REPORT
OF THE
PUBLIC ACCOUNTS COMMITTEE
ON THE ACCOUNTS OF THE FEDERATION
FOR THE YEAR
2000-2001
NATIONAL ASSEMBLY SECRETARIAT ISLAMABAD
T A B L E O F C O N T E N T S
Page Nos
01. Preface .............................................. (iii)
02. Composition of Public Accounts Committee ............. (iv)
03. Executive Summary .................................... (v)
04. Excess Budget Statement for the Year 2000-2001 ....... (xxxv)
Reports of the Ministries/Divisions
05. Cabinet Division ................................... (1)
06. M/O Commerce ....................................... (26)
07. M/O Communications ................................. (40)
08. Council of Islamic Ideology ........................ (1219)
09. M/O Defence ........................................ (134)
10. M/O Defence Production ............................. (323)
11. Economic Affairs Division .......................... (357)
12. M/O Education ...................................... (366)
13. Election Commission of Pakistan .................... (1219)
14. M/O Environment, Local Government and .............. (399) Rural Development
15. Establishment Division ............................ (1219)
16. Finance Division ................................... (403)
17. M/O Food, Agriculture & Livestock .................. (456)
18. M/O Foreign Affairs ................................ (495)
19. M/O Health ......................................... (527)
20. M/O Housing & Works ................................ (582)
21. M/O Industries & Production and .................... (609) Special Initiatives
22. M/O Information & Broadcasting ..................... (684)
23. Information Technology & Telecom Division .......... (715)
24. M/O Interior ....................................... (741)
25. Kashmir Affairs and Northern Areas ................. (802) (KANA) Division
26. M/O Labour, Manpower & Overseas Pakistanis ......... (823)
(i)
Page Nos
27. M/O Law, Justice & Human Rights ................... (1223)
28. M/O Minorities, Culture, Sports, .................. (842) Tourism & Youth Affairs
29. Narcotics Control Division ........................ (1220)
30. National Assembly Secretariat ..................... (1220)
31. Pakistan Atomic Energy Commission ................. (1220)
32. Parliamentary Affairs Division .................... (1220)
33. M/O Petroleum & Natural Resources ................. (853)
34. M/O Planning & Development ........................ (903)
35. M/O Population Welfare ............................ (1220)
36. M/O Ports & Shipping .............................. (908)
37. President Secretariat ............................. (1221)
38. Prime Ministers Inspection Commission ............ (1221)
39. Prime Ministers Secretariat ...................... (1221)
40. M/O Privatization & Investment .................... (927)
41. M/O Railways ...................................... (933)
42. M/O Religious Affairs, Zakat & Ushr ............... (979)
43. Revenue Division (CBR) ............................ (1007)
44. States & Frontier Regions (SAFRON) Division ....... (1107)
45. M/O Science & Technology .......................... (1221)
46. Senate Secretariat ................................ (1222)
47. M/O Social Welfare & Special Education ............ (1153)
48. Statistics Division ............................... (1160)
49. Supreme Court of Pakistan ......................... (1222)
50. Wafaqi Mohtasib Secretariat ....................... (1222)
51. M/O Water & Power ................................. (1168)
52. M/O Women Development ............................. (1202)
(ii)
P R E F A C E
Under the Constitution of the Islamic Republic of Pakistan, the disbursement from the Federal Consolidated Fund requires approval by the National Assembly of Pakistan. While authorizing huge sum of the tax-payers money, the Assembly has a right to reassure itself that the moneys so granted were steered to the intended purpose and were spent prudently and in accordance with rules. The Assembly oversees expenditure through its Committee on Public Accounts, on the basis of Appropriation Accounts, Finance Accounts and Audit Reports prepared by the Auditor-General of Pakistan. The said reports are tabled in the National Assembly.
No money can be spent on any service over and above, for which it
was granted by the National Assembly. Excess expenditure/savings in the grants, if any, is viewed seriously. The PAC examine with reference to the facts of each case, the circumstances leading to such saving/excess expenditure, and make appropriate recommendations.
The Public Accounts Committee as such has a highly sensitive
assignment. It has to base its work on the reports of the Auditor General of Pakistan. The PAC through its constant efforts has been able to complete the examination of Auditor Generals report for the year 2000-2001. The report of the PAC to the National Assembly is the final act in process of legislative oversight of public expenditure. Malik Allah Yar Khan, Chairman PAC and all Members of the PAC deserve appreciations for completing this credible task.
The drafting and preparation of this Report has been possible due
to the hard work, concerted efforts and diligence of Mr. Moin-ul-Islam Bokhari, Joint Secretary (PAC), Mr. Khalid Mahmood, Officer on Special Duty (PAC), Mr. Hamid Raza Mughal, Data Processing Supervisor and the staff of the Public Accounts Committee Wing of the National Assembly Secretariat. They deserve appreciations for their excellent work.
(KARAMAT HUSSAIN NIAZI) Secretary
National Assembly Secretariat
Islamabad, the September 17th, 2007
(iii)
COMPOSITION OF PUBLIC ACCOUNTS COMMITTEE
(1) Malik Allah Yar Khan Chairman
(2) Lt. Col. (R) Ghulam Rasul Sahi Member
(3) Rai Mansab Ali Khan Member
(4) Dr. Abdul Ghaffar Khan Jatoi Member
(5) Sardar Ashiq Hussain Gopang Member
(6) Mr. Riaz Fatyana Member
(7) Mr. Muhammad Safdar Shakir Member
(8) Mr. Ali Akbar Mazhar Wains Member
(9) Maj. (R) Tanvir Hussain Syed Member
(10) Prof. Aasiya Azeem Member
(11) Ch. Wajahat Hussain Member
(12) Kunwar Khalid Younus Member
(13) Makhdoom Shah Mahmood Hussain Qureshi Member
(14) Ch. Qamar Zaman Kaira Member
(15) Syed Qurban Ali Shah Member
(16) Mr. Liaqat Bloch Member
(17) Hafiz Hussain Ahmed Member
(18) Maulana Abdul Ghafoor Haidri Member
(19) Ch. Nisar Ali Khan Member
(20) Mr. Omar Ayub Khan Ex-officio Member Minister of State for Finance
(v)
REPORT OF THE
PUBLIC ACCOUNTS COMMITTEE
ON THE ACCOUNTS OF THE FEDERATION
PAKISTAN
FOR THE YEAR 2000-2001
EXECUTIVE SUMMARY
Parliamentary control over public finance in Pakistan
is exercised in two stages: the proposals stage and the
results stage. At the first stage, the government comes
forth with a Budget proposal for National Assemblys
approval. The government must get the financial nod of the
Public representatives to give effect to its policies and
programmes. The second stage relates to the control over the
expenditure of public money. This is the stage where the PAC
comes into picture when it examines the accounts of the
Federal Government compiled by the Controller General of
Accounts (CGA) and the Auditor General of Pakistan. This
process assigns responsibility to the public representatives
to keep a check on public expenditure. Under Article 171 of
the Constitution of the Islamic Republic of Pakistan, the
Auditor General of Pakistan submits Annual Audit reports to
the President who causes them to be laid before the National
Assembly. For a detailed scrutiny, these reports are
referred to the Public Accounts Committee. The Rules of
Procedure and Conduct of Business in the National Assembly,
2007, govern the functions of the Standing Committee on the
Public Accounts.
2. After the constitution of the current National
Assembly of Pakistan in November 2002, the Public Accounts
Committee met for the 1st time for the election of its
Chairman on April 10, 2004. The Committee was briefed by the
(ix)
National Assembly Secretariat about its functions and the
pending work on April 16, 2004. The Auditor General of
Pakistan briefed the PAC about his Department on April 17,
2004. The PAC thereafter, took up Auditor Generals Reports
for examination/discussion.
3. In order to create a productive atmosphere and for
effective working, the PAC has institutionalized the
following guiding principles: -
(1) During the discussion on the Audit Reports, pertaining to Ministries/Divisions/Departments, the names of the persons involved in the irregularities will not be divulged so that the chances of prejudice, victimization, personal liking or disliking or any sort of bias may be warded of.
(2) The Principal Accounting Officers (PAOs)/ Secretaries of the Ministries/Divisions, who represent them in the PAC meetings, were expected to be fair. They should not press on concealment of the irregularities.
(3) It is a joint responsibility of the elected public
representatives and the government functionaries
to protect the national interest.
(4) The Principal Accounting Officers (PAOs) must ensure personal attendance in meetings of the Committee and PAC related communication must be given top priority.
(5) All functionaries of Ministries/Divisions appearing before PAC must come fully prepared in
order to promptly respond to the queries of the Committee.
(x)
PAC REPORTS
4. The Ad-hoc PAC, during the suspension/dissolution
period of the National Assembly, discussed the Audit reports
for the years 1996-97 & 1999-2000 and prepared its Reports,
which were disposed off after the approval of the then Chief
Executive/President.
5. There were 09 Auditor Generals Reports pending
examinations, when present PAC met first time in April 2004.
The primary objective of the PAC, right from the beginning
was to dispose off unfinished work pertaining to previous
years, which was an uphill task. For the speedy disposal of
pending reports, the Committee constituted four sub-
committees and allocated two years audit reports to each one
of them.
6. The PAC started taking up for its examination the
Federal Accounts/Auditor Generals Reports for the year
2000-2001 from 25th May 2004. This was the Report containing
the largest audit paras (6308 audit paras). The Committee
met regularly at least once or twice in a month to consider
this Report, keeping in view the schedule of the National
Assembly sessions. The PAC held 27 sessions of 3-4 in days
in each month and held meetings for 118 days during that
period. During the said period, the Committee also held
double sittings.
