Professional Documents
Culture Documents
3-Executive Summary
3-Executive Summary
i
CED Central Excise Duty
CEO Chief Executive Officer
CFO Chief Financial Officer
CFT Cross Functional Team
CHEC China Harbour Engineering Company
CIA Chief Inspector of Armament (POFs)
CICL Credit Insurance Company Limited
CIF Cost, Insurance and Freight
CMD Contract Management Department
CMS Consumer Meter Station (SNGPL)
CNG Compressed Natural Gas
COCO Company Owned and Company Operated
CoI Certificate of Investment
CPC Central Purchase Committee
CPF Contributory Provident Fund
CST Comparative Statement
CSTC China Shipping Trading Company
CVT Capital Value Tax
DI Dredging International
DAC Departmental Accounts Committee
DAE Diploma of Associate Engineering
DDWP Departmental Development Working Party
DEPZ Duddar Exports Processing Zone
DF Dealer Finance
DFA Deputy Financial Advisor
DGCA&E Directorate General of Commercial Audit & Evaluation
DGDP Director General Defence Purchase (POFs)
DGM Deputy General Manager
DHA Defence Housing Authority
DHAI Defence Housing Authority Islamabad
DPG Direct Passing Gas
DR Discrepancy Report
DWP Development Working Party
EBITDA Earnings before Interest, Taxes, Depreciation and Amortization
ECB Executive Committee of the Board
ECC Economic Co-ordination Committee
ii
ED Executive Director
EOBI Employees’ Old Age Benefits Institution
EOGM Extra Ordinary General Meeting
EOT Extension of Time
EPF Early Production Facility
EPS Earnings per Share
EPZA Export Processing Zones Authority
EPZs Export Processing Zones
EVC Electronic Volume Corrector (SNGPL)
FBR Federal Board of Revenue
FDIBL First Dawood Investment Bank Limited
FEC Foreign Exchange Currency
FIA Federal Investigation Agency
FIR First Information Report
FMU Financial Monitoring Unit
FoB Free on Board
FWBL First Women Bank Ltd
GCP Ghee Corporation of Pakistan (Pvt.) Limited
GDS Gas Development Surcharge (SNGPL)
GFR General Financial Rules
GM Gene General Manager
GoP Government of Pakistan
GPA General Power of Attorney
GPF General Provident Fund
GST General Sales Tax
HBFCL House Building Finance Company Limited
HDD Horizontal Directional Drilling
HEC Higher Education Commission
HHU Hand Held Unit (SNGPL)
HM3 Hundred Cubic Meter
HMC Heavy Mechanical Complex (Pvt) Limited
HR Human Resource
HRB Human Resource Budget
HRD Human Resource Development
HRS Human Resource Services
HSBC Hong Kong and Shangai Banking Corporation
iii
HSD High Speed Diesel
HSFO High Sulphur Furnace Oil
IA&E Inspectorate of Armament of Explosives (POFs)
IAS International Accounting Standards
IATA International Airlines Travelling Association
IBNR Incurred But Not Reported
IC Investment Committee
ICB International Competitive Bidding
ICC International Cricket Council
ICIS Independent Commodity Information Services
IDA International Development Association
IDBP Industrial Development Bank of Pakistan
IM Industrial Management
IMF International Monetary Fund
INTOSAI International Organization of Supreme Audit Institutions
IPC Interim Payment Certificate
IPO Initial Public Offering
IRs Internal Requisitions
IT Information Technology
KBO Karachi Booking Office
KEPZ Karachi Export Processing Zones Authority
KESC Karachi Electric Supply Company
KIBOR Karachi Inter-Bank Offered Rate
KoFHA Korangi Fisheries Harbour Authority
KP Khyber Pakhtunkhwa
KPT Karac Karachi Port Trust
KS&EW Karachi Shipyard & Engineering Works
KTDMC Karachi Tools, Dies and Moulds Centre
LC Letter of Credit
LCA Liverpool Cotton Association
LD Liquidated Damages
LDC Late Delivery Charges
LHC Lahore High Court
LPC Last Pay Certificate
LPG Liquefied Petroleum Gas
LPO Local Purchase Order
iv
LPP Last Purchase Price
LPS Late Payment Surcharge
MT Motor Transport
MAG Military Accountant General
MBA Master of Business Administration
MCC Metallurgical Construction Company
MCF Metric Cubic Feet (SNGPL+OGDCL)
MCO Mobile Credit Officer
MCS Master of Computer Science
MD Managing Director
MINFA Ministry of Food and Agriculture
MIS Management Information System
MMBTU Million Metric British Thermal Unit
MMCF Million Metric Cubic Feet
MMD Material Management Department
MoD Ministry of Defence
MODP Ministry of Defence Production
MOIP Ministry of Industries and Production
MoP Ministry of Production
MOU Memorandum of Understanding
MP&NRs Ministry of Petroleum & Natural Resources
MRDL MCC Resource Development (Pvt.) Limited
MRV Material Return Voucher
MTBs Market Treasury Bills
NAB National Accountability Bureau
NADRA National Database and Registration Authority
NBP National Bank of Pakistan
NESPAK National Engineering Services of Pakistan
NFML National Fertilizer Marketing Ltd
