Audit Report on the Accounts of Tehsil Municipal Administrations District Narowal

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Audit Report on the Accounts of Tehsil Municipal Administrations District Narowal AUDIT REPORT ON THE ACCOUNTS OF TEHSIL MUNICIPAL ADMINISTRATIONS DISTRICT NAROWAL AUDIT YEAR 2016 -17 AUDITOR GENERAL OF PAKISTAN TABLE OF CONTENTS ABBREVIATIONS & ACRONYMS ..................................................... i PREFACE .............................................................................................. ii EXECUTIVE SUMMARY ................................................................... iii SUMMARY OF TABLES AND CHARTS ......................................... vii Table 1: Audit Work Statistics .....................................................................vii Table 2: Audit Observation regarding Financial Management ......................vii Table 3: Outcome Statistics .........................................................................vii Table 4: Irregularities Pointed Out ............................................................. viii Table 5: Cost-Benefit Ratio ....................................................................... viii CHAPTER-1 .......................................................................................... 1 1.1 TEHSIL MUNCIPAL ADMINISTRATIONS, NAROWAL ............ 1 1.1.1 INTRODUCTION ........................................................................... 1 1.1.2 Comments on Budget and Accounts (Variance Analysis) ................. 2 1.1.3 Brief Comments on the Status of Compliance on MFDAC Paras of Audit Year 2015-16 ......................................................................... 4 1.1.4 Brief Comments on the Status of Compliance with PAC Directives . 4 1.2 AUDIT PARAS ......................................................................... 5 1.2 TMA NAROWAL ..................................................................... 6 1.2.1 Non-production of Record ............................................................... 7 1.2.2 Irregularity / Non-compliance .......................................................... 8 1.2.3 Internal Control Weaknesses .......................................................... 14 1.3 TMA SHAHKARGARH ........................................................ 18 1.3.1 Non-production of Record ............................................................. 19 1.3.2 Irregularity / Non-compliance ........................................................ 20 1.3.3 Internal Control Weaknesses .......................................................... 24 ANNEXURES....................................................................................... 33 ABBREVIATIONS & ACRONYMS AIR Audit Inspection Report B&R Building & Road CO Chief Officer DAC Departmental Accounts Committee DCO District Coordination Officer DDO Drawing and Disbursing Officer MB Measurement Book MRS Market Rate Schedule PAC Public Accounts Committee PAO Principal Accounting Officer PDG & TMA Punjab District Governments & Tehsil Municipal Administration PDP Proposed Draft Para PFR Punjab Financial Rules P&C Planning and Coordination PLGO Punjab Local Government Ordinance PPRA Punjab Procurement Regulatory Authority Rs Rupees TDC Tehsil Development Committee TMA Tehsil Municipal Administration TMO Tehsil Municipal Officer TS Technical Sanction TO (F) Tehsil Officer (Finance) TO (I&S) Tehsil Officer (Infrastructure & Services) TO (P&C) Tehsil Officer (Planning & Coordination) TO (R) Tehsil Officer (Regulations) i PREFACE Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan, 1973 read with Section 115 of the Punjab Local Government Ordinance, 2001, requires the Auditor General of Pakistan to audit the accounts of the Provincial Governments and the accounts of any authority or body established by, or under the control of the Provincial Governments. Accordingly, the audit of all Receipts and Expenditures of the Local Fund and Public Accounts of Tehsil Municipal Administrations of the Districts is the responsibility of the Auditor General of Pakistan. The Report is based on audit of the accounts of various offices of the Tehsil Municipal Administrations of District Narowal for the Financial Year 2015-16. The Directorate General Audit District Governments Punjab (North), Lahore conducted audit during 2016-17 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 systemic issues and audit findings carrying value of Rs 1.00 million or more. Relatively less significant issues are listed in the Annex-A of the Audit Report. The audit observations listed in the Annex-A shall be pursued with the Principal Accounting Officer at the DAC level and in all 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. The audit results indicate the need for