Speeches

REPORT OF THE AUDITOR GENERAL OF BHUTAN TO THE SIXTH ANNUAL AUDIT CONFERENCE 
ON 
MONDAY THE 21ST JULY 2003  

Theme: AUDITING BEYOND THE BOOKS OF ACCOUNTS

Salutation

1.   Your Royal Highness, 
      Venerable Dorji Lopon, 
      His  Excellency the Ambassador extraordinary plenipotentiary of India to Bhutan ,
      Lyonpo Wangdi Norbu and Ugyen Tshering
      Dashos and Aums,
      My dear colleagues, and
      Ladies and gentlemen.

2.   I would like to join my colleagues in extending our warmest welcome to the Hon'ble Chief Guest HRH the Crown Prince of the Great Himalayan Kingdom of Bhutan .  I sincerely appreciate Your Royal Highness’s presence here today as the auditors try to reflect, refresh and gear up for auditing in the next financial year.

3.   I would also like to welcome all other dignitaries and all the audit officers to the Conference in particular those who had traveled from Samdrup Jongkhar and Bumthang. 

4.   We had decided that the 6^th Annual Audit Conference must be on the theme “Auditing Beyond Books of Accounts.” We felt it is of extreme importance and relevance if we really wish to uphold the three principal pillars of good governance- Efficiency, Transparency and Accountability.

5    Simply put we intend Auditing beyond Books of Accounts to mean:

· finding out and reporting on the extent of how much benefit a Ngultrum or a policy or a plan had generated and impact created to the beneficiaries, client or the assessment of the intended objective achieved or not are  much more desirable than how the wherewithal of a ngultrum is recorded in the books;

· Finding out and reporting whether and how much the actual beneficiaries benefited;

· Finding out and reporting what is expected of an organization or person to do as per the laws, policies rules and plans is more important than merely reporting on what was carried out; and

· Finding out and reporting on what was committed had been delivered or not is equally crucial than knowing only that was handed out. A promise half fulfilled is not same as promise kept.

6    It is also critical to:

· find out initial intentions had actually been applied and/or attained;

·  find out whether what was needed was given rather than what was wanted to be given; and

·  Ascertain and report on what is recorded, explained and shown accounts for whole and the true picture or not.

7.     And thus in brief what we intend the Auditing Beyond the Books of account to be is what a purposeful and a meaningful auditing ought to be.  

NUMBER OF AUDIT REPORTS ISSUED
 
Your Royal Highness,  

8.      May I now with Your Royal Highness’s gracious permission report on what we had done since the last Conference that was held a year ago on  the theme   ROLE OF AUDIT: A SUCCESSFUL NINTH PLAN.

9.      First, we would all like to thank God Almighty the year 2002-2003 was better than ever and we could not ask for a greater one. In this context of exuberation, I am happy to report that for the year 2002- 2003, more than 205 agencies were audited in the Kingdom, including audit of Country offices and few bilateral organizations, 158 Inspection Reports were transmitted to various organizations, 102 certifications were issued for projects financed by more than 37 donors including the accounts of the Bhutan Chamber of Commerce and Industries. 

10.  Follow-ups were pursued for more than 51 previous reports separately. Special audit of NWAB Stove Distribution Projects in villages, renovations of three historic Lhakhangs of Taktshang, Rigsum Goenpa and Patsheling Goenpa were carried out. Value for Money Audits (VFM) of Health referral outside Bhutan and Computer procurement studies of all eleven organizations were conducted.

AUDIT CLEARANCE (A.C.)

11  For the period July 2002 to June 2003, clearances were issued in the area of promotion for 2876, training 1633, resignation 614 and contract extension 270.

AUDIT RECOVERY

12  The RAA reports that Nu. 27,608,319.48 were collected in cash as Audit Recoveries for the Financial Year 2002. The collection of the year is over176% more than for the year 2000. As information in the half of the year 2003 Nu 12,144,682.19 is already being collected.

CAPACITY BUILDING

13  Many auditors attended trainings and meetings both in and outside the country in India, China, Japan and Thailand . JICA, ASOSAI, UNDP and Colombo Plan funded the courses.

