By M.V.Ramakrishnan

Monday, August 7, 2017

Attitudes Of Government Auditors : Tradition And Transformation

In the preceding posts I had recalled an important high-level discussion in which the seniormost officer of the Indian Audit & Accounts Service -- Mr. H.B. Bhar, Deputy Comptroller & Auditor-General of India, for whose inflexible passion for factual accuracy I had the greatest respect and even admiration -- went seriously wrong and made an incredible faux pas in terms of pure logic.

The subject of that discussion was a highly sensitive and intricate issue concerning the Government's massive export incentives, and the financial and moral implications of that mistake were enormous.  And it wasn't the only occasion on which Mr. Bhar had taken such a false step in a major context, presumably because of an inflexible mind-set he had inherited from a long and conservative tradition of routine audit in the British regime and in the early decades of independent India.

Those situations arose in the course of some extremely sophisticated audit investigations I was conducting as a senior civil servant.  But one doesn't really need to cite such complex and expensive issues in order to show how intrinsically the whole character of audit is conditioned by the rigid or rational attitudes of the auditors.  Even some simple scenarios can prove this basic truth, as I discovered quite early in my official career :-


Glossary & annotations
(in same order as in text)

British Raj  --  Popular bilingual expression denoting colonial India in the 19th/20th centuries (till 1947, when India became independent).  'Raj' in Hindi means 'regime'.

Executive Engineer  --  In the British regime, the basic administrative unit called District covered a much larger area than it does now ;  and there was only a single Executive Engineer in charge of all civil public works -- like roads, buildings, bridges and canals -- in the whole District. 

Simla --  Beautiful hill resort in the Himalayas, summer headquarters of Government of India in the British Raj -- now called Shimla.

Accountant-General  --  In the early days of independent India, when I joined the civil service, each State had only a single AG, who therefore had an imposing image in Government and social circles.  Later on, when the scope of Govt. audit went on expanding, the larger States began to have two or more AGs, which diminished the official and social status of them all.  

Gorton Castle  --  Magnificent New-Gothic building, which used to accommodate the summer headquarters of the Govt. of India in the British Raj.  Subsequently, it was occupied by the Accountant-General of the State of Himachal Pradesh, with a few chambers reserved for the IAAS Training School. 

IAAS --  Indian Audit & Accounts Service. 

Yarrows  --  A lovely mansion of the British type, housing the IAAS Hostel.

Jack and the Beanstalk  --  English fairy tale, about a young boy who climbs a sky-high magic beanstalk, and finds a castle above the clouds where he encounters a ferocious giant.

West Bengal  --  Large Eastern State in India. 

Calcutta  --  Anglicized name for Kolkotha, which is now the city's official name.

Treasury  --  District office dealing with all Govt. payments and receipts.  

DRAFT PARA  --  Not a paragraph really, but a draft narrative containing tentative audit observations meant for inclusion in one of the CAG's numerous Audit Reports.  It is invariably sent to the concerned Govt. Department for a rejoinder and/or discussions, which must be duly considered before the material is finalized for publication.  I have really no idea why it's called a 'para', because a draft para may contain any number of paragraphs, even a hundred if necessary!

Kangsabati Project  --  An irrigation project in West Bengal, with dam, reservoir and canals, for distributing water drawn from river Kansabati.

Bankura  --  District in West Bengal.

Gazetted officers  --  In the British and even post-British regimes, postings, transfers and other matters relating to Govt. officers drawing salaries above a specified level were/are notified in the periodical official Gazette -- hence the term 'gazetted officers'.

SANCTIONS  --  In the Govt. set-up in India, 'sanction' means Govt.'s approval of a specific item of expenditure (on staff. equipment, etc.), entitlements (leave, loans, etc.), or projects, specifying levels or limits of funds provided (buildings, roads, development/welfare schemes, etc.).

Maharashtra  --  Major Western State in India. 

Bombay  --  Anglicized name of cosmopolitan metropolis on India's West coast, now called by its native name Mumbai. 


27 December 1995

Of audit and attitudes

Recalling in recent weeks the substance of most of the topics featured in this column during the past one year, I couldn't help remembering some of my own varied experiences as an officer of the Indian Audit & Accounts Service.  This nostalgic sentiment marked a remarkable if gradual transformation of my whole attitude towards a civil service career in general, and towards accounts and audit in particular.

My true ambition when I was a student was to become a successful artist, writer and journalist.    But my father -- who had retired as an Executive Engineer in the British Raj -- had other ideas, and he saw to it that I wrote the civil service examination.  I was hoping to fail, and even tried to give some impertinent answers in the interview, but somehow the examiners seemed to like it, and one of them even kept smiling benevolently all the time.  And soon afterwards I was enrolled in the organization of the Comptroller & Auditor-General of India, as a probationer in the IAAS Training School, Simla.  That was in 1957.

Merely living in Simla for a whole year was a thrilling adventure.  The School, like the Accountant-General's Office, was located in an imposing building called Gorton Castle at the top of a magnificent hill ;  and the hostel for about twenty trainees -- which resembled an ancient mansion in England and was called Yarrows -- was on the rim of a deep valley.  Climbing up to the classes in the morning and again in the afternoon, I was always reminded of Jack and the beanstalk.  Life, in short, was very enjoyable.

But the curriculum was extremely drab and discouraging.  Constitution of India and Parliamentary Financial Control were  interesting subjects, but Fundamental Rules, Civil Service Regulations, Accounts Code Volumes 1 to 4, Audit Code, Audit Manual, and Book-keeping :  I could have found nothing more forbidding!

I failed twice in the departmental examinations held in the School, but had two more chances in the second year, when I was transferred as a probationer to the office of the Accountant-General, West Bengal, in Calcutta.  Sheer self-respect forced me to work very hard that year and pass the tests.  However, I was not very pleased when I became an Assistant Accountant-General in the third year in the same office -- although by the official and social standards prevailing those days, it was a prestigious and glamorous designation.

