Finance ministry doles out Rs240m honoraria among its officials

ISLAMABAD: The finance ministry, which is responsible for ensuring financial discipline in the entire public sector, has been found involved in distributing Rs240 million as honoraria amongst its officials without an approved policy of the cabinet and in violation of rules. Adding insult to injury, the honoraria were not included in salaries to evade income tax.

A report of the Auditor General of Pakistan disclosed that the Finance Division incurred expenditure amounting to Rs240,167,079 on account of payment of honoraria, up to four running basic pays, during the financial year 2022-23. It recommends recovery of the excess amount paid.

According to the report, honorarium means a recurring or non-recurring payment granted to a government servant from general revenues as remuneration for special work of an occasional or intermittent character. However, any work which falls within the orbit of the normal duties of a government servant cannot, as far as he is concerned, be treated as ‘special work’.

During the audit of the Finance Division, it was found that the division incurred expenditure amounting to Rs240,167,079 on account of payment of honoraria, up to four running basic pays, during the financial year 2022-23. Audit observed: i) The payment of four honoraria without an approved policy of the cabinet is a violation of rules; ii) The honoraria were granted through DDO Vendor No.30005932 instead of crossed cheques or inclusion in pay slip of the employees; iii) The honoraria were not included in salaries i.e. payment through salary slips of the employees which reduced the tax slabs for payment of income tax. “Audit is of view that grant of honoraria without an approved policy of the cabinet is not only serious lapse on the part of management but also a violation of the directives of the prime minister and financial instructions laid down in Financial Management and Powers of Principal Accounting Officers Regulations, 2021,” the Auditor General’s report said.

The Finance Division, according to the report, explained that during the financial year 2022-23, honoraria were granted amounting to Rs240,025,940 to the employees of the Finance Division on three (03) occasions, as per detail below: i) Amounting to Rs220,860 in August 2022 through pay slip (leftover employees of Finance Division); ii) Amounting to Rs947,161 in May 2023 through pay slip (granted by the outgoing Finance Secretary; iii) Amounting to Rs238,857,919 (budget honoraria up to 4-month basic pay) in recognition of the services rendered as per criteria duly approved by Finance Minister as Chairman (ECC). The ECC decision dated 01-07-1996 allows payment of honoraria to BS 1-20 for officers BPS 21-22, specific approval was obtained from the finance minister in the capacity of chairman, ECC.

The division added, “Financial Management and Powers of PAO Regulation, 2021 vide Sr. No.63 allows payment of honoraria as per prescribed policy. The cabinet vide its decision dated 31.05.2018 directed that a new policy for the grant of honoraria may be presented to the newly elected government for approval. The prime minister also directed the Finance Division on 16.04.2020 to place a policy on honoraria before the cabinet. In compliance with these directions, the Finance Division submitted an honoraria policy before the ECC, which was considered/approved by the committee in its meeting dated 03.06.2022.

“The Pay Roll System runs on the 21st of each month whereas the budget honoraria are usually approved in the last week of June of each financial year, it is not possible to draw the honoraria through the Pay Roll System of AGPR. Therefore, AGPR approved cash payment through DDO in the last days of closing of the financial year,” the Finance Division management told the audit team, adding that the tax from the budget honoraria was deducted up to 10%.

The audit, however, noted that the reply of the management is not acceptable as the honoraria was paid without approval of policy from the cabinet. Further, the ECC in its decision granted honoraria for the specific time period as no directions for the future were included in the decision and as per the Rules of Business. The functions of ECC do not include the mandate for the provision of honoraria. The audit recommends recovering the excess amount paid more than the provision of rules besides formulation and approval of policy from cabinet in the light of the decision of the prime minister.