Auditing system in SAI Bhutan Area = 38,394 sq. kms Population = 0.647 million National Language = Dzongkha Currency = Ngultrum Major Exports = Electricity, Timber, Cement, Agricultural Products, handicrafts etc. Density = 16/sq.km
(Audit Act of Bhutan, 2006) (16 th National Assembly proposed for Auditing System in Bhutan) 1963 - Accounts and Audit Organization 1970- Royal Audit Office 1974 – Department of Audit (Financial manual 1974) 1985 – Royal Audit Authority - autonomous & independent) 2005 – Constitutional Body Kashos (Royal Edict) Issued 1970 – 4 Royal Auditors 1985 – RAA autonomous & independent) 1997 1999 2000 2005 – Constitutional Body Reiterating independence of the RAA
Independent views on the quality of public sector activities and the stewardship of Public Funds (People’s Representatives) (Executing Agencies)
Independent views on the quality of public sector activities and the stewardship of Public Funds. Auditing & Reporting without fear, favor and prejudice on the economy, efficiency and effectiveness in the use of public resources.
Article 25.1, Constitution of the Kingdom of Bhutan Article 3, of the Audit Act of Bhutan 2006 There shall be a Royal Audit Authority to audit and report on the Economy, Efficiency and Effectiveness in the use of Public Resources. Article 44 (c), Audit Act It shall be the duty of the Authority to promote Economy, Efficiency and Effectiveness in the use of public resources through its reports and recommendations. ACHIEVE ULTIMATE OBJECTIVE WHAT HAS BEEN DONE WHAT HAS NOT BEEN DONE
Government or any of its instrumentalities Legislature & related institutions Judicial and Judicial Bodies Zhung Dratshang, Rabdeys & related institutions Constitutional Bodies Defence & Security Services Corporations & Financial Institutions established under the laws of the Kingdom in which the Government has an ownership interest. All entities fully or partly funded by the Government & NGOs All entities whose loans are approved or guaranteed by the Government All entities receiving funds, grants and subsidies directly or through the Government Collections and contributions from the people & fund raised through lottery Any entity or activity upon command of the Druk Gyalpo The RAA shall conduct without fear, favour or prejudice, the audits of the following:
Not withstanding the provisions of any laws relating to the accounts and audit of any public authority, the Parliament, if satisfied that the public interest so requires, shall direct that the accounts of such authority be audited by the Auditor General.
Section 39 of the Audit Act of Bhutan 2006 “The Authority shall conduct without fear, favour or prejudice the audits of the following” a. Government or any of its instrumentalities which include, Ministries, Departments, Divisions, Units, Dzongkhags, Gewogs, Thromdues, autonomous bodies, foreign- assisted or special projects of the Royal Government; Audit Jurisdictions
b.Zhung Dratshang, Rabdeys and all related institutions; c.Judiciary and Judicial Bodies; d.Legislature and related institutions; e.Constitutional bodies f.Defense and Security Services; g.All corporations, Financial Institutions including the Central Bank and their subsidiaries established under the laws of the Kingdom in which the Government has an ownership interest; Cont. Audit Jurisdictions
h. All entities including non-governmental organizations, trusts, charities and civil societies fully or partly funded by the government; whose loans are approved or guaranteed by the government; and those receiving funds, grants and subsidies directly or through the Government and collections and contributions from people and fund raised through lottery i.Any entity or activity upon Command of the Druk Gyalpo Cont. Audit Jurisdictions
Scope of Audit The Authority shall audit the following matters to ascertain whether: (a) The amount appropriated have been expended for the specified programs and tasks within the approved budget limits; (b) The financial transactions comply with the existing laws and the evidence relating to items of income and expenditure are sufficient; (c) The accounts have been maintained in the prescribed forms and such accounts fairly represent the position of the transactions; (d) The program implementations are adequately monitored to avoid incidences of cost and time overruns;
Cont…Scope of Audit (e) The inventory of public properties is accurate and upto- date, and custody, control, management and physical safeguard measures instituted are adequate; (f) Physical assets and infrastructures reported actually exist and confirm to the required specifications and standards; (g) The available resources including human, financial and other assets are properly utilized; (h) The accounting and related system of controls, financial or otherwise including the arrangements for internal audit and internal control of cash, kind and other public property against any loss, damage and abuse are adequate;
Conti….Scope of Audit (i) The accounts of revenue, taxes, other incomes and deposits are accurate and the systems relating to assessment, realization, recording and methods of reporting are adequate; (j) The debts, liabilities and specific purpose funds are recorded accurately and managed properly; (k) The ICT and other technological systems developed are appropriate and adequate controls and security measures are instituted to prevent unauthorized access to the system; and (l) The implementation of programs and activities are as planned and the intended objectives achieved.
Article 25.1 of the Constitution There shall be a Royal Audit Authority to audit and report on the economy, efficiency and effectiveness in the use of public resources LINKING LAPSES WITH ACCOUNTABI LITIES AUDITINGREPORTINGFOLLOW UP Performance Audit Financial Audit Compliance Audit Propriety/Regularity Audit Special Audit Individual reports to the agencies Certification Report of the consolidated financial statements Annual Audit Report AG’s Advisory series AG’s Occasional Paper Direct Accountability Supervisory Accountability Team level Divisional Level Committee level PAC/Parliament Our Audit Framework System Audit Environment Audit Thematic Audit
Role of RAA Prior to 2006 1.Auditing 2.Investigation 3.Prosecution
REPORTS Audit Reports – Issued after completion of each audit & after providing 1 month to respond to initial audit observations Audit Reports addressed to: The concerned Minister & head of the audited entity The Speaker of the N.A for the audits of the Legislative Offices The Chairman of the NC for the audit of the National Council The Minister of Finance for audit of Defence and certification of donor funded projects The Chief Justice of Bhutan for audits of the courts The Chairperson of the Board for the audits of the corporations and financial institutions
Audit Clearance Certificate Promotion Further Studies Training Post Retirement Benefits Elections Contract Extension Secondment
Contents Result of the audit of the Annual Financial Statement of the Government; the overall financial condition and recommendation to improve the economy, efficiency and effectiveness of the govt. Significant audit findings and recommendations for improvement of agencies Annual Audit Report
Cases where the Authority did not receive acceptable responses or cooperation Cases where the follow-up reports are not adequate or are not being carried out as recommended Cont. Annual Audit Report
Follow-up of Audit Reports Section 76 of the Audit Act of Bhutan 2006 “The Lhengye Zhungtshog, Ministries, and other concerned authorities shall be responsible to take timely follow-up actions on Audit Reports” Dedicated Follow-up Division - Issue reminders - Up date the status
Audit Information Management System Audit Information Management System (AIMS) -All Audit Reports -Accountability for each lapses -Up dated on a continual basis -Generates latest status of individual audit reports -Produces Audit Clearance Certificate
Relations with stakeholders Parliament through PAC Anti-corruption Commission Office of Attorney General Continuous relations with agencies Awareness programme at the grass root levels Awareness programme with ministries, departments and Dzongkhags PAC’s hearing RAA’s participation in the conference organized by other organizations