KIIFB accounts should have been audited by CAG, says Kerala High Court

The previous State government’s decision not to entrust the audit of the Kerala Infrastructure Investment Fund Board (KIIFB) to the Comptroller and Auditor General (CAG) is more than concerning, observed the Kerala High Court.

The Division Bench of Chief Justice Soumen Sen and Justice V.M. Syam Kumar stated that the previous government should have allowed the audit, especially with regard to the “enormous discrepancies” noticed in the preliminary report.

The court held that transparency must be maintained in the accounts and functioning of the KIIFB since it was funded by the State, which furnished guarantees for its borrowings. The court also expressed displeasure at KIIFB’s adverse stance against the CAG audit.

The court noted that the present government had resolved to restructure KIIFB and as per the recommendations of an expert committee, have the CAG audit the KIIFB accounts comprehensively.

The court was considering a public interest litigation by P. Anilkumar of Kasaragod, seeking a CAG audit of KIIFB accounts. The petitioner argued that the guarantees furnished by the State government to KIIFB against borrowings bypassed the limits set by the Union government, effectively creating 'off-Budget borrowings' that threatened the State’s fiscal stability and required mandatory CAG oversight.

An affidavit filed by the CAG in this regard showed that the outstanding balance of loans taken by KIIFB as of March 31, 2024, was ₹20,041.52 crore. The CAG stated that the State has undertaken the payment of principal and interest of these loans. Entrusting the audit of KIIFB accounts to the CAG would empower it to undertake a comprehensive audit, including certification of the accounts, ensuring that KIIFB’s financial statements are prepared in a true and fair manner, the affidavit stated.

The court disposed of the plea, noting that the petitioner’s grievances had been substantially addressed by the State’s take on conducting the audit.