RReeppoorrtt ooff tthhee PPuubblliicc AAccccoouunnttss CCoommmmiitttteeee ttoo tthhee

SSiixxtthh SSeessssiioonn ooff tthhee SSeeccoonndd PPaarrlliiaammeenntt

(23-24 November, 2015)

Committee Members:

1. Hon. Pema Dakpa (NC MP-Zhemgang) Chairperson;

2. Hon. Dophu Dukpa, (NA MP-Kabji-Talo) Dy. Chairperson;

3. Hon. Choida Jamtsho (NA MP-Nganglam) Member

4. Hon. Karma Tenzin (NA MP-Wamrong) Member;

5. Hon. Tashi Dorji (NC MP-Wangdue phodrang) Member.

TABLE OF CONTENTS

INTRODUCTION......................................................................................................................... 1

CHAPTER I: SYNTHESIS OF ANNUAL AUDIT REPORT 2014 ....................................... 1

CHAPTER II: SYNTHESIS OF REVIEW REPORTS OF AAR 2009-2013....................... 13

CHAPTER III: STATUS OF CASES FORWARDED TO ANTI- CORRUPTION

COMMISSION (ACC) ............................................................................................................... 17

CHAPTER IV: PAC’S BUSINESS ........................................................................................... 20

CONCLUSION ........................................................................................................................... 22

ANNEXURE ............................................................................................................................. 22

1 | P a g e

PUBLIC ACCOUNTS COMMITTEE REPORT TO THE SIXTH SESSION

OF THE SECOND PARLIAMENT

INTRODUCTION

The Public Accounts Committee (PAC) is mandated to review and report on the Annual

Audit Report (AAR) to Parliament for its consideration or any other reports presented by

the Auditor General as enshrined in Article 25(6) of the Constitution of the Kingdom of

Bhutan. The committee functions as per the Rules of Procedures of Public Accounts

Committee 2015.

The committee has examined and evaluated the financial audit reports, conducted several

meetings and public hearings and completed synthesized report for presentation to the 6th

Session of the Second Parliament of Bhutan for information and deliberation. The main

components of the report are Synthesized Annual Audit Report 2014, Synthesized

Review Report of Annual Audit Report 2009-13, Status of cases forwarded to Anti

Corruption Commission (ACC), Other Issues, PAC Observations and PAC

Recommendations.

CHAPTER I: SYNTHESIS OF ANNUAL AUDIT REPORT 2014

The content of the Annual Audit Report 2014 are accomplishments of the Royal Audit

Authority (RAA), summary of audit findings, certification of annual financial statements,

detailed audit findings, audit report on the government payroll and provident fund, review

of 10th

Five Year Plan, recommendations, auditor’s report on the audit of accounts and

operation, glossary of terms.

2 | P a g e

Through rigorous follow up, RAA has recovered Nu. 115.628 million from the pending

irregularities where the recoveries are 48% from Ministries, 27% from Dzongkhags and

Gewogs, 24% from Autonomous Bodies and the rest from Corporation and Financial

Institutes. The RAA issued the total of 692 audit reports comprising of 599 financial

audits, 84 compliance audits, 3 performance audits, 6 special audits. The RAA endorsed

and forwarded 12 audit reports containing 22 cases with elements of financial

irregularities to the Anti Corruption Commission considering the possible existence of

element of fraud and corruption.

The total unresolved irregularity reflected in the report is Nu. 634.313 million pertaining

to 7 Ministries (Nu. 131.762 million), 13 Dzongkhags (Nu. 27.587 million), 12 Gewogs

of seven Dzongkhags (Nu. 2.326 million), 8 Autonomous Bodies (Nu. 239.491 million),

7 Corporations (Nu.202.25 million), 5 Financial Institutions (Nu. 30.676 million) and

one Political Party (Nu. 0.221 million) as shown in Table 1.

