The Open Budget Survey, which is published every two years, has revealed that Nepal's supreme audit institution (SAI) provides adequate budget oversight.
Office of the Auditor General is the supreme audit institution in Nepal.
"Under the law, it has full discretion to undertake audits as it sees fit," the report read, adding that the head of the supreme audit institution cannot be removed without legislative or judicial approval, which bolsters its independence.
Hailing the Office of the Auditor General, the report further stated that the supreme audit institution has been provided with sufficient resources to fulfill its mandate but has a 'weak quality assurance system in place'.
The report has provided recommendation to improve auditing by legislature. "Nepal should prioritize establishment of a specialized budget research office for the legislature to enable more robust discussions on the budget to strengthen budget oversight," it reported, asking government to ensure the executive receives prior approval by the legislature before implementing a supplemental budget.
The legislature provides weak oversight during the planning stage of the budget cycle and no oversight during the implementation stage of the budget cycle. Nepal scored the lowest -- 18 out of 100 -- in Budget Oversight (by Legislature), though it has scored highest -- 75 out of 100 -- in Budget Oversight (by Audit).
The legislature does not have a specialized budget research office, and the executive does not receive prior approval by the legislature before implementing a supplemental budget.
Thus, the report has also recommended ensuring, in both law and practice, that the legislature is consulted prior to the spending of any unanticipated revenue, and the spending of contingency funds that were not identified in the Enacted Budget.
Though, the budget oversight has improved due to effectiveness of Office of the Auditor General, Nepal still has to go long way to improve its budgetary system, the report added. "Nepal should also prioritize publication of executive budget proposal consistently in a timely manner to improve budget transparency," it said, adding that it has to produce and publish a Pre-Budget Statement and a Citizens Budget, increase the comprehensiveness of the Year-End Report by presenting more details on planned versus actual debt and interest, as well as on the planned versus actual macroeconomic forecast for more transparency.
Drawing on internationally accepted criteria developed by multilateral organizations, the Open Budget Survey uses 109 indicators to measure budget transparency. These indicators are used to assess whether the central government makes eight key budget documents available to the public in a timely manner and whether the data contained in these documents are comprehensive and useful. Each country is given a score out of 100 which determines its ranking on the Open Budget Index, the world's only independent and comparative measure of budget transparency.
Nepal has scored 24 on the 2015 Open Budget Index which is substantially lower than its score in 2012. "The decline in Nepal's Open Budget Index score was largely due to its failure to make the fiscal year 2013-14 Executive's Budget Proposal publicly available," it explained.
However, since the end of the Open Budget Survey research period on June 30, 2014, Nepal has returned to its previous practice of publishing the Executive's Budget Proposal in a timely manner.
Since 2012, the government has increased the availability of budget information by improving the comprehensiveness of the Enacted Budget, the report added. However, the government has decreased the availability of budget information by failing to make the Executive's Budget Proposal publicly available. Moreover, the government has failed to make progress in producing a Pre-Budget Statement and a Citizens Budget that can help not only increase Nepal's score but makes budgetary process more transparent and effective.
Nepal's score of 19 out of 100 in Public Participation category indicates that the provision of opportunities for the public to engage in the budget process is weak. It is lower than the global average score of 25.
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