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Audit Report on the Accounts of Secretary Local Government Department Karachi Metropolitan Corporation & Karachi Water & Sewerage Board Audit Year 2013-14

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Audit Report on the Accounts of Secretary Local Government Department Karachi Metropolitan Corporation & Karachi Water & Sewerage Board Audit Year 2013-14 AUDIT REPORT ON THE ACCOUNTS OF SECRETARY LOCAL GOVERNMENT DEPARTMENT KARACHI METROPOLITAN CORPORATION & KARACHI WATER & SEWERAGE BOARD AUDIT YEAR 2013-14 AUDITOR-GENERAL OF PAKISTAN TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS .......................................................................... i PREFACE ......................................................................................................................... iv EXECUTIVE SUMMARY .............................................................................................. v SUMMARY TABLES & CHARTS ............................................................................... ix Table 1: Audit Work Statistics ....................................................................................... ix Table 2: Audit observations Classified by Categories ................................................... ix Table 3: Outcome Statistics ............................................................................................ x Table 4: Table of Irregularities pointed out ................................................................... xi CHAPTER-1 ...................................................................................................................... 1 1.1 Introduction/profile of the entities ....................................................................... 1 1.1.1 Secretary Local Government ........................................................................ 1 1.1.2 Karachi Metropolitan Corporation ................................................................ 1 1.1.3 Karachi Water & Sewerage Board ................................................................ 1 1.1.4 Comments on Budget and Accounts (Variance Analysis) ............................ 2 1.2 AUDIT PARAS .................................................................................................... 10 1.2.1 Misappropriation / Fraud ............................................................................ 10 1.2.2 Non-Production of Record .......................................................................... 11 1.2.3 Irregularity / Non-Compliance .................................................................... 12 1.2.4 Internal Controls Weaknesses ..................................................................... 36 ANNEXURE .................................................................................................................... 39 ABBREVIATIONS AND ACRONYMS BPS Basic Pay Scale CDGK City District Govt. Karachi CE Chief Engineer Cft Cubic feet CPWA Code Central Public Works Accounts Code CPWD Code Central Public Works Department Code CSR Composite Schedule of Rates DAC Departmental Accounts Committee DDO Drawing & Disbursing Officer DG Director General DMD Deputy Managing Director E&M Electrical Mechanical F.A Financial Advisor FAO Field Audit Office FBR Federal Board of Revenue FD Finance Division / Department F&P Finance and Planning FY Financial Year GFR General Financial Rules GOS Govt. of Sindh GST General Sales Tax HBA House Building Advance H.R Hot rolled HRA House Rent Allowance HRM Human Resource Management IPC’S Interim Payment Certificate KMC Karachi Municipal Corporation KMDC Karachi Medical & Dental College KW&SB Karachi Water & Sewerage Board LG Local Govt. LGD Local Govt. Department MD Managing Director MEFDAC Memorandum for Departmental Accounts Committee i MS Medical Services MT&RI Municipal Training & Research Institute NEK North East Karachi PAO Principal Accounting Officer PS Personal Secretary PC-I Planning Commission Proforma-I PD Project Director P&F Purification and Filter P/L Providing and Laying P/F Providing and Fixing POL Petroleum, Oil and Lubricants PPRA Public Procurement Regulatory Authority MT&RI Municipal Training & Research Institute PWD Public Works Department RA Running Account R.E Resident Engineer Rft Running feet RO&DP Reverse Osmosis & Desalination Plant R&T Road & Transport SE Superintendent Engineer S.S (HTP) Special Secretary for Housing & Town Planning SCS&LGTA Sindh Civil Services & Local Govt. Training Academy S/F Supplying & Fitting Sft Square Feet SLGB Sindh Local Govt. Board SMH Sobhraj Maternity Hospital SO Section Officer SPPRA Sindh Public Procurement Regularity Authority SR Supplementary Rule SRC Standing Rates Committee SUV Sports Utility Vehicle TMA Town Municipal Administration T&C Transport & Communication TR Treasury Rules UA Union Administration ii UC Union Council VOL Volume WD Water Distribution XEN Executive Engineer iii PREFACE Articles 169 & 170 (2) of the Constitution