News Archives

January

Annual Audit Report

Press Release - Dated: 25th January 2002

In the service of the PAL DRUKPA and towards contributing to ITS commitment to see that in the Kingdom of Bhutan there is accountability in the public service and the society, the RAA is pleased to release its Annual Report for the Year 2000.

This report is a humble attempt to firstly report the account of hard and dedicated work of our auditors for one calendar year and their accountability. Secondly, it is intended to serve as an account and commentary on the quality and capacity of our public services and an assessment of the attitude of members of the Bhutanese society in appreciation of the judiciousness and sense of responsibility in the application and demands on the national resources. 

During the year 2000, more than 202 agencies were audited, 183 reports were transmitted and 59 previous reports were actively pursued, some as old as 1998.  The statistics in the table below portray the hard and dedicated work of our auditors for one calendar year.    

Nature of 0bservation	Agencies (Nu. in million)
	MoHA	MoF	MoC	MoHE	MTI	MoA	Autonomous	Judiciary	Corps.	GOI Projects	Total
Excess payments	3.73	0.65	4.42	0.36	0.12	0.41	0.28	0.39	6.51	20.88	37.75
Misappropriation	2.11	0.18			0.26	0.12					2.67
Outstanding advance	45.80	100.76	39.17	100.90	102.95	13.09	13.05		18.94	7.42	442.08
Outstanding revenue	1.09	82.90	9.83	0.49	7.05	0.53	1.32	0.64	0.85	0.49	105.19
Irregular payments	3.12	1.91	17.42	5.25	0.46	1.73			21.71	43.33	94.93
Tendering losses	0.13		8.60		9.68	0.42			0.36		19.19
Non-accountal of stocks	0.07		0.20		0.91					0.17	1.18
Loss of revenue		0.78	11.34		1.40						13.52
Wasteful Expenditure						2.46				24.95	27.41
Non-levy of Liquidated damages										0.55
Recoverable Amount from Contractors										9.68
Total	56.05	187.18	90.98	107.00	122.83	18.76	14.65	1.03	48.37	107.46	754.31

I am happy to report that no major instances of corruption of the nature of near compatibility a malaise that afflicts in others countries is detected.  It is due primarily ascribed to the superiority in political statesmanship that Bhutan was privileged under the farsighted leadership of His Majesty the King. 

Irregularities in the application of the government funds reported in this rep are more of administrative lapses.  They nonetheless total over Nu. 754 million in the year 2000 only.  We feel prudent management if diligently applied could have offset the borrowings and the resource gap of about Nu. 700 million in the 1999-2000 Annual Budget of the Royal Government. 

About Nu. 442 million of the government money was lying unadjusted or not recovered from the contractors, suppliers and employees in the form of outstanding advances.  Similarly, revenue worth over Nu. 105 million remained not collected.  Excess and irregular payments to contractors/suppliers were almost found to be norms in almost every audited agencies.  Works were awarded without inviting tenders/quotations in total disregard and respect of the interest of the nation. 

In the year 2000 alone, cash over Nu. 10 million from the suppliers, contractors and officials of different government organizations and agencies with interest in many cases were recalled by this office.  The year 2001 also may see this figure double the amount?  It is optimistic that thereafter the irregularities of such nature would see a adminishing trend as we graduate to a more cleaner, responsible and accountable society-contributed by many policy initiatives of the Royal Government in the recent past. 

Audit is hoped to increasingly have both a deterrent and reformative effect in protecting government interest, money and property from misuse or abuses as we shift the approach in auditing from transaction to performance auditing. The statistic on the multitude of cases of irregularities appear as symptomatic of a fundamental systemic problem.  Weak internal control systems, poor or lack of monitoring, reporting and evaluating system and practices at every supervisory level in most organizations need to be attended urgently. 

We hope that this report will contribute to further enhance accountability, transparency and efficiency in the Bhutanese public service and society. 

The Royal Audit Authority will strive to continuously play a crucial role to discharge oversight function and serve as a watchdog agency in the safeguard and proper utilization of public money and property.

We shall anticipate useful comments and feed backs via the electronic and/or manual medium and would be welcomed in the email address: raa@druknet.net.bt / better_bhutan@hotmail.com . Or may deposited in the Suggestion Box at the main office by the Reception Area.

This report shall also be available on RAA's Web site: www.raa.gov.bt with effect from 1st February 2002.

or Copies available from: 

PPD, RAA,
Post Box 191.
Thimphu Bhutan

Issued on 25th January 2002

Kunzang Wangdi
Auditor General of Bhutan

11th February

On the Auditor General to the Royal Government of Bhutan on the meetings with chartered accountant firms in Kolkata.  

