4.3 Irregularities (Beruju) and Their Settlement in Nepal

Irregularities (Beruju) and Their Settlement in Nepal

Understanding Beruju (Irregularities)

Beruju refers to financial transactions identified during an audit as non-compliant with prevailing laws, improperly recorded, or conducted irregularly or unreasonably, as defined by the Financial Procedures and Fiscal Accountability Act, 2076 BS (2019). These irregularities are documented in audit reports as outcomes of the audit process.

Beruju is classified into three types based on the nature of the irregularity:

• Recoverable Beruju: Involves financial loss to the state, requiring recovery from responsible parties.
• Regularizable Beruju: Non-compliant transactions that can be regularized with proper documentation or procedures.
• Advance Beruju: Unsettled advances at the fiscal year’s end.

Both internal and final audits identify beruju, but internal audit irregularities become irrelevant once the final audit is conducted. Responsibility for beruju lies with the involved individual or entity, the office head, and the accounting officer.

Example: An audit of a local government’s road construction project reveals unverified payments to a contractor, classified as recoverable beruju, requiring the responsible official to refund the amount.

Beruju Settlement

Beruju settlement involves taking corrective actions as recommended in audit reports to resolve irregularities, ensuring they are not listed in subsequent reports. This includes recovering funds, regularizing transactions with evidence, or settling advances. The process, governed by the Financial Procedures and Fiscal Accountability Act, 2076 BS (2019) and its Regulations, 2077 BS (2020), aims to relieve responsible parties from liability while protecting public funds and ensuring accountability.

Responsibility for settlement lies with the office head, accounting officer, and the involved individual or entity.

Types of Beruju

Theoretical Beruju

Theoretical beruju highlights deficiencies in an organization’s policies, procedures, internal controls, or management practices without specifying a monetary amount. The organization’s management or office is held accountable for addressing these issues.

Listed Beruju

Listed beruju includes irregularities with specified monetary amounts, recorded in the audit ledger. These are settled by recovery, regularization with evidence, or advance settlement.

Subcategories of Listed Beruju

• Recoverable Beruju: Involves financial loss to the state due to unauthorized payments, overpayments, or uncollected revenues. If not recovered, it is transferred to the Central Revenue Collection Office for recovery as government dues.
• Regularizable Beruju: Non-compliant transactions without financial loss, such as missing documentation or procedural lapses, which can be regularized with proper evidence or approvals.
• Advance Beruju: Unsettled advances by individuals or entities at the fiscal year’s end, especially in multi-year projects, leading to significant recorded amounts.

Example: A government office fails to provide invoices for equipment purchases, classified as regularizable beruju. Submitting valid invoices can resolve this irregularity.

Conditions Leading to Beruju

Beruju is recorded in the following scenarios:

1. Embezzlement or Misappropriation: Misuse of funds, assets, or falsified records (e.g., inflated payments or under-collection).
2. Financial Loss: Losses due to erroneous decisions, negligence, delays, or unnecessary purchases.
3. Non-Compliance: Expenditures exceeding authority, non-adherence to laws, or misallocation of funds.
4. Missing Documentation: Incomplete or missing financial records, such as bank statements or contracts.
5. Non-Transferred Responsibilities: Failure to transfer cash or asset responsibilities to subsequent years.
6. Non-Reimbursed Advances: Unsettled loans or advances from budgets or deposits.
7. Unsettled Advances: Advances not cleared by the fiscal year’s end.
8. Other Recoverable Amounts: Under-collected revenues, unrecorded penalties, or unremitted funds.

Legal and Institutional Framework for Beruju in Nepal

Legal Provisions

• Financial Procedures and Fiscal Accountability Act, 2076 BS (2019): Governs beruju recording, settlement, and write-off (Sections 38, 39, 40).
• Financial Procedures and Fiscal Accountability Regulations, 2077 BS (2020): Details procedures for internal audit beruju settlement, 35-day settlement timelines, and monitoring committees (Rules 85–93).
• Audit Act, 2075 BS (2018): Mandates the Auditor General to verify beruju records and settlement efforts (Section 8) and requires action on beruju (Section 22).
• Local Government Operation Act, 2074 BS (2017): Requires internal audit issues to be resolved before final audits (Section 77).
• Government Accounting Guidelines, 2073 BS (2016): Specifies beruju recording and settlement procedures.
• Internal Audit Procedure Guidelines, 2073 BS (2016): Outlines internal audit processes.
• Auditor General’s sector-specific audit guidelines clarify beruju types and settlement.