NGO Non-Government Organization
NICL National Insurance Company Limited
NIPD&MC National Industrial Parks Development and Management Company
NIRC National Industrial Relations Commission
NIT National Investment Trust
NIT Notice Inviting Tender
NLC National Logistic Cell
v
NSS New Simplified Scheme
NTDC National Transmission & Dispatch Company Limited
OGDCL Oil and Gas Development Company Limited
OGRA Oil and Gas Regulatory Authority
OM Observation Memo
P&L Profit and Loss
P&NR Petroleum & Natural Resources
PAC Public Accounts Committee
Pak PWD Pakistan Public Works Department
PAO Principal Accounting Officer
PATLO Pakistan Army Technical Liaison Officer (POFs)
PAX Passenger
PBG Performance Bank Guarantee
PCA Petroleum Concession Agreement
PCBL Punjab Co-operative Board Limited
PCESSDC Pakistan Chemical and Energy Sector Skill Development Company
PC-I Planning Commission –I
PCSI Pakistan Cotton Standards Institute
PDC Peripheral Development Charges
PEC Pakistan Engineering Council
PEO Principal Executive Officer
PEPAC Pakistan Environmental Planning and Architectural Consultants
(Pvt) Limited
PG&JDC Pakistan Gems and Jewellery Development Company
PHA Pakistan Housing Authority
PIAC Pakistan International Airlines Corporation
PID Press Information Department
PIDC Pakistan Industrial Development Corporation (Pvt.) Limited
PIM Pakistan Institute of Management
PKR Pak Rupee
PM Prime Minister
PNSC Pakistan National Shipping Corporation
POFIT Pakistan Ordnance Factory Institute of Technology
POFs Pakistan Ordnance Factories
POL Petrol, Oil and Lubricant
PPC Pakistan Penal Code
vi
PPL Pakistan Petroleum Limited
PPM Personnel Policy Manual
PPRA Public Procurement Regulatory Authority
PPRs Public Procurement Rules
PQA Port Qasim Authority
PR Price Reduction
PRCL Pakistan Re-insurance Company Limited
PRI Pakistan Remittance Initiatives
PRIMACO Pakistan Real Estate Investment & Management Company
PS Private Secretary
PSDP Public Sector Development Programme
PSEs Public Sector Enterprises
PSFCL Pakistan Steel Fabricating Company (Private) Limited
PSI Pre-Shipment Inspection
PSM Pakistan Steel Mills Corporation (Private) Limited
PSO Pakistan State Oil
PSPC Pakistan Security Printing Corporation
PSQCA Pakistan Standards Quality Control Authority
PUG Passing Unregistered Gas
QICT Qasim International Container Terminal
R&D Research and Development
RAR Running Account Receipt
RBS Rebroadcasting Station
RDFC Regional Development Finance Corporation
REPZ Risalpur Export Processing Zone
RRC Rate Reasonability Committee
RSD Ramp Service Department
SAM Special Asset Management (ZTBL+SME Bank)
SAP System Application Programme
SBFC Small Business Finance Corporation
SBP State Bank of Pakistan
SDA Special Deposit Account
SEC State Engineering Corporation
SECP Security Exchange Commission of Pakistan
SEPZ Sialkot Export Processing Zone
SEPZ Saindak Export Processing Zone
SESS1 Sindh Employee Social Security Institution
vii
SLIC State Life Insurance Corporation of Pakistan
SMEDA Small and Medium Enterprises Development Authority
SMS Sale Meter Station (SNGPL)
SNGPL Sui Northern Gas Pipelines Limited
SNTD Short Notice Term Deposit
SOP Standard Operating Procedure
SPL Security Paper Limited
SPO Sales Promotion Officer
SRL Skyrooms (Pvt.) Ltd
SRO Statutory Regulatory Order
SSA&BM Small Artillery Ammunition and Brass Mill
SSGCL Sui Southern Gas Company Limited
TABS Technical Assistance for Banking Sector
TAs Temporary Assignees
TBS Town Border Station (SNGPL)
TCP Trading Corporation of Pakistan
TDM Tools, Dies and Moulds
TDR Term Deposit Receipt
TGS Technical Ground Support Division
TIP Transparency International Pakistan
TRG The Resource Group
TUSDEC Technology Upgradation and Skill Development Company
UAE United Arab Emirates
UAN Universal Access Number
UBL United Bank Limited
UFG Un-accounted for Gas
UNSD United Nations Statistics Division
UO Un-official
USC Utility Stores Corporation of Pakistan (Pvt.) Limited
VSS Voluntary Separation Scheme
WEC Work Evaluation Committee
WIL Wah Industries Limited
WIP Work in Progress
WPPF Workers’ Profit Participation Fund
ZOT Zulfiqarabad Oil Terminal
ZTBL Zarai Taraqiati Bank Limited
viii
Preface
Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan
1973, read with Sections 8 and 15 and other relevant provisions of the
Auditor-General’s (Functions, Powers and Terms and Conditions of Service)
Ordinance, 2001 require the Auditor-General of Pakistan to conduct audit of the
expenditure from the Federal Consolidated Fund, Public Account and that of
Government Commercial Undertakings and of any Authority or Body established
by the Federation.
