R E P O R T

OF THE

PUBLIC ACCOUNTS COMMITTEE

ON THE

ACCOUNTS OF THE FEDERATION

FOR THE YEAR

2005-2006

NATIONAL ASSEMBLY SECRETARIAT ISLAMABAD

TABLE OF CONTENTS

PREFACE ..................................................................................................................................... i

PUBLIC ACCOUNTS COMMITTEE ........................................................................................ ii

EXECUTIVE SUMMARY ......................................................................................................... iii

EXCESS BUDGET STATEMENT FOR THE YEAR 2005-2006 .......................................... xiv

CABINET DIVISION .................................................................................................................. 1

CIVIL SECRETARIAT (FATA) ............................................................................................... 24

MINISTRY OF COMMERCE .................................................................................................. 35

MINISTRY OF COMMUNICATIONS .................................................................................... 52

COUNCIL OF ISLAMIC IDEOLOGY ..................................................................................... 68

MINISTRY OF CULTURE ....................................................................................................... 69

MINISTRY OF DEFENCE ....................................................................................................... 76

MINISTRY OF DEFENCE PRODUCTION .......................................................................... 159

ECONOMIC AFFAIRS DIVISION ........................................................................................ 180

MINISTRY OF EDUCATION ................................................................................................ 187

ELECTION COMMISSION OF PAKISTAN ......................................................................... 195

MINISTRY OF ENVIRONMENT .......................................................................................... 196

EARTHQUAKE RECONSTRUCTION AND REHABILITATION AUTHORITY ............. 203

ESTABLISHMENT DIVISION .............................................................................................. 214

FEDERAL BOARD OF REVENUE ....................................................................................... 217

FEDERAL TAX OMBUDSMAN SECRETARIAT ............................................................... 248

FINANCE DIVISION .............................................................................................................. 249

MINISTRY OF FOOD, AGRICULTURE & LIVESTOCK ................................................... 275

MINISTRY OF FOREIGN AFFAIRS .................................................................................... 288

MINISTRY OF HEALTH ....................................................................................................... 307

HIGHER EDUCATION COMMISSION (HEC) .................................................................... 312

MINISTRY OF HOUSING & WORKS .................................................................................. 321

MINISTRY OF INDUSTRIES, PRODUCTION .................................................................... 345

AND SPECIAL INITIATIVES ............................................................................................... 345

MINISTRY OF INFORMATION & BROADCASTING ....................................................... 366

MINISTRY OF INFORMATION TECHNOLOGY &TELECOMMUNICATION .............. 374

MINISTRY OF INTERIOR ..................................................................................................... 386

MINISTRY OF INVESTMENT .............................................................................................. 396

MINISTRY OF KASHMIR AFFAIRS & NORTHERN AREAS .......................................... 397

MINISTRY OF LABOUR & MANPOWER .......................................................................... 410

MINISTRY OF LAW, JUSTICE & HUMAN RIGHTS ......................................................... 420

MINISTRY OF LOCAL GOVERNMENT & RURAL DEVELOPMENT ............................ 422

MINISTRY OF MINORITIES AFFAIRS ............................................................................... 423

NATIONAL ACCOUNTABILITY BUREAU ....................................................................... 433

MINISTRY OF NARCOTICS CONTROL ............................................................................. 434

NATIONAL ASSEMBLY SECRETARIAT ........................................................................... 436

NATIONAL RECONSTRUCTION BUREAU ....................................................................... 437

OVERSEAS PAKISTANIS DIVISION .................................................................................. 438

PAKISTAN ATOMIC ENERGY COMMISSION ................................................................. 441

MINISTRY OF PARLIAMENTARY AFFAIRS .................................................................... 443

MINISTRY OF PETROLEUM AND NATURAL RESOURCES ......................................... 444

PLANNING AND DEVELOPMENT DIVISION .................................................................. 479

PRIME MINISTER‟S INSPECTION COMMISSION ........................................................... 491

MINISTRY OF POPULATION WELFARE .......................................................................... 493

MINISTRY OF PORTS AND SHIPPING .............................................................................. 494

MINISTRY OF POSTAL SERVICES .................................................................................... 526

PRESIDENT‟S SECRETARIAT ............................................................................................ 557

PRIME MINISTER‟S SECRETARIAT .................................................................................. 558

MINISTRY OF PRIVATIZATION ......................................................................................... 559

MINISTRY OF RAILWAY .................................................................................................... 560

MINISTRY OF RELIGIOUS AFFAIRS, ZAKAT & USHR ................................................. 580

MINISTRY OF STATES & FRONTIER REGIONS .............................................................. 590

MINISTRY OF SCIENCE AND TECHNOLOGY ................................................................. 593

SENATE SECRETARIAT ...................................................................................................... 599

MINISTRY OF SOCIAL WELFARE & SPECIAL EDUCATION ....................................... 600

MINISTRY OF SPORTS ......................................................................................................... 606

STATISTICS DIVISION ......................................................................................................... 621

MINISTRY OF TEXTILE INDUSTRY .................................................................................. 623

MINISTRY OF TOURISM ..................................................................................................... 627

WAFAQI MOHTASIB SECRETARIAT ................................................................................ 634

MINISTRY OF WATER & POWER ...................................................................................... 635

MINISTRY OF WOMEN DEVELOPMENT ......................................................................... 652

MINISTRY OF YOUTH AFFAIRS ........................................................................................ 657

REPORTS OF THE SUB-COMMITTEES FOR THE YEAR 2005-2006 .................... 660

CABINET DIVISION ................................................................................................... 661

MINISTRY OF COMMUNICATION .......................................................................... 662

MINISTRY OF CULTURE ........................................................................................... 664

MINISTRY OF DEFENCE ........................................................................................... 668

MINISTRY OF EDUCATION ...................................................................................... 671

HIGHER EDUCATION COMMISSION ..................................................................... 673

MINISTRY OF INFORMATION TECHNOLOGY AND TELECOMMUNICATION .................... 675

MINISTRY OF INDUSTRIES, PRODUCTION & SPECIAL INITIATIVES ............ 682

MINISTRY OF PETROLEUM & NATURAL RESOURCES ..................................... 690

MINISTRY OF POSTAL SERVICES .......................................................................... 692

MINISTRY OF WATER AND POWER ...................................................................... 694

i

PREFACE

Under the Constitution of the Islamic Republic of Pakistan, the disbursement from the Federal Consolidated Fund requires approval by National

Assembly of Pakistan. While authorizing huge sum of the tax payer‟s 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 law/rules.

The National 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 laid in

the National Assembly under orders of the President of Pakistan.

As a rule, no money granted by the National Assembly can be spent on

any service over and above for the purpose. Excess expenditure, if any, is viewed

seriously. The PAC examine with reference to the facts of each case, the

circumstances leading to any excess expenditure and make appropriate

recommendations. The PAC also constitutes Sub-Committees and Inter-

departmental Committees for the scrutiny of some important issues.

Major issues and Committee‟s general recommendations on each

Ministry/Division have been highlighted separately in the respective sections for

having a quick glance on their performance.

The drafting and preparation of this Report has been made possible due to

the concerted efforts of officers/staff of the Public Accounts Committee of the

National Assembly Secretariat.

The National Assembly Secretariat is graciously appreciative of the

guidance and motivation received from Chairman, Public Accounts Committee,

Ch. Nisar Ali Khan and other Members of the Committee in doing justice to this

difficult and taxing assignment.

It is hoped that suggestions and recommendations of the Committee would

encourage and assist the Government in smarten up the system and procedure for

constructive financial management.

