Upholding Independence: Triumphs and Challenges of the Royal Audit Authority of Bhutan

Author: Bikram Gurung, Assistant Auditor General, SAI Bhutan

Introduction

Supreme Audit Institutions (SAIs) are crucial for good governance, accountability, and transparency. In Bhutan, the Royal Audit Authority (RAA) audits public resources, with its effectiveness critically dependent on independence amidst political, economic, or institutional pressures. This article examines SAI Bhutan’s real-world experiences, highlighting its successes in safeguarding independence and the persistent challenges it faces, drawing insights from official publications, peer reviews, and specific audit cases.

Legal and Constitutional Foundations of RAA’s Independence

The RAA’s independence is deeply embedded in Bhutan’s legal and constitutional framework. The Constitution of Bhutan (2008) and the Audit Act of Bhutan 2018 [1, 2] establish the RAA as an independent authority with several key safeguards:

• Auditor General (AG) Appointment and Tenure: The AG is appointed by the Druk Gyalpo (King) from a jointly recommended list by key constitutional office holders, ensuring a non-partisan selection. Serving a fixed, non-renewable five-year term or until the age of 65, and removable only through impeachment, the AG enjoys substantial security of tenure, insulating the office from political interference [1, 2].
• Functional Autonomy: The Audit Act grants the RAA full functional independence in all auditing aspects—planning, programming, investigation, and reporting. It mandates operations without fear, favor, or prejudice, and explicitly states that the RAA is not subject to external direction unless specified by the Act [2].
• Access to Information: Unrestricted access to necessary audit information is guaranteed by both the Constitution and the Audit Act [1, 2].
• Reporting and Dissemination: The RAA is obligated to report its findings through Annual Audit Reports to the Druk Gyalpo, Prime Minister, and Parliament, with full freedom over content, timing, and dissemination [1, 2].
• Financial Safeguards: The State is constitutionally mandated to provide adequate financial provisions. A critical provision ensures interim funding, guaranteeing at least the previous year’s budget if the national budget is delayed, thereby mitigating financial pressures [2].

These provisions collectively protect the RAA’s independence from political, economic, and institutional interference, ensuring its role in upholding public sector accountability and transparency.

Challenges to RAA’s Independence

Despite its strong legal framework, the RAA faces several challenges:

• Parliamentary Audit Requests: While the RAA controls audit scope, the legal framework lacks an explicit right for the AG to refuse parliamentary requests for specific audits [3]. Though the AG has historically resisted such pressures, this ambiguity remains a potential vulnerability for external influence.
• Overlap with Royal Civil Service Commission (RCSC): The Royal Civil Service Act grants the RCSC oversight over the RAA, including internal organizational approval and a mandate to audit the RAA and its staff [3]. This creates a potential conflict with the RAA’s managerial and administrative autonomy and its core audit mandate, as it involves an external body auditing the SAI itself, potentially compromising RAA’s independence in human resource management and internal governance.
• Budgetary Constraints: Despite constitutional mandates for adequate funding, the RAA’s budget share of the state budget was small (0.36% – 0.38% between 2012-2015) [3]. Budget reductions, such as those during the COVID-19 pandemic, can significantly impact the RAA’s capacity for high-quality audits, limiting its reach and effectiveness [3].

Cases Illustrating Independence and its Impact

Two cases exemplify the RAA’s independence and its tangible impact on public sector accountability:

Case 1: RAA Confronts Nu. 2,840.092 Million Financial Irregularities (FY 2022-23)

This case highlights the RAA’s proactive role in financial accountability. In FY 2022-23, the RAA published 456 audit reports, identifying irregularities totaling Nu. 2,840.092 million (approximately USD 34 million) [4]. These included:

The report detailed required actions from auditees, identifying accountable officials for resolution, sanctions, and corrective actions. Public disclosure of these findings, attributing fraud and non-compliance to specific agencies underscores the RAA’s functional independence and commitment to transparency, driving accountability despite significant financial implications [4].

Case 2: RAA’s Review of the Judiciary System (2019)

In its “Review of Judiciary System and Practices, 2019,” the RAA found court judgments largely inaccessible to the public [5]. This audit is significant, demonstrating the RAA’s willingness to scrutinize the judiciary, a co-equal branch, without fear, favor and prejudice. The RAA’s findings prompted positive developments: a media and communication unit was established at the Supreme Court, and judicial services were delinked from the Bhutan Civil Service Commission in 2022 to enhance judicial independence [5]. This case exemplifies the RAA’s strengthening role in promoting accountability and transparency across all government branches, even in sensitive areas.

