The Comptroller and Auditor General (CAG) of India is an authority, established by the Constitution of India under Chapter V, who audits all receipts and expenditure of the Government of India and the state governments, including those of bodies and authorities substantially financed by the government. The CAG is also the external auditor of government-owned companies. The reports of the CAG are taken into consideration by the Public Accounts Committees, which are special committees in the Parliament of India and the state legislatures. The CAG is also the head of the Indian Audit and Accounts Service, which has over 58,000 employees across the country. The CAG is mentioned in the Constitution of India under Article 148 – 151. The CAG is ranked 10th and enjoys the same status as a judge of Supreme Court of India in Indian order of precedence.
He can resign any time from his office by addressing the resignation letter to the president. He can also be removed by the president on same grounds and in the same manner as a judge of the Supreme Court. In other words, he can be removed by the president on the basis of a resolution passed to that effect by both the Houses of Parliament with special majority, either on the ground of proved misbehaviour or incapacity.
The fundamental basis of the parliamentary system of the Government is the responsibility of the executive to the legislature for all its actions. The legislature is able to enforce this responsibility only if it is competent to scrutinize the activities of the executive. However, not all activities of the executives can be scrutinized by any layman. Checking of the accounts and assessing the soundness of the financial transactions of the executive is the specialized job for which the constitution via articles 148 to 151 in Part V makes provisions for a Comptroller and Auditor General of India.
Constitutional Provisions
Article 148:
There shall be a CAG of India who would be appointed by President and who can be removed from office in a manner and on grounds like Judge of a Supreme Court.
Third schedule has the oath of affirmation for CAG
Salary and other conditions of work to be defined by a Law enacted by the Parliament. Salary specified in second schedule
Once left office, CAG is not eligible for a Government of India or Government of State jobs
Conditions of service of persons serving in the Indian Audit and Accounts Department and the administrative powers of the Comptroller and Auditor-General are prescribed by President after consultation with CAG, subject to any law by parliament.
Expenses and salary drawn upon Consolidated Fund of India.
Article 149: Duties and Powers of CAG include checking accounts of Union and States and / or other body prescribed in the Law enacted by the Parliament.
Article 150: The accounts of Union and States will be kept in such as way that is prescribed by the President on advice of the CAG.
Article 151: Report of CAG of Union Accounts to be submitted to President who causes them to be laid before each house of parliament. Report of CAG of State Accounts to be submitted to Governor who causes them to be laid before state legislature.
CAG’s (DPC) Act, 1971:
As per the provisions of the constitution, the CAG’s (DPC) (Duties, Powers and Conditions of Service) Act, 1971 was enacted. As per the various provisions, the duties of the CAG include the audit of:
Receipts and expenditure from the Consolidated Fund of India and of the State and Union Territory having legislative assembly;
Trading, manufacturing, profit and loss accounts and balance sheets, and other subsidiary accounts kept in any Government department;
Accounts of stores and stock kept in Government offices or departments;
Government companies as per the provisions of the Companies Act, 1956;
Corporations established by or under laws made by Parliament in accordance with the provisions of the respective legislation;
Authorities and bodies substantially financed from the Consolidated Funds of the Union and State Governments;
Anybody or authority even though not substantially financed from the Consolidated Fund, the audit of which may be entrusted to the C&AG;
Grants and loans given by Government to bodies and authorities for specific purposes;
and Entrusted audits e.g. those of Panchayati Raj Institutions and Urban Local Bodies under Technical Guidance & Support (TGS).
Appointment and Term to Constitutionals Posts
The CAG is appointed by the President of India by a warrant under his hand and seal. The CAG, before taking over his office, makes and subscribes before the president an oath or affirmation:
• to bear true faith and allegiance to the Constitution of India;
• to uphold the sovereignty and integrity of India;
• to duly and faithfully and to the best of his ability, knowledge and judgement per¬form the duties of his office without fear or favour, affection or ill-will; and
• to uphold the Constitution and the laws. He holds office for a period of six years or upto the age of 65 years, whichever is earlier
Vision, Mission and Core Values of CAG
Vision
We strive to be a global leader and initiator of national and international best practices in public sector auditing and accounting and recognized for independent, credible, balanced and timely reporting on public finance and governance.
