AGP Reveals Rs2.536 Trillion Embezzlement in PSE Accounts

Major Financial Irregularities Found in Public Sector Enterprises

The Auditor General of Pakistan (AGP) has uncovered significant financial irregularities within the accounts of Public Sector Enterprises (PSEs) under the control of the federal government. These issues include embezzlement, misappropriation, and non-recovery of funds amounting to Rs2.536 trillion. The findings were detailed in the audit report for the 2024-25 fiscal year, which highlights various areas of concern across multiple sectors.

Key Findings from the Audit Report

The Directorate General of Commercial Audit and Evaluation (North and South) is responsible for auditing and evaluating these enterprises, which maintain their accounts on a commercial basis. The audit revealed several critical issues:

• Embezzlement/Misappropriation: 18 cases were identified involving Rs3,576.262 million.
• Irregularities in HR/Employee Matters: 134 cases were noted, totaling Rs16,965.690 million.
• Mis-procurement: 137 cases were found due to violations of rules, procedures, and regulations, amounting to Rs185,828.117 million.
• Imprudent Investments: 13 cases led to losses of Rs25,328.945 million.
• Non-Recovery of Funds: 130 cases were recorded, with an amount of Rs861,837.666 million.
• Lack of Auditable Records: In two cases, management failed to produce auditable records.
• Value for Money Compromised: 30 cases involved Rs40,913 million.

Sector-Specific Audit Observations

The audit findings varied by sector, with different amounts of recoverable funds highlighted for each:

• Aviation Division: Rs165,534.535 million in audit observations, including Rs24,007.973 million recoverable.
• Cabinet Division: Rs49,900.531 million in audit observations, with Rs4,418.920 million recoverable.
• Ministry of Commerce and Textiles: Rs881,879.431 million in audit observations, including Rs450,873.061 million recoverable.
• Ministry of Defence Production: Rs141,473.762 million in audit observations, with Rs1,803.604 million recoverable.
• Finance Division: Rs722,978.830 million in audit observations, including Rs278,006.716 million recoverable.
• Industries and Production: Rs250,495.672 million in audit observations, with Rs14,812.781 million recoverable.
• Information Technology: Rs1,233.303 million in audit observations, including Rs7.397 million recoverable.
• Information Ministry: Rs11,954.293 million in audit observations, with Rs1,977.666 million recoverable.
• Interior Ministry: Rs36,137.711 million in audit observations, including Rs6,644.064 million recoverable.
• Maritime Affairs: Rs69,658.937 million in audit observations, with Rs17,161.300 million recoverable.
• National Food Security and Research: Rs316,426.857 million in audit observations, including Rs216,036.222 million recoverable.
• Planning, Development and Special Initiatives: Rs57,102.339 million in audit observations, with Rs1,978.780 million recoverable.
• Science and Technology: Rs599.518 million in audit observations, including Rs54.078 million recoverable.

Recommendations for Improvement

In response to these findings, the AGP has made several recommendations to address the identified issues:

• Strengthen Internal Controls: A robust internal control structure is necessary to prevent embezzlement, fraud, and misappropriation.
• Transparent Appointments: Personnel should be appointed following HR policies and government guidelines.
• Streamline Procurement Procedures: Ensuring economy, efficiency, and value for money in procurement processes, as outlined in the Public Procurement Rules, 2004.
• Improve Fund Management: Management should enhance its financial practices, particularly in relation to investments with commercial banks.
• Early Realization of Receivables: Public Accounts Officers (PAOs) should focus on recovering outstanding receivables promptly.
• Due Diligence in Expenditure: All expenditures must be incurred after thorough due diligence, maintaining a sense of probity and propriety.
• Maintain Proper Records: Audit records must be provided, and responsibility should be assigned to those at fault.

These measures aim to bring about greater accountability and transparency in the operations of public sector enterprises, ensuring that resources are used efficiently and effectively.