Successful Models, Safeguards, and Advocacy Efforts

The RAA’s ability to maintain independence stems from:

• Robust Legal Provisions: Constitutional enshrinement and detailed provisions in the Audit Act of Bhutan 2018 provide primary safeguards, including the AG’s secure tenure, functional autonomy, and guaranteed access to information, forming a strong protective shield [1, 2].
• Parliamentary Oversight: The Public Accounts Committee (PAC) in Parliament reviews RAA reports and ensures follow-up, providing external accountability and translating audit observations into concrete reforms [1].
• Proactive Advocacy: The INTOSAI Peer Review (2016) recommended continuous advocacy to strengthen legal and financial independence, especially regarding parliamentary audit requests and the RCSC overlap [3]. The RAA’s historical refusal of certain parliamentary requests, even without explicit legal backing, demonstrates its internal advocacy and commitment to its mandate.

Impact on Public Sector Accountability and Transparency

RAA’s independence directly enhances audit effectiveness, public sector accountability, and transparency. Findings on financial irregularities (Nu. 2,840.092 million in FY 2022-23) and the judiciary review highlight the RAA’s ability to identify systemic weaknesses and hold public entities accountable [4, 5]. By publicly reporting fraud, non-compliance, and inefficiencies, the RAA provides crucial information to the public and Parliament, fostering transparency and driving necessary reforms. Follow-up actions and reforms demonstrate a tangible impact on governance and resource management in Bhutan.

Strategies and Lessons Learned for Other SAIs

For other developing nation SAIs, the RAA’s experience offers practical strategies:

• Prioritize a Strong Legal Framework: Advocate for constitutional and legislative provisions explicitly guaranteeing SAI independence, including secure tenure, functional autonomy, and adequate financial resources. These are the first line of defense.
• Cultivate Proactive Advocacy: Proactively advocate for independence, especially when legal ambiguities exist. Principled stands, even without explicit legal backing, can establish precedents and strengthen institutional resolve.
• Foster Engagement with Oversight Bodies: Build strong, collaborative relationships with parliamentary oversight committees (like Bhutan’s PAC) to ensure audit findings lead to concrete actions and reforms, amplifying the SAI’s impact.
• Embrace Transparency in Reporting: Publicly disseminate audit findings, even from sensitive sectors, to build public trust and generate external pressure for accountability. Transparency is a powerful tool.
• Invest in Continuous Capacity Building: Invest in professional development and adopt modern auditing techniques (e.g., digital auditing, data analytics) to enhance audit quality and impact. This strengthens credibility and effectiveness, as suggested by RAA’s strategic reforms.

Conclusion

The Royal Audit Authority of Bhutan exemplifies a Supreme Audit Institution that, despite operating within a developing nation context, has largely succeeded in upholding its independence. Its strong constitutional and legal backing, coupled with a proactive approach to auditing and reporting, has enabled it to expose significant financial irregularities and drive reforms even in sensitive areas like the judiciary. While challenges persist, particularly concerning parliamentary oversight and the role of the RCSC, the RAA’s journey offers valuable lessons for SAIs worldwide: a robust legal framework, continuous advocacy, strategic engagement with oversight bodies, and unwavering transparency are paramount in safeguarding independence and ensuring effective public sector accountability.

References

• Royal Audit Authority of Bhutan. (2018). Audit Act of Bhutan 2018. https://www.bhutanaudit.gov.bt/wp-content/uploads/2020/07/Audit-Act-of-Bhutan-2018.pdf
• Constitution of the Kingdom of Bhutan. (2008). Article 25. https://www.bhutanaudit.gov.bt/wp-content/uploads/2020/07/Constitution-of-Bhutan.pdf
• INTOSAI. (2016). Peer Review on the Independence of the Office of the Royal Audit Authority of Bhutan. https://www.bhutanaudit.gov.bt/wp-content/uploads/2020/11/Peer_Review_Bhutan_2016_english.pdf
• Deki, S. (n.d.). RAA Confronts Nu. 2,840.092 Million Financial Irregularities. Bhutan Today. https://www.bhutantoday.bt/raa-confronts-nu-2840-092-million-financial-irregularities/
• BTI Project. (2024). BTI 2024 Bhutan Country Report. https://bti-project.org/en/reports/country-report/BTN