Mission
Mandated by the Constitution of India, we promote accountability, transparency and good governance through high quality auditing and accounting and provide independent assurance to our stakeholders, the Legislature, the Executive and the Public, that public funds are being used efficiently and for the intended purposes.
Mandate
The Constitution of India forms the basis for the existence and mandate of the CAG. Articles 148 to 151 ensure that the CAG and the IAAD (Indian Audit and Accounts Department) that works under him are able to conduct their work in an impartial and upright manner. Article 148 imbues the CAG with the immunities from executive action accorded to a Supreme Court Judge (making him independent of the Executive as well as the Legislature). Articles 149 and 150 define his duties and powers. Article 151 prescribes that his reports relative to Union and the States are to be submitted to the President/Governor and placed before the respective legislatures (Lok Sabha or Vidhan Sabha).
The salary and other conditions of service of the Comptroller and Auditor General prescribed by Parliament by law viz., the Comptroller and Auditor General (Conditions of Service) Act, 1953, as amended in 1971.
Being equated with a judge of the Supreme Court, the CAG draws the equivalent: 90,000 per month. He is entitled to receive pension after his retirement. In letters, his service conditions are equivalent to those of a Secretary to the Gove.
Independence
The Constitution has made the following provisions to safeguard and ensure the independence of CAG:
• He is provided with the security of tenure. He can be removed by the president only in accordance with the procedure mentioned in the Constitution. Thus, he does not hold his office till the pleasure of the president, though fie is appointed by him.
• He is not eligible for further office, either under the Government of India or of any state, after he ceases to hold his office.
• His salary and other service conditions are determined by the Parliament. His salary is equal to that of a judge of the Supreme Court.
• Neither his salary nor his rights in respect of leave of absence, pension or age of retirement can be altered to his disadvantage after his appointment.
• The conditions of service of persons serving in the Indian Audit and Accounts Department and the administrative powers of the CAG are prescribed by the president after consultation with the CAG.
• The administrative expenses of the office of the CAG, including all salaries, allowances and pensions of persons serving in that office are charged upon the Consolidated Fund of India. Thus, they are not subject to the vote of Parliament.
• Further, no minister can represent the CAG in Parliament (both Houses) and no minister can be called upon to take any responsibility for any actions done by him.
Powers, Functions and Responsibilities
The constitution also prescribes that the CAG will not be eligible for further office either under the Government of India or under the government of any state after he has ceased 10 hold office. The administrative expenses of the office of the CAG, including all salaries, allowances and pensions payable to or in respect of persons serving in that office are charged upon the Consolidated Fund of India.
The CAG cannot function in an independent manner unless he enjoys certain constitutional protection and privileges. The Indian Constitution, therefore, ensures the CAG’s independence through the following provisions:
The CAG holds office for a term of six years from the date he assumes office or until he attains the age of 65 years, whichever is earlier. He can be removed from office only by an order of the President passed after an address by each House of Parliament supported by a majority of the total membership of the House and by a majority of not less than two-thirds of the members of the House present and voting on the ground of proved misbehaviour or incapacity. His salary and service conditions cannot be varied to his disadvantage after he is appointed. A CAG shall not be eligible for further office under the Government of India or of any state, after he leaves office.
It is one of the positive features of the Indian government system that the CAG’s independence has rarely been questioned and his reports and comments have always been given due respect.
