In each State, offices of the Accountant General do two separate jobs for the CAG. The Accountant General (Accounts and Entitlements) compiles the State's accounts. The Accountant General (Audit) audits them, and the CAG certifies them and reports to the Governor. The Governor lays the reports before the State Legislature.
Last reviewed: 17 October 2026. Facts checked. We opened the cag.gov.in page on constitutional provisions (Article 151), a Madhya Pradesh Accountant General page on audit products and tabling, a Tamil Nadu Accountant General FAQ page, and a Punjab Accountant General page on the audit provisions of the 1971 Act. We read search summaries of CAG and SAI India "Accounts at a Glance" publications for Nagaland and Tamil Nadu, but did not open the PDFs ourselves. The arrangement can differ between States (some have more than one Accountant General office), so confirm for the State you work with.
Two roles, one department
Both offices belong to the Indian Audit and Accounts Department, which is headed by the CAG. See the CAG's role and powers.
| Office | Job |
|---|---|
| Accountant General (Accounts and Entitlements), "A&E" | Compiles the State's accounts of receipts and expenditure from treasuries and other accounting units, and prepares the annual accounts |
| Accountant General (Audit) | Audits government departments, schemes and bodies and prepares audit reports |
The search summaries say the A&E office compiles accounts from the initial accounts sent by district treasuries, public works and forest divisions and advices from the Reserve Bank of India.
The two annual accounts
The summaries describe the State's annual accounts as two documents:
- Finance Accounts summarise the Consolidated Fund, the Contingency Fund and the Public Account.
- Appropriation Accounts show grant-wise expenditure against the provision approved by the State Legislature, with explanations of the differences.
The Nagaland and Tamil Nadu documents say the accounts are placed before the Legislature after audit by the Accountant General (Audit) and certification by the CAG. Article 150 lets the President prescribe the form of State accounts on the CAG's advice.
What the Accountant General (Audit) audits
The 1971 Act applies Section 13 to each State and to each Union Territory with a legislative assembly. A CAG page says it covers the Contingency Fund, the Public Account, and trading and profit-and-loss accounts kept by departments. Audit covers expenditure, receipts, stores and stock, and grants and loans, as explained in government audit and the three types.
Audit offices plan their work. A CAG FAQ page says each office prepares an annual plan from a detailed risk analysis, using factors such as expenditure, internal controls, past findings, media reports and schemes.
How a State audit result reaches the Legislature
- The audit team inspects a department or scheme and issues an inspection report to the officer in charge.
- Significant findings become draft paragraphs sent to the department Secretary, with a copy to the Finance Secretary.
- The department has six weeks to reply, unless another period is set.
- Finalised paragraphs go into a report.
- A CAG-authorised officer sends the signed report to the State Finance Department, which submits it to the Governor to be presented to the Legislature.
- The report is referred to the Public Accounts Committee or the Committee on Public Undertakings.
More on steps 2 to 5 is in how CAG reports are prepared, and on step 6 in the Public Accounts Committee.
Local bodies
Panchayati Raj Institutions and Urban Local Bodies are usually audited by State agencies. A search found that CAG reports describe Technical Guidance and Supervision (TGS) by the CAG over this audit under Section 20(1) of the 1971 Act, based on State entrustment, and that some reports also cite Section 14 for direct audit. Reports blur the two, so read the report for the State concerned. We did not open the Act to check the section text.
Other products
State audit offices also produce reports on Annual Technical Inspection of local bodies and other miscellaneous reports, according to menu listings on the Madhya Pradesh page. We have not described their content.
What auditees should keep ready
- Complete treasury and departmental records for the year.
- Sanction orders and budget provision details.
- Reconciled expenditure figures, because the Appropriation Accounts compare actuals with provision.
- A tracker for draft paragraph replies and action taken notes.
Frequently Asked Questions
What does the Accountant General do?
In the A&E role, compiles State accounts. In the Audit role, audits departments and prepares audit reports, for the CAG.
Who audits State government accounts?
The CAG, through the Accountant General (Audit) offices of the Indian Audit and Accounts Department.
What are Finance Accounts and Appropriation Accounts?
Finance Accounts summarise the Consolidated Fund, Contingency Fund and Public Account. Appropriation Accounts show grant-wise expenditure against the Legislature's approved provision.
To whom does the CAG report on State accounts?
To the Governor, under Article 151, who has the reports laid before the State Legislature.
Does the CAG audit panchayats directly?
It depends on the arrangement. Reports describe both direct audit under Section 14 and technical guidance and supervision under Section 20(1). Check the State's report.
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