maintain accuracy in government financial systems. Compliance audits sustain regularity and propriety in government. Performance audits are holistic assessment of economy, efficiency and effectiveness of programmes.

The process

CAG’s audits are carried out as per Auditing Standards of the CAG, which are in accordance with International Standards of Supreme Audit Institutions. CAG’s audit process entails Audit Planning based on risk analysis. An in-house Centre for Data Management and Analytics analyses national level data, and of audited entities, using advanced tools and statistical methods, to identify potential high risk areas.

Next is conducting the audit, where audit teams review functioning of the audited entity, gather audit evidence through documents, physical inspection, questionnaires etc.

Audit increasingly reaches out to stakeholders for getting different perspectives. To start with, entry conference with the audited entity is held; and to wrap up, an exit conference.

The hallmark of CAG’s audit reports is professionalism in identifying deviations and making recommendations to the executive. This necessitates SAI India being a knowledge driven organisation, with a robust capacity development infrastructure of 15 institutions with domain specialisations.

Since April 2023, SAI India has transited to 100 per cent digital auditing processes, utilising an enterprise-wide audit process and knowledge management IT System.

Audit increasingly uses Geographic Information System, drone visualisation, geotagging and machine learning. For instance, remote sensing technology was used in audit of storm water management in Bengaluru. Drones were employed to detect illegal sand mining in Tamil Nadu. Google Earth imagery was used in audit of Coastal Ecosystems. These reports are available on www.cag.gov.in.

CAG spearheaded preparing the Compendium of Asset Accounts on Mineral and Energy Resources in States 2020-21. As Chair of SAI20 under India’s G20 Presidency, SAI India focussed attention on audit of the Blue Economy.

In the international arena, SAI India contributes to India’s soft power — steering knowledge sharing among Supreme Audit Institutions, auditing UN agencies, leading in multilateral fora, and nurturing bilateral ties. CAG’s current international audit portfolio includes WHO, FAO, ILO, Organization for Prohibition of Chemical Weapons, and International Atomic Energy Agency.

CAG is member of UN Panel of External Auditors since 1993 and was its Chair for four years.

The ultimate goal of audit is to provide value to stakeholders. Impact of audit is realised when executive responds through policy changes, design improvements, mid-course corrections, etc. These, directly and tangibly underscore the core principle of SAI India — to uphold good governance and responsible stewardship of public funds.

The writer is Deputy CAG. Views are personal

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