The CAG-KIIFB tug-of-war continues. Neither the Comptroller and Auditor General nor Finance Minister T M Thomas Isaac is willing to concede an inch.
The KIIFB CEO had in early October written a detailed letter to the CAG showing why audit under Section 14(1) of the C&AG (Duties, Powers and Conditions of Service) Act (CAG-DPC Act) would be more comprehensive. To this the CAG has written back saying he would still prefer to audit KIIFB under Section 20 (2).
Finance Minister T M Thomas Isaac said he had received the letter on Wednesday. According to the minister, the CAG has shifted the goal post in the new letter. “In an earlier letter, the CAG had said audit under Section 14(1) was not comprehensive and that it allowed the scrutiny of only the receipts and expenditure related to the grants provided by the government,” Isaac said.
The KIIFB CEO explained that all expenses and expenditure of the Board, including those related to funds secured from non-government sources like 'masala bonds', could be audited by the CAG under Section 14(1). “This time, therefore, the CAG has come up with a different argument. The CAG now says that the KIIFB will fall out of the CAG's ambit if the grants provided by the government is less than 75 per cent of the expenditure of the Board,” Isaac said.
The CAG-DPC Act states that the CAG can take up audit under Section 14(1) only if the government support is “substantial”. By “substantial” the Act means a Company's expenditure should be financed by 75 per cent or more government funds. So if the government grant is less than 75 per cent of the total expenditure of KIIFB, it falls outside the scope of the CAG's Section 14(1) audit.
Still, the Act empowers the CAG to audit KIIFB for three years continuously even if the grants are not “substantial”.
The CAG, therefore, is worried about the future, about what happens after three years. Here is the CAG's concern, as stated in the latest missive sent to the government. “Given the extent of funds being mobilised by KIIFB and the projects, which are approved and planned for implementation, it is likely that the extent of government financing of KIIFB and the proportion of this to its total expenditure will undergo changes in the near future,” the letter says.
The CAG's concern is not unfounded, and is even acknowledged by Isaac. The average yearly flow from the government coffers to the KIIFB is only Rs 1700 crore. The KIIFB, as Isaac himself had stated, is about to spend Rs 10,000 crore this fiscal alone. If so, the government support does not add up to even 20 per cent of the expenditure.
In such an event, the CAG said the mandate of the CAG under sections 14(1) and 14(2) of the CAG-DPC Act would cease to operate after three years. This is why, the letter asserts, the CAG wants the audit to be conducted under Section 20 (2).
Isaac still maintains that Section 20 (2) is a derived right. “Section 20(2) is for companies, unlike KIIFB, that do not automatically fall within the CAG's powers,” Isaac said.
The minister said that Section 14(1) alone gives the CAG absolute and sweeping powers. “If there is a concern that KIIFB would slip out of the CAG audit in three years, the government would still allow the CAG to continue the comprehensive audit that the Constitutional body had been carrying out under Section 14(1),” Isaac said.
However, sources in the CAG office brush this aside as mere rhetoric. “It feels good when the minister sounds so welcoming but where is the provision in the law to allow the CAG to continue audit if the grants fall below 75 per cent of the expenditure,” the source said.
“This is why the CAG is insisting on audit under Section 20(2). There is no time limit to the audit under this section. There is also no provision under this section that prescribes any grant-expenditure proportion. This is why we say Section 20(2) gives the CAG more sweeping powers,” the source added.
The finance minister said that he would attempt once again to convince the CAG.
