ISLAMABAD: The Ministry of Finance (MoF) is to consult Auditor General of Pakistan (AGP) on forensic audit of loss-making public sector entities for the last ten years as directed by Prime Minister Imran Khan.
On August 31, 2020, Finance Division noted that the Prime Minister directed Adviser to the Prime Minister on Finance and Revenue to get forensic audit of the major loss-making State-Owned Enterprise (SOEs) for the last ten years.
According to the available data on loss-making State Owned Enterprises (SOEs) for FY 14 to FY 18, the top 15 loss-making entities consistently contributed to more than 90% of the overall losses of SOEs. The data for FY 19 had been received but it was in the scrutiny and verification stage.
The meeting was apprised about the list of top 15 loss-making entities in FY19, total losses incurred by each SOE during FY 14 to FY 18 and accumulated losses of each SOE.
Finance Division further said that in order to proceed in the matter, the following issues need to be addressed: (i) to identify the SOEs to be audited;(ii) to decide if forensic audit be undertaken by Auditor General of Pakistan or by reputed firms of chartered accountants;(iii) scope and ToRs of the proposed forensic audit;(iv) to decide forensic audit may be undertaken for 10 years for all loss-making entities or not? and ;(v) the timelines of forensic audit.
Finance Division submitted a following proposals for consideration and approval of the Cabinet Committee on SOEs: (i) major loss-making entities may be selected on the basis of either the total losses accrued during FY 14 to FY 18 or may be based on the accumulated losses as of FY 18; (ii) a forensic audit may be undertaken by the Auditor General of Pakistan to ensure consistency and reliability of the results;(iii) the draft scope/ TORs' of forensic audit may be approved ;(iv) forensic audit may be undertaken initially for a period of last five years ( FY 2016 to FY 20) and be extended to cover last ten years for selected SOEs on case to case basis once the initial report is received;(v) Auditor General of Pakistan may be advised to complete the forensic audit of selected SOEs within a time of 9-120 days and submit its report to the CCoSOEs for further directions.
The meeting observed that carrying out a forensic audit is a gigantic task, which requires expertise/skill in conducting of special audit. It was informed that the proposed job would be done through AGP. The capacity of AGP to do the job was apprehended.
It was suggested that services of audit firms may be obtained to carry out forensic audit. The committee observed that estimated cost of period under which audit is to be completed, may be obtained in the first instance. It was also suggested that Ministries / Divisions may also be consulted to select major loss-making SOEs under their control for the forensic audit. Further, the audit should not be confined to a particular sector.
After a detailed discussion, the committee took the following decisions ;(i) obtain information from AGP about availability of expert auditors to carry out forensic audit of major loss-making SOEs in pursuance of Prime Minister's directive; (ii) to obtain information from audit firms regarding estimated cost of forensic audit and estimated time during which the forensic audit would be competed; and (iii) to consult relevant Ministries/ Division to select major loss-making SOEs under their control for the forensic audit. The said audit should not be confined to a particular sector.
Finance Division will submit its compliance report on the decision to the CCoSEs in its next meeting for consideration.
Copyright Business Recorder, 2020
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