KARAMAT HUSSAIN NIAZI

Secretary

National Assembly Secretariat

Islamabad, the January 21st,2010

ii

PUBLIC ACCOUNTS COMMITTEE

1. Ch. Nisar Ali Khan Chairman

2. Mr. Riaz Fatyana Member

3. Mrs. Rukhsana Bangash Member

4. Mr. Aftab Shahban Mirani Member

5. Mrs. Faryal Talpur Member

6. Mr. Nadeem Afzal Chan Member

7. Mr. Saeed Ahmad Zafar Member

8. Mrs. Yasmeen Rehman Member

9. Khawaja Mohammad Asif Member

10. Sardar Ayaz Sadiq Member

11. Mr. Zahid Hamid Member

12. Rana Mahmood-ul-Hassan Member

13. Mian Riaz Hussain Pirzada Member

14. Mr. Bahadur Ahmed Khan Sihar Member

15. Mr. Hamid Yar Hiraj Member

16. Syed Haider Abbas Rizvi Member

17. Mr. Asfandyar Wali Member

18. Mrs. Asiya Nasir Member

19. Sardar Ali Mohammad Khan Mahar Member

20. Minister-in-Charge for Finance and Revenue (Ex-Officio Member)

R E P O R T

OF THE

PUBLIC ACCOUNTS COMMITTEE

ON THE

ACCOUNTS OF THE FEDERATION

FOR THE YEAR

2005-2006

iii

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 Assembly‟s 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 constitution of Public Accounts Committee by the House on April 10th

,

2008, the Public Accounts Committee met for the 1st time for the election of its

Chairman on September 19th

, 2008. The Committee was briefed by the National

Assembly Secretariat and Auditor General Office about its functions and workload

pending on October 07th

, 2008. The PAC thereafter, took up Auditor General‟s Reports

for the year 2005-06 for examination/discussion w.e.f November 4th

, 2008.

3. In order to create a productive atmosphere and for effective working, the PAC

has institutionalized the following guiding principles: -

i) 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.

ii) It is a joint responsibility of the elected public representatives and the

government functionaries to protect the national interest.

iii) The Principal Accounting Officers (PAOs) must ensure their personal

attendance in meetings of the Committee and PAC related

communication must be given top priority.

iv

iv) All functionaries of Ministries/Divisions appearing before PAC must

come fully prepared in order to promptly respond to the queries of the

Committee.

PAC REPORTS

4. The Former PAC completed the examination of the Audit Reports for the years

1988-89, 1995-96 & 2000-2001 and prepared its Reports, which were laid before the

House on November 20th

, 2008 by the present Chairman, Ch. Nisar Ali Khan.

5. There were 12 Audit Reports pending for examinations, when current PAC met

for the first time in November, 2008. The primary objective of the PAC, right from the

beginning was to dispose off unfinished work pertaining to previous years, which was

an up hill task. For the speedy disposal of pending reports, the Committee constituted

four sub-committees and allocated one year Audit Report to each Sub-committee.

6. The PAC started taking up for its examination the Federal Accounts/Audit

Reports for the year 2005-2006 from November 4th

, 2008. This Report contained 1464

audit paras. The Committee met regularly at least once or twice in a month to consider

this report. The PAC held 11 sessions of 5-7 days in each month and held meetings for

55 days during that period including double sitting for many days.

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 2005-

2006, the Committee reviewed 175 grants, whereas, the sub-committees reviewed 370

grants in Appropriation of Accounts for the years 1989-90 & 1991-92. 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.

v

9. The Committee repeatedly expressed concern over the state of financial

indiscipline. While examining Appropriation Accounts in number of cases, the

committee 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 are

responsible for maintaining the Accounts. In most of the Ministries/Divisions/Attached

Departments and 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 spend 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

transgression.

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 Revenues (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 such as effective internal controls/audit

system. Strengthening the internal control 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. The Committee was informed

by the Auditor General of Pakistan that on the directive of previous PAC, Chief Finance

& Accounts officer are appointed for internal budgetary control system in

Ministries/Divisions.

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 the responsibility to account for the Government‟s use of tax payer‟s money,

vi

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 national responsibility, which the PAC

exercises on behalf of the National Assembly. These reports are in many volumes.

These Federal spendings 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.

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 meeting 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.-

i) Take necessary action by holding the meetings of DACs once a month to review audit paras at the earliest opportunity;

ii) Review, at regular interval, the progress of all the pending audit paras;

iii) Initiate disciplinary action in the cases in time, where required; and iv) 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

vii

the PAC personally or when attended the meetings, they were found not fully prepared.

During the meetings, they were often obliged to seek the assistance of their

subordinates, sometimes at a very low level. This practice has always been discouraged

by the PAC.

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.

COURT CASES

17. It was noticed that the Ministries/Divisions did not take timely actions to defend

court cases effectively at an appropriate level. Some time 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

curb this unhealthy trend 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;

The expenditure should not be, prima facie, more than the demand; and

viii

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. Besides examination of Auditor General‟s Reports, the PAC took notice of the

under-mentioned issues of public importance pertaining to following

Ministries/Divisions:-

i) M/O Water & Power

Provision of power tariff D-2(1) in Chak Shahzad to former President

ii) M/O Labour & Manpower

Alleged corruption in EOBI

iii) M/O Petroleum & Natural Resources

a) Price hike of Oil and Gas

b) Injecting of huge quantity of Synthetic Gas into Natural Gas

iv) M/O Defence Production

a) Purchase of Submarines by Pakistan Navy at the cost of $ 1.5

Billion (Rs.120 Billion)

b) Heavy Industry Taxila Education City, District Rawalpindi.

v) M/O Interior, ICT Police, Islamabad

Increasing tendency of accidents on Islamabad Expressway

vi) CDA, (Cabinet Division)

Construction of Islamabad Expressway and installation of five overhead

bridges

vii) M/O Defence

Military Land Act 1937

viii) M/O Special Initiatives

Alleged corruption in Clean Drinking Water Project

ix) M/O Tourism

Purchase of vehicle

x) M/O Housing & Works

Missing of files/record regarding allotment of Plots/Flats

xi) M/O Finance

Written off loans during last 8 years and procedure alongwith Rules and

regulation for awarding of loans by the commercial Banks/National

Bank of Pakistan, including under Saeban Loan Scheme.

xii) M/O Foreign Affairs

a) US based lobbyist for Pakistan

b) Reported sale of Pakistan Embasssy building Tokoyo, Japan in

2007 on a throwaway price.

xiii) M/O Ports & Shipping

Encroachment of KPT Land

xiv) M/O Minorities Affairs

ix

Evacuee Trust Property at Lahore

MAJOR FINDINGS/SIGNIFICANT IRREGULARITIES AND

RECOMMENDATIONS PERTAINING TO DIFFERENT

MINISTRIES/DIVISIONS

20) During discussion on the Auditor General‟s Reports pertaining to various

Ministries/Divisions, the PAC arrived at some of the major recommendations. The paras are

as under:-

i) LOSS DUE TO INVESTMENT IN STOCK EXCHANGE IN

VIOLATION OF PRIME MINISTER‟S INSTRUCTIONS-

RS 4.14 BILLION

(M/o Planning & Development Para No. 214 ARPSE-2005-06 DGA

CA&E Lahore)

ii) UN-NECESSARY PURCHASE OF LPG PLANT BY OGDCL–

RS 576 MILLION

(M/o Petroleum & Natural Resources/OGDCL Para No. 193.12 ARPSE-

2005-06 DGA CA&E Lahore)

iii) MISAPPROPRIATION OF PC POLES – RS.39.685 MILLION

(M/o Water and Power Para No. 7.1 AR-2005-06 DGA Wapda Lahore)

iv) UNDUE ADVANTAGE OF RS.1244 MILLION ALLOWED TO A

CONTRACTOR

(M/o Water and Power Para No. 1.1 AR-2005-06 DGA WAPDA

Lahore)

v) NON-RECOVERY OF STANDARD RENT FROM

UNAUTHORIZED OCCUPANTS RS. 89.3 MILLION

(M/o Housing and Works Para No. 5.30 AR-2005-06 DGA Works

Lahore)

