The Public Accounts Committee and the Comptroller and Auditor General

Step four: the loop closes. The Committee reports to the House; the Government furnishes action taken replies; and the Committee reports again on those replies. A paragraph is not disposed of until the Committee is satisfied or records that it is not.

Why the fourth step is the important one

Because without it the whole apparatus stops at a document.

Chapter 470 asked what happens to a Commission of Inquiry's report and found that the Act requires only that it be laid with an action taken memorandum, and that nothing compels the House to take it up. Chapter 700 asked what happens when the Central Vigilance Commission's advice is not accepted and found only a requirement of recorded reasons. Chapter 900 asked what follows a report laid before Parliament and found no duty to consider it.

The Public Accounts Committee is the one institution in this paper that has solved that problem, and it solved it by practice rather than by law. It does not let a paragraph go. It reports, it receives the reply, it reports on the reply, and it returns to the subject in a later year. That is what a continuous committee can do and a one-off inquiry cannot, and it is the strongest argument in the whole paper for a permanent committee over an ad hoc commission.

What the auditor cannot do, and what that means for the committee

The Comptroller and Auditor General has no power to disallow an item, to surcharge an officer or to punish anybody. He audits and he reports. His British counterpart's historical powers of disallowance and surcharge in local audit have no equivalent in his Union functions.

So his report is a finding without a sanction, exactly like the reports of every other institution in this paper.

And that is precisely why the committee matters. The sanction is the examination: a Secretary who must appear before a committee of Parliament and explain a paragraph, whose answers are recorded and whose Ministry's reply is reported on, is subject to a discipline that no auditor's paragraph by itself imposes. The auditor supplies the fact; the committee supplies the consequence.

And the honest qualification. The consequence is reputational and administrative, not legal. The Committee cannot order recovery, cannot impose a penalty and cannot direct a prosecution. Chapter 1130 counts that among the weaknesses; but note that recovery, penalty and prosecution are available elsewhere in this paper, in Module II's machinery, and that the committee's report is one of the things that sets them going.

The three provisions of the 1971 Act this chapter needs

Section 13, the audit of the Union and State receipts and expenditure from the Consolidated Fund, and of the Contingency Fund and public accounts, which Module IV works.

Section 16, the audit of receipts.

Section 19, the audit of Government companies and corporations, which is what feeds the Committee on Public Undertakings.

Note the shape. The Act tells the auditor what to audit; article 151 tells him whom to report to; and the Rules made under article 118 create the committee that reads the report. Three instruments, three different levels, one process. That is a good closing sentence for an answer on financial accountability.

The State counterpart

Article 151(2) does for a State what clause (1) does for the Union: the reports go to the Governor, who causes them to be laid before the Legislature of the State; and every State Legislature has its own Public Accounts Committee under rules made by it under article 208.

So the whole mechanism is replicated at the State level, which is worth a line because MU's questions ask about the country and not only about the Union, and because chapter 1280 works the State position.

A worked example

The audit report for a year carries a paragraph that a Ministry paid an advance of forty crores to a contractor without the security the rules required, and that the contractor did not perform.

How does the paragraph reach the House? Article 151(1): submitted to the President, who shall cause it to be laid before each House.

Who examines it? The Committee on Public Accounts.

Who appears? The Secretary of the Ministry, as the accounting officer. Not the Minister: the Committee's business is with the officer who authorised the payment, and chapter 1070 explains why a Minister is not ordinarily summoned.

What does the Committee ask? Whether the payment was authorised, whether the rule requiring security was followed, who relaxed it and on what recorded reason, and what has been done to recover.

What can the Committee do about the forty crores? Nothing directly. It reports.

What then? The Government furnishes an action taken reply; the Committee reports on that reply; and if it is not satisfied it says so and returns to the matter.

Is that the end of the matter? Not necessarily. The recorded facts are available to the Central Vigilance Commission under section 18 of its Act, to a disciplinary authority, and to the Central Bureau of Investigation if an offence is disclosed. The committee does not punish; it produces the record on which others may.

