By TIOL News Service

NEW DELHI, MAY 13, 2014: WHILE inaugurating the 8th Annual Summit on "Corporate Frauds - Risk and Prevention under Changing Paradigm" here today, the CAG of India, Mr Shashi Kant Sharma, said that the recent ruling of the Supreme Court is a landmark one and has removed, once for all, the doubts on the constitutional mandate to audit private firms by the CAG so far as it relates to revenue sharing with the Government. "Our long time stand, that an entity using public resources in its business and sharing revenue with the Government can be audited by the CAG, has been vindicated by the Supreme Court," he added.

The CAG said that there is no doubt that the institution of the CAG is duty bound to report to the Parliament in all such matters which involve revenue sharing with Government on country’s natural resources. Mr Sharma disclosed that the work on Telecom audit is already in progress and the first report would be ready before the year end. The CAG would be taking up performance audit of some ongoing PPP projects shortly, the CAG added.

Removing doubts on expertise of the CAG to audit PPPs, he said, "PPP Audit is not a new area to the institution of CAG and we have got recognition worldwide and the institution takes pride in it. So nobody should have any doubt on our expertise on this area."

The CAG stated that Indian economy would grow into a mature market economy, which would present opportunities to maximize profits and help the corporates expand across the globe with confidence and credibility. The CAG expressed that the captains of Industry would not want to be known as lynchpins of a crony capitalist economy.

Mr Sharma said that many corporate tycoons in emerging economies are today accused of making fortunes by "rent seeking". They want to grab a bigger slice of the pie, rather than making the pie bigger. This type of rent seeking is not only unfair but also bad for long term growth, the CAG said.

Stating categorically that audit by CAG will not be taken up in a routine manner, Mr Sharma clarified that the CAG audit is an independent audit which is different from statutory audit or internal audit. Stating that the companies will have to strengthen their internal control mechanism and that would be a step in the right direction, CAG said that there would be protocols to undertake such audits which would be done keeping in view the risk assessment and impact on public interest. The CAG asked, why companies should fear such audit if they have nothing to hide, in a mature market economy, where there is very little scope for manipulations and fudging.