Audit Report on the Accounts of Assistant Director Local Government, Election & Rural Development Department and Selected Union Councils

Home , Dera Ismail Khan, Muryali, Ratta Kulachi, Yarik, Zandani

AUDIT REPORT ON THE ACCOUNTS OF ASSISTANT DIRECTOR LOCAL GOVERNMENT, ELECTION & RURAL DEVELOPMENT DEPARTMENT AND SELECTED UNION COUNCILS

DISTRICT DERA ISMAIL KHAN KHYBER PAKHTUNKHWA

AUDIT YEAR 2015-16

AUDITOR GENERAL OF PAKISTAN

TABLE OF CONTENTS

1 ABBREVIATION AND ACRONYMS i

2 PREFACE ii

3 EXECUTIVE SUMMARY iii

4 SUMMARY TABLES AND CHARTS vi

Table 1: Audit Works Statistics vi

Table 2: Audit Observations Classified by Categories vi

Table 3: Outcome Statistics vii

Table 4: Irregularities Pointed Out viii

Table 5: Cost Benefit viii

5 CHAPTER 1 1

1.1 AD LGE & RDD and selected Union Councils 1

1.1.1 Introduction 1

1.1.2 Comments on Budget and Accounts (Variance Analysis) 1

1.1.3 Brief Comments on the Status of Compliance 2

1.2 Audit Paras 3

6 Annexures 15

iii

ABBREVIATIONS AND ACRONYMS

ADP Annual Development Programme AP Advance Para DAC Departmental Accounts Committee DDAC District Development Advisory Committee DG Director General GFR General Financial Rules LCB Local Council Board LGO Local Government Ordinance MFDAC Memorandum for Department Accounts Committee PC-I Planning Commission document-I PCC Plain Cement Concrete UAs Union Administrations UCs Union Councils WSS Water Supply Scheme ZAC Zila Accounts Committee

Preface Articles 169 and 170 of the Constitution of the 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 and Section-115 of the Khyber Pakhtunkhwa Local Government Ordinance, 2001(as amended) and Section 37 of Local Government Act 2013 require the Auditor-General of Pakistan to conduct audit of the receipts and expenditure of Local Fund of Union Councils and Assistant Director Local Government.

The report is based on audit of the accounts of Assistant Director Local Government & Rural Development Department and 10 Union Councils D I Khan for the Financial Year 2014-15. The Directorate General of Audit, District Governments, Khyber Pakhtunkhwa, Peshawar conducted audit on test check basis during 2015-16 with a view to reporting significant findings to the relevant stakeholders. The main body of the Audit Report includes the systemic issues and significant audit findings. Relatively less significant issues are listed in the Annexure-1 of the Audit Report. The Audit Observations listed in the Annexure-1 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 respective 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.

The observations included in this report have been finalized in the light of written replies of the Departments. DAC meetings could not be convened despite repeated requests.

The Audit Report is submitted to the Governor of Khyber Pakhtunkhwa in pursuance of Article 171 of the Constitution of the Islamic Republic of Pakistan, 1973 read with Section 37 of Khyber Pakhtunkhwa Local Government Act, 2013 to be laid before appropriate legislative forum.

Islamabad (Rana Assad Amin) Dated: Auditor General of Pakistan v

EXECUTIVE SUMMARY

The Directorate General Audit, District Governments, Khyber Pakhtunkhwa, Peshawar, is responsible to conduct the audit of all District Councils, Municipal Committees (MCs) and Union Councils (U Cs) and ADs LG&RD. Its Regional Directorate of Audit D I Khan has audit jurisdiction of District Councils, Municipal Committees, A D Local Governments and UCs of two Districts i.e. D I Khan and Tank.

The Regional Directorate has a human resource of 06 officers and staff, constituting 1500 man days. A budget of about Rs 10.089 million was allocated during 2014-15. It has the mandate to conduct financial attest audit, audit of sanctions, audit of compliance with authority and audit of receipts as well as the performance audit of entities, projects and programs. Accordingly, Regional Directorate Audit D I Khan carried out audit of the accounts of Assistant Director Local Government & Rural Development Department and 10 U Cs for the Financial Year 2014-15 and the findings included in the Audit Report.

Assistant Director Local Government & Rural Development Department and the UCs District D I Khan perform their functions under Khyber Pakhtunkhwa Local Government Act, 2013. Administrative Secretary i.e Secretary Local Government and Rural Development Department, Khyber Pakhtunkhwa is the Principal Accounting Officer for these local bodies. According to financial provisions of the Act the Secretary Local Government and Rural Development Department, Khyber Pakhtunkhwa authorizes the Annual Budget Statement for these local bodies in the form of budgetary grants. a. Scope of audit

There are 47 Union Councils in District D I Khan out of which the accounts of 10 Councils were examined in detail. These Union Councils were selected for detail audit by excluding the last year audited entities, on the basis of random sample from each Tehsil and keeping in view the available man days, as detailed below.