Table 1. Irregularities by Agency

Sl. No. Agency Irregularities Amount( Nu in million)

1 Ministry 131.762

2 Dzongkhags 27.587

3 Gewogs 2.326

4 Autonomous Agencies 239.491

5 Corporations 202.25

6 Financial Institutes 30.676

7 Political Parties 0.221

Total 634.313

a) Seven Ministries reflecting irregularities are:

1. Ministry of Information and Communications (Nu. 85. 688 million);

2. Ministry of Finance (Nu. 18.403 million);

3. Ministry of Foreign Affairs (Nu. 12.856 million);

3 | P a g e

4. Ministry of Health (Nu. 9.345 million);

5. Ministry of Agriculture and Forests (Nu. 4.601 million);

6. Ministry of Works and Human Settlement (Nu. 0.679 million); and

7. Ministry of Economic Affairs (Nu. 0.210 million).

b) Thirteen Dzongkhags reflecting irregularities are:

1. Sarpang Dzongkhag (Nu.16.520 million);

2. Chhukha Dzongkhag (Nu.2.181 million);

3. Trashiyangtse Dzongkhag (Nu.1.748 million);

4. Dagana Dzongkhag (Nu. 1.663 million);

5. Trashigang Dzongkhag (Nu. 1.174 million);

6. Gasa Dzongkhag (Nu. 0.824 million);

7. Trongsa Dzongkhag (Nu. 0.729 million);

8. Tsirang Dzongkhag (Nu. 0.725 million);

9. Monggar Dzongkhag (Nu. 0.710 million);

10. Samtse Dzongkhag (Nu.0.634 million);

11. Samdrupjongkhar Dzongkhag( Nu. 0.290 million);

12. Thimphu Dzongkhag( Nu. 0.210 million); and

13. Wangduephodrang Dzongkhag( Nu. 0.179 million).

c) Twelve Gewogs reflecting irregularities are:

1. Lochina Gewog (Nu. 0.598 million), Darla Gewog (Nu.0.259 million),

Sampheling Gewog (Nu. 0.186 million), Bongo Gewog (Nu. 0.045 million) and

Phuntsholing Gewog (Nu.0.045 million) under Chhukha Dzongkhag;

2. Lunana Gewog (Nu. 0.200 million) under Gasa Dzongkhag;

3. Gakiling Gewog (Nu.0.710 million) under Haa Dzongkhag;

4. Naja Gewog (Nu. 0.232 million) under Paro Dzongkhag;

5. Dzomi Gewog (Nu.0.051 million) under Punakha Dzongkhag;

6. Mendrelgang and Sergithang Gewogs under Tsirang Dzongkhag; and

4 | P a g e

7. Gasel Tshogongma Gewog under Wangduephodrang Dzongkhag.

d) Eight Autonomous Bodies reflecting irregularities are:

1. Bhutan Education City Secretariat (Nu. 110.219 million);

2. Royal University of Bhutan (Nu.68.544 million);

3. National Land Commission (Nu. 35.827 million);

4. Thimphu Thromde Administration (Nu. 21.755 million);

5. Phuntsoling Thromde Administration (Nu.1.253 million);

6. Tourism Council of Bhutan (Nu. 1.203 million);

7. Election Commission of Bhutan (Nu. 0.164 million); and

8. Judiciary

e) Seven Corporations reflecting irregularities are:

1. Dungsam Cement Corporation Limited (Nu. 179.726 million);

2. DHI-Infra Limited (Nu. 12.342 million);

3. State Trading Corporation of Bhutan Limited (Nu. 5.510 million);

4. Food Corporation of Bhutan Limited (Nu. 4.153 million);

5. Bhutan Postal Corporation Limited (Nu. 0.390 million);

6. Bhutan Power Corporation Limited (Nu. 0.129 million); and

7. Natural Resources Development Corporation Limited.

f) Five Financial Institutes reflecting irregularities are:

1. Bhutan National Bank Limited (Nu. 29.927 million);

2. National Pension and Provident Fund (Nu. 0.449 million);

3. Bhutan Development Bank Limited (Nu. 0.300 million);

4. Bank of Bhutan Limited; and

5. Royal Monetary Authority of Bhutan.

5 | P a g e

The one political party reflecting irregularities is Druk Phuentsum Tshogpa (Nu. 221

million).

