Royal Audit Authority issued 412 audit reports and revealed irregularities amounting close to Nu 2000 million during the past year
By Rinzin Norbu
The past year saw unresolved irregularities amounting to Nu 2,051.233M showing an increase of 44.95% as compared with 2019. Most increases were noted in non-performing loans of the financial institutions, Northern East West Highway (NEWH) construction and fraud in four gewogs of Trashigang Dzongkhag. Unresolved irregularities reported for the past five years has been increasing except in 2017 revealing inadequacies in internal control, accountability and non-implementation of past recommendations provided in Annual Audit Reports.
The highest amount of irregularities of Nu 1,574.244M was reported under the category ‘Shortfalls, Lapses and Deficiencies’ followed by Nu 408.862M under the category ‘Non-compliance to Laws and Rules’. The category, ‘Mismanagement’ had irregularities of Nu 42.760M, Fraud and Corruption had Nu 18.330M and ‘Embezzlement’ had Nu 7.837M worth of irregularities.
FRAUD AND CORRUPTION
The RAA reported cases with possible elements of fraud and corruption pertaining to some agencies during the year. The total amount of irregularities under this category aggregated to Nu 18.330M. Out of the total irregularities reported, Nu 11.357M pertained to four Gewogs under Trashigang Dzongkhag perpetrated by one Account Assistant who was looking after the accounts of four Gewogs. It was followed by Autonomous agencies at Nu 4.914M and Dzongkhags at Nu 2.059 respectively. Ministries, Financial Institutions, Dungkhag Administrations, Corporations and NGO’s had no cases with possible elements of fraud and corruption.
The total irregularities reported under Embezzlement amounted to Nu 7.837M of which the Corporations had Nu 3.626M worth of irregularities followed by Gewog at Nu 2.476M. Financial Institutions, Dzongkhag Administrations and Dungkhag Administrations had no cases of embezzlement whereas NGO’s had Nu 1.088M. Autonomous agencies and Ministries had only Nu 0.323M and Nu 0.324M worth of irregularities respectively.
Irregularities relating to Mismanagement cases were highest in Dungkhag Administration with Nu 13.667M followed by Dzongkhag Administrations at Nu 9.911M and Corporations at Nu 8.369M. While Financial Institutions recorded no mismanagement cases, Ministries had cases amounting to Nu 3.236M, NGOs had Nu 2.386M and Autonomous Agencies had irregularities amounting to Nu 3.634M. An aggregate of Nu 42.760M worth irregularities were observed in all agencies for cases related to Mismanagement.
NON-COMPLIANCE TO LAWS AND RULES
The total irregularities reported under this category amounted to Nu 408.062M. Autonomous agencies had highest irregularities amounting to Nu 249.469M followed by Ministries with Nu 91.227M and Gewog Administrations with Nu 37.544M. At the lower end of the spectrum, Dungkhag Administrations only had N.1.178M irregularities under non-compliance followed by Financial Institutions at Nu 3.643M.
SHORTFALLS, LAPSES AND DEFICIENCIES
The irregularities under this category amounted to Nu 1,574.615M accounting for over 50% of the total irregularities for the year 2020. Financial Institutions had the most cases of irregularities under this category largely at Nu 651.267M contributed by Non-Performing Loans followed closely by Ministries at Nu 540.837M which was due to cases on road construction and widening projects. Corporations stand third with Nu 215.915M while the lowest were Dungkhag Administrations with Nu 19.799M of irregularities observed under Shortfalls, lapses and deficiencies.
SUMMARY OF JOINT HYDROPOWER AUDITS
The RAA conducted one Joint Audit of Hydro Power Project for MHPA which had unresolved irregularities amounting to Nu 6.379M. There were irregularities worth Nu 4.293M against the category of Non-compliance to Laws and Rules and Nu 2.086M in Shortfalls, Lapses and Deficiencies.
The Fraud & Corruption and Embezzlement cases are reported irrespective of their recovery and settlement status considering the severity of such irregularities.
‘Shortfalls, Lapses and Deficiencies’ are the category with highest amount of irregularities in most agency types including Ministries, Financial Institutions, Corporations, NGO’s and Dzongkhags. However, it can be observed that Autonomous Agencies and Gewog Administrations had more cases on ‘Noncompliance to Laws and Rules’. The agency types with highest amount for irregularities under the ‘Shortfalls, Lapses and Deficiencies’ were Financial Institutions with Nu 651.267M and Ministries with Nu 540.837M respectively. For ‘Non-compliance to Laws and Rules’, Autonomous Agencies had Nu 249.469M followed by Ministries with Nu 91.227M.
Under the budgetary agencies, the highest amount of irregularities is reported under Ministry of Works and Human Settlements at Nu 345.813M followed by Autonomous Agencies at Nu 288.788M and Ministry of Economic Affairs with Nu 261.341M. Under the non-budgetary agencies, Bhutan Development Bank Ltd. had irregularities amounting to Nu 311.023M followed by Royal Insurance Corporation Ltd and Bank of Bhutan with irregularities amounting to Nu 183.445M and Nu 160.442M respectively. The major increase for the non-budgetary agencies was due to huge portion of non-performing loans.
In the process of auditing the annual financial statements of the RGOB, it was observed that there was underutilization of capital budget by 30.03% as only Nu 22,046.920 million (M) was utilized from a total revised budget allocation of Nu 31,510.374M.
The underutilization resulted due to impact by the COVID-19 pandemic in mobilizing resources, inadequate implementation readiness and capacities of respective agencies, change in design and drawings of the activities, lack of responsive bidders and delay in getting clearances.
The Annual Audit Report 2020 has been compiled from 412 audit reports issued during the year including two performance audit reports and one Joint Audit on Hydropower Projects.