Conslidated Audit Report - KP Ay2023-24

CONSOLIDATED AUDIT REPORT
ON THE ACCOUNTS OF
(GOVERNEMNT OF KHYBER
PAKHTUNKHWA)
FOR THE
AUDIT YEAR 2023-24
AUDITOR GENERAL OF PAKISTAN
TABLE OF CONTENTS
PREFACE ....................................................................................................................... viii

EXECUTIVE SUMMARY ..................................................................................................... 1
PUBLIC SECTOR ENTERPRISES GOVERNMENT OF KHYBER PAKHTUNKHWA 6
CLIMATE CHANGE, ENVIRONMENT AND DISASTER MANAGEMENT
ORGANIZATIONS .............................................................................................................. 73
GOVERNMENT OF KHYBER PAKHTUNKHWA ........................................................ 140
REVENUE RECEIPTS GOVERNMENT OF KHYBER PAKHTUNKHWA ................ 931
PROVINCIAL ZAKAT FUND AND DISTRICT ZAKAT COMMITTEES KHYBER
PAKHTUNKHWA.............................................................................................................. 997
PREFACE
Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan, 1973 read
with Sections 8 and 12 of the Auditor-General’s (Functions, Powers and Terms and Conditions of
Service) Ordinance, 2001 require the Auditor-General of Pakistan to conduct audit of the accounts
of Federal Government, Provincial Governments and the accounts of any authority or body,
established by these Governments. Auditor-General of Pakistan, being Auditor-General of Azad
Jammu & Kashmir (AJ&K) and Gilgit-Baltistan (GB) also conducts audit in both these Regions
under their respective legal provisions.
This consolidated Audit Report (Khyber-Pakhtunkhwa) is based on audits of the accounts
of 2,664 entities of the Government of Khyber-Pakhtunkhwa for the financial year 2022-23,
conducted by 5 Field Audit Offices, and also contains some audit observations for the previous
years. The audit was conducted during 2023-24 on a test check basis in accordance with applicable
laws / rules and according to the INTOSAI auditing standards to report significant audit findings
to the stakeholders. The report includes only the systemic issues and audit findings carrying high
monetary value. Relatively less significant issues shall be pursued with the respective Principal
Accounting Officers (PAOs) in the meetings of Departmental Accounts Committees (DACs) and
in cases where the PAOs do not initiate appropriate action, the audit observations will be brought
to the notice of the Public Accounts Committee in the next year’s Audit Report. Sectoral analysis
has been added in this report covering strategic review and overall perspective of audit results.
Impact Audit – A new concept of Impact Audit has been introduced, which is an attempt
to determine the impact of a new programme or recent changes to an existing programme, with its
specific focus on service delivery.
Audit findings indicate the need for adherence to the regularity framework besides
instituting and strengthening the internal controls to avoid violation of rules and regulations.
Most of the audit observations included in this report have been finalized in the light of
written responses of the management and discussions in the DAC meetings.
- Sd -
(Muhammad Ajmal Gondal)
Auditor-General of Pakistan
Islamabad
Dated: . .2024
EXECUTIVE SUMMARY
a. Scope of Audit
Department of Auditor-General of Pakistan (DAGP) is mandated to conduct audit of 2,664

formations working under different PAOs/Departments in Province of Khyber-Pakhtunkhwa.
Audit coverage relating to expenditure for the current audit year, under compliance audit category,
comprises 243 formations having a total expenditure of Rs. 340.215 billion and receipts of Rs.
45.730 billion for the financial year 2022-23.
In addition to this compliance audit report, DAGP conducted Financial Attest Audits,
Special Audits, Performance Audits, Forensic Audits, etc. Reports of these audits are published
separately.
b. Recoveries at the instance of audit
As a result of audit, a recovery of Rs. 60.051 billion was pointed out in this report.
Recovery effected from January to December 2023 was Rs. 0.969 billion that has been verified by
audit.
c. Audit Methodology
Desk audit was carried out to understand systems, procedures and control environment of
audited entities. Permanent files of the audited entities were updated and utilized for understanding
the institutional framework. Audit methodology included:
i. Understanding the business processes with respect to control mechanism.

ii. Identification of key controls on the basis of prior years’ audit experience/special
directions from the Auditor General’s office.
iii. Prioritizing risk areas by determining significance and risks associated with the
identified key controls.
iv. Design/update audit programmes for testing the identified risk conditions.
v. Selection of audit formations on the basis of:
a. Materiality/significance.
b. Risk assessment.
vi. Selecting samples as per sampling criteria/high value items/key items.
vii. Execution of audit programmes.
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viii. Identification of weaknesses in internal controls and development of audit
observations and recommendations relating to non-compliance with rules, regulations
and prescribed procedures.
ix. Evaluating results.
x. Reporting.
xi. Follow-up.
d. Audit Impact
Audit through its findings and recommendations helped the management in different ways
like:
i) Improvement in their existing working, specially related to their revenue generation
and expenditure utilization.
ii) Improvement in their working by following the rules and regulations.
iii) Effecting recoveries in different cases.
iv) Improvement in transparency and accountability of operations within the commercial
entities.
Major issues pointed out during audit were admitted by the management and the entities
agreed to review the pointed out issues and take necessary corrective actions. The strengthening
of internal control in the audited entities were well taken by the management for review and
corrective measures. Despite non-convening of DAC meetings, following impact was made due
to audit:
i) Provincial Disaster Management Authority (PDMA) Khyber-Pakhtunkhwa was
making payments through cash / personal accounts of the camp managers for the
expenses related to Bakka Khail Camp. On pointation of Audit, the administrative
department vide letter dated 15.09.2023 issued instructions to carry out all the
activities of camp through bank payments to the vendors instead of payments in cash.
ii) PDMA Khyber-Pakhtunkhwa published annual report of the Authority for year 2022
as pointed out / recommended by the audit authorities in previous audit reports.
iii) PDMA Khyber-Pakhtunkhwa hired a consultant firm to formulate Provincial Disaster
Management Plan (PDMP) to effectively cope with disasters in a planned manner.
iv) An amount of Rs. 10.000 billion which was transferred from the Pension Fund
Investment Account to the Provincial Consolidated Fund treated as “Dividend” was
recorded as “Domestic Debt” through transfer entry.
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v) Third Party Payments which were not reflected in the Financial Statements and Finance
Accounts of the Government are now being reflected in the accounts.
Audit findings and recommendations would have a multiplier impact if the DAC
and PAC meetings were held regularly. DAC meeting is one of the major tools to
improve internal controls and overall governance but the PAOs did not convene the
required number of DAC meetings despite repeated requests. If the DAC meetings
are conducted regularly, recurrence of irregularities would decrease and pointed-
out government dues can be recovered timely in strengthening financial
management and improving internal controls.
e. Comments on Internal Controls and Internal Audit Department
The present report has identified a range of irregularities, which have been recurring over
the years. The recurrence of these irregularities indicates that systemic issues were cropping up
either due to inadequate oversight mechanism or inappropriate design of internal controls.
Although many Audit Entities have internal audit setups, but the financial irregularities
observed during the current audit reflect that this function failed to deliver effectively. The efficient
functioning of internal audit would have helped the management in effective implementation of
internal controls and strengthening the internal control environment in audited entities. It is high
time that positions of Chief Finance & Accounts Officers (CF&AO) and Chief Internal Auditors
(CIA), as enacted through PMF Act coupled with Financial Management and Powers of Principal
Accounting Offices Regulations 2021, are put in place in all Ministries/Divisions and their services
are effectively utilized to strengthen Public Financial Management (PFM) System.
d. Key Audit Findings of the Report
Major audit findings included in this Audit Report have been clubbed under various
categories as under:
i. Human Resource / Employment related irregularities – Rs. 1,885 Billion.

ii. Financial management, Misappropriation and procedural irregularities – Rs. 474.729
Billion.
iii. Internal Control and Performance related irregularities – Rs. 16.305 Billion.
iv. Duties, taxes, assessment and claims related issues – Rs. 19.281 Billion.
v. Procurement and hiring of services related irregularities – Rs. 283.032 Billion.
vi. Value of money, Public Service Delivery & Performance related issues – Rs. 17.387
Billion.
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vii. Project Related Issues – Rs. 5.905 Billion.
viii. Management of Accounts with commercial banks – Rs. 63.380 Billion.
ix. Recovery Related Irregularities – Rs. 24.958 Billion.
x. Other / Miscellaneous Issues – Rs. 9.276 Billion.
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xi.
AUDIT REPORT
ON
THE ACCOUNTS OF
PUBLIC SECTOR ENTERPRISES
GOVERNMENT OF
KHYBER PAKHTUNKHWA
AUDIT YEAR 2023-24
AUDITOR-GENERAL OF PAKISTAN
5
PUBLIC SECTOR ENTERPRISES GOVERNMENT OF KHYBER
PAKHTUNKHWA
Chapter–1
Industries, Commerce, Mineral Development and Technical Education
Department
Introduction
The Industries, Commerce & Technical Education Department of Government of Khyber
Pakhtunkhwa is one of the major Government Institutions striving to promote industrial
development, trade and investment in the province. The main focus of activity is promotion of
trade and investment in the province. Government of Khyber Pakhtunkhwa is keen on creating a
business-friendly investment climate in line with the Federal Government Policies and present the
Province as an attractive investment destination for the entrepreneurs/investors. The objective of
the Industrial Policy of Khyber Pakhtunkhwa is essentially to develop the economy of Khyber
Pakhtunkhwa by taking the following steps:
• To rehabilitate the sick industrial units by taking necessary remedial measures.
• To create more jobs by facilitating Small and Medium Enterprises (SMEs)
• To grow and flourish by providing Business Support Services (BSS) including necessary finances.
• To create more Special Economic Zones (SEZs) to attract local and foreign investors to set up
industries.
Attached Departments
 Directorate of Industries and Commerce
 Small Industries Development Board
 KP Board of Investment & Trade
 KP Economic Zones Development & Management Company
 Trade Testing Board
 KP Board of Technical Education
 Government Printing & Stationary Department
 Sarhad Minerals (Pvt) Ltd
 KP – Technical Education & Vocational Training Authority
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Budget and Accounts (Variance Analysis) for the year 2022-23
(Rs in million)
Entity Particular Budgeted Actual Saving/
(Excess)
SML Salary, Wages and Staff Expenses 10.36 8.26 2.1
Other Expenses 21.97 19.88 2.09
Development & Excavation Expenses 10.52 9.28 1.24
Total 42.85 37.42 5.43
KP-EZDMC Operational Expenses 1,096 747 351
Capital Expenses 538 232 306
Developmental Expenses 5,728 2,241 3,487
Total 7,537.4 3,379.36 4,144
KP-TEVTA Salary & Operational Expenditure 3,095.92 3,000.59 95.33
ADP 2,252..10 1,132.56 1,119.54
Total 5,348.02 4,133.15 1,214.87
GP & SD Expenditures 239.12 195.96 43.16
Total 239.12 195.96 43.16
Source: Data provided by the Management
Sectorial analysis for the year 2022-23

(Rs in million)
Entity Particular Targets Achievements Variance
Excess/
(Shortfall)
SML Revenue from Sale of Salt and Other 44.85 42.26 (2.59)
Receipts
Total 44.85 42.26 (2.59)
KP-EZDMC Operational Revenue 1,195 1,067 (128)
Capital Revenue 1,458 109 (1,349)
Developmental Revenue 4,760 1,126 (3,634)
Total 7,413 2,302 (5,111)
KP-TEVTA Revenue (Grant + Tuition Fee) NA 3,294.18 -
Total NA 3,294.18 -
GP & SD Revenue 103.37 103.37 -
Total 401.30 130.82 -
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Audit Profile of “SML, TEVTA, EZDMC and GP&SD”
(Rs in million)
S. Description Total Audited Expenditure Revenue /
No. Nos. audited for the Receipts audited
year 2022-23 for the year
2022-23
1 Formations 6 4 5,471.03 4,648.35
2 Assignment Accounts/ SDAs - - - -
etc.(excluding FAP)
3 Authorities / Autonomous - - - -
Bodies etc. under the PAO
4 Foreign Aided Projects - - - -
(FAP)
1.1 SARHAD MINERALS LTD (SML), PESHAWAR

1.1.1 Introduction
The Company was registered as a Private Limited Company on May 16, 1984 with equity
sharing of Sarhad Development Authority (SDA) 51% and Pakistan Mineral Development
Corporation (PMDC) 49%. The registered office of SML is situated in Industrial Estate, Jamrud
Road, Peshawar while the principal place of business is situated in District Karak. The principal
activity of the company is the exploration, extraction and sale of rock salt etc.
1.1.2 Comments on Audited Accounts
Management failed to provide annual audited accounts of Sarhad Minerals Limited (SML)
for the years 2018-19 to 2022-23 till finalization of this report despite repeated requests.
1.1.3 Compliance of PAC Directives
Audit Year Total Full Partial Pending Paras % of
Paras compliance Compliance Compliance
2017-18 3 - - 3.2.4.1 to 3.2.4.3 0
2015-16 2 - - 3.3.3.1 to 3.3.3.2 0
2014-15 4 - - 3.3.3.1 to 3.3.3.4 0
The paras could not be discussed in PAC meetings due to non-convening of Provincial
PAC meetings on these reports.
1.1.4 Audit Impact
Audit has contributed towards adding value to the control mechanism of organizations
through audit recommendations. As a result of audit, management’s awareness about internal
controls and overall financial discipline improved considerably.
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1.1.5 Category-wise Summary of Audit Observations
Audit observations amounting to Rs 129.27 million were raised in this report during the
current audit of SML. Summary of the audit observations classified by its nature is given as under:
Overview of Audit Observations
(Rs in million)
S. No. Classification Amount
1 Non-Production of record -
2 Reported cases of fraud, embezzlement and misappropriation -
3 Irregularities
a. HR / Employees related irregularities -
b. Procurement related irregularities 7.06
c. Management of Accounts with Commercial Banks 1.73
4 Value for money and services delivery issues 3.49
5 Recovery -
6 Others 116.99
1.1.6 AUDIT PARAS

1.1.6.1 Loss due to non-imposing of penalty on the defaulter contractors - Rs 3.49 million
According to Clause-xiv of the excavation agreements “penalty @ Rs 10 & Rs 20 per

metric ton will be charged from the contractors, if they failed to produce the agreed/demanded
quantity as per agreement”.
During audit of Sarhad Minerals Limited (SML) Peshawar, for the years 2018-19 to 2021-
22, it was observed that as per agreement, the contractors
M/s Shams-uz-Zaman, M/s Shahid Wali and M/s Zahoor Wali shall have to produce at least
389,820 tons of rock salt during the period from 2014-15 to 2021-22. The record revealed that all
the three contractors failed to achieve the production target and could produce only 138,956 tons
of rock salt during above said period with a shortfall of 250,864 tons. Due to weak internal controls,
SML management did not impose penalty of Rs 3,490,660 on the contractors by invoking relevant
clause of the agreement.
Audit is of the view, that on failure of the contractors in fulfilling contractual obligations,
they were liable to be penalized but that was not done, which clearly shows undue favour to the
contractors at the cost of public ex-chequer. The non-imposing of penalty resulted in loss of Rs
3.49 to the company.
The irregularity was reported to the management and department on October 24, 2023 but
no reply was received till finalization of report.
DAC meeting was not convened by the PAO till finalization of this report despite request
on October 24, 2023 followed by reminders dated November 29, 2023 and January 11, 2024.
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Audit recommends to investigate the matter for not taking action against the contractors as
per agreement besides fixing responsibility thereof; and made the loss good by effecting recovery
either from contractors or the person(s) held responsible.
Para- 3 (SML – 2018-22)
1.1.6.2 Loss due to defective agreement – Rs 55.66 million
According to KP-GFR Chapter-2 Clause-19 (ix), “provisions must be made in contracts

for safeguarding government property entrusted to a contractor”.
During audit of Sarhad Minerals Limited (SML) Peshawar, for the years 2018-19 to 2021-22, it
was observed that management entered into agreement for excavation of rock salt @ Rs 110 and
Rs 120 per metric ton with three private contractors namely M/s Shahid Wali, Zahoor Wali and
Shamsu Zaman. As per agreement, SML will provide the gunpowder and safety fuse to the
excavation contractors free of cost. As per record, from July 2018 to January 2023 the total
production of rock salt was 119,905 metric ton against which gunpowder of 49,770 kgs. was issued
to the contractors. Thus, average utilization of gunpowder was 2.41 kgs. for production of one
metric ton. Audit further observed from the record that PMDC (a parent company) was also
excavated the rock salt at Jatta Bahdur Khel, Karak and their average production of rock salt was
5 metric ton on utilizing per kg. gunpowder (114,245.5 metric ton/22,800 kgs = 5.01 metric ton
per kg).
It is worth mentioning here that at the time of award of contract, the management did not
fix any production limit against one kg gunpowder. Resultantly, the contractors consumed more
than double gunpowder against production of one metric ton as compared to utilization of
gunpowder by PMDC, which is also exploring the salt at same vicinity.
The irregularity was occurred due to weak controls of contract management in the
organization.
Audit is of the view, that had the SML management fixed the production limit per metric
ton against one kg gunpowder at par with PMDC, they could not only increase the production but
also can save Rs 55.660 million against the consumption of gunpowder. The excess expenditure
is a loss to the company. Thus, due to mismanagement and defective agreement, company was put
into loss of Rs 55.66 million.
Audit recommends to investigate the matter of such losses besides fixing responsibility
thereof.
Para- 6 (SML – 2018-22)
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1.1.6.3 Irregular payment to the contractors without valid agreement - Rs 6.26 million and award of
agreement in non-transparent manner - Rs 14.01 million
According to Rule-4(3) of Corporate Governance Rules – 2013, “the chief executive is

responsible for the management of the Public Sector Company and for its procedures in financial
and other matters, subject to the oversight and directions of the Board, in accordance with the
ordinance and these rules. His responsibilities include implementation of strategies and policies
approved by the Board, making appropriate arrangements to ensure that funds and resources are
properly safeguarded and are used economically, efficiently and effectively and in accordance with
all statutory obligations”.
22, it was observed that the management entered into salt extraction contract with three contractors
i.e. M/s Shamus Zaman, M/s Shahid Wali and M/s Zahoor Wali on 13.9.2014, 12.09.2015 &
12.09.2016 respectively for a period of 01 year @ Rs 110/ metric ton. The contract period of all
the three contactors was further extended by the Board up to 30.06.2020, however, thereafter the
period was not further extended by the authority but the contractors are still working and
excavating salt and a payment of Rs 6.261 million was made to the contractor up to 31.01.2023.
It is further added that the excavation contracts to M/s Shahid Wali and M/s Zahoor Wali
were awarded without calling competitive rates in violation of KPPRA Rules. As the contracts
were awarded in non-transparent manners, thus, payment of Rs 14.01 million to the contractor was
held irregular.
The irregularity was occurred due to weak controls of contract management in the
organization.
Audit is of the view that the payment of Rs 6.26 million and Rs 14.01 million without any
valid agreement and in non-transparent manners is termed as irregular which is tantamount to
misuse of financial powers.
Audit recommends to investigate the matter of such irregular payment.
Para- 02 & 10 (SML – 2018-22)
1.1.6.4 Loss due to non-imposing/deduction of levy - Rs 1.73 million
According to Finance Act, 2022, Sales Tax/C.D. @ 20% was imposed on table/rock salt
by the Federal Govt. vide National Assembly Secretariat O.M. No. F.22 (23)/2022-Legis dated
30.06.2022.
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During audit of Sarhad Minerals Limited (SML), Peshawar for the years 2018-19 to 2021-
22, it was observed that the local management sold a quantity of 18,854 metric ton rock salt valuing
Rs 8,657,960/- to three purchasers from 01.07.2022 to 31.01.2022 without levying and deducting
the sales tax/CD at notified rate which deprived the public exchequer from revenue of Rs 1.732
million.
The position showed weak financial controls in the organization.
Audit is of the view that the non-deduction of Sales Tax/C.D. of Rs 1.73 million resulted
in loss of revenue to the public exchequer.
Audit recommends to investigate the causes due to which the Sales Tax/C.D. could not be
recovered from the purchasers besides fixing responsibility thereof and made the loss good by
effecting recovery from the person(s) held responsible.
Para- 07 (SML – 2018-22)
1.1.6.5 Ill-planned procurement through splitting - Rs 6.05 million and loss due to purchase of gun-
powder at higher rates -
Rs 1.01million
According to Chapter – V of KPPRA Rules 2014 “each procuring entity shall plan its
procurements with due consideration to transparency, economy, efficiency and timeliness, and
shall ensure equal opportunities to all prospective bidders in accordance with Section 22 of the
Act”. Further, SML Board in its 55th meeting held on 28.02.2018 decided that explosive would be
arranged by PMDC Salt Quarries Jatta/Bahadur Khel under the explosive license.
22, it was observed that a quantity of 38,460 kgs gunpowder valuing Rs 7,068,744/- and safety
fuse 55,800 meters valuing Rs 980,956/- was purchased from M/s PMDC during July 2018 to June
30, 2022. During this period SML management also made spot/cash purchase of said items and a
quantity of 24,780 kgs gunpowder valuing Rs 5,499,650 and 28,000 meters safety fuze valuing Rs
551,950 was purchased from M/s Muhammad Younas & Brother Karak. The average price of
gunpowder and safety fuse of
M/s PMDC was Rs 183.79 per kg and Rs 17.57 per meter respectively, while rates of M/s
Muhammad Younas & Brother were Rs 221.93 per kg and
Rs 19.71 per meter respectively.
The irregularity was occurred due to non-adherence of KPPRA Rules and Board decision.
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Audit is of the view that procurement of gunpowder along with safety fuze valuing Rs
6,051,600 from M/s Muhammad Younas & Brother on cash and single source basis is not only
against the KPPRA Rules and SML Board decision but also caused loss of Rs 1,005,029 due to
purchase of store at higher rates.
Audit recommends that matter needs to be investigated at appropriate level for fixing
responsibility thereof.
Para- 11 (SML – 2018-22)
1.1.6.6 Sale of rock salt without any sale policy and open competitive marketing - Rs 41.06 million
The SML has not framed any policy about sale of rock salt. According to Rule 4 (3) of
the Public Sector Companies (Corporate Governance) Rules, 2013 the Chief Executive is
responsible for the management of the Public Sector Company and for its procedures in financial
and other matters, subject to the oversight and directions of the Board, in accordance with the
ordinance and these rules. His responsibilities include implementation of strategies and policies
approved by the Board, making appropriate arrangements to ensure that funds and resources are
properly safeguarded and are used economically, efficiently and effectively and in accordance with
all statutory obligations.
During audit of Sarhad Minerals Limited (SML), Peshawar for the years 2018-19 to 2021-
22, it was observed that the company management has not framed any sale policy and the rock salt
was sold to M/s Shahid Wali,
M/s Zahoor Wali and M/s Shams. It is pertinent to mentioned here that the said parties are also the
excavation contractors and during the years 2018-22, rock salt valuing Rs 41.06 million was sold
to these excavator contractors without any competitive market rates/auction.
The irregularity was occurred due to non-availability of proper sale and marketing policy
of the company.
Audit is of the view that the management has failed to develop any sale & marketing policy
and not advertised its products in open market. SML has the potential to increase its production
manifold by focusing on marketing and sales, targeting the chemical industry and exploring export
buyers for its rock salt. The company is relying on a few contractors, resultantly, could not fetch
the most competitive price for its product.
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Audit recommends to investigate the matter of such slackness on the part of the
management, besides fixing responsibility on person(s) at fault.
Para- 15 (SML – 2018-22)
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1.2 Khyber Pakhtunkhwa Technical and Vocational Training Authority
(TEVTA), Peshawar
1.2.1 Introduction
Khyber Pakhtunkhwa Technical and Vocational Training Authority (TEVTA) was
established vide Khyber Pakhtunkhwa Act No.XII of 2015 replacing the erstwhile Khyber
Pakhtunkhwa Technical and Vocational Training Agency ordinance 2002 and became effective
form December 15, 2014 with the joining of its Managing Director on 02 February 2015, it became
operational.
Management failed to provide annual audited accounts for the year
2015-16 to 2022-23 till finalization of this report despite repeated requests.
Audit Total Full Partial Pending Paras No % of
Year Paras compliance Compliance Compliance
2022-23 34 - - 2.3.6.1 to 2.3.6.34 0
2021-22 15 - - 3.3.4.1 to 3.3.4.15 0
2020-21 18 - - 3.5.4.1 to 3.5.4.18 0
1.2.4 Audit Impact
Audit observations amounting to Rs 1,545.50 million were raised in this report during the
current audit of Khyber Pakhtunkhwa Technical Vocational Training Authority (KP-TEVTA).
This amount also includes recoverable amount of Rs 177.321 million. Summary of the audit
observations classified by nature is as under:
15
(Rs in Million)
2 Reported cases of fraud, embezzlement and misappropriation 7.07
3 Irregularities
a. HR / Employees related irregularities 9.27
c. Management of Accounts with Commercial Banks -
5 Recovery 177.32
6 Others 919.07
1.2.6 AUDIT PARAS

1.2.6.1 Un-authorized grant of KP-STVET allowance to the PAF employees - Rs 9.270
million
According to clause 1.1 of the 3rd MoU between KP-TEVTA and KP-STVET on
12.04.2018 “this agreement is subject to observance of provisions of KP-TEVTA Act 2015
(amended 2017) and Rules and Regulations made there under”. Clause 2.3 of the said MoU
requires that “all agenda items recommended by Chairman KP-STVET are mandatory to be
included in the agenda items for approval of KP-TEVTA BoD”.
During audit of KP- TEVTA Peshawar for the year 2022-23, it was observed that 28
officers/officials of the PAF, attached with the KP-STVET were allowed special allowance w.e.f.
July 2019. During audit for the year 2020-21 the audit pointed out the irregularity which was
discussed in DAC meeting held 03-02-2022 wherein it was decided that the payment of allowance
to STVET employees may be stopped forthwith and the amount already paid needs to be recovered.
The committee also ordered an inquiry on the matter, thereafter, the para was not considered
further by audit for printing. During audit of 2022-23 it was observed that the concerned
management failed to stop payment on this account and despite clear decision of DAC the
allowance was regularly paid to the officials up to August 2022 (the month in which the STVET
was closed). An amount of Rs 9.270 million was paid to officers
(@ Rs 243,958 per month).
Due to weak internal controls, DAC decision was not implemented.
Audit is of the view that special allowance was allowed by the Chairman STVET at its own
without the approval of KP-TEVTA, therefore held irregular. The payment of un-authorized
allowance was increased to
Rs 9.270 million and after closure of KP-STVET its recovery is remote.
The irregularity was reported to the management and department on October 06, 2023.
During DAC meeting held on January 23, 2024 the management admitted the facts highlighted by
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the audit. DAC directed the management to take up the matter with quarter concerned for recovery
of amount paid un-authorizedly.
Audit recommends compliance of DAC directives.
Para- 1 (KP-TEVTA – 2022-23)
1.2.6.2 Irregular retention of KP-TEVTA funds by the defunct KP-STVET – Rs 102.65

million and expenditure of - Rs 26.19 million
The KP-Industries Department vide letter dated 13-08-2020 conveyed the directives of the
Chief Minister, Khyber Pakhtunkhwa to MD KP-TEVTA for implementation, in which the
TEVTA was directed to take over custody of nine vehicles from KP-STVET and impose
moratorium on transfer of further funds to KP-STVET till consideration and approval of the KP-
TEVTA Board. Further, in compliance to the decision of TEVTA Board, MD KP-TEVTA vide
office order dated 28.04.2023 issued directions, according to which the mutual
coordination/understanding with defunct KP-STVET administration is ceased with immediate
effect. All the financial accounts maintained by KP-STVET are hereby closed with immediate
effect and the saving shall be surrendered to the relevant accounts of KP-TEVTA accordingly and
no further developmental and operational expenditure shall be made out of KP-TEVTA
funds/accounts.
During audit of KP-TEVTA Peshawar for the year 2022-23 it was observed that the KP-
STVET management failed to surrender the funds of
KP-TEVTA Rs 102.648 million in compliance to the decision of KP Government and KP-TEVTA
Board. The MD KP-TEVTA vide office order dated 28.04.2023 issued directives that all the
financial accounts maintained by KP-STVET are hereby closed with immediate effect and the
savings shall be surrendered to the relevant accounts of KP-TEVTA accordingly.
The record further revealed that after above said decision of the competent authority the
KP-STVET continue to make expenditure from the account and an amount of Rs 26.19 million
was incurred without having any lawful authority.
Due to weak controls of financial management, the amount could not be retrieved from the
defunct KP-STVET.
Audit is of the view that after above said decision of the competent authority there was no
justification with STVET to maintain the above bank accounts further. The act of the management
of keeping the amount of Rs 102.65 million in accounts and expenditure of Rs 26.19 million
therefrom is termed as irregular.
During DAC meeting held on January 23, 2024, the management admitted the facts highlighted
by audit. DAC directed the management to take up the matter with STVET management for
recovery of amount lying with them in bank accounts from the date the activities of STVET were
ceased by the competent authority.
17
Paras- 2 & 3 (KP-TEVTA – 2022-23)
1.2.6.3 Non implementation of approved ADP projects despite release of funds – Rs 109.009
million
According to Section – 1.2 of the KP-Annual Development Plan Policy “the ADP has to
be a reflection of the vision and priorities of the Government of Khyber Pakhtunkhwa. Therefore,
in its formulation, it should help achieve the goals and objectives of the provincial government”.
During audit of KP-TEVTA Peshawar for the year 2022-23 it was observed that the
Competent Authority approved PC-I of the project titled “KP Youth Internship Program in Leading
Industry & MNCs” in 2019 with 3 years’ implementation period from 2021-22 to 2023-24. Funds
of Rs 20.00 million were released to the TEVTA in 2020-21 and Rs 30.00 million in 2021-22. The
record revealed that the management has not so far started the scheme and the amount is lying in
bank account of TEVTA.
Similarly, in another case fund Rs 5.250 million were available with the KP-TEVTA under
regular MNC since long, whereas, during 2022-23 an amount of Rs 30.00 million was further
released by the Finance Department. The amount could not be considered for utilization against
specific project and is lying in bank account.
To promote the Private Public Partnership in the KP-Province the provincial government
introduced Public Private Partnership mode in the province and an amount of Rs 23.759 million
was released to the KP-TEVTA in 2019-20. The management has failed to implement the program
and the amount is lying in TEVTA bank account since receipt.
Due to weak operational management, the projects could not be launched.
Audit is of the view that the above said position showed that the KP-TEVTA management
is not serious in implementation of projects approved under ADP despite releases of funds. The
KP-Planning & Development Division vides its letter dated 14.03.2023 showed its concern over
delay in implementation of approved ADP projects. Non-implementation of projects despite
release of funds Rs 109.009 million against above said projects was grave negligence on the part
of concerned management.
During DAC meeting held on January 23, 2024 the management stated that the matter is under
process. DAC directed the management to implement the programs without further loss of time.
Para- 4 (KP-TEVTA – 2022-23)
1.2.6.4 Un-authorized retention and utilization of interest earned on ADP funds - Rs 56.530
million
18
According to the Government of KP Finance Department notification No. BO (RES-111)
FD/2-2/2013-2014 dated 27.06.2013, No2/3- (F/L)/FD/ 2019-20/ Vol-XIII dated 03.02.2020 &
No. 2/3- (F/L)/FD/2007-08/Vol-IX dated 02.06.2015 “interest/profit accrued/earned on the funds
placed in commercial banks may be deposited in government treasury under the given relevant
head of account”. The Finance Department further stated that “all heads of Govt. Departments/
Autonomous/ Semi-Autonomous bodies/ Corporations are requested to ensure compliance of the
above instructions of the Government and send a copy of challan profit deposited to the Finance
Department for record”.
During audit of KP-TEVTA Peshawar for the year 2022-23, it was observed that the
management maintained account No 3003207683 at Bank of Khyber, Peshawar. All the Funds
released by the Finance Department against different ADP projects are placed/deposited therein.
As per monthly bank statement a handsome profit/interest of Rs 56.530 million was credited in the
account during the year 2022-23.
Due to weak financial controls in the organization, the irregularity was occurred.
Audit is of the view that the interest earned on said funds needs to be deposited in to
government treasury as per standing instruction of the provincial government, but the management
utilized the said amount without the approval of the Finance Department. Thus, retention and
utilization of profit/interest of Rs 56.530 million without having any lawful authority is held
irregular/un-authorized.
During DAC meeting held on January 23, 2024 the management apprised that as per KP-TEVTA
Act 2015, Board may invest money in government saving schemes. Audit informed the committee
that as per directives of the Finance Department the interest amount needs to be deposited in govt.
treasury. DAC directed the management to refer the case to Finance Department for clarification.
Para- 5 (KP-TEVTA – 2022-23)
1.2.6.5 Non-surrender of savings of institutes to the government – Rs 30.689 million

As per rule of 95 of KP GFR Vol-I “all anticipated saving should be immediately
surrendered to the Government before closing of financial year”.
During audit of KP-TEVTA for the year 2022-23, it was observed that the main source of
funding of authority for its operational requirement is one-line budget grant from KP Government
for operational expenditure of KP-TEVTA HQ and its institutes. During the year 2021-22 and
2022-23 the KP Government has granted operational budget of Rs 517.678 million and Rs 690.637
million respectively to the Authority, which was accordingly allocated to all institute of KP-
TEVTA. At year-end the institutes surrendered the unspent amount/savings of Rs 30.689 million
to KP-TEVTA (2022-23 Rs 29.417 million + 2021-22 Rs 1.272 million). The KP-TEVTA
management did not surrender the savings to government rather was kept in bank account. The act
of the management was not in line with the directives of the government, thus, held irregular.
19
Due to weak administrative controls, the amount was not surrendered to the government.
Audit is of the view that each year the KP-TEVTA has demanded handsome amount and
despite its limited resources, the provincial government provided the said grant amount to the
Authority for its operational expenditure. Saving means the amount was demanded in excess of
the actual requirement, thus, needs to be surrendered to the government.
During DAC meeting held on January 23, 2024 the management apprised the committee that due
to shortage of funds the savings could not surrendered to the government. DAC directed the
management to refer the case to Finance Department with full facts for clarification.
Para- 6 (KP-TEVTA – 2022-23)
1.2.6.6 Irregular award of work of feasibility report at higher rate –

Rs 5.145 million and payment against a defective report – Rs 3.859 million
As per KP-PPRA 2014, Rule- 6(iv) “the lowest offer from the qualified bidder shall be
accepted for award of the contract and will be the best evaluated bid”. Further, Section – 2.6 of the
KP-Annual Development Plan (ADP) Policy 2019-23 provides that “each sector should develop a
sectorial plan that guides ADP project selection. Projects should contribute to achieving the
outcomes the sector intends to achieve, and these outcomes should in turn be driven by a clear
definition of sectorial needs, and solutions, policies and strategies to fulfill them. The financial
constraints at hand must also be considered in developing these plans”.
During audit of the KP-TEVTA, Peshawar for the year 2022-23 it was observed that as a
result of tender for preparation of feasibility study report for establishment of Construction
Machinery Training Institute (CMTI) in newly merged areas of FATA in December 2020, three
firms i.e. M/s Shaz Consultant, M/s ESS-I-AAR Consultant JV and M/s Structural Engineering
Solution JV technically qualified. M/s ESS-I-AAR Consultant quoted the lowest rate
Rs 4.404 million, while, M/s Shaz Consultant was 2nd lowest with Rs 5.145 million. The
management ignored the 1st offer and awarded the work to 2nd lowest firm M/s Shaz Consultant.
Further, the contract was signed with the firm in March 2021, whereas, the date of Stamp Paper
and attestation of Notary Public was 13.09.2021.
The Feasibility Report submitted by the firm in January 2022 (with delay of 6 months) was
not up to the mark and the management pointed out a number of deficiencies, which were not
removed by the firm, however, payment of Rs 3.859 million was released to the firm. The report
prepared with estimated cost of Rs 2,350.997 million, in view of huge cost of the project the
competent authority did not consider the project feasible. The savings of
Rs 1.286 million were also not surrendered to the government.
Due to weak internal controls the procurement was made in violation of KPPRA Rules.
20
Audit is of the view that rejection of 1st offer of a qualified firm is against the norms of
KP-PPRA Rules, thus, award of work Rs 5.145 million is held irregular. The act also caused loss
of Rs 0.741 million to the KP-TEVTA. Further, payment to the firm on submission of a defective
report is also not justified.
During DAC meeting held on January 23, 2024 the management apprised that the firms to whom
contract was awarded secured the highest marks. Audit informed the committee that the
management rejected the firm who offered lowest rate. DAC directed the management to get the
relevant record verified from audit.
Para- 7 & 8 (KP-TEVTA – 2022-23)
1.2.6.7 Misappropriation of tuition fee of DIT – Rs 7.071 million

According to Rule – 5(5)(a) (i) of the SECP Corporate Governance Rules, 2013, “the Board
shall establish a system of sound internal controls, which shall be effectively implemented at all
levels to ensure compliance with the fundamental principles of probity and propriety; objectivity,
integrity and honesty and relationship with the stakeholders, the principle shall be adhered to,
especially with respect to handling of public funds, assets, resources and confidential information
by directors, executives and employees”.
During audit of KP-TEVTA Peshawar for the year 2022-23 it was observed from the record
of GTVC (B) Khaki, Mansehra that the institute management did not maintain cash book and other
accounting records in respect of fee collected from students of Diploma in Information Technology
(DIT). During visit, the concerned management informed that no cash book or other record is
available in respect of fee collected from students. The audit worked out tuition fee of Rs 7,071,160
received from students during the period from 2020-21 to 2022-23 (2020-21 – Rs 2,240,000 +
2021-22 – Rs 2,291,140 + 2022-23 – Rs 2,540,020), however, no cash book was maintained
showing receipt and expenditure. Further, the Principal of the Institute reported involvement of
Accountant in embezzlement of Rs 471,892, surprisingly instead of taking any disciplinary action
against the culprit who was transferred from Mansehra to GTVC(W) Swabi.
Position showed weak internal controls in the organization at Institute level.
Audit is of the view that non-maintenance of accounting record of receipts and payments
is serious offence on the part of management. On the other hand, no disciplinary action was
initiated against the Accountant, involved in act of fraud.
During DAC meeting held on January 23, 2024 the management admitted the facts. DAC directed
the management to hold a fact-finding inquiry on the issue.
Para- 9 (KP-TEVTA – 2022-23)
21
1.2.6.8 Non-implementation of Chief Minister Free Technical Education Program and non-
surrender of left over amount to the government – Rs 363.913 million
The Khyber Pakhtunkhwa Government has allocated fund of Rs 700 million for imparting
free Technical Education Training to the youth of KP Province. The implementation of this
program was started during financial year 2011 and implemented in three phases from 2011-12 to
2013-14 with cost of Rs 400 million. The Board decided that the left over amount of the program
may be utilized for short-term training of the youth of KP and newly merged areas.
During audit of KP-TEVTA Peshawar for the year 2022-23 it was observed that the KP-
Government approved & released an amount of Rs 700.00 million for a scheme titled “Free
Education Training to youth of KP Province” during the period from 2011-12 to 2013-14. During
this period, an amount of Rs 400 million was expended on the program leaving unutilized balance
of Rs 300.00 million. Complete record comprising PC-I or Feasibility Study Report of the program
along with other relevant record was not provided by the management. However, in 2019 the
TEVTA Board in 13th meeting decided to utilize the said leftover amount on free training of youth
in KP-TEVTA own institutes. Accordingly, 6 months’ training was started and an amount of Rs
154.043 million was expended on training. Although, the trainees were registered with technical
board by paying fee Rs 3.30 million but neither the examination was held nor any certificate was
granted to the trainees. In the absence of proper examination and training certificate the
expenditure is termed as wasteful. The major portion was expended on account of remuneration to
the teaching and non-teaching staff of the institute in addition to their routine pay.
Position showed weak internal controls in the organization.
Audit is of the view that the program was launched in 2011 for three years i.e. 2011-12 to
2013-14, thus, thereafter, the leftover amount was required to be surrendered to the KP-
Government, however, the KP-TEVTA management expended the funds for other purposes. As
the act of management is not covered under the rules, thus, retaining the leftover amount of Rs 300
million and profit earned on said amount Rs 63.913 million is termed as irregular.
During DAC meeting held on January 23, 2024 the management apprised the committee that the
funds in question are in safe custody and are being utilized for the very purposes. DAC directed
the management to refer the case to the KP Government with full facts for further
guidance/clarification.
Para- 10 (KP-TEVTA – 2022-23)
1.2.6.9 Irregular expenditure on purchase of books in-violation of proper procedure – Rs

20.00 million
According to Para – 5 of the Revised Administrative Approval dated 27-04-2023, “the
sanctioning authority shall allow appropriate rates after observing all codal formalities/standing
instructions regarding schedule of rates and financial regularity”.
22
During the audit of KP-TEVTA Peshawar for the year 2022-23, it was observed that the
Finance Department vide letter dated 19.04.2023 conveyed concurrence of the scheme titled “One
Liner Provision for Improvement & Development of Technical Education”. The scheme included
purchase of books for four GPIs and an amount of Rs 20.00 million was allocated for this purpose.
Accordingly, purchase orders of Rs 20.00 million were issued to
M/s Atlas Book Bank on 13.01.2023 on the basis of three hand collected quotations. It was
observed that the Administrative approval was received on 27.04.2023, whereas, the purchase
orders were issued on 23.01.2023 i.e. prior to receive of Administrative Approval. The supplier
submitted the quotation on 24.12.2022, delivery challan and bill was received 09.12.2022 i.e. prior
to quotation date and purchase orders. All above said facts showed that the books were purchased
from the person of own choice without adopting proper procedure just to favor the firm at the cost
of public funds.
Due to weak procurement controls, proper procurement procedure was not adopted.
Audit is of the view that the procedure adopted for the purchase of books and delivery of
books prior to placement of order and receive of Administrative approval is not covered under the
rules, thus, held irregular. Further, the books were selected without the consultation of concerned
Institutes, during visit to GPI Mansehra the institute management was not satisfied with the
selection.
books were purchased from the firm offered lowest rates. DAC directed the management to hold
a fact-finding inquiry on the matter.
Para- 11 (KP-TEVTA – 2022-23)
23
1.2.6.10 Illegal occupation of educational institutes resulted in loss - Rs 180.200 million
According to para (5) (a) of the Public Sector Companies (Corporate Governance) Rules,
2013 as amended up to April 21, 2017 “the principle of probity and propriety entails that
company’s assets and resources are not used for private advantage and due economy is exercised
so as to reduce wastage. The KP-TEVTA has not devised any mechanism to have a watch on its
institutes working in remote areas of KP”.
During audit of KP-TEVTA for the year 2021-22, it was observed that two institutes
located at Miranshah and Chaghmalai Sararogha were occupied by Pakistan army in 2004-05
without taking approval from Provincial Government or TEVTA. Whereas, the TEVTA
management started its institutes in rented buildings. Provincial Government and TEVTA
management issued a number of letters to Pakistan army for vacation of buildings but without any
response. Pakistan army neither provides any substitute nor paid rent of occupied buildings to
TEVTA. The payment of rent at places where the TEVTA has its own institute buildings is not
justified which caused extra financial burden of Rs 180.200 million which is a loss (Mirnashah Rs
106.00 million + Chaghmalai Rs 74.200 million).
The irregularity was occurred due to weak internal controls in the organization.
Audit is of the view that the KP Government established technical institutes in said remote
areas for imparting skilled trainings to the youth of the area but occupied by the Pakistan army.
Due to non-vacation of buildings, the TEVTA management hired rented building and non-payment
of rental charges by the occupants resulted in loss of Rs 180.200 million.
the management to take up the matter at appropriate level for retrieval of TEVTA buildings.
Para- .12 (KP-TEVTA – 2022-23)
1.2.6.11 Irregular utilization of funds of expired and dropped out projects - Rs 46.890 million
As per rule of 95 of KP GFR Vol-I “all anticipated saving should be immediately
surrendered to the Government before closing of financial year”.
During audit of KP-TEVTA Peshawar for the year 2022-23, it was observed that two
projects titled “Provision of Infrastructure Facilities & Equipment for the Up-Graded GPIs at
Timergera, Takhtbhai, Swabi, Abbottabad, Kohat & Nowshera to the Level of Technology” and
“Procurement of Equipment/Machinery, Furniture & Library Books for GPIs in KP” were
approved by the PDWP at a cost of Rs 900.2421 million and Rs 363.780 million respectively in
December 2015, the Administrative approval was issued by the competent authority on
08.02.2016.
The management failed to implement the schemes within scheduled time and the PC-I of
both the projects was expired in June 2021 and projects were dropped out from the ADP Schemes.
24
Despite the fact that the PC-I of the projects have since been expired and dropped out from the
ADP schemes, tenders were called for through press and purchase orders worth Rs 46.890 million
were issued on 24.06.2022.
Due to weak project management, the projects could not be implemented timely.
Audit is view that after expiry of PC-I and drop out of projects, the already released amount
needs to be surrendered to the government. But in this specific case, fund of expired PC-I and
dropped projects were utilized which is not covered under the rules, hence, the expenditure of Rs
46.89 million is termed as irregular.
During DAC meeting held on January 23, 2024 the management admitted the delay. DAC directed
the management to hold a fact-finding inquiry on the issue.
Para- 13 (KP-TEVTA – 2022-23)
1.2.6.12 Unjustified abnormal delay resulted into cost overrun - Rs 81.132 million
PC-1 for establishment of Government Technical Institute (Boy), Dara Adam Khel valuing
Rs. 80.802 million was administratively approved by BOD of FATA-DC on 15.09.2017. As per
PC-1, date of duration of the project was August 2017 to June 2020.
During audit of KP-TEVTA Peshawar for the year 2022-23, it was observed that FATA-
DC administratively approved PC-1 for establishment of Government Technical Institute (Boys),
Darra Adam Khel valuing Rs. 80.802 million in September 2017 with completion date up to June,
2020. FATA-DC awarded the civil work to Works & Services (C&W) Department, Merged Areas,
Secretariat, in November 2017. Work of Package-I (const. of main building) was not awarded to
any contractor but works of package-II (Electrification) & III (Development) were awarded to M/s
Daud & Brothers and M/s Fifty Star Construction on November 15, 2017 respectively. The firm
completed the package-III work (compound wall, overhead tank and tube well bore), however,
work of construction of main building is yet to be awarded and due to very reasons, work on
Package- II (Electrification Work) could not be started. Original PC- 1 has been expired on June
30, 2020. Executive Engineer, C&W Kohat submitted revised cost, enhanced by Rs. 152.649
million as per MRS-2022. PC-1 of revised cost is yet to be approved.
Position showed lack of interest of KP-TEVTA management and C&W department.
Audit is of the view that C&W department failed to execute/complete the project even after
lapse of almost six years which resulted in increase in cost from Rs 71.517 million to Rs. 152.649
million. The main reasons of non- completion of the project was non-award of civil work of Main
Building. Due to delay in execution of work the cost increased (cost of overrun & time over run
factors) by Rs 81.132 million.
25
audit. DAC directed the management to take up the matter with C & W Department presenting all
the points highlighted by audit.
Para- 14 (KP-TEVTA – 2022-23)
1.2.6.13 Loss due to procurement of store at higher rates - Rs 22.712 million and irregular
procurement of changed specification store
- Rs 20.920 million
As per PCs-1 of the projects titled “Introduction of 02 technologies (Civil & Electrical) at
Govt. Technical Institute, Sadda Kurram Agency” and “Overcoming of Staff/Equipment
deficiencies in Technical Institutes in FATA” Machinery & Equipment items have mentioned with
specification and the contractor was bound to supply the store as per specification.
During audit of KP-TEVTA Peshawar for the year 2022-23, it was observed that PC-1 of
two projects were approved on 26.12.2017 at a cost of Rs. 104.76 million and 87.094 million
respectively with completion period of three years i.e. upto June, 2020. Each projects included
procurement of electrical technology/machineries valuing Rs. 12.767 million. The management
could not procure the equipment in due time, later on, due to increase in cost, both the PC-1s were
revised to Rs. 181.841 million and 107.854 million respectively. Despite having funds, the
management did not initiate procurement process up to November 2022. In December 2022, two
contracts dated 18.04.2023 for purchase of equipment were awarded to M/s Electrical Engineering
Services, Lahore at his quoted rate of Rs. 24.143 million each against PC-1 cost of Rs. 12.767
million each. Non-initiating of procurement process timely resulted in time & cost overrun factors
due to which cost enhanced by Rs 22.712 million (Rs 24.143 million x 2 projects – Rs 12.767
million x 2 projects) which was 189% higher than PC-1 cost.
Audit further observed that PC-1 contained specification of each revenue item (Machinery
& Equipment) on the basis of which Tender documents were issued and technical evaluation was
carried out. However, the management issued both the purchase orders of 81 items valuing Rs.
24.143 million each in which 19 items valuing Rs. 10.460 million each were of changed
specification (to lower capacity).
The irregularity was occurred due to inefficient project management.
Audit is of the view that sufficient funds against said projects was available with the
TEVTA even then the management failed to procure the items approved in PCs-I and abnormally
delay attributed the fact of price hike due to which the management compromised on specification
and quality of the product. As the management did not follow the specification given in PC-1 and
Tender documents while placing the orders due to which procurement worth Rs 20.920 million is
held irregular.
26
audit. DAC directed the management to hold a fact-finding on the matter.
Para- 16 & 17 (KP-TEVTA – 2022-23)
1.2.6.14 Non-recovery of outstanding training dues from NAVTTC -

