History of Indian Audit and Accounts Department

The Office of the Comptroller and Auditor General has its beginnings in 1858 – the year the British Crown took over the reins of governing British India from the East India Company. The first Auditor General (Sir Edward Drummond) was appointed in 1860 and had both accounting and auditing functions. Departments of Accounts and Audit were created (reorganized) in 1862.

The Government of India Act, 1919 provided for ‘Auditor General in India’ responsible for the audit of expenditure in India from the revenues of India. This Act is a landmark in the history of the Audit Department as the Auditor General came to be statutorily recognized. Through the Government of India Act of 1935, he was designated as the Auditor General of India and was appointed by the King of England, thereby cementing the independence enjoyed by the post in the years to follow. The Government of India Act, 1935 also laid down the provisions for appointment and service conditions of the Auditor General. The detailed accounting functions were specified in the Audit and Accounts Order of 1936. Post-independence, four categories of field offices existed within the Audit Department namely Civil, P&T, Railways and Defence Services.

A thorough revamping and strengthening of the department was undertaken by the first Auditor General of India Shri V. Narahari Rao under a five year scheme of strengthening the department. By 1947, the concept of a federal auditor for the provinces had to give way for the continuance of a single Auditor General for both the centre and the states. Under the constitution of free India, four major articles, i.e., Articles 148, 149, 150 and 151 defined the basic structure of the institution of the CAG of India.

Under these articles, the basic essence continues to remain the same – that the CAG of India is an independent constitutional authority who is neither part of the legislature nor executive, though appointed by the President on the advice of the Prime Minister and can be removed only through a motion of impeachment. The CAG was both the audit and accounting authority for the Centre as well as the States.

The accounting functions were taken away in the case of the Centre in 1976 and handed over to the Controller General of Accounts (the Principal Accounting Authority of the GoI) while accounts of the States continue to be compiled by the CAG. Several entitlements functions in the States were also transferred from the CAG to State Governments between 1976 and 1989.

In terms of the provisions of the Constitution, CAG’s (DPC) Act, 1971 was enacted, detailing the Duties, Powers and Conditions of Service of the CAG of India. Over the years the Department’s functions and activities increased tremendously due to major developments in Government policies – centralized planning systems, increasing investments in developmental expenditure and sectoral outlays and the rapid growth of public sector enterprises. Some of the other major developments included the growth of revenue audit and performance audit of major schemes/programmes across the country which greatly increased the demand for a skilled workforce of the IA&AD. Various functional audit wings also continue in keeping with their historical convenience – Defence, P&T, Commercial, Science & Technology and Railway Audit which are managed by officers of the IA&AS.

The year 1984 saw the bifurcation of the existing offices into audit and accounts offices in the States by creating separate offices for accounting and entitlement functions. This separation ensured that the same office that compiles the accounts does not audit them further strengthening the independence of the auditor, thereby ensuring the highest standards of credibility and transparency. This was followed up by creating an office of the Director General (Inspection) to monitor the functioning of the IA&AD. Capacity building and skill development received impetus in 1986 with the creation of a Training Division in 1986.

The CAG set up an Audit Advisory Board in March 1999. In pursuance of Section 23 of the CAG’s (DPC) Act, Regulations on Audit and Accounts 2007 were made and notified. These regulations incorporate the present audit practices, explain various concepts and define the scope of audit. IA&AD carried out a comprehensive restructuring in 2012. The rationale for this was to have an integrated view in audit by bringing the audit of concerned ministries, their PSUs and Autonomous Bodies under one audit authority within IA&AD.

In recent years the credibility of the IA&AD has further been enhanced by SAI India making a foray into INTOSAI and ASOSAI and other international fora. Subsequently the CAG’s election to the Board of Auditors of the UN in 1992 and assignments to carry out audit of several international bodies like WTO, WHO and FAO have further helped to reiterate the credibility of the institution of the CAG of India. The SAI India was appointed to the Board of Auditors of the United Nations in 2014 for a period of six years.

The Department has also witnessed a marked improvement in terms of infrastructure and other facilities in the working environment that are not only aesthetically alluring but also eco-friendly and trend setting. The quest for excellence is now the overriding factor in the development of new audit practices in the IA&AD. In the years to come the Audit Department is without doubt going to be a more competent and efficient organization.