The Comptroller and Auditor General (CAG) tabled its latest Financial Audit Report on Accounts of the Union Government 2024-25 in Parliament on 2 April 2026. The review flagged ₹54,282.32 crore in unaccounted Central expenditure, highlighting persistent systemic irregularities in financial management and raising concerns over transparency, accountability and the accuracy of public accounts.

While the report noted positive macroeconomic indicators, including 7.10% real GDP growth and an 8.27% decline in fiscal deficit compared to the previous year, it also highlighted recurring failures in expenditure tracking, accounting practices and financial oversight.

Financial Irregularities in Accounts of the Union Government 2024-25

One of the most significant observations related to pending Utilisation Certificates (UCs), which certify that grants released by the government have been used for their intended purpose. As of 31 March 2025, 33,973 UCs amounting to ₹54,282.32 crore remained outstanding across 15 ministries and departments. Of this, ₹38,287.52 crore pertained to the previous three financial years between 2021–22 and 2023–24. However, some pending certificates dated back nearly four decades to 1985–86.

The Ministry of Housing and Urban Affairs accounted for the highest pending amount at ₹18,272.91 crore, followed by the Department of Higher Education with ₹14,359.76 crore.

The CAG noted that this violated Rule 238 of the General Financial Rules (GFR), 2017, which requires utilisation certificates to be submitted within 12 months of the end of a financial year. The report emphasised that utilisation certificates remain the only mechanism available to confirm whether public funds released as grants-in-aid were actually used for the purposes approved by Parliament.

Beyond delays in certification, the auditor also identified widespread accounting errors and misclassification of expenditure and receipts amounting to ₹12,754.47 crore. Of this, ₹8,742.56 crore related to expenditure booked under incorrect accounting heads, while receipt misclassifications totalled ₹4,011.91 crore.

The report cited instances where revenue expenditure was wrongly booked under capital heads and non-tax revenues were incorrectly shown as tax revenues. In one case, the Department of Atomic Energy booked ₹3,089.97 crore of operational revenue expenditure under capital major heads despite accounting norms prohibiting such classification.

Another recurring issue identified by the auditor was the continued reliance on “Minor Head 800”, an omnibus accounting category intended only for miscellaneous transactions. The report stated that more than 50% of expenditure amounting to ₹4,957.58 crore and receipts worth ₹4,087.43 crore under several major heads were booked under “Other Expenditure” and “Other Receipts” categories during 2024–25.

The CAG warned that excessive use of such broad categories obscured the actual nature of government transactions and weakened transparency in financial reporting. The CAG said these practices distorted the government’s fiscal position and reduced transparency in public accounts.

The audit also pointed to weaknesses in fund transfers and reconciliation practices. According to the report, ₹9,222 crore collected through cess, levies and surcharges was not transferred to designated reserve funds during the financial year. These included funds such as the Prarambhik Shiksha Kosh and the Pradhan Mantri Swasthya Suraksha Nidhi. In addition, ₹10,380.36 crore collected for compensatory afforestation remained pending for disbursement to states and Union Territories by the end of the financial year.

The report also highlighted 56 cases of adverse balances under various fund and deposit heads. Of these, 39 cases had remained unresolved for more than five years. A particularly large adverse balance of ₹44,714.77 crore was reported under the Ministry of External Affairs due to what the ministry described as an incorrect transfer entry.

The CAG further noted that balances under Suspense Heads were being “netted”, resulting in understatement of actual liabilities pending clearance. The Suspense Account (Civil), for example, was understated by 76.6%. Additionally, cash balances worth ₹3,880.67 crore remained unreconciled with the Reserve Bank of India.

The report also drew attention to budgeting inefficiencies. Parliament had approved expenditure of ₹1,47,54,642.48 crore for 2024–25, but actual expenditure stood lower at ₹1,42,63,339.67 crore, resulting in overall savings of ₹4,91,302.81 crore.

At the same time, several grants recorded excess expenditure because of inadequate provisioning, while others showed persistent underspending over multiple years. The CAG said these patterns reflected weaknesses in budget estimation and expenditure planning.

See Also: CAG Questions Centre’s Claim of 100% Rural Electrification—Flags Discrepancies in Implementation, Accounting and Outcomes

Audit Compliance Framework—A Lack of Enforcement and Accountability

Under India’s financial oversight framework, the CAG can identify irregularities and place findings before Parliament. primarily happens through the Public Accounts Committee (PAC), which examines audit findings and seeks explanations and “Action Taken Notes” from ministries. Departments are expected to recover wrongly spent funds, correct accounting practices and strengthen internal controls under the GFR.

Ministries can initiate departmental inquiries, recover losses or withhold future grants in cases of non-compliance. If findings suggest corruption or deliberate financial manipulation, cases may also be referred to vigilance agencies such as the Central Vigilance Commission or the CBI.

However, the enforcement system remains largely compliance driven rather than penalty based. Many audit observations remain unresolved for years because corrective action depends on ministries themselves, parliamentary follow-up and internal administrative processes. This is one reason why issues such as pending utilisation certificates, adverse balances, misclassification of funds and excessive use of omnibus accounting heads continue to recur across successive CAG reports.

To address the recurring problems, the auditor recommended stricter adherence to accounting norms and stronger monitoring systems. It specifically called for a robust digital tracking mechanism within the Public Financial Management System (PFMS) to enable real-time recording and reporting of expenditure.

PFMS, developed by the Controller General of Accounts under the Ministry of Finance, was originally launched in 2009 to digitally track government fund flows, expenditure and payments across ministries, states and implementing agencies. The platform has since expanded into a nationwide financial management and payment network integrated with banking systems, Direct Benefit Transfer schemes and treasury systems across states.

However, the CAG report suggested that despite the existence of digital infrastructure and prescribed accounting rules, persistent delays, misclassification of funds and unresolved discrepancies continue to affect the reliability and transparency of Union Government accounts.

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