vi) EXPENDITURE ON ACCOUNT OF PAY AND ALLOWANCES

OF WORK CHARGED ESTABLISHMENT OF PAK-PWD IN

EXCESS OF THE PERMISSIBLE LIMIT RS. 160.1 MILLION

(M/o Housing and Works Para No. 5.1 AR-2005-06 DGA Works

Lahore)

x

vii) NON-RECOVERY OF WATER CHARGES FROM THE

RESIDENTS RS.158.4 MILLION

(M/o Housing and Works Para No. 5.2 AR-2005-06 DGA Works

Lahore)

viii) NON-RETRIEVAL OF 20,000 ACRES OF LAND COSTING –

RS.100 BILLION

(M/o Housing and Works Para No. 1.1 AR-2005-06 DGA Works

Lahore)

ix) LOSS OF RS. 12.742 MILLION ON ACCOUNT OF SHORT

RECOVERY OF RAILWAY‟S DUES OWING TO IRREGULAR

ADJUSTMENT OF SCHOOL FUND

(M/o Railways 1.1 AR-2005-06 DGA Railways Lahore)

x) UNAUTHORIZED EXPENDITURE OF RS. 48.481 MILLION DUE

TO INCREASE IN TWO EXISTING ALLOWANCES AND

AUTHORIZING AN ADDITIONAL ALLOWANCE

(M/o Postal Services Para 5.1 AR-2005-06 DGA PT &T Lahore)

xi) UNJUSTIFIED PROCUREMENT OF IMPORTED VEHICLES

RS. 16 MILLION

(M/o Communications Para No.3.16 AR-Civil Works 2005-06 DGA

Works)

xii) RECOVERY OF RS. 0.903 MILLION ON ACCOUNT OF

PAYMENT OF CASUAL TELEPHONE CONNECTION

(M/o Social Welfare & Special Edu. Para No.21.1 AR-FG 2006-07 DGA

FG)

xiii) NON-TAXATION OF COMMISSION/INTEREST INCOME

UNDER NORMAL LAW RS. 9.453 MILLION

(FBR Para No.1.9 AR-RRA 2005-06 DGA RRA)

xiv) LOSS OF REVENUE DUE TO NON-INITIATIN OF TIMELY

PROCEEDINGS RS. 1,063.543 MILLION

(FBR Para No.1.13 AR-RRA 2005-06 DGA RRA)

xi

xv) TAX FRAUD BY ISSUANCE OF FAKE/FLYING INVOICES RS.

1213.79 MILLION

(FBR Para No.13.1 AR-RRA 2005-06 DGA RRA)

xvi) FRAUDULENT DRAWL OF SALES TAX REFUND RS. 20.00

BILLION

(FBR Para No.13.2 AR-RRA 2005-06 DGA RRA)

xvii) NON/SHORT-REALIZATION OF SALES TAX, ADDITIONAL

TAX AND PENALTY RS. 1352.088 MILLION

(FBR Para No.9.2 (a) AR-RRA 2005-06 DGA RRA)

xviii) INADMISSIBLE REFUND OF SALES TAX RS. 140.002

MILLION.

(FBR Para No.9.1(a) AR-RRA 2005-06 DGA RRA)

xix) PORT WATER JET FOUNTAIN

(M/o Ports and Shipping 2005-06 DGA (FG) Islamabad)

xx) ENCROACHMENT OF 102 KANALS CDA LAND BY THE

PRIVATE HOUSING SCHEME – RS. 71.4 MILLION

(Cabinet Division (CDA) Para No. 1.10 AR-2005-06 DGA Works

Lahore)

xxi) LOSS OF PONTENTIAL EARINING OF RS. 1,889 MILLION

DUE TO UNNECESSARY DETENTION OF A WAGON IN

HEAVY MECHANICAL COMPLEX, TAXILA

(M/o Railways Para No. 3.4 AR-2005-06(A) DGA Railway Lahore)

xxii) NON-SUBMISSION OF ACCOUNTS BY PORT QASIM

AUTHORITY

(M/o Ports & Shipping Para No. 46.SAR 2000-05 DGA CA&E Karachi)

xxii) OVERPAYMENT OF RS. 0.465 MILLION ON ACCOUNT OF

SUPPLY OF KHAKI CANVAS BAGS

(Ministry of Postal Services Para No. 1.3 AR-2005-06 DG (PT&T

Lahore)

xii

AUDIT OF PUBLIC SECTOR ORGANIZATIONS/CORPORATIONS

20. 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 highly paid by these

Corporations/Enterprises; therefore, the issue of 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 Company‟s

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

Special Legal Committee under the Convenership of Mr. Zahid Hamid MNA to

formulate a comprehensive report, indicating necessary measures/amendments required

in the relevant laws in such cases.

OFFICE OF THE AUDITOR GENERAL OF PAKISTAN

21. 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. They also 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.

xiii

NATIONAL ASSEMBLY SECRETARIAT

22. The PAC would like to acknowledge hardwork of PAC wing work team including,

Mr. Tahir Hanfi, Joint Secretary (PAC), Mr. Fayyaz Hussain Shah and Mr. Khaleeq

Ahmed, Deputy Secretaries (PAC) and Mr. Sharafat Ali, Section Officer (PAC) and Staff

of PAC Wing, National Assembly Secretariat for their focused efforts for providing

efficient support to the Committee in conducting its deliberations within shortest span of

time.

CONCLUDING REMARKS

23. 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 2005-2006 be regularized in

accordance with the provisions of the Constitution.

Islamabad, the January 21, 2010

CH. NISAR ALI KHAN

Chairman

Public Accounts Committee

KARAMAT HUSSAIN NIAZI

Secretary

National Assembly Secretariat

DETAILS OF EXCESS EXPENDITURE

FOR THE YEAR 2005-06

xiv

EXCESS BUDGET STATEMENT FOR THE YEAR 2005-2006

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.

Cabinet Division

22-12-2008

1 - Cabinet

Division

(OTC)

122,800,000

15,000,000

137,800,000

139,200,014

1,400,014

The PAC regularized

the excess.

2 - Cabinet

Division

(OTC)

958,062,000

1,475,934,000

2,433,996,000

2,453,742,538

19,746,538

- do -

3 - Emergency

Relief

and Repatriation

(OTC)

50,862,000

918,175,000

969,037,000

1,284,991,688

315,954,688

- do -

02.

M/O Commerce

01-04-2009

14 - Commerce

Division

(OTC)

1,721,941,000

20,580,000

1,742,521,000

6,964,193,868

5,221,672,868

- do -

03.

M/O

Communications

04-11-2008

16 -

Communicati

ons

Division

(OTC)

1,595,607,000

1,000

1,595,608,000

1,752,819,377

157,211,377

A Sub-Committee

was constituted to

examine the grant

and report to PAC

within one month.

17 - Other

Expenditure

of Communications

Division (OTC)

1,475,591,000

---------

1,475,591,000

1,572,153,146

96,562,146

The PAC regularized

the excess.

xv

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

04.

M/O Culture, Sports

and Youth Affairs

20-02-2009

19 - Culture,

Sports and

Youth Affairs

Division (OTC)

196,164,000

80,000

196,244,000

207,661,098

11,417,098

- do -

20 - Other

Expenditure

of Culture, Sports

and Youth Affairs

Division (OTC)

190,625,000

253,001,000

443,626,000

484,856,732

41,230,732

The PAC regularized

the excess.

05.

M/O Defence

02-02-2009

21 - Defence

Division

(OTC)

1,435,856,000

119,698,000

1,555,554,000

1,627,293,938

71,739,938

-do-

22 - Meteorology

(OTC)

264,286,000

4,000

264,290,000

270,305,552

6,015,552

-do-

24 - Federal

Government

Educational

Institutions in

Cantonments and

Garrisons (OTC)

1,027,697,000

23,444,000

1,051,141,000

1,207,944,242

156,803,242

-do-

xvi

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

131- Development

Expenditure of

Defence Division

(OTC)

609,493,000

269,039,000

878,532,000

1,696,477,120

817,945,120

-do-

25 - Defence

Services

223,223,213,000

17,579,927,000

240,803,140,000

244,990,073,147

4,186,933,147

-do-

06.

