The Office of the Auditor General is planning to conclude the audit of the last fiscal by mid-February and submit a report to the president by mid-April next year. The external auditor of government has already asked the government offices to carry out their internal audits to facilitate the OAG’s audit. OAG is going to carry out audit of 5,498 offices including local units. Along with the regularity of the government spending, the OAG has said that it will also gauge the performance, rationale and efficiency of spending in its audit.

Auditor General Tanka Mani Sharma spoke to Pushpa Raj Acharya of The Himalayan Times on what OAG has been doing to improve the effectiveness of the auditing. Excerpts:

Office of the Auditor General has set a target to conclude the audit of last fiscal by mid-February next year. Are you certain the task will be concluded within the set timeframe?

We have developed an action plan to carry out the audit of last fiscal by mid-February 2018 on the basis of our capacity to deploy auditors across the country. We are going to carry out audit of fiscal 2016-17 in three different phases. Auditors have already been deployed in the Kathmandu Valley and 10 other districts — five districts of remote Karnali zone and five other districts of the mountainous region. We have selected Kathmandu Valley in the first phase because a large chunk of government expenditure is channelised from Kathmandu and a large number of government offices are located here. Altogether, 85 teams of auditors under the leadership of our directors have been mobilised to carry out an audit of the entire government offices and local bodies in Kathmandu Valley and 10 other districts in the first phase. Auditors will be deployed in 31 districts in the second phase from November and in the remaining 31 districts in the third phase from January 2018 to conclude the audit by mid-February. After concluding the audit we will give the offices 35 days to settle the arrears and submit justification to the OAG before publishing the 55th OAG report. We have informed the ministries, judicial bodies and Parliament regarding our action plan. We are going to audit the accounts of all government offices including the local units. We have to carry out audit in 5,498 offices. I am hopeful that we will be able to conclude the audit within the desired timeframe.

OAG has said that it will gauge the impact of government spending. How do you plan to gauge the impact of the spending?

We will hire experts related to the concerned fields for the impact audit. OAG will focus not only on financial audit. We will also look into non-financial types of audit that are performance, rationale and efficiency of the government spending. The objective of the impact audit is to make the spending entity responsible to deliver better results. For instance, the government has been spending huge resources for the construction and expansion of roads and the expenditure has been well presented in their book-keeping. During impact audit we will check the quality of construction to see whether it has met the required specification or not, and its environmental and social impact, among others by hiring related experts. We will select some projects as samples for this purpose. The OAG will also issue a notice to the public seeking feedback from the local level on irregularities in development works and on public service delivery when our teams are mobilised to the various  districts to carry out the audit.

Why has OAG asked government not to issue deputation letters to staffers responsible for accounting and project heads despite their transfer until the audit has been concluded?

There is a trend of seeking transfers at the end of fiscal years without concluding even the internal audit. This is why we have asked the government to make them more accountable. Though we cannot fix the criteria for the transfer and promotion of the government staffers, however, we have urged the government to cross-check whether the concerned officer has adhered to the principles of financial accountability or not while promoting them or providing them responsibility in projects that have a budget of over Rs one billion. The OAG report will mention the names of the officers, who have not adhered to financial accountability.

You mentioned that OAG report will mention names of officers who have not adhered to principle of financial accountability. Don’t you think that this might inadvertently encourage officers not to take any decisions?

I do not think this will happen. The OAG report will also mention whether the concerned officers had taken any decisions or not to run their respective programmes. As an oversight agency, the OAG also has to take major issues of public concern into account and carry out special audit of these issues.  We have listed 62 different issues under the various ministries and constitutional bodies for a concurrent audit. For example, there has been an issue of misutilisation of revenue exemption facility in imports under the Ministry of Finance. Likewise, there has been public concern on issuance of survey and generation licence to hydropower projects and the unjustified extension of such licences under Ministry of Energy, among others. We have listed such issues for the concurrent audit.

The government has said that arrears in advance payments are not actually arrears. There has been a debate for long between government and OAG on arrears in advance payments. What is your take on this?

This is not an issue in fact. I have also talked to Financial Comptroller General Office — internal auditor of the government — to make sure that the advance payments of the previous fiscal year have to be mentioned in the bookkeeping of the next financial year. If the advance payments of the previous fiscal are not mentioned in the bookkeeping of next fiscal, then we have to mention the advance amount as arrears. In fact, arrears amount is the amount that needs to be recovered.

The amount of arrears has been increasing every passing year. What would the OAG like to suggest the government to minimise arrears?

After concluding the audit we usually provide 35 days to the concerned offices to settle the arrears. This year, the OAG is mulling over to provide more time to the government offices to settle arrears. As we are going to submit the report by mid-April, we can provide time till the end of March to settle the arrears and submit justification to the concerns of the OAG. The Public Accounts Committee of the Legislature-Parliament discusses with the concerned government offices to settle the arrears and follows up on it. The House panel also discusses on the policy related issues like subsidy on fertilisers from the Ministry of Agricultural Development, and tax exemption in import of goods from Ministry of Finance to protect domestic industries, among others. After the discussions, the House panel instructs the government to amend policies if required.

What is the major focus of OAG to strengthen its capacity to bring effectiveness in financial and non-financial audit?

We have recently launched a six-year action plan to strengthen the capacity of the OAG. It has focused on six major areas to improve the organisational structure and working procedure of the OAG as the country has adopted a federal structure. It includes physical facility and human resources development. We are planning to open offices in all seven provinces in the near future. Secondly, we have to reform the laws and policies related to audit to improve the audit process. Likewise, the action plan also envisions to develop technology friendly method and legalise the technology related working procedures. We will also carry out audit of sustainable development, natural conservation and public health apart from the financial audit. Similarly, we have to ensure enhanced accountability and transparency in public service delivery, development works, and income and expenses of the government.