Nu 8 Billion, Sitting in Plain Sight

The full numbers

The Royal Audit Authority issues an Annual Audit Report flagging financial irregularities — money that cannot be fully accounted for, contracts where documentation is missing, transactions where due process appears to have been bypassed. The trajectory:

• 2017: Nu 407 million unresolved
• 2018: Nu 766 million
• 2019: Nu 1,138 million
• 2020: Nu 1,920 million
• 2021–22: Nu 4,002 million
• FY 2023–24: Nu 3,961 million
• FY 2024–25: Nu 9,987 million — driven heavily by PHPA-II (Nu 7,790M, 78% of total). The non-PHPA-II underlying figure is closer to Nu 2,200M Important nuance: the FY 2024–25 jump is concentrated in one mega-project — Punatsangchhu-II hydropower. Strip out PHPA-II and the underlying figure is more like Nu 2,200M, still 5× the 2017 baseline but not 25×. The PHPA-II irregularities are themselves systemic (Finance & Revenue Management failures, incorrect steel price escalation indices producing Nu 99.5M and Nu 26.3M overpayments to construction firms) — but they reflect one project’s governance, not a country-wide collapse. Over the same period, the National Integrity Score (a survey-based measure of public perception and institutional self-assessment) moved from 7.97 in 2019 to 8.01 in 2022. Both numbers are presented as official measurement of how Bhutan is doing on public integrity. They tell opposite stories. The survey-based integrity score reflects the perceptions and self-reports of citizens, service users, and civil servants. The audit irregularities reflect the actual financial trail. When the two diverge by an order of magnitude, the question is: which one is closer to reality?

Imagine this

A senior auditor at the Royal Audit Authority sits in her Thimphu office at 8:30 PM, the only light still on in her floor. She has spent 14 hours reviewing accounts from a gewog water-scheme contract. There are four invoices that do not match the bank transfers. Three suppliers cannot be located. The total figure is small — Nu 4.2 million. It is one of more than a thousand cases flagged in her agency’s annual report. She flags it, writes the memo, sends it up the chain. It will sit in the “unresolved” file for 2–4 years. If a parliamentary committee picks it up, it may get a hearing. More likely, it joins the cumulative Nu 9.99 billion of FY 2024–25 flagged irregularities — itself dwarfed by the Nu 7.79 billion PHPA-II case alone. The same week, the National Integrity Assessment survey comes through her office. She fills it out honestly: she rates Work Integrity 8.5, Integrity Culture 7.9, Ethical Leadership 8.1. Her own audit work — the actual financial irregularities she has documented all year — is not part of the survey questions. The score she gives, and the score her audit files would give if anyone tabulated them, are about different things. The headline absorbs her score; the audit file gathers dust.

Where this came from

The growth in unresolved irregularities does not necessarily mean corruption increased 10×. It may reflect: (a) the Royal Audit Authority became more aggressive in flagging items 2017–2022, (b) the resolution process slowed down due to capacity constraints, (c) the volume of public spending grew, increasing absolute irregularity flags, or (d) actual public-financial-management quality declined.

The 2022 NIA report leans toward a mix of (a), (b), and (d) — better detection plus slower resolution plus some real deterioration in transactional integrity. The survey-based score (8.01) measures something different: how integrity-conscious people feel the system to be.

People can feel the system is good even if the audit trail shows growing leakage — particularly if they don’t see the audit reports.

Why this matters now

The audit-irregularities figure is a leading indicator of public-financial-management capacity. A 10× jump in 5 years suggests either capacity to flag is growing faster than capacity to resolve, or actual leakage is growing fast — both are concerning. The trend coincided with the 12th FYP’s rapid scaling of infrastructure spending and the COVID-period emergency procurement.

The integrity score’s stability is, in this light, a measurement artifact: the survey questions don’t probe the audit trail, so the audit trail doesn’t move the score. If only one of these two figures could be reported nationally as “how Bhutan is doing on integrity,” the audit figure would be the more useful — it is a hard financial trail, not a perception measure.

What it should be

• Public-financial-management capacity that resolves irregularities within 12–24 months of flagging, not 4+ years.
• Independent parliamentary committees with real authority over RAA findings.
• Public visibility of unresolved-cases trajectories — published quarterly, not just annually.
• The integrity score should incorporate audit-trail outcomes, not just survey perceptions.

How others do it

• New Zealand (top of Transparency International CPI most years) — audit findings published in real time with named accountability; cases resolved 90%+ within 18 months
• Singapore — Corrupt Practices Investigation Bureau resolves cases quickly; the integrity score and the audit trail track closely
• Estonia — full digital trail of public spending publicly visible; audit findings reduce because the audit trail is the budget
• Norway — Office of the Auditor General has constitutional authority; resolution rates 95%+ within 24 months
• Bhutan: aggressive flagging, slow resolution, integrity score insulated from the audit trail

The question we should be sitting with

Which number is closer to the truth of how we are doing on public integrity — the survey score that says 8.01, or the audit irregularities that hit Nu 9.99 billion in a single year? And when one mega-project (PHPA-II) alone accounts for Nu 7.79 billion of those flagged irregularities, what does that tell us about how much of Bhutan’s “audit problem” is really a “PHPA-II governance problem”?