Karnali Government Faces Escalating Financial Irregularities, Audit Report Reveals

Surkhet. Yamlal Kandel, Chief Minister of Karnali, has been stating in public forums that 'other provinces should learn from us in establishing good governance and systems.' He also appears to be focused on streamlining internal activities rather than creating any major strategic projects for the province. Although he emphasizes financial discipline, adherence to law, and controlling current expenditure in almost every public forum, the results have been different.

The eighth report of the Auditor General shows that the financial anarchy of the Karnali Province government has increased in the first financial year (2081/082) since Chief Minister Kandel took office. The Auditor General stated that financial anarchy has increased due to project selection without ensuring resources, transfers of funds against rules, non-compliance with the Public Procurement Act, and finishing the budget at the end of Asar (mid-July).

The eighth audit report of the Karnali government, submitted to the Province Chief of Karnali, Yagyaraj Joshi, on Thursday, states, 'It is mentioned that funds should only be transferred within the limit of 10 percent as per the Appropriation Act.' However, in that year, at the end of the financial year, i.e., in the month of Asar, 6.31 percent of the total fund transfer, amounting to 9 crore 68 lakh 21 thousand, was transferred. The Auditor General has termed this as an activity against policy.

Audit Irregularities Increased by 0.86 Percent

The audit irregularity rate of the Karnali government was 1.22 percent in the financial year 2080/081, which increased to 2.08 percent in 2081/082, making it the second highest compared to other provinces.

In the financial year 2081/082, the audit irregularities of the Karnali government amounted to 77 crore 35 lakh 62 thousand rupees. With this, the audit irregularities of Karnali Province have exceeded 4 Arba 73 crore 56 lakh 7 thousand.

Out of the total audit irregularity amount, the Ministry of Physical Infrastructure and Urban Development of Karnali alone accounts for 50 percent last year. According to the report, this ministry alone has audit irregularities of 39 crore 27 lakh 70 thousand rupees. The report mentions that audit irregularities have increased in this ministry due to procedural errors in large contracts, construction work, and the tendency not to settle issues on time.

The Auditor General's office audited 37 Arba 19 crore 80 lakh 76 thousand rupees from 137 offices, including provincial ministries and subordinate bodies of the provincial government, last year. Out of this, 66 crore 94 lakh 56 thousand irregularities were found when auditing 31 Arba 25 crore 11 lakh 13 thousand rupees of provincial ministries and subordinate offices. Among these, 35.84 percent of documents were not submitted, and 30.13 percent of the amount was irregular. The Auditor General has pointed this out as a lack of transparency and increased financial indiscipline in the financial transactions of the Karnali government.

Similarly, an amount of 10 Arba 41 crore has been identified as irregularities in other committees and organizations. The Auditor General has defined irregularities as transactions conducted without following legal procedures, not maintaining required accounts, and transactions that are irregular or unreasonable.

Karnali has seen violations of the Public Procurement Act, direct procurement without calling for bids in many projects or splitting them into smaller packages and getting work done through quotations. The Auditor General's report mentions that even when work is not done due to the weakness of the contractor, the contract period is extended multiple times without imposing penalties, and contractors are paid more than the actual work done.

'The monitoring of whether the grants provided in the agriculture and livestock sectors are effective and reaching the target groups has also not been done,' the report states. 'Grants should be provided based on production, but funds have been distributed arbitrarily without completing the process.'

Analysis of Karnali Government's Audit Irregularities Up to the Eighth Report

Up to the eighth report of the Auditor General, the highest audit irregularities as a percentage of the total audit were observed in the financial year 2077/078. In terms of amount, the highest irregularities of 1 Arba 68 crore 84 lakh 2 thousand were observed in 2078/079.

After that, the rate of audit irregularities decreased in the subsequent financial years, falling to 1.22 percent in 2080/081, but increased to 2.08 percent last year. Up to the seventh report, the audit irregularities in provincial government offices, committees, and other organizations were 4 Arba 12 crore 5 lakh. After the re-examination of 17 crore 64 lakh 58 thousand rupees, an additional 1 crore 79 lakh in irregularities was added, bringing the previous net irregularities to 3 Arba 96 crore 20 lakh. Last year's addition of 77 crore 35 lakh irregularities has pushed the total audit irregularities of the Karnali government beyond 4 Arba 73 crore 56 lakh.

Physical Ministry Accounts for Half of Total Irregularities

Out of the total audit irregularity amount, the Ministry of Physical Infrastructure and Urban Development of Karnali alone accounts for 50 percent last year. According to the report, this ministry alone has audit irregularities of 39 crore 27 lakh 70 thousand rupees. The report mentions that audit irregularities have increased in this ministry due to procedural errors in large contracts, construction work, and the tendency not to settle issues on time.

Similarly, the Ministry of Social Development has irregularities of 17 crore 69 lakh, the Ministry of Water Resources and Energy has 4 crore 21 lakh, and the Ministry of Industry, Tourism has more than 2 crore 91 lakh rupees in audit irregularities.

Audit Committee Active in Reducing Irregularities, But Government Ignores It

Bindaman Bisht, Chairman of the Audit Committee and former Finance Minister of the Karnali government, attributes the increase in Karnali's audit irregularities to irregularities in the government's spending system and the disregard of the committee's directives.

If the directives of the Public Accounts Committee of the Provincial Assembly had been implemented by the government and concerned bodies, the amount of audit irregularities in Karnali would have been significantly reduced. However, the government has been defying the directives of the Audit Committee.

Up to the seventh report, the committee had issued 203 directives to the government and its bodies for reducing audit irregularities and establishing financial discipline. The committee has records of issuing directives 10-16 times for implementation to the Ministry of Physical Infrastructure and Urban Development, Social Development, and Water Resources Ministry, where many irregularities have increased.

However, the committee states that none of these directives have been implemented by the government and concerned bodies. Bindaman Bisht, Chairman of the Audit Committee and former Finance Minister of the Karnali government, attributes the increase in Karnali's audit irregularities to irregularities in the government's spending system and the disregard of the committee's directives.

'The government has no attention towards settling past audit irregularities,' he told RatoPati. 'As a result, the eighth report shows exactly double the audit irregularities compared to the seventh report.'

According to Bisht, the committee has already discussed the past six reports and issued directives. He stated that the ministries and offices are uninterested in re-examining them and writing them off.

The committee has been issuing clear, subject-specific directives regarding the settlement of identified irregularities and matters to be considered and improved in future performance. 'However, neither are those directives implemented, nor has the government's mismanagement stopped,' Bisht said.

'Chief Minister's Financial Discipline Agenda Failed'

Chairman of the Public Accounts Committee, Bisht, claims that Chief Minister Yamlal Kandel's agenda of financial discipline has failed.

According to him, the non-expenditure of the budget is also a type of irregularity. Karnali makes the largest budget payments at the end of Asar compared to all other provinces. 'This increases audit irregularities, so I have repeatedly questioned the Chief Minister in the assembly and elsewhere, asking where your financial discipline is maintained,' he said. 'He only talks about establishing financial discipline and systems everywhere.'

He stated that although the agenda is to maintain financial discipline in speeches, the government and the Chief Minister have completely failed in this regard.

'Since he has failed in his core agenda, the Karnali government has failed,' he said. 'He claims to have created a project bank, but it is in disarray, and his shortcomings are being covered up using it; this is the government's incompetence.'