The Comptroller and Auditor General’s office, with its across-the-spectrum audits in recent times, has ruffled many a feather in the political and corporate establishments.
But its status as the trusted auditor and the cases on its plate seem to be only growing with time.
On Monday, while the Delhi High Court allowed CAG to conduct audit of five major private telecom companies, the auditor also moved a step closer to inspecting the accounts of Delhi’s three private power distribution companies (discoms) and sought from the state government all available financial records of these firms.
According to Chief Minister Arvind Kejriwal, who had last week announced a historic subsidy scheme to make electricity 50 per cent cheaper for 82.4 per cent of the capital’s consumers, the audit will expose financial irregularities and make a case for reduction in power rates.
Even as the discoms opposed the audit, Delhi’s Lieutenant Governor Najeeb Jung on Monday said the companies must cooperate or face cancellation of licences.
“A CAG audit of electricity companies is being carried out since power distribution was privatised. Licences of those not cooperating in the process may be cancelled,” he said in his address to the Delhi Assembly.
He added the government would not be a ‘silent bystander’ on the issue and would not hesitate in taking decisions.
Jung had requested CAG for the audit after a meeting with Kejriwal last week.
The auditor has now written to the state government seeking appointment of a nodal officer to coordinate between the two parties for the audit.
A senior CAG official told Business Standard the letter did not clearly mention the objectives and extent of the audit. It did not specify whether CAG had to examine the profit & loss of these companies or power rates.
The two parties -- the auditor and the government -- will soon hold a meeting to understand the specific purpose of the audit.
Besides, the Delhi High Court’s decision to allow CAG to audit the books of private telecom companies is seen further strengthening the stand of Kejriwal’s Aam Aadmi Party that discoms’ financials be audited.
However, unlike Delhi discoms, the telcos have a revenue-sharing arrangement with the government, under which these pay the national exchequer more than Rs 20,000 crore (Rs 200 billion) annually.
The issue of a CAG audit of Delhi discoms is currently before the high court, which will hear the case on January 22.
In its order on audit of telecom companies’ financials, the Delhi High Court has stuck to only receipts (or revenue earned) of the companies, and not the expenses, as the government’s income from telecom operators is linked to telcos’ revenues.
The bench of Pradeep Nandrajog and V Kameswar Rao said: “A small caveat by way of reminder to CAG. In relation to the accounts of the telecom service providers, the audit has to be only an audit pertaining to the receipts and no more.
The Comptroller and Auditor General would not confuse himself with his wide all-embracing power under Section 14(2) of the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971 which includes inquiries into aspects like faithfulness, wisdom and economy in expenditures.”
At present, telcos pay 1-8 per cent as