PAC and CAG office : Operational relationship

CAG derives his basic powers from article 128 (1) and mandate from article 128 (4) giving him absolute auditing freedom not subject to any other authority. CAG is also empowered by

*CAG's (Addl. Functions) Act, 1974 to audit all the statutory/autonomous/semi-autonomous public sector enterprises

*CAG's (Addl. Functions) (Amendment) Act, 1975 to audit all the nationalised banks and financial institutions

*Audit Code issued under the authority of the President

PAC while discussing CAG's Audit Reports delivers upon the following aspects

*Whether the public funds have been spent in compliance with all the financial rules, regulations, propriety and austerity

*Whether the public money has been used for the purpose for which the parliament made such grants

*Whether money has been re-appropriated by the competent authority

*Whether money spent or unspent beyond or below the parliamentary grants are appropriately justified by the executive

*Whether money has been spent observing economy, efficiency and effectiveness to ensure value for money

*Whether individuals engaged in public spending have resorted to misappropriation, fraud, corruption and misuse of public money

*Any other aspects deemed necessary to be examined

In dispensing with the above mentioned anomalies, PAC gives due consideration to

* CAG's recommendations

*Executive's replies, explanations and clarification

*Hearing individuals responsible for misdeeds

PAC may resolve the audit objections through

*100 per cent settlement on the basis of consensus among the members

*Partial settlement pending specific directives for subsequent compliance

*Rejection of executive's reply and fixing up responsibilities

*Recoveries

*Adjustments

*Departmental actions

* Writing off

*Allowing time for rectification of errors

CAG's audit is legislative audit meant for the parliament via the PAC. It is the producer of audit reports and PAC, on behalf of the parliament is the user. This operational relationship between the PAC and CAG needs to be very strong and effective. The following pre-requisites are important for that purpose

*Quality audit reports

*Modern audit reports like performance audit, system based audit reports etc.

*Timeliness of audit reports

*Proper briefing of the audit reports to the honourable Chairman and members of PAC

*Close interaction between PAC and CAG with regard to preparation of agenda, minutes and fixation of date of PAC meetings

*On the spot verification of the audit objections by audit prior to PAC meetings to ascertain the latest position.

Step taken by CAG to strengthen the relationship is launching of Strategic Plan (2003-2006) by the present CAG w.e.f January, 2003 to revamp and refurbish the audit department to improve upon its overall efficiency and effectiveness by adopting

*Short term plan to improve upon office discipline/attendance/ conduct/working environment

*Mid term plan to enhance the capability of the work force by introducing daily work-book, in-house training, monitoring, supervision, inspection and involvement of senior officers in field audit etc

*Long term plan to issue simple guidelines and directives to supplement the existing audit manuals and audit methodologies to evolve realistic field tested audit plans and audit strategies to issue re-structured audit reporting format in Vol-I, II and III to rationalise audit coverage through prioritisation of auditable entities and audit subjects/areas

*Long term plan to arrange advanced long and short domestic and overseas training for the work-force to switch over to performance auditing or value for money auditing, issue based auditing and system-based auditing side by side with compliance auditing to start IT auditing to effect reforms through CAG's Strategic Plan (2003-2006) and the Financial Management Reforms Programme funded by the Department for International Development, UK and Royal Netherlands Government to motive the work-force to accept the reforms through intensive presentation sessions on overseas audit reports, journals, magazines, domestic important reports. Seminars and Workshops to create knowledge and experience sharing relationship with the private sector accounting and auditing professionals of ICAB, ICMAB, Institute of Internal Audit etc. to enhance research and publication.

Crash programmes have been undertaken to settle the pending audit reports though bi-lateral and tri-lateral meetings with the Ministries departments at the instruction of PAC.

Recommendations
*Chairman and members of PAC may visit the overseas parliaments like the House of Commons of UK, the Congress of USA etc. for familiarisation

*PAC should have its own full fledged secretariat consisting of necessary staff and logistic support

*Rationalisation of the working pattern should be as the following

*Single Ministry wise meeting

*Agenda may include the following representations of audit objections of a single Ministry-Div.

Compliance audit objections : 50%

Performance audit objections : 30%

CAG's recommended audit paras

on already submitted audit reports

to the parliament :20%
100%

*Agenda may include the following business of a single Ministry-Div.

New audit objections : 50%

Follow up of PAC's previous

decisions : 30%

CAG's recommended audit paras

on already submitted audit reports

to the parliament : 20%
100%

Conclusion
Effectiveness of PAC largely depends on effectiveness of CAG. High quality audit reports catering to the present day needs will facilitate the better deliberations by PAC, thus each complementing the other. All possible steps, therefore, should be taken to enhance this relationship. 'Strengthening Parliamentary Democracy' project could play an effective role in this regard.

Asif Ali is Comptroller and Auditor General of Bangladesh.