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Mainstream, Vol XLV, No 51

Appointment of CAG

Tuesday 11 December 2007, by Era Sezhiyan


About the importance of the Comptroller and Auditor General in the parliamentary system of governance, Dr B. R. Ambedkar said in the Constituent Assembly on May 30, 1949: “I am of opinion that this dignitary is probably the most important officer in the Constitution of India. If this functionary is to carry out the duties-and his duties are far more important than the duties even of the judiciary-he should be certainly as independent as the Judiciary.”

Prof K. T. Shah was against appointing the Auditor-General from the cadre of the Civil Service and demanded ’to lay down the qualifications which will provide for practical experience and technical knowledge in the person appointed as Auditor-General’.

On behalf of the Drafting Committee, T. T. Krishnamachari assured that “we had some very good Auditor Generals who were good administrators and who have functioned as Accountant-Generals in various places” which gave the impression that the Auditor-General, later designated as Comptroller and Auditor General, would be chosen from the experienced Accountant Generals belonging to the IAAS ranks.

The assurance given in the Constituent Assembly was followed in appointment of the three CAGs from the IAAS seniors like V. Narahari Rao (1948-54), A. K. Chanda (1954-60) and A. K. Roy (1960-66) who with their rich experience and expertise, not only succeeded in setting up an effective Public Audit on a sound foundation, but also rendered valuable assistance to make the Parliamentary Committees take firm decisions and adopt suitable procedures to ensure the accountability of the executive.

In the 1950s, the Government of India desired to organise public enterprises as private limited companies in order to preclude the CAG audit. While some leading Members felt that formation of Government Companies under the Indian Companies Act would whittle away parliamentary control, they were hesitant to raise their objections against the powerful Nehru Government. However, CAG Narahari Rao boldly came out to declare that it was ’a fraud on the Constitution’ if the Government Companies were not subject to public audit. Supporting the commendable views of the CAG, the Public Accounts Committee recommended in its Third Report of 1952-53: “The Comptroller and Auditor General should have the unquestioned right to audit the expenditure of these concerns, by whatever name they may be called, because they are financed from the Consolidated Fund of India.”

During the Lok Sabha discussion on December 11, 1953, Finance Minister C.D. Deshmukh agreed for legislation to bring all government companies under the public audit.

Ashok Chanda introduced the system of Financial Advisors in the Union Ministries to cope with the huge volume of work generated by the development planning. A. K. Roy initiated the new field of revenue audit that improved the tax collection of the Government. They are looked upon as the triumvirate legends responsible for establishing a responsible Supreme Audit Institution (SAI) in India.

However, in the continuous appointments of seven CAGs during the last 42 years from 1966 onwards, only one IAAS Officer was chosen and all other postings went to the Civil Officers. It may be noted that an IAS Officer retires on completion of 60 years of age. The term of CAG is six years or till the end of 65 years of his age whichever is earlier. If a Government Secretary about to retire manages to get the posting of CAG, he gets an extension of five years in higher post, without any training or experience to deal with high standards of auditing the vast complex Government transactions, whereas a talented Deputy CAG with more than three decades of experience in the Audit and Accounts Service is denied his rightful promotion. It is more a loss to the supreme audit than to the individual concerned.

It looks as though the Government has made an unwritten policy of appointing only IAS officers to head the Supreme Audit. Thus the Audit office has become another public sector enterprise to accommodate superannuating Government officials.

In United Kingdom, the Comptroller and Auditor General is an officer of the House of Commons and Head of the National Audit which is an independent Parliamentary body for auditing central Government departments, Government agencies and non-departmental public bodies. The appointment of the CAG is made “on an address presented by the House of Commons and no motion shall be made for such an address except by the Prime Minister acting with the agreement of the Chairman of the Committee of Public Accounts.”

In Australia, the Governor General appoints the Auditor General on the recommendation of the Minister concerned after the Minister has referred his recommendation for approval of the Joint Committee of Public Accounts and Audit.

In Germany, the Bundestag (Parliament) and the Bundesrat (Federal Council) elect without debate on a proposal made by the Federal Government about appointment of President and Vice-President of the Federal Court of Audit. Before making his proposal, the Federal President shall consult the standing committee of the large Senate of the Federal Court of Audit.

In Japan, the three Commissioners of the Board of Audit are appointed by the Cabinet with the consent of both Houses of the Diet.