(xi)
APPROPRIATION ACCOUNTS OF THE FEDERAL GOVERNMENT
7. Annually compiled Appropriation Accounts of the Federal
Government bring out the position of budgetary control of
the government. Expenditure against each grant is discussed
by the Committee with the respective Principal Accounting
Officer in the context of public funds placed at their
disposal by the National Assembly, and actual spending by
the departments under their control. Financial control and
budget management also came under detailed review.
8. In the course of examination of the Appropriation
Accounts for the year 2000-2001, the Committee reviewed
working of 170 grants, whereas, the sub-committee reviewed
186 grants in Appropriation of Accounts for the year
1995-96. The Committee came across situations where excesses
and savings were a regular feature. There was a liberal
resort to supplementary grants, which in certain cases were
obtained, towards close of the financial year, even though
the original allocation was not consumed fully. Excesses
even after receipt of generous supplementary allocations
were also found in some cases.
9. The Committee repeatedly expressed concern over the
state of financial indiscipline. While examining
Appropriation Accounts in number of cases, noticed that the
Principal Accounting Officers (PAOs) were usually not
equipped with the skilled assistance at the base level i.e.
the Accounts Officers, who should maintain the Accounts. In
most of the Ministries/Divisions/Attached Departments and
(xii)
subordinate offices, it was observed that the PAOs were not
vigilant enough to get the accurate budgetary estimates
prepared for the next year or to monitor the flow of the
expenditures through a proper system of internal control.
The result was that a large number of cases of savings and
excesses in spending the budgetary grants surfaced. In a
country where it is difficult to mobilize funds for the
urgent needs for the development projects, the proper
budgeting is very essential i.e. if we collect Rs one
billion as revenue and spent Rs two billions, the available
funds have to be rationed. If adequate budgetary allocation
has been made to one department of the government, the other
departments gets less, even a saving by one department,
which is not diverted to a needy project in another
department in time, is a national loss. The Committee
cautioned the Ministries and Divisions that strict notice
would be taken of budgetary transgressions.
10. In some cases the Committee observed variations in the
figures of various components of the grant, although total
amount of expenditure shown by the Office of Accountant
General of Pakistan Revenue (AGPR) and Administrative
Departments concerned were in agreement. The Committee
advised the Controller General of Accounts (CGA) and all
concerned to look into the matter and take corrective
measures.
11. The most effective safeguard against misuse of public
funds lies in creating some arrangement in each
Ministry/Division that is mesh around effective internal
controls/audit system. Strengthening the internal control
(xiii)
is, therefore, vital to good governance. In some
Ministries/Divisions/ Departments and their subordinate
offices, the Committee noticed that the Officers dealing
with their Accounts were not trained for such assignments,
resulting weak internal budgetary controls. Therefore, the
Committee directed for appointing the Chief Accounts/
Finance Officers in the Ministries/Divisions for rendering
the required assistance to the PAOs.
COMMENTS ON REPORTS OF THE AUDITOR-GENERAL
12. It is a fundamental principle of any parliamentary
system that each Federal, Provincial and District Government
must be held responsible to the legislature
(by whose authority it governs) and through the legislature
to the citizens at large. This includes being held to
account for the Governments use of taxpayers money, which
is reported annually by the Auditor General of Pakistan in
our case. Examination of all reports of the Auditor-General
of Pakistan pertaining to the money spent by Federal
Ministries and Departments is a responsibility, which the
PAC exercises on behalf of the National Assembly. These
reports are in many volumes. These Federal spending are
examined from different perspectives which include: review
of financial transactions from regulatory, propriety and
procedural points of view, comprehensive review of
performance of Organizations, comments regarding future
plans of public entities, comments arising out of accounting
documents, special studies of various activities, etc.
(xiv)
13. Many significant issues surfaced during the Committee
deliberations on the Report of the Auditor General. A brief
and to the point replies by the PAOs and the directives
issued by the PAC as a result of discussion on each para
were issued for the necessary actions by the PAOs at the
culmination of each PAC meetings which are appended to the
report. Some of the significant issues for the attention of
the House are in the succeeding paras.
SIGNIFICANT ISSUES
14. It was regularly observed that the response of the
Ministries and Departments to the audit observations is not
satisfactory. Even the routine matters, which could easily
have been sorted out between the audit and Departments
concerned do not receive timely attention. The Committee did
receive the required response from the Departments after the
formal notices for its meetings were issued, however, it
does not mean that all cases reported in Audit Reports are
kept pending till the review by the PAC. To arrive at some
agreeable solutions of the issues contained in the audit
paras before the PAC meetings an important forum of the
Department Accounts Committee (DAC) was activated. The
result of the DAC meetings proved to be very useful and it
helped in accelerating the disposal of issues by the PAC.
The Committee has emphasized that in future the settlement
of audit observations and reconciliation of accounts would
be the primary responsibility of the Principal Accounting
Officers. The PAC directed the
Ministries/Divisions/Departments to.-
(xv)
(a) take necessary action by holding the meetings of
DACs on 01-02 months interval basis to review
audit paras at the earliest opportunity;
(b) review, at regular interval, the progress of all
the pending audit paras;
(c) initiate disciplinary action in the cases in time,
where required; and
(d) complete action at their end and try to settle
disagreements with the Audit where possible,
within three months of the receipt of Audit
Report.
15. Generally, it was observed that some of the Principal
Accounting Officers (PAOs)/Head of the Corporations/
Autonomous bodies either hesitate to appear before the PAC
personally, even when attended the meetings, they were not
prepared fully. During the meetings, they were often obliged
to seek the assistance of their subordinates, sometimes at a
very low level. This practice needs to be changed.
RELUCTANCE TO PRODUCE RECORD TO AUDIT
16. The PAC time and again observed the reluctance of
Ministries/Divisions to produce the required record to the
Audit, resulting unnecessary audit objections, which also
consume valuable time of the PAC. The Committee directed
that the proper record be maintained and produced before the
Audit as and when demanded.
(xvi)
COURT CASES
17. It was noticed that the Ministries/Divisions did not
take timely actions to defend court cases effectively at an
appropriate level. Sometime PAOs were observed to have been
assisted in such matters by an Officer, who was not even
conversant with the facts of such cases. Serious efforts
were not made to get the stay orders vacated in numerous
cases with the result that recoveries and administrative
actions were delayed. The PAC felt concerned about this
state of affairs and directed for taking effective measures
to arrest this tendency in the public interest.
VIOLATION OF GENERAL FINANCIAL RULES
18. General Financial Rules (GFRs) were not observed by the
Officers/Officials of some Departments while spending public
funds placed at their disposal. The canons of propriety laid
down in the GFRs need to be emphasized by the PAOs in
respective Departments/Organizations. Every official or
Institution must abide by the General Financial Rules (GFRs)
while spending funds placed at their disposal. The canons of
propriety laid down in the GFRs provide that every officer
incurring or authorizing expenditure from public funds
should be guided by the high standards of financial
propriety. Among the principles, on which emphasis has been
generally laid, are as under:-
Every public servant should exercise the same
vigilance in respect of expenditure incurred from
public money, as a person of ordinary prudence
would exercise in respect of expenditure of his
own money;
(xvii)
The expenditure should not be, prima facie, more
than the demand; and
No authority should exercise power of sanctioning
expenditure to pass an order that would be
directly or indirectly disadvantageous to the
national exchequer.
ISSUES OF PUBLIC IMPORTANCE
19. The PAC took notice of the under-mentioned issues due
to their public importance:-
(a) Stock Exchange Crises - 2005
(1) The Committee noticing the crises called all
the stake holders at its meeting on 2nd April
2005. Mr. Yasin Lakhani, Chairman, Karachi Stock
Exchange, Mr. Abdul Waheed Jan Chairman, Islamabad
Stock Exchange, Mr. Asif Zafar, Chairman, Lahore
Stock Exchange alongwith the Managing Directors of
respective Stock Exchanges participated. Mr.
Muhammad Iqbal Hussain, Senior Joint Secretary
(Investment), Finance Division also attended the
meeting.
(2) While briefing the PAC on the issue
Mr. Tariq Hassan, the then Chairman, Security and
Exchange Commission of Pakistan (SECP) and his
team informed the PAC about the causes of sudden
plunge in the KSE index with a ripple effect on
stock markets in Lahore and Islamabad. The reason
behind the market decline was alleged to be the
deliberate manipulations, which needs a prob. It
was also possible that the market participants
(xviii)
deliberately sold their shares in the market in
order to create a bearish sentiments and to put
pressure on the SECP with regard to its reform
agenda, covering phase-out of COT (carry over
transactions)/BADLA and abolishment of group
account in CDC. About the trading activities in
the market, the SECP informed that future market
was a relatively new concept in the country, which
remained low over the last two years. However,
trading in the market started picking up in
January 2005. In March, heavy volumes were
witnessed over the futures counters. He also
informed that it came to our knowledge that some
major operators, banks, DFIs and NBFCs, purchased
shares in the ready market and subsequently sold
them in the futures market. The majority of
sellers in the futures market were big operators,
whereas the buyers were small brokerage houses.
The bearishness in the market reduced the
liquidity and resultantly the buying institutions
decided not to square their sales positions to
settle.
