The mandate of the RAA as enshrined under the Constitution of the Kingdom of Bhutan 2008 and the Audit Act of Bhutan 2006 is to audit and report on the economy, efficiency and effectiveness in the use of public resources without fear, favour or prejudice. While this mandate is delivered primarily through regular auditing and reporting, the adoption of Financial Resources Management Accountability Index (FRMAI), a multi-thronged review model is yet another step in promoting accountability and transparency in the use of public resources.
The objective of the financial audit is primarily to express an opinion on the views presented by the financial statements and their presentation in accordance with the relevant financial reporting framework. The FRMAI is aimed at providing holistic and objective quantitative assessment of the financial resources management of the audited agencies with reference to specified accountability elements.
Large number of cases of irregularities, violation of laws, rules and regulations, wastages, misuse of public resources, lack of due diligence and prudence in management and use of public resources have continually surfaced in audit, which warrant proper attention and improved accountability. Moreover, recent macro-economic performance characterized by failure of our financial sector and diminishing public confidence on them has of late dented the credibility of the public financial management system and posed serious threats on the future sustainability of our economy. Therefore it is only prudent that accountability system at all levels is strengthened and improved.
FRMAI is an assessment and reporting mechanism developed specifically with the objective of carrying out assessment of Financial Resources Management Accountability performance of the statutory bodies and public sector organisations at various levels. Under the FRMAI, nine accountability elements have been identified and recognised which are assessed against each indicator and sub-indicator using specific set of criteria. The scores are assigned for each element according to their relevance and significance to the organisation being assessed and impact on the financial resources management.
The indexing based on number of objective parameters is intended to reflect the performance of agencies in managing the limited financial resources made available to them by the government/public. Although, the regular auditing and reporting would also indicate the financial management performance of an agency, yet one may not be able to draw a conclusion as to which agencies had performed well, and which had not in absence of valid, objective and reliable assessment tool which has universal applications across sectors. Therefore, the FRMAI is aimed at rendering an objective and credible tool for assessing and drawing conclusion on the financial management performance of the audited agencies.
The development of FRMAI was conceived and envisaged in the year 2010, and was incorporated in the RAA’s Strategic Plan 2010-2015 as one of the strategies to enhance effectiveness of audit services. In RAA’s context, FRMAI is a Framework for assessing and evaluating the budgetary and fiscal discipline, regularity and propriety of transactions and performance of the public sector financial management.
This particular exercise will be executed while carrying out the annual scheduled audits and the results reported accordingly.