Sindh government departments: AGP audit report reveals Rs 50.829 million irregularities

Financial irregularities and malpractices swallowed up Rs 50.829 million of Sindh public sector departments, detected by the audit report on the accounts of public sector enterprises 2010-11, Business Recorder learnt on Sunday.
The audit report, which Auditor General of Pakistan carried out, says that Sindh agriculture supplies organisation, Karachi, is under process of winding up since 2001-02 and Sindh Sugar Corporation, Hyderabad, is under liquidation process since 1998-99, but their privatisation decisions have not yet been implemented.
Whereas Sindh agriculture supplies organisation, Karachi, Sindh Seed Corporation, Hyderabad, Pakistan Swedish Institute of Technology, Wood Works Production Unit, Landhi, Karachi, Pakistan Swedish Institute of Technology, Garment Production Unit, Landhi, Karachi, Sindh Government Press, Khairpur, Sindh Government Press, Karachi, Sindh Small Industries Corporation, Karachi, and Sindh Sugar Corporation, Karachi did not submit their accounts by November 30, 2010, despite repeated requests, the report says.
The report's comments on internal control shows the business of the public sector departments was pathetic, urging to improve the controls of managements to safeguard the public money against the fraud, waste and inefficiency.
"The organisations covered in the report require strengthening of financial and management controls to address weaknesses more specifically in the areas as under," the report says.
It says inventory management is one area where almost all organisations need improvement in the purchases, physical verification, and record keeping. It says purchases were made without utilising the available stock, resulting in blocking the capital and observed obsolete inventories were not disposed of for years.
"Maximum retaining levels and reordering levels were not defined; annual physical verification was not carried out. A central control over the inventory held by various units under the administration of a department needs to be devised to enable utilisation of idle spares/equipment," the audit report adds.
It suggests the receivables management in all the organisations requires immediate attention. The report noticed rising trend in the receivables in the organisations, which were audited. It says that trade debts were not being collected within the stipulated period and late collection surcharge is also not levied on delayed payments, besides aging of receivables was not being done.
Planning and monitoring systems, relating to setting up of targets for usage of bulldozers, needed to be strengthened to ensure targeted achievement of the Agricultural Engineering Workshops, the report says.
"This was another grey area, where either the Department did not vigorously pursue its set operational and financial targets, or it simply went ahead with over-ambitious and unrealistic targets, resulting in losses of millions of rupees," it maintains.
Financial management, the report says, needs to be strengthened by establishing a system of maintenance of accounts comprising an immediate posting of financial transactions, periodical reporting within a financial year, observance of year-end procedures, timely preparation of financial statements upon close of financial year and timely audit of accounts.
"The Principal Accounting Officers will be in a position to control the affairs of their organisations by strengthening the financial management. The non-submission of audited accounts illustrates weakness of Internal Control," the audit report adds.
The Principal Accounting Officers need to initiate necessary steps to evaluate, institute and strengthen the internal controls so that detective and preventive measures are taken at the right time, the report urges. "In this regard, Internal Audit Department may be established, which may directly report to the Principal Accounting Officer. A copy of the report generated by the Internal Audit Department as well as physical verification report need to be provided to Audit," the report commented.
The audit report in its recommendations says, the executive (Principal Accounting Officers) need to take necessary steps to evaluate, institute and strengthen the management, budgeting and accounting controls to optimise operational capacity and streamline inventory of stores to achieve economy, efficiency and effectiveness.
To expedite liquidation of closed enterprises to avoid recurring expenses and deterioration of the properties, ensure timely recovery of sundry debts, loans and advances, arrange timely submission of annual audited accounts to audit authorities and improve financial health of loss bearing organisations, the report advised.