FAQ's

Major audit findings arising out of audit inspections are processed as draft paragraphs for inclusion in the CAG’s Audit Reports to be placed before the Legislature. The audit offices send the proposed draft paragraphs to the concerned Secretaries to Government by name for sending the replies of theGovernment within a period of six weeks.The replies of the Government are taken into consideration before finalising the draft audit paragraphs. In cases where the replies are satisfactory, the draft paragraphs are not included in the Audit Reports.

The replies received from the auditees in response to the Inspection Reports are examined in the audit offices and if found satisfactory, the observations are settled by them.Periodical reminders are issued by the audit offices regarding outstanding Inspection Reports/ observations. The audit observations are also discussed and settled during Audit Committee meetings between audit personnel and the representatives of the auditees. At the time of the nextaudit too, the audit observations that remain unsettled are reviewed by the audit parties. In sum, the audit observations contained in the IR are pursued till their final settlement.

The results of an inspection are formally communicated in a report known as an Inspection Report to the officer-in-charge of the concerned auditee unit with a request to submit written replies on the audit findings within a stipulated time period.

An Audit Plan is an annual programme of audit, which specifies the units and schemes/programmes to be audited during the ensuing financial year, based on the availability of audit resources during the year.Every year, each audit office frames a formal Audit Plan, based on detailed risk analysis, with reference to the quantum of expenditure, level of internal controls, past audit findings, media reports, schemes undertaken by the departments and other parameters. The plan identifies the auditee units proposed to be taken up for audit and allocation of audit resources.The aims of the Audit Plan are to:•provide reasonable assurance tothe stakeholders that all reasonable risks have been covered while deciding the audit priorities;•prioritise the audit assignments to cover the mandatory and high-risk areas/sectors (departments, programmes/schemes/projects etc) with special emphasis on current issues and thrust areas;•improve the quality of audit by providing adequate supervision and guidance using the services of experts, if considered necessary;•pay special attention to new and emerging challenges to audit, attributable to changes in the auditee environment.

The Audit Reports contain comments on the regularity, propriety and effectiveness of expenditure. The Audit Reports draw attention to:(a)matters arising from Appropriation Accounts, the more important being;(i)cases of excess over grants/appropriations requiring regularization;(ii)cases where expenditure has been incurred on a ‘New Service’ ‘New Instrument of Service’ without specific authority of the Legislature;(iii)points relating to efficiency of budgeting and control over expenditure;(b)points of interest arising from Finance Accounts;(c)points arising from the audit of expenditure, including expenditure on commercial and trading activities carried on by Government departments and of accounts of stores and stock. The Reports indicate important cases of non-observance ofrules and standards of financial propriety;(d)points arising from reviews from the financial aspect of the achievements of selected projects and schemes undertaken by Government;(e)important cases of loss, write-offand wasteful or nugatory expenditure;(f)points arising from the audit of other financial transactions of Government, such as receipts, debt, deposit and remittance transactions;(g)matters relating to Government companies, statutory corporations and other autonomous bodies, the accounts of which are audited by the Indian Audit & Accounts Department; (h)any other matter of interest from the financial or accounting point of view which the CAG considers necessary to bring to the notice of the Legislature

The mandate of C&AG of India for performance audits is described in Sections13, 14, 15, 16, 17, 19 and 20 read with Section 23 of this Act. Chapter 7 of the Regulations on Audit and Accounts, 2007 provides the specific guidance on this subject.