14. We had also organised In-house trainings on Powerpoint presentation skills, Audit Programmes and Working papers, Construction Audits, Interviewing Skills, PIT/TDS and Refresher Course for the Non- Professional Drivers of RAA. The trainings were organised in such a way that each auditor gets an opportunity to attend at least one of these trainings. In a way, all the auditors benefited from such trainings. One of the most notable features of these trainings is that for the first four trainings the resources persons/instructors were from the RAA itself.

15  Based on the level of the candidate, we make it a point that whoever goes or Ex-country training should come back and teach other auditors on the   subject of his/her training.

DANIDA PROJECT

16  We are grateful to Danida to receive yet another assistance of Nu. 12.7 million under Good Governance & Public Administrative Reform for a   period of five years commencing July 2003.

17  Under this project procurement of construction testing equipments, pool vehicles for regional offices, In-country and Ex-country training will be possible.

18. Networking with Regional Offices and Audit Awareness are the main activities under the project.

BHUTAN INTEGRITY HOUSE

19 The office of the RAA at Kawang-Jangsa was completed in the year 2003 financed by DANIDA. As was announced in the last Conference it was christened as the Bhutan Integrity House. It is now fully functional with the historic Drub Rabney conducted by the Venerable Tshenyi Lopon and the same auspiciously inaugurated by our beloved Crown Prince on 10^th January 2003 .

RELATIONS WITH NEIGHBORING SAI

20  A six member delegation from Bhutan led by the Auditor General visited India at the invitation of the Comptroller and Auditor General of India in February, 2003 reciprocating the latter’s visit to Bhutan earlier. A delegation from Chinese National Audit Office also visited Bhutan as a part of their visit to the three nations in the sub-continent in November 2002 to Bhutan . These exchanges of visits had added extra dimension in the existing relations with our neighbors.

AAR 2001

21  The RAA yet was responsible for stirring the hornet’s nest when it had issued its Annual Audit Report 2001. We were accused of delay in issuing the report to inaccurate reporting and reporting things that were resolved.

22  On the whole it was satisfying to look back, in that we had succeeded to bring issues of audit to the centre stage of the national debate at different forums. On the other hand, we are equally concerned, as most of our findings do not bring the full impact, as these ought to.

23    We are hopeful; the lessons from our weaknesses would help us grow yet stronger to champion the cause of accountability and the integrity in our public services and the society, while increasing positive voices overshadow the dissenting notes from the corners that are directly hit by our works.

24    A myth is also being created by a few that quantity and not the quality is the audit’s yardstick. While there is no rule laid down to say that a good auditor is one who can issue a maximum number of memos or vice versa, yet it is not fair also to describe an auditor who issues maximum number of memos is no good auditor. From my experience the indifference shown to the auditors in responding timely to audit queries had resulted in many of the avoidable memos being record in our reports.

AA2 2002

25  I am confident that the Annual Audit Report 2002, the Draft of which will be presented to this Conference for discussion, will be even of a higher quality both in terms of its contents in and relevance. We hope that it will enhance the sense of accountability to greater heights.  We expect it to be submitted to His Majesty the King, in the month of August 2003.

CORPORATE PAY STUDY

Sir,

26  It was noteworthy to report that the Auditor General was appointed as the Chairman of the Committee to study the Remuneration System across the Bhutanese Corporate sector by the CCM, in particular, the public sector corporations. We have found that remunerations are more often not related to the performance and productivity but based on how much civil servants are being paid. 

FINANCIAL RULES COMMITTEE

27. The Auditor General served also on the Financial Rules Committee of the Ministry of Finance, where many issues that were pending regularization were resolved.

HIGH-LEVEL COMMITTEE ON INVESTIGATION OF THE IRREGULARITIES AND ILLEGAL REGISTRATION OF LAND HOLDINGS IN THIMPHU VALLEY .

28  The Auditor General also served as the Vice-Chairman of the High-level Committee on Investigation of the Irregularities and Illegal Registration of land holdings in Thimphu Valley. The Committee detected that more than 1305 individuals are responsible for illegal and unauthorized occupation of 1,753.45 acres of Zhungsa. It would indicate that a nation-wide review of the land allotment and registration might become necessary to ensure that there is just and fair land administration in the country.

