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Audit Report on the Accounts of Secretary Local Government Department Karachi Metropolitan Corporation & Karachi Water &

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Audit Report on the Accounts of Secretary Local Government Department Karachi Metropolitan Corporation & Karachi Water & AUDIT REPORT ON THE ACCOUNTS OF SECRETARY LOCAL GOVERNMENT DEPARTMENT KARACHI METROPOLITAN CORPORATION & KARACHI WATER & SEWERAGE BOARD AUDIT YEAR 2012-13 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 ................................................................ 2 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 .......................................................................... 12 1.2.3 Irregularity / Non-Compliance .................................................................... 13 1.2.4 Internal Controls Weakness ........................................................................ 36 ANNEXURE .................................................................................................................... 41 ABBREVIATIONS AND ACRONYMS ACL Audit Command Language AEE Assistant Executive Engineer ADOE Assistant Director Officer Education ADP Annual Development Programme AG Accountant General Admn Administration BOQ Bill of Quantity BPS Basic Pay Scale BT&D Bulk Transmission & Distribution CDGK City District Govt. Karachi CE Chief Engineer Cft Cubic feet CNG Compressed Natural Gas CPWA Code Central Public Works Accounts Code CPWD Code Central Public Works Department Code CRC/PBM Consumer Report Card / Performance Bench Mark CSR Composite Schedule of Rates DAC Departmental Accounts Committee DCO District Coordination Officer DDO Drawing & Disbursing Officer DG Director General DMD Deputy Managing Director D.O District Officer EDO Executive District Officer ECNEC Executive Committee for National Economic Council 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 i 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 HS&TO Hydrant Services & Tanker Operation I/C Including IPC’S Interim Payment Certificate KD Karachi Division KMC Karachi Municipal Corporation KW&SB Karachi Water & Sewerage Board LG Local Govt. MD Managing Director MEFDAC Memorandum for Departmental Accounts Committee MNA Member of National Assembly MOU Memorandum of Understanding MPA Member of Provincial Assembly MPAPP Member of Provincial Assembly Priority Programme 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 ii PSDP Public Sector Development Program RA Running Account R.E Resident Engineer RHC Rural Health Centre Rft Running feet RO&DP Reverse Osmosis & Desalination Plant RRG Revenue Resources Generation 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 SOP Standard Operating Procedures SPPRA Sindh Public Procurement Regularity Authority SR Supplementary Rule SRC Standing Rates Committee TMA Town Municipal Administration T&C Transport & Communication TR Treasury Rules UA Union Administration 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 Corporation and Karachi Water & Sewerage Board for the financial year 2011-12. The Directorate General of Audit, Local Councils, Sindh, conducted audit during 2012-13 on test check basis with a view to reporting significant findings to the relevant stakeholders. 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. While in remaining cases Principal Accounting Officer failed to convene DAC meetings, despite pursuance by audit. The Audit Report is submitted to the Governor of the 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 and annual budget amounted to Rs 67.096 million for the financial year 2011-12. The office has a mandate to conduct regularity audit (compliance with authority audit) on test check basis with a view to report 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. According to financial provisions of the Constitution of Islamic Republic of Pakistan Provincial Consolidated Fund is based on Annual Budget Statement which 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). It comprises of one Principal Accounting Officer (PAO). Karachi Metropolitan Corporation covers fifteen groups of offices. Karachi Water & Sewerage Board includes Managing Director, five Deputy Managing Directors and nine Chief Engineers. Financial provisions of the Ordinance of 1979 describe the budget as Local Fund and Public Account for which Annual Budget Statement is authorized by the Administrator/Karachi Water & Sewerage Board in the form of budgetary grants on the basis of the estimated revenue receipt duly approved by Local Government Department, GoS. a. Scope of Audit The expenditure of the Secretary Local Government Department, Karachi Metropolitan Corporation and Karachi Water & Sewerage Board (KW&SB) for the financial year 2011-12, was Rs 1,8715.221 Million covering 01 PAO and 394 formations. Out of this, DGA, Local Councils, Sindh, audited an expenditure of Rs 7,486.088 Million, in terms of percentage, is 40% for the financial year 2011-12. Out of 394 formations, audit of 132 formations were conducted which, in terms of Percentage, is 100% achievement against the planned activities. Annexure-2 (Audit Impact Summary) provides additional information regarding the audit impact. v The selection of the audit formations i.e. DDO wise was made keeping in view the significance and risk assessment of entities, samples were selected after prioritizing risk areas by determining significance and risk associated with identified key controls. b. Recoveries at the at the instance of audit Recoveries of Rs 1,344.568 Million were
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