Audit Act of Bhutan, 2006

Link to law: http://www.nationalcouncil.bt/assets/uploads/docs/acts/2014/Audit_act_of_bhutan,_2006_Eng.pdf

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TABLE OF CONTENTS

Title Page

PREAMBLE 5
CHAPTER 1: PRELIMINARY 6

TITLE, COMMENCEMENT AND EXTENT 6
REPEAL 6

CHAPTER 2: ROYAL AUDIT AUTHORITY 6
ESTABLISHMENT 6
THE APPOINTMENT OF AUDITOR GENERAL 7
ELIGIBILITY AND QUALIFICATIONS OF AUDITOR GENERAL 7
OATH OR AFFIRMATION 7
TERMS AND CONDITIONS OF SERVICE 8
RESIGNATION AND REMOVAL 8
INDEPENDENCE OF THE AUTHORITY 8

CHAPTER 3: CODE OF PROFESSIONAL CONDUCT 9
COMPLIANCE 9
RESPONSIBILITY 10
ACCOUNTABILITY 10
CONFIDENTIALITY 10
INTEGRITY 10
SELFLESSNESS 10
TRANSPARENCY 10

PERSONAL CONDUCT 11
CONFLICTS OF INTEREST 11
VIOLATION 13

CHAPTER 4: FUNCTIONS, JURISDICTIONS AND SCOPE OF AUDITING 13

FUNCTIONS OF THE ROYAL AUDIT AUTHORITY 13
AUDIT JURISDICTION 14
SCOPE OF AUDIT 16

CHAPTER 5: POWERS, RESPONSIBILITIES AND RIGHT OF
ACCESS TO INFORMATION 17

POWERS OF THE AUTHORITY 17
RESPONSIBILITY OF THE AUTHORITY 19
POWERS OF THE AUDITOR GENERAL 19
RESPONSIBILITIES OF THE AUDITOR GENERAL 20
RIGHT OF ACCESS TO INFORMATION 21

CHAPTER 6: AUDITING AND REPORTING STANDARDS 22
STANDARDS AND PRACTICES 22
AUDIT REPORT 23
ANNUAL AUDIT REPORT (AAR) 25
PUBLICATION OF REPORTS 26
ADMISSIBLE PERIOD TO RESPOND 26
FOLLOW-UP OF AUDIT REPORTS 27

CHAPTER 7: TESTIMONY 27
TESTIMONY, OPINION AND REPORTS 27

EXPERT OPINION 27
CHAPTER 8: ACCOUNTABILITY OF THE AUTHORITY 28

AUDITING THE AUTHORITY AND PEER REVIEW 28
PROTECTION OF INFORMATION, SOURCES AND PERSONS 29

CHAPTER 9: OFFENCES AND PENALTIES 30
OFFENCES 30
PROSECUTION 30
PENALTIES 31

CHAPTER 10: MISCELLANEOUS 31
IMMUNITY FROM PROSECUTION 31
RULE MAKING POWER 31
AUTHORITATIVE TEXT 32
AMENDMENT 32
DEFINITIONS 32

P R E A M B L E

Whereas the Constitution provides the Royal Audit Authority of

Bhutan as an independent Authority; and

Whereas in keeping with His Majesty’s vision to enhance

accountability and proper utilization of public resources through

effective auditing and reporting without fear, favour or prejudice,

and to promote Good Governance;

The National Assembly of Bhutan in its 85th Session held on 5th

Day of the 5th Month of the Male Dog Year of the Bhutanese

Calendar, corresponding to 30th June, 2006 hereby enacted the

Audit Act of Bhutan as follows:

C H A P T E R 1 : P R E L I M I N A R Y

Title, Commencement and Extent

1. This Act shall:

(a) Be called the AUDIT ACT OF BHUTAN, 2006;
(b) Come into force on the Day of the Month

of the Male Dog Year of the Bhutanese Calendar,
corresponding to 2006; and

(c) Extend to the whole of the Kingdom of Bhutan or
otherwise within the jurisdiction of Bhutan.

Repeal

2. This Act hereby repeals any provisions of any law, by-law,
rules or regulation which is inconsistent with this Act

C H A P T E R 2 : R O Y A L A U D I T A U T H O R I T Y

Establishment

3. There shall be a Royal Audit Authority to audit and report on
the economy, efficiency, and effectiveness in the use of public
resources.