(3) An analysis of the down fall in the market
presented before the PAC revealed that the down
fall in the index was due to substantial decline
in share prices of OGDC, PTCL, PSO, POL, NBP and
PPL. The PAC was informed that OGDC alone pushed
the index down by 44%, PTCL by 15%, PSO by 3%, POL
by 2% and NBP by 4%.
(xix)
(4) The Chairman, SECP further informed that the
SECP would further strengthened the risk
management measures after this decline. The PAC
suggested that the proposed Task Force, headed by
Mr. Justice Saleem Akhtar, should determine the
factors that actually led to the crash, identify
the responsible persons and Institutions, so that
strict action is taken against those found
involved in the manipulated practices. Suggesting
what would form some of the Terms of Reference for
inquiry by the Task Force, may include the
following:-
(i) the excessive buying positions by several brokers in the futures market, who were not able to get an exit opportunity due to the continuous decline in the market;
(ii) the sellers in the March, future contracts, who were carrying hedged position from ready market and then decided not to square
up their positions; and
(iii) withdrawal of funds by the financers and how the downward circuitbreakers blocked their exit opportunity from the market.
(5) The PAC expressed its displeasure to the
Chairman SECP for not taking timely actions to
avert the mishap. The Committee further directed
that the matter should be investigated at an early
date and the findings should be submitted to the
Standing Committee of the National Assembly on
Finance & Revenue for further deliberations. The
SECP should streamline their Rules and Regulations
so that such crises are averted in future.
(xx)
(b) Sugar Crises - 2006
The PAC took up the Sugar crisis prevailing
during the year 2006. Secretary, M/O Food,
Agriculture & Livestock briefed the Committee that
the yield of sugarcane in 2005-2006 was about 48.8
million tons, whereas the average yield of
sugarcane during the year 1996-2006 came to about
47.6 million tons. The reason for the sugar
shortage was, due to decline in sugarcane crop by
12% in the year 2004-2005 and 6% in
2005-2006.
(2) The price of sugar in the local market was Rs
26.71 per kg and in international market
US$ 298.22 per ton, in October 2005, followed by
in November Rs 27.50 per kg & US$ 295.46 per ton,
in December Rs 28.47 per kg & US$ 335.00 per ton,
in January, 2006 Rs 29.49 per kg & US$ 390.84 per
ton, February Rs 35.56 per kg & US$ 443.44 per
ton, March Rs 35.61 per kg & US$ 451.31 per ton
and in April Rs 36.77 per kg & US$ 467.88 per ton.
(3) Following was attributed to the sugar price
hike in the country:-
International Prices went up 40% since December 2005.
Domestic Prices also went up 30% since December 2005.
(xxi)
Increase in ex-mill price aligned with import parity.
The prices of raw material also went up averagely 40%.
Reluctance of the private sector to import sugar during 2006 despite duty free imports.
(4) The Government took following remedial steps to reduce sugar prices:-
Several meetings were held with Pakistan Sugar Mills Association (PSMA) to reduce sugar prices.
Augmented supply with imports by TCP.
Private sector encouraged to import sugar.
Import of raw sugar was also allowed since December 2004.
Import of refined sugar without any restriction on its quantity allowed since February 2005.
(5) The Government also constituted a Secretaries
Committee during March 2006 under the Chairmanship
of the Advisor to Prime Minister on Finance to
formulate medium and long term strategy to ensure
stability in supply and prices of the sugar.
(6) In order to reduce the prices, the Government
allowed import of refined sugar from January to
September 2005, 0.622 million tons, whereas the
import of raw sugar in the same period was 0.282
(xxii)
million tons. In the current year the import of
refine sugar from October 2005 to April 2006 was
0.309 million tons; whereas the import of raw
sugar within the current year from October 2005 to
February 2006 was 0.270 million tons.
(7) Regarding the role of TCP in sugar prices,
the Chairman TCP informed the Committee that the
TCP imported about 0.191 million tons in July to
September 2005 and 0.059 million tons during the
year 2006.
(8) Dr. Ashfaq Hassan Khan, Economic Advisor
Finance Division, informed the Committee that
during 2003-2004, the production of sugarcane was
53 million tons, which produced about 4.0 million
tons of sugar. A carry over stock of half a
million ton was available; therefore, 4.5 million
tons sugar was available; whereas our requirement
was from 3.3 to 3.5 million tons. Under
commercial, market mechanism, if we have something
surplus, the prices decrease in the market.
Keeping surplus stock with Mills, one way was to
export the surplus sugar. However, the Government
decided, to store the sugar instead of exporting.
In view of the Mill owners difficulties, the
Government purchased 4 lac tons sugar from mills
through TCP and stored it within the Mills
premises. The Government purchased this sugar from
the mill owners with the condition that they will
(xxiii)
make payments to the growers by 30th June 2004.
Some Sugar Mills made payments to the growers and
some did not. The majority of the farmers remained
without payments. In the next sugar season, 2004-
2005, the farmers cultivated less sugarcane.
Therefore, the sugarcane produce decreased from 53
million tons to 47 million tons. Consequently 3.2
million tons less sugar was produced. The stock of
sugar purchased by the Government during last year
was available to meet the requirements. Therefore,
the prices of sugar remained stable during that
year.
(9) On a question, it was stated that the middle
men role was that, they purchased sugarcane from
farmers @ Rs 10-25/- less than the official rate.
The same sugarcane was sold to the same sugar mill
on official rates carrying loss to growers.
(10) A PAC Member pointed out that 4 lac tons raw
duty free sugar was imported by some sugar mills
at the rate of US$ 200 per ton which comes to
Rs 20/- per kg and marketed at higher rates. He
also read out the names of some such sugar mills
from press clippings.
(11) A Government, decision was referred,
according to that the Sugar Mills cannot keep its
stock/stores more than 25% of their production. It
was pointed out that this decision was not
implemented.
(xxiv)
(12) The PAC observed that the Economic
Coordination Committee (ECC) allowed import of
duty free raw sugar to control runaway domestic
prices and consequently some 20 mills imported
400,000 tons duty free raw sugar. When the raw
sugar was purified by local mills, it cost
Rs 21-22 per kg and the millers should have sold
the sugar in the market at reasonable rates.
Ironically, the millers were noted to have, not
only sold sugar at a price exceeding Rs 42/- per
kg, but seem to have paid sales tax at the control
price of the sugar fixed at Rs 29/- per kg,
against the spirit of ECC decision. It was
astonishing as to why did the consumers not
benefit from import of duty free raw and refined
sugar? Why were the rich mill owners allowed to
pocket huge profits without any check? Large
number of mills have been hoarding sugar, in
defiance of the Govt. orders. Some new mills have
been set up in the cotton growing areas. The
Committee was not satisfied with the answers given
by the Officers of the Ministries to the questions
raised at the meeting. The Committee observed that
previous year, TCP had purchased 400,000 tons of
sugar from various mills and the stock was still
lying with the sugar mills, when the crisis
ensued. The mills seem to had refused to hand over
the sugar to the TCP despite the latter having
paid the money a year ago.
(xxv)
(13) The Committee concluded that the short fall
in sugar cane produce was mainly because of the
persistent failure of mill owners to pay farmers
for their produce. The Govt. could not even press
the mills to start crushing season in time, during
October, which was started in December as it
suited the mills. Expressing its concern on the
sugar cartels power, the PAC suggested to the
Govt. to enhance the powers of the Sugarcane
Commissioners, as at present, they cant even
enter sugar mills without millers permission to
investigate anything. The sugar cane crushing
season be ensured to start in October every
year. Payments to farmers should be ensured
alongwith removal of illegal Kandas. Through
good governance and better center-province
co-ordination such crisis can be averted in
future.
MAJOR FINDINGS/RECOMMENDATIONS PERTAINING TO DIFFERENT MINISTRIES/DIVISIONS
20. During discussion on the Auditor Generals Reports
pertaining to various Ministries/Divisions, the PAC arrived
at some of the major recommendations as under:-
(1) In the Ministry of Industries and Production, the
Committee found a number of cases regarding wasteful
expenditures and losses. In one case, the management of
Pakistan Steel Mills unnecessarily paid Rs 318.164 million to
the House Building Finance Corporation on behalf of allottees
of a housing project. The PAC directed the PAO to take action
against the persons concerned, who were responsible for
(xxvi)
wasteful expenditures. However, the Committee recommended
that the public sector Organizations should not involve
themselves in such projects and the Finance Division should
not approve such schemes in future.
(2) While discussing the Audit Report on the Ministry of
Law, Justice and Human Rights, the Committee noticed lack of
judicial infrastructure and shortage of judges for providing
expeditious and in expensive justice to the people. The
Committee observed that the system to monitor the
performance of lawyers in pleading the government cases was
poor. In the opinion of the Committee, it was still
difficult for a poor man in the street to get the justice
expeditiously. The people have to wait for a long time in
this regard. It was observed that there was an urgent need
for the Government to revamp the system of lower judiciary,
meet the shortage of judges and to arrange for their
appropriate training so that the common man should get the
justice expeditiously.
(3) While examining the Audit Report, pertaining to
Ministry of Information and Broadcasting, the Committee
observed the loss of Rs 18.06 million due to non-recovery of
advertising dues from different Agencies by the PTV
authorities and directed to expedite the recovery process,
also directed action against the officer(s) concerned
responsible for not recovering departmental dues in time.
Further, the Committee also directed the MD PTV to see
himself whether airing some songs/ advertisements which do
not go alongwith values prevailing in our social set up, was
in order. Some examples of such songs being played were also
narrated.