S.No Name of Tehsil Total No. of UCs No. of UCs Audited No. of UCs Last year Audited this year 1 D.I.Khan 13 03 03 2 Kulachi 08 02 02 3 Paharpur 11 02 01 4 Paroa 07 01 02 5 Daraban 08 02 02 Out of the total expenditure of the Assistant Director Local Government and Union Councils, D I Khan for the Financial Year 2014-15, the auditable expenditure under the jurisdiction of RDA was Rs 364.453 million. Out of this, RDA D I Khan audited an expenditure of Rs 255.117 million which, in terms of percentage, was 70% of auditable expenditure.

The receipts of Union Councils D I Khan, for the Financial Year 2014-15, were Rs 0.930 million. Out of this, RDA D I Khan audited receipts of Rs 0.604million which, in terms of percentage, was 65% of auditable receipts.

b. Recoveries at the instance of audit

Recoveries of Rs 1.153 million were pointed out during the audit, which were not in the notice of the executive prior to audit. None of the recovery pointed out has been made. c. Audit Methodology Audit was conducted after understanding the business processes of Assistant Director Local Government Office and Union Councils with respect to their functions, control structure and key controls. This helped auditors in understanding the systems, procedures, environment, and the audited entity before starting the audit. Audit used desk audit techniques for analysis of compiled data and review of actual vouchers called for scrutiny and substantive testing in the Regional Directorate of Audit D I Khan. d. Audit Impact

Audit pointed out various irregularities of serious nature to the management. However, no impact was visible as the management failed to reply and the irregularities could not come to the light in the proper forum i.e. DAC. vii e. Comments on Internal Control and Internal Audit department The purpose of internal control system is to ensure effective operation of an organization. It consists of measures employed by the management to achieve objectives, safeguard assets, ensure accuracy, timeliness and reliability of financial and accounting information for decision making.

One of the basic component of Internal Control System, as envisaged under Para 13 of GFR Volume-I, is Internal Audit which was not prevalent in the office of the Assistant Director Local Government & Rural Development Department and UCs District D I Khan. Neither rules for internal audit have been framed nor internal audit report as required was provided to audit. f. Key audit findings of the report; i. Non Production of record of Rs 1.507 million were noticed in two cases1. ii. Irregularity & Non-compliance of Rs 70.049 million were noticed in three cases2. iii. Internal Control weakness “amounting to Rs 52.435 million were noticed in five cases3. g. Recommendations

i. Corrective actions need to be taken to stop the practice of violation of rules and regulations for non-production of record. ii. Internal controls in all areas i.e. financial, managerial, operational, administrative and accounting need to be strengthened at AD LG&RD level as well as Union Council level to pre-empt the reported lapses and fair value for money is obtained from public spending.

iii. Inquiries need to be held to fix responsibility for losses, irregular payments and wasteful expenditure.

1 Para: 1.2.1.1 2 Para: 1.2.2.1, 1.2.2.2 3 Para: 1.2.3.1, 1.2.3.2, 1.2.3.3, 1.2.3.4, 1.2.3.5 4 Para 1.3.3.1

viii

SUMMARY TABLES & CHARTS

Table 1: Audit Work Statistics (Rs in million) S.No Description No. Budget 1 Total Entities (PAOs) in Audit Jurisdiction 01 365.383 2 Total formations in audit jurisdiction 48 365.383 3 Total Entities(PAOs) Audited 01 255.721 4 Total formations Audited 11 255.721 5 Audit & Inspection Reports 01 255.721 6 Special Audit Reports - - 7 Performance Audit Reports - - 8 Other Reports - -

Table 2: Audit Observations classified by Categories (Rs in million) Amount Placed under Audit S.No. Description Observation 1. Unsound asset management - 2. Weak financial management 70.049 3. Weak Internal controls 52.58 4. Others 1.507 Total 124.136

Table 3: Outcome Statistics (Rs in million) Total for the Expenditure Total year on Acquiring For the Civil 2009- S. No Description Physical Receipts Others year Works 10 Assets 2014- (last Procurement 15 UC report) Outlays 1. - 211.060 0.930 153.393 365.383 71.201 Audited Amount Placed under Audit 2. Observation / - 120.999 - 3.015 124.136 43.695 Irregularities of Audit Recoveries Pointed Out at 3. - - - - - the instance of Audit Recoveries Accepted 4. /Established at - - - - - the instance of Audit Recoveries Realized at the 5. - - - - instance of Audit

Note: The outcome figures reported for the year 2015-16 pertains to the Ten (10) Union Councils audited last year. Since the PAO is the same therefore, these amounts have been included here to show cumulative effect against the PAO.