4. The Authority shall be an independent and non-partisan
institution headed by the Auditor General.

The Appointment of Auditor General

5. The Auditor General of Bhutan shall be appointed by the
Druk Gyalpo from a list of eminent persons recommended
jointly by the Prime Minister, the Chief Justice of Bhutan, the
Speaker, the Chairperson of the National Council and the
Leader of the Opposition Party.

Eligibility and qualifications of Auditor General

6. A person shall be eligible for appointment as the Auditor
General if he is:

(a) A natural born citizen of Bhutan;

(b) Not married to a person who is not a citizen of
Bhutan;

(c) Not convicted of any criminal offence;

(d) Not in arrears of taxes or other dues to the
Government;

(e) Not holding any office of profit in any public
companies and corporations;

(f) A senior government official suitably qualified for the
post;

(g) Have no political affiliation; and

(h) Have not been terminated from Public Service.

Oath or Affirmation

7. The Auditor General shall, upon assuming office, take an
Oath or Affirmation of office and secrecy as provided in the
Third and Fourth Schedule of the Constitution respectively.

8. The Oath and Affirmation shall be taken before His Majesty
the Druk Gyalpo or Chief Justice of the Bhutan as per the
command of His Majesty the Druk Gyalpo.

Terms and conditions of service

9. The term of office of the Auditor General shall be five years
or until attaining the age of sixty-five years, whichever is
earlier.

10. The Auditor General shall not be eligible for re-appointment.

11. The Auditor General shall receive such salary, allowances and
other benefits as may be prescribed by law in parity with
holders of other constitutional offices.

Resignation and removal

12. The Auditor General may resign from office at any time in
writing to the Druk Gyalpo.

13. The Auditor General can be removed only by impeachment.

14. The vacancy of the post of Auditor General shall be filled
within a period of thirty days from the date of such vacancy.

Independence of the Authority

15. The Authority shall enjoy full organizational and functional
independence including programming, investigative and
reporting.

16. The Authority shall have full authority to determine and
administer its organizational structure, budgetary and
personnel requirements.

17. The State shall make adequate financial provisions for the
independent administration of the Authority.

18. The Authority’s budget shall be approved by the Parliament
as a part of the National Annual Budget. If the decision of the
Parliament on National Budget is delayed, the Ministry of
Finance shall provide the Authority with interim funds, which
shall be at least equal to the previous year’s budget.

19. Except for the Auditor General, the Authority shall prescribe
the service conditions and personnel policies for its staff
broadly in accordance with the Civil Service Act.

C H A P T E R 3 : C O D E O F P R O F E S S I O N A L
C O N D U C T

Compliance

20. The Auditor General shall ensure that his conduct is, in
appearance and in fact, in compliance with this Code.

21. The Auditor General shall:

(a) Have the moral integrity required to competently,
efficiently and professionally carry out his tasks; and

(b) Not only abide by the provisions of this Act but
ensure that all auditors comply with the Good Code of
Conduct, Ethics and Secrecy of the Authority.

22. The Auditor General, auditors and staff shall individually and
collectively ensure that the integrity of the Authority is
maintained.

Responsibility

23. The Auditor General shall ensure that his conduct is
consistent with the dignity, reputation and integrity of the
Authority and the sovereignty and integrity of Bhutan.

Accountability

24. The Auditor General shall have a duty to account and be held
accountable for the policies, decisions and actions of the
Authority.

Confidentiality

25. The Auditor General shall maintain confidentiality in cases
where the decisions, documents and deliberations should not
be disclosed in the public interest.

Integrity

26. The Auditor General shall not be influenced in any manner
whatsoever by any individual or body of individuals in the
discharge of his official duties.

Selflessness

27. The Auditor General shall take decisions solely based on the
public interest and not on any other factors.

Transparency

28. The decisions and actions of the Auditor General shall be
transparent and he shall give reasons for his decisions.

Personal conduct

29. The Auditor General having been entrusted with the sacred
responsibility to serve the Tsawa-Sum, shall:

(a) Refrain from indulging in habits and behaviour that
infringe upon the performance of official duties or
tarnish the image of the Auditor General, the
Authority or the Country;

(b) Not do or direct to be done, in abuse of his office or
power, any act prejudicial to the rights of any other
person knowing that such act is unlawful or contrary
to any government policy;

(c) Not maintain or operate a bank account in any
country outside Bhutan;

(d) Not provide information, which is detrimental to the
prestige, territorial integrity and sovereignty of the
Kingdom; and

(e) The Auditor General shall not accept any gifts,
presents or benefits.

