Govt drops plan to dispense with CAG audit of PSUs

New Delhi, March 23 | Updated: Mar 24 2006, 05:30am hrs
The new Companies Act, drafted by the company affairs ministry and being circulated in the government, has taken almost all of the Irani Committee's views on board, but not the panel's proposal to do away with supplementary audits of public sector undertakings (PSUs) by the comptroller and auditor general (CAG). The ministry, which was earlier inclined to accept the Irani panel's view has done an about-turn in the face of stiff opposition by the large sections of parliamentarians, especially those from the Left parties.

The government, however, intends to take measures to expedite the CAG's auditing process. This is in view of the widespread opinion that huge delays in the CAG's authetication of PSU balance sheets puts them in the dock.

According to official sources, many PSUs don't have their accounts audited for10-12 years because of certain "working problems," one of which, of course, is the special exclusion of PSU directors from the liabilities their counterparts in the private sector are subjected to. It is alleged that the companies don't supply the relevant data to the constitutional body in full and in time.

"We have decided to take a moderate view on this (doing away with CAG audit for PSUs)," an official said.

The Irani panel had said the CAG's auditing of PSUs was superfluous. It said statutory audits by chartered accountants would suffice. At present, over 1,200 companies including over 50 listed PSUs, which issue anaudiated financail statements every quarter as per Sebi guidelines, has to get their accounts authenticated by the CAG.

CAG audits are also reckoned to be more qualitative in nature and a reliable source of information for Parliament about the functining of the PSUs. Audit by the CAG helps expose fraud, siphoning of funds, mismanagement and violation of law the conmpanies. The Irani Committee had said CAG audits are superfluous and merely duplicate what the statutory auditors had done.