* Y. Krishan, formerly Deputy Comptroller & Auditor General of India Clarion Books, C/36 Con-naught Place, New Delhi-110 001. Rs.160/-
Time Magazine had recently observed "Democracy by itself does not solve problems: it simply holds them up to public scrutiny and invites participation in their resolution". So does Audit. The book "Audit in India's Democracy" discusses the vertical relationship between democracy and audit, one of its vital organs.
J.K. Galbraith described Indian democracy as the classic case of a functioning anarchy and expressed his belief in god because the country did survive all onslaughts on the systems from various quarters. The book describes those onslaughts and sees a ray of hope in Audit which has not wilted in the last 40 years.
Democracy is tightrope walking and poles need to be strong and the rope taut to enable the trapeze artist to perform. The book brings out pillars of Indian Democracy have occasionally proved to be weak. Legislature and Judiciary have wilted at crucial junctures, many a time. Is it because of poor policy formulation, over-optimistic estimations, lack of budgetary control, blurred perceptions and other inefficiencies? Is it also because the executive is also seen to be wanting somehow or other? The author quotes from the Harvard Business Review (HBR.) and says that in U.S. effective audit is considered essential even in private sector to ensure corporate legality and ethics. According to HBR.
"The Directors of private company take the role of overseers of management activities too lightly. This, it is felt, is due to the natural camaraderie between the directors and management.... in some cases, the management dominates the directors: many directors have not the necessary background, temperament and time to serve as effective assesors. In short, it has been recognised that the directors are not necessarily qualified to function as a watchdog".
Extending this to Public Sector, the democracy gets under threat if the legislature and executive were to combine together and function not in the interest of the people. It is such combinations which Audit prevents in an effort to preserve democracy.
The author also lists out instances where the public sector corporations have attempted to dress up their accounts to show profits. According to him, an independent government audit is inescapable in a democracy and quotes W.A. Robson who submitted a memorandum before the Mikardo Committee (Parliament Select Committee in the U.K.). According to Robson,
"...The certificate given by professional auditors to the accounts of the nationalised industries resemble the unilluminating formula which applies to joint stock companies in the private sector. I do not believe that the professional audit used for nationalised industries serves any important purpose beyond ensuring that financial regularity and honesty are observed in their administration. The time has come to consider the entire process of audit to see if it could be made to achieve more than it does at present. The relationship between a professional auditor and the company which is his client and pays his fees, is entirely inappropriate for a public corporation."
Mr. Krishan moves over to make out a case for enlarged public audit in Indian context to encompass the nationalised banks and other financial institutions which move massive funds from one industrial house to another. In an excellent Foreward, Shri T.N. Chaturvedi the erstwhile Comptroller and Auditor General of India says
" national economy is a composite one and exclusion of financial institutions from the purview of public audit does not help in projecting the integrated and full picture of economy " This recalls to one's mind an incomparable quote from the celebrated American poet Robert Frost.
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"Never ask of money spent, |
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Where the spender think it went, |
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Nobody was even meant, |
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To remember or invent |
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What he did with every cent" |
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Robert Frost |
This may be of interest to the reader of this Journal. It is to same democracy that Prof. Mackenzee sums up the importance of audit by saying "Without audit no accountability no control and if there is no control where is the seat of power?". It is, thus, a vital organ of democracy.
The book has been brought out under Public Concern Series and that shows Democracy in India is vibrant and there is a growing awareness. The book is unique, as it analyses the audit findings in a variety of fields in the last 40 years. This should be handy to Government Auditors, Professional auditors, political scientists and lovers of democracy.
- S. Sathyamoorthy