Royal Audit Authority (RAA) prepares to adopt International Auditing Standards

As reported in the kuensel, (Subba, 2016) Royal Audit Authority of Bhutan is in the process to adopt International Auditing Standards. The process is also in line with vision of the having corruption free society in Bhutan with proper utilization and good governance in place. It will enhance the basic norms of auditing report system with professionalism in carrying out the works by the auditors.

It is also reported that RAA is undertaking this steps to overcome the growing complexities and technological advancement in doing the business. It will further help the government in enhancing credibility of auditing works. It is another way to improve on standard auditing report system to have uniform and standards norms for all. The adoption will be a benchmark for the various stakeholders of the RAA to measure the performance of auditors. It is their one of the strategic goals under its Strategic Plan 2015-20. It focuses on development of staff and organization system for sustainable implementation of International Standards for Supreme Audit Institutions (ISSAI) in RAA.

If the current adoption for international standards of auditing goes well, it will further help enhance the overall performance of auditors in the country and ensure the transparency in the use of public funds without involvement of corruptions. The success in the RAA will also be the success for the country and its people building stronger bonding’s and ensure future certainty on use of public resources more efficiently. This will also ensure the trust of the people on those responsible to handle the public funds and resources to the best of the country. Bhutan in need cannot accept the corruption given our limited resources and our dependency on the external grants, aids and loans. The corruption will in fact drag the country into more debt and inefficiency in resources mobilizations with possible withdrawal of external grants and aids to Bhutan.

References:

Subba, M. B. (2016, October 26). RAA Prepares to adopt international auditing standards. Kuensel, P.5. Thimphu, Bhutan.

Increase of Personal Income Tax (PIT) Slab and its Impact to the nation.

With the approval of increase in the slab for PIT by the National Assembly of Bhutan from initial amount of Nu.100,000 as basis exemption, it has now revised to Nu.200,000 with effect from 7^th July 2016 as reported in Revised Taxes and Levies Act of Bhutan, 2016 (2016, p. 9).

The increase in the slab rate came as the much awaited decision from the National Assembly of Bhutan giving an opportunity save an extra amount. The increase in the slab rates comes with both advantage and disadvantage to the country. Around 46,105 taxpayers will be benefiting from the tax exemption, however it will cost the country to lose up to 484 million of ngultrum as forgone revenue (Dolkar, 2016).

With the increase in the slab rate, an individual will not file their personal income tax return if their annual earnings do not exceed Nu.200,000. On the other end, the tax rate will remain same as it is now. Income with Nu.200,000 to will 250,000 will have 10% as tax rate, 15% for Nu.250,001 to Nu.500,000, 20% for Nu.500,001 to 10,00,000 and 25% for Nu.10,00,000 and above. It is also informed by the Prime Minister that the increase in the slab rate comes after 15 years of its implementation and it would mean a lot to the lower income brackets. Bhutan’s current slab rate is also the lowest income tax slab in the region as reported by the Finance Minister.

The purpose of increase in the slab rate was also to cope up with the current inflation rate of Bhutan which stands at 3.31 % in the second quarter of 2016 as reported in the trading economics (2016). There is also an increase in the amount of education allowance expenses from Nu.50,000 to Nu.150,000 beside the increase in PIT Slab giving lesser final tax liability for the tax payers. Beside the financial benefits the taxpayers would enjoy, it would also reduce the work load for the tax officials while carrying out both self and desk assessment. The decrease in the work load will have positive influence with increase efficiency in their service delivery.

References: 

Dolkar, D. (2016, June 9). Business Bhutan. Retrieved from www.businessbhutan.bt: https://businessbhutan.bt/pit-revision-to-cost-government-nu-484mn-a-year/

National Assembly of Bhutan. (2016). Revised Taxes and Levies Act of Bhutan. Thimphu: National Assembly of Bhutan.

Role of the International Monetary Fund (IMF) in Bhutan.

Presented by Amra Srdanovic on 27^th October, 2016

  Resident PFM Adviser (Bhutan).

The speaker started her presentation with the introduction of International Monetary Fund (IMF), which is an organization comprising of 189 member countries created in 1945 working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment, sustainable economic growth and reduce poverty around the world. She mentioned that IMF ensures the stability of the International Monetary System in three ways; Surveillance, Lending and Capacity Development. Bhutan had joined IMF on 28^th September, 1981 becoming the 147^th member nation.

IMF in Bhutan provides both short and long term Technical Assistance (TA) to the Royal Government (Article IV consultation), Royal Monetary Authority (RMA), Ministry of Finance and New South-Asia Regional Technical Training Centre – SARTTAC (New Delhi). The IMF resident adviser to Bhutan, Ms. Amra Srdanovic at the request of the Bhutanese government, provides technical assistance to the Department of Public Accounts (DPA) in the Ministry of Finance on high level objectives which includes;

1.  Improving the effectiveness of expenditure control and the efficiency with which it is achieved.

2.      Improving the quality and timeliness of the financial reporting.

3.      Improving the cash flow forecasting and cash management.

4.      Supporting the execution of budget reforms in so far as they affect DPA’s operations and

5.      Supporting further development/enhancement of the Public Expenditure Management System (PEMS).

She informed the student that, currently the government of Bhutan has PEMS in the process for all government agencies and Government Accounting System Reform (GASR) with DPA to lead the implementation of the e-payment system reform. The resident adviser focuses on Public Financial Management (PFM) policies in the country which helps promote efficient and effective use of the public funds with appropriate level of control. PFM cycle includes four broad activities; Resource mobilization, Resource allocation, Resource utilization and Audit and Reporting. It was shown that Bhutan has always placed greater importance to Good Governance on principles of accountability, transparency and efficiency. This principle has helped the country to allocate the resources properly by having strong planning and budgeting system which translates the five year plan into sectorial strategies, programs and annual budgets within a rolling three year fiscal framework. Further, the efficiency in use of resources for service delivery is assisted by competitive procurement yielding greater value for money.

This has helped our country to gain more attention from IMF and Donors in the recent years with regard to PFM besides Asian Development Bank (ADB) being one active partner to Bhutan in the areas of macro-fiscal analysis and fiscal risk management. She also informed that the Fiscal Affairs Department (FAD) of the IMF have expanded its PFM TA to the Bhutan with primary focus on macro-fiscal analysis, budget preparation, cash management and payment systems.

The presentation ended with question and answer session.