Among the budgetary agencies, the highest amount of irregularities is reported under

Autonomous Agency with Nu. 239.491 million followed by Ministry of Information and

Communication with 85.668 million and Dzongkhags with Nu. 27.587 million. Under the

non budgetary agencies, Dungsam Cement Corporation Limited has the largest amount of

reported irregularities amounting Nu. 179.726 million representing 77.22% followed by

Bhutan National Bank Limited with irregularities of Nu. 29.927 million.

For convenience, the irregularities have been classified as

Fraud, Corruption and Embezzlement;

Mismanagement;

Violation of Laws and Rules; and

Shortfalls, Lapses and Deficiencies.

As shown in Chart 1, the highest amount of irregularities was Nu. 263.888 million

reflected under Violation of Laws and Rules category. The least amount of irregularities

of Nu. 98.918 million was reflected under the Fraud, Corruption and Embezzlement

category. Under the Shortfalls, Lapses and Deficiencies category, the amount is Nu.

136.458 million followed by Nu. 135.049 million under Mismanagement category. The

irregularities are a result of a lack of due diligence and competence, poor supervision,

monitoring and internal control, poor enforcement of rules and regulations and finally

non regulations of advances.

6 | P a g e

Chart 1. Irregularities by category

Considering the magnitude of irregularities of Ministries, Autonomous agencies and

Corporations, the amount of irregularities resolved was further analyzed. As shown in

the Table 2, it was found that the 55.12% of the irregularities of the Autonomous

agencies have been resolved, 16.06% by Corporations and 11.42% by Ministries.

Autonomous agencies such as Bhutan Education City and National Land Commission

have resolved all or most of the irregularities, thereby representing a higher rate of

recovery.

Table 2. Resolved irregularities AAR 2014 as of 30th

September 2015

Agencies

Irregularities Amount

( Nu. in million)

Resolved Amount

( Nu. in million)

Percentage

Ministry 131.762 15.049 11.42

Autonomous Agencies 239.491 132.00 55.12

Corporations 202.250 32.473 16.06

0

50

100

150

200

250

300

Fraud, Corruption and

Embezzlement

Mismanagement Violation of Lawa and Rules

Shortfalls, Lapses and Deficiencies

98.918135.049

263.888

136.458

Am

ou

n(

Nu

in m

illio

n)

Irregularities Category

Category wise irregularities

7 | P a g e

The general recommendations of RAA are:

1. Need to institute strong control mechanism to facilitate timely surrender of closing

cash balances to the Department of Public Accounts (DPA);

2. Ensure robustness of Public Expenditure Management System through appropriate

controls and coordination mechanisms; and

3. Ensure stick enforcement of rules and regulations through appropriate supervision

and monitoring mechanisms.

1. Prominent Issues

1.1 Basis of “Qualified” Audit Opinion on the Annual Financial Statement of the

Royal Government of Bhutan for the Financial Year ended 30th

June 2014

The RAA found sufficient audit evidences to provide the basis for its qualified audit

opinion as:

a) There were mismatches between Employees’ contribution (6.a) reported under

the Receipts and Payments statements of the budgetary agencies and monthly PF

schedules generated from Payroll module of the PEMS. Further, inconsistent

number of employees under monthly PF schedules was observed, which

apparently indicated circumvention of accounting module wherein in lieu of using

payroll module, the budgetary agencies had used Accounts Module to prepare

monthly salary. Pending review and reconciliation of these differences, the exact

extent of impact in these accounts cannot be ascertained.

b) The Bank Reconciliation Statement for the year under review indicated that the

amount withdrawn reported as per cash book was less than that of the amount

reported as per Bank to the tune of Nu. 1,113,410,385.19. Pending review and

confirmation of such difference in the PEMS and with respective budgetary

8 | P a g e

agencies, the exact extent of impact of which in these accounts is not

ascertainable.

PAC’s Observations

While developing PEMS, the payroll module was not developed but was later

incorporated. The mismatch between Employees contribution reported under

"receipts" and "payments" and the inconsistent number of employees are primarily

due to using different module such as payroll module and accounts module by

different government agencies. For example, the release by Finance Ministry to Royal

Bhutan Police is out of the payroll system although the contribution is made to NPPF.

This is also due to duplication of employee identity and failure to incorporate last pay

certificate (LPC). The MoF, RCSC and NPPF are working on it to rectify the issue.

