Cag Scrutiny Of Banks, Lic Likely

The office of the Comptroller & Auditor General (CAG) is closely examining a proposal to bring the financial scrutiny of the Life Insurance Corporation and nationalised banks within its ambit.

We are in the process of formulating our views on the matter. Once that is decided we will it take up with appropriate authorities in the central government, comptroller and auditor general V K Shunglu told Business Standard.

State treasury expenditures and pension payments for government employees are routed through various nationalised banks and it is being increasingly felt that bank audits should also be taken up by CAG. Such a move, it has been argued, will facilitate cross verification of financial data and go a long way in checking financial irregularities. The matter was taken up at the accountant generals meeting held recently.

 

The CAG is also closely examining the reasons why banks and LIC were kept out of the scope of CAG audit during nationalisation of these industries. Any move to bring banks under CAG audit will, however, require amendments to the Banking Regulation Act which endorses bank audit by chartered accountancy firms. Besides, the DPC Act will also have to be amended to facilitate such a move.

The accounts of General Insurance Company and its four subsidiaries National Insurance, New India Assurance, Oriental Insurance and United India Assurance fall within the purview of CAG audit.

Although LIC is a public institution with the central government holding its entire equity, unlike other public sector undertakings, its audit is not entrusted with the CAG. The internal audit of LIC is conducted by its internal audit department while chartered accountancy firms are appointed for the purpose of conducting statutory audits.

The CAG has stressed the need to strengthen the accounting systems and bring about greater transparency.

According to Shunglu, There is a growing concern for strengthening the system and the matter is being deliberated upon with the central and state government officials.

Large budgetary outlays are channelled through local institutions and panchayats, and there is an urgent need to strengthen the present system by bringing about greater transparency, he added.