AUDIT REPORT ON THE ACCOUNTS OF DISTRICT GOVERNMENT CHAKWAL AUDIT YEAR 2013-14 AUDITOR GENERAL OF PAKISTAN TABLE OF CONTENTS ABBREVIATIONS & ACRONYMS ....................................................... I PREFACE ................................................................................................. II EXECUTIVE SUMMARY .................................................................... III SUMMARY TABLE & CHARTS ........................................................VII Table 1: Audit Work Statistics.......................................................................... vii Table 2: Audit observations .............................................................................. vii Table3: Outcome Statistics ................................................................................. viii Table4: Irregularities Pointed Out ......................................................................... ix CHAPTER 1 ...............................................................................................1 1.1 District Government, Chakwal ................................................................. 1 1.1.1 Introduction of Departments ..................................................................... 1 1.1.2 Comments on Budget and Accounts (Variance Analysis) ........................ 1 1.1.3 Brief Comments on the Status of Compliance with PAC/ZAC Directives .................................................................................................................. 3 1.2 AUDIT PARAS .............................................................................4 1.2.1 Non-production of Record ........................................................................ 5 1.2.2 Irregularity and Non-compliance of Rules ................................................ 7 ANNEXURES ...........................................................................................14 ABBREVIATIONS & ACRONYMS AIR Audit Inspection Report BHU Basic Health Unit C&W Communication and Works CCB Citizen Community Board CD Community Development DAC Departmental Accounts Committee DCO District Coordination officer DDO Drawing and Disbursing Officer DEO (EE-M) District Education Officer (Elementary Education-Male) DGA Director General Audit DHO District Health Officer DO District Officer EDO Executive District Officer FD Finance Department F&P Finance and Planning HR Human Resource HRA House Rent Allowance MB Measurement Book MLC Medico-legal Certificate MS Medical Superintendent MSD Medical Store Depot MRS Market Rate Schedule PAC Public Accounts Committee PAO Principal Accounting Officer PESRP Punjab Education Sector Reform Programme PFR Punjab Financial Rules PLGO Punjab Local Government Ordinance POL Petroleum Oil and Lubricants PPPRA Punjab Public Procurement Rules Authority RHC Rural Health Center SMO Senior Medical Officer THQ Tehsil Headquarters ZAC Zila Accounts Committee i PREFACE Articles 169 & 170 of the Constitution of the Islamic Republic of Pakistan, 1973 read with Section 115 of the Punjab Local Government Ordinance, 2001 require 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 Government. Accordingly, the audit of all receipts and expenditure of the District Government Fund and Public Account of District Government is the responsibility of the Auditor General of Pakistan. The report is based on audit of the accounts of various offices of the District Government, Chakwal for the financial years 2011-12 and 2012-13. The Directorate General of Audit District Governments Punjab (North), Lahore conducted audit during 2013-14 on test check basis with a view to report significant findings to the relevant stakeholders. The main body of the Audit Report includes only the systemic issues and audit findings carrying value of Rs1.00 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 observations 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 in the light of written responses and discussion in DAC meetings. The Audit Report is submitted to the Governor of 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 (Muhammad Akhtar Buland Rana) 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 / Town Municipal Administrations and Union Administrations of three City District Governments and sixteen District Governments. Its Regional Directorate of Audit, Rawalpindi has audit jurisdiction of District Governments, Tehsil/Town Municipal Administration and Union Administrations of one City District Government i.e. Rawalpindi and three District Governments i.e. Jhelum, Chakwal and Attock. The Regional Directorate has a human resource of 15 officers and staff, total 4,185 man-days and the annual budget of Rs17.400 million for the financial year 2012-2013. It has mandate to conduct Financial Attest, Regularity Audit and Compliance with Authority & Performance Audit of entire expenditure including programmes/projects & receipts. Accordingly, Regional Directoroate of Audit Rawalpindi carried out audit of the accounts of various offices of the District Government, Chakwal for the financial years 2011-2012 and 2012-13. District Government Chakwal conducts its operations under Punjab Local Government Ordinance, 2001. It comprises one Principal Accounting Officer (PAO) i.e. the District Coordination Officer (DCO) covering six groups of offices i.e. Finance & Planning, Works & Services, Education, Health, Community Development and Agriculture. The financial provisions of the Punjab Local Government Ordinance, 2001 require the establishment of District Government fund comprising Local Government Fund and Public Account for which Annual Budget Statement is authorized by the Nazim/Council/Administrator in the form of budgetary grants. 2. Audit of District Government, Chakwal was carried out with the view to ascertain that the expenditure was incurred with proper authorization, in conformity with laws / rules / regulations, economical procurement of assets and hiring of services etc. iii 5. Audit of receipts / revenues was also conducted to verify whether the assessment, collection, reconciliation and allocation of revenues were made in accordance with laws and rules, there was no leakage of revenue in the Government Account / Local Fund. Audit Objectives Audit was conducted with the objective to ensure that: 1. Money shown as expenditure in the accounts was authorized for the purpose for which it was spent. 2. Expenditure incurred was in conformity with the laws, rules and regulations framed to regulate the procedure for expending public money. 3. Every item of expenditure was incurred with the approval of the competent authority in the Government for expending the public money. 4. Public money was not wasted. 5. The assessment, collection and accountal of revenue is made in accordance with prescribed laws, rules and regulations. a) Audit Methodology Audit was performed through understanding the business process with respect to functions, control structure, prioritization of risk areas by determining their significance and identification of key controls. This helped auditors in understanding the systems, procedures, environment, and the audited entity before starting field audit activity. Audit used desk audit techniques for analysis of compiled data and review of permanent files / record. Desk Audit greatly facilitated identification of high risk areas for substantive testing in the field. b) Audit of Expenditure and Receipt Total expenditure of the District Government Chakwal for the finanacial year 2012-2013 was Rs4,329.725 million covering 272 formations. Out of this RDA Rawalpindi audited expenditure of Rs767.766million which in terms of percentage was 17% of total expenditure. Regional Director Audit, planned and executed audit iv of 32 formations i.e. 100% achievement against the planned audit activities. Total receipts of the District Government Chakwal for the financial year 2012-2013, were Rs44.261 million. RDA Rawalpindi audited receipts of Rs17.50 million which was 40% of total receipts. c) Recoveries at the Instance of Audit Recovery of Rs63.186 million was pointed out, which was not in the notice of the executive before audit. d) Key Audit Findings of the Report i. Non-production of Record of Rs63.772 million noted in one case1 ii. Non Compliance of Rules of Rs7.384 million noted in four cases2. iii. Recoveries of Rs 63.186 million noted in four cases3. iv. Analysis of budget and expenditure of District Government Chakwal for the financial year 2012-13 revealed that the original budget was Rs4,318.423 million, supplementary grant was Rs653.577 million whereas Rs619.883 million were