Structure of CAG’S Office
The Indian Audit and Accounts Department (IAAD) is headed by the Comptroller and Auditor General of India (CAG).He is assisted by five Deputy Comptroller and Auditors General of India. One of the Deputy CAGs is also the chairman of the Audit Board. Below the Deputy CAG are four Additional Deputy Comptroller and Auditors General of India. The hierarchy in the CAG’s office comprises Assistant Comptroller and Auditor General of India, Directors General, Principal Directors, Directors, and Deputy Directors. One Director acts as Secretary to CAG. At the regional level, in various states, there are a number of Accountants General who act as agents of the CAG in performing their functional and supervisory responsibilities at the state level. Moreover, as of 31 March, 2011, IAAD had 141 main offices, 116 branch offices and 435 Resident Audit Offices.
Functional Areas
• To prescribe, with the approval of the President, the form in which the account of the union and of the states are to be kept.
• To perform such duties and exercise such powers in relation to accounts of th union and the states and of any other bodies or authority, as may be prescribe, by any law made by the Parliament.
• To report to the President or to the Governors of the states on the accounts 0 the union or states.
The constitution has also provided in Article 279(i) that the CAG has to ascertain d certify the net proceeds of any tax or duty mentioned in Chapter I of Part XII of the titution. Besides these constitutional provisions and the Act of 1971 (details to follow), is necessary to mention that, before 1976, the CAG had a two-dimensional role, that accounting and auditing. Due to separation of accounts and audit in 1976, the CAG’s duty is the auditing of accounts. Since 1976, accounting is being done by the various departments themselves.
The CAG as Auditor General
The primary purpose of audit is to ensure that the money has been applied to the purpose or purposes for which the grants made by the Parliament were intended to provide and that the expenditure conforms to the authority which governs it. The audit thus performed becomes an important instrument in the control of public expenditure, for it is this instrument which makes the executive accountable. It has a dual role to play: firstly, it checks the extent of application by the government servants, of rules and regulations issued on behalf of the administration and secondly, it ensures, on behalf of the legislature, that the actions of the government have been in accordance with the views and requirements of the legislature.
It brings to bear rational financial criticism based on the accounts and a subtle influence on the process of incurring expenditure and, after it has been incurred, by bringing to notice the wastefulness in public expenditure. The staff of the audit department is always vigilant to detect inaccuracies and errors in accounts.
The purpose of audit is to ‘offer financial criticism’ and its value lies in its reports pointing out the impropriety or irregularity of certain transactions so that appropriate action could be taken to rectify them. As it prevents the recurrence of irregularities and paves the way for a prudent expenditure policy, its impact is that of a deterrent. While it may be argued that audit is essentially a post-mortem and a post-event exercise, it has a wholesome influence in creating a proper atmosphere in which the departments try to mitigate and avoid irregularities. Despite the handicap that it bolts the stable door after the horse has run away, as Herbert Britain observed, audit is probably the most potent force making for prudent financial administration. “What one department is publicly pilloried for today, all other departments will try to avoid tomorrow.”
The powers of the CAG, regarding audit, are provided for in the Comptroller and Auditor General of India (Duties, Powers and Conditions of Service) Act, 1971. According to this act, the CAG can audit:
• All receipts and expenditure from the Consolidated Fund of India and of the states and union territories.
• All transactions relating to the Contingency Funds and Public Accounts.
• All trading, manufacturing, profit and loss accounts and balance sheets and other subsidiary accounts kept in any department.
• All stores and stock of all government offices or departments.
• Accounts of all government companies set up under the Indian Companies Act, 1956.
• Accounts of all central government corporations whose Acts provide for audit by the CAG.
• Accounts of all authorities and bodies substantially funded from the Consolidated Fund.
Accounts of any authority, even though not substantially funded by the government, at either the request of the Governor/President or at the CAG’s own initiative.
