𝐍𝐮. 𝟏𝟖𝟒.𝟒𝟓𝟖 𝐌𝐢𝐥𝐥𝐢𝐨𝐧 𝐑𝐞𝐜𝐨𝐯𝐞𝐫𝐞𝐝 𝐃𝐞𝐬𝐩𝐢𝐭𝐞 𝐏𝐮𝐛𝐥𝐢𝐜 𝐒𝐞𝐜𝐭𝐨𝐫 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐈𝐫𝐫𝐞𝐠𝐮𝐥𝐚𝐫𝐢𝐭𝐢𝐞𝐬

…𝑹𝑨𝑨 𝒓𝒆𝒄𝒐𝒗𝒆𝒓𝒔 𝒇𝒖𝒏𝒅𝒔 𝒂𝒏𝒅 𝒆𝒏𝒇𝒐𝒓𝒄𝒆𝒔 𝒂𝒄𝒄𝒐𝒖𝒏𝒕𝒂𝒃𝒊𝒍𝒊𝒕𝒚 𝒕𝒉𝒓𝒐𝒖𝒈𝒉 𝒓𝒆𝒔𝒕𝒊𝒕𝒖𝒕𝒊𝒐𝒏, 𝒔𝒂𝒏𝒄𝒕𝒊𝒐𝒏𝒔, 𝒂𝒏𝒅 𝒄𝒐𝒓𝒓𝒆𝒄𝒕𝒊𝒗𝒆 𝒂𝒄𝒕𝒊𝒐𝒏𝒔 𝒂𝒄𝒓𝒐𝒔𝒔 𝒑𝒖𝒃𝒍𝒊𝒄 𝒔𝒆𝒄𝒕𝒐𝒓

By Yeshi Dolma

While the Annual Audit Report 2024–25 reveals substantial financial irregularities that have raised concerns about governance standards across Bhutan’s public sector, the document also presents a more encouraging story of institutional effectiveness. The Royal Audit Authority (RAA) facilitated total recoveries of Nu. 184.458 million during the financial year, demonstrating that Bhutan’s accountability framework is producing tangible results in restitution and corrective measures that protect public resources.

Among the most significant recoveries, Nu. 6.325 million was directly refunded to the Asian Development Bank, reflecting the RAA’s ongoing coordination with international development partners to ensure proper utilisation of externally assisted project funds. This refund represents not only the recovery of misappropriated resources but also the preservation of Bhutan’s relationships with development institutions that provide critical financing for national development programmes. Additionally, Nu. 2.829 million was adjusted from Running Bills, demonstrating an alternative mechanism for recovering funds through direct offset against future payment obligations to contractors and service providers.

“These recoveries highlight the critical role of audit in safeguarding public resources,” the Auditor General stated during the press conference. “The three-pronged strategies of reinforcing accountability pursued by RAA in restitutions, sanctions and corrective measures have demonstrated improvements in most agencies. The cases that require actions from the auditees are spelt out in the individual audit reports, identifying accountable officials for treatment of issues, initiating sanctions and taking corrective actions.”

The report documents numerous specific cases where recoveries were effected following audit interventions, providing detailed accounts of how irregularities occurred and how they were detected. The National Soil Service Centre, Simtokha, emerged as a 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 chemicals. The duplicate payment related to a single bill- Bill No. 895 dated 24 April 2023- which was processed twice through the 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.

Similarly, the Regional Office of Industry, Commerce and Employment, Samdrup Jongkhar, was found to have an accountant who misused funds amounting to Nu. 4.553 million through a sophisticated scheme involving advances released to various officials that were adjusted as expenditure without any supporting documents. This fraudulent practice occurred due to the absence of appropriate controls in sanctioning and recovery of personal advances. The amount was recovered in full and deposited into the Audit Recoveries Account, though the case was referred to the Anti-Corruption Commission for further investigation regarding institutional accountability and potential criminal prosecution.

“The cases containing elements of fraud reported for the year span multiple functional areas and agency types,” said Chhoden, Deputy Auditor General. “In the Finance and Revenue Management category, we identified multiple instances where advances were processed without proper documentation, revenue was not properly accounted for, and funds were withdrawn without supporting vouchers. Each of these cases has been referred to the Anti-Corruption Commission where appropriate.”

Chhoden further explained, “It is important to understand that not all audit irregularities are recoverable in monetary terms. Only those cases where a recoverable amount can be clearly established are reflected as recoveries. Many irregularities, particularly in areas such as infrastructure development, cannot always be quantified in financial terms. The recovery figures reported for FY 2024–25 do not necessarily relate only to that financial year, as recovery is an ongoing process and may pertain to irregularities identified in earlier periods as well. At the time of reporting, we present the recovery status as it stands, but additional recoveries may take place after the report is issued. This should not be interpreted as an inability to enforce recovery. Some cases are still under verification, some are in the process of recovery, and others are undergoing legal procedures, including cases before the courts. We have multiple mechanisms available to pursue recovery, and the process continues beyond the audit reporting period.”

The recovery mechanisms operate through a structured framework encompassing three interconnected approaches: restitution, sanctions, and corrective measures. Restitution involves the actual return of funds to the government treasury or relevant stakeholders through direct refunds, running bill adjustments, or other recovery mechanisms. Sanctions refer to disciplinary actions against responsible officials, ranging from administrative penalties within the civil service to criminal referrals for cases involving fraudulent intent. Corrective measures address systemic weaknesses in policies, procedures, and controls to prevent recurrence of similar irregularities in the future.

The RAA pursues the implementation of audit recommendations through a regular follow-up process, with actions sought from agencies in accordance with the Audit Act of Bhutan 2018. This legislative framework provides the legal authority for the RAA to demand compliance and enforce accountability standards across all audited entities, from the highest ministries to the smallest gewog administrations. During the year, the RAA forwarded four audit reports containing 16 individual cases to the Anti-Corruption Commission for further investigation, demonstrating the collaborative relationship between these two critical accountability institutions.

Post-COVID-19 challenges posed significant obstacles to the audit function, with high employee attrition pushing the organisation to the brink of failing to deliver its constitutional mandates. The report acknowledges that performance audits were particularly impacted, with the small unit responsible for this function suffering from both reduced frequency and fewer topics covered following the separation of employees. Despite these challenges, the organisation demonstrated remarkable resilience.

“With appropriate strategies, we demonstrated resilience and a unified spirit that the audit coverage and the quality of financial and compliance audit were not compromised,” the Auditor General noted. “However, performance audits were greatly impacted by being a small unit in terms of frequency and the number of topics covered, with the separation of employees. However, we are now fully staffed and poised to make up for the past shortfalls.”

The RAA remains steadfast in its commitment to uphold independence, professionalism, and embrace international best practices in public sector auditing, guided by the principles of the International Organisation of Supreme Audit Institutions to focus on producing high-quality audit reports and recommendations. The 13th Five-Year Plan, as well as the draft Strategic Plan 2025–2030, recognise leveraging IT skills and knowledge for conducting audits as strategic areas, focusing on capacity building of auditors in IT audit, provision of required infrastructures, platforms and tools.

“Public trust in governance depends on demonstrable accountability,” the report emphasizes. “The RAA reaffirms its unwavering loyalty to the Tsa-Wa-Sum and our sacred duty to safeguard public resources, enhance accountability and contribute meaningfully to the sustainable and inclusive development of our beloved Kingdom. I extend my sincere appreciation to the management and staff of the audited agencies for their cooperation, and to the auditors and supporting staff of the RAA for their dedication and integrity.”