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Auditing Theory

Notes The objective of the Financial Committees, in doing so, is not to focus only on the individual
irregularity, but on the defects in the system which led to such irregularity, and the need for
correction of such systems and procedures.

14.3.10 CAG’s Role

The Comptroller & Auditor General of India plays a key role in the functioning of the financial
committees of Parliament and the State Legislatures. He has come to be recognised as a ‘friend,
philosopher and guide’ of the Committee. His Reports generally form the basis of the Committees’
working, although they are not precluded from examining issues not brought out in his Reports.
He scrutinises the notes which the Ministries submit to the Committees and helps the Committees
to check the correctness submit to the Committees and helps the Committees to check the
correctness of facts and figures in their draft reports.
The Financial Committees present their Report to the Parliament/State Legislature with their
observations and recommendations. The various Ministries/Department of the Government
are required to inform the Committees of the action taken by them on the recommendations of
the Committees (which are generally accepted) and the Committees present Action Taken Reports
to Parliament/Legislature.
In respect of those cases in Audit Reports, which could not be discussed in detail by the
Committees, written answers are obtained from the Department/Ministry concerned and are
sometimes incorporated in the Reports presented to the Parliament/State Legislature. This
ensures that the audit Reports are not taken lightly by the Government, even if the entire report
is not deliberated upon by the Committee.

Did u know? Union Audit Reports
The Union Audit Reports of the Comptroller and Auditor-General of India, contain the
findings of transaction audit and performance audit in the areas of:

1. Civil Audit
2. Audit of Autonomous Bodies
3. Defense Services
4. Railways

5. Receipts of the Government
6. Central Commercial
The Audit of the CAG is bifurcated into two streams namely Performance Audit and
Regularity (Compliance) Audit.
While audit of the Civil Departments, Railways and Defense are conducted as per the
direct mandate in the constitution and relevant provisions of the DPC Act, the Commercial
Audit is conducted under the provisions of Company Act. Autonomous Bodies are audited
as per the mandate in the act establishing the body.
The reports of the CAG are deliberated upon by the Public Accounts Committee (PAC) of
the parliament, save the commercial reports which are examined by the Committee on
Public Undertakings (COPU).

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