Audit detects Rs152.1bn misappropriation in KP

PESHAWAR: A recent audit report exposed unprecedented fraud, mismanagement, and irregularities in various projects and departments of Khyber-Pakhtunkhwa government.

The report revealed losses to the public exchequer amounting to Rs152.1 billion. Misappropriation, mismanagement of funds, and misclassification of developmental expenditures of over Rs84.836bn were detected in 12 cases. Missing and misuse of vehicles losses were estimated at Rs8.81 million in 2 cases, fraudulent payments and withdrawals of Rs132.95 million were detected in 10 cases. Doubtful payments, expenditures, and withdrawals of Rs514.609m were also detected in 16 cases.

A KP government official told this correspondent that the audit objections belonged to the previous government, and the officials would have to defend themselves in the Public Accounts Committee. He said there was a proposed mechanism to remove the objections; otherwise, they would have to refund the amount.

The audit findings highlight systemic issues, including fraudulent payments, cost overruns, and ineffective governance, threatening the province’s development trajectory and undermining public trust. As a result of the audit, a recovery of Rs42,967.396 million was pointed out in the report. Recovery effected from January to December 2023 was Rs747.389 million, which was verified by the audit.

The report is based on the audit of the KP government accounts for financial year 2022-23 and accounts of some formations for previous financial years. The KP Directorate General Audit conducted the audit during the Audit Year 2023-24 on a test check basis, to report significant findings to the relevant stakeholders.

The audit noted questionable financial practices, including an unjustified cost increase of Rs200.536 million in a single project despite substantial rebates offered. The report revealed that blockage of public money of Rs139.156 million was noticed in three cases, delaying critical developmental work.

The audit report said that an Rs10 billion were transferred from the pension fund investment account to the provincial consolidated fund treated as a ‘dividend’ and recorded as ‘domestic debt’ through transfer entry. The Environment, Forestry, and Wildlife Department has a departmentalised accounting system based on Forest Manual 1962. Due to its non-compliance with the Public Financial Management Act 2019 and cash management and single treasury account rules 2020, the department engaged in cash disbursements of billions of rupees which resulted in serious audit observations. On the recommendations of audit, the department was now updating its manual in the light of the above statutes and rules. The Works Department executed schemes and projects without framing proper estimates, obtaining technical sanctions and agreements on standard operating procedures.

The audit report pointed out an abnormal and unjustified increase in the cost of a project despite a substantial rebate of Rs200.536 million given in one case. Blockage of public money of Rs139.156 million was noticed in three cases.

Similarly, cost overrun due to deviation from parameters, multiple revisions of PC-I, and non-observance of PC-I of Rs1,211.383 million was noticed in four cases. Doubtful payments, expenditures, and withdrawals of Rs514.609 million was noticed in 16 cases. Excess payments, expenditure, and supply of Rs281,324.400 million were observed in seven cases. Fraudulent payment and withdrawal of Rs132.954 million was noticed in 10 cases. The illegal retention of public money and inadmissible payment of Rs3,524.817 million was noticed in 14 cases.

The report says ineffective implementation of the project early age programming amounting to Rs25.987 million was noticed in one case. Irregular payments, expenditures, and release of funds of Rs14,825.130 million were observed in 43 cases.

However, less deduction, deposit and realisation of funds of Rs11,066.500 million was noticed in 45 cases. Loss of Rs35,456.760 million was noticed in 181 cases. Misappropriation, mismanagement of funds, and misclassification of developmental expenditure of Rs84,836.540 million was noticed in 12 cases. Missing and misuse of vehicles of Rs8.810 million was noticed in two cases.