ISLAMABAD: The Auditor General of Pakistan (AGP) has unearthed misappropriation and embezzlement of public funds in various ministries to the tune of over Rs12 billion, with irregularities of government funds amounting to Rs258bn.

The AGP’s report covers the fiscal year 2018-19 — the first year of the Pakistan Tehreek-i-Insaf government — and recommends strict action, including references, to investigation agencies against those responsible.

The AGP has finalised its report on Audit Year 2019-20 and it would be submitted to parliament and the president in a couple of days. The report also disclosed that record for a number of entities and accounts was not given to audit teams in violation of rules.

A government minister while commenting on the audit report said that such irregularities during the period of past governments used to involve up to Rs1,000bn. Geo TV quoted Minister for Industries Hammad Azhar as saying the graph had come down by 80 per cent but added that the PTI government needed to improve it further.

Recommends strict action against those involved; minister says graph of irregularities has dropped

The audit report identified 56 cases of misappropriation and embezzlement of public funds and fictitious payments amounting to Rs12.561bn. In addition, there were 98 cases involving recovery of Rs79.59bn and 37 instances of non-production of record of Rs17.97bn.

Likewise, the audit unearthed 35 cases pertaining to weak financial management amounting to Rs152.21bn. The AGP put on record that audit paras for the Audit Year 2019-20 involving procedural violations, internal control weaknesses and irregularities which were not considered significant for reporting were not being reported to Public Accounts Committee of the National Assembly.

Based on these findings, the audit has proposed to the government to ensure that no expenditure be incurred without budgetary cover and authorisation by the parliament and supplementary grants should not be issued without need assessment and approval from parliament before close of financial year.

The AGP also recommended to the parliament that cases of serious embezzlement of public money be sent to investigation agencies and the government should be directed that retained government receipts and unspent balances be deposited into the government treasury wherever applicable.

The Audit has also sought strengthening of internal control system to reduce risks and internal audit and printing of its report should be ensured along with the sharing of Financial Attest Audit Reports with AGP’s audit teams where required.

Moreover, all assets should be recorded in the stock register and physical verification be carried out annually and all auditable record be produced to audit when demanded. The audit report also suggested that principal accounting officers (federal secretaries heading the ministries) should be directed to take seriously issues of non-production of record as it hampered audit functions of the Auditor General of Pakistan.

The Federal Government conducts its operations under the Rules of Business, 1973, and comprises 60 Principal Accounting Officers (PAOs) for different ministries, divisions and entities. The audit report was finalised after reviews of Internal and External Quality Control Committee meetings with the objective of ensuring parliamentary oversight over the expenditure incurred by federal ministries and divisions.

It reviewed financial systems, transactions and evaluation of compliance with applicable statutes and regulations, the probity and propriety of administrative decisions taken and to highlight cases of irregular expenditure or waste of public money.

The evidence was primarily gathered by applying procedures like inquiries from the management, review of monitoring and progress reports and examination of payment vouchers. Desk audit was carried out before initiating field activities which included performing of audit tests and analytical procedures to evaluate internal controls and to assure that payments were validated by proper supporting documents, approval of competent authority and expenditure was incurred in accordance with the approved budget.

It was noted with concern that for most of the entities audited during 2019-20 it was noticed that the internal audit units were non-existent. Instances of internal control failures were also noted which resulted in irregularities and loss of public money. Similarly, the permanent feature of internal audit reports was found missing in majority of the audited organisations.

The report claimed credit for positive impact of its previous audit reports as the system of issuance of supplementary grants got streamlined. “Finance Division is now issuing Supplementary Grants only in exceptional cases and that too after the approval of the Federal Government,” it noted.

Published in Dawn, June 29th, 2020