Economic Affairs

Division

16-02-2009

27 - Economic

Affairs

Division (OTC)

339,124,000

38,602,000

377,726,000

1,549,143,451

1,171,417,451

-do-

133- Development

Expenditure of

Economic Affairs

Division (OTC)

2,890,500,000

---------

2,890,500,000

2,893,500,000

3,000,000

The PAC

Regularized the

excess.

161- External

Development

Loans and

Advances by the

Federal Govt.

(Charged)

23,029,555,000

----------

23,029,555,000

44,245,249,940

21,215,694,940

The PAC constituted

an IDC to resolve the

issue of

reconciliation in the

grant.

xvii

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

07.

M/O Education

16-01-2009

32 – Federal Govt.

Educational

Institutions in the

Capital and Federal

Areas (OTC)

1,462,178,000

---------

1,462,178,000

1,599,001,393

136,823,393

The PAC

Regularized the

excess.

08.

Establishment

Division

23-02-2009

6 – Federal Public

Service Commission

(OTC)

132,228,000

1,814,000

134,042,000

136,996,210

2,954,210

- do -

7 – Other

Expenditure

of Establishment

Division (OTC)

398,736,000

5,678,000

404,414,000

406,809,791

2,395,791

- do -

09

M/O Environment

18-02-2009

35 – Zoological

Survey

Department (OTC)

8,844,000

----------

8,844,000

8,856,654

12,654

- do -

10.

Earthquake

Reconstruction and

Rehabilitation

Authority (ERRA)

15-12-2008

127-A-

Development

Expenditure of

Prime Minister‟s

Secretariat (OTC)

-----------

37,720,001,000

37,720,001,000

40,744,500,081

3,024,499,081

The PAC directed the

Ministry to reconcile

the figures with

AGPR and report to

PAC within a week.

xviii

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

11.

Civil Secretariat

(FATA)

29-09-2009

111- Federally

Administered Tribal

Areas (OTC)

3,963,753,000

266,817,000

4,230,570,000

4,610,349,647

379,779,647

The PAC

Regularized the

excess.

156- Development

Expenditure of

Federally

Administered Tribal

Areas (OTC)

5,150,000,000

781,240,000

5,931,240,000

5,993,051,976

61,811,976

-do -

12.

Federal Board of

Revenue (FBR)

05-11-2008

44 – Revenue

Division

(OTC)

63,635,000

204,000

63,839,000

75,012,670

11,173,670

-do -

46 – Land Customs

and

Central Excise

(OTC)

1,500,000,000

64,326,000

1,564,326,000

1,577,544,023

13,218,023

- do -

47 – Sales Tax

(OTC)

500,000,000

118,374,000

618,374,000

628,235,363

9,861,363

- do -

13.

Federal Tax

Ombudsman

Secretariat

16-12-2008

- Federal Tax

Ombudsman

(Charged)

36,443,000

2,423,000

38,866,000

40,469,631

1,603,631

-do -

xix

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

14.

Finance Division

07-04-2009

37 – Controller

General

of Accounts (OTC)

996,562,000

1,000

996,563,000

1,020,698,580

24,135,580

The PAC

Regularized the

excess.

40 – Other

Expenditure

of Finance Division

(OTC)

2,691,037,000

1,133,957,000

3,824,994,000

4,031,096,132

206,102,132

- do -

163 - Development

Loans

and Advances by

the Federal Govt.

(OTC)

26,105,869,000

7,255,000,000

33,360,869,000

34,990,400,730

1,629,531,730

- do -

- Servicing of

Domestic Debt

(Charged)

190,185,165,000

10,404,894,000

200,590,059,000

202,548,418,036

1,958,359,036

- do -

- Audit (Charged)

758,570,000

42,193,000

800,763,000

822,886,773

22,123,773

- do -

39 – National

Savings

(OTC)

588,521,000

150,000

588,671,000

647,119,370

58,448,370

- do -

xx

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

15.

M/O Food,

Agriculture &

Livestock

16-02-2009

120- Capital Outlay

on

Purchase of

Fertilizer (OTC)

8,999,000

---------

8,999,000

25,095,294

16,096,294

-do -

16.

M/O Foreign Affairs

16-12-2008

53 - Foreign Affairs

4,251,210,000

186,142,000

4,437,352,000

4,632,850,637

195,498,637

-do -

54 – Other

Expenditure

of Foreign Affairs

Division (OTC)

798,617,000

289,476,000

1,088,093,000

1,088,374,725

281,725

The PAC regularized

the excess.

17.

M/O Health

19-02-2009

56 – Medical

Services

(OTC)

2,592,680,000

350,605,000

2,943,285,000

2,980,957,749

37,672,749

- do -

57 – Public Health

(OTC)

203,007,000

34,002,000

237,009,000

238,807,144

1,798,144

- do -

18.

M/O Housing &

Works

19-12-2008

59 – Civil Works

(OTC)

1,362,193,000

8,600,000

1,370,793,000

1,371,522,635

729,635

- do -

xxi

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

19.

M/O Industries,

Production and

Special Initiatives

18-12-2008

63 – Department of

Investment

Promotion and

Supplies (OTC)

11,220,000

211,000

11,431,000

12,154,781

723,781

- do -

20

M/O Information &

Broadcasting

16-01-2009

65 – Information

and

Broadcasting

Division (OTC)

119,422,000

670,000

120,092,000

122,622,486

2,530,486

- do -

66 – Directorate of

Publications

Newsreels and

Documentaries

(OTC)

40,442,000

130,000

40,572,000

44,847,257

4,275,257

- do -

67 – Press

Information

Department (OTC)

140,641,000

101,000

140,742,000

151,809,232

11,067,232

- do -

68 – Information

Services Abroad

(OTC)

159,441,000

15,675,000

175,116,000

211,329,071

36,213,071

The PAC regularized

the excess.

xxii

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

69 – Other

Expenditure

of Information and

Broadcasting

Division (OTC)

1,525,908,000

322,372,000

1,848,280,000

1,868,737,263

20,457,263

- do -

21.

M/O Information

Technology and

Telecommunications

17-12-2008

70 – Information

Technology and

Telecommunication

Division (OTC)

1,088,427,000

---------

1,088,427,000

1,244,707,953

156,280,953

- do -

22.

M/O Interior

15-01-2009

72 – Islamabad

(OTC)

1,708,893,000

387,336,000

2,096,229,000

2,189,929,650

93,700,650

- do -

74 – Civil Armed

Forces

(OTC)

7,222,585,000

352,504,000

7,575,089,000

8,044,191,340

469,102,340

- do -

75 – Frontier

Constabulary

(OTC)

1,531,409,000

---------

1,531,409,000

1,759,416,664

228,007,664

- do -

76 – Pakistan

Coastguards

(OTC)

359,162,000

34,601,000

393,763,000

412,586,829

18,823,829

- do -

xxiii

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

23.

M/O Investment

(Board of

Investment)

31-03-2009

99 – Board of

Investment

(OTC)

82,470,000

1,000

82,471,000

83,291,426

820,426

- do -

24.

M/O Kashmir

Affairs and Northern

Areas

19-02-2009

79 – Kashmir

Affairs &

Northern Areas

Division (OTC)

155,000,000

1,190,000

156,190,000

197,941,627

41,751,627

The PAC regularized

the excess.

81 – Northern

Areas

(OTC)

2,127,578,000

329,499,000

2,457,077,000

2,806,668,904

349,591,904

- do -

25.

