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Auditor Generals Report: A Mere Formality or an Effort to Maintain Accountability?

A brief look at Nepali peoples perception of the Office of the Auditor General and its annual reports.
The Office of the Auditor General (OAG) can and should play the role of watchdog to control irregularities in the government entities. The OAG should make its auditing system more effective so that it can reveal all malpractices in the government agencies. Its reports should be available widely and understandable by a layman.

By Siromani Dhungana*
The Office of the Auditor General in Nepal states is vision as the following: An Independent, efficient and effective audit institution to promote good governance. Similarly, its mission is to provide quality audit service to the nation for the efficient management of public resources.

Efficient management of public resources, however, has always been in question. Government should respond to the findings and recommendations of auditor general but that is not happening. The Auditor-General in Nepal is the auditor of more than four thousand public entities, including government departments, local authorities and their subsidiaries, security forces, licensing trusts, community boards and others. Recently, the OAG submitted its 50th annual report. The office claims that the report covers number of areas of audit concerns in the management of public funds.

The State of Public Sector Accountability

Today, many Nepalis simply do not believe on the expenditure detail made public by the government entities because they believe (and rightly so) corruption has been a part of the system and such system highly encourages expenses to be inflated.

The overall accountability performance of the government entities is poor and disappointing in Nepal. This needs to be improved significantly to allow the public to hold public entities accountable for use of public money, and for the effectiveness of their service delivery.

AGs Report: Nothing More than a Formality

The OAG released its 50th annual report in April but the report hasnt attracted much interest from general public.
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Its contents are hardly reported. Even if some media report it the general public is not very eager to find more, says Kathmandu-based researcher Anirudra Neupane.

Low Awareness about Audit Report

Audit report is a public document. The government should ensure massive circulation of the audit report, Neupane says. But the OAG does nothing to make the report available to the wider mass.

I think, the office should publish its report in simplified form. So far, it has been publishing a single report including all its observation within the same book. The office should start the new practice of publishing district-wise reports. If a person from Humla wants to know the public expenditure by the government entities in his/her district, the person should be able to read Humla-only report, and they shouldnt be burdened with the whole report.

Vouching & Verification

Verification, however, is the most important step in the audit process. After receiving vouchers, auditors are required to ensure that whether the facts stated in the vouchers are correct or not. Verification process involves reviewing, inspecting and checking of the vouchers to ensure that the documents conform to specific requirements. For instance, if any government entity says it spent Rs 1 billion in road construction then it should also be the responsibility of the OAG to at least to be sure that minimum quality standard has been followed on constructing the road.

Our entire auditing system is mostly formal and inefficient. Generally, OAG carries out auditing based on vouchers received by the office from various government entities. Generally, vouching and verification are popular term in auditing process. Vouching is the process of recognizing obligation and authorizing cash disbursements. Auditors tallies vouchers in the auditing process.

Reveal Individual Audit Report

According to the OAG, the audit observations and findings reported were based on audit examination of the financial statements and accounts of a total of 4,802 government bodies including constitutional Bodies, Supreme Court, Legislature-Parliament, Ministries, Nepal Army, Armed Police Force, Nepal Police, Government fully-owned Enterprises, District Development Committees, Board, Trust, and Universities.
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The report has yet to include individual audit report, i.e., detailed expenditure by individual public entity and the amount of the arrears. Individual audit report will help general public to understand the performance of the government entity of their concern.

Arrear-focused Report

Currently, OAG is focused on arrears. Report of the OAG is more focused on expenditure of public money by government entities but has given very nominal concern to the actual expenditure and its effectiveness, Neupane said. Participatory approach has been completely neglected in the financial audit and limited numbers of performance audit are also not considering the response of larger beneficiaries. The main purpose of performance audit is to provide public accountability for the responsible use of public resources and regulatory powers, he adds.

Performance Audit

Financial audit is not sufficient to ensure accountability. It is often blamed that many projects complete on the paper but not in the real sense in the country. So, the AuditorGeneral Office should start performance audit system to ensure that the targets are met in real life. Government performance auditing focuses on improving how governments provide programs and services.

Performance audits incorporate an evaluation of concerned projects to examine the project execution against the criteria given to the concerned government agency. Bill tally and inspection of voucher is not sufficient to track the existing rampant corruption in the country.

Reform the System of Audit Plan

The primary duty of the Office of the Auditor General is to play the role of public watchdog in the realm of public finance effectively. More interaction with public during the audit process is a must to ensure effectiveness of the audit. Formality in the releasing of audit report cannot ensure the accountability in the government entities and transparency in expenditure.

(*Kathmandu-based economic journalist, researcher and media academic, Siromani Dhungana is a young and prominent media scholar in Nepal. He is also a lecturer of Journalism and Mass Communication (JMC) at Tribhuvan University. He has been appointed by the Ministry of Educations Curriculum Development Center to revise the journalism syllabus for grade nine and ten as well as to rewrite journalism textbooks for the secondary level. He has also received Narayan Shanti Mishra Gold Medal for being faculty topper in JMC from Tribhuvan University in 2009 batch. He can be contacted at meshiromani@gmail.com or siromanidhungana@gmail.com. Dhungana is also an editor of Nepals popular blog site: www.blog.com.np ) 3|Page

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