Accounting deficiencies

Issues raised by the CAG should be addressed

The Comptroller and Auditor General of India’s (CAG’s) new report, Adding Value to Public Governance 2025-26, noted that its audits led to recoveries of ₹4,251.34 crore in 2025-26. However, in several major cases, the amount recovered or the corrective action taken fell short of the financial implications flagged by the CAG. At various levels, its findings led to 74 amendments to laws, rules and regulations, 231 changes to government orders and notifications, and 253 revisions to accounting policies and procedures. These figures indicate that audit can influence governance beyond financial recovery. Yet the gap between findings and outcomes remain a concern. In Odisha, for instance, a revenue implication of ₹10,294.24 crore from the undervaluation of iron-ore grades led to a recommendation for an investigation covering all auctioned mines. The reported response was the notification of new mineral rules in 2025, providing for artificial intelligence (AI)-enabled surveillance and Global Positioning System (GPS) tracking.

 While these measures could improve oversight, the report notes that their impact depends on effective implementation and enforcement. Under a welfare scheme in Odisha, ₹ 782.26 crore was disbursed to 1.27 million ineligible beneficiaries while ₹107.64 crore went to beneficiaries with incorrect bank account details. The reported corrective step was to integrate the scheme’s database with the government schemes and other databases. The case on the oil cess points to a different weakness: Nearly ₹2.9 trillion in cess on crude oil collected by the Union government up to 2023-24 had not been transferred to a designated fund because it had not been created. In response, the Union government subsequently established the Oil Industry Development Fund and transferred ₹17,730 crore, which is about 6 per cent of the amount cited. These examples show that corrective measures and partial transfers do not necessarily resolve the full financial implications identified by audit.

 The findings expose several weaknesses. They clearly suggest that internal control and checks are weak at various levels of government. The problem is not only that lapses occur but also that systems often fail to detect them early, prevent their recurrence, or ensure timely corrective action. Besides, audit observations do not automatically translate into public money recovered or better administration. Delays, litigation, weak departmental followups and poor internal controls allow losses to persist. A change in rules or the integration of databases may address the source of an irregularity, but its effectiveness must be judged by measurable outcomes. Stronger legislative scrutiny and fresh audits can help ensure that audit objections are resolved rather than left pending.

 The CAG has proposed greater use of technology for identifying risks, anomalies, and weaknesses in internal controls with greater precision and speed. However, technology cannot compensate for weak enforcement or inadequate administrative capacity. Governments need stronger internal audit processes, transparent reporting, and followup audits to verify corrective action and prevent repeat irregularities. This report is a timely reminder that accountability must extend beyond identifying failures to correcting them. The aim should be to collect revenue where it is due, account for it properly, and spend efficiently.