Testing time for Indian telecoms as CAG can audit their accounts

Indian telecom service providers — Bharti Airtel, Idea Cellular, Vodafone, Tata Teleservices, Reliance Communications, etc. are facing major task of addressing queries from the comptroller and auditor general (CAG).

On Monday, the Delhi high court gave the nod to the CAG to audit the accounts of private telecom companies.

India’s private telecoms will face tough times ahead if AAP’s Delhi government decides to approach the CAG to audit the books.

Recently, Arvind Kejriwal-led Delhi government approached the CAG to audit the power distribution companies in the state.

A bench of justices Pradeep Nandrajog and V Kameswar Rao permitted the top accounting body to conduct audit of private telecom companies under the Telecom Regulatory Authority of India (TRAI) Act.

It rejected the separate petitions of Association of Unified Telecom Service Providers (AUSPI) and Cellular Operators Association of India (COAI) filed against the decision of Telecom tribunal TDSAT on the issue in 2010.


Both the associations had argued, in essence, that CAG can’t audit private companies.

To achieve the purpose of audit, the operators had pointed out that they have already put in place mechanism of special audit as envisaged in the license agreement between department of telecom and the companies.

Significant revenues could accrue to the government following the high court’s decision.

The CAG has vigorously staked its claim to audit the accounts and sought revenue sharing details from the telecom companies. In lengthy written submissions CAG has cited the Constitution of India and the CAG Act 1971 to contend that it is duty bound to audit accounts of the Union and those “in relation to accounts of the Union.”

CAG has said it has full powers to audit accounts of the telecom firms to ensure that claims to receipts have been “pursued with due diligence by Union and no loss occurred due to fraud and efficiency and effectiveness of the transactions has been maintained.”

In June 2010, in an interim order, the HC directed private telecom operators to submit their account books to CAG national auditor so as to enable it to determine if there was any underreporting of licence fees by the companies. But HC restrained CAG from demanding any additional documents except revenue-sharing details and had further directed it to not disclose the same information to the public or to any third party.

The order was later modified by SC which directed the firms to furnish their financials to CAG, but stopped the auditor from vetting the papers till HC decides the case, PTI reported.

[email protected]