 bill no  251  of  2016 the comptroller and auditor general's (duties, powers and conditions of service) amendment bill, 2016 by shri baijayant panda, mp a billfurther to amend the comptroller and auditor general's (duties, powers and conditions of service) act, 1971be it enacted by parliament in the sixty-seventh year of the republic of india as follows:—short title and commencementamendment of section22 in section  2 of the comptroller and auditor general's (duties, powers and conditions of service) act, 1971 (hereinafter referred to as the principal act),—56 of 1971(i) after clause (b), the following clause shall be inserted, namely:—5"(ba) 'audit' means examination of accounts, transactions and records by the comptroller and auditor general in performance of its duties and exercise of powers under the constitution of india and includes examination of the economy, efficiency and effectiveness in the application of funds;"; (ii) after clause (c), the following clause shall be inserted, namely:—"(ca) 'prima facie' means sufficient to establish a fact or raise a presumption unless disproved;"103 in section 13 of the principal act,—amendment of section 13(i) after clause (a), the following clause shall be inserted, namely:—15"(aa) to audit all receipts which are payable into the consolidated fund of india  or of a state or  of a union territory having a legislative assembly and to satisfy himself that the rules and procedures in that behalf are designed to secure an effective check on the assessment, collection and proper allocation of revenue and are being duly observed;";20(ii) for the words "and in each case to report on the expenditure, transactions or accounts so audited by him", the words "and in each case to report on the audit conducted by him" shall be substitutedamendment of section 144 in section 14 of the principal act,  in the explanation to sub-section (1), for the words "seventy-five per cent", the words "fifty-one per cent" shall be substitutedamendment of section 155 in section 15 of the principal act, for sub-section (1), the following sub-section shall be substituted, namely:—25"(1) where any grant or loan is given for any specific purpose from the consolidated fund of india or of any state or of any union territory having a legislative assembly to any body or authority, not being a foreign state or international organisation, the comptroller and auditor general shall—30(a) scrutinise the effectiveness of the selection criteria or the conditions prescribed by the concerned government or governments for selecting appropriate bodies or authorities to carry out the specific purpose;(b) scrutinise the procedures by which the sanctioning authority satisfies itself as to the fulfilment of the selection criteria or the conditions subject to which such grants or loans were given;35(c) audit the expenditure of the grant or loan given to the body or authority toascertain whether it was utilised for the specific purpose for which it was sanctioned;explanation— for the purposes of clauses (b) and (c), the comptroller and auditor general shall have the right to access, after giving reasonable previous notice, the books and accounts of that body or authority:40provided that the president, the governor of a state or the administrator of a union territory having a legislative assembly, as the case may be, may, where he is of opinion that it is necessary so to do in the public interest, by order, relieve the comptroller and auditor general, after consultation with him, from making any such scrutiny in respect of any body or authority receiving such grant or loan"6 for section 16 of the principal act, the following section shall be substituted, namely:—substitution of new section for section 165"16 (1) where the union government or a state government enters, directly or indirectly, through an entity auditable under section 14 or 19, into any contractual agreement or any other arrangement with any body or authority for any specific purpose, and the contractual agreement or arrangement involve—| (                  | a   | ) the transfer of any asset or property controlled by the government; or        ||--------------------|-----|---------------------------------------------------------------------------------|| (                  | b   | ) the right to use or modify or develop any asset or property controlled by the || government; or     |     |                                                                                 || functions          |     |                                                                                 || with respect       |     |                                                                                 || to other           |     |                                                                                 || bodies or          |     |                                                                                 || authorities        |     |                                                                                 || entering into      |     |                                                                                 || contractual        |     |                                                                                 || agreements         |     |                                                                                 || with the           |     |                                                                                 || union or the       |     |                                                                                 || states            |     |                                                                                 || 10                 |     |                                                                                 || (                  | c   | ) the right to levy charges on the users of any asset or property controlled by || the government; or |     |                                                                                 |(d) the sharing of revenue or profit incurred or accrued, as the case may be, from the modification or development or use of any asset or property, the comptroller and auditor-general shall—15(i) scrutinise the effectiveness of the selection criteria or the conditions prescribedby the concerned government or governments for selecting appropriate bodies or authorities to carry out the specific purpose;20(ii) scrutinise the terms and conditions of the contractual agreement orarrangement, especially with regard to accountability, sharing of information and allocation of risks between the government or governments and the body or authority;(iii) for the purpose of clause (d), audit such accounts, receipts, expenditure and transactions of the body or authority as are prima facie related to the contractual agreement or arrangement to ensure that the interest of the concerned government or governments by way of sharing of cost, revenue or profit is protected25explanation—for the purposes of scrutiny and audit under items (ii) and (iii),the comptroller and auditor general shall have the right to access, after giving reasonable previous notice, to the books and accounts of that body or authority30(2) the comptroller and auditor general may, in accordance with  regulations framed under this act, dispense with the scrutiny or audit under sub-section (1) for certain classes of contractual agreements or arrangements keeping in view the value of the asset or property transferred or the amount of investment involved"7 for section 18 of the principal act, the following sections shall be substituted, namely:—substitution of new sections for section 18"18 (1) the comptroller and auditor general shall, in connection with the performance of his duties under this act, have authority—35powers of comptroller and auditor- general in c o n n e c t i o n with audit of accounts40(a) to require that any accounts, books, papers and other documents which deal with or form the basis of or are otherwise relevant to the audit or scrutiny to be conducted by him, be sent to such place as he may appoint for his inspection;(b) to put such questions or make such observations as he may consider necessary to the person in charge of the office or establishment, by whatever name called, and to call for such information as he may require for the preparation of any account or report which it is his duty to prepare;45(c) to enter into and remain, at all reasonable times, on any premises occupied by—(i) any entity to be audited under section 13, 14, 17 or 19, including treasuries and such offices, as are responsible for the keeping of initial or subsidiary accounts;| (                                                                                    | ii   | ) any entity to be audited or scrutinised under section 15 or 16, if so         ||--------------------------------------------------------------------------------------|------|---------------------------------------------------------------------------------|| authorised by a warrant issued by the appropriate court under the provisions of      |      |                                                                                 || the code of criminal procedure, 1973;                                                |      |                                                                                 || 2 of 1974                                                                           |      |                                                                                 || 5                                                                                    |      |                                                                                 || (                                                                                    | d    | ) to examine or make copies of any document or record made available or         || obtained by him;                                                                     |      |                                                                                 || (                                                                                    | e    | ) to require any officer or employee of the entity being audited or scrutinised || to—                                                                                  |      |                                                                                 || (                                                                                    | i    | ) present himself at a specified date, time and venue;                          || 10                                                                                   |      |                                                                                 || (                                                                                    | ii   | ) give evidence or furnish any clarification, on oath or affirmation, either    || orally or in writing, that, in the opinion of the comptroller and auditor general it |      |                                                                                 || is expedient for carrying out the duties assigned to him under this act             |      |                                                                                 |(2) the comptroller and auditor general may reimburse such reasonable costs and expenses as may have been incurred by the officer or employee in complying with the directions under clause (e) of sub-section (1), after recovering such costs and expenses from the entity to which the evidence relates15(3) the person in charge of any office or establishment, by whatever name called, the accounts of which have to be audited or scrutinised by the comptroller and auditor general, shall afford all facilities and comply with requests for information in as complete a form as possible and with all reasonable expedition within a period of not exceeding seven days20penalties for refusal ofi n f o r m a t i o n by publicauthorities18a (1) any refusal, without reasonable cause, by a person who is required to provide records or documents or to give evidence or to furnish information or to comply with the directions of the comptroller and auditor general within a reasonable period specified by the comptroller and auditor general or such extended period as allowed by him, shall be treated as refusal of information22 of 20052522 of 2005(2) notwithstanding anything in the right to information act, 2005, the comptroller and auditor general, on refusal of information under sub-section (1), may make a reference to the central information commission or the state information commission, as the case may be, if the entity being audited or scrutinised is a public authority as defined under the right to information act, 20053022 of 2005(3) the central information commission or the state information commission, as the case may be, shall have the power to consider such cases of refusal of information and impose penalties under the right to information act, 2005"8 for section 19a of the principal act, the following section shall be substituted, namely:—substitution of new section for section19a35"19a (1) the reports of the comptroller and auditor general shall be submitted to the government or the  governments concernedlaying of reports before parliament or the legislature of the state(2) the central government shall cause every report received by it under