Govt stand doubtful in CAG-KIIFB audit row

Activist group exploring legal recourse to establish transparency in KIIFB

KOCHI: The inordinatley long stand-off between Kerala Infrastructure Investment Fund Board (KIIFB) and Comptroller & Auditor General of India (CAG) on the audit of former’s accounts has now started making noise beyond the Assembly Question & Answer sessions.

Or have the ‘Assemblians’ chosen to give the ‘KIIFB audit’ issue a miss after other hot issues gained prominence there? Despite repeated requests from CAG’s side to allow it to carry out the KIIFB audit under Section 20 (2) of CAG-DPC Act, a favourable response from the Government is still awaited.

The State Human Rights Protection Centre has taken strong exception to the Kerala government’s recalcitrant stand disallowing a comprehensive audit of Kerala Infrastructure Investment Fund Board (KIIFB) accounts by CAG under Section 20 (2) of CAG-DPC Act 1971.

To put the story into perspective, the debate between KIIFB and CAG hinges on the key question – whether the government should allow CAG to carry out an audit, which it deems fit and relevant for KIIFB, but can’t be carried out without the express permission of the Government.

While KIIFB maintains that CAG should be content with an audit under Section 14 (1), which even otherwise comes as a prerogative of CAG and sans government consent, CAG insists on a more comprehensive audit under Section 20 (2), which can only be fulfilled with the government approval.

Till this day, the government has not conceded on its stated stand on the issue and discussions on this has been rendered almost infructous .

The main handicap with the audit under Section 14 (1) and making it less effective is the unpredictability as to how long CAG can continue with the audit as there is limitation on this count by definition.

Audit under Section 14 (1) is invoked in the case of entities receiving substantial investments from the government. Leaving aside the whole lot of definitions and features of each section, under 14 (1), CAG will cease to audit the entity (KIIFB) once the amount of grants and loans from the government falls below 75 per cent of the total expenses in a given year, though the section allows CAG to continue the audit for two more years since then.

The main shortcoming in the CAG Act in the present context, according to a leading chartered accountant, is that the CAG Act is somewhat silent on the future of on-going audit activity once CAG ceases to enjoy the right to audit KIIFB under 14 (1) as explained before.

“On the one hand, Section 20 (2) can’t be invoked in the absence of government consent, and on the other, CAG ceases the right to audit KIIFB after the grants and loans from government fall below the stipulated level,” he explained adding that in such a scenario, KIIFB may escape from the scope of CAG audit.

There are also concerns raised on the issue of ‘Conflict of Interest’ in the case of  KIIFB (with Kannur International Airport Ltd (KIAL) too). While KIIFB as the entity to be audited by CAG is headed by the chief minister as its chairman, the government, which is the body supposed to give approval for the audit, is also headed by the same chief minister.

The repeated requests from CAG’s side over the months seeking approval from the government to carry out audit under Section 20 (2) seem to have fallen on a deaf year. Dr Thomas Isaac and Dr KM Abraham have time and again made their stand clear.

They have said that it could allow CAG to carry out the audit of all receipts and expenditure provided under Section 14 (1) as against a full audit available under Section 20 (2).

Talking to, Joy Kaitharath (seen in the picture), General Secretary of the Human Rights Protection Centre said it can’t remain a mute spectator to the government’s disdainful attitude towards the issue of governance and transparency at the government entities. He said the government inevitably represents the public and hence should stand to safeguard the public interest.

And how can a government shoot down a request for greater transparency; or on what ground can the government say ‘no’ to a more comprehensive and sustainable audit process?

“It is now months together the issue has been hanging fire. It’s inexplicable what the real issue with the government is as regards allowing a full audit of KIIFB under 20 (2); do they fear overdoing of transparency exercise on KIIFB accounts or do their cupboards have hidden skeletons?” Kaitharath expressed dismay at the government stand.

Kaitharath, the Right-to-Information activist, said he was weighing options available under law to pave the way for an ‘uninterrupted’ audit of KIIFB accounts provided under Section 20 (2).

Finance minister and KIIFB vice chairman, Dr TM Thomas Isaac, had argued that it was not practical to have the Comptroller and Auditor General (CAG) function as the statutory auditor of KIIFB.

Isaac argues KIIFB already has the most elaborate audit mechanism for any institution in the country. He thinks if the CAG is also roped in as a statutory in-house auditor, there could be a dilemma. “We can have a situation where we would have two statutory auditors. From whom do we get the reports now,” he said.

At the same time, Dr KM Abraham has gone to the extent of stating that Section 20 (2) can’t be invoked in the case of KIIFB, as ‘Section 20 (2) applies only to an institution where its audit has not been entrusted to the CAG by ‘Law’.

But several experts rebuffed this argument by raising the issue of limitation under 14 (1) which disallows the audit to continue once the government grants and loans fall below the stipulated level of 75 per cent of expenses. This, in fact, leaves KIIFB as an entity without a CAG audit.

And in that bizarre eventuality, they warn of a scenario where neither 14 (1) nor 20 (2) would be in operation for KIIFB in terms of CAG audit.


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