Institutional Arrangements

• Council of Ministers: Approves write-offs for unrecoverable beruju.
• Auditor General’s Office: Identifies and verifies beruju.
• Public Accounts Committee (PAC): Discusses beruju and issues recovery directives.
• Provincial Public Accounts Committee: Provides policy guidance on provincial beruju.
• Beruju Settlement Committee: Chaired by a PAC member, includes deputy Auditor General and senior officials, decides on regularization or recovery.
• Beruju Settlement Monitoring Committee: Chaired by the Chief Secretary, monitors and evaluates settlement efforts.
• Beruju Write-Off Committee: Recommends write-offs to the Council of Ministers.
• Kumari Chowk and Central Revenue Collection Office: Recovers unsettled beruju as government dues.
• Financial Comptroller General Office and Provincial/District Treasury Offices: Conduct internal audits and facilitate settlement.
• Responsible Officials: Accountable for settling beruju.

Operational Efforts for Beruju Settlement

• Beruju settlement is a key responsibility of office heads, linked to performance evaluations.
• Discussions with office heads and responsible officials occur before final audit reports.
• The Auditor General’s annual report, including beruju, is publicized and discussed in Parliament.
• High priority is given to settlement, with reminders, directives, and blacklisting for non-compliance.

Beruju Settlement Committee

Under the Financial Procedures and Fiscal Accountability Act, 2076 BS (2019), Section 42, a Beruju Settlement Committee is formed to address unresolved beruju, with the following composition:

• Chairperson: Member designated by the Public Accounts Committee.
• Members: Deputy or Assistant Auditor General, Secretary of the Ministry of Finance (or designated official), Financial Comptroller General (or designated official).
• Member-Secretary: Head of Kumari Chowk and Central Revenue Collection Office.

Functions:

• Regularize or write off beruju (except embezzlement or recoverable cases) based on justification.
• Return unresolvable beruju for regularization or recovery (Section 43).

Beruju Settlement Monitoring Committee

Under Rule 93 of the Financial Procedures and Fiscal Accountability Regulations, 2077 BS (2020), this committee, chaired by the Chief Secretary, includes:

• Members: Secretaries of Finance and Federal Affairs Ministries, Financial Comptroller General.

Functions:

• Evaluate beruju settlement efforts by ministries and offices.
• Summon office heads for discussions on unresolved beruju.
• Recommend disciplinary actions for non-compliance.
• Issue directives to enhance settlement.
• Monitor recovery and transfer to the Central Revenue Collection Office.
• Submit quarterly reports to the Prime Minister’s Office, Ministry of Finance, and Public Accounts Committee.

Responsibilities for Beruju Settlement

• Primary responsibility lies with the involved official or entity.
• Accounting officers and office heads are accountable for recovery or regularization.
• Officials must transfer unsettled beruju details during transfers or retirement.
• Internal audits must be conducted before officials are relieved from duties.

Beruju Settlement Procedures

As per the Government Accounting Guidelines, 2073 BS (2016):

• Responsible officials settle beruju through recovery, regularization, or evidence submission.
• Accounting officers oversee compliance with legal procedures.
• Beruju identified by the Auditor General must be settled within 35 days.
• Maintain beruju ledgers at central and operational levels.
• Recoverable beruju is deposited into revenue accounts; tax-related beruju into specific tax heads.
• Unsettled recoverable beruju is transferred to Kumari Chowk for recovery as government dues.

Kumari Chowk and Central Revenue Collection Office

Functions:

• Recover amounts owed to the government, including misappropriated funds or assets.
• Maintain ledgers for outstanding dues and recover them as government dues.
• Recover penalties from quasi-judicial bodies.
• Exercise quasi-judicial powers, including evidence collection, summoning witnesses, and detaining individuals.
• Freeze payments, bank accounts, or assets of responsible parties.
• Maintain and update annual ledgers of outstanding dues.
• Seize and auction properties of responsible parties.
• Act as the secretariat for the Beruju Settlement Committee.