sub-section(1) to be laid before each house of parliament within seven days if parliament is in session, and if parliament is not in session, within seven days of the first sitting  of the next session40(3) the state government shall cause every report received by it under sub-section (1)to be laid before the legislature of the state, within seven days if the legislature of the state is in session, and if the legislature of the state is not in session, within seven days of the first sitting  of the next session" statement of objects and reasonsthe comptroller and auditor general of india (cag) is one of the key pillars in the system of checks and balances envisaged under our constitution since its institution in 1850, the reports of the cag have highlighted several cases of misappropriation of public funds that were rightfully meant for the development of the nationpresently, the comptroller and auditor general's (duties, powers and conditions of service) act, 1971, better known as the audit act, governs the working of the cag however, the act has not been amended to keep pace with changing times and is unable to address some of the key challenges being faced by the cag today this bill aims to strengthen the office of the cag and remove the impediments that hinder the performance of his dutiesthe bill essentially makes the following six provisions—(1) gives statutory backing to 'performance audits'performance audit, which is concerned with an evaluation of the efficiency and effectiveness of the application of funds, is the primary tool used by auditors to check if there has been any waste in the use of public money this form of audit allows the auditor to question government policy and decisions that led to inefficiencyperformance audits were used by the cag in his reports on the xixth commonwealth games and the reports on the allocation of 2g spectrum and coal blocks, among others each report proved to be exceedingly incriminating a mere accounting exercise would not have been able to unearth the issues highlighted by the cag in these reportspresently, performance audits are not explicitly recognised under the existing act as a result, some parties have questioned the power of the cag to pass judgement on the efficacy of government policy it is therefore critical that the power to conduct performance audits be explicitly codified in law (2) brings contractual agreements and other partnership arrangements such as public private partnership within the ambit of the cagover the past few decades, especially after 1991, the role  of the government in india has been considerably redefined the government is now increasingly participating in newer ways with the private sector for better delivery of services several infrastructure projects are now undertaken in the public private partnership (ppp) mode that involves transfer of valuable public assets (such as mines and oilfields), investment and/or revenue sharing between the government and the private sector many of these newer structures are presently outside the ambit of the cag this reduces oversight and creates avenues for corruption therefore, the scope of the cag's powers must be expanded to include such arrangementshowever, we must be careful of overreach the expanded remit of the cag should not deter participation of the private sector private enterprises are likely to be wary of excessive intrusiveness in their decision making processes, and rightly so  moreover, the cag may not have the required sectoral insight to question the commercial decisions taken by the managementin this bill, a balance has been sought the power of the cag has been restricted to the audit of transactions that are "prima facie related to the contractual agreement or arrangement to ensure that the interest of the concerned government or governments by way of sharing of cost, revenue or profit is protected" (3) gives additional powers to the cag to seek accounts and informationthe current act does not prescribe any time limits for responding to cag's requests for information it does not prescribe any penalties either often, this is misused to avoid scrutiny countries such as australia and new zealand pre-empt this by specifically empowering the cag in this respectthis bill seeks to confer additional powers on the cag to call for information, access premises, examine employees under oath and use penal provisions under the rti act for public entities for private entities, the bill also empowers cag but requires it to go through existing legal channels such as seeking a warrant from the courts before conducting any search and seizure operations in this way, the rights of the private entities are also protected(4) re-defines 'substantially financed' to bring more bodies within the ambit of the cagthe current act empowers the cag to audit all expenditure of bodies that are'substantially financed' from government resources a body is considered 'substantially financed' if seventy-five per cent of its total expenditure is received from the government and the amount received is greater than rupees twenty-five lakh this bill lowers the requirement to fifty-one per cent(5) allows more scrutiny in cases where organisations receive loans or grants from the government to bring in more accountability and to limit the siphoning of public money, this bill also empowers the cag to (a) scrutinise the 'effectiveness' of the criteria used for selecting organisations; and (b) conduct limited audits to ascertain whether the money was spent on the tasks for which it was sanctioned(6) prescribes time limits for laying reports of the cag in the legislature currently, government often delay the tabling of reports which are politically inconvenient the report of the cag on the delhi metro rail corporation in 2008 was not tabled for a year this bill makes it mandatory for the government to lay the reports of the cag before parliament or the state legislature within seven days of the first sitting on commencement of the sessionempowering the cag is the first step in containing the menace of corruption that is increasingly becoming entrenched in our system this bill is a step in that directionnew delhi;baijayant pandanovember 12, 2014 president's recommendation under article 117 (1) of the constitution ————[copy of letter no 8(5)/b(r)/2015 dated 28 july, 2016 from shri arjun ram meghwal, minister of state in the ministry of finance and corporate affairs to the secretary general, lok sabha]the president, having been informed of the subject-matter of the comptroller and auditor general's (duties, powers and conditions of service) amendment bill, 2016 (amendment of section 13, etc) by shri baijayant panda, mp, has recommended the introduction of the bill