Table 4: Irregularities pointed out (Rs in million)

Amount Placed under S. No Description Audit Observation

Violation of Rules and regulations, principle of propriety 1 119.846 and probity in public operation Reported cases of fraud, embezzlement, thefts and misuse 2 - of public resources. Accounting Errors (accounting policy departure from NAM1, misclassification, over or understatement of 3 account balances) that are significant but are not material - enough to result in the qualification of audit opinions on the financial statements.

4 Quantification of weaknesses of internal control systems. -

Recoveries and overpayment, representing cases of 5 establishment overpayment or misappropriations of public 1.153 monies 6 Non-production of record 3.015 7 Others, including cases of accidents, negligence etc. 0 Total 124.136

Table 5 : Cost benefit Ratio (Rs in million)

S # Description Amount 1 Outlays Audited (item 1 of Table 3) 364.453 2 Expenditure on audit 0.090 3 Recoveries realized at the instance of audit - Cost-Benefit Ratio 1:0

CHAPTER-1 1.1 Administrator Union Councils District D I Khan 1.1.1 Introduction District D I Khan has five Tehsils i.e. D.I.Khan, Kulachi, Paharpur, Paroa and Draban. There is an Assistant Director Local Government and Rural Development Department and 47 Union Councils. Each Union Council has a secretary. Assistant Director Local Government and Rural Development Department is Drawing and Disbursing Officer (DDO) for his office and Union Councils of the District D I Khan. According to 1998 population census the population of District D I Khan is 1,123,593.

1.1.2 Comments on Budget and Accounts (variance analysis)

An amount of Rs 366.241 million was allocated as budget by the Provincial Government to Assistant Director Local Government and Rural Development Department and 10 selected Union Councils of District D I Khan. An amount of Rs 0.930 was realized during the financial year 2014-15. Thus making a total of Rs 367.171 at the disposal of Assistant Director Local Government and Rural Development Department and 10 selected Union Councils, against which an expenditure of Rs 364.453 million was incurred by the Assistant Director Local Government and Rural Development Department and 10 selected Union Councils D I Khan with a saving of Rs 1.788 million during financial Year 2014-15. Detail is given below: (Rs in million)

Period Particulars Budget Expenditure Excess/(Saving)

Salary 155.100 154.033 (1.067) 2014-15 Non Salary 98.119 97.127 (0.992) Developmental 113.022 113.293 0.271 Total 366.241 364.453 (1.788) Receipts 0.930 0.930 0 G. Total 367.171 365.383 (1.788)

The saving of Rs 1.788 million in all heads of account indicate weakness in the capacity of these local institution to utilize the amounts allocated.

Expenditure 2014-15

(Rs in million)

Development Rs. 113.251 25.43%

Salary Salary Rs 354.033 38.73%

Non Salary Rs 97.127 35.85%

1.1.3 Brief comments on the status of Compliance with PAC/ZAC Directives

The audit reports on the accounts of Assistant Director Local Government and Rural Development Department and 10 Union Councils District Tank prepared under the Khyber Pakhtunkhwa Local Government Act. 2013, and have not yet been discussed in DAC and ZAC.

1.2 Audit Paras

1.2.1 Non Production of Record

1.2.1.1 Non Production of Record - Rs 1.590 million

Section 14 (3) of the Auditor-General’s (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001 provides that any person or authority hindering the auditorial functions of the Auditor-General of Pakistan regarding inspection of accounts shall be subject to disciplinary action under relevant Efficiency and Discipline Rules, applicable to such person. Section 36 of Local Government Act 2013 require the Auditor-General of Pakistan to conduct audit of the receipts and expenditure of Local Fund of Union Councils and Assistant Director Local Government Assistant Director, Local Government, Dera Ismail Khan incurred expenditure of Rs.3,582,948 on account of Contingence Charges during 2014-15 (as detailed in Annexure-4) however the record of the expenditure for Rs.1,590,403 was not produced to audit despite repeated requests. Non production of record occurred due to weak internal control and as resulted the validity of the amount disbursed could not be verified. When reported in January 2016, management did not respond to audit observation. Request for convening of DAC meeting was made on 02-02-2016 which was not convened till finalization of this Report. Audit recommends production of record and inquiry into the matter and action against the person (s) at fault. AP- 253 (2014-15)

1.2.2 Irregularity & Non-compliance

1.2.2.1 Fraudulent award of contract –Rs.15.00 million

Chapter-II (I) & d (2) Methods of Procurement of Good Rules of Khyber Pakhtunkhwa Public Procurement of Goods, Works and Services Rules, 2014, requires that the procuring entity shall use open competitive bidding as the principal method of procurement for the procurement of goods over the value of Rs. 100,000 (rupees one hundred thousand) and these procurement opportunities may also be advertised in print media appearing in at least one national English and one Urdu newspaper with nationwide circulation along with advertising the same either on the procuring entity or Authority website.

