What is the International Centre for Audit of Local Governance, which the CAG inaugurated in Gujarat?
Rajkot, July 18, 2024
CAG Murmu earlier said there are around 2.5 lakh panchayats and 8,000 urban local bodies (ULBs) in India and there is a need to promote good practices in their auditing and aid their capacity-building.
Comptroller and Auditor General (CAG) of India Girish Chandra Murmu inaugurated the International Centre for Audit of Local Governance (iCAL) in Rajkot on Thursday (July 18). The institute, a first in the country as per the CAG office, will function out of the office building of the Accountant General (account & entitlement and Audit-1) in Rajkot and aims to set global standards for auditing local governance bodies.
How will iCAL work?
According to the CAG’s note, iCAL will be a collaborative platform for policymakers, administrators and auditors linked with local governments. It will enhance the local government auditors’ independence to ensure improved financial performance assessment, service delivery, and data reporting. It will also serve as a centre of excellence for capacity building of local government auditors.
“Its primary aim is to empower auditors, executives, and elected representatives of local governments to effectively fulfil their roles through training and leadership development initiatives,” the note says, adding, “iCAL will also act as a knowledge centre and thinktank for addressing governance issues at grassroot levels across nations through interactive workshops, knowledge sharing sessions, peer exchanges etc.”
Dinesh Patil, principal accountant general (Audit-I), Gujarat, has been given the additional charge of director general of iCAL.
How are local bodies audited in India?
India has a three-tier governance structure comprising the Union or Central government, state governments, and local bodies at urban and rural levels. Panchayati Raj Institutes (PRIs) like village panchayats, taluka (block) panchayats and district panchayats have been set up for self-governance in rural areas, with Urban Local Bodies such as municipal corporations and municipalities in urban areas.
“Local governments are the most important link in the governance spectrum… It is at this level that the aspirations, concerns and needs of the people are most acutely felt and addressed. It is here that local level planning of developmental programs is undertaken,” Murmu had earlier said.
While keeping accounts is the responsibility of the concerned local body, many state governments have an Examiner of Local Fund Accounts (ELFA) or Director of Local Fund Accounts (DLFA) for auditing their accounts. In Gujarat, for instance, the ELFA is an autonomous office functioning under the aegis of the finance department.
ELFA audits the utilisation of funds granted by the state government to local bodies. Other institutions, such as universities, also audit their performance. The CAG, on the other hand, conducts audits of all funds (including the state and Central governments). It also exercises control and supervision over the proper maintenance of accounts and auditing for all three levels of PRIs/ULBs. Under its technical guidance and support initiative, CAG also advises and supports ELFA or DLFA and thereby supplements the latter’s work.
Why was a need felt for it?
Murmu said during his visit to Rajkot in January that there are around 2.5 lakh panchayats and 8,000 urban local bodies (ULBs) in India. He said 40 countries have their respective supreme audit institutions (SAIs) conducting audits of local bodies and there is a need to promote global good practices.
While the CAG said that a lot of funds are flowing to local bodies now and there is a need for proper auditing of these institutions, there have long been concerns about the lack of funding available to local bodies, and its utilisation. A 2022 report from the Reserve Bank of India (RBI) found, “Most municipalities only prepare budgets and review actuals against budgeted plans but do not use their audited financial statements for balance sheet and cash flow management, resulting in significant inefficiencies.”
At an international conference earlier this year in Delhi, Murmu said, “There must be institutionalised collaboration among SAIs and with international audit organisations to share best practices, exchange knowledge and experiences of glocal auditors.” A collaborative platform could aid the improvement of local government audit practices, he added.
“To effectively navigate the complexities of auditing local governments, we need to build the capacity of our auditors as well as the local government employees to enhance their understanding of financial management practices and internal controls. Besides, open communication channels with local government officials can facilitate the audit process, improve data accessibility, and foster cooperation in addressing audit findings. It is to this end that we have set up SAI India’s International Centre for Audit of Local Governance at Rajkot,” Murmu said.
[The Indian Express]
