On 29th May 2025, the Auditor General delivered an enlightening session to the third-year students of Jigme Singye Wangchuck (JSW) School of Law, focusing on the role of the Royal Audit Authority (RAA) in promoting accountability, transparency and good governance in Bhutan and the legal framework in place.
Recognising law students as future defenders of justice, guardians of public trust and upholders of citizens’ rights and freedoms, the Auditor General personally led the engagement.
RAA’s Mandate and Oversight Role
The session opened with an overview of RAA’s mandate, enshrined in the Constitution of Bhutan and the Audit Act. The Auditor General highlighted that audit plays a critical role in identifying governance gaps and recommending corrective actions to help public agencies fulfil their objectives effectively.
He outlined the RAA’s oversight framework: Parliament allocates public resources to the executive branch, which they implement and reports back. The RAA, as an independent body, audits the executive’s use of these resources and reports to Parliament to ensure that public funds are used prudently. These reports are produced independently, without “fear, favour or prejudice.”
The Audit Process and Types
The Auditor General explained the four key phases of the audit process:
- Planning (15 Jan – 15 Feb): With digitisation, including the use of ePEMS, auditors can plan audits internally without having to visit agencies.
- Execution: Entry meetings are conducted with agencies, followed by evidence collection and exit meetings to present audit findings.
- Reporting: Audit teams return to RAA to compile findings and submit reports to the agencies, who must respond with Action Taken Reports (ATR) within a month.
- Follow-Up: Ongoing communication between RAA and the agencies ensures the implementation of recommendations.
Three main types of audits were explained:
- Financial Audits: Assess the fairness of financial statements.
- Compliance Audits: Check adherence to laws, rules and procedures.
- Performance Audits: Evaluate the economy, efficiency and effectiveness of operations through a research-based approach.
The findings from the Financial and Compliance Audits are consolidated into the Annual Audit Report (AAR), submitted to His Majesty The King, the Prime Minister and Parliament. The AAR is the only document discussed during a Joint Session of Parliament and is allocated two days for deliberation in the summer session. Performance Audit Reports are discussed during the winter sessions.
Enforcing Accountability
The Auditor General underscored that each material irregularity identified during audits leads to specific actions which include Treatment (recovery, rectification etc), Sanctions (Disciplinary Actions, legal recourse etc) and Corrective Measures such as system improvement. In order to implement these actions, the following accountabilities are fixed on the responsible officials;
- Direct Accountability: Applied to those directly responsible.
- Supervisory Accountability: Held by supervisors; escalates to direct accountability if they fail to act.
- Overall Accountability: Assigned to agency heads; failure to intervene similarly leads to direct accountability.
Corrective measures may include financial recovery, rectification of incomplete work or improvements in systems and processes.
Audit Clearance and Service Efficiency
The RAA’s Audit Clearance System ensures that individuals and contractors have no unresolved audit issues. It is required for promotions, transfers, training, retirement and license applications/renewals. The Audit Clearance Portal allows individuals to track audit clearance status using their CID number, enhancing service delivery and transparency. Furthermore, the integration with MBoB payment services has simplified the process of audit recoveries.
Fraud Triangle and Internal Controls
One of the session highlights was the explanation of the Fraud Triangle, which illustrates how opportunity, pressure and rationalisation can lead to unethical behaviour. The Auditor General emphasised the need for strong internal controls, including documentation, communication, monitoring and risk management, to reduce such opportunities. He noted factors such as low salaries, lifestyle pressures and familiarity in the workplace as common motivators for unethical behaviours.
Collaboration with Oversight Bodies
RAA maintains strong collaborative ties with the Anti-Corruption Commission (ACC), the Office of the Attorney General (OAG), and indirectly, the judiciary. This collaboration is facilitated through Memoranda of Understanding (MoUs), case-based referrals and regular bilateral and tripartite meetings, ensuring effective coordination in promoting accountability and combating corruption.
When audit findings suggest possible corruption or fraud, the RAA refers such cases to the ACC, which conducts further investigation. If the case qualifies for prosecution, the ACC conducts the investigation and forwards it to the OAG, which is responsible for prosecuting the individuals or agencies in court. In some instances, audited agencies themselves may initiate legal proceedings based on audit findings and recommendations. Through this process, the RAA plays a pivotal role in the national accountability framework and maintains an indirect but critical link to the judiciary.
Technology-Driven Progress
Despite a reduction in its workforce, the RAA has significantly expanded audit coverage through digital innovation. Encouragingly, more agencies are now reporting nil audit issues, signalling improvements in compliance and internal controls. The ultimate aim of RAA is to bring audit irregularities to near zero by end of the 13th Five Year Plan.
Interactive Session and Student Engagement
The Auditor General concluded his address by quoting His Majesty The King:
“I will not be corrupt and I will not tolerate corruption in others”
This powerful message underscored Bhutan’s national commitment to upholding integrity across all sectors. Following the address, students engaged in an active Q&A session. Key issues raised included:
1. Accountability of the RAA
Students asked who holds the RAA accountable. The Auditor General clarified that RAA is among the most scrutinised agencies through the various mechanisms:
- External Audit by an auditor appointed by Parliament, whose report is tabled alongside RAA’s Annual Audit Report.
- Internal Audit conducted by different regional offices on a rotational basis, covering all aspects of RAA’s operations.
- Annual Performance Report submitted to Parliament detailing RAA’s achievements and areas for improvement.
- International Peer Reviews as part of the International Organisation of Supreme Audit Institutions (INTOSAI), which assess independence, ethics, financial management, stakeholder engagement and audit quality.
- Client Satisfaction Surveys to gather feedback from audited agencies.
- Open Invitation for Audit: RAA welcomes any individual or organisation to audit it.
- Ethical Safeguards: These include oaths of good conduct, standing instructions, periodic transfers to avoid familiarity risks and strict disciplinary actions based on complaints or social media reports against the auditor.
2. Independence of Audit Institutions in Bhutan
Students questioned whether complete independence is possible for audit institutions in Bhutan. The Auditor General acknowledged that while absolute independence is ideal, in resource-constrained contexts like Bhutan, practical independence and leading by example are more crucial. RAA still relies on RCSC for staffing and MoF for budget, but it functions independently with strong cooperation from both institutions.
3. Jurisdiction Over Private Entities
Responding to queries about the RMA’s penalty on T Bank, the Auditor General clarified that RAA does not audit privately-owned banks like T Bank unless the Government has made some investment with the bank. However, any private entity using public resources (e.g., timber, water, land) falls under RAA’s jurisdiction.
4. Reporting Cases to ACC
On the question of thresholds for forwarding issues to ACC, the Auditor General noted that there is no fixed financial threshold; rather, the nature and gravity of the case determine escalation. All potential cases undergo layered reviews at the division, departmental and executive levels before being referred. ACC responds within two weeks to confirm if the case qualifies for further investigation, helping avoid unnecessary delays in issuing audit clearances.
Conclusion
The student representative expressed gratitude to the Auditor General for accommodating the session, noting that it offered a valuable opportunity to witness the real-world application of the theoretical concepts they study in class. The session served as a meaningful exchange between the Auditor General and Bhutan’s future legal professionals. It not only deepened their understanding of the audit function and institutional accountability but also instilled in them a stronger sense of responsibility towards upholding public trust.