Assistant Director, Local Government, Dera Ismail Khan, executed six (6) Nos. of schemes during 2014-15 as detail below.

S. No. Name of Scheme Cost (Rs) Construction of Street, Drain, Culverts, earth filling, Shingle Road, 1 Water Tank, Installation of submersible/ Pressure/Hand Pumps etc in 2,000,000 PK -65, Site-I Construction of Street, Drain, Culverts, earth filling, Shingle Road, 2 Water Tank, Installation of submersible/ Pressure/Hand Pumps etc in 2,000,000 PK -65, Site-II Construction of Street, Drain, Culverts, earth filling, Shingle Road, 3 Water Tank, Installation of submersible/ Pressure/Hand Pumps etc in 2,000,000 PK -65, Site-III Construction of Street, Drain, Culverts, earth filling, Shingle Road, 4 Water Tank, Installation of submersible/ Pressure/Hand Pumps etc in 2,000,000 PK -65, Site-IV Construction of Street, Drain, Culverts, earth filling, Shingle Road, 5 Water Tank, Installation of submersible/ Pressure/Hand Pumps etc in 2,000,000 PK -65, Site-V 6 Rebuild of existing St. Johan church, Sabzi Mandi, D.I.Khan 5,000,000 TOTAL 15,000,000

It was observed that:- i. The contracts were awarded through defective tendering system, as in each case, the copy of advertisement published in dummy Newspaper dated 22.05.2014 was placed by the department in order to show inviting of tender from general public through open competition while in legal copy of Newspaper (daily Mashriq) dated 22.05.2014, no such advertisement was published and fake copy was used by the Department. ii. As per requirement for tendering process, the advertisement should be published in at least two national level newspapers but no such formality was fulfilled. iii. The Tender Register was also not maintained by the department to verify the total number of participants and their rates offered for contract. Unauthorized expenditure occurred due to weak internal control which resulted into defective tendering system and Government deprived off from economical rates. When reported in January 2016, management did not respond to audit observation. Request for convening of DAC meeting was made on 02-02-2016 which was not convened till finalization of this Report. Audit recommends investigation into the matter and action against the person(s) at fault. AP- 244 (2014-15)

1.2.2.2 Loss to Government due to non-deduction of sales tax-Rs 1.153 million According to Sales Tax Act 1990 as provided in the S.R.O. 660 (I) /2007 dated 30-6-2007 read with Finance Act 2014, the Sales tax must be deducted @ 17% from the unregistered persons. Assistant Director, Local Government, Dera Ismail Khan purchased pressure pumps, submersible pumps etc amounting to Rs. Rs.7,942,223 under

5 various schemes during 2014-15. However the GST @17% amounting Rs. 1,153,999 was not deducted from the contractor’s bills (as detail in Annexure-5). Moreover no proof of registration of contractors with sales tax department was available in record. Audit observed that non deduction of sales tax occurred due to lack of financial control, which resulted in loss to public exchequer. When reported in January 2016, management did not respond to audit observation. Request for convening of DAC meeting was made on 02-02-2016 which was not convened till finalization of this Report. Audit recommends recovery and action against the person(s) at fault. AP-246 (2014-15)

1.2.3 Internal Control Weaknesses

1.2.3.1 Illegal retention of Public Money in Designated Bank Account - Rs 29.00 million

According to Treasury Rule 290, no money shall be drawn from the treasury unless it is required for immediate disbursement. It is not permissible to draw money from the treasury in anticipation of demands or to prevent the lapse of budget. During audit of accounts record of Assistant Director, Local Government, Dera Ismail Khan for the year 2014-15, it was revealed that funds of Rs 29,000,000 were released to Assistant Director, Local Government, out of Chief Minister Directives for execution of various developmental schemes. It was observed that:- i. The whole amount was drawn on simple receipt from Govt: treasury and deposited into designated Bank a/c No. 11657-08 the Bank of Khyber, D.I.Khan, instead of drawing funds from treasury on bill to bill basis /work done basis. ii. Bank Statement for the year 2014-15 was also not produced to Audit, to verify the payments made to contractors through designated accounts. Illegal retention of public money occurred due to lack of internal control, which resulted in doubtful payment. When reported in January 2016, management did not respond to the audit observation. Request for convening of DAC meeting was made on 02-02-2016 which was not convened till finalization of this Report. Audit recommends proper inquiry into the matter and action against the person(s) at fault. AP- 247 (2014-15)