RAA Press Release

The Auditor General accompanied by two senior auditors viz. Bhanu B. Chhettri, Assistant Auditor General and Ugyen Wangchuk, Dy. Chief Auditor visited Kolkata between 22.01.02 to 08.02.02 to meet with Chartered Accountant firms.

Meetings were held with a total of 43 firms. Out of which the 17 of these were new firms who had applied to be empanelled.

The firms stated that there was a time where due to poor record keeping and accounting, auditors were not able to give their opinion on the accounts in Bhutan. However it was reported that considerable improvement were found to have taken place in the accounts and record keeping over the years under the dynamic leadership of His Majesty the King.

Several weaknesses were pointed out to the team about corporate management in Bhutan those that have scope for improvement such as:

1.      Shortage of properly/fully trained accountants.

2.       Lack of adequate planning of works and counterpart personnel not made available when the auditors visit the companies.

3.       Auditing is not yet respected as a useful tool to improve the performance and productivity.

4.       Importance not being given on the need of regular and effective supervision, monitoring and evaluation capacities and internal control system within the companies.

5.       Physical verification of assets and cash, their management not being given importance.

6.       Proper check between the book balance and the physical balance not found being carried out need to be seen periodically by supervisors at every level.

7.        Lack of complete records of old outstanding debtors.

8.        Need for clear distinction between capital and revenue expenditure especially for tax purposes was felt necessary.

9.       Provisions for Non Performing Assets (NPA) only specify the minimum limit.

10.   Security value of assets mortgaged is ignored in some cases while determining the amount of Non Performing Assts and provision required.

11.   The accounts are not timely and fully reconciled and balances not confirmed.

12.   Generally there was no system of generating the Management Report in the Financial Institutions.

13.    Qualifications in the audit reports were repeatedly issued due to inadequate follow up.

14.   Transparency of the system and decision making process in the companies needed to be promoted.

15.   National accounting standards within the country are necessary for uniformity, consistency and comparability.

16.   Many companies do not have Accounting Manual. 

17.   Compliance of certain provisions of the Companies Act is very poor, particularly holding of meetings.

18.   The Terms of Reference (TOR) for appointment of the statutory auditors were not revised for a long period.

19.   System of internal audit, concurrent audit in companies in Bhutan needed to be introduced.

20.   The tax assessment in Bhutan is not carried out in time.

21.   The practice of private sector companies in Bhutan obtaining quotations for audit of their companies is not ethical.

22.   Bhutanese companies do not have the system to submit following types of  audits  reports:

·         Management Report.

·         Long form Report.

·         Stock audit Reports

·         Report on Fraud based auditing

·        Concurrent audit, branch audit, branch inspection audit done for Banks which are very common in Banks are not carried out in Bhutan.

The team also visited the new firms in order to meet the other partners and employees of the firm, to ascertain the working environment and the size of the offices. Where necessary and possible site visits were conducted such as M/s. Taj Leather Works, Khadim’s Shoe Factory etc..

Based on the information obtained, a new panel is being  prepared. Complete record on each firm will be maintained,  available for use by all Bhutanese firms and for appointment of new auditors to public sector firms.

The larger and more experienced firms were requested to train Bhutanese auditors. They are willing to support us in training of our Articles.

    It is heartening to know from larger firms that a great number of Chartered accountant firms are interested to take   up      assignment in Bhutan not purely for business opportunities but to help Bhutan and promote their profession.

Members of the Council of the Institute of Chartered Accountants of India and the Association of the Chartered Accountants of West Bengal had expressed their interest to work very closely in the near future. A Felicitation Function was hosted by the Association of Chartered Accountants of West Bengal in honour of the Auditor General on 6^th February at the Calcutta Club.

We returned home not only with useful knowledge and feedback but having won more friends. 

Kunzang Wangdi
Auditor General of Bhutan           

18th March  

Bhutan becomes the 29^th member of the INTOSAI standing Committee on Electronic Data Processing Audit.  

Press Release

The function of the International Organisation of Supreme Audit Institution’s  (INTOSAI) Standing Committee on Electronic Data Processing (EDP) audit is to support the international development of knowledge and skills in the use and audit of information technology.

This is done by providing information, facilities for Supreme Audit Institutes  (SAI) to exchange experiences, and by encouraging bilateral and regional co-operation. The Comptroller and Auditor General of India is currently the Chairman of the Committee and in a span of ten years, the committee has not only increased in its size, but also made significant contributions to INTOSAI through its various activities.

The aims of the Committee include:

·             Supporting and promoting the development and transfer of knowledge;

·             Bringing out an EDP Audit Directory on the basis of members’ contributions;

·             Promoting discussion, development and dissemination of standards and guidelines among the members, and encouraging bilateral and regional cooperation and exchange of experiences;

·         Promoting local and regional training activities for auditors and audit directors;

·     Assisting individual SAIs in locating expertise within the member countries for bilateral exchange.

