Pak's national auditor points to serious financial irregularities in defence sector

The Auditor General of Pakistan (AGP) has released over 300 pages of an exhaustive audit report detailing severe financial irregularities, opaque procurement processes, and unauthorised expenditures within various branches of the country’s defence services.

The extensive report reveals widespread issues and calls for immediate reforms and accountability.

Overview of audit findings

The audit for the fiscal year 2023-24 scrutinised expenditures totalling Rs 566.29 billion. This amount includes Rs 335.63 billion from the latter part of the 2022-23 audit and Rs 230.66 billion from the initial phase of the 2023-24 audit.

The report exposes numerous financial mismanagement issues, including advance payments made before the completion of work, failures to recover rents and allied charges, and violations of public procurement rules.

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It also highlights irregularities in the execution of unauthorised work and non-compliance with Defence Services Regulations and A-1 land policy.

Budget allocation & compliance concerns

For the 2022-23 fiscal year, Pakistan’s Ministry of Defence was allocated Rs 1.563 trillion, which was later increased to Rs 1.592 trillion through supplementary grants. Despite this significant budget, the AGP report raises concerns about the ministry’s persistent non-compliance with audit objections.

The AGP noted that “the Ministry of Defence complied with 659 directives of the Public Accounts Committee (PAC) of the parliament out of 1974, which indicates that compliance of PAC directives is very slow. The principal accounting officer should take necessary steps to expedite compliance with PAC directives.”

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Additionally, the Ministry of Defence Production performed poorly, complying with only 109 out of 372 PAC directives.

Procurement irregularities

The audit uncovered significant procurement-related irregularities. Many procurements exceeding Rs 500,000 were not advertised as required by the Public Procurement Regulatory Authority (PPRA). In several instances, contracts were divided and awarded to preferred contractors to bypass transparent bidding processes.

The audit also found cases where procurement was conducted without formal contract agreements or proper estimates, such as the renovation of a Foreign Trainees Mess Shed at an Army School.

The report criticised management for inadequate responses to audit objections, citing missing or incomplete documentation.

Unimplemented recommendations

The Departmental Audit Committee (DAC) had recommended holding inquiries and regularising expenditures to address these issues. However, by the time the audit report was published, these recommendations had not been acted upon.

The report also highlighted discrepancies such as cash receipt vouchers (CRVs) issued without receiving items and the issuance of 5 per cent super check certificates without proper verification.

The AGP’s findings underscore an urgent need for reform within the Defence Services to address financial mismanagement and improve procurement transparency.