A report of the Financial Comptroller General Office shows various government agencies flouted rules while making payments worth over Rs3 billion last fiscal year

January 21, 2019

Prithvi Man Shrestha, The Kathmandu Post, 20 January 2019

Various government agencies flouted rules while making payments worth over Rs3 billion last fiscal year, shows a report of the Financial Comptroller General Office, the top body responsible for the government’s treasury operations.

In its annual report on internal audit, the office says as much as Rs3.35 billion was paid by government agencies going against the rules. While payment in excess of Rs3.31 billion was made against the limit, Rs41.20 million was paid despite the rules not allowing it, the report, a copy of which was seen by the Post, has revealed.

“Sometimes such payments are made due to a lack of proper understanding among the government staffers responsible for maintaining accounts. But ill-intention in some cases cannot be ruled out,” said Jagannath Devkota, a spokesperson for the FCGO, hinting at corruption.

“If the internal audit and final audit fail to track such illegal payments, chances are high that the amount would be lost from the government coffers.”

As per the report, the maximum amount of such payments has been made in the form of advance payment to contractors, suppliers, builders and service providers, among others.

The Office of the Auditor General has also been pointing out such payments in its annual reports. The OAG is a constitutional body tasked with promoting accountability and transparency and ensuring that public funds are efficiently used.

OAG officials say there is a tendency among officials to wrongly interpret the law to make illegal payments if there is a scope of personal benefits from transactions.

“Officials with ill-intention tend to misinterpret the laws, rules and regulations while making payments to contractors, suppliers and service providers,” said Baburam Gautam, deputy auditor general at the OAG. “At times, government offices make illegal payments also due to pressure from the higher authorities,” he added in an indication of a larger nexus.

The payment made illegally is part of the total transactions that are unaccounted for, according to the FCGO, which is responsible for internal audit of government transactions as per the Financial Procedure Act.

The FCGO checks if the government agencies have adopted austerity measures while spending the budget and whether the due procedure has been followed. This gives them opportunity to self-correct the mistakes as suggested by the internal audit. This also helps the Auditor General’s Office while conducting its final audit.

However, OAG officials say the finding of internal audit is not taken as seriously as that of the OAG. Most of the irregularities pointed out by the FCGO during the internal audit are generally not cleared before final audit. The internal audit sometimes fails to spot a lot of irregularities which the final audit conducted by the OAG finds later. So, the amount related to irregularities after the final audit usually remains higher than what internal audit shows, according to OAG officials.

For example, the internal audit showed the amount of irregularities in the fiscal year 2016-17 at Rs43.47 billion. But the final audit showed that such amount stood at Rs120 billion that fiscal, according to the 55th annual report of the OAG.

“Lack of adequate human resource and expertise is another reason the internal audit often fails to spot various irregularities which are later identified at the time of final audit,” said Gautam.

According to the internal audit report, the total unaccounted amount related to irregularities in the fiscal year 2017-18 stood at Rs53.58 billion which is 4.94 percent of the total expenditures that year. Government agencies spent Rs1.08 trillion last fiscal. Among the government agencies, the Ministry of Physical infrastructure is worst in following the due spending procedure. Of the total irregularities, Rs22.89 billion is related to this ministry, which is 42.73 percent of the total irregularities, according to the FCGO.