Rs 51.071 million
According to Para-v (I) of Article-VI, of NAVTTC agreement “first financial release of 40
% of overall training cost will be released based on the first deliverables, second financial releases
of 30% on second deliverables, third financial release of 20% on third deliverables and final
financial release of 10% will be released based on fourth deliverables i.e. satisfactory completion
of training program”.
management executed an agreement dated March 2022 with National Vocational & Technical
Training Commission (NAVTTC), Islamabad for provision of six months high-tech and
conventional trainings to 1,958 students of Batch-III in 49 institutes of TEVTA at a cost of Rs.
85.118 million. Record revealed that KP-TEVTA completed the six months training in September
2022. However, NAVTTC released an amount of Rs. 34.047 million to KP-TEVTA against
overdue amount of Rs 85.118 million, while, remaining amount of Rs. 51.071 million is yet to be
released. The amount is pending due to non-reconciliation of figure with the NAVTTC as the
Commission has also its claim on TEVTA.
Position showed weak controls of financial management in the organization.
Audit is of the view that after above said claim of the NAVTTC management, the TEVTA
was required to reconcile its figures with the Commission for the materialization of claimed
amount of Rs 51.071 million. Delay in reconciliation might resulted in loss to the TEVTA on this
account.
During DAC meeting held on January 23, 2024 the management apprised that the reconciliation
process is in process. DAC directed the management to complete the process at the earliest and
recover the overdue amount from NAVTTC.
Para- 21 (KP-TEVTA – 2022-23)
1.2.6.15 Non-recovery of training charges from Auqaf Department -

Rs 34.413 million
According to para- 1.13 and 1.14, “Sponsoring Department (Auqaf) will finance the
training in the agreed areas of skills while adhering to parameters of the project and will set the
27
funds transfer mechanism jointly. Implementing Department (KP-TEVTA) will overall
responsible for internal administrative and financial control of the program in accordance with the
budget allocation”.
management signed a Memorandum of Understanding (MoU) dated February 25, 2020 with KP -
Auqaf, Hajj, Religious and Minority Affairs Department, Govt. of KP for provision of three
months, six months and twelve months’ trainings to 1875 students in different trades/technologies
in three batches from 2019-20 to 2021-22 at a cost of Rs. 250.800 million (Rs 83.6 million for per
batch of 625 trainees). The training of batch – I & II has been completed successfully, however,
the Auqaf Department released an amount of Rs 37.023 million against total expenditure of Rs
51.335 million leaving a balance of Rs 12.61 million. The management issued several letters
followed by reminders to Auqaf Deptt. for payment of overdue amount of Batch – II but the
department even failed to reply to said letters.
Despite the fact that the issue is unresolved, the KP-TEVTA has started training of Batch
III. The management has so far incurred an amount of Rs 24.802 million on training of Batch – III
up to September, 2023 from its own account and the Auqaf Deptt. has not released even a single
penny. Thus, incurring of Expenditure without allocation of funds is not justified at all.
The position showed weak financial as well as administrative controls in the organization.
Audit is of the view that the matter for recovery of training charges of Batch – II was un-
resolved, the management started training of Batch – III without involving the Auqaf Department.
Resultantly an amount of Rs 24.803 million, incurred by the management is yet to be recovered
from the Auqaf Deptt. The total recoverable against Auqaf on account of training charges increased
to Rs 34.413 million.
the management to recover the overdue amount from the concerned department and get it verify
from audit.
Para- 22 (KP-TEVTA – 2022-23)
28
1.2.6.16 Non-completion of projects started since long valuing - Rs 384.911 million
As per summary for the Chief Minister Govt. of KPK dated May 22, 2014 “block allocation
for KP-TEVTA for the year 2014-15” an amount of Rs. 1,439.800 million may be placed at the
disposal of TEVTA in non-lapsable account. The amount shall be used for developing Annual
Development Program to TEVTA for the next financial year. Annual Development Program of
the Government for the year 2014-15 will not contain any new development scheme for TEVTA”.
During audit of KP-TEVTA Peshawar for the year 2022-23, it was observed that the KP
Government placed an amount of Rs. 1,439.800 million (non- lapsable) in May 2014 at the disposal
of TEVTA for annual development program for the financial year 2014-15. Record revealed that
the management prepared 148 development projects valuing Rs. 1,084.39 million against allocated
budget of Rs. 1,439.800 million leaving a balance of Rs 355 million till date. The competent
authority approved PC-I of 10 projects at a total cost of Rs 384.911 million, which were started
during the period from 2015 to 2017 and an amount of Rs 203.716 million has so far incurred on
these projects, the scheduled completion date of said projects has since been expired but the
projects are yet to be completed.
Position showed weak administrative control in the organization.
Audit is of the view that non-utilization of available funds against ADP schemes and non-
completion of projects since long showed inefficiency on the part of management, which might
result in increase in cost due to price hike in market.
During DAC meeting held on January 23, 2024 the management apprised the committee that some
projects have been completed. DAC directed the management to get the relevant record along with
PC-IV of completed project verified from audit.
Para- 23 (KP-TEVTA – 2022-23)
1.2.6.17 Loss due to non return of KP-TEVTA vehicle by KP-STVET -

Rs 3.00 million
The KP-Industries Department vide letter dated 13-08-2020 conveyed the directives of the
Chief Minister, Khyber Pakhtunkhwa to MD KP-TEVTA for implementation, according to which
the TEVTA was directed to take over custody of nine vehicles from KP-STVET and impose
moratorium on transfer of further funds to KP-STVET till consideration and approval of the
KP-TEVTA Board.
During audit of KP-TEVTA Peshawar for the year 2022-23 it was observed that in
compliance to the decision of KP Government and KP-TEVTA Board, all the institute run by the
KP-STVET were taken back by the KP-TEVTA along with assets. The record revealed that the
management of KP-STVET failed to return a vehicle Toyota Corolla GLI-2015 No. AA-4692
having market price of Rs. 3.00 million despite repeated requests by the TEVTA management.
29
Position showed weak administrative control in the organization.
Audit is of the view that after closure of KP-STVET, there was no justification to retain
the above said vehicle further. The act of the management is termed as irregular and the vehicle
valuing of Rs 3.00 million retained by the management of KP-STVET after taken back the institute
by KP-TEVTA have no logical grounds thus, held irregular.
audit. DAC directed the management to take up the matter at appropriate level for recovery of
vehicle from the concerned department.
Para- 24 (KP-TEVTA – 2022-23)
30
1.2.6.18 Loss due to advance payment without bank guarantee to a defaulter company - Rs
10.705 million
According to para (5) (a) of the Public Sector Companies (Corporate Governance) Rules,
2013 as amended upto April 21, 2017 the principle of probity and propriety entails that company’s
assets and resources are not used for private advantage and due economy is exercised so as to
reduce wastage. The principle shall be adhered to, especially with respect to the following, namely:
- (i) handling of public funds, assets, resources and confidential information by directors,
executives and employees; and claiming of expenses. The KP-TEVTA has not devised any
mechanism to have a watch on its institutes working in remote areas of KP.
management made an advance payment of Rs 72.00 million to M/s Pakistan Machine Tools
Factory (Pvt.) Ltd (PMTF) Karachi in 2019 against purchase order dated 19.4.2019 for
procurement of 13 machines. The supplier supplied 11 machines and failed to deliver two Shaper
Machines valuing Rs 7.254 million and one Cylindering Grinding Machine valuing
Rs. 3.451 million.
The irregularity was occurred due to weak financial control of the management.
Audit is of the view that the TEVTA management made advance payment without securing
its interest through bank guarantee. Even the DD (F&A) also objected advance payment without
bank guarantee, however, the management made payment and now the supplier has failed to
deliver the machines and the TEVTA has sustained loss of Rs 10.705 million on this account.
audit. DAC directed the management to hold a fact-finding inquiry on the matter to find reasons
under which the 100% advance payment was made without bank guarantee.

Para- 25 (KP-TEVTA – 2022-23)
1.2.6.19 Non-compilation of annual accounts for the years 2015-16 to

2022-23 and non-preparation of general ledger/trial balance.
According to KP-TEVTA Revised Regulation 2021, Regulation-VI, Chapter-2, Clause 11
(i) “The book of accounts shall be maintained separately” & (ii) “The Authority shall appoint a
firm of Chartered Accountants to get the Funds audited”. Furthermore, KP-TEVTA Regulation-I,
Chapter 2, Clause 11 (2) vii provides that “Computerize all the activities of the Head Office,
Regional Offices and Collages / Institutions of the Authority” and Clause 11 (2) viii provides that
“arrange proper networking of all the activities of Head Office, college and institutions of the
Authority and update it from time to time”.
31
During Audit of KP-TEVTA (HO) Peshawar for the year 2022-23 it was observed that KP-
TEVTA failed to compile/finalize annual accounts for the years from 2015-16 to 2022-23. Even
the management did not prepare general ledger/trial balance for the above said period. Although,
the management hired the services of a Chartered Firm in 2021 for compilation of annual accounts
since inception to 2021-22 but the accounts are yet to be compiled. The main reason of non-
compilation of accounts was improper maintenance of accounting record. As per record during the
period from 2017-18 to 2022-23 the income/receipts of the Authority was Rs 25,861.351 million
against which the expenditure was of Rs 18,774.187 million, however the accounts of said figures
are yet to be compiled.
Moreover, the KP-TEVTA is running 106 technical institutes and assets/inventory worth
billions of rupees was purchased for said institutes, however, the management has no record of
said inventory. In the absence of proper record of assets/inventory, their existence is open to doubt.
Position showed weak financial management of the organization.
Audit is of the view that non-preparation/compilation of annual accounts as well as other

accounts record, firstly, restricts the management/BoD to make quick and right decisions and
secondly the BoD is unaware about the status of receipts/expenditure/assets/liabilities. The Board
has also not approved the addition/deletion in assets during said period. Further, non-compliance
to its own regulation is a serious lapse on the part of management.
services of a firm has been hired. DAC directed the management to get the annual accounts
complete at the earliest and maintain the books of accounts including General ledger and get it
verified from audit.
Note: The issue was reported earlier also in the audit report for the audit year 2022-23 vide para
number 2.3.6.13, audit year 2021-22 vide para number 3.3.4.15 and audit year 2020-21 vide para
number 3.5.4.1. Recurrence of same irregularity is a matter of serious concern.
Para- 26 (KP-TEVTA – 2022-23)
32
1.3 Khyber Pakhtunkhwa - Economic Zones Development & Management
Company (KP-EZDMC), Peshawar
1.3.1 Introduction
Khyber Pakhtunkhwa Economic Zones Development and Management Company (KP-
EZDMC) was originally established on March 13, 2015 under Section 5 of Companies Ordinance
1984. Later on, it was registered as a public company limited by guarantee under Section – 42 (not
for Profit Company) of the Companies Ordinance 1984.
The Company is engaged in the establishment and up-gradation of new economic zones
and existing economic zones/industrial estates. Operations of the company are primarily financed
through grants from provincial government, proceeds from sale and allotments of plots, generation
and supply of power and other miscellaneous sources. The registered office of the company is
situated at Plot No. 120, Industrial Estate, Jamrud Road, Hayatabad, Peshawar.
1.3.2 Comments on audited accounts:
Management failed to provide annual audited accounts for the year
2022-23 till finalization of this report despite repeated requests.
1.3.3 Compliance of PAC directives

Audit Total Full Partial Pending Paras No %age of
2022-23 27 - - 2.2.6.1 to 2.2.6.27 0
Thematic 11 3.11.1.1 to 3.11.4.2
2021-22 15 - - 3.3.4.1 to 3.3.4.15 0
2020-21 29 - - 3.3.4.1 to 3.3.4.29 0
2019-20 12 - - 2.3.4.1 to 2.3.4.12 0
2018-19 1 - - 3.3.3.1 0
2017-18 11 - - 3.1.4.1 to 3.1.4.11 0
SDA - - - - -
2016-17 7 - - 3.1.4.1 to 3.1.4.7 0
2015-16 10 - - 3.1.4.1 to 3.1.4.10 0
2014-15 7 - - 3.1.4.1 to 3.1.4.7 0
2013-14 15 - - 3.1.4.1 to 3.1.4.15 0
2012-13 12 - - 3.3.2.1 to 3.3.2.12 0
2011-12 11 - - 3.3.2.1 to 3.3.2.11 0
2010-11 3 - - 4.3.1 to 4.3.3 0
2009-10 4 14,15, 16, 17 0
1.3.4 Audit Impact
33
current audit of KP-EZDMC. This amount also includes recoverable amount of Rs 14.35 million.
Summary of the audit observations classified by its nature is given as under:
(Rs in Million)
3 Irregularities
b. Procurement related irregularities -
5 Recovery 14.35
6 Others 1,638.678
1.3.6 AUDIT PARAS

1.3.6.1 Loss of interest income due to imprudent investment decision worth - Rs 68.050
million
According to para-7 of KP-EZDMC Investment and Fund Management Policy, “the Chief
Finance Officer shall be responsible to ensure the efficient and effective management of the
Company’s funds to obtain the highest possible return. For this purpose, a need assessment of the
expected Company’s cash flows shall be carried out on periodic basis and any excess funds shall
be invested in secured risk free investment opportunities offered by the Banks having sound
financial standing and credit ratings”.
During audit of KP-EZDMC Peshawar for the year 2022-23, it was observed that the
Company invested funds of Rs. 1.000 billion in Bank of Khyber @ 11.20 % for period of one year
in November 2021. The funds were roll over for another period of six months. The record revealed
that the Bank of Khyber offered rates of 16.10% and 19.91% for short-term investments of three
months during same period.
Position showed weak financial management of the organization.
Audit is of the view that the investment of huge funds of Rs.1.000 billion at lower rate
resulted in loss of Rs 68.050 million to the formation.
34
The irregularity was reported to the management and department on November 29, 2023
but no reply was received till finalization of report.
dated November 29, 2023 followed by reminder dated January 11, 2024.
Audit recommends to investigate the reasons of violation of approved investment policy
which caused loss to the formation besides fixing responsibility thereof. Made the loss good by
effecting recovery from the persons held responsible.
Para- 1 (KP-EZDMC – 2022-23)
1.3.6.2 Loss of revenue due to non-cancellation of industrial plot at Industrial Estate Hattar
worth - Rs 68.400 million
According to Rule-16 of the terms and condition of lease deed “the land should be utilized
for the approved industry only and shall not be put to another use or purpose, neither for any
residential or commercial. Disregard or violation of this clause, the Board of Directors SDA shall
be the final authority, the allotment lease liable to cancellation and it may be cancelled without
notice”.
During audit of KP-EZDMC, Economic Zone Hattar for the year 2022-23 it was observed
that industrial plots No.140, 143-145 measuring 6 acre at Phase-V Economic Zone Hattar were
allotted to M/s Solve Tech Industries on 20-08-1990. After short operation, the allotee closed the
industry in year 2000 and sub-letted the premises to M/s Eco Pak Industry for storage purposes
without approval of the Estate Management. The management issued cancellation notices in 2009
and 2010 but the plot was not cancelled. Further, the allottee shifted/removed machinery from the
site without approval of estate management. A fact-finding committee was constituted to
investigate un-authorized transfer of machinery in 2014. However, the report of the committee was
not shared with audit. In February 2023 the management transferred the leasehold rights of the
plot to M/s ACM Hi-Tech Engineering (Pvt) Ltd. on payment of 5% transfer charges Rs 3.6 million
only.
Due to weak operational management, on violation the plot could not be cancelled.
Audit is of view that on violation the plot was required to be cancelled immediacy for re-
allotment to other interested party at prevailing rate of Rs 12.00 million per acre. However, after
cancellation, the plot was allotted on recovery of transfer charges Rs 3.60 million. Due to non-
charging of prevailing rate, the company sustained loss of Rs 68.400 million (Rs. 12.00 million
per acre x 6 acre = Rs 72.00 million – Rs 3.600 million).
35
Audit recommends to investigate the matter, fix responsibility thereof and recover the loss
from the persons held responsible.
Para- 4 (KP-EZDMC – 2022-23)
1.3.6.3 Loss due to non-cancellation of commercial plots - Rs 66.000 million and non-
recovery of non-utilization charges - Rs 13.200 million
According to Clause – 3 of the terms of allotment, “the lessee shall erect on the site a
building or buildings of the description and dimension as may be approved by the authority within
a period of 12 calendar months”. Further, as per Clause – 14 of terms of allotment “non-utilization
charges @ 20% of the prevailing lease price will be charged in case the allottee fails to complete
the unit within the stipulated time i.e. three years. The plot will stand cancelled and no extension
will be allowed in any case after expiry of 4 years (including one year extension period)”.
During audit of KP-EZDMC Economic Zone, Hattar for the year 2022-23 it was observed
that commercial plots were allotted to four parties for establishment of commercial market/plaza
during 1993 on 30 years lease period. The record revealed that proper lease deeds were not signed
with allottees, in few cases lease deeds were executed after 10 years. The allottees failed to
construct the commercial market/plaza on allotted plots, the lease period was expired in 2023. The
allottees have transferred the lease rights of plots to another party. Despite all this, the management
did not cancel the allotment rather issued lease renewal notices to the allottees.
Due to weak internal controls of operational management, the land was not properly
utilized by the allottees.
Audit is of the view that due to non-cancellation of plots of defaulting allottees, the
company sustained loss of Rs 66.000 million and due to non-recovery of non-utilization charges
Rs 13.200 million.
Audit recommends to investigate the matter, fix responsibility thereof and action needs to
be initiated according to the terms & conditions of the allotment.
Para- 5 (KP-EZDMC – 2022-23)
1.3.6.4 Irregular award of civil works on the basis of defective technical evaluation worth -
Rs 657.039 million
According to KPPRA Rule 14- (b) single stage, two envelops bidding shall apply to large
and complex contracts where the experience and the past performance in the execution of similar
contracts, capabilities with respect to personnel and construction equipment’s and financial status
and capacity of the bidder is required to the procuring agency. The procuring entity shall evaluate
36
the technical proposal based on criteria specified in the [“bid solicitation”]1 documents without
reference to the price and reject any proposal which does not conform to the specified
requirements.
After evaluation and approval of the technical proposals the procuring entity, shall at a time
within the bid validity period, publicly open the financial proposals of the technically accepted
bids only. The bid found to be the lowest evaluated bid shall be accepted;
During the audit of KP-EZDMC, Peshawar for the year 2022-23 it was observed that the
management awarded civil work of ‘construction of office building for KP-EZMDC’ worth Rs
657.039 million to M/s Sarhad Engineering and Electric Company on April 14, 2022. Record
revealed that the firm was selected despite the fact that it failed to honor the terms of tender
document as during technical evaluation the bidder did not provide annual accounts for the year
2017-18 and income tax return for the last three years. The bidder does not possess the requisite
plant and machinery required as per bidding documents and secured only 8 marks out of 20. The
bank statements for 2020-21 did not support the financial affairs. Full 5 marks of working capital
were awarded in spite of the fact that bidder was financially unable to execute such huge project.
The bidder submitted credit line of Rs 805.00 million to justify their financial strength for
execution this project.
Position showed weak administrative controls in the organization.
Audit is of the view that in view of above deficiencies, the award of civil work Rs 657.039
million on the basis of defective technical evaluation was held irregular.
Audit recommends to investigate the matter and fix responsibility thereof.
Para- 7 (KP-EZDMC – 2022-23)
1.3.6.5 Non-cancellation of commercial and industrial plots due to non-setting up industries

- Rs 7.227 million
As per clause -7 of the allotment letter “construction of factory must be completed in
accordance with approved plan/specifications within three years from the date of allotment. Failing
which, extension charges/non-utilization charges/cancellation will be applied as per bylaws”.
During audit of KP-EZDMC Economic Zone, Peshawar for the year 2022-23 it was
observed that ten industrial/commercial plots measuring 8.625 acre land valuing Rs 7.227 million
37
were allotted during the period 1987 to 2006 but the allottees failed to set up/operationalize their
business despite lapse of a period ranging from 17 to 36 years.
Due to weak controls of operational management, the plots could not be utilized for specific
purposes.
Audit is of the view that as per lease deed, the allottees were bound to construct their
industry within 4 years (including one-year grace period). In case of failure the plot is liable to be
cancelled, but the management did not initiate any action in this regard.
Audit recommends to investigate the causes under which the plots could not be cancelled
on failure by the allottees in commencing the industrial activities besides fixing responsibility
thereof.
Para- 8 (KP-EZDMC – 2022-23)
1.3.6.6 Non transparent award of civil work - Rs 318.422 million and loss due to ignoring
the lowest bidder - Rs. 24.518 million
the technical proposal on the basis of criteria specified in the [“bid solicitation”]. After evaluation
and approval of the technical proposals the procuring entity, shall publicly open the financial
proposals of the technically accepted bids only. The lowest evaluated bid shall be accepted.
During audit of KP-EZDMC Peshawar for the year 2022-23 it was observed that
management of KP EZDMC awarded ‘Infrastructure Development Works at Marble City Chitral’
at cost of Rs. 318.422 million to M/s Janson Construction Company, Peshawar on September 10,
2021 with completion period of one year. The project comprised of ADP funds Rs 204.00 million
and KP EZDMC funds Rs 114.422 million.
The record revealed that bidding process was initiated before approval of PC-I in
September 2021, administrative approval was received in November 2021. Bids were called on
single stage one envelop system instead of two envelop system in deviation of KP PPRA Rules.
The disqualified bidders were already working with KP EZDMC in other contracts. The lowest
bid 17.70% below the engineer estimates was ignored and the accepted the bid at 7th No 10%
below the estimates which caused loss of Rs 24.518 million.
The first variation order of Rs 104.042 million i.e. 36% of the contract value was submitted
by excluding two major components from approved scope of work in June 2022 after 9 months of
38
award of contract. Further, 14 months’ extension was granted to the contractor against the original
completion period of 12 months.
Position showed weak internal controls in operational activities.
Audit is of the view that the above facts showed negligence on the part of management in
award of work valuing Rs 318.422 million due to which company sustained loss of Rs 24.518
million.
Audit recommends to investigate the matter besides fixing responsibility thereof.
Para- 9 (KP-EZDMC – 2022-23)
1.3.6.7 Irregular award of civil work in violation of KP-PPRA Rules worth - Rs 122.265
million and loss due to ignoring the lowest rate - Rs 7.052 million
the technical proposal based on criteria specified in the [“bid solicitation”]2 documents without
reference to the price and reject any proposal which does not conform to the specified
requirements. The bid found to be the lowest evaluated bid shall be accepted.
During audit of KP-EZDMC Peshawar for the year 2022-23 it was observed that the
management awarded civil work of ‘Rehabilitation of 04 KM Access Road from Michani Rest
House to MIE’ to M/s Haji Khan Rahim & Sons at Rs 122.265 million in September 2021 with
completion period of one year i.e. up to September 2022 on single stage one envelop system in
deviation to KP-PPRA Rules. The record revealed that the lowest bidder M/s Shah Contractor with
quoted price of 21.65% below the engineer estimate was ignored and the contract was awarded at
16.10% below the engineer estimates.
Position showed weak internal controls in operational activities.
Audit is of the view that award of work at higher rates resulted in loss of Rs 7.052 million
(lowest rate 21.65% - contract award rate 16.10% = 5.55% x engineer estimates Rs 129.071
million) to the Company.
39
Para- 10 (KP-EZDMC – 2022-23)
40
1.3.6.8 Loss of revenue income due to non-allotment of plot - Rs 12.00 million and non-
recovery of outstanding dues of cancelled plot - Rs 1.15 million
As per KP-EZDMC allotment policy “Industrial plot will be leased out initially for a period
of 99 years while the commercial plots for a period of 30 years after auction”. Further, as per
Clause –C of allotment criteria, “it will essential for all the units to start construction within 06
months and become functional/operational within 24 months from the date of allotment or
possession. The extension can be granted in exceptional cases subject to penalty. For the first six
months, extension can be granted on justified grounds of delay on payment of a penalty equal to
05% per annum of total value; further 01-year extension can be granted on justified grounds on
payment of penalty equal to 10 % per annum. For subsequent extension charges will be at the rate
of 25% per annum”.
During audit of KP-EZDMC Peshawar for the year 2022-23 it was observed that a plot
No.192B measuring 1.046 acre was allotted to M/s Tatara Pharmaceutical on 24 .07.2003 for
setting up pharmaceutical unit. The allottee utilized the space for different commercial activities
and failed to operationalize the unit even after lapse of more than 10 years and requested for change
in name and nature of business to M/s Tatara Industries for setting up meat process unit on
30.10.2013. The allottee was allowed with the condition that they will deposit the entire
outstanding dues including extension charges
Rs 1.151 million. The allottee failed to clear the outstanding dues; accordingly, the management
cancelled the plot on 11.03.2014. Thereafter, the management failed to re-allot the plot till date
and is lying vacant since 2003.
Position showed weak operational controls in the organization.
Audit is view of that the non-allotment of cancelled plot since 2014 deprived the formation
from the revenue of Rs 12.00 million (prevailing rate) and non-recovery of outstanding dues from
the defaulter allottee put the organization in loss of Rs 1.151 million.
from the concerned party
Para- 12 (KP-EZDMC – 2022-23)
1.3.6.9 Loss due to irregular transfer of plot - Rs 6.533 million

As per Clause -7 of the allotment letter “construction of factory must be completed in
accordance with approved plan/specifications within three years from the date of allotment, failing
which, extension charges/non-utilization charges/cancellation will be applied as per bylaws”.
41
During audit of KP-EZDMC Peshawar for the year 2022-23 it was observed that at
Industrial Estate Gadoon Amazi a plot No.08 measuring 7 acres was allotted to M/s Super Popular
Steel Mills for setting up a unit. The allottee failed to construct the industrial unit within prescribed
time rather transferred the plot to the new management. The estate management failed to recover
transfer fee @ 8% Rs 2.800 million and extension charges Rs 3.733 million. A departmental
enquiry was carried out in October 13, 2022, the inquiry committee held Mr. Faisal Hayat Khan
Manager responsible for the gross negligence and loss of Rs 6.533 million to the company and
recommended for demotion of the officer and recovery of the loss. However, no recovery was
affected from the allottee or from the officer so far.
Due to weak internal controls the recommendation of the inquiry committee could not be
implemented.
Audit is of the view that the negligence on the part of estate management, the formation
sustained loss of Rs 6.533 million.
Audit recommends to recover the amount either from the person held responsible or party
concerned.
Para- 13 (KP-EZDMC – 2022-23)
1.3.6.10 Irregular award of development work worth - Rs 304.52 million and loss due to non-
imposition of LD Charges - Rs 30.452 million
According to Para - 47.1 of the bidding documents, “if the contractor failed to comply with
the time for completion for the whole of the works or, if applicable, any section within the relevant
time, then the contractor shall pay liquidated damages @ 0.1% of the contract price subject to
maximum of 10% of contract price for such default for every day or part of the day which shall
elapse between the relevant time for completion and the date mentioned in the tender”.
During audit of KP-EZDMC Peshawar for the year 2022-2023 it was observed that the
management awarded ‘‘leftover civil work of Infrastructure Development of Hattar Special
Economic Zone, Package-I’ to M/s Zakoori Construction Company at cost of Rs. 304.52 million
on 14.09.2021 with completion period of 12 Months. The record revealed that bids were called on
single envelop system; no technical evaluation was carried out. Five bids received and all were
10% below the engineer estimates. Contract was awarded despite the fact that contractor failed to
deposit bid security @ 2% of the bid price.
Further, the contractor failed to complete the work within the stipulated time period even
failed to complete the work after two extensions. A payment of Rs. 170.89 million has so far made
to the contractor against the contract cost Rs. 304.52 million.
42
Audit is of the view that award and execution of civil work in deviation of KP PPRA Rules
and approved terms and condition is held irregular. In case of delay in completion of work the
management was required to invoke the LD clause, however, no such action was initiated by the
management and the company sustained loss of Rs.30.452 million.
Audit recommends to investigate the matter and fix responsibility thereof.
Para- 14 (KP-EZDMC – 2022-23)
1.3.6.11 Loss due to irregular transfer of commercial plot worth -

Rs 14.250 million
According to Rule-12 of the terms and condition of allotment “within six months from the
date of possession you shall start construction in accordance with the plans/drawings of the
proposed building duly approved by the KP-EZDMC and complete in all respect within a period
of 2/3/4 years from the date of allotment letter, failure to complete the building within the period
the total premium of the plot shall be forfeited in favour of KP-EZDMC”. Rules -27 further
provides that “in case of breach of any one or more of the above cited conditions and non-
observance of the above mentioned obligation, the allotment will be liable to be
withdrawn/cancelled after deduction of 25% of the total premium of the plot”.
During the audit of KP-EZDMC Economic Zone, Hattar for the year 2022-2023 it was
observed that a commercial plot No. 13 measuring one kanal was leased out to Mr Adnan Khan
Awan allotment letter dated 20-01-2020 at lease price of Rs 7.000 million. The allotee failed to
construct building as per approved terms and conditions of allotment. The allottee requested for
approval of drawing on 07-07-2022, thereafter, in September 2022 the allottee requested for
transfer of leasehold rights.
The record revealed that in technical report, the unit was shown as operational, whereas,
the commercial plot allotted in 1993 and was cancelled in 2012 due non-construction of building.
The transfer of leasehold rights of a vacant commercial plot made in deviation to approved
policy/terms and conditions.
Position showed weak operational controls in the organization.
Audit is of the view that on non-utilization of plot for the purpose for which it was allotted,
the management was required to cancel the plot and consider it for re-allotment at prevailing price.
Non-cancellation of plot on deviation from policy and its non-allotment to some other interested
43
party resulted in loss of Rs 14.250 million (Rs 15,000,000 prevailing rate – Transfer charges
received Rs 750,000) due to non-cancellation of vacant commercial plot.
Para- 15 (KP-EZDMC – 2022-23)
44
1.4 Government Printing & Stationery Department (GP&SD),
Peshawar
a) Introduction:
Government Printing and Stationery Department, Peshawar was established in 1902. The
functions of the department are to print the Provincial Budget, Annual Development Programme,
Govt. Gazette Notifications and other rules, regulations for Services and General Administration
(S&GAD) and Provincial Assembly and to supply all kinds of printing forms and registers of the
Governor House, Government/Semi-Government Departments and Autonomous Departments.
b) Comments on Audited Accounts

Management failed to provide the annual audited accounts for the years 2018-19 to 2022-
23 till finalization of this report despite repeated requests.
c) Ccompliance of PAC Directives

2020-21 6 - - 3.4.4.1 to 3.4.4.6 0
2016-17 4 - - 3.4.4.1 to 3.4.4.4 0
d) Audit Impact
e) Category-wise Summary of Audit Observations
current audit of KP - Government Stationery & Printing Department (KP-GS&PD). Summary of
the audit observations classified by nature is as under:
(Rs in Million)
1 Non-Production of record 27.93
3 Irregularities
45
5 Recovery -
6 Others 1,110.59
f) AUDIT PARAS
1.4.6.1 Non-transparent appointment of employees - Rs 27.928 million and non-
production of record of newly recruited employees
According to Section 14 (2&(3) of the Auditor-General’s (Function Powers and Terms and
Condition of service) Ordinance 2001, “the officer in-charge of any office or department shall
afford all facilities and provide record for audit inspection and comply with the request for
information in as complete a form as possible and within reasonable expedition. Any person or
authority hindering the auditorial functions of the Auditor-General regarding inspection of
accounts shall be subject to disciplinary action under relevant Efficiency and Discipline Rules,
applicable to such person”.
During the audit of Government Printing & Stationery Department, Peshawar for the years
2020-21 to 2022-23, it was observed that vacant posts of different categories were advertised in
press on December 25, 2020 for appointment. As a result, 34 employees (BPS – 4 to BPS 14) were
appointed on regular basis and an amount of Rs 27.928 million was paid to newly appointees on
account of pay & allowances up to August 2023.
The Audit Team requested for provision of recruitment file/record to assess the procedure
adopted for appointments vide requisition dated 07-08-2023 followed by subsequent reminders
but the same was not provided till close of audit. The management informed that requisite files
have been misplaced and not available in record.
Audit is of the view that the non-provision of record to audit is a serious lapse on the part
of management and liable to initiate disciplinary action against the concerned officials. Further, in
the absence of record the appointments as well as payment there against Rs 27.928 million is
termed as irregular.
dated November 06, 2023 followed by reminders dated November 29, 2023 & January 11, 2024.
Audit recommends that matter needs to be investigated to probe the reasons for non-
provision of record besides fixing responsibility thereof. Disciplinary action needs to be taken
against person(s) held responsible for non-provision of record and all the relevant record may be
provided to audit for verification of transparency in appointment procedure.
Para- 1 (GP & SD – 2020-23)
46
1.4.6.2 Irregular/un-authorized appointments in-violation of proper procedure
and payment of - Rs 16.088 million
According to Rule – 10(2) of KP Civil Servant Appointment, Promotion and Transfer

Rules1989, “initial recruitment to the posts, which does not fall within the purview of commission,
shall be made on the recommendations of Departmental Selection Committee after press
advertisement of posts”.
During audit of Government Printing & Stationery Department, Peshawar for the years
2020-21 to 2022-23, it was observed that the management made appointments against various
vacant posts through Departmental Selection Committee during the period 2021-22. The record
revealed that eleven posts of BS – 4 to 16 were advertised in press dated 25-12-2020 against which
31 appointments were made. The appointment of 20 candidates without advertising the
requirement as well as payment to said appointees Rs 16.089 million is also held irregular.
Audit is of the view that recruitment without press advertisement is clear-cut violation of
the Supreme Court of Pakistan orders and also against the prescribed rules of KP Government.
The position also indicates that appointments were made in non- transparent manner and leads
towards un-due favour to the ineligible persons at the cost of Govt. Exchequer.
Audit recommends to investigate the reasons of appointment in violation of rules besides
fixing responsibility thereof.
Para- 2 (GP & SD – 2020-23)
1.4.6.3 Loss to Government exchequer due to non-deduction of tax – Rs 3.432

million
According to Section 153 (1) of Income Tax Ordinance 2001, “every prescribed person
making a payment in full or part including a payment by way of advance to a resident person or
permanent establishment in Pakistan of a non-resident person- (a) for the sale of goods; (b) for the
rendering of services; (c) on the execution of the contract, other than a contract for the sale of
goods or the rendering service, shall, at the time of making the payment , deduct tax from the gross
amount payable at the rate specified in division III of part III of the first schedule”. Rules – 183
further provides that “the paying authority shall deduct tax at source at applicable rates and deposit
into Government treasury within seven days. Failure to do so will attract additional tax @ 24% for
the delayed period”.
47
2020-21 to 2022-23, it was observed that that management engaged M/s MKJ Associate Peshawar
for supply of different size papers. An amount of Rs 59.538 million was paid to the firm from
March 07, 2019 to September 30, 2022; however, withholding tax amounting to Rs 3.432 million
(@ 4.5%) could not be recovered from the firm.
Position showed weak financial controls in the organization.
Audit is of the view that the management was required to deduct withholding Tax at
prescribed rates while making payment but the same was not deducted which put the treasury in
loss of Rs 3.432 million.
Audit recommends to investigate the matter regarding non deduction of income tax at the
time of payment besides fixing responsibility thereof and the tax amount may be recovered either
from the concerned firm or person(s) held responsible for deposit into govt. treasury.
Para- 3 (GP & SD – 2020-23)
1.4.6.4 Un-justified/doubtful payment on account of short supply store - Rs 29.35

million
According to Para-23 of KP General Financial Rules, “every government officer should
realize fully and clearly that he will be held personally responsible for any loss sustained by
government through fraud or negligence on his part and that he will also be held personally
responsible for any loss arising from fraud or negligence on the part of any other government
officer to the extent for which it may be shown that he contributed to the loss by his own action or
negligence”.
2020-21 to 2022-23, it was observed that the management issued purchase order dated 30-12-2020
to M/s MKJ Associates Peshawar for supply of paper and binding material valuing Rs 62.28
million. The firm supplied the material, which was accordingly entered in store ledger.
On examination of store inward gate passes record it was observed that all the store items
were received but the offset papers 27x34 80 gram (imported) quantity 3,450 reams valuing Rs
29.35 million was not received. The said item was entered in store ledger as receipt on 12-07-2021
and payment of Rs 29.35 million was accordingly released to the supplier. Furthermore, the
requisite documents i.e. inspection reports, issue voucher, consumption reports and other relevant
documents were also not provided to audit which creates doubts about physical existence of store.
48
Audit is of the view that the facts revealed that the store valuing
Rs 29.135 million remained unsupplied and the subsequent payment was fraudulent.
Audit recommends that the matter needs to be investigated at appropriate level by
conducting an inquiry at higher level besides fixing responsibility thereof.
Para- 4 (GP & SD – 2020-23)
1.4.6.5 Loss due to shortage of inventory stock - Rs 8.34 million

In accordance with Para 148 of the KP Financial Rules, “all materials received should be
examined, counted, measured or weighed as the case may be, when delivery is taken, and they
should be taken in charge by a responsible Government officer who should see that the quantities
are correct and their quality good, and record a certificate to that effect. The officer receiving the
stores should also be required to give a certificate that he has actually received the materials and
recorded them in the appropriate stock register”.
Further, in accordance with para-20 of Financial Rules “any loss of public money, store or
other property held by or on behalf of government, caused by defalcation or otherwise, which is
discovered in a treasury or other office or department should be immediately reported by the officer
concern to his immediate official superior”.
2019-20 to 2022-23 it was observed that the management arranged a detailed physical verification
of store in November 2021. As per verification report, a huge quantity of store worth Rs 8.335
million was found short.
Position showed poor store inventory management system in the organization.
Audit is of the view that shortage of store worth Rs 8.335 million and its non-probing
resulted in loss to the formation.
Audit recommends that a detailed inquiry may be conducted at appropriate level with a
view to fix responsibility and made the loss good by effecting recovery from the person(s) held
responsible.
Para- 5 (GP & SD – 2020-23)
49
1.4.6.6 Irregular procurement of store by splitting -
Rs 6.761million
According to Clause – 19 of KPPRA Rules 2014 the procuring entity shall engage in open
competitive bidding if the cost of the object to be procured is more than the financial limit which
is applicable under rule 18 of these rules. Procurement from Rs 500,000/- to Rs 5 million shall be
posted on the procuring entity’s website and Authority’s website. These procurement opportunities
may also be advertised in print media, if deemed necessary by the procuring entity.
2020-21 to 2022-23, it was observed that the management had procured different store items from
seven suppliers worth Rs. 6.654 million during the period 2020-21 and 2021-22 on single source
basis. As the store was purchased in disregard to the PPRA Rules on single source basis thus held
irregular.
Due to weak procurement controls the proper procedure was not adopted.
Audit is of the view that the items were of common use and the management was required
to follow the PPRA rules for procurement of store but the same was not done and deprived the
department from the benefit of healthy competitive rates.
Audit recommends to investigate the reasons due to which the store was purchased from
selected suppliers in violation of public procurement rules besides fixing responsibility thereof.
Para- 7 (GP & SD – 2020-23)
1.4.6.7 Unverified expenditure due to non -preparation of accounts for the last
five years - Rs 1,107.155 million
According to Section 30 of KP Finance Act 2022 “government business enterprises shall
submit their annual audited financial statements to the Finance Department and published them on
their website not later than ninety days following the close of each financial year”.
During audit of the Government Printing & Stationary Department, Peshawar for the years
2020-21 to 2022-23, it was observed that the annual accounts of the department for the years 2016-
17 to 2022-23 were not finalized by the management till date despite lapse of more than 05 years.
The management incurred expenditure of Rs 1,107.155 million during said period but the
expenditure remain un-verified. This state of affairs showed that the financial record was not
properly maintained and proper supporting documents were not available with the management.
50
One of the reasons of non-finalization/compilation of annual accounts is non-availability of
accountant/accounts staff.
Position showed weak administrative controls in the department.
Audit is of the view that the management was required to finalize its accounts/financial
statement timely so that true & fair picture of the state of affairs of the department come to the
knowledge of the stakeholders.
Audit recommends to justify the reasons for non-finalization of the annual accounts besides
fixing responsibility thereof efforts needs to be made for early finalization of annual accounts.
Para- 8 (GP & SD – 2020-23)
51
1.4.6.8 Loss due to delay in finalization of contracts – Rs 16.689 million
According to Rules – 30 of KPPRA “each procuring entity shall plan its procurements with
due consideration to transparency, economy, efficiency and timeliness, and shall ensure equal
opportunities to all prospective bidders in accordance with section 22 of the Act”.
During audit of Government Stationery & Printing Department, Peshawar for the years
2020-21 to 2022-23, it was observed that the management issued tender notice in January 2022 for
purchase of 14 stationery items. The comparative statement was prepared on 17.01.2022 but the
procurement was scraped without any logical reasons and the requirement was retendered in
February 2022 after preparation of CST the procurement was again dropped. As a result of 3rd
tender inquiry the orders were placed on the successful bidders. A comparison of rates received as
a result of 1st and 2nd tendering and rates at which the orders were placed showed a loss of Rs
16.689 million to the formation due to purchase of store at higher rate.
Position showed weak internal controls in procurement matters.
Audit is of the view that as a result of 1st tendering the reasonable rates were received,
however, the management did not finalize the case rather scraped it without recording any reasons
and orders were placed on the rates received as a result of 3rd tender. The increase in rate is general
phenomenon of the market, had the management finalized deal at rates received as a result of 1st
tender the loss of Rs 16.689 million could have been avoided.
52
Audit recommends to investigate the reasons due to which the orders could not be placed
timely which caused loss to the formation besides fixing responsibility thereof and made the loss
god by effecting recovery from the person(s) held responsible.
Para- 13 (GP & SD – 2020-23)
53
Chapter-2
SPORTS, CULTURE, TOURISM ARCHAEOLOGY AND MUSEUM
DEPARTMENT
Introduction
The Tourism, Culture, Archeology & Museum Department is mandated to administer the
operations and development of the following. Promotion and development of culture preservation
and conservation of archaeological sites tourism sector enablement and tourism value chains to
attract national and international tourists.
This Department have the following attached Formations/Directorates:
1. Culture & Tourism Authority Khyber Pakhtunkhwa.
2. Directorate of Archeology & Museums, Khyber Pakhtunkhwa
3. Directorate of Tourist Services Khyber Pakhtunkhwa
4. Directorate of Culture Khyber Pakhtunkhwa Peshawar
5. Galiyat Development Authority
6 Kaghan Development Authority

(Rs in million)
(Excess)
TCKP Expenditure 202.39 202.39 -

(Rs in million)
Excess/
(Shortfall)
TCKP Revenue 94.81 83.56 (11.25)
Audit Profile of “TCKP”

(Rs in million)
2022-23
1 Formations 1 1 202.39 83.56
54
etc.(excluding FAP)
(FAP)
2.1 Tourism Corporation Khyber Pakhtunkhwa

2.1.1 Introduction
Tourism Corporation Khyber Pakhtunkhwa (TCKP) was established by the Government of Khyber
Pakhtunkhwa in December, 1991 as a Public Limited Company under the Companies Ordinance 1984. All
the shares of the Corporation are held by the Khyber Pakhtunkhwa Department of Culture and Tourism.
Currently the company is managing rest houses, recreational parks and various tourist information centers
in Khyber Pakhtunkhwa. Its major source of income was lease rent and profit from investments. Main
objective of the Tourism Corporation are to:
 Promote and develop industry in Pakistan in general and in Khyber Pakhtunkhwa in particular and
to carry on the business connected with tourism in Khyber Pakhtunkhwa;
 Arrange and provide all facilities, incentives, services, assistance, encouragements, concessions,
recreations and amusements to tourists;
 Acquire, design, establish, construct and run hotels, restaurants, refreshment rooms, rest houses,
camping sites, facilities for ice skating, hunting lodges, clubs amusements parks, aquariums,
holiday resorts and places of interest and entertainments of all kinds to tourists;
 Develop land and construct or acquire temporary or permanent buildings, accommodations and
other structures including roads, tank channels as well.

