CAG?s (Comptroller and Auditor General) office celebrated 150 years and a commemorative postage stamp was released. But in a pedantic sense, 150 years isn?t true. On November 16, 1860, Edmund Drummond became the first Accountant General (AG), not CAG. The Website describes CAG as the ?supreme audit institution of India? and this is correct. CAG audits receipts and expenditure of the central and state governments and bodies funded by the government. It undertakes external audit for PSUs and all these reports are presented to the Public Accounts Committees of Parliament and state legislatures. Plus, there is Indian Audit and Accounts Service, which CAG (the individual) heads. Relevant parts about CAG in the Constitution are in Articles 148 to 151. There is a side issue in Article 148 (4) worth flagging. CAG will not be eligible for further office, after retirement. Even when law may have been satisfied, there have been a few instances where governments haven?t abided by spirit of this provision. Article 149 states pre-Constitution powers of AGs have been inherited by CAG. Whether it is the naming of service, CAG?s own description on Website or constitutional provisions, we are therefore talking about an audit and account function. Therefore, what is the Comptroller bit doing there? In Hindi, CAG is ?niyantrak? (comptroller) and ?mahalekhaparikshak? (auditor general).

However, there is no comptroller function at all. Reasons are partly historical and colonial. In Britain, the Exchequer and Audit Departments Act of 1866 spliced roles of Comptroller General (who authorised expenditure) and Commissioners of Audit (who audited expenditure).

Indeed, in other countries, equivalent of CAG has a comptroller function. We haven?t had such a role, perhaps because administrative systems wouldn?t have had capacity to deliver. But with computerisation, that?s now possible. Should that be part of agenda for reforming CAG? The Prime Minister?s speech on occasion of 150 years has been reported widely. ?The reports of the Comptroller & Auditor General are taken very seriously by the media, by the public, by the government and by our Parliament. This casts a huge responsibility on the institution to ensure that its reports are accurate, balanced and fair. Very often, there is a very thin line between fair criticism and fault finding, between hazarding a guess and making a reasonable estimate, between a bona fide genuine error and a deliberate mistake. As an important watchdog in our democracy, it falls upon this institution to sift the wheat from the chaff, to distinguish between wrong-doing and genuine errors, to appreciate the context and circumstances of decision making processes.?

Two parts of this paragraph have puzzled me. First, notice the order in which CAG?s reports are taken seriously?media, public, government, Parliament. One would have expected order to be the reverse, with Parliament mentioned first and media mentioned last.

Given scant respect shown by governments (Centre and state) to CAG reports, is this sub-conscious at work? How many CAG reports does PAC consider? How many ministries and departments bother with action taken reports? Second, what is this business about a thin dividing line?

There are valid points to be made about government budgeting and accounting systems and constraints on administrative delivery. Elsewhere, the speech states, ?suggesting methods of doing things better and differently should be an integral part of the evolving process of audit.? Sure, we should look beyond financial irregularities, fraud and scams? There can be other forms of audit (performance, efficiency). But can such suggestions emanate from within CAG system or should they evolve outside? Public expenditure management is an issue beyond CAG. Whether it is 2G, CWG or disinvestment earlier, there are problems with valuing the future, as opposed to the present. Ex post static valuations are easy. Ex ante dynamic valuations are inherently subjective, regardless of who does it.

Is an argument being made that CAG lacks technical and economic expertise, or mindset, to do this? That?s a fair point, though it is doubtful CAG can ever be reformed in this sense. Several other bodies also lack similar expertise. Or is an argument being made that CAG indictments have erred? This is a different argument and is difficult to substantiate, since especially in case of 2G, we have a band, not a specific value of opportunity costs. While on CAG reform, what about independent regulatory bodies like Sebi, Trai, Competition Commission, CERC and Company Law Board? They (and their decisions) are outside CAG audit, sometimes explicitly excluded in legislation. Perhaps CAG audit is not the answer. But how can these regulatory bodies be made accountable to Parliament? The simple point is this. Citizens have rights that public expenditure should be accountable. In any democracy, this oversight is Parliament?s (or state legislature?s) responsibility, since they are elected representatives. However, there is citizen cynicism about whether this is effectively done.

Thus, a few high profile instances become symbols of countervailing pressure. Perhaps CAG should indeed become a comptroller.

?The author is a noted economist