Section 20 of The Comptroller and Auditor-Generals Duties Powers and Conditions of Service Act 1971

Section 20 of The Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971
Audit of accounts of certain authorities or bodies

Original Text

20. Audit of accounts of certain authorities or bodies.—(1) Save as otherwise provided in section 19, where the audit of the accounts of any body or authority has not been entrusted to the Comptroller and Auditor-General by or under any law made by Parliament, he shall, if requested so to do by the President or the Governor of a State or the Administrator of a Union territory having a Legislative Assembly, as the case may be, undertake the audit of the accounts of such body or authority on such terms and conditions as may be agreed upon between him and the concerned Government and shall have, for the purposes of such audit, right of access to the books and accounts of that body or authority:

Provided that no such request shall be made except after consultation with the Comptroller and Auditor-General.
(2) The Comptroller and Auditor-General may propose to the President or the Governor of a State or the Administrator of a Union territory having a Legislative Assembly, as the case may be, that he may be authorised to undertake the audit of the accounts of any body or authority, the audit of the accounts of which has not been entrusted to him by law, if he is of opinion that such audit is necessary because a substantial amount has been invested in, or advanced to, such body or authority by the Central or State Government or by the Government of a Union territory having a Legislative Assembly, and on such request being made, the President or the Governor or the Administrator, as the case may be, may empower the Comptroller and Auditor-General to undertake the audit of the accounts of such body or authority.
(3) The audit referred to in sub-section (1) or sub-section (2) shall not be entrusted to the Comptroller and Auditor-General except where the President or the Governor of a State or the Administrator of a Union territory having a Legislative Assembly, as the case may be, is satisfied that it is expedient so to do in the public interest and except after giving a reasonable opportunity to the concerned body or authority to make representations with regard to the proposal for such audit.

Visual Summary

Audit by Request

The President or Governor can request the CAG to audit bodies not covered by other laws.

Substantial Investment

CAG can propose an audit if the Government has invested or advanced a substantial amount.

Safeguards

Audit must be in public interest, and the body must be given a chance to represent itself.

Summary

Section 20 acts as a “catch-all” provision that extends the jurisdiction of the Comptroller and Auditor-General (CAG) to bodies or authorities that are not automatically subject to CAG audit under other specific laws (like Section 19). It establishes a mechanism for auditing such entities either upon the specific request of the Government or upon a proposal by the CAG based on substantial government financial involvement. Crucially, this section balances the need for accountability with procedural fairness by requiring that such audits be in the public interest and that the entity involved be given an opportunity to be heard before the audit is mandated.

Key Takeaways

Consent Audit: This section covers bodies where audit is not statutorily entrusted to the CAG by Parliament, requiring a specific agreement or order.
Initiation by Government: The President, Governor, or Administrator can request the CAG to audit a body. This requires prior consultation with the CAG.
Initiation by CAG: The CAG can propose an audit if the Government has a substantial financial stake (investment or advance) in the body.
Natural Justice: Before any audit is entrusted under this section, the body must be given a reasonable opportunity to make representations.

Key Analysis

• Scope Expansion: Section 20 is vital for fiscal transparency because government funds often flow through NGOs, societies, or special purpose vehicles that fall outside the definition of “Government Companies” (Section 19). This section ensures these funds can still be tracked.
• Two-Way Street: The legislation provides a reciprocal mechanism. The Executive can ask the Auditor (Sub-section 1), or the Auditor can prompt the Executive (Sub-section 2). This dual-trigger ensures that neither oversight nor political will becomes a bottleneck.
• Procedural Fairness: Sub-section (3) incorporates the principle of Audi Alteram Partem (hear the other side). Since an audit can be intrusive, the law mandates that the entity be heard before the audit is imposed, preventing arbitrary exercise of power.
• Public Interest Test: The ultimate litmus test for activating this section is “public interest.” It is not enough for the government to just want an audit; it must serve the broader public good.

Key Ingredients

Target Entity: A body or authority NOT entrusted to CAG by any other Parliamentary law.
Trigger Event: Request by President/Governor OR Proposal by CAG.
Financial Condition (for CAG proposal): Substantial investment or advance by the Government.
Justification: Must be expedient in the public interest.
Due Process: Opportunity for the body to make representations.

Related Provisions

Practical Illustrations

Example 1: Government RequestA prominent sports federation, registered as a society, receives land and grants from the State Government. It is not a Government Company. The Governor, suspecting mismanagement, consults the CAG and requests an audit of the federation’s accounts. The federation is given a chance to object, but if public interest is established, the audit proceeds.

Example 2: CAG ProposalThe Central Government invests heavily in a Public-Private Partnership (PPP) entity for highway construction. The entity is not automatically audited by the CAG. The CAG, noting the substantial investment of public money, proposes to the President that this entity be audited. The President agrees it is in the public interest and empowers the CAG to proceed after hearing the entity.

Process Flowchart

Practice Questions

Q: Under Section 20(1), who can request the CAG to undertake an audit of a body not covered by Parliament law?

A. The Finance Minister only
B. The President, Governor of a State, or Administrator of a Union Territory
C. The CEO of the body concerned
D. The Supreme Court of India

View Correct Answer

Correct Answer: B. The President, Governor of a State, or Administrator of a Union Territory
Reasoning: Section 20(1) explicitly names these authorities as the ones who can make the request to the CAG.

Q: What is the primary condition for the CAG to propose an audit under Section 20(2)?

A. The body must be making a profit
B. The body must request the audit itself
C. A substantial amount has been invested in or advanced to the body by the Government
D. The body must be at least 10 years old

View Correct Answer

Correct Answer: C. A substantial amount has been invested in or advanced to the body by the Government
Reasoning: Section 20(2) allows the CAG to propose an audit if he is of the opinion that it is necessary due to substantial government investment.

Q: Before an audit is entrusted under Section 20, what procedural safeguard must be followed?

A. The body must be given a reasonable opportunity to make representations
B. The body must pay an audit fee in advance
C. The employees of the body must vote on it
D. The audit must be approved by the Supreme Court

View Correct Answer

Correct Answer: A. The body must be given a reasonable opportunity to make representations
Reasoning: Section 20(3) mandates that the body be given a chance to represent itself regarding the proposal for audit.

Frequently Asked Questions

Can the CAG audit a private body under Section 20?

Yes, potentially. If a private body or authority is not covered by other laws but has received substantial government investment or the government requests it in the public interest, the CAG can be empowered to audit it under Section 20, provided the procedural safeguards (like the opportunity to represent) are followed.

What is the difference between Section 19 and Section 20?

Section 19 deals with the audit of Government Companies and Corporations where the audit mandate is automatic or defined by specific Acts (like the Companies Act). Section 20 is a residual or “catch-all” provision for bodies not covered by Section 19 or other laws, where the audit is discretionary and based on request or proposal.

Is the audit under Section 20 mandatory for the CAG?

Under Section 20(1), if the President/Governor requests it, the CAG “shall” undertake the audit on agreed terms. However, the request itself requires prior consultation with the CAG. Under Section 20(2), the CAG “may” propose the audit, making it discretionary on his part to initiate.

Conclusion

Section 20 serves as a critical bridge in the financial accountability framework of India. By allowing the CAG to audit bodies that fall outside the standard statutory definitions of government companies, it ensures that public money remains under scrutiny regardless of the legal structure of the entity holding it. This provision balances the need for rigorous oversight with the principles of natural justice, ensuring that audits are conducted fairly and only when the public interest genuinely demands it.