Kathmandu: A majority of federal secretaries and high-level officials, including Chief Secretary Ek Narayan Aryal and Auditor General Toyam Raya, have jointly stated that it is practically impossible to resolve audit irregularities that occurred before the implementation of Nepal’s federal constitution in 2072 BS (2015 AD). During a discussion organized by the Public Accounts Committee (PAC) of the House of Representatives on Sunday, officials suggested that an alternative legal and administrative solution should be adopted to address these legacy issues.

The meeting included secretaries from most ministries and constitutional bodies, who collectively expressed concern over the unresolved irregularities inherited from now-defunct government structures such as District Development Committees (DDCs). They argued that after federalism was implemented, many such institutions were dissolved or devolved to provincial and local governments, but the corresponding audit liabilities remained with federal ministries—despite the loss of documents and ambiguity in responsibilities.

Chief Secretary Aryal remarked that “theoretical irregularities” from before 2072 should be written off through a political or legal decision. “The DDCs were dissolved, and no one knows where their documents are now. But their liabilities remain. How can we expect to resolve those practically?” he asked the committee, adding that accountability mechanisms for that period are no longer in place.

Auditor General Toyam Raya echoed the sentiment. “After hearing the Chief Secretary and secretaries, I agree that pre-2072 irregularities should be dismissed. The current audit framework cannot track those files or verify actions taken at the local level after federalization,” Raya stated.

The PAC had directed all ministries and constitutional bodies to submit a response to a 13-point questionnaire regarding the status of unresolved audit irregularities and their efforts to address them. Although the government has launched a 'Zero Irregularities Campaign' to promote financial discipline, ministries said this initiative lacks a strong foundation to resolve legacy issues from the pre-federal period.

Some central bodies such as the Office of the Prime Minister, Water and Energy Commission Secretariat, and National Planning Commission have maintained zero audit arrears for three consecutive years. However, key ministries including Finance, Urban Development, Health, Education, and Agriculture still face significant unresolved irregularities—especially from older autonomous and now-abolished institutions.

Despite linking arrear clearance to performance evaluations and appointing focal persons to monitor progress, ministries admitted that results have been minimal. Labor Secretary Krishnahari Pushkar warned that assigning contracts to the lowest bidders often leads to poor quality work and contributes to further irregularities. Similarly, Public Procurement Monitoring Office Secretary Mukunda Prasad Niraula said existing procurement laws are fueling misuse and inefficiency.

Education Secretary Chudamani Poudel flagged universities as particularly challenging areas for arrear resolution. He also cited earthquake-damaged school reconstructions as another complex zone of audit concerns. Many secretaries complained about the audit style itself, citing vague language in the Auditor General’s reports, inflexible procedures, and frequent misplacement of transferred documents.

Ministries also noted that they continue to bear financial liabilities of autonomous institutions under their jurisdiction, without adequate control mechanisms. Suggestions to resolve audit backlogs included digitalizing audit systems, strengthening internal audits, legal reform, real-time tracking through a “bad debt dashboard,” and enhancing the capacity of the Bad Debt Settlement Committee under the Financial Responsibility Act.

According to the 62nd Annual Report of the Auditor General for 2082 BS, total unsettled arrears (referred to as "bad debts") across federal, provincial, and local levels have reached Rs. 1.284 trillion, marking a 9.45% increase over the previous year. Of this, Rs. 733.20 billion are audit-related, while Rs. 551.10 billion are revenue arrears and pending reimbursements of foreign grants and loans. The fiscal year 2080/81 alone saw an increase of Rs. 91.59 billion in total arrears.

The PAC is now under pressure to recommend a legal pathway to dismiss or restructure historical irregularities, while ensuring that newer audit issues are tackled with systemic reforms and digital accountability.