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Audit Report on the Accounts of Defence Services Audit Year 2019-20

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Audit Report on the Accounts of Defence Services Audit Year 2019-20 AUDIT REPORT ON THE ACCOUNTS OF DEFENCE SERVICES AUDIT YEAR 2019-20 AUDITOR-GENERAL OF PAKISTAN i TABLE OF CONTENTS Page N o . PREFACE iv ABBREVIATIONS AND ACRONYMS v EXECUTIVE SUMMARY xii CHAPTER-1 Public Financial Management AUDIT PARAS 5 CHAPTER-2 Ministry of Defence 2.1 Introduction 15 2.2 Comments on Budget and Accounts 19 2.3 Classified Summary of Audit 20 Observations 2.4 Status of Compliance of PAC Directives 20 ii AUDIT PARAS Pakistan Army 2.5 Non-production of Record 22 2.6 Procurement Related Irregularities 28 2.7 Un-authorized / Irregular Expenditure 41 2.8 Recoverables / Overpayments 65 2.9 Loss to State 89 Military Lands and Cantonments 2.10 Non-production of Record 91 2.11 Procurement Related Irregularities 93 2.12 Un-authorized / Irregular Expenditure 95 2.13 Recoverables / Overpayments 104 2.14 Loss to State 125 Pakistan Air Force 2.15 Procurement Related Irregularities 139 2.16 Un-authorized / Irregular Expenditure 144 2.17 Recoverables / Overpayments 152 2.18 Loss to State 157 Pakistan Navy 2.19 Non-production of Record 160 2.20 HR / Employee related irregularities 162 iii 2.21 Procurement Related Irregularities 164 2.22 Un-authorized / Irregular Expenditure 174 2.23 Recoverables / Overpayments 191 2.24 Loss to State 199 Military Accountant General 2.25 Procurement Related Irregularities 204 2.26 Un-authorized / Irregular Expenditure 206 2.27 Recoverables / Overpayments 207 Inter Services Organizations 2.28 Non-production of Record 208 2.29 Un-authorized / Irregular Expenditure 210 2.30 Recoverables / Overpayments 212 2.31 Loss to State 214 CHAPTER-3 Ministry of Defence Production 3.1 Introduction 216 3.2 Classified Summary of Audit observations 218 3.3 Status of Compliance of PAC Directives 219 AUDIT PARAS 3.4 Non-Production of Record 221 3.5 Procurement Related Irregularities 223 3.6 Management of Accounts with 225 Commercial Banks 3.7 Un-authorized / Irregular Expenditure 227 iv 3.8 Recoverables / Overpayments 239 3.9 Loss to State 245 Annexure-I MefDAC Paras (DGADS North) 254 Annexure-II MefDAC Paras (DGADS South) 355 v PREFACE According to Articles 169 and 170 of the Constitution of Islamic Republic of Pakistan 1973, read with Sections 8 and 12 of the Auditor- General’s (Functions, Powers and Terms and Conditions of Service) Ordinance 2001, the Auditor General of Pakistan conducts audit of budgetary grants of the Defence Services. The Directorates General of Audit Defence Services (North and South) conducted Compliance Audit on the accounts of Defence Services for the financial year 2018-19 with the view to report significant findings to the relevant stakeholders. The Audit assessed, on test check basis whether the management complied with applicable laws, rules and regulations in managing the resources in line with principles of economy, efficiency and effectiveness. This Audit Report indicates certain recommendations that, if taken, will help the management to improve financial discipline. Majority of the audit findings included in this report have also been discussed in DAC meetings. This Audit Report is submitted to the President in pursuance of the Article 171 of the Constitution of Islamic Republic of Pakistan 1973, for causing it to be laid before the Parliament. (Javaid Jehangir) Auditor-General of Pakistan Dated: 2020 iv ABBREVIATIONS AND ACRONYMS ACAS Assistant Chief Air Staff ACE Additional Chief Engineer ACW Annual Capital Works AFDP Armed Forces Development Programme AFI Air Force Instruction AFNS Armed Forces Nursing Services AFOHS Air Force Officers Housing Scheme AG Accountant General AGE Assistant Garrison Engineer AGP Auditor General of Pakistan AHQ Air Headquarters AMF Aircraft Manufacturing Factory AOC Air Officer Commanding ARV Annual Rental Value ASC Army Services Corps ASID Army Stores Inspection Depot ASRF Advance System Rebuild Factory ATG Annual Training Grant AWACS Airborne Warning and Control System BA Fee Building Application Fee BG Bank Guarantee BMP Dte Budget Marketing and Procurement Directorate BOO Board of Officers BOQ Bachelor Officer Quarter BoQ Bill of Quantity BRAC Bholari Residential Area Contract BTAC Bholari Technical Area Contract BTS Base Trans-receiver Station BTU British Thermal Unit C&SC Command & Staff College CA Contract Agreement v CBC Cantonment Board Clifton CBI Cash Book Item CBR Cantonment Board Resolution CBs Cantonment Boards CDR Cash Deposit Receipt CEME Commander Electrical & Mechanical Engineering CEO Cantonment Executive Officer CFA Competent Financial Authority CIF Cost Insurance and Freight CIMLA Cantonment Institute of Municipal and Land Administration CLAR Cantonment Lands Administration Rules CLS Chief of Logistics Staff CMA