Conflicts of interest

30. The Auditor General shall ensure that no conflict of interest
arises or appears to arise, between his public duties and his
private interests, financial or otherwise.

31. A conflict of interest may exist when the Auditor General is
influenced or appears to be influenced by private interests.
Private interests include not only the Auditor General’s
financial or other interests but also the financial or other
interests of the Auditor General’s spouse or dependant.

32. The Auditor General shall:

(a) Declare the assets and liabilities, including the assets
and liabilities in the name of his spouse and
dependants within 3 months after the appointment,
annually thereafter and 3 months before leaving the
office, to the Anti-Corruption Commission;

(b) Not undertake any private trade or commercial
activity or additional employment;

(c) Not hold chairmanship or membership in a public or
private company whether it carries remuneration or is
honorary other than as may be required in his official
capacity as the Auditor General;

(d) Not act as consultant to any company, business or
association or provide assistance to any such body,
except as may be appropriate in his official capacity
as the Auditor General;

(e) Not be a member of, belong to, or take part in any
society the membership of which is incompatible with
the functions or dignity of his office; and

(f) Not make any unauthorized commitment or promise
that purports to bind the Government.

33. All auditors, including the Auditor General, shall declare any
potential conflict of interest before undertaking any particular
audit or other duties concerning a particular person or entity.

34. All auditors, including the Auditor General, shall maintain the
highest degree of incorruptibility.

35. The Auditor General may exclude an official from an audit if
he considers there is a reasonable cause to doubt the existence
of a conflict of interest.

Violation

36. Violation of this Code by the Auditor General shall be a
ground for his impeachment for misbehaviour.

37. Violation of the Good Code of Conduct, Ethics and Secrecy
of the Authority by the auditors shall be a ground for
disciplinary action.

C H A P T E R 4 : F U N C T I O N S , J U R I S D I C T I O N S
A N D S C O P E O F A U D I T I N G

Functions of the Royal Audit Authority

38. The functions of the Authority shall be to:

(a) Carry out financial, propriety, compliance, special
audits and any other form of audits that the Auditor
General may consider significant and necessary;

(b) Conduct Performance audit to ascertain and report on
the economy, efficiency and effectiveness of the
operations of agencies audited;

(c) Conduct in depth audit of any aspects of the accounts,
operations, systems and management practices of the
agencies;

(d) Conduct the audit of assessment, collection and
accounting of revenues & taxes;

(e) Conduct the audit of aid, grants and public debt of the
Nation;

(f) Certify the Consolidated Annual Financial Statements
of the Royal Government;

(g) Report its findings and recommendations to the
relevant authorities; and

(h) Follow-up on the compliances of the Audit Reports.

Audit Jurisdiction

39. The Authority shall conduct without fear, favour or prejudice
the audits of the following:

(a) Government or any of its instrumentalities which
include, Ministries, Departments, Divisions, Units,
Dzongkhags, Gewogs, Thromdues, autonomous
bodies, foreign-assisted or special projects of the
Royal Government;

(b) Zhung Dratshang, Rabdeys and all related
institutions;

(c) Judiciary and Judicial Bodies;

(d) Legislature and related institutions;

(e) Constitutional bodies;

(f) Defence and Security Services;

(g) All corporations, Financial Institutions including the
Central Bank and their subsidiaries established under
the laws of the Kingdom in which the Government
has an ownership interest;

(h) All entities including non-governmental
organizations, foundations, trusts, charities and civil
societies fully or partly funded by the Government;
whose loans are approved or guaranteed by the
Government; and those receiving funds, grants and
subsidies directly or through the Government and
collections and contributions from people and fund
raised through lottery.

(i) Any entity or activity upon Command of the Druk
Gyalpo.

