Fin Secy Somanathan bats for change in CAG's performance audit culture

Finance Secretary TV Somanathan

In a bid to restore confidence in decision-making among bureaucrats, Finance Secretary TV Somanathan advocated for a change in the performance audit culture of the Comptroller and Auditor General (CAG) of India.

Mandated by the Constitution of India, CAG conducts auditing and accounting of a government's balance sheet to provide information to the legislature, the public and the executive on whether public funds are being collected and used effectively and efficiently.

"In performance audit, the auditor has the benefit of hindsight, which the executor of the project did not have. This is a source of a lot of internal second-guessing in government because people do not want their names to appear in that CAG report. We need to change our audit approach so that whether a thing was done properly or not must be evaluated against the information, technology, the knowledge available to the decision maker at the time of taking the decision. With that knowledge, with that information was the decision reasonable or unreasonable?" he said at an event on February 27.

The finance secretary said, If through such a process, a decision is found to be unreasonable, it should certainly be criticised, but if it was reasonable in the facts and circumstances then probably that should not figure as a criticism of a decision taken.

Given the current approach of the CAG around performance audits, there is great reluctance to take risks among bureaucrats and that is one of the reasons why things are slow in government, "it is because people are afraid to actually take decisions they are empowered to take," he said.

"Move to a situation where this loose term vigilance is not misused to cover every kind of administrative lapse or possible lapse and must be confined to issues where corruption is involved. Every other issue becomes a vigilance issue, this needs to stop if we want officers to exercise the discretion rested in them," Somanathan added.

Somanathan said that performance audits could be more about lessons learnt rather than faults found.

"Everybody tends to defend themselves against future audits and this builds a defensive culture (among bureaucrats) discouraging even proper pro-public decisions," the finance secretary said.