Auditor General’s 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.

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  1 | Page    Auditor General’s 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 inthe 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 alayman. By Siromani Dhungana *    The Office of the Auditor General in Nepal states is vision as the following: “AnIndependent, 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 fourthousand public entities, including government departments, local authorities and theirsubsidiaries, security forces, licensing trusts, community boards and others. Recently, theOAG 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 The overall accountability performance of the government entities is poor anddisappointing in Nepal. This needs to be improved significantly to allow the public to holdpublic entities accountable for use of public money, and for the effectiveness of theirservice delivery.Today, many Nepalis simply do not believe on the expenditure detail made public by thegovernment entities because they believe (and rightly so) corruption has been a part of the system and such system highly encourages expenses to be inflated.  AG’s Report: Nothing More than a Formality The OAG released its 50th annual report in April but the report hasn’t attracted muchinterest from general public.  2 | Page   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 tothe wider mass.I think, the office should publish its report in simplified form. So far, it has been publishinga 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 toknow the public expenditure by the government entities in his/her district, the personshould be able to read Humla-only report, and they shouldn’t be burdened with the wholereport. Vouching & Verification 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 theprocess of recognizing obligation and authorizing cash disbursements. Auditors talliesvouchers in the auditing process.Verification, however, is the most important step in the audit process. After receivingvouchers, auditors are required to ensure that whether the facts stated in the vouchersare correct or not. Verification process involves reviewing, inspecting and checking of thevouchers 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 bethe responsibility of the OAG to at least to be sure that minimum quality standard hasbeen followed on constructing the road. 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.  3 | Page   The report has yet to include individual audit report, i.e., detailed expenditure byindividual public entity and the amount of the arrears. Individual audit report will helpgeneral 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 expenditureof public money by government entities but has given very nominal concern to the actualexpenditure and its effectiveness,” Neupane said. Participatory approach has beencompletely neglected in the financial audit and limited numbers of performance audit arealso not considering the response of larger beneficiaries.The main purpose of performance audit is to provide public accountability for theresponsible use of public resources and regulatory powers, he adds. Performance Audit  Financial audit is not sufficient to ensure accountability. It is often blamed that manyprojects complete on the paper but not in the real sense in the country. So, the Auditor-General Office should start performance audit system to ensure that the targets are met inreal life. Government performance auditing focuses on improving how governmentsprovide programs and services.Performance audits incorporate an evaluation of concerned projects to examine theproject execution against the criteria given to the concerned government agency. Bill tallyand inspection of voucher is not sufficient to track the existing rampant corruption in thecountry. Reform the System of Audit Plan The primary duty of the Office of the Auditor General is to play the role of publicwatchdog in the realm of public finance effectively. More interaction with public duringthe audit process is a must to ensure effectiveness of the audit. Formality in the releasingof audit report cannot ensure the accountability in the government entities andtransparency in expenditure. (*Kathmandu-based economic journalist, researcher and media academic, Siromani Dhungana is a youngand 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 Education’s Curriculum Development Center to revise the journalism syllabus for grade nine and ten as well as to rewrite journalism textbooks for thesecondary level. He has also received Narayan Shanti Mishra Gold Medal for being faculty topper in JMC fromTribhuvan University in 2009 batch. He can be contacted at or is also an editor of Nepal’s popular blog site:  )
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