Recovery Process:

• Issue a 35-day notice to responsible parties to settle dues.
• Extend the deadline by up to 30 days for valid reasons.
• Deduct dues from salaries, pensions, or other payments.
• Freeze and auction properties if dues remain unpaid.
• Initiate legal action, including imprisonment, for unrecovered amounts.

Why Beruju Settlement?

• Prevent misuse or misappropriation of public resources.
• Maintain government ownership over public funds and assets.
• Promote good governance in the public sector.
• Ensure economy, efficiency, effectiveness, and propriety in financial management.
• Strengthen legal compliance.
• Enhance proper utilization of advances.
• Build public trust in government operations.
• Control revenue leakage due to fraud or collusion.
• End impunity and uphold the rule of law.
• Strengthen final audit processes.

Reasons for Persistent or Increasing Beruju in Nepal

• Weak reward and punishment mechanisms.
• Lack of good governance and professionalism in the public sector.
• Decline in ethics and integrity.
• Weak institutional oversight and control mechanisms.
• Ineffective implementation of beruju settlement laws.
• Lack of government urgency and commitment.
• Failure to link beruju settlement to career development or performance evaluations.
• Ineffective audits.
• Weak internal controls and monitoring systems.
• Practice of classifying mobilization advances within deadlines as beruju.
• Poor coordination among oversight and enforcement bodies.
• Lack of honest implementation of legal provisions.
• Prevalence of corruption-friendly social behaviors.
• Ability to evade beruju responsibilities without consequences.
• Lack of unified digital beruju records and transparency.
• Low awareness and sensitivity among stakeholders.

Measures to Enhance Beruju Reduction and Settlement

Recommendations:

• Promote good governance in the public sector.
• Strengthen ethics and integrity.
• Enhance reward and punishment systems.
• Secure government commitment to beruju settlement.
• Improve institutional oversight and activity.
• Link beruju settlement to career development.
• Develop audits as a tool for corruption control.
• Strengthen internal controls and monitoring systems.
• Revise the practice of classifying mobilization advances as beruju.
• Foster collaboration among oversight and enforcement bodies.
• Promote civic education to transform corruption-friendly behaviors.
• Ensure honest and effective implementation of legal provisions.
• Develop robust control systems to prevent evasion of beruju responsibilities.
• Create unified digital beruju records with public access.
• Raise awareness among stakeholders about beruju consequences.

Recent Beruju Trends in Nepal

According to the Auditor General’s 62nd Annual Report (2082 BS):

• FY 2080/81 (2023/24):
• Audited Amount: NPR 94.62 trillion (5,659 entities, including federal, provincial, local governments, and others).
• New Beruju: NPR 91.59 billion (1.81% of audited amount).
• Breakdown:
• Recoverable Beruju: 32.9%
• Regularizable Beruju: 61.3%
• Advance Beruju: 5.8%
• Total Accumulated Beruju: NPR 7.33 trillion (9.45% increase from previous year).

Entity	Beruju Amount (NPR Lakh)	Beruju as % of Audited Amount
Federal Government	477,430	1.54%
Provincial Government	42,000	1.36%
Local Government	253,242	2.26%
Committees and Other Entities	143,307	2.74%
Total	915,979	1.81%

Analysis: The federal government has the highest beruju amount, while committees and other entities have the highest beruju percentage relative to audited amounts. Regularizable beruju dominates due to non-compliance, missing documentation, and untransferred responsibilities.

Conclusion

Nepal’s beruju and settlement framework, supported by robust legal and institutional mechanisms, aims to ensure financial discipline and accountability. Addressing challenges like weak enforcement, lack of digital records, and poor coordination can reduce beruju, strengthen governance, and enhance public trust.

References

• Financial Procedures and Fiscal Accountability Act, 2076 BS (2019)
• Financial Procedures and Fiscal Accountability Regulations, 2077 BS (2020)
• Audit Act, 2075 BS (2018)
• Local Government Operation Act, 2074 BS (2017)
• Government Accounting Guidelines, 2073 BS (2016)
• Internal Audit Procedure Guidelines, 2073 BS (2016)
• Auditor General’s 62nd Annual Report, 2082 BS (2025)