• Articles 148-151 of the Indian Constitution provides for an office of Comptroller and Auditor General (CAG) of India and its duties.
  • Article 148 provides for an independent office of the Comptroller and Auditor General of India (CAG).
  • He is the head of the Indian Audit and Accounts Department.
  • He is the guardian of the public purse and controls the entire financial system of the country at both the levels–the Centre and the state.
  • His duty is to uphold the Constitution of India and laws of Parliament in the field of financial administration.
  • He is one of the bulwarks of the democratic system of government in India.


  • Article 148: broadly deals with the CAG appointment, oath and conditions of service.
  • Article 149: deals with Duties and Powers of the Comptroller and Auditor-General of India.
  • Article 150: says that the accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the CAG, prescribe.
  • Article 151: says that the reports of the Comptroller and Auditor-General of India relating to the accounts of the Union shall be submitted to the president, who shall cause them to be laid before each House of Parliament.
  • Article 279: Calculation of “net proceeds” is ascertained and certified by the Comptroller and Auditor-General of India, whose certificate is final.
  • Sixth Schedule: the accounts of the District Council or Regional Council should be kept in such form as CAG, with the approval of the President, prescribe. In addition, these bodies accounts are audited in such manner as CAG may think fit.

Appointment and Terms of Service

  • The CAG is appointed by the president of India by a warrant under his hand and seal.
  • He holds office for a period of six years or up to the age of 65 years, whichever is earlier.
  • He can resign any time from his office by addressing the resignation letter to the president.
  • He can also be removed by the president on same grounds and in the same manner as a judge of the Supreme Court.

Procedure for removal

  • He/she can be removed either on the ground of “proved misbehaviour or incapacity”.
  • He/she can be removed by the president on the basis of a resolution passed to that effect by both the Houses of Parliament with special majority i.e. majority of two- third members present and voting supported by more than 50% of the total strength of the house.
  • Security of tenure: He can be removed by the president only in accordance with the procedure mentioned in the Constitution. Thus, he does not hold his office till the pleasure of the president, though he is appointed by him.
  • Re-appointment: He is not eligible for further office, either under the Government of India or of any state, after he ceases to hold his office.
  • His salary and other service conditions are determined by the Parliament. His salary is equal to that of a judge of the Supreme Court.
  • Neither his salary nor his rights in respect of leave of absence, pension or age of retirement can be altered to his disadvantage after his appointment.
  • The conditions of service of persons serving in the Indian Audit and Accounts Department and the administrative powers of the CAG are prescribed by the president after consultation with the CAG.
  • The administrative expenses of the office of the CAG, including all salaries, allowances and pensions of persons serving in that office are charged upon the Consolidated Fund of India. Thus, they are not subject to the vote of Parliament.
  • No minister can represent the CAG in Parliament (both Houses) and no minister can be called upon to take any responsibility for any actions done by him.

The Constitution (Article 149) authorises the Parliament to prescribe the duties and powers of the CAG in relation to the accounts of the Union and of the states and of any other authority or body. Accordingly, the Parliament enacted the CAG’s (Duties, Powers and Conditions of Service) act, 1971. The duties and functions of the CAG as laid down by the Parliament and the Constitution are:

  • He audits the accounts related to all expenditure from
    • Consolidated Fund of India,
    • consolidated fund of each state and
    • Consolidated fund of each union territory having a Legislative Assembly.
    • Contingency Fund of India
    • Public Account of India
    • contingency fund of each state and
    • Public account of each state.
  • He audits:
    • All trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept by any department of the Central Government and state governments.
    • The receipts and expenditure of the Centre and each state to satisfy himself that the rules and procedures in that behalf are designed to secure an effective check on the assessment, collection and proper allocation of revenue.
    • all transactions of the Central and state governments related to debt, sinking funds, deposits, advances, suspense accounts and remittance business
    • Receipts, stock accounts and others, with approval of the President, or when required by the President.
  • He audits the receipts and expenditure of the following:
    • All bodies and authorities substantially financed from the Central or state revenues;
    • Government companies; and
    • Other corporations and bodies, when so required by related laws.
Where the grant or loan to a body or authority from the Consolidated Fund of India or of any State or of any Union territory having a Legislative Assembly in a financial year is
  1. not less than rupees twenty-five lakhs and
  2. the amount of such grant or loan is not less than seventy-five per cent of the total expenditure of that body or authority

Then, such body or authority shall be deemed, for the purposes of this sub-section, to be substantially financed by such grants or loans as the case may be.

