Role of CAG in Meeting Challenges of Good Governance :-

To understand the role of CAG in good governmance ,firstly we have to understand what is CAG and which type of work carried by the CAG:-
Finance, Accounts and Audit are as old as history itself. History bqars out that a good accounts and audit organisation existed in ancient India. Kaut...ilya in his famous Arthasastra gives an elaborate account of the accounting system that existed in the Mauryan period. According to the Arthasastra,

                               "In the Mauryan policy, the final authority, in the matter of Finance, was the King; one of whose daily duties was to attend to the accounts of receipts and expenditure. Each Minister was responsible for the finance of his department and each department had its own accountant, treasurer and others. The Collector General was the head of the Finance Department. Below him was the special commissioner (Pradeshtara), who was a kind of Government Auditor checking District and Village group account, in addition to being in charge of collecting certain kinds of revenue. The accounting and financial, year closed on the last day of Ashadha".

Similarly, Gupta rulers introduced more elaborate and orderly system of accounts and audit during their rule. According to Ramachandra Dikshitar "The accounts were maintained, as during the days of their predecessors, the Mauryas, and were submitted periodically for audit and approval. This is made clear to us by th'e term PATYUPARIKA. This may be translated broadly as corresponding to the modern Accountant General. The Accountant General who presided over the accounts
department was responsible to the Council of Minister for his acts. It is evident that there was an elaborate Department of Accounts in the Gupta time." Likewise, the medieval rulers, viz. Sultans and Moghuls, laid proper stress on collection of revenue and conduct of audit. The Moghuls vested greater authority in their financial chief. by naming him as the Vnrir or Dewan.

Although the ancient and medieal administrations estahlishcd a coherent accountand audit organisations, it  vent illlo decay, during the period of later Moghuls. Subsequently, it was the British. Who introduced a proper system of accounting and auditing. In 1858. when the East lndia Company's administration was taken over by the Crown, a comptementary post ol Accountant-General at the India office was created \ to prepare the accounts of the expenditure incurred in England. Simultaneously, an independent Auditor was appointed by the Crown for the audit of these accounts.This arrangement was, however, shortlived. In 1860, both accounting and auditing funaons were amalga.mated and placed in charge of the Accountant-General to the Government of India. who was designated as 'Auditor General'. The statutory recognition of the Auditor General came, however, only in 1919, with the introduction of Constitutional Reforms. He was made independent of the Government af lndia and was appointed by the Secretary of State and held office as the administrative head of the Indian Audit Department. during his Majesty's pleasure. The Government of lndia Act 1935 gave further recognition to the importance and status of this office. Thereafter, his appointment was made by His Britannic Majesty and the conditions of his service were also determined by His Majesty-in-Council. His duties and powers were prescribed by rules made under the order of His Majesty-in-Council. His salary, allowances. and pension were made chargeable on the revenues of the Federation. He could be removed from office only in the same manner and on the same grounds, as a Judge of the Federal Court.

The Comptroller and Auditor General (CAG) of India is called भारत के नियंत्रक महालेखापरीक्षक in hindi,CAG is an authority, established by the Constitution of India, who audits all receipts and expenditure of the Government of India and the state governments, including those of bodies and authorities substantially financed by the government. The CAG is also the external auditor of government-owned companies. The reports of the CAG are taken into consideration by the Public Accounts Committees, which are special committees in the Parliament of India and the state legislatures . The CAG of India is also the head of the Indian Audits and Accounts Service, which has over 58,000 employees across the country.
CAG is head of Indian Audit and Accountant Service. He is appointed by President. He can hold his office for 6 years or up to age of 65 years. He can give resignation at any time or can be impeached by President through Parliament resolution with special majority.
The importance of CAG is easily understand by the following words of  BABA SAHEB AMBEDAKAR:

“ I am of the opinion that this dignitary or officer (C&AG) is probably the most important officer of the Constitution of India. He is the one man who is going to see that the expenses voted by parliament are not exceeded, or varied from what has been laid down by Parliament in what is called appropriation Act. If this functionary is to carry out the duties- and his duties, I submit are far more important than the duties than the duties of the Judiciary. “
-: Working system of CAG in indian government:-
Accourding to article 151 , CAG represent audit report to the president or governer before put reports on parliment or state legislatures respectively.
To, begain with ,when the audit take place ,during the course of inspection of various organation, ’INSPECTION REPORT’of each unit are prepared and sent to them, about 72000 reports sent every year.and their progress also watch.
The report submitted to parliament of president contain two parts:
1.Audit report on appropriation accounts – this show that the money granted by the loegislaturre for various grants or purpose is properly use or not.\
2.Audit report on the financial report m – annual receipts and expenditure during the year.
The audit report in brfief contain a narriation of cases involving financial inreggularities,losses,frauds,waste ful expenditure and saving etc. the high profile cases like  2G spectrum , CWG and AADARSH is come on light with the help of these  CAG reports.
Role of  CAG in Indian governance :-
-:Major function of CAG:-
1.To prescribe,with the approval of president,the form in wich the accounts of unioun and states are to be kept
2.To perfom such duties and excerice such powers in relations to accounts of unioun or states or anyother body , as many percribed by any law made by parlient.
3.To report the president or governer of the state on the account of country or state.
-:The CAG as Auditor General;-
The primary purpose of audit to ensure that the money has been applied to the purpose for which the mgrand made by parliament were intended to provide and that the expenditure conform to the authority which governance it,thus this audit is important instrunment in the control of public expenditure.
It play double role,firstly it check the extend of application by the government servents ,of rules and regulations issuied on behalf of the administration and secondly it insure ,on behalf of the legislature,that the actions of the government have been in accordance with the views and the requirnments of the legislature
The purpose of audit is to ‘offer financial criticism’ and it’s valu lie in it’s report poimting out thee some impropriety of certain transaction and so the suitable action rectify it.
According to Herbert Britain “What one department is publicaly pilloried for today all other departments will try to avoid tomorrow.”
-: Audit of Revenue :-
C&AG after some initial resistance on the part of revenue department was able to extend its dimension to audit of revenues which includes audit of tax assessment such as Income tax, Central Excise and Customs, Sales tax etc. The audit of receipts has helped bringing considerable revenue for the government by pointing out cases of under assessment of tax, and also assisted in better functioning of tax administration machinery by pointing out lacunae or loopholes in the Act/ Rules and deficiencies in the functioning of tax administration.
-:Audit of Commercial Enterprises:-
The audit of government companies was brought within the purview of C&AG’s audit at the insistence of then CAG by introducing a suitable provision in the Companies Act 1956, although there were initial attempts to exclude his jurisdiction. Thus, while Chartered Accountants are required to certify Annual Accounts of government companies, C&AG has been granted right to conduct supplementary audit.
-:Audit of Public Sector Undertakings:- 
Under Section 619 of the Companies Act, 1956, the auditor (statutory auditor) of a
government company including deemed government company, appointed by the CAG
conducts the audit of accounts of the companies. On the basis of supplementary audit
conducted thereafter, the CAG issues comments upon or supplements the Audit Report of the statutory auditor.

-:Auditt of AUTONOMOUS BODIES:-

A large numbers of body setup , specialy in field of education and development like IIMs ,these bodies are audit by CAG.

-:Statutory corporations :-

Audit of six statutory corporations is conducted by the CAG. Of the five statutory
corporations in whose case CAG is the sole auditor, four viz. Airports Authority of India, Inland Waterways Authority of India, Damodar Valley Corporation and National Highways Authority of India presented their accounts for the year 2009-10 for audit in time. The accounts of Food Corporation of India for the year 2009-10 were awaited as on 30 September 2010. In case of Central Warehousing Corporation, CAG conducts supplementary audit and the accounts were received in time. The C&AG of India as the Government auditor plays an important role in effective public sector governance. The significant findings and recommendations as conveyed in the Audit Reports represent critical inputs to good governance that can lead organisations to take prompt and appropriate corrective actions to remedy identified] weakness and deficiencies. The principles of accountability, transparency, probity, equity and fairness are reviewed, examined and audit observations thereon are reported by C&AG of India in the various Audit Reports including Reports on the performance ofselected critical activities The amendments to Sections 217 and 292 of the Companies Act, 1956 (made applicablefrom December 13, 2000) set the tone for Corporate Governance in the country.