(xxvii)
(4) (a) From the Annual Accounts of Ministry of Finance,
the Committee noticed that the Ministry was required to get
the excess expenditures of the Ministries/Divisions
regularized from the National Assembly as per provisions of
Article 84 of the Constitution, which has not been done for
some past years. The Committee directed the Ministry of
Finance to expedite the matter and suggested a joint
Committee of the Secretary Finance Division with the
Controller General of Accounts and Auditor Generals of
Pakistan for streamlining the process of getting excess
expenditures (excess budget statements) approved from the
National Assembly in time.
(b) The financial impact of the pay hike in some of the
public sector Organizations on the lines of private sectors
will cost high to the public exchequer. The stunning pace
with which the private sector is increasing their salary
bills many times, as compared to the existing salaries
structure is a source of concern. The public sector
Organizations now seems to have joined the club by bridging
the gap with substantial rise in their salary structure i.e.
PIA, CAA, PSO, SNGPL and SSGPL are some of the examples. The
Government needs to address this tendency to avoid
un-necessary increase in the expenditure, which ultimately
burdens the common man, through increase in revenue
collection.
(5) The Committee observed that the emphasis of
Privatization Division/Commission appeared to be on disposal
of profitable units. There is a possibility of the
Government to stuck up with units which have been a
(xxviii)
perpetual drain on the public resources, while
the profitable units which balance the loss making
Organizations/Units would be disposed of speedily. The
National Refinery, a profit-earning unit, was privatized in
2006, the PSO is next in line. As was reported in the PAC
meeting, the PSO earned a net profit of Rs 1.4 billion for a
period of six months from 1st July to 31
st December 2006. The
Committee, therefore, recommends that the selection for
privatization of such units should be made with utmost care.
The PAC showed its displeasure on the use of proceeds of the
privatization for Budgetary Financing, it observed that it
was in violation of the Privatization Commission Ordinance
No.LII of 2000. The Committee also desired for a joint report
on this issue from a Committee comprising of the Secretary
Finance Division, Auditor General of Pakistan, Controller
General of Accounts and Secretary Privatization & Investment
Division.
(6) In the National Highway Authority (NHA), Ministry of
Communications, the Committee found number of cases involving
fraudulent payments of million of rupees, huge excess
payments, huge losses and non-adjustments of advances. The
Committee recommended initiation of disciplinary and criminal
proceedings against the persons responsible for violating
Financial Rules/Instructions. Taking effective steps to
improve internal financial control in the National Highway
Authority for better financial management was also desired.
The NHA was directed to award all contracts in future on open
tender basis, not involving itself in individual negotiations
with the contractors.
(xxix)
(7) (a) The Committee scrutinized the accounts of the
Central Board of Revenue Division (CBR) and observed that in
eighteen (18) audit paras, regarding central excise duty,
the Department did not provide the required record to the
Audit for scrutiny. The Committee recommended that in
future, the Officer responsible should be proceeded against,
who fail to provide the required record to the Audit for its
examination in time. The Committee directed the PAO to look
into the causes of not producing the required
documents/record to the Audit.
(b) The Committee also noticed that on account of custom
duty and sales tax, CBR authorities failed to recover
Rs 287.247 million from automobile assemblers. The Committee
directed to expedite the recovery from concerned companies
and desired initiating disciplinary proceedings against the
person(s), who failed to realize it.
(c) Certain deficiencies were observed in the revenue
collections activity. In the area of income tax collection,
although the results reported by the CBR under its new
policy have been viewed to be very encouraging. However,
audit paras related to collection of sales tax, excise duty
etc. revealed short realization of revenue worth millions of
rupees. The CBR needs to put in sustained efforts to bring
more improvements in such areas. Audit also
high-lighted certain deficiencies in the areas of
finalization of adjudication cases, evasion of taxes and
insufficiency of internal control. This needs special
attention by the Secretary Revenue Division.
(xxx)
(8) While discussing the Report on Ministry of Religious
Affairs, Zakat & Ushr, the Committee observed that the
Ministry spent huge amount of funds to hold Seerat
Conference each year. The Specific objectives of conferences
were not defined. In the absence of particulars of the
participants and criteria for their selection, the
expenditure on TA/DA hotel charges could not be qualified.
The Committee desired the Ministry to prepare the Standing
Operating Procedures (SOP) regarding holding Seerat
Conference in future.
(9) From the Fifth Annual Accounts of the Statistics
Division, the Committee observed that the 5th Census was due
in 1991 but was undertaken in 1998 with the delay of seven
years instead of the required ten years. The Census plays a
very important role in national planning and its
development. Therefore, the Committee recommended that
Census should be mandatory after every ten years and it
should take place without any political interference. For
this purpose, if amendments are required in the Census
Ordinance No. X of 1959, the same should be done.
(10) In the Ministry of Defence Production, the Committee
found several instances of the huge recoverable amounts from
different Companies/individuals. The Committee recommended
to review current contract system in the Ministry and its
subordinate Departments, black list such contractors, who
defaulted and circulate their lists amongst other
Departments of the Ministry as well as other
Ministries/Divisions.
(xxxi)
(11) During the examination of Special Audit Report on
Ministry of Defence/PIA, the Committee expressed its concern
on the PIAs losses and its officials involvement in
irregularities. The Committee recommended to introduce
effective accountability system in PIA to make the
Organization economically viable. Further, the PAC did not
approve the suggestion of Secretary, Ministry of Defence
regarding paying more attention to current reports and
forgetting past years audit reports.
(12) (a) In the examination of the Appropriation Accounts
of the Ministry of Food, Agriculture & Livestock, the
Committee observed huge savings in some of the budgetary
grants without plausible reasons. The Committee desired the
Ministry to submit an explanation on the following for
further action:-
a) For not properly planning the budgetary estimates in the beginning of the financial year, resulting huge savings.
b) Why the Finance Division was not approached for obligatory payment to FAO (UNO) during the early months of the financial year?
c) Reasons for not approaching the Finance Division
well in time for the release of Rs 53 million required for the research.
(b) The PAC also directed the Controller General of
Accounts to analyze the Ministrys point of view on
Appropriation Accounts and submit its report to the
Committee. It was also directed to the PAO that in future
budget estimates should be prepared with utmost care and
diligence.
(xxxii)
(c) The Committee also found that Fertilizer Import
Department of the Ministry imported a huge quantity of DAP
fertilizer, samples of which were later on got tested from
different laboratories. On the report of the laboratories,
the cargo was required to be rejected. But the Department
failed to take appropriate action in time and accepted the
defective cargo causing loss of millions of US dollars to
the public exchequer. The Committee directed the PAO to take
appropriate steps to avoid re-occurrence of such events.
(13) During examination of accounts pertaining to the
Ministry of Petroleum & Natural Resources, the Committee
observed that the oil marketing companies and Refineries are
maneuvering oil prices to their advantage and unnecessary
burden is being put on to the ordinary citizens. Policies of
oil pricing, refinery margins, distribution margins,
deregulating the oil imports was causing benefit of approx.
$ 7-8 billion every year to the Multi-National and the
National Companies in the oil & gas sector. The Government
should take notice of this cartel.
AUDIT OF PUBLIC SECTOR ORGANIZATIONS/CORPORATIONS
21. The increasing tendency to exclude the audit of public
sector bodies, such as Corporations from the purview of the
Auditor General dilutes the concept of sustainable
accountability through legislative oversight. Reports of the
private Auditors appointed by the Management Of Public
Sector Corporations/Enterprises are not presented to the
legislature. Private Sector Auditors are appointed and paid
by these Corporations/Enterprises; therefore, the issue of
(xxxiii)
conflict of interest is always there. With a diluted
statutory audit, tendency and chances of misusing public
resources may increase. The Committee felt a need to
ascertain whether some provisions of Power and Functions of
Auditor General of Pakistan Ordinance No. XXIII of 2001, the
Companys Act and other Acts/provisions of the rules,
regulating the audit of accounts of Public Sector
Corporations cited in PAC meetings, have a restrictive
effect on the jurisdiction of the Auditor General and
thereby encouraging other newly created Authorities and
Autonomous Bodies to avoid audit by the Auditor General.
This impacts the legislative oversight of public funds.
(2) Further, in some cases it was contested that the
decisions of the Board of Directors of different Public
Sector Enterprises (PSEs) in which representative of Finance
Division also participated, over ride the normal Financial
Rules of the Federal Government. In order to ensure the
legislative oversight of public funds and to identify such
Organizations/Public Bodies and anomalies in their statues,
the PAC constituted a Committee under the Auditor General of
Pakistan with Secretary Finance and Law, Justice & Human
Rights Divisions as its members
to formulate a comprehensive report, indicating necessary
measures/amendments required in the relevant laws in such
cases.
(3) The above-mentioned Committee in its recommendations
appended in the report has stated that the audit was a
constitutional requirement. It was emphasized that a
constitutional office like office of the Auditor General of
Pakistan should be provided independence as envisioned in
the Constitution of the country. The need for establishing
(xxxiv)
Institution like the Supreme Auditing Institutions (SAIs),
may be underlined, keeping in view the intention of the
Constitution. It was opined since the office of the Auditor
General of Pakistan was based on a basic principle of
accountability of the Government, it was required to put the
regime of law, reflected in the primary and secondary
legislation, in appropriate order so that legislation should
not suffer from infirmity and contradictions. Since the
legislation governing the jurisdiction of the AGP would have
policy consequences for the decision makers, it may be
appropriate to prepare a paper for seeking the Governments
approval. Further, the subject of accounts and audit has
been allocated to the Finance Division vide entry 3 of item
II of Schedule II to the Rules of Business, 1973. The
Finance Division may initially prepare the requisite paper
for seeking the Government approval in consultation with the
Ministry of Law, Justice & Human Rights. Thereafter the AGP
may make a presentation to the President/the Prime Minister
to seek their concurrence to the legislative changes.
