3-Executive Summary 23.03.2014
3-Executive Summary 23.03.2014
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FoB Free on Board
GBTS Gulshan-e-Benazir Township Scheme
GCP Ghee Corporation of Pakistan
GDS Gas Development Surcharge (SNGPL)
GEPZ Gwadar Export Processing Zone
GFR General Financial Rules
GM Gene General Manager
GoP Government of Pakistan
GoPb Government of Punjab
GPA General Power of Attorney
GPA Gwadar Port Authority
GPF General Provident Fund
GRR Guaranteed Rate of Return
GST General Sales Tax
GTDMC Gujranwala Tools, Dies and Moulds Centre
HBFCL House Building Finance Company Limited
HEC Higher Education Commission
HM3 Hundred Cubic Meter
HMC Heavy Mechanical Complex (Pvt) Limited
HR Human Resource
HRB Human Resource Budget
HRD Human Resource Development
HSD High Speed Diesel
IA&E Inspectorate of Armament of Explosives (POFs)
IAS International Accounting Standards
IATA International Air Transport Association
IC Investment Committee
ICB International Competitive Bidding
IMF International Monetary Fund
INTOSAI International Organization of Supreme Audit Institutions
IPC Interim Payment Certificate
IPO Initial Public Offering
IT Information Technology
KBO Karachi Booking Office
KCIP Korangi Creek Industrial Park
KEPZ Karachi Export Processing Zones
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KESC Karachi Electric Supply Corporation
KIBOR Karachi Inter-Bank Offered Rate
KPT Karac Karachi Port Trust
KS&EWL Karachi Shipyard & Engineering Works Limited
KSSL Kissan Support Services (Pvt.) Limited
KTDMC Karachi Tools, Dies and Moulds Centre
LAM Limit of Authority Manual
LC Letter of Credit
LD Liquidated Damages
LoA Letter of Award
LPC Last Pay Certificate
LPG Liquefied Petroleum Gas
LPS Late Payment Surcharge
MAG Military Accountant General
MBA Master of Business Administration
MCF Metric Cubic Feet (SNGPL+OGDCL)
MCO Mobile Credit Officer
MCS Master of Computer Science
MD Managing Director
MFDAC Memorandum for Departmental Account Committee
MINFA Ministry of Food and Agriculture
MIS Management Information System
MMBTU Million Metric British Thermal Unit
MMCF Million Metric Cubic Feet
MoD Ministry of Defence
MODP Ministry of Defence Production
MOIP Ministry of Industries and Production
MoP Ministry of Production
MoP&NR Ministry of Petroleum and Natural Resources
MOU Memorandum of Understanding
MP&NRs Ministry of Petroleum & Natural Resources
MT Motor Transport
MTBs Market Treasury Bills
NAB National Accountability Bureau
NADRA National Database and Registration Authority
NBP National Bank of Pakistan
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NESPAK National Engineering Services of Pakistan
NFML National Fertilizer Marketing Ltd
NFR Non Fuel Retail
NGO Non-Government Organization
NICL National Insurance Company Limited
NIPD&MC National Industrial Parks Development and Management Company
NIRC National Industrial Relations Commission
NJI New Jubilee Insurance
NLC National Logistic Cell
NSC National Security Council
OEM Original Equipment Manufacturer
OGDCL Oil and Gas Development Company Limited
OGRA Oil and Gas Regulatory Authority
OM Observation Memo
OSP Other Security Products
P&L Profit and Loss
PAC Public Accounts Committee
PACO Pakistan Automobile Corporation
Pak PWD Pakistan Public Works Department
PAO Principal Accounting Officer
PATLO Pakistan Army Technical Liaison Officer (POFs)
PAX Passenger
PBG Performance Bank Guarantee
PBG Performance Bank Guarantee
PBM Pakistan Bail-ul-Mal
PCA Petroleum Concession Agreement
PCESSDC Pakistan Chemical and Energy Sector Skill Development Company
PC-I Planning Commission –I
PDCs Peripheral Development Charges
PEC Pakistan Engineering Council
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
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PICIC Pakistan Industrial Credit and Investment Corporation
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
PPL Pakistan Petroleum Limited
PPM Policy and Procedure Manual
PPRA Public Procurement Regulatory Authority
PPRs Public Procurement Rules
PQA Port Qasim Authority
PRCL Pakistan Reinsurance Company Limited
PRI Pakistan Remittance Initiatives
PS Private Secretary
PSDP Public Sector Development Programme
PSEs Public Sector Enterprises
PSFCL Pakistan Steel Fabricating Company Limited
