Performance Audit Authority

The following letter was published in Business Standard on August 3, 2012. Also read 'Tail Piece' and comments in Moneylife down below.
M G Warrier

Business Standard, August 31, 2012




Letters: A new authority, if not CAG

Business Standard / New Delhi Aug 31, 2012, 00:20 IST

This refers to the report “ONGC rapped for exploration delay” (August 28). Performance audit was introduced as part of commercial audit that was carried out by the Indian Audit and Accounts Department in the late sixties. The purpose was to go beyond the mere checking of accounts and ensure that each item of expenditure was backed by a “voucher” and find out whether the expenditure from public funds actually served the purpose envisaged when the outlay of expenditure was planned.

In the years that followed, the scope of audit has expanded along with the growth in public expenditure, multiplicity of sectors and ever-growing size of projects and extending geographies. Since the funding comes ultimately from taxpayers, the difference between public and private sectors is also narrowing. So, when the Comptroller and Auditor General (CAG) comments on the nation’s resources being “sold out” to the private sector, traditional accountants begin to doubt his jurisdiction.

India’s resources, including financial resources, deserve more dignified treatment. If the government or political leadership feels that the CAG, or for that matter any of the regulatory authorities, should not comment on the performance part of policy decisions by ministries, it is time the country thought about having a separate authority to do the job. The government should set up a Performance Audit Authority that should have powers and the competence to act as a watchdog to ensure that public expenditure is insulated from pilferages and leaks of the kind we are seeing every day.

M G Warrier Mumbai


August 30, 2012 Online comments @ Moneylife.in

M G WARRIER 13 hours ago




The commendable work being done by CAG, is not the brain-wave of Vinod Rai or his predecessor who have sharpened the tools of audit to make them effective in the present context.

Performance audit is a concept introduced as part of commercial audit carried out by the then Indian Audit and Accounts Department in the late sixties. The purpose was to go beyond mere checking of accounts and ensuring that each item of expenditure was backed by a ‘voucher’ and find out whether the expenditure from public funds actually served the purpose envisaged when the outlay of expenditure was planned.

In the years that followed, the scope of audit has expanded along with the growth in public expenditure, multiplicity of sectors and ever-growing size of projects and extending geographies. As the funding comes ultimately from the taxpayer, the difference between public and private sectors is also getting narrowed down. Suffice to say, when CAG comments on nation’s resources ‘sold out’ to private sector, traditional accountants get a doubt about his jurisdiction.

India’s resources including financial resources deserve a more dignified treatment. If government or political leadership feel that CAG or for that matter any of the regulatory authorities should not comment on the performance part of policy decisions by ministries, it is time the country thought about having a separate authority to do the job. GOI should set up a ‘Performance Audit Authority’ which should have powers and competence to act as a watchdog to ensure that public expenditure is insulated from pilferages and leakages of the kind that are coming out every day. The present efforts of CAG, commendable though they are, do not result in online corrective measures which alone can minimize plundering of resources. Healthcare, not reasons for death through post-mortem, is the need of the hour for the Indian Economy as a whole.