The CAG of India has recently placed in the public domain a performance review that turns the auditing gaze inwards, that is, on the auditing and accounting functions carried out by the Indian Audit and Accounts Department during the year 2012-13.

Every year, this constitutionally established supreme audit institution presents more than 100 audit reports to Parliament and the State legislatures. Even as the CAG, Shashi Kant Sharma, underlines the feeling that “the need for transparency and accountability is sharply felt in every sphere of public life,” a hard look at some of the facts and figures reported in this performance review suggests that we need to initiate a debate on ‘what next’ in audit.

Despite the resurgence of anti-corruption agitations over the last few years, the accountability quotient within Indian citizenry and polity still lies at rock bottom. The age-old ‘anything goes’ attitude runs deep in public life.

During the year 2012-13, CAG auditors pointed out to the Government several instances of under-assessment of taxes or of specific losses to the exchequer, of which a mere 14.42 percent were accepted. During the same year, the CAG suggested recoveries worth Rs 2,51,220 crores, while the union and state governments actually recovered Rs 5337 crores at the instance of the audit - a mere 2.2 per cent of the recoveries pointed out by audit.

Similarly, the CAG’s Activity Report for the year 2011-12 suggested that audited entities accepted about 35 per cent of the under-recoveries pointed out by the audit, the total of such losses or under-recoveries amounting to Rs 79,213 crores in that year. Of this amount, the CAG’s auditing efforts resulted in recovery of Rs 3357 crores by governments during the year; that is to say, the rate of recovery stood at 4.2 per cent of recoveries pointed out at the instance of audit.

Now, this huge mismatch between what CAG auditors considered recoverable and what audited entities admitted as lapses on their part or subsequently recovered is quite worrisome. But beyond these shattering figures, do citizens and their representatives know any further details?

We also need to note and underline that a lion’s share of such under-assessment of taxes or losses to the exchequer pertains to state governments, with the figure pegged at Rs 2,30,063 crores, compared to which state governments could only ultimately recover Rs 2943.80 crores.

The Activity Report also tells us how a dedicated fund arising out of Clean Energy Cess had not yet been opened despite the collection of Rs 1066.46 crore during the year 2010-11.

Equally troublesome is an admission wherein the CAG of India reports that as on 31 March 2013, it was still awaiting 11,133 ‘Action Taken Notes’ on audit reports from previous years, from the Union and State governments! On 31 March 2012, the number of Action Taken Notes awaited had risen to 18,762. What does the CAG of India plan to do to take any audit to its logical conclusion, when such indifference prevails amongst the audited entities?

At the heart of these questions lies a bit of a ‘business-as usual’ comfort zone,  which also seems to exist among the CAG auditors themselves. If not for that, how do we explain the fact that out of 1516 recommendations made in 198 performance audit reports, audited entities accepted just 454 recommendations, - that is just about 30 per cent? During the previous year (2011-12), audited entities accepted 627 (i.e. 39 per cent) recommendations out of 1590 issued by the CAG.

Why is it that the non-acceptance rate on CAG-recommendations ranges between 60 to 70 percent among audited entities? Is it because these entities inhabit a comfort zone which comes with the knowledge that there are no consequences even if the CAG’s recommendations are not accepted and adhered to? Shouldn’t the CAG move to the next level where it tells audited entities what other audited entities have achieved by accepting and adhering to its recommendations?

Many a time, audited entities maintain a deliberate silence over the observations pointed out in inspection reports issued by CAG auditors; in a few among the cases where they have recorded their replies contesting CAG observations, CAG auditors noted that the reply (and protestations) were untenable.

Clearly, there is a need to pursue auditing in a more dogged manner by putting these habitual non-compliances by the audited entities - such as not submitting replies on time - under the scanner and reporting the names of non-compliant entities/ministries in the annual activity report of the CAG.

The authority also needs to pay attention to the time lag between the inspection reports issued and the replies received from audited entities (in the event that the audited entity/ministry doesn’t file a reply within reasonable time, the issuance of reminders), and between that date  and the date when draft and final reports are submitted and presented in state legislatures/parliament. The Performance Report 2012-13 states that two reports were submitted to the parliament on 31 March, 2013 and 61 reports were submitted to state legislatures after 31 March, 2013.

The CAG must work towards bringing about changes that invoke at least a reasonable degree of fear of its audits amongst audited entities. At the same time, citizens will have to watch how the Public Accounts Committee and the Committee of Public Undertaking function under the newly-elected parliament during the next five years. It is too early to say if the change of regime indeed underlines the vote for accountability, or if opposition parties have been highlighting the anti-corruption plank merely to grab power for themselves.