The differences in the Bank Reconciliation Statements for the year to the tune of

Nu.1,113,410,385.19 was mainly due to the bank statement submitted by BOB that

had a huge closing balance while the actual amount released to Department of Road,

Zhemgang amounted Nu.272,410,167.28.

PAC’s Recommendation 1

The MoF in future must take necessary measures to avoid the occurrence of such

lapses in the Annual Financial Statement.

1.2 Payment of Children Education Allowance to the staff of Royal Bhutan

Embassies.

The RAA found that Royal Bhutan Consulate, Kolkata, Royal Bhutan Embassy, Brussels

and Permanent Mission of Bhutan to the United Nations, Geneva had made inadmissible

payment of Nu. 0.405 million. Similarly, in AAR 2013, the Royal Bhutan Embassies in

New Delhi and Dhaka, Permanent Mission of Bhutan (PMB) in Geneva and the Royal

9 | P a g e

Bhutan Consulate, Kolkata had made inadmissible payment of Nu. 1.933 million. Also in

AAR 2011, the Royal Bhutanese Embassy in Bangkok made inadmissible payment of

Nu. 1.443 million. The total amount of Nu. 3.781 million was inadmissible as per Foreign

Service Rules and Regulation 2000 since such an allowance is payable only if the

Children are not in receipt of free education either in Bhutan or abroad.

During PAC hearing on 4th

November 2015, The Hon’ble Secretary, Ministry of Foreign

Affairs mentioned that they had been receiving the allowance since 1999 and from 2009

the RAA started objecting it. During the hearing the officials from the Ministry of

Foreign Affairs stated the following:

Many of the countries where the Royal Government has diplomatic posts do not have

English medium Public Schools. There are private English medium schools and our

diplomats are not able to send their children due to exorbitant fees.

Our diplomats are, therefore, compelled to keep their children in Bhutan either in

public or private schools. It is also important for the children to continue to learn

Dzongkha.

As a result, diplomats have to maintain two households – one at the place of posting

and another in Bhutan, which is generally run by the spouse. Besides, the extra

expenses separation of families is a hard ship that diplomats have to endure.

The CEA that is being paid to our diplomats is very small compared to what is being

paid by other countries to their diplomats. Many countries in South Asia pay their

diplomats 70%-75% of the tuition fees for education in private schools in the places

of posting.

The Foreign Service Rules and Regulations which includes the entitlements were last

revised in 2002 and attempts to revise the rules were unsuccessful in spite of the

advice of RAA. However, a tripartite exercise is now underway among the MoFA,

MoF and the Royal Civil Service Commission (RCSC) which is expected to bring

clarity to the rules.

10 | P a g e

PAC’s Observations

The FSER specifically stipulates that Children Education Allowance (CEA) shall be

payable only if the children are not in receipt of free education either in Bhutan or

abroad.

The 3rd

Session of the Second Parliament recommended that the concerned Embassies

repay the allowance immediately and take necessary administrative actions against the

concerned officials. Despite the recommendations of the Parliament neither recovery

has been made nor has administrative action been taken against the concerned

officials.

Although there is clarity in the rule, the RAA also feels that there is a practical

problem in the implementation, as some expenditure is still incurred even if the

children of diplomats working abroad were availing free education in Bhutan.

However, RBE Bangkok, PMB New York and PMB Geneva had stopped paying

CEA for the children of diplomats studying in the government schools in Bhutan.

RBE Kuwait, Dhaka and Brussels are still paying CEA, but Kuwait and Dhaka would

stop paying CEA from November 2015 while Brussels would stop the payment from

December 2015. The Royal Bhutan Consulate in Kolkota is still paying CEA and has

no mention to stop paying.

The FSER has not been revised since 2002 even though the Bhutan Civil Service

Rules (BCSR) under Chapter 17, Clause 17.7.1 requires that the Ministry of Foreign

Affairs in consultation with the Ministry of Finance and the RCSC carry out a

periodic review of the FSER every three years.

11 | P a g e

PAC’s Recommendation 2

The MoFA together with the MoF and the RCSC should revise the FSER

immediately. The payment of CEA for children in receipt of free education either in

Bhutan or abroad should be stopped till the FSER is revised.

