UPPSC 2019 Prelims Q139: In which year was accounting separated from auditing and

Q: What is the answer to UPPSC 2019 Prelims Q139?

C. Correct — C, 1976. Until the mid-1970s the Comptroller and Auditor General of India wore two hats at the Union level: he compiled and kept the accounts of the Central Government, and he also audited them — an arrangement long criticised because the same authority was both preparing and checking the same accounts. The reform, known as the departmentalisation of accounts, took effect in 1976: each Union ministry and department took over the compilation of its own accounts through its own Controller/Chief Controller of Accounts under the Ministry of Finance, and the CAG was relieved of the accounting function for the Union. From that point his Union-level role has been confined to audit. The legal vehicle was the CAG's (Duties, Powers and Conditions of Service) Act, 1971 — the statute enacted under Article 149 — as amended in 1976 to give effect to the separation. Note the limit of the change: it applied to the Union. The CAG continues to compile and keep the accounts of most State Governments, so the accounting side has not disappeared. (The title 'Comptroller and Auditor-General' is fixed by Article 148 and inherited from the British office — it is not a consequence of the State-accounts role) entirely.

UPPSC 2019 Prelims GS Paper-I · Question 139 of 150

Verified against the official question paper. Answer as per the official UPPSC answer key.

In which year was accounting separated from auditing and Comptroller and Auditor General's task only remained confined to auditing the Government Accounts ?

(a)1975
(b)1977
(c)1976
(d)1981

Answer

Why

Correct — C, 1976. Until the mid-1970s the Comptroller and Auditor General of India wore two hats at the Union level: he compiled and kept the accounts of the Central Government, and he also audited them — an arrangement long criticised because the same authority was both preparing and checking the same accounts. The reform, known as the departmentalisation of accounts, took effect in 1976: each Union ministry and department took over the compilation of its own accounts through its own Controller/Chief Controller of Accounts under the Ministry of Finance, and the CAG was relieved of the accounting function for the Union. From that point his Union-level role has been confined to audit. The legal vehicle was the CAG's (Duties, Powers and Conditions of Service) Act, 1971 — the statute enacted under Article 149 — as amended in 1976 to give effect to the separation. Note the limit of the change: it applied to the Union. The CAG continues to compile and keep the accounts of most State Governments, so the accounting side has not disappeared. (The title 'Comptroller and Auditor-General' is fixed by Article 148 and inherited from the British office — it is not a consequence of the State-accounts role) entirely.

Why the others are wrong

(a)1975 — No change in the CAG's accounting responsibilities took effect in 1975. The year is memorable for the proclamation of the national Emergency in June 1975, and that fame is precisely what makes it a plausible-looking decoy in a list of mid-1970s dates.
(b)1977 — 1977 is a genuine landmark year in Indian administration — the change of government at the Centre, and the year the Prime Minister's Office came into existence in its present form — but the separation of accounts from audit had already taken effect the previous year, in 1976.
(d)1981 — Too late by half a decade. The departmentalisation of accounts was a 1976 measure carried out through an amendment to the CAG's (DPC) Act, 1971; nothing in 1981 altered the division between the CAG's audit function and the executive's accounting function.

Concept

The CAG is the constitutional guardian of the public purse, created by Article 148 and described by Dr Ambedkar as one of the most important officers under the Constitution. He is appointed by the President, holds office for six years or until the age of 65 whichever is earlier, and can be removed only in the manner and on the grounds applicable to a judge of the Supreme Court. Article 149 leaves his duties and powers to be prescribed by Parliament — hence the CAG's (Duties, Powers and Conditions of Service) Act, 1971 — and Article 151 requires his reports on Union and State accounts to be laid before Parliament and the State legislatures respectively. In Parliament those reports become the working material of the Public Accounts Committee, which examines them and reports back. V. Narahari Rao was independent India's first CAG.

Reason from the principle rather than from rote. Audit means an independent check on how money was spent, and no auditor can be independent while also keeping the books being audited; separating the two was therefore the natural reform, and it was carried out in 1976 through departmentalisation of accounts. Two boundaries are worth holding on to. First, the separation was for the Union: the CAG still compiles the accounts of most States. Second, despite the word 'Comptroller' in his title, the CAG has no control over the issue of money from the Consolidated Fund — that is an executive and treasury function — a distinction UPSC has asked about directly. Do not confuse 1971, the year of the governing Act, with 1976, the year of the separation.

Key facts

Accounting was separated from auditing at the Union level in 1976 through the departmentalisation of accounts; the CAG's Union role became audit-only.
Each Union ministry now compiles its own accounts through a Controller/Chief Controller of Accounts; the reform was effected by amending the CAG's (DPC) Act, 1971.
The CAG still compiles and keeps the accounts of most State Governments, so the accounting function was not abolished everywhere.
The CAG is created by Article 148, his duties are prescribed by Parliament under Article 149, and his reports are laid before the legislature under Article 151.
The CAG's reports are examined by the Public Accounts Committee, which is why the office is described as the 'friend, philosopher and guide' of that committee.

