Non-budgetary agencies top RAA irregularities with 56.12 percent



The total irregularities for the financial year (FY) 2022-23 amounted to Nu 2,840.093 million (M) of which 56.12 percent pertained to non-budgetary agencies1 and 43.88 percent to budgetary agencies.

According to the annual audit report, 2022-23 published by the Royal Audit Authority (RAA), the anomalies in the budgetary agencies are Nu 979.053 M for non-compliance, Nu 229.189 M for deficits and lapses, and Nu 37.998 M for fraud and corruption. While Nu 1.607 M was for fraud and corruption in non-budgetary agencies, Nu 1265.752 M for non-compliance, and Nu 326.494 M for deficits and lapses.

Non-budgetary agencies include Corporations and Financial Institutions, State Owned Enterprises, non-governmental organizations, Civil Society Organizations, and Hydropower projects.

While budgetary agencies are government organizations including Ministries and Agencies for which annual budgets are included in the appropriation bill and appropriations are made by the National Assembly. 

During the period, Nu 202.458 M was recovered as audit recoveries from both the budgetary with Nu 190.264 M and non-budgetary agencies with Nu 12.194 M. An additional amount of Nu 3.211 M was recovered and deposited directly with the Department of Public Accounts (DPA).

While irregularities in general have significantly reduced during the year despite an increase in the number of audits conducted, the total audit recoveries for the year amounted to Nu 205.699 M remains the highest so far.

The type of irregularities observed during the period showed that there were instances of fraud and corruption amounting to Nu 39.605 M of which the Ministry of Information and Communication accounted for Nu 12.718 M accounting to 32.11 percent and Dagana Dzongkhag Administration, accounted for Nu 9.213 M accounting for 23.25 percent.

Irregularities under non-compliance to laws, rules, and regulations amounted to Nu 2,244.804 M of which Punatshangchu Hydroelectric Project-II accounted for 39.47 percent and Phuentsholing Township Development Project accounted for 21.35 percent.

Irregularities under shortfall, lapses, and deficiencies amounted to Nu 555.683 M of which Druk Holding and Investments accounted for 26.25 percent and Punatshangchu Hydroelectric Project-II accounted for 24.11 percent.

The report states that the efficiency and effectiveness of control mechanisms are dependent on the monitoring and supervision of the activities that take place within the agencies. Most irregularities point towards a lack of accountability and ownership of implementing agencies and officials towards the activities resulting in financial implications to the government.

Additionally, implementing agencies do not take actions, as recommended in individual audit reports, to ensure that irregularities pointed out by the RAA are properly treated, officials responsible are sanctioned, and a proper system is put in place to curb the repetition of such irregularities in the future.

The RAA also noted that despite issues getting settled in court and verdicts passed, the responsible agencies fail or delay in their actions to enforce the court verdict resulting in the piling up of pending issues.

The RAA has provided seven recommendations to improve accountability, governance, and public finance management in the country.

The RAA believes that, if all agencies collectively prioritize resolving audit issues, act on the recommendations provided, and hold officials accountable for their actions, His Majesty’s vision of Bhutan being a ‘corruption-free’ and ‘zero-incidences of non-compliance’ can be realized.

Meanwhile, the RAA notes that the number of irregularities has started declining despite the increase in some audits conducted and this in itself is a positive step towards achieving His Majesty’s Vision.

The Annual Audit Report 2022-23 contains audited Annual Financial Statements (AFS) of the Royal Government of Bhutan (RGoB) and an analysis of audit findings issued during the period. It also contains the performance of RAA for the FY 2022-23.

The audit findings reported are from 456 financial and compliance audit reports and one performance audit report issued between 1st July 2022 and 30th June 2023.

Meanwhile, the approved budget for the FY 2022-2023 was Nu 74,807.887 M which was revised to Nu 79,360.850 M. The sources of the revised government budget comprised 41.84 percent from domestic revenue, 26.32 percent from grants, 24.49 percent from borrowings, and 0.02 percent from other receipts.

The government borrowed Nu 66,367.393 M through T-bills and Nu 3,603.620 M through bonds besides redeeming Nu 75,363.898 M during the year.

The debt stock was reduced by Nu 6,496.505 M in the liability of T-bills leaving a balance of Nu 9,050 M as of 30th June 2023.

The government also raised Nu 8,727.508 M from external borrowings including Nu 7,965.412 M in cash and Nu 726.096 M in kind. Total grants received during the year amounted to Nu 14,363.319 M comprising Nu 14,093.105 M in cash and Nu 270.215 M in kind.

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