Dr. B.R. Ambedkar described the Comptroller and Auditor General (CAG) of India under Article 148 as the most important constitutional officer, serving as the guardian of the public purse. The CAG’s mandate extends beyond verifying technical legal compliance (Legality Audit) to examining whether public money is spent prudently and with integrity (Propriety Audit).

Ensuring the Legality of Public Expenditure (Regulatory Audit)

• Constitutional Appropriation Audit: Verifies that expenditures from the Consolidated Fund of India (Article 266) comply with parliamentary appropriations under Article 114.
• Statutory Compliance Check: Ensures that expenditures follow General Financial Rules (GFR), procurement manuals, and administrative delegations.
• Auditing Sanctions: Verifies that every transaction is backed by sanction from a competent authority, checking for misallocation or fiscal overruns.
• Taxation and Revenue Audits: Audits revenue receipts—including corporate taxes, customs, and GST—to verify accurate assessment and collection.

Ensuring the Propriety of Public Expenditure (Performance & Value Audits)

• Principles of Financial Propriety: Examines whether an administrator exercised the same vigilance and restraint in spending public money as a person of ordinary prudence would exercise with their own funds.
• Auditing Wastefulness and Extravagance: Evaluates public expenditures to ensure funds are not spent for private benefit or beyond clear public necessity.
• Performance and “Value for Money” (VFM) Audits: Assesses public programs based on the 3Es:
  • Economy: Minimizing procurement costs without sacrificing quality.
  • Efficiency: Ensuring maximum output per unit of resource input.
  • Effectiveness: Evaluating whether policy objectives were achieved (e.g., performance audits of the Clean Ganga Mission and PMAY).
• Reviewing Discretionary Decisions: Examines discretionary allocations to ensure executive actions are free from bias or arbitrariness.
• Adherence to International Standards (INTOSAI): Applies international auditing standards to evaluate public debt, defense purchases, and natural resource allocations.

Institutional Linkage with the Public Accounts Committee (PAC)

• The CAG serves as the “friend, philosopher, and guide” to the parliamentary Public Accounts Committee, translating complex audit findings into reports for legislative scrutiny.

Auditing legality confirms expenditures are authorized, while auditing propriety checks that public funds deliver value. Together, they protect public accountability and the rule of law.