in lok sabha under article 117(1) of the constitution annexure extract from the comptroller and auditor general's (duties, powers and conditions of service) act, 1971 (56 of 1971)      definitions2 in this act, unless the context otherwise requires,— (a)     (b) "appropriation accounts" means accounts which relate the expenditure brought to account during a financial year, to the several items specified in the law made in accordance with the provisions of the constitution or of the government of union territories act, 1963, for the appropriation of moneys out of the consolidated fund of india or of state, or of a union territory having a legislative assembly, as the case may be;(c) "comptroller and auditor general" means the comptroller and auditor general of india appointed under article 148 of the constitution;       13 it shall be the duty of the comptroller and auditor general— (a)     ;general provisions relating to audit(b) to audit all transactions of the union and of the states relating to contingency funds and public accounts;(c)     14 (1)     audit of receipts and expenditure of bodies or a u t h o r i t i e s substantially financed from union or state revenuesexplanation—where the grant or loan to a body or authority from the consolidated fund of india or of any state or of any union territory having a legislative assembly in a financial year is not less than rupees twenty-five lakhs and the amount of such grant or loan is not less than seventy-five per cent of the total expenditure of that body or authority, such body or authority shall be deemed, for the purposes of this sub-section, to be substantially financed by such grants or loans, as the case may be(2) notwithstanding anything contained in sub-section (1), the comptroller and auditor general may, with the previous approval of the president or the governor of a state or the administrator of  a union territory having a legislative assembly, as the case may be, audit all receipts and expenditure of any body or authority where the grant or loan to such body or authority from the consolidated fund of india or of any state or of any union territory having a legislative assembly, as the case may be, in a financial year is not less than rupees one crore(3) where the receipts and expenditure of any body or authority are, by virtue of the fulfilment of the conditions specified in sub-section (1) or sub-section (2), audited by the comptroller and auditor general in a financial year, he shall continue to audit the receipts and expenditure of that body or authority for a further period of two years notwithstanding that the conditions specified in sub-section (1) or sub-section (2) are not fulfilled during any of the two subsequent years15  (1) where any grant or loan  is given for any specific purpose from the consolidated fund of india or of any state or of any union territory having a legislative assembly to any authority or body, not being a foreign state or international organisation, the comptroller and auditor general shall scrutinise the procedures by which the sanctioning authority satisfies itself as to the fulfilment of the conditions subject to which such grants or loans were given and shall for this purpose have right of access, after giving reasonable previous notice, to the books and accounts of that authority or body:functions of comptroller and auditor general in the case of grants or loans given to other authorities or bodiesprovided that the president, the governor of a state or the administrator of a union territory having a legislative assembly, as the case may be, may, where he is of opinion that it is necessary so to do in the public interest, by order, relieve the comptroller and auditor general, after consultation with him, from making any such scrutiny in respect of any body or authority receiving such grant or loan [10] m c gonzalez-garcia, m c gonzalez-garcia, maudit of receipts of union or of states16 it shall be the duty of the comptroller and auditor general to audit all receipts which are payable into the consolidated fund of india and of each state and of each union territory having a legislative assembly and to satisfy himself that the rules and procedures in that behalf are designed to secure an effective check on the assessment, collection and proper allocation of revenue and are being duly observed and to make for this purpose such examination of the accounts as he thinks fit and report thereon [10] m c gonzalez-garcia, m c gonzalez-garcia, m18 (1) the comptroller and auditor general shall in connection with the performance of his duties under this act, have authority—(a) to inspect any office of accounts under the control of the union or of a state, including treasuries and such offices responsible for the keeping of initial or subsidiary accounts, as submit accounts to him;powers of comptroller and auditor general in c o n n e c t i o n with audit of accounts(b) to require that, any accounts, books, papers and other documents which deal with or from the basis of or are otherwise relevant to the transactions to which his duties in respect of audit extend, shall be sent to such place as he may appoint for his inspection;(c) to put such questions or make such observations as he may consider necessary, to the person in charge of the office and to call for such information as he may require for  the preparation of any account or report which it is his duty to prepare(2) the person in charge of any office or  department, the accounts of which have to be inspected and audited by the comptroller and auditor general, shall afford all facilities for such inspection and, comply with requests for information in as complete a form as possible and with all reasonable expedition       19a (1) the reports of the comptroller and  auditor general, in relation to the accounts of a government company or a corporation referred to in section 19, shall be submitted to the government or governments concerned(2) the central government shall cause every report received by it under sub-section(1) to be laid, as soon as may be after it  is received, before each house of parliamentlaying of reports in relation to accounts of government companies and corporations(3) the state government shall cause every report received by it under, sub-section (1)to be laid as soon as may be after it is received, before the legislature of the stateexplanation—for the purposes of this section, "government" or "state government", in relation to a union territory having a legislative assembly, means the administrator of the union territory       ———— a billfurther to amend the comptroller and auditor general's (duties, powers and conditions of service) act, 1971————gmgipmrnd—2485ls(s3)—03112016