The Royal Audit Authority (RAA) is certain that its association with the diverse activities of the EDP audit committee will not only help its auditors in developing their skills and in enhancing their knowledge relating to IT audit, but also help boost its efforts in EDP audits.

With the inclusion of the SAI of Bhutan, the INTOSAI Standing Committee on EDP Audit has now 29 members. The next meeting of the committee is scheduled in November 2002 in New Delhi.

For further details you can visit www.nao.gov.uk/intosai/edp

Article for Hot Spots for Sunday Times of India

 Vithal C. Nadkarni

Until I went to Bhutan, I used to believe that Shangri-La was a hoax born of an American author's imagination. It was just a name of an imaginary paradise on earth where no one ever grew old. However, after Bhutan I'm convinced that James Hilton got it all wrong in his “Lost Horizon”. I'm happy to report that I've found my last Shangri-La. A seven-day visit to it seems to have subtracted as many years from my Bambai-battered frame.
By that token, had we stayed longer, we'd have had to return in diapers. But jokes apart, you can feel the rejuvenating effect of the crystal-pure air and the magic mountain waters even as you approach land-locked Bhutan, as we did, by road from the Bagdogra airport in West Bengal to Phuentsholing, which lies about eight hours by land rover from the capital, Thimphu.

We could have flown in directly from Calcutta or Delhi to Paro, the country's sole airport. This is surely one of the most spectacular of all mountain flights, which gives you a raven's eye-view of Mount Everest, Kanchenjunga, Makalu and other peaks like Chomolhari and Tsrim Khang in Bhutan (which is also known as the Land of the Druk Yul, or the kingdom of the Thunder Dragon).

But we chose the more rugged and hair-raising approach to what early British visitors described as `dark and steep glens, and the high tops of mountains lost in clouds, constituting altogether a scene of extra-ordinary magnificence and sublimity'.

Going to Thimphu as we did from the purgatories of the plains (44 degrees in Calcutta) we felt like Dante must have done when he reached his Paradisio. But there is far more to Bhutan than just mountains and trekking. It's a country of deep spiritual background which strikes you through its magic everywhere. The people seem friendly, open and content, living in harmony with nature in a manner that I've found nowhere else in the world. 

As you sit on the panoramic porch of Hotel Jambayang, having chilled Red Panda beer with fresh buttered popcorn and asparagus-and-cheese emadatshi, accompanied by luscious momos or dumplings  with mouthscalding chili salsa, you realise why foreigners refer to Bhutan as a Living Eden.

Also, as a staunch Saraswat who, unlike General Pervez Musharaff, likes to boast that both Kashmir and Goa run in his blood, I found great similarities between Bhutan's home-brewed ara and Goanchi pheni.

But the ara, which Minjur Dorji, our friend, philosopher and guide from Bhutan's Royal Audit Authority had procured for us from his home in the yaklands above the snowline in central Bhumthang, was smokier, being redolent of the blue pine used to distill the moonshine from a variety of local grains ranging from buckwheat, rice and oats.
In retrospect, as compared to other `lost paradises' like Kashmir and now Nepal, Bhutan comes across as a jewel of tranquility, wisely administered by a King and his councilors who seem eager to propel their 7,00,000 subjects into the 21st century without losing their souls or traditions.

Box to follow.

June 5

Auditor General of Bhutan, leaves for England

Press release 

The Auditor General of Bhutan, leaves for England to attend the International Conference on “Enhancing Good Governance by Curbing Corruption” organized by 677^th Wilton Park Conference in association with the Commonwealth Parliamentary Association from the 10^th to 13^th June 2002. Many eminent personalities from different parts of the world will share experiences and views, discuss and address the issues relating to the corruptions, a disease that afflicts many societies and economics everyday. 

The Auditor General intends to share the experience and good practices of Bhutan when the conference discusses issues such as Key Elements of a National Integrity System to fight Corruption, the Economic and Social Costs of Corruption in Impending Growth and Development, Methods of Enhancing Good Governance by Curbing Corruption, International Initiatives and Conventions to Combat Corruption, Bribery, Money Laundering and Tax Regulations, Parliamentary oversights, integrity and impartiality of the Public Service, Fair award of contracts and business code of conduct and compliance.

July

The Second Annual In-house Training

The Second Annual In-House Training  commenced from 1^st July 2002. The Indian Ambassador to Bhutan, H.E. K.S Jasrotia was the Chief Guest for the inaugural ceremony. The Chief Guest spoke on the Indo-Bhutan relations and said that “Bhutan is our friendliest neighbour and our relations are warm, friendly and productive”. He touched on the various scholarships and training slots offered to Bhutan under the various schemes and said that the training of Audit Officers have also form a part. The Auditor General dedicated this year’s In-house training to the several Indian Auditors who played instrumental role in the development of Bhutanese Accountability and Integrity System. 

