9.2. Power and functions

The Constitution (Article 149) authorises the Parliament to prescribe the duties and powers of CAG in relation to the accounts of union and 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 central government. However, for state Governments both the Audit and Accounts are managed by the CAG.

The powers and functions of CAG are as follows:

1) He audits accounts related to all expenditure from the consolidated fund, contingency fund and public account of India; consolidated fund, contingency fund and public account of each state and Union territory (those having such fund)

2) He audits the receipts and expenditure of the centre and each state to satisfy himself that rules and procedures in that behalf are designed to secure an effective check on the assessment, collection and proper allocation of revenue.

3) He audits the accounts of any other authority when requested by the President or Governor. For example, the audit of local bodies.

4) He audits the receipts and expenditure of the following:

a. All bodies and authorities substantially financed from the Central or state revenues;

b. Government companies; and

c. Other corporations and bodies, when so required by related laws.

5) He advises the President with regard to prescription of the form in which the account of centre and states shall be kept.

6) He submits his audit reports of central accounts to the President, who shall in turn place them before both houses of Parliament. Analogously in a state, he submits his audit reports of state accounts to the Governor, who shall in turn place them before state legislature.

7) He ascertains and certifies net proceeds of any tax or duty and his certificate is final in this regard. The ‘Net proceeds’ means the proceeds of a tax or a duty minus the cost of collection.

8) He compiles and maintains the account of state government. Earlier, he was also responsible for maintenance of account of central government but after 1976 he was relieved of this responsibility.

9) He acts as the friend, philosopher and guide to the Public Accounts Committee of the Parliament which exercises detailed financial control on the behalf of Parliament.

The CAG submits three audit reports to the President-audit report on appropriation accounts, audit report on finance account, and audit report on public undertakings. The President lays these reports with both the Houses of Parliament. After this, the Public Accounts Committee examines these reports (only first two, the report on PSUs go to the Committee on Public Undertakings) and lays down its findings in the Parliament.