This committee was set up first in 1921 under the provisions of the Government of India Act of 1919 and has since been in existence. At present, it consists of 22 members (15 from the Lok Sabha and 7 from the Rajya Sabha). The members are elected by the Parliament every year from amongst its members according to the principle of proportional representation by means of the single transferable vote. Thus, all parties get due representation in it. The term of office of the members is one year. A minister cannot be elected as a member of the committee. The chairman of the committee is appointed from amongst its members by the Speaker. Until 1966 - ‘67, the chairman of the committee belonged to the ruling party. However, since 1967 a convention has developed whereby the chairman of the committee is selected invariably from the Opposition.
The function of the committee is to examine the annual audit reports of the Comptroller and Auditor General of India (CAG), which are laid before the Parliament by the President. The CAG submits three audit reports to the President, namely, audit report on appropriation accounts, audit report on finance accounts and audit report on public undertakings.
The committee examines public expenditure not only from legal and formal point of view to discover technical irregularities but also from the point of view of economy, prudence, wisdom and propriety to bring out the cases of waste, loss, corruption, extravagance, inefficiency and nugatory expenses.
In more detail, the functions of the committee are:
1. To examine the appropriation accounts and the finance accounts of the Union government and any other accounts laid before the Lok Sabha. The appropriation accounts compare the actual expenditure with the expenditure sanctioned by the Parliament through the Appropriation Act, while the finance accounts shows the annual receipts and disbursements of the Union Government.
2. In scrutinising the appropriation accounts and the audit report of CAG on it, the committee has to satisfy itself that
(a) The money that has been disbursed was legally available for the applied service or purpose
(b) The expenditure conforms to the authority that governs it
(c) Every re-appropriation has been made in accordance with the related rules
3. To examine the accounts of state corporations, trading concerns and manufacturing projects and the audit report of CAG on them (except those public undertakings which are allotted to the Committee on Public Undertakings)
4. To examine the accounts of autonomous and semi-autonomous bodies, the audit of which is conducted by the CAG
5. To consider the report of the CAG relating to the audit of any receipt or to examine the accounts of stores and stocks
6. To examine the money spent on any service during a financial year in excess of the amount granted by the Lok Sabha for that purpose
In the fulfillment of the above functions, the committee is assisted by the CAG. In fact, the CAG acts as a guide, friend and philosopher of the committee.
On the role played by the committee, Ashok Chanda (who himself has been a CAG of India) observed: “Over a period of years, the committee has entirely fulfilled the expectation that it should develop into a powerful force in the control of public expenditure. It may be claimed that the traditions established and conventions developed by the Public Accounts Committee conform to the highest traditions of a parliamentary democracy.”5
However, the effectiveness of the role of the committee is limited by the following:
(a) It is not concerned with the questions of policy in broader sense.
(b) It conducts a post-mortem examination of accounts (showing the expenditure already incurred).
(c) It cannot intervene in the matters of day-to-day administration.
(d) Its recommendations are advisory and not binding on the ministries.
(e) It is not vested with the power of disallowance of expenditures by the departments.
(f) It is not an executive body and hence, cannot issue an order. Only the Parliament can take a final decision on its findings.