The correct answer is option 3, the 1935 Act. The 1935 Act suggested the creation of the post of Comptroller and Auditor General (CAG). The CAG is an independent constitutional authority responsible for auditing the accounts and financial transactions of the central and state governments. The CAG plays a crucial role in ensuring transparency and accountability in the use of public funds. It conducts audits to assess the financial practices and efficiency of government departments. The CAG submits audit reports to the President or Governors, and these reports are then presented to Parliament or State Legislatures. The 1935 Act was a significant milestone in establishing the CAG as an important institution in India`s governance framework.