Inauguration of 25TH Conference of Accountants General
The Lok Sabha Speaker Mrs Meira Kumar has pointed out that it was necessary to re craft the legal framework in a manner that enables the CAG to effectively discharge his constitutional responsibilities. She emphasized that the legal framework has to be suitably strengthened so that any ambiguities or inadequacies in the powers of the CAG, to discharge his mandate in the present day scenario, can be removed. The Speaker was inaugurating the XXVth Conference of the Accountants General in New Delhi today.
Following are the texts of the speeches made by the Speaker as well as the CAG at the function.
Speech of the Speaker, Lok Sabha
“I am happy to be here today to share my thoughts with you at the inauguration of the 25th Conference of the Accountants General where the senior executives of the audit department will meet to discuss and brainstorm on strategic and operational issues.
Chanakya, the great thinker and administrator, had stated in the Arthashastra that prevention was better than cure and if regular checks and balances were conducted from time to time, economic crises would not occur. It was therefore the duty of the ruler to ensure that accounting was done and auditing took place from time to time. This philosophy was adopted in different measures in subsequent societies and has finally culminated in the institution of the CAG in modern, independent India.
Executive accountability to the legislature is a cornerstone of our democracy. It is also an essential component of good governance. The Comptroller and Auditor General of India, is the instrument of fiscal accountability provided for in the Constitution. His primary role is to report to the Legislature whether the activities of the Government in all financial matters are carried out in accordance with the Constitution and the laws and rules framed thereunder – both in letter and in spirit. He also provides assurance that the sums authorized by the legislature in the budget have been spent for the intended purposes and within the sanctioned limits. The members of the Indian Audit & Accounts Department have the task of assisting the Comptroller and Auditor General to effectively carry out his Constitutional mandate.
The role of the CAG was established through practice and tradition in British India and finally enshrined in our Constitution. Your institution is approaching its 150th year. The world has seen momentous changes over this long period and the rate of change has become exponential in the recent past. Technological innovation has revolutionized communications and access to information through television, internet and mobile phone networks. The structures and processes of governance have also changed significantly over the past few decades. The range of Government activities has increase manifold and many players, other than the Central and State Governments, such as local bodies, societies, NGOs and private sector, through public private partnerships, have become partners in the process of development. This has introduced complexities in fund flows, expenditure, accounting and evaluation.
To remain relevant in this rapidly changing world every institution has to consciously review and modernize its procedures and practices. I am happy to note that the theme of your conference, “Transformation of Indian Audit and Accounts Department” reflects this reality. The phenomenon of government funds flowing out to a plethora of agencies through multiple channels, sometimes without well defined monitoring and accounting mechanisms, gives new dimensions to accountability. I have been informed that the CAG’s (Duties, Powers & Conditions of Service) Act enacted in 1971 is being given a fresh look to overcome the limitations in the mandate of CAG in the present scenario. It is necessary that the legal framework is recrafted in a manner that enables the CAG to effectively discharge his constitutional responsibilities. The legal framework has to be suitably strengthened so that any ambiguities or inadequacies in the powers of the CAG, to discharge his mandate in the present day scenario, can be removed.
We should recognise that the objective of the executive and audit are the same, viz. that the aam aadmi gets the greatest benefit. This overarching reality often gets lost in practice. It is a natural tendency to become defensive on audit reports which comment on performance. This phenomenon can be tackled through greater interaction and frequent engagement at different levels as it facilitates an understanding of each other’s view point. I have learnt with great satisfaction that Audit has taken steps in the right direction by highlighting the innovations, good practices and positive aspects noticed in the implementation of programme.
I am happy to learn that you have collaborated with the Government in developing a control based risk management framework which is going to be applied in implementing various schemes. This will provide an in-house oversight mechanism which will empower the field level officers to prevent, detect and set the right inefficiencies and leakages by suitable interventions. Consequently, the deliveries should improve. Some of the performance audits done by your department in the recent past also underline the positive interactions and the collaborative approach which has led to effective mid-course corrections that will contribute substantially to the achievement of the overall objectives. Such initiatives will encourage free exchange of information and ideas, leading to better governance.