(4) The PAC supports the idea of the Committee and
recommend that the Finance Division with the help of
Ministry of Law, Justice & Human Rights should first prepare
a paper highlighting the implications of existing provision,
the economic and administrative consequences of the change
in legislation, seeking Governments approval for reviewing
restrictions on audit jurisdiction of SAI Pakistan keeping
in view the constitutional provisions. The Government should
then take a considered decision in this regard.
(xxxv)
REIMBURSEMENT OF PENSIONERS MEDICAL BILLS
22. (1) The Public Accounts Committee has been approached
by some pensioners, requesting simplification/streamlining
the procedure for re-imbursement of their medical
bills/claims. The pensioners are entitled to re-imbursement
of medical expenses incurred on their treatment. Present
procedure of payment of medical bills/claims involves the
Heads of their Departments. These medical re-imbursements
claims on submission by the retired employees for payment
are processed by their respective Departments from where the
pensioner had retired. Following documents are mandatory
with each claim for pre-audit and payment in the Accounts
Offices:-
(i) budget provision under relevant head of the Department concerned against which the expenditure is to be charged;
(ii) expenditure sanction of the Department
concerned, containing requisite certificates etc; and
(iii) coded classification proforma of the Department
concerned duly signed by the DDO for booking the expenditure against the Department.
(2) At times, the Departments concerned do not accede to
the payment request, stating that the Finance Division have
not provided sufficient funds for the purpose. In view of
the difficulties being experienced by majority of the
pensioners, the Committee suggests that the payment
procedure of medical bills/re-imbursement claims be
simplified. Sufficient funds in this regard are suggested to
be allocated separately to each Ministry/Division/
Department.
(xxxvi)
DEVOLUTION OF POWERS
23. It is evident from above that there is a dire need of
suitable reforms in relevant sectors. The Committee
recommends that the Government through a suitable forum
should take stock of the situation and try to
institutionalize devolution of powers to lower level as much
as possible.
OFFICE OF THE AUDITOR GENERAL OF PAKISTAN
24. The PAC generally appreciates the hard work put in by
the Auditor-General of Pakistan and his Officers in preparing
the Audit Reports. However, there is a need for the audit
staff to be more professional considering the present day
challenges. The Auditors also have an obligation to
constantly update and improve their skills in discharging
their professional responsibilities. They must know and apply
auditing, accounting and financial management standards,
procedures and practices. Should possess a good understanding
of the constitutional, legal and institutional principles and
standards, governing the operations of the audited entities.
This will ensure the fairness, impartiality and competence of
the Auditors.
NATIONAL ASSEMBLY SECRETARIAT
25. The PAC would like to express its thanks to
Mr. Moin-ul-Islam Bokhari, Joint Secretary (PAC), Mr. Khalid
Mahmood, OSD (PAC), Officers and Staff of PAC Wing, National
Assembly Secretariat for their efficient work and support to
the Committee in conducting its deliberations.
(xxxvii)
CONCLUDING REMARKS
26. While submitting this Report to the National Assembly of
Pakistan, the Committee finally recommends that:-
(i) Suggestions, directives and recommendations made by the Committee in this Report and the Actionable Points be accepted for implementation by respective Ministries/Divisions/Departments in the Federal Government; and
(ii) Excess budget statements for the year 2000-2001 be
regularized in accordance with the provisions of the Constitution.
(MALIK ALLAH YAR KHAN) Chairman PAC (KARAMAT HUSSAIN NIAZI) Secretary National Assembly Secretariat Islamabad, the September 17
th, 2007
(xxxviii)
DETAILS OF EXCESS EXPENDITURE
FOR THE YEAR 2000-2001
(xxxix)
EXCESS BUDGET STATEMENT FOR THE YEAR 2000-2001
S.# Name of Ministry/ Division and Date
of Meeting
Grant No. & Name of Grant
Original Grant Supplemen- tary Grant
Final Grant Actual
Expenditure Excess PAC Recommendations
1 2 3 4 5 6 7 8
01.
Interior Division (May 25
th, 2004
70 - Interior Division (OTC)
71,900,000
2,600,000
74,500,000
102,858,611
28,358,611
The PAC expressed its concern over the lack of budgetary control by the Division. The Committee however, regularized the grant with the direction to the PAO to improve the Financial discipline.
73 - Civil Armed Forces (OTC)
3,611,213,000
6,000,000
3,617,213,000
3,663,211,729
45,998,729
The PAC regularized the grant in the light of justification given by the PAO. However, the Committee directed the PAO to improve the budgetary control.
75 - Pakistan Rangers (OTC)
2,161,924,000
88,000,000
2,249,924,000
2,250,086,766
162,766
On the clarification by the PAO, the PAC regularized the grant.
132 - Development Expenditure of Interior Division (OTC)
1,222,025,000
57,002,000
1,279,027,000
2,152,304,737
873,277,737
On the clarification by the PAO, the PAC regularized the grant.
02.
M/O Commerce (November 4
th,
2004)
14 - Commerce Division (OTC)
776,045,000
1,335,000
777,380,000
789,489,065
12,109,065
The PAC regularized the excess with the direction that the Ministry should reconcile the difference in figures with AGPR
(xli)
S.# Name of Ministry/ Division and Date
of Meeting
Grant No. & Name of Grant
Original Grant Supplemen- tary Grant
Final Grant Actual
Expenditure Excess PAC Recommendations
1 2 3 4 5 6 7 8
03.
M/O Railways (March 29
th, 2005
99 - Pakistan Railways (Charged) (OTC)
2,710,753,000
14,094,976,000
----
244,247,000
2,710,753.000
14,339,223,000
5,702,696,035
14,593,810,491
2,991,943,035
254,587,491
The Committee expressed annoyance and directed the PAO to take immediate and effective steps to improve budgetary and accounting system in Pakistan Railways. The Committee felt that the budgetary estimates be prepared with utmost care and diligence.
04.
M/O Information & Broadcasting (April 29
th, 2005
68 - Information Services Abroad (OTC)
116,538,000
1,435,000
117,973,000
139,648,217
21,675,217
After hearing the Ministry's reply, the PAC regularized the grant.
05.
Information Technology & Telecommunication Division (July 5
th, 2005
105 - Information Technology & Telecommunication Division (OTC)
35,333,000
440,000,000
475,333,000
528,104,968
52,771,968
The PAC regularized the grant and directed the PAO to get the excess expenditures regularized.
06.
Kashmir Affairs & Northern Areas Division (September 27
th,
2005)
79 - Kashmir Affairs & Northern Areas and States and Frontier Regions Division (OTC)
111,614,000
1,000
111,615,000
149,730,144
38,115,144
After hearing the Ministry reply, the PAC regularized the expenditures and directed the PAO to get the figures of the Grant reconciled with the Finance Division/AGPR immediately and send report to the PAC Secretariat.
(xlii)
S.# Name of Ministry/ Division and Date
of Meeting
Grant No. & Name of Grant
Original Grant Supplemen- tary Grant
Final Grant Actual
Expenditure Excess PAC Recommendations
1 2 3 4 5 6 7 8
7.
States & Frontier Regions Division (September 27
th,
2005)
80 - Frontier Regions (OTC)
914,908,000
1,000
914,909,000
946,236,691
31,327,691
The PAC expressed its displeasure and commented that when it was an excess expenditure, why the amount was surrendered? It showed bad planning and poor coordination by the SAFRON Division. The Committee regularized the grant and advised the PAO that such lapses should not occur in future. Further the figures of the Grant should be reconciled with the Finance Division and AGPR immediately and report to this effect to be sent to the PAC Secretariat by the Division.
83 - Maintenance Allowances to Ex-Rulers (OTC)
3,748,000
-----
3,748,000
4,147,800
399,800
On the presentation of the Grant, the PAC settled the Grant with the direction to the PAO to strengthen the Budgetary System. The Division was further directed for getting the figures of the Grant and expenditure be reconciled with the Finance Division and the AGPR immediately in a professional way to avoid any financial irregularity. A Report to this effect to be submitted to the PAC Secretariat.
(xliii)
S.# Name of Ministry/ Division and Date
of Meeting
Grant No. & Name of Grant
Original Grant Supplemen- tary Grant
Final Grant Actual
Expenditure Excess PAC Recommendations
1 2 3 4 5 6 7 8
8.
Finance Division (May 9
th to 11
th,
2006)
35 - Superannuation Allowances and Pension (Charged) (OTC)
241,037,000
30,629,776,000
-----
-----
241,037,000
30,629,776,000
557,395,214
32,460,754,247
316,358,214
1,830,978,247
After hearing Ministry reply, the PAC regularized the Grant.
37 - Other Expenditure of Finance Division (OTC)
1,668,456,000
1,151,194,000
2,819,650,000
3,059,999,489
240,349,489
-do-
Servicing of Domestic Debt (Charged)
175,413,014,000
10,098,315,000
185,511,329,000
188,481,449,026
2,970,120,026
-do-
Repayment of Domestic Debt (Charged)
1,628,944,145,000
123,987,561,000
1,752,931,706,000
1,820,662,462,666
67,730,756,666
-do-
9.