In South Korea, the Chairman of the Board of Audit is appointed by the President with the consent of the National Assembly.

In Thailand, the Auditor General is appointed with the prior approval of the National Assembly.

In the USA, the Government Accountability Office (GAO) is the audit, evaluation and investigative arm of the United States Congress and thus an agency in the Legislative Branch. The Comptroller General, head of the GAO, occupies a non-partisan position in the U.S. Government and is appointed by the President, with the advice and consent of the Senate, for a 15-year, non-renewable term. The Comptroller General may not be removed by the President, but only by Congress through impeachment or joint resolution for specific reasons. Since 1921, there has been no formal attempt ever made to remove a Comptroller General. The long tenure of the Comptroller General and the manner of appointment and removal gives GAO a continuity of leadership and independence that is rare within Government.

Thus, in most of the countries, there is no scope for the head of the Supreme Audit Institution (SAI) to be chosen at the discretion of the Government. India is a member of the International Organisation of Supreme Audit Institutions (INTOSAI) which operates as an umbrella organisation for the external Government audit community and has 186 members. The INTOSAI has been insisting that “the Supreme Audit Institutions should have the functional and organisational independence required to carry out their mandate.” It is therefore desirable that India adopts the international practice of appointing head of Supreme Audit Institution to be independent of the discriminatory power of the Executive.

At the foundation-stone-laying function of the building for the CAG Office in New Delhi on July 21, 1954, President Rajendra Prasad emphasised the importance of audit: “In a democratic set-up involving allocation of hundreds of crores of rupees, the importance of this kind of scrutiny and check can never be over-emphasised, particularly at the present moment when the Government is incurring huge expenditure in so many welfare projects. It is essential that every rupee that we spent on all these is accounted for. The important task-I am afraid, a task not always very pleasant-devolves upon the Comptroller and Auditor General and his office. In accordance with the powers vested in him, he has to carry on these functions without fear or favour in the larger interests of the nation.”

Rajendra Prasad, as a true Gandhian, was very much concerned about proper accounting of every rupee spent in the ’huge expenditure’ of the Government. In the annual budget of 1954, the total budgetary transactions of the Central and the States (including the extra-budgetary resources of the public sector undertakings) was Rs 1,254 crores only, whereas the same for the year 2005-06 has risen to the level of Rs 10,49,775 crores!

In 1951, there were only five public undertakings with a total investment of Rs 29 crores under the Union Government and very few in the States. Now at the end of the Tenth Plan, the total financial resources given to the Public Sector Enterprises under the Centre and the States including the Union Territories come to Rs.15,92,300 crore. Public enterprises other than the nationalised banks and some financial institutions are subject to public audit.

Thus, the CAG and his officers have very high and heavy responsibility to see whether financial transactions of the governments and their enterprises are being managed with strict measures of economy, efficiency and effectiveness.

At a function held on June 2, 1954 in the Office of the Accountant General, Madras, Vice President S. Radhakrishnan advised the Audit Officers to the duty they owe to the country. He said: “The Comptroller and Auditor General is responsible not to the government. He must serve as the check on the government. The government may make mistakes. It is wrong to assume that the government can do no wrong. The Auditor General is independent of the executive. It is the duty of the audit and accounts department to carry out the financial policies of the government and maintain the authority to Parliament. If I have to give one advice and if I am presumptuous enough to give any advice to the officers of the Audit and Accounts Department, it is this: ’Do not shrink from the truth for fear of offending men in high places.’”

High expectations raised from and rich tributes paid earlier to the eminent CAGs by the political and constitutional dignitaries of India are being recalled here just to emphasise the important role assigned to the Public Audit in ensuring the accountability of the Executive to Parliament and through Parliament to the real sovereign, the People.

By appointing continuously for the last thirty years only IAS Officers working as Secretaries in one or other of the Ministries to the post of the CAG, it is not known how the Government found that an IAS Officer is far superior and competent to fill up the constitutional post of the CAG in preference to the seasoned IAAS Officers who have all the experience and competency to perform the duties of Auditor General. Principally the Government is wrong in having such an unwritten and inexcusably unjust policy in this regard.

The Cabinet has a collective responsibility to Parliament and the Ministers are individually answerable to Parliament for all the work of their Ministry/Departments. However in the vast administrative and financial activities of the Government, there may be many occasions where an individual officer in charge of a department acts against the rules and procedures laid down, he becomes answerable to the Parliamentary Committees. Rule 52 (1) of the General Financial Rules states: “Departments of the Central Government shall be responsible for the control of expenditure against sanctioned grants and appropriations placed at their disposal. The control shall be exercised through the Heads of Departments and their Controlling Officers, if any, and Distributing Officers subordinates to them.”