M/O Labour and

Manpower

01-04-2009

82 – Labour and

Manpower Division

(OTC)

181,559,000

2,113,000

183,672,000

187,788,505

4,116,505

- do -

83 – Other

Expenditure

of Labour and

Manpower Division

(OTC)

6,022,669,000

1,801,000

6,024,470,000

6,026,568,698

2,098,698

- do -

xxiv

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

26.

M/O Local

Government and

Rural Development

17-12-2008

87 – Local

Government

and Rural

Development

Division (OTC)

59,812,000

1,215,000

61,027,000

61,497,191

470,191

- do -

27.

M/O Minorities

Affairs

14-01-2009

88 – Minorities

Affairs

Division (OTC)

101,705,000

----------

101,705,000

102,417,838

712,838

- do -

28.

M/O Petroleum and

Natural Resources

06-02-2009

151 – Development

Expenditure of

Petroleum and

Natural Resources

Division (OTC)

28,000,000

-----------

28,000,000

28,042,051

42,051

- do -

167 – Capital

Outlay on

Petroleum and

Natural Resources

(OTC)

317,346,000

1,669,768,000

1,987,114,000

2,647,613,049

660,499.049

The PAC regularized

the excess.

29.

Planning and

Development

Division

17-02-2009

96 – Planning and

Development

Division (OTC)

224,297,000

15,890,000

240,187,000

271,430,833

31,243,833

- do -

xxv

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

30.

M/O Postal Services

19-01-2009

18 – Pakistan Post

Office Department

(OTC)

4,659,532,000

---------

4,659,532,000

4,665,258,791

5,726,791

The PAC directed the

PAO to get it

regularized from

M/O Finance and

bring it back before

PAC in the next

meeting.

31.

M/O Railways

23-12-2008

101 – Pakistan

Railways

(Charged)

5,516,064,000

2,111,458,000

7,627,522,000

7,868,041,909

240,519,909

The PAC regularized

the excess.

32.

M/O Science and

Technology

23-02-2009

105 – Scientific and

Technological

Research Division

(OTC)

137,070,000

96,320,000

233,390,000

360,596,354

127,206,354

- do -

106 – Other

Expenditure

of Scientific and

Technological

Research Division

(OTC)

1,395,793,000

455,455,000

1,851,248,000

1,924,079,699

72,831,699

- do -

33.

M/O Social Welfare

and Special

Education

15-01-2009

107 – Social

Welfare and

Special Education

Division (OTC)

5,193,903,000

-----------

5,193,903,000

5,216,604,148

22,701,148

The PAC regularized

the excess.

xxvi

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

34.

M/O States and

Frontier Regions

22-05-2009

110– Frontier

Regions

(OTC)

1,361,502,000

---------

1,361,502,000

1,697,497,292

335,995,292

- do -

35.

Statistics Division

15-01-2009

28 – Statistics

Division

(OTC)

454,807,000

2,934,000

457,741,000

468,909,559

11,168,559

- do -

36.

Supreme Court of

Pakistan

(The report of the

Committee constituted

by the Supreme Court

of Pakistan is still

awaited).

- Supreme Court

(Charged)

149,506,000

38,600,000

188,106,000

188,159,623

53,623

Yet not discussed by

the PAC as the report

of the Committee

constituted by the

Chief Justice of

Pakistan is still

awaited.

37.

M/O Textile

Industry

07-11-2008

114 – Textile

Industry

Division (OTC)

51,465,000

57,001,000

108,466,000

108,800,045

334,045

The PAC regularized

the excess.

38.

M/O Tourism

16-02-2009

116 – Other

Expenditure

of Tourism

Division (OTC)

58,774,000

---------

58,774,000

62,992,832

4,218,832

- do -

xxvii

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

39.

Wafaqi Mohtasib

Secretariat

16-01-2009

- Wafaqi

Mohtasib

(Charged)

98,967,000

1,352,000

100,319,000

100,734,997

415,997

- do -

40.

M/O Water and

Power

07-11-2008

117 – Water and

Power

Division (OTC)

162,009,000

63,985,000

225,994,000

250,971,112

24,977,112

- do -

R E P O R T S

1

CABINET DIVISION

1. OVERVIEW

Appropriation Accounts and Annual Audit Reports for the year 2005-2006

pertaining to the Cabinet Division were taken up for examination by Public

Accounts Committee (PAC) on December 22, 2008, May 22 & October 28,

2009. Audit also presented the following Audit reports:

i) Audit Report on the Accounts of Public Sector Enterprises for the

year 2005-06.

ii) Audit Report on the Accounts of Federal Government (Civil) for

the year 2005-06, Audit year 2006-07.

iii) Audit Report on the Accounts of Government of Pakistan (Civil

Works) for the year 2005-06.

iv) Audit Report on the Accounts of Telecommunication Sector for

the year 2005-06.

1.1 The PAC having considered Audit‟s point of view and explanations

given by the Principal Accounting Officer (PAO), made its

recommendations in a number of cases i.e. non retrieval of 20,000 acres

of land, loss due to award of work at higher rate on single tender, loss

due to non-deduction of rebate, non recovery of rent, non recovery of

spectrum Administrative fee, non recovery from Telecom/Mobile

Sector/Operators etc.

1.2 During the course of discussion, the Committee issued some policy

recommendations, depending on the nature of the issue, directing the

PAO to take appropriate action.

1.3 There were 88 paras and 7 Grants reported by the Audit. These paras

were initially examined by the Departmental Accounts Committee

(DAC) and thereafter discussed in the meetings of PAC. 36 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. On 46 paras, the PAC directed the PAO to implement the

DAC‟s decision. The Committee gave direction on 13 paras. PAC

directed recovery amounting to Rs 8508.72 million out of which a sum

of Rs 159.58 million has been realized. For the remaining amount, the

Committee directed the Ministry to affect recoveries within the

2

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.

2. ACTIONABLE POINTS

Actionable points arising from the discussion of the PAC meeting on the

Appropriation Accounts and Audit Report for the year 2005-06, pertaining to the

Cabinet Division held on 22nd

December, 2008 are as under:-

APPROPRIATION ACCOUNTS (CIVIL VOL-I, 2005-06)

2.1. i) GRANT 1-CABINET (PAGE 35-AA)

(EXCESS OF RS.1,400,014)

AGPR pointed out the excess of 1.02% of the total grant.

ii) GRANT 2-CABIENT DIVISION (PAGE 37-AA)

(EXCESS OF RS.19,746,538)

AGPR pointed out the excess worked out as 0.81% of the total grant. A

supplementary grant of Rs 4,867,000 was sanctioned but not included in

supplementary schedule of authorized expenditure. After taking it into

account the excess was decreased to Rs 14,879,538 (0,61%).

iii) GRANT 3- EMERGENCY RELIEF AND REPATRIATION

(PAGE 42-AA)

(EXCESS OF RS 315,954,688)

AGPR pointed out the excess worked out as 32.60% of the total grant. A

supplementary grant of Rs 314,600,000 was sanctioned but not included

in supplementary schedule of authorized expenditure. After taking it into

account the excess was decreased to Rs 1,354,688 (0,11%).

iv) GRANT 4 - OTHER EXPENDITURE OF CABINET DIVISION

(PAGE 44-AA)

(SAVING OF RS 41,295,657)

AGPR pointed out the saving worked out as 10% of the total grant. An

amount of Rs 41,460,367 (10.04%) was surrendered converting the grant

3

to be closed with minor excess of Rs 164,710 (0.04%).

v) GRANT 13- STATIONERY AND PRINTING (PAGE 55-AA)

(SAVING OF RS 17,538,471)

AGPR pointed out the saving worked out as 38.69% of the total grant.

