REDACTIVE PRICING AUDIT AND THE CAG’S DUTIES
14, May 2019
Prelims level : Polity & Governance Mains level : Governance, Constitution, Polity, Social Justice and International relations
Why in News:
- Parliament is constitutionally privileged to know under what conditions a procurement of Rafale fighter aircraft was decided on.
- The Supreme Court’s observations in connection with the Rafale fighter aircraft deal by citing the Comptroller and Auditor General of India’s (CAG’s) report on redacted pricing,
and subsequent media reports and the controversy over “stolen files” brought back into the
spotlight the role of the supreme audit institution of India.
- Redaction is the selection or adaption by ‘obscuring or removing sensitive information’ from
a document prior to publication.
- The CAG is mandated to audit all receipts and expenditures of the three-tier governments in India and report to the legislature judiciously, independently, objectively in compliance with applicable laws, rules and regulations, without fear and favour. Legislative committees such as the Public Accounts Committee and Committee on Public Undertakings examine the CAG’s selected reports.
- In the preface of the audit report, the CAG stated that redactive pricing was unprecedented but had to be accepted due to the Ministry’s insistence citing security concerns. It was unprecedented that an audit report submitted by the CAG to the President under Article 151 of the Constitution suppressed relevant information. Redactive pricing is nowhere used in SAI audit reports. It does not seem to have been used in a government audit by any SAI of any country. Redactive pricing in the ‘Performance Audit Report of the Comptroller and Auditor General of India on Capital Acquisition in Indian Air Force (Union Government – Defence Services, Air Force, Report No. 3 of 2019)’ suppresses more than it reveals. An audit is expected to analyse the facts and comparative pricing charts to highlight the financial propriety and prudence of the procurement decision.
- A performance audit is done to establish whether the procurement activity was executed keeping in mind economy, efficiency, effectiveness, ethics and equity. Only a thorough pricing audit can bring out the credibility and integrity of a purchase decision, thereby achieving an SAI’s constitutionally mandated responsibilities.
Comptroller and Auditor General of India:
- CAG is an independent authority under the Constitution of India. He is the head of the Indian audit & account department and chief Guardian of Public purse. It is the institution through which the accountability of the government and other public authorities (all those who spend public funds) to Parliament and State Legislatures and through them to the people is ensured. CAG derives its audit mandate from different sources like– Constitution (Articles 148 to 151). The Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971
- Important Judgments
- Instructions of Government of India.
- Regulations on Audit & Accounts-2007