The good, the bad, and the ugly of Defence Ministry’s audit

ISLAMABAD: The Auditor General of Pakistan (AGP) has shared a table in its latest audit report on the Defence Ministry, showing nil compliance by the ministry to 51 audit paras and one actionable point over nine years, from 2011-12 to 2021-22.

The report also highlights 30 years of regulatory irregularities in the operations of Pakistan Maritime Security Agency (PMSA), an agency working under the Ministry of Defence.

The AGP’s audit report for the fiscal year 2023-24, however, does not show any major financial irregularity in the defence budget during the period under review. Instead, it reports overall savings of Rs314 million.

The report notes that the PMSA, since its establishment under the PMSA Act of 1994, has failed to frame the essential rules and regulations mandated under Sections 18 and 19 of the Act. Despite clear legal provisions requiring both the federal government and the agency’s director general to notify rules and regulations in the official gazette, no such framework has been established to date.

Auditors termed the failure “a serious lapse” and a violation of statutory obligations. The Departmental Accounts Committee (DAC), in a meeting held on December 9, 2024, directed PMSA to urgently initiate the rule-making process. The AGP report contains a table under the heading “Status of Compliance with PAC Directives,” which appears to be the most serious finding in the Defence Ministry’s audit. It shows that for nine years between 2011-12 and 2021-22, a total of 51 audit paras were raised, along with one instance of “actionable points issued.” However, there is not a single case of compliance. The compliance portion of the table shows all entries as nil (zero).

The AGP’s audit further found that PMSA failed to deposit Rs6.95 million into the Federal Consolidated Fund, in violation of the Public Finance Management Act, 2019. The amount was part of Rs37.53 million in proceeds generated through the auction of boats and fish seized from Indian fishermen in Pakistani waters. However, only Rs30.58 million was deposited in the national exchequer, leaving the rest unaccounted for.

Under the Treasury Single Account (TSA) system, mandated by the Finance Division in 2020, all revenues generated by government entities must be deposited into the central treasury. The auditors stressed that PMSA’s retention of public money was illegal and needed to be reversed.

The positive aspect of the audit report regarding the Defence Ministry’s spending was its savings. During the financial year 2023-24, the ministry -- which was allocated a budget of Rs1.9 trillion -- showed savings of Rs314 million. These savings arose largely from underutilisation in current and development expenditures.

The information minister was requested on Wednesday to respond to the AGP report’s findings on the Defence Ministry’s non-compliance with audit paras for nearly a decade. The minister said he would furnish the Defence Ministry’s response on Thursday. However, despite a reminder, no response was received on Thursday. Previously, in The News story based on the AGP’s audit report on the federal government, a government spokesman had said that these audit reports are first discussed in the DAC, which is chaired by the Principal Accounting Officer (PAO). Most of the audit observations, he said, are settled at the DAC level and are recommended to the Public Accounts Committee (PAC) for final settlement. Such recommendations are generally accepted by the PAC as they are.

“So the so-called irregularities are not final by any means. The PAC has already directed all PAOs to hold DACs on a monthly basis so that maximum audit observations are settled at the DAC level,” the spokesman added.