CAG
1. Context
2. Key Points
- Among the premises raided by the ED was the BMC's Central Purchase Department (CPD) office in Byculla, Mumbai.
- The raids aimed to uncover evidence related to the alleged financial irregularities in the BMCs Jumbo Covid Care Facility Centres.
- Following the alleged irregularities, the Maharashtra government formed a Special Investigation Team (SIT) headed by the Commissioner of Mumbai Police on June 19.
- The SIT was tasked with investigating financial irregularities across several departments of the BMC.
3. About CAG
- Article 148 of the Indian Constitution provides for an Independent Office of Comptroller Auditor General (CAG)
- Head of the Indian Audits and Account Department
- It is an apex authority for external and internal audits of the expenses of the National and State governments
4. Appointments, Term & Removal
- The CAG is appointed by the President, they should take oath before the president or before someone from the President's office
- CAG holds Office for six years or up to the age of 65 years whichever is early
- CAG can resign by addressing their resignation to the President
- CAG can be removed by the President from Office in the same manner as a Supreme court Judge or Resolution passed by the President in both houses of the Parliament with a special majority, either on the ground of misbehaviour or incapacity
- CAG is not eligible to join any Central Government Post or any State government Post
- Expenses, allowances, and salaries are drawn from the Consolidated Fund of India.
5. Duties of CAG
- CAG will conduct all expenses from Consolidated Fund in all the states and UT has a legislative assembly
- CAG Audits all the expenses from the Contingency Fund of India and Public accounts of India as well as the Contingency Fund of State and Public Accounts of a State
- CAG Audits all trading accounts, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept by any department of the Central and State Governments
- CAG Audits the receipts and expenditures of all bodies and Authorities which are financed by the Central and State Government revenues
- CAG Submits audit reports relating to the Central Government to President and State Governments to Governor, they will furnish these reports in parliament as well as in-state assemblies
- CAG submits three reports to the President 1-Report on Appropriation accounts, a report on financial accounts, a report on public undertakings
6. CAG Audit and Financial Irregularities
Obstacles Faced by CAG The CAG's audit covered Rs 8, 500 crores of the total expenditure, as the BMC objected to auditing the remaining amount. The BMC issued a legal notice to halt the audit of any acts, works or decisions related to Covid management and expenditure amounting to Rs 3, 538.73 crores, citing provisions of the Epidemic Act, 1897 and the Disaster Management Act 2005.
Project Audits and Findings The CAG report, spanning 146 pages, highlighted weaknesses in internal control mechanisms within the BMC. It revealed instances where work orders were awarded without tenders, contractual documents were not executed and third-party auditors were not appointed to assess the quality of work.
Departments Under Scrutiny Various BMC departments were found to have financial irregularities. The Development Plan Department was flagged for overvaluation of expenditure during land acquisition and delays in acquiring land for public amenities. The Bridges Department awarded work orders without registering private contractors with the BMC. The report also mentioned cost escalations, delayed clearances and irregularities in various other projects and departments.
Financial Transactions During the Pandemic While the ED is investigating financial transactions during the Pandemic period, the CAG report sheds light on the wide-ranging financial irregularities across multiple BMC departments.
7. The way forward
The ED raids and the CAG report have brought to light alleged financial irregularities in the BMC's operations. Investigations and further actions will be taken to determine the extent of the scam and hold those responsible accountable.
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For Prelims: Enforcement Directorate, Brihanmumbai Municipal Corporation, Special Investigation Team, Comptroller Auditor General, Consolidated Fund of India, Contingency Fund of India, Report on Appropriation accounts, a report on financial accounts, a report on public undertakings,
For Mains:
1. Examine the constitutional provisions and powers of the CAG in conducting audits of government expenses at both the central and state levels. Discuss the significance of the CAG's role in upholding financial discipline and promoting good governance. (250 Words)
2. Explore the role of technology and digital platforms in improving financial oversight and preventing irregularities in government projects. Discuss the potential benefits and challenges associated with the implementation of digital auditing mechanisms. (250 Words)
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Previous Year Questions
1. Which one of the following is not correct in respect of Directorate of Enforcement? (CDS 2021)
A. It is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance.
B. It enforces the Foreign Exchange Management Act, 1999.
C. It enforces the Prevention of Money Laundering Act, 2002.
D. It enforces the Prohibition of Benami Property Transaction Act, 1988.
Answer: D
2. The Comptroller and Auditor-General (CAG) of India can be removed from office only by the: (UPSC CAPF 2015)
A. President on the advice of the Union Cabinet.
B. Chief justice of the Supreme Court.
C. President of India after an address in both Houses of Parliament.
D. President on the advice of Chief Justice of India.
Answer: C
3. With reference to the Union Government, consider the following statements: (UPSC 2015)
1. The Department of Revenue responsible for the preparation of Union Budget that is presented to the Parliament.
2. No amount can be withdrawn from the Consolidated Fund of India without the authorization from the Parliament of India
3. All the disbursements made from Public Account also need authorization from the Parliament of India.
Which of the statements given above is/are correct?
A. 1 and 2 only B. 2 and 3 only C. 2 only D. 1, 2 and 3
Answer: C
4. The Contingency Fund of India is placed at whose disposal? (SSC CGL 2017)
A. The Prime Minister
B. Judge of Supreme Court
C. The President
D. The Finance Minister
Answer: C
5. In India, other than ensuring that public funds are used efficiently and for their intended purpose, what is the importance of the office of the Comptroller and Auditor General (CAG)? (UPSC 2012)
1. CAG exercises exchequer control on behalf of the Parliament when the President of India declares a national emergency/financial emergency.
2. CAG reports on the execution of projects or programs by the ministers are discussed by the Public Accounts Committee.
3. Information from CAG reports can be used by investigating agencies to press charges against those who have violated the law while managing public finances.
4. While dealing with the audit and accounting of government companies, CAG has certain judicial powers for prosecuting those who violate the law.
Which of the statements given above is/are correct?
A. 1, 3 and 4 only B. 2 only C. 2 and 3 only D. 1, 2, 3 and 4
Answer: C
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