An amount of Rs 19,705,537 (43.48%) was surrendered converting the

grant to be closed with excess of Rs 2,167,066 (4.78%).

vi) GRANT 123 - CAPITAL OUTLAY ON LAND REFORMS (PAGE

57-AA)

(SAVING OF RS 14,262)

AGPR pointed out the saving worked out as 2.85% of the total grant.

vii) GRANT 126-DEVELOPMENT EXPENDITURE OF CABINET

DIVISION (PAGE 58-AA)

(SAVING OF RS 222,043,058)

AGPR pointed out the saving worked out as 33.36% of the total grant. A

supplementary grant of Rs 37,601,000 was sanctioned but not included

in supplementary schedule of authorized expenditure. After taking it into

account the saving shall be increased to Rs 259,644,058 (36.92%). An

amount of Rs 136,184,000 (19.36%) was surrendered leaving net saving

of Rs 123,460,058 (17.56%).

PAC DIRECTIVE

On the presentation of the above seven grants by the AGPR and after

Ministry‟s reply the PAC regularized the excesses /savings of the Grants

with the directive that target should be zero saving and zero excess.

AUDIT REPORT ON THE ACCOUNTS OF PUBLIC SECTOR ENTERPRISES

FOR THE YEAR 2005-06

PRINTING CORPORATION OF PAKISTAN (PVT) LIMITED

2.2. PARA 2.1 (PAGE-7-ARPSE)

Audit pointed out that the over all financial position of the Corporation was very

4

poor. Accumulated losses had an increasing trend according to the working

results of the Corporation for the year 2004-05 as compared to the previous

years.

The Ministry informed the Committee that figures have been taken from audited

accounts of PCP for relevant years. The figures/analyses given in the table are

audited figures and correct. PCP sustained net loss of Rs 154,441 million during

the year 2004-05 as per audited accounts.

PAC DIRECTIVE

The PAC suggested to build up clientele of the Corporation and directed the

Ministry to hold a meeting with the Corporation to get briefing on the

performance where targets be fixed for new leadership under intimation to the

PAC.

2.3. PARA 2.6 (PAGE 9-ARPSE)

The Audit pointed out that contributory Provident Fund of Rs 411.948 million

including interest appearing as payable in books of accounts as on June 30, 2005

has not been transferred to the trust account, which is against the provisions of

Section 227 of Companies Ordinance, 1984.

The Ministry informed the Committee that this amount of C.P. Fund

Contribution and interest accrued thereon accumulated over the past so many

years could not be paid by PCP due to paucity of funds. The liability cannot be

cleared in lump sum. However, PCP has started payment of monthly C.P Fund

contribution to C.P. Fund Trust with effect from 1-2-2006. An Amount of 100

million has been paid to C.P. Fund trust during the current financial year i.e.

2008-09.

PAC DIRECTIVE

The PAC settled the para and directed the Ministry that this type of irregularity

should not be repeated in future and installments should be fixed to return the

money.

2.4. i. Para 3 (Page 9-ARPSE)

ii. Para 2 (Page 7-ARPSE)

iii. Para 2.2 (Page 8-ARPSE)

5

iv. Para 2.3 (Page 8-ARPSE)

v. Para 2.4 (Page 8-ARPSE)

vi. Para 2.5 (Page 9-ARPSE)

vii. Para 4 (Page 10-ARPSE)

DEPUTY CONTROLLER STATIONERY & FORMS, KARACHI

viii. PARA –ANNEXURE-I(01) (PAGE 409-ARPSE)

On the presentation of the above paras, the PAC directed the Ministry to

implement decisions of the DAC.

AUDIT REPORT ON THE ACCOUNTS OF FEDERAL GOVERNMENT

(CIVIL)

FOR THE YEAR 2005-06, AUDIT YEAR 2006-07

2.5. PARA 1.1 (PAGE 1-AR)

DISASTER PREPAREDNESS OF EMERGENCY RELIEF CELL FOR

EARTHQUAKE OF 8TH

OCTOBER, 2005

The Audit pointed out that the subject of disaster relief has been allocated to the

Cabinet Division (3 (3) item-24 of Schedule-II of Rules of Business, 1973).

Cabinet Division has a small cell called Emergency Relief Cell (ERC). This

Cell, a apart from other things, is responsible for;

i. Provision of Cash as well as kind to supplement the resources of

Provincial Governments in the event of major disasters.

ii. Coordinating relief activities among different stake holders and

iii. Stockpiling certain items of basic necessity and establishing central

inventory of resources.

In order to manage these activities, ERC comprises of one Director General, one

Deputy Secretary and four Section Officers with supporting staff. In addition

they have an Aviation Squadron with 2 Commissioned Officers and a Ware

House which is headed by a Store Supervisor and supporting staff of 16 persons.

Despite those arrangements, the organization was not prepared for earthquake

2005.

The Ministry informed the Committee that appreciating the need to identify

risks and proposing risk mitigation measures it needs to be pointed out that

Cabinet Division has never been given the mandate and task of disaster

6

preparedness. Under the National Calamity (Prevention and Relief) Act -158,

disaster relief is the primary responsibility of the Provincial Governments. At

the Federal level Emergency Relief Cell of the Cabinet Division is responsible

for supplement and support to provincial governments.

PAC DIRECTIVE

The PAC observed that it is the responsibility of the Ministry to monitor the

performance of the autonomous organizations working under them and the

autonomy should not be exchanged for performance. The PAC directed the

Ministry to come up with clear policy for NDMA and the idea must be

replicated in provinces.

AUDIT REPORT ON THE ACCOUNTS OF GOVERNMENT OF

PAKISTAN (CIVIL WORKS) FOR THE YEAR 2005-06

CAPITAL DEVELOPMENT AUTHORITY

2.6. PARA 1.1(PAGE 1-AR)

NON-RETRIEVAL OF 20,000 ACRES OF LAND COSTING RS. 100

BILLION

The Audit pointed out that according to the Directorate of Land and

Rehabilitation letter NO. CDA/DLA/Adv-poss./2001/1053 dated 8.1.2002 land

was to be vacated and area demarcation poles/pillars to be installed after taking

possession. Capital Development Authority, (Director, Planning Wing) could

not get vacated the land acquired from 1961 to 1985 for development of sectors,

F-6, H-11 & 12, G-12, F-12 and National Park area from land encroachment.

The non-retrieval of land resulted in non-realization/generation of revenue i.e.

sale proceed of plots.

The Ministry informed the Committee that in pursuance of the recommendations

of the Master Plan of Islamabad thousands of acres of land had been acquired,

planned and developed by CDA in Islamabad. The exact area and the location of

land under encroachment have not been pointed out in the audit Para. Sector F-6

has been developed and no such encroachments is reported. Sector H-11 has

been developed as per the approved layout plan. Sector H-12 has been allotted to

NUST. Sector G-12 and F-12 have not yet been acquired. The land issues of

Sector E-12 area are being resolved by Land Directorate., CDA so as to

undertake development as per approved layout plan. The planned plots in Sector

7

E-12 stand allotted. The acquired land in Park Area has been utilized by

planning and development of various CDA‟s schemes i.e. Poultry & Vegetable

(P&V) Scheme-I, P&V Scheme-II, Orchard Scheme Murree Road, Model

Villages Rawal Town, Margalla Town, Shahzad Town, model Urban Shelter

Project Frash, Kuri Agro Farming scheme, NIH , etc. However, some of the land

remained unutilized due to falling under the adverse possession. The matter was

discussed in the CDA Board meeting held on 27.7.2007. The Board decided

50,000 pillars will be constructed by Engineering Wing. These pillars should be

provided to Director Lands and the rehabilitations, CDA for fixation on the

acquired land of CDA. Director Lands & Rehabilitation will work as project

director. He will coordinate with Engineering Wing, Director Estate

Management-II and Enforcement Directorate for proper and timely demarcation

of the land and fixation of the pillars. The above Board decision has been

forwarded to concerned formation of CDA for implementation in consultation

with one another.

PAC DIRECTIVE

The PAC directed the PAO to come up with the revised reply within 6 weeks.