Our systems of Government accounting and financial reporting are facing many challenges today. The present accounting system dates back to the days when exchequer control was achieved through the treasury system. While it retains a certain degree of effectiveness its robustness has come under strain as the fund flow patterns of Government have changed and as the bulk of developmental expenditure takes place outside the treasuries. We have not yet developed a system of accounting for the funds which are spent by implementing agencies for schemes through their bank accounts. While expenditures are reported to the legislature on various schemes, they are actually amounts transferred from the government coffers to various implementing agencies who keep the funds in bank accounts. The actual expenditure on the final beneficiary is not collated, compiled or reported. Consequently, the balances remaining unutilized and lying in bank accounts are not known. I am happy to know that your department is seized of this matter and you are already studying the modalities of tracking and accounting of scheme expenditures. You have to also provide leadership in the long haul that would culminate in the introduction of accrual accounting, bringing greater transparency in the accounts with a clearer depiction of assets and liabilities. Meanwhile, issues such as the ownership of accounts by the executive heads in their capacity of chief accounting officers should be settled. All these reforms would go a long way in promoting good governance.
The nation is moving forward on a path of growth which has to be made irreversible. It is the duty of every institution to do its bit in maintaining the momentum of growth. Here you have to adopt a very balanced approach. You have to ensure accountability and transparency without hindrance to innovation and initiative. The government machinery is shifting gradually to an IT environment and your large work force has to update its audit procedures in a timely manner. I am happy to find that you are keeping pace with all the emerging issues which are gaining in significance and have been engaged in building capacities in dealing with these new challenges in the areas of e-Governance, Social Audit and Environment Audit. Continuous engagement with various stakeholders will help you to appreciate issues better and equip you to conduct more informed and balanced audit which would lead to strengthening of systems and improve delivery mechanisms.
I wish you all the best for you deliberations. I am sure your discussions will lead to significant initiatives which will equip your department to face the myriad challenges thrown by a world and society in transition.
Speech of CAG
“It is my pleasure to welcome you to the XXV Conference of Accountants General on the theme “Strengthening Audit and Accounts for Good Governance, Transparency and Accountability”. I am particularly grateful to you Madam for accepting our request to inaugurate this Conference today as it also happens to be Revered Babu Jagjivan Ram’s 103rd birth anniversary and you necessarily have a large number of commitments. He was truly a titan and one of the prominent pillars whose contribution to post independence India has been invaluable.The Hon’ble Chairperson of the PAC and COPU could not attend due to last minute preoccupation.
This biennial conference provides a forum for senior officials of the Indian Audit and Accounts Department to deliberate on key strategic issues relating to governance and public accountability and the contributions that our organisation can make in these areas. This twenty-fifth conference is of particular significance in that this year marks the 150th year of the foundation of our Institution, and thus provides an occasion for all of us to look back at what we have achieved in the past, and how far we have to go. It is for the first time that certain key events in this Conference are being web cast live to 42 IA&AD offices all over India through VPN. I welcome these officers also.
The system of Parliamentary Democracy in India has assigned a very important role to the Comptroller & Auditor General of India and the Public Accounts Committee of Parliament. Together, they have a responsibility to guard the national treasury and ensure accountability in public financial administration. With ever increasing outlays of the Government and changes & complexities introduced in the system of public service delivery, the task of Audit has become not only more extensive but also more onerous. On its efficient functioning depends the safety of the tax payer’s money; on its effectiveness depends the integrity and accountability of the public administration.
Traditionally, Public Audit was rule based and was concerned with probity and compliance alone. In recent decades, however, there have been increasing demands from stakeholders to know more about performance and results, rather than merely accounting for legality and propriety in public spending. This has altered the perception of the role of the Auditors General in most of the countries around the globe. The CAG’s role has expanded from being merely an auditor of financial transactions of the Government to that of a promoter of an organisations’ performance and to act as a powerful trustee of public good. Consistent with this expanded role, the CAG in India has been according highest priority to people centric programmes especially in the social and infrastructure sectors while drawing up the annual plans for performance audits. The aim is to report, almost on concurrent basis, on what governments have actually produced in terms of outcomes after investing substantial amount of public monies in such programmes. Our Reports now affords an opportunity to the Government to make mid-course corrections and improve service delivery to the targeted people.
