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
- not less than rupees twenty-five lakhs and
- 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.
TYPES OF AUDIT
- Performance audits: to assess how well a public entity’s operations have been managed with regard to economy, efficiency, and effectiveness.
- Financial Audits: objective evaluation of your company’s financial statements.
- 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.