1.3 Advance and excess payment

The irregularities classified under Violation of Laws and Rules and Shortfalls, Lapses

and Deficiencies amount Nu. 400.346 million. It is dominated by excess payments and

advances to officials and suppliers by the agencies. Some of the significant irregularities

across the agencies are as:

Excess computation of payable amount for earth work excavattion over areas due

to flaws in the analysis rate (Nu. 3.579 million) by the Ministry of Information and

Communications;

Outstanding advances against various staff and officials (Nu.7.839 million) by the

Ministry of Finance;

Outstanding advances against various officials (Nu.0.682 million) by Ministry of

Foreign Affairs;

Procurement of various medicines at higher rates from other forms than the lowest

evaluated rate resulting into excess payment (Nu 9.345 million) by Ministry of

Health;

Outstanding advances against various staff (Nu. 3.346 million) by the Ministry of

Agriculture and Forests;

The excess payment to contractor for various construction work (Nu. 0.507

million) by Chhukha Dzongkhag;

Excess payment to contractor for the construction of Science Laboratory at Daga

Lower Secondary School (Nu.0.313 million) by Dagana Dzongkhag;

12 | P a g e

Excess payment to contractor for traditional Debri painting for Mithrup Lhakhag

and Kague Lhakhag (Nu. 824 million) by Gasa Dzongkhag;

Outstanding advances against various employees (Nu.0639 million) by Trongsa

Dzongkhag;

Excess payment to the contractor for the construction of farm road and bailey

bridge (Nu.598 million) by Lokchina Gewog under Chhukha Dzongkhag;

Excess and inadmissible payment of hire charges and spare parts for construction

of Bemphu farm road (Nu. 0111 million) by Naja Gewog under Paro Dzongkhag;

Overpayment of supervision fees and accounts (Nu. 19.899 million) by Royal

University of Bhutan;

Outstanding advances against contractors and Bhutan Power Corporation Limited

(Nu.3.914) by Thimphu Thromde;

Outstanding advances against tour operators (Nu.0.501 million) by Tourism

Council of Bhutan; and

Irregularities in rate analysis of items of works resulting excess payment

(Nu.197.082 million) by Dungsam Cement Corporation Limited.

PAC’s Observations

The practice of paying advances to officials, suppliers and contractors is common in most

agencies and not liquidated by the end of the financial year. There are also instances of

excess and inadmissible payment to suppliers and contractors arising from irregularities

in rate analysis of items and works. The possible causes are poor enforcement of rules

and regulations, lack of supervision and monitoring.

PAC’s Recommendations 3

The concerned agencies have to strictly follow the financial rules and regulations and

RAA has to enforce the accountability fixation to the immediate supervisors.

13 | P a g e

1.4 Common lapses and deficiencies in the implementation of the 10th

Five Year

Plan (FYP) activities by the Dzongkhags

RAA reviewed the implementation of the 10 FYP activities in 14 Dzongkhags and

observed that non execution, delays and deferment of planned activities; wasteful and

underutilization of the facilities and infrastructure as the common lapses and

deficiencies.

It was reported that around 120 planned activities were not executed, delayed or

deferred. These include the construction of farm roads, bridges, schools and health

buildings. Further, 34 facilities and infrastructures were found to be wasteful and

underutilized. The facilities and infrastructure include farm road, agriculture and

drinking water facilities, community information centers and office buildings.

PAC’s Observations

Most of these lapses and deficiencies are due to lack of proper need analysis and

consultation with stakeholder, preliminary and feasibility studies, coordination amongst

the relevant implementing agencies, monitoring and evaluation, and unrealistic

budgeting.

PAC’s Recommendations 4

The government should strictly monitor the implementation of the planned activities

in the Dzongkhags and ensure that such lapses and deficiencies are not repeated.

CHAPTER II: SYNTHESIS OF REVIEW REPORTS OF AAR 2009-2013

From the review reports of AAR 2009 to 2013, the total unresolved irregularities stands

at Nu. 612.369 million. The amount of resolved irregularities is Nu. 53.417 (8.02%) only.

The highest unresolved amount is from the Ministries with an amount of Nu. 545.053

14 | P a g e

million followed by Corporations and Financial Institutions with an amount of Nu.

