ISLAMABAD – The Auditor General of Pakistan (AGP) report has uncovered procurement violations in defence services in 2023-24 audit report.
The report shared by AGP mentioned financial irregularities, and shady procurement practices, across various defence service formations. The detailed report sheds light on issues such as non-recoveries, excessive and advance payments, procurement-related discrepancies, losses to the state, and missing records.
The audit reviewed expenditures amounting to Rs566.29 billion, including Rs335.63 billion during the second phase of the 2022-23 audit and Rs230.66 billion in the first phase of the 2023-24 audit.
It focused on splitting financial powers, non-compliance with Defence Services Regulations, making advance payments before work completion, failing to recover rent and associated charges, neglecting to deduct applicable taxes, violating public procurement rules, ignoring A-1 land policy, and executing unauthorized projects.
Defence Services were allocated Rs1.56 trillion for FY 2022-23 which was later increased to Rs1.592 trillion through supplementary grants. The audit raised concerns about the Defence formations’ low compliance rate with audit objections over the past four decades, indicating inadequate efforts to address these issues and regularize accounts.
Auditor General Since 1985, the Ministry of Defence has complied with only 659 out of 1,974 directives from the Public Accounts Committee (PAC) of parliament, highlighting slow progress. The report urged the principal accounting officer to accelerate compliance with PAC directives.
Ministry of Defence Production showed similarly poor performance, having complied with only 109 out of 372 PAC directives. The report emphasized the need for the principal accounting officer to expedite compliance with PAC directives, as they involve public funds.
The audit also revealed that certain Army formations conducted procurements in violation of established rules. In some instances, procurement and contract jobs were split and awarded to favored contractors or suppliers on the same day to bypass transparent bidding processes.
Advertisements were posted on Public Procurement Regulatory Authority portal, omitting newspaper advertisements due to the secret nature of defence work. However, AGP said that only the defence secretary, as the principal accounting officer, has the authority to exempt procurement from the rules in such sensitive cases. This exemption was neither sought during procurement nor after the audit, despite auditors’ insistence.
The report repeatedly noted that the responses from relevant authorities were untenable, as no documentary evidence of PPRA advertisements was provided during the audit.
AGP noted that only defence secretary could approve exemptions from Public Procurement Rules for sensitive procurements, but such approvals were not obtained. Departmental Audit Committee (DAC) recommended inquiries to assign responsibility and regularize expenditures, but these actions were not implemented before the audit report was published.
