Sunday July 03, 2022

An Attempt to go beyond legal mandate: Auditor general of Pakistan’s move to expand its scope, extent nailed

October 21, 2021

Islamabad :” In an elaborate legal opinion, the Attorney General for Pakistan’s office has shot down a concerted move by the Auditor General of Pakistan’s office to expand its scope and extent of powers and rubbished its attempt to take on the role of a ‘super regulator’.

The cabinet division sent the authoritative opinion of the attorney general office to the auditor general, asking it to communicate it to its offices and circulate to the regulatory authorities, including the Pakistan Telecommunication Authority, National Electric Power Regulatory Authority, Oil and Gas Regulatory Authority (Ogra), Naya Pakistan Housing Development Authority, Special Technology Zone Authority, Public Procurement Regulatory Authority and Frequency Allocation Board, official correspondence available with The News shows.

The opinion was prepared by Additional Attorney General Chaudhry Aamir Rehman and was issued with the approval of the attorney general for Pakistan. The opinion was sought by the cabinet division through the Law Ministry.

The attorney general office stated that the upshot of the opinion is that the audit of the economy of administrative activities, efficiency of utilisation of human, financial and other resources and effectiveness of performance is beyond the scope of the auditor general. However, the auditor general in performance of his constitutional mandate is required to audit all accounts, expenditure, sanctions or legal authority, receipts, stores and stock, transactions and profit and loss accounts of the federation, the provinces and the authorities established or controlled by the federation or the provinces, the opinion said.

It said the attorney general office examined the views of the law department, Ogra, and the auditor general on the subject and considering various provisions of Auditor General’s (Functions, Powers, Terms and Conditions of Service) Ordinance, Public Finance Management Act, 2019 and Constitution, as expounded by superior courts.

The opinion said it is appropriate to fully comprehend the scope of powers conferred upon the auditor general by the Constitution. In this regard it will be pertinent to peruse Articles 169 and 170 that delineate its functions and powers.

It said that the Constitution is a social contract amongst the people of Pakistan, entered to politically organise themselves into a state and they have thus agreed to surrender their individual authority in favour of the State to be exercised by people's chosen representatives. The Constitution also identifies the relationship between the State and the individuals and guarantees the rights retained by the people for their welfare, security, safety and prosperity. In order to achieve the goals set out by the social contract, the government of the time had to perform numerous functions aimed at the welfare of the people.

The opinion said the performance of such functions require the generation of revenues. The public money so generated/ collected forms a trust and the government is the trustee and therefore responsible to the people for the proper utilisation of the funds, collected for the benefit of the public at large. Various bodies are established by or under statutes which at times generate their own revenues but have been established, mandated or controlled by the government. These bodies are required to ensure transparency in their accounting and financial affairs, because of being in the public domain and because they are instrumentalities of the government, established to further the objectives for which they are created.

For the purpose of ensuring that the revenues generated by the federal and provincial governments through taxes, levies, impositions and loans etc, and the financial affairs of statutory/ autonomous bodies are monitored appropriately for compliance with the Constitution and applicable law, the important constitutional office of the auditor general has been established under the Constitution.

The opinion said having discussed the scheme of the Constitution and the importance of the office of the auditor general, one can now discern the scope of its powers in the light of the settled principles of interpretation of the Constitution. It is a well settled principle of interpretation that each and every word has to be given due regard and no word is to be considered superfluous.

It is the stance of the auditor general that Article 170 ordains to undertake an audit of the economy of administrative activities; efficiency of utilisation of human, financial and other resources; and effectiveness of performance in relation to achieving the objectives of a public entity being the constituent factors of financial propriety, having direct bearing on the expenditure and receipts of the federation and the provinces, therefore, liable to audit. True that the Constitution commands financial accountability. However, it also delineates the limit of such accountability.

According to the opinion, audit of expenditure, sanctions or legal authority, receipts, stores and stock, transactions and profit and loss accounts are all relevant for the purposes of financial accountability and the auditor general will be well within its powers to undertake such audit.

The decision-making process of the regulatory bodies if allowed to be second guessed by the auditors will erode their independence, which has been held sacrosanct by the Supreme Court. Even otherwise such a course would make the auditor general a super regulator, which role has not been envisioned by the Constitution nor has any such power been conferred upon it by law.

The cabinet division conveyed to the auditor general that the attorney general office has stated that Articles 169 and 170 make it clear that the “extent” refers to the period for which the audit is carried out whereas the “nature” would relate to the quantum of audit i.e. full or partial audit as the auditor general may determine.

Article 170 is not a stand-alone article and does not vest any extra power in the auditor general other than prescribed under Article 169. Section 8 of the ordinance stipulates that audit is to be carried out of all expenditure from the Federal Consolidated Fund; all transactions of the Federation relating to public accounts; all profit and loss accounts and other subsidiary accounts kept under the orders of the president or the governor in any federal or provincial department; and the accounts of any authority or body of the Federation or the provinces.

Section 8 makes it clear that the nature and extent of audit of authorities can’t go beyond the Federal Consolidated Fund, the public accounts and profit and loss accounts kept under the authority of the president or governor. The power under Section 14 of the ordinance cannot be stretched to include any other audit other than the audit of accounts, expenditure etc. as mentioned in Section 8.