Finance Minister Bishnu Prasad Poudel on Monday directed Rastriya Beema Sansthan (RBS) and Rastriya Beema Company (RBC) to complete their pending financial audit of the past eight years in the next three months.
Breaching the government law that requires the insurers to submit their transaction report to the regulator within the stipulated time of every fiscal year, the state-owned insurance companies have not done their financial audit since the fiscal year 2017/18.
The insurers have to submit to the Nepal Insurance Authority (NIA) the internal audit report within 60 days from the end of each quarter in every fiscal year, reads the Internal Audit Directive for Insurers 2016. However, these insurance companies have been completely ignoring the directive issued by the regulator.
Likewise, these public enterprises have also ignored the orders issued time and again by the Office of the Auditor General (OAG), a constitutional body and the supreme audit institution of the country. According to the Audit Act, the concerned entities have to provide financial details to the auditor appointed by the OAG for the audit.
At a time when the amount of unaccounted expenditures has been growing, the status of government entities that have failed to get their transactions audited has not been clear, reads the 55th annual report of the OAG. According to the report, although the OAG had sent reminders repeatedly to the RBS and the RBC to report their transactions they failed to get their accounts audited.
In over a decade, it was just in September 2021 that these entities completed the audit of decade-long financial transactions since the fiscal year 2009/10 through 2012/13. These insurers had been reiterating that they have been unable to conduct the audits for over a decade due to loss of records of the old financial transactions.
An official at the RBS said it would be almost impossible for them to complete audit reports of the past eight years in just three months.
The sector’s regulator NIA, time and again talks about carrying out risk-based supervision of the insurers by asking them to submit their annual financial reports on time. However, the government-owned insurance companies have been acting as an exception regarding the implementation of the state rule.
Meanwhile, Finance Minister Poudel has directed these insurers not to distribute bonus and cash dividend until they finalize all the audit reports.