Negative spirit

To begin with I was asked to look after some treasury and public works audit sections, and the task was an endless ordeal, checking heaps of heaps of vouchers received in the audit office every month from the treasuries and PW divisions.  Every now and then I had to bulldoze the papers on Sunday afternoons, after spending an hour in a Chinese restaurant on the way and guzzling half a gallon of beer!

The attitude of my immediate boss, a Senior Deputy AG, was also not very reassuring.  One day he called me and said :  "Ramakrishna, look at these two cases in this old inspection report on the Kangsabati Project accounts. I want to convert them into draft paragraphs for the Audit Report.  Go and have a discussion with the Superintending Engineer in Bankura, and come back with a couple of drafts."

So I went on tour to the project site and met the SE as directed.  Now, this officer insisted that the two audit objections -- which concerned some infructuous expenditure -- were not justified at all because there had been certain extenuating circumstances  caused by unexpected floods ;  and he showed me some reliable evidence to support his argument.

The SE was an elderly person, and asked me about my background.  When I told him my father had been a civil engineer, he said :  "Young man, why don't you write to your father about these cases and find out what he thinks?  Then if he says we were wrong, you can pursue the objections -- otherwise, just drop them!"  

But I was already convinced that the objections were not quite fair, given all the facts ;  so I told him there was no need to trouble my father or anyone else, and agreed to close the cases.  What I didn't reckon with was how my boss would react.  When I went back to Calcutta and told him what I had done, he flew into a fury and gave me a severe dressing-down.

"What do you mean, you dropped the objections?" he raved, "I told you to come back with a couple of draft paras, and you have just thrown away the whole material!  How can you  prepare any case for the Audit Report if you behave like this?"

"But the SE explained everything convincingly, Sir!" I said.  "There was really no justification for those objections.  We can't include such flimsy things in the Audit Report, can we?"

But my boss was in no mood to listen to any argument, and expressed great displeasure.  The negative spirit which governed his whole approach gave me a severe jolt ;  and I was distressed to find later on that many other senior audit officers too seemed to have a similar perception of things.

Sanction vs. service

Take the case of even the Accountant-General, who happened to be a very liberal-minded and highly respected person.  In my fourth year I was posted as Assistant AG in charge of a set of sections auditing the salaries and other claims of gazetted officers of the State Government, and I had the privilege of  working directly under the AG without the intervention of any Deputy AG.  And another shocking experience was in store for me.

In West Bengal there was an unusual system of 'pre-auditing' Government expenditure.  There were special registers in which full details of the gazetted officers' credentials, postings and entitlements were noted, and their monthly salary bills had to be checked with the entries in those registers and cleared by the AG's office for payment by the treasury officers.

Now, there was a professor who was about to retire, and there was some confusion about the date of his superannuation because two different dates were somehow figuring in official records as his date of birth.  The State Government was still considering the problem, and meanwhile the professor continued to perform his duties although the first of the disputed dates had already passed.

The section officer put up a note saying that since there was a contradiction we could not authorize the payment of salary for the current month.  I did not agree.  I felt that since the officer was actually serving the Government during that month, his salary had to be paid ;  and that if the Government ruled subsequently that the earlier of the two dates was the correct one, it would have to sanction an extension of service to cover the delay in superannuation caused by the Government's own delay in resolving the issue.

Opposing the section officer's suggestion, I submitted a well-argued note to the Accountant-General, confidently expecting that he would approve my stand.  But the AG wrote an elaborate note in which he made some profound statements about the sanctity of sanctions, concluding that till the doubt was sorted out by the Government we could not authorize the payment of the professor's salary.

I asked for a discussion with the AG, and found myself at the receiving end of a pleasant but one-sided lecture about sanctions and their inviolable sanctity.  This episode left a bitter taste of disbelief and frustration in my mind, particularly because the AG did have a very liberal outlook but seemed to be overpowered by the formidable force of a negative audit tradition.

There was an interesting sequel to this story.  Several years later I was working as the seniormost Deputy AG in the office of the AG, Maharashtra, in Bombay ;  and an almost identical case arose, concerning a Government doctor who was on the verge of superannuation and had overshot the first of two conflicting dates.  There was no pre-audit system in Maharashtra, but the office suggested that the treasury officer should be told not to pay the doctor's salary till the issue was resolved.

And with great relish I over-ruled the proposal, recording a forceful note in which I argued that the sanctity of service was no less important than the sanctity of sanctions -- and that as long as the Government allowed the officer to go on working while it was wrestling with the problem, it had no choice but to go on paying his salary.

Changing environment

Meanwhile, the whole environment of Government audit in India was already changing in substantive terms.  Not only had the sphere of the CAG's jurisdiction progressively expanded (to cover Government revenues and public-sector undertakings), but there was an increasingly wider perspective in which the auditors were expected to organize their scrutiny of official records and evaluate their findings. 

And this trend would continue for more than a quarter-century, creating splendid opportunities for enterprising officers to undertake penetrating audit investigations and significant performance reviews.  I do look forward to sharing with the readers, from time to time, some of my recollections and reflections in this regard.


PostScript, 2017

I and the camera-eye

What I didn't disclose in the above article (and other similar ones in my column India of C-A-G) was my own vital role in bringing about the significant transformation in audit perceptions and the evolution of highly innovative and sophisticated audit practices, because my policy as a journalist was to introduce a personal element in my column only as an observer and not as an actor. 

Of course, there were some contexts (like the tobacco exports scene) where the dividing line tended to get quite blurred ;  but the Editor, Mr. N. Ravi, never chose to restrain me or even moderate my texts.

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