Issues with the audit process
1. CAG’s reports are not timely because there is substantial time gap between occurrence of an irregularity and its audit. It reviews programmes after these have run for a few years.
2. Audit findings are based exclusively on documents and files. The situation on the ground is quite different from what is reflected in the papers. There is practically no verification to validate the audit findings.
3. CAG reports tend to be unduly negative and their focus is on irregularities and faultfinding. They do not recognize the practical constraints under which the departments function.
4. They do not give due credit for good performance.
5.They do not discriminate between errors arising out of bonafide/malafide intentions. Audit as such could act as a dampener against new initiatives and risk taking.
6. They do not delve into the root causes of the problems and how to address them.
7. Reporting each year a large number of problems which are already known does not add value. Audit must therefore identify systemic problems.
8. The relationship between the auditor and auditee is not always harmonious. Generally interaction is confined mainly to the lower levels. Audit is viewed as a policing. There is poor response to external audit which seriously reduces the effectiveness of audit.
9. There is inadequate coordination between external audit and internal audit.
Issues with post audit process
1.There is hardly any accountability for not taking timely action on audit observations. Thousands of reports containing a huge number of observations are lying unattended in the departments. Audit Committees comprising representatives of audit and government agencies have been set up to review the departmental action taken on inspection reports but their functioning is not satisfactory.
2. Detailed examination of paras included in the Audit Reports by PAC is barely about 15-20 against the total number of 1000 – 1500 paras in the CAG reports.
3. The Ministries take only those audit paras seriously which come up for discussions in the PAC
4. PAC and CoPU must form sub-committees and consider more paras this way. Other paras should be assigned to the respective Departmental Standing Committees.
5. Ministries are supposed to submit Action Taken Notes on the paras not discussed. But such Action taken Notes are largely formal rather than substantive
6. In the State Legislatures, there is a huge pendency of Audit Paras to be examined by State PACs. Some of the pending paras are 10 to 20 years old.