Keeping in view the important role of the Audit Committee in good Governance
of an entity audit reviewed the functioning of Audit Committee of listed central
government companies to assess its effectiveness. During review, it is noticed that some of the Audit Committee of listed Government Companies contributed considerably towards improvement in financial reporting, accounting policies, internal control system, analysis of non moving inventories etc and ensured credibility of financial statements. While Audit Committee of Indian Oil Corporation Limited significantly contributed in the areas of significant Audit Findings of Internal Audit, review of Idle assets, monitoring
the award of work on nomination/single tender basis, implementation of SAP system. On
the suggestion of the Audit Committee, Steel Authority of India Limited has planned a
special study on “Safety Management” and “Major Raw Material Stock Accounting”.
-: Social Audit:-
During the last five years, CAG has conducted performance audits of most of the key socioeconomic programmes of the Government of India e.g. National Rural Employment Guarantee Scheme (NREGS), National Rural Health Mission (NRHM), Sarva Shiksha Abhiyan (SSA), Mid‐day Meals Scheme, Accelerated Rural Water Supply Programme (ARWSP), and Pradhan Mantri Gram Sadak Yojana (PMGSY). CAG’s audits have also covered several niche areas of public interest like Consumer Protection Act, Waste Management, Police Modernization Scheme etc. CAG’s audit of Government departments, offices, and agencies in the States, dealing with implementation of Government schemes, also touches upon the performance of schemes or their components at various levels of the audit process. CAG’s audit is an external audit on behalf of the tax payers. The Union and State Legislatures, through their respective legislative committees on public accounts and public undertakings, discuss the matters brought out in CAG’s audit reports and make recommendations to the executive for appropriate management action. In a broad theoretical sense, therefore, CAG’s audit itself is a social audit. Yet, in its commonly perceived sense, CAG audit remains a Government process largely confined to Government
officials and Government auditors. Social audit, on the other hand, in its current connotation, seeks to make the audit process more transparent and seeks to take audit findings to a wider public domain of stakeholders, i.e. users of the Government schemes, services and utilities ,The demand for social audit has grown in recent years due to the steady shift in devolution of Central funds and functions relating to socio‐economic schemes to the local tiers of Government – Panchayati Raj Institutions (PRIs), Urban Local Bodies (ULBs) and other special purpose agencies set up by the Government for implementation of

-:Relations with Public Accounts Committee :- 
 The Comptroller & Auditor General audits the accounts and submits his Report to Parliament / State Legislature which are automatically remitted to the Public Accounts Committee(PAC) / Committee on Public Undertakings( COPU). Parliament has constituted PAC and COPU under Rule 308(1) and  Rule 312 A of the Rule of Procedure and Conduct of Business of Lok Sabha.
-:Limitations :-

Inspite of the various safeguards provided by the Constitution to maintain the
independence of Comptroller and Auditor General from the Executive and
Parliament, his/ her independence appears to be limited by four factors viz.,

(a) restraint of the Executive on his/ her budgetary autonomy
(b) block of control overstaff
(c) indirect accountability to the Finance Ministry of the Union and the Finance Department of the State  Government for handling accounting duties
(d) absence of direct access to Parliament (unlike the Attorney General) in defence of his/ her official conduct, if and when questioned on the floors of Parliament.

To conclude, notwithstanding these limitations, the Comptroller and Auditor General plays a unique role in rndian democracy, by upholding the Constitution and the laws in the field of financial administration. He/She is neither an officer of Parliament nor a functionary of Government. He/ She is one of the most important officers of the Constitution and his/ her functions