Redactive Pricing Audit

Redaction is the selection or adaptation by removing sensitive information from a document before publication. Under redactive pricing method, CAG withheld full commercial details and blackened the figures on the procurement deal on security concerns cited by Ministry of Defence.

Whether the Ministry’s insistence citing security concerns could have been accepted by the CAG can be examined only by the Supreme Court in the light of the constitutional provisions on the CAG’s duties and parliamentary privileges and prerogatives.

Significance of Redactive Pricing Auditing :

Parliament is constitutionally privileged to know what the executive had done and how and under what conditions procurement was decided.
The CAG’s audit is expected to highlight value for money in purchase decisions. But the audit report submitted by the CAG to the President under Article 151 of the Constitution suppressed relevant information.
Acceptance of ministry insistence to blackened the price citing security concerns by CAG is a matter of concern
The acceptance by CAG can be examined only by the Supreme Court in the light of the constitutional provisions on the CAG’s duties and parliamentary privileges and prerogatives

CAG:

The CAG is mandated to audit all receipts and expenditures of the three-tier governments in India and report to the legislature judiciously, independently, objectively in compliance with applicable laws, rules and regulations, without fear and favour.
In the preface of the audit report, the CAG stated that redactive pricing was unprecedented but had to be accepted due to the Ministry’s insistence citing security concerns.
CAG conducts financial compliance and performance audits and submits his reports to the legislature to help people’s representatives in enforcing legislative oversight and public accountability of the executive.
Legislative committees such as the Public Accounts Committee and Committee on Public Undertakings examine the CAG’s selected reports.
The CAG’s audit is expected to highlight value for money in any purchase decisions of the government.
An audit by CAG is expected to analyse the facts and comparative pricing charts to highlight the financial propriety and prudence of the procurement decision.

Performance Audit & Purchase Audit done by SAI India:

The vision of Supreme Audit Institution of India (SAI) India represents what we aspire to become: We strive to be a global leader and initiator of national and international best practices in public sector auditing and accounting and recognised for independent, credible, balanced and timely reporting on public finance and governance.

Read Bad Bank

Audits done by SAI India can be classified into

Compliance Audit
Financial Audit
Performance Audit.

Challenges:

Complex audit
Pivotal to procurement
Not transparent

Conclusion:

The CAG’s audit is expected to highlight value for money in purchase decisions.
A performance audit is done to establish whether the procurement activity was executed keeping in mind economy, efficiency, effectiveness, ethics and equity.
Only a thorough pricing audit can bring out the credibility and integrity of a purchase decision, thereby achieving a Supreme Audit Institution of India (SAI’s) constitutionally mandated responsibilities

Read La Nina effect