Audit Effect on Corporate Image
FOR the Audit, it is just another objection; once the CAG raises an objection (however objectionable it is), the Department promptly slaps a Show Cause Notice and adjudicating authorities and appellate authorities blindly confirm the demands. Most of these orders fall flat in higher appellate forums. CAG had raised objections on notifications issued by the government, abatement on MRP and several other unimaginable issues. The CAG's original job was to check the expenditure of the Government, but it slowly entered into the income field and has now become a dreaded word in the bureaucracy. Even politically, the opposition uses the CAG report to score a few brownie points over the ruling party.
The CAG has a very damaging effect on Corporate India. These Audit objections and SCNs and confirmed orders have to be shown in the Balance Sheet. Confirmed demands are to be shown as contingent liabilities and that really affects the beauty of the balance sheet. This is like a black spot on a prospective bride, which damages her matrimonial prospects. Huge contingent liabilities damage the company's ratings and investor confidence and of course bank loans. To that extent, the CAG has contributed enormously to the woes of Industry and Trade in the Country. The CAG is a hundred and fifty year old institution and the attitude seems to have frozen somewhere in the last century. If the CAG himself conducts an audit on the fiscal damage his institution has caused the country, the results will be startling.
Perhaps it is time we changed the role of the CAG, To start with, they should not be allowed to visit the factories of the manufacturers and the premises of the service providers. Their job is to check government income and expenditure – let them do their checking in government offices, not the factories and offices of harried businessmen.