40. Notwithstanding the provisions of any laws relating to the
accounts and audit of any public authority, the Parliament, if
satisfied that the public interest so requires, shall direct that
the accounts of such authority be audited by the Auditor
General.

Scope of Audit

41. The Authority shall audit the following matters to ascertain
whether:

(a) The amount appropriated have been expended for the
specified programs and tasks within the approved
budget limits;

(b) The financial transactions comply with the existing
laws and the evidence relating to items of income and
expenditure are sufficient;

(c) The accounts have been maintained in the prescribed
forms and such accounts fairly represent the position
of the transactions;

(d) The program implementations are adequately
monitored to avoid incidences of cost and time
overruns;

(e) The inventory of public properties is accurate and up-
to-date, and custody, control, management and
physical safeguard measures instituted are adequate;

(f) Physical assets and infrastructures reported actually
exist and confirm to the required specifications and
standards;

(g) The available resources including human, financial
and other assets are properly utilized;

(h) The accounting and related system of controls,
financial or otherwise including the arrangements for
internal audit and internal control of cash, kind and
other public property against any loss, damage and
abuse are adequate;

(i) The accounts of revenue, taxes, other incomes and
deposits are accurate and the systems relating to
assessment, realization, recording and methods of
reporting are adequate;

(j) The debts, liabilities and specific purpose funds are
recorded accurately and managed properly;

(k) The ICT and other technological systems developed
are appropriate and adequate controls and security
measures are instituted to prevent unauthorized
access to the system; and

(l) The implementation of programs and activities are as
planned and the intended objectives achieved.

C H A P T E R 5 : P O W E R S , R E S P O N S I B I L I T I E S
A N D R I G H T O F A C C E S S T O I N F O R M A T I O N

Powers of the Authority

42. The Authority may:

(a) Develop rules, procedures and guidelines to carry out
auditing economically, efficiently and effectively;

(b) Determine the objectives, scope, frequency and
findings of audits in accordance with the laws and
Generally Accepted Auditing Practices;

(c) Determine the audit findings to be included in the
report in the light of observations made by the
auditors and explanations, justifications and evidence
furnished by the auditee agency;

(d) Develop investigative auditing procedures designed to
increase the likelihood of detection of fraud and
corruption thereby reducing the incidence of their
occurrences;

(e) Adopt procedures for the issuance of audit clearance
certificates;

(f) Establish requirements that copies of audited financial
statements, performance and other reports of agencies
be delivered to it;

(g) Represent the Kingdom in the fields of auditing in
national, regional and international arena; and

(h) Cooperate with international and regional accounting
and auditing associations and bodies in the
development and application of the generally
accepted auditing standards, principles and practices
in line with acceptable international standards and
practices.

43. The Authority shall have the power to settle the audit
observations in the light of justifications provided,
compliance made, and improvement noted as may be
appropriate.

Responsibility of the Authority

44. It shall be the duty of the Authority to:

(a) Carry out its responsibilities by conducting proper
and timely audits of public funds utilized by the
ministries, departments, corporations and other
organizations of the Government;

(b) Report on whether the concerned agencies complies
with the will of the Parliament, as expressed through
budgetary appropriations; and

(c) Promote economy, efficiency and effectiveness of the
use of public resources through its reports and
recommendations.

Powers of the Auditor General

45. The Auditor General shall have power to:

(a) Enforce the provisions of this Act;

(b) Issue statements on the generally accepted auditing
standards and principles and related guidelines;

(c) Appoint other persons, organizations or companies to
perform any particular audits;

(d) Station an auditor in any agency in order to carry out
the functions of the Authority effectively.

(e) Require every person employed in the Authority to
comply with any security requirements;

(f) Develop and implement training programmes which
ensures that Audit staff remain competent to carryout
their duties in accordance with the prevailing
standards and practices;

(g) Make financial commitments on behalf of the
Authority, including contracting for professional
services in accordance with the governing policies
and procedures of the Government;

(h) Enter into agreements with, and receive and manage
funds from donors for capacity building of the office
in accordance with the governing policies and
procedures of the Government; and

(i) Represent the Authority at home and abroad.

46. The Auditor General shall have the power to require the
agencies to provide technical and professional support as may
be necessary and warranted in proper discharge of audit
function.

