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| The Other Auditor: It's CAG |
| Rahul Roy / New Delhi Jul 06, 2009, 00:56 IST |
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Supposing I tell you about an audit organisation with more than 100 offices in India and nearly 50,000 people on its rolls; an organisation which is the external auditor of the World Health Organisation (WHO), World Trade
Organisation (WTO) and was the external auditor of the United Nations and Food and Agriculture Organisation. This organisation represents a group of auditors who in the last year issued 63,000 reports and could manage to earn an actual recovery of Rs 14,887 crore for its clients — you would say, I am day dreaming!
However, all of these and more is true. The audit organisation I am referring to is the office of the Comptroller and Auditor General of India (CAG). In the run up to the Union Budget 2009, I feel we must pause and think in terms of accountability and effectiveness of governance and this is where the CAG comes in. Contrary to popular perception and perhaps because of the low key manner in which the CAG functions, in addition to the traditional audits there are a large number of specialised studies like IT audits, environment audits, studies on performance audits (examples being on cleanliness and sanitation in Indian Railways; on rural water supply programmes; on the National Rural Employment Guarantee Act (NREGA) that are routinely under-taken by the CAG.
Returning to the question of accountability, do we realise that in 2007-08, the Union government made a provision for transferring more than Rs 50,000 crores directly to autonomous bodies, societies and NGOs who keep these accounts in banks outside the government system and unspent amounts whereof are not auditable, thereby inflating government expenditure to such extent. The CAG report talks about more than Rs 20,000 crore incurred in the major functions of the government, representing over 50 per cent of the total expenditure under these heads which is classified under “Other Expenditure” leading to opaqueness in government accounts.
The Department of Telecommunication (DoT) receives levy towards Universal Service Obligation (USO) for increasing teledensity in rural and remote areas. Though, the fund had disbur-sed only a part of the collections to eligible service providers, it showed a nil balance, whereas, the balance should have been more than Rs 14,000 crore. This matter has been repeatedly highlighted by the CAG. The practice of netting off suspense accounts results in understating the real magnitude of un-reconciled outstandings in the annual accounts of the government. Many of these suspense account entries have been pending for over 20 years and CAG reports have repeatedly harped on this. Unspent budgetary provisions (which clearly indicate either poor budgeting or shortfall in performance, or a combination of both) was in excess of Rs 1,00,000 crores which included unspent provisions for defence services, financial institutions, education, police, panchayati raj, telecommunication, health and family welfare. All of them thrustreas of the government!!
Though, the National Rural Employment Guarantee Act (NREGA) was one of the flagship programmes of the previous government and largely instrumental in the subsequent mandate it got, do we know that when CAG audited it, as many as 13 state governments had not formulated rules for carrying out the provisions of NREGA; dedicated programme officers had not been appointed in 102 out of a sample 141 blocks and documented annual plans had not been prepared in 175 out of a sample of 558 panchayats? However, on most grounds, the state of Andhra Pradesh seemed to have been setting benchmarks in best practices. An audit of the rural water supply programme reveals that during the period 2003-07, more than 150,000 habitations which had been fully covered with safe sou-rce of drinking water, a few years earlier, had slipped into the partly covered/non-covered (where there is no drinking water source, within 1.6 km) category.
All of these and much more is available on the public website of CAG and routinely tabled in Parliament and state legislatures. But how much public debate or awareness have we seen around these? In this era of transparency and inclusive growth, it is really amazing that no NGO or TV channel or pressure group of young dynamic parliamentarians cutting across party lines have come up to highlight such issues, encourage public debate and push for action as well as fixing responsibility. It is an irony that in a few days when all the Chambers of Commerce will be debating direct and indirect tax proposals which peripherally impact the multitude in hinterland India, there will be no debate on the findings of the Other Auditor on the inefficiencies in governance, outlays and outcomes, affecting the ‘Other India’.
Rahul Roy is director, Ernst & Young India Pvt Ltd
Email: rahul.roy@in.ey.com
(The views expressed herein are the personal views of the author and do not necessarily represent the views of Ernst & Young Global or any of its member firms)
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