The management failed to provide annual audited accounts of the Corporation for the years
2017-18 to 2022-23 till finalization of this report despite repeated requests.
2020-21 18 - - 4.2.4.1 to 4.2.4.18 0
2017-18 4 - - 4.1.4.1 to 4.1.4.4 0
2016-17 13 - - 4.1.4.1 to 4.1.4.13 0
2015-16 2 - - 4.1.4.1 to 4.1.4.2 0
2014-15 6 - - 4.1.4.1 to 4.1.4.6 0
2013-14 6 - - 4.1.4.1 to 4.1.4.6 0
2012-13 7 - - 4.1.4.1 to 4.1.4.7 0
2011-12 1 - - 4.1.4.1 0
2010-11 5 - - 6.3.1 to 6.3.5 0
55
STC
2.1.4 Audit Impact
current audit of TCKP. Summary of the audit observations classified by its nature is given as under:
56
(Rs in million)
3 Irregularities
4 Value for money and services delivery issues -
5 Recovery -
6 Others 1,128.78
2.1.6 AUDIT PARAS

2.1.6.1 Non-adhering to government orders for liquidation of corporation and shifting of TCKP assets &
liabilities to KP-CTA – Rs 995.08 million
According to Khyber Pakhtunkhwa Tourism Act, 2019 Chapter-III, Section-8 (i) “the
Authority shall take over the administrative, financial and regulatory control of all the activities,
offices, projects, centers etc. of the Corporation, Directorates and Institute in the prescribed
manner”. The Act further clarifies under Section – 3 “all action required for giving effect to the
provision of this Act. including administrative and financial transition shall be completed within
one year of the commence of this Act”. The TCKP Board in its 22 nd meeting held on 24-06-2020
appointed to the Bank of Khyber as liquidator of the Company, who was responsible to submit its
liquidation report to the ACS Committee. As per Section – 387 (5) of the Companies Ordinance
1984 (now Companies Act. 2017) “the winding up proceedings shall be completed by the
liquidator within a period of one year”.
During audit of Tourism Corporation, Khyber Pakhtunkhwa (TCKP) Peshawar for the
years 2020-21 & 2021-22, it was observed that the KP Government vide notification dated 08-10-
2019 passed a Tourism Act. 2019 and KP Tourism & Culture Authority was established.
According to said Act the authority shall take over the administrative, financial and regulatory
control of all the activities, offices, projects, centers, directorates and institutes etc. of the TCKP
in prescribed manner. As the corporation was established as public limited company under the
Companies Ordinance, 1984, thus, the TCKP Board in 22nd meeting appointed the BoK as
liquidator of the company. According to Companies Act. the liquidation process needs to be
completed within one year. The record revealed that the management didn’t follow the procedure
of liquidation and winding up of Company as required under Companies Ordinance/Act. The
Company was merged with the Tourism & Culture Authority without completing the liquidation
process. The assets & liabilities of the Corporation were transferred without having any fair value,
as the annual accounts of 2016 to 2021 were not compiled. As per provisional/draft accounts an
amount of Rs 995.08 million was appearing as bank balance as on 30-6-2020, however, in the
57
absence of final accounts and completion of liquidation process the transfer of assets and liabilities
including bank balances is termed as irregular.
Audit is of the view that the TCKP management as well as BOD failed to comply with the
aforementioned orders of the Govt. and handing over all assets & liabilities of TCKP to KP-CTA
were without evaluating company’s assets & liabilities by independent Chartered Account Firm
and not following legal liquidation / winding up process as per Govt. rules / orders. This action
raised question about transparency/ neatness of all these shifting and held irregular in audit.
dated October 24, 2023 followed by reminders dated November 29, 2023 & January 11, 2024.
Audit recommends that departmental inquiry may be initiated to investigate the reasons for
non-completion of liquidation process till date and handing over Corporation’s assets and shifting
of its employees to KP-CTA in violation of Govt. orders besides fixing responsibility on person(s)
at fault.
Para- 4 (TCKP – 2020-22)
2.1.6.2 Irregular expenditure after winding up of Corporation - Rs 114.75 million
According to Khyber Pakhtunkhwa Tourism Act, 2019 Chapter-III, Section-8 (i) “the
Authority shall take over the administrative, financial and regulatory control of all the activities,
offices, projects, centers etc. of the Corporation, Directorates and Institute in the prescribed
manner”.
years 2020-21 & 2021-22, it was observed that after notification of KP-Tourism Act. 2019 the
TCKP management has transferred all its assets & liabilities to the Tourism & Culture Authority.
Thereafter, the management was required to cease all the activities of the Corporation. However,
the record revealed that instead of ceasing all its activities from October 2019, the TCKP
management continued its operations till June, 2021 without any valid authority and made
expenditure of Rs 114.750 million.
Audit is of the view, that after transfer of all the assets and liabilities to the newly
established Authority, the Corporation was required to cease its activities but this was not done
and the Corporation continued to expend amount without having any lawful authority, hence, held
irregular.
58
Audit recommends that department justify the reasons for such expenses after winding up
of corporation along with investigation of violation of Govt. orders and expenditures may be
regularized by the competent authority, besides fixing responsibility on person(s) at fault.
Para-2 (TCKP – 2020-22)
59
Un-authorized retention and utilization of profit earned on ADP funds - Rs 5.25 million
According to KP Finance Department notification No. BO (RES-111) FD/2-2/2013-2014
dated 27.06.2013, No2/3- (F/L)/FD/2007-08/Vol-IX dated 10.02.2014 & No2/3- (F/L)/FD/2007-
08/Vol-IX dated 02.06.2015 “the interest/ profit accrued/earned on the funds placed in commercial
banks may be deposited in Government Treasury under the given relevant head of account”. The
Finance Department further stated that “all heads of Government Departments/Autonomous/Semi-
Autonomous Bodies/Corporations are requested to ensure compliance of the above instructions of
the government and send a copy of challan profit deposited to the Finance Department for record”.
years 2020-21 & 2021-22, it was observed that the management maintained bank accounts for
placing the funds received under ADP grants for certain projects. As per available record an
amount of Rs 5.25 million was credited in said accounts on account of profit during 2020-21 &
2021-22. As per government instructions, as referred above, profit earned on these ADP Funds
was required to be deposited into government treasury, but the management failed to do so and
utilized it without the approval of the Finance Department. The act of the management regarding
utilization of profit of Rs 5.25 million is not covered under the policy/rules thus held irregular.
Audit recommends to investigate the matter at appropriate level, besides fixing
responsibility on person(s) at fault.
Para- 3 (TCKP – 2020-22)
2.1.6.3 Loss due to missing of TCKP vehicles - Rs 59.06 million

According to General Financial Rules (GFR) Chapter-VIII-Rule-159, “physical
verification of all stores must be made at least once in every year to ensure the physical existence
of the organization assets”. Rule – 23 further provides that “every government officer should
realize fully and clearly that he will be held personally responsible for any loss sustained by
government through fraud or negligence on his part and that he will also be held personally
responsible for any loss arising from fraud or negligence on the part of any officer to the extent to
which it may be shown that he contributed to the loss by his own action or negligence”.
years 2020-21 & 2021-22, the management provided handing/taking over list of physical assets
shifted to KP- Culture and Tourism Authority (KP-CTA), which includes 17 TCKP vehicles,
whereas, five (5) vehicles were not handed over to the authority. Audit demanded record of these
vehicles but the management did not provide record/proof of existence/possession of these
60
vehicles. The record pertaining to repair & maintenance of vehicles was also silent about these
five vehicles.
Audit is of the view that the above state of affairs clearly shows weak internal control
system and non-existence of proper monitoring mechanism, due to which management failed to
safeguard its assets, which resulted into loss of Rs 59.06 million (approx).
Audit recommends that an inquiry may be initiated to investigate the matters and
immediate recovery of these vehicles must be ensured with intimation to audit, besides fixing
responsibility on person(s) at fault.
Para- 6 (TCKP – 2020-22)
2.1.6.4 Non-account for income & expenditure of rest houses and camping pods in accounts
According to Memorandum & Articles of Association of TCKP (former STC) Clause-
27(b) “the business of an annual general meeting shall be to receive and consider the profit & loss
account and balance sheet, the reports of the Directors and the Auditors”. Section 93 further
provides that “the board shall cause to be kept proper books of accounts required under Section
230 of the Company’s Ordinance (now Act)”.
years 2020-21 & 2021-22, it was observed that the management failed to finalize/compile their
annual accounts from Chartered Accountants for the last seven years i.e. 2015-16 to 2021-22. The
management provided draft/provisional accounts, the scrutiny of which showed that the income
generated through leasing/renting out of 169 Rest Houses and 12 Camping Pods, situated at
different location in KP is not portrayed in draft accounts/books of accounts. The management
provided only detail of said rest houses and camping pods, while, income generated through
leasing out said rest houses and camping pods was not made available to audit. The record is also
silent with regard to expenditure made against these earnings.
Audit is of the view that the position showed doubtful activity on the part of management
and leads to concealment of facts & figures in annual accounts.
Audit recommends to investigate the reasons for concealment of income & expenditures
of rest houses & camping pods along with non-preparation and certification of annual accounts
from the chartered firm, besides fixing responsibility thereof.
61
Para- 8 (TCKP – 2020-22)
2.1.6.5 Doubtful adjustment of advance without original vouchers - Rs 9.94 million

In accordance with para-4(3) of Public Sector Corporate Governance Rules-2013, “the
Chief Executive is responsible for the management of the Public Sector Company and for its
procedures in financial and other matters, subject to the oversight and directions of the board, in
accordance with the ordinance and these rules. His responsibilities include implementation of
strategies and policies approved by the Board, making appropriate arrangements to ensure that
funds and resources are properly safeguarded and are used economically, efficiently and
effectively and in accordance with all statutory obligations”.
years 2020-21 & 2021-22, it was observed that an advance of Rs 9.940 million was paid to District
Police Officer Chitral, for deployment of police force in Shandur Polo Festival 2019. Audit
observed that the adjustment was made against simple expenditure statement from concerned
District Police Officer Chitral instead of against original bills/vouchers.
Audit is of the view that the adjustment of advance without original vouchers/bills created
doubt about the authenticity of the expenditure and was against the canons of financial propriety.
Audit recommends to investigate the matter of such doubtful advance adjustments, besides
fixing responsibility on person at fault.
Para- 18 (TCKP – 2020-22)
62
2.1.6.6 Irregular payment on account of medical reimbursement - Rs 3.76 million
According to TCKP Services Rules Chapter-V (Medical Facilities) under the heading
“Explanation”, “the corporation will arrange for medical cover through authorized medical
attendants and chemists. Cash reimbursement pertaining to the medical treatment is not allowed
except in extraordinary circumstances and on the verification of such expenses by the authorized
medical attendants”.
years 2020-21 & 2021-22, it was observed that the management paid an amount of Rs 3.759
million on account of medical reimbursement to its employees during 2020-21. The scrutiny of
medical bills showed that the bill pertains to private clinics and were without
certification/verification of authorized medical attendant.
Audit is of the view that the management was required to follow the prevailing medical
rules prior to payment and get the bills verified from the concerned Medical Officer. The payment
of Rs 3.76 million without verification of medical officer is termed as irregular.
Audit recommends to investigate the reasons of non-compliance of medical rules and the
bills may be got verified from concerned medical officer, besides fixing responsibility thereof.
Para- 20 (TCKP – 2020-22)
63
CHAPTER-3
Finance Department
Introduction
Finance Department is responsible for supervision and control of provincial finances,
preparation of provincial budget, formulation and interpretation of financial rules, civil servants
rules related to pay, allowances and pension, management of public funds, management of public
debit, banking, coordination of national and provincial finance commissions, administration of
local fund audit and treasuries.
This Department have the following attached Formations/Directorates:
1. General Provident Investment Fund

2. Pension Fund
3. Hydel Development Fund
4. Central Provident Fund
5. Retirement Benefit & Death Compensation Fund
1. Bank of Khyber
2. Local Government Fund

(Rs in million)
(Excess)
HDF Expenditure 5,426 5,426 -

(Rs in million)
Excess/
(Shortfall)
HDF Revenue 7,725.80 7,725.80 -
Audit Profile of “HDF”

(Rs in million)
2022-23
64
1 Formations 1 1 5,426.00 7,725.80
etc.(excluding FAP)
(FAP)
3.1 Hydel Development Fund (HDF), Peshawar

3.1.1 Introduction
Government of Khyber Pakhtunkhwa (KP) established Hydel Development Fund in 1992
with the initial allocation of Rs150 million. The Fund was given a legal cover through “Khyber
Pakhtunkhwa Hydel Development Fund Ordinance 2001”. The objective of this fund was to
develop Hydel Electricity in Khyber Pakhtunkhwa. The Provincial Government contributed Rs
14,553 million as equity in the fund upto June 30, 2013. Total size of the fund was Rs 23,302
million as on June 30, 2013. For the smooth management of this fund a board was constituted
under the chairmanship of Chief Minister Khyber Pakhtunkhwa, with Minister for Finance,
Minister for Irrigation and Power, Chief Secretary Khyber Pakhtunkhwa, Additional Chief
Secretary, Secretary Finance, Secretary Energy and Power and others as members of the Board.
The management failed to provide annual audited accounts for the years 1992-93 to 2022-
23 till finalization of this report despite repeated requests.
3.1.3 Compliance of PAC directives

2018-19 7 - - 2.1.4.1 to 2.1.4.7 0
2017-18 4 - - 2.1.4.1 to 2.1.4.4 0
2015-16 12 - - 2.1.4.1 to 2.1.4.12 0
2014-15 5 - - 2.1.4.1 to 2.1.4.5 0
3.1.4 Audit Impact
65
current audit of HDF. Summary of the audit observations classified by its nature is given as under:
(Rs in million)
3 Irregularities
5 Recovery -
6 Others 18,755.32
3.1.6 AUDIT PARAS

3.1.6.1 Non-implementation of decision of the provincial cabinet committee leading to financial
mismanagement - Rs 13,145.85 million
The Provincial Cabinet constituted a Cabinet Committee on Hydel Development Fund and
the committee in its meeting held on 30.12.2021 vides Para 4 (a)(b) made following
recommendations:-
“in the event, there are any excess funds in the HDF compared to the requirements for the
next five years, such excess funds be transferred to Provincial Consolidated Fund. In the event
there is a shortfall in requirements for the next five years, the HDF Board may decide that a
commensurate of the profits (proportionate to HDF’s equity participation in projects) in the coming
years be transferred to the HDF, while any excess funds above those needed to meet the aforesaid
requirement be transferred to the PCF.”
During audit of Hydel Development Fund, Peshawar for the years 2018-19 to 2022-23, it
was observed that in compliance to above said decision of the Committee no such working was
done by the management despite lapse of more than 2 years and huge amount of Rs 7.720 billion
and Rs 5.426 billion was transferred to PEDO in 2021-22 & 2022-23 respectively for hydel
activities.
Audit is of the view that the management was required to implement the decision of
Cabinet Committee prior to release of funds to PEDO. The release of funds from HDF without
implementation of Cabinet Committee Decision leads to financial mismanagement of Rs 13.145
billion.
The irregularity was reported to the management and department on January 12, 2024 but
66
DAC meeting was not convened by the PAO till finalization of report despite request dated
January 12, 2024.
Audit recommends that the matter may be investigated at appropriate level for non-
compliance to the decision of the Cabinet Committee besides fixing responsibility thereof.
Para- 1 (HDF – 2018-23)
3.1.6.2 Non-deposit of profit in provincial consolidated fund amounting to - Rs 5,481.99 million

According to Para – 3(3) of the KP-HDF Ordinance, 2001 “all profits from hydel projects
undertaken from the funds shall be deposited in the Provincial Consolidated Fund at the close of
each financial year”.
was observed that during the period from 2019-20 to 2021-22 profit amounting to Rs 5,481.99
million was earned by the PEDO from hydel projects but the profit amount could not be deposited
into Provincial Consolidated Fund. As the act of the management is clear violation of the KP-HDF
Ordinance 2001, thus, constitute irregularity on the part of management.
January 12, 2024.
Audit recommends to investigate the matter to find the reasons due to which the profit
earned on invested amount could not be deposited in treasury besides fixing responsibility
thereof. The amount of profit may be deposited in treasury without further loss of time.
Para- 2 (HDF – 2018-23)
3.1.6.3 Loss of interest income due to retention of hydel funds by PEDO Rs- 108.29 million
According to Para 23 of GFR “every government officer should realize fully and clearly
that he will be held personally responsible for any loss sustained by government through fraud or
negligence on his part and that he will also be held personally responsible for any loss arising from
fraud or negligence on the part of any other government officer to the extent to which it may be
shown that he contributed to the loss by his own action or negligence.”
During audit of Hydel Development Fund, Peshawar, it was observed that the management
of HDF released an amount of Rs 10,170 million to PEDO during the year 2021-22 for execution
of various projects. The PEDO could utilize an amount of Rs 5,863 million during the year 2021-
22 on said projects, while, the balance un-utilized amount of Rs 4,307 million was remained with
PEDO up to November 2022.
The HDF management has not framed any mechanism to monitor the released funds.
Further, there was lack of proper assessment of the financial requirements for the projects before
fund releases. The inefficiency led to the delayed surrender of funds by PEDO which is against
the norms of financial propriety standards.
67
Audit is of the view that had the un-spent balance of Rs 4,307 million remained in
investment/placed in bank @ Rs 5.5% per annum interest loss of Rs 108.284 million (Rs 1,307 X
5.5% X 116/365 days = Rs 22.85 million + Rs 3,000 X 5.5% X 189/365 days = Rs 85.44 million)
could have been avoided.
January 12, 2024.
Audit recommends to investigate the reasons due to which the amount was remained with
PEDO for an abnormal period, caused loss besides fixing responsibility thereof. Make the loss
good by effecting recovery from the concerned department.
Para- 7 (HDF – 2018-23)
3.1.6.4 Wasteful expenditure on account of rent and renovation of building - Rs 22.21 million
According to Rule-10 (i) of GFR “every public officer is expected to exercise the same
vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence
would exercise in respect of expenditure of his own money”.
During audit of Hydel Development Fund, Peshawar for the years 2018-19 to 2022-23 it
was observed that HR Committee in its 3rd meeting held on 01.03.2019 decided to hire two floors
of KP Bar Council building on rental basis to accommodate the staff to be hired in future at
monthly rent of Rs 640,000/- (Inclusive Taxes) with Advance payment of rent of each six months
for a period of three years i.e. March 31, 2019 to March 30, 2021 through an agreement dated
March 20, 2019. An amount of Rs 17.920 million was paid on account of rental charges from
March 2019 to June 2021. Further management also expended an amount of Rs 4.288 million on
renovation of Pakhtunkhwa Bar Council Building at Peshawar.
The record revealed that the management did not utilize the said premises for a single day
and was remained vacated during entire contract period. The management vide letter dated
19.05.2021 decided to cancel the rental agreement of said building.
Audit is of the view that the building was hired without assessing its requirement and
handsome amount was expended on renovation of building. As the building could not be utilized,
thus, payment of Rs 17.92 million on account of rental charges and Rs 4.288 million on account
of renovation has gone waste.
January 12, 2024.
68
Audit recommends to investigate the reasons due to which the building was hired without
any necessity and handsome amount was paid on account of rental charges and renovation besides
fixing responsibility thereof.
Para- 8 (HDF – 2018-23)
3.1.6.5 Revenue loss due to non-vigilance of management - Rs 19.19 million

According to Para 23 of GFR “every government officer should realize fully and clearly
that he will be held personally responsible for any loss sustained by government through fraud or
negligence on his part and that he will also be held personally responsible for any loss arising from
fraud or negligence on the part of any other government officer to the extent to which it may be
shown that he contributed to the loss by his own action or negligence.”
During audit of Hydel Development Fund, Peshawar for the years 2019-2023, it was
observed that the management maintained a Special Deposit Account (SDA) with Bank of Khyber.
One of the silent features of this account stipulates that "profit is calculated on daily actual deposit
basis.”. Upon reviewing the bank statements of the SDA account, it was observed that each month
the profit amount was transferred or credited into the account after a delay of six months, instead
of on monthly basis which resulted into loss of revenue as the amount of profit could not be
considered for further profit in subsequent period due to delayed posting of monthly profit. The
delay in posting of profit and non-considering the profit amount for markup resulted into loss of
Rs 19.19 million to the formation.
Audit is of the view that had the profit been credited on monthly basis instead after a gap
of six months, the profit amount would have been considered for further compound profit. Thus,
due to management’s negligence, the organization was deprived of from potential interest revenue
of Rs. 19.189 million.
January 12, 2024.
Audit recommends to investigate the matter and fix responsibility thereof. Take immediate
corrective action to ensure that profit earned is credited into account on monthly basis.
Para- 9 (HDF – 2018-23)
3.1.6.6 Irregular hiring of fund manager/manager operations - Rs 7.61 million

According to HR Policy of the KPFM vide No. 5/7(KPFM) FD 2018-19 Human Resource
(HR) Policy Vol-I dated 13.06.2019, modes of hiring in order of preference for Grade 7 and below
will be as under:
69
“Internal postings and referrals, online resume database, headhunting through recruitment
firms, career fairs, campus visits etc., media advertisements (e.g. in Newspapers) contract may be
offered and renewed up to a maximum of 2 years’ period”.
During audit of HDF for the period 2018-19 to 2022-23, it was observed that the
management appointed an accountant on contract basis in August 2006 in GPI & PF for one year
contract. Thereafter, his contract was renewed after every two years till 2018. The officer was
upgraded as manager operation in 2018 vide 98th Board meeting.
Audit is of the view that the appointment was made for one year and thereafter the officer
was retained further by upgrading the post as manager operation. As the appointment was made in
violation of the prescribed procedure as given in HR Policy, thus, appointment as well as payment
their against Rs 7.61 million is held irregular.
January 12, 2024. .
Audit recommends to investigate for non-observance of HR Policy besides fixing
responsibility thereof.
Para- 11 (HDF – 2018-23)
3.1.6.7 Loss due to fraudulent transactions - Rs 2.07 million

M/s Parker Russell-A.J.S Chartered Accountants vide its letter No. PRAJS/HDF/21-22/757
darted 21.11.2022 pointed out two fraudulent transactions vide section 5.4 of the report.
was observed that the management made two transactions with National Bank of Pakistan vide
authority letters dated 17.02.2014 and 24.03.2014. The record showed that funds of HDF
amounting to Rs 602,113 and Rs 1,629,347 were unlawfully transferred to HBL A/c No.
22727000337803 on 17.02.2014 maintained at Bhittai Colony, Karachi. The amount was
transferred by the then Assistant Fund Manager of HDF and countersigned by the then Secretary
Finance and Secretary Energy & Power Department of KP. Record showed that these authority
letters were not issued by KP Government, FIA after its investigation asked the management of
HDF to conduct a Departmental Inquiry/Forensic Audit of all investments in PIBs by the HDF and
for special audit of total investment of Rs 150 billion by the KP Finance Department in NBP. The
issue was also placed in the 15thBoD meeting wherein it was decided that a reputed firm may be
hired for conducting forensic audit. The firm M/s Parker Russell conducted forensic audit and
pointed out fraudulent transactions of Rs 2.077 million.
Audit is of the view that since November, 2022 the management took no action to proceeds
further in the matter even failed to conduct departmental inquiry as advised by the FIA. Position
70
showed that the management is not serious to recover the fraud amount from the person(s) involved
and the HDF sustained loss of Rs 2.077 million.
January 12, 2024.
Audit recommends that matter needs to be inquired at appropriated level to made the loss
good besides fixing responsibility thereof.
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AUDIT REPORT
ON
THE ACCOUNTS OF
CLIMATE CHANGE, ENVIRONMENT AND
DISASTER MANAGEMENT ORGANIZATIONS
OF GOVERNMENT OF KHYBER PAKHTUNKHWA
AUDIT YEAR 2023-24
72
CLIMATE CHANGE, ENVIRONMENT AND DISASTER MANAGEMENT
ORGANIZATIONS
Chapter - 1
Provincial Disaster Management Authority and Rescue 1122 under Relief,

Rehabilitation and Settlement Department, Government of Khyber
Pakhtunkhwa
1.1 Introduction
A. Provincial Disaster Management Authority Khyber Pakhtunkhwa
In order to alleviate the sufferings of people affected by earthquake, floods and military operations,
there was a need to establish a system of relief, reconstruction and rehabilitation for affected persons. In
this regard, an Act No. XXIV of 2010 was promulgated for establishment of National Disaster Management
Authority by the Parliament. In compliance of Section 15 of the said Act, the Provincial Government of
Khyber Pakhtunkhwa established Provincial Disaster Management Authority on 27 October, 2008 to deal
with the disaster management activities in the province. PDMA Khyber Pakhtunkhwa is mandated to
prepare and implement the disaster management policies in the Province under National Disaster
Management (Khyber Pakhtunkhwa) Act, 2012. The District Disaster Management Units (DDMUs) are
mandated for executing disaster management activities at district level.
Rescue 1122 Khyber Pakhtunkhwa
The Khyber Pakhtunkhwa Rescue 1122 was established in January 2010. Later, the Khyber
Pakhtunkhwa Emergency Rescue Service Act, 2012 was enacted as guiding legislation of the department.
After successful implementation of Emergency Offices in the major Districts of the Province, now the
expansion is being made in the merged areas of FATA. Rescue-1122 Khyber Pakhtunkhwa is mandated to
ensure the presence of rescue service in the province in an efficient and effective manner. Its function
includes to respond and carry out the relief operations for public in emergencies i.e. acts of terrorism, fire
incidents, road traffic accidents, building collapses and medical emergencies.
B. Comments on Budget & Accounts of audited formations (Variance analysis)

(Rs. in billion)
Sr. Financial
Name of formation Budget Expenditure Savings
No. Year
PDMA &DDMUs Nowshera, Charsada,
1. 2022-23 Swabi, D I Khan, Tank, Swat, Dir Upper, 15.141 13.996 1.145
Dir Lower, Shangla, Kohistan Upper,
73
Kohistan Lower at Pattan and Kohistan
Lower at Kolai Palas)
Rescue 1122 (Hqs) Khyber
2. 2022-23 1.906 1.246 0.660
Pakhtunkhwa
Total 17.047 15.242 1.805
Source: budget and expenditure statements
C. Sectoral Analysis
The Relief Rehabilitation and Settlement Department (RR&SD), Khyber Pakhtunkhwa is
mandated to formulate policies, strategies and guidelines for relief, rehabilitation and emergency activities
in the Province. The Provincial Disaster Management Authority (PDMA), Rescue 1122 service and
Directorate of Civil Defence act as implementation agencies of the Department.
The total size of Annual Development Programme (ADP) 2022-23 of Khyber Pakhtunkhwa was
Rs. 376.19billion, out of which an allocation of Rs. 4.087billion (1.09%) was kept for the development
schemes of Relief, Rehabilitation and Settlement Department (PDMA & Rescue-1122) for FY 2022-23.
There are 38 ongoing projects of Relief, Rehabilitation & Settlement Department, Khyber
Pakhtunkhwa in the provincial ADP 2022-23, out of which 30 projects pertain to Rescue-1122 and 08
belong to PDMA. Rescue-1122 projects mainly include:
i. Development expenditures on District and Tehsil Emergency Offices
ii. Feasibility Study and Expansion of Emergency rescue Services to conduct mines rescue
operations
iii. Establishment of Rescue Academy
The ADP projects related to PDMA include:
i. Revamping of PEOC & MIS Section and Development of MIS for PDMA
ii. Establishment of Camp Management Support Unit for Displaced Persons (DPs) in PDMA
iii. Establishment of Gender and Child Cell in PDMA
iv. Economic revitalization of North Waziristan compensation for business lost
An expenditure amounting to Rs. 6.814 billion was incurred on these projects by June, 2023 out of the total
approved cost of Rs. 18.453 billion. 3
Details of budget and expenditure of PDMA, Khyber Pakhtunkhwa for the financial years 2022-
23& 2021-22 is as under:
(Rs. in billion)
Sr. Financial Name of Formation Budget Expenditure Savings

No. Years
PDMA & DDMUs Khyber
1. 2022-23 15.461 14.107 1.354
Pakhtunkhwa
3
https://pndkp.gov.pk/adp/
74
PDMA & DDMUs Khyber
2. 2021-22 17.766 16.969 0.797
Pakhtunkhwa
Graphical representation of the budget and expenditure for the last two financial years is as below:
Budget and Expenditure
Budget (Rs. in billion) Expenditure (Rs. in billion)
17.766 16.969
15.461
14.107
F.Y 2022-23 F.Y 2021-22
Out of the total expenditure of PDMA, Khyber Pakhtunkhwa for the financial year 2022-23, major
expenditure of Rs. 8.974 billion was incurred on Citizen Losses Compensation Program (CLPC) for
Temporarily Displaced Persons (TDPs) of newly merged areas of Khyber Pakhtunkhwa and House
Damages during Flood 2022.
Provincial Disaster Management Authority (PDMA), Khyber Pakhtunkhwa is the lead agency
dealing with disasters and disaster planning in the province. While the Authority has achieved success in
the post disaster related activities and relief operations in the aftermath of disasters, the activities related to
mitigation and prevention measures have not been well initiated and the focus has not been on the Disaster
Risk Reduction (DRR) measures. The Provincial Disaster Management Plan had not been prepared by
PDMA which indicates that there is lack of proper ground work and planning in dealing with the future
disasters. PDMA has approved policy document i.e. Khyber Pakhtunkhwa, Provincial Disaster
Management Authority Relief Compensation Regulations 2019, which is a good steps toward streamlining
the compensation payments. However, in certain instance it was noticed that there were procedural lapses
and lack of documentation while making the compensation payments.
Similarly, PDMA was not able to fully make use of Disaster Management Information System
(DMIS) designed to enhance PDMA's core functions, including Warehouse Management, maintenance of
records of food and non-food items in both the main warehouse and district warehouses. DDMUs did not
enter record of receipt and distribution of Food Items / Non Food Items on DMIS.
During audit of donor assistance of flood 2022, it was noticed by the audit team that District
Disaster Management Units (DDMUs) lacked proper warehousing facilities. The relief items stock was
found stored in government offices / education buildings and rented rooms. Critical deficiencies were
consistently observed during the visit of these storage locations which includes disorganized stacking,
75
insufficient pallet utilization, inadequate air circulation, structural instability, roof leakage, and rat
infestations. In times of disaster, the availability of both permanent and temporary warehouses plays a
critical role in ensuring the swift and effective delivery of relief items to affected areas. These warehouses
serve as logistical hubs, facilitating the storage, organization, and distribution of essential supplies that are
vital for the survival and recovery of disaster-stricken communities.The DDMUs are required to look into
this matter and take necessary measures.
The detail of budget and expenditure of Rescue-1122, Khyber Pakhtunkhwa for the financial years
2022-23 and 2021-22 is as under:
(Rs. in billion)
Sr. Financial
Name of formation Budget Expenditure Savings
No. Years
1. 2022-23 Rescue 1122 (HQ) & DEOs 4.345 4.335 0.010
2. 2021-22 Rescue 1122 (HQ) & DEOs 5.902 5.486 0.416
Graphical representation of the budget and expenditure for the last two financial years is as under:
Rescue-1122
Budget and Expenditure
Budget (Rs. in billion) Expenditure (Rs. in billion)
5.902
5.486
4.345 4.335
FY 2022-23 FY 2021-22
A review of Rescue-1122 expenditure for the financial year 2022-23 indicates that an expenditure
amounting to Rs. 3,919.43 million was incurred on establishment, expansion and operationalization of
District Emergency Offices, while expenditure amounting to Rs. 415.92 million was expended on patient
referral ambulance service.
The Khyber Pakhtunkhwa Emergency Rescue Service (Rescue 1122) has played a key role in
providing rescue services in the province since inception. Emergency Rescue Service (Rescue 1122)
Khyber Pakhtunkhwa took following major steps during the financial year 2022-23:
i. Rescue 1122 service was fully operationalized in all districts of Khyber Pakhtunkhwa.
ii. Eight (08) Rescue 1122 stations were established at tourist spots for provision of
emergency and rescue services.
76
iii. Expansion of Rescue-1122 stations to Tehsil level in Khyber Pakhtunkhwa including
merged areas was under process and target of expansion in major tehsils was achieved.
However, certain measures are still required to be taken to achieve full benefits of the Service. To
point out a few, the Emergency Service Academy has not been established so far resulting in lack of training
and non-enhancement of skills and professional expertise of the staff. Similarly, Rescue 1122 has not
established Emergency Rescue Service Fund for dealing with emergency operations and staff welfare as
required under Khyber Pakhtunkhwa Emergency Service Act 2012.
Data related to rescue operations carried out by Rescue Service 1122, Khyber Pakhtunkhwa since
inception in 2010 to date i.e. 2023 is as under:
Drowning, 3,422 Others, 13,406 Road accidents,

166,842
Medical
Patient rescued, emergencies,
965,230 688,708
Building Fire Emergencies,

collapse, 1,603 27,824
Table I: Audit profile of Relief, Rehabilitation & Settlement Department, Government of Khyber
Pakhtunkhwa.
(Rs. in billion)
Sr. Description Total Nos. Audited Expenditure Revenue/

No. audited FY Receipts
2022-23 audited FY
2022-23
1. Formations 74(main entities 14(including 15.242 Nil
and regional PDMA (Hqs),
/district offices) 12DDMUsand
Rescue-1122
(Hqs) where
major
expenditure was
incurred)
77
2.  Assignment 1 1 Nil Nil
Account
 SDAs Nil -
 Fund A/c 1 1
(excluding
FAP)
3. Authorities 2 2 Nil Nil
/Autonomous
bodies etc.
under the PAO
4. Foreign Aided 1 1 0.372 Nil
project (FAP)
USAID Funded
1.2 Classified Summary of Audit Observations
Audit observations amounting to Rs. 2,772.469million have been raised pertaining to

“Rescue-1122 (Hqs), PDMA and DDMUs Nowshera, Charsada, Swabi, D I Khan, Tank, Swat,
Dir Upper, Dir Lower, Shangla, Kohistan Upper, Kohistan Lower at Pattan and Kohistan Lower
at Kolai Palas).Recovery of Rs. 359.167 million has been pointed out in the audit observations.
Summary of the audit observations classified by nature is as under:
Table II: Overview of Audit Observations
(Rs. in million)
Sr. Classification Amount

No
1. Irregularities 1,951.692
A HR/ Internal Control Weaknesses 1,844.942
B Procurement 106.750
2. Financial Management 664.124
3. Public Service Delivery / Performance 156.653
1.3 Brief Comments on the Status of Compliance with PAC Decision

The Directorate General Audit (CC&E) started auditing and reporting Relief and Rehabilitation
Department of Khyber Pakhtunkhwa since financial year 2016-17. No Audit Report has been discussed in
PAC meeting so far.
78
1.4 AUDIT PARAS
HR / Internal Control Weaknesses
1.4.1 Payment of monthly allowances to alternate recipients instead of actual TDPs – Rs.
772.840 million
According to Para 23 of General Financial Rules (GFR) Vol-I, every Government officer should
realize fully and clearly that he would be held personally responsible for any loss sustained by Government
through fraud or negligence on his part and that he will also be held personally responsible for any loss
arising from fraud or negligence on the part of any other Government officer to the extent to which it may
be shown that he contributed to the loss by his own action or negligence.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa (Complex Emergency

Wing) disbursed Monthly Subsistence Allowance (MSA) and Monthly Ration Allowance (MRA) at the
rate of Rs. 12,000 and Rs. 8,000 per month respectively to the Temporary Displaced Persons (TDPs).
During audit of PDMA Khyber Pakhtunkhwa for the financial year 2022-23, it was observed that
payment amounting to Rs. 772.840 million was made to alternate recipients in place of actual TDPs.
Moreover, it was also observed that there was no documentary evidence justifying the practice. Details are
as under:
Origin of TDPs
Total No. Rate Total
Allowance Returned of per Amount
Type from Khost/ District District Alternate month disbursed
Khyber NWA recipients (Rs.) (Rs.)
Afghanistan
1 2 3 4 5 (2+3+4) 6 7 (5x6)
Monthly
Ration 12921 61 25660 38642 8,000 309,136,000
Allowance
Monthly
Subsistence 12921 00 28173 41094 12,000 463,704,000
Allowance
Grand Total 25842 61 53833 79736 -- 772,840,000
Audit held that payment to alternate recipients without approved policy and mechanism was not
justified and may result in inadmissible payments.
Initial audit observation was issued on 09.08.2023. The management replied that monthly
allowances for TDPs are disbursed through cellular companies, ensuring transparency via biometric
verification. However, issues such as fingerprint challenges for elderly individuals, those residing abroad,
or deceased/disabled persons prompted the formulation of a policy to address these challenges/issues. This
79
policy, endorsed by the then Additional Chief Secretary (Ex FATA), allows for payments to alternate
beneficiaries in place of the primary recipients. All payments to alternate beneficiaries are duly verified by
relevant tribal leaders and district administration, adhering to the established policy. Further, a deadline
until 30th December 2023 has been set, in collaboration with TDP Secretariat/11 Corp, for 3600 families to
submit revised alternate beneficiaries (wife, son, daughter) along with a Family Registration Certificate
(FRC). Failure to comply will result in the cessation of allowances by PDMA.
The Departmental Accounts Committee (DAC) meeting was held on 20&21.12.2023. The forum
decided to discuss the matter in next DAC meeting after implementation of policy of revised alternative
recipients.
Audit recommends implementation of DAC decision.
(Para No.6 of AIR 2022-23 PDMA, Khyber Pakhtunkhwa)
1.4.2 Unverifiable expenditure without supporting documents and distribution of relief

items without maintenance of necessary record – Rs. 153.169 million
According to Para. 4.5.3 of Accounting Polices and Procedural Manual, each claim should be
accompanied by all necessary supporting documentation.
Further, according to Deputy Commissioner Nowshera letter No. 9922-
26/Flood/PS/DC/NSR/2022 dated 26.08.2022, the tehsildar concerned shall be responsible to collect food
and non-food items from office of the ADC (R&HR) and shall maintain proper record against each affected
individual. Furthermore, Deputy Commissioner Office also constituted the village committees for
distribution of relief items. The village committees were required to submit the detail of beneficiaries within
two (02) days.
District Disaster Management Units (DDMU) in Khyber Pakhtunkhwa made various payments
amounting to Rs. 153.169 million. Moreover, the DDMUs also distributed relief items among the flood
affectees 2022. Details are as under:
(Rs. in million)
Sr.
Name of DDMU Amount Particulars
No.
Purchase of food and non-food items
1. Nowshera 140.546
(Annexure-II-a)
2. Kohistan Upper at Dassu 3.216 Compensation and miscellaneous expenditure
3. Tank 3.622 Transportation of food and non-food items
Transportation for Claim Assessment Committee
4. Tank 2.990
visits
5. Tank 2.00 M/s Eminent Technologies
6. Charsadda 0.795 Various cheques
7. Dir Upper - Distribution of relief items to the affectees
8. Kohistan Upper at Dassu - Distribution of relief items to the affectees
9. Kohistan Lower at Pattan - Distribution of relief items to the affectees
Total 153.169 ---
80
During audit of DDMUs Nowshera, Dassu, Tank, Charsadda, Dir Upper, Kohistan Upper and
Kohistan Lower at Pattan for the financial year 2022-23, it was observed as under:
i. The vouchers and necessary supporting documents in support of payments made was not
available on record.
ii. Management of DDMUs Nowshera, Dir Upper, Kohistan Upper at Dassu and Pattan
handed over relief items (food & non-food item) in bulk quantities to the field revenue staff
- Patwaries and Village Committees for distribution among the affectees. (Annexure-II-b
& Annexure-II-c) However, record of subsequent distribution to flood affectees such as
detail of beneficiaries, date and place of distribution, acquaintance roll etc. was not
available.
Audit held that in-absence of proper record, the expenditure incurred and distribution of relief items
could not be authenticated.
The observation was issued to the respective DDMUs during August-October 2023, however no
response was received.
The PAO was requested to convene DAC meeting vide letters dated 14.09.2023, 06.10.2023 and
17.11.2023. However, the meeting was not convened by the PAO till finalization of this report.
Audit recommends that proper mechanism may be devised by the PDMA and DDMAs for receipt
and distribution of relief items and supporting record may be maintained by the relief agencies upto the
level of end user for audit scrutiny.
(Para No. 06, 04, 7&11, 08, 04, 09 and 5 of AIR 2022-23 of DDMU Nowshera, Dassu, Tank, Charsadda, Dir Upper,
Kohistan Upper and Kohistan Lower at Pattan)
1.4.3 Irregular cash drawl of public funds – Rs. 39.113 million

According to Finance Department, Government of Khyber Pakhtunkhwa letter No.BO (W&M)/6-
5/2019-20 dated 19.02.2020, in order to streamline the management in public account and observe fiscal
discipline, it was decided to stop forthwith all payments through open cheques or cash payments.
Further, according to Para 2.3.2.8 of Accounting Policies & Procedures Manual, to minimize the
risk of fraud and corruption, payments shall be made through direct bank transfer and cheques.
District Disaster Management Units (DDMUs) in Khyber Pakhtunkhwa made various payments
amounting to Rs. 39.113 million through cash/bearer cheques during the financial year 2022-23. Details
are as under:
(Rs. in million)
Sr. No. Name of DDMU Amount

1. Dir Lower 13.606
2. Nowshera 12.995
3. Shangla 3.481
4. Tank 3.412
5. Dir Upper 3.082
81
6. D.I. Khan 1.748
7. Swabi 0.789
Total 39.113
During the audit of DDMU Dir Lower, Nowshera, Shangla, Tank, Dir Upper, D.I. Khan and Swabi
for the financial year 2022-23, it was revealed from the bank statements that management had withdrawn
amount and made payment in cash amounting to Rs. 39.113 million instead of payment through cross
cheques.
Audit held that cash withdrawal was violation of the instructions of Finance Department
Government of Khyber Pakhtunkhwa and chances of misuse of the amount could not be ruled out.
Audit recommends that non-adherence to the instructions of Finance Department and irregular cash
drawl of government money may be inquired to fix responsibility on the persons at fault.
(Para No. 02, 10, 03, 09, 01, 06 and 03 of AIR 2022-23 DDMU Dir Lower, Nowshera, Shangla, Tank, Dir Upper,
D.I. Khan and Swabi)
1.4.4 Irregular compensation payments on accounts of damaged houses – Rs. 21.160

million
According to Para 8(1)(b) of Khyber Pakhtunkhwa, Provincial Disaster Management Authority
Relief Compensation Regulations 2019, the compensation cases shall be initiated by the Revenue field staff
or halqa patwari or moharrir, as the case may be, by submitting report along with mandatory documents.
District Disaster Management Unit (DDMU) Kohistan Upper paid an amount of Rs. 21.160 million
on account of compensation of 93 fully/partially damaged houses during the financial year 2022-23.
During the audit of District Disaster Management Unit (DDMU) Kohistan Upper for the financial
year 2022-23, it was observed as under:
i. There was no disaster/calamity/incident report available on record with essential
information such as the nature, date, and the extent of damages in the affected areas.
ii. In all compensation cases, there were no reports of field revenue staff showing the details
about the nature and date of the disaster/calamity/incidents. As such, the initiation of
compensation cases without the report of Revenue field staff was irregular.
iii. Certificates of ownership lacked necessary details and affixation of official stamps.
(Annexure-III-a).
iv. There was limited photograph evidence available with DDMUs to accurately assess the
extent of damage. (Annexure-III-b)
82
v. Multiple compensation claims were assessed and paid on the same photograph which was
not justified and raised concerns about assessment process. (Annexure-III-c).
vi. Cases of multiple payments within a family were also observed. For instance, eight cheques
were issued within a family i.e. a father and seven sons. Further, the attached photographic
evidence with the respective compensation claims did not indicate the presence of distinct
houses for each applicant, raising doubts about the legitimacy of these claims. (Annexure-
III-d).
vii. There were some cases which were processed without pictorial evidences.
viii. The assessment form, in all the cases, was found without the official seal of the members
of claim assessment committee.
Audit held that payment of compensation without disaster incident reports and lack of evidences
was unjustified and the authenticity of assessment and payment of compensation could not be verified.
The observation was issued to the management on 06.10.2023, however no response was received.
Audit recommends that the management may look into the matter and take necessary corrective
measures. Besides, in future, all claims may be processed and paid strictly as per the approved regulations
and specified procedures.
(Para No. 7 of AIR 2022-23 DDMA Kohistan Upper)
1.4.5 Missing stocks of already held relief items and non-availability of record of
distribution of fresh relief items
According to Rule 148 of General Financial Rules (GFR) Vol-I, all materials received should be
examined, counted, measured or weighed as the case may be, when delivery is taken, and they should be
taken in charge by a responsible Government officer who should see that the quantities are correct and their
quality good, and record a certificate to that effect. The officer receiving the stores should also be required
to give a certificate that he has actually received the materials and recorded them in the appropriate stock
register.
District Disaster Management Unit (DDMU) Charsadda reported the status of old stock to PDMA
vide letter dated 21.02.2022 and provided details of quantities of items like tents, blankets, buckets, jackets,
mosquito nets, water tanks, and gallons held with the DDMA. (Annexure-IV)
During the audit of DDMU Charsadda for the financial year 2022-23, it was observed as under:
i. The whereabouts of the old stock reported to PDMA was not available and the items were
not depicted in the stock register.
ii. Relief items received by DDMU in July 2022 were claimed to be issued to various
locations. However, essential records such as demand, district administration's order for
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dispatch, acknowledgment, acquittance rolls and proof of receipt of the items by the
affectees were not available.
Audit held that unknown whereabouts of the old stock of relief items and absence of distribution
of new stock of relief items was lapse on the part of management. Further, chances of mismanagement of
relief items could not be ruled out.
Audit recommends that unknown whereabouts of the costly relief items and absence of distribution
record may be inquired to fix responsibility.
(Para No. 5 of AIR 2022-23 DDMU Charsadda)
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1.4.6 Unverifiable expenditure incurred without observance of codal formalities – Rs.
12.997 million
According to Rule 178 of General Financial Rules (GFR) Vol-I, except in cases covered by any
special rules or orders of Government, no work should be commenced or liability incurred in connection
with it until i. administrative approval has been obtained ii. sanction has been obtained iii. a properly
detailed design and estimate has been sanctioned, and iv. funds to cover the charge during the year have
been provided by competent authority.
District Disaster Management Unit (DDMU) Nowshera made payment amounting to Rs. 12.997
million to the contractor M/s Jamal Shah & Co vide cheque No. 48112682 dated 28.04.2023 during the
financial year 2022-23.
During the audit of DDMU Nowshera for the financial year 2022-23, it was observed that DDMU
Nowshera released funds amounting to Rs. 3.00 million to TMA Nowshera for works related to flood 2022.
DDMU requested TMA Nowshera to provide vouched accounts. In response TMA provided vouched
accounts for Rs. 12.997 million. Audit observed as under:
i. Incurrence of expenditure amounting to Rs. 12.997 million against the funds Rs. 3.00
million and creation of liability amounting to Rs. 9.997 million without approval of the
competent authority was unjustified.
ii. Detailed design, engineering estimate, administrative approval, and technical sanction duly
approved by the competent authority were not available.
iii. TMA awarded work through quotations. Moreover, the quotation call letter and the
quotations did not contained detailed description of work required to be carried out i.e.
name of work, location, estimated quantity/ measurement, time required to complete the
work etc.
iv. The contractor submitted bills / vouchers without mentioning any detail of work carried
out.
v. The Measurement Book (MBs) for the work duly certified by the technical branch of TMA
along with pre/post pictorial evidence and GPS coordinates were not available to
authenticate the work.
Audit held that payment without observing codal formalities in violation of rules resulted into
irregular payment.
Audit recommends that an inquiry may be conducted to probe the facts and action be taken against
the responsible for making payment in violation of rules and regulations.
(Para No. 12 of AIR 2022-23 DDMU Nowshera)
1.4.7 Non-fixing of responsibility for negligence resulting in loss to Government – Rs.