In order that the CAG may discharge his duties effectively, he has been given certain privileges and powers which facilitate the process of auditing. The CAG, or the staff authorized by him, can inspect any office of the organizations which are subject to his audit. He and his staff can scrutinize the transactions of the government and question the administration regarding the various aspects of these transactions. On hearing the explanations, the CAG may withdraw his objections or, if he finds them serious, incorporate them in his report which is submitted to the Parliament. To enable the CAG to perform this function smoothly, he is endowed with full access to all the financial records including books, papers, and documents. Moreover, the CAG has the freedom to ask for the relevant information from any person or organization. His right to call for information and accounts is statutory, as was affirmed by the order made by the Government of India in 1936 in order to enforce the Act of 1935. The present provision of according him free access to files and information is a practice continuing from the past. A modification, however, was introduced in 1954 in the central government according to which, if secret documents are involved, they are sent to the CAG by name specifically and are returned as soon as the work is over.
The audit function of the CAG can be studied by dividing it into the following heads:
Audit of Expenditure
It is the prime task of the CAG to audit all expenditure incurred from the revenue of the union and the states. It may be mentioned at the outset that the audit by the CAG is not an administrative but a financial audit. Administrative audit entails an examination of technical, personnel and organizational processes of the administrative apparatus. This audit is not within the jurisdiction of the CAG. He is concerned only with the financial aspects. However, when an administrative act has seriously adverse financial repercussions or implications, the CAG can see whether that particular administrative act was in conformity with the prescribed laws and approved financial procedures and whether it has resulted in any extravagance or loss.
Audit of expenditure consists of ensuring whether the following essential conditions have been fulfilled or not:
• that the expenditure is covered by sanction, whether special or general, accorded by a competent authority;
• that the expenditure conforms to the relevant provisions of the statutory enactments and is in accordance with the financial rules and regulations framed by the competent authority;
• that there is sanction, either general or special, accorded by the competent authority;
• that it is within the ambit of the purpose for which the grant was intended; that the demand is supported by a voucher in proper form and the person to whom the payment has been made has duly acknowledged the payment and the fact of payment has been so recorded as to make a second claim on the government impossible;
• that the various programmes, schemes and projects in which large funds have been invested are being run economically;
• that the various public sector undertakings are yielding the results expected of them; and
• that the expenditure has been incurred with due regard to the broad and general principles of financial propriety.
All these constitute what is called the statutory audit. In other words, these are specifically provided for by statute or law. Side by side, another area, which is known as discretionary audit, has emerged. The discretionary audit is based on a liberal interpretation of the functions given by the statute and the recommendations of the Public Accounts Committee. It had recommended that “the Public Accounts Committee should, even more than in the past, encourage the CAG to scrutinize and criticize improper and wasteful expenditure and to indicate whether censure is in his opinion required.
In practice, the discretionary powers have become more important than the ones laid down by the statute. Much depends on the approach and style of the incumbent also. A precise area of audit cannot be prescribed in the case of discretionary audit because no rules regarding this have been laid down. Yet, it may be mentioned that discretionary audit lays emphasis on undertaking investigation and reporting on any wasteful and uneconomical expenditure regarding contracts and major deals.
The statutory audit is also known as the ‘regularity audit’ in the sense that its chief purpose is to see whether rules and procedures have been followed in accordance with the basic statutes, rules, essential requirements of audit and accounts and the general or particular orders issued by higher authorities. It also involves a “general conformity to the broad principles of orthodox finance by the sanctioning and the spending authorities.” Former CAG, T N Chaturvedi observes that in the process of seeing whether the expenditure conforms to the rules, regulations, statutes and enactments, the CAG is also interpreting the rules, orders and statutes. This appears to be a quasi-judicial function.
Audit of Government Undertakings
The CAG also undertakes audit of the commercial undertakings of the governments of the union and the states. Commercial undertakings exist in three forms:
• Departmental undertakings, run on the pattern of departments.
• Statutory corporations created by specific laws of the Parliament and broadly controlled by the government.
• Government companies, set up under the Indian Companies Act, 1956, in the form of private or public limited companies.
