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Kerala, PSUs hold shares, CAG audit must for Kannur airport: Centre

The Union government has reiterated that CAG needs to audit the accounts of Kannur International Airport Limited (KIAL) on an annual basis. 

Published: 25th August 2021 06:31 AM  |   Last Updated: 25th August 2021 06:31 AM   |  A+A-

Kannur airport

Express News Service

THIRUVANANTHAPURAM: The Union government has reiterated that CAG needs to audit the accounts of Kannur International Airport Limited (KIAL) on an annual basis.Minister of State for Finance Pankaj Chaudhary said 64% of KIAL shares have been held by the state government and public sector enterprises. Hence, it is proper for CAG to audit the transactions of KIAL.

In May, this year, the Kerala High Court stayed a proposed CAG audit in KIAL after the company challenged the plan. The case is still pending with the court. KIAL argued that it was not a government company and hence wouldn’t be bound by the CAG audit. 

When the CAG, through the office of the principal accountant general, sought to appoint an auditor for the 2018-19 financial year, KIAL replied that as per the new 2013 Act, CAG could not appoint a statutory auditor.

In a written reply furnished on August 3 to a question by CPM’s Rajya Sabha member K Somaprasad, Chaudhary said the share composition of KIAL was such that 32.86% was held by the state government and 31.93% by the public sector enterprises under the state and Central governments.

“In KIAL, Compliance Audit for 2009-11, 2011-15 and 2015-16 was conducted under Section 143(7) of the Companies Act, 2013 read with Section 19 of CAG’s (Duties, Powers and Conditions of Service) 
Act, 1971. Financial Audit for 2009-10 to 2015-16 was conducted under Section 143(6) of the Companies Act, 2013.Compliance and Financial Audits of KIAL from 2016 have not been allowed,” Chaudhary said.

“The Ministry of Corporate Affairs directed KIAL to comply with the provisions of Section 139(5) and 139(7) of the Companies Act, 2013 by virtue of the fact that about 64% of the shares of the Company are held by the Kerala Government,” Pankaj Chaudhary said. He, however, said CAG is not empowered under Section 14(1) of CAG’s (DPC) Act, 1971 in conducting suo motu audit of KIAL.

To a related query, Chaudhary replied that compliance audit of Kerala Infrastructure Investment Fund Board (KIIFB) for the 1999-2007 period and for 2016-20 was conducted under Section 14(1) of the CAG’s (DPC) Act, 1971.“CAG is empowered to conduct the compliance audit of KIIFB under Section 14(1) of CAG’s (DPC Act), 1971. The audit is conducted as per the prescribed procedure for conduct of such audits,” he told

Somaprasad. The CAG’s observations about the legality of KIIFB’s external borrowings in its audit report last fiscal had kicked up a row in the state. The CAG report had said the loans were taken by bypassing the cap set on external borrowings and that was done by flouting constitutional norms.In January, the Kerala assembly passed a resolution condemning CAG’s audit report against KIIFB.



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