Audit findings indicate the need for adherence to the regularity framework
besides instituting and strengthening internal controls to avoid recurrence of
similar violations and irregularities.
Most of the observations included in this report have been finalizated in the light
of discussions in the Departmental Accounts Committee meetings.
-Sd-
Dated: March 04, 2013 (MUHAMMAD AKHTAR BULAND RANA)
Auditor-General of Pakistan
ix
x
EXECUTIVE SUMMARY
Directorates General of Commercial Audit and Evaluation (DsG, CA&E) Lahore
and Karachi carry out audit and evaluation of Public Sector Enterprises (PSEs)
established by Federal Government which maintain their accounts on commercial
basis.
xi
a. Scope of Audit
Out of total expenditure of the entities for the financial year 2011-12, auditable
expenditure under the jurisdiction of the DsG, CA&E, Lahore and Karachi was
Rs 882.98 billion covering 99 formations falling under 24 PAOs. Of this, the
Directorates General audited the expenditure of Rs 854.43 billion which in terms
of percentage is 96.76% of auditable expenditure. The audit of receipts of
Rs 1,282.42 billion pertaining to these formations was also conducted.
d. Audit Impact
xiii
Inventory Management
It was noticed that the Public Sector Enterprises were not observing
regulations for acquisition of human resources while making fresh
appointments, re-employment of retired personnel or appointment of
consultants. The appointments without advertisements not only result in
non-competitive recruitment but also create space for undue favour to the
non-deserving candidates. The recruitment policies of the organizations
need to be reviewed to maintain and ensure transparency.
Receivables Management
Procurement Management
The public sector enterprises are not following the PPRA Rules in letter
and spirit and certain procuring agencies while engaging in procurement
violated the PPRA Rules-2004.
xiv
f. The key audit findings of the report;
The main body of the Audit Report includes audit findings carrying value
of rupees one million or above. Relatively less significant issues are listed in the
Annexure-I of the Audit Report. The audit observations in the Annexure-I shall
be pursued with the Principal Accounting Officers of the relevant
Ministries/Divisions at DAC level.
1
Paras 3.4.4.1, 3.1.4.1, 6.6.4.1, 6.6.4.2, 9.3.4.1, 9.6.4.1, 9.7.4.1, 10.3.4.1, 18.2.4.1, 18.7.4.1, 18.8.4.1,
18.8.4.5;
2
Paras 4.1.4.3, 5.2.4.1, 5.3.4.1, 7.2.4.3, 9.7.4.5, 10.3.4.3, 15.1.4.1, 18.7.4.8, 18.7.4.22, 21.8.4.2, 25.1.4.2,
25.1.4.12;
3
Paras 4.1.4.10, 6.1.4.11, 6.1.4.12, 10.3.4.8;
4
Paras 4.1.4.7, 4.1.4.8, 5.2.4.14, 5.3.4.4, 16.1.4.8, 18.7.4.16, 18.7.4.18;
5
Paras 6.5.4.2, 6.6.4.3, 6.6.4.9, 6.6.4.10, 6.6.4.12, 7.2.4.6, 7.2.4.11, 18.5.4.1, 18.6.4.2, 18.7.4.5, 18.7.4.6,
19.2.4.3, 21.8.4.1, 25.1.4.1;
6
Paras 18.7.4.21, 19.1.4.3, 19.1.4.4;
7
Paras 6.6.4.6,
8
Paras 6.6.4.25;
9
Paras 4.1.4.2;
xv
g. Recommendations
xvi
SUMMARY TABLES & CHARTS
xvii
xviii
SUMMARY TABLES & CHARTS
Table 1: Audit Work Statistics
(Rs in million)
S. No. Description No. Budget
xix
Table 4: Irregularities pointed out
(Rs in million)
Amount
placed under
S. Audit
No. Description observations
1. Violation of rules and regulations and violation of principle of 8,054.47
propriety and probity in public operations.
2. Reported cases of fraud, embezzlement, thefts and misuse of public 502.77
resources.
3. Accounting Errors (accounting policy departure from IAS, 0
misclassification, over or understatement of account balances) that
are significant but are not material enough to result in the
qualification of audit opinions on the financial statements.
4. Weaknesses of internal control systems. 8,548.38
5. Recoveries and overpayments, representing cases of established *1,476.77
overpayment or misappropriations of public money.
6. Non – production of record. 12.10
7. Others, including cases of accidents, negligence etc. 6,339.16
Total 24,933.65
*This amount represents the recoveries and overpayments pointed out by audit
whereas the figures shown at table-3 sr-4 column-7 represent only the cases
where recovery has been started / made.
Table 5: Cost-Benefit
(Rs in million)
S.
No. Description
1. Outlays Audited 2,136,855.87
2. Expenditure on Audit 110.72
3. Recoveries realized at the instance of Audit 1,552.99
Cost-Benefit Ratio 1 :14.03
xx