SHADY DEALS STUDY

29. Based on an article that appeared in the Kuensel on a heading Shady Deals the CCM had requested the RAA, to conduct a study. The RAA attempted to review all its reports to detect the cases of gross misuses and violation of the rules. The RAA had submitted its report to the CCM.

    30. While from the audit reports cases of bribery cannot be identified, it had reported the involvement of 121 Suppliers, and 202 contractors involving Nu 1,053.51 millions. The crimes range from purchases made at higher rates to fictitious payments. It is yet to be known as to what actions that might have been initiated on the same by the Royal Government.

DRAFT AUDIT ACT

31. In keeping with the Commitment that the previous Council of Ministers had made to the Bhutanese people and for which the RCSC had requested the RAA to spearhead the drafting of the Audit Act. A bilingual draft was submitted to the Lhengyel Zhungtshog for onward submission to the 81^st Session of the Gyalyong Tshogdu. 

32. However, it did not receive the intended priority over other Acts and Conventions from the Lhengyel Zhungtshog.

33. I am happy to report that the draft Act provides for the appointment of a Public Accounts Committee (PAC), one the recent Gyalyong Tshogdu had decided to establish, given the follow up of the audit reports being found by Chimis far from satisfactory and actions if taken by organizations not being transparent.

GLOBAL FORUM III.

34. The Auditor General had led a two member delegation to Seoul , Korea to attend the Global Forum III for “Fighting Corruption and Safeguarding Integrity” at the invitation of the Minister of Justice, Government of Republic of Korea.

35.   The Final Declaration inter-alia spelt out that the participants:

i. agreed that to strike a right balance, it is important to find common values and explore ways to co-exist peacefully, while respecting and preserving economic and cultural diversity. 

ii. singled out democratic principles as undoubtedly of universal value, and generally agreed that democracy is essential for development.

iii. pointed out that it is generally the poor who ends up paying the price for corruption, as it causes more harm to people in areas where resources are limited.  The global fight against corruption is a fight of one of the causes of poverty and underdevelopment. 

iv. noted that decentralization and deregulation may                                               reduce avenues for corruption.  

v. condemned corruption as a grievous crime. The causes of corruption, as well as the remedies for it differ from country to country based upon the characteristics of the  society, the developmental stage of its economy and other factors. However, participants warned that economic and   cultural practices can never be used as an excuse to justify corruption

36.  The Auditor General during the Conference took the opportunity also to interact with the Chairman of the Transparency International and Chief Commissioner, Commission for the Investigation of Abuse of Authority, Government of Nepal, the Cabinet Secretary of Nepal, Chairman of the Public Accounts Committee of Canada, the Prosecutor General of Government of Japan and other ministers of the Ministries of Justices to exchange views and experiences.

37.  During the year, the Deputy Auditor General of the RAA attended a Conference on ‘Curbing Corruption’ at Copenhagen in Denmark .

OPENING OF THE OFFICES OF THE ASSISTANT AUDITOR GENERALS

Your Royal Highness,

38. The RAA to make its presence felt and visible while reaching its services closer to the outlying areas had decided to open additional field offices with the approval of His Majesty the King at Bumthang and Tsirang. While the former was opened on 11^th November 2002 the latter one being operated from the HQs will now begin to function from Tsirang with effect from 26^th of July when it would be inaugurated.

PRIVATE SECTOR INVOLVED IN THE IRREGULARITIES

     39. A review of the private sector involvement, which had caused the irregularities reported in the Annual Audit Report 2001, revealed a total of 97 Companies involving irregularities to the extent of Nu.105.00 million. The crimes and offences that were committed are of the following nature:

1. Irregularity in contract management and enforcement of contract clause in favour of contractors and suppliers;

2. Irregular, Excess payment and claims made for works not executed by contractors and suppliers;

3. Procurements/ supplies made without inviting quotation and through questionable means;

4. Non payment of outstanding royalties and rents; and overdue outstanding advances.

40. The RAA hopes the private sector would instead play a more enthusiastic and selfless role to monitor and report to govt. on flagrant disregard of the rules by any employer, supplier, contractor, builder and public servant and instead refrain from being a party to the commission of offences.

