June 23, 2002
Snapshot from an Audit Document: Of 1209 paras CAG submitted in 1997-98, PAC discussed only 16 (Photo: Wikipedia)
‘Supreme’ Audit– ‘Shutting Stable Door After Steed Is Stolen!’
By Mukesh Jhangiani
United News of India
New Delhi (UNI) – India’s Comptroller and Auditor General (CAG) has acknowledged at least two instances in which Parliamentary recommendations arising from its findings have gone unheeded for 25 years, suggesting that the country’s ”supreme” audit system is not as effective as it should be.
Both instances pertain to the University Grants Commission– its ”inequitable” distribution of grants between Central and State Universities and its failure to produce ”utilisation certificates” for Rs 511.37 crore grants made between 1958-59 and 1988-89.
The Public Accounts Committee of Parliament had recommended steps to mend each situation, but, according to a CAG report, the steps were not implemented in either case. Here are excerpts of the report:
”During 1969-70 to 1975-76 the share of development grant of Central and Deemed Universities was 41 per cent against 59 per cent of State Universities.
”(The) PAC in its seventy third report (Sixth Lok Sabha) while disapproving the inequitable distribution of grants had directed (the) UGC to play a positive role in creating conditions to enable the State Universities and Colleges to take advantage of the facilities of development grant.
”Despite this inequity in the disbursement of development grant, it increased constantly since then and during 1992-93 to 1999-2000 the share of 15 Central Universities alone stood at 53.43 per cent as against 46.57 per cent of 212 Deemed and State Universities.
”Thus, (the) UGC failed to take effective measures to eliminate disproportionate disbursement of grants, despite the recommendations of (the) PAC 25 years ago…
”As many as 50,877 utilisation certificates (UCs) involving Rs 511.37 crore pertaining to the period 1958-59 to 1988-89 were outstanding as on 31 March 1999. (The) UGC failed to provide updated information as the details are yet to be compiled.
”On the basis of recommendations of (the) PAC in its 73rd Report(Sixth Lok Sabha) it was decided to constitute peripatetic parties for on the spot liquidation of outstanding utilisation. However, no peripatetic party was constituted as of July 2000.”
The CAG’s report did not name the officials responsible for the failure nor did it explain how or why the situation was allowed to remain unsorted for so many years.
Dr Bhimrao Ramji Ambedkar, one of the authors of India’s constitution, thought of CAG as ”the one man who is going to see that the expenses voted by Parliament are not exceeded, or varied from what has been laid down by Parliament in what is called appropriation Act.” He held the CAG’s duties to be ”far more important than the duties of the Judiciary”.
The incumbent CAG, Vijayendra Nath Kaul, is an Indian Administrative Service officer appointed to the post three months ago by President K R Narayanan, to whom he reports. According to official documents, the CAG, as head of the Indian Audits and Accounts Department, is assisted by about 60,000 employees in over 90 offices across the nation. The Department has a Rs 846 crore budget– bulk of it spent on staff pay and allowances.
The CAG’s reports on the accounts of the Union submitted to the President are laid before each House of Parliament, and those on the States submitted to the respective Governor are laid before the legislature.
They contain objections and remarks over errors committed by government authorities in spending money– specifying non-spending, under-spending, overspending and misspending of allocated funds.
In Parliament, they are routed either to the Public Accounts Committee (PAC)– which scrutinises sections on central ministries, departments and offices– or the Committee on Public Undertakings(COPU)– which goes over sections on central public sector undertakings (PSUs).
Representatives from the ministries and departments appear before the Committees when matters relating to them are taken up to answer questions raised by members on the basis of the report of the CAG, who is present during the hearings.
The Committees’ conclusions and recommendations are presented to Parliament and the Ministries concerned required to file action taken reports.
A PAC official said matters reported by the CAG are usually gone into, the process sometimes involving more than one Action Taken reports.
As to the system countenancing a lapse of 25 years just to find that steps recommended by the PAC were not acted upon, the official appeared surprised by the allusion to the observation made in the CAG’s report.
But Chhattrapal Singh, a Lok Sabha Member who has been in the PAC four years in a row, said such occurences owed to the non-binding nature of its recommendations. ”That’s the lacuna in the Parliamentary system. It must be remedied by making the recommendations of the PAC mandatory.”
A Bharatiya Janata Party Member from Uttar Pradesh, Singh said, ”To allow a choice in whether or not to implement recommendations after two eminent bodies– the CAG and the PAC– have gone into a matter raises questions about our earnestness to end corruption and improve administration.”
Critics say such audit exercises mean little unless those responsible are brought to book– something over which India’s CAG is powerless. Critics say all that constitutional authority and elaborate auditing machinery notwithstanding there are several weaknesses in the system. And the situation is no different in the States.
