Licence proposed for internal auditors

  • Move follows series of embezzlement cases involving govt staff
  • Having separate accountants and auditors to clean up act
- Post Report, Kathmandu

May 16, 2018-

Following a series of embezzlement cases involving accounting staff at state entities, the Financial Comptroller General Office has sought legal instruments to make internal auditors of government bodies get licence in order to avoid conflict of interest and make internal audit more effective.

The proposal comes at a time when the government is working to restructure state agencies at the federal, provincial and local level through an Organisation and Management survey.

The Office of the Auditor General (OAG), in its 55th annual report, expressed its concern that staffers doing accounting and auditing of government transactions coming from the same service raises questions over the impartiality of internal audit.Internal audit is considered an inseparable part of internal control, a lack of which has been blamed for many financial anomalies in government offices.

“We have been advocating licensing system so that only those licensed will take part in internal audit,” said Jibnath Pokharel, the deputy financial comptroller general. “This will help avoid conflict of interest as only those licensed can perform this duty.”Government staffers conducting internal audit need further training and study to qualify for the licence. This is expected to develop efficient human resource for the purpose.

In June last year, the Commission for Investigation of Abuse of Authority filed a corruption case against eight officials of the Itahari Transport Management Office, mostly from accounting background, at the Special Court for embezzling revenues worth Rs612.12 million. “Had there been separate teams for accounting and auditing, such embezzlement might have been spotted early and those involved in the malpractice penalised,” said an FCGO official.

Besides, many government offices do not follow the legal requirement of conducting internal audits every four months, the OAG stated. This, according to the report, has prevented the mistakes made by the management from being corrected on time, leading to non-transparency of transactions. On the other hand, the lack of monitoring from higher authorities during internal audits has resulted in double and additional payments.

Provinces introduce law for internal audit

Provincial governments have opened the door for internal audit of the financial transactions at the agencies under them by introducing separate Financial Procedure Acts. In line with the law, Province Treasury Offices are expected to handle internal audit of the transactions of the provincial government agencies.

District Treasury Offices under the Financial Comptroller General Office (FCGO) had been conducting such audits of provincial governments as a temporary arrangement.“From the next fiscal year, Provincial Treasury Offices will be responsible for internal audit as our job is to conduct internal audits only of agencies under the federal government,” said Jibnath Pokharel, deputy financial comptroller general.

But the provinces have made different arrangements for internal audit with some requiring it every two months and some doing it every four months.

Yet others have made no mention of when they would conduct internal audit. Province 6 will conduct internal audits every two months while provinces 2, 3 and 4 will be doing so every four months. Provinces 1, 5 and 7 have not said when internal audits will happen. Offices under the FCGO conduct internal audits of federal government offices every four months. (PR)

Published: 16-05-2018 08:21

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