Audit Report on the Accounts of Defence Services Audit Year 2018-19
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AUDIT REPORT ON THE ACCOUNTS OF DEFENCE SERVICES AUDIT YEAR 2018-19 AUDITOR-GENERAL OF PAKISTAN TABLE OF CONTENTS Page No. PREFACE iv ABBREVIATIONS AND ACRONYMS v EXECUTIVE SUMMARY xi SUMMARY TABLES & CHARTS I. Audit Work Statistics xx II. Audit Observations Classified by Categories xx III. Outcome Statistics xxi IV. Irregularities Pointed Out xxii V. Cost-Benefit Analysis xxii CHAPTER-1 Ministry of Defence 1.1 Introduction 1 1.2 Status of Compliance of PAC Directives 1 AUDIT PARAS Pakistan Army 1.3 Irregular / Un-authorized Expenditure 3 1.4 Recoverables / Overpayments 22 1.5 Loss to State 42 1.6 Mis-procurement of stores 52 1.7 Non-production of Record 58 Military Lands and Cantonments 1.8 Irregular / Un-authorized Expenditure 61 i 1.9 Recoverables / Overpayments 65 1.10 Loss to State 96 1.11 Mis-procurement of stores 104 Pakistan Air Force 1.12 Irregular / Unauthorized Expenditure 106 1.13 Recoverables / Overpayments 117 1.14 Loss to State 125 1.15 Mis-procurement of Stores 131 Pakistan Navy 1.16 Irregular / Unauthorized Expenditure 140 1.17 Recoverables / Overpayments 152 1.18 Loss to State 163 1.19 Mis-procurement of Stores 166 1.20 Non-production of Record 170 Military Accountant General 1.21 Irregular / Unauthorized Expenditure 172 1.22 Recoverables / Overpayments 175 Inter Services Organizations 1.23 Irregular / Unauthorized Expenditure 177 1.24 Recoverables / Overpayments 178 CHAPTER-2 Ministry of Defence Production 2.1 Introduction 180 2.2 Status of Compliance of PAC Directives 180 ii AUDIT PARAS 2.3 Irregular / Unauthorized Expenditure 182 2.4 Recoverables / Overpayments 191 2.5 Loss to State 196 Annexure-I MefDAC Paras (DGADS North) 205 Annexure-II MefDAC Paras (DGADS South) 239 iii PREFACE The Auditor-General conducts Audit subject 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 Audit of Defence Services was carried out accordingly. The Directorates General of Audit Defence Services (North and South) conducted Compliance Audit on the accounts of Defence Services during July to November for the financial year 2017-18 with the view to report significant findings to the relevant stakeholders. Audit examined the economy, efficiency and effectiveness aspects of the Defence Services. In addition, Audit also assessed, on test check basis whether the management complied with applicable laws, rules and regulations in managing the resources. The Audit Report indicates specific actions that, if taken, will help the management realize the objectives of the Defence Services. Most of the observations included in this Report have been finalized in the light of discussions in DAC meetings. The 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: 2019 iv ABBREVIATIONS AND ACRONYMS ACAS Assistant Chief Air Staff ACE Additional Chief Engineer 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 BTS Base Trans-receiver Station BTU British Thermal Unit C&SC Command & Staff College CA Contract Agreement CNA Controller of Naval Accounts CBC Cantonment Board Clifton v CBI Cash Book Item CBR Cantonment Board Resolution CBs Cantonment Boards CDR Cash Deposit Receipt 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 CNE Civilian Non-Entitled COD Central Ordnance Depot COMLOG Commander Logistics COMPAK Commander Pakistan COMSAT College of Management Sciences and Technology CP Dte Civilian Personnel Directorate CPD Chief Project Director CRV Consignee Receipt Voucher DAC Departmental Accounts Committee 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 Director General Munition Production DGP (Army) Directorate General Procurement (Army) DGW&CE Director General Works & Chief Engineer vi DHA Defence Housing Authority DMA Daily Messing Allowance DOHS Defence Officers Housing Scheme DP Draft Para DP (Air / Navy) Directorate Procurement (Air / Navy) DP Establishment Defence Production Establishment 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 FBR Federal Board of Revenue FIA Federal Investigation Agency FOB Free on Board FOR Free on Rail 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 HQ SC Headquarter Southern Command HQ SC Headquarter Southern Command vii HRA House Rent Allowance HRF (T) Heavy Rebuilt Factory (Tank) HSR Hospital Stoppage Receipts 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 JSHQ Joint Staff Headquarters JSI Joint Services Instruction KARF Kamra Avionics and Radar Factory KCB Karachi Cantonment Board KW&SB Karachi Water & Sewerage Board LAC Land Acquisition Collector LC Letter of Credit / Local Currency LD Liquidated Damages LP Local Purchase LS Logistic Support LUMS Lahore University of Management Sciences MAG Military Accountant General Mef DAC Memorandum for Departmental Accounts Committee MEO Military Estate Office MES 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 NAB National Accountability Bureau NAM New Accounting Model viii NHQ Naval Headquarters NHS Naval Housing Scheme NIV Not in Vocabulary NLC National Logistics Cell NLI Northern Light Infantry NOC No Objection Certificate NORE Naval Officer Residential Estate NUST National University of Science and Technology OC Officer Commanding PA Dte Personnel Administration Directorate PAC Pakistan Aeronautical Complex PAF Pakistan Air Force 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 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 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 ix SI&T School of Infantry & Tactics SMA Special Messing Allowance SOP Standing Operating Procedure SRB Sindh Revenue Board SRO Statutory Regulatory Order SSD Special Security Division SSD Station Supply Depot SSGC Sui Southern Gas Company STA Special Transfer Account TC/ DC Term Contract/ Decoration Contract TESCO Tribal Electric Supply Company TIP Transfer of Immovable Property TO&E Table of Organization and Equipment TR Treasury Receipt UA Unit Accountant UNRA United Nations Reimbursement Account VOQ Visiting Officers Quarter WAPDA Water and Power Development Authority WTI Walton Training Institute x EXECUTIVE SUMMARY The Directorates General of Audit Defence Services (North and South) being Field Audit Offices (FAOs) of the Department of Auditor- General of Pakistan are responsible for conducting the audit of budgetary grants of Defence Services (except Pakistan Ordnance Factories), administered by Ministry of Defence (MoD) and Ministry of Defence Production (MoDP). Audit of accounts of other allocations made to Defence Services like Special Transfer Account, United Nations Reimbursement Account and Defence Pension is also conducted by these FAOs. Moreover, audit of the Federal Government Education Institutions (FGEI) under the Ministry of Defence with their budget allocation from civil grant is also within mandate of these FAOs. Besides, these FAOs conduct audit of Cantonment Boards,