48.486 million.

Table 3. Agency wise resolved and unresolved irregularities of AAR 2009 to 2013

Resolved irregularities as on 30th

Sept 2015

Agency AAR

2009

AAR

2010

AAR

2011

AAR

2012

AAR

2013

Total

Ministries 0.000 16.176 10.955 3.384 19.895 50.410

Dzongkhags 0.700 0.090 1.540 0.000 0.000 2.330

Gewogs 0.000 0.000 0.000 0.000 0.000 0.000

Autonomous Agencies 0.000 0.000 0.037 0.000 0.154 0.191

Corporations and Financial

Institutions

0.000 0.000 0.000 0.000 0.286 0.286

Non-Governmental

Organizations

0.000 0.000 0.000 0.200 0.000 0.200

Total 0.700 16.266 12.532 3.584 20.335 53.417

Unresolved irregularities as on 30th

Sept 2015

Ministries 3.249 70.036 250.265 156.181 65.322 545.053

Dzongkhags 0.000 0.307 0.576 0.802 5.360 7.045

Gewogs 0.042 0.000 0.021 0.220 4.619 4.902

Autonomous Agencies 0.000 0.000 1.357 1.656 0.483 3.496

Corporations and Financial

Institutions

0.000 0.000 41.357 4.251 2.878 48.486

Non-Governmental

Organizations

0.000 0.000 0.000 0.000 3.387 3.387

Total 3.291 70.343 293.576 163.11 82.049 612.369

Since the highest unresolved irregularities were under Ministries, Corporations and

Financial Institutions, a break up analysis was carried out. Amongst the Ministries,

Ministry of Foreign Affairs has the highest irregularities amounting to Nu. 196.23 million

15 | P a g e

followed by Ministry of Information and Communications with Nu. 173.63 million

(Table 4). Amongst the Corporations and Financial Institutions, Penden Cement

Authority Limited has the highest irregularity with Nu. 45.576 million.

Table 4. Unresolved Irregularities by Ministry, Corporation and Financial Institutions, AAR

2009 to 2013

Sl.

No.

Ministry AAR

2009

AAR

2010

AAR

2011

AAR

2012

AAR

2013

Total

1 Ministry of Labour and Human

Resources

3.249 0.000 0.000 3.295 5.043 11.587

2 Ministry of Health 0.000 67.282 0.000 8.695 0.000 75.977

3 Ministry of Finance 0.000 0.363 0.000 7.801 0.034 8.198

4 Ministry of Foreign Affairs 0.000 2.391 190.821 0.733 2.285 196.23

5 Ministry of information and

communications

0.000 0.000 59.026 114.142 0.462 173.63

6 Ministry of Agriculture and Forests 0.000 0.000 0.403 0.289 0.000 0.692

7 Ministry of Economic Affairs 0.000 0.000 0.015 0.513 31.095 31.623

8 Ministry of Works and Human

Settlements

0.000 0.000 0.000 13.148 9.498 22.646

9 Ministry of Education 0.000 0.000 0.000 7.565 14.613 22.178

10 Ministry of Home and Cultural

Affairs

0.000 0.000 0.000 0.000 2.832 2.832

Total 3.249 70.036 250.265 156.181 65.862 545.593

Corporation and Financial

Institutes

1 Pendent Cement Authority Limited 0.000 0.000 39.462 3.906 2.208 45.576

2 Food Corporation of Bhutan Limited 0.000 0.000 0.000 0.315 0.085 0.400

3 Construction Development

Corporation Limited

0.000 0.000 0.000 0.030 0.174 0.204

4 Wood Craft Centre Limited 0.000 0.000 0.000 0.000 0.296 0.296

16 | P a g e

5 Bhutan Postal Corporation Limited 0.000 0.000 0.000 0.000 0.115 0.115

6 Total 0.000 0.000 39.462 4.251 2.878 46.591

As shown in Chart 2, the highest unresolved irregularities fall under Shortfalls, Lapses

and Deficiencies followed by Fraud, Corruption and Embezzlement and then by

Mismanagement. The least is under the Violation of Laws and Rules.

