Address At The Members Of The Cag?s Audit Advisory Board And The Senior Officers New Delhi
New Delhi : 02-04-2007
Evolution of on-line non-intrusive e-Audit
'Audit is a partner in the
Mission of National Development'
I am delighted to address the members of the CAG?s Audit Advisory Board and the Officers of the CAG organized by the Comptroller and Auditor General of India. My greetings to all of you friends. I would like to discuss with you today on the topic ?Evolution of on-line non-intrusive e-Audit?.
I had made certain suggestions during my address to the ?All India Conference of the Accountants General, New Delhi? on 20 September 2005 and my address to the members of the CAG while Laying of Foundation Stone for the New Building of the CAG in New Delhi on 19 October 2006. Let us discuss some of these suggestions which will make the CAG a partner in national development:
Suggestions to the members of CAG
1. The audit teams can work with Programme Chiefs or Executives of national programmes or projects from the inception of the project and participate in the evolution of the PERT of the Project. You will find that there may be ten to fifteen critical paths for a ten year programme and for five year projects it may be more. The Critical paths in the project PERT will be the CAGs Audit area and points.
2. The aim of the audit should be to detect the deviations in near real time when the project is in progress and provide constructive solutions so that the objective of the project is met well in time.
3. CAG may consider incorporating a mutually agreed online audit system for high value schemes of national importance such as rural employment scheme, golden quadrilateral, large power plants so that maximum value for money is realized in a time bound manner.
4. Audit should be sensitive to the fact that E-commerce and a borderless world (Internet) would soon be a reality. You have to evolve a policy statement for e-Audit based on the e-Commerce and e-Governance standards.
5. e-Audit is essential to be proactive enabler of missions facilitating the programme or project outcome as envisaged.
6. Forecasting of challenges for effective fiscal utilization and providing useful inputs for maintaining the momentum of the project should also become a part of the audit.
7. Reengineering systems and procedures to avoid mistakes. Audit can provide do?s and don?ts to the executives based on past experience and the practicability of field level implementation.
8. Continuous training of audit personnel on modern trends of audit for carrying out specialized audit on development projects with a clear understanding of projects and programmes.
9. The CAG in partnership with organizations can periodically conduct courses for scientific technological and managerial teams of the programme on the audit philosophy with case studies how audit queries can transform into audit para, audit para into oral evidence by PAC and PAC recommendation. This will alert both audit community and technological community on the right audit path, right project management path and right technological path.
10. CAG may consider creation and maintenance of a centralized national asset register. The salient features of the asset can be put on the website for public awareness. Periodically the status of the asset may be reviewed and updated since CAG is the custodian of national wealth. This is indeed a big mission and challenge.
I would suggest the Audit Advisory committee to analyze these suggestions and see how many of these suggestions have been put into practice. Also they may like to provide advice on further implementing these suggestions with suitable modification if considered necessary.
Role of Advisory Board to the CAG of India
As you are aware, the Comptroller & Auditor General of India, is, de-facto, our nation?s ?chief accountability officer?. The CAG?s mission is not only to oversee conformance to rules and regulations, but on the basis of the unique experience and database acquired by CAG over the years, to help improve performance, transparency and assure the accountability of government for the benefit of our people.
The CAG over the years has earned a reputation for professional, objectivity; fact-based nonpartisan, non-ideological, fair and balanced reviews of government programs and operations. The CAG?s Reports help Parliament review and reconsider the base of government spending and taxation policies. I believe that the CAG also has an obligation to provide policymakers with support in identifying issues and options that could help to address fiscal pressures. Such advice could enable Parliament and governments consider significant changes on the spending and or revenue side of the government budget, and mitigate the effects of long-term deficits.
The Audit Advisory Board constituted with persons of such high eminence and great experience in their fields may advise the CAG on audit matters far beyond the present limited perspective of adherence and conformance to rules and regulations. The main thrust has to be how to make audit as partners in reaching the benefits of public funded programmes to the people.
In the present context, the Advisory Board may examine and make suggestions to help improve performance, transparency and assure the accountability of government reexamination in all areas of government spending, namely, defence, external affairs, education and employment, rural and urban development, health care, internal security, natural resources, energy and environment, science & technology, transportation and other relevant areas of significant public interest.
Non Utilization of Allotted Budget
One of the general report comes out the audit is the unspent money in many of the vital programmes. Why? For example, when I studied the utilization profile of budget allotment for the Scientific Ministries before I addressed the 94th Indian Science Congress, to my surprise I found that approximately 20% of the funds allotted to Science and Technology Departments had remained unutilized during the year 2005-2006, and in certain ministries it was found that more than 50% of the amount allotted had not been utilized. Recent report on healthcare spending by the state governments, it says ?Most of the states failed to spend central funds on health? and it shows clearly that around 6 to 8 states have spent ranging from 0% to 28% only till the end of Jan 2007. This indeed is a serious matter. Audit should find out the reason and the bottlenecks for the non-utilization of funds, since it is happening in number of states and ministries. They may also like to suggest the systemic changes required to improve the situation.
