Millennium Post

The need to audit our auditors

In the hullabaloos of corruption and scams, we have discussed everything, but the audit. A new line of bureaucracy was also envisaged by some sections of civil society in the name of Lokpal, but majority of people including members of civil society have hardly appreciated the role of audit in governance.

Credibility of Comptroller and Auditor General (CAG) is also under serious threat, since some of their audit reports have done serious damage to the current government. Most of the discussions are around Rais and Singhs and their alleged affiliation to rival groups. There are some very serious issues related to audit and institutions of audit that needs immediate attention.

Pranab Mukherjee in his presidential address to CAG’s conference last month very rightly underlined the role of CAG – ‘The institution of CAG is an important part of the governance and accountability structures of our country. Its existence underpins and highlights the necessity for accountability of public expenditures by public authorities towards the Parliament which represents the supreme will of the people of this country.’

Office of CAG is responsible for statutory audit and due to constraints of manpower and other factors, CAG cannot and does not take all the decisions of expenditure and receipts of government in its audit engagement. There are many schemes which have not been audited ever by the CAG. Apart from statutory audit of CAG, role of internal audit is immense in the processes of governance. Internal auditors are more conversant with the functioning of departments, ministries, autonomous bodies etc. Since most of the internal auditors in government have played their role as accountants and have a good idea about the payment processes and other policy issues, their audwit is more useful for the department.

Internal auditors do not restrict themselves just to fault finding, their more important role is to advise remedies to the problems. Mukherjee, from his vast experience as the finance minister, made these remarks on importance of internal audit in the same CAG’s conference – ‘The union ministry of finance is currently examining the Report of the Working Group set up to strengthen “internal audit mechanisms” in the Government of India. I am sure that the recommendations, once accepted by the government, will go a long way in making internal audit an effective tool of governance and internal control, thereby complementing the role of the CAG. All these are significant steps towards transparency and good financial administration.’

If departments, ministries and other units of governments strengthen the internal audit wings by increasing the manpower to the required level, address the needs of their capacity building and give them adequate responsibility and autonomy, process of decision-making and use of public money will be more responsible. Apart from this, the concept of audit committee should also be made mandatory in all departments/ministries. This committee is headed by the secretary of that department and represented by financial advisers and chief controller/ controller of accounts of that department. Audit committee looks into the reports of internal audit as well as of CAG and ensures that due attention is given to the audit reports.

Apart from understanding the little nuances of policies and decision processes of government, handling of data and analysing the same with due care is a major challenge for the auditors. Since, most of the data is computerised these days, understanding the data structure and their various formats and security aspects of the same are also of importance.

Recently, some initiatives have been taken to motivate officers and staffs of accounts and audit organisations to acquire professional degrees in auditing. But most of the degrees available in the market do not take the Indian system of governance and accounting into consideration while designing the course or developing the case studies. We need to develop our own courses in audit keeping in view the governance in India. Use of IT tools for data analysis and decision-making should also be promoted intersecting the divides of hierarchy of government.

Recently an idea was propagated to make CAG a multi-member committee. Better idea would be to give due respect to the Indian audit and accounts service, who with their long experience as auditors in various sectors, are appointed as CAG. It is also pertinent to have a forum where all organised services in accounts, finance and audit meet on regular basis, share their experiences and give a periodic report to government on better practices of accounts and audit. They should also advice on the challenges auditing and accounting organisations are facing.

Now that government has announced direct cash transfer to beneficiaries, apart from challenge to the implementing ministries and agencies involved, it also throws bigger challenge to the internal auditors to pull up their socks and get ready to see that schemes are implemented without flouting any principle of financial discipline and none of the decisions leave scope for corruption. Let people know that auditing is better than policing, as far as governance is concerned.

Akhilesh Jha is a government servant. The views are his own
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