47. The Auditor General may delegate the exercise of any of his
powers to other auditors but such delegation shall not remove
him of the responsibility and accountability for acts by those
individuals delegated with such powers.

Responsibilities of the Auditor General

48. The Auditor General shall have the duty to:

(a) Carry out his responsibilities with utmost loyalty and
dedication to the Tsawa-Sum, unaffected by any
consideration for those in positions of power and
influence and showing no discrimination whatsoever
in the line of his work;

(b) Inform the Anti-corruption Commission or relevant
authority on any activity or person identified in the
course of an audit that may constitute as offences
under this Act or other laws;

(c) Perform such other duties, in relation to the accounts
of bodies administering public funds, as may be
prescribed by law.

49. The Auditor General shall be held accountable for the
Authority’s non-compliance with the provisions of
this Act and for any acts contrary to the objectives
and functions of the Authority.

Right of access to information

50. Subject to the provisions of other laws, the Authority shall
have the right of access to the personnel records, information
and premises of the entities being audited and parties
involved.

51. The Authority shall have right of access to the records, bank
statements of agencies audited, suppliers, taxpayers and other
third parties in accordance with the laws, if found relevant and
material to the audit of an entity.

52. The Authority shall have powers to enforce or initiate
enforcement action to secure access to needed records, which
are not produced.

53. The Authority shall be provided with copies of any documents
or materials, access to premises, office space and other
facilities necessary for auditing.

54. The Auditor General or anyone authorized by him upon
written notice may require anyone currently or previously
involved in the activities under audit to:

(a) Provide a written explanation of any related matter; or

(b) Attend and give evidence, affirmation or otherwise,
before the Auditor General or the designated person.

55. The Auditor General shall have power to obtain information
from individuals who have been participants or beneficiaries,
and those who may be providers of services.

C H A P T E R 6 : A U D I T I N G A N D R E P O R T I N G
S T A N D A R D S

Standards and practices

56. The Authority shall establish auditing, reporting standards and
practices that will meet the highest auditing and reporting
standards.

57. The Authority shall publish standards and practices in an
appropriate manner to make the proposal known to the public
and invite comments before adopting such standards.

58. An auditee shall submit annual financial statements for their
operations for audit in accordance with standards and
requirements established by laws.

59. The Authority may rely on the audits performed by other
organizations including internal auditors if it has reasonable
assurance through such means as prior experience, tests or
other indicators that the audits and the reports on those audits
are accurate, reliable and meet its standards.

60. Audit methods shall be adapted to the progress of the sciences
and techniques relating to sound financial management and
reporting.

61. The Authority shall intimate an entity to be audited before
starting the audit unless it is a special investigation audit.

Audit Report

62. The report covering the financial operation of the agency shall
contain the Authority’s opinion on the financial statements
indicating, whether the financial statements have been fairly
presented in accordance with applicable laws and generally
accepted accounting principles.

63. The report shall invite attention to the cases and indications of
fraud, abuse or illegal acts.

64. The report shall also disclose appropriate supplementary
explanation and information about the financial statements,
monthly and annual accounts, as well as violations of legal or
the regulatory requirements, including instances of non-
compliance.

65. The Auditor General shall address an Audit Report to:

(a) The concerned Minister and head of the audited entity
requiring the follow-up action and copy endorsed to
others where appropriate;

(b) The Chief Justice of Bhutan for audits of the Courts;

(c) The Speaker of the National Assembly for the audit of
Legislative Offices;

(d) The Chairman for the audit of the National Council;

(e) The Minister of Finance for the audit of Defence and
Security Services;

(f) The Ministry of Finance for certification audits in
respect of donor funded projects; and

(g) The Chairpersons of the Board of Directors for the
audits of the Corporations and Financial Institutions.

66. Confidential information may be covered in a separate report.
Such information shall not be divulged or released prior to its
authorized release, or revealed to other parties not concerned,
without prior clearance and approval of the Auditor General
or his duly designated representative.

67. The Authority shall submit copies of the Audit Report to the
Druk Gyalpo, the Prime Minister and the Chairperson of the
Royal Civil Service Commission or the Chairperson of the
Anti-Corruption Commission, where offences are serious and
require urgent attention.

68. The concerned agency shall immediately take action on audit
observations and ensure that any fund or property misspent,
misused or wasted is recovered without undue delay.

