Nu 55M for hospitality and entertainment?

Former cabinet ministers, National Assembly Speaker, National Council chairperson, Opposition Leader and Chief Justice of the Supreme Court spent Nu 55.01 million (M) on hospitality and entertainment (HE) in a year.

This was found out while auditing the HE expenses from July 1, 2015 to June 30, 2016. The expenditure excludes the discretionary grants of Nu 3.10M paid to ministerial rank individuals by the government.

The expenditure exceeded the approved HE budget of Nu 40M for the year by Nu 15.01M, where re-appropriation of HE expenses is not permitted as per the budgetary norms.

Of the 55.01M, more than Nu 14.74 million was spent without supporting documents for soelra and tips, contributions, donations, chagyep, semso, nyendhar and other miscellaneous expenditure.

The then Prime Minister claimed Nu 2.29M without supporting documents followed by health and education minister with Nu 2.17M and Nu 1.46M. The National Assembly speaker claimed Nu 1.85M without supporting documents, National Council chairperson claimed Nu 0.89M and Chief Justice Nu 0.85M.

This violated a finance ministry notification which states that the Prime Minister, cabinet ministers and equivalent positions are entitled to payment or reimbursement of actual expenses for in-country travels upon production of original bills.

The Royal Audit Authority (RAA), however, stated that considering the nature of expenses like soelra or tips, chagyep, semso, nyendhar where obtaining of original supporting documents may not be practicable, there is a need for the Ministry of Finance and the government to review the extant rules and stipulate such requirements where practical and necessary.

The report also stated that Nu 2.08M was spent on alcoholic beverages, which was another violation of a finance ministry notification. The notification states that actual expenses of in-country daily subsistence allowance (DSA) should not include alcoholic beverages.

Unlike the budgetary expenses, which follow the due process of budgeting cycle, the HE budget does not follow due process of budgeting and is not included as part of the normal budget of ministries and agencies concerned.

The RAA observed that there was an increasing trend on HE expenses.

It stated that Nu 45.94M were spent on HE purpose annually from the fund allocated under the general reserve finance ministry maintained.

“The annual expenditure increased to Nu 55.01M in 2015-16 as compared to Nu 40.73M in 2013-14 and Nu 42.07M in 2014- 15 respectively as against annual approved budget of Nu 30M for 2013-14 and Nu 40M for 2014-15 and 2015-16.”

It also stated that in the three consecutive financial years from 2013 to 2016, a total of Nu 137.81M were spent on HE, indicating that it did not adhere to the austerity and overall cost-cutting measures initiated by the then government.

The report stated that the finance ministry and the government needs to enforce the cost-cutting measures already initiated by the government.

The report stated that Nu 16.04M was spent on payment of tips, soelras and gifts of which Nu 10.05M was spent on tips and soelra and Nu 5.99M on gifts.

It also stated that Nu 39.97M was spent on food and accommodation, donations, offerings/nyendhar, semso, drinks and miscellaneous expenses like purchase of khadhar and conference hall charges.

A sum of Nu 35.99M was expensed on official visits and Nu 19.01M on entertaining official guests in the respective agencies. The official visits comprised of in-country including constituency and ex-country visits.

From the total expenses of Nu 35.99M incurred on the official visits, Nu 3.59M was incurred for constituency visits.

While the first time constituency visits by MPs and including OL has been specified in the then drafted Guidelines for Chadi and Hospitality, there is lack of clarity on the constituency visits of cabinet ministers, Speaker and  NC chairperson.

 

Need for guidelines

The RAA asked the finance ministry to revisit the rationale behind the institution of the discretionary grant vis-à-vis HE budget for prudent and judicious use of scarce public resources, as most of the actual expenses like donations, offerings, semso, tips, soelras and nyendars were discretionary in nature.

It also pointed out that there was lack of proper accountability and transparency in the use of fund as the expenditures incurred were mostly discretionary in nature, which had occurred mostly due to the absence of clear guidelines, rules and regulations and budgetary controls in place.

“Considering that cost-cutting and austerity measures are instituted by the government for prudent and effective use of public resources, it is imperative that government initiates timely corrective measures to properly regulate the HE budget vis-à-vis the discretionary grant,” the report stated. “Development of clear guidelines defining intent and purposes of the fund, specifying limits on expenditure duly supported by accountable and transparent processes would contribute towards prudent and judicious use of resource allocated by the Parliament.”

It was learnt that the then Cabinet has endorsed the proposal to develop the guidelines on the HE expenses but the RAA had not received the action taken report in the form of guidelines.

Kuensel could not obtain the budget spent on HE in 2016-17, 2017-18 and 2018-19 financial years, as ministry officials said they need permission from the minister to provide the details.

Finance minister, Namgay Tshering, said he would share the information with the media once it is ready. 


Recommendations

Develop guidelines on the HE expenses

Adhere to the maximum overall ceiling for HE budget

Fix proper limits on the amounts of gifts, contributions, donations and other expenses of discretionary nature

Support expenditure by receipts or acknowledgements

Review expenditure on alcoholic beverages

Spell out the purpose and objectives of the Discretionary grant

To improve and streamline accounting, budgetary controls, system and processes on the administration of HE fund.


Tashi Dema 

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