CAG Developing LLM for Accurate Auditing and Efficiency

18 Sep 2025 GS 2 Governance

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Context:

The Comptroller and Auditor-General of India (CAG) is developing a Large Language Model (LLM) to improve efficiency, consistency, and accuracy in audits.
First version expected by November 2025.
The model will be trained on previous inspection reports, embedding decades of institutional knowledge.

Knowledge Integration
- Enables auditors to access institutional knowledge quickly.
- Standardises analysis by drawing from past cases, rules, and precedents.
Data Handling
- Analyses large datasets efficiently.
- Identifies patterns, anomalies, and risks with greater accuracy.
Document Generation
- Helps auditors prepare inspection reports, risk assessments, and comprehensive audits.
Remote & Hybrid Audits
- Facilitated by ongoing digitisation of records at the Centre and States.
- Risk-based planning and secure access to govt platforms will support audits beyond physical inspections.
Use of Geospatial Tools
- Platforms like PM GatiShakti to provide evidence-based auditing, consistency across sectors.

Pilot Studies: Remote audits already tested in various domains.
- Receipts audits progressing faster due to automation and standardised data.
- Example: PAG Telangana’s compliance audit of the Stamps & Registration Department—real-time, office-based scrutiny.
Connect Portal:
- New digital interface for 10 lakh auditee entities.
- To be launched at the Annual Conference of State Finance Secretaries (Sept 19, 2025).
- Will unify communication between audit entities and the CAG’s office.

Efficiency & Accuracy: AI reduces manual effort and inconsistencies in auditing.
Transparency & Accountability: Strengthens public financial management and oversight.
Risk-based Auditing: Moves from routine checks to targeted scrutiny of high-risk areas.
Digital Governance: Supports India’s shift towards e-governance, paperless offices, and hybrid work models.

Part V, Chapter V of the Constitution (Union):
- Article 148 – Establishment of CAG, appointment by the President, conditions of service, removal similar to SC judge.
- Article 149 – Duties and powers of CAG (as prescribed by Parliament).
- Article 150 – Accounts of the Union and States to be kept in a form prescribed by the President on advice of CAG.
- Article 151 – CAG’s reports on Union accounts to the President, on State accounts to the Governor; laid before legislatures.

Audit of receipts and expenditure of Union and States.
Audit of government companies (under Companies Act).
Audit of autonomous bodies substantially financed by govt.
Certification of net proceeds of taxes shared between Union and States (Art. 279).
Audit of defence accounts, public debt, and trading/manufacturing accounts.

Overreach Debate:
- CAG accused of going beyond auditing into policy criticism (e.g., 2G, coal, PPP projects).
- Critics argue this affects its credibility as a neutral auditor.
Follow-up & Enforcement:
- CAG submits reports to legislatures, but effectiveness depends on Public Accounts Committee (PAC) and legislative scrutiny.
- Weak follow-up often dilutes accountability.
Capacity & Modernization:
- Growing complexity (PPP, infrastructure, digital economy) needs tech-driven audits (LLM initiative, remote audits, geospatial tools).
Autonomy & Independence:
- CAG is appointed by President (executive dominance), no independent collegium-like mechanism.
- Terms and post-retirement opportunities (e.g., Governorships) may affect perceived neutrality.
Political Exploitation:
- Audit reports often become political tools rather than instruments of constructive reform.