CAG establishes new vertical for state public sector audits

The new vertical is designed to streamline the auditing process. Credit: ImageFlow/Shutterstock.

India’s Comptroller and Auditor General (CAG) has announced the creation of a dedicated unit for auditing approximately 1,600 state public sector undertakings (PSUs).

The Economic Times reported that this initiative aims to enhance the speed and efficiency of audits conducted on these enterprises.

The new vertical is designed to streamline the auditing process, similar to the existing structure for Central Public Sector Enterprises.

CAG officials noted that the current method, which involves senior management auditing multiple states, is time-consuming and inefficient.

Deputy CAG A M Bajaj highlighted that the separate unit will facilitate the consolidation of information across state PSUs.

This will enable stakeholders to make easier comparisons and improve overall transparency in the auditing process.

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In addition to the new vertical, the CAG is leveraging digital transformation to enhance auditing capabilities.

The integration of technologies such as generative AI and optical character recognition (OCR) is expected to reduce errors and improve accuracy in voucher verification.

Bajaj also mentioned that a standardised risk assessment model is being developed to ensure data-driven and risk-focused audit planning nationwide.

This model will utilise tools like IDEA and Tableau to enhance the auditing framework.

The upcoming State Finance Secretaries Conference, scheduled for September 2025, will address these developments as key agenda items. The CAG aims to discuss the implications of the new vertical and technological advancements in auditing.

In addition, the CAG clarified that the hiring of empanelled Chartered Accountant (CA) firms for auditing central autonomous bodies will not compromise the autonomy of the apex audit body.

Instead, it is expected to bolster the auditing process. The office of the CAG is currently in the process of selecting CA firms for 30 locations, with final decisions anticipated within the next two weeks.