140.00 million
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According to Finance Department, Government of Khyber Pakhtunkhwa letter No. BO
IX/FD/1-1/Relief-2021-22 dated 18.05.2022, the administrative department was required to fix
responsibility against the concerned officers / officials for delay in submission of Civil Petition for
Leave to Appeal (CPLA) in Supreme Court of Pakistan resulting a huge loss of Rs. 140.00 million
to government exchequer.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa released an
amount of Rs. 139.291 million vide cheque No. 064370 dated 08.11.2022 to Deputy Commissioner
Nowshera for onward payment to the plaintiff.
During audit of the PDMA Khyber Pakhtunkhwa for the financial year 2022-23, it was
observed that despite clear orders by the Finance Department, the administrative department did
not take necessary action to fix responsibility against the concerned officers / officials for delay in
submission of CPLA in Supreme Court of Pakistan till date of audit i.e. August, 2023.
Audit held that inaction on the part of the Relief and Rehabilitation Department resulted in non-
fixing of the responsibility for the lapse which had led to loss of Rs. 140.000 million.
Initial audit observation was issued on 09.08.2023. The management replied that the delay in filing
the CPLA was result of prolonged correspondence among different government tiers. After receiving the
Peshawar High Court's order dated 06.09.2019 on 24.10.2019, PDMA forwarded it to the Law Department
for review by the Scrutiny Committee. The committee deemed it suitable for CPLA on 05.11.2019,
providing PDMA only one day to submit the CPLA. Despite filing the CPLA with a delay condemnation
application, the Supreme Court of Pakistan did not grant the request and CPLA was dismissed being time
barred by 17 days.
The reply was not acceptable because PDMA had not obtained the copies of Court order in time.
There was a major delay of 48-day by PDMA, which resulted in delayed correspondence. As a result, the
CPLA could not be filed in time and was dismissed by the Supreme Court of Pakistan being time barred
causing a substantial loss of Rs. 140.00 million to the government exchequer.
The Departmental Accounts Committee (DAC) meeting was held on 20&21.12.2023. The DAC
directed the administrative department to conduct a fact-finding inquiry and its outcome be shared with
audit authorities.
1.4.8 Non-conducting of inquiry for the negligence resulting in loss to Government
exchequer – Rs. 3.900 million
According to Relief, Rehabilitation & Settlement Department letter No. SO(Lit)/RR&SD/2-
14/2021-Said Rehman (CPLA)/248 dated 07.10.2021, the Commissioner Malakand Division Swat was
requested to nominate an inquiry officer to conduct a fact-finding inquiry against the delinquent officer /
officials on becoming the case titled “M/s Said Rehaman etc. versus Government of Khyber Pakhtunkhwa”
as time barred.
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District Disaster Management Unit (DDMU) Shangla paid Rs. 3.900 million to the thirty nine (39)
decree holders / petitioners @ Rs. 100,000 each in a case titled “M/s Said Rehman etc. versus Government
of Khyber Pakhtunkhwa” during the financial year 2.022-23.
During the audit of District Disaster Management Unit (DDMU) Shangla for the financial year
2022-23, it was observed that management did not conducted any fact-finding inquiry against the delinquent
officer / officials on fault due to which the case titled “M/s Said Rehaman etc. versus Government of Khyber
Pakhtunkhwa” became time barred.
Audit held that payment was made due to negligence of management and non-initiation of fact
finding inquiry was also lapse on the part of administrative department.
Audit recommends that fact-finding inquiry may be carried out and outcome may be shared with
audit authorities.
(Para No. 5 of AIR 2022-23 DDMU Shangla)
1.4.9 Missing relief items and non-maintenance of record of distribution
examined, counted, measured or weighed as the case may be, when delivery is taken, and they should be
taken in charge by a responsible Government officer who should see that the quantities are correct and their
quality good, and record a certificate to that effect. The officer receiving the stores should also be required
to give a certificate that he has actually received the materials and recorded them in the appropriate stock
register.
Further, according to Para 23, every Government officer should realize fully and clearly that he
would be held personally responsible for any loss sustained by Government through fraud or negligence on
his part.
Provincial Disaster Management Authority (PDMA) Punjab dispatched various relief items which
included 2000 tents, 7500 food packages and 6000 bags of atta (20-kg) to the District Disaster Management
Unit (DDMU) Dera Ismail Khan.
During the audit of DDMU Dera Ismail Khan for the financial year 2022-23 it was observed as
under:
i. DDMU provided an incomplete and unsigned list regarding receipt of relief items which
indicated less receipt of relief items. Details are as under:
Quantity dispatched by Qty. received by
Sr. No. Item Less receipt
PDMA DDMU
1. Tents 2,000 1,000 1,000
2. Food packages 7,500 2,500 5,000
3. Atta (20-kg) 6,000 2,500 3,500
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ii. There was no supporting record to confirm the actual receipt of items from PDMA i.e.
acknowledgments /goods receipt notes, inspection reports, transportation details and stock
register.
iii. Subsequent distribution record of relief items among the affectees was also not available
to authenticate the distribution.
Audit held that less receipt relief items and absence of proper record of receipt and subsequent
distribution was serious lapse on the part of management. Resultantly, chances of misuse of relief items
could not be ruled out.
Audit recommends that whereabouts of relief items may be probed into besides fixation of
responsibility for non-maintenance of receipt and distribution record of relief items.
(Para No. 12 of AIR 2022-23 DDMU Dera Ismail Khan)
1.4.10 Non-maintenance of record and non-reporting of relief items through Disaster

Management Information System (DMIS)
According to Provincial Disaster Management Authority (PDMA) Notification No.
PDMA/KP/A&F/PEOC/1-2/2022-23 dated 15.03.2023, all the Addl: Deputy Commissioners (Relief &
HR) /DDMO in respective districts of Khyber Pakhtunkhwa were nominated as focal persons for carrying
out the tasks related to Disaster Management Information System (DMIS) which included verification of
damaged items, ensure entry of Food Items (FI) / Non Food Items (NFI’s) provided by donors, and maintain
& monitor stockpiles of relief items.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa in collaboration with
International Rescue Committee (IRC) developed DMIS with the intention to enhance PDMA's core
functions, including warehouse management. This system was designed to aid District Administration in
providing food and non-food items, while also maintaining records of these items in both the main
warehouses and district warehouses.
During the audit of District Disaster Management Unit (DDMU) Kolai Palas, Shangla, Dir Upper,
Dir Lower, Swat, Tank, Swabi, Charsadda, Nowshera and D.I. Khan for the financial year 2022-23, it was
observed that activities related to DMIS were not carried out in the respective DDMUs.
Audit held that non recording of FI / NFIs in DMIS was lapse on the part of management of
DDMUs which resulting into non-implementation of instructions and failure to meet the objectives of
DMIS.
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Audit recommends that necessary corrective measures may be taken to ensure effective utilization
of the DMIS and successful achievement of its objectives.
(Para No. 06, 09, 07, 07, 04, 16, 07, 11, 22 and 16 of AIR 2022-23 DDMU Kolai Palas, Shangla, Dir Upper, Dir
Lower, Swat, Tank, Swabi, Charsadda, Nowshera and D.I. Khan)
1.4.11 Unverifiable distribution of relief items by DDMU Kohistan Lower

According to National Disaster Management Authority (NDMA) guidelines on stocking,
maintenance and supply of relief & rescue items, 2(a), relief items mean items distributed in emergency
situation caused by any disaster providing immediate relief for basic needs of human beings to affectees.
These can be food and non-food or both such as tents, blankets, rice, wheat flour etc.
District Disaster Management Unit (DDMU) Kohistan Lower at Pattan received 6,141 blankets
from NDMA in addition to 873 blankets, and 598 quilts from PDMA.
During the audit of DDMU Kohistan Lower at Pattan for the financial year 2022-23, it was
observed that the DDMU had shown distributed 5,261 blankets among various Chairmen Village Council,
although there was no declaration of disaster or emergency in place. Moreover, neither acknowledgment
from the respective chairmen was available on record, nor any record of distribution of blankets among the
affectees like names and details of beneficiaries, acquaintance rolls and proof the receiving of the items
was available. (Annexure-V)
Audit held that distribution of relief items without any notified disaster / emergency and in the
absence of record authenticating the receipt of items by the affectees was unjustified resulting in
unverifiable distribution of relief items.
Audit recommends that distribution of relief items without disaster/emergency may be inquired to
fix responsibility on the persons at fault beside corrective measures may be taken to avoid occurrence of
such events in future.
(Para No. 4 of AIR 2022-23 DDMU Kohistan Lower at Pattan)
1.4.12 Non-maintenance of inventory and record of donations provided by charity

organizations for flood relief 2022
According to PSO to Chief Secretary, Government of Khyber Pakhtunkhwa Notification No.
PSO/CS/KP/ Floods/2022 dated 28.08.2022, collection through major charity organization shall be routed
through district administration to ensure optimal distribution. An inventory shall be maintained by Deputy
Commissioners concerned to ensure all affected area are covered.
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Various national and international charity organizations (NGOs/INGOs) distributed relief items
(food & non-food items) including cash grants to the flood affectees of 2022.
During the audit DDMUs Dassu, Pattan, Dir Upper, Dir Lower, Swat, Charsadda, Nowshera and
Dera Ismail Khan for the financial year 2022-23, it was observed that despite clear instructions issued by
the Government of Khyber Pakhtunkhwa, no record of donations provided by national and international
charity organizations was maintained. For instance, the details of relief items and cash grant distributed by
various charity organizations in one DDMU i.e. District D.I. Khan is at Annexure-VI.
Audit held that due to non-maintenance of record/inventory, optimal utilization of donations in all
the affected areas could not be ascertained.
Audit recommends that corrective measures may be taken to maintain necessary record to ensure
fair distribution of donations among the affectees.
(Para No. 11, 9, 9, 8, 5, 2, 2 and 11 of AIR 2022-23 DDMU Dassu, Pattan, Dir Upper, Dir Lower, Swat, Charsadda,
Nowshera and D.I. Khan)
1.4.13 Unverifiable receipt and issuance of relief items by DDMU Nowshera during flood
relief 2022
examined, counted, measured or weighed as the case may be, when the delivery is taken, and they should
be taken in charge by a responsible Government officer who should also see that the quantities are correct
and their quality is good, and record a certificate to that effect. The officer receiving the stores should record
them in the appropriate stock register.”
District Disaster Management Unit (DDMU) Nowshera received a large quantity of relief items
from PDMA during the financial year 2022-23 for onward distribution among the flood affectees. Further,
an adequate quantity of relief items was also available in stock as on 30.06.2023.
During audit of DDMU Nowshera for the financial year 2022-23, it was observed as under:
i. Entries in Stock register were not recorded in prescribed manner. Alterations, cutting and
over writing was observed in many cases. For instance, alteration, cutting and overwriting
in entries of tents, mattresses and hygiene kites was made during the currency of audit.
(Annexure-VII)
ii. DDMU provided a list of items received from PDMA. The comparison of said list with available
stock register revealed variation in quantities e.g. as per list, 725 tents were received from PDMA
however, the stock register revealed receipt of 600 tents only.
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iii. Discrepancies in quantities of relief items dispatched by PDMA and received in DDMU was also
observed. For instance, PDMA dispatched 7140 blankets to DDMU, whereas, the stock register
shows receipt of 7100 blankets. As such, 40 blankets were missing.
iv. Various relief items were dispatched by PDMA to DDMU Nowshera, but the receipts of
those items was not confirmed as no entry in stock register was recorded. Details of these
items is as under:
Sr. No Item Qty. Date of dispatch Folio/GDN No.
1. Plastic Dongi 3672 29.08.2023 3526
2. Glass (Plastic) 1848 29.08.2023 3526
3. Glass (steel) 1236 29.08.2023 3526
4. Plastic Chabri 1140 29.08.2023 3526
5. Plastic Dolcha 852 29.08.2023 3526
6. Plats Plastic 630 29.08.2023 3526
7. Plats Steel 540 29.08.2023 3526
8. Steel Mug 348 29.08.2023 3526
v. Supporting record of issuance of relief items against the entries shown in stock register was not
available i.e. demand notes, handing / taking over certificates and acknowledgments etc.
vi. Relief items were issued in bulk quantity to various officers / officials as well as to unknown
individuals without any justification. Further, subsequent record of distribution of these items
among the flood affectees was also not available.
Audit held that improper maintenance of stock register, and absence relevant record was violation
of rules resulting into non authentication of receipt and distribution of relief items.
Audit recommends that improper maintenance of record may be inquired to fix responsibility.
Beside a comprehensive stock register along with allied record may be maintained to avoid risk of
mismanagement and misuse of relief items.
1.4.14 Improper maintenance of cash book(s) by DDMUs in respect of the funds released for
relief purposes
According to Rule 5 of Federal Treasury Rules, a Cash Book should be maintained in Form T. R.
4A. The cash book should show (on the receipts side) the opening cash balance and (on the disbursement
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side) the closing cash balance of the month. A certificate to the affect that the closing balance has been
verified by actual count and found correct should also be recorded.
Further, according to Para 2.1.4 of the Guidelines for Drawing and Disbursing Officers, the
function and responsibility of DDO is to carry out reconciliation with the accounts office well in time and
to promptly identify and settle discrepancies.
District Disaster Management Units (DDMUs) in Khyber Pakhtunkhwa were required to maintain
separate cash books for the funds released by Provincial Disaster Management Authority (PDMA) Khyber
Pakhtunkhwa for relief purposes.
During the audit of DDMUs Dassu, Pattan, Shangla, Dir Upper, Tank, D.I. Khan, Swabi and
Nowshera for the financial year 2022-23, it was observed as under:
i. The cashbooks lacked a systematic monthly arrangement, with entries recorded for
sporadic and fragmented periods.
ii. Various instances of cutting, overwriting and corrections were observed in the totaling of
monthly balances, which raised concerns about the accuracy of the financial records.
iii. Monthly reconciliation with the bank was not carried out. Discrepancies existed between
opening and closing balances in cashbooks and corresponding in the bank statement.
iv. The cashbooks were found unsigned by the DDO and head of the department.
v. Certificates verifying the correctness and accuracy of the entries at the end of each month
were also not recorded by the DDOs.
vi. Instances of missing cheques and broken series of cheque numbers were noted, with no
information on whether they were issued or cancelled.
Audit held that improper maintenance of cashbooks was not justified resulting into unverifiable
expenditure and non-reconciliation of monthly accounts with banks.
The observation was issued to the respective DDMU during August-October 2023, however no
Audit recommends that responsibility for improper maintenance of cash book may be fixed beside
maintenance of cash books in proper format and monthly reconciliation may also be carried out with the
respective banks.
(Para No. 10, 8, 8, 5, 15, 14, 6, and 4 of AIR 2022-23 DDMU Dassu, Pattan, Shangla, Dir upper, Tank, D.I. Khan,
Swabi and Nowshera)
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1.4.15 Non-maintenance of record of affectees accommodated in relief camps and non-
retrieval of items upon closure of the camps
According to Para 6(3)(g) of National Disaster Management Authority (NDMA) guidelines for
minimum standard of relief in camps, soon after the arrival in a relief camp, the affected person/family shall
be registered by camp management in collaboration with NADRA. The camp manager shall ensure to
maintain record of each registered person / family as per prescribed format (Annexure-I to the Guidelines).
Further, Para 8(f) of the Guidelines ibid provides that upon closure of the relief camps, all the registers,
reports, bills, vouchers and record etc. shall be kept in a box under lock and key and be shifted to the office
of the Deputy Commissioner concerned through DDMU.
Further, according to Guideline w(1) of NDMA guidelines on stocking, maintenance and supply of
relief & rescue items, it should be endeavored to establish central relief camps to provide coordinated relief
assistance to the people. Such camps should be established under respective districts / tehsil / agency
administration. On closure of relief camps, if possible, all usable relief equipment / stores i.e. tents,
generators, may be retrieved, serviced, maintained and stored back for future use.
District Disaster Management Unit (DDMU) Nowshera and Dera Ismail Khan incurred an
expenditure amounting to Rs. 162.216 million and 118.204 million respectively for provision of cooked
food and food items to the affectees accommodated in relief camps. Moreover, National Disaster
Management Authority (NDMA), Provincial Disaster Management Authority (PDMA) KPK and others
agencies had issued a large quantity of relief items to DDMU Kohistan lower at Pattan for onward
distribution among the affectees accommodated in relief camps. (Annexure-VIII)
During the audit of DDMU Nowshera, Dera Ismail Khan and Lower Kohistan at Pattan for the
financial year 2022-23, it was observed that the record of affectees accommodated in each relief campswas
not maintained. Moreover, record regarding retrieval of relief items from the affectees upon closure of the
relief camps was also not maintained as required under the NDMA guidelines.
Audit held that non-maintenance of record of affectees accommodated in relief camps was
unjustified and lapse on the part of management.
Audit recommends that non-maintenance of record may be inquired to fix responsibility.
(Para No. 3, 8 and 12 of AIR 2022-23 DDMU Nowshera, D.I. Khan and Pattan)
1.4.16 Missing / less receipt of relief items dispatched by NDMA and PDMA to DDMUs in
Khyber Pakhtunkhwa
examined, counted, measured or weighed as the case may be, when the delivery is taken, and they should
be taken in charge by a responsible Government officer who should also see that the quantities are correct
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and their quality is good, and record a certificate to that effect. The officer receiving the stores should record
them in the appropriate stock register.”
National Disaster Management Authority (NDMA) Islamabad and the Provincial Disaster
Management Authority (PDMA) Khyber Pakhtunkhwa had dispatched various relief items to District
Disaster Management Units (DDMUs) for further distribution among the affectees of flood 2022.
During the audit of DDMU Dassu, Dir Upper and Dir Lower for the financial year 2022-23, it was
observed as under:
i. NDMA dispatched various relief items (food and non-food items) to DDMU Dassu.
However, neither any record of receipt nor subsequent distribution among the flood
affectees was available. Annexure-IX-a.
ii. PDMA had dispatched various relief items to DDMU Dassu however, the stock
register revealed less receipt of relief items such as 1,328 Blanket and 250 bucket were
missing.
iii. Stock register of the DDMU Dassu showed a receipt of 525 tents from PDMA.
However, as per details shared by PDMA, no tents were issued to DDMU Dassu.
iv. NDMA dispatched 13,600 food packages and 78 bags of wheat flour to DDMU Dir
Upper as detailed at Annexure-IX-b. However, DDMU Dir Upper showed receipt of
1,023 food packages only.
v. NDMA dispatched 14,222 food packages to DDMU Dir Lower as detailed at
Annexure-IX-c. However, DDMU Dir Lower showed receipt of only 1,022 food
packages.
vi. NDMA dispatched a huge quantity of donations / relief items received from friendly
states to DDMU Dir Lower. However, DDMU had not maintained any record of
receiving of these donated relief items. Annexure-IX-d.
Audit held that missing /short receipt of relief items was serious lapse on the part of management
of DDMUs and chances of mismanagement and misuse of relief items could not be ruled out.
Audit recommends that short / less receipt of relief items may be investigated and outcome may be
share with audit authorities.
(Para No. 06, 08 and 03 of AIR 2022-23 DDMU Dassu, Dir upper and Dir lower)
1.4.17 Physical verification of assets / stocks and costly relief items not conducted by PDMA,
Khyber Pakhtunkhwa
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According to Rule 159 of General Financial Rules (GFR) Vol-I, physical verification of store
should be carried out once in a year. Moreover, Rule 160 provides that a certificate of verification of stores
with its results should be recorded on the list, inventory or account, as the case may be, where such a
verification is carried out.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa procured various items
i.e. IT equipment, plant & machinery, furniture & fixture, machinery & equipment, hardware items and
relief items etc. from different head of accounts during various financial years.
the Authority had not carried out physical verification of stock, store and costly relief items to ascertain and
verify the receipt, proper storage and issuance of the item and identify theft, misplacement and misuse of
items, if any.
Audit held that non-conducting of physical verification of costly items and stores was not justified
as physical verification of stores was extremely important for an organization like PDMA which was
constantly engaged in procurement, storing and distribution of relief and other item to multiple agencies
and users.
Initial audit observation was issued on 09.08.2023. The management replied that a committee
headed by Director HR/Admin PDMA has been notified to carry out the annual physical verification of
stores and stocks. The physical verification report will be shared accordingly.
directed to ensure completion of physical verification of all the stock and store, including warehouse of
PDMA till 31.03.2024. In case of non-compliance till the date fixed by DAC, responsibility shall be fixed
on the person(s) at fault.
Note: The issue was also reported earlier in the Audit Report for the Audit Year 2022-23 vide Para
No. 1.4.47. Recurrence of same irregularity is a matter of serious concern.
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1.4.18 Non-obtaining of vouched accounts and non-adjustment of advance amount by
Rescue 1122 - Rs. 443.208 million
According to Para 668 of Federal Treasury Rules (FTR) Vol-I, the grant released for departmental
or allied purposes is subject to adjustment by submission of detailed accounts supported by vouchers or
refund.
Further, according to Para No. 4.5.7.2 of Accounting Policies and Procedure Manual, the
authorizing officer shall ensure that the claim voucher (bill) bears valid evidence that preparation, approval
and certification have been properly carried out.
Rescue 1122 Khyber Pakhtunkhwa transferred an amount of Rs. 443.208 million to C &W
department KPK and Deputy Commissioners for acquisition of land and civil works during the financial
year 2022-23. (Annexure-X)
During audit of Rescue 1122 Khyber Pakhtunkhwa for the financial year 2022-23, it was observed
that vouched account, payment vouchers and allied record in respect of releases were not obtained from the
respective departments. Moreover, reconciliation with departments was also not carried out to ascertain the
total amount utilized and unspent balances, if any, for return to Rescue 1122.
Audit held that non-obtaining of vouched accounts was not justified and violation of rules. In
absence of vouched accounts and non-reconciliation of the expenditure, the expenditure incurred by the
department concerned could not be verified.
Initial audit observation was issued on 25.08.2023. The management replied that vouched account
has been received from the concerned department and available for verification.
The reply of the management was not acceptable because complete vouched account such as
sanctions with supporting documents, payment vouchers, bills and approvals were not provided in support
of reply.
The Departmental Accounts Committee (DAC) meeting was held on 08.12.2023. The DAC
directed the Rescue 1122 to obtain the vouched accounts from Deputy Commissioners/District Revenue
Officers. Besides, The DAC directed to review and verify the vouched accounts received from C&W
department and adjust the amounts accordingly and retrieve un-spent balances, if any.
Note: The issue was also reported earlier in the Audit Report for the Audit Year 2022-23 vide
Para No. 1.4.8 having financial impact of Rs. 828.017 million. Recurrence of same irregularity is a matter
of serious concern.
(Para No.08 of AIR 2022-23 Rescue-1122, Khyber Pakhtunkhwa)
1.4.19 Non-obtaining of supporting documents and vouched accounts by PDMA and

DDMUs – Rs. 258.555 million
According to Para 6 of Revised Procedure for Operation of Assignment Accounts, the drawing
authorities will submit monthly account of expenditure with copies of paid vouchers to the AGPR/DAO
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concerned for post audit purpose by 15th of each month who will carry out 100% post audit. The
AGPR/DAO will issue a certificate of post audit by the end of month to the DDO concerned.
Further, according to attachment 2 of Letter of Agreement signed between United Nations
Development Project (UNDP) and Planning and Development Department (PD&D) Government of Khyber
Pakhtunkhwa for the project ‘Scaling up of glacial lake outburst flood risk reduction in northern Pakistan’
(GLOF-II), the partners of PD&D KP receiving funds to implement GLOF-II will be responsible for making
available supporting documents for the expenses incurred i.e. vouchers, transaction listing, running bills
etc.
District Disaster Management Units (DDMUs) in Khyber Pakhtunkhwa made payments amounting
to Rs. 213.222 million to various departments/offices for different works as detailed at (Annexure-XI-a).
Similarly, PDMA Khyber Pakhtunkhwa released an amount of Rs. 45.333 million from GLOF-II project
to various departments during the financial year 2022-23. (Annexure-XI-b)
During audit of PDMA Khyber Pakhtunkhwa and DDMUs Dassu, Kolai Palas, Dir Lower, Dera
Ismail Khan and Nowshera for the financial year 2022-23, it was observed that detailed vouched accounts
and supporting documents in respects of disbursements made amounting to Rs. 258.555 million by
PDMA/DDMUs were not obtained from the concerned departments/ offices till date of audit i.e. October,
2023.
absence of vouched accounts and non-reconciliation of the expenditure, the expenditure incurred by the
department concerned could not be verified.
The matter was reported to the PDMA & DDMUs during August-October 2023. The management
of PDMA admitted the stance of audit and replied that original record was in the custody of concerned
executing departments and will be handed over to PDMA after conducting their annual audit. Once all the
original record is received, the same will be available for audit verification. However, no reply was received
from DDMUs till finalization of report.
directed that vouched accounts should be obtained from the executing agencies to the satisfaction of audit
authorities. Further, a proper reconciliation mechanism should also be devised to ensure utilization of
already released funds prior to making any further payments
Audit recommends that detailed record of entire amount released to various departments / entities
may be obtained and scrutinized, besides reconciliation and necessary adjustment.
(Para No. 3, 01, 01, 05, 08 and 13 of AIR 2022-23 DDMU Dassu, Kolai Palas, Dir Lower, D.I. Khan, Nowhsehra
and PDMA, KP)
Financial Management
1.4.20 Non-deposit of profit into Government treasury – Rs. 268.661 million
97
According to Para-3(ix) of Government of Khyber Pakhtunkhwa Finance Department letter
No.2/3(F/L)/FD/2019-20/ Vol-XIII dated 03.02.2020, in case of current account, the same be converted to
PLS mode and the profit earned on designated bank accounts be deposited in Government Treasury.
District Disaster Management Units (DDMUs) Kohistan Upper (Dassu), Kohistan Lower (Kolai
Palas), Dera Ismail Khan, Nowshera and Dir Upper maintained PLS accounts in different banks for the
funds received from Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa.
During the audit of DDMU Kohistan Upper (Dassu), Kohistan Lower (Kolai Palas), Dera Ismail
Khan, Nowshera and Dir Upper for the financial year 2022-23, it was observed that an amount of Rs.
268.661 million was earned as profit on the amounts retained in these accounts. However, the amount of
profit was not deposited into Government treasury till conclusion of audit i.e. October 2023. Details are as
under:
(Rs. in million)
Sr.
Name of DDMU Bank A/C No. Amount
No.
1. Kohistan Upper at Dassu NBP 3098249138 221.951
2. Dera Ismail Khan BoK 3000870381 24.558
3. Kohistan Lower at Kolai Palas NBP 3150270817 18.082
4. Nowshera BoK 3001216472 2.059
5. Dir Upper BoK 012600228010 2.011
Total 268.661
Audit held that non-deposit of profit into government treasury was violation of rules.
Audit recommends that amount of profit may be deposited into Government treasury.
(AIRs 2022-23, Paras No. 02 DDMU Dassu, 02 DDMU Kolia Palas, 02 DDMU Dir Upper, 02 DDMU D.I. Khan,
13 DDMU Nowshera)
1.4.21 Overpayment of monthly allowances to TDPs – Rs. 106.760 million (approximately)

According to Rule 23 of General Financial Rules (GFR) Vol-I, every Government officer
should realize fully and clearly that he would be held personally responsible for any loss sustained
by Government through fraud or negligence on his part and that he will also be held personally
responsible for any loss arising from fraud or negligence on the part of any other Government
officer to the extent to which it may be shown that he contributed to the loss by his own action or
negligence.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa (Complex
Emergency Wing) incurred an expenditure amounting to Rs. 4,050.360 million on payment of
Monthly Subsistence Allowance (MSA) and Monthly Ration Allowance (MRA) at the rate of Rs.
98
12,000 and Rs. 8,000 respectively to the Temporary Displaced Persons (TDPs) though Mobilink
Microfinance Bank Ltd during the financial year 2022-23. The management provided data (soft
form) of payment made to TDPs as MSA and MRA for the period July 2022 to June 2023, which
was analyzed by the audit team.
During audit of PDMA Khyber Pakhtunkhwa for the financial year 2022-23, it was
observed as under:
i. CNIC 2150161984748 received extra payments of MSA and MRA three (03) in July and
two (02) in August 2022. Resultantly, six (06) additional installments of MSA and MRA
(3 for each) to the same recipient / IDP was paid. Further, two different alternate recipients
were receiving the payments of MSA and MRA for the same ID in August-2022.
(Annexure-XII-a)
ii. During the month of July 2022, a total of 2,022 TDPs received triple payments of MSA
and MRA each. While in August 2022, 1,291 TDPs received double payments of MSA and
MRA each. This resulted into overpayment. Further, names of these recipients differed in
records from July-2022 to September 2022 and October 2022 to June 2023 which indicates
non-verification of record of TDPs by NADRA. (Annexure –XII-b)
iii. 1,103 TDPs received one installment of MRA, whereas several TDPs received 2, 6, 8, 9,
10, or 12 installments of MRA throughout the year 2022-23. Detailed information was not
available about these recipients, whether they were new TDPs or they had returned to their
homes. (Annexure-XII-c)
Audit held that due to multiple payments to an individual, chances of overpayment could
not be ruled out.
Initial audit observation was issued on 09.08.2023. The management replied that CEW utilizes an
automated system (MIS) to ensure data integrity through duplicate filtering, CNIC verification, and linkage
with the NADRA biometric system. Regarding multiple payments highlighted by the audit, these were
arrears for the months of March, April, and May 2022, disbursed in the months of July and August 2022 to
TDPs.
The reply was not acceptable because multiple payments were made to a large number of recipients
during July and August 2022. Further, discrepancies were noted in the names of recipients/TDPs associated
with the same CNIC number between records for the periods July to September 2022 and October 2022 to
June 2023. Moreover, no detailed information about the new TDPs and TDPs returned to their homes was
available with CEW-PDMA.
directed the management of PDMA to constitute a committee headed by Director CEW to scrutinize all the
instances of payments pointed out by audit and furnish a comprehensive report within two week.
99
1.4.22 Loss to Government due to investment at lower interest rates – Rs. 27.255
million (approx.)
PLS mode and the profit earned on designated bank accounts be deposited in Government Treasury
immediately.
District Disaster Management Units (DDMU) Dera Ismail Khan, Nowshera and Dir Upper
maintained accounts with Bank of Khyber for the funds received from Provincial Disaster Management
Authority (PDMA) Khyber Pakhtunkhwa.
During the audit of DDMU Dera Ismail Khan, Nowshera and Dir Upper for the financial year 2022-
23, it was observed that interest rate paid by Bank of Khyber was much lower than the policy rate notified
by the State Bank of Pakistan (SBP) from time to time. Moreover, Bank of Khyber had not increased the
interest rates in consonance with increase in policy rates.
Audit held that low interest rates paid by Bank of Khyber resulted in loss to the government
amounting to Rs. 27.255 million. (Annexure-XIII)
Audit recommends that the management may take up the matter with Bank of Khyber for
enhancement of interest rates.
(Para No. 03, 21 and 03 of AIR 2022-23 D.I Khan, Nowshera and Dir Upper)
1.4.23 Overpayment to the supplier – Rs. 25.350 million

According to Request For Quotations (RFQ) dated 22.08.2022, Provincial Disaster Management
Authority (PDMA) Khyber Pakhtunkhwa requested the suppliers to quote the rates for supply of 5000
family size tents inclusive of all government applicable taxes.
Further, according to quotation of M/s Ali Trading Corporation for the supply of 5000 family size
tents (4x4 meter), the rate was quoted as Rs. 34,895 inclusive of all the applicable taxes.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa made payment
amounting to Rs. 174.475 million to M/s Ali Trading Corporation for supply of 5000 family size tents (4x4
meter) vide cheque No. 064363 dated 05.10.2022. The supplier had quoted rates of inclusive of all
applicable Government taxes and the agreement was signed. Meanwhile, FBR vide notification dated
30.08.2022 exempted GST on relief items.
100
payment was made without deduction of GST amounting to Rs. 25.350 million in violation of instructions
of FBR.
Audit held that payment without deduction of GST resulted in over payment of Rs. 25.350 million
to the contractor and loss to the government exchequer.
Initial audit observation was issued on 09.08.2023. The management replied that purchases were
made on emergency basis under provision of Section 32 of PDMA Act (amended) 2012 and Section 3(2)
of PPR 2014. Furthermore, a show cause notice was issued by the tax authorities to PDMA directing to
submit the less deducted taxes into Government treasury. In the said list, the above firm was not included,
which shows that tax authorities have no objection on exemption claimed by the firm.
The reply was not acceptable because the contractor had provided rates inclusive of all applicable
taxes. Following the exemption of GST by the Federal Government, PDMA was required to pay the
contractor after deducting GST from the quoted rate. However, PDMA made the payment to the contractor
at the quoted rates, including GST, resulting in an overpayment.
directed to recover the overpaid amount from vendor within 30-days and the record of recovery be produced
to audit authorities for verification.
1.4.24 Loss due to non-deduction of government taxes from the suppliers – Rs. 19.980
million
According to Section 3 of Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, a taxable service
is a provision of service listed in the Second Schedule, by a registered person from his registered office or
place of business in the Province in the course of an economic activity. Further, according to Sr. No. 1 of
Second Schedule (Taxable Services), food provisioning / food servicing or food supply facilities/ services
was chargeable @ 15%.
Furthermore, according to the Sales Tax Special Procedure (Withholding) Rules, 2017, a
withholding agent, shall deduct an amount equal to one fifth of the total value of sales tax shown in the
sales tax invoice issued by a registered person and make payment of balance amount to him. Furthermore,
according to Section 153(1) of Income Tax Ordinance 2001, rate of income tax on other services provided
by non-companies was 10%.
District Disaster Management Units (DDMUs) Dera Ismail Khan, Tank and Nowshera made
payments amounting to Rs. 129.204 million to different vendors for the services rendered during the
During the audit of DDMU Dera Ismail Khan, Tank and Nowshera for the financial year 2022-23,
it was observed that applicable taxes amounting to Rs. 19.980 million were not deducted from the payments
made to the vendors. Details are as under:
101
(Rs. in million)
Sales Tax
on Service Total
Sr. Total Income
DDMU not GST Taxes not Remarks
No. Amount tax
deducted deducted
@ 15%
1. D.I Khan 49.77 7.465 - - 7.465
2. Tank 28.24 4.237 - - 4.237
3. Tank 15.96 - 0.574 2.521 3.095 Annexure-

XIV
4. Nowshera 11.50 1.725 1.322 - 3.047
5. Tank 23.734 - 2.136 - 2.136 Annexure-

XIV
Total 129.204 13.427 4.032 2.521 19.980
Audit held that non-deduction of applicable taxes resulted in loss to the government exchequer
amounting to Rs. 19.980 million.
Audit recommends that amount of applicable taxes may be recovered from the vendors and
deposited into government treasury.
(Para No. 4, (8, 12&10) and 19 of AIR 2022-23 DDMU D.I. Khan, Tank and Nowshera)
1.4.25 Less deduction of applicable taxes and non-deposit of withheld tax into government
treasury - Rs. 15.955 million
According to Section 161(1) of Income Tax Ordinance, 2001, where a person (a) fails to collect tax
or deduct tax from a payment or (b) having collected tax or deducted tax, fails to pay the tax to the
Commissioner as required under section 160, the person shall be personally liable to pay the amount of tax
to the Commissioner.
District Disaster Management Unit (DDMU) Nowshera incurred an expenditure amounting to Rs.
150.285 million for purchase of relief items (food items & non-food items) during the financial year 2022-
23. Details are as under:
(Rs. in million)
Sr. No. Description Expenditure

1. Provision of non-cooked food 118.934
2. Provision of non-food items 23.151
3. Provision of cooked food 8.200
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Total 150.285
During the audit of DDMU Nowshera for the financial year 2022-23, it was observed as under:
i. DDMU withheld an amount of Rs. 13.836 million on account of applicable taxes and duties
from the payments made to the suppliers / contractors/consultants. However, the amount
of taxes was not deposited into the government treasury till date of audit i.e. October, 2023.
(Annexure-XV)
ii. Payment amounting to Rs. 10.00 million was made to M/s A.Q Builders for provision of
uncooked food items. The management deducted 8% Sales Tax on Services instead of
deduction of GST @ 17%. Moreover, Income Tax was not deducted from the payment.
iii. M/s Sarbiland Khan was paid for Rs. 3.428 million (cheque No. 48112622) and Rs. 1.411
million (cheque No. 48112621) for provision of cooked food. However, 10% Sales Tax on
Services was charged instead of applicable rate of 15%. Furthermore, Income Tax at @
10% was not deducted.
iv. M/s Sarbiland Khan was paid Rs. 1.670 million for provision of transport services (cheque
No. 48112621, 48112657, 48112667, 48112673 and 48112674) with an incorrect deduction
of 10% Sales Tax on Services instead of 15%. Furthermore, Income Tax at 3% was not
deducted.
v. An amount of Rs. 815,674 (Cheque No. 48112655, 48112666) was paid for provision of
labour. Neither Sales Tax on Services at the rate of 15% nor Income Tax was deducted.
Audit held that incorrect application / non-deduction of income tax and non-deposit of withheld
amount resulted in loss to government.
The observation was issued during August-October 2023, however no response was received.
Audit recommends that taxes may be deducted as per applicable rates and withheld amount of taxes
may be deposited into government treasury.
(Para No. 17 and 9 of AIR 2022-23 PDMA KP and DDMU Nowshera)
1.4.26 Overpayment to contractor and loss to government due to non-deduction of

applicable taxes – Rs. 15.380 million
According to the Sales Tax Special Procedure (Withholding) Rules, 2017, a withholding agent,
shall deduct an amount equal to one fifth of the total value of sales tax shown in the sales tax invoice issued
by a registered person and make payment of balance amount to him.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa awarded a

contract for supply of 5750 tents to M/s Azmat Khan & Brothers on 31.05.2016. The contractor
103
supplied ordered quantity and submitted the bill amounting to Rs. 80.420 million. Meanwhile a
dispute arised between the PDMA and contractor. The contractor filed a writ petition before
Peshawar High Court Peshawar.
During the audit of PDMA Khyber Pakhtunkhwa for the financial year 2022-23, it was
observed that PDMA paid Rs. 82.195 million to contractor without deduction of applicable taxes
from the contractor amounting to Rs. 15.380 million. Details are as under:
(Rs. in million)
Contract cost including GST (17%) 80,419,500
Contract Cost excluding GST 17% (80,419,500 /1.17) 68,658,547
a. Amount of GST @ 17% 11,760,953
b. Income Tax (Rs. 80,419,500 x 4.5%) 3,618,878
Total 15,379,831
Audit held that non-deduction of applicable taxes resulted in excess payment to the
contractor and loss to the government amounting to Rs. 15.380 million.
Initial audit observation was issued on 09.08.2023. The management replied that the Court of Civil
Judge-I Peshawar attached the PDMF account maintained with NBP and directed the Manager NBP to pay
the amount to petitioner / contractor out of said account. As such, payment to the contractor was not made
by PDMA due to which the deduction of taxes was not made.
The reply was not acceptable because it was the department's responsibility to communicate to the
honorable court that the petitioner's claimed amount included government taxes. Despite the prolonged
duration of the court case i.e. almost six-year, the PDMA had neglected to explicitly state the facts in the
court records, thereby failing to meet its obligation.
The Departmental Accounts Committee (DAC) meeting was held on 20&21.12.2023. The
DAC directed the PDMA to conduct a fact-finding inquiry and report be shared with the
administrative department and audit authorities.
1.4.27 Overpayment to vendors due to incorrect calculation of taxes – Rs.

12.631 million
According to Rule 23 of General Financial Rules (GFR) Vol-I, every Government officer should
arising from fraud or negligence on the part of any other Gov ornament officer to the extent to which it may
be shown that he contributed to the loss by his own action or negligence.
District Disaster Management Unit (DDMU) Tank made payments amounting to Rs. 65.633
million to different vendors during the financial year 2022-23 for provision of cooked food, hiring of labor
and transportation.
104
During the audit of DDMU Tank for the financial year 2022-23, it was observed that the suppliers
had submitted invoices with the gross amounts for payments. However, instead of subtracting the taxes
from these gross amounts, the management added tax amounting to Rs. 12.631 million to the invoice prices
and made payments. (Annexure-XVI)
Audit held that due to incorrect calculation of tax amounts, overpayments were made to the
suppliers on one hand and on the other, government sustained a loss of Rs. 12.631 million.
Audit recommends that overpayments may be recovered from the suppliers / vendors and deposited
into Government treasury, beside responsibility may be fixed on the persons at fault.
(Para No. 5 of AIR 2022-23 DDMU Tank)
1.4.28 Irregular cash payments to field revenue staff for provision of cooked food to
affectees– Rs. 11.500 million
According to Finance Department Government of Khyber Pakhtunkhwa vide letter No
BO(W&M)/6-5/2019-20 dated 19.02.2020, in order to streamline the management in public account and to
observe fiscal discipline, all payments through open cheques or cash were stopped hence forthwith.
Further, according to Para 2.3.2.8 of Accounting Policies & Procedures Manual, to minimize the
risk of fraud and corruption, payments shall be made through direct bank transfer and cheques.
District Disaster Management Unit (DDMU) Nowshera paid an amount of Rs. 11.500 million to
various field revenue staff for provision of cooked food to the flood affectees 2022. Details are at
(Annexure-XVII-a)
During the audit of DDMU Nowshera for the financial year 2022-23, it was observed as under:
i. The amounts were released to field revenue staff through bearer/open cheques. The field
revenue staff submitted vouchers/bills on behalf of the vendors. However, these vouchers
did not contained essential details to justify the expenditure incurred i.e. detail/ number
of beneficiary, distribution locations and acknowledgment etc.
ii. A cheque No. 48112612 amounting to Rs. 921,600 was en-cashed by an unknown person.
The said cheque was issued to Halqa Patwari, Badrashi who handed over the cheque to
unknown individual to receive the amount on his behalf. The drawl of public money by
unknown person was unjustified. Details are at (Annexure-XVII-b).
iii. Vouchers / bills indicated that bulk quantities of cooked food was handed over to nazims
/ individuals for distribution, without proper authorization from the district
administration. Furthermore, subsequent record of distribution of the cooked food was
not available. (Annexure-XVII-c, Annexure-XVII-d)
105
iv. Some payments lacked necessary details such as name of recipient/payee and date e.g.
Rs. 518,000 was paid for 56 degs on a simple paper however, no other record such as
name of recipient and date etc. was available. (Annexure-XVII-e).
Audit held that payments made to the field revenue staff instead of actual vendors and absence of
distribution record of food to the affectees was serious lapse on the part of management of DDMU.
Resultantly the expenditure incurred cannot be authenticated.
Audit recommends that payment to the field revenue staff instead of suppliers may be inquired to
fix responsibility on the persons at fault.
1.4.29 Non-conversion of current account into PLS account resulting in loss to Government
– Rs. 40.736 million
PLS mode and the profit earned on designated bank accounts be deposited in Government Treasury
immediately.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa released funds to
District Disaster Management Units (DDMUs) in Khyber Pakhtunkhwa. These funds were required to be
kept in PLS accounts and profit earned to be deposited into Government treasury.
During the audit of DDMU Tank, Charsadda, Swabi, Shangla, Pattan and Swat for the financial
year 2022-23, it was observed that DDMUs kept funds in current accounts instead of PLS account and
sustained a loss of Rs. 40.736 million. Details are as under:
(Rs. in million)
Sr. Name of DDMU Loss (Appx.)