An officer working as Defence Secretary is suddenly raised to the post of CAG and if, at that time, the Audit Officers are engaged in a long-standing scrutiny of some questionable Defence deals, what will be the natural disposition of the new CAG who has been involved in making the wrong decisions concerned in the Defence Ministry?

If the Secretary from Petroleum Ministry is chosen to the post of CAG, how will he be reacting to the Audit investigations into the nebulous and surreptitious transactions by the Petroleum Ministry? Normally, we import petroleum to the extent of $50 billion at a time out of the total annual import of $180 billion. There are major public sector enterprises dealing with petroleum products such as IOC, HPCL, BPCL, etc. How can someone involved in the executive decisions taken earlier in the Ministry be able to face the audit objections brought to surface now in the Audit?

Unless a dossier is prepared for each Officer about the irregularities, mismanagement and misuse of power committed as per the Audit Reports on the whole, how can he be promoted to such a sensitive and independent post of CAG?

In 1996, January-February, the Indian Audit and Accounts Service Association considered the appointment of the next CAG and made the following submissions:

“(a) IA&AS is a Service constituted under Article 148(5) of the Constitution with specific purpose to implement provisions of Articles 149 to 151 and the Comptroller & Auditor General’s (Duties and Powers) Act of 1971 and only a professional drawn from their rank who possesses the requisite experience of auditing and accounting can discharge the functions of the post of C&AG.

“(b) After independence during Pt. Jawaharlal Nehru’s time when the best traditions of Parliamentary democracy were followed, the first three C&AGs were drawn from the IA&AS.

“(c) Giving specific examples, the Association has pointed out that most countries choose an officer from within the rank of officers working in their national Audit office to head the Audit organisation.”

I understand that the IAAS Officers discussed this matter with the Chairman of the Public Accounts Committee of Parliament, who personally met the President and the Prime Minister and conveyed his full support to the representation made by the officers.

The consultation paper circulated by the National Commission to Review the Constitution recommended a high level committee for appointment of CAG. However, the final report recommended that “a healthy convention be developed to consult the Speaker of the Lok Sabha, before the Government decides on the appointment of the CAG so that the views of the PAC are also taken into account”. (Para 5.16.3).

In recent years, the Government have made statutory provisions of selection through high level committees in appointment of sensitive posts. The Human Rights Act provides appointment of the chairperson and other person of the National Human Rights Commission to be based on the recommendations of a committee consisting of the Prime Minister, Home Minister, Leaders of the Opposition in the two Houses of the Parliament, the Speaker of the Lok Sabha and the Deputy Chairman of the Rajya Sabha. For the post of Central Vigilance Commissioner, the Act provides for appointment of a three member committee consisting of the Prime Minister, Home Minister and the Leader of the Opposition in the Lok Sabha. One should be careful not to give, overtly or covertly, a stronger hand to the government to enforce its decisions in appointment of any sensitive post.

I have no ill will and personal animosity against any of the CAGs while I was in Parliament or in the PAC, the COPU (Committee on Public Undertakings) or other Committees. I always appreciated and have great respect for the exemplary work done by the team of Audit officers assisting the Committees of Parliament. The entire working of Parliamentary system and its major objective of ensuring accountability of the executive people rests greatly on the invaluable reports and assistance of the Public Audit.

If there is no independent audit, there will be no accountability; if there is no accountability, there will be no control of the executive and if there is no control, there will be no parliament worth its name!

The term of the present CAG expires on January 6, 2008 and there is already speculation for filling up the vacancy with an IAS officer. I earnestly appeal to all in the Government, in the Parliament, the media and the public to save the parliamentary system of a functioning democracy by appointment of a competent and experienced IAAS Officer to the post of Comptroller and Auditor General.

It may take centuries for a country to regain its freedom; it may take several decades to establish a strong democratic basis of governance. But it is easier to squander them away in no time. Let this generation be not blamed for losing a precious gift given by the freedom fighters and defenders of democracy of the past in our country.

The author is a senior Fellow of the Institute of Social Sciences and a former Chairman of the Public Accounts Committee of Parliament. He can be contacted on e-mail:

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