Nepali Times Asian Paints
Economic Sense
Auditors’ nightmare


The Beed is appalled. Last week, the Office of the Auditor General (OAG) presented a report pertaining to fiscal 1999/2000, which showed that Rs 71 billion of expenditure that year by different arms of government was not in accordance with procedure, or has not been accounted for properly. And advances worth Rs 26 billion were made-but have still not been settled.

The 1,542 page audit report is essentially a post-mortem of government activities involving cash. Generally, this Beed and other like-minded individuals have come to accept that audit processes on the government front are a mere formality-they look into financial transactions relating to the year before, and some time in the next year submit a report. The report-if indeed, it does come out in the second year after the fiscal year in question-may or may not catch the attention of the Public Accounts Committee (PAC). If it does, then it might be questioned the following year. Answers can be returned to the committee whenever. In short, a bit of a joke.

And the OAG is so constrained by its own constitution that it has little influence in the world of government. Our good auditors tend to slink around in a self-pitying state and the Beed does not blame them. But it is a shame-a powerful tool of the legislature that could, in theory provide the executive with the checks and balances it surely needs, is a mere formality to ensure that the existing legislature-executive nexus is not exposed.

The government spends nearly Rs 100 billion each year-roughly 20 percent of the GDP-but there is only the most primitive of methods of auditing this expenditure. The government expects audits of private and non-governmental organisations to be conducted in a timely manner, and corrective actions to arise from the conclusions of such audits almost immediately, but exudes a breezy uncaring attitude to putting its own house in order.

The sort of rampant, open corruption we see can only be eradicated by good governance. Good governance demands an efficient system of accountability-audits. But not the toothless kind we see now. OAG reports submitted to parliament need to be honoured in the right spirit-how else can we institutionalise the sense of discipline government in this country needs so desperately?

Accepting and honouring the findings of the OAC is the first step, but if we can climb that mountain, we then need to turn our attention to strengthening the OAG's office. There is perhaps no real need to say this, but we live in a world of information technology and advanced communication systems. In times like these we need to build the capacity of our watchdogs, not take away from it. The OAG requires more resources to understand the changing environment in which financial transactions are conducted, it needs technologies
and it needs to understand how they work.

Government is not a monolithic entity. It answers to many constituencies and there is no unified chain of command. To control the functioning of an entity like this, there need to be checkpoints every so often-and the OAG is an important one. Its recommendations have to be observed as a mandatory procedure. Bilateral and multilateral agencies in Nepal should make it a point that their grants and loans are tied to follow-up of the audit report. If the government really does not care about proper procedures and systems, then why does it bother funding them? The OAG must be integrated into the system of governance-if only to ensure they don't keeping adding 200 pages to their report ever year in a desperate plea for attention. All the best, Bishnu Bahadur KC, Auditor General.

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(11 JAN 2013 - 17 JAN 2013)