The Public Accounts Committee (PAC) is mandated to scrutinize the appropriation accounts of the Union Government and the annual finance accounts, which fall under the purview of the Comptroller and Auditor General of India (CAG). The CAG's audit reports are laid before Parliament, and the PAC examines these reports to ensure that public money has been spent in accordance with the demands for grants and that the expenditure conforms to the rules and regulations. While the PAC is a crucial parliamentary watchdog, its composition primarily involves members from both Houses, with a larger representation from the Lok Sabha, but statement 1 as written is incorrect regarding its exclusive composition from Lok Sabha members.