International Centre for Audit of Local Governance, which the CAG inaugurated in Gujarat

International Centre for Audit of Local Governance, which the CAG inaugurated in Gujarat

Subject: Polity

Sec: Local Govt, PRI

Context:

Comptroller and Auditor General (CAG) of India Girish Chandra Murmu inaugurated the International Centre for Audit of Local Governance (iCAL) in Rajkot.

More about News:

• 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.

Comptroller and Auditor General (CAG):

Founded: 1858

Abbreviation: CAG

Deputy: Deputy Comptrollers and Auditors General of India

Appointed by: President of India

Headquarters: New Delhi, Delhi

Department: Indian Audit and Accounts Department (IAAD)

Aim:

• To set global standards for auditing local governance bodies.

How will iCAL work?

• 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.

Primary aim :

• To effectively fulfil their roles through training and leadership development initiatives.
  • Empower auditors
  • Executives
  • Elected representatives of local governments.

Three-tier governance structure:

• 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.

How are local bodies audited in India?

• 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.
• 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.
• The CAG, 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.

Why was a need felt for it?

• 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.