No.
1. DDMU Tank 23.465
2. DDMU Charsadda 10.086
3. DDMU Swabi 4.150
4. DDMU Shangla 3.035
Total 40.736
Audit held that non-conversion of current account into PLS account was violation of the
instructions which resulted in loss to government in shape of profits earned.
The matter was reported to the management of respective DDMUs during August-October 2023,
however no reply was received.
106
Audit recommends that current accounts may be converted into PLS accounts at the earliest.
(Para No. 03, 01, 01, 02, 07 and 03 of AIR 2022-23 Tank, Charsadda, Swabi, Shangla, Pattan and Swat)
1.4.30 Non-deduction of taxes resulting in overpayment to the supplier – Rs. 1.210

million
According to the Sales Tax Special Procedure (Withholding) Rules, 2017, a withholding agent,
shall deduct an amount equal to one fifth of the total value of sales tax shown in the sales tax invoice issued
by a registered person and make payment of balance amount to him.
District Disaster Management Unit (DDMU) Nowshera made payment amounting to Rs. 4.840
million to M/s Sarbiland Khan & Co for provision of cooked food to the flood affectees 2022 during the
During the audit DDMU Nowshera for the financial year 2022-23, it was observed as under:
i. The payment was made to the contractor without deduction of Income Tax and Sales Tax
on Services amounting to Rs. 0.605 million (Rs. 217,799 + Rs. 387,203).
ii. Instead of deducting the applicable taxes from the invoice amount, the management added
the taxes in the invoice amount and made payments to supplier. Hence, the tax amounting
to Rs. 0.605 million (Rs. 217,799 + Rs. 387,203) was paid from the government exchequer.
Details are as under:
Amount of taxes added by
Gross amount of bill as
department (Rs.) Payment made
submitted by contractor
Income Tax (Rs.)
(Rs.) KPPRA 8%
4.5%
3,000,000 154,285 274,287 3,428,572
1,235,000 63,514 112,916 1,411,430
4,235,000 217,799 387,203 4,840,002
Audit held that overpayment to the contractor was unjustified resulting in loss to the government
amounting to Rs. 1.210 million.
Audit recommends recovery of the amount from contractor.
1.4.31 Non-reconciliation of funds released by Finance Division for TDPs

According to Minutes of Standing Committee on States and Frontier Regions held on 08.05.2023,
vide agenda No. 12, the committee was informed that Finance Division allocated / released funds to the
107
tune of Rs. 112 billion against approved cost of Rs. 95 billion through federal budget outside PSDP under
‘Relief and Rehabilitation of TDPs Program”.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa showed receipt and
utilization of federal funds under the grant ‘Relief and Rehabilitation of TDPs Program’ as under:
(Rs. in million)
Sr. Funds received from
Description Utilization
No. Federal Govt.
1. Return Grant 11,849.00 8,700.00
2. Immediate Rehabilitation 20,353.00 20,353.00
3. Housing Subsidy 32,976.00 32,151.00
4. Permanent Reconstruction 30,164.00 30,164.00
5. Over & above (Rs. 95.356 billion) 17,000.00 12,314.00
Total 112,342.00 103,682.00
During the audit of PDMA Khyber Pakhtunkhwa for the financial year 2022-23, it was observed
that Finance Division allocated funds amounting to Rs. 112,342.00 million for the relief and rehabilitation
of TDPs. However, as per record produced by Rehabilitation & Reconstruction Unit (RRU)/PDMA, an
amount of Rs. 103,682.00 million was shown utilized, whereas the status/whereabouts of balance amount
of Rs. 8,660.00 million was not made known.
Audit held that non-availability of status/whereabouts of the balance amount was not justified
leading to financial indiscipline.
Initial audit observation was issued on 09.08.2023. In response, the management of RRU/PDMA
had not addressed the audit observation properly and provided one pager statement showing the detail of
amounts received from Finance Division and further disbursed by RRU.
The reply of the management was not acceptable because the provided statement did not serve the
purpose of reconciliation.
directed the management of RRU to ensure the provision of proper reconciliation duly verified by the
Finance Division. Additionally, a revised response, clearly stating the position of funds received and
utilized by the concerned district administrations/executing agencies until the present date, should be
submitted to the audit authorities within 15 days.
1.4.32 Non-reconciliation and internal audit of payments related to Citizen Losses
Compensation Program
108
According to para 2.1.4 of Guideline for DDOs, the function and responsibility of DDO is to carry
out reconciliation with the accounts office well in time and to promptly identify and settle discrepancies.
Further, according to note sheet No. 64(e), the Section Officer (Establishment) endorsed the approval of
budget of Rehabilitation & Reconstruction Unit for the financial year 2020-21 subject to proper
reconciliation of all the accounts of previous expenditure from all the concerned districts.
Rehabilitation & Reconstruction Unit (RRU) of Provincial Disaster Management

Authority (PDMA) Khyber Pakhtunkhwa released an amount of Rs. 32,151.05 million to various
districts for Citizen Losses Compensation Program (CLCP) during the years 2015-16 to 2022-23.
(Rs. in million)
Sr. No. Name of the District Expenditure
1. Khyber 4,118.88
2. Kurram 1,869.20
3. North Waziristan 4,056.80
4. Orakzai 4,961.31
5. South Waziristan 17,144.86
Total 32,151.05
observed that neither there was any mechanism for reconciliation of the CLCP payments nor
internal audit of the respective districts was carried out to identify any gaps and shortcomings for
timely redressal.
Audit held that non-reconciliation of the amounts disbursed for CLCP and non-conducting
of internal audit was unjustified resulting in weak oversight of management on the CLCP
payments.
Initial audit observation was issued on 09.08.2023. The management replied that PDMA releases
funds to the concerned district administrations for further payment/ disbursement to the beneficiaries.
However, reconciliation with the concerned district administration has not been carried out till date. The
management further informed that internal audit of the funds released could not be carried out till date.
DAC directed that DDO of RRU shall ensure that in future, no funds shall be released to the district
administration without prior reconciliation of the funds already released. Moreover, internal audit
of the funds released be carried out and internal audit report be shared with audit authorities.
1.4.33 Unverifiable debit transactions in the Bank Statement resulting in doubtful

expenditure – Rs. 118.706 million
109
According to Para 14.5.1.1 of Accounting Policies and Procedures Manual, cash transactions
relating to the Public Account shall be reconciled as part of the routine monthly bank reconciliation
process.
District Disaster Management Unit (DDMU) Kohistan Lower at Pattan maintained current account
No. 4097874132 with National Bank of Pakistan (NBP) for the funds received from PDMA Khyber
Pakhtunkhwa.
During the audit of DDMU Kohistan Lower at Pattan for the financial year 2022-23, it was
observed that various debit transactions amounting to Rs. 118.706 million were appearing in bank statement
for the period 2017-18 to 2022-23. However, neither these debit transactions were reflected in the cash
book of PDMA Funds nor relevant record to verify the expenditure was available. Details are as under:
Sr. No. Cheque No. Date Amount (Rs.)
1. 8519876 01.03.2022 38,787,500
2. 867390 08.02.2021 6,000,000

3. 867389 01.02.2021 30,872,000
4. 867362 30.03.2020 3,000,000
5. 867345 10.04.2018 1,143,600

6. 867346 10.04.2018 6,297,600
7. 867344 16.06.2017 12,524,000

8. 867343 19.04.2017 3,994,900
9. 867337 18.04.2017 1,440,000
10. 867328 18.04.2017 3,013,700
11. 867332 18.04.2017 882,600
12. 867338 18.04.2017 989,600
13. 867334 18.04.2017 2,421,950
14. 867335 18.04.2017 2,421,950
15. 867333 17.04.2017 2,046,600
16. 867326 17.04.2017 2,872,300
Total 118,708,300
Audit held that in absence of entries in cash book and supporting record, the authenticity of the
transaction could not be verified. Further, misuse / misappropriation of funds could not be ruled out.
110
Audit recommends that absence of entries in cash book and supporting record of the expenditure
may be investigated at appropriate level and outcome may be shared with audit authorities.
(Para No. 2 of AIR 2022-23 DDMU Kohistan Lower at Pattan)
Public Service Delivery / Performance
1.4.34 Loss to Government exchequer due to negligence of PDMA – Rs. 133.262 million
According to Para 23 of General Financial Rules (GFR) Vol-I, every Government officer
should realize fully and clearly that he would be held personally responsible for any loss sustained
by Government through fraud or negligence on his part and that he will also be held personally
responsible for any loss arising from fraud or negligence on the part of any other Government
officer to the extent to which it may be shown that he contributed to the loss by his own action or
negligence.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa awarded a
contract for supply of 5750 tents to M/s Azmat Khan & Brothers on 31.05.2016. The contractor
delivered the ordered quantity on 25.07.2016 and submitted the bill amounting to Rs. 80.420
million. However, PDMA asserted that tents were found substandard and consequently, PDMA
decided to withhold the payment and requested the contractor to replace the defective tents. The
contractor contested the decision of PDMA by filing writ petition before the Peshawar High Court
Peshawar.
observed as under:
i. PDMA failed to establish its stance of defective tents before the honorable Court,
leading to the Court’s decision in favor of the contractor.
ii. PDMA did not file an appeal against the Court’s decree. The contractor filed execution
petition against which PDMA filed objection petition. However, the Court dismissed
the objection petition, stating that since PDMA had not filed an appeal against the
decree, the decree had attained finality.
iii. The honorable Court ordered payment of Rs.133.262 million including interest amount
of Rs. 51.242 million to contractor. Accordingly, an amount of Rs. 82.195 million was
paid to the contractor vide pay order No. 07470563 dated 22.03.2022. The status of
payment of interest amount was not made known to audit.
Audit held that mismanagement, negligence and apparent connivance on part of the
management resulted in loss of Rs. 133.261 million to the government exchequer.
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Initial audit observation was issued on 09.08.2023. The management replied that Civil Judge-I
Peshawar announced decree in favor of contractor, which was challenged through an objection petition by
PDMA. However, the objection petition was dismissed and subsequent First Appeal was also dismissed.
The lower court then attached the PDMF account and directed the Manager NBP to pay the decreed amount
to the contractor. The order is currently challenged in the Apex court.
The reply was not acceptable because PDMA did not file appeal against the order of Civil Judge-I
Peshawar on 02.11.2021. Instead, PDMA submitted an objection petition against the execution petition of
the petitioner/contractor. The court dismissed the objection petition, citing that since PDMA had not
appealed against the order 02.11.2021, the petitioner's decree had attained finality.
DAC directed PDMA to conduct a fact-finding inquiry and its outcome be shared with the
administrative department and audit authorities.
(Para No. 3 of AIR 2022-23 PDMA, Khyber Pakhtunkhwa)
1.4.35 Irregular use of relief funds for non-specified purposes in contravention to Relief
Policy 2019 – Rs. 15.723 million
According to letter No. PDMA/Accts/4-2/2022-23 dated 18.07.2022 of Provincial Disaster
Management Authority (PDMA) Peshawar, the expenditure may be incurred from the released funds as per
Relief Policy 2019 in vogue such as payment for compensation to disaster / flood affectees, provision of
cooked food (in case of emergency declaration) and provision of food packages after fulfillment of codal
formalities.
District Disaster Management Unit (DDMU) Tank paid an amount of Rs. 15.723 million to M/s
Eminent Technologies on account of miscellaneous civil works i.e. desilting of blocked water
ways/channels, rehabilitation of damaged roads, rehabilitation of protection walls / bands etc. during the
During the audit of DDMU Tank for the financial year 2022-23, it was observed that the funds
were utilized in contravention of the relief policy 2019 as expenditure incurred on civil works was not
covered under the policy and PDMA instructions.
Audit held that utilization of funds for non-specified purposes was irregular.
Audit recommends to inquire the matter and fix responsibility against the persons at fault.
(Para No. 2 of AIR 2022-23 DDMU Tank)
1.4.36 Non-retrieval of 29 vehicles by PDMA resulting in recurring cost on hiring of rented

vehicles – Rs. 7.668 million
112
According to Para 10(i) of General Financial Rules (GFR) Vol-I, every public officer is expected
to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary
prudence would exercise in respect of expenditure of his own money. Further, according to Para 11, each
head of a department is responsible for enforcing financial order and strict economy at every step. He is
responsible for observance of all relevant financial rules and regulations both by his own office and by
subordinate disbursing officers.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa incurred an expenditure
amounting to Rs. 7.668 million on rent of nine (09) vehicles during the financial year 2022-23. The details
of rented vehicles and their usage is at (Annexure-XVIII-a)
During Audit of PDMA Khyber Pakhtunkhwa for the financial year 2022-23, it was observed as
under:
i. PDMA had allotted 29 vehicles from its pool of 65 vehicles to other departments and these
vehicles were not retrieved till conclusion of audit i.e. August 2023.
ii. PDMA had hired nine (09) vehicles and was incurring recurring expenditure on account of
rental charges. (Annexure-XVIII-b)
Audit held that this practice revealed a clear case of inefficiency where on one hand, PDMA allotted
its vehicles to other departments and on other hand, had incurred unnecessary cost for renting the hired
vehicles. Had PDMA retrieved the 29 vehicles, a substantial amount spent on a rental charges could have
been avoided.
Initial audit observation was issued on 09.08.2023. The management replied that some vehicles
have been retrieved and letters have been issued for the retrieval of the remaining vehicles. The DAC was
further apprised that PDMA is overseeing Camp Management at Baka Khel and addressing the needs of
remaining TDPs in Bannu and surrounding districts. Moreover, given the ongoing activities such as CLCP,
immediate rehabilitation and relief efforts during natural and manmade disasters, frequent travel of PDMA
staff is necessary. However, the available vehicles with PDMA are not roadworthy. Therefore, PDMA has
hired a few vehicles to ensure the smooth operation of its activities.
The reply was not acceptable because PDMA had allotted 29 vehicles to other departments, while
huge recurring expenditure was being incurred on account of hiring of rented vehicles.
expressed a serious concern and disagreement with the management's response and directed PDMA to
immediately retrieve all vehicles and to gradually discontinue the use of rental vehicles accordingly.
(Para No. 29 and 30 of AIR 2022-23 PDMA, Khyber Pakhtunkhwa)
1.4.37 Non-preparation of Provincial Disaster Management Plan by PDMA Khyber

Pakhtunkhwa
113
According to Section 17 of National Disaster Management Act 2010, there shall be a plan
for disaster management for every province to be called the provincial disaster management plan.
The provincial plan shall be prepared by the provincial authority having regard to the guidelines
laid down by the national authority after consultation with the district government.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa was required
to prepare Provincial Disaster Management Plan (PDMP) as per guidelines by the national
authority after consultation with the stakeholders.
the Authority had not prepared the Provincial Disaster Management Plan.
Audit held that non-preparation of the PDMP was a serious lapse on part of the
management resulting into unplanned execution of disaster management activities.
Initial audit observation was issued on 09.08.2023. The management replied that PDMA initiated
the process of preparing the PDMP. For this purpose, a specialized consultant firm, the NCEG has been
hired. The consultant has submitted the Inception Report with a completion timeframe of PDMP as
November 2023.
emphasized the significance of the Provincial Disaster Management Plan and directed the PDMA
management to present the PDMP in the upcoming DAC meeting.
1.4.38 Non-adherence to decisions of Khyber Pakhtunkhwa Rescue Emergency Council

According to decisions of 15th and 17th meeting of Khyber Pakhtunkhwa (KP) Rescue Emergency
Council held on 08.11.2021 and 27.04.2022 respectively, the council approved a committee to frame the
Terms of Reference (ToRs) for ambulatory service and directed that these TORs should be presented before
approval in the next meeting.
Further, according to decision of 14th meeting of KP Rescue Emergency Council held on
22.10.2019, the council constituted a sub-committee and directed to submit recommendations for framing
of regulations regarding emergency procurement. The council in its 15 th meeting held on 08.11.2021
decided that emergency procurement rules should be vetted from the Finance Department KPK and
afterwards the same would be submitted to the council for approval.
Rescue 1122, Khyber Pakhtunkhwa was required to implement the decisions of the Council taken
in the meetings held on 22.10.2019, 08.11.2021 and 27.04.2022.
as under:
114
i. Rescue 1122 had not formulated TORs for ambulatory services and submitted to the
Council for approval.
ii. Recommendations for framing of regulations regarding emergency procurement were not
submitted to the Council.
iii. Emergency procurement rules were not got vetted from the finance department KPK and
submitted to the Council for approval.
Audit held that non-compliance of the decisions of Rescue Emergency Council was a negligence
on the part of management resulting in undermining the strategic role of the body and non-implementation
of decisions taken for improvement of the Service in the Province.
Initial audit observation was issued on 25.08.2023. The management replied that SOP’s/TOR for
Ambulatory Service and regulations for emergency procurement have been prepared and submitted to
RR&S Department for approval and for consideration of the Rescue Council.
directed the Rescue-1122 to place the subject matter in the upcoming meeting of Rescue Council and share
the minutes of the same with audit Authorities.
115
1.4.39 Unjustified taking over of off-road vehicles from health Department
According to 47th meeting of Provincial Cabinet of Khyber Pakhtunkhwa, held on 27.11.2020, it
was decided that all road-worthy ambulances of Health Department shall be handed over to Rescue 1122.
Further, according to Relief Rehabilitation & Settlement Department Notification No. SO (Admn)
RR&SD/2-7/2020 dated 10.12.2020, (in pursuance of 47th meeting of Provincial Cabinet of Khyber
Pakhtunkhwa, held on 27.11.2020) the Director General Rescue 1122 KP was authorized to take over all
the road worthy ambulances of Health Department with immediate effect.
Rescue 1122 Khyber Pakhtunkhwa received total 469 ambulances from health department out of
which 355 ambulances were on-road, while 114 ambulances were off road.
that the management of Rescue 1122 KPK had taken over 114 off road/condemned ambulances from the
Health Department in violation of the decision of Provincial Cabinet. Moreover, despite lapse of a
considerable time the ambulances were not auctioned posing the risk of further deterioration and potential
financial loss.
Audit held that acceptance of condemned ambulances was violation of cabinet decision and may
led to potential loss to public exchequer.
Initial audit observation was issued on 25.08.2023. The management replied that the matter has
been taken up with health department for reverting the condemn Ambulances for Auction.
directed the management to expedite the matter regarding reverting the condemned ambulances back to
Health Department for auction and share the progress in next DAC meeting.
116
1.4.40 Non-distribution of relief items by DDMUs among the flood affectees 2022 resulting
in wastage of resources
According to Para 23 of General Financial Rules (GFR) Vol-I, every Government officer should
arising from fraud or negligence on the part of any other Government officer to the extent to which it may
be shown that he contributed to the loss by his own action or negligence
National Disaster Management Authority (NDMA) and Provincial Disaster Management Authority
(PDMA) Khyber Pakhtunkhwa provided various relief items to District Disaster Management Units
(DDMUs) for onward distribution among the flood affectees. Beside, donations from the friendly states
were also received through NDMA.
During the audit of DDMUs Swat, Pattan, Swabi, Dir Lower and Shangla for the financial year
2022-23, it was observed that a huge quantity of food items, medicine and other relief items i.e. Dettol and
cement bags etc. remained undistributed in the warehouses of respective DDMUs. These items were found
to be either expired or were near to expiry. (Annexure-XIX)
Audit held that non-distribution of relief items not only deprived the affectees from essential
support but also led to wastage of valuable resources.
The matter was reported to the management of the respective DDMUs during August-October
2023, however no reply was received.
Audit recommends that management may look into the matter for corrective measures, besides non-
distribution of relief items may be probed into to fix responsibility against the person(s) at fault.
(Para No. 7&8, 11, 7, 6&9 and 7 of AIR 2022-23 DDMU Swat, Pattan, Swabi, Dir Lower, and Shangla)
117
1.4.41 Lack of proper warehouse facilities at DDMUs level
According to Para 151 of General Financial Rules (GFR) Vol-I, the head of an office or any other
officer entrusted with stores of any kind should take special care for arranging for their safe custody, for
keeping them in good and efficient condition and for protecting them from damage or deterioration. Suitable
accommodation should be provided more particularly for valuable and combustible stores.
District Disaster Management Units (DDMUs) in Khyber Pakhtunkhwa held a huge quantity of
relief items (food and non-food items) i.e. tents, blankets, kitchen sets and sweaters as balance quantity as
on 30.06.2023.
During the audit of DDMU Dassu, Pattan, Palas, Shangla, Dir upper, Dir lower, Swat, D.I. Khan,
Swabi, Charsadda and Nowshera for the financial year 2022-23, it was observed that the DDMUs lacked
proper warehouse facilities. The existing relief items stock was found stored in government offices /
education buildings and rented rooms. Critical deficiencies were consistently observed during the visit of
these storage locations including disorganized stacking, insufficient pallet utilization, inadequate air
circulation, structural instability, roof leakage, and rat infestations. Further details regarding the deficiencies
identified in each DDMU are at (Annexure-XX).
Audit held that in absence of proper warehouse facilities and adequate stacking mechanisms, there
was a significant risk of deterioration of the stored relief items resulting in substantial losses to government
exchequer.
The matter was reported to the management of respective DDMU during August-October 2023,
however no reply was received.
Audit recommends that management may take necessary effective measures to enhance storage
conditions and overall inventory management system for efficient relief supply chain.
(Para No. 13, 10, 5, 6, 6, 10, 6, 15, 5, 3 and 1 of AIR 2022-23 DDMU Dassu, Pattan, Palas, Shangla, Dir upper, Dir
lower, Swat, D.I. Khan, Swabi , Charsadda and Nowshera)
1.4.42 Non-preparation of Annual Financial Statements by PDMA Khyber Pakhtunkhwa

According to Clause 11.4 of the Accounting Procedure for operation / utilization of the Provincial
Disaster Management Fund of PDMA, the Annual Financial Statements will be prepared for the financial
year by 31st August of each calendar year and submitted to the Director General Audit for the purpose of
external audit.
Provincial Disaster Management Authority (PDMA) Khyber Pakhtunkhwa was required to prepare
annual financial statements in order to disclose information about the financial position, performance and
changes in financial position of the entity useful to a wide range of users and stakeholders.
PDMA had not prepared Annual Financial Statements since inception of the organization.
118
Audit held that non-preparation of Annual Financial Statements was violation of Accounting
Procedure of PDMA resulting into non-presentation of financial position and performance to the
stakeholders.
Initial audit observation was issued on 09.08.2023. The management replied that PDMA is funded
through the provincial consolidated fund. The responsibility for preparing financial statements and
appropriation accounts, including receipts and payments, as well as assets and liabilities, falls under the
mandate of the Accountant General Khyber Pakhtunkhwa. The Accountant General Khyber Pakhtunkhwa
regularly submits these statements to the Controller General of Accounts and the Auditor General of
Pakistan.
The reply was not acceptable as according to Accounting Procedure for PDMA's Provincial
Disaster Management Fund, annual financial statements must be prepared by August 31 st each. Further, in
light of Finance Department Government of Khyber Pakhtunkhwa, Accounting Procedure for Special
Deposit Funds 2022, PDMA shall prepare financial statements as prescribed in IPSAS and shall be certified
by a Chartered Accountant. The audited financial statements shall be submitted to the Controller General
Accounts before 30th September each year.
directed the management of PDMA to prepare annual financial statements for the upcoming financial year
in accordance with specified timelines and accounting standards.

(Para No. 1 of AIR 2022-23 PDMA, Khyber Pakhtunkhwa)
Procurement
1.4.43 Unverifiable expenditure incurred on provision of food items to flood affectees 2022
According to Para 4.5.1.3 of Accounting Policies and Procedural Manual, while processing
expenditure, a sequentially numbered purchase order shall be raised by each DDO for all expenditures to
be incurred. All claim vouchers (bills) shall be approved by a delegated officer. Further, according to Para.
4.5.3, each claim should be accompanied by all necessary supporting documentation.
District Disaster Management Units (DDMUs) in Khyber Pakhtunkhwa incurred expenditure
amounting to Rs. 79.935 million for provision of cooked food and food items to the affectees of flood 2022.
The detail is as under:
(Rs. in million)
Sr.
Name of DDMU Amount Particulars
No.
1. Dera Ismail Khan 49.770 Cooked food
2. Nowhsera 20.150 Provision of cooked food
119
3. Kohistan Lower at Pattan 7.297 -do-
4. Kohistan Upper at Dassu 2.718 Purchase of food items
Total 79.935
During the audit of DDMU D.I. Khan, Nowshera, Pattan and Dassu for the financial year 2022-23,
it was observed as under:
i. There were no formal work orders issued to vendors / suppliers specifying the
quantity, rate and place of delivery.
i. There was no detail of relief camps, number of affectees accommodated in relief
camp, name of designated person responsible to distribute the cooked food etc.
Similarly, there was no record / information of beneficiary, distribution locations
etc. for the cooked food provided.
ii. Inspection / goods receipt note certifying the quality and quantity of items received
was also not available on record.
iii. There was no proper and arranged record / vouchers in respect of expenditure
incurred. This has led to difficulty in verifying the expenditure.
Audit held that in absence of proper work orders for provision of cooked food /food items and
record of other details, audit was unable to verify the expenditure incurred.
Audit recommends that payments for claims without issuing of formal work order and non-
maintenance of proper record may be inquired to fix reasonability.
(Para No. 20, 09, 06 and 08 of AIR 2022-23 DDMU Nowshera, D.I. Khan, Pattan and Dassu)
1.4.44 Unverifiable execution of claimed rehabilitation works due to non-fulfilling of codal

formalities and absence of supporting record – Rs. 15.723 million
According to Rule 6(1) of Khyber Pakhtunkhwa Public Procurement of Goods, Works and Services
Rules, 2014, the procuring entity shall use open competitive bidding as the principal method of procurement
for the procurement of goods over the value of Rs. 100,000 (rupees one hundred thousand). Further,
according to Para 54 of the rules ibid, any breach of these rules shall account to mis-procurement and the
person responsible for such breach shall be liable to be proceeded under the relevant law.
Moreover, according to Para 200 of General Financial Rules (GFR) Vol-I, for every work there
should be a duly sanctioned detailed estimate. It is also desirable that CPWA Form 24 or 27 should be used
for payment made to the contractors.
District Disaster Management Unit (DDMU) Tank incurred an expenditure amounting to Rs.
15.723 million on miscellaneous civil works such as desilting of blocked water ways/channels,
120
rehabilitation of damaged roads and rehabilitation of protection walls / bands. The works were carried out
through M/s Eminent Technologies during the financial year 2022-23. (Annexure-XXI)
During the audit of DDMU Tank for the financial year 2022-23, it was observed as under:
i. The work was carried out through quotation method without invoking emergency.
Moreover, the quotations were solely obtained from three pre-selected vendors leading to
selection of M/s Eminent Technologies for the civil works.
ii. The expenditure was incurred through splitting of works and thereby avoiding competitive
bidding process.
iii. M/s Eminent Technologies was registered with FBR as computer software services
provider. Hence, the civil work was executed through non-technical / irrelevant vendor.
iv. Proper estimates showing the detailed description of works such as measurement,
identification of the road/scheme with RDs, nature of work, drawing/designs, cross
sections along with technical sanction and administrative approval were not prepared. The
quotations were requested on per hour/per day basis instead of detailed estimates.
v. No record showing the actual work done i.e. invoice / bill showing the quantities and
measurement for the actual work done at site was available. Moreover, Measurement Book
(MB) was also not available to authenticate the actual execution of works at site.
vi. Neither any technical person was available with DDMU nor the services of technical staff
of C&W department, irrigation department, TMA was engaged for verifying the executed
work.
vii. There were no pre and post pictorial evidences along with GPS coordinates to ascertain the
work done.
Audit held that award of contract without open competitive bidding process and non-fulfillment of
codal formalities was in violation of rules resulting into irregular expenditure.
Audit recommends that claim of expenditure without fulfillment of codal formalities and in absence
relevant record may be inquired by the administrative department to fix responsibility on the persons at
fault and recover the loss.
(Para No. 4 & 6 of AIR 2022-23 DDMA Tank)
1.4.45 Purchase of land without proper documentation and expenditure in excess of PC-I
provision – Rs. 8.040 million
121
According to Rule 21 of Khyber Pakhtunkhwa Land Acquisition Rules, 2020, the Collector shall,
through Qaumi Commission and revenue officer concerned, determine the ownership of land and assess
the cost and compensation amount within 30 days of the notification under Section 4 of the Land
Acquisition Act 1984. Further, according to Rule 20(1), the Collector shall, after approval by the committee
under rule 10, notify a Qaumi Commission of elders comprising of members up to 20 in number, from
amongst the notables of the area where the land is proposed.
Moreover, according to Umbrella PC–I of the projects “Extension of Emergency Rescue Services
(Rescue 1122) in Sub Divisions (Frontier Regions) of Khyber Pakhtunkhwa”, the amount allocated for
purchase of land in Frontier Regions Kohat was Rs. 5.000 million.
Rescue 1122 Khyber Pakhtunkhwa incurred an expenditure amounting to Rs. 8.040 million on
acquiring land for the project “Extension of Emergency Rescue Service (Rescue-1122) in Frontier Regions
of Khyber Pakhtunkhwa” during the financial year 2022-23.
as under:
i. The documents regarding assessment of rates by Qaumi Commission and revenue officer
concerned as well as acquisition roll showing the disbursement of amount to the land
owners were not available. Moreover, documentary evidence regarding demarcation,
taking possession of acquired land and transfer of title of land (mutation deed) on the name
of Rescue 1122 KP was not available.
ii. The funds amounting to Rs. 5.000 million were allocated for purchase of land whereas
department incurred expenditure amounting to Rs. 8.040 million. Hence expenditure
amounting to Rs. 3.040 million (60% of allocated cost) were incurred in excess of
allocation without revision of PC-I.
Audit held that in absence of documents related to assessment of rates and transfer to tittle of
acquired land on the name of Rescue-1122, the payment made for purchase of land could not be
authenticated. Moreover, incurrence of expenditure in excess of PC-I provision resulted into irregular
expenditure.
Initial audit observation was issued on 25.08.2023. The management replied that the possession
and demarcation of the land will be made after award of land from the District Administration. Moreover,
the matter has been taken up for revision of PC-I.
directed that para stands till provision of documentary evidence regarding award of land to Rescue 1122
and possession of land by the Rescue service. Moreover, Rescue-1122 to furnish the revised PC-I upon
approval from the competent forum. DAC decided that the para will be discussed in subsequent DAC in
the light of compliance made by department.
(Para No.01 & 05 of AIR 2022-23 Rescue-1122, Khyber Pakhtunkhwa)
122
1.4.46 Unverifiable procurement of transportation services – Rs. 3.052 million
According to Para 4.5.1.3 of Accounting Policies and Procedural Manual, while processing
expenditure, a sequentially numbered purchase order shall be raised by each DDO for all expenditures to
be incurred. All claim vouchers (bills) shall be approved by a delegated officer. Further, according to Para.
4.5.3, each claim should be accompanied by all necessary supporting documentation. Change criteria with
KPPRA.
District Disaster Management Unit (DDMU) Charsadda paid an amount of Rs.3.052 million for
hiring transportation services during flood relief 2022. (Annexure-XXII)
During audit of DDMU Charsada for the financial year 2022-23, it was observed as under:
i. There were no formal work orders issued to vendors specifying the date, time, number of
floods affectees to be evacuated, number of trips involved and location of evacuation and
destination.
ii. The payment was made to various vendors on account of transportation facility provided
to evacuate flood affectees. However, necessary record such as list / detail of beneficiaries,
trip record, pictorial evidences of relief operations or any other official documentation
confirming engagement of transportation services was not available.
iii. The voucher / bill of the vendor lacked confirmation / verification of the concerned revenue
officer.
Audit held that in the absence of proper record in support of payment the expenditure incurred
could not be verified.
Audit recommends that irregular expenditure without supporting record may be inquired to fix
the responsibility on the person (s) at fault.
(Para No. 7 of AIR 2022-23 DDMU Charsadda)
123
Chapter – 2
Environmental Protection Agency under Forest, Environment & Wildlife
Department, Government of Khyber Pakhtunkhwa
2.1 Introduction
A. Environment Protection Agency (EPA) Khyber Pakhtunkhwa was established in 1989 with
headquarters at Peshawar. After 18th Amendment in the Constitution of Islamic Republic of Pakistan, the
subject of environment was devolved to the provinces. Consequently, Khyber Pakhtunkhwa province
enacted the Khyber Pakhtunkhwa Environmental Protection Act, 2014.
EPA Khyber Pakhtunkhwa is mandated to check and monitor compliance with applicable
environmental laws, rules and regulations. The major functions of EPA include protection, conservation,
rehabilitation and improvement of environment; prevention and control of pollution; and promotion of
sustainable development in the Province. EPA Khyber Pakhtunkhwa has established its Sub-offices in 04
regions i.e. Peshawar, D.I Khan, Abbottabad & Swat.
B. Comments on Budget & Accounts of audited formation (Variance Analysis)
(Rs. in million)
Sr. Financial
Name of Formation Budget Expenditure Savings
No. Years
Environmental Protection Agency
1. 2022-23 (HQ) (including Central Directorate, 120.362 85.937 34.425
Peshawar)
Source: budget and expenditure statements
C. Sectoral Analysis
Environmental Protection Agency (EPA) works under the administrative control of Forestry,
Environment & Wildlife Department, Khyber Pakhtunkhwa.
The detail of budget and expenditure of EPA Khyber Pakhtunkhwa for the financial years 2022-23
and 2021-22 is as under:
124
(Rs. in million)
Sr. No. Financial Year Budget Expenditure Savings

1. 2022-23 230.418 146.613 83.805
2. 2021-22 98.678 67.957 30.721
Graphical representation of the budget and expenditure for the last two financial years is as under:
Budget & Expenditure
Budget (Rs. in million) Expenditure (Rs. in million)
230.418
146.613
98.678 67.957
FY 2022-23 FY 2021-22
The major portion of expenditure of EPA, Khyber Pakhtunkhwa relates to Employees Related
Expenses.
The role of Environmental Protection Agency, Khyber Pakhtunkhwa is pivotal for environmental
protection in the province. Main industries under the jurisdiction of EPA, Khyber Pakhtunkhwa are detailed
as under:
Sr. No. Description of industrial units Number of units
1. Steel 29
2. Paper and packaging 18
3. Chipboard 04
4. Ghee and Banaspati 11
5. Plastic 16
6. Grinding 25
7. Poultry Feed 07
8. Chemical & Lubricants 17
9. Pharma 21
10. Food & Beverages 18
11. Woolen mills 06
12. Miscellaneous 14
Total 186
Source: Industrial survey by EPA, Khyber Pakhtunkhwa
Major industries in the jurisdiction of EPA, Khyber Pakhtunkhwa in term of percentage (%) are
graphically illustrated as under:
125
Main industires under jurisdiction of EPA Kyber
Paktunkhwa
Miscellaneous
Woolen mills 7%
3%
Food & Beverages Steel
10% 16%
Paper and
packaging
Pharma 10%
Chipboard
11% 2%
Plastic Ghee and

Chemical & Grinding 9% Banaspati
Lubricants 13% 6%
9% Poultry Feed
4%
An analysis of the audit findings contained in audit reports of the Auditor General of Pakistan
indicate that the EPA has not been able to fully achieve its objectives as were conceived since inception
and effective environmental protection in the Province remains a challenge.
Only one Environmental lab is available in Peshawar and that too is understaffed. This has led to
non-gathering of data regarding various sectors of environment in Khyber Pakhtunkhwa. EPA is also
handicapped due to staff shortage and want of logistic support which has further weakened its monitoring
capacity. Environment Protection Agency (EPA) Khyber Pakhtunkhwa has not been able to promote a
culture of research and development in the province to contribute towards the prevention of pollution and
sustainable economic development. Similarly, EPA Khyber Pakhtunkhwa also lacked in recommending
environmental courses, topics, literature and books for incorporation in the curricula and syllabus of
educational institutions as required under Environmental Protection Act.
In the provincial ADP, there were only two (2) ongoing projects of EPA. One was related to Zigzag
technology for Brick Kilns and other was for establishment of labs in the regional offices. Similarly, the
Federal PSDP has also not catered for any environmental scheme for Khyber Pakhtunkhwa. In order to
address the environment related issues in the province, there is a strong need to enhance the share of
Environmental Protection Agency (EPA) in the provincial ADP as well as launching of schemes under
Federal PSDP.
EPA Khyber Pakhtunkhwa has recently taken some positive steps to strengthen the process of
environmental approvals and monitoring. The Khyber Pakhtunkhwa Environmental Assessment Rules,
2021 were issued on 02.09.2021. These rules replaced the Pakistan Environmental Protection Agency
(Review of Initial Environmental Examination and Environmental Impact Assessment Regulations), 2000
which were previously used for issuance of environmental approvals to the proponents.
It was noticed that since inception EPA Khyber Pakhtunkhwa could not operationalize and utilize
KP Environmental Improvement Fund for providing financial assistance to the projects in public and private
sectors and activities/operations of the agency designed for the protection, conservation, rehabilitation and
improvement of the environment, prevention and control of pollution.
126
EPA Khyber Pakhtunkhwa has neither notified the environmentally sensitive area in the geographic
region of KP nor constituted the Environmental Monitoring Committee (EMC) to take suitable mitigation
measures in solving environmental problems and creating awareness on environmental issues.
127
Table I: Audit profile of Forest, Environment & Wildlife Department, Government of Khyber
Pakhtunkhwa (Environment only).
(Rs. in million)
Sr. Description Total Audited Expenditure Revenue/Receipts

No. Nos. audited FY audited FY
2022-23 2022-23
1. Formations 7 2 (EPA HQs 85.937 Nil
including
Central
Directorate )
2.  Assignment Nil - Nil Nil
Account Nil -
 SDAs Nil -
 Etc.
(excluding FAP)
3. Authorities Nil - Nil Nil
/Autonomous bodies
etc. under the PAO
4. Foreign Aided Nil - Nil Nil
project (FAP)

Audit observations amounting to Rs. 23.642 million have been raised pertaining to
Environmental Protection Agency, Khyber Pakhtunkhwa. Recovery of Rs.20.142 million has
been pointed out in the audit observations. Summary of the audit observations classified by
nature is as under:
Table II: Overview of Audit Observations
(Rs. in million)
Sr. Classification Amount
No
1. Irregularities 3.500
A HR / Internal Control Weaknesses 3.500
B Procurement 0.000
2. Financial Management 20.142
3. Public Service Delivery / Performance 0.000
2.3 Brief Comments on the Status of Compliance with PAC Decision

The Directorate General Audit (CC&E) started auditing and reporting EPA Khyber Pakhtunkhwa
since financial year 2019-20. No Audit Report has been discussed in PAC meeting so far.
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2.4 AUDIT PARAS
Public Service Delivery / Performance
2.4.1 Non-operationalization of Khyber Pakhtunkhwa Environmental Improvement Fund

resulting in non-achievement of objectives of EPA
According to Section 8(4)(i),(ii)&(v) of the Khyber Pakhtunkhwa Environmental Protection Act
2014, the Khyber Pakhtunkhwa Environmental Improvement Fund shall be utilized for providing financial
assistance to the projects in public and private sectors and activities/operations of the agency designed for
the protection, conservation, rehabilitation and improvement of the environment, prevention and control of
pollution. Further, according to Section 10 (1)(ii), the Board shall have the power to invest the fund in such
profit-bearing government bonds, saving schemes and securities as it may deem suitable.
Environmental Protection Agency (EPA), Khyber Pakhtunkhwa maintained a PLS account at Bank
of Khyber titled ‘Khyber Pakhtunkhwa Environmental Improvement Fund’ since 16.08.2016. An amount
of Rs. 141.115 million was available in the bank account as on 30.06.2023.
During audit of EPA Khyber Pakhtunkhwa for the financial year 2022-23, it was observed as under:
i. The Environmental Improvement Fund was not operationalized and was not being utilized
for the purposes specified in the Act.
ii. Funds were not invested in profit-bearing schemes and securities as required under the Act
and were placed idle in the Bank of Khyber.
iii. Interest rate offered by Bank of Khyber (BoK) was lower than the policy rates notified by
the State Bank of Pakistan from time to time which resulted in loss of interest amounting
to Rs. 9.446 million. Detail is as under:
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(Rs. in million)
SBP policy rate Difference in
Interest rate Interest
as per interest rate Loss due to low
Principal offered by amount
Sr. No Date Monetary applied by BoK interest rate
Amount BoK per paid by
Policy and Policy rate paid by BoK
annum (%) BoK
Statement (%) (%)
(1) (2) (3) (4) (5) (6) 6-4 = (7) 3x7= (8)
1. 01.07.2022 60.069 6.79% 2.039 13.75% 6.96% 2.081
2. 03.01.2023 94.980 10.95% 5.198 16.00% 5.05% 2.398
3. 04.07.2023 141.115 14.96% 10.555 22.00% 7.04% 4.967
Total 9.446
Audit held that non-operationalization of the Fund resulted in non-achievement of the objectives
of the Agency.
Initial audit observation was issued on 11.08.2023. The management replied that the Fund shall be
managed by the Board which was constituted in 2018 and its first meeting was held in July 2023 to discuss
the EIF-Investment Plan. Further, Bank of Khyber was approached for investment of EIF funds who had
agreed upon the investment of funds at the rate of 21.5%. However, the same was in process. Moreover,
the case of lower interest rate has been taken up with the Bank of Khyber to increase the rate of interest as
per policy of the SBP.
The PAO was requested to convene DAC meeting vide letters dated 12.09.2023, 26.10.2023,
17.11.2023 and 30.11.2023. However, the meeting was not convened by the PAO till finalization of this
report.
Audit recommends that Khyber Pakhtunkhwa Environmental Improvement Fund may be
operationalized and utilized for the specified objectives as conceived in the Khyber Pakhtunkhwa
Environmental Protection Act 2014.
(Para No. 01, 03 & 04 of AIR 2022-23 KP-EPA)
2.4.2 Non-declaration of ‘environmentally sensitive areas’ in the province by EPA Khyber

Pakhtunkhwa
According to Rule 24(1) of Khyber Pakhtunkhwa Environmental Assessment Rules, 2021, the
Agency may, after approval of the Government designate an area to be environmental sensitive area.
Further, according to Rule 24(3), the Agency may from time to time, issue guidelines to assist proponents
and other persons involved in the environmental assessment process to plan and prepare projects located in
environmentally sensitive areas.
Environmental Protection Agency (EPA), Khyber Pakhtunkhwa was required to notify the
environmentally sensitive areas in the province in pursuance of Environmental Assessment Rules, 2021.
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During audit of EPA Khyber Pakhtunkhwa for the financial year 2022-23, it was observed that the
Agency neither notified environmentally sensitive areas nor issued any guidelines to assist toward planning
and preparation of projects located in environmentally sensitive areas.
Audit held that non-declaration of environmentally sensitive areas in the province by the EPA was
violation of the rules resulting in lack of required planning and due diligence required in initiating projects
in such areas.
Initial audit observation was issued on 11.08.2023. The management replied that the data and
identification of potentially sensitive areas have already been asked from EPA KP Regional Offices which
shall be placed on the Agenda of the upcoming meeting of the Environmental Assessment Advisory
Committee. Further, Forest & Wildlife protected areas and Archaeological sites have already been
considered as sensitive areas.
report.
Audit recommends that the environmentally sensitive areas may be notified by the Agency and
guidelines may also be issued accordingly to regulate the projects in such areas.
No. 2.4.11 and Performance Audit Report on approvals & clearances of IEE/EIA and post clearness
monitoring during last three years by EPA, Khyber Pakhtunkhwa for the Audit Year 2021-22 vide Para No.
5.3. Recurrence of same irregularity is a matter of serious concern.
(Para No. 13 of AIR 2022-23 KP-EPA)
Financial Management
2.4.3 Non-deposit of profit into Government treasury and unauthorized deduction of

Income Tax – Rs. 17.792 million
According to Para-3(ix) of Government of Khyber Pakhtunkhwa Finance Department
letterNo.2/3(F/L)/FD/2019-20/ Vol-XIII dated 03.02.2020, current account should be converted into PLS
mode and the profit earned on designated bank accounts be deposited in Government Treasury immediately
except where Departments/ Offices/ Autonomous & Semi-autonomous Bodies/ Organizations/
Corporations have been specifically permitted under some Statute /Act.
Moreover, according to Section 49 (2) of Income Tax Ordinance 2001, the income of a Provincial
Government or a Local Government in Pakistan shall be exempt from tax under this Ordinance.
Environmental Protection Agency (EPA), Khyber Pakhtunkhwa maintained a PLS saving account
at Bank of Khyber for the purpose of Khyber Pakhtunkhwa Environmental Improvement Fund. Profit /
interest earned on the account amounting to Rs. 17.792 million was transferred into the Fund account during
the financial year 2022-23.
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Bank of Khyber deducted Income Tax amounting to Rs. 4.253 million from profit / interest earned.
(Rs. in million)
Interest Advance Income

Sr. Name of Bank and Branch
Date paid by tax deducted by
No. Name
bank Bank
1. The Bank of Khyber, Civil 01.07.2022 2.039 0.306
Secretariat Branch, Peshawar
2. 03.01.2023 5.198 0.780
3. 04.07.2023 10.555 3.167
Total 17.792 4.253
During audit of EPA Khyber Pakhtunkhwa for the financial year 2022-23, it was observed as under:
i. Profit earned on the account was not deposited into government treasury and was retained
in the Fund account.
ii. The Bank of Khyber deducted Income Tax amounting to Rs. 4.253 million despite the fact
that the entity was exempt from tax.
Audit held that non-deposit of profit into government treasury and retaining the same in EPAs
designated account was violation of rules. Besides, unauthorized deduction of Income Tax resulted in loss
of Rs. 4.253 million to the Agency.
Initial audit observation was issued on 11.08.2023. The management replied that according to
Section-8 of the Khyber Pakhtunkhwa Environmental Protection Act the board may invest the Fund in such
profit bearing government bonds, saving schemes and securities as it may deem suitable and may take such
measures and exercise such powers as may be necessary for utilization of the Fund for the purposes
specified in sub-sec 3 of section 8. The management further replied that the case of un-authorized deduction
of advance Income Tax has been taken up with the Inland Review Department as par policy of government
of Pakistan.
The reply of the management was not satisfactory as EPA was not authorized to retain the profit
earned on the Fund.
report.
Audit recommends that the profit may be deposited into government treasury, besides recovery of
Income Tax from the Bank of Khyber.
(Para No. 06 and 14 of AIR 2022-23 KP-EPA)
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2.4.4 Non-recovery of Initial Environmental Examination (IEE) review fee– Rs. 2.350
million
According to Rule 7 of Khyber Pakhtunkhwa Environmental Assessment Rules, 2021, the
proponent shall pay, at the time of submission of an Environmental Impact Assessment (EIA) or
Initial Environmental Examination (IEE) or General Environmental Approval (GEA), a non-
refundable review fee to the specified account of the Agency, as per rates given in Schedule-V.
Whereas, Schedule-V to Khyber Pakhtunkhwa Environmental Assessment Rules, 2021 states that
the project requiring IEE shall deposit Review Fee amounting to Rs. 250,000.
Environmental Protection Agency (EPA), Khyber Pakhtunkhwa issued show cause notices
to various proponents for deposit of IEE fee in accordance with Schedule-V to Khyber
Pakhtunkhwa Environmental Assessment Rules, 2021.
During audit of EPA Khyber Pakhtunkhwa for the financial year 2022-23, it was observed that
despite issuance of show cause notices, various proponents had not deposited the outstanding amounts of
review fee amounting to Rs. 2.350 million. Details are as under:
(Rs. in million)
Fee
Sr. Show Cause Nature of Fee as Fee to be
Name of proponent
No. notice Date Business Deposited per recovered
rules
1. 03.02.2023 Syed Naqash Haider Crush Plant 0.045 0.750 0.705
2. 03.02.2023 Syed Fakhar Abbass Crush Plant 0.015 0.250 0.235
3. 03.02.2023 Mr. Abdul Rehman Crush Plant 0.015 0.250 0.235
4. 03.02.2023 Mr. Imtiaz Ahmed Crush Plant 0.015 0.250 0.235
5. 03.02.2023 Mr. Husnain Tariq Crush Plant 0.015 0.250 0.235
6. 03.02.2023 Mr. Muhammad Arshad Crush Plant 0.015 0.250 0.235
7. 03.02.2023 Mr. Babar Khan LPG Plant 0.015 0.250 0.235
8. 03.02.2023 Mr. Israr Arshad Crush Plant 0.015 0.250 0.235
Total 2.350
Audit held that non-recovery of outstanding review fee resulted in loss amounting to Rs. 2.350
million to the government exchequer.
Initial audit observation was issued on 11.08.2023. The management replied that the office of the
Director (North), EPA Regional Office Abbottabad has issued show cause notices to the proponents.
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report.
Audit recommends that outstanding amount of review fee may be recovered from the proponents
within one month period.
HR / Internal Control Weaknesses
2.4.5 Development of housing scheme without environmental approval by EPA

According to Section 18(1) of Khyber Pakhtunkhwa Environmental Protection Act 2014, whoever
contravenes or fails to comply with the provisions of Sections 11, 12, 13, 14 and 17 or any order passed
issued thereunder, shall be punishable with a minimum fine of fifty thousand rupees which may extend to
five million rupees, and in the case of a continuing contravention of failure, with a compulsory additional
fine which may extend to one hundred thousand rupees for every day during which such contravention or
failure continues.
Environmental Protection Agency (EPA), Khyber Pakhtunkhwa conducted a field visit on
08.09.2022 to Mardan and had pointed out that development work of Multi Villas Housing Scheme Mardan
had started without prior approval of the Agency.
During audit of EPA Khyber Pakhtunkhwa for the financial year 2022-23, it was observed that the
Agency failed to take necessary punitive action against the housing society. Moreover, no penalty was
imposed by the EPA despite clear violation of Section 13 of EPA Act 2014. The penalty was required to be
imposed at the following rates:
(Rs. in million)
Per day fine Total
Closing date Further
Date of Specified due to Amount of
of FY 2022- Particulars default for
monitoring penalty continuing penalty to
23 249 days
default be imposed
Penalty against
continuous violation of
24.10.2022 30.06.2023 EPA Act 2014 as per 0.050 0.100 24.900 24.950
section 18 of KP EPA
Act
Audit held that inaction by EPA led to operation of the housing scheme without environmental
approval resulting in implications for environment..Moreover, non-imposition of penalty on proponent
resulted in loss to the Government.
134
Initial audit observation was issued on 11.08.2023. The management replied that the proponent
submitted IEE report followed by presentation on 11.11.2022, however, the review process was under
process in EPA, the imposition of administrative penalty was not possible at this stage.
The reply of the department was not satisfactory as neither the environmental approval was
accorded by EPA, nor penalty was imposed despite lapse of one year of submission of IEE report by the
proponent.
report.
Audit recommends that management may enforce the provision of the Act for illegal
operationalization of the scheme without environmental approval. Besides imposition of penalty as required
under the EPA Act.
2.4.6 Operation of marble factories in violation of EPA Act and non-imposition of penalties
According to Section 18(1) of Khyber Pakhtunkhwa Environmental Protection Act 2014, whoever
contravenes or fails to comply with the provisions of Sections 11, 12, 13, 14 and 17 or any order passed
issued thereunder, shall be punishable with a minimum fine of fifty thousand rupees which may extend to
five million rupees, and in the case of a continuing contravention of failure, with a compulsory additional
fine which may extend to one hundred thousand rupees for every day during which such contravention or
failure continues.
Environmental Protection Agency (EPA), Khyber Pakhtunkhwa issued ad-interim orders to the
proponents of twenty (20) marble factories located at Warsak road Peshawar as per Section 17(4) of Khyber
Pakhtunkhwa Environmental Protection (KP-EPA) Act 2014.
During audit of EPA Khyber Pakhtunkhwa for the financial years 2021-23, it was observed that
management had not imposed penalties on the proponents of the marble factories, despite issuance of ad-
interim orders. (Annexure –XXIII)
Audit held that non-imposition of penalties was unjustified resulting in loss to public exchequer
and further degradation of environment due to continued operation of the marble factories.
Initial audit observation was issued on 11.08.2023. The management replied that EPA utilized both
the option of conducting sealing operation, with the assistance of District Administration, and referring the
cases of violators to the Environmental Protection Tribunal. Further, whenever, the Government of Khyber
Pakhtunkhwa deliver its judgment/directions/orders regarding shifting of marble units to Mohmand
Economic Zone, the EPA being a regulatory authority will implement such directions in letter & spirit.
report.
135
Audit recommends that EPA may take necessary legal action against the pollutors, besides
imposition of penalty as required under the EPA Act.
/(Para No. 23 of AIR 2022-23 KP-EPA)
2.4.7 Non-obtaining of undertakings from proponents before commencement of the

projects
According to Rule 14(2) of Khyber Pakhtunkhwa Environmental Assessment Rules, 2021, where
the Agency accords its approval subject to certain conditions, the proponent shall, before commencing
construction of the project, acknowledge acceptance of the stipulated conditions by executing an
undertaking in the form specified in schedule-x on stamp paper.
Environmental Protection Agency (EPA), Khyber Pakhtunkhwa granted conditional environmental
approvals to different proponents during the financial year 2022-23. (Annexure-XXIV)
During audit of EPA Khyber Pakhtunkhwa for the financial year 2022-23, it was observed that EPA
had issued approvals for commencement of projects with certain conditions and requirement to be met by
the proponents, however,undertakings as specified in schedule-x were not obtained from the proponents for
compliance of the essential conditions of the approvals.
Audit held that non-obtaining of undertakings in prescribed form from the proponents was not
justified resulting in non-enforcement and non-monitoring of the essential conditions and requirements set
forth in the respective environmental approvals.
Initial audit observation was issued on 11.08.2023. The management replied that letter has been
issued to the proponent to submit schedule x within a week.
report.
Audit recommends that EPA may ensure to obtain undertakings from the proponents so as to ensure
that the stipulated conditions set forth at the time of granting environmental approvals are monitored and
fully met.
The issue was also reported earlier in the Performance Audit Report on approvals & clearances of
IEE/EIA and post clearness monitoring during last three years by EPA, Khyber Pakhtunkhwa for the Audit
Year 2021-22 vide Para No. 5.3. Recurrence of same issue / irregularity is a matter of serious concern.
2.4.8 Lack of effective monitoring mechanism for checking the implementation of

conditional approvals and activities committed at the stage of IEE/EIA submission
According to Rule 20(3) of Khyber Pakhtunkhwa Environmental Assessment Rules, 2021, to
enable the Agency to effectively monitor compliance with the conditions of approval, the proponent shall
furnish such additional information as the Agency may require.
Environmental Protection Agency (EPA), Khyber Pakhtunkhwa was established as a regulatory
136
body for the protection, conservation, rehabilitation and improvement of the environment and promotion
of sustainable development.
During audit of EPA Khyber Pakhtunkhwa for the financial years 2022-2023, it was observed that
the Agency had issued various environmental approvals with certain conditions, however, no post
monitoring was carried out to check and ascertain the compliance of the conditions of approvals and
commitments made at the time of submission of IEE/EIA by the proponents. Details are as under:
Nature of Date of
NameofProponent/Project Terms & conditions
Approval Approval
Remodeling of Thandiani Road, EIA 30.05.2023 The NOC recommended that replanting of
District Abbotabad suitable species of plants in lieu of each fell tree
shall be ensured as per procedure in vogue
Mardan LPG Private Ltd on IEE 02.06.2021 The proponent was issued show cause notice for
GPS Coordinates near Ambar non-compliance of conditions/mitigation
Interchange Tehsil Lahore measures in constructional phase of
District Swabi environmental approval
Audit held that without any effective monitoring system in place, the whole process of submission
of IEE and EIA and grant of approvals was ineffective resulting in non-implementation of the conditions
laid down at the time of the grant of environmental approvals.
Initial audit observation was issued on 11.08.2023. The management replied that the construction
environmental approval for the project “Mardan LPG Private Ltd on GPS Coordinates near Ambar
Interchange Tehsil Lahore District Swabi” was issued and the site was monitored for checking of the
conditions of approval. Further, on the basis of field visit report, the operational approval was issued to the
proponent.
The reply of the management was not satisfactory as documentary evidence in support of reply was
not provided. Further, no reply was provided about the Project “Remodeling of Thandiani Road, District
Abbotabad”.
report.
Audit recommends that a proper mechanism may be developed to monitor that proponents are
complying with the conditions of environmental approvals.
Moreover, regular sites visits and monitoring activities may be carried out to ensure compliance of environmental
laws and condition contained in the respective environmental approvals.
2.4.9 Non-obtaining of vouched accounts and non-adjustment of advances paid to C&W

department – Rs 3.500 million
137
According to Para 668 of Federal Treasury Rules Vol-I, advances granted under special orders of
competent authority to government officers for departmental or allied purposes may be drawn on the
responsibility and receipt of the officers for whom they are sanctioned, subject to adjustment by submission
of detailed accounts supported by vouchers or by refund, as may be necessary.
Environmental Protection Agency (EPA), Khyber Pakhtunkhwa transferred an amount of Rs. 3.500
million to C&W Department KP for civil works during financial year 2022-23.
During audit of EPA Khyber Pakhtunkhwa for the financial year 2022-23, it was observed that
vouched account containing the payment vouchers, bills, copies of sanctions and other supporting
documents were not obtained from the concerned department. Besides, the amount was not adjusted in the
books of accounts of EPA.
absence of vouched accounts and non-reconciliation of expenditure, the expenditure incurred by the
department could not be verified by the EPA.
Initial audit observation was issued on 11.08.2023. In reply the management provided utilization
certificate received from Communication & Works Department.
The reply of the management was not satisfactory as neither the vouched accounts were obtained
from C&W department nor the same were verified by the EPA for adjustment and retrieval of unspent
balance.
report.
Audit recommends that vouched accounts may be obtained from the concerned Department for
necessary scrutiny by the department and adjustment in the books of accounts.
138
AUDIT REPORT
ON
THE ACCOUNTS OF
GOVERNMENT OF
KHYBER PAKHTUNKHWA
AUDIT YEAR 2023-24
139
GOVERNMENT OF KHYBER PAKHTUNKHWA
1.3 Audit Paras
1.3.1 Expenditure in excess of original grant - Rs. 281,260 million
According to Para 4.2.8.2 and 4.2.3 of the APPM, the authorising officer must not authorise a
claim unless it has been duly certified and sufficient funds are available in the concerned budget head
to make the payment. The budget availability review function involves assessing whether the
expenditure or commitment entered into is provided in the Schedule of Authorized Expenditure and is
provided for in a Supplementary Grant. A budget availability review clearance form (form 4AA) will
be prepared following this function and approved by an officer who has the authority to incur the
expenditure.
During certification audit of Appropriation Accounts of the Government of Khyber Pakhtunkhwa

for the Financial Year 2022-23, it was noticed that total expenditure amounting to Rs. 1,166,439 million
was incurred against the Original Grant of Rs. 1,122,215 million. However, detailed grant-wise analysis
revealed that in certain grants, an expenditure of
Rs. 281,260 million was incurred in excess of the Original Grant (Annexure-I).
The lapse occurred due to violation of APPM, which resulted into excess expenditure over the
original grant.
In the DAC meeting held on 01.11.2023, it was discussed that the matter will be taken up with the
Finance Department for regularization of supplementary grant. The Committee decided that the para will
hold till valid authorization of the grants.
Audit recommends to obtain approval of the excess expenditure from the provincial assembly.
1.3.2 Unauthorized supplementary grant - Rs. 350,949 million
According to Article 126 of the Constitution of Islamic Republic of Pakistan 1973, notwithstanding
anything contained in the foregoing provisions relating to financial matters, at any time when the Provincial
Assembly stands dissolved, the Provincial Government may authorize expenditure from the Provincial
Consolidated Fund in respect of the estimated expenditure for a period not exceeding four months in any
financial year, pending completion of the procedure prescribed in Article 122 for the voting of grants and
the authentication of the schedule of authorized expenditure, in accordance with the provisions of Article
123 in relation to the expenditure.
During certification audit of Appropriation accounts of the Government of Khyber Pakhtunkhwa

for the Financial Year 2022-23, it was observed that supplementary grant amounting to Rs. 350,949 million
was incorporated in the appropriation accounts but the same was neither approved from the competent
forum nor signed by the Chief Minister Khyber Pakhtunkhwa. Audit held that without authorization of the
140
Supplementary Grant / Budget by the Chief Minister, the Finance Department and Accountant General
KPK were not authorized to incorporate the Supplementary Grant in the appropriation accounts.
The matter is brought to the notice for early authorization of the Supplementary Grant from the
competent forum as mentioned in the Constitution before incorporation into appropriation accounts.
The lapse occurred due to violation of Article 126 of the Constitution of Islamaic Republic of
Pakistan 1973 which resulted in unauthorized expenditure.
In the DAC meeting held on 01.11.2023, it was decided that the matter will be taken up with the
Finance Department for regularization of the supplimentry grant. The para will hold till corrective
measures.
Audit recommends to obtain authentication of the supplementary grant from the provincial
assembly.
1.3.3 Unjustified block allocation without expenditure in the relevant cost centres -
Rs. 15,786 million
According to Rule 65 of the GFR, the material on which the Budget and Demands for Grants are
based is obtained by Finance Division in the form of detailed estimates submitted by heads of departments,
administrations etc., who in their turn depend for the material on heads of offices and other offices who
collect the revenues or incur expenditure. The Accountant General is responsible for rendering such
assistance in the preparation, check and the consolidation of Budget Estimates and Demands for Grants as
may he required by Finance Division in consultation with the Auditor-General.
According to Rule 73 (xi) of GFR, lump sum provision in the budget should not be made or
proposed except in most exceptional circumstances, which should be invariably recorded. As far as
possible, provision for contingent charges under the primary unit “Other Charges” should be proposed
according to the prescribed detailed heads of expenditure so that the number of references to the Financial
Advisers / Finance Division is reduced to the minimum.

for the financial year 2022-23, it was observed that a sum of Rs. 15,786 million was unnecessarily allocated
under various grants in different cost centers (DDOs) without spending a single penny from these cost
centers. The allocated amounts were either re-appropriated or shown surrendered later on (Annexure-II).
The lapse occurred due to weak budgetary planning and violation of general financial rules which
resulted in idle funds parked in the cost centres.
In the DAC meeting held on 01.11.2023, it was discussed that the matter will be taken up with the
Finance Department. It was decided that the para will stand till corrective measures.
Audit recommends to investigate the matter for fixing of responsibility against the person(s) at fault
besides allocation of budget as per relevant rules / procedures.
141
1.3.4 Unauthorized reappropriation of funds without token money - Rs. 172.862 million
According to Para 97 of the GFR Vol-I, no re-appropriation shall be made without original /
supplementary grant. While S No. 7 (7) of the Delegation of Powers & Rules 2001 provides that re-
appropriation will not be made to meet the expenditure on purposes not contemplated in the Schedule of
authorized expenditure pertains to a particular year. If funds to meet such expenditure are not available
under the relevant grant, re-appropriation to meet such expenditure may be made but only after a token sum
has been authorized through a supplementary grant by the Finance department.

for the Financial Year 2022-23, it was observed that expenditure amounting to Rs.172.862 million incurred
under the various object heads in which no token money was granted in original grants or supplementary
grant while payments were made against the nil budget provision which was irregular and violation of
above rules. The details given below.
Grant Page Head of

Cost Centre Description Amount
No. No. A/c
2 11 PR5544 A04 Employee retirement benefits 381,000
2 12 -do- A06 Transfer 161,370,000
4 28 PR-4654 A05 Grant & Subsidies 1,500,000
8 47 PR-4646 A05 Grant & Subsidies 600,000
10 61 A05 Grant & Subsidies 2,400,000
More than one
10 77 DDOs A05 Grant & Subsidies 1,800,000
10 77 -do- A09 Physical Assets 300,000
More than one
11 86 DDOs A09 Physical Assets 4,511,200
Total 172,862,200
The lapse occurred due to weak financial controls and non-adherence to rules which resulted into
unauthorized reappropriation of funds.
In the DAC meeting held on 01.11.2023, it was decided that the para is recommded to be settled
subject to verification of revised draft manuscript of Appropriation Accounts. The revised draft was not
provided till date.
Audit recommends to justify the matter and take corrective measures.
1.3.5 Misclassification of developmental expenditure - Rs. 83,315 million

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According to Para 3.2.1.2 and 3.2.4.2 of the APPM, a number of other Government entities provide
support during the budget process. These include various committees responsible for the review and
approval of budget proposals (as nominated from time to time by the Ministry of Finance), including: The
Planning Commission, The Economic Affairs Division and the Accountant General. The budget will be
compiled to be consistent with the Chart of Accounts specifications.
According to Para 2.6 of the APPM, capital expenditure is defined as the expenditure incurred for
the purpose of acquiring, constructing or enhancing physical assets or on schemes of capital outlay, as given
by the object code in the Chart of Accounts.
According to Para 4.2.7.3 of the APPM, the verification of expenditure function involves the
certifying officer verifying the validity of the claim voucher, in accordance with procedures set out in
section 4.5.5, and ensure it correctly identifies the account head to which payment will be charged.
During certification audit of Financial Statements of Khyber Pakhtunkhwa for the Financial Year
2022-23, it was noticed that expenditure amounting to Rs. 90,618 million was booked under the head
A03970 – Others, out which an amount of Rs. 83,315 million was expended under the developmental funds
(NC12 and NC 22) (Annexure-III). However, the total expenditure including incurred from developmental
funds was treated as operating cost. Audit held that this expenditure pertains to developmental funds and
should have been capitalized and classified as developmental expenditure.
The lapse occurred due to violation of chart of accounts which resulted in mis-classification, under-
statement of developmental expenditure and over-statement of operating cost.
In the DAC meeting held on 17th October 2023, it was discussed that the budget was allocated in
the A03-operating expenses, the matter will be taken up with the Finance Department for corrective
measures. It was decided that the para will stand till correction of the amount observed.
Audit recommends to take corrective measures.
1.3.6 Misclassification and misstatement of expenditure of developmental budget as pay and

allowances - Rs. 1,257 million
According to Para 2.6 of the APPM, capital expenditure is defined as the expenditure incurred for
the purpose of acquiring, constructing or enhancing physical assets or on schemes of capital outlay, as given
by the object code in the Chart of Accounts.
According to Para 4.2.7.3 of the APPM, the verification of expenditure function involves the
certifying officer verifying the validity of the claim voucher, in accordance with procedures set out in
section 4.5.5, and ensure it correctly identifies the account head to which payment will be charged.
During certification audit of the Financial Statements of the Government of Khyber

Pakhtunkhwa for the Financial Year 2022-23, it was noticed in the data extracted from SAP that
143
employees of the projects were paid through SAP under direct credit system from the head A01
(pay and allowances). Wheras the funds of the projects were released under the Head A03970,
A12470 and A12270 etc (Others). The AG KPK paid the salaries to project employees from A01
Head amounting to Rs. 1,256.934 million booked under the A01 head but the amount was not
transferred to its relevant head (Annexure-IV).
The lapse occurred due to weak internal controls, non implementation of project accounting
and lack of relevant configuration in SAP, which resulted in booking of expenditure under the
wrong head leading to mis-classification, under-statement of project expenditure and over-
statement of pay and allowances by Rs. 1,256,934,743.
In the DAC meeting held on 17th October 2023, it was discussed that the matter will be taken up
with the departments for correction of the mis-classification pointed out. It was decided that the para will
stand till correction of the amount observed.
Audit recommends to adopt proper procedures for payment of salaries through SAP under
project module and timely reconciliation and correction of mis-classified expenditure.
1.3.7 Non reconciliation of the difference in bank and book balance –

Rs. 14,644 million
According to Para 6.3.5.2 of the APPM, the Accountant General (AG and AGPR) will prepare a
consolidated monthly reconciliation in the prescribed format for each of the government’s bank account
with the SBP under their jurisdiction.
During certification audit of Financial Statements of Government of Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was noticed that an amount of Rs. 47,188 million was shown as the closing
balance in the consolidated fund account whereas the cash balance was Rs. 16,501 million, which resulted
into a difference of Rs. 30,687 million. Later on, during reconciliation, an amount of Rs. 16,043 million
was reconciled and the remaining balance of Rs. 14,644 million was still not reconciled.
Audit held that without proper reconciliation, the figures cannot be authenticated.
The lapse occurred due to violation of APPM and non-maintenance of monthly reconciliation
record which resulted in difference in bank and book balance of cash.
In the DAC meeting held on 17th October 2023, it was decided that the para stands till correction
of the amount observed.
Audit recommends to reconcile the closing balances with the state bank of Pakistan.
1.3.8 Non-disclosure of receipts and payment by third parties in the financial statements
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According to Para 11.4.1.1 and 11.4.2.3 of APPM, all loan monies received must be recorded as a
capital receipt in the Federal or Provincial Consolidated Fund. This includes any direct loans from donors
to beneficiaries within the Government. The detail of all liabilities recognised shall be held in a Liabilities
Register by the AGPR and AG offices, and periodically updated as advised from the appropriate entities.
This Register shall hold a formal detailed and aggregated record of all recognised liabilities for the
respective Federal or Provincial Governments.
According to Para 2.2.8.1 and 2.2.8.2 of the Financial Reporting Manual, the AG/AGPR will
provide information on actual revenue collections by Minor Object heads against forecasts for the period
(forecasts may need to be prorated, where meaningful), identifying the collecting Division / Department
and on a year-to-date basis. This information will be generated from AG’s / AGPR’s own accounts as set
out in chapter 5 of APPM.
During certification audit of Financial Statements of the Government of Khyber Pakhtunkhwa for
the financial year 2022-23, it was observed that in the statement of cash flows, statement of receipts and
payments and statement of comparison of budget and actual expenditure; the receipts and payments from
the third parties payments were left blank. The said figures were also not recorded in the Finance Accounts
of the Government of Khyber Pakhtunkhwa due to which the above-mentioned statements did not present
a true and fair position. The same nature para has also been reported in the previous financial year’s
certification audit report.
The lapse occurred due to violation of prescribed accounting policies and procedures, which
resulted in non-completion of financial statements, understatement of receipts, expenditure and debt.
In the DAC meeting held on 17th October 2023, it was decided that the para will stand till correction
Audit recommends to complete the financial statements by incorporating the figures of the third
party.
1.3.9 Non reconciliation of foreign debt - Rs. 48,708 million

Understatement of receipts of Foreign Aided Projects - Rs. 21,715 million
According to Para 11.4 of APPM, all loan monies received must be recorded as a capital receipt in
the Federal or Provincial Consolidated Fund. This includes any direct loans from donors to beneficiaries
within the Government. Cash transactions arising from liabilities (eg. loan receipts, repayments of interest
and principal) shall be recorded in the Sub Ledger and General Ledger of the respective DAO/AG/AGPR
offices. The related non-cash transactions arising from liabilities (eg. loan liability, loss or gain on
exchange), shall also be recorded for incorporation into the Annual Accounts. Further according to para
11.5.1.2 of the said manual the AG/AGPR will reconcile the loan receipts and payments with EAD / MoF.
According to Para 11.3.2.3 and 11.3.2.4 of the APPM, external debt should be distinguished from
grants received from overseas donors. Such foreign assisted grants are not liabilities. Where external loans
are provided in the form of commodities, such as supplies, equipment and food, the liability shall be
recorded at the cash (Rupee) equivalent.
145
During certification audit of Financial Statements of Government of Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was noticed that an amount of Rs. 48,708 million was shown as foreign debt.
On detail scrutiny, it was observed that no further details of receipts and payment of individual loans was
available. The total amount received during the year was written as lump sum in the “statement of detail of
foreign loans” (page 77 of finance accounts). Moreover, no bifurcation was made between the debt and
grants received from foreign donors and the whole amount received was treated as foreign debt. Audit also
observed the following;
 Statement of domestic debt is updated upto 2017-18 and no further entries have been made
(Page No. 74 of the Finance Accounts)
 Loans from federal government is not updated since 2013-14 (Page No. 75 of the Finance
Accounts)
 An amount of Rs. 26,909 million was shown as opening and closing balance of debt from
Bank of Khyber, which was not traceable.
Further scrutiny and comparison of record produced by the Debt Management Unit of the Finance
Department KP with the figures reported in the Financial Statements revealed that the actual disbursement
from the foreign debt during the FY 2022-23 was Rs. 70,423 million. It showed that Rs. 21,715 million of
foreign debt was additionally raised by the Finance Department but was not taken into account.
The lapse occurred due to violation of APPM which resulted in reporting of unauthentic figures.
In the DAC meeting held on 17th October 2023, it was decided that the para will stand till correction
Audit recommends to reconcile the debt figures to present true and fair picture.
146
Chapter - 2
ESTABLISHMENT & ADMINISTRATION DEPARTMENT
2.1A) Introduction
The Establishment and Administration Department is the core administrative organ of the province
entrusted with General Administration and Establishment matters such as Posting Transfers within
secretariat and throughout the province. Its functions also include providing Protocol to Chief Minister,
President, and Prime Minister, State Guests and Official Delegation and arrangement of Cabinet meetings.
Estate Office of the Administration Department is responsible for maintaining official rest houses
in Islamabad, Abbottabad and Peshawar and allotment of government residential accommodations and
maintenance of these properties. Major beneficiaries of the department are the Provincial Government,
District Government and Provincial and District Employees.
As per Rules of Business 1985 (amended to date), the department has been assigned the following business;
 It shall be the responsibility of the Chief Secretary to coordinate the work of all departments of
Government.
 The Chief Secretary may call for any case or information from any Department or Attached
Department.
 The Establishment and Administration Department shall be responsible for:
o the determination of the principles of control of Government servants, including
recruitment, conditions of service and discipline;
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o the coordination of the policy of all Departments with respect to services under their control
so as to secure consistency of treatment;
o securing to all government servants the rights and privileges conferred on them by or under
any law for the time being in force; and
o determining the strength and the terms and conditions of services of the personal staff of
Ministers.
 Cabinet Work, including Cabinet of Minister (Appointment, Salaries and Privileges of Ministers);
and all secretarial work of the Cabinet of Ministers including convening of meetings.
 Chief Minister Secretariat Work
 Honours, Awards & Sanads for Public Services and Ceremonials like Warrant of precedence and
table of precedence; Pakistan Flag Rules; Civil uniforms; Court mournings; and Liveries &
Clothing Rules.
 Declaring Holidays and Office Hours.
 Office management including management of Civil Secretariat and Government Offices generally;
and Secretariat Standing Orders.
 All matters related to services like service rules and their interpretation, services associations, All
Pakistan Unified Group (APUG) Officers, and the matters relating to recruitment, training, pay
allowances, promotion, leave, postings etc. of the P.C.S (Executive Group), P.C.S (Secretariat
Group) Services, the Khyber Pakhtunkhwa Provincial Management Service; and the Ministerial
Establishment of the Provincial Secretariat.
 Preparation of Civil List and Official Gazette.
 Organization and Methods including periodic review of the organization staff, function and
procedures of the Departments, Attached Departments and Subordinate Offices, and suggestions
for improvement thereof; Improvement of general efficiency and economic execution of the
Government Business; Advice regarding proper utilization of stationery and printing resources of
the Government; and Training in Organization and Methods.
 Looking after the affairs of the Anti-Corruption; Public Service Commission; Estate Office; Khyber
Pakhtunkhwa. Services Tribunal; Benevolent Fund; staff cars pool; and Framing and alteration of
Rules of Business of Provincial Government and allocation of business among Ministers and
Departments; distribution of provincial quota of motor cars; and identity Cards for civil
officers/officials.
 Conduct of departmental examinations (Section Officers, Senior Scale Stenographers and
Assistants); and conduct of Departmental Examination of DMG (BS-17), PCS (EG), PMS officers
and Civil Tehsildars etc.
 Welfare and Group Insurance of Provincial Government employees, Formation of cadres and
classification of posts, Instructions for the preparations and submission of Annual Confidential
Reports, Declaration of Assets, Secretaries Committee Meetings; and Constitution of Selection
Board; Adhoc Committee; and Service Rules Committee.
 Relaxation of age limits rules; tendering advice to the referring department on service matters; and
principles regulating promotions from one post for a class to another.
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 Policies of departmental enquiries; advance copies of representations; change in the date of birth;
change of name; postings and transfers; marriage with foreign nationals; re-employment of retired
officers and extension in service to superannuated officers; relaxation of T.A. rules provincial
services; language examination rules; maintenance of cards by low paid officers; departmental
examinations rules processing; radio talk by government servants; guest / rest houses; and
concessions to candidates from Tribal and Backward Area.
 Government Servants Conduct Rules and their interpretation; Ordinance / Acts and Rules relating
to Service matters of Civil Servants; and Framing, Processing, Notifications and interpretation of
recruitment / service rules and amendment thereof; Writ petition filed by person retired under
Martial Law Regulation; Inter-Provincial transfers; General circulars, etc. and other matters
pertaining to Complaint Cell.
 Condonation of interpretation/breakage in service; Casual Leave Rules; State Guests; and Protocol.
 Matters relating to Federal Cabinet Meetings.
Audit Profile of Administration Department:

(Rs. in million)
Expenditure Revenue/Receipts
Total
S No. Description Audited Audited FY 2022- Audited FY 2022-
Nos
23 23
1 Formations 13 02 3,806 80
 Assignment Account
2  SDA Nil Nil Nil N/A
(Excluding FAP)
3 Authorities/Autonomous bodies etc. under PAO Nil Nil Nil N/A
4 Foreign Aided Projects (FAP) Nil Nil Nil N/A
2.1B) Comments on budget and accounts (variance analysis)
Summary of the Appropriation Accounts:
The summarized position of actual expenditure 2022-23 against the total of grants/appropriation
was as follows;
149
Non-Development:
(Amount in Rs.)
Grant # and
Grant Original Supp. Re- Total Actual Excess/
Name of Surrender Final Grant
Type Grant Grant Appropriation Expenditure (Savings)
Department
02-Provincial
NC24 365,777,000 0 0 51,679,580 314,097,420 314,089,920 -7,500
Executive
02-Econominc
Crime NC24 0 0 0 0 0 0 0
Investigation
02-Provincial
NC21 1,407,284,000 0 138,750,042 155,640,780 1,390,393,262 1,390,347,989 -45,273
Executive
02-
Administrative NC21 56,493,000 0 19,811,515 17,836,241 58,468,274 58,468,274 0
Inspection
02-District
NC21 13,055,000 0 10,662,600 5,309,000 18,408,600 18,408,600 0
Administration
02-
Estabishment NC21 2,698,194,000 0 -198,144,411 411,395,569 2,088,654,020 2,088,632,214 -21,806
services
02-
Administrative NC21 270,600,000 0 -39,952,128 40,896,317 189,751,555 189,751,555 0
Training
02-
NC21 175,578,000 0 20,816,703 32,887,636 163,507,067 163,507,067 0
Court/Justice
02-Anti-
NC21 369,165,000 0 48,055,679 31,005,631 386,215,048 386,215,048 0
Corruption
Total 5,356,146,000 0 0 746,650,754 4,609,495,246 4,609,420,667 -74,579
Final Grant Total Actual Expenditure Excess/ (Savings)

2,088,654,020
2,088,632,214
1,390,393,262
1,390,347,989
386,215,048
386,215,048
314,097,420
314,089,920
189,751,555
189,751,555
163,507,067
163,507,067
58,468,274
58,468,274
18,408,600
18,408,600
Amount in Rs.
150
Development:
(Amount in Rs.)
Grant # and
Grant Original Suppl Re- Final Total Actual Excess/
Name of Surrender
Type Grant Grant Appropriation Grant Expenditure (Savings)
Department
50-
Establishment NC22 159,441,000 0 15,000,000 79,441,000 95,000,000 95,000,000 0
&
Administration
NC12 291,650,000 0 35,000,000 249,855,289 76,794,711 76,794,711 0
Total 451,091,000 0 50,000,000 329,296,289 171,794,711 171,794,711 0
100,000,000
90,000,000
80,000,000
70,000,000
60,000,000
Amount in Rs.
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0
50- Establishment & Administration NC 22 50- Establishment & Administration
Final Grant Total Actual Expenditure
Overview of expenditure against the final grant:

(Rs. in million)
Total Actual
Grant Type Final Grant Excess/(Savings) Variance %
Expenditure
Non-
4,609.50 4,609.42 -0.074579 -0.24%
Development
Development 171.79 171.79 0 0.00%
Total 4,781.29 4,781.22 -0.074579 -0.24%
151
5,000.00
4,000.00
3,000.00
Rs. in million
2,000.00
1,000.00
0.00
Non-Development Development
-1,000.00
Final Grant Total Actual Expenditure Excess/(Savings)
2.1(c) Issues in Establishment & Administration Department

The Government of Khyber Pakhtunkhwa Rules of Business 1985 established the Establishment
and Administration Department with set of functions to be performed by each wing headed by two
secretaries. However, under the Khyber Pakhtunkhwa Delegation of Financial Powers Rules 2018, the
financial powers were delegated to the Chief Secretary to the Government of Khyber Pakhtunkhwa and the
Secretary Administration being the administrative secretary of the department which resulted in two
Principal Accounting Officers for one department. The provincial Public Accounts Committee requires the
PAO to be responsible for the expenditure and receipts of the department concerned. In the instant case
responsibilities have not been defined for the incurrence of expenditure and collection of receipts by the
department and as such are in violation of the PAC directives being duality in the controls function. There
were no details of the head-wise figures of the departmental own receipts collected by the department. The
department did not furnish initial replies at the time of exit meeting and is also not convening DAC meeting
within time. During the current year wastage of fund on project, non-recovery of accommodation charges,
unauthorized payment for POL of helicopter and issues related to pay and allowances were identified.
2.2 Classified summary of Audit Observations
Audit observations amounting to Rs. 697.994 million were raised in this report during the current
audit of the Administration Department. This amount also includes recoveries of Rs. 31.970 million as
pointed out by the audit. Summary of the audit observations classified by nature is as under:
Overview of Audit Observations:
S No. Classification Amount

152
(Rs. in million)
1 Non-production of record -
3 Irregularities -
A HR/Employees related irregularities 245.541
B Procurement related irregularities -
C Management of Accounts with Commercial Banks -

4 Value for money and service delivery issues 412.062
5 Others 35.919
Non-productionof record
00
4.472
35.919
Reported cases of fraud,
embezzlement and
misappropriation
245.541 Irregularities
HR/Employees related
irregularities
Procurement related
irregularities
412.062 0
Management of Accounts
with Commercial Banks
Value for money and service

delivery issues
Others
153
2.3 Brief comments on the status of compliance with PAC directives:-
Total No. of
Name of Full Partial Nil
SNo. Audit Year actionable
Department compliance compliance compliance
points
Establishment &
1 2001-02 14 14 - -
Administration
2 2002-03 -do- 12 11 - 01
3 2003-04 -do- 06 06 - -
4 2004-05 -do- 03 01 - 02
5 2005-06 -do- 04 03 - 01
6 2008-09 -do- 14 05 - 09
7 2009-10 -do- 32 09 - 23
8 2010-11 -do- 25 08 - 17
9 2011-12 -do- 20 08 - 12
10 2012-13 -do- 08 07 - 01
11 2013-14 -do- 12 06 - 06
12 2014-15 -do- - - - -
13 2015-16 -do- - - - -
14 2016-17 -do- 09 3 4 2
15 2017-18 -do- - - - -
16 2018-19 -do- 3 - - 3
2.4 Audit Paras
2.4.1 Wasteful expenditure on account of project activities – Rs. 348.272 million
According to Para 05 of the approved PC-I of the project Performance Management and Reforms Unit
(PMRU), the major objectives of the project are to ensure effective service delivery to the citizens;
coordinate and oversee implementation of sectoral reforms in government departments, their attached
departments and allied institutions; undertake performance management through Key Performance
Indicators (KPIs) of all tiers of provincial government; promote e-governance and use of latest Information
Communication Technology (ICT) in government; draft Policies, SOPs for various sectors; serve as a focal
point for all offices and institutions of the government of KP; prepare regular briefs for the consumption of
Chief Secretary KP; and effectively monitor service delivery and gauge performance of various tiers of the
government.
According to Para 4 of the minutes of the meeting of representative of all district government held on 12-
10-2015, the chair informed the participants that a comprehensive Vehicle Management Database has been
adopted in Administrative Department on pilot basis, which will be extended to other department and
district government.
During audit of the accounts of Secretary Establishment & Administration Department Khyber
Pakhtunkhwa – PMRU Project for the Financial Year 2022-23, it was observed that the PMRU project
154
incurred a substantial amount of Rs. 348,272,000/- since its inception in 2016, with 85% of the total
expenditure directed toward human resources in the form of pay and allowances. However, this expenditure
allocation was not accompanied by proper monitoring or progress reporting to assess the achievement of
project objectives.
Audit further observed that;
 The authorities failed to establish an Advisory Council or Board under the Chairmanship of the
Chief Secretary Khyber Pakhtunkhwa, consisting of experienced civil servants, as mandated by
Clause 6 of the approved PC-I. This Council was intended to critically evaluate reform initiatives
for long-term sustainability and effective implementation.
 The project management did not leverage the expertise of the Advisory Council to realign existing
reform initiatives and enhance public service delivery.
 The project management showed limited progress on various sub-objectives, including the KP
Good Governance Strategy, Citizen Portal, District Performance Monitoring Framework (DPMF),
and others. The lack of progress was evident from the non-functional status of 296 schemes /
projects across seven departments, which remained unaddressed despite directives.
 The project management withdrew funds from the government treasury without adhering to the
prescribed procedure of maintaining an assignment account, as per the guidelines issued by the
Finance Department KP.
 The project management could not provide record regarding collaboration with the line
departments and district administration to develop solutions for improved service delivery.
 The District Performance Monitoring Framework (DPMF) of the Project clashed with another
project by the P&D Department i.e. M&E, resulting in the potential wastage of government
resources.
 The Transport Section received and handed over vehicles without adopting the previously decided
Vehicle Management Database System, indicating inefficiencies in asset management. Its record-
keeping was incomplete, with only two registers maintained – "vehicles received" and "vehicles
handed-over" – lacking signatures and stamps from the responsible officers. Furthermore, the stock
register failed to provide essential vehicle information.
 Despite decisions taken in Secretaries Committee meetings, the department neither provided a
posting / transfer policy nor established monitoring mechanisms, as required by agendas set during
meetings.
 The number of pending cases / inquiries increased instead of decreasing, reflecting a poor
performance in the case disposal and inquiries management e.g. pending cases/inquiries increased
from 176 to 276, as reported on Secretary Committee meeting held on 29.03.2022.
 Administrative departments delayed framing rules despite approvals of Acts, such as the PDA Act
was passed in 2017, which still lacked approved rules & regulations, indicating poor performance
in the Local Government sector.
 Despite directives issued in Secretary Committee meetings, the PMRU project did not provide
necessary information on closed projects' vehicles indicating a lack of follow-through on key tasks.
Audit held that the project management failed to provide any documentary evidence / report regarding
achievement of any of the objectives of the project which means that the public funds were utilized by the
authorities without any public service delivery on ground.
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The lapse occurred due to non-achievement of project objectives which resulted in wasteful expenditure.
When pointed out in August 2023, no reply was given.
The department was requested vide letter dated 26.09.2023 followed by a reminder letter dated 01.01.2024
for holding DAC meeting. However, the DAC meeting was not convened till finalization of this report.
Audit recommends to inquire the matter and fix responsibility on the person(s) at fault.
PDP No. 6 (2022-23)
2.4.2 Wasteful expenditure on account of pay and allowances of OSD officers –

Rs. 27.538 million
According to Para 10 (i) of the General Financial Rules volume-I, every government officer shall exercise
the same vigilance in respect of expenditure incurred from public moneys, as a person of ordinary prudence
would exercise in respect of expenditure of his own money.
Pakhtunkhwa – Main Office for the Financial Year 2022-23, it was observed that a sum of Rs. 27,538,866/-
was paid to 35 number of officers on account of their pay and allowances who were posted as Officers on
Special Duty. However, further scrutiny of record revealed that these OSD officers were assigned this
special designation without suitable justification despite of the fact that sufficient vacant posts in the same
cadre were available.
It is worth mentioning here that these officers were availing privileges such as use of vehicles and POL etc.
along with pay and allowances. However, the management failed to provide record regarding performance
of special tasks / duties by these officers.
Audit held that making the officers as OSDs without performing any special tasks and keeping other
available posts as vacant was wastage of the scarce government resources with no utility at all.
The lapse occurred due to weak internal controls which resulted in wasteful expenditure on pay and
allowances.
Audit recommends to discourage making officers as OSDs to avoid wasteful expenditure.
PDP No. 8 (2022-23)
156
2.4.3 Loss to the government due to unauthorized utilization of helicopters – Rs. 17.119 million
According to Clause 3 read with Clause 7B (1) of the Khyber Pakhtunkhwa Ministers (Salaries, Allowances
and Privileges) (Second Amendment) Act 2022, the Chief Minister may use or allow a Minister, Advisor
or Special Assistant to Chief Minister, Public Servant or Government Servant to use an aircraft or helicopter
of the Government, at government expenses, for his official use or for any journey relating to his duties as
such.
Pakhtunkhwa - DG Aviation KP for the Financial Year 2022-23, it was observed that an expenditure of Rs.
17,119,763/- was shown incurred on account of fuel charges of two helicopters of the provincial
government. Further scrutiny of record revealed that the total flight duration of both helicopters from July
2022 to June 2023 was 171 hours. However, the management neither obtained the necessary approval of
the Chief Minister in cases where the helicopter was used by other VIPs nor purpose of the visits was
provided.
Moreover, the management also failed to record the official purpose of any visit undertaken by the Chief
Minister KP, which was against the rules and regulations referred to above and misutilization of the public
assets cannot be ruled out.
Furthermore, the management also incurred an expenditure of Rs. 771,000 on account of refreshment
charges on VIP’s during these visits.
The lapse occurred due to weak internal controls and non-observance of rules which resulted into loss to
the government.
Audit recommends to investigate the matter and take appropriate action against the person(s) at fault.
PDP No. 1 (2022-23)
2.4.4 Wasteful expenditure due to incomplete construction of hanger for helicopter –

Rs. 63.79 million
According to Paras 56, 58 and 95 of CPWD Code, proposals in the estimates must be structurally sound and
estimates are accurately calculated and based on adequate data. Work should not be commenced until
administrative approval and a properly detailed design have been sanctioned. A public officer is strictly
prohibited to deviate from sanctioned design in the course of execution of work.
Pakhtunkhwa - DG Aviation KP for the Financial Year 2022-23, it was observed that an ADP scheme
157
costing Rs. 74.990 million was approved in the PDWP meeting held on 14-04-2015 for “Construction of
Hanger of MI-17 at Peshawar Airport’’. The purpose of the scheme was to provide proper hanger for KP
Helicopter which was damaged due to rains and hailstorms. However, the management failed to complete
the scheme within the stipulated period of 18 months and revised the original PC-I in the PDWP meeting
held on 02-11-2017 by increasing the project cost to Rs. 351.183 million resulting into a cost-over-run of
Rs. 276.19 million.
Further scrutiny of record revealed that the management could only manage to expend an amount of Rs.
63.795 million up to March 2023 with no developmental work on ground, as pointed out in the monitoring
report of P& D Department dated 27.03.2023. The report further states that the executive engineer admitted
that the DG Aviation KP has changed the drawings and design of the project due to which the scheme could
not be completed in time.
Audit held that all the stakeholders including Chief Secretary Office, Secretary Establishment and
Administration Department and DG Aviation Office failed to plan, execute and monitor the project in the
best public interest and as per justification provided in the approved PC-I.
The lapse occurred due to weak internal controls and lack of proper coordination which resulted in wasteful
expenditure.
PDP No. 2 (2022-23)
2.4.5 Loss to the government due to non-recovery of rent on account of residential accommodation
According to Rule 18 (1) of the Khyber Pakhtunkhwa Residential Accommodation at Peshawar (Procedure
for Allotment) Rules 2018, an allottee, who is transferred out of Peshawar in any department, organization,
board, authority and commission etc. may retain the residential accommodation on the following terms;
A one year on payment of normal rent; and
B subsequent one year on payment of market rent;
Provided that such retention shall only be allowed if the allottee did not avail residential accommodation in
his new place of posting.
Provided further that no further extension shall be allowed beyond the permissible period of two years
mentioned above.
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According to Para 6.10 of the By Laws of the Civil Officers Mess, Bills shall be promptly cleared on receipt.
Any bills not been cleared in two months after the expiry of the month shall make a member liable to
termination of membership and recovery of dues in a manner decided upon by the Management Committee
in its discretion may also declare such member ineligible for fresh membership for the period determined
at its discretion.
Pakhtunkhwa – Estate Office for the Financial Year 2022-23, it was observed that the office provided
residential accommodation to different categories of officers during their service at District Peshawar.
However later on, the officers were posted out from District Peshawar or retired, but the management
neither vacated the allotted residential accommodations nor made the necessary recovery of the rent from
the officers concerned, which resulted into loss of Rs. 17,729,996/- to the provincial exchequer (Annexure-
V).
It was further observed that membership fee of the civil officers mess amounting to Rs. 1,070,600/- was
outstanding against the members, however, the same was neither recovered from them nor their
membership suspended by the management, as required under the rules aforementioned.
The lapse occurred due to weak internal controls which resulted into loss of
Rs. 18,800,596/- to the government.
Audit recommends to recover the outstanding amount besides fixing of responsibility on the person(s) at
fault.
Note: The issue was reported earlier also in the Audit Report for Audit Year 2022-23 vide DP Number
2.4.5 having financial impact of Rs. 27.130 million. Recurrence of same irregularity is a matter of serious
concern.
PDP No. 3 (2022-23)
2.4.6 Unauthorized payment on account of pay and allowances – Rs. 202.699 million
According to Rule 10 (V) of the General Financial Rules Volume-I, the amount of allowances granted to
meet expenditure of a particular type should be so regulated that the allowances are not on the whole a
source of profit to the recipients.
According to Clause 2 (III) of the Project Policy 2008, revised from time to time, fixed pay package for project
posts shall be sanctioned at the time of approval of PC-I with reference to the responsibilities attached with
the posts. Approximate fixed package in reference to various pay scales shall be paid.
159
Pakhtunkhwa – Performance Management & Reforms Unit (PMRU) Project for the Financial Year 2022-
23, it was observed that a payment of Rs. 202,699,040/- was made to the regular staff posted as employees
of PMRU on account of Special PMRU Allowance, Medical Allowance and Monetization Allowance for
last five years. However, further scrutiny of record revealed that neither there was any provision in the
Project Policy 2008 nor was the staff entitled to draw these allowances, as detailed below;
Year Special PMRU Medical Monetization Total
Allowance Allowance Allowance Amount
2022-23 32,747,893 3,299,980 4,491,935 40,539,808
Amount paid for the last 4 years from 2017-22 (Rs. 40,539,808 X 4 years) 162,159,232
Grand total 202,699,040
Moreover, upon initiation of the Project Implementation Policy 2022, the Special PMRU Allowance was
discontinued and two running basic pays were allowed to the employees of the project in lieu of the said
allowance.
It is worth mentioning here that the approval of these allowances was granted by the Chief Minister Khyber
Pakhtunkhwa through a summary in complete violation of the approved Project Policy 2008.
Audit held that making payment of the allowances to the employees of the project in violation of the project
policy was a serious lapse.
Audit further held that the department converted and declared 05 different project posts (BPS-17 and 18)
as scheduled posts and allowed the admissibility of the scheduled post / executive allowance in addition to
the monetization and medical allowance as allowed to the other project posts.
The lapse occurred due to weak internal controls and non-observance of government policy which resulted
in unauthorized payment.
Audit recommends to investigate the matter and take appropriate action against the person(s) at fault besides
recovery of the amount.
PDP No. 5 (2022-23)
2.4.7 Overpayment on account of PMRU Special Allowance and monetization –

Rs. 13.170 million
According to the Summary to the Chief Minister KP for Establishment of Performance Management and
Reforms Unit as a ADP scheme, approved by the Chief Minister Khyber Pakhtunkhwa on 13.01.2016, the
Special PMRU Allowance of the officers / officials shall be as follow;
BPS-19 Rs. 150,000
160
BPS-18 Rs. 100,000
BPS-17 Rs. 85,000
BPS-16 Rs. 20,000
Pakhtunkhwa – PMRU Project for the Financial Year 2022-23, it was observed that an amount of Rs.
12,120,000/- was drawn on account of Special PMRU Allowance in excess of the rate approved by the
Chief Minister KP, as detailed below;
Allowance
Designation Rate Drawn Diff. Months Posts Overpayment
P.M
Deputy Director (BPS-18) 100,000 150,000 50,000 24 5 6,000,000
Assistant Director (BPS-17) 85,000 100,000 15,000 24 1 360,000
Web Developer (BPS-17) 85,000 100,000 15,000 24 1 360,000
Account Officer (BPS-17) 85,000 100,000 15,000 24 1 360,000
Application Developer (BPS-17) 85,000 100,000 15,000 24 1 360,000
Communication & 85,000 100,000 15,000 24 1 360,000
Advocacy Officer (BPS-17)
Manager MIS (BPS-17) 85,000 100,000 15,000 24 1 360,000
OS Developer (BPS-17) 85,000 100,000 15,000 24 1 360,000
GIS Specialist (BPS-17) 85,000 100,000 15,000 24 1 360,000
BPS-16 Officer 20,000 35,000 15,000 24 9 3,240,000
Total 12,120,000
Similarly, scrutiny of record revealed that two officers of the Project Management and Reform Unit are
drawing monetization allowance in addition to vehicle allotted to them.
Name of officer Designation Rate Months Total Remarks
Sana Hafeez Deputy Director 55,000 14 770,000 Allotted vehicle # A-5882
LPC showed no conveyance
Muhammad Taufiq Deputy Director 55,000 05 275,000
allowance
Total 1,045,000
Hence, payment of monetization allowance in addition to the allotted vehicle is unauthorized.
The lapse occurred due to violation of the instruction which resulted in overpayment of Rs. 13,165,000/- to
the employees.
Audit recommends to recover the excess amount.
PDP No. 7 (2022-23)
2.4.8 Unauthorized payment of Executive Allowance – Rs. 2.134 million
161
According to Finance Department Khyber Pakhtunkhwa Notification No. FD/SOSR-II)2-5/2021-22
(Executive Allowance) dated 07.07.2021, Executive Allowance is not admissible in any kind of leave as
well as posting against OSD and leave reserve posts.
Pakhtunkhwa for the Financial Year 2022-23, it was observed that a sum of Rs. 2,134,350/- was paid on
account of executive allowance to the following officers during OSD period;
OSD E.A
Name BS TO Mon. Rate Amount
From Drawn
M. Hassan Ahsan 17 23.09.22 30.11.23 9 7 59,355 415,485
Arshad Khan Afridi 20 29.09.22 31.12.22 3 1 150,990 150,990
Mohammad Qasim 18 01.07.22 31.12.22 6 2 109,185 218,370
M. Arshad Qayyum 18 01.07.22 30.09.22 3 2 100,575 201,150
Adeel Shah 20 01.04.23 30.06.23 3 2 150,990 301,980
M. Idrees Khan 20 01.04.23 30.06.23 3 2 178,050 356,100
Amer Latif 20 01.04.23 30.06.23 3 2 191,580 383,160
M. Qaisar Khan 19 27.02.23 31.05.23 3 1 107,115 107,115
Total 2,134,350
The lapse occurred due to weak internal controls which resulted in unauthorized payment.
Audit recommends to recover the amount and take appropriate action against the person(s) at fault.
PDP No. 10 (2022-23)
2.4.9 Suspected misappropriation on account of POL and Repair & Maintenance -

Rs. 4.472 million
Para 23 of the General Financial Rules Volume I requires that every Government Officer should realize
fully and clearly that he will be held personally responsible for any loss sustained by Government through
fraud or negligence either on his part or on the part of his subordinate staff.
Pakhtunkhwa for the Financial Year 2021-22, it was observed that an amount of Rs. 2,430,096/- was
incurred on account of POL on the vehicles. However, comparison of the relevant POL vouchers with the
monthly vehicles list provided by the local office, revealed that the vehicles were not at the strength of the
local office. It is apprehended that the invoices were fake.
Similarly, expenditure to the tune of Rs. 2,042,736/- was incurred on repair and maintenance of vehicles
which were neither on the strength of the department nor were allotted to other departments, meaning
thereby that the amount was drawn on fake invoices.
162
The lapse occurred due to weak internal controls which resulted in suspected misappropriation of Rs.
4,472,832/-.
When pointed out in January 2023, no reply was furnished.
The department was requested vide letter dated 17.04.2023 followed by a reminder dated 19.12.2023 for
holding DAC meeting, however it was not convened till finalization of this report.
Audit recommends to recover the amount besides fixing of responsibility against the person(s) at fault.
PDP No. 557 & 565 (2021-22)
163
Chapter-3
AGRICULTURE DEPARTMENT
3.1 A) Introduction
As per Rules of Business 1985 (amended to-date), the department has been assigned the business
of:
 Agricultural Education and Research including Agricultural University.

