In November 2009, the CAG requested the government to amend the 1971 Audit Act, which would enhance the scope of its audits and ensure timely tabling of reports. This came after the planning commission and the public accounts committee expressed concern in this regard. But no progress has been made till now.
In its latest meeting held in March this year, the audit advisory board of the CAG reiterated their demand. According to the minutes of another meeting held in November last year, obtained under the RTI Act, the board members flagged this particular concern: “Though the government agreed in principle that this needs to be rectified, the amendments have not been introduced so far.”
Currently, the Audit Act does not give CAG the power to audit local bodies, societies, flagship programmes such as the NRHM, Sarva Shiksha Abhiyan, MGNREGA, or other schemes, which account for 65% of total government expenditure in the 11th five year plan. At present, most government programmes are implemented by local bodies due to legislations that came into force post 1971, which is why CAG lacks the power to monitor them.
The audit advisory board, chaired by the CAG of India, has 17 members including Pratap Bhanu Mehta, president of the centre for policy research; Rohini Nilekani, chairperson of charitable trust Arghyam’ Sunita Narain, director general of the centre for science and environment; KV Kamath, chairman of ICICI Bank; social activist Shabana Azmi and central vigilance commissioner Pardeep Kumar.
In 2009, the CAG had submitted their request after discussion with the ministry of finance. Anticipating prompt government approval, the CAG initiated measures such as setting up offices of accountant generals to audit local bodies in six states. It also started the recruitment process, as per the minutes of a meeting held in 2011.
The CAG was concerned that very few local bodies maintained proper accounts and most were in a bad financial condition. The CAG undertakes audit of local bodies — such as panchayats or city corporations — only on the invitation of the state government.
Sources in the CAG said frequent reminders have been sent to the ministry of finance, the nodal agency to which the CAG reports. “It is now the government’s responsibility to act on the request,” sources said.
The amendment further proposes to enhance CAG’s powers to access information under the Audit Act. In the past, almost 30% of the documents demanded by CAG officials have been denied to them. The CAG also wants deadlines to be set for tabling of its reports in Parliament. Many of these reports are not in favour of the government. The amendment would also allow the CAG to audit public-private partnership contracts. Taking the example the Reliance Industries Limited audit in the KG basin, the CAG said that the propsed amendments would make the process easier.