Abstract

Public sector governance in the twenty-first century is increasingly characterized by complex policy challenges, inter-ministerial programmes, and multi-stakeholder delivery systems. Governments are investing unprecedented resources in infrastructure, digital platforms, social protection, and environmental initiatives that cut across traditional administrative boundaries. In such a context, traditional silo-based auditing approaches often fall short in capturing systemic risks that arise from interconnected governance structures.

Supreme Audit Institutions (SAIs) therefore face the challenge of evolving their audit methodologies to ensure that accountability mechanisms keep pace with the complexity of public administration. Integrated and cross-cutting audits have emerged as an important tool in this regard. These audits examine policy frameworks, institutions, and operations across multiple entities to assess whether public programmes achieve intended outcomes in an efficient, economical, and effective manner.

This article examines the role of integrated and cross-cutting audits in strengthening public sector accountability. It discusses conceptual foundations, institutional challenges, and presents a case study from India on the audit of “Multi-Modal Transport And Logistics (MMTAL)” initiatives led by Indian Railways.

Introduction: The Evolution of Accountability

Public sector accountability has traditionally been viewed through the lens of individual departmental performance. However, as governments shift toward "Whole-of-Government" approaches, addressing complex issues like climate change, logistics integration, urban development, and digital transformation, the mandate for Supreme Audit Institutions (SAIs) must similarly evolve.

SAIs must adopt methodologies that track the flow of resources and data across various legal and administrative boundaries. Integrated and cross-cutting audits represent this new frontier, focusing on outcomes rather than just departmental outputs.

Concept of Integrated and Cross-cutting Audits

An Integrated Audit combines elements of financial, compliance, and performance auditing into a single oversight exercise. It ensures that the reliability of financial reporting and the efficacy of internal controls are evaluated alongside the economy and efficiency of the program.

A Cross-cutting Audit, conversely, follows a theme or a project across multiple ministries, departments, and even levels of government (Central, State, and Local). It is particularly effective for:

• Infrastructure Projects: Where land acquisition, environmental clearance, and funding involve different agencies.
• Digital Ecosystems: Where data flows between systems like FOIS (Railways), ULIP (Logistics), and private sector platforms.
• Social Safety Nets: Where beneficiaries receive services from health, education, and social welfare departments simultaneously.

Case Study: Theme-Based Audit of Multimodal Transport and Logistics (MMTAL)

A prime example of this approach is the recent audit of “Multimodal Transport and Logistics” initiatives within the Indian Railways and the broader logistics ecosystem.

Background and Context

Efficient logistics is a critical determinant of economic competitiveness and trade efficiency. In India, logistics systems involve multiple modes of transport—railways, roads, ports, inland waterways, and air cargo. However, these sectors have historically developed in silos, resulting in fragmented planning and operational inefficiencies. While logistics costs for India as a whole stood at 7.97% of GDP in FY 2023-24 ¹ for long distance, they remain as high as 16.9% for MSMEs, eroding competitiveness and raising inflation, congestion, and emissions. Rail’s freight share declined from 89% in 1951 to 26% in 2025, while road accounts for over 70%, reflecting weak multimodal integration and capacity constraints. Rail freight remains significantly cheaper—₹1.96 per tonne-km compared to

₹3.78 for road ² - and far cleaner: road transport accounts for 90% of transport-sector CO₂ emissions, while rail contributes only 6% ³.

Government initiatives such as the Unified Logistics Interface Platform (ULIP), PM Gati Shakti National Master Plan and the National Logistics Policy aim to address these challenges by promoting integrated infrastructure development and multimodal connectivity.

Despite these initiatives, several structural challenges persist:

• low average freight train speeds
• inadequate multimodal terminals
• weak first- and last-mile connectivity
• fragmented digital systems across transport modes
• regulatory and documentation complexities
• Lack of assured time and dynamic pricing

By virtue of its constitutional mandate, the SAI of India is uniquely positioned to undertake a cross-sectoral, system-level, and forward-looking audit. This is critical in the context of unprecedented public expenditure, multiple concurrent initiatives across ministries, and persistent gaps between policy intent and outcomes.

Audit Objectives and Scope

The audit was designed as a cross-sectoral and inter-departmental exercise, covering the period 2022-23 to 2024-25. Its objectives included assessing:

• alignment of railway planning with national logistics policies
• integration between railways, roads, and ports
• operational performance of logistics infrastructure
• digital platforms supporting logistics operations
• Global best practices and suitability to Indian context

The audit covered multiple levels of the railway organization—from policy formulation at the Railway Board to implementation at zonal, divisional, and field units. It also examined related entities such as logistics terminals, dedicated freight corridors, and multimodal logistics parks (MMLPs) from both Roadways and Ports sector.

