Auditors support CAG move to rope in private firms
June 16, 2025
Audit firms back CAG’s move to engage CA and LLP firms for audits of local bodies from July 2025 to March 2027. ICAI clarifies private auditors will assist under CAG supervision, ensuring audit quality without diluting constitutional authority. Industry sees it as a global best practice.
Audit firms in India have come out in support of the Comptroller & Auditor General of India’s (CAG’s) recent decision to engage Chartered Accountant (CA) and Limited Liability Partnership (LLP) firms for auditing the financial statements of autonomous, local and other bodies.
The move is in the wake of an opposition to the CAG’s move in some circles.
As of now, the services of private auditors will be used by the CAG for the period between July 2025 and March 2027.
Audit firms, including some of the Big Five firms, feel that there’s “misinterpretation” and “lack of understanding” on the scope of work that will be assigned to the private CA firms during their engagement with CAG. “The idea that CA firms will do audit work on behalf of CAG is incorrect. The terms of the contract states that the personnel from CA firms would work under the overall supervision of senior audit officer of the CAG,” said a partner at Big Five firm, on condition of anonymity.
On June 3, CPI (M)’s member of parliament S Venkatesan wrote a letter to President Droupadi Murmu objecting to the CAG’s tender describing it as a dilution of the constitutional mandate given to the national auditor.
“It’s not a matter of compromising the constitutional responsibility. Due to the complex nature of work at the central and state autonomous bodies, CA firms can use their expertise to enhance the overall audit quality,” said an audit head of a CA firm.
The president of the Institute of Chartered Accountants of India (ICAI) Charanjot Singh Nanda told FE that the selected CA firms will only assist CAG in its job, and the audit work will be carried out by the CAG officials.
For instance, private auditors believe that CAG operates under structured and accountable guidelines. The tender to involve private CA firms is in line with global audit practices of utilising external expertise for data collection, field-level audit assistance, or sector-specific matters.
In a statement, ICAI also said that CAG has the discretion to engage professionals with adequate expertise to assist its officers, without compromising its constitutional mandate.
“As per the tender, the CA firms will not operate independently. They will function under the direct supervision of the CAG’s Field Audit Officers and the designated Senior Audit Office. The engagement of CA firms is in no way a compromise of its independence or constitutional function, but rather a strategic step to ensure effective coverage, domain-specific audit quality, and timely audit execution,” ICAI said.
[The Financial Express]