PSM Pakistan Steel Mills
PSOCL Pakistan State Oil Company Limited
PSPC Pakistan Security Printing Corporation
PUG Passing Unregistered Gas
R&D Research and Development
RBS Rebroadcasting Station
RECP Rice Export Corporation of Pakistan
RSD Ramp Service Division
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
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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
SRO Statutory Regulatory Order
SSGCL Sui Southern Gas Company Limited
TCP Trading Corporation of Pakistan
TDR Term Deposit Receipt
TIP Transparency International Pakistan
TT charges Telegraphic Transfer charges
TUSDEC Technology Upgradation and Skill Development Company
UAN Universal Access Number
UBL United Bank Limited
UFG Un-accounted For Gas
UO Un-official
USC Utility Stores Corporation of Pakistan (Pvt.) Limited
USD US Dollar
VSS Voluntary Separation Scheme
WIL Wah Industries Limited
WIP Work in Progress
WPPF Workers’ Profit Participation Fund
ZTBL Zarai Taraqiati Bank Limited
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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.
Most of the observations included in this report have been finalized in the
light of discussions in the Departmental Accounts Committee meetings.
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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. Section 15 of the Auditor-General’s (Functions, Powers and
Terms and Conditions of Service) Ordinance, 2001 empowers the Auditor-
General of Pakistan to conduct audit of companies and corporations established
in the public sector. For this, DsG, CA&E have a human resource of 142 officers
and staff equivalent to 39,126 mandays for audit. The annual budget of both the
Directorates General for the year 2012-13 amounted to Rs 190.13 million. Out of
39,126 mandays, 34,906 were utilized for conducting of audit of Federal Public
Sector Enterprises by spending budget of Rs 144.45 million. This report contains
results of audit inspection and evaluation of financial performance of public
sector entities for the financial year 2012-13 conducted during the year 2013-14.
a. Scope of Audit
There are 101 commercial entities of the Federal Government under the
jurisdiction of DsG, CA&E, Lahore and Karachi. These entities operate under the
administrative control of 27 Principal Accounting Officers (PAOs). As per Audit
Plan 2013-14, the DsG, CA&E, Lahore and Karachi audited the accounts
pertaining to year 2012-13 of 57 commercial entities against the planned 73
entities.
Out of total expenditure of the entities for the financial year 2012-13,
auditable expenditure under the jurisdiction of the DsG, CA&E, Lahore and
Karachi was Rs 889.57 billion covering 101 entities falling under 27 PAOs. Of
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this, the Directorates General audited the expenditure of Rs 798.13 billion which
in terms of percentage is 89.72% of auditable expenditure. The audit of receipts
of Rs 1,117.70 billion pertaining to these formations was also conducted.
d. Audit Impact
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.
Receivables/Debt Management
1
Para 2.1.4.4., 2.1.4.8, 5.4.4.2, 6.3.4.5, 6.3.4.9, 6.6.4.1, 13.2.4.9, 13.4.4.4
2
Para 2.1.4.3, 2.1.4.6, 2.1.4.7, 2.1.4.9, 4.1.3.3, 4.5.4.2, 5.1.4.1, 5.2.4.7, 6.4.4.8, 6.3.4.10, 6.3.4.12, 15.1.4.1
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iii. Overpayment/recovery pointed out in 08 cases - Rs 104.68 million.3
iv. There were 03 cases pertaining to non protection of assets involving an
amount of Rs 7.75 million.4
v. There were 13 cases of irregular appointments having financial impact of
Rs 76.30 million.5
vi. There were 03 cases amounting to Rs 268.15 million pertaining to
blockage of funds.6
vii. Non-Production of record in 3 cases. 7
viii. Irregular payment of bonus amounting to Rs 16.49 million in 3 cases.8
ix. Irregular/doubtful investment amounting to Rs 122.61 million in 3 cases9
x. Irregular payment of insurance claims Rs 2,368.61 million in 3 cases.10
xi. Irregular expenditure on acquiring/maintaining property amounting to
Rs 220.67 million in 3 cases.11
xii. Unlawful encroachment of SBP land amounting to Rs 102.66 million in 2
cases.12
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.
g. Recommendations
3
Para 5.2.4.6, 6.1.3.4, 6.1.3.6, 6.1.3.8, 6.5.4.3, 8.10.4.2, 8.21.4.4, 14.2.4.1
4
Para 6.5.4.5, 8.12.4.8, 8.13.4.2
5
Para 2.1.4.11, 2.2.3.2, 3.2.4.3, 6.7.4.3, 6.7.4.2, 8.1.4.1, 8.1.4.2, 8.11.4.7, 8.18.4.3, 8.21.4.7,
13.2.4.5, 13.2.4.8, 16.1.3.3
6
Para 4.5.4.3, 11.1.4.1, 11.1.4.6
7
Para 4.1.3.2, 13.4.4.2, 16.4.3.2
8
Para 4.4.4.1, 6.1.3.7, 8.4.4.2
9
Para 6.1.3.3, 6.1.3.5, 13.2.4.7
10
Para 6.1.3.10, 13.1.4.1, 16.3.4.3
11
Para 6.3.4.3, 6.3.4.6, 16.4.3.6
12
Para 6.3.4.4, 6.3.4.5
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i. ensure recovery against overpayments (PBC & OGRA) ;
ii. ensure timely recovery of sundry debts, loans and advances (SME Bank,
ZTBL and HBFC);
iii. streamline the recruitment policies to protect the inalienable rights of
every citizen, as provided in the Constitution (SME Bank, NESPAK,
PIAC, PSO, GPA and OGDCL);
iv. ensure compliance with PPRA Rules 2004 (POFs, NICL, KS&EW and
SBP);
v. improve financial health of enterprises running in losses (PCP, SME
Bank, HMC, HEC & OEC);
vi. pursue legal cases actively (ZTBL) ;
vii. optimize operational capacity and streamline inventory of stores/spares to
achieve economy, efficiency and effectiveness.
viii. ensure provision of auditable record for ascertaining transparency.
ix. arrange timely submission of annual audited accounts to Audit
(Ref. Annexure-2);
x. expedite liquidation of closed enterprises to avoid recurring expenses and
deterioration of their assets (Ref. Annexure – 3).
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SUMMARY TABLES & CHARTS
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SUMMARY TABLES & CHARTS
Table 1: Audit Work Statistics
(Rs in million)
S. No. Description No. Budget
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Table 4: Table of Irregularities pointed out
(Rs in million)
Monetary value
S. of audit
No. Description observations
1. Violation of rules and regulations and violation of principle of 264,794.21
propriety and probity in public operations.
2. Reported cases of fraud, embezzlement, thefts and misuse of public 5,570.24
resources.
3. Accounting Errors (accounting policy departure from IAS, -
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. 22,493.87
5. Recoveries and overpayments, representing cases of established 4,968.29
overpayment or misappropriations of public money.
6. Non – production of record. -
7. Others, including cases of accidents, negligence etc. 2,865.90
Total 300,692.52
*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. 2013-14 2012-13 2011-12
No. Description
1. Outlays Audited 1,915,829.59 2,136,855.87 3,639,864.224
2. Expenditure on Audit 144.45 110.72 102.007
3. Recoveries realized at the instance 14,380.64 1,552.99 592.162
of Audit
Cost-Benefit Ratio 1:99.55 1 : 14.03 1.0:5.8
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