Article 151 of the Constitution of India provides that the reports of the Comptroller and Auditor General of India relating to the accounts of the Union or a State government shall be submitted to the President or the Governor of the State respectively, who shall cause them to be laid before each House of Parliament/ Legislature of the State. The statutory position is established under the Comptroller and Auditor General's (Duties, Powers and Conditions of Service), Act 1971.Under Section 18 read with Section 2(e) of the Act, the Comptroller & Auditor General has the authority:•to inspect any office of accounts under the control of the Union or of a State or of a Union Territory having a legislative assembly; •to require that any accounts, books, papers and other documents which deal with or form the basis of or are otherwise relevant to the transactions to which his duties in respect of audit extend, shall be sent to such place as he may appoint for his inspection; and•to put such questions or make such observations as he may consider necessary, to the person in charge of the office and to call for such information as he may require for the preparation of any account or report which it is his duty to prepare. The person in charge of any office or department, the accounts of which have to be inspected and audited by the Comptroller & Auditor General, shall afford all facilities for such inspection and comply with requests for information in as complete a form as possible and with all reasonable expedition

Compliance audit is carried out with a view to verifying that the expenditure conforms to the relevant provisions of the Constitution, Acts passed by the Legislature, laws, rules, regulations, and other instructions pertainingto the entities being audited Performance audit is an independent assessment or examination of the extent to which an entity, programme or organisation operates efficiently and effectively, with due regard to economy.• Financial audit is basically audit of the financial statements of the Union and State Governments (Appropriation Accounts and Finance Accounts), autonomous bodies, Government companies/ corporations etc. in accordance with the auditing standards generally accepted in India and expressing of opinions on these accounts through audit certificates.

Compliance Audit Financial Attest Audit Performance Audit

The organisations subject to the audit of the CAG are:- All the Union and State Government departments including the Indian Railways,Defence and Posts and Telecommunications. About 1500 public commercial enterprises controlled by the Union and State governments, i.e. government companies and corporations. Around 400 non-commercial autonomous bodies and authorities owned or controlled by the Union or the States. Bodies and authorities substantially financed from Union some of the local bodies and Panchayati Raj Institutions which are critical grass root agencies for implementation of developmental programmes and delivery of services.

In order to carry out his wide audit mandate in an unfettered manner the Act provides for: Power to inspect any office or organisation subject to his audit. Power to examine all transactions and question the executive. Power to call for any records, papers, documents from any audited entity. Power to decide the extent and manner of audit.

As envisaged in Article 149 of the Constitution, the Parliament enacted a detailed legislation called the CAG’s Duties, Powers and Conditions Act in 1971 which describes his mandate and puts almost every spending, revenue collecting or aid/grant receiving unit of the Government (the Centre and the States) under his audit domain. His duties are to audit and report upon: All receipts into and spending from the coffers (called the Consolidated Fund) of the Union and State Governments. All transactions relating to the Emergency expenses (called Contingency Funds) and relating to the monies of the public held by the Government e.g. Postal savings, Vikas Patras (called Public Accounts) at Central as well as State levels. All trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept in any Government department. All stores and stock accounts of all Government offices and departments. Accounts of all Government companies and Corporations e.g. ONGC, SAIL etc. Accounts of all autonomous bodies and authorities receiving Government money e.g. municipal bodies, IIM's, IIT's, State Health societies. Accounts of any body or authority on request of the President/Governor or on his own initiative. The Act also provides for compilation of accounts of the State Governments from the subsidiary accounts maintained by the State Governments.

The Constitution enables the independent and unbiased nature of audit by the CAG by providing for: His appointment by the President of India Special procedure for removal (like a Supreme Court Judge) Salary and expenses Charged (not Voted) to the Consolidated Fund of India Disallowing his holding any other Government office after his term expires

In a democracy, those holding power and positions of responsibility must be answerable for their actions. For this purpose the Constitution has mandated several institutional mechanisms like the Judiciary, Vigilance bodies and an independent Supreme Audit Institution (SAI).The Comptroller and Auditor General of India (CAG) and the Indian Audit and Accounts Department (IAAD) functioning under him, constitute the Supreme Audit Institution of India. The Constitution of India has mandated us as the auditors to the nation. We are thus an instrument for ensuring accountability. Articles 149-151 of the Constitution prescribe the unique role of the CAG.