Provinces, the Federal Ministries and Divisions, AJK, and Gilgit-Baltistan have all opposed the directive of the Executive Committee of National Economic Council (Ecnec) to undertake performance/programme audit of Public Sector Development Projects (PSDP) of over Rs 1 billion by an audit firm of repute, it is learnt.
Sources said that Ecnec had directed audit of all completed and ongoing programme/projects of over Rs one billion by an audit firm of good repute to ensure transparency as well as timely completion of development projects. The Ecnec directives were to conduct informal audit of PSDP projects every six months and formal audit after every year to ensure transparency in utilisation of funds and their timely execution.
The Planning Commission had requested the Ecnec for review of its decision on ''Programme audit'' of projects from audit firms because of opposition by all stakeholders. The meeting was informed that majority of the stakeholders maintained that under the prevailing rules, the office of the Auditor General of Pakistan (OAGP) is responsible for ensuring transparency, timely execution of projects and financial propriety of PSDP funded projects.
The office of the Auditor General of Pakistan, presently dealing with audit of PSDP funded projects, has also opposed the audit from private audit firm for a variety of reasons such as: (i) the experience and capacity of the Chartered Accountant firm(s) to conduct performance/programme audit of public sector projects in terms of knowledge of the regulatory framework would be limited.
The knowledge of the rules and regulations as well as that of performance auditing techniques is critical for conducting such audits; (ii) the performance audit of the public sector projects/programme falls under the preview of the OAGP. This department has attained advanced capacity for such audits and developed specific methodologies and guidelines for performance auditing of various sectors.
Internationally, the Supreme Audit Institutions (SAIs) alone are generally entrusted with the performance/programme audits of Public Sector Projects. In Pakistan, the Department of the Auditor General of Pakistan has trained over 1000 local officers and over 100 officers of the other SAIs in this specific field; (iii) According to rules of business, audit of the Public Sector Projects is the responsibility of the Auditor General of Pakistan.
The involvement of private chartered accountants in audit is legally possible only after a change in rules of business; (iv) No provision of funds to meet the audit (twice a year) by private audit firms is available in the approved PC-Is of on-going projects, hence it will cause revision as well as enhancement in costs of these projects; (v) Informal audit after every six months and formal audit after every year would amount to sub-letting the responsibilities of the executing and implementing agencies.
This will also absolve these agencies of their own responsibilities, accountability and professional obligations besides giving opening for corrupt practices; (vi) The engaging of private firms for informal and formal audit of these mega developments projects involving substantial public fund expenditure will clash with the constitutional obligations of the Auditor General of Pakistan beside such audits will have no legal standing. Moreover, such private audit will have contrary and adverse effects on the transparency, good governance, financial propriety and responsibility of concern organisations/departments/Ministry.
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