of the public accounts committee on the accounts...

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)


of Meeting



Final Grant Actual


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)


of Meeting



Final Grant Actual


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)


of Meeting



Final Grant Actual


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)


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)


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)


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)


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)


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.


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.


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

of the public accounts committee on the accounts...

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