Chart 2. Unresolved irregularities by category, AAR 2009 to 2013 as on 30th

September

2015

PAC’s Observations

The recovery rate of irregularities for the period 2009-2013 is low (8.02%) due to lack of

accountability fixation mechanism other than the payable of 24% penal interest. The

Parliament during the 3rd

session of the Second Parliament had directed that all pending

issues of AAR till 2010 be resolved by the agencies concerned within 30th

April, 2014

and that of AAR 2011-2012 be resolved by 30th

November, 2014. However, the response

from the agencies has been poor resulting into low recovery.

0

50

100

150

200

250

300

350

Fraud, Corruption and

Embezzlement

Mismanagement Violation of Laws and Rules

Shortfalls, Lapses and Deficiencies

138.838109.226

18.295

345.382

Am

ou

n(

Nu

. in

mill

ion

)

Irregularities Category

Unresolved Irregularities

17 | P a g e

PAC’s Recommendations 5

For better use of public resources and assuring accountability to the people, the head

of the agency is directly accountable for monitoring and resolving the audit

irregularities. Therefore, the head of the concerned agency has to take legal action on

the officials if the audit irregularities are not resolved within 12 months from the date

of issue of audit report and accordingly report the implementation status to RAA latest

by 30th

September of each financial year for incorporation in the AAR. However, the

head of the agency has to report the legal action taken on the irregularities from 2009

to 2013 to RAA latest by 30th

March 2016. Accordingly, the RAA should report the

implementation status in 2015 Annual Audit Report as separate chapter. The Ministry

of Finance has to issue a Circular to all agencies for implementation of the

resolution.

CHAPTER III: STATUS OF CASES FORWARDED TO ANTI- CORRUPTION

COMMISSION (ACC)

Out of 51cases forwarded to ACC, 26 cases (50.98%) have been resolved, and 21 cases

are unresolved (Table 5). Further, unresolved cases are categorized into cases under

investigation, submitted to Office of Attorney General (OAG), sub judice and returned

for administrative actions.

Table 5. Status of cases of forwarded to ACC by RAA

AAR No. of

forwarded

cases

No. of

Resolved

cases

No. of Unresolved cases

No. of cases

under

investigation

No. of

cases in

the Office

of

Attorney

General

No. of

cases in

the

Court

No. of Cases

returned for

administrative

action

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2009 6 3 0 0 3 0

2010 6 5 0 1 0 0

2011 7 3 0 3 1 0

2012 12 5 2 2 0 3

2013 7 5 1 0 0 1

2014 13 5 1 0 2 5

Total 51 26 4 6 6 9

Status of the cases under investigation:

a) Audit Report on the Revenue Accounts of Thimphu Dzongkhag for the period

1/7/2009 to 30/06/2010. This case is yet to be investigated by the ACC.

b) Audit Report on the Accounts and Operation of Penden Cement Authority Limited

(PCAL), Gomtu for the period 1/1/2011 to 31/12/2011. This case is yet to be

investigated by the ACC.

c) Audit Report on Government Land and Government Reserve Forest for the period

ended 31/12/2012. The preliminary investigation has been started but put to halt

temporarily due to some other pressing cases.

d) Audit Report on Royal Monetary Authority of Bhutan (RMAB) on manipulation

and tampering of documents by one of the Dy. Governors resulting into

inadmissible payment of USD 420. The Commission meeting dated 13/10/2014

decided to club it with earlier complaints 13/9/30 and 13/10/31 and is yet to be

investigated.

19 | P a g e

PAC’s Observations

As per section 48 (b) of the Audit Act, the RAA has forwarded the irregularities to

ACC that may have indicative of fraudulent offences. Further, the protocol of

mutual assistance and information sharing between the RAA and ACC was signed

for preventing and combating corruption, and promoting good governance.

Individual with multiple responsibilities has the potential to undermine the fairness

because of the possibility of a clash between the self's interest and professional

interest, therefore, the chances of corruption is more likely to exist.

No uniformity maintained with the officials involved in the corruption cases, some

are suspended immediately upon qualification for investigation while some still

works in office even after the qualification of investigation on corruption issues.

The committee also observed that a junior designation staff who does not have the

authority has been charged with of supervisory accountability when the official

charged for corrupt intend is an executive official of the institution. There is no

clear information to fix accountabilities.