In countries such as Germany, Japan, China, France and New Zealand auditing officers have powers to summon erring officials and make them pay from their own pockets for losses caused by them to the State. In some serious cases the erring official is imprisoned after institution of criminal proceedings in a court of law.
In India, a group of Government appointed experts recently pointed to the fact that the CAG does not even have the power to summon government officials who commit irregularities to ask them to explain their decisions– let alone make them pay for the loss caused or punish those stealing public funds.
Stressing that a primary audit function is to see that provisions of law, rules and regulation are properly applied in incurring expenditure or collecting revenue, experts reported that ”while audit notices systematic violation of law, rules and regulations by departmental officers it is unable to take an effective action to prevent them.”
They cited the Bihar fodder scam. ”Serious financial irregularities and misappropriation of government funds were being committed by senior government functionaries and the Treasury officials all acting together in collusion.
”The Accountant General (AG) Bihar could not detect the irregularity in time as Treasury officers suppressed the vouchers through which money was drawn and did not transmit them to AG thus preventing its audit.
”(The) CAG has been making mention of excess drawal over voted provision in its Audit Report presented to Bihar Legislature but Public Accounts Committee, it is said, did not even me(e)t to discuss the report leave apart take preventive action.
”After the scam became public knowledge, (the) CAG has produced a well documented Audit Report but it is more a case of getting wise after the event– after crores in public money has been looted and shutting the stable door after the steed has been stolen.”
The experts noted that the PAC’s functions included examining the Government explanation for extra expenditure and presenting a report to the legislature recommending regularisation– a necessity as all government expenditure must have the sanction of the legislature.
But the group reported that ”In many States, (the) PAC’s have not been able to discharge even the Constitutional obligation of regularising ‘excess expenditure’ over budgetary grants.”
It cited how Rs. 94,314 crore excess expenditure was not regularised as of 1999– Rs 22,767 crore in Jammu and Kashmir, 13,618 crore in Uttar Pradesh, Rs 12,569 crore in Assam and Rs 6,059 crore in Bihar.
”Thus in almost all the States huge amount of public money has been spent in violation of budgetary control envisaged in the Constitution and fraught with the risk of misappropriation of public money,” the group noted.
The situation has arisen because no time limit is set for regularisation, experts said. ”There is no time limit prescribed for placing Appropriation Accounts certified by the CAG in Parliament or State Legislature and the regularisation of excess expenditure over voted grants by the PAC.”
At the Central level, the Parliamentary PAC and COPU have not been able to examine all audit reports submitted by the CAG.
In 1997-98, for instance, of 16 reports containing 1209 paras submitted by the CAG, the PAC selected 76 paras for review but was able to discuss only 16 of them.
The implication: these committees are able to examine only a tiny fraction of the contents of the CAG’s multi-volume reports, ”which defeats the very purpose of parliamentary financial control and the accountability of Executive which Parliament is required to enforce”.
But a senior official aiding the PAC said that even the CAG paras that are not ticked for detailed attention or examination are circulated to the departments concerned for their Action Taken Notes. The PAC, taking ”serious note of the prevailing laxity and the formalistic ritual with which the ATNs on the non-selected paras are generally furnished,” has decided to examine all ATNs, the official said.
He cited the CAG’s unselected para on the purchase of a Rs 1.42 crore house for India’s Consulate General at Frankfurt that came with a ”heated indoor swimming pool with a sauna bath cabin and a separate shower room”. The problem: Recurring pool maintenance costs. The outcome: The Mission was ”instructed to exercise restraint to meet any unnecessary expenditure on the maintenance of the swimming pool”.
The experts’ group suggested need to empower Audit Officers to pursue their findings by summoning the officers concerned for evidence on oath and, where default is established, taking steps for recovery of loss or disciplinary action under the Civil Services Conduct Rule or initiation of criminal action under the Penal code in cases involving criminal liability.
For that matter, experts noted that the CAG itself is dependent upon public funds for functioning and therefore must be held accountable to Parliament for its spending decisions.
In countries such as Britain and Australia, independent auditors audit CAG accounts and a Parliamentary committee oversees their work.
But in India, there is no external audit of the accounts of the CAG’s office, proclaimed as India’s ”Supreme Audit Institution”.
The CAG nominates one of the Accountants General under him as an auditor for the CAG’s office. Experts believe that the accounts of the CAG must also be scrutinised independently.
”The operations of the office of the CAG itself should be subject to scrutiny by an independent body. To fulfil the canons of accountability, a system of external audit of CAG’s organisation should be adopted for both the Union and the State level organisations,” the expert report said.
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