𝐌𝐢𝐥𝐥𝐢𝐨𝐧𝐬 𝐋𝐨𝐬𝐭 𝐓𝐡𝐫𝐨𝐮𝐠𝐡 𝐃𝐨𝐮𝐛𝐥𝐞 𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬 𝐑𝐞𝐯𝐞𝐚𝐥 𝐃𝐞𝐞𝐩 𝐒𝐲𝐬𝐭𝐞𝐦𝐢𝐜 𝐅𝐚𝐢𝐥𝐮𝐫𝐞𝐬

…𝒅𝒖𝒑𝒍𝒊𝒄𝒂𝒕𝒆 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔 𝒐𝒇 𝑵𝒖. 0.202 𝒎𝒊𝒍𝒍𝒊𝒐𝒏, 𝑵𝒖. 0.100 𝒎𝒊𝒍𝒍𝒊𝒐𝒏, 𝒂𝒏𝒅 𝑵𝒖. 4.164 𝒎𝒊𝒍𝒍𝒊𝒐𝒏 𝒉𝒊𝒈𝒉𝒍𝒊𝒈𝒉𝒕 𝒓𝒆𝒄𝒖𝒓𝒓𝒊𝒏𝒈 𝒗𝒆𝒓𝒊𝒇𝒊𝒄𝒂𝒕𝒊𝒐𝒏 𝒈𝒂𝒑𝒔 𝒂𝒏𝒅 𝒘𝒆𝒂𝒌 𝒇𝒊𝒏𝒂𝒏𝒄𝒊𝒂𝒍 𝒄𝒐𝒏𝒕𝒓𝒐𝒍𝒔

By Yeshi Dolma

A disturbing pattern of procurement irregularities has emerged from the Annual Audit Report 2024-25, with double payments to contractors representing a significant and recurring vulnerability in Bhutan’s public financial management system. These findings expose systemic weaknesses in payment verification processes that allow the same invoices to be processed multiple times. Such lapses directly undermine the government’s fiscal integrity and systematically shortchange public resources that could otherwise be deployed for national development.

The National Soil Service Centre, Simtokha, emerged as a particularly troubling case study in procurement lapses when auditors discovered a double payment of Nu. 0.202 million to M/s Tshogdag Enterprise, Thimphu, for the purchase of agricultural chemicals. The duplicate payment related to a single bill, Bill No. 895 dated 24 April 2023, which was processed twice through the government payment system.

The first payment was processed via Disbursement Voucher No. 4.29 dated 27 April 2023, and the second through Disbursement Voucher No. 5.21 dated 19 May 2023.

Upon audit detection, the amount was recovered and deposited into the Audit Recoveries Account, though the Centre has yet to take disciplinary action against the officials responsible for these lapses.

“The absence of proper payment verification protocols creates opportunities for duplicate processing that can persist for extended periods before detection,” said Jamtsho, Auditor General. “The RAA recommended appropriate action on the officials for the lapses. However, the Centre is yet to take actions on the issue. This lack of follow-through on accountability recommendations represents a significant weakness in the enforcement chain.”
Another significant case involved the office of the Gup of Tangsibji Gewog, where a double payment of Nu. 0.100 million was observed pertaining to the Renovation of Chendebji Lhakhang, a religious heritage project.

The payment was made based on photocopied bills rather than original documentation, a practice that fundamentally undermines the integrity of the payment verification system by allowing the same invoice to be submitted and processed multiple times. The RAA noted that the adjustment of the advance amounting to Nu. 0.077 million against the Gup was made through the original bills, indicating systematic double adjustment of claims that may have been facilitated by inadequate documentation controls at the gewog level.

During the audit, the Gup stated that the accountant had inadvertently misplaced the original bill. The Gup further explained that, following discussions with the Royal Audit Authority, it was clarified that the allegation of double payment based on photocopied bills was not accurate. The Gup also submitted all relevant bills, which demonstrate that the funds were expended on the renovation of the lhakhang.

These procurement irregularities do not exist in isolation but form part of a broader pattern of financial and revenue management deficiencies identified across multiple agencies and administrative levels. The RAA’s classification system places procurement-related fraud and errors within specific functional and operational areas to enable targeted identification of causes and recommendation of appropriate corrective measures.