The manipulation and tampering of the documents case of Royal Monetary

Authority of Bhutan was qualified for investigation a year ago, but the case is still

not yet investigated.

PAC's Recommendations 5

The Government must look into the work of the officials entrusted with multiple

responsibilities and need to reassign the work in order to avoid undermining of

fairness ultimately leading to reduction of corruption practice.

The committee felt imperative to maintain the standardization of suspending the

officials involved in the corruption practices after qualifying for the investigation

by the Anti Corruption Commission of Bhutan mainly on the following reasons:

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Risk of Manipulating/Replacing the documents

Risk of Tampering the documents

Risk of Tutoring the witnesses

Risk of Flight

Manipulation and tampering of the document resulting into inadmissible

payment by one of the Dy. Governor is a serious concern under category 1 and

such high profile issue requires immediate attention of the ACC to investigate.

CHAPTER IV: PAC’S BUSINESS

1. PAC Public Hearings

PAC has conducted Public Hearings of 4 Agencies which included Ministry of

Foreign Affairs, Samtse Dzongkhag, Naja Gewog and Penden Cement Authority

Limited (PCAL) as per the Rules of Procedure of the PAC 2015. During the public

hearings, the concerned auditors from the RAA have participated as witness and

provided clarifications. During the question and answer session, the committee asked

the agencies to resolve the cases proactively as early as possible by

producing/submitting necessary documents to RAA for further review.

2. PAC as an associate member to Commonwealth Association of PAC (CAPAC)

The PAC of Bhutan had the opportunity to participate on the 5th

Westminster

Workshop of CAPAC in Malta in June 2015 in the capacity of Secretary General of

ARAPAC. The Executive Secretary of Commonwealth Association had made a

special mention about PAC Bhutan in the meeting and declared it to be the First

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Associate member of CAPAC. The Chair of the CAPAC, Chair of the PAC of Malta

has already extended invitation to PAC Bhutan for associate membership on Oct 2,

2015. The Constitution of CAPAC and application membership form are attached as

annexure.

3. Establishment of Asian Regional Association of PAC (ARAPAC) Permanent

Secretariat in Bhutan

The decision to establish ARAPAC was taken in Dhaka, Bangladesh at a meeting of

PACs across the SAARC region, in November 2009 to facilitate the exchange of

information, opinion and experience relating to public Accounts Committees and to

discuss matters of mutual interest to the members. The World Bank Group agreed to

provide a temporary secretariat at the regional association.

The ARAPAC was established at a meeting in 2010 in Bangladesh. The Association

has PACs from East and South East Asia and currently has 14 member countries. The

member countries are Afghanistan, Bangladesh, Bhutan, Indonesia, Malaysia,

Maldives, Myanmar, Nepal, Pakistan, Sri Lanka, Singapore, Thailand, Timor Leste

and Vietnam.

During the Annual General meeting held in Kathmandu, Nepal from 9th

to 11th

September 2015, it discussed about the establishment of a Permanent Secretariat for

the PAC. The member countries deliberated in length and eventually agreed to set up

the Permanent Secretariat in Bhutan for three years and the World Bank Group agreed

to provide the funds/budget for this project. The secretariat will be responsible for the

day–to-day running of the organization. The PAC of Parliament of Bhutan has been

serving as Secretary General of ARAPAC since its inception. The Constitution of

ARAPAC is attached as annexure.

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Considering the benefits that it would have for the country and as enshrined in the

ARAPAC Constitution, the PAC recommends the establishment of ARAPAC‘s

Permanent Secretariat in Bhutan. Similarly, joining CAPAC as an associate

member would benefit in the capacity building of PAC members of the Parliament.

CONCLUSION

The PAC is able to present this synthesized report to the Parliament only with the good

support of Royal Audit Authority and other stake holders. The committee has high

expectation that the House is informed and clarified enough on the audits irregularities.

Further, the committee is hoping meaningful deliberation on the report especially the

recommendations.

Annexure

a. Status of Audit report 2014

b. Summary of the Review Report of AAR 2009-13

c. Status of cases forwarded to ACC

d. Constitution of the ARAPAC

e. Constitution of the CAPAC

*** Tashi Delek ***