What is a representative parliamentary democracy, if accountability of the expenditure from the public funds by the executive is not ensured through an effective public audit and parliamentary oversight and financial control?
With the self-certification of medical expenses worth taka 28 lakhs by the Speaker of Bangladesh's Parliament while he was on a study tour to Singapore and London ironically financed by Parliament Secretariat and a UNDP project for strengthening parliamentary democracy - or the globetrotting by Sir John Bourne, chief of British National Audit Office at the expense of public exchequer generating controversies recently, the need for greater probity and parliamentary financial control has become even more pronounced.
Government Accountability and Public Audit: Re-engineering
the Comptroller and Auditor General of India, B P Mathur; Eastern Book
Corporation, Rs.495.
We have plenty of such controversies at home. A loan agreement for an urban reforms project in Kerala to be financed by Asian Development Banks gets signed without semblance of debate in state assembly. Opposition party MLAs in Gujarat have to knock the doors of High Court to get a report by Public Accounts Committee tabled in the state assembly. These instances go to indicate the utter apathy in the Indian executive (bureaucracy) for public finance, accountability and public audit concerns. In India, it is more so that parliamentary oversight and financial controls remains locked into the chaltaa hei (business as usual) attitude.
On 13 July, a new book by Dr B P Mathur, Former Deputy CAG and Chairperson, Audit Board, titled Government Accountability and Public Audit: Re-engineering the Comptroller and Auditor General of India was launched in New Delhi. The book tries to field the question, "why has the institution of CAG failed to instill fear", reviews the working of the office of CAG, presents a roadmap for much needed progressive reforms and makes an ardent plea for empowerment of public audit.
Mathur brings to this book his experience as member of the committee on Legal Control of Fiscal Policy and Public Audit Mechanism, which was constituted by the Justice Venkatachaliah Commission to review the working of the Constitution. The book is divided into two parts, with the latter part containing a representative set of Mathur's articles published in journals, newspapers and other publications. The first seven chapters in the first part discuss the philosophy behind the public audit, the audit concepts, the organisation of the CAG and the problems faced by the audit in becoming an effective instrument in financial control, while the next nine chapters make out a case for restructuring the office of CAG and Public Accounts Committee.
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.
At the time of framing the constitution, the institution of CAG and the public audit arrangement
in a federal set up was revisited. The recommendation of Dr Ambedkar to have Auditors in Chief for the
States was dropped during the constituent debates. What this meant was that the Accountant General, who
is responsible for auditing the finances of the States, became a subordinate officer, without enjoying
constitutional or legal status, while all the power has been concentrated in the CAG in person at the
headquarters in New Delhi, The CAG is thus having responsibility to certify Finance and Appropriation Accounts
of the Union Government as well as each of the 28 States and 3 Union Territories, before they are placed
in respective Houses.
The expansion of public audit to include PSUs was not easy. Elaborating how the CAG got this mandate, Mathur writes in the book, "In the '50s, when government companies were being set up to promote the new born nation's industrialization, there were attempts to exempt them from CAG's audit and the then CAG, V Narhari Rao resisted this as he felt this would be an unconstitutional act. His demand was met by an amendment to the Companies Act, which made a provision for supplementary audit of government companies by CAG and appointment of statutory auditors on his recommendations."
Similarly, in the '60s, when A K Roy took over as CAG, audit of Income Tax was taken up for the first time by CAG, in spite of initial hesitation as Income Tax officers exercised judicial functions while assessing tax cases. And in late '70s, CAG started carrying out performance appraisals of government projects. An unparalleled report, examining performance of 20 irrigation projects 12 of them being large projects was presented to the parliament in December 1977.
According to Mathur, of late the institution has been showing signs of ageing, with it's methodology not being able to keep up the pace with changing time and its structure remaining anachronistic. At the same time, the space for debates on the findings of public audit through parliamentary institutions such as Public Accounts Committee have been gradually shrinking. Over the years, while CAG's reporting has substantially increased, the percentage of the reports examined by the PAC each year has declined, says Mathur. Also, CAG's mandate on auditing PSUs have come under attacks repeatedly.
Still, if one makes it a habit to glance through the voluminous audit reports produced by the Supreme Audit Institution of India every year and examine the near contemptuous responses in case, they are attempted at all by departments/ ministries concerned, one would rather sympathize with auditors and would often wonder if there would be a similar response, had the officials been asked to depose in a court of law and made to answer a query in an ongoing judicial proceedings.
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.
Penalising errant officials in India and achieving closure on abuse of office remains an unsettled matter in India. Speaking shortly after releasing the book, Justice V N Khare referred to an Act ensuring accountability of a person who holds a government office that was promulgated in 1859. Justice Khare opined that a public servant holds a government office as a trustee and if his actions affect a loss to the exchequer, the same is recoverable from the said person. However, he said with a sigh that such a provision has not been implemented. An instance has been cited from late '60s, when a Lt Governor drew sumptuary allowance for two months while he was on leave and the same was objected to by the AG and the clarification was secured from home Ministry and the amount was recovered.
However, Mathur points out that a similar recovery is no longer possible and cites a few instances to demonstrate this. He writes about the Secretary of TRAI claiming a per-diem-halting allowance of $500 for a foreign tour although he had availed free hotel accommodation facility from ADB, Manila. When confronted with this audit objection, the defaulting officers of TRAI indulged in obfuscation by pointing out that TRAI, being a statutory authority enjoys a special status. Such a situation results into correspondence between CAG's audit officer and the defaulting department dragging on and on to the advantage of the errant officials.
Justice Khare also emphasised the need to revisit Article 311 of the Constitution, so that government servants can be punished for deliberate default and neglect of their duty. In fact, this article gives protection to government servants against arbitrary action of dismissal, removal or reduction in rank in service. But over the years government servants have misused it, and it has become difficult to punish them for mischief and malafide action.
Successive regimes from 1978 onwards have attempted to bureaucratise the CAG itself, even as the need to initiate a reform process on progressive side have become all the more pronounced. Governments have appointed persons from Indian Administrative Services (IAS) on the post of CAG and at times those appointments have been mired in controversies. In the book, Mathur has quoted an observation by K P Joseph, former Accountant General, who says, "This is like appointing an IAS officer without a law degree as the Chief Justice of the Supreme Court of India". In 2005, following the recommendations by J J Irani Committee on the amendment in Companies Act, there arose a situation wherein CAG's power to audit PSUs came under attack. (Less scrutiny of PSUs planned and CAG audits of PSUs must stay.)
However, there are a few aspects that are not addressed sufficiently by Mathur's book. The present CAG has put in the motion some 'reform exercise' by constituting a Government Auditing Standards Advisory Board (www.gasab.nic.in). Mathur has not commented on this exercise, which has been ongoing for sometime.
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 for instance then chief minister Jayalalitha's tirade against the AG of Tamilnadu in 2004. Also, as noted earlier, there has been a gradual selectivity in examination of audit findings by Public Accounts Committee. Added to this is almost non-existent interface of CAG with citizens and civil society.
Civil society campaigns on public finance and accountability issues have remained more focused on fighting corruption at the local level - hence have leaned more towards social audit. Mathur writes that there is a need to look beyond and launch a larger public finance and accountability campaign to reclaim public audit to ensure parliamentary oversight and control on all public finance, be it emanating domestic agencies like NABARD or LIC, or from multilateral and bilateral financial institutes, like World Bank, Asian Development Bank and export credit agencies.