ANNUAL AUDIT PLANS

41. Since, 2000-2001, we have now implemented three annual audit plans. By and large, achievement of the plans have been only satisfactory as 100% achievement of our targets strictly as per plan had not been possible. It was because we had to accommodate many unplanned audits i.e. special audits and other audits on requests etc. While a Plan is expected to provide strong direction, certain degree of flexibility to was inevitable. Having said so, we expect the new plan to be made realistic and practical. 

INTOSAI AUDIT TRAINER

Ladies and Gentlemen,

42.  I am happy to report that for the first time in the history of Bhutan the RAA can boast to have an internationally certified INTOSAI Trainer. Tashi, Assistant Chief Auditor has the proud privilege to be the first. Through him we want to contribute our bit in promoting the auditing profession in the world as Bhutan sees it, especially the effective aspects of auditing which had won certain acclaims.

FOLLOW UP STRATEGY and STRENGTHEN LEGAL UNIT of RAA

43.    While works in the RAA itself is intensified yet the cooperation in following up by the audittee is not consistent and uniform. Also the weightage, emphasis and importance given on auditing vary from sector to sector and from one personality to the other.

44.  It has now been made clear to the RAA that ensuring satisfactory follow-up is equally the responsibility of the RAA itself. Thus with this added obligation, an aggressive follow up strategy is being proposed for discussion in this Conference. It must include strengthening of the legal unit, any deviance to be brought to the notice of the concerned authorities and the media by the RAA, the defaulting parties be made to answer for their illegal actions.

45.  In addition important exit Audit Conferences being conducted at the end of the conclusion of an audit would be presided over by the Auditor General.

46.  When no satisfactory response is received after the three months time given on issue of an inspection report the same will be placed before the public and RAA Website.

47.  The authority to issue Audit clearance generally would be decentralized to be issued by the field office. However, go ahead for only the Auditor General must clear senior positions in grade 3 and above & for important positions. 

48.  Any Agency head that practices discrimination in follow-up especially to protect senior and influential will invite audit observation for defiance and for practicing of nepotism.

49.  We will also devise a system of identifying audit findings of serious nature requiring administrative and legal actions consistent with the provisions of the Royal Decrees and Civil Service Rules & Regulations. The field auditors must by all means form the follow-up exercise as an integral part of their field works. 

AUDIT REPORTS TO BE OPEN BOOKS: A REITERATION

Lyonpos & Dashos

50. The Royal Audit Authority pleads that the audit findings are made accessible and available to all interested as well as affected in your organizations. We urge that audit reports be no longer regarded as a secret or sacred document to be guarded zealously by the finance officer and head of office. 

51. Accordingly, the action and decisions taken should also be made available in a widely circulated media for public to be aware of the integrity and accountability system in each of your organizations. 

AUDITORS ARE ACCOUNTABLE

52. It is important for the society to know that auditors are not above laws, rules and regulations. Though human, Auditors have sworn to a professional code of conduct and ethics. While they should enjoy immunity for charges on account of discharge of lawful duties they can be taken to task for willful negligence and wrong doing.

53.  In the recent past, questions were raised on the integrity of auditors. I am not suspecting or casting doubts on auditor any abut remind you that it is important that through each of our actions, we dispel this myth. Also bear in our mind that each one of has an obligation to live up to the trust and confidence reposed on us by His Majesty the King.

54.  All field auditors, I urge each of you to take advantage of this forum by actively participating and sharing your experiences and knowledge as well as discussing issues of audit interest and concerns.

ANNUAL INVOCATION OF RAA

55.  Let us pray that Bhutan will continue to progress yet further in a manner our successive Kings would wish. May all Challenges that Bhutan faces be soon overcome. May the 6^th Annual Audit Conference be a great success.

56. Once again, Your Royal Highness, for your gracious presence here today, the RAA family is honoured and immensely encouraged; and remain highly grateful and deeply indebted

Thanking You. 

TASHI DELEG