Every annual report from the Board of Audit (BOA), an independent government body, makes dismal reading — until you get to the bottom line. The latest says that 43 billion yen in taxpayer money was wasted and misused in fiscal 2003. That is the largest amount in 20 years. The report gives appalling examples of irregularities, such as preparing fake police-investigation receipts and paying travel expenses for fictitious trips.
Normally the BOA conducts inspections once a year for a given number of offices, which are notified of inspection schedules in advance. Seemingly endless irregularities suggest that something is wrong with the current inspection system. What is needed is a new system that makes surprise inspections the rule rather than the exception. The results of such unscheduled inspections should be published from time to time so that corrective action can be taken without delay.
It is also necessary to increase the number of inspectors. The current inspection staff, numbering 850, is too small to cover 34,000 offices throughout the country. This time around, the BOA inspected 2,700 offices, or just 8 percent of the total, and 41 percent of the central government offices. At the very least, all ministerial offices in Tokyo should be inspected each year.
Inspections are usually carried out on the basis of monthly financial documents that are submitted to the BOA on a regular basis. The BOA, however, may visit central offices and prefectural governments when they deem inspections necessary. In fiscal 2003, for example, the BOA conducted surprise inspections on “items of special concern to the public,” including accounting irregularities involving the police.
According to the report, a regional police headquarters in Hokkaido padded accounts by preparing fake receipts from local shops that had cooperated in investigations. The police also used phony shop names to set up fictitious accounts. “(They) provided false information and made a systematic attempt to evade accountability,” the report points out.
That kind of abuse probably would have been prevented if surprise inspections had been conducted earlier. Under current rules, each office to be inspected is so notified one to 1 1/2 months in advance. The official explanation for this is that inspections will be more efficient if offices involved are given enough time to get the necessary papers ready.
The fact is that the BOA is also empowered to conduct surprise inspections and request the submission of all relevant documents, including those that otherwise would not be disclosed for reasons of confidentiality or privacy. There is no reason why the audit board should not make full use of its inspection powers.
The 2003 audit discovered egregious accounting irregularities at the Hiroshima Prefectural Bureau of the Health, Labor and Welfare Ministry. The bureau issued fake travel orders to employees so that they could receive payments for trips they did not make. Such malpractices were supposed to have been stamped out after corrective measures were put in place nationwide in 1979, when slipshod accounting management by a public railway corporation came to light.
An audit of the health ministry also found that some employees had used public money for wining and dining and that a slush fund had been created to cover expenses for get-acquainted parties. It was not immediately clear, however, how much money had been used, because no records were left.
The inspection results are reported to the prime minister around November each year. The BOA says an annual report is desirable for practical reasons, including scheduling technicalities. The BOA need not stick to the once-a-year rule because there are no legal restrictions on the timing or frequency of reports. Being an independent organ, it should not worry about government offices’ resistance to ad hoc inspections.
The BOA is authorized to express its opinion on ways of preventing irregularities or to request that corrective measures be taken. Such requests were frequently made in the early postwar period but rarely in recent years. The explanation is that government offices themselves have taken the initiative on remedial action or have punished those responsible. In malicious cases, however, the BOA should act on its own and demand that disciplinary action be taken.
To eliminate waste of taxpayer money, it is essential to enhance the sense of ethics in the civil service and to improve its internal auditing capacity. Given the recurring irregularities, it is also vital to increase the inspection capability of the Board of Audit itself.
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