AUDIT REPORT ON THE ACCOUNTS OF CITY DISTRICT GOVERNMENT FAISALABAD AUDIT YEAR 2017-18 AUDITOR GENERAL OF PAKISTAN TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS ............................................................. i Preface .................................................................................................................. iii EXECUTIVE SUMMARY ................................................................................. iv SUMMARY TABLES & CHARTS ................................................................... ix Table 1: Audit Work Statistics .............................................................................. ix Table 2: Audit Observations Classified by Category ............................................ ix Table 3: Outcome Statistics .................................................................................... x Table 4: Irregularities Pointed Out ........................................................................ xi Table 5: Cost Benefit ............................................................................................. xi CHAPTER 1 ......................................................................................................... 1 1.1 Introduction ................................................................................................ 1 1.1.1 Comments on Budget and Accounts .......................................................... 2 1.1.2 Brief Comments on the Status of Compliance of MFDAC Audit Paras of Audit Report 2016-17 ................................................................................. 4 1.1.3 Brief Comments on the Status of Compliance with PAC Directives ......... 4 1.2 AUDIT PARAS ......................................................................................... 6 1.2.1 Non Production of Record .......................................................................... 6 1.2.2 Irregularities and Non-Compliance ............................................................ 8 1.2.3 Performance ............................................................................................. 38 1.2.4 Internal Control Weaknesses .................................................................... 45 ANNEXURE ....................................................................................................... 60 Annexure-A .......................................................................................................... 60 Annexure-B .......................................................................................................... 68 Annexure-C .......................................................................................................... 69 Annexure-D .......................................................................................................... 71 Annexure-E .......................................................................................................... 73 Annexure-F ........................................................................................................... 74 Annexure-G .......................................................................................................... 76 ABBREVIATIONS AND ACRONYMS AASHTO American Association of State Highway and Transportation Officials ADC Additional Deputy Commissioner B&R Buildings & Roads CCTV Close Circuit Television CDGF City District Government Faisalabad Cft Cubic Feet CFSC Citizen Facilitation and Service Center C&W Communication & Works CPO City Police Officer DAC Departmental Accounts Committee DAO District Accounts Office/Officer DCO District Coordination Officer DDC District Development Committee DDO Drawing and Disbursing Officer DDSC District Development Steering Committee DGA Directorate General Audit DO District Officer EDO Executive District Officer FD Finance Department FESCO Faisalabad Electricity Supply Company F&P Finance & Planning GST General Sales Tax INTOSAI International Organization of Supreme Audit Institutions IPSAS International Public Sector Accounting Standards JMF Job Mix Formula LED Light Emitting Diode LG&CD Local Government & Community Development LG&RD Local Government & Rural Development MB Measurement Book MC Municipal Corporation Pak MDGs Pak Millennium Development Goals MFDAC Memorandum for Departmental Accounts Committee i MNA Member National Assembly M&R Maintenance & Repair MRS Market Rate System NAM New Accounting Model NESPAK National Engineering Services Pakistan NLC National Logistic Cell PAC Public Accounts Committee PC-I Planning Commission Form-I PARCO Pak Arab Refinery Company PCPS Pre Cast Parabolic Segment P&D Planning & Development PDG Punjab District Government PDWP Provincial Development Working Party PFR Punjab Financial Rules PHA Parks and Horticulture Authority PHE Public Health Engineering PLGO Punjab Local Government Ordinance POL Petroleum Oil and Lubricants PPRA Punjab Procurement Regulatory Authority PSTS Punjab Sales Tax on Services RCC Reinforced Cement Concrete RDA Regional Directorate of Audit Rft Running Feet RR&MTI Road Research & Material Testing Institute SAP Systems, Applications and Products SDO Sub-Divisional Officer Sft Square Feet S&GAD Services and General Administration Department Sqm Square Meter TMA Town/Tehsil Municipal Administration TSE Technically Sanctioned Estimate WAPDA Water & Power Development Authority WASA Water and Sanitation Agency W&S Works & Services XEN Executive Engineer ii Preface Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan, 1973 read with Sections 8 & 12 of the Auditor General's (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001 and Section 115 of the Punjab Local Government Ordinance, 2001 require the Auditor General of Pakistan to conduct audit of Receipts and Expenditure of the Local Fund and Public Account of District Governments. The report is based on audit of the accounts of various offices of the City District Government, Faisalabad for the Financial Year 2016-17 (July, 2016 to December, 2016). The Directorate General of Audit, District Governments, Punjab (South), Multan conducted audit during Audit Year 2017-18 on test check basis with a view to reporting significant findings to the relevant stakeholders. The main body of the Audit Report includes only the systemic issues and audit findings carrying value of Rs 1 million or more. Relatively less significant issues are listed in the Annexure-A of the Audit Report. The Audit observations listed in the Annexure-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. 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 responses of the management concerned and DAC directives wherever conveyed. The Audit Report is submitted to the Governor of the Punjab in pursuance of Article 171 of the Constitution of the Islamic Republic of Pakistan, 1973 read with Section 115 of the Punjab Local Government Ordinance, 2001 for causing it to be laid before the Provincial Assembly. -Sd- Islamabad (Javaid Jehangir) Dated: 22.02.2018 Auditor General of Pakistan iii EXECUTIVE SUMMARY The Directorate General Audit, District Governments, Punjab (South), Multan is mandated for carrying out audit of the City District Governments and District Governments in Punjab (South). The Regional Directorate of Audit (RDA), District Governments, Faisalabad, a Field Audit Office of the DGA, District Governments, Punjab (South), Multan, carries out audit of District Governments Faisalabad, Jhang, Toba Tek Singh and Chiniot. The Regional Directorate has a human resource of 17 officers and staff, constituting 4,784 mandays and the budget amounting to Rs 20.158 million was allocated in Audit Year 2017-18. The office is mandated 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 of Audit, Faisalabad carried out audit of the accounts of various formations of City District Government, Faisalabad for the financial year 2016-17 and the findings are included in the Audit Report. The City District Government, Faisalabad conducts its operations under Punjab Local Government Ordinance, 2001. The District Coordination Officer (DCO) is the Principal Accounting Officer (PAO) of the District Government and carries out functions of the District Government through group of offices as notified in Punjab Local Government Ordinance. According to the Ordinance, the District Government Fund comprises District Local Fund and Public Account. Due to delay of electoral process, Zila Nazim / Zila Council was not elected; therefore, the Annual Budget Statement was authorized by the DCO, who has been notified as Administrator by Government of the Punjab in February, 2010. City District Faisalabad is administratively divided into eight towns namely Lyallpur, Iqbal, Madina, Jinnah, Jaranwala, Samundari, Tandlianwala and Jhumra. iv 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