ISLAMABAD – Major financial irregularities, improper procurement processes, and unauthorised expenditures within various defence services units have been pointed out in Auditor General of Pakistan report.
The audit report for Defence Services for fiscal year 2023-24 highlights plethora of concerns, including issues with non-recoveries, advance payments, procurement irregularities, state losses, and missing records.
The report reviewed a total expenditure of Rs566.29 billion, comprising Rs335.63 billion from the second phase of the 2022-23 audit and Rs230.66 billion from the first phase of the 2023-24 audit.
It mentioned non-compliance with Defence Services Regulations, such as advance payments before work completion, improper financial power splitting, failure to recover rent and charges, non-deduction of taxes, breaches of procurement rules, and unauthorized work.
Defence sector’s poor track record in addressing audit objections over the past four decades was also mentioned, with insufficient efforts to rectify and regularize accounts.
Auditor General mentioned that Ministry of Defence acted on less than 40percent directives from the Public Accounts Committee (PAC), indicating slow compliance. The Ministry of Defence Production also showed poor performance, meeting only 109 out of 372 PAC directives.
The report stresses that the principal accounting officer (the federal secretary of the ministry) must take action to expedite compliance with PAC directives due to the significance of public funds.
The audit found that some Army formations violated procurement rules by splitting contracts and awarding them to preferred contractors on the same day, avoiding transparent bidding.
The audit also noted that for secret or urgent procurements, the defence secretary is authorised to grant exemptions from procurement rules. However, these exemptions were not properly documented or approved, despite auditor insistence.
The Departmental Audit Committee (DAC) recommended conducting inquiries to determine responsibility and regularize expenditures. However, these recommendations had not been acted upon by the time the audit report was published.
Procurement regulations mandate that all procurements over Rs500,000 be advertised on the PPRA website. The audit found that several Army procurements for the 2021-22 and 2022-23 fiscal years violated these rules.
In one case, the management’s response to audit objections indicated that procurement was done using a comparative statement (CST) from a depot, but no approved CST documentation was provided. Orders were issued to various contractors at the same rate, suggesting favoritism.
It said formation were issued at rates nearly three times higher than the lowest bid, disregarding competitive bidding. The audit also found that cash receipt vouchers (CRVs) were issued without receiving items, and super check certificates were issued improperly.
