The most discussed topic in the recent times was that whether the CAG can audit the books of Private Sector Company. The people had different views on this. Some had given their opinion that the opening of books of accounts of the company would lead to destruction of investors sentiment, other were giving the opinion that the private company is not required to be audited as because they are outside the purview of the Comptroller and Audit General of India. They do not have the constitutional mandate also. Hence, they cannot do the audit. Further opinion was that ,the Books of the company are being audited by the statutory auditors and internal auditors ,hence, if the CAG will be auditing again, then it will be the whole waste of time.
However, keeping in view the recent scams which happened recently in the Indian economy, it becomes mandatory to give power to the CAG to Audit the private sector companies. Whether it is allocation of 2G spectrum or allocation of Coal mines, it all involves the money of citizen of India and it must be utilized in the manner so it benefits to the citizen of India. However, we have witnessed that the allocation was not done properly and thus the main deprived community was the citizen of India. They did not get the benefits which they deserved.
In all these cases, it was only the CAG which pointed out that the scams have happened or irregularities have taken place in the allocation of the natural resources. These have been only pointed out by the CAG. If they will not point out then it will be difficult for the citizen of India to get the information about all these irregularities. Hence, the CAG should be equipped with all the power which will facilitate in their Audit. The legislator should always try to strengthen the arms of such an institution so that the alottee of the natural resources would use the natural resources in a very transparent and efficient manner.
The Alottee of the natural resources must utilize the natural resources in a very efficient manner as well as at the time of allocation they should not use the undesirable means to get it allocated. Because, whenever, the undesirable means are being used then this leads to corruption and it destroys the healthy competition and we all know that the healthy competition is always required for an economy to grow. And if it destroys the competition then the monopoly of single party takes place as a result of which that person comes in a position to manipulate the market or command the market.
Hence, to come out from all this monopolistic situation, it becomes mandatory to award the contract or natural resources in competitive manner and if this does not happen then the role of CAG like institution becomes imperative. Because, these institution will take care that the process of awarding contract or natural resources have been followed and not followed then it will be informed to the public through parliament.
The recent ruling of the Supreme Court of India in the case of Association Of Unified Telecom Service Providers & Ors. Vs. Union Of India & Ors. which upheld the ruling of High Court of Delhi has clarified relating to power of the CAG with respect to Audit of private companies. They have stated two conditions which are required to be fulfilled in the case of Audit of private sector companies:
- The Company must be utilizing the public resources in its business and
- The company must be sharing revenue with the Government.
Hence, if the company is using public resources in its business and there is revenue sharing with the Government then the company may be audited by the CAG.
However, it is not like that the all the company will be audited by the CAG. It will depend of the level of risk and other various matters. The scope of the Audit will be very much clear as narrated by the CAG.
Hence, we do not find any adverse impact of Audit done by CAG. The Industry should take it in a positive manner as because where the economy is opening up to scale a great height and hence transparency and healthy completion are having the paramount importance. Because, in the absence of the two, it would be very difficult for economy to grow and we will not be able to achieve the inclusive growth also because the economy, in the absence of transparency and healthy competitiveness, the economy would provide the benefit to some category of persons which the country would not want.
(Author- CA Sanjay Kumar Chaudhary, Mail Id: firstname.lastname@example.org)
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