CAG Performance Audit on UPSIDA: Audit or After-Action Report?

Audit or After-Action Report: When CAG Must Go Beyond Narrating What the Department Already Did

By P. SESH KUMAR

New Delhi, February 21, 2026 — The Performance Audit on UPSIDA (CAG’s Report No. 14 of 2025 of Government of Uttar Pradesh) is forceful in tone and weighty in numbers. It documents forged credentials, weak financial vetting, non-recoveries, delayed projects, and plot allotment irregularities.

But a sharper institutional question emerges: how should the CAG avoid merely reproducing administrative developments — such as contract cancellations or FIRs — that were already initiated by UPSIDA or the Government of Uttar Pradesh? When an audit recounts actions already taken rather than independently unearthing systemic risk, it risks sliding from constitutional watchdog to retrospective chronicler.

When the Audit Echoes the File

One of the more uncomfortable aspects of the UPSIDA audit narrative is this: several of the headline developments-cancellation of contracts awarded on forged papers, initiation of FIRs, or administrative action-were not triggered by the CAG audit itself. They were already underway.

That distinction matters.

If forged documents were detected internally and contracts were cancelled in 2017–18, and the audit later documents that these cancellations happened, then the audit is not uncovering the fraud-it is certifying the aftermath.

Certification has value. But discovery has greater value. And diagnosis has the greatest.

The risk here is subtle but serious. When audit reports prominently recount actions already taken-“contracts were cancelled,” “FIRs were filed,” “amounts are under recovery”-they may inadvertently appear to endorse administrative closure rather than interrogate institutional failure.

A performance audit should ask: Why did forged documents pass through scrutiny in the first place? Why or how were internal controls insufficient to prevent this? Why were financial capacity checks either absent or cosmetic? What governance design made such lapses predictable?

Merely narrating cancellations shifts the focus to damage control rather than root cause.

The Danger of Administrative Replay

When an audit reproduces departmental actions already recorded in files, three risks arise.

First, it dilutes audit distinctiveness. If the executive already cancelled the contract and filed FIRs, the audit’s value cannot lie in stating that these actions occurred. It must lie in evaluating whether those actions were timely, sufficient, systemic, and preventive.

Second, it may create the illusion of closure. An FIR is not reform. A cancellation is not control strengthening. Recovery “under process” is not financial discipline. If audit reporting stops at recounting these measures, it risks mistaking motion for accountability.

Third, it diverts attention from institutional architecture. The public discourse shifts to “who forged” instead of “why governance allowed forgery to succeed.”

An audit that merely documents post-facto administrative action resembles an after-action report. A performance audit must instead function as a system redesign brief. Perhaps, the CAG expects the Public Accounts Committee to seek answers to these questions during oral examination of the senior officers of Government.

Where the UPSIDA Audit Needed Greater Depth

The UPSIDA audit is strong in presenting irregularities — ₹255 crore contracts on forged papers, inadequate assessment of bidders’ financial capacity, non-recovery of liquidated damages, and weak allotment procedures.

But what remains insufficiently explored is the structural anatomy of these failures. Were verification mechanisms manual and unchecked? Was there absence of digital cross-validation? Did tender evaluation committees lack technical expertise? Were incentive structures skewed toward speedy allotment rather than prudent scrutiny?

Was internal audit inactive or ineffective? Were red flags repeatedly ignored over years? Without mapping these causal chains, the audit remains event-focused rather than system-focused.

Performance auditing should move beyond: “This happened.” To “This happened because the institutional design guaranteed it.”

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How CAG Can Avoid Reproducing Executive Narratives?

If future performance audits are to avoid becoming compilations of departmental file notes, the CAG must consciously shift methodology.

First, audit reporting should clearly distinguish between discoveries made through audit examination and actions already initiated by the entity. Could a separate section titled “Audit-Initiated Findings” versus “Departmental Actions Preceding Audit” prevent conflation?

Second, the audit must evaluate the adequacy of departmental responses. If contracts were cancelled, was responsibility fixed internally? Were control processes amended? Was recurrence prevented? Were systemic safeguards institutionalised? Without this assessment, narrating cancellations becomes superficial.

Third, sampling and methodology must be transparent and robust. When findings appear based on specific cases without statistical grounding, the audit risks being read as selective documentation rather than comprehensive performance evaluation. Some references to sampling do appear in the report, though. But these could be more scientifically and rationally listed.

Fourth, the audit should include explicit root-cause mapping. This means tracing irregularities back to governance frameworks, control failures, accountability diffusion, IT system weaknesses, and policy ambiguities. The absence of such analysis leaves readers with symptoms but no diagnosis.

Fifth, recommendations must be structural rather than advisory. Instead of recommending “strict adherence to rules,” audits should propose design changes-digital verification platforms, risk-scoring systems for bidders, mandatory capacity validation protocols, automated recovery enforcement dashboards, and measurable accountability timelines. 

The Real Value Addition Expected from CAG

The Constitution did not create the CAG to restate administrative file movement. It created it to independently assess whether public institutions are designed and operating in a manner that protects public resources.

In the UPSIDA case, the real opportunity lay in transforming a series of irregularities into a blueprint for governance reform across industrial development authorities-not just in Uttar Pradesh but nationwide.

The CAG could have:

• Demonstrated how manual verification frameworks are inherently vulnerable.
• Shown how diluted liquidated damage (LD) clauses incentivise delay- also, keep in view that LDs are generally difficult to withstand legal scrutiny and challenges.
• Mapped how weak enforcement culture erodes contract discipline.
• Quantified systemic fiscal exposure beyond the specific cases examined.
• Benchmarked UPSIDA’s governance practices against best-practice development authorities.

That is where performance auditing moves from narrative to nation-building.

Lessons Forward

For UPSIDA, the lesson is clear: cancellations are not reform. Systems must be redesigned to prevent recurrence.

For the Government of Uttar Pradesh, the lesson is that administrative action must not stop at reactive measures. Structural control strengthening must be monitored and enforced.

For the CAG, the lesson is even sharper. Performance audits must avoid becoming chronicles of executive response. They must interrogate the institutional DNA that breeds recurring failure.

The future credibility of performance auditing depends not on how many irregularities are listed, but on how convincingly audits demonstrate that systems are either fit for purpose—or fundamentally flawed.

Closing Reflection

An audit that narrates what the department already did is informative. An audit that explains why the department had to do it is transformative.

The UPSIDA report stands at that crossroads. The next evolution of Indian performance auditing must choose transformation.

(This is an opinion piece. Views expressed are author’s own.)

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