On the first week, the auditors were trained on System Based Auditing, Certification Audits, IT Audit and Audit of Aid, Grants and loans. Since this training was based on the MoU signed between the two SAIs of Bhutan and India, the resource persons were from the office of the Comptroller and Auditor General of India.

This was followed by 3 days training on Performance Auditing. Mr. I.S Ahluwalia, the works auditor and Mr. Chekey Gyeltshen, the Head of VFM Section of Royal Audit Authority were the resource persons for the training.

On 10^th of July 2002, the auditors were briefed on the new Pension Scheme by the Director, Joint Director and other staffs of the NPPF. 

The training on PIT/TDS and Refresher Course for the Non-Professional drivers of Royal Audit Authority were postponed due to the untimely and sudden demise of one of the senior staffs of Royal Audit Authority.

October 23

Press Release

A Delegation of seven members from the China National Audit Office (CNAO), People's Republic of China would be arriving Bhutan on the 31st October on a three days good will visit. The delegation will be led by Mr. Linghu An, Deputy Auditor General.

Supreme Audit Institutions (SAIs) of China (CNAO) and Bhutan (RAA) are both the members of the international Organization of SAI (INTOSAI) and Asian Organization of SAI (ASOSAI). The CNAO is the member of the governing body of both the organizations. Currently the CNAO is the chairman of the Working Committee on Environmental Auditing of ASOSAI and member of the EDP Working Committee of INTOSAI where Bhutan is also a member. 

Date: 4th December

Executive summary on the 11^th Meeting of INTOSAI Standing Committee for the IT Audit in New Delhi.  

A three-member delegation from the SAI of Bhutan attended the 11^th meeting of the INTOSAI Standing Committee on IT Audit in New Delhi from 27-29^th November 2002. A total of 22 INTOSAI member countries with 48 participants attended the meeting chaired by CAG, India.  

Initially the INTOSAI Standing Committee was on EDP Audit but now onwards it was decided to rename as IT Audit.  

The following programmes were highlighted during the three days meeting: 

Report on INTOSAI IT Audit Courseware was reported by SAI UK. The issues were raised that it is difficult to receive materials from the member countries and also suggested that it would be difficult to sustain only on thematic approach journal. It was also suggested to have heading for each journal.  

It was decided to have articles on mixed IT journal containing more on case studies with headings. It was informed to the floor that the materials would be

put on the web site by the SAI USA and review by the SAI Zimbabwe and assured to distribute to all the member countries on CD by June’03. 

The meeting also discussed on Performance Auditing. The SAI UK assured to send printed materials of IT Audit on Public Sector to the member countries where the IT facilities are not available and also put them in the web site. The SAI Israel suggested publishing the materials on CD Rom and Web site. The SAI Bhutan informed the floor that the article on Audit Information Management System (AIMs), which is developed by the SAI Bhutan, was contributed in the ASOSAI journal and the SAI India seconded it. The SAI Bhutan assured to put the same article into the INTOSAI web page manage by the SAI UK.  

The SAI USA presented a proposal on cost estimate tutorial for Audits. The SAI USA came up with this proposal after having being experience on cost estimate audit in Custom & postal service in USA and assured to provide to all interested member countries.  

Advance Training Modules was presented by the SAI USA and Progress Report on Research Project on Detection and Prevention on IT Related Fraud by SAI UK. This project was agreed to take over by SAI Netherlands and SAI Japan assured to give necessary informations.  

SAI Omen presented a paper on Computer Assisted Audit Techniques (CAATs) for non-financial audits. It was decided that the SAI Omen would send the variety of informations on using CAATs to SAI within three months time.  

SAI India presented a paper on e-governance and decided to have e-governance as the theme for the 12^th meeting.   

The materials of the above topics are available in the following web sites:

www.idi.no

www.eurosaiit.org

www.nao.gov.uk

www.nao.gov.uk/intosai/edp/

www.intosaiedp.org

www.intosaiitaudit.org 

The meeting approved to hosts for the next 12^, 13, 14 and 15^th Meeting to be hosted by SAI Norway in September’ 03, SAI Russia Federation- in 2004, SAI Bhutan-2005, and SAI Brazil 2006 respectively.  

The Chair, SAI India appreciated and thank all the delegates of the member countries for the successful and fruitful outcome of the 11^th meeting of INTOSAI Standing Committee on IT Audit and adjourned the meeting.

Two officers joined IA&AS, Shimla

Date: 20th December 2002

Chimi Dorji and Ugyen Dorji, Assistant Chief Auditors of the Royal Audit Authority have recently joined the 2002 batch of Indian Accounts & Audit Service (IA&AS) trainee officers. They will be trained at the National Academy of Audit & Accounts (NAAA), Shimla for a period of 13 months beginning  December the 15^th, 2002.