Even though the Supreme Court has ruled that the Comptroller and Auditor General (CAG) was empowered to examine accounts of the private telcos, the basic question remains that to what extent can CAG will scrutinize operators’ accounts.

Telecom service providers have to pay a part of their annual revenue as licence/spectrum fee. If CAG limits its audit to finding the revenue received by the operators, then telcos would not have much problem.

Operators have apprehensions that the CAG would extend its brief.

“I hope CAG remains limited to audit of revenue. Recently, CAG has attained notoriety by poking its nose in everything – from policy making to auditing private operators,” said a CEO of a pan India operator.

One should remember that CAG has been trained for auditing accounts of government and public sector.

On Thursday, the Supreme Court ruled that a CAG scrutiny was imperative to ensure that the government, which has accorded the private companies licenses of the valuable natural resources, was receiving its “legitimate share.”

                 

The court modified the Delhi High Court order that had granted a right of statutory audit to the CAG.

The SC said that the audit will not be a statutory audit or a special audit but will confine to examining the statements of account for ascertaining that there was no loss to public exchequer.

A bench of Justices K S Radhakrishnan and Vikramjit Sen asserted that since telecom companies exploited natural resources, it should be ensured that the government received its due under the revenue sharing agreement.

Telecom operators had moved the Court after TRAI found that some telecom operators were allegedly under-reporting income to avoid paying revenue share to the government.

The telecom companies approached the High Court seeking a stay on the CAG’s decision.

The January 6 court ruling has been viewed with apprehension by private firms as it is possible to interpret the directive to say all companies that contribute to the consolidated fund of India can be audited by CAG.

The case goes back to 2009 when DoT hired CAG-empanelled auditors to look into the books of Bharti Airtel Ltd, Vodafone India Ltd, Idea Cellular Ltd and Reliance Communications Ltd for the years 2006-07 and 2007-08.

DoT then issued notices to recover almost Rs 1,600 crore in unpaid dues from the five telcos in June 2012 after it was found that they had allegedly under-reported revenues.