Economic Affairs Division (January 18
th, 2007
152 - External Development Loans and Advances by the Federal Govrt. (Charged)
11,299,027,000
-----
11,299,027,000
14,242,970,016
2,943,943,016
The PAC regularized the Grant.
Repayment of Short Term Foreign Credits (Charged)
12,422,500,000
3,450,782,000
15,873,282,000
22,538,806,641
6,665,524,641
The PAC regularized the Grant.
(xliv)
R E P O R T S
(1 )
CABINET DIVISION
1. OVERVIEW
Appropriation Accounts and Annual Audit Reports for the
year 2000-2001 pertaining to the Cabinet Division were
taken up for examination by Public Accounts Committee
(PAC) on August 5th, 2004 and October 16
th, 2006. Audit
also presented Performance Audit Report on National
Archives of Pakistan.
1.1 The PAC having considered Audits point of view and
explanations given by the Principal Accounting Officer
(PAO), made its recommendations in number of cases i.e.
involving loss due to delay in printing and delivery of
lists of polling stations for the Elections 1997,
principles of policy i.e. non-compliance with
constitutional provisions, retention of gifts by the
Prime Minister Secretariat etc.
1.2 During the course of discussion in the meeting, the
Committee issued some policy recommendations, depending
on the nature of the issue, directing the PAO to take
appropriate action.
1.3 There were 109 paras reported by the Audit. These paras
were initially examined by the Departmental Accounts
Committee (DAC) and thereafter were discussed in the
meetings of PAC. 09 paras were recommended for
settlement by the PAC either on the basis of
clarifications given by the PAO or the corrective
measures taken by the Division. The Committee gave
(2 )
directives on 23 paras and 77 paras were sent back to
the Departmental Accounts Committee (DAC) for re-
examination. PAC directed recovery amounting to Rs
169.775 million out of which a sum of Rs 101.492
million has been realized. For the remaining amount,
the Committee directed the Ministry to affect
recoveries within the stipulated time in each case. It
was also decided that the progress of implementation of
the PAC directives would be reviewed in the future
sessions.
In some cases the Committee directed Audit to verify
details/facts, given in certain cases, in defence of
the viewpoint presented by the PAO.
2. IMPORTANT PARAS
2.1 PARA 1.1 (PAGE II-AR)
PRINCIPLES OF POLICY, NON-COMPLIANCE WITH CONSTITUTIONAL PROVISIONS
The PAC conveyed its displeasure on non-observance of
the requirements of the Article 29(1) of the
Constitution and directed the PAO to bring it in the
notice of the Prime Minister.
2.2 PARA 3.3 (PAGES 46-47-AR-FAB) IRREGULAR AND UN-AUTHORIZED EXPENDITURE ON ENGAGEMENT OF A CONSULTANT SELECTED WITHOUT OPEN TENDERS RS 1.408 MILLION
The PAC recommended the PAO to try to get the ex-post
facto approval of the expenditures from the Finance
Division and forward a report to the Committee/Audit.
(3 )
3. GENERAL RECOMMENDATIONS
3.1 The Cabinet Division and its attached department should
follow the Rules of Business in future and initiate the
required reports in time.
3.2 Remedial measures may be initiated by the PAO for
resolving the issue of bad debtors in Printing
Corporation of Pakistan within 03 months. A list of
such defaulters was desired by the PAC before
initiating writing off action of the amount.
3.3 The PAC recommended for privatization of sub offices of
Printing Corporation of Pakistan at Lahore and Karachi
in view of heavy losses being sustained by the
Corporation.
4. ACTIONABLE POINTS
Actionable points arising from the discussion of the
PAC meetings on the Cabinet Division held on August 5th,
2004 and October 16th, 2006 are as under:-
August 5
th, 2004
APPROPRIATION ACCOUNTS (CIVIL) (VOL-1-2000-2001) 4.1 GRANT NO.1-CABINET (PAGE 37-AA)
(Saving of Rs 9,094,257)
Audit pointed out that the grant closed with the saving
of Rs 9,094,257/- which works out to 35.49% of the
total grant. An amount of Rs 10,560,517 was surrendered
which converted the saving into excess of Rs 1,466,260.
The department may explain the excess.
(4 )
The PAO explained to the PAC that excess occurred due
to payment of TA/DA claims to the Minister/Minister of
State which were pending and were paid during the month
of June, 2001.
PAC DIRECTIVE
The PAC recommended the excess in the grant to be
regularized.
4.2 i) GRANT NO.2-CABINET DIVISION(PAGE 39-AA)
(Saving of Rs 75,456,581)
Audit pointed out that the grant closed with the
saving of Rs 75,456,581/ which works out to 12.39%
of the total grant. A sum of Rs 72,075,600/- were
surrendered in time leaving net saving of Rs
3,380,981/-.
ii) GRANT NO.3. EMERGENCY RELIEF AND REPATRIATION (PAGE 45-AA) (Saving of Rs 4,898,001)
Audit pointed out that the grant closed with the
saving of Rs 4,898,001 which works out to 0.93% of
the total grant. A sum of Rs 4.855,001/- were
surrendered in time leaving net saving of
Rs 43,000.
iii) GRANT NO.4 LAND REFORMS (PAGE-47-AA) (Saving of Rs 411,453)
Audit pointed out that the grant closed with the
saving of Rs 411,453/- which works out to 4.24% of
the total grant. A sum of Rs 230,837/- were
surrendered in time leaving net saving of Rs
180,616/-.
(5 )
iv) GRANT NO.5 OTHER EXPENDITURE OF CABINET DIVISION (PAGE 49-AA) (Saving of Rs 25,563,047)
Audit pointed out that the grant closed with the
saving of Rs 25,563,047/- which works out to
10.06% of the total grant. A sum of Rs 19,417,511
was surrendered in time leaving net saving of
Rs 6,145,536.
v) GRANT NO.13. STATIONERY AND PRINTING (PAGE-56AA) (Saving of Rs 14,641,948)
Audit pointed out that the grant closed with the
saving of Rs 14,641,948/- which work out to 25.42%
of the total grant. A sum of Rs 8,642,299 was
surrendered leaving net saving of Rs 5,999,649.
vi) GRANT NO.113 CAPITAL OUT LAY ON LAND REFORMS (PAGE 58-AA) (Saving of Rs 500,000)
Audit pointed out that the grant closed with the
saving of Rs 500,000/. The entire budget provision
was surrendered in time.
vii) GRANT NO-116-DEVELOPMENT EXPENDITURE OF CABINET DIVISION (PAGE 59-AA) (Saving of Rs 5,130,000)
Audit point out that the grant close with the
saving of Rs 5,130,000/-which works out to 21.66%
of the total grant. A sum of Rs 5,100,000 was
surrendered leaving net saving of Rs 30,000.
(6 )
On the presentation of the above mentioned seven grants
by the AGPR, the PAO explained to the PAC that major
reason of the savings in the grants was the cut imposed
on expenditure by the Finance Division.
PAC DIRECTIVE
The PAC recommended the savings in all above grants to
be settled.
AUDIT REPORT PUBLIC SECTOR ENTERPRISES (VOL-II-2000-2001)
4.3 PARA 34 (PAGE 21-ARPSE)
Audit pointed out that the Printing Corporation of
Pakistan (PCP) was incorporated in January 1969 as
private limited company. The Company is wholly owned by
the Federal Government. Principally it is engaged in
the printing of Government Publications. The
Corporations financial health is in critical
condition. Its current assets are less than its current
liabilities by Rs 332.727 million. The accumulated loss
of Rs 552.666 million has eroded the whole paid-up-
capital resulting in negative equity of Rs 434.217
million as on 30-06-2001. Corporation should make
itself cost effective otherwise its continuation as a
going concern is at stake.
The PAO informed the PAC that the critical condition of
the PCP is due to the excess of staff and non-
professional attitude. Presently, the corporation is
trying to improve its efficiency as well as its
marketing strategies and reducing its staff in order to
make the Corporation profitable.
(7 )
PAC DIRECTIVE
The PAC recommended the PAO to privatize the sub
offices of the corporation at Lahore and Karachi as
early as possible. The main Office of PCP in Islamabad
may not be privatized so that the confidential and
essential documents of the Government can be got
printed from here.
4.4 PARA 35 (PAGE 22-ARPSE)
Audit pointed out that the debtors of the Corporation
amounting to Rs 91.133 million as on 31-01-2002
included dues of Rs 76.488 million.
The PAO informed the PAC that in the light of the DACs
recommendations, a Committee would be set up to
consider all the recoverable amounts from different
Ministries/Divisions/ Departments. The PCPs board may
consider to write off the non-recoverable amount.
PAC DIRECTIVE
The PAC directed the PAO to resolve the issue of bad
debtors within 03 months. The committee also directed
the PAO to provide a list of defaulters to the
PAC/Audit before writing off the amounts pertaining to
different Ministries/Departments.
4.5 PARA 39 (PAGE 25-ARPSE)
LOSS OF RS 4.385 MILLION DUE TO DELAY IN PRINTING AND DELIVERY OF LISTS OF POLLING STATIONS FOR ELECTION 1997
Printing Corporation of Pakistan received the work of
printing of the lists of polling stations of National
and Provincial Assemblies in the Gazette of Pakistan
(8 )
Extraordinary Part III, 1997 from Election Commission
of Pakistan. The printing job was required to be
completed and delivered 15 days before the election
date. The printing work was got done by PCP through a
private printer. The printing was delayed and lists of
polling stations were delivered to the Election
Commission after the Election 1997. As a result the
Election Commission refused to pay the bill of Rs 4.385
million.
