New Delhi: The Comptroller and Auditor General of India (CAG) has established a dedicated vertical exclusively for auditing approximately 1,600 Public Sector Undertakings (PSUs) operated by various state governments. This strategic move is designed to expedite the auditing process and enhance operational efficiency across state PSUs.
Separate Vertical for State PSUs
Deputy CAG K S Subramanian (HR, IR, Coordination and Legal) announced that the newly created vertical will be staffed at a single location focused solely on auditing state PSUs within one particular state. “Very recently a separate vertical has been created. An order has been issued. Once this vertical comes up, one location will have positions for auditing only state PSUs of a particular state,” he said.
This initiative aims to overcome the current challenge where senior management auditors must cover multiple states – often 4 to 5 – leading to delays and inefficiencies. By focusing audits regionally, faster completion and improved quality of audit reports are expected.
Enhancing Consolidation and Stakeholder Comparisons
Deputy CAG A M Bajaj highlighted the benefits of consolidating information related to state PSUs, which will facilitate easier comparisons for stakeholders. The move mirrors the existing auditing framework for approximately 700 Central Public Sector Enterprises (CPSEs) managed through a separate vertical.
In addition to PSUs, the CAG audits about 485 Central Autonomous Bodies (CABs) and more than 700 State Autonomous Bodies, making it one of the largest audit responsibilities in the country.
Digital Transformation and Remote Auditing
Riding on the wave of digital innovation, the CAG’s office is actively expanding remote and hybrid auditing practices to boost transparency, efficiency, and collaboration. Leveraging Generative AI and Optical Character Recognition (OCR) technology in voucher verification is expected to reduce errors and improve audit accuracy.
Tools like IDEA and Tableau underpin a Standardized Risk Assessment Model, enabling data-driven, risk-focused audit planning across the nation. Bajaj noted, “Our initial efforts at remote/hybrid audit of GST, stamp duty and registration and public works have been highly successful and encouraging.”
The move toward digitization and remote auditing will be a key topic at the upcoming State Finance Secretaries Conference scheduled for September 2025.
Addressing Concerns Over Hiring CA Firms
The CAG is also finalizing plans to engage empanelled Chartered Accountant (CA) firms at 30 locations to support auditing of central autonomous bodies. This step is intended to augment, not undermine, the CAG’s autonomy and auditing quality.
Responding to objections raised by CPM MP S Venkatesan, who wrote to President Droupadi Murmu expressing concerns that hiring CA firms would dilute CAG’s independence, Deputy CAG Bajaj clarified, “Audit responsibilities have gone up manifold and autonomous bodies have become very big. The co-option of CA firms will strengthen the auditing process.”