The CAG at the Union level — before and after 1976

Before 1976→CAG both COMPILED the accounts of the Central Government and AUDITED them

From 1976 (departmentalisation of accounts)→Ministries compile their own accounts through Controllers of Accounts; the CAG's Union task is AUDIT ONLY

Legal vehicle→CAG's (Duties, Powers and Conditions of Service) Act, 1971, amended in 1976

What did NOT change→The CAG still compiles and keeps the accounts of most State Governments

Constitutional base→Art. 148 (office), Art. 149 (duties prescribed by Parliament), Art. 151 (reports laid before the legislature)

Study next

Articles 148 to 151 — appointment, oath, independence, duties and reports of the CAGTypes of audit — regularity/compliance audit, propriety audit and performance audit, and their limitsThe Public Accounts Committee, the Estimates Committee and the Committee on Public Undertakings — composition and mandateConsolidated Fund, Contingency Fund and Public Account of India — Articles 266 and 267The Indian Audit and Accounts Department and the Controller General of Accounts — who does what after 1976

Common traps

Answering 1971 — that is the year of the CAG's (DPC) Act, not of the separation of accounts from audit.
Reading 'Comptroller' as a power to control the issue of money from the Consolidated Fund; the CAG only audits, unlike the British Comptroller and Auditor General.
Assuming the CAG stopped keeping accounts everywhere; the separation was at the Union level, and he still compiles the accounts of most States.

UPPSC asks the plain year or the plain fact, while UPSC prefers the functional boundary — which duty the CAG does *not* perform, or how his reports connect to the Public Accounts Committee — so learn the 1976 change together with what the office can and cannot do.

Related PYQs

UPSC_2001_GS1_Q862001Open & attempt →

Which one of the following duties is NOT performed by the Comptroller and Auditor General of India?

(a) To audit and report on all expenditure from the Consolidated Fund of India
(b) To audit and report on all expenditure from the Contingency Funds and Public Accounts
(c) To audit and report on all trading, manufacturing, profit and loss accounts
(d) To control the receipt and issue of public money, and to ensure that the public revenue is lodged in the exchequer

Answer(d) To control the receipt and issue of public money, and to ensure that the public revenue is lodged in the exchequer

The same boundary question from the other direction — UPPSC asks when the accounting work was taken away, UPSC asks which non-audit function the CAG never had; both test that the office is an auditor, not a controller of money.

UPSC_2012_GS1_Q512012Open & attempt →

In India, other than ensuring that public funds are used efficiently and for intended purpose, what is the importance of the office of the Comptroller and Auditor General (CAG)? 1. CAG exercises exchequer control on behalf of the Parliament when the President of India declares national emergency/financial emergency. 2. CAG reports on the execution of projects or programmes by the ministries are discussed by the Public Accounts Committee. 3. Information from CAG reports can be used by investigating agencies to press charges against those who have violated the law while managing public finances. 4. While dealing with the audit and accounting of government companies, CAG has certain judicial powers for prosecuting those who violate the law. Which of the statements given above is/are correct?

(a) 1, 3 and 4 only
(b) 2 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4

Answer(c) 2 and 3 only

Maps the CAG's post-1976 role precisely — audit reports feeding the Public Accounts Committee and investigating agencies, with no exchequer control and no judicial power.

UPPSC_2021_PRE_PaperI_Q492021Open & attempt →

The Public Accounts Committee of Indian Parliament scrutinizes the

(a) Report of the Comptroller and Auditor General
(b) Consolidated Fund of India
(c) Public Account of India
(d) Contingency Fund of India

Answer(a) Report of the Comptroller and Auditor General

Completes the accountability chain that the 1976 separation created: the CAG audits and reports, and the Public Accounts Committee then examines those reports on Parliament's behalf.

Practice

practice — not a real PYQ
Which of the following statements about the Comptroller and Auditor General of India is correct?
- (a)He compiles the accounts of the Union Government as well as auditing them
- (b)Since 1976 his Union-level role is confined to audit, while ministries compile their own accounts
- (c)He controls the issue of money from the Consolidated Fund of India
- (d)He can be removed by the President at pleasure
Answer(b) Since 1976 his Union-level role is confined to audit, while ministries compile their own accounts — he still keeps the accounts of most States, has no control over the issue of money, and can be removed only in the manner prescribed for a Supreme Court judge.
practice — not a real PYQ
The duties and powers of the Comptroller and Auditor General of India are prescribed by
- (a)the Constitution itself, exhaustively, in Article 148
- (b)Parliament by law, under Article 149
- (c)the President by rules, under Article 150
- (d)the Finance Commission, under Article 280
Answer(b) Parliament by law, under Article 149 — which it did through the CAG's (Duties, Powers and Conditions of Service) Act, 1971, amended in 1976 to separate accounting from audit.