The PAO informed the PAC that:-
i. An inquiry was conducted to investigate the
matter. It was revealed that printed lists of
polling stations for National and Provincial
Assemblies stood delivered to the Election
Commission in time and elections were conducted on
their basis, however, some extra copies were
required by them for reference/record, which were
slightly delayed due to engagement of PCP for
other important election work segments.
ii. Amount of loss will be placed before the PCP Board
for write off action.
PAC DIRECTIVE
After hearing the PAOs reply on the issue, the PAC
settled the para subject to the verification of record
by Audit. However, the Committee directed the
department that before writing off the amount by the
PCP Board, information may be given regarding such
amount, to the PAC/Audit.
(9 )
4.6 i) PARA 36 (PAGE 22-ARPSE) EXTERNAL AUDITORS OBSERVATIONS
ii) PARA 37 (PAGE 24-ARPSE) LOSS OF RS 146.173 MILLION DUE TO NON ACCEPTANCE OF KTR DIRECTORY, 1996 BY PTCL
iii) PARA 38(PAGE 25-ARPSE) DELAY IN PRINTING OF TELEPHONE DIRECTORIES AND WITHHOLDING OF PCP DUES AMOUNTING TO RS 7.055 MILLIIONS BY PTCL
iv) PARA 40(PAGE 26-ARPSE) IRREGULAR PAYMENT OF BONUS OF RS 2.991 MILLION
v) PARA 41 (PAGE 26-ARPSE) LOSS OF RS 223,240 DUE TO AWARD OF NUMBERING AND BINDING WORK OF BALLOT PARPERS AT HIGHER RATES
vi) PARA 43(PAGE 29-ARPSE) UNJUSTIFIED PAYMENT OF RS 0.369 MILLION TO EX-CASHIER FOR INORDDINATE DELAY IN FINALIZATION OF CASE
PAC DIRECTIVE The PAC directed that the above mentioned 06 Audit
paras may be examined in the DAC meeting and the
Committee/Audit may be informed about the outcome
within 02 months.
AUDIT REPORT ON GOVERNANCE SERIES REPORT # 1, PERFORMANCE AND GOVERNANCE SERIES FOR THE YEARS 1997-98 TO 2000-2001
4.7 PARA 1.1 (PAGE II-AR)
PRINCIPLES OF POLICY, NON-COMPLIANCE WITH CONSTITUTIONAL PROVISIONS
Audit pointed out that the Cabinet Division failed to
produce the Annual Report to meet the requirements of
the Constitution of the Islamic Republic of Pakistan
(10 )
under Article 29(1) and Rule 26(1), Rules of Business
of the Federal Government. No Annual Report has been
produced after 1996.
The PAO informed the PAC that according to the opinion
of Law & Justice Division, the Annual Reports in past
years were not prepared, as there was no Parliament.
PAC DIRECTIVE The PAC conveyed its displeasure on non-observance of
the requirements of the Article of the Constitution and
directed the PAO to bring it in the notice of the Prime
Minister.
4.8 PARA 1.2 (PAGE 13-AR) QUARTERLY REPORT/YEAR BOOK-NON-PREPARATION SINCE 1976
Audit pointed out that according to Rules of Business;
Cabinet Division was responsible to print a quarterly
report/year book showing the activities of each
Division. The Cabinet Division did not prepare this
report since 1976.
The PAO informed the PAC that now instead of quarterly
report Annual Report is being prepared.
PAC DIRECTIVE
The PAC directed the PAO that the Annual Report be
prepared regularly in future; showing the activities of
each Ministry/Division of the Government as required
under the Rules of Business with an intimation of 1st
such report to the Committee/Audit.
(11 )
4.9 PARA 1.5 (PAGE 16-AR) CONTROL OF STAFF CARS AND CENTRAL POOL OF CARS
Audit pointed out that the scrutiny of the record of
Central Pool of Cars and other staff cars showed that
it was being maintained according to Staff Cars Rules
1980, but movement register and requisition slips of
some vehicles examined by Audit revealed that the
vehicles remained under the use of non-entitled
officers The vehicles were kept on running round the
clock and no requisition slips were
maintained/available in the office records and movement
registers were not maintained according to rules. The
procedure regarding disposal of vehicles is being
violated. The repair procedure adopted by the Division
is also uneconomical due to avoidance of competition.
The PAO informed the PAC that all the vehicles were
used as per the Rules. Audit can verify the record.
PAC DIRECTIVE
The PAC settled the para subject to verification of the
required record by Audit.
4.10 PARA 1.6 (PAGE 17-AR)
ADOPTION OF URDU AS THE OFFICIAL LANGUAGE
Audit pointed out that according to the constitution,
the Urdu Language would be used as official language
within fifteen years from its commencing day. The
fifteen year transition period established by the
constitution expired in 1988 but either the Government
does not believe that the assurance provided by the NLA
is credible; or the political will to implement the
constitutional requirement is non-existent.
(12 )
The PAO informed the PAC that this being a
constitutional issue requires considerations by the
higher authorities.
PAC DIRECTIVE
The PAC directed the PAO to review the progress made by
the NLA regarding the formulation of recommendations
for adopting Urdu as an official language with a report
to the Committee/Audit. The position may also be
brought to the notice of the Prime Minister.
4.11 PARA 2.2.9 (PAGE 39-AR) LOSS OF RS 879,196 SUSTAINED BY GOVT. DUE TO HIRING OF THREE PRIVATE BUSINESS TO PROVIDE PICK AND DROP FACILITY TO THE OFFICERS/OFFICIALS OF CABINET DIVISION.
Audit pointed out that the Cabinet Division hired three
busses for the pick & drop facility of their staff.
This hiring was floated through an open tender and was
given to the lowest bidder. The Departmental
Authorities while entering into a new contract with
M/s. Pindi Hazara transport company with effect from 1-
98 agreed to enhance the rent of buses from 18000/- to
24000/- and 16000/- to 18000/- P.M. In this way the
amount was paid in excess of the approved monthly
subsidy of Rs 34000/- allowed by the Finance Division.
The PAO informed the PAC that all this is being done
for the interest of the employees of the Division.
Moreover the poor employees of the Rawalpindi area are
utilizing this facility.
(13 )
PAC DIRECTIVE
The PAC recommended to the PAO to send the case for the
regularization of expenditure to the Finance Division
and report the outcome to the Committee/Audit.
4.12 PARA 2.2.12 (PAGE 44-AR) RETENTION OF GIFT FOR RS 210,000 BY THE PRIME MINISTER
SECRETARIAT
Audit pointed out that one watch with an assessed value
of Rs 210,000/- was retained by the Prime Minister
Secretariat (Internal). As per Tosha Khana rules there
was no provision for re-gifting of gift kept in Tosha
Khana. As such retention of above 18 Kt. Watch by the
Prime Minister Secretariat since 10/97 was unjustified
and without any legal authority.
The PAO informed the PAC that the matter was taken up
with P.M. Secretariat but the watch has not been
traced. Now an Inquiry Officer has been appointed to
investigate the matter. The result of the Inquiry will
be intimated to Audit on its finalization.
PAC DIRECTIVE
The PAC directed the PAO to expedite the inquiry, fix
responsibility, take action against the person (s)
concerned and forward report to the Committee/Audit
within 01 month.
(14 )
4.13 PARA 2.4.7 (PAGE 51-AR) EXPENDITURE OF RS 78,000/- ON ACCOUNT OF PURCHASE OF TWO LASER PRINTER 460/12
Audit pointed out that two Laser Printers Model 460/12
were purchased for 78000/- from M/S Pak Links,
Islamabad. Open tender system was not adopted to
purchase the printers so, the purchase procedure as
required was completely violated in this regard.
The PAO informed the PAC that during the DAC meeting,
it was recommended that an investigation in the case
may be carried out.
PAC DIRECTIVE The PAC directed the PAO to hold an inquiry, fix
responsibility and take action against the person(s)
responsible within 01 month with a report to the
Committee/Audit.
4.14 PARA 2.7.1 (PAGE 63-AR) USE OF VEHICLES BY NON-ENTITLED OFFICERS Audit pointed out that two staff cars were misused by
the staff. One car was in the exclusive use of PS to
Minister (IPC) and the other car was misused by the
JS(IPC).
The PAO informed the PAC that use of one car was
allowed under the delegated powers of the PAO. An
inquiry has been ordered and the official responsible
has been suspended in the case of other car where the
petrol was consumed without running the car. After
finalization of inquiry, further action will be taken.
(15 )
PAC DIRECTIVE
The PAC directed the PAO to expedite finalization of
inquiry and intimate action taken to the
Committee/Audit.