Audit of Appropriation
The appropriation audit consists in ensuring that the grants are spent for the purpose for which they have been provided. This audit enables the CAG to satisfy himself that the expenditure which is being audited is within the ambit of the grants and that the expenditure incurred has been incurred for the specific purpose for which it was voted by the legislature. In this process, certain cases which depict a discrepancy between the estimates and the final turnout might come to light. A scrutiny of such cases has to be made. It also verifies whether there have been reappropriations from one head to another and whether such reappropriations conform to the authority delegated. Thus, it is a document which reveals the various aspects of the transactions of the government. The appropriation audit is not done on a test basis, as in the case of accounting audit. It must be detailed, thorough and complete. Every payment is checked in the books to its right head of service so as to ensure that the intentions of the legislature have been honoured.
NOTE: The main idea behind this audit is to ensure that the accounts presented by the concerns give a complete and true picture of the various financial aspects of the concerns. The public has a large stake in the running of these undertakings as vast public funds are involved. Hence, together with the other ministerial and parliamentary checks over these undertakings, they are also subject to the audit control by the CAG. In the case of departmental undertakings, the CAG is the sole auditor. Further, the Acts by which the governments corporations are set up specify whether the CAG will audit their accounts, or whether the accounts will be audited by auditors appointed by the government.
To avoid these pitfalls, a system was devised in 1956 to provide personal contacts between the representatives of audit and of administration. Under this, the secretary of each department could take up the objections which he considered unjustified with the concerned Accountant General directly. If these discussions failed, the secretary could take up the matter with the CAG himself. Though the system had received excellent support in the initial stages, it is slowly falling into disuse.
The preceding analysis underscores that audit is essential as an instrument of parliamentary and financial control. B R Arnbedkar had pointed out in the Constituent Assembly debates that the CAG was probably the most important officer in India, because it was he who saw that the expenses voted by Parliament were well utilized. He may be criticized on the ground that the audit is too critical, concerned with details etc., but that exactly is the intention why the post of CAG was created. The CAG protects public funds from the reach of arbitrary power and, in that sense, is an important and most useful dignitary of the state.
Reports of the CAGs
According to Article 151 of the Indian Constitution, the CAG presents the audit report of the union and the states to the President of India and the Governors of the states, who lay them before the Parliament or the state legislatures respectively. The duty of making the report has been entrusted to the CAG under the Act of 1971. Some observers have expressed the opinion that the CAG is the agent of the Parliament in the sense that he is performing a task for the Parliament. “He is Parliament. Parliament only works through him.
To begin with, when the audit takes place, during the course of inspection of the various organizations, ‘Inspection Reports’ of each unit/organization are prepared and copies are sent to them. About 72,000 inspection reports are sent in a year. They are asked to take corrective action and their progress is also watched. The most important matters in these Inspection Reports are included in the Annual Audit Report.
The report submitted to the Parliament by the President, or to the state legislature by the Governor consists of two parts: (i) Audit report on the Appropriation Accounts, and (ii) Audit report on the Finance Accounts. The appropriation accounts show the appropriation of the money granted by the legislature to the various grants and heads of expenditure and whether the money granted for a specific purpose has been spent for that purpose or not. The Finance Accounts show the accounts of annual receipts and expenditure during the year.
The audit report, in brief, contains a narration of cases involving financial irregularities, losses, frauds, wasteful expenditure and comments thereon, accuracy of budgeting control of expenditure, savings etc. The CAG provides ‘audit paras” criticizing public expenditures of the departments and the ‘paras’ are developed post event scrutiny by the CAG staff and a detailed discussions with the senior staff of the department concerned. The finalized ‘paras’ are then brought before the Parliament where the concerned parliamentary committee that deals with the affairs of a particular ministry or department disposes off each ‘para’. The form of the audit reports is constantly under review and has undergone periodical changes. No matter what the format, the objective, that loss of money has to be prevented remains the same.They highlight transactions which have not proved financially viable. They have proved themselves to be neon signs that these are mistakes which ought to be avoided. As the report focuses its gaze on the omissions, each department is on its toes because the report may bring adverse and undesirable publicity in its wake.
