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Speech by Shri P Chidambaram, Union Finance Minister at the 26th Accountants General Conference
October, 09th 2012
 Speech by Shri P Chidambaram, Union Finance Minister
                         at the
         26 Accountants General Conference

     I am pleased to join you at the 26th Conference of Accountants

General and to share my views with you.              Last year, you crossed the

important milestone of 150 years.         That would have been a proud

moment for any institution, and I offer you my greetings and good wishes

as you complete another year of hard work and solid achievement.

     The      theme   of   this   Conference    of    Accountants   General   is

"Strengthening Professional Practices".        I understand that this includes

strengthening the key streams of public audit viz. Financial Audit,

Compliance Audit and Performance Audit. I am also happy to note that

there is a separate sub-theme on "Strengthening Public Financial


     The office of the Comptroller and Auditor General of India has a key

role that is defined in the Constitution of India.        The Constitution says

that the C&AG "shall perform such duties and exercise such powers in

relation to the accounts of the Union and of the States and of any other

authority or body as may be prescribed by or under any law made by

Parliament." I think the words are quite significant.         The office of the

C&AG is under the Constitution; but the authority of the C&AG to perform

duties and discharge functions is under a law made by Parliament. Thus,

while it is correct to describe the office of the C&AG as a Constitutional

office, it may also be remembered that the C&AG owes his authority to a

law made by Parliament.

     Audit is an important function in any system governed by the rule of

law. Audit is a profession. Like in any other profession, the practitioners

of the profession have added to the body of knowledge over the years.

Initially, national auditing standards and benchmarks were established,

but over the years auditing standards and professional practices have

acquired international benchmarks. Naturally, the National Auditor will be

judged by his ability to meet such international benchmarks. I am happy

to note that the C&AG has adopted many of these international

benchmarks. Recognition of that fact has led to the C&AG of India being

appointed as the external auditor of the World Food Programme (WFP),

World Intellectual Property Organization (WIPO) and the International

Atomic Energy Agency (IAEA). The C&AG has also earned a place on the

Governing Board of the International Organisation of Supreme Audit

Institutions(INTOSAI) and the Asian Organisation of Supreme Audit

Institutions(ASOSAI). I congratulate you on winning these distinctions. I

can sense an opportunity for the C&AG to become a global leader and a

standard setter in the field of public audit and serve as a model for fellow

Supreme Audit Institutions across the globe.

      Recently, through the Finance Act, 2012, Parliament entrusted to

the C&AG the review of compliance of the provisions of the Fiscal

Responsibility and Budget Management Act, 2003 (FRBM).                     Fiscal

responsibility has two sides ­ revenue and expenditure.          Fiscal stability

and fiscal consolidation can be achieved only by placing an equal stress

on revenue and expenditure. On the revenue side, needless to say, tax

policies are the prerogative of the Government; tax laws are the

prerogative of Parliament.    Given the tax policies and the tax laws, the

Auditor should ask the question whether the Department of Revenue has,

diligently and efficiently, collected the tax revenues due to Government.

The Auditor should ask the question if there has been any laxity in tax

administration. The Auditor should ask the question if any authority has

waived or written off tax dues without proper justification. Likewise, on

the   expenditure   side,   the   Auditor   should   look   at   the   estimated

expenditure and the actual expenditure and ask the question if there has

been any wasteful expenditure or diversion of funds or falsification of

accounts.   Government looks to the Auditor's report to improve its

systems and procedures so that, both on the revenue side and the

expenditure side, Government is able to meet its budgeted targets.

     One of the areas engaging the attention of the Ministry of Finance is

the way forward in strengthening the financial reporting framework for

the Government.     Successive Finance Commissions have suggested a

number of measures in this regard.          The Government Accounting

Standards Advisory Board (GASAB) has formulated and recommended the

Indian Government Accounting Standards (IGAS) for cash system of

accounting and Indian Government Financial Reporting Standards (IGFRS)

for accrual system of accounting.     The Government has notified three

Indian   Government      Accounting    Standards,    namely,    Disclosure

Requirements; Accounting and Classification of Grant-in-aid; and Loans

and Advances made by Governments. I am told that two other standards

recommended by GASAB are under consideration for notification.         The

adoption of these standards will improve the overall standards of

Government accounting and financial reporting which, in turn, will

enhance the quality of decision-making and public accountability. I feel

there is a need to strengthen this process so that we are at par with other

countries in the matter of accounting standards.

     The revision of the list of Major and Minor Heads of Account is also

under consideration. The C&AG and the Ministry of Finance need to work

together to ensure that the new chart under consideration adds value to

the existing chart of accounts and is able to factor in the need for a

modern financial reporting system. Besides, there are issues relating to

capacity which, unless resolved, will stall the roll out of the new reporting

system.    It is widely acknowledged that the benefits in terms of

improvements in financial reporting for the Union and the States are

enormous. It is my sincere hope that we would be able to put in place, as

soon as possible, a modern financial reporting system.

      In recent months issues relating to probity, ethics and integrity

have occupied centre stage.      That is necessary and correct.     I would

strongly endorse and support the increased awareness of such issues and

urge everyone to join in an informed and healthy debate on such issues.

There is a consensus that corruption impedes economic development,

undermines stability and erodes trust in public institutions. The C&AG has

played a key role in addressing issues of good governance and the

Government is obliged to take necessary action to address gaps in

governance. I visualise the role of the C&AG and the responsibility of

Government as complementary to each other.         I also believe that both

the C&AG and the Government have the common objectives of infusing

greater transparency, improving financial management and ensuring

better outcomes.

      Unfortunately, however, some dissonance has crept into the public

discourse and, for reasons which are inexplicable, the C&AG and the

Government have been cast as adversarial to each other. Perhaps, this is

because of the nature of the functions of the Government and of the

C&AG. Policy making, sometimes, is through trial and error. Decisions

are taken often without full information and in an environment of

uncertainty. Audit is a post-decisional review. I believe that institutions

and individuals are always in a learning process.    The recent opinion of

the Supreme Court has brought about a great degree of clarity. It is my

intention and desire, as the Minister in-charge of Finance, to work with

the C&AG and his colleagues to erase the impression of adversaries and

restore trust and confidence in all institutions of Government.

      I am confident that this Conference will provide a platform for

exchange of ideas and strengthening of public audit practices. The issues

of governance, macro economy, fiscal health and financial reporting,

which I have touched upon, are closely interlinked. These should remain a

part of the broader canvas of public auditors. I am confident that the

C&AG, through his reports, will continue to provide independent and

unbiased assurance on how well socio-economic objectives have been

advanced, public purpose has been served and how further improvements

can be effected.

      I wish the 26th Conference of Accountants General all success.


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