Koshi Province Local Units Face Rising Financial Irregularities: Audit Report

Biratnagar. Financial indiscipline and tendency to spend budget against the law are increasing in the local units of Koshi Province, according to the Auditor General's report. The Auditor General's Office has presented the annual report for the fiscal year 2081/082 to the Public Accounts Committee of the Koshi Provincial Assembly. The data shows that the size of arrears is increasing alarmingly in the local units. The Auditor General's Office stated that the arrears have piled up in the province's municipalities due to financial transactions without full compliance with laws, procedures, and standards, spending against agreements, and failure to settle advances taken on time. However, amidst this disappointing situation, there are also some local units that have presented an excellent model of good governance and financial discipline, teaching a lesson to the entire province. According to the latest audit report for the fiscal year 2081/082, out of a total of 137 local units in Koshi Province, audits have been completed for only 128 municipalities. An audit of a total of Rs 1 kharba 87 arba 61 lakh 72 thousand in these 128 municipalities revealed arrears of Rs 2 arba 78 crore 85 lakh 11 thousand. This amounts to 1.49 percent of the total audited amount. Although the average arrears percentage for the entire province may seem normal, some municipalities have very high arrears rates, while some have proven themselves excellent by reducing their arrears to zero. The data shows that municipalities in the hilly and mountainous regions are far ahead in maintaining financial discipline compared to the accessible and resource-rich municipalities of the Terai. The municipality with the lowest arrears in the entire Koshi Province is Solududhkunda Municipality in Solukhumbu district. This municipality has a zero arrears percentage, i.e., 0.00 percent. While auditing Rs 1 arba 69 lakh 63 thousand, this municipality had only Rs 46 thousand in arrears, proving that the municipality's internal control system and transparent expenditure management are strong. The second municipality with the lowest arrears is also Mapya Dudhkoshi Rural Municipality in Solukhumbu. This municipality has only 0.13 percent arrears, amounting to Rs 12 lakh 81 thousand. The third and fourth places in the list of excellent municipalities are Dhankuta Municipality in Dhankuta and Bhojpur Municipality in Bhojpur, respectively. Both these municipalities have an equal arrears percentage of 0.16 percent. Bhojpur district has a dominance in the list of the top 10 municipalities maintaining financial good governance. As many as four municipalities from Bhojpur have made it into the top 10. Along with Bhojpur Municipality (0.16 percent), Ram Prasad Rai Rural Municipality of Bhojpur is in fifth place with 0.21 percent arrears, Hatuwagadhi Rural Municipality is in seventh place with 0.31 percent arrears, and Aamchok Rural Municipality is in eighth place with 0.33 percent arrears. Similarly, Deumai Municipality in Ilam has secured the sixth position with 0.23 percent arrears. Sangurigadhi Rural Municipality of Dhankuta (0.40 percent) and Suryodaya Municipality of Ilam (0.41 percent) are in the ninth and tenth positions, respectively, in the list of the top 10. This list shows that reducing arrears at the local level is not a big deal if there is proper leadership and compliance with the law. However, the other side of the coin is quite frightening. Many municipalities in the province are plundering state funds arbitrarily, flouting the law. The highest arrears in Koshi Province have been observed in Devangunj Rural Municipality in Sunsari district. This rural municipality has the highest arrears rate in the entire province, i.e., 7.89 percent. While auditing Rs 1 arba 27 crore 91 lakh of Devangunj, arrears of Rs 10 crore 9 lakh 85 thousand were found. This is a sample of extreme negligence in itself. The second place in the list of municipalities with high arrears is Phakphokthum Rural Municipality in Ilam, with an arrears rate of 5.50 percent. Maiwa Khola Rural Municipality in Taplejung stands in third place with 5.25 percent arrears. Other poor performing municipalities in the race for financial indiscipline include Myanglung Municipality in Tehrathum in fourth place, with arrears of 4.36 percent. In fifth place is Bhote Koshi Rural Municipality in Sankhuwasabha (4.05 percent), in sixth place is Limchugbung Rural Municipality in Udaypur (3.85 percent), and in seventh place is Tapli Rural Municipality in Udaypur (3.73 percent). Similarly, Sotang Rural Municipality (3.41 percent), Miklajung Rural Municipality in Morang (3.37 percent), and Budhiganga Rural Municipality in Morang (3.37 percent) are listed among the municipalities with the eighth, ninth, and tenth highest arrears, respectively. Out of the 137 municipalities in Koshi Province, 9 municipalities have not undergone audits. These include 2 in Jhapa, 3 in Morang, and 4 in Sunsari, totaling 9 local units that did not conduct audits because their entire office records (bills, vouchers, and documents of financial transactions) were destroyed during the Genji movement on Bhadra 24. According to the Auditor General's Office, there is not just one reason for the increase in arrears. The main reasons are local units not spending within the budget limits, making arbitrary expenditures by transferring funds to non-essential areas, and extreme disregard for laws and regulations in procurement management. Additionally, the tendency of employees or representatives to take advances and add more advances without settling them on time has also increased the arrears amount. The problem is escalating year by year due to the extremely weak internal control system, complete lack of accountability and transparency in work processes, and the lack of serious discussions on arrears settlement in the committees on time. The Auditor General's Office states that arrears will decrease if operations are conducted with full compliance with the law, payments are made only after sufficient proof, available resources are used frugally, and advance settlement is strictly enforced.