adherence to the regularity framework besides instituting and strengthening internal controls to prevent recurrence of such violations and irregularities. The observations included in this Report have been finalized without responses of the entities because concerned departments did not convene DAC meetings despite repeated reminders. The Audit Report is submitted to Governor of the Punjab in pursuance of Article 171 of the Constitution of the Islamic Republic of Pakistan, 1973 to cause it to be laid before the Provincial Assembly of Punjab. Islamabad (Javaid Jehangir) Dated: Auditor General of Pakistan ii EXECUTIVE SUMMARY The Directorate General Audit (DGA), District Governments, Punjab (North), Lahore is responsible to carry out the Audit of District Governments, Tehsil Municipal Administrations and Union Administrations of nineteen (19) districts. Its Regional Directorate of Audit, Gujranwala has Audit jurisdiction of District Governments, TMAs and UAs of six (06) Districts i.e. Gujranwala, Gujrat, Hafizabad, Mandi Baha-ud-Din, Narowal and Sialkot. The Regional Directorate of Audit Gujranwala had a human resource of seventeen (17) officers and staff, total 4,233 man-days and the annual budget of Rs 25.20 million for the Financial Year 2016-17. It had a mandate to conduct Financial Attest, Regularity Audit, Compliance with Authority and Performance Audit of programmes and projects. Accordingly, Director General Audit, District Governments Punjab (North), Lahore carried out Audit of accounts of two (2) TMAs of District Narowal for the Financial Year 2015-16. Each Tehsil Municipal Administration in District Narowal conducts its operations under Punjab Local Government Ordinance, 2001. Tehsil Municipal Officer is the Principal Accounting Officer (PAO) and acts as coordinating and administrative officer, responsible to control land use, its division, development and to enforce all laws including Municipal Laws, Rules and Bye-laws. The PLGO, 2001 requires the establishment of Tehsil Local Fund and Public Account for which Annual Budget statement is authorized by the Tehsil Nazim / Tehsil Council / Administrator in the form of Budgetary Grant. Audit of Tehsil Municipal Administrations of Narowal District was carried out with the view to ascertaining whether the expenditure was incurred with proper authorization and in conformity with laws / rules / regulations for economical procurement of assets and hiring of services etc. Audit of receipts was also conducted to verify whether the assessment, collection, reconciliation and allocation of revenues were made in accordance with Laws and Rules. iii a. Scope of Audit Total expenditure of two (02) TMAs of District Narowal for the Financial Year 2015-16 under the jurisdiction of DG District Audit (N) Punjab was Rs 597.45 million covering two PAOs and two (2) entities. Out of this, the Directorate General Audit (N) Punjab audited an expenditure of Rs 272.44 million which in terms of percentage, was 45% of the auditable expenditure. Total receipts of the two (02) Tehsil Municipal Administrations of Narowal District for the Financial Year 2015-16, were Rs 444.21 million. Directorate General Audit Punjab (N), audited receipts of Rs 226.55 million which was 51% of total receipts. b. Recoveries at the Instance of Audit Recovery of Rs 69.52 million was pointed out, which was not in the notice of executive before audit. However, no recovery was effected till the compilation of this report. c. Audit Methodology Audit was performed through understanding the business processes of TMAs with respect to functions, control structure, prioritization of risk areas by determining the significance and identification of key controls. This helped auditors in understanding the systems, procedures, environment and the audited entity before starting field audit activity. d. Audit Impact A number of improvements, as suggested by audit, in maintenance of record and procedures, have been initiated by the concerned departments. However, audit impact in shape of change in rules has not been significant due to non-convening of regular PAC meetings. e. Comments on Internal Controls and Internal Audit Department Internal control mechanism of Tehsil Municipal Administrations of District Narowal was not found satisfactory during audit. Many instances of weak Internal Controls have been highlighted during the course of audit which includes some serious lapses like withdrawal of public funds without iv advertisement at PPRA website. Negligence on the part of TMAs authorities may be captioned as one of important reasons for weak Internal Controls. Section 115-A (1) of PLGO, 2001 empowers Tehsil Administration to appoint an Internal Auditor but the same was not appointed
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