A comparative review of the Royal Audit Authority’s (RAA) Annual Audit Reports over the past three fiscal years show a marked increase in the financial implications of audit irregularities, accompanied by a significant evolution in how such irregularities are identified, classified and interpreted.
The irregularities nearly quadrupled Since the Fiscal Year (FY) 2022–23 which stood at Nu 2,840.092 million (M). This increased to Nu 3,961.136M in FY 2023–24, before surging sharply to Nu 9,987.242M in FY 2024–25—representing more than a threefold rise within two years.
While the rising figures may appear concerning, the RAA has clarified that higher financial implications do not necessarily point to increased corruption.
“The increase in amounts should not be viewed in isolation or equated directly with corruption,” an RAA official said. “It reflects expanded audit coverage, improved detection capacity, and long-standing structural weaknesses in financial management, especially in capital-intensive sectors.”
A key trend emerging from the analysis is the steady decline in fraud-related cases as a proportion of total irregularities. Fraudulent irregularities declined from Nu 39.604M (1.39%) in the FY 2022–23, to Nu 15.762M (0.40%) in the FY 2023–24 and further down to Nu 8.375M (0.08%) in the FY 2024–25.
Conversely, non-fraudulent irregularities increased significantly, culminating in FY 2024–25, when 99.92% of all irregularities were categorized as “Errors.”
According to the RAA, this reflects the adoption of a revised classification framework.
“The revised framework helps distinguish between willful misconduct and systemic or procedural lapses,” the Authority stated. “This allows agencies to focus on corrective and preventive measures rather than treating all findings as punitive.”
In FY 2022–23 and FY 2023–24, audit irregularities were categorized under three broad headings: Fraud and Corruption; Non-compliance with Laws, Rules and Regulations; and Shortfalls, Lapses and Deficiencies.
In FY 2023–24, non-compliance alone accounted for 55.76% of total irregularities, while shortfalls and deficiencies made up 43.84%, indicating widespread weaknesses in regulatory compliance and operational efficiency.
From FY 2024–25, the RAA adopted a more functional classification system, consolidating most issues under Errors, further broken down into Finance and Revenue Management, Procurement, Human Resource Management and Property Management.
“This shift allows us to pinpoint where systems are failing, rather than merely reporting outcomes,” an RAA official explained.
Across all three fiscal years, hydropower projects accounted for the largest share of financial irregularities, with the scale escalating sharply in FY 2024–25.
In that year alone, hydropower projects recorded over Nu 7.49 billion (B) in finance and revenue management errors, representing more than 86% of total irregularities in that category.
“Hydropower projects involve very large financial volumes,” the RAA noted. “Even minor procedural lapses can translate into substantial financial implication, which is why stronger internal controls and specialized oversight are essential.”
A senior official from the Finance Ministry, speaking on condition of anonymity, said the findings were “a reminder that project governance must match the scale of investment.”
“When projects run into billions, even small weaknesses in compliance can have serious fiscal consequences,” the official said.
Despite the rising financial implications, audit opinion outcomes have remained consistently strong.
In the FY 2022–23, 439 of 456 reports didn’t qualify, while 426 of 439 financial audit reports were disqualified in the FY 2023–24, and 439 of 454 financial audit reports didn’t qualify during the FY 2024–25.
The number of qualified opinions remained limited, indicating that financial statements are largely reliable, even as compliance and control weaknesses persist.
“Clean audit opinions mean financial statements are fairly presented,” the RAA clarified. “They do not imply that systems are free from risk.”
Referrals to the Anti-Corruption Commission (ACC) declined as well over the three years, from nine reports in FY 2022–23 to four reports in FY 2024–25.
However, the RAA cautioned against complacency.
“Procedural errors, if left unresolved, can create conditions that may eventually lead to fraud,” an RAA official warned. “That is why timely corrective action is critical.”
Overall, the three-year comparison highlights a shift in the RAA’s audit philosophy—from a predominantly punitive approach towards one focused on early detection, systemic correction and prevention.
The Authority has reiterated that audit recommendations must be acted upon promptly, accountability must be clearly fixed, and parent ministries—particularly the Ministry of Finance (MoF)—must strengthen oversight mechanisms.
“Audit findings are not mere observations,” the RAA stressed. “They are governance tools meant to safeguard public resources.”
As public expenditure continues to expand, particularly in infrastructure and hydropower development, the RAA has emphasized that financial discipline and governance systems must evolve in tandem to protect public funds, maintain public trust and ensure sustainable national development.
Tashi Namgyal
From Thimphu
