WEB DESK: According to a report in this newspaper on 17th November, 2015, Auditor General of Pakistan (AGP) will route a law through Ministry of Finance and the Ministry of Law and Justice to Parliament that will make it mandatory for public organizations to present their accounts to the AGP.
The law is being reviewed to bring these entities’ accounts under the purview of the AGP because of their refusal to get their accounts audited by the AGP on the plea that they have their own audit systems. The AGP’s argument, on the other hand, is that though the overall recovery, as a result of their audit, may be insignificant as a percentage of total budget it is, nonetheless, Rs 40 billion per annum. Besides, AGP has detected irregularities/embezzlements in a number of organisations which needed to be checked. For instance, Sui Northern Gas Pipelines Limited caused a Rs 168.7 million loss to the country due to non-recovery of theft charges of gas, ZTBL inflicted a loss of Rs 3.2 million due to encashment of loans by MCO, USC suffered a loss of Rs 7.9 million due to theft at USC stores, Ogra made irregular appointment of a legal counsel and therefore incurred a loss of Rs 25.6 million due to unauthorised appointment of consultants. Besides, PSO suffered a loss of Rs 66 million in the audit year 2010-11 and an excess payment of Rs 1.8 million was discovered in PIAC in 2011-12 due to fraudulent billing by a laundry contractor. In addition, PIAC suffered a loss of $569,245 in 2012-13 due to fraudulent use of credit cards in a defective web ticketing system.
The desire/demand of the AGP to expand its authority may appear to be justified in certain circles but is not based on solid grounds. It is also not likely to improve the working of public organisations which are huge in size, have business dealings of billions of rupees and the amount of fraud and embezzlement is just peanuts in terms of their balance sheets. Honestly speaking, auditing by AGP is not likely to make much difference on the extent of the fraud in these organisations when we see that corrupt and fraudulent practices are still in vogue in entities which are subject to annual audit by the AGP at present. In our view, AGP should confine itself to the audit of government departments run and managed directly through the taxpayers’ money. Public organisations established solely for business dealings and not dependent on public exchequer for running their day-to-day affairs do not need to be subjected to the government audit on a regular basis. There are a number of reasons for such an approach. The AGP probably lacks the capacity and does not have enough professionals in its ranks to take on new responsibilities. Also, public organisations about which the AGP has talked about and complained have already their own internal audit systems and are obliged to hire external auditors of repute to double-check their accounts. The imposition of a third tier of audit would only complicate the matters. In particular, heads of the institutions would tend to refrain from making quick decisions and taking timely initiatives which are necessary in business undertakings, fearing negative comments from the AGP at the end of every fiscal year. The new measure, therefore, could further undermine the ease of doing business in the country which has already slipped by 10 positions in the last year. The AGP also needs to realise the impact of its annual observations on the efficiency of the organisations already in its domain and change in the behaviour of top officials of these organisations due to its annual audits. If these organisations continue to function as usual and have not changed their routine ways of doing business, there would probably be no improvement in the working of public organisations likely to come under the ambit of the AGP for audit purposes due to the change in the relevant law. The best way to improve the working of public organisations and remove malpractices is to appoint persons with impeccable integrity and high degree of professionalism at the top, rather than creating another layer of largely controversial audit.