Auditing and Public Finance

Himanshu Upadhyaya reviews the book:

Government Accountability and Public Audit: Re-engineering the Comptroller and Auditor General of India, B P Mathur; Eastern Book Corporation, Rs.495.

He says the book tackles the question,

Public audit of an organisation or individual by a statutory authority is proven to give teeth to enforcement. Why then has India's CAG failed to instill fear in the various government departments and enterprises it monitors?

From the review,

...Mathur goes into some history of public audit in India. Like other institutions of governance in India, the structure of Indian Audit and Accounts Department (IAAD) also has the colonial legacy stretching as back as 1858, when the East India company administration was taken over by the British government. Two years after that, the independent accounting offices of Bengal, Madras and Bombay presidencies were amalgamated into what came to be known as Auditor General. The subsequent Government of India Acts of 1919 and 1935 enhanced the position of Auditor General, whose stature and independence was equated to a judge of a Federal Court...

...Such indifference to audit queries, objections and Inspection Reports emanate from the crippling constraint that audit officers do not have powers to summon officials to depose and adjudicate, writes Mathur. He cites the example of audit of the Westland Helicopter deal (1989-'90, where for audit officials to get the files related to the deal was a herculean task. Mathur's view is that if powers analogous to a Commission of Enquiry Act were extended to the CAG, it will give it more teeth and help in carrying out its investigations...

...Although, the final outcome of public audit - CAG's audit reports – are presented in legislature for discussions and Public Accounts Committee – as well as Committee on Public Undertakings – are constituted with an express purpose of follow up on them to ensure parliamentary financial controls, the relationship of CAG and Parliament itself has remained rather ambiguous. Enough parliamentary backing hasn't come forth in event of attacks from vested interests who find the audit reports unpalatable...

The issues become complex here. Power should not be vested with a group of government institutions - dependent or independent of functions of Parliament. Monitoring agencies are also accountable. The psychology of correcting others is so dominant that we conveniently forget, and ignore the thought, to correct ourselves. This is applicable to institutions and individuals.
______________________