Methodology for Cross-cutting Audits

Unlike traditional audits, the Audit Design Matrix (ADM) for a cross-cutting theme must identify "interface risks"—points where the hand-off between two agencies might lead to data loss, financial leakage, or delays. The audit adopted several innovative practices consistent with integrated audit principles.

1. Institutional collaboration - An Integrated Audit Group was established to coordinate efforts across different audit wings and ensure consistency in methodology. It consists of officers and teams from Audit offices of Roadways, Shipping and Customs.
2. Data-driven analysis - A dedicated Remote Digital Auditing Cell examined digital platforms and logistics data flows, enabling evidence-based analysis of operational performance. The analysis covered integration of IT systems of various modes of transport to check for end-to-end integration and data flow, including real time data availability.
3. External domain expertise - Academic institutions like IIM Mumbai and IIM Ahmedabad was engaged to support analytical frameworks for Origin-Destination pairs and benchmarking.
4. Stakeholder consultations - The audit included consultations with policymakers, logistics operators, freight users, and industry associations. Beneficiary survey by NCAER is being conducted to capture user perspectives on logistics costs, operational challenges, etc.
5. Field Visits – Field visits to ports, CONCOR terminals, MMLPs, etc apart from regular visit to audit departments was done to get first hand experience.

Key Insights from Audit

Although the audit is still evolving, the integrated approach has already generated several important insights:

• Fragmented planning across transport sectors led to infrastructure gaps and inefficient modal integration. There was no policy for MMLPs in Railways.
• Digital interoperability remains a key challenge, as different transport modes operate separate information systems with limited integration between them on real time basis.
• First- and last-mile connectivity to rail terminals significantly affects logistics efficiency and modal shift from road to rail as a result of which Railways is w=not able to increase its modal share from 26%.
• Stakeholder feedback indicates that regulatory complexity and documentation requirements continue to increase transaction costs and hence they prefer roadways over railways.

These findings highlight the value of integrated audits in identifying systemic issues that cut across institutional boundaries.

Lessons for Supreme Audit Institutions

The experience from this case study offers several lessons for SAIs seeking to adopt cross-cutting audit approaches.

1. Institutional coordination within the SAI - Integrated audits require collaboration across audit departments and sectors within the SAI itself. Establishing specialized audit groups can help coordinate such efforts.
2. Use of data analytics and digital tools - As government programmes increasingly rely on digital platforms, auditors must strengthen their capacity for data analytics and system audits.
3. Engagement with domain experts - Complex policy areas such as logistics, climate change, or digital governance may require expertise beyond traditional auditing skills. Partnerships with academic institutions and research organizations can enhance analytical depth. E.g. data scientists, urban planners, and logistics experts.
4. Beneficiary-centric approach - Citizen and stakeholder feedback is crucial for evaluating programme outcomes. Surveys, workshops, and consultations should therefore form an integral part of audit methodology.
5. Focus on systemic recommendations - The objective of cross-cutting audits is not merely to identify deficiencies but to provide actionable recommendations that improve coordination and policy effectiveness.

Challenges and learnings from MMTAL

Despite their benefits, integrated and cross-cutting audits face significant hurdles:

• Coordination Constraints: SAIs often faces challenges when they have to do auditing by collaboration of

multiple offices, since Integrated and cross-cutting audit is new and jurisdiction and conceptual understanding of offices varies. The solution is Integrated Audit Group to oversee such audits.

• Skill Gaps: Auditors require "Data Literacy"—the ability to analyze IT system logs and understand system integration design documents. Capacity building and regular Workshops/interaction among offices is the way to go.
• Resource Intensity: These audits require larger teams and longer timelines than traditional departmental inspections. The field audit for MMTAL audit was initiated in December and completed in March (four months). Thus, this audit has set a benchmark on how to squeeze the time and resources.

Conclusion

As we look toward the mid-21st century, the role of the auditor is changing from a "fault-finder" to a "system-evaluator." The case study on the audit of Multi-Modal Transport and Logistics initiatives in India illustrates how such approaches can identify systemic bottlenecks and recommend evidence-based policymaking. Through data-driven analysis, stakeholder engagement, and collaboration with domain experts, the audit demonstrates the potential of integrated methodologies to strengthen accountability and improve governance outcomes.

By sharing such experiences and best practices, SAIs across the ASOSAI region can collectively advance the development of modern, responsive, and impactful public sector auditing systems and thus accountability.

¹ DPIIT Report - NCAER study (September 2025)- Assessment of Logistics Cost in India

² DPIIT Report - NCAER study (September 2025)- Assessment of Logistics Cost in India

³Working Paper on “ Pathways to decarbonize India’s transport sector: Scenario analysis using the Energy Policy Simulator” by WRI India (August 2024).