Major Functions Of CAG

These are the major functions of CAG ( Comptroller and Auditor General of India ) : –

1. To prescribe with approval of the President the form in which accounts of Unions and States are to be kept.

2. To audit the accounts related to all expenditure from the Consolidated Fund of India, States and the Union Territories with Legislative Assembly ; Contingency Fund of India and the States and the public Accounts of India and the States.

3. CAG audits the accounts of all Corporations and bodies which are provided for an audit by CAG in the Act of the Parliament. For some corporations auditors are appointed on the advice of CAG. While for some others , like RBI , there is no role of CAG.

4. CAG can audit accounts of all government companies set up under Indian Companies Act 1956. Government companies have their own independent auditors under the Memorandum & Articles of Association which are appointed on the advice of CAG. CAG can conduct the test audit on any government companies.

5. CAG audits the receipts and expenditures of all bodies substantially financed from Central or State revenue.

6. CAG can audit accounts of any authority even if not substantially funded by the government at either the request of the President or the Governor or CAG’s own initiative.

7. Article 279 of Indian Constitution provides that CAG has to ascertain and certify the net proceeds of any tax or duty. CAG’s certificate is final.

Net Proceeds = Total Proceeds of tax or duty – The cost of Collection.

8. The CAG compiles and maintains the account of the State government. But for the Union government since 1976, there is departmentalisation of accounts and CAG primary duty is auditing only.

Which commission is referred to as Toothless Paper Tiger ?
Ans – CAG is referred to as “Toothless Paper Tiger”.


CAG submits the 3 audit reports namely : –

1. The audit report of Appropriation Account.
2. The audit report of Finance Accounts.
3. The audit report of Public Undertakings.

CAG submits reports to the President or the Governor who shall present them before the Parliament or the State Legislature respectively.

CAG acts as the friend , philosopher and guide to the PAC of the Parliament.


Special privileges given to the CAG to assist in the discharge of following duties : –

1. CAG can inspect any office or organisation subject to office.
2. CAG has full access to records.
3. CAG has statutory rights to call for information from any person or organisation.
4. Sometimes CAG has quasi judicial functions .

CAG possesses a quasi judicial authority. In that CAG interprets statutes, rules and orders and has to occupy these as they stand irrespective of persons or the agency.


Nature of Audits done by CAG : –

The nature of audits conducted by CAG is broadly of 2 types : –

1 ) Statutory or regulatory Audit – Main purpose is to see whether the rules and procedure have been followed in accordance with basic statutes.

2 ) Discretionary Audit – This type of audit is based on liberal interpretation of function given by statutes. It generally lays emphasis on undertaking investigation and reporting wasteful and uneconomical expenditure. CAG audits goes a step further than professional audits.

A professional auditor verifies the account by auditing cash books, vouchers and documents, etc and sees that all revenues and expenditure is properly accounted for.

CAG role is not merely to ensure that the appropriation made by the Parliament have not been exceeded without the supplementary vote or the expenditure incurred to the rules but also to bring to notice to the Parliament the impropriety of action even when the legality is not in question.

CAG is to satisfy himself on behalf of the Parliament as to the wisdom , faithfulness and economy of the expenditure.

The CAG has to also check if the expenditure has succeeded in achieving the desired results by checking economy, efficiency, effectiveness of expenditure.

Economy – whether the government has utilized the financial, human and physical resources in an economical manner.

Efficiency – whether the results intended were achieved and how successful the operation was.

Effectiveness – is the review of performance with respect to overall objectives.


Critical Analysis of CAG : –

The reports of CAG of all departments and department undertakings are handed over to PAC. For Public Sector Undertaking and companies report go to CoPU. CAG assists these committees during investigation.

Invariable CAG is present during the meetings of these committees. After the examination of witnesses , PAC prepares a report and submits this report to the Parliament.

CAG has to watch whether the corrective actions are undertaken or not. In case if action is not taken then CAG reports to PAC. CAG has no power to impose corrective action on its own. Hence it is referred to by few as “Toothless Paper Tiger”.

It is observed that administration and audit have become distasteful of each other.


CAG has recently been accused of overreach. Especially when the audit touches upon the policy issues. However policy process and expenditure are interrelated and hence it is intune with the spirit of the Constitution to go beyond just regulation audit.

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