Annual Audit Report (AAR)

69. The Auditor General shall submit the Annual Audit Report
(AAR) during the fourth quarter of the fiscal year on the
audits carried out during the previous fiscal year.

70. The Annual Audit Report shall contain the result of the audit
of the Annual Financial Statements of the Government, the
overall financial condition and recommendations to improve
the economy, efficiency and effectiveness of the Government.
The report shall assess whether the administration as a whole
has been economical, efficient and effective in the utilization
of the public fund.

71. The Annual Audit Report shall include:

(a) The Audit Report on the operation of the Royal Audit
Authority for the fiscal year;

(b) Works performed by the Authority during the period
defined;

(c) Significant audit findings and recommendations for
improvement of agencies audited;

(d) Cases where the Authority did not receive acceptable
responses or cooperation ;

(e) Cases where, in the Auditor General’s opinion, the
follow-up reports submitted by an entity are not
adequate, or are not being carried out as
recommended;

(f) Future course of action in the interest of enhancing
accountability and improving auditing operational
capacity; and

(g) Any other matter based on audit findings that the
Auditor General, in his opinion, considers to be
significant and of a nature that needs to be brought to
the attention of His Majesty the Druk Gyalpo, the
Parliament and the people of Bhutan.

72. The Auditor General shall submit the Annual Audit Report to
the Druk Gyalpo, the Prime Minister and the Parliament.

73. The Auditor General shall endorse copies of the Annual Audit
Report to the Lhengye Zhungtshog, concerned Head of the
audited entity, the Chairperson of the Anti-Corruption
Commission and the Chairperson of the Public Accounts
Committee.

Publication of Reports

74. The Auditor General shall publish its Annual Audit Report
every fourth quarter of the fiscal year on the activities carried
out during the previous fiscal year.

Admissible period to respond

75. All audited entities must respond to the Audit Reports within
the time frame as specified here under:

a) Response to initial audit
observations

- within one month of the
issue of field audit memos

b) Response to agency
specific reports

- within three months of the
issue of the reports by the
Authority

c) Response to draft
Annual Audit Report

- within one month of the
issue of the draft by the
Authority

Follow-up of Audit Reports

76. The Lhengye Zhungtshog, Ministries, and other concerned
authorities shall be responsible to take timely follow-up
actions on Audit Reports under this Act.

77. The Royal Audit Authority shall issue reminders on reports
not being acted upon and if there be further non-compliance
and non co-operation, a defaulting auditee must be questioned
and required to submit explanation.

C H A P T E R 7 : T E S T I M O N Y

Testimony, opinion and reports

78. The Auditor General or an official authorized by him from the
Authority shall be obligated to testify before the Parliament or
the Judiciary.

79. The Auditor General shall review every five years the
auditing system for maximizing and utilizing the use of public
funds and optimizing the values for its intended purpose.

80. The Auditor General, or anyone designated to do so by him
from the Authority may provide advice or information to a
person or entity relating to the responsibilities of the
Authority.

Expert opinion

81. The Authority may provide the Parliament and the
administration with their professional knowledge in the form
of expert opinions, including comments on financial bills
when requested.

C H A P T E R 8 : A C C O U N T A B I L I T Y O F T H E
A U T H O R I T Y

Auditing the Authority and Peer Review

82. The operations of the Authority shall be subject to the same
standards and requirements established by this Act or other
relevant Law.

83. The Parliament shall appoint independent auditors drawn
from professional firms or bodies not within the audit
jurisdiction of the Authority for auditing the annual accounts
of Royal Audit Authority.

84. The Authority shall provide its financial statements and
operational information to appointed auditor within 45 days
after the end of a fiscal year.

85. The Auditor shall:

(a) Submit a report on any matter related to the
operations of the Authority without fear or favour or
prejudice, to the Parliament; and

(b) If required testify before the Parliament or entities of
the Parliament on matters related to the operations of
the Authority.

86. The Authority may undertake a peer review by a member of
peer organizations or other professional bodies from time to
time to ensure consistency and high standard of auditing.

Protection of information, sources and persons

87. Auditors shall respect the security requirements applicable to
the information that they receive and obtain.

88. The Authority shall maintain the confidentiality of the source
of any information received about potential offences, in good
faith and trust, under the laws of the Kingdom.

