The CAG erred in making public its findings

The auditor of a company cannot decide on the policies the management ought to follow. This is common sense. It is the management that decide what risks the company is to take to progress. Not the auditor. And in case there are decisions taken which have resulted in losses, it is the duty of the auditor to point out these. These observations by the auditor are taken as feedback for further improvement, and not as fodder for pointing fingers and pulling down the management.

A good auditor always refrains from sensationalism. He does not go to the press with his findings. He does not call a general body meeting to announce his findings. He places his findings before the Board of Directors, and they decide on action to be taken in the matter, if at it is necessary. It is not binding on them to punish anyone on these findings.

Yet, in our country, we find the CAG doing just that. It immediately called a press conference to announce its findings. And the press, which thrives on sensationalism, immediately pounced on the report and crucified publicly every person named in the report without verifying the veracity of the report. It is insane. No where in the world does an auditor hold a press conference.

In normal circumstances, in a company if the management has taken a risk, the Board never comes in the way of its thinking; in fact it expects more of it. At the same time, it does not ignore the auditors report. If the auditors do point out any fraud or corruption charges, it may even sack the management.

The CAG has called a press conference to reveal its findings on the Commonwealth Games. It has named the Chief Minister of New Delhi as well as the Prime Minsiter’s Office as the culprit in addition to Suresh Kalmadi for taking decisions during the organization of the Games.

In this report, the CAG has accused the Chief Minister of Delhi of spending nearly Rs 100 crores on Delhi’s beautification. The accusation implies that this money should not have been spent. There is no hint of any corruption in this observation. The CAG has merely pointed out that this is a “wastage of public funds”.

If one were to go by the CAG’s advice (assuming the CAG had given it before the spends were incurred), then Delhi may have looked like a third world city during the Games and the foreign sportsperson who attended the Games would take home the image of a third world country.