Among the federal ministries, the Ministry of Communications and Information Technology had the highest amount in unsettled accounts in proportion to its expenditure in the fiscal year 2020-21 as per the report of the Office of Auditor General.

The auditing body places spendings by government agencies made without following the laws and rules under the unsettled accounts category as such spendings cannot be reconciled or settled at the end of the year for lack of relevant documents including payment receipts and counterfoils.

According to its 59th annual report released on July 13, the ministry’s unsettled accounts totalled Rs3.87 billion, which is 25.45 percent of its total expenditure.

The report has also named Hari Prasad Basyal, secretary of the ministry during the period, as responsible for reconciling unsettled accounts. As per the Financial Procedure and Fiscal Responsibility Act-2019, the secretary is the audit accountable officer.

As per the law, the secretary is responsible for reconciling the unsettled accounts and recovering any dues besides looking after the financial administration and conducting internal audits.

Basyal, now retired, was the secretary of the communications ministry for the entire fiscal year 2020-21 (from July 16, 2020 to July 15, 2021). As per Section 39 of the Act, the secretary is responsible for ensuring the unsettled accounts are reconciled and take action to recover unlawful payments and expenditures.

The secretary can also impose fines on government staff under the concerned ministry who are responsible for financial irregularities. The Act, however, is silent on the penalty the secretary faces for failing to act.

“Although there are certain provisions for ensuring accountability, hardly anyone has been made accountable,” said Som Bahadur Thapa, former secretary of the Parliamentary Public Accounts Committee.

According to him, there is a provision that the chief secretary-led Committee to Monitor the Reconciliation of Unsettled Accounts can take action against the responsible government officials who fail to reduce the unsettled accounts by 40 percent.

“But the rule has hardly been followed,” he said.

Basyal, on his part, said that he cannot be blamed for the huge amounts in unsettled accounts in the agencies under the communications ministry in 2020-21 because he was transferred to another ministry after the end of that fiscal year.

“The expenses were made during my time at the ministry,” he said. “But I was not there at the time when I should have acted to reconcile the accounts.” He claimed that during his tenure at the ministry, he had cleared 36 percent of outstanding unsettled accounts from the previous fiscal year (2019-20), still lower than the required minimum of 40 percent.

According to the Auditor General’s report, the ministries that saw frequent transfers of secretaries have posted more amounts in unsettled accounts. Such ministries included the Ministry of Agriculture and Livestock Development and Ministry of Industry, Commerce and Supplies.

The Agriculture Ministry has yet to reconcile 15.53 percent of its expenses where two secretaries (agriculture) and three secretaries (livestock development) were changed in a year, according to the report. The Ministry of Industry, Commerce and Supplies saw transfers of two secretaries (industry) and two secretaries (commerce) each.

Bhanu Acharya, a former auditor general, said frequent changes of secretaries, accounting officers and project chiefs created difficulty not only in clearing the unsettled accounts but also in making those who are responsible for the irregularities accountable.

“When a new person comes in to take the responsibility, he or she becomes reluctant to shoulder the responsibility of clearing the outstanding unsettled accounts related to the previous leadership,” said Acharya.

Usually, an external audit of the government’s annual spending takes place after the fiscal year ends. But by the time audit reports come out, secretaries are changed.

“Frequent transfers of secretaries, project chiefs and account chiefs lead to administrative instability while affecting financial administration of the government,” said Acharya. “It also makes it difficult to make someone accountable for unsettled expenditures.”

After the Office of the Auditor General submits its annual audit report to the President, it is tabled in Parliament and the findings are discussed at the parliamentary Public Accounts Committee.

But critics say that the Public Accounts Committee also has not been effective in making the government entities and their leadership accountable to improve.

“There is a trend of holding basic and general discussions on the report at the Public Accounts Committee instead of going into specific details,” said Acharya. “The parliamentary discussions have largely become a ritual as it has failed to force the government to act on unsettled accounts.”

But stakeholders say that the auditor general’s report itself is too big for the lawmakers to crack.

“The 870-page audit report is too big. It is not necessary to produce such a big report by incorporating even minor issues,” said Sukadev Khatri, former acting auditor general. “Internationally, there is a trend of conducting risk-based audits and issuing specific audits. We have continued to follow the traditional way of auditing.”

The auditing body does conduct special audits on certain issues every year. However, the traditional auditing system and parliamentary Public Accounts Committee’s lethargy also lead to impunity, according to the stakeholders.

“Both the executive and oversight bodies should be more active to reduce the unsettled accounts,” said Thapa, former secretary at the Parliamentary Accounts Committee. “If the government agency is slow to act, the oversight body such as the accounts committee and National Vigilance Centre should put pressure on related government agencies and public officials.”

It is not that the report of the constitutional auditing body has always been ineffective. For example, its report was crucial to bring the issue of the Tax Settlement Commission and the tax evasion case against Ncell at the forefront of public discourse.

The 54th audit report had exposed the corruption at the Tax Settlement Commission, which had exempted certain business groups of more than 99 percent of their tax liabilities.

This invited investigation from the Commission for Investigation of Abuse of Authority and corruption cases were filed against the office bearers of the commission including immediate director general of the Inland Revenue Department Chudamani Sharma, and subsequently, the law regarding the formation of the commission.

The same report also called for investigation into ‘tax evasion’ during the buyout of Ncell by Axiata from Sweden’s Teliasonera. Subsequently, Ncell was forced to pay billions in unpaid taxes through the court verdict.

Khatri, the former acting auditor general who played an instrumental role in bringing the issue to the fore, said that the report was discussed widely, ultimately yielding desired results. “I myself pushed hard for implementation of the report recommendation,” he said.

But questions also remain how many auditors general indeed push for action based on the audit reports published during their tenure.

Experts say there may be a couple of examples when officials, agencies and companies are held accountable based on the OAG report but by and large, not many face action based on the irregularities pointed out by the audit report, which is published one year later.

There are multiple examples where OAG’s findings of irregularities have been ignored. The auditing body had exposed alleged irregularities during the purchase of wide body planes for Nepal Airlines Corporation and irregularities while leasing out the land of the Nepal Trust to Yeti Holdings, among others.

Although the Commission for Investigation of Abuse of Authority also looked into those allegations, it failed to take the responsible people to book, which many believe is due to political influence.

The latest audit report has pointed out that there is room for addressing the issue of rising unsettled expenditures if the oversight body is proactive.

For example, the Election Commission requires anyone contesting local elections must not have any amount in unsettled accounts.

“This helped in the recovery of unsettled expenditures [from many local officials],” the report said while calling for the continuation of the policy in the upcoming provincial and federal elections due later this year.