State-owned Haffkine gets a rap from CAG

Published
23rd Apr, 2022

Context

The CAG report on the financial statements of the Maharashtra-owned Haffkine Biopharmaceutical Corporation Limited, has observed that the company not only failed to comply with the Supreme Court.

The company was also accused for hiding its own bank account details and submitted the wrong balance sheet details.
The CAG has ordered for the breach of Privilege motion against the officials of the company.

About

About the Report

The officials can be charged under section 143(6)(b) of the Companies Act, 2013, under which order for supplementary audit of the financial statements can be given.
The report also observed that the apex court had upheld the irregularities in the tender process of the company’s procurement of polio doses in bulk in a case involving Haffkine.
The company was the Bionet-Asia Co.Ltd and the second lowest bidder Nirlac chemicals.

The Companies Act, 2013

Section – 143: Powers and Duties of Auditors and Auditing Standards

The auditor’s report shall also state: whether he has sought and obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of his audit.
whether, in his opinion, proper books of account as required by law have been kept by the company so far as appears from his examination of those books and proper returns adequate for the purposes of his audit have been received from branches not visited by him.

Role of CAG

The Constitution of India provides for an independent office of the Comptroller and Auditor General of India (CAG). He is the head of the Indian audit and accounts department.
He is the guardian of the public purse and controls the financial system of the country both at the central level and state level.

Constitutional Provisions Related to CAG

Part V, Chapter V of the Constitution of India, talks about the Comptroller and Auditor General of India.

Article 148 speaks of the CAG, his appointment, the oath of his service.

Article 149 broadly speaks of the duties and powers of the CAG.

Article 150: The accounts of the Union and States shall be kept in such form as the President may prescribe on the advice of the CAG.

Article 151: The reports of the CAG relating to the Union shall be submitted to the President. The reports of the CAG relating to the State shall be submitted to the Governor.

He audits all transactions of the Central and State Governments related to debts, deposits, funds, etc.
He audits the accounts of any other authority when requested by the President or Governor. For example, local bodies.
He advises the President with regard to the prescription of the form as to how the records of Centre and State shall be kept.
He submits his report relating to the Centre to the President, who then places it before both houses of Parliament.
He submits his report relating to State to the Governor, who then places them before State Legislature.
He ascertains and certifies the net proceeds of any tax or duty, and his certificate is final on the matter.
He submits three audit reports to the President: