AGP detects Rs 236.47 million embezzlement, irregularities in PTVC's accounts

Auditor General of Pakistan has detected embezzlement and irregularities of more than Rs236.47 million in Pakistan Television Corporation's accounts. According to the Audit Report-2010-11, national exchequer suffered a loss of Rs141.91 million due to violation of government instructions and international accounting standard by the corporation.
The audit report says that by violating the instructions of Finance Ministry, the management of PTVC (HQ) Islamabad paid a sum of Rs40.786 million and Rs101.126 million as bonus to the officers and staff during 2008-09 and 2009-10, respectively on the eve of Eid Festivals. The Corporation sustained operating loss of Rs1.066 billion and Rs287.921 million during the years 2008-09 and 2009-10, respectively as such bonus was not admissible to the employees.
The report says that Ministry of Finance granted vide sanction dated October 3, 2009, an amount of Rs1.034 billion in the assignment account No ACC-2447 9 to cover the losses incurred by PTVC during the previous year (Note 29 of audited accounts for the year 2008-09). PTVC treated this as "Other income" in the accounts for the year ended June 30, 2009. As per IAS-18, revenue can only be recognised if it is probable that inflow of economic benefits would occur. Further, as per IAS-10 adjusting events are only those that provide evidence of conditions that existed on the balance sheet date.
The violation of the IAS-18 and 10 resulted in overstatement of profit for the year 2008-09. The treatment as well as disclosure resulted in a profit of Rs118.957 million whereas the Corporation have sustained a loss before taxation of Rs915.043 million for the year 2008-09. Thus, due to non-observance of Government instructions, the profit was overstated in violation of the International Accounting Standards, which resulted in an inadmissible payment of Rs141.912 million on account of bonus.
The matter was pointed out to the management on November 30, 2010 and the Ministry on December 10, 2010. The management in its reply dated January 3, 2011 stated that it was not the payment of bonus but ex-gratia. The reply was not acceptable as in the annual accounts the amount was reflected under the head of bonus. The Corporation sustained operating losses and accumulated loss after taxation and as such, the payment of bonus was not covered under the instructions of Finance Division.
DAC in its meeting held on January 13, 2011 directed the management to investigate and fix responsibility at ministerial level. No response was received till finalisation of this report.
In another case, public money of worth Rs23.598 million was wasted due to non-transparent procurement of store in violation of PPRs.
The report says that PTVC (HQs) Islamabad procured DVC pro 50-post production equipment valuing JP Yen 46,109,930 on FOB (equivalent to Pak Rs 23,597,587 @ 0.511768) as proprietary item from M/s Systec International Osaka Japan through their Local agent M/s System Network, Karachi against contact dated October 29, 2005.
The store was procured without calling competitive rates through press, as these items were not covered under rule 42 of PPRs. This resulted in non-transparent purchase of store of Rs23.598 million in violation of the rules.
The matter was reported to the management on November 30, 2010 and the Ministry on December 10, 2010. The management in its reply dated January 03, 2011 stated that the store was of proprietary nature and procurement was made as per PTV Procurement Rules. The reply was not acceptable as on one side the management stated that the store was of proprietary nature and on other hand; three bids were obtained before placing the order.
DAC in its meeting held on January 13, 2011 decided that the Audit might examine the position in light of PTV's own rules on proprietary nature of procurement. Audit was of the view that the management got quotations from three firms, which proved that the store was of not proprietary nature and as such, the store was procured in non-transparent manner in violation of the PPRs.
Similarly in another case, the report says that the national exchequer faced loss of 46.781 million due to un-necessary procurement of store.
The report says that Pakistan Television (HQs) Islamabad, imported seven transmitters worth Rs46.781 million from China out of Public Sector Development Programme (PSDP) funds during 2005-06. The transmitters are lying in parking area of PTV (HQs) in miserable condition since their import due to non-installation of transmitters since their import; the funds of Rs46.781 million were blocked.