4.15 i) PARA 1.3 (AR-PAGE-14) NON-OBSRVANCE OF RULES OF BUSINESS/SECRETARIAT INSTRUCTIONS
ii) PARA 1.4 (AR-PAGE-15) FOLLOW-UP ON DECISIONS OF THE HIGHEST DECISION MAKING AUTHORITIES
iii) PARA 1.7 (AR-PAGE-20)
DISASTER RELIEF
iv) PARA 1.8 (AR-PAGE-21) NATIONAL DOCUMENTATION CENTER
v) PARA 1.9 (AR-PAGE-24)
INTER PROVINCIAL COMMITTEE
vi) PARA 2 (AR-PAGE-27) COMMENTS ON INTERNAL CONTROL
vii) PARA 2.1 (AR-PAGE-27)
MANAGEMENT OF BUDGET AND ACCOUNTS
viii) PARA 2.2.1 (AR-PAGE-31) USE OF TELEPHONE BY NON-ENTITLED OFFICERS
ix) PARA 2.2.2 (AR-PAGE-31) USE OF GOVT. VEHICLES OVER AND ABOVE THE ENTITLEMENT
x) PARA 2.2.3 (AR-PAGE-33)
USE OF GOVERNMENT VEHICLES BY THE NON-ENTITLED OFFICERS RECOVERY OF RS 561,492
xi) PARA 2.2.4 (AR-PAGE-34)
RECOVERY OF RS 631803/- FOR MISUSE OF VEHICLES BY THE OFFICERS OF E.R.C
(16 )
xii) PARA 2.2.5 (AR-PAGE-35) PROCUREMENT OF MACHINERY AND EQUIPMENT WORTH RS 862,018
xiii) PARA 2.2.6 (AR-PAGE-36)
PURCHASE OF DURABLE GOODS AMOUNTING TO RS 3.6 MILLION
xiv) PARA 2.2.8 (AR-PAGE-38)
EXPENDITURE RS 3.03 MILLION UNDER HEAD 5900-OTHERS xv) PARA 2.2.10 (AR-PAGE-40)
a) DRAWL OF RS 713,604 ON ACCOUNT OF PURCHASE OF RIBBONS, TONERS FOR COMPUTERS AND PHOTO COPIERS
b) EXPENDITURE OF RS 4,173,472 ON REPAIR OF
VEHICLES
xvi) PARA 2.2.11 (AR-PAGE-42) RECOVERY OF RS 260,858 ON ACCOUNT OF AIR-TICKETS AND HOTEL CHARGES
xvii) PARA 2.3.1 (AR-PAGE-46)
GENERAL COMMENTS
xviii) PARA 2.3.2 (AR-PAGE-46) PAYMENT OF RS 43,945 ON ACCOUNT OF SALES TAX TO UNREGISTERED SUPPLIERS
xix) PARA 2.3.3 (AR-PAGE-47)
SHORTAGE OF CASH AMOUNTING TO RS 127,091
xx) PARA 2.3.4 (AR-PAGE-47) DETERIORATION OF VEHICLE NO.S-001 MERCEDEZ (S.L 500) DUE TO NON DISPOSAL
xxi) PARA 2.4.1 (AR-PAGE-48)
GENERAL COMMENTS
xxii) PARA 2.4.3 (AR-PAGE-49) HEAVY EXPENDITURE AT THE CLOSE OF FINANCIAL YEAR
(17 )
xxiii) PARA 2.4.4 (AR-PAGE-49) IRREGULAR/UNAUTHORIZED OPENING OF BANK ACCOUNTS AND INTER TRANSFER OF FUNDS
xxiv) PARA 2.4.5 (AR-PAGE-50)
EXPENDITURE OF RS 2116344/- ON ACCOUNT OF C.P FUND
xxv) PARA 2.4.6 (AR-PAGE-50) IRREGULAR/UNAUTHORISED PAYMENT OF RS 1,276,000/- ON ACCOUNT OF MEDICAL CHARGES
xxvi) PARA 2.5.1 (AR-PAGE-52)
RECOVERY OF RS 18,705,917/- ON A/C OF PROVISION OF HELICOPTERS SERVICE TO VARIOUS AGENCIES
xxvii) PARA 2.5.2 (AR-PAGE-53)
PROCUREMENT OF SUB-STANDARD WHEAT FROM PASSCO AMOUTING TO RS 21.701 MILLION FOR RELIEF ASSISTANCE TO AFGHANISTAN
xxviii) PARA 2.5.4 (AR-PAGE-55)
PROCUREMENT OF IRRI-6, RICE AMOUNTING TO RS 14 MILLION FROM USC FOR RELIEF ASSISTANCE TO BANGLADESH
xxix) PARA 2.5.6 (AR-PAGE-57)
PAYMENT OF CONVEYANCE ALLOWANCE AND NON-DEDUCTION OF HOUSE RENT CHARGES AMOUNTING TO RS 26,904/-
xxx) PARA 2.6.1 (AR-PAGE-59)
LOSS OF RS 283,000/- ON ACCOUNT OF BOOKS ISSUED TO STATIONERY AND FORMS DEPARTMENT
xxxi) PARA 2.6.2 (AR-PAGE-60)
NON RECOVERY OF HBA, MCA AND MOTOR CAR ADVANCE AMOUNTING TO RS 0.108 MILLION
xxxii) PARA 2.6.3 (AR-PAGE-60) PUBLIC RESOURCES UTILIZED FOR THE BENEFIT OF A PARTICULAR PERSON OR SECTION OF THE COMMUNITY
xxxiii) PARA 2.7.2 (AR-PAGE-64)
NON-PRODUCTION OF RECORD
(18 )
xxxiv) PARA 2.8.1 (AR-PAGE-67) PAYMENT OF RS 318,216/- ON ACCOUNT OF HOUSE ALLOWANCES AND ELECTRICITY/FUEL SUBSIDY
xxxv) PARA 2.8.2 (AR-PAGE-68)
NON-DEDUCTION OF HOUSE RENT CHARGES AMOUNTING TO RS 129,836
xxxvi) PARA 2.8.3 (AR-PAGE-69) FINANCIAL ASSISTANCE TO THE NEEDY AND POOR PERSONS AMOUNTING TO RS 290 MILLION
xxxvii) PARA 2.9 (AR-PAGE-71)
INTERNAL CHECK/INSPECTION AND PHYSICAL VERIFICATION OF STORE AND STOCK
xxxviii) PARA 2.10 (AR-PAGE-71)
IMPROPER MAINTENANCE OF STORE/STOCK REGISTERS xxxix) PARA 2.11 (AR-PAGE-72)
CONCLUDING REMARKS
PAC DIRECTIVE
The PAC directed the PAO to re-examine above
mentioned 39 paras in the DAC and report to the
Committee within 02 months.
4.16 i) PARA 2.2.7 (AR-PAGE-37) EXPENDITURE OF RS 2,214,140/- ON ACCOUNT OF PRINTING TELEPHONE DIRECTORIES
ii) PARA 2.2.13 (AR-PAGE-44)
PROMOTION OF MR.ABDUL STTAR DRIVER AS TRANSPORT SUPERVISOR
iii) PARA 2.4.2 (PAGE 48-AR)
UNAUTHORIZED RETENTION AND USE OF GOVERNMENT/ RECEIPT AMOUNTING TO RS 11,663,670
iv) PARA 2.5.3 (AR-PAGE-54) PROCUREMENT OF BLANKETS, AMOUNTING TO RS 16.373 MILLION FROM OS DTE FOR RELIEF ASSITANCE TO CHECHEN PEOPLES
(19 )
v) PARA 2.5.5(AR-PAGE-56) RETENTION OF PUBLIC FUNDS AMOUNTING TO RS 1,643,200
PAC DIRECTIVE
The PAC settled the above paras after hearing
PAOs reply.
AUDIT REPORT PUBLIC SECTOR ENTERPRISES
(VOL-I-2000-2001)
4.17 i) PARA 06 (PAGE 15-ARPSE)
ii) PARA 07 (PAGE 15-ARPSE)
iii) PARA 08 (PAGE 15-ARSPSE)
iv) PARA 42 (PAGE 28-ARPSE)
PAC DIRECTIVE
The PAC settled the paras.
PERFORMANCE AUDIT REPORT ON NATIONAL ARCHIVES OF PAKISTAN
4.18 PERFORMANCE AUDIT REPORT
Audit pointed out different findings/deficiencies in
the National Archives of Pakistan, Islamabad. The
findings were as under:-
(a) Unsatisfactory maintenance of record of national
significance.
(b) Lack of supervision of the archival activity.
(c) Lack of prioritization of archival material and pilling up of unimportant record.
(20 )
(d) Poor cataloging of material
(e) Inadequate and improperly maintained physical
facilities. (f) Lack of adequate human resources. (g) Retrieval of archival record from India office
library, London and other international organizations.
(h) Lack of proper controls.
The PAO informed the PAC that the Performance Audit
Report was discussed in detail in DAC meeting. A number
of steps have since been taken by the management to
improve the efficiency of the department. A regular
Director General has also been appointed who is taking
keen interest in improving the working of the
department; therefore no further steps are necessary to
be discussed.
PAC DIRECTIVE
The PAC agreed to the suggestions of the PAO.
Actionable Points
(October 16th, 2006)
AUDIT REPORT OF TELECOMMUNICATION SECTOR 2000-2001 PAKISTAN TELECOMMUNICATION AUTHORITY (PTA) AND
FREQUENCY ALLOCATION BOARD (FAB)
4.19 PARA 2.6 (PAGES 35-36-AR-PTA) IRREGULAR PAYMENT ON ACCOUNT OF HONORARIUM RS 2.154 MILLION
Audit pointed out that Economy Measures for the
financial year 1999-2000 issued by the Finance Division
were also applicable to all organizations, Semi
(21 )
Autonomous/ Autonomous Bodies and Corporations etc.
According to these instructions, it was required that
no honorarium be paid and where deviation is necessary,
honorarium should be paid after approval by the Finance
Division. Pakistan Telecommunication Authority paid Rs
2,153,946/- on account of honorarium to its employees
during 1999-2000 without the required approval of the
Finance Division. Detail of payments revealed that the
honorarium was sanctioned rather liberally beca