Before they are presented to the President, the audit reports are put through rigorous quality assurance procedures and are countersigned by the CAG. After they are submitted to the legislature, the legislature, in turn, hands them over for examination to the concerned parliamentary committees. The reports of all the departments, including Railways, Post and Telegraph and other departmental undertakings, are handed over to the Public Accounts Committee (PAC). The reports relating to corporations and companies are given to the Committee on Public Undertakings (COPU). The CAG also assists these committees during the investigations. These committees have wide powers of obtaining information from the departments or public enterprises, as the case may be. After these investigations, and taking into consideration the report of the CAG, these committees make recommendations regarding the course of action to be taken.
Since 1989, an Annual Activity Report of each department is brought out by the CAG to assess the overall working of the department and to let all those interested in the functioning of the department know the details of its working. It serves a dual purpose: it gives a complete and true picture of the existing state of affairs and also helps in planning for the future.
The C&AG presents one or more volumes of his Audit Reports to Parliament/State legislatures and Union Territories with legislative assemblies under the sectors as shown in the following graphics:
Duties and powers
The Constitution (Article 149) authorizes the Parliament to prescribe the duties and powers of the CAG in relation to the accounts of the Union and of the states and of any other authority or body. Accordingly, the Parliament enacted the CAG’s (Duties, Powers and Conditions of Service) act, 1971. This Act was amended in 1976 to separate accounts from audit in the Central government.
The duties and functions of the CAG as laid down by the Parliament and the Constitution are:
• He audits the accounts related to all expenditure from the Consolidated Fund of India, consolidated fund of each state and consolidated fund of each union territory having a Legislative Assembly.
• He audits all expenditure from the Contingency Fund of India and the Public Account of India as well as the contingency fund of each state and the public account of each state.
• He audits all trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept by any department of the Central Government and state governments.
• He audits the receipts and expenditure of the Centre and each state to satisfy him¬self that the rules and procedures in that behalf are designed to secure an effective check on the assessment, collection and proper allocation of revenue.
• He audits the receipts and expenditure of the following:
All bodies and authorities substantially financed from the Central or state revenues;
Government companies; and
Other corporations and bodies, when so required by related laws.
• He audits all transactions of the Central and state governments related to debt, sinking funds, deposits, advances, suspense accounts and remittance business. He also audits receipts, stock accounts and others, with approval of the President, or when required by the President.
• He audits the accounts of any other authority when requested by the President or Governor. For example, the audit of local bodies.
• He advises the President with regard to prescription of the form in which the accounts of the Centre and the states shall be kept (Article 150).
• He submits his audit reports relating to the accounts of the Centre to President, who shall, in turn, place them before both the Houses of Parliament (Article 151).
• He submits his audit reports relating to the accounts of a state to governor, who shall, in turn, place them before the state legislature (Article 151).
• He ascertains and certifies the net proceeds of any tax or duty (Article 279). His certificate is final. The ‘net proceeds’ means the proceeds of a tax or a duty minus the cost of collection.
• He acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament.
He compiles and maintains the accounts of state governments. In 1976, he was relieved of his responsibilities with regard to the compilation and maintenance of accounts of the Central Government due to the separation of accounts from audit, that is, departmentalization of accounts.
The CAG submits three audit reports to the President-audit report on appropriation accounts, audit report on finance accounts, and audit report on public undertakings. The President lays these reports before both the Houses of Parliament. After this, the Public Accounts Committee examines them and reports its findings to the Parliament.