of the Islamic Republic of Pakistan, 1973, read with Sections 8 and 12 of the Auditor General (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001, require the Auditor General of Pakistan to conduct audit of the receipts and expenditure of the Secretary Local Govt. Department, Karachi Metropolitan Corporation, Karachi Water & Sewerage Board, Taluka / Town Municipal Administrations and Union Councils. This report is based on audit of the accounts of various offices of the Secretary Local Govt. Department, Karachi Metropolitan Cooperation and Karachi Water & Sewerage Board for the financial year 2012-13. The Directorate General of Audit, Local Councils, Sindh, conducted audit during 2013-14 on test check basis with a view to reporting significant findings to the relevant stakeholders. The main body of the Audit Report includes only the systematic issues and audit findings having value of Rs 1 million or more. Relatively less significant issues are listed in the Annexure-1 of the Audit Report. The Audit observations listed in Annexure-1 shall be pursued with the Principal Accounting Officer at the DAC level and in all the cases where the PAO does not initiate appropriate action, the Audit observation will be brought to the notice of the Public Accounts Committee through the next year’s Audit Report. Audit findings indicate the need for adherence to the regularity framework, besides, instituting and strengthening internal controls to avoid recurrence of similar violations and irregularities. Most of the observations included in this report have been finalized in the light of written response(s) and discussion(s) in the DAC meetings in case of paras related to audit year 2012-13. Principal Accounting Officer failed to convene DAC meetings for the audit year 2013-14, despite pursuance by audit. The Audit Report is submitted to the Governor of Sindh in pursuance of Article 171 of the Constitution of the Islamic Republic of Pakistan, 1973 read with Section 116 of the Sindh Local Government Act 2013, for causing it to be laid before the Provincial Assembly of the Sindh. Islamabad (Muhammad Akhtar Buland Rana) Dated: Auditor-General of Pakistan iv EXECUTIVE SUMMARY The DG Audit, Local Councils, Sindh, Karachi is responsible to carry out the audit of 119 Taluka / Town municipal Administrations. This Directorate General has a human resource of 33 officers and staff, resulting in 2,937 man days. Annual budget amounting to Rs 77.141 million was allocated to this office for the financial year 2012-13. The office has a mandate to conduct regularity audit (compliance with authority audit) on test check basis with a view to reporting significant findings to the relevant stakeholders. This office also conducts performance audit of programmes / projects. Secretary Local Govt. Department performs his duties under the Sindh Rules of Business 1986. The funding of the local government department is sourced through Provincial Consolidated Fund for which Annual Budget Statement is authorized by the Provincial Assembly. Further, Karachi Metropolitan Corporation and Karachi Water & Sewerage Board conduct their operations under Sindh Local Government Ordinance, 1979 (as amended). Both entities have one Principal Accounting Officer (PAO). Karachi Metropolitan Corporation covers fifteen groups of offices i.e. Administrator, Finance & Planning, Revenue, Information Technology, Education, Health, Community Development, Agriculture, Enterprise & Investment Promotion, Karachi Mass Transit Cell, Municipal Services, Transport & Communication, Literacy, Law, and Parks & Horticulture. Karachi Water & Sewerage Board includes Managing Director, five Deputy Managing Directors and nine Chief Engineers. Financial provisions of the Ordinance describe the Government as District Local Fund and Public Account for which Annual Budget Statement is authorized by the Administrator in the form of budgetary grants while MD, KW&SB was provided budget on the basis of the estimated revenue receipts duly approved by Local Government Department, GoS. a. Scope of Audit The combined expenditure of the Secretary Local Government Department, Karachi Metropolitan Corporation and Karachi Water & Sewerage Board (KW&SB) for the financial year 2012-13, was Rs 17,753.63 Million covering 01 PAO and 1,680 formations. Out of this, DGA, Local Councils, Sindh, audited an expenditure of Rs.7,101.452 Million, in terms of percentage, is 40% for the financial year 2012-13. Out of total 1,681 formations, 971 formations were planned and 512 formations were audited which, in terms of Percentage, is 52.7% achievement against the planned activities. v Annexure-2 (Audit Impact Summary) provides additional information regarding the audit impact. The selection of the audited formations i.e. DDO wise was made keeping in view the significance and risk assessment, samples were selected after prioritizing risk areas by determining significance and risk associated with
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