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Exclusive: How CAG is taking on a more proactive role

CAG is adopting ways to achieve economy and efficiency even during audit process

India's CAG interview CAG Girish Chandra Murmu | Facebook

The iconic 1990 chart-busting rock classic ‘Winds of Change’ by the Scorpions may have been all about the defining fall of the Berlin Wall on November 9, 1989. If one listens carefully though, the song could well be reverberating off the high pale earth-coloured boundary walls of the office of the Comptroller and Auditor General (CAG) of India located in the national capital.

That the BJP’s new swanky national headquarters at Pandit Deen Dayal Upadhyaya Marg is just across the road may well be a metaphor for the new effort to change the nature of relationship between the national auditor and the political executive—from antagonism to one of cooperative affability.

Historically maintaining a low profile, constitutional bodies like the Election Commission (EC) and the CAG, have often demonstrated the range and intensity of powers they wield. After all, it took just one T.N. Seshan from EC and one Vinod Rai from CAG to show the country how seriously they should be taken because of their constitutionally-vested mandate.

In the not-so-distant past, CAG’s probing audit was looked upon by the government ministries, departments and state governments as a fault-finding exercise hell-bent on chastising the entities audited.

Nor did the CAG connect with the political executive as the entire gamut of work relating to furnishing of data and detailing explanations lay with the bureaucrats. And that is what may be changing soon with a new outreach plan by the CAG.

CAG Girish Chandra Murmu, told THE WEEK in an exclusive chat: “Earlier our engagement was primarily with the bureaucrats, but of late, we have extended our outreach to political executives. In a few instances, it has also been due to the invitation from the political executive who wanted audit inputs on various financial and governance issues pertaining to their domain or sector.”

Among the entities requesting proactive engagement with the CAG include Assam Chief Minister Himanta Biswa Sarma and the Union Rail Ministry.

The national auditor elaborates: “In states, our Accountant Generals have always been closely interacting with state officials for all audit engagements but now we have further strengthened our engagement efforts not only through various innovative products such as ‘departmental appreciation notes’ and ‘management letters’ but also by increasing level of interaction and touch points.”

On the response received, he says: “Wherever we have engaged with political executives, they have been very responsive. These engagements have helped in creating shared understanding of the most pressing concerns, nuances of the challenges faced and possible solutions which would help in furthering the shared goal of good governance.”

The prompt for a change to the exercise of wider powers by the CAG may have first germinated in a landmark Supreme Court verdict on October 12, 2012 which ruled that the CAG is not there just to keep and maintain accounts.

The apex court had then said: “The CAG is not a ‘munim’ (keeper of accounts). He is a constitutional authority who can examine the revenue allocation and matters relating to the economy.”

The case pertained to a plea challenging the CAG’s power to conduct a performance audit of the controversial allocation of coal blocks by the Congress-led UPA government.

A constitutional authority, CAG audits the Union ministries, departments and offices, state government departments and offices, government-owned companies and corporations, autonomous bodies substantially financed by government and other bodies/authorities whose audit is entrusted to CAG.

And then again, on November 16, 2021, Prime Minister Narendra Modi, addressing the first-ever Audit Diwas (Audit Day), had said that the ‘CAG vs Government’ had to change: “I used to tell my officers when I was the Chief Minister of Gujarat, and I continue to say even today that you must give all the documents and data that are asked by the CAG. Give them other files related to your work as well. This creates scope for us to do better work. Our self-assessment work becomes easy.”

Change of role

Another sphere where the CAG is moving away from the traditional role and adopting a pro-active role is in trying to bring about mid-course corrections and suggesting ways and means to achieve economy and efficiency even during the course of the audit process.

In the past, the CAG’s role was limited to reading of accounts while maintaining total distance from policy design and execution.

An imperative need was felt to change that approach also because SAIs are in a unique position to give near real time feedback to governments and policymakers for not only mid-course correction but also changes in approach, where required.

“As it (audit) is a contemporary exercise, which goes on during the implementation of the policy, the audit observations and constructive recommendations not only helps in mid-course corrective action to improve policy implementation but also in improving the policy design. This is very significant as through these audits, we are able to be an aid to good governance and protect public interest,” the CAG said.

“As you know that apart from compliance and financial audits, we also do performance audits, the main objective of which is to constructively promote economical, effective and efficient governance. Though we do not question the policy but we audit its implementation to see how policy has translated into practice. This includes audit of the scheme, program and delivery design and the governance mechanism put in place to implement the policy.”

Improving efficiency of LSGDs

Another area witnessing CAG’s proactive initiative is in the effort to improve effectiveness and efficiency of local self-government bodies be it the Panchayati Raj Institutions (PRIs) or the Urban Local Bodies (ULBs).

Says Murmu: “Greater resources by way of a higher number of audit personnel have been allocated for the audit of local bodies and some restructuring in the state Accountant General offices has also been carried out to enhance audit coverage, keeping in view their rising importance in the scheme of governance.”

“The emphasis is on capacity building through training and regular interactions by the state AG Offices on various facets of auditing and reporting.”

“District-centric approach with a primary focus on the implementation of activities under the functions devolved to the PRIs and ULBs. The focus is to assess how effectively the LBs have been able to provide the designated services to the target beneficiaries and citizens with the funds and powers devolved to it,” the national auditor added.

With India assuming presidency of both the Shanghai Cooperation Organisation (SCO) and of G20, this year is a particularly important year for CAG with a number of meetings being held with the Supreme Audit Institutions (SAI) of all the participating countries with the two focus areas being ‘Blue Economy’ and Artificial Intelligence (AI).

Blue Economy

‘Blue Economy’ looks at conserving marine and freshwater environments while promoting their sustainable use, producing food and energy, supporting livelihoods, and acting as a driver for economic advancement and welfare.

With a 7,517 km long coastline and an Exclusive Economic Zone of over 2 million square km, India has about 199 ports, including 12 major ports that handle approximately 1,400 million tons of cargo each year with the coastal economy sustaining over 4 million fishermen and other coastal communities.

The primary challenge to auditing the complex and variegated ‘Blue Economy’ sub sectors like marine fisheries, coastal eco-system, aquaculture, coastal and marine tourism, bio-technology from marine resources, and extraction of sea-bed mineral resources, lies in integrating them into a single auditing framework.

Privacy concerns on AI

Asked about the addressing of serious privacy concerns on AI and its applications in the case of of audit processes, the CAG says: “India is well aware of the privacy concerns of AI and its applications. Though AI is an amazing performance enhancing tool, the concerns regarding bias and privacy, transparency and accountability are real and important. That’s why we are having this engagement regarding responsible AI in SAI20.”

“We in SAI India have some experience in applying AI tools in some of our audit products. We are seriously engaging with the major players in AI, both in the government and private sector in order to have a deep understanding of the privacy issues and to develop frameworks and control regarding application of AI in audit process as well as auditing AI applications.”

Aiding these changes is a total automation of the audit process and knowledge management system under a project called One IAAD One System (OIOS) Project that is expected to be launched in less than a month.

The OIOS will connect CAG’s 138 field offices with the headquarters in New Delhi. Of the total 45,000 staff in CAG, about 29,000 are in the field audit offices.

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