1.2.3.2 Doubtful expenditure on account of POL and repair charges - Rs 1.171 million Motor Car Maintenance Rules 1997 requires the proper maintenance of log book for a Government vehicle by recording each and every entry of POL and repair work on each occasion. AD (Local Government) D I Khan incurred expenditure of Rs 1,171,004 on account of POL and repair of transport during 2014-15 as detailed below: -

S # Head of Account Amount (Rs) 1 POL 721,414 2 Repair of transport 449,590 Total 1,171,004

It was observed that: - i. The log book of the vehicles i.e AD Local Government and Chairman DDAC were not maintained to verify the consumption of POL. ii. No bill of POL of filling station to whom payment was made was available in record. iii. No duty orders for tour program/ journey was filled by the DDO/Driver. iv. Record of repair of vehicle carried out was not shown to audit. v. Detail of expenditure of Rs.1,171,004 (POL Rs. 721,414 + repair Rs. 449,590 ) was not available. Audit observed that doubtful expenditure occurred due to lack of internal control, which resulted in unauthenticity of spendings. When reported in January 2016, management did not respond to audit observation. Request for convening of DAC meeting was made on 02-02-2016 which was not convened till finalization of this Report. Audit recommends investigation and action against the person (s) at fault AP- 256 (2014-15)

1.2.3.2 Unauthorized expenditure on a/c of installation of pressure pumps- Rs.7.942 million

Para 23 of GFR required that every Government officer should realized fully and clearly that he will be held personally responsible for any loss sustained by government through fraud or negligence either on his part or on the part of his subordinate staff. Para 2.39 of the B&R code states that for water supply projects the nature and quantity of the existing supply should be given Para 10 (iii) & (iv) of GFR requires that no authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage & Public moneys should not be utilized for the benefit of a particular person or section of the community as per. The Dead Stock Registrar will be maintained and updated accounting for each item as stores, vehicles, earth moving and agriculture machinery as provided by note (C) of clause 8 of the 2nd schedule of NWFP Delegation of Financial Powers Rules-2001. Para 178 of GFR requires that no work should be commenced or liability incurred (except in cases covered by special rules, orders) in connection with in until. Administrative Approval has been obtained from the competent authority.

Assistant Director, Local Government, Dera Ismail Khan incurred expenditure of Rs 7,942,223 (as per detail in annexure-6) on account of Installation of Pressure/ Hand Pumps/ Submersible Pumps of various depth out of Developmental Funds during 2014-15. It was observed that: - i. 589 Nos of Pressure/ Hands/ Submersible Pumps were installed inside the homes of selected people which was unauthorized and rest of the community was deprived of the benefit. ii. The location of Pressure/ Hand Pumps was not mentioned in Technical Sanction, Administrative approval and DDC minutes.

iii. The total numbers of pumps and location was neither verified by monitoring committee of Deputy Commissioner, D I Khan nor approved by Sponsoring body (MPA). iv. The existing position of water supply schemes of PHE & TMA was also not available in record before introducing the schemes of pumps. v. Handing Taking and responsibility of maintenance was also not obtained any Government agency. vi. No Stock Register/ Asset Register were maintained by the department for items of work executed at site i.e submersible, pressure and hand pumps etc. vii. As per Administrative Approval and Technical Sanction the complete name of schemes was “Construction of Streets, Drain/Culverts, Berms/Protection bund, water reservoirs, and Installation of Hand/Pressure/ Submersible Pumps” while 100% expenditure was incurred only on “Installation of Hand/Pressure/ Submersible Pumps”. viii. As per minutes of DDC meeting, the Monthly Monitoring Report on PC- IV proforma was required to be submitted to all concerns, but no such formality was fulfilled by the Department. Audit observed that unauthorized expenditure occurred due to lack of internal control which resulted in loss to the general public. When reported in January 2016, management did not respond to preliminary audit observation. Request for convening of DAC meeting was made on 02-02-2016 which was not convened till finalization of this Report. Audit recommends inquiry into the matter and action against the person (s) at fault. AP- 245(2014-15)

1.2.3.4 Doubtful expenditure on a/c of missing item of works - Rs 2.928 million According to Para 220 and 221 of CPWA Code, Sub Divisional Officer, before making payments to contractor, is required to compare the quantities in the bills and see that all the rates are correctly entered and that all the calculations have been checked arithmetically. Assistant Director, Local Government, Dera Ismail Khan executed various Developmental Schemes of Installation of submersible pumps during 2014-15 as detailed below: -

