• Appointment procedure: Neither the Constitution nor the CAG (Duties, Appointment and Conditions of Service) Act of 1971 stipulates any qualifications for the position of CAG. Moreover, the appointment of the CAG is done without any consultation with state governments or other Parliamentary offices. This puts a question mark on its objective of ensuring executive accountability.
• Centralisation of Financial audit system: Large amounts of duties pertaining to the audits of government are placed under the single office of CAG. For example the office of CAG handles the audit of both the Central and State government as well as the PSU. Additionally, the structure of the Indian Audit and Accounts Department (IAAD) is highly centralized, with significant power concentrated in the CAG’s hands and very little delegated to State Account Generals or Principal Directors of Audit. This is evident from the fact that the CAG approves numerous audit reports for both the Union and State governments and certifies the finance and appropriation accounts of the Union, State, and Union territories with legislatures. 

• Violates the principles of Federal structure: A major issue with the Indian audit and accounts department stems from the fact that the organizational structure of the CAG does not align with the federal provisions outlined in the Constitution. The draft Constitution had included a provision for a separate auditor general for the states, known as the Provincial Auditor General; however, this clause was later removed upon the recommendation of an expert committee. 
• Post facto audits: Comptroller and Auditor General in India only perform function of Post facto auditing i.e. when expenditure is already done by executive. It does not have powers to perform the function of comptroller like its British counterpart. Hence, CAG faces criticism of being reactive rather than proactive.
• Exceeding mandate: Some experts criticize the CAG’s powers related to discretionary propriety audits. They argue that it goes beyond the mandate of CAG because such audits and reports based on them create a sense of fear among bureaucrats and make them risk-averse which would prevent them from making any innovation in policy implementation. For example,  in March 2008 alone, there were at least 31 stories by different newspapers or news agencies based on reports of proprietary audits by the CAG. This led to a period of policy paralysis in India, during which bureaucrats went into a ‘stalling mode’ due to fears of the three Cs – CAG, CVC, and the courts. 
• Limitations on CAG: 
  • The expenditure incurred on intelligence agencies and other security agencies acts as a limitation on the auditing role of CAG, because such expenditure is outside the purview of CAG.
  • In case of local bodies like Panchayats and Urban local bodies, CAG does not have the full authority to audit accounts.
  • Audit of NGOs funded by the government is also outside the purview of CAG.
  • CAG in India does not have power of contempt or summoning.
• Delay in submission of inputs and Reports: On many occasions it has been observed that the departments of Central and State governments cause undue delay in submission of requisite documents to the CAG. Such behaviour on part of government agencies and departments hampers the ability of the CAG to compile and submit its reports on time.

Strengthening the CAG: Pathway to Decentralization, Legal Recognition and Improved Appointment Process

• For appointment procedure: National Commission to Review Working of Constitution (NCRWC) recommended that the power of appointment of CAG should be kept outside the exclusive domain of the Executive. Certain qualifications need to be added in CAG (Duties, Powers and Conditions of service) Act, 1971 so that a person with expertise can hold such a position. Former CAG of India Vinod Rai recommended a collegium or committee to be formed to appoint CAG on the lines of appointment of Chief Vigilance Commissioner.
• Decentralisation of the audit system: There is an urgent need to decentralise the audit system; there should be a separate state auditor for each and every state and also specialised agencies which would maintain account. The state auditor should be made responsible for all financial audits of state government as well as those of local self government in the state. 

• Legal status to State Accountant General: Although no legal status has been provided to the Accountant General of State, in practice he/she discharges all the duties prescribed in the Constitution for the CAG. Given this position it is imperative that a legal status is provided to the state accountant general. It has been suggested that an independent Auditor General for the States having the same status as a High Court Judges are created by amending the Constitution. However, it should be ensured that the CAG of India is given power of superintendence over State Auditor Generals, in policy matters relating to accounts and audit, in the same manner that the Supreme Court has over the High Courts.

• To expand the ambit of CAG: Experts suggest that Panchayati raj institutions, public private partnerships (PPPs) and government funded NGOs should be brought under ambit of CAG.
• More powers to CAG: By incorporating international practices like those prevalent in Britain, USA, Australia such as  having power of comptrolling, summoning, decentralisation  etc. should be provided to institution of CAG in India.

Conclusion

The CAG has effectively exposed several scams in India; for instance, a CAG report from 2001 revealed that the government overpaid for coffins during the Kargil war, indicating that approximately Rs 1,762 crore worth of supplies (over four-fifths of the total) were delivered more than six months after the conflict ended. 

Another CAG report raised concerns about a $50 million contract the navy had for the purchase of a 37-year-old US warship. Besides this the 2G spectrum , Commonwealth games, Adarsh housing society scam etc were unveiled by the CAG report. 

In a recent speech the Vice President Jagdeep Dhankar had said that “Timely detection of fiscal misdemeanours and effective consequential correction mechanisms are peremptory CAG obligations,”. Although CAG has played an effective role in fulfilling these obligations, for it to continue to ensure accountability and transparency in financial matters of the government, structural reforms need to be undertaken such as transparent appointment procedure, legal status to State auditor general etc. This will help the office of CAG to effectively play its role as a crusader against corruption and fiscal inefficiency.