CAG urges Centre, states to follow uniform system for recording expenses

The CAG has asked the Centre and all the states to start using standard categories for recording government spending, to make accounting and auditing uniform across the country, latest by fiscal year 2027-28.

The CAG advisory seeks to do away with the wide variation among states in the operation of expenditure heads at the disaggregated level.

The matter had been engaging the attention of multiple stakeholders and was impacting inter-temporal and inter-state comparison as well as those with the Union Government, Jayant Sinha, Deputy CAG (Government Accounts) and Chairperson (GASAB) has said.

The Comptroller and Auditor General of India (CAG) has notified a common list of heads of expenditure at the disaggregate level, commonly referred to as 'Object Heads' of expenditure.

This is being done as part of recent initiatives to strengthen public financial management in the country, Sinha said.

Wide variation in the depiction of expenditure of economic nature at the disaggregate level impacts inter-temporal and inter-state comparisons as well as those with the Union Govemment, he added.

Accordingly, a need for standardisation of classification of expenditure of the Union Government and the state government was felt.

As part of the exercise initiated by the office of the CAG, a Working Group consisting of officers from the CAG, some state governments, Controller General of Accounts and Controller General of Defence Accounts was constituted.

"Based on the recommendations of the Working Group and engagement with the Ministry of Finance, Department of Expenditure, Government of India, on the issue. it has been decided that a uniform object head structure applicable to both the Union Government and all the state governments may be implemented," the CAG office memorandum said.

"The revised list of common Object Heads, to be implemented by the Union Government and the state governments, may be adopted keeping in view the level of preparedness but preferably effective from Financial Year 2027 -28," it said.

Sinha said CAG's notification harmonising the Object Heads of expenditure, which are to be adopted by all states latest by financial year 2027-28, will address a decades long issue affecting the budgeting and accounting framework of the states and constitutes a significant reform in the national public expenditure space, Sinha added.

He emphasised that strengthening public financial management especially in states is a key component of CAG's strategic plan and is intrinsic to CAG's mission to promote accountability, transparency and good governance through high quality auditing and accounting and for providing independent assurance to all stakeholders.