2.7. PARA 1.11 (PAGE 8-AR)

NON RECOVERY OF COST OF GAS AND ELECTRICITY FROM

ALLOWANCE RS 67.5 MILLION

The Audit pointed out that the Model Housing Shelter was to be developed on

self-finance basis and electricity, gas; telephone was to be provided by the

beneficiaries out of their own arrangements as per provision of approved PC-I

for development of Model Urban Shelter Project Farash, Islamabad.

Subsequently CDWP also approved the project subject to be condition that cost

of electrification and gas in the cost estimate was to be recovered from the

allottees along with other costs. CDA failed to recover the said amount.

The Ministry informed that electricity and gas has been provided by the CDA on

its own expenditure to attract the allottees as well as being a welfare project in

pursuance of CDA Board decision.

PAC DIRECTIVE

The PAC settled the para with the direction that rules must be followed in

future and approval of CDWP may be obtained within six weeks under

intimation to PAC.

8

2.8. PARA 1.12 (PAGE 9-AR)

LOSS DUE TO AWARD OF WORK AT HIGHER RATE ON SINGLE

TENDER BASIS RS. 51.2 MILLION.

The Audit pointed out that as per Para No. 93(ii) of CDA procedure Manual Part

III. Award of single tender is to be allowed where only a particular firm or

contractor possesses the necessary skills and qualifications to undertake a work.

Capital Development Authority awarded four road works to M/s FWO on single

tender basis @ 12.50 % above the NIT without inviting open competition.

During the same period i.e. March 2004 and January, 2005 another work of the

same nature i.e. Development of facilities Darbar Bari Imam and Construction

of Vehicular Roads in Sector I-14/4 in the same Directorate were awarded

@13.86% & 10.86% below the NIT amount.

The Ministry informed the Committee that the para relates to the work

”Construction of 3rd

Avenue between Sector G-3 and G-4, Islamabad” awarded

to M/s FWO @12.50% above NIT cost at S.No.IV. In this regard it is clarified

that the above said work was awarded to M/s FWO as per MOU signed between

CDA and FWO in pursuance of special approval/permission granted by the

Prime Minister of Pakistan. Since mode of award of works stated in this Audit

para is different from others, so comparison of the works awarded through

MOU, with the works awarded after inviting tenders through press as per normal

procedure in vogue, is not justified.

PAC DIRECTIVE

The PAC directed that the Sub-Committee which is also handling NHA cases

may consider this para with a report to PAC within one month.

2.9. PARA 1.19 (PAGE 14-AR)

LOSS DUE TO NON-DEDUCTION OF REBATE – RS. 12.1 MILLION

The Audit pointed out that 11% rebate was required to be deducted from the

contractor bills as per accepted bid of the contractor. Contrary to the above,

CDA paid 48th

bill to the contractors for Rs. 279.6 million including payment of

Rs. 109.8 million on account of extra items and no rebate was deducted from

this amount as was required under agreement. This resulted in loss of Rs. 12.1

million.

9

The Ministry informed the Committee that M/s NESPAK approved the variation

of extra item. During variation of cost M/s NESPAK clarified that the unit rates

of additional work can not be based on the rates available in the contract as per

clause 52.1 of the contract as the rates available in the contract were applicable

on the completion of project within the period of 12 months without escalation.

The rates of extra item were based on prices of material prevailing at the time of

issuance of final drawing of the girders. Hence the deduction of rebate was not

required.

PAC DIRECTIVE

The PAC directed the PAO to hold an inquiry to be conducted by Additional

Secretary/Joint Secretary of the Cabinet Division involving Director General

Audit (works), and representative of CDA with report to PAC within one month.

2.10. PARA 1.36 (PAGE 25-AR)

LOSS DUE TO NO ACTION AGAINST DEFAULTING HOUSING

SCHEMES RS. 2.5 MILLION

The Audit pointed out that validity of the NOC was automatically deemed to

have been withdrawn in case of the sponsors do not complete at least 10% of

development works within one year from the date of issuance of the NOC. If the

completion of the schedule is delayed beyond the completion period specified,

the sponsor shall pay a sum of Rs. 500,000 for grant of extension for a period of

one year. No further extension shall be granted as per Para 9 (iii) and 10 of

Modalities and Procedures framed under ICT (Zoning) Regulation 1992 for

development of private housing schemes in Zone-II and V. CDA had neither

withdrawn cancelled NOC, nor imposed penalty of Rs. 500,000 in violation of

ICT Zoning Regulation 1992.

The Ministry informed the Committee that CDA Board had decided to take over

“Jeddah Town” for development. The modalities regarding possession/facing of

the site, layout Planning Division, engineering designs and its development are

being finalized with NAB.

PAC DIRECTIVE

The PAC directed the PAO to ensure that the CDA should have system in place

to stop such things happen and to strengthen and revise the system. The PAC

further directed to submit the report on the following with in one month:

10

(i) Parliamentarian Housing Society,

(ii) 11 plots converted into 4 corner plots and allotted to CDA officers,

(iii) NAB enquiry report on Jeddah Town.

2.11. PARA 1.39 (PAGE 27-AR)

OVERPAYMENT DUE TO NON-REDUCTION OF RATE RS. 2

MILLION

The Audit pointed out that the composite Rates of items include advance tax

deductible at source according to NHA Composite Schedule of Rates 2000

(Punjab). FWO, exempted from the deduction of income tax, was paid full rates

of items of the work Construction of Main Roads, Vehyicular Roads, Streets and

axillary work in Sector G-13 Islamabad. While awarding the contract to the

FWO the schedule rates were required to be deducted by 6% as the FWO was

exempted from the payment of tax. Non-reduction of rates resulted in

overpayment of Rs. 2 million.

The Ministry informed the Committee that M/s FWO is a government

organization and work was awarded to them on negotiation. In the first instance,

M/s FWO had offered the rate at 26% above the NIT cost, but keeping in view

certain exemptions availed by M/s FWO they were asked to reduce their rates,

therefore, as a result of negotiations they finally offered the rate at 18% above

the NIT. The difference of (26%-18%), 8% is more than 6% income tax. These

rates were also approved by the sponsoring Ministry of Housing & Works.

PAC DIRECTIVE

The PAC settled the para and directed that there should be a uniform policy for

deduction of income tax from Public Sector Organizations and directed the

Ministry of Finance to take up the matter with the FBR to resolve the issue

accordingly and report to PAC within one month.

2.12. PARA 1.40 (PAGE 28-AR)

NON-RECOVERY OF RENT AMOUNTING TO RS. 2 MILLION.

The Audit pointed out that duty of Departmental Controlling Officers is to see

that all the sums due to government are regularly and promptly assessed/realized

and duly credited in the public account as per rule 26 of GFR Vol.I. Moreover,

as per revised rent policy issued rent of room was required to be paid in advance

11

vide NO. CDA/DD/GH/19/98 dated 4.4.1996, Para 2.

The Ministry informed the Committee that as advised by the Department

Accounts Committee, D.O. letters have been issued as detailed under:-

a) D.O. letter from Chairman CDA to Secretary, National Assembly

Secretariat for the recovery of outstanding dues from Parliamentarians.

b) D.O. letter from Chairman, CDA to the head of departments for the

recovery of outstanding amounts from their subordinates.

As soon as outstanding amounts are recovered through above arrangements, the

same shall be produced to Audit for verification.

PAC DIRECTIVE

The PAC directed the Ministry that list of such occupants should be provided to

the PAC and appropriate action should be initiated for recovery. The PAC

further directed to recover the rent and utility bills from the persons who

occupied the Parliament Lodges/Government Hostel immediately after change

of the Government in 1999-2000 and report the recovery position within next six

weeks.

2.13. PARA 1.52 (PAGE 36-AR)

LOSS DUE TO NON-FULFILLMENT OF CONTRACTUAL

OBLIGATION

RS 0.985 MILLION

The Audit pointed out that the contractor was bound to supply crush stone, sand,

etc, valuing Rs 138.945 million @ 9.27% below the NIT cost as per contract

agreement.

