CAG to release report on natural resource accounting in November 2022

The Comptroller and Auditor General of India on Friday stated it will be coming up with the report on Natural Resource Accounting (NRA) by November, 2022.

Recognising the importance of Natural Resources, there was an attempt to develop accounting systems to help monitor their responsible utilisation, which will in turn lead to sustainability.

The UN has adopted (2012) the System of Economic and Environmental Accounting (SEEA) - Central Framework which is the latest internationally accepted framework, for NRA. NRA has deep inter-linkages with the SDGs as 4 out of the 17 goals directly relate to management of natural resources and their accounting.

India is a signatory to the UN General Assembly resolution titled, "Transforming our world; the 2030 agenda for sustainable development" (Sep 25, 2016) with the approval of more than 190 countries which requires the preparation of Natural Resource Accounts.

Around 30 nations like Australia, Canada, China, France, and Germany have attained various degrees of success in adopting environmental accounting while many others are striving to catch up.

According to CAG Government Accounting Standards Advisory Board (GASAB) was constituted by the CAG of India in 2002 with representation from all accounting services in GoI, regulatory authorities like RBI, ICAI and State Governments on rotation for improving standards of Governmental accounting and financial reporting to enhance the quality of decision-making and public accountability.

CAG of India is a member of an international body of Supreme Audit Institutions, called WGEA (Working Group on Environmental Auditing), which suggested (2010) that the audit institutions should aid their countries to adopt Natural Resources Accounts.

GASAB prepared a Concept Paper on NRA in July 2020, inter-alia, envisaging short, medium and long term goals starting from 2020, of which, the first goal was preparation of Asset Accounts on Mineral & Energy Resources, more importantly of the non-renewable and finite resources, which would ultimately aid in building resilience to environmental issues like climate change. Besides preparing the paper, GASAB and CAG decided to continue its engagement to assist the State Governments in the preparation of Asset Accounts which is the first of the four stages in the preparation of Natural Resource Accounts. To begin with, a broad based consultative group was constituted (August 2020) consisting of stakeholder ministries like MoMines, MoEFCC, MoSPI, MoPNG, MNRE, specialist agencies like Indian Bureau of Mines, ICAI, ICMAI, TERI, NRSC, GSTN etc and five State Governments and eminent environmentalist and retired bureaucrat Mukul Sanwal, IAS 1971.

NRA Cells in States were also constituted in all 28 States and 2 UTs (Delhi and JK) with unique collaboration of Accountants General (Audit, A & E) and the State Government Departments to steer the project.

As per the action plan envisaged in the Concept paper, GASAB prepared the templates for the Asset Accounts for Mineral and Energy Resources, field tested it in three States through pilot studies. They were then reviewed by the experts in the Consultative Committee.

The templates were, thereafter, distributed to the States for preparation of Asset Accounts. After the Prime Minister's declaration on Panchamrits at COP 26, GASAB included specific table to monitor progresses towards achievement of some of these targets.

GASAB has handheld the States working through the State Accountants General with strenuous efforts and monthly meetings to monitor the progresses and address the challenges in this task. It also carried out intensive capacity building efforts to build processes to prepare such accounts on a sustained basis.

As on date, all 28 States and 1 UT (J & K) have prepared the Asset Accounts for 2020-21. They are being verified and validated by various stakeholders including the State Governments and our field Offices.

To ensure automated collection and compilation of data from 2022-23, GASAB has developed SOPs for guiding the States. Besides the dataflow, the Guidelines and SOPs also suggest recommendations for end-to-end mapping of supply and use of resources which would help the States in mopping up due revenues due from these resources and also plug the leakage and wastage.