Irregularities relating to the shortfall, lapses, and deficiencies were observed with financial implications amounting to Nu 1.5bn of which hydropower accounted for 28.92%, according to the annual report of the Royal Audit Authority (RAA).
Further, non-compliance to Laws, Rules, and Regulations had irregularities worth Nu 2.3bn of which hydropower accounted for 71.39%.
The RAA in its annual report highlighted a significant irregularity amounting to Nu 4bn in 2021, which is an increase of 184% from the irregularities reported in 2020.
The annual audit report 2021 has been compiled from 197 audit reports issued last year.
As per the report, about 84% of irregularities pertained to non-budgetary agencies. The hydropower constituted irregularities aggregating to Nu 2.1bn, corporations with Nu 1.1bn, and non-government organizations with Nu 49mn under non-budgetary agencies.
However, in terms of financial implications, payments for works not executed and goods and services not delivered was the most common observation with irregularities aggregating to Nu 1.1bn followed by the excess payment due to incorrect rate analysis amounting to Nu 542mn.
The total financial implication from irregularities observed in budgetary agencies amounted to Nu 649mn corresponding to 16%.
Irregularities by category:
Of the total irregularities, fraud and corruption accounted for 3.32% aggregating to Nu 133mn.
Budgetary agencies had audit observations aggregating to Nu 8.6mn, while non-budgetary agencies had audit observations aggregating to Nu 1.2mn.
The report states that the State Trading Corporation of Bhutan Limited had the highest amount of irregularities amounting to Nu 123mn, followed by the Dungkhag Administration, Gelephu amounting to Nu 5mn, representing 93.42% and 3.95% respectively.
The cases of fraud and corruption reported were categorized under four subcategories.
The cases under malpractices and abuses accounted for Nu 122mn, representing 91.84%. Misappropriation of cash accounted for Nu 8.7mn and payment for works not executed or goods not delivered accounted to Nu 1.8mn, representing 6.56% and 1.37% respectively of the total irregularities reported.
Similarly, the issues of non-compliances were reported based on materiality with the potential to undermine the rule of law, which is one of the tenets of good governance. The cases reported under non-compliances amounted to Nu 2.3bn, representing 58.10% of the total irregularities.
The cases under this category comprise non-compliance to procurement norms accounted for Nu 1.9bn representing 82.58%. Non-compliance to financial norms, other regulations, and human resource management norms amounted to Nu 367mn, Nu 37mn, and Nu 0.6mn respectively.
The PHPA-I had irregularities amounting to Nu 1.6bn representing 71.39% of the total irregularities under non-compliance to Laws, Rules, and Regulations.
Other agencies under this category included the Dzongkhag Administration, Zhemgang amounting to Nu 82mn, STCBL with Nu 80mn, TCB with Nu 77mn, and Kuensel Corporation Ltd with Nu 58mn, representing 3.55%, 3.45%, 3.31%, and 2.53% respectively.
In addition, irregularities related to shortfalls, lapses, and deficiencies were reported based on the materiality with the potential to undermine the economic and efficient functioning of agencies.
Of the three sub-categories under shortfalls, lapses and deficiencies amounted to Nu 1.5bn, representing 38.58% of the total irregularities.
The case under this category comprises shortfalls and uneconomical operations for Nu 1.3bn representing 88.84%. Deficiencies on property management and non-cooperation amounted to Nu 216mn and Nu 0.062mn respectively.
Amongst budgetary agencies, the Centre for Bhutan Studies and the Dzongkhag Administration, Haa had the highest amount of irregularities amounting to Nu 79mn and Nu 35mn respectively.
PHPA-I, SMCL, and STCBL had the highest irregularities under this category with Nu 446mn, Nu 417mn, and Nu 286mn respectively.
Kinley Yonten from Thimphu