Over the last several years, we have been adapting our approach and functioning to make ourselves relevant in the process of upgrading governance. A key component of our performance auditing has been evaluation of flagship programmes in the socio-economic sector and assessing the outcomes of devolution by the Government. Our recent and ongoing performance audits cover development programmes in the health, education, employment & irrigation sectors. In addition, sustainable development and environmental conservation have become key audit concerns. Our performance audits have become more “real time” in their nature, with a view to providing opportunities for mid-course corrective action, and we are extremely conscious of our role as an aid to management. This is evidenced by our recent study on “Preparedness for the XIX Commonwealth Games,” which was intended to serve as a benchmark for the Executive for monitoring progress on this mammoth exercise.
On the issue of transaction or compliance audit, which has been the subject of much debate within and outside our organization, we are working towards moving away from reporting individual, isolated instances of non-compliance and waste therefore frittering away scarce human resources on relatively less significant issues to a broader risk-based approach. We now focus towards providing overall assurance at the Departmental level on the adequacy and effectiveness of operational, financial and administrative controls, or adopting a thematic approach covering selected activities or operations.
We have also been consciously adopting a long-term, strategic approach to planning, with a view to closely aligning our strategies and priorities with those of our stakeholders – the Legislature, the Executive, and the public at large. We are currently finalizing the Perspective Plan for the Department covering the next five years. We are also working on a Strategic Plan which will reflect our vision and mission over a longer, ten year time horizon. The five themes of this conference, covering various critical aspects of auditing and accounting, form part of the overall framework of our institution towards transforming ourselves as enablers of good governance, transparency and accountability.
While we are fully geared towards re-positioning ourselves to meet the challenges of the 21st century, there are several external aspects on which we actively solicit the assistance of the Legislature and the Executive. One such aspect is the need to revisit our legal mandate, which was drafted nearly four decades ago and has undergone only peripheral amendments. This exercise is necessary due to the increasing use of non-Governmental and private channels for providing social and infrastructural services to the public and the widespread growth of public-private partnerships (PPPs). If we are to fully discharge our responsibilities to society and Parliament, our mandate must enable us to trace the rupee to its ultimate utilization at the grassroots level, irrespective of such agencies and institutions falling within the formal governmental framework or not. Another challenge is free and unfettered access to records. While such access is stipulated in our current mandate, we often face difficulties in enforcing such access in a timely manner. We must, at least, have the same powers that the citizen has in enforcing his right to information under the Right to Information Act. We have proposed a draft to the Government of India, which seeks to address these issues in clear and unambiguous terms, and Madam we seek your guidance and support to ensure that we can fulfil the public trust.
Yet, another challenge is the lack of adequate and timely action by the Executive on our audit findings. These pertain to those presented to Parliament as well as those reported to the Government at various levels, depending on their importance. At times, we do not even get timely and complete responses to our findings, let alone action on our recommendations. Our legislative committees – the Public Accounts Committee and the Committee on Public Undertakings – at both the Central and State levels, are, understandably, not in a position to examine and take evidence on the entire volume of our audit findings in detail, but the lack of adequate action by the Executive is very disconcerting. Parliaments will must prevail for which we need to change the mindset of Governmental functionaries on this key aspect.
The position in regard to the number of meetings held in a year by the State PACs/COPUs and their effectiveness in dealing with Audit Reports needs to be improved. If the PACs/COPUs are to become an effective instrument for ensuring executive accountability to the legislature, then a clear priority has to be accorded in discussing Audit Reports. Madam Speaker, while I have written to the Speakers of Legislative Assemblies of some states, we look forward to your good offices in persuading the Speakers to activate the existing legislative mechanisms so as to speed up the discussion of the Audit Reports. Since you have a pivotal role in setting the standards of legislative function in the country, I propose to organize a national level Seminar for the Chairpersons of PACs/COPUs under your leadership. Such a seminar will go a long way in deliberating the issues confronting us and in strengthening the accountability mechanism.
It is under this backdrop that we commence our deliberations during this conference. We hope some innovative ideas and strategies will emerge to tackle these internal and external challenges and help us to serve the nation better in promoting transparency and accountability. Madam, we are indeed very grateful to you for agreeing to inaugurate this Conference and guide us as we architecture the way forward for the department.”