Controller of Military Accounts CMES Commander Military Engineering Services CMH Combined Military Hospital CNA Controller of Naval Accounts CO Commanding Officer CNS Chief of Naval Staff CNE Civilian Non-Entitled COD Central Ordnance Depot COMCEP Commander Central Punjab COMCOAST Commander Coastal Areas COMKAR Commander Karachi COMLOG Commander Logistics COMNOR Commander North COMPAK Commander Pakistan COMSAT College of Management Sciences and Technology CP Dte Civilian Personnel Directorate CPD Chief Project Director CRV Certificate Receipt Voucher CST Comparative Statement DAC Departmental Accounts Committee vi DBA Director Budget Accounts DCAS Deputy Chief of Air Staff DCI Defence Complex Islamabad DCNS Deputy Chief of Naval Staff DG DP Directorate General Defence Purchase DG RV&F Director General Remount Veterinary and Farms DGMP Directorate General Munitions Production DGP (Army) Directorate General Procurement (Army) DGW&CE Director General Works & Chief Engineer DHA Defence Housing Authority DMA Daily Messing Allowance DO Deviation Order DOHS Defence Officers Housing Scheme DP Draft Para DP (Air / Navy) Directorate Procurement (Air / Navy) DP Establishment Defence Production Establishment DRS Daily Receipt Statement DRTS Damage Repair Training Simulator DSAS 2000 Defence Services Accommodation Scales 2000 DSR Defence Services Regulations DW&CE Director Works & Chief Engineer EDO Executive District Officer E-in-C Engineer-in-Chief EME Electrical and Mechanical Engineering Engr. Engineer ESD Engineering Stores Depot FA Financial Advisor FAM Financial Audit Manual FAT Functional Acceptance Tests FBR Federal Board of Revenue FED Federal Excise Duty FIA Federal Investigation Agency FOB Free on Board FOR Free on Rail vii FOST Flag Officer Sea Training FR Financial Regulations FTO Federal Treasury Office FWO Frontier Works Organization GE Garrison Engineer GHQ General Headquarters GSR General Staff Requirements GST General Sales Tax HEC Higher Education Commission HESCO Hyderabad Electric Supply Company HIT Heavy Industries Taxila HMT Heavy Mechanical Transport HQ SC Headquarter Southern Command HRA House Rent Allowance HRF (T) Heavy Rebuilt Factory (Tank) HSR Hospital Stoppage Receipts HULS Hand Upper Limb Surgery IE&I Institute of Electronics and Instruments INTOSAI International Organization of Supreme Audit Institutions ISPR Inter Services Public Relations IT Invitation of Tender JCOs Junior Commissioned Officers JDs Job Description JSHQ Joint Staff Headquarters JSI Joint Services Instruction KARF Kamra Avionics and Radar Factory KBCA Karachi Building Control Authority KCB Karachi Cantonment Board KDA Karachi Development Authority KW&SB Karachi Water & Sewerage Board KV Kilo Volts LAC Land Acquisition Collector LC Letter of Credit / Local Currency LD Liquidated Damages viii LOC Line of Control LP Local Purchase LPO Local Purchase Order LS Logistic Support LUMS Lahore University of Management Sciences MAG Military Accountant General Mef DAC Memorandum for Departmental Accounts Committee MEO Military Estate Office MER Monthly Expenditure Return MESMilitary Enginee Military Engineering Services MH Military Hospital MIS Management Information System ML&C Military Lands and Cantonments MOD Ministry of Defence MODP Ministry of Defence Production MOL Memorandum of Law MOQs Married Officer Quarters MRF Mirage Rebuild Factory MRI Magnetic Resonance Imaging MTBF Medium Term Budgetary Framework NAB National Accountability Bureau NAM New Accounting Model NHQ Naval Headquarters NHS Naval Housing Scheme NIV Not in Vocabulary NLC National Logistics Cell NLI Northern Light Infantry NOC No Objection Certificate NUST National University of Science and Technology OC Officer Commanding OEM Original Equipment Manufacturer OJT On Job Training OPD Outdoor Patient Department PA Dte Personnel Administration Directorate ix PAC Pakistan Aeronautical Complex PAF Pakistan Air Force PAFW Pakistan Armed Forces Form of Works PAO Principal Accounting Officer PBG Performance Bank Guarantee PC Peshawar Command PEC Pakistan Engineering Council PESCO Peshawar Electric Supply Company PNAD Pakistan Naval Ammunition Depot PNMSD Pakistan Navy Medical Supply Depot PNS Pakistan Navy Ship PPRA Public Procurement Regulatory Authority PTDC Pakistan Tourism and Development Corporation QCC Quality Control Committee QMG Quarter Master General R&E Risk and Expense RAR Running Account Receipt RC Rawalpindi Command RDS Remote Data Station RHQ Regional Headquarter RO Reverse Osmosis RSPA Revised System of Pay & Accounting RTLT Repair Through Local Trade RV&F Remount Veterinary and Farms SADA Special Army Development Account SAR Special Audit Report SBP State Bank of Pakistan SCR Surveillance Counter Reporting SECP Securities and Exchange Commission of Pakistan SI&T School of Infantry & Tactics SMA Special Messing Allowance SOP Standing Operating Procedure
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