CAG's invite to private firms for audit | CPI(M)'s Madurai MP writes to President Murmu to intervene

New Delhi: The Comptroller and Auditor General’s (CAG) move to empanel Chartered Accountants (CAs) for audit of autonomous and local bodies for the first time have attracted criticism from officers’ association and a senior CPI(M) MP, who called it “highly dangerous” and a possible precursor to the “highly unacceptable” outsourcing of a Constitutional mandate.

The CAG had on May 27 invited ‘Expression of Willingness’ with a deadline of June 5 from CA firms to conduct financial audits of autonomous and local bodies for a period between July this year and March 2027. The CA firms are presently empanelled to conduct primary audit of PSUs under relevant provisions of Company Act.

CPI(M)'s Madurai MP S Venkatesan shot off a letter to President Droupadi Murmu on June 3 objecting to the CAG's move, claiming that it "dilutes" the independence of the CAG and principles envisaged by the Constitution. At present, the audits of local bodies are conducted by the Indian Audit and Accounts Department (IAAD) officers.

Venkatesan said the officers of the CAG possess expertise in auditing these bodies and it is “not an exaggeration” to say that CAG and its audit department are the “guardians” of the financial interests of Indian people. He warned that there is a “danger” that confidential and sensitive information held by these bodies “may fall into private hands”.

In a letter to CAG K Sanjay Murthy, All India Audit and Accounts Officers’ Association (AIAAOA)Secretary General OS Sudhakaran expressed “strong objection” to engaging CAs and Article Clerks for CAG’s “routine” work and said it was “highly inappropriate” and “against the spirit of the Constitutional mandate”.

Emphasising that state and union governments infuse crores of rupees into these bodies by way of grants, loans and equity every year and CAs certify the utilisation of these grants in many cases, the letter said it goes without saying that engaging them is “not only suicidal but makes a mockery” of the constitutional provisions.

While claiming that the engagement of CAs could “only opens the gate for outsourcing” of CAG's audit work, which is “highly unacceptable and against the spirit of the constitutional mandate”, he warned against “chances of misuse/manipulation of sensitive information" as they are engaged for a short duration on contract basis.

“The officials of IAAD visit the auditee units as constitutional authorities and their understanding of the working of Autonomous Bodies/Local Bodies, the regulations that govern them, etc., is unparalleled, which no Chartered Accountant or their articled clerks can ever hope to have. The Chartered Accountants and Articled clerks proposed to be engaged are contract workers having no such constitutional obligations,” the letter said.

With the CAG office facing acute staff shortage, sources indicated that a rap on the knuckles by a Parliamentary panel for the delay in conducting audits of autonomous and local bodies appeared to have prompted the new move, which the AIAAOA called “adhocism”.