ISLAMABAD: The report of the Auditor General of Pakistan (AGP) for the audit year 2019-20 reveals that there is no internal audit structure available in the country's Cantonment Boards.
The report adds that the defence services receive a single line budgetary grant and the budget allocation by CMA (Controller Military Accounts) is not available. “A detailed head-wise spending level budget is not made for all heads of accounts, which resulted in excess expenditure to the tune of Rs. 44.612 billion,” the report states.
The non-availability of system-based data, unlike in the civil audit, continues to be a hindrance for the defence audit, says the report. The PAF and PAC Kamra follow imprest-based post-audit and accounting systems in departure of the Financial Regulations 1986. As a result of gradual IT interventions in the defence services, the report says, forms and procedures have undergone revisions without due approval from the AGP.
“Internal controls on databases such as payroll master data, inventory, pension etc. as well as internal audit, including IT audit, is required to be established,” the report states, adding, “There is no formal mechanism to reconcile the Military Accountant General’s (MAG) monthly expenditure figures with the executive, which raises questions about the correctness of accounting reports.
The report adds that decentralization of data management by the MAG to CMAs lacks the development of a quality assurance mechanism at both ends. “System-based transfer of accounting data from CMAs to MAG for consolidation and reporting is presently on parallel run with the paper-centric legacy system of punching media. An authentic quality control system at CMA, MAG and CLA (Controller Local Audit) levels should be in place before full abandonment of the legacy system.”
The report suggests that formal conveying of sanction of expenditure with full particulars of each transaction along with details of budget, entity and authority to CMA concerned should be put in place in the whole defence services in line with civil practices.
The report adds that consolidation of payments to reduce the number of cheques in CMAs lacks maturity, wherever done, which is a departure from the usual workflow of PMAD (Pakistan Military Accounts Department) as it disengages it with PMAD HR and their respective joint directors.
The audit report recommends: i) The PAO (Principal Accounting Officer) should issue instructions to produce the auditable documents to the audit teams during audit to avoid the reported cases of non-production of auditable record. ii) Public Procurement Rules and Instructions contained in the Defence Purchase Procedure & Instructions (DPP&I) should be implemented in letter and spirit. PPRA should be included in the syllabi of all training courses in defence institutions. iii) Cantonment Boards need to ensure proper zoning regulations to avoid misuse of properties besides effective and timely provision of civic amenities to residents. iv) The unauthorized use of A-I land should be checked limiting its use for the specified purposes only. The income earned from the use of A-I land should be made transparent, disclosed in the public accounts and provided to audit for scrutiny. v) The management needs to take steps to recover large amounts of government dues pointed out in the report and fix responsibility thereof. vi) The policy regarding distribution of CNE fund needs to be revised to ensure recovery of cost of government store and distribution of profit earned on CNE share. vii) An internal audit wing comprising qualified officers and staff should be institutionalized in the Military Lands and Cantonments Department to mitigate the risk of irregularities. viii) HRA (House rent allowance) should not be paid to allottees of government accommodation and may be recovered as per policy in vogue. ix) MoD and MoDP should take up cases with the Auditor General of Pakistan for approval of revised forms and procedures adopted as a result of automation by the three services and other defence entities, under Article 170(1) of the Constitution. x) Monthly account reconciliation between executive and account office should be made at entity level to authenticate budget and account figures. xi) CMA-wise budget should be allocated for effective budgetary controls at each transaction level. xii. BG (bank guarantee) verification authentication system should be strengthened by the MoD / MoDP in consultation with the SBP / SECP. xiii) Given the magnitude of present commercial activities in the defence services relating to land, dairy, medical, DP Establishments, etc there is an emerging need to frame rules to formalize existing arrangements thereby introducing controls far beyond SOPs / drills. xiv) No CMA cheques should be issued to non-public funds against sanction for payment to units. xv) UA (Unit Accountant) offices attached with engineering units need to be upgraded to proper account offices linked with the CMAs through system based accounting system for daily transfer of booked data. xvi) Issue of recovery of rent and allied charges has been repetitively pointed out by audit over the years. MoD should tackle this problem holistically. xvii) Successive Audit Reports reflect rampant internal control weaknesses in Cantonment Boards. MoD / ML&C should take steps to strengthen controls in the boards for efficient and effective service delivery / value for money. It should include the creation of an internal audit structure in ML&C.”