 Experimental and demonstration farms.
 Improvement of Agricultural methods.
 Protection against insects and pests and prevention of plant diseases.
 Government gardens, including Botanical and Zoological gardens.
 Agricultural Engineering, mechanized cultivation and soil conservation.
 Improvement of varieties, its nutritional requirements and maintenance of soil fertility in
research wings.
 Improvement of Livestock.
 Prevention of animal diseases.
 Veterinary Training and Research.
 Prevention of cruelty to animals.
 Zoological Survey.
Audit Profile of Agriculture Department;

Total Audited FY Audited FY
S No. Description Audited
Nos 2022-23 2022-23
(Rs in million) (Rs in Million)
1 Formations 37 20 10,851 174
164
 Assignment
Account
2  SDA Nil Nil Nil Nil
 Etc
(Excluding FAP)
Authorities/Autonomous
3 01 01 1937.69 N/A
bodies etc under PAO
Foreign Aided Projects
4 Nil Nil Nil N/A
(FAP)
3.1 B) Comments on budget and accounts (variance analysis)

A summary of grants/appropriations and actual expenditure in FY 2022-23 is given below:
Non-Development; (Rs.)
Grant #
and Name Grant Original Supplementary Re- Total Actual Excess/
Surrender Final Grant
of Type Grant Grant Appropriation Expenditure (Savings)
Department
18- -
NC21 5,026,039,000 210 0 2,416,546,098 2,609,492,112 2,609,460,869
Agriculture 31,243
19- Animal
NC21 2,550,001,000 739,094,000 0 449,154,242 2,839,940,758 2,839,952,261
Husbandry 11,863
20-
NC21 44,619,000 858,000 0 37,226,759 37,226,759
Cooperation 8,250,241 -
23- -
NC21 306,718,000 100 0 50,495,534 256,222,566 256,150,550
Fisheries 72,016
61- -
NC21 349,687,000 0 7,290,515 135,631,759 221,345,756 221,342,606
Agriculture 3,150
61- Animal -
NC21 368,315,000 0 172,652,061 9,954,695 531,012,367 530,917,078
Husbandry 95,289
61- -
NC21 47,474,000 0 6,909,824 8,490,796 45,893,028 45,757,004
Fisheries 136,024
-
Total 8,692,853,000 739,952,310 186,852,400 3,078,523,365 6,541,133,346 6,540,807,127
325,859
165
3,000,000,000
2,500,000,000
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
-500,000,000
Series 1 Series 2 Series 3
Development; (Rs.)
Grant #
Total
and Name Re-
Grant Original Supplementa Actual Excess/
of Apprioriati Surrender Final Grant
Type Grant ry Grant Expenditur (Savings)
Departme on
e
nt
50- 5,734,440,0 3,004,543,5 2,804,213,7 2,848,052,5

NC22 0 74,317,290 43,838,73
Agriculture 00 08 82 19
7
50- 2,420,245,0 1,047,245,5 1,012,207,1 1,012,207,1

NC12 0 -360,792,290
Agriculture 00 89 21 21 -
60-
Agriculture
Research
NC22 33,882,000 0 0 28,229,101 5,652,899 5,652,899
and -
Extension
Services
60-Animal
NC22 189,517,000 0 0 145,961,303 43,555,697 48,536,704
Husbandry 4,981,007
8,378,084,0 4,225,979,5 3,865,629,4 3,914,449,2 48,819,74
Total 0 -286,475,000
00 01 99 43 4
166
3,000,000,000
2,500,000,000
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
0
50-Agriculture 50- Agriculture 60-Agriculture Research 60-Animal Husbandry
and Extension Services
Overview of expenditure against the final grant: (Rs. in million)
Final Total Actual

Grant Type Excess/(Savings) Variance %
Grant Expenditure
Non- -
0.00%
Development 6,541.13 6,540.81 0.33
Development 1.26%
3,865.63 3,914.45 48.82
Total 0.47%
10,406.76 10,455.26 48.49
167
7,000.00
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
0.00
-1,000.00
168
3.1(c) Issues in Agriculture Department
The department has not implemented Agriculture Policy 2015-25 and Food Security Policy 2021
in true spirit, procurements are not economical evident from purchase of wheat, ureaand transportation
charges at higher rates, irregular expenditure on machinery, ineligible distribution of wheat seed and
deviated from approved work plan.Furthermore, thedepartment neither furnished initial reply at the time of
exit meeting nor convened DAC meeting within time.

Audit observations amounting to Rs. 2,426.329 million were raised in this report during the current
audit of the Agriculture Department. Summary of the audit observations classified by nature is as under:
Amount
S No. Classification
(Rs. in million)
1 Non production of record -
3 Irregularities -
A HR/Employees related irregularities -
B Procurement related irregularities 33.893
4 Value for money and service delivery issues 1,008.407
5 Others 1,384.029
Graphical Classification of Audit Observations

00
33.893 Non production of record

embezzlement and misappropriation
Irregularities
1,008.41 HR/Employees related irregularities
Procurement related irregularities

1,384.03
Management of Accounts with
Commercial Banks
Value for money and service delivery
issues
Others
169
Total No. of
points
Agriculture
1 2001-02 14 14 - -
Department
2 2002-03 -do- 12 11 - 01
3 2003-04 -do- 06 06 - -
4 2004-05 -do- 03 01 - 02
5 2005-06 -do- 04 03 - 01
6 2008-09 -do- 14 05 - 09
7 2009-10 -do- 32 09 - 23
8 2010-11 -do- 25 08 - 17
9 2011-12 -do- 20 08 - 12
10 2012-13 -do- 08 07 - 01
11 2013-14 -do- 12 06 - 06
12 2014-15 -do- - - - -
13 2015-16 -do- - - - -
14 2016-17 -do- 09 3 4 2
15 2017-18 -do- - - - -
16 2018-19 -do- 3 - - 3
3.4 Audit Paras
3.4.1 Non-implementation of Agriculture Policy 2015-25 and Food Security Policy 2021
According to the Khyber Pakhtunkhwa Agriculture Policy 2015-2025; following activities/policy actions
will be performed for successful achievement of the policy objectives;
1. Enhancing and strengthening the commodity chain for key commodities.
2. Strengthening systems for technology generation, assessment, and dissemination.
3. Creating accredited laboratory and inspection system for product certification.
4. Agriculture zoning for development.
5. Capacity development and registration of NGO/CSO service providers.
6. Specific actions for promoting private sector investment.
7. Targeted support to selected poor areas.
8. Rangeland development.
9. Disaster risk preparedness.
10. Strengthening Farm Services Centers.
11. Restructuring of the Department.
12. Review of Seed Act, Market Acts, Consumer Rights Act, and Plant Breeder’s Rights.
170
According to KP Food Security Policy 2021:
1. Government may prioritize & ensure financial investment in development budget which may have
allocation of 8-10% of the total ADP under Agriculture Sector.
2. Government may invest in reclamation and development of culturable waste through Agriculture
Department. The Livestock & Agriculture Extension Departments should launch awareness
campaigns for promotion of farming activities on the newly reclaimed land to maximize
productivity.
3. Extension of credit facilities for land and infrastructure development through short, medium and
long-term projects.
4. Agriculture commodities business should be regulated under legal framework with the help of all
stake holders in order to minimize trader’s exploitation and to enforce fair pricing mechanism for
both producers and consumers.
5. Private investments be ensured in harvesting, gardening & packaging, processing and marketing of
the Agriculture commodities.
6. Introduction of mechanized farming through Farm Services Centers.
7. Introduction of Cluster/Specialized Farming facilities so that small land holders convert their
productive units into big chunks.
8. Research on climate resilient varieties and Agricultural practices.
9. Research on development and diversification of rain fed crops.
10. Research on upland / mountain agriculture.
11. Institutional strengthening & reforms for specialized and better services delivery.
12. Adoption to modern technologies especially Information Communication Technologies (ICT) is
indispensable.
13. Data authenticity is one of the major constraints in sustainable planning and informed decision
making. Adoption to modern technologies like satellite imageries should be the focus area while
devising any strategy for the development of Agriculture in the province.
14. Special incentives and encouragement for enhanced Gender participation in the overall Agricultural
improvement programs.
15. Promotion of Public Private Partnership and contractual farming.
16. Introduction of Kissan Card / e-Voucher Scheme for farmer to get inputs on credit (in kind) with
soft terms & conditions.
17. Development of Agriculture zones across the province.
18. Creation of dedicated Secretariat for Livestock sector.
19. Efficient use of allocated share of Irrigation water under Water Apportionment Accord 1991.
During audit of the accounts of Secretary Agriculture Research, Animal Husbandry, Co Operation
Department Khyber Pakhtunkhwa Peshawar for the Financial Year 2022-23, it was observed that
Agriculture and Food Security Policies were initiated by the Department in 2015 and 2021 respectively.
The verification of record revealed that the Department did not devise any mechanism for monitoring of
the implementation of policyhence relevant data of implementation was not available with the department.
Audit obtained the data of wheat crop from the Food Department Khyber Pakhtunkhwa which is tabulated
below showing the impact of policies of Agriculture Department;
(Figures in Metric Ton)
171
Local Purchased from Purchased from
Year Imported Total
Growers Punjab PASSCO
2017-18 93,266 - - - 93,266
2018-19 52,063 100,000 - - 152,063
2019-20 19,888 - 550,000 - 569,888
2020-21 419 - 600,000 447,209 1,047,628
2021-22 - 100,000 500,000 519,000 1,119,000
2022-23 - - 1,400,000 - 1,400,000
Total 165,636 200,000 2,650,000 1,166,209 4,381,845
The above table clearly shows that after the introduction of Agriculture Policy 2015 and Food Security
Policy 2021, the production of local wheat decreased to a level when there was nothing left with the growers
to sell, compelling the government to import the wheat.
The lapse occurred due to weak administrative controls which resulted into non-implementation of the
policies and non-achievement of objectives and targets.
When pointed out in September 2023, it was stated that policy is implemented through attached directorates.
The relevant data could be available with the directorates. No consolidated data or details regarding the
requisite fields/components of the policy are available at this office.
The department was requested vide letter dated 11.11.2023 for holding DAC meeting. However, the DAC
meeting was not convened till finalization of this report.
Audit recommends to prioritize the policy objectives and subsequent planning according to the available
resources.
PDP No. 2 (2022-23)
3.4.2 Loss to the government due to purchase of wheat seed at higher rate -
Rs. 257.135 million
According to Clause VII and VIII of the SOP of Agriculture Development Fund, the Program Steering
Committee is the competent forum to accord approval of budget for different activities to be carried out
during the year like purchase of seed, purchase of bags, repair of machinery, transportation, operational cost
etc.
During audit of the accounts of Directorate General Agriculture (Extension) Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was observed that expenditure amounting to Rs. 257.135 million was incurred
on the purchase of wheat seed over and above the prescribed rate by Program Steering Committee.
According to the PSC meeting convened on 14-03-2023 and approved minutes of the said meeting on
3/5/2023, the rate for the purchase of wheat seed was fixed at Rs. 62 per kg. However, a meeting of
departmental level committee held its meeting one day prior to the steering committee meeting i.e. 2/5/2023
172
fixed Rs.135/Per kg. The scrutiny of record revealed PSC approved rate was fixed at Rs.3100/- per bag of
50 kg, while the same were purchased at higher rate than approved as per detail given below.
(Amount in Rs.)
Kind of Bags Actual Market Enhanced Diff. Loss
seed Procured rate rate
Basic 960 3100 6750 3650 3,504,000
Certified 22178 3100 6200 3100 68,751,800
Certified 43248 3100 6500 3400 147,043,200
Certified 13047 3100 6000 2900 37,836,300
Total 257,135,300
Audit is of the view that the departmental committee was a lower forum and the department was required
to follow the approved rates of PSC which was an apex body which shall decide policy matters pertaining
to seed production / procurement and marketing arrangement.
The lapse occurred due to weak internal controls which resulted into loss of Rs. 257.135 million to the
government.
When pointed out in November 2023, no reply was furnished.
Audit recommends to recover the losses from the concerned besides high level enquiry against the
concerned for such losses under intimation to audit.
PDP No. 29 (2022-23)
3.4.3 Irregular expenditure on account of advertisement charges - Rs. 2.930 million
According to Para 12 of GFR Vol-I, controlling officer must see not only that the expenditure is kept within
the limits of the authorized appropriation but also that the funds allotted to spending units are expended
upon object for which the money was provided.
During audit of the accounts of Directorate General Soil & Water Conservation Khyber Pakhtunkhwa for
the Financial Year 2021-22, it was observed that a sum of Rs. 2,930,100/- was incurred by the local office
on account of advertisement charges, as detailed below;
Date Billing Date Amount
5/22 15/1/2022 199,500
5/22 16/4/2022 129,600
5/22 18/4/2022 199,500
5/22 17/4/2022 199,500
3/22 17/7/2021 259,200
3/22 2/8/2021 1459600
6/22 24/5/2022 199500
173
6/22 25/5/2022 199500
6/22 22/5/2022 84200
Total 2,930,100/-
In this connection the following points needs clarification;

1. The whole amount was paid to “Daily Jan Nisar Pakistan” Karak. As the schemes relates to all
merged area districts therefore, payment made to local Newspaper needs justification.
2. As per Government orders all the advertisement must be made through Director Information KP
whereas this process had been violated by local office.
3. The payment was not been made through cross cheque from Accounts office. First the local office
drewcheque through DDO and deposited the said amount in designated bank accounts. After that
payment was made to the Newspaper without acknowledgment.
4. No original cutting of Newspaper was found attached with the bill which also creates doubt.
The lapse occurred due to weak internal controls which resulted into irregular expenditure.
In the DAC meeting held on 25.10.2023, the Para was marked for detailed verification of record. However,
no progress was intimated to Audit till finalization of this report.
Audit recommends to recover the amount paid besides fixing responsibility on the persons at fault.
PDP No. 1057 (2021-22)
3.4.4 Irregular expenditure on account of purchase of Wheat Cleaner and Grader -

Rs. 15.675 million
According to clause 8 (3) of the KPPRA, Pre-qualification of bidders shall be based entirely upon the
capability, competence and resources of the bidders relevant to performance in the particular assignment,
taking into account the following;
a) Legal status along with proof of registration with one of the Federal or Provincial Registration.
b) Proof of being a taxpayer. (c) Organizational profile, relevant experience, past performance, list of clients
and references. (d) Relevant experience and past performance.
e) Existing capabilities with respect to human resource, personnel, computing and engineering equipment,
machinery and plant, as may be the case. (f) Financial position for the last three years including bank
statements and audited reports by an external auditor. (g) Proof of possessing appropriate managerial
capability; and (h) any other factor that a procuring entity may deem relevant, depending on the nature and
complexity of the contract but not inconsistent with these rules.
During audit of the accounts of Directorate of Cereal Crops Research Institute Pirsabak Nowshera for the
Financial Year 2020-21, it was observed in the PSDP project “Wheat Productivity Enhancement Project
Khyber Pakhtunkhwa” that an amount of Rs. 15,675,000/- was incurred on the purchase of Seed Cleaner
and Grader Capacity 2.5 ton/hour along with 50KV Generator and paid the amount to M/S Marwat &
Yousafzai vide Cheque No. 2110440 dated 11-06-2021. The tendering process for the purchase of the
project machinery & equipment was carried out by the office of Director General Agriculture Research
Peshawar.
However, Audit observed the following shortcomings;
174
 The procuring entity adopted single stage, two envelops procedure, where bids were to be evaluated
on technical and financial grounds and price was taken into account after technical evaluation.
However, records of the office showed that total three firms participated in the tendering process
in which two firms were disqualified. Both the firms were disqualified on the grounds that the firms
were not capable to prepare and install big seed cleaner and not a single number was given, which
led to the only one qualified firm, Marwat and Yousafzai.
 The management failed to prepare the detail specification of the proposed machinery which resulted
in doubtful selection of the contractor.
 The technical committee made the technical evaluation without assigning the requisite technical
marks to the unqualified firms which is against the KPPRA rules.
 The selected firm had also not provided the complete specification of items, but that was ignored
and granted undue favor by the technical committee.
 The selected company had no experience in the installation of subject machinery and equipment as
evident from the profile of the firm.
 The selected firm was not an authorized distributor of the machinery and equipment supplied which
was the Condition No. 2 of the standard bid document of the procuring entity.
 As per bid evaluation criteria no iii, the firm submitting the proposal without any specific make/
model/brand will be rejected. However, the selected firm submitted the proposal without the same
requirement but was not rejected.
Audit held that the procuring entity neither fulfilled the basic requirement of KPPRA rules nor followed
their own standard bidding conditions which led to the irregular, less competitive and doubtful contracting.
The lapse occurred due to weak internal controls which resulted into irregular expenditure.
In the DAC meeting held on 26 & 27.12.2022, it was decided that the department may provide the relevant
record to Audit for verification. However, no progress was intimated to Audit till finalization of this report.
Audit recommends to inquire the matter and fix responsibility on the persons at fault.
PDP No. 87 (2020-21)
3.4.5 Doubtful supply of machinery and equipment - Rs. 5.543 million
According to the technical and financial proposals submitted by M/S S.U enterprises for the
following items, the contractor was bound to provide the items of that particular origin and country along
with proper shipment documents as agreed to authenticate the supply of item;
Supplier name Name of items Unit Rate Amount
Analytical Electrical Balance Model PR224/E
M/S SU Enterprises Ohaus-USA 2 149,000 298,000
Conductivity Meter Model Starter 3100C Ohaus
-do- USA 1 81,900 81,900
-do- Grinder Model MFC Micro Hammer Mill
Kinematica AG-Switzerland 1 550,000 550,000
-do- Spectrophotometer Model UV1100 Robus-UK 1 550,000 550,000
-do- Kjeldahl digestion, Distillation, 1 2,212,000 2,212,000
175
-do- Titrator and accessories Model S2 Cat # 80 48 49002
Behr-Labor-Germany 1 453,600 453,600
Total 4,145,500
Grand Total (4145500+1398150) 5,543,650
During audit of the accounts of Directorate of Cereal Crops Research Institute Pirsabak Nowshera for the
Financial Year 2020-21, it was observed in the PSDP project “Wheat Productivity Enhancement Project
Khyber Pakhtunkhwa” that an amount of Rs. 4,145,500/- was paid to M/s S.U Enterprises vide cheque No.
2110439 dated 11-06-2021 on account of supply of above items. However, scrutiny of the bill of entry
revealed that the same equipment items were shipped and imported from AJMAN FREE ZONE UAE which
make the supply doubtful and needs to be justified.
Similarly, an amount of Rs. 1,398,150/- was also paid to Rays Technologies vide cheque No. 2110441
dated 11-06-2021 on account of supply of Flame Photometer, Model 360 Sherwood Made in England,
however, shipment documents of the same machine were not found on record which make the supply
doubtful and needs to be authenticated.
Audit held that the high value items which were supposed to be imported from the country of origin i.e.
Germany, USA, UK, and Switzerland were imported from UAE which make the supply of the items as
doubtful due to the difference of country of origin.
The lapse occurred due to violation of rules and regulations which resulted into doubtful supply of items.
When pointed in November 2021, it was replied that the procurement process has been done at the DG
Office. The matter would be discussed and detailed reply shared with Audit.
In the DAC meeting held on 26 & 27.12.2022, it was decided that the department may conduct detailed
investigation in the matter. However, no progress was intimated to Audit till finalization of this report.
Audit recommends to investigate the matter and take appropriate action.
PDP No. 88 (2020-21)
3.4.6 Loss to the government due to non-forfeiture of performance security of the defaulter
contractors - Rs. 14.675 million
According to Clause 4.4 of the general conditions of contract and 4.4 of the contract data of the contract
agreement executed with M/S Hizbullah Khan Gandapur in August 2017, the contractor shall furnish to the
procuring entity within 14 days after receipt of the letter of acceptance, a performance security in the form
of bank draft or bank guarantee @4% valid for a period of one year or till the defect liability period is over
and also satisfactory completion certificate is issued by the Engineer.
During special audit of the Gomal Zam Dam – Command Area Development Project DI Khan, it was
observed that the Project Management executed contract agreements for construction of different packages
of watercourses and roads with different contractors. However, further scrutiny of record revealed that the
contractors failed to complete the works within the stipulated (and even in the multiple extended) period of
time. Accordingly, the balance works of 02 packages of watercourses and roads each were awarded to the
On-Farm Water Management Tank in August 2020 under MOU-6. However, the project management failed
176
to forfeit the performance security of the defaulter contractors which resulted in loss of Rs. 14,675,105/- to
the government, as detailed below;
Original
Pkg. Performance
Contractor Name Works Contract
No. Security
Price
10 Hizbullah Khan & Sons 23 No WCs 46,267,755 4,626,775
12 Hizbullah Khan & Sons 13 No WCs 48,483,298 4,848,330
16 Nasrullah & Brothers Roads 26,233,671 2,900,000
17 M. Zed Khan Roads 21,175,210 2,300,000
Total 14,675,105
The lapse occurred due to weak internal controls which resulted in loss to the government.
When pointed out in April 2023, the management stated that the report has been discussed with the Audit
Party and that a detailed reply will be furnished after consulting the relevant record.
In the DAC meeting held on 10.01.2024, it was decided that the department may recover the amount from
the contractors. However, no progress was intimated to Audit till finalization of this report.
Audit recommends to inquire the matter and fix responsibility against the person(s) at fault besides
forfeiting the performance securities at the earliest.
PDP No. 1162 (2021-22)
3.4.7 Unauthorized issuance of agriculture machinery to Model Farm Services Center DI Khan –
Rs. 55.663 million
According to Paragraph 01 of the Note for Secretary Agriculture and Livestock and Cooperatives
Department, it was submitted that the donor agency has agreed in March 2020 to the proposal of providing
support to the farming community of the project area in the form of distribution of various agriculture
machinery.
According to Clause F at Page No. 10 of the MoU for COVID-19 Early Recovery Strategy (Short &
Medium Term) signed with Agriculture Extension Department in May 2020, the large agriculture
machinery like motorized wheat hand reaper, wheat thresher, kharif double drill, maize planter, maize
sheller, cotton planter, and post hole digger will be distributed amongst the farmed / registered water user
associations on the basis of cluster approach, and the associations will provide receipt of the received
machinery for verification purposes. For safety of the machinery, the formed committee will ensure proper
space and shelter in the agreed venue / hujra as per decision of the cluster board / members.
According to Clause 2.1 (3) (i) of the Addendum-II of the Consultancy Contract executed with M/S Taleem
Foundation in June 2020, the consultant shall establish Farmers Facilitation Centers (FFCs) for collective
use of the agriculture machinery through resolutions from the concerned water user associations.
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During special audit of the Gomal Zam Dam – Command Area Development Project DI Khan, it was
observed that an amount of Rs. 55,663,796/- was paid to M/S Aziz Enterprises on account of purchase of
different agriculture machinery, as detailed below;
Invoice Cheque Date Particulars Amount
No. No.
8 93321194 12.02.21 500 Agriculture Machinery and Tools in DI Khan 17,756,102
9 93321195 12.02.21 402 Agriculture Machinery and Tools in Tank 13,061,060
11 93321223 15.06.21 Other Agriculture Machinery 8,334,360
12 93321224 15.06.21 Other Agriculture Machinery 9,994,530
16 34304838 03.12.21 04 Kharif Double Drill and 03 Maize Planters 3,530,530
17 34304839 03.12.21 05 Kharif Double Drill and 04 Maize Planters 2,987,214
Total 55,663,796
However, further scrutiny of record revealed that the agriculture machinery purchased was handed over to
the Model Farm Services Center DI Khan vide Handing / Taking Over Certificate No. 2175 dated
24.03.2022 instead of distributing the same amongst the water user associations in the command area as
per the approved policy and criteria or utilizing the machinery through Farmers Facilitation Centers
established by M/S Taleem Foundation for collective use of agriculture machinery through resolutions from
the concerned water user associations.
Moreover, the USAID A&E Consultant i.e. M/S HPK vide their verification certificate dated 09.02.2021
verified the supplied agriculture machinery in Model Farm Services Center DI Khan and observed their
non-distribution amongst the water user associations. The project director provided a distribution timeframe
and assured that the same will be distributed by the end of February 2021 together with demonstrations on
its operation. However, the project director instead of distributing the machinery amongst the water user
associations handed over the same to the Model Farm Services Center in March 2022.
From the Focal Person / Agriculture Specialist Crops GZD-CADP letter dated 26.10.2020 addressed to M/S
Taleem Foundation wherein the latter was requested to provide a complete list of clusters as per 259 water
user associations formed till date and 4087 beneficiaries list at the earliest to avoid any inconvenience in
distribution of the subject machinery amongst them, also establishes the unauthorized handing over to
MFSC.
The lapse occurred due to violation of the agreed guidelines and the signed MOU which resulted in
unauthorized issuance of the agriculture machinery.
When pointed out in April 2023, the management stated that the report has been discussed with the Audit
Party and that a detailed reply will be furnished after consulting of the relevant record.
In the DAC meeting held on 10.01.2024, it was decided that the department may provide the relevant record
to Audit for verification. However, no progress was intimated to Audit till finalization of this report.
Audit recommends to inquire the matter for fixing of responsibility against the person(s) at fault.
PDP No. 1173 (2021-22)

178
3.4.8 Unauthorized expenditure due to deviation from approved Work Plan -
Rs. 1,237.873 million
According to Section I E2 of Schedule II of the Project Execution, “the recipient shall cause the Project
Implementation Entity, not later than two months after furnishing each annual work plan and budget
referred to in the preceding paragraph to the association to finalize and adopt, and thereafter ensure that the
project is carried out in accordance with such plan and budget as agreed in writing with the Association.”
During audit of the accounts of Khyber Pakhtunkhwa Irrigated Agriculture Improvement Project
Peshawar for the Financial Year 2022-23, it was observed that Rs. 3,716.280 million were incurred on
various components in the following districts as per details given below;
(Rs. In million)
Expenditure on
District Name Approved work allocation Difference
unapproved work
Bannu 166.717 337.548 170.831
Buner 113.651 115.518 1.867
Charsadda 113.651 154.948 41.297
D.I Khan 1208.046 1323.683 115.637
Karak 91.171 353.225 262.054
Kohat 89.623 122.338 32.715
LakkiMarwat 239.713 749.984 510.271
Swat 287.831 325.167 37.336
Tank 52.879 97.484 44.605
South Waziristan 76.367 91.058 14.691
Mohmand 38.758 45.327 6.569
Total 2478.407 3716.28 1237.873
The verification of record revealed that the expenditure incurred in the above districts was higher than the
budget allocation of approved annual work plan. Audit therefore, held that the higher amount of expenditure
than the approved budget allocations is unauthorized.
The lapse occurred due to violation of approved annual work plan which resulted in excess expenditure.
When pointed out in October 2023, no reply was furnished.
Audit recommends to investigate the matter and fixing responsibility on person (s) at fault.
PDP No. 20 (2022-23)
179
3.4.9 Loss to the government due to overpayment on account of transportation charges - Rs. 11.605
million
According to para section 5.01 of Article V of Financial agreement, the recipient and the project
implementation Entity shall carry out their respective parts of the project;
 With due diligence and efficiency;
 In conformity with appropriate administrative, technical, financial, economic environmental and
social standards and practices; and
 In accordance with the provision of the legal agreement.
During audit of the accounts of Khyber Pakhtunkhwa Irrigated Agriculture Improvement Project Peshawar
for the Financial Year 2022-23, it was observed that Rs. 37,875,603/- was paid to M/S Bilal & CO on
account of transportation charges of wheat seed. Further verification of record revealed that the project
management awarded the contract for transportation of wheat seed to M/S Bilal & Co on the plea that M/S
Bilal & CO is the registered transport contractor of Food Department KP. However, the project management
did not consider the approved rates of the Food Department KP for economy, due to which government
sustained a loss of Rs. 11,605,591/- by payment of higher rates than the rates paid by the Food Department
in the same period from and to the same stations. Detail comparison is elaborated below;
Rate per KM Approved
S. No. Dispatch Point Delivered at Tons Distance Difference Amount
Per Tone Rate
1 Khanewal DIK 91.5 394 15.13 6.93 8.2 295,618
2 Pipplan DIK 102.5 110 20.85 6.93 13.92 156,948
3 Khanewal DIK 97.6 340 15.13 6.93 8.2 272,109
4 Pipplan DIK 135 151 20.85 6.93 13.92 283,759
5 Pipplan DIK 68 121 20.85 6.93 13.92 114,534
6 Pipplan DIK 284 167 18.98 6.93 12.05 571,507
7 Jhang DIK 238.5 233 18.16 6.93 11.23 624,057
8 Jhang DIK 261.5 232 18.16 6.93 11.23 681,302
9 Pipplan DIK 134.25 131 20.85 6.93 13.92 244,808
10 Pipplan DIK 21.85 200 18.98 6.93 12.05 52,659
11 Pipplan DIK 9.65 197 18.98 6.93 12.05 22,908
12 Khanewal Tank 35 398 15.13 6.93 8.2 114,226
13 Khanewal DIK 34.15 273 15.13 6.93 8.2 76,448
14 Khanewal Malakand 165.1 650 15.13 5.59 9.54 1,023,785
15 Khanewal Malakand 35 650 15.13 5.59 9.54 217,035
16 Khanewal Charsadda 70 707 15.13 6.81 8.32 411,757
17 Khanewal Nowshera 315 621 15.13 6.87 8.26 1,615,780
18 Sahiwal Swabi 30 514 15.13 5.09 10.04 154,817
19 Khanewal Swabi 67.5 577 15.13 5.09 10.04 391,033
20 Sahiwal Swat 155 557 15.13 5.59 9.54 823,636
21 Sahiwal Swat 137.5 559 15.13 5.59 9.54 733,268
22 Sahiwal Swat 151.2 560 15.13 5.59 9.54 807,771
23 Sahiwal Swat 25 542 15.13 5.59 9.54 129,267
24 Khanewal Mardan 283.3 625 15.13 5.04 10.09 1,786,561
Total 11,605,591
The lapse occurred due to weak internal controls which resulted into loss to the government.
When pointed out in October 2023, it was stated that the procurement made as per rule, reply will be
submitted later.
180
PDP No. 23 (2022-23)
3.4.10 Ineligible distribution of wheat seeds - Rs. 72.888 million
According to Email from World Bank dated 10th November 2022:

 Non-availability of land ownership / use documents / record verified by the Revenue Department
cannot be accepted. And affidavit can be used in addition, to cases identified as above.
 Unfortunately, there cannot be exceptions to proof of land ownership/use records.
During audit of the accounts of Khyber Pakhtunkhwa Irrigated Agriculture Improvement Project Peshawar
for the Financial Year 2022-23, it was observed that wheat seeds amounting to Rs. 338,410,800/- were
purchased from M/S Punjab Seed Corporation and distributed among the farmers in flood affected areas of
KP.
Further verification of record revealed that wheat seeds amounting to Rs. 72,888,400/- were distributed in
the following district where no revenue record was available and violated basic/approved criteria for
distribution of wheat seeds. Audit therefore held that the distribution of seed is ineligible in the absence of
revenue record / fard or affidavit.
S. No. District Name Quantity Rate Amount

1 Kohistan 700 5200 3,640,000
2 Dir Upper 2100 5200 10,920,000
3 Dir Lower 2249 5200 11,694,800
4 Chitral Lower 2466 5200 12,823,200
5 Chitral Upper 2500 5200 13,000,000
6 Malakand 4002 5200 20,810,400
Total 14017 72,888,400
The lapse occurred due to non-observance of distribution criteria which resulted in ineligible and
unauthentic distribution of wheat seeds.
When pointed out in October 2023, it was stated that the districts where relevant revenue record was not
available, the beneficiary list was verified from the Deputy Commissioner / Assistant Commissioner as per
project documents.
The reply was not convincing as the donor agency had clarified that there cannot be exceptions to proof of
land ownership / use records.
181
Audit recommends to investigate the matter and fix responsibility on the person(s) at fault.
PDP No. 27 (2022-23)
182
Chapter-4
AUQAF, HAJJ, RELIGIOUS AND MINORITY AFFAIRS

DEPARTMENT
4.1 A) Introduction
of:
 Administration of the Khyber Pakhtunkhwa Waqf Properties Ordinance, 1979; and the West
Pakistan Historical Mosques Cess Fund Ordinance, 1960.
 Charitable and Religious Endowments.
 Religious Trusts.
 Muslims graveyard taken over by the Chief Administrator of Auqaf under section 6 of the West
Pakistan Waqf Properties Ordinance, 1961.
 Control and repair, etc., of all Historical Mosques and Shrines taken over by the Auqaf
Department.
Audit Profile of Auqaf, Hajj and Minority Affairs Department;
Expenditure
Revenue/Receipts
Total Audited FY
S No. Description Audited Audited FY 2022-23
Nos 2022-23
(Rs in Million)
(Rs in Million)
1 Formations 02 01 791 0
 Assignment
Account
2  SDA 03 Nil Nil N/A
 Etc
(Excluding FAP)
183
3 Nil Nil Nil N/A
4 Nil Nil Nil N/A
(FAP)
4.1 B) Comments on budget & accounts (variance analysis)
Summary of the Appropriation Accounts
The Summarized position of actual expenditure 2022-23 against the total of grants/appropriation
was as follows:
Non-Development;
(Amount in Rs.)
Grant #
and Name Re-
Grant Original Supplementar Total Actual Excess/
of
Type Grant y Grant
Apprioriatio Surrender Final Grant
Expenditure (Savings)
Departmen n
t
37 - Auqaf,
religious
1,305,010,41 1,752,428,61 1,752,447,27
and NC21 3,057,439,000 30 0
4 6 4 18,658
Minority
Affairs
1,305,010,41 1,752,428,61 1,752,447,27
Total 3,057,439,000 30 0
4 6 4 18,658
Chart Title
2,000,000,000
1,800,000,000
1,600,000,000
1,400,000,000
1,200,000,000
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
37 - Auqaf, religious
and Minority Affairs
184
Development;
(Amount in Rs.)
Grant #
Total
and Name Re-
Grant Original Supplementar Final Actual Excess/
of Apprioriatio Surrender
Type Grant y Grant Grant Expenditur (Savings)
Departmen n
e
t
50 - Auqaf,
Hajj,
415,961,79 179,284,70 179,416,70
Religious NC22 582,490,000 0 4,420,500
3 7 7 132,000
& Minority
Affairs
50 - Auqaf,
Hajj,
166,656,03 362,017,96 362,017,96
Religious NC12 289,560,000 0 239,114,000
2 8 8 -
& Minority
Affairs
582,617,82 541,302,67 541,434,67
Total 872,050,000 0 243,534,500 132,000
5 5 5
400,000,000
350,000,000
300,000,000
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
0
50 - Auqaf, Hajj, 50 - Auqaf, Hajj, Category 3 Category 4
Religious & Minority Religious & Minority
Affairs Affairs
185
Overview of expenditure against the final grant;
(Rs. in million)
Grant Type Final Grant Total Actual Expenditure Excess/(Savings) Variance %
Non-Development 1,752.43 1,752.45 0.00%

0.02
Development 541.30 541.43 0.02%
0.13
Total 2,293.73 2,293.88 0.01%
0.15
2,000.00
1,800.00
1,600.00
1,400.00
1,200.00
1,000.00
800.00
600.00
400.00
200.00
0.00
4.1(c) Issues in Auqaf Department
The major issues in the department were non-production of record by the Secretary / Chief
Administrator Auqaf regarding the properties, land and other assets and accounts maintained by the entity.
The departments do not hold DAC meetings to discuss serious irregularities pointed out by Audit. There
were issues in the awarding of contracts for supply of different services.
audit of the Auqaf Department. Summary of the audit observations classified by nature is as under:
186
Amount
(Rs. in million)
3 Irregularities -
5 Others 1,116.599
(Rs in million) Non production of record
0 Reported cases of fraud,

275.651
Irregularities
HR/Employees related irregularities

Commercial Banks
1,116.60 Value for money and service delivery

issues
Others
187
Total No. of
S. No. Audit Year actionable
points
Establishment &
1 2001-02 14 14 - -
Administration
2 2002-03 -do- 12 11 - 01
3 2003-04 -do- 06 06 - -
4 2004-05 -do- 03 01 - 02
5 2005-06 -do- 04 03 - 01
6 2008-09 -do- 14 05 - 09
7 2009-10 -do- 32 09 - 23
8 2010-11 -do- 25 08 - 17
9 2011-12 -do- 20 08 - 12
10 2012-13 -do- 08 07 - 01
11 2013-14 -do- 12 06 - 06
12 2014-15 -do- - - - -
13 2015-16 -do- - - - -
14 2016-17 -do- 09 3 4 2
15 2017-18 -do- - - - -
16 2018-19 -do- 3 - - 3
4.4 Audit Paras
4.4.1 Non-production of auditable record by the Chief Administrator Auqaf
According to Section 8 (a & b) of the Auditor-General's (Functions, Powers and Terms and
Conditions of Service) Ordinance 2001. The Auditor-General shall;
a) audit all expenditure from the Consolidated Fund of the Federation and of each Province and to
ascertain whether the moneys shown in the accounts as having been disbursed were legally
available for, and applicable to, the service or purpose to which they have been applied or charged
and whether the expenditure conforms to the authority which governs it;
b) audit all transactions of the Federation and of the Provinces relating to Public Accounts;
c) audit all trading, manufacturing, profit and loss accounts and balance sheets and other subsidiary
accounts kept by Order of the President or of the Governor of a Province in any Federal or
Provincial department; and
d) audit, subject to the provisions of this Ordinance, the accounts of any authority or body established
by the Federation or a Province, and in each case to report on the expenditure, transactions nr
accounts so audited by him.
During audit of the accounts of Secretary Auqaf Hajj Religious and Minority Affairs Department
Khyber Pakhtunkhwa / Chief Administrator Auqaf for the Financial Year 2022-23, it was observed that the
auditable record of the office of Administrator Auqaf was demanded time and again vide several
188
requisitions. In response the Administrator Auqaf vide letter dated 13.09.2023 intimated that the accounts
of the Auqaf Department / property are audited by the Local Fund Audit Khyber Pakhtunkhwa and that the
Auditor-General of Pakistan has the mandate to audit only the accounts relating to the grants provided by
the provincial government out of the consolidated fund for a specific purpose.
Audit observed that the Secretary of the Department was the Chief Administrator Auqaf who failed
to provide the auditable record to Audit, as the provincial cabinet appointed the Secretary of the Department
as Chief Administrator Auqaf in its 78th meeting held on 02.08.2022 and Section 3 of KP Waqf Properties
Ordinance 1979.
The lapse occurred due to violation of Articles 169 & 170 of the Constitution of Islamic Republic
of Pakistan and Section 8 of the Auditor-General Ordinance 2001 which resulted into non production of
record.
When pointed out in September 2023, no reply was furnished.
The department was requested vide letter dated 25.10.2023 followed by a reminder letter dated
01.01.2024 for holding DAC meeting. However, the DAC meeting was not convened till finalization of this
report.
Audit recommends production of complete auditable record of the office of the (Chief)
Administrator Auqaf besides taking disciplinary action against the person(s) at fault for hindering the
auditorial function.
PDP No. 46 (2022-23)
4.4.2 Loss to the government due to retendering at higher rates - Rs. 275.651 million
According to Section 3 of the KPPRA Act 2012, all public procurements shall be conducted in such
a manner as provided in this Act, rules and regulations made under this Act and shall promote the principles
of transparency, economy, value for money, accountability and swift grievance handling
According to Rule 23 of GFR Vol-I, every government officer will be personally responsible for
any loss or fraud on his part or on the part of his subordinate.
Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that an agreement was signed with
M/S Liaison Corporation (Consultant) on 06.06.2022 under ADP No. 143/210372 – (Celebration of
Religious Festivals of Minorities, Interfaith Harmony Conference) worth Rs. 299.000 million which was to
be executed during 2021-22 and 2022-23 with 5 major components/activities.
Further scrutiny of record revealed that the Department floated tender for hiring consultancy
services in the Financial Year 2021-22. The total value of tender comprising 4 components was Rs. 23.349
million on Least Cost Selection basis. The tender was not awarded to the bidder on Least Cost Selection
basis; rather the department opted for re-tendering on Quality & Cost Base Selection. The contract was
189
awarded at the cost of Rs. 299.000 million for five components. It, prima facie, caused loss of Rs. 275.651
million (Rs. 299.000 million – 23.349 million) to the government.
The lapse occurred due to weak administrative controls which resulted in loss to the government.
report.
Audit recommends to recover the loss sustained from the responsible person(s).
PDP No. 34 (2022-23)
4.4.3 Irregular and unfair distribution of grant-in-aid to the deserving minority community - Rs.
7.500 million
According to rule 10 of GFR Vol-I, every public officer is expected to exercise the same vigilance
in respect of expenditure incurred from public moneys as person of ordinary prudence would exercise in
respect of expenditure of his own money. Public moneys should not be utilized for the benefit of a particular
person or section of community.
According to notification No.SO(HR&MA)/AHR&MAD/1-31/2019/5071-76 dated 25.07.2019,

that the competent authority i.e Secretary Auqaf, Hajj, Religious & Minority Affairs has constituted a
scrutiny committee with the TORs to devise criteria for distribution of Grant-in-Aid amount amongst the
deserving Minorities Communities and to scrutinize the applications received under regular side scheme
“Grant in-aid” for the distribution amongst deserving communities comprising of the following :-
1. Deputy Secretary Chairman
2. Section Officer (Admn) Member
3. Section Officer (HR & MA) Member
4. Section Officer (Auqaf) Member
5. Assistant (HR & MA Section) Member
Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that a sum of Rs.7.500 million was
released by the Finance Department which were distributed in the minorities. Audit raised the following
observation:
1. Criteria for scrutiny of applications (deserving candidates) was not devised. A Scrutiny Committee
was constituted by the higher ups quoted ibid. The payments were made to 332 applicants against
6561 applications received for Rs. 5.000 million without any examination and due process.
2. The payments were made through excel sheet balloting (draw) evident from the minutes of the
meeting without any merit and right as all the candidates applied may not be eligible and were
included in the draw.
190
3. In case of district Peshawar against the 1891 Nos of applicants, 47 applicants were paid Rs. 15,000
each. Whereas, in case of D.I. Khan 477 applications were received and payment made to 116 of
applicants which clearly showed favoritism in the payment of grant in aid and violation of merit.
4. Only 1 applicant was paid from District Mardan and minority population of the 16 districts were
totally ignored in the excel balloting as not a single payment was made in these districts.
5. The names of 29 candidates amounting to (29 x 15000) Rs. 435,000/- were not declared and the
amount was illegally retained by the management.
The lapse occurred due to weak internal controls and non-formulation of criteria which resulted
into irregular and unfair distribution of grant-in-aid.
report.
Audit recommends to inquire the matter and fix responsibility against the person(s) at fault.
PDP No. 39 (2022-23)
4.4.4 Unauthentic expenditure due to non-submission of adjustment accounts –