The seven functional areas identified include Finance and Revenue Management, Procurement of Goods and Supplies, and five other operational domains that collectively represent the full spectrum of government financial activities.
The Department of Agricultural Marketing and Cooperatives, operating through the Kaja Throm market facility in Thimphu, featured prominently in the report’s fraud section with multiple interconnected instances of financial misconduct that collectively point to deep-seated control weaknesses. Auditors found a short accountal of revenue amounting to Nu. 4.164 million in its operations.

Against total collections of Nu. 18.860 million for the period from 1 January 2022 to 31 December 2024, only Nu. 14.697 million was deposited into the Current Deposit Account, resulting in a short deposit of Nu. 4.164 million. When the RAA recommended that management furnish supporting evidence to justify the shortfall, the management failed to provide relevant documents explaining the difference, leading to referral of the case to the Anti-Corruption Commission for further investigation.

Additional findings at Kaja Throm included withdrawal of funds aggregating Nu. 2.310 million from the bank without any supporting documents. The RAA observed that amounts were withdrawn without proper disbursement vouchers or bills, and management failed to produce relevant supporting documentation when requested. A short recovery of rental charges aggregating Nu. 1.630 million was also identified, with calculations based on available information for rental spaces revealing significant shortfalls between actual collections and recorded deposits. Again, management failed to furnish relevant documents explaining the difference.

Most disturbingly, auditors discovered that six booklets of Money Receipt Books were missing from Kaja Throm operations. The department had used 101 money receipt books during the period from 1 January 2022 to 31 December 2024, of which six booklets containing 150 individual receipts could not be accounted for. This missing documentation raises serious questions about revenue that may have been collected but never recorded or deposited, representing a potential loss of public funds that cannot now be verified.

“The gaps in documentation resulting from incomplete financial records and lack of accountability for revenue management during the transition from Microsoft Excel to Manual Receipt Books in 2022 impeded the verification process,” said Kencho Dorji, Asst. Auditor General. “The exact date of transition was not on record, and there was no clear record of revenue collected during the period when Excel-based record-keeping was in use. This transition represents a significant control failure that has created an accountability gap spanning multiple years.”

The Royal Bhutan Police, Trongsa Division VII, also featured in the fraud findings with a short recovery of Nu. 0.051 million that demonstrates incomplete response to detected misconduct. The internal audit of RBP had previously detected misuse of Nu. 0.149 million by the dealing accountant from the rental budget, with recovery effected and deposited into the Government Budget Fund Account in March 2025. However, the RAA’s subsequent verification confirmed that total misuse was actually Nu. 0.200 million, indicating that the initial detection and recovery efforts were incomplete and that public funds remained unaccounted for.

“The RBP was recommended to recover the balance amount and deposit into the Audit Recoveries Account, besides initiating appropriate action on the official concerned,” the report states. “The RBP is yet to take actions on the issue. This delay in implementing audit recommendations undermines the effectiveness of the entire accountability framework.”

The court system was not immune to procurement and financial irregularities, with the Royal Court of Justice at Panbang in Zhemgang found to have fabricated document surrender records. A cash balance of Nu. 0.018 million was not actually surrendered to the Government Budget Fund Account at the end of the financial year, despite being recorded as surrendered in the disbursement voucher.

This discrepancy indicates deliberate falsification of records to conceal the actual position of public funds. Additionally, an amount of Nu. 0.006 million was recorded as expenditure through reimbursement of cash expenses to an official, though the purported payee confirmed not having received the amount, indicating that funds may have been diverted through false reimbursement claims.

These procurement fraud cases have been referred to the Anti-Corruption Commission for further investigation, with the RAA recommending identification of responsible officials for appropriate action. The systematic nature of these irregularities, spanning multiple agencies and functional areas, points to deeper control weaknesses that extend beyond individual agencies to the broader public financial management framework. The four reports forwarded during the year contained 16 individual cases requiring the ACC’s specialized investigative resources, particularly those involving prima facie evidence of fraudulent intent.

The report’s ten recommendations include calls for reinforcing control mechanisms to regulate payment processes, reviewing practices around Closed Work Accounts and Deposit Works compliance, and scaling up digitization of financial records to eliminate paper-based vulnerabilities that enable duplicate payments and undocumented transactions.

The RAA has specifically noted that the Ministry of Finance should ensure robust monitoring controls to oversee compliance with activities executed as Deposit Works and should review and streamline the process of collecting rebates on procurement of cement and High-Density Polyethylene Pipes, which have been identified as areas prone to leakage.