Change the facts to a State Ministry. Article 151(2): the report goes to the Governor and is laid before the State Legislature, whose own Public Accounts Committee, constituted under rules made under article 208, does the same work.

What beginners get wrong

That the Comptroller and Auditor General reports to the Government. He submits to the President or the Governor, who shall cause the report to be laid before the House.

That the auditor can disallow or surcharge. In his Union functions he cannot. He audits and reports.

That the Public Accounts Committee audits. It examines the audit report; the audit is the Comptroller and Auditor General's.

That the Minister appears before the Committee. The Secretary appears, as accounting officer.

That the Committee's report is the end. The action taken reply and the Committee's report on that reply are what close the loop, and they are practice rather than statute.

Quick revision

Art 149: the auditor's duties and powers are as prescribed by law made by Parliament, that law being the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act 1971.

Art 150: the form of the accounts is prescribed by the President on the advice of the Comptroller and Auditor General, the words "on the advice of" substituted for "after consultation with" by the Forty-fourth Amendment, s.22, w.e.f. 20 June 1979.

Art 151(1): Union reports to the President, who shall cause them to be laid before each House. Art 151(2): State reports to the Governor, laid before the State Legislature.

The four steps: audit, laying, examination by the Committee on Public Accounts of the Secretary as accounting officer, and the action taken reply with a further report on it.

The auditor cannot disallow, surcharge or punish. The sanction is the examination, and it is reputational and administrative, not legal.

Three instruments, three levels: the 1971 Act says what to audit; art 151 says whom to report to; the Rules under art 118 create the committee that reads it.

Test yourself

1. How does an audit report become accountability? In four steps. The Comptroller and Auditor General audits under the powers conferred by the law made under article 149, namely the Act of 1971. Under article 151(1) his reports on the accounts of the Union are submitted to the President, who shall cause them to be laid before each House of Parliament, and under article 151(2) his reports on the accounts of a State go to the Governor to be laid before the State Legislature. The Committee on Public Accounts then examines the paragraphs, calling the Secretary of the Ministry concerned before it as the accounting officer to answer for the expenditure, and reports to the House. Finally the Government furnishes action taken replies and the Committee reports again upon those replies, returning to the matter until it is satisfied or records that it is not. It is the sequence, and particularly the last step, that converts a finding into accountability.

2. Why does the Committee matter if the auditor has already reported? Because the auditor has no sanction. He has no power to disallow an item, to surcharge an officer or to punish anyone; he audits and reports, and his report by itself is a finding without a consequence, exactly like the report of a Commission of Inquiry or the advice of the Central Vigilance Commission. The consequence is supplied by the examination: a Secretary who must appear before a committee of Parliament and account for a paragraph, whose answers are recorded, whose Ministry must reply in writing and whose reply is itself reported on, is subject to a discipline that no audit paragraph imposes on its own. The auditor supplies the fact and the committee supplies the consequence.

3. What is the significance of the action taken reply? It is what closes the loop, and it is the one solution in this paper to the problem that reports laid before a House are not necessarily acted upon. A Commission of Inquiry's report is laid with a memorandum of action taken and nothing compels the House to consider it; the Central Vigilance Commission can require only that reasons for departing from its advice be recorded; the reports of every institution in this paper are recommendatory. The Public Accounts Committee alone does not let a paragraph go: it reports, it receives the Government's reply, it reports on the reply, and it returns to the subject in a later year. That is what a permanent committee can do and an ad hoc inquiry cannot, and it is achieved by practice rather than by any statutory requirement.

4. Who appears before the Committee on Public Accounts, and why? The Secretary of the Ministry concerned, in his capacity as the accounting officer, and not the Minister. The reason is that the Committee's inquiry is into whether money was spent as the House authorised, with proper sanction and correctly accounted for, which are matters of administration for which the Secretary is answerable, and not into the policy which the House itself approved when it voted the demand. Confining the examination to the officer also preserves the committee's non-partisan character, which is what allows it to report unanimously and, by the same convention that gives its chair to the Opposition, to be believed when it does.