"Some dissonance has crept into the public discourse and for reasons which are inexplicable, the CAG and the government have been cast as adversarial to each other," Chidambaram said at a CAG conference in New Delhi on Tuesday. "Perhaps this in the nature of the functions of the government and CAG."
Chidambaram said that the CAG has played a key role in addressing issues of good governance and the government is obliged to take necessary actions to address gaps in governance.
Since policy making is often through trial and error and audits are a post-decision exercise, "they are cast as adversaries to each other," he added.
Highlighting that institutions and individuals are in the process of learning, Chidambaram said, "The recent opinion of the Supreme Court has brought about a great degree of clarity".
The Supreme Court in its 27 September opinion had said that auctions are not the only permissible method for disposal of natural resources across sectors.
The CAG had used auctions as the benchmark for calculating undue benefit to private companies in the allocation of coal blocks without bidding.
Chidambaram said that CAG comes under the constitution of India.
"The authority of the CAG to perform duties and discharge functions is under a law made by Parliament. Thus, while it is correct to describe the office of the CAG as a constitutional office, it may also be remembered that CAG owes its authority to a law made by Parliament," he said.
Chidambaram said while tax policies are the prerogative of the government, tax laws are the prerogative of Parliament.
"Government looks to the auditor's report to improve its systems and procedures so that both on the revenue side and expenditure side government is able to meet its budgeted targets," he said.
Chidambaram said the government would work to soon put in place a modern financial reporting system.
He further said that through Finance Act, 2012, Parliament entrusted to CAG the review of compliance with the Fiscal Responsibility and Budget Management Act, 2003.