AUDIT REPORT ON THE ACCOUNTS OF GOVERNMENT OF BALOCHISTAN AUDIT YEAR 2015-16 AUDITOR-GENERALOF PAKISTAN TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS i Preface iii EXECUTIVE SUMMARY iv SUMMARY OF TABLES & CHARTS ix I Audit Work Statistics ix II Audit observations regarding Financial Management ix III Outcome Statistics x IV Table of irregularities pointed out xi V Cost-Benefit xi Chapter 1 Public Financial Management Issues Certification Audit of Accountant General Balochistan Quetta 1 1.1 Audit Paras 1 Chapter 2 Agriculture and Cooperatives Department 17 2.1.1 Introduction 17 2.1.2 Comments on Budget and Accounts (Variance Analysis) 17 2.1.3 Brief comments on the status of compliance with PAC directives 17 2.1.4 Significant Issues for PAC’s Notice 18 2.2 AUDIT PARAS 20 Chapter 3 Autonomous Bodies 29 3.1 Balochistan University of Engineering & Technology Khuzdar 29 3.1.2 Comments on Budget and Accounts (Variance Analysis) 29 3.1.3 Brief comments on the status of compliance with PAC directives 29 3.1.4 AUDIT PARAS 30 3.2 Sardar Bahadur Khan Women’s University, Quetta 34 3.2.1 Introduction 34 3.2.2 Comments on Budget and Accounts (Variance Analysis) 34 3.2.3 Brief comments on the status of compliance with PAC directives 34 3.2.4 AUDIT PARAS 35 3.3 University of Balochistan 39 3.3.1 Introduction 39 3.3.2 Comments on Budget and Accounts (Variance Analysis) 39 3.3.3 Brief comments on the status of compliance with PAC directives 39 3.3.4 AUDIT PARAS 40 Chapter 4 Board of Revenue 43 4.1.1 Introduction 43 4.1.2 Comments on Budget and Accounts (Variance Analysis) 43 4.1.3 Brief comments on the status of compliance with PAC directives 44 4.1.4 Significant Issues for PAC’s Notice 44 4.2 AUDIT PARAS 46 Chapter 5 Communication and Works (C&W) Department 59 5.1.1 Introduction 59 5.1.2 Comments on Budget and Accounts (Variance Analysis) 59 5.1.3 Brief comments on the status of compliance with PAC directives 59 5.1.4 Significant Issues for PAC’s Notice 60 5.2 AUDIT PARAS 63 Chapter 6 Health Department 77 6.1.1 Introduction 77 6.1.2 Comments on Budget and Accounts (Variance Analysis) 77 6.1.3 Brief comments on the status of compliance with PAC directives 77 6.2 AUDIT PARAS 78 Chapter 7 Irrigation Department 86 7.1.1 Introduction 86 7.1.2 Comments on Budget and Accounts (Variance Analysis) 86 7.1.3 Brief comments on the status of compliance with PAC directives 86 7.1.4 Significant Issues for PAC’s Notice 87 7.2 AUDIT PARAS 89 Chapter 8 Public Health Engineering Department 96 8.1.1 Introduction 96 8.1.2 Comments on Budget and Accounts (Variance Analysis) 96 8.1.3 Brief comments on the status of compliance with PAC directives 97 8.1.4 Significant Issues for PAC’s Notice 97 8.2 AUDIT PARAS 99 Chapter 9 Police Department 108 9.1.1 Introduction 108 9.1.2 Comments on Budget and Accounts (Variance Analysis) 108 9.1.3 Brief comments on the status of compliance with PAC directives 108 9.2 AUDIT PARAS 109 Annexure-1 MFDAC PARAS(List) 115 Annexures - 2-50 as referred in the report 136-298 ABBREVIATIONS AND ACRONYMS AASHTO All American State Highways Technical Officials AG Accountant General APPM Accounting Policies and Procedure Manual B&R Buildings and Roads BOQ Bill of Quantities CNIC Computerized National Identity Card Constt: Construction CGA Controller General of Accounts CPWA Central Public Work Accounts CPWD Central Public Works Department C&W Communication and Works CSR Composite Schedule of Rates Cft. Cubic Feet Cum Cubic Meter CV Cash Voucher DAC Departmental Accounts Committee DDO Drawing and Disbursing Officer DG Director General DM Dera Murad DOP Date of purchase E&M Electrical and Mechanical ECNEC Executive Committee of National Economic Council FTR Federal Treasury Rules GBPS Government Boys Public School GFR General Financial Rules GI Galvanized Iron i/c Including ISA Inter Security Allowance Kg Kilogram Km Kilometer MB Measurement Book MD Managing Director MES Military Engineering Service MFDAC Memoranda for Departmental Accounts Committee M Meter mm Millimeter i MSD Medical Store Depot NOC No Objection Certificate NSR Non Schedule Rate OFWM On Farm Water Management O&M Operation and Maintenance PAC Public Accounts Committee PC-I Planning Commission-I PD Project Director P&D Planning and Development P/F Providing and Fixing P/L Providing and Laying POL Petroleum, Oil and Lubricants PSDP Public Sector Development Program QESCO Quetta Electric Supply Company RCC Reinforcement Cement Concrete RDs Road Distances Rft. Running Feet SDO Sub Divisional