Share your experience
While studying the CAG reports in 2005, I had found that CAG had conducted audit of rural employment generation programme. The performance audit of Jawahar Rojghar Yojana disclosed that the scheme suffered from shortcomings in the critical areas of targeting, inadequacy of provision of funds, fictitious reporting and lack of evidence of employment generated. Based on this experience, I had suggested to the members of the CAG to provide e-governance based audit support system to the Central and State Governments for implementing provisions of employment guarantee bill 2005, so that the shortcomings which were noticed in the earlier scheme of rural employment generation does not get repeated. However, I find that based on the survey conducted by an NGO, recently on the implementation of the Rural Employment Guarantee Scheme in different States following problems have again come to light as per the press report: rampant corruption, widespread irregularities, delay in payment, fewer working days and lack of awareness. I would suggest the Audit Advisory Committee to consider this issue and provide suggestions which can enable CAG to participate in this programme and offer methods for smooth and transparent implementation of the scheme with the focus on the objectives of the programme and realization of the district development goals.
When to audit?
Constitutionally, CAG is the only central government organization, which has got a jurisdiction to access the budget and programme information from the Central and State Governments and their implementing agencies. Also Constitution doesn?t specify at what juncture of the programme or the project CAG should audit. When you audit after the function is over, it becomes historical, very few people will appreciate the suggestions to incorporate in the next projects. With the availability of technological tools, now I would like to give a scenario, how e-governance can be supported through e-Audit for enhancing the performance of Governance.
E-Governance, E-Commerce and E-Audit ? is it possible?
I have a suggestion for the consideration of the Audit Advisory Board of the CAG for enhancing the overall performance effectiveness of the Government expenditure using the technologies for E-Governance. This proposal may be called On-line, non-intrusive E-Audit. I shall now give my visualization of such an E-Audit system taking Ministry of Health as an example:
1. 1-APR-2007: Ministry of Health gets allotted Rs. 15291 Crores with the planned outcome and with quarterly and annual targets (Both Physical and Financial).
2. The budget approval in detail in each section wise, unit wise expenditure are made available as a webservice.
a. 15 APR 2007: Units under the ministry are, communicated and orders passed regarding the budget allotment.
b. 30-APR-2007: Each of these institutions publishes the details of the budget allotted programme wise such as Malayria Eradication, Support to HIV/AIDS Patients, Infrastructure Development, Primary Secondary and Tertiary Healthcare against the task and schedule as a web service. Project Implementation commences at the Ground level.
3. 1-JUL-2007: First quarter performance review to be taken up by the automatic webservice agents of the CAG e-Audit system.
a. Each programme unit updates the progress of the projects ? both physical and fiscal and its parameters against each budget head allotted, which are published in their own e-Governance portal as a web service. The critical path analyses are also provided as a supplementary data.
b. CAG e-Governance Webservice agent which crawls through the Ministry of Health Webservices and collects the data from the individual budget webservices.
c. CAG e-Audit system analyzes the actual expenditure against plan expenditure and records the deviations.
d. Deviations are categorized as those within the control of the project managers/Institutions and those outside the direct control of the project managers. Special focus is given to progress on the critical path.
e. Based on the performance and deviation analyses the CAG E-Audit system puts into operation an alert mechanism to the concerned programme units of the health departments within the project network (Responsible for the deviation) as well as the health ministry.
f. CAG E-Audit Ticker Monitor (Like Stock market Ticker) ? makes the project and all the stakeholders of the project aware of the project progress and its deviations from the original plan and its targets. This helps the project Managers as well as the supporting institutions in the project network to take corrective actions autonomously in a time bound manner.
g. The above steps are repeated every quarter of the financial year and the CAG webservices updates the data from the programme units webservice agents automatically and non-intrusively through the secured e-Governance Grid.
h. From the third quarter onwards and with special focus on critical path, CAG webservice would identify those expenditure centers whose performance is in constant deviation against the plan. This alert would be transmitted as a special report to the superior authorities of the project in the hierarchy by the webservice. Also CAG can give suggestions to the project about the improvement in procedure which can enable the project to make up the lost time.
i. On 31st Mar 2008, a consolidated report on project performance of the health ministry and its constituents is made available as the webservice data leading to public awareness of the performance as a ministry as a whole.
j. In the final report of the CAG to Parliament the dynamic data with analysis and comments shall be provided with the specific recommendations as to the centers which have to take the responsibility for cost and time over run of the project, and recommend measures to prevent recurrence of such events in the future.
The above system of CAG E-audit and its E-audit ticker has to be built based on the e-Governance Web service system of the concerned ministries and departments through the Smart and secured E-Governance GRID which includes the e-procurement and e-Commerce. The Audit Advisory Board may like to debate and improve on the system for implementation by CAG and the other departments of the Government including Centre and States. To start with it can be initiated as a project in any one ministry which is implementing multiple inter-departmental and inter-institutional project.
If we implement e-Audit as described above through webservices, it will lead to firstly, programmes will progress as per planned schedule; secondly, projects will be completed with in time and cost; thirdly transparency will be enhanced and finally corruption will be reduced.
Conclusion
You need creative leaders for implementing such systems for managing complex and large projects and delivering the fruits of performance to the people. For success in all missions we need creative leaders. Creative leadership means exercising the vision to change the traditional role from the commander to the coach, manager to mentor, from director to delegator and from one who demands respect to one who facilitates self-respect.
This will be greatest service which the Audit Advisory Board of CAG can create
for injecting a new vibrancy in the whole system of Governance.
May God Bless you.