Powers of CAG in context with the companies:
The Companies Act, 1956 empowers the C&AG to:
Appoint/ re-appoint the auditors of a Government company;
Direct the manner in which accounts shall be audited; Give such instructions to the auditors in regard to any matter relating to audit;
To conduct a supplementary or test audit of the accounts;
and To comment upon or supplement the audit report of the statutory auditors.
An Audit Advisory Board has been set up under the Chairmanship of the C&AG, which consists of eminent persons in diverse fields. Its structure is as follows:
Chairman is CAG
Member Secretary is Director General (Audit) in the office of the C&AG
Deputy Comptroller and Auditors General [ex-officio members]
Other members eminent personalities in diverse fields. Term is 2 years for each.
Role
The role of CAG is to uphold the Constitution of India and the laws of Parliament in the field of financial administration. The accountability of the executive (i.e., council of ministers) to the Parliament in the sphere of financial administration is secured through audit reports of the CAG. The CAG is an agent of the Parliament and conducts audit of expenditure on behalf of the Parliament. Therefore, he is responsible only to the Parliament.
The CAG has ‘to ascertain whether money shown in the accounts as having been disbursed was legally available for and applicable to the service or the purpose to which they have been applied or charged and whether the expenditure conforms to the authority that governs it’. In addition to this legal and regulatory audit, the CAG can also conduct the propriety audit, that is, he can look into the ‘wisdom, faithfulness and economy’ of government expenditure and comment on the wastefulness of such expenditure. However, unlike the legal and regulatory audit, which is obligatory on the part of the CAG, the propriety audit is discretionary.
The secret service expenditure is a limitation on the auditing role of the CAG. In this regard, the CAG cannot call for particulars of expenditure incurred by the executive agencies, but has to accept a certificate from the competent administrative authority that the expenditure has been so incurred under his authority.
The Constitution of India visualizes the CAG to be Comptroller as well as Auditor General. However, in practice, the CAG is fulfilling the role of an Auditor-General only and not that of a Comptroller. In other words, ‘the CAG has no control over the issue of money from the consolidated fund and many departments are authorised to draw money by issuing cheques without specific authority from the CAG, who is concerned only at the audit stage when the expenditure has already taken place In this respect, the CAG of India differs totally from the CAG of Britain who has powers of both Comptroller as well as Auditor General. In other words, in Britain, the executive can draw money from the public exchequer only with the approval of the CAG.
Importance of the Office of CAG
It is the importance of the CAG office, which led Dr. B.R. Ambedkar to say that the CAG was the most important officer under the Constitution of India. It is the CAG’s audit reports which helps ensure executive’s accountability to the Parliament in the sphere of financial administration. Since it conducts audit of expenditure on behalf of the Parliament, it is an agent of the Parliament and thus responsible only to it. However, in recent times questions have been raised not only with respect to the basis of the office of the CAG, but also the model of the institution of CAG and factual efficacy in the reports. The CAG’s reports on the Commonwealth Games and the auctioning of 2G Spectrum have been the immediate triggers behind these utterances. It has been argued that the job of the CAG is merely to look at the compliance of systems, rather than questioning the policy itself. On the face of it, the argument seems valid. However, when analysed closely, in the context of changing times, it holds little water. It must be remembered that the CAG is concerned with providing a fair and transparent audit leading to credible governance. In its quest to do so, it not only needs to look at the compliance of systems, but also go deeper into issues of policy making. This is because systems and policies are not independent of each other; therefore the effect that policies have on systems need to be looked into. Moreover, with changing times, governance has not remained confined only to the State. Not only the civil society and media but also the citizens at large have acquired a stake in ensuring that the best governance practices are followed in India. In this context, the independence of the CAG from the executive makes it an appropriate body for oversight on the government expenditure. In the pursuance of its goals, if it needs to question the rationale behind policies and whether they confirm to the standards of ethics and fairness, it would not be improper. It must be kept in mind that the role of CAG is not that of a mere accountant to the government, rather to uphold the Constitution of India and the laws of Parliament in the field of financial administration.