Officer Sft. Square Feet S/R Supplying and Repairing UoB University of Balochistan V. No. Voucher Number Vol Volume ii Preface Articles 169 and 170 of the constitution of 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 receipts and expenditure from the Consolidated Fund and Public Accounts of the Federation and of each Province; and the accounts of any authority or body established by the Federation or a Province. The report is based on audit of the accounts of various departments and autonomous bodies of Government of Balochistan for the Financial Year 2014-15 and accounts of some entities of Departments pertaining to previous financial years. The Directorate General of Audit Balochistan conducted audit during 2015-16 on test check basis with a view to reporting significant findings to the relevant stakeholders. The main body of the Audit Reports includes only the systemic issues and Audit findings carrying value of Rs.1 million or more. Relatively less significant issues are given 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 observations 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 the report have been finalized in the light of discussions in the DAC meetings and written responses of the Departments. The Audit Report is submitted to the Governor Balochistan in pursuance of the Article 171 of the Constitution of Islamic Republic of Pakistan, 1973, for causing it to be laid before the Provincial Assembly. --SD-- (Rana Assad Amin) Dated: 09 April 2016 Auditor General of Pakistan iii EXECUTIVE SUMMARY The Director General Audit, Balochistan carries out the audit of Government of Balochistan. The Provincial Government conducts its operations under the Rules of Business 1973 that comprises 36 Principal Accounting Officers (PAOs) for different Departments, attached Departments, subordinate offices, Departmental Accounting Offices, and certain Autonomous Bodies. Financial provisions of the Constitution describe the Government funds as Provincial Consolidated Fund and Public Account for which Annual Budget Statement is authorized by the Provincial Assembly in the form of budgetary grants. For audit of the same, DG Audit Balochistan has a human resource of 43 personnel resulting in 10,793 man-days. The annual budget of the DG Audit Balochistan amounted to Rs.48.75 million. This office is mandated to conduct regularity (financial attest audit and compliance with authority audit), performance audit of departments and Projects run by these Departments. a. Scope of Audit Out of total expenditure of the Government of Balochistan for the Financial Year 2014-15, auditable expenditure under the jurisdiction of DG Audit Balochistan was Rs.95,345.72 million, covering 22 PAOs and 516 formations. Of this, DG Audit Balochistan so far audited an expenditure of Rs.47,574.90 million which in terms of percentage is 50% of auditable expenditure. Report also covers expenditure incurred in the previous financial year from January to June 2015. Further, DG Audit Balochistan audited receipt of Rs.1,273.30 million during the year. In addition, DG Audit Balochistan conducted 9 Foreign Aided projects. Reports of these audits are being published separately. b. Recoveries at the Instance of Audit Recovery of Rs.3,226.83 million was pointed out during audit of 2014-15, and an amount of Rs.193.66 million was recovered during period under report. Out of the total recoveries, Rs.130.68 million was not in the notice of the executive before audit was conducted. c. Audit Methodology The audit year 2015-16 witnessed intensive application of desk audit techniques in the DG Audit Balochistan. This was facilitated by access to live SAP/R3 data, intranet, internet facilities, and availability of iv permanent files. Desk review helped auditors in understanding the systems, procedures, environment, and the audited entity before starting field activity. This greatly facilitated in the identification of high risk areas for substantive testing in the field. d. Audit Impact There were no changes in rules, practices and systems during the year on the pointation of Audit. e. Comments on Internal Controls and Internal Audit Department Audit of the departments and subordinate offices, conducted during the year, indicated that effective internal controls were missing in most of the organizations and Government Departments. Recurrence of similar irregularities pointed out by statutory audit year after year is a reflection upon the level of effectiveness of Internal Controls.