89. The Authority shall not provide information to any member of
the public or any person or authority, if in its opinion, the
information has:

(a) To be held confidential under national laws and
accepted legal practice;

(b) Commercial and industrial confidentiality of national
significance; and

(c) National Security and larger public interest
implications under laws of the Kingdom.

90. The Authority shall give the same level of confidentiality and
protection as is required by laws of the Kingdom for any
secret or sensitive material or evidence, written or otherwise,
obtained by or made available to the Authority from an entity
pursuant to this Act.

91. The Authority shall:

(a) Provide for the safety of person whose assistance and
cooperation had been significant and material for an
audit in upholding the public interests;

(b) Require the appropriate authorities to provide
protection and ensure safety of person whose support
to the Authority is significant and material for
enhancement or safeguarding of the national interest;
and

(c) Require authorities to provide protection and ensure
safety of auditors, where, in the opinion of the
Auditor General, there is apparent risk and threat to
their safety.

C H A P T E R 9 : O F F E N C E S A N D P E N A L T I E S

Offences

92. Any person who has committed an offence under this Act or
who fails to comply with any provision of this Act shall be
guilty of an offence.

93. A complainant or informer, who knowingly gives or causes to
be given any false or misleading information relating to any
offence committed by an entity or a person with malicious
intent shall be guilty of an offence.

Prosecution

94. No person shall be liable for an offence under this Act unless
found guilty and convicted by a court of law.

95. A person alleged of commission of an offence shall be
prosecuted by the Office of the Attorney General in
accordance with its Act and other relevant laws.

Penalties
96. Any person who is found guilty of an offence shall on

conviction be liable to punishment provided for such offence
under the Penal Code of Bhutan or other relevant laws of the
Country.

97. Every person convicted of an offence of corruption under this
Act or any other law, for which no penalty is specifically
provided under the Penal Code of Bhutan or any other law,
shall be liable to a fine or to imprisonment, or both, as graded
by the court.

98. Any disciplinary action against the auditors or other staff can
be imposed only with the Service Rules framed under this
Act.

C H A P T E R 1 0 : M I S C E L L A N E O U S

Immunity from prosecution

99. The Auditor General and its auditors shall enjoy immunity
from prosecution for any lawful act arising from the due
discharge of their duties under this Act.

Rule making power

100. The Authority may make rules necessary to carry out its
functions economically, efficiently and effectively in
accordance with law.

Authoritative Text

101. The Dzongkha text shall be the authoritative text, if there exist
any difference in meaning between the Dzongkha and the
English text of this Act.

Amendment

102. The amendment of this Act may be effected only by the
Parliament.

Definitions

103. For the purpose of this Act unless the context indicate
otherwise, the words, phrases and acronym are defined as
follows:

(a) “Accounts” means the records, ledgers and books,
maintained under existing laws showing particulars of
transactions, and other documents substantiating such
transactions.

(b) “Act” means the Audit Act of the Kingdom of
Bhutan.

(c) “Audit” means formal inspection, investigation,
examination or review of an individual’s or
organization’s accounting records, operations,
financial position, or compliance with applicable
laws, rules, regulations and standards and ascertaining
whether or not the intended objectives are achieved.

(d) “Auditor General” means the Auditor General of
Bhutan appointed under the Constitution and this Act.

(e) “Authority” means the Royal Audit Authority of
Bhutan established by the Constitution of the
Kingdom with power to enforce this Act.

(f) “Corruption” means as defined in the Anti Corruption
Act.

(g) “Government” means the Royal Government of
Bhutan.

(h) “Kingdom” means the Kingdom of Bhutan.

(i) “Misbehavior” means any action or inaction in
violation of the code of professional conduct
mentioned in this Act.

(j) “Peer Review” means a periodic outside review of an
organization’s quality control system to maintain and
improve the quality of the services performed by peer
organizations committed to excellence and
professionalism.

(k) “Performance Audit” means the aspects of value-for-
money (VFM), operational and management audits
including an audit of the economy, efficiency and
effectiveness with which the audited entity uses its
resources in carrying out its responsibilities and any
other review or examination of any aspect of the
operations of an entity including audit of any
performance report prepared by the management.