S No Name of Schemes Amount (Rs.) Installation of Submersible Pumps in PK-68, MB No 3, Page 1 1,929,310 No 03. No of Pumps =06 Supply/ Installation of S/Pumps in wanda Sher Khan UC Yarik MB No 1, Pages No 2 999,053 38-41 Total 2,928,363

However it was observed that the item of work “S/F of 1.5/2’’ dia PVC Pipe C/D class working pressure pipe” was not included in detail cost estimate and contractor bills. Since it was integral part of the scheme and in absence of it, the whole scheme became invalid. Audit has, therefore reason to believe that the schemes were not executed and payment was doubtful. Audit observed that doubtful expenditure occurred due to lack of internal/financial control, which resulted in loss to public exchequer. When reported in January 2016, management did not respond to audit observation. Request for convening of DAC meeting was made on 02-02-2016 which was not convened till finalization of this Report. Audit recommends inquiry into the matter and action against the person (s) at audit. AP- 252 (2014-15)

1.2.3.5 Overpayment on a/c of application of wrong rates and excessive quantity at site – Rs 1.486 million

According to Para 220 and 221 of CPWA Code, Sub Divisional Officer, before making payments to contractor, is required to compare the quantities in the bills and see that all the rates are correctly entered and that all the calculations have been checked arithmetically.

Assistant Director, Local Government, Dera Ismail Khan executed various Developmental Schemes during 2014-15 as per detail given below: i. Item of work “Boring/Drilling” was executed in excess quantity that required for Installation of Submersible Pumps, which resulted in loss to Government for Rs 602,013 (as detailed in annexure-7a).

ii. an item of work “Burnt Brick on edge” @ 705/M2 and 720/M2 as approved in BOQ of MRS-2013 in Chapter “Flooring”, instead of applying more economical and suitable item “Providing and lying dry Brick Pavement (item code 16-21)@4772.82 M3 which resulted into overpayment of Rs 403,828 (as detailed in annexure-7b).

iii. Item of work “Embankment formation in ordinary soil/ earth filling, Compacted 95% to 100% with lead of 5KM, the rate of lead was paid on the basis of carriage of material by human coolie instead of mechanical means as mentioned in Chapter 01 of the MRS-2013 (Item Code 01-01- e+01-01-f), which resulted into overpayment of Rs 283,307(as detailed in annexure-7c).

iv. An expenditure of Rs.2,539,325 on execution of Scheme “Construction of Street and Drain in PK-68 upto 2nd Running Bill during 2014-15. On detailed checking, it was observed that arithmetically calculated balance of bill is Rs 2,342,100 which resulted into overpayment of Rs 197,225 (as detailed in annexure-7d).

Audit observed that that overpayment occurred due to lack of internal control which resulted into loss to Government for Rs 1,486,373. When reported in January 2016, management did not respond to audit observation. Request for convening of DAC meeting was made on 02-02-2016 which was not convened till finalization of this Report. Audit recommends recovery of overpayment from the person (s) at fault.

AP- 249, 248, 250 & 251 (2014-15)

1.3 Audit Paras Administrator Union Councils D I Khan

1.3.1 Non production of record

1.3.1.1 Non- production of record of Union Councils

Section 14 (3) of the Auditor-General’s (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001 provides that any person or authority hindering the auditorial functions of the Auditor-General of Pakistan regarding inspection of accounts shall be subject to disciplinary action under relevant Efficiency and Discipline Rules, applicable to such person. Section 36 of Local Government Act 2013 require the Auditor-General of Pakistan to conduct audit of the receipts and expenditure of Local Fund of Union Councils and Assistant Director Local Government Assistant Director Local Government, D I Khan did not produce record of Union Councils despite of repeated verbal & written requests (detail attached in Annex-8). Non production of record occurred due to weak internal control due to which the validity of the amount disbursed could not be verified. When reported in January 2016, management did not respond to audit observation. Request for convening of DAC meeting was made on 02-02-2016 which was not convened till finalization of this Report. Audit recommends production of record and inquiry into the matter and action against the person (s) at fault.

AP- 262 (2014-15)

ANNEXURES

Annexure-1 Detail of MFDAC Paras (Rs in AP No. Name of Department Title of Advance Para million) 254 -do- Irregular expenditure on A/C of 0.260 entertainment 257 -do- Irregular expenditure on A/C of printing 0.219 charges 258 -do- Unauthorized expenditure 0.299 259 -do- Unauthorized expenditure 0.505 260 -do- Non deduction of convince and HRA 0.072 255 -do- Loss to Govt due to less deduction of i.tax 0.073

Annexure-2

AUDIT IMPACT SUMMARY

S.No Rules/System/Procedure Audit Impact 1 According to GFR, physical verification of Increase probability for store/assets should be carried out once in a year. safeguarding the Government assets and stock 2 According to Financial and Treasury rules all Increase in revenue collection on dues of the government should be correctly and account of Government dues promptly assessed, collected and paid into Government Treasury.

3 According to GFR, receipts and expenditure To ensure that the departmental should be reconciled. accounts are sufficiently accurate to render possible and efficient Departmental control of expenditure and receipts.

Annexure-3

Budget and expenditure Summary (Rs in million)

Period Particulars Budget Expenditure Excess/(Saving)

Salary 155.100 154.033 (1.067) 2014-15 Non Salary 98.119 97.127 (0.992) Developmental 113.022 113.293 0.271 Total 366.241 364.453 0.271 Receipts 0.930 0.930 0 G. Total 367.171 365.383 0.271

Annex-4 (Para No.1.2.2.1) Detail Showing Non production of Record

S.No Head of Account Total Produced Not-produced Expenditure (Rs.) (Rs.) (Rs.) 1. F&F 299,896 150,000 149,896 2 Publicity 250,000 225,000 25,000 3. M&E 114,970 108,309 6,661 4. Newspaper 88,727 49,621 39,106 5. Repair of Transport 449,590 295,690 153,900 6. Stationery 209,477 189,680 19,797 7. Repair of F&F 119,100 79,700 39,400 8. Hot & Cold 90,000 24,100 65,900 9. Electricity 88,810 16,810 72,000 10. Repair of M&E 114,970 64,170 50,800 11. Printing 219,200 77,200 142,000 12. Telephone 99,168 6,885 92,283 13. TA/DA 118,850 13,000 105,850 14. POL 721,414 432,207 289,207 15. Entertainment 598,776 260,173 338,603 Total 3,582,948 1,992,545 1,590,403

Annex-5 (Para No 1.2.2.3) Detail Showing Non Deduction of Sales Tax

S.No Name of Scheme Item Quantity Rate Amount (Rs.)

1 Submersible pumps 2HP 8 46,000 368,000 Hand Pumps 10 6,196 61,960 Installation of Pressure pumps and Submersible Pumps in PK-65 Pressure Pumps 10 15,500 155,000 Pressure Pumps 10 11,140 111,400 Pressure Pumps 10 15,500 155,000 2 Pressure Pumps-300' 8 46,000 368,000 Pressure Pumps-400' 2 46,000 92,000 Pressure Pumps-400' 1 46,000 46,000 Construction of Street, P/Pumps, Submersible pumps in PK-65 Pressure Pumps-40' 1 11,140 11,140 Pressure Pumps-160' 10 11,140 111,400 Pressure Pumps-80 Rft 2 6,196 12,392 3 Installation of Pressure and Hand Pumps in PK-68 Pressure Pumps 310 11,225 3,479,750 4 Installation of Pressure pumps in UC Band Kurai Pressure Pumps 10 10,814 108,140 Pressure Pumps 5 10,814 54,070 5 supply and Installation of Submersible Pumps in wanda Sher Khan Submersible pumps 3 45,800 137,400 Submersible pumps 1 45,800 45,800 6 Installation of Hand Pumps in UC Hissam Hand Pumps 4 3,000 12,000 Pressure Pumps 16 15,049 240,784 7 Installation of Hand Pumps in Village Korai Hand Pumps 4 3,000 12,000 Pressure Pumps 16 15,049 240,784 8 Installation of Pressure Pumps in UC Zandani Site-I, Kaich Pressure Pumps 1 18,835 18,835 Pressure Pumps 33 15,049 496,617 9 Installation of Pressure Pumps in UC Dhap Shumali, Larr etc Site- Pressure Pumps 35 10,814 378,490 II Pressure Pumps 36 10,814 389,304 10 Installation of Pressure Pumps in UC Dhap Shumali, Larr etc Site- Pressure Pumps 8 10,814 86,512 II (A) Installation of Pressure Pumps in UC Dhap Shumali, Larr etc Site- Pressure Pumps 7 10,814 75,698 II (B) 11 Installation of Submersible Pumps in PK-68 Submersible Pumps 10 45,792 457,920 12 Installation of Submersible Pumps in Submersible Pumps 5 15,049 75,245 (i) village Paniyala (ii) Village Kot dah Submersible Pumps 13 10,814 140,582 Total 7,942,223 Sales tax @ 17% ( 7,942,223 / 1.17-7,942,223) 1,153,999

Annex-6 (Para No 1.2.3.3) Detail showing unauthorized expenditure

S No Name of Scheme Item Quantity Rate Amount ( Rs)

1 Submersible pumps 2HP 08 46,000 368,000 Hand Pumps 10 6,196 61,960 Installation of Pressure pumps and Submersible Pumps in PK-65 Pressure Pumps 10 15,500 155,000 Pressure Pumps 10 11,140 111,400 Pressure Pumps 10 15,500 155,000 2 Pressure Pumps-300’ 08 46,000 368,000 Pressure Pumps-400’ 02 46,000 92,000 Pressure Pumps-400’ 01 46,000 46,000 Construction of Street, P/Pumps, Submersible pumps in PK-65 Pressure Pumps-40’ 01 11,140 11,140 Pressure Pumps-160’ 10 11,140 111,400 Pressure Pumps-80 Rft 02 6,196 12,392 3 Installation of Pressure pumps and Hand Pumps in PK-68 Pressure Pumps 310 11,225 3,479,750 4 Installation of Pressure pumps in UC Band Kurai Pressure Pumps 10 10,814 108,140 Pressure Pumps 05 10,814 54,070 5 supply and Installation of Submersible Pumps in wanda Sher Khan Submersible pumps 03 45,800 137,400 Submersible pumps 01 45,800 45,800 6 Installation of Hand Pumps in UC Hissam Hand Pumps 04 3,000 12,000 Pressure Pumps 16 15,049 240,784 7 Installation of Hand Pumps in Village Korai Hand Pumps 04 3,000 12,000 Pressure Pumps 16 15,049 240,784 8 Installation of Pressure Pumps in UC Zandani Site-I, Kaich Pressure Pumps 01 18,835 18,835 Pressure Pumps 33 15,049 496,617 9 Installation of Pressure Pumps in UC Dhap Shumali, Larr etc Site- Pressure Pumps 35 10,814 378,490 II Pressure Pumps 36 10,814 389,304 10 Installation of Pressure Pumps in UC Dhap Shumali, Larr etc Site- Pressure Pumps 08 10,814 86,512 II (A) 11 Installation of Pressure Pumps in UC Dhap Shumali, Larr etc Site- Pressure Pumps 07 10,814 75,698 II (B) 12 Installation of Submersible Pumps in PK-68 Submersible Pumps 10 45,792 457,920 13 Installation of Submersible Pumps in Submersible Pumps 05 15,049 75,245 (ii) village Paniyala Submersible Pumps 13 10,814 140,582 (ii) Village Kot dah Total 7,942,223

Annex-7 (Para No 1.2.3.5) Detail showing overpayment (a)

Length/Qty Length/Qty executed Rate of S No. of Overpayment Scheme executed on Install: Difference excess No pumps Rs for B/d of PVC Drilling Pipe Install: S/ Pumps 1 in PK-68 in PK-68 106.69 M 80 M 26.69 M 2926.90 2 156,237 (M. Imran) B File Install: S/ Pumps in UC Chehkan, 2 121.88M 45.73 M 76.15 m 2926.90 2 445,776 MB No.01, Page No 42 to 47 Total 602,013

(b)

S. Amount Paid Amount to be paid Name of Scheme Overpayment No on M2 on M3 Construction of Janazagah PK-68, 1 244,192 188,956 55,236 MB No.3, Page 76-85

Construction of street in PK-68, MB 2 1,438,560 1,089,968 348,592 No.3 ( 2nd Running Bill) Total 403,828

(c)

Rate Rate to be Qty Overpayment S No Scheme Difference Paid Paid Executed (Rs) Constt: of Street in PK-68, 350.36 01 (M. Imran) earth filling 532/M3 181.64/ M3 1300 M3 236,132 /M3 under floor-File 03 Bricks pavement & Constt: 350.36 02 of street in UC Yarik, 560 /M3 209.64 / M3 225.03 M3 47,175 /M3 (Ikramullah) Total 283,307

(d)

Expenditure Incurred in Total amount of bill in actual in Rs Overpayment in Rs Rs

2,539,325 2,342,100 197,225

Annex-8 Statement showing detail of UCs non production of record

S # Name of UC Period 1 UC City-I, D.I.Khan July 2010 to June 2015 2 UC City-2, D.I.Khan July 2010 to June 2015 3 UC City-3, D.I.Khan July 2010 to June 2015 4 UC City-4, D.I.Khan July 2010 to June 2015 5 UC Muryali July 2010 to June 2015 6 UC Paroa July 2010 to June 2015 7 UC Ramak July 2010 to June 2015 8 UC Chehkan July 2010 to June 2015 9 UC Dera Dehat-I July 2010 to June 2015 10 UC Dera Dehat-II July 2010 to June 2015 11 UC Draban July 2010 to June 2015 12 UC Ratta Kulachi July 2010 to June 2015