Rs. 959.422 million
Illegal retention of public money drawn from treasury – Rs. 392.567 million
According to para 28 (2) of the Federal treasury rule vol-I, a government officer supplied with
funds for expenditure shall be responsible for such funds until an account of them has been rendered. He
shall also be responsible for seeing that the payment are made to person entitled to receive.
According to fund flow mechanism for financial assistance to Aiama of Jamia Masjids of KPK
Clause G (13) provides that Assistant commissioner /Deputy Commissioners shall carry out monthly
reconciliation of the expenditure with District Accounts Officer and provide a copy of the reconciled
expenditure with DAO and provide a copy of the reconciled expenditure to the secretary Auqaf Department
which shall carry out the PAO level expenditure reconciliation with Accountant General Office.
Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that the expenditure of Rs. 1,351.990
million was drawn by Assistant Commissioner/ Deputy Commissioner on account of Financial Assistance
of Aima of Jamia Masjids of KPK. The amount was directly punched by the Finance Department through
the respective PRs of the Deputy Commissioner. Out of the drawn amount, a sum of Rs. 959.422 million
was shown disbursed by different Deputy Commissioner to Aimas leaving an undisbursed balance of Rs.
392.567 million (Rs. 1351.422 million - 959.422 million). The amount was illegally retained by the
concerned DCs. The details of APRs / Cross cheques issued in the name of Aima for Rs. 959.422 million
were not provided whether the amount disbursed were actually received by the entitled Aima or otherwise.
191
It was further noticed that neither expenditure was reconciled at DC’s office nor at the PAO level
with Accountant General Office. The expenditure so incurred was, therefore, remained unverified.
The lapse occurred due to weak internal controls which resulted into unauthentic expenditure.
report.
Audit recommends to investigate the matter and fix responsibility on the person(s) at fault besides
reconciliation of the expenditure.
PDP No. 41 (2022-23)
4.4.5 Unauthorized transfer of government funds from government treasury to Designated Bank
Account and incurrence of expenditure therefrom - Rs. 149.677 million
Non-transfer of undisbursed amount of financial assistance to Provincial
Account–I - Rs. 1030.008 million
Para 1 & 2 of the Finance Department letter No. 2/3(F/L)/FD/2019-20/Vol-XIII dated 03.02.2020
provides that no funds should be kept in any bank account by any DDO unless authorized by finance
Department. Such balances lying should be drawn and credited to Government treasury immediately.
Moreover, balance in the bank accounts if any, remaining on June 30 th of respective financial year shall not
be available for use without its prior revival by Finance Department. It was further stated that quarterly and
annual reconciliation of the designated Bank accounts shall be carried out with Finance Department. Read
with the Finance Department letter No. 2/3-(F/L)/Capital-FD/2007-8/Vol-IX dated 10.02.2014 and even
letter No. 02.06.2015, the interest/profit amount accrued/earned on the funds placed in bank (PLS mode)
may be deposited in the government treasury.
According to fund flow mechanism for financial assistance to Aiama of Jamia Masjids of KP at
Clause (F) 12, any amount remained undisbursed, in the current financial year shall be returned and
deposited in provincial account 1, by reducing the expenditure to the extent of receipt.
Khyber Pakhtunkhwa for the Financial Year 2021-22, it was observed that the local office kept a bank
balance of Rs. 147,458,047/- in its Designated Bank Account No. 001507133007 (the Bank of Khyber) as
on 01.07.2021. The amount was brought forward without any lawful authority (out of developmental funds
allocations) and were shown spent during the Financial Year 2021-22, without fulfillment of codal
formalities. Audit also observed the following;
 Details of the schemes against which the funds were withdrawn from the government treasury
and other auditable record such as PC-I, agreement with the contractors, details of activities
planned, and paid vouchers were not produced to Audit.
192
 Necessary entries of the expenditure amounting to Rs. 138.898 million were also not recorded
in the cash book or in any other subsidiary book of account.
 Profit earned on the PLS account during the Financial Year 2021-22 amounting to Rs. 5.472
million was not deposited into the government treasury.
 Unspent balance on the closing of the Financial Year 2021-22 amounting to
Rs. 19.693 million was not surrendered to the provincial government.
 Quarterly and annual reconciliation was not carried out with Finance Department KP.
Similarly, it was noticed that the department was allocated fund amounting to
Rs. 1802.040 million for the financial assistance to Aima of Jamia Masjids of KP. The funds were released
to the Assistant / Deputy Commissioners in various districts through different cost centers who transferred
the funds to their designated banks accounts. Out of the total allocation, a sum of Rs. 771.196 million was
reported as utilized, while an amount of Rs. 1030.008 million remained as unspent balance. The unspent
balance was required to have been credited into the Provincial Account-I instead of retaining the same in
the designated bank account.
The lapse occurred due to weak internal controls which resulted in unauthorized transfer of funds.
When pointed out in January 2023, no reply was furnished.
The department was requested vide letter dated 31.03.2023 followed by subsequent reminders
dated 28.08.2023, 26.12.2023 and 01.01.2024, respectively, for holding the DAC meeting. However, no
DAC meeting was convened till finalization of this report.
depositing the unspent balances into the government treasury.
PDP No. 337 & 344 (2021-22)
193
Chapter – 5
COMMUNICATION & WORKS DEPARTMENT
5.1 A)Introduction
The Communication and Works Department is responsible for the development of infrastructure
by construction of road, bridges and buildings and maintenance within the province. This department was
established in 1903 as Public Works Department. In 1955 it was bifurcated as Building & Roads (B&R)
Department and Irrigation Department. The department is a Provincial Government entity which receives
budget from the Provincial Government through Finance Department. Its accounts form part of the financial
statements of the Provincial Government. Secretary office is an Administrative Department of the
Communication & Works in the province. The department has its subordinate offices at all the districts.
The sub-ordinate offices have their own DDOs and receive their budget from the provincial government.
of:
 Construction, equipment, maintenance, repairs, internal electrification and fixation of rent of all
Government buildings, residential and non-residential, including tents, dak bungalow and circuit
houses except those entrusted to Establishment & Administration Department.
 Accommodation for Federal and Provincial Government servants in the province except that
entrusted to Establishment & Administration Department.
 Construction, maintenance and repairs of roads, bridges, ferries, tunnels, rope-ways, causeways
and tram-ways lines.
 Road Funds.
 Tolls (excluding those levies by Local Government).
194
 Engineering training other than:
o Engineering University;
o Engineering Colleges; and
o Engineering Schools.
 Evaluation/Fixation of Rent/Control/Management. Leases and disposal sales of Government
buildings.
 Water supply of sanitary works pertaining to Government buildings and Government estates.
 Laying standards and specifications for various types of roads and bridges for the province.
 Planning and designing roads and connected works for the department financed from Provincial
and / or Federal Funds.
 Road research and material testing.
 Execution of works on behalf of other agencies/departments as Deposit Works.
 Preparation of architectural plans/drawing of buildings of Provincial Government.
 Provincial Building Maintenance Cell (PBMC).
Audit Profile of Communication & Works Department: (Rs. in million)

Revenue /
Total Exp. audited
Description Audited Receipts audited
Nos FY 2022-23
FY 2022-23
Formations 136 31 26,596 0
 SDA N/A N/A N/A N/A
(Excluding FAP)
Authorities/Autonomous bodies etc under PAO N/A N/A N/A N/A
Foreign Aided Projects (FAP) 02 02 2475 N/A

A summary of grants allocated to the Communication and Works Department and expenditure by
the department in financial year 2022-23 is given below:
195
Non-Development:
(Amount in Rs.)
Grant # and
Grant Supplementary Re- Total Actual Excess/
Name of Original Grant Surrender Final Grant
Type Grant Appropriation Expenditure (Savings)
Department
14-
Communication NC21 3,870,602,000 100 - 366,438,114 3,504,163,986 3,496,628,158 -7,535,828
and Works
15-Roads,
Highways,
NC21
Bridges Buildings 4,756,100,000 3,057,660,000 - 2,070,054,042 5,743,705,958 5,753,705,958 -
&24
and Structures
(Repair)
61-
Communication NC21 1,930,968,000 - 65,747,119 659,095,802 1,337,619,317 1,337,609,714 -9,603
and Works
61- Roads,
Highways and NC21 181,920,000 - -59,529,007 122,390,993 0 0 0
Bridges
61- Building and
NC21 130,623,000 - 45,658,000 101,172,124 75,108,876 75,108,876 0
Structure
Total 10,870,213,000 3,057,660,100 51,876,112 3,319,151,075 10,660,598,137 10,663,052,706 -7,545,431
7,000,000,000
6,000,000,000
5,000,000,000
Amount in Rs.
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
0
14-Communication 15-Roads, 61- Communication 61- Roads, 61- Building and
-1,000,000,000 and Works Highways, Bridges and Works Highways and Structure
Buildings and Bridges
Structures (Repair)
196
Development:
(Amount in Rs.)
Grant # and
Department
56-
Construction
NC12
of Roads 34,450,529,000 0 12,327,551,223 22,122,977,777 22,137,738,237 0
& 22 -
Highways
and Bridges
60-
Highways,
NC12 4,988,571,000 0 116,000,000 1,775,688,751 3,328,882,249 3,328,882,249 0
Roads &
Bridges
60-
Highways,
NC22 141,068,000 0 -12,500,000 16,068,000 112,500,000 11,250,000 0
Roads &
Bridges
60-Buildings
NC12 158,417,000 0 0 143,277,606 15,139,395 15,139,395 0
and Structure
60-Buildings
NC22 141,068,000 0 -12500000 16,068,000 112,500,000 112,500,000 0
and Structure
Total 29,561,609,000 15,463,313,010 40,751,509,101 40,768,728,414 17,219,313
25,000,000,000
20,000,000,000
15,000,000,000
Amount in Rs.
10,000,000,000
5,000,000,000
0
60- Highways, Roads & Bridges
56- Construction of Roads
60- Highways, Roads & Bridges
60-Buildings and Structure
60-Buildings and Structure

Highways and Bridges
197
(Rs. in million)
Total Actual
Expenditure
Non-Development 10,660.60 10,663.05 -7.545431 -0.07%
Development 40,751.51 40,768.73 17.219313 0.04%
Total 51,485.64 51,495.32 9.68 0.02%
45,000.00
40,000.00
35,000.00
30,000.00
Rs. in million
25,000.00
20,000.00
15,000.00
10,000.00
5,000.00
0.00
-5,000.00
5.1 (c) Issues in Communication & Works Department
The major issue in the Communication & Works Department is deviation from the approved scope
of work/ design which caused overpayments. Mostly, estimates of the developmental schemes executed in
the tax exempted area were not reduced to defray the amount added in the MRS for taxes provisions. Many
instances were noticed where contract agreement provisions were not applied to ensure completion of the
projects within time nor penalties were imposed for delay. Furthermore, cases were noticed where neither
MRS specifications were observed nor material tests were conducted to ascertain the quality and suitability/
unsuitability of the materials. There were no details of the head-wise figures of the departmental own
receipts collected by the department.
198
Audit observations amounting to Rs. 30.463.2 million were raised in this report during the current
audit of Communication & Works Department. This amount also includes recoveries of Rs. 212.109 million
Amount
S. No. Classification
(Rs. in million)
1 Non production of record 11.390
2 Reported cases of fraud, embezzlement and Misappropriation 173.197
3 Irregularities -
B Procurement related irregularities 29,829.878
5 Others 315.166
Amount
(Rs. in million)
Non production of record
11.39
173.197
315.166
0 0
144.959 Reported cases of fraud, embezzlement
and Misappropriation
Irregularities

Commercial Banks
29,829.88 Value for money and service delivery

issues
Others
199
5.3 Brief comments on the status of compliance with PAC directives
Total No. of
points
1 2011-12 C&W 07 06 - 01
2 2012-13 -do- 10 05 - 05
3 2013-14 -do- 30 09 - 21
4 2014-15 -do- 26 20 - 06
5 2015-16 -do- 27 11 - 16
6 2016-17 -do- 17 09 - 08
7 2017-18 -do- 18 11 - 07
5.4 Audit Paras
5.4.1 Misappropriation of government funds – Rs. 173.197 million
According to the Establishment Department letter No.SO(Policy)E&D/2-6/2019 dated 15.11.2019,

the inquiry should be finalized in 15 days read with 56 of CPWD.
During audit of accounts of Chief Engineer South-I C&W Khyber Pakhtunkhwa for the Financial
Year 2021-22, it was noticed that inquiry dated September 2021 was conducted by Engr Bakht Rawan,
Principal Design Engineer (Buildings) on the project titled: Construction of shingled road from Angori to
Sarak (7Kms) in central Kurram”. As per inquiry report the scheme was awarded to Mr. Sajid Rehman. The
work order was issued on 17.05.2010 with completion time of 36 months but till date of inquiry the scheme
was not completed.
The enquiry committee confirmed an over payment of Rs.4.68 million for the structure work which
was not carried out at site by the contractor and proposed to recover the said from the contractor. The fact-
finding Committee also held that all the payment of Rs.173.197 million irregular and illegal due to non-
availability of contract agreement, Technical Sanction and time extension.
The inquiry report was submitted by SO (Estb) to Chief engineer South-1 vide letter dt 27.09.2021
for appropriate action but till date of audit. April, 2023, no action was taken which needs to be justified.
Moreover, field staff was exonerated from the whole lapses which is strange.
The lapse occurred due to non-approval of technical sanction and time extension which resulted
into misappropriation of funds.
In the DAC meeting held on 06.09.2023, it was decided that the department may provide the
relevant record to Audit for verification. However, no progress was intimated to Audit till finalization of
this report.
200
Audit recommends to recover the amount in light of the findings of the inquiries besides
blacklisting the contractor and conducting a fact-finding inquiry against the person(s) at fault for non-
finalization of the inquiry.
PDP No. 787 (2021-22)
5.4.2 Loss to the government due to non-recovery of taxes from contractors -

Rs. 85.142 million
Para 23 of GFR Vol I provides that every public officer is personally responsible for any loss
sustained by government through fraud or negligence on his own part or on the part of subordinate
disbursing officers.
During the audit of accounts of Chief Engineer South-I C&W Khyber Pakhtunkhwa for the
Financial Year 2021-22, it was observed that Executive Engineer Highway Division Kohat paid an amount
of Rs 877.846 million to the contractors on account of execution of road works during the year. On detail
scrutiny of the relevant record, it was revealed that no deduction of requisite taxes was made from the
contractors by the local office and put government into loss of Rs. 85.142 million as detailed below;
Financial Year Expenditure KPRRA @ 2% DPR @ .2 % IT @ 7.5% Total
2021-22 877.846 17.549 1.755 65.838 85.142
Audit held that payment to the contractors was required to be made after deduction of taxes and
duties.
The lapse occurred due to weak internal controls & financial mismanagement which resulted into
loss to the government.
this report.
Audit recommends to recover the outstanding government dues from the contractors.
PDP No. 793 (2021-22)
201
5.4.3 Overpayment due to non-adjustment of available material at site – Rs. 42.208 million
According to rate analysis of MRS 2019, Item No. (08-01-d-03) Random Rubber Masonry (1:6) in
foundation and plinth includes 30% to 40% cost of stone. Read with Item No. (08-01-a) Random Rubber
dry masonry includes 30% to 40% cost of stone.
According to Section 3.2.1.1, 3.2.4 & 3.9.5.2 of the Technical Specifications 2019 for
workmanship, issued by Communication & Works DepartmentKhyber Pakhtunkhwa, materials of any kind
such as shingle or hard good quality stone, obtained from excavation shall remain the property of the
government. The Engineer shall decide regarding the unsuitability of the material by conducting appropriate
laboratory tests. The materials obtained from the excavations may be disposed-off. Suitable excavation
material may be used in raising dams, embankments, ramps, rail and road formations or refilling the voids
of foundations after the erection of the structure.
During audit of the accounts of Executive Engineer C&W Division Swat-I for the Financial Year
2022-23, it was observed that contracts of different developmental schemes were awarded to various
contractors.
Further comparison of bills, MBs and TSs revealed that the local office overpaid Rs. 42.208 million
by allowing full rate of Random Rubber Masonry for a quantity of 7850.55 m3 while ignoring the available
stone of 81,936 m3 at site from excavation in hard rock material. The cost of stone available was not
deducted from the payments of different types of RRM, resulting in overpayment to contractors.
In addition, cutting in hard rock and excavation was paid without rock classification and grading
on the basis of geological survey reports and verified cross-section of the road supported with level book
and recovery schedule.
The department was requested vide letter dated 03.01.2024 for convening the DAC meeting.
However, no meeting was convened till finalization of this report.
Audit recommends to inquire the matter in detail and recover the overpaid amount of Rs. 42.208
million besides fixing of responsibility on the person(s) at fault.
concern.
PDP No. 46 (2022-23)
5.4.4 Loss to the government due to execution of excessive quantities of asphalt -

Rs. 6.940 million
202
According to Para 220 and 221 of CPWA Code, the Sub Divisional Officer, before making
payments to the contractors is required to compare the quantities in the bills and see that all the rates are
correctly entered and that all the calculations have been checked arithmetically.
2022-23, it was observed that local office awarded the contract of different developmental schemes to
different contractors. On scrutiny of the relevant record, it was noticed that excessive quantity of 342.59 m3
Asphalt amounting to Rs.6.940 million was paid over and above the payment required as per cross section
quantities entered in bidding documents calculated on standard 2-inch thickness of Asphalt.
The irregularity occurred due to weak internal control and violation of rules which resulted into
PDP No. 47 (2022-23)
5.4.5 Overpayment to contractor due to allowing excessive quantity of granular sub base – Rs.
1.691 million
According to approved Technical Sanction of the scheme, quantity allowed for item of work
granular sub base using pit run gravel is 0 m3.
2022-23, it was observed that contract of the developmental scheme “Construction of Archalai Road was
awarded to M/S Naikpekhel with a bid cost of Rs. 66.381 million (0.10%% against the total estimated cost
of Rs. 72.947 million. An up-to-date payment of Rs. 22,168 million was made to contractor vide voucher
No. 15-H-II dated 26.10.22.
Further scrutiny of record Pc-1/TS and paid voucher No. 15-H-II revealed that local office overpaid
Rs 1.691million to contractor due to allowing excessive quantity of granular sub base course using pit run
gravel against the provision approved in TS which resulted in overpayment and loss to public exchequer.
The lapse occurred due to weak financial controls and deviations from technical sanction which
resulted into loss to the government.
203
PDP No. 48 (2022-23)
5.4.6 Overpayment to contractor on account of transportation of material – Rs. 14.529 million
According to the technical specification of C&W Department KP for the Year 2020, Clause 3.9.4,
carriage of material for the construction of embankment which is considered to be included in the rate of
roadway excavation or borrow excavation is 900 m (3000ft).
During audit of the account of Executive Engineer C&W Division Swat-I for the Financial Year
2022-23, it was observed that contract of the developmental scheme Construction of Babe-Eudya with allied
works at Shamozai & beautification works near babe-Udyana was awarded to M/S Asad builders &
construction with a bid cost of Rs. 99.000 million. An up-to-date payment of Rs. 22.168 million was made
to the contractor vide Voucher No. 2-S dated 08.06.2023.
Further scrutiny of record like PC-1/TS and paid Voucher No.2-S dated 08.06.2023 revealed that
local office overpaid Rs. 14.529million to contractor due to allowing separate rate for transportation of
roadway excavation in surplus/unsuitable common material. As per specification, rate of roadway
excavation includes transportation of the excavated materialup to 900meter, as detailed below;
Item of work Qty paid rate (Rs) Total (Rs) Cost factor @ Below@ 0.10% (Rs)
(m3) 8%
Extra for every 15m extra lead or 47433,130 81 3,842,083 4,149,449 4,145,299
part thereof for earth work soft,
ordinary, hard & very hard
Transportation of earth all types 47433,130 202.91 9,624,656 10,394,628 1,0384,233
beyond 25om up to 50m
Total 14,529,532
The lapse occurred due to weak financial controls and deviation from specifications which resulted
into overpayment to contractor.
When pointed out in December 2023, no reply was furnished.
Audit recommends to inquire the matter in detail and recover the overpaid amount of
Rs. 14.529 million besides fixing of responsibility on the person(s) at fault.
PDP No. 57 (2022-23)
204
5.4.7 Overpayment due to non-utilization of available material at site of PCC 1:3:6 mass concrete
workmanship, issued by Communication & Works Department Khyber Pakhtunkhwa, materials of any kind
such as shingle or hard good quality stone, obtained from excavation shall remain the property of the
government. The Engineer shall decide regarding the unsuitability of the material by conducting appropriate
laboratory tests. The materials obtained from the excavations may be disposed off. Suitable excavation
material may be used in raising dams, embankments, ramps, rail and road formations or refilling the voids
of foundations after the erection of the structure read with rate analysis of MRS 2017, item No. (6-36-a)
PCC 1:3:6 using 50 % boulders includes 25 % cost of stone.
2022-23, it was observed that contract for Construction of 2-km by-pass road in Barikot was awarded to
M/S Malaum Jabba Construction Company at the bid cost of Rs.39.111 million. The award of contract was
made at the rebate rate of 30.30% below on the estimated cost of Rs. 44.852 million without rate analysis
based on MRS-2017. A payment of Rs.65.199 million was made to the contractor till 6 thRunning Bill vide
Voucher No. 04-HI dated 6.09.2022.
Further comparison of record with PC-1, MB and paid vouchers revealed that local office overpaid
Rs. 5.932 million to the contractor in the item of work PCC 1:3:6 using 50% boulders as a huge quantityof
5362.500 m3 was available from excavation in hard rock which was neither transported nor utilized. In
addition, no test report was available on record.
The lapse occurred due to improper preparation of estimates and payment made thereon which
resulted into overpayment to contractor.
Rs. 5.932 million besides fixing responsibility on the person(s) at fault.
PDP No. 58 (2022-23)
5.4.8 Overpayment due to non-adjustment of available material at site - Rs. 49.729 million
According to Rate analysis of MRS 2020, item No. (08-01-d-03), Random Rubber Masonry (1:6)
in foundation and plinth includes 30% to 40% cost of stone read with item No. (08-01-d-03), Random
Rubber Masonry (1:6) in foundation and plinth includes 30% to 40% cost of stone.
workmanship, issued by Communication & Works Department, Government of Khyber Pakhtunkhwa,
205
materials of any kind such as shingle or hard good quality stone, obtained from excavation shall remain the
property of the government. The Engineer shall decide regarding the unsuitability of the material by
conducting appropriate laboratory tests. The materials obtained from the excavations may be disposed-off.
Suitable excavation material may be used in raising dams, embankments, ramps, rail and road formations
or refilling the voids of foundations after the erection of the structure.
During audit of the accounts of Executive Engineer C&W Division Swat-II for the Financial Year
2022-23, it was observed that contracts of different developmental schemes were awarded to different
contractors.
Further comparison of bills, MBs and TSs revealed that the local office overpaid Rs. 49.729 million
to different contractors by allowing full rate of Random Rubber Masonry of 22672.01 m3 while ignoring
the available stone of 31843 m3 at site from roadway excavation in surplus/unsuitable hard material
requiring blasting. The cost of stone available was not deducted from the payments of RRM, resulting into
overpayment to contractors.
and recovery schedule. TS was not produced.
The lapse occurred due to weak financial control which resulted in overpayment to contractor.
Rs. 49.729 million besides fixing responsibility on the person(s) at fault.
PDP No. 65 (2022-23)
5.4.9 Overpayment to contractor due to allowing excessive quantity than Technical Sanction – Rs.
1.996 million
According to approved Technical Sanction of the scheme, quantity allowed for item of work
erecting and removal of from work to concrete in any shape position (horizontal/vertical) is 0 m3.
During audit of account of Executive Engineer C&W Division Swat-II for the Financial Year 2022-
23, it was observed that contract of the developmental scheme Construction of GHSS Madyan District Swat
was awarded to M/S Zain ul Abideen with a bid cost of Rs. 77.575 million (17.77% below against the total
estimated cost of Rs. 89.424 million). An up-to-date payment of Rs. 67.171 million was made to the
contractor vide Voucher No. 13-BK dated 22.08.2022.
206
Further scrutiny of record like PC-I /TS and paid voucher revealed that the local office overpaid
Rs. 1.996 million to contractor due to allowing excessive quantity of erecting and removing of formwork
(horizontal and vertical) against the provision approved in TS which resulted into overpayment and loss to
the public exchequer.
The lapse occurred due to weak financial control which resulted into overpayment to contractor.
PDP No. 67 (2022-23)
5.4.10 Overpayment to contractor due to non-deduction of voids – Rs. 4.106 million
According to Clause-20 of the contract agreement, the conversion of loose measurement into solid
was provided as 0.67% to 0.89%.
2022-23, it was observed from the review of 1st R/Bill of the contractor M/S Bashir Ahmad for the work
Construction of Civil work of public parks at tehsil Matta, approach road of public parks at tehsil matta
vide Voucher No.34-BM dated 12-01-2023.Scrutiny of record revealed that local office overpaid Rs 4.106
million to contractor due to non-deduction of voids from the item of work common back fill with 8 KM
lead.
The lapse occurred due to weak financial controls which resulted into overpayment to contractor.
The department was requested vide letter dated 03.01.2024for convening the DAC meeting.
PDP No. 69 (2022-23)
5.4.11 Overpayment to contractor on account of structure back filling using granular material - Rs.
2.776 million
207
According to Para 220 and 221 of CPWD Code, the Sub Divisional Officer, before making
payments to the contractors is required to compare the quantities in the bills and see that all the quantities
and rates are correctly entered and that all the calculations have been checked arithmetically.
2022-23, it was observed from the review of 7th R/Bill for the work Construction of AC Office Matta
(Block-A) vide Voucher No.31-BM dated 13.12.2023 revealed that the local office overpaid Rs. 1.603
million on account of structure back filling brought from outside. The huge quantity of 3905 m3 was
available from excavation in foundation which was not transported and utilized in structure back filling.
However, undue favor was extended to contractor and fictitious payment for quantity of 1385.602 m3 was
paid on account granular back filling brought from outside resulted in overpayment to contractor.
In addition, no provision was available for granular material in the PC-I /BOQ.
Similarly, it was observed from the review of Voucher No. 14-BK dated 25.11.2022 BHU Fatehpur
to RHC level that local office paid 1.173 million to contractor on account of granular material brought from
outside for quantity of 1101 m3 @ 1065.99 /m3. Granular material required to be executed in water logged/
slush area. However, audit observed that no soil test report was available on record to justify the soil is
waterlogged. The soil was ordinary soil as item of work excavation in foundation and building was claimed
for amounting to Rs 528,048 for quantity of 2087m3 @ 252.95/m3 which confirms the audit of point of
view that fictitious payment made for granular material just to compensate contractor.
The lapse occurred due to weak financial control which resulted into overpayment to contractor.
million besides fixing of responsibility on the person at fault.
PDP No. 71 (2022-23)
5.4.12 Overpayment to contractor due to non-utilization of excavated materials –

Rs. 1.210 million
conducting appropriate laboratory tests. The materials obtained from the excavations may be disposed off.
Suitable excavation material may be used in raising dams, embankments, ramps, rail and road formations
or refilling the voids of foundations after the erection of the structure.
208
During audit of account Executive Engineer C&W Division Swat-II for the Financial Year 2022-
23, it was observed from the review of 1st R/Bill of the contractor M/S Bashir Ahmad for the work
Construction of Civil work of public parks at tehsil matta, approach road of public parks at tehsil matta
vide voucher No.34-BM dated 12-01-2023, scrutiny of record revealed that local office overpaid Rs 4.210
million to contractor in the item of work common back fill including having lead up to 8 Km by ignoring
the 1066.62 m3 quantity of excavation which was neither transported nor utilized in common back fill,
In addition TS was not provided to audit.
The lapse occurred due to weak financial controls which resulted into overpayment to contractor.
million besides fixing of responsibility on the person at fault.
PDP No. 85 (2022-23)
5.4.13 Loss to the government due to non-imposition of penalty on the contractors for delay in
execution of works - Rs. 16.200 million
According to clause 2 of contract agreement executed with the contractor, liquidated damages for
delay equal to 1 % of the contract price per day subject to maximum of 10% of the contract price stated in
the letter of acceptance would be recoverable.
During the audit of accounts of Executive Engineer Building Division Swat-I for the Financial Year
2020-21, it was observed that the following schemes were executed and awarded to the below cited Govt.
contractor, which should have been completed within their stipulated time frame as clearly mentioned in
the work order. Detail given below:
Project Contractor Bid Cost Commenc. Completion Penalty
Date Date @10% (M)
Playground at Kot Charbagh M/s Swat Const: 65.616 23-01-2017 22-01-2018 6.561
Playground at Khwaza Khela -do- 41.430 30-11-2016 29-11-2017 4.143
Playground at Tehsil Matta M/s Al-Habib 12.892 10-05-2018 09-05-2019 1.289
SDC at Matta M/s Bakht Zada 21.275 15-12-2016 14-06-2018 2.127
SDC Barikot M/s Bashir ahmad 20.808 26-12-2016 25-06-2018 2.080
Total 16.200
The lapse occurred due to weak internal control and violation of rules which resulted into loss to
the government.
In the DAC meeting held on 02.05.2023, it was decided that the department may make complete
recovery of the amount. However, no progress was intimated to Audit till finalization of this report.
209
Audit recommends to recover the amount of Rs. 16.200 million and fix responsibility on the
person(s) at fault.
concern.
PDP No. 538 (2020-21)
5.4.14 Loss to the government due to less deposit of Income Tax – Rs. 42.992 million
According to Income tax Department letter No-WHU-47/RTO-PR/2017-18 dated 11/7/2017,

income tax at the rate of 7% & 7.5% shall be deducted from the payments of a filer contractor/ company.
During audit of the accounts of Khyber Pakhtunkhwa Provincial Roads Improvement Project for
the Financial Year 2020-21, it was noticed that the Project Management paid total sum of Rs.
2,704,962,341/- to MS Umer Jan (JV) for dualization of Mardan Swabi road (0 – 42.04 KM) since
commencement of works i.e. July, 2019 till 30th June, 2021.
Scrutiny of record revealed that income tax of Rs. 42,992,359/- was less deposited as summarized
below.
DUALIZATION OF MARDAN – SWABI ROAD PROJECT
S.# Description IPC Payment ADP Share GOP Share I.Tax Due IT Paid Less deposit
LOT-1
1,514,231,836 1,377,819,102 47,098,239 113,567,388 89,541,430 24,025,958
1 (IPC-1 to IPC-11 )
LOT-2
1,190,730,506 1,083,564,760 32,657,933 89,304,788 70,338,387 18,966,401
2 (IPC-1 to IPC-13
Grand Total 2,704,962,341 2,461,383,862 79,756,172 202,872,176 159,879,816 42,992,359
The lapse occurred due to violation of provisions of rules which resulted into loss to the
government.
When pointed out in August 2021, however, no reply was furnished.
In the DAC meeting held on 08.05.2023, the department reported partial recovery and the DAC
forum directed to ensure complete recovery. However, no progress was intimated till finalization of this
report.
Audit recommends to recover the income tax and deposit the same into the government treasury.
PDP No. 18 (2020-21)
5.4.15 Loss to the government due to non-deduction of income tax – Rs. 8.613 million

income tax at the rate of 7.5 %shall be deducted from the payments of a filer contractor/Company. As per
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contract agreement executed b/w the project Management & the consultant (JV) that income tax @ 8%
(ACC) & 10% (CEC) will be applicable while making payment.
the Financial Year 2020-21, it was noticed that the consultancy contract agreement was signed with MS
Associated Consultant Center (ACC) in association with MS Creative Engineering Consultant (CEC) Joint
venture, for Design, Construction & Supervision of dualization of Mardan Swabi road (0 to 42.05 KM).
Accordingly, payment of Rs. 93,109,125/- was made to the Consultants (JV) since commencement of work
i.e. July, 2019 till 30th June, 2021.
Audit observed that income tax amounting to Rs.49,588,649/- was required to be deducted by the
PIU being withholding agent while making payments to the consultant. However, neither the PIU deducted
income tax nor any evidence was produced in case the same has been deducted/ deposited by the consultant,
as per detail summarized below:
Firm Name Remuneration Reimbursable Total Paid Income Tax Remarks

MS Associate Consultant Center (ACC) 34,848,470 - 34,848,470 2,787,878 Deduction of IT @ 8% from
Creative Engineering Consultant (CEC) 57,526,125 734,530 58,260,655 5,826,066 ACC & @ 10% from CEC
was required in light of
Grand Total 92,374,595 734,530 93,109,125 8,613,943 Contract. Agreement &
rules.
The lapse occurred due to weak financial management which resulted into loss to the government.
In the DAC meeting held on 08.05.2023, the department reported partial recovery and the DAC
forum directed to ensure complete recovery. However, no progress was intimated till finalization of this
report.
Audit recommends to recover the income tax and deposit the same into the government treasury.
PDP No. 19 (2020-21)
5.4.16 Overpayment to contractor in Escalation due to incorrect insertion of base rate of bitumen –
Rs. 14.726 million
According to the clause 13.8 (Adjustment for changes in cost) of the contract agreement executed
by Provincial Roads Improvement Project C&W Department Peshawar with MS Khattak Allied
Construction Co. for the rehabilitation & improvement of Risalpur Pirsabaq & Jahangira road section 37
KM, the amount payable to the contractor shall be adjusted for rises or falls in the cost of labour, goods and
other inputs to the works, by the addition or deduction of the amounts determined by the given formula.
The weightings (coefficients) for each factors of cost stated in the tables of adjustment data shall only be
adjusted if they have been rendered unreasonable, unbalanced or inapplicable.
Pn = a + b(Ln/Lo) + c(En/Eo) + d(Mn/Mo)”
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the Financial Year 2020-21, it was observed that escalation payment of Rs.215,134,452/- was made to MS
Khattak Allied under the scheme rehabilitation & improvement of Risalpur Pirshabaq & Jahangira road
section 36 KM till IPC 16.
Scrutiny of the Escalation bill and its comparison with monthly bulletins for base rates revealed
that incorrect base rate of bitumen was taken for escalation as the correct base rate of bitumen in 12/2017
was Rs.57,277/ton while the same was taken as Rs.53,312/ton. Scaling down the base rate of bitumen,
scaled up the difference between base and current rates and resulted in financial favor to the contractor and
loss to the government worth Rs.14,726,064/- as summarized below and detail in the enclosed statement.
Particulars Amount
Escalation due as per contract weightings and by excluding non-utilization of bitumen 200,408,388
Escalation paid 215,134,452
Overpayment 14,726,064
The base date is the date 28 days prior to last submission of bids, the last date of bid submission
was 22-12-2017, hence the base date was 24-11-2017 and by that date, the rate of bitumen was Rs.57,277/
ton
Audit held that the overpayment occurred due to unauthorized changes in fixed and variable
coefficients and allowing bitumen without actual utilization to extend financial favor to the contractor.
In the DAC meeting held on 08.05.2023, the department reported recovery of

Rs. 7.0337 million while the DAC forum directed to ensure complete recovery. However, no progress was
intimated till finalization of this report.
Audit recommends to recover the overpaid amount from the contractor.
3.4.1 and 3.4.5 having financial impact of Rs. 8.648 million. Recurrence of same irregularity is a matter of
serious concern.
PDP No. 22 (2020-21)
5.4.17 Non-recovery of lease / rent from petrol pumps & CNG stations - Rs. 49.300 million
According to the Government of KPK C&W department notification No SOG/W&S/11-137/Misc

dated 16.8.2003, annual rent of lease land of pertrol pumps has been fixed Rs. 20,000 within municipal;
corporation limit and Rs. 12,000 outside municipal corporation w.e.f 1 st july 2003
During audit of the accounts of Executive Engineer C&W Division Haripur for the Financial Year
2020-21, it was noticed that local office did not realize annual rent from the owners of the petrol pump and
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CNG stations situated at the approach roads under the jurisdiction of C&W Division Haripur w.e.f 2003 to
2021.
The lapse occurred due to non-recovery of rent and weak internal controls & financial
mismanagement which resulted into non-recovery of lease / rent.
When pointed out, no reply was furnished.
Audit recommends to recover the amount of annual rent from the owner of petrol pump and CNG
station.
PDP No. 515 (2020-21)
5.4.18 Loss to the government due to awarding of contract at higher rates -

Rs. 2929.067 million
According to Para 35 of Section-I of the Standard Bidding Documents, the Employer shall use the
criteria and methodologies listed in Section III. If specified in the BDS, the Employer's evaluation will be
carried out by applying rated criteria that take into account technical factors, in addition to cost factors: An
Evaluated Bid Score will be calculated for each responsive bid using the formula, specified in Section III,
Evaluation and Qualification Criteria. The scores to be given to technical factors and sub factors are specified
in the BDS.
According to Para 5.50 of Section 05 of the World Bank Procurement Regulations, Evaluation criteria
and methodology shall be specified in detail in the request for bids / request for proposals document. The
evaluation criteria and methodology shall be appropriate to the type, nature, market conditions, and
complexity of what is being procured. For international competitive procurement, the Bank's requirements for
the submission of Bid / Proposal prices (format, structure and details), and method of comparison and
evaluation of Bid / Proposal prices (including treatment of taxes levied in the Borrower's country for
procurement of Goods, Works, Non-consulting services, and Consulting Services), are detailed in the
appropriate Bank's Standard Procurement Documents.
During audit of the accounts of Khyber Pakhtunkhwa Integrated Tourism Development Project
(KITE) – C&W Component for the Financial Year 2022-23, it was observed that M/S Aitmad Builders and
Developers initially submitted quotations of Rs. 1,403,758,949/- and 1,296,576,590/- for Lot # 01 and 02,
respectively. However, it was observed that a substantial alteration in the quoted original price occurred,
resulting in an inexplicable increase of the contract cost from Rs. 2,700,335,539/- to an astonishing Rs.
5,755,216,136/-. This represented a net increase of Rs. 3,054,880,597/-, effectively doubling the contract
price. Such an alteration, attributed to an alleged arithmetic error by the contractor, raises significant
concerns regarding the transparency and integrity of the contracting process, suggesting potential
connivance between the management and the contractor.
Lot #01: Mankyal-Bada-Serai Road (KM 00 to 09+290)
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Ranking Arithmetic Revised price
Name of Firm Quoted Price
of Bid correction of bid
M/S Aitmad Builders and 1,403,758,949 1st 1,571,949,628 2,975,708,577
Developers
M/S SGEC-AMC-JV 1,490,399,436 2nd - -
Lot #02: Bada-Jabai Road (KM 00 to 12+760)
Ranking Arithmetic Revised price
Name of Firm Quoted Price
of Bid correction of bid
M/S Aitmad Builders and 1,296,576,590 1st 1,482,930,969 2,779,507,559
Developers
M/S SGEC-AMC-JV 1,394,828,173 2nd -
Total of Aitmad Builders 2,700,335,539 3,054,880,597 5,755,216,136
Audit further observed the following irregularities;

 The contract was awarded at a staggering 28.75% above the original engineer estimates for both
lots, far exceeding the acceptable deviation from the engineer estimates. Generally, when a contract
cost increases by 15% or more from the engineer estimates, it necessitates a revision of the project's
PC-I, yet this essential step had not been taken till date of audit.
 M/S Aitemad Builders and Developers were recommended as the best evaluated bid for an amount
of Rs. 2,826,148,533 for the same road in the previous bidding process carried out in May 2021
which was then cancelled without any justified reason. Now the same contractor has been selected
by the management for construction of the same work at the cost of Rs. 5,755,216,136/- which
resulted in a loss of Rs 2,929,067,603/- to the government.
 Pre-bid meeting was attended by the 10 no. of well-known contractors. However, neither of them
applied for the contract and the above two firms not attended that meeting but they were shortlisted
for technical and financial proposals evaluation. It is worth mentioning here that project
management failed to maintain any tender register. Therefore, Audit could not authenticate the
exact number of contractors who applied for the bid.
 M/S SGEC-AMC-JV was held non-responsive by the bid evaluation committee, yet their financial
proposal was opened and considered, hence, their bid was required to be returned unopened.
 The technical evaluation process was marred by a lack of detailed marking for each criteria item
instead the committee followed by indicated only “passed” word description against each criteria.
 As per Para 27 and 31 of the Standard Bidding Documents, the contractor was allowed to change
the bid price for correction of arithmetic error only. Audit held that these errors should be upto 2-3
percent of the contract. However, in the instant case the error doubled the contract cost of the civil
works. There was little disparity in the rate quotes between the two contractors, with M/S SGEC-
AMC-JV offering to undertake both lots at a cost of Rs. 2,885.227 million, which stood at roughly
half of the revised contract price proposed by M/S Aitmad Builders and Developers.
 It is worth mentioning that the selected contractor was disqualified in the bidding process during
March 2021 due to mis-presentation of facts in the upgradation of Abbottabad Tandiani Road 24.37
KM and Upgradation of Mankial Beda Serai Road (22 KM) Swat.
 Finally, a significant cost disparity was identified when comparing the per kilometer cost of the
road in question with the National Highway Authority's (NHA) average cost. While the NHA
reported a per kilometer cost of 110.991 million in 2021 for a similar two-lane road, the project's
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per kilometer cost stood at a staggering 261.60 million, which is more than double the NHA's
average cost. This substantial cost deviation, when considering geographic and demographic
factors, raises concerns about the cost-effectiveness and justifiability of the project.
The lapse occurred due to weak internal controls and defective bidding process which resulted in
loss to government due to award of contract at higher rates.
The department was requested vide letter dated 13.11.2023 for holding DAC meeting. However,
the DAC meeting was not convened till finalization of this report.
Audit recommends inquiring the matter and fixing responsibility on person(s) at fault.
PDP No. 18 (2022-23)
5.4.19 Loss to the government due to awarding of contract at higher rates - Rs. 31.385 million
According to para 35 of Section-I of the Standard Bidding Documents, the Employer shall use the
criteria and methodologies listed in Section III. If specified in the BDS, the Employer's evaluation will be
carried out by applying rated criteria that take into account technical factors, in addition to cost factors: An
Evaluated Bid Score will be calculated for each responsive Bid using the formula, specified in Section III,
Evaluation and Qualification Criteria. The scores to be given to technical factors and sub factors are specified
in the BDS.
According to para 5.50 of the section 05 of the World Bank Procurement Regulation, Evaluation
criteria and methodology shall be specified in detail in the request for bids/request for proposals document.
The evaluation criteria and methodology shall be appropriate to the type, nature, market conditions, and
complexity of what is being procured. For international competitive procurement, the Bank's requirements for
the submission of Bid/Proposal prices (format, structure and details), and method of comparison and
evaluation of Bid/Proposal prices (including treatment of taxes levied in the Borrower's country for
procurement of Goods, Works, Non-consulting services, and Consulting Services), are detailed in the
appropriate Bank's Standard Procurement Documents.
(KITE) – C&W Component for the Financial Year 2022-23, it was observed that M/S Aitmad Builders and
Developers initially submitted the bid price of Rs. 969,373,039/- for Rehabilitation and Remodeling of
Thandiani Road Lot # 01 (KM 00+000 to KM 13+000) and Rs. 941,617,090/- for Rehabilitation and
Remodeling of Thandiani Road Lot # 02 (KM 13+000 to 24+377). However, it was observed that a
substantial change in the quoted original price occurred, resulting into an increase of the contract cost from
Rs. 1,910,990,129/- to Rs. 2,994,119,567/- increasing the contract cost by Rs. 1,083,129,438/-. Such a huge
change, attributed to an alleged arithmetic error by the contractor, raises concerns regarding the
transparency of the procurement process.
Audit has the following further observations;
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 M/S Transtech Engineering Corporation applied among other 04 competing bidders and was
shortlisted as the lowest bidder with a corrected bid quoted price of Rs. 1,490,172,341/. However,
the same bidder was declared disqualified as per Section-III of the Evaluation Criteria given in the
bidding document and the contract was then awarded to the 2nd lowest bidder i.e. M/S Aitmad
Builders and Developers at the revised contract price of Rs. 1,521,557,775. Audit held that the
former contractor was disqualified on the ground that it had submitted experience of its subsidiary
company. However, no documentary evidence was provided to Audit for the same. Therefore, the
disqualification of the former contractor was unjustified. This resulted into a loss of Rs. 31,385,434
(Rs. 1,521,557,775 - 1,490,172,341) to the public exchequer.
 It is worth mentioning here that the disqualified contractor has been executing civil work since
1989 as evident from their website. As per Section III (D) 4.1 (a) of the Standard Bidding
Document, the contractor should have 05 years General Construction experience staring from 01 st
January 2017. However, the selected contractor failed to possess such experience as required under
Section III (D) 4.1 (a) of SBD. The contractor was registered with FBR on 01 st February 2019, as
per FBR record. Therefore, Audit held that the experience showed by the contractor before
February 2019 was fake.
 Single stage one envelope procedure was used for procurement of civil works, wherein price is the
only determining factor. Keeping in view the complexity of the civil works, Audit is of the view
that a single stage two envelope procedure for procurement should have been used.
 As per Rule 45 of KPPRA Rules 2014, the project management was required to have announced
the final results of the bid evaluation giving justification for acceptance or rejection of the bids on
KPPRA website. However, neither bid evaluation report was posted on KPPRA website nor was
any justification provided for the rejection of the 04 unsuccessful bidder as evident from
Notification of intention to award which make the bidding process doubtful.
 It is worth mentioning that the selected contractor was disqualified in the bidding process during
March 2021 due to mis-presentation of facts in the upgradation of Abbottabad Tandiani Road 24.37
KM and Upgradation of Mankial Beda Serai Road (22 KM) Swat.
The lapse occurred due to weak internal controls and defective bidding process which resulted in
loss to government due to award of contract at higher rates.
Audit recommends inquiring the matter and fixing responsibility on person(s) at fault.
PDP No. 19 (2022-23)
5.4.20 Illegal and unauthorized payment of mobilization advance against submission of

counterfeited performance security bonds - Rs. 734.878 million
216
According to Clause 32 of the International Bidding Documents, the successful bidder shall furnish
to the employer a performance security within 28 days after the receipt of letter of acceptance and in case
of failure shall constitute sufficient grounds for annulment of award and forfeiture of the bid security.
During audit of the accounts of Pakhtunkhwa Highways Authority (PKHA) Peshawar for the
Financial Year 2021-22, it was observed that M/S Khattak Allied Construction was paid Rs.734.878 million
as mobilization advance on the submission of performance bonds of United Insurance Company for the
execution of various schemes as detailed below:
Endorsement Date of issue Guarantee NO Sum Insured Rs.
UIC/024/PB/0169//10/020E1 23-09-22 UIC/024/BP/0169/10/020 90,375,924
UIC/024/PB//0170/10/020E1 23-09-22 UIC/024/BP/0170/10/020 84,662,310
UIC/024/PB//0171/10/020E1 23-09-22 UIC/024/BP/0171/10/020 6,516,6905
UIC/024/PB//0172/10/020E1 23-09-22 UIC/024/BP/0172/10/020 62,118,935
UIC/024/PB//0173/10/020E1 23-09-22 UIC/024/BP/0173/10/020 44,047,920
UIC/024/PB//0174/10/020E1 23-09-22 UIC/024/BP/0174/10/020 20,434,787
UIC/024/PB//0175/10/020E1 23-09-22 UIC/024/BP/0175/10/020 60,278,514
UIC/024/PB/0176//10/020E1 23-09-22 UIC/024/BP/0176/10/020 59,827,700
UIC/024/PB//0177/10/020E1 23-09-22 UIC/024/BP/0177/10/020 75,417,270
UIC/024/PB//0178/10/020E1 23-09-22 UIC/024/BP/0178/10/020 47,796,605
UIC/024/PB0/179//10/020E1 23-09-22 UIC/024/BP/0179/10/020 46,551,292
UIC/024/PB/0180/10/020E1 23-09-22 UIC/024/BP/0180/10/020 50,000,000
UIC/024/PB/0181/10/020E1 14-10-22 UIC/024/BP/0181/10/020 28,200,000
Total 734,878,162
The Audit, for authentication of the performance guaratnees furnished by the contractor, wrote
letter to M/S United Insurance Company on 27.04.2023 (copy enclosed). In response to Audit’s letter, the
Insurance Company denied issuance of above noted performance guarantees in favor of M/S Allied Khattak
Construction Company.
Audit held that the contractor continued to defraud the Government for 05 years by furnishing fake
performance guarantees to obtain mobilization advance.
The lapse occurred due to violation of rules and regulations which resulted in illegal and
unauthorized payment to contractor.
When pointