Aim is to ensure financial propriety

In the past few years the Comptroller and Auditor General (CAG) has brewed many a storm, much to the dismay of the United Progressive Alliance government. Be it the report on 2G spectrum allocation or the discrepancies in spending Commonwealth Games funds, CAG reports have caused much furore and political turmoil.

The controversial report on the issue of allocation of 2G licences and spectrum was tabled in Parliament on November 16, 2010. Two days before that, A Raja resigned as the communications minister, as the controversy had preceded the tabling, with the media splashing the report much earlier.

CAG and the Indian Audit and Accounts department, functioning under the former, constitute the supreme audit institution in the country. In states, the institution looks after both audit and accounts as the accountant general. At the Centre, it confines itself to audit, with the Controller of Government Accounts doing the accounting job. The CAG office is currently headed by the 11th comptroller and auditor general, Vinod Rai. Besides, there are five deputy CAGs and four additional deputy CAGs.

Depending on the purpose, CAG can conduct compliance, financial attest, performance or some offbeat audits like social and environment. While compliance audit is done on select transactions, like purchases by the public works department, and entails raising questions related to financial propriety, financial attest audits are largely supplementary in nature. It also looks at public-private partnership projects, where the government does the viability gap funding for private developers. Even in the case of the petroleum ministry approving higher cost of development of Reliance Industries’ D6 block, CAG decided to audit the case, as it had a bearing on the quantum of revenue flowing into the government coffers.

As opposed to private auditors, who are often accused of turning the other way when company managements rig the accounts, the very creation of CAG through a chapter in the Constitution ensures autonomy. But the fact that the head of the institution is appointed by the government and usually from the Indian Administrative Service often raises doubts about its functioning.

Vinod Rai, man on a mission

Vinod Rai took over as Comptroller and Auditor General of India on January 7, 2008. During his tenure, the CAG report on the allocation of 2G spectrum was tabled, and this led to the arrest of former telecom minister A Raja along with several executives of private companies.

Rai, a former finance secretary has also been a director on several boards, including State Bank of India, ICICI Bank, IDBI Bank, Life Insurance Corporation of India and Infrastructure Development and Finance Company of India. 64-year-old Rai, has also been chairman of the United Nations panel of external auditors, and member of the governing board of the International Organisation of Supreme Audit Institutions. (INTOSAI).

An alumnus of Harvard University, US, Rai took over as chairman of the governing board of the Asian organisation of supreme audit institutions in February this year