The Comptroller and Auditor General of India (CAG) has once again come into focus as 14 pending reports on the performance of the previous Aam Aadmi Party (AAP) government in Delhi were tabled in the Assembly. Among these, a report on the now-defunct excise policy, which estimated a loss of Rs 2,002 crore to the Delhi government, was presented on Tuesday.

As India’s supreme audit institution, the CAG has submitted numerous audit reports to the Lieutenant Governor (L-G) of Delhi in recent years. However, the previous AAP government had not presented these reports in the Assembly, leading to criticism from the Bharatiya Janata Party (BJP), whose MLAs approached the High Court. Some of these reports, including performance audits on issues such as the renovation costs of former Chief Minister Arvind Kejriwal’s residence, liquor supply in Delhi, air pollution mitigation, and the functioning of the Delhi Transport Corporation, were submitted to the L-G four years ago.

In the lead-up to the Delhi Assembly elections, the BJP pledged to table the CAG reports in the Assembly. With the first session of the new government now underway, the BJP is fulfilling this promise. Here’s an overview of how the CAG selects audit subjects, prepares reports, and the subsequent process:

Powers and Duties of the CAG
The CAG’s role is defined under Articles 148 to 151 of the Indian Constitution, which outlines the appointment, duties, and reporting of the auditor general, who is appointed by the President. The Comptroller and Auditor General’s (Duties, Power, and Conditions of Service) Act, 1971, further specifies the CAG’s service conditions, duties, and powers. Additionally, other statutes, such as the Fiscal Responsibility and Budget Management Act of 2003, empower the CAG to review compliance with fiscal provisions and present findings to Parliament.

Beyond auditing central and state governments, the CAG maintains state government accounts, authorizes pensions for state government employees, and manages General Provident Fund accounts for serving employees.

Types of Audits Conducted by the CAG
The CAG conducts three main types of audits:
1. Compliance Audit: Assesses adherence to laws, rules, regulations, and directives issued by competent authorities.
2. Performance Audit: Evaluates the implementation and effectiveness of government schemes and programs.
3. Financial Audit: Certifies the accounts of the government and Public Sector Undertakings (PSUs).

How the CAG Selects Audit Subjects
The CAG employs a risk assessment process to finalize audit subjects, considering factors such as project outlays, media coverage, and historical inspection reports. It also adheres to guidelines from the International Organization of Supreme Audit Institutions (INTOSAI), which emphasize relevance to citizens. Based on these criteria, the CAG’s office approves an annual audit plan, implemented through its field offices. An Audit Advisory Board meets biannually to suggest audit subjects and methodologies.

The government or courts can also recommend audits. For example, the Supreme Court directed the CAG to audit the Delhi-Noida Direct (DND) flyover project.

The Audit Process
Once a subject is selected, the CAG holds an entry conference with the concerned department or organization to outline the audit plan, methodology, and timeline. Officials also request access to necessary records and documents. After the audit, an exit conference is held to share findings and seek responses. A draft report is then shared with the audited entity, which typically has six weeks to respond. The finalized report is signed by the CAG and submitted to the government (President or Governor), which tables it before the legislature.

The tabling of CAG Reports
Article 151 of the Constitution mandates that CAG reports be laid before Parliament or state legislatures, but no specific timeline is prescribed. This often leads to delays, as seen with the previous Delhi government, which withheld about a dozen CAG reports for years. Similarly, West Bengal has also delayed tabling CAG reports in the past.

CAG reports become public only after being presented in the legislature. The Public Accounts Committee (PAC) examines selected reports, seeks government responses, and recommends actions. Since 2019, the PAC has submitted 152 reports to the Lok Sabha, including reviews of CAG audits and government actions.

Impact of CAG Reports
CAG reports highlight financial losses, and procedural lapses, and provide recommendations that often lead to policy changes. For instance, the Telangana government revised its Engineering Procurement Contract mode following a CAG audit. One of the most impactful reports in recent decades was on the 2G spectrum allocation in 2010, which had significant political repercussions and contributed to the downfall of the Manmohan Singh-led UPA government in 2014.

Annual Audit Output
In the 2022-23 financial year, the CAG approved 172 audit reports related to the Union and state governments, submitted to the President and respective Governors. This marks an increase from previous years; for example, only 73 reports were approved in 2018-19.

The CAG’s role remains critical in ensuring transparency and accountability in government operations, with its reports often serving as catalysts for reform and public discourse.