  • He audits the accounts of any other authority when requested by the President or Governor, for example, the audit of local bodies.
  • He advises the President with regard to prescription of the form in which the accounts of the Centre and the states shall be kept (Article 150).
  • He submits his audit reports relating to the accounts of the Centre to President, who shall, in turn, place them before both the Houses of Parliament (Article 151).
  • He submits his audit reports relating to the accounts of a state to governor, who shall, in turn, place them before the state legislature (Article 151).
  • He ascertains and certifies the net proceeds of any tax or duty (Article 279). His certificate is final. The ‘net proceeds’ means the proceeds of a tax or a duty minus the cost of collection.
  • He acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament.
  • He compiles and maintains the accounts of state governments. In 1976, he was relieved of his responsibilities with regard to the compilation and maintenance of accounts of the Central Government due to the separation of accounts from audit, that is, departmentalisation of accounts.
  1. Performance audits: to assess how well a public entity’s operations have been managed with regard to economy, efficiency, and effectiveness.
  2. Financial Audits: objective evaluation of your company’s financial statements.
  3. Compliance Audits: is an assessment as to whether the provisions of the applicable laws, rules and regulations made there under and various orders and instructions issued by the competent authority are being complied with.
  • Audit report on appropriation accounts,
  • Audit report on finance accounts, and
  • Audit report on public undertakings.

The President lays these reports before both the Houses of Parliament. After this, the Public Accounts Committee examines them and reports its findings to the Parliament.

  • The appropriation accounts compare the actual expenditure with the expenditure sanctioned by the Parliament through the Appropriation Act
  • The finance accounts show the annual receipts and disbursements of the Union government.
  • Appointment
    • In the present selection process for the CAG, it is the Government machinery which appoints the CAG on its own. This goes against its role of ensuring executive accountable.
    • Also, Union government appoints the CAG without any consultation from state governments. This goes against the principles of federalism.
    • There are currently no criteria available for selection of this constitutional post. People have no idea who all are shortlisted, on what basis final name was selected.
    • Conflict of interest while appointing CAG e.g. when former secretaries or administrators are appointed as CAG, the independence of the institution is seemed to be compromised e.g. GC Murmu’s appointment as CAG etc.
  • Post facto audit: Its report is post-facto i.e. CAG audits expenditure only after it has been incurred.
  • In India, CAG is not a member of the parliament while in Britain CAG is a member of house of the Commons.
  • Exceeding mandate: Some sections criticised CAG’s reports on 2G, Coal blocks allocation as beyond its jurisdiction and mandate. This has led to a situation of fear of the 3Cs – CBI, CAG and CVC. This promotes risk-averse attitude among the bureaucrats as auditors may not take into consideration the practical problems in the administration.
  • There is lack of economic expertise within CAG and Indian Audit and Accounts Service while auditing natural resources like coal etc.
  • The secret service expenditure is a limitation on the auditing role of the CAG. In this regard, the CAG cannot call for particulars of expenditure incurred by the executive agencies, but has to accept a certificate from the competent administrative authority that the expenditure has been so incurred under his authority.
  • Delay in supply of documents: Usually delayed and more often, the crucial documents are supplied to the auditors at the end of the audit programme. This is done with objective of obstructing meaningful audit of crucial records.
  • There has also been delays in the tabling the report of CAG in the Parliament.

Former CAG, Vinod Rai, has suggested several reforms in the institutional framework:

  • Bring all private-public partnerships (PPPs), Panchayati Raj Institutions and government-funded societies, within the ambit of the CAG.
  • CAG Act of 1971 should be amended to keep pace with the changes in governance.
  • A collegium type mechanism to choose a new CAG on the lines of selecting a Chief Vigilance Commissioner (CVC).