Local Levels Face Weak Financial Discipline, New Irregularities Totaling NPR 19.04 Billion

Kathmandu. The state of financial discipline in the local levels of the country appears weak. According to the 63rd annual report published by the Office of the Auditor General, new irregularities amounting to NPR 19.04 billion and 77 lakh were added in the fiscal year 2081/82. The Auditor General audited a total of 721 local levels this year, including 4 metropolitan cities, 10 sub-metropolitan cities, 261 municipalities, and 446 rural municipalities. According to the report, out of the total audit of NPR 11 kharba 9 billion and 52 crore of 721 local levels, 1.72 percent, or NPR 19.04 billion, was found to be irregular. While initial audits showed NPR 21.47 billion in irregularities, after 502 local levels submitted evidence, NPR 80 crore and 14 lakh was audited (settled), resulting in the current irregular amount, the Auditor General stated.

What type of irregularities and how much? The Auditor General stated that the largest portion of the added NPR 19.04 billion in irregularities is under the heading of expenses incurred without proper procedures (requiring regularization). According to the Auditor General's report, NPR 2.01 billion and 33 lakh are to be collected (embezzlement/misappropriation), NPR 15.18 billion and 94 lakh are to be regularized due to insufficient evidence/improper procedures, and NPR 1.84 billion and 50 lakh are in advances.

With the newly added irregularities, the total updated irregularities of local levels have now reached NPR 22.04 billion and 72 lakh. While the remaining irregularities of local levels until last year were NPR 20.92 billion and 89 lakh, only NPR 7.86 billion was reconciled this year, the report states.

Irregularities in one local level exceed 15 percent According to the Auditor General's data, there are 681 local levels with less than 5 percent irregularities compared to the audited amount. Similarly, 39 have 5 to 15 percent irregularities, and the irregularities in one local level exceed 15 percent, the report states.

The Auditor General has pointed out many instances where local levels have grossly violated budgets and laws. The Auditor General has mentioned arbitrary spending by keeping funds in reserve. It has been observed that 219 local levels have spent NPR 7.56 billion and 74 lakh by keeping it in reserve without a plan (without specifying a title), contrary to the Local Government Operation Act. Similarly, the report states that 268 local levels have not conducted internal audits of their income/expenditure as required by law.

According to the Auditor General's report, 90 local levels have a cash balance in their bank accounts that is NPR 54 crore and 49 lakh less than what their ledgers show. The accounts of the bank accounts and ledgers have not been reconciled. 221 local levels have not conducted inventory inspections at the end of the year, and 293 local levels have not used the public property management system, the Auditor General stated.

Similarly, 177 local levels have kept NPR 13 crore and 30 lakh of tax deducted during payment, including other taxes, for themselves instead of depositing it into the relevant account, the report states. The Auditor General has warned of improvements, stating that the revenue collection system of local levels is also weak and there is a practice of giving tax exemptions against the law.