RAA to tighten the noose on corruption

The increasing incidences of fraud and corruption, and subsequent handling of corruption charges by agencies has prompted RAA to clamp down hard on perpetrators

By Chimi Wangmo

Over the recent years, the Royal Audit Authority has reported increasing trend of unresolved irregularities in their Annual Audit Reports.

Just in the span of past four years the Authority reported cases of fraud and corruption to the tune of Nu 95.918 million.

Royal Audit Authority, as the apex audit institution of the nation, states it has the responsibility of building trust and confidence in the public sector and government through its work of auditing and reporting.

It further states that despite the authority trying to clamp down and report corruption, in terms of trend of reported irregularities, there is has been no signs of any visible progress.

RAA said while rising trend of irregularities could be attributed to range of factors such as increase in the size of public expenditure, enhanced coverage of audit et al, it is also an indication that there is deficit of ethics and morality in the way public resources are managed.

“It places equal responsibility all institutions to uphold the culture of professionalism, ethics and accountability. The current state of affairs should knock on the conscience of all,” RAA, in the Auditor General’s Report, states.

The authority further underscores that unless the collaborative mechanisms amongst all institutions in the public sector are put in place to pursue collective responsibility towards creating a cleaner society, institutions and agencies shall always remain derailed in their collective mission and continue to revolve around the question, “who is responsible?” and set in vicious cycle of blame game.

Therefore, RAA stated it calls for a deeper introspection to take the step forward and provide insights into what, where, and how things have faltered in the journey of creating a cleaner public sector worthy of trust and confidence of the stakeholders.

How do frauds and Irregularities occur?

According to RAA, irregularities occur basically due to failing of control systems put in place to ensure that processes designed produce desired results.

The cases of irregularities classified under fraud and corruption are those which have occurred with the intent to deceive as suggested by the evidences obtained by the auditors.

However, according to RAA, what is challenging is that there is a thin line between fraud and error in that, fraudulent act can be conveniently justified as “error” and when no substantive evidence could be obtained to counter such claims, there is no basis to suspect fraud. And in the process, there are possibilities that perpetrators go scot-free.

According to RAA irregularities occur when basic controls are lax.

“In what RAA sees it as a manifestation of lack of control consciousness within the organization, there were cases of frauds committed by officials operating the accounts involving colossal amount of funds in the absence of even the basic and minimum controls in operating the accounts,” RAA further states.

For instance, RAA observed that an amount of Nu. 10.878 million was embezzled in 2019 by an accountant looking after the accounts of four Gewogs.

It further noted that the operations of accounts were managed single handedly by the accountant and there were no check and balance put in place.

Similarly, fraudulent case involving Nu 8.398 million was also detected in one of the Dungkhags which was also perpetrated by an accountant. RAA said it reportedly happened due to lack of knowledge of supervisor in financial rules.

“Had it not been for the absolute control given to a single official to operate the accounts without any monitoring system, and the leaders in positions possessed at least the minimum knowledge of operations he/she has taken charge of, such undesirable behaviors could not have occurred,” the Authority warns.

In addition, it also reflected failure to exercise leadership and monitoring at various levels. Opportunity to perpetrate frauds was thus, created and rendered the system vulnerable.

The Authority states that such kind of situations rendered by lack of control consciousness lead to numerous questions such as what prompted the Dzongkhag to assign four Gewogs to one Accountant without putting in place even a minimum check and balance?

Further, it states that questions like what encouraged the supervisor to continue approving payments without assessing the legitimacy comes to mind.

According to RAA another case of creating opportunity for perpetrating fraud and irregularities in our system is creating vulnerabilities to enhance propensity for compromising on individuals’ ethics and code of conduct.

Civil servants like accountants, revenue officials, auditors, customs and tax officials, engineers and procurement personnel are considered vulnerable groups as per the Bhutan Civil Service Rules and Regulations (BCSR) 2018 due to their nature of work and susceptibility to corruption and corrupt activities.

RAA states that such category of civil servants need to be regularly shuffled and transferred to ensure that there is no familiarity threat and risk of animosity with clients.

“When transfers of people in these professions are not enforced, their long relationship with the clients poses risk of familiarity or animosity, both leading to compromising on ethical standards,” RAA observed.

According to them, the familiarity may lead to various undesirable practices through collusions, illicit dealings and undue influences. On the other hand, holding animosity with long tenured officials may lead to unnecessary harassments or disfavor.

Therefore enhanced vulnerabilities act as an opportunity to resort to undesirable behaviours, and one of the examples of weak controls put in place is the absence of verification process in making payments for goods and services RAA states.

RAA further reported host of instances where agencies had made extra payments for works not executed or for goods not delivered. RAA states that, in such cases, site engineers have the responsibility to verify the claims of contractors and for goods, stores officials to verify the goods received.

“The fact that cases of extra payment made on these accounts continue to surface repeatedly, the credibility of verification process remain doubtful. These are basically fueled by lack of oversight mechanism to exercise due dililigence and authenticate the verification done by the site engineers,” the Authority cautions.

In addition, unless done with justifiable reasons, such acts could be construed as favouring the contractors, suppliers or consultants and would fall under fraudulent activities.