Capital Development Authority (Deputy Director, Machinery Pool

Organization) procured material valuing Rs 106.212 million against contract

value for

Rs 138.945 million and final bill was paid. The work completion date was 24th

November, 2004. The contractor did not supply full material as agreed upon in

contract agreement @ 9.27% below the estimate. A quantity of 353-466 ft

remained unsupplied. The left over material was subsequently supplied through

another contractor @ 22% above premium. Due to non fulfillment of supply

material of original contract higher rates @ 31.27% above were allowed/paid for

12

balance quantities. This resulted in loss of Rs 0.985 million.

The Ministry informed the Committee that it still holds its earlier stance that

after expiry of the contract, the contractor can not be forced to make supply.

Therefore, under the contract obligation the tender was closed with the

concurrence of the competent authority and fresh tenders were invited.

PAC DIRECTIVE

The PAC directed the PAO to produce the relevant record to Audit. The PAC

shall discuss the para after reconciliation of record by Audit.

2.14. i. PARA 1.4 (PAGE 3-AR)

ii. Para 1.20 (Page 15-AR)

iii. Para 1.21 (Page 15-AR)

iv. Para 1.24 (Page 17-AR)

v. Para 1.25 (Page 18-AR)

vi. Para 1.27 (Page 19-44-AR)

vii. Para 1.28 (Page 20-AR)

viii. Para 1.31 (Page 22-AR)

ix. Para 1.32 (Page 23-AR)

x. Para 1.35 (Page 25-AR)

xi. Para 1.37 (Page 26-AR)

xii. Para 1.42 (Page 29-AR)

xiii. Para 1.43 (Page 30-AR)

xiv. Para 1.44 (Page 31-AR)

xv. Para 1.45 (Page 32-AR)

xvi. Para 1.47 (Page 33-AR)

xvii. Para 1.51 (Page 36-AR)

xviii. Para 1.53 (Page 37-AR)

xix. Para 1.54 (Page 38-AR)

xx. Para 1.57 (Page 40-AR)

PAC DIRECTIVE

On the recommendations of the DAC, the PAC settled the above audit paras.

2.15. i. PARA 1.2 (PAGE 1-AR)

ii. PARA 1.3 (PAGE 2-AR)

iii. PARA 1.5 (PAGE 3-AR)

13

iv. PARA 1.6 (PAGE 4-AR)

v. PARA 1.7 (PAGE 5-AR)

vi. PARA 1.8 (PAGE 6-AR)

vii. PARA 1.9 (PAGE 7-AR)

viii. PARA 1.10 (PAGE 7-AR)

ix. PARA 1.13 (PAGE 10-AR)

x. PARA 1.14 (PAGE 11-AR)

xi. PARA 1.15 (PAGE 11-AR)

xii. PARA 1.16 (PAGE 12-AR)

xiii. PARA 1.17 (PAGE 13-AR)

xiv. PARA 1.18 (PAGE 13-AR)

xv. PARA 1.22(PAGE 16-AR)

xvi. PARA 1.23 (PAGE 17-AR)

xvii. PARA 1.26 (PAGE 19-AR)

xviii. PARA 1.29 (PAGE 21-AR)

xix. PARA 1.30 (PAGE 21-AR)

xx. PARA 1.33 (PAGE 23-AR)

xxi. PARA 1.34 (PAGE 24-AR)

xxii. PARA 1.38 (PAGE 27-AR)

xxiii. PARA 1.41 (PAGE 29-AR)

xxiv. PARA 1.46 (PAGE 32-AR)

xxv. PARA 1.48 (PAGE 34-AR)

xxvi. PARA 1.49 (PAGE 34-AR)

xxvii. PARA 1.50 (PAGE 35-AR)

xxviii. PARA 1.55 (PAGE 38-AR)

xxix. PARA 1.56 (PAGE 39-AR)

PAC DIRECTIVE

On the presentation of above audit paras by the Audit Department, the PAC

directed the PAO to assign this work to an Additional Secretary to implement

the DAC‟s decision involving the Audit and CDA with report to PAC within

one moth.

ACTIONABLE POINTS

Actionable Points arising from the discussion of the PAC meeting held on

22-5-09 on the accounts of Cabinet Division for the year 2005-06.

14

AUDIT REPORT ON THE ACCOUNTS OF TELECOMMUNICATION

SECTOR

FOR THE YEAR 2005-2006

PAKISTAN TELECOMMUNICATION AUTHORITY

2.16.1 PARA 1.3 (PAGE 5-6-AR)

NON-RECOVERY OF SPECTRUM ADMINISTRATIVE FEE OF RS. 110

MILLION AND PENALTY OF RS.44 MILLION FROM MOBILE

OPERATORS

Audit pointed out that all fees, fines or other amounts due or payable to the

Authority may be recovered as land revenue arrears according to Section-30 of

Pakistan Telecommunication (Re-organization) Act, 1996.Para 4.4.1 of General

Conditions of License provides that the licensee shall pay all annual fees to the

Authority within 120 days of the end of the financial year to which such fees

relate. In case of delay, 2 % penalty per month on the amount unpaid would be

recovered.

PTA Headquarter did not recover the spectrum administrative fee amounting to

Rs 110 million and penalty of Rs 44 million during 2004-05 as detailed below:

(Rs. in million)

S.No. Name of

Operator M/s

Period

Involved

Total

Claim

Amount

Recovered

Balance

Recover-

Able

Penalty

1 Mobilink Ltd.

Dec, 04

to June,

05

56 56 0 9

2 Instaphone

Ltd. -do- 48 0 48 8

3 Paktel Ltd. -do- 55 55 0 9

4 Telenor Ltd. -do- 45 45 0 4

5 U-Fone Ltd.

June, 04

to June,

05

57 0 57 9

6 Warid Ltd -do- 45 40 5 5

TOTAL 306 195 110 44

The PAO informed the PAC that all the cases for recovery were in the court.

15

The date of hearing for Insta-phone Ltd is in the next month (June) and the date

of hearing about recovery from the U-Phone is the 16th

June, 2009.

The PAO also informed the PAC that as a matter of Policy, all regulatory bodies

have been given under the control of Cabinet Division.

PAC DIRECTIVE

The PAC directed the PAO:-

to make sure that all the companies local or foreign must follow the rules and regulations,

to ensure the speedy progress of recovery cases,

to discuss with Attorney General of Pakistan for ensuring progress on these cases, to move an application within 4 to 6 weeks through a

competent legal authority for vacation of stay,

democratize the organization by listening to the end users,

to play a proactive role in such cases,

to prepare a comprehensive briefing on the overall functioning of PTA for the PAC in its next meeting on the Cabinet Division,

to give a performance report for last 3 months to the PAC within one month, as to how the complaints of consumers are entertained,

percentage of complaints addressed and the mode of receipt of

complaints.

to provide a copy of law to the PAC regarding imposition of penalty on the companies if they fail to deposit the License fee, within one month.

to give priority to the public interest,

to get some amount from these companies for advertisement campaign by the PTA and provide contact numbers of PTA on those

advertisements to make for more easier for public to contact for their

complaints.

to implement each and every directive of the PAC in its letter and spirit.

The PAC also desired to send the case of the Mobile Phone Companies to the

Prime Minister of Pakistan.

2.17 ARA 1.5 (PAGE 6-7-AR)

NON-RECOVERY OF Rs.11,837 MILLION FROM TELECOM/MOBILE

SECTOR

Audit pointed out that PTA did not recover the balance amount of Rs 11,837 out

of Rs 15,012 million in violation of the provisions of Act as detailed below:

16

(Rs. in million)

S.# Description Amount

Recoverable

Amount

Recovered

Balance

Recoverable

1 Initial Spectrum Fee (Short

Term) 195 124 71

2 Initial License Fee (Short Term) 14,756 3,022 11,734

3 Basic Telephony 3 0 3

4 Card Pay Phone Service 52 24 28

5 O