The Securities and Exchange Commission of Pakistan (SECP) has found financial and administrative irregularities in the affairs of National Testing Service (NTS) during an on-site inspection of books of accounts, books and papers. Sources said the inspection team after an on-site inspection of the accounts proposed appointment of one or more competent persons to investigate the affairs of the company as per clause (c) of section 263 of the Ordinance to unearth the irregularities, particularly regarding misapplication of funds, as were highlighted in the inspection report.
Official documents available with Business Recorder noted that the SECP in the light of the inspection team appointed M/s Horwath Hussain Chaudhry & Company as chartered accountant to investigate the affairs of the company but its order was impugned by the NTS through an appeal before the Appellate Bench of the Commission. The matter is still pending before the Appellate Bench.
The project National Testing Services ("NTS-Project") established under the COMSATS Institute of Information Technology (CIIT) Ordinance 2000 failed to comply with the provisions of the Public Sector Companies Rules and the PPRA Rules. Since the board of directors does not have appropriate mix of the people from diverse segments of society, the company lacks transparency in the management of its affairs. The inspection of books of accounts of NTS Pakistan by the SECP disclosed that a substantial amount of Rs 78 million was paid to various consultants in the name of consultancy charges, the actual purpose of which appears to be otherwise and requires a deeper probe.
The Company has incurred various capital expenditure in excess of the limit prescribed under the Ordinance without the authority of the board resolution, thereby violated the provision of the said section. The treatment of capital expenditure on land and building as well as on vehicles was not made in accordance with the guidelines provided and the company is, therefore, required to make necessary corrective measure to streamline treatment in accordance with applicable accounting standards.
The testing fee charged from the candidates appears to be on the higher side as the same is paid to the respective clients in the garb of consultancy charges. No costing mechanism has been employed by the company to determine the estimated cost attributable to each testing project.
The reports further revealed that the company has extended a huge amount of interest-free loan/advances to its associated undertakings COMSATS Institute of Information Technology CIIT out of the reserves piled up through charging higher fee from the candidates, which is in violation of provision of section 208 of the Ordinance and the condition of the licence issued to the company.
No provision of doubtful debt has been made against testing fee receivable balances, which have been overdue for more than three years. Various MoUs signed by the company with its associated universities for awarding need-based scholarship, appear to have been prepared in haste as most of them were undated and/or not signed by the company's representatives.
The net assets of the NTS-Project transferred to the company in 2013 included a plot bearing No 96 measuring 0.88 acres (4259 sq. yards) situated at Sector H-8/1 Islamabad, which was allotted by Capital Development Authority (CDA) to the CIIT. The company, however, has not produced any evidence of ownership of the plot as claimed by it by virtue of such transfer of NTS-Project, which indicates that the said plot is still the property of the CIIT.
The board of governors of the CIIT was, prima facie, deliberately kept unaware by the management committee of the NTS-Project about the incorporation of the company in the year 2003. This also suggests that the application for grant of licence by the CIIT to the commission in the year 2003 was without the consent and approval of the BoG of the CIIT. All this matters warrant a deeper probe to unearth the facts.