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SAI-BHUTAN Royal Audit Authority

SAI-BHUTAN Royal Audit Authority. Auditing and Reporting on Economy, Efficiency & Effectiveness. PRESENTATION ON AUDITING SYSTEM IN BHUTAN. Overview of the Presentation Country Facts Origin of the RAA Overall Function Jurisdiction Scope of Audit RAA Organizational Structure

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SAI-BHUTAN Royal Audit Authority

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  1. SAI-BHUTANRoyal Audit Authority Auditing and Reporting on Economy, Efficiency & Effectiveness

  2. PRESENTATION ON AUDITING SYSTEM IN BHUTAN

  3. Overview of the Presentation • Country Facts • Origin of the RAA • Overall Function • Jurisdiction • Scope of Audit • RAA Organizational Structure • RAA’s Approach Towards Balance reporting • Our Audit Framework • Reports • Audit Clearance Certificate • Annual Audit Reports • Follow up • Relations with stakeholders

  4. Country Facts Population = 0.647 million Area = 38,394 sq. kms Density = 16/sq.km Major Exports = Electricity, Timber, Cement, Agricultural Products, handicrafts etc. Currency = Ngultrum National Language = Dzongkha Auditing system in SAI Bhutan

  5. Origin of the RAA (Audit Act of Bhutan, 2006) 2006 Kashos (Royal Edict) Issued 1970 – 4 Royal Auditors 1985 – RAA autonomous & independent) 1997 1999 2000 2005 – Constitutional Body 2005 – Constitutional Body 1985 – Royal Audit Authority - autonomous & independent) Went through various structural & organisational changes 1974 – Department of Audit (Financial manual 1974) Reiterating independence of the RAA 1970- Royal Audit Office 1963 - Accounts and Audit Organization 1961 (16th National Assembly proposed for Auditing System in Bhutan)

  6. Overall Function Accountable for the Stewardship of Public Funds LEGISLATURE EXECUTIVE (People’s Representatives) (Executing Agencies) Independent views on the quality of public sector activities and the stewardship of Public Funds Royal Audit Authority

  7. 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.

  8. WHAT HAS NOT BEEN DONE WHAT HAS BEEN DONE ACHIEVE ULTIMATE OBJECTIVE There shall be a Royal Audit Authority to audit and report on the Economy, Efficiency and Effectiveness in the use of Public Resources. Article 3, of the Audit Act of Bhutan 2006 Article 25.1, Constitution of the Kingdom of Bhutan 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.

  9. JURISDICTION The RAA shall conduct without fear, favour or prejudice, the audits of the following: Audit Jurisdiction as per the Audit Act of Bhutan 2006

  10. JURISDICTION 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.

  11. 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

  12. Zhung Dratshang, Rabdeys and all related institutions; Judiciary and Judicial Bodies; Legislature and related institutions; Constitutional bodies Defense and Security Services; 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

  13. 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

  14. 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; Scope of Audit

  15. (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; Cont…Scope of Audit

  16. (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. Conti….Scope of Audit

  17. RAA Organisational Structure

  18. LINKING LAPSES WITH ACCOUNTABILITIES Our Audit Framework AUDITING REPORTING FOLLOW UP Direct Accountability Supervisory Accountability Thematic Audit Environment Audit Individual reports to the agencies Performance Audit Certification Report of the consolidated financial statements Financial Audit Compliance Audit Annual Audit Report Propriety/Regularity Audit AG’s Advisory series Special Audit AG’s Occasional Paper System Audit Team level Committee level Divisional Level PAC/Parliament

  19. Auditing • Investigation • Prosecution Role of RAA Prior to 2006 " RAA's Approach Towards Balanced Reporting" After 2006 RAA RAA ACC Balanced Reporting Auditing Success Stories Attorney General's Office Lapses

  20. REPORTS Audit Reports – Issued after completion of each audit & after providing 1 month to respond to initial audit observations The concerned Minister & head of the audited entity The Chief Justice of Bhutan for audits of the courts Audit Reports addressed to: 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 Chairperson of the Board for the audits of the corporations and financial institutions Agencies to respond within three months after the issue of the reports by the RAA

  21. Promotion Further Studies Training Post Retirement Benefits Elections Contract Extension Secondment Audit Clearance Certificate

  22. 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

  23. 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

  24. 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 Follow-up of Audit Reports

  25. 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 Audit Information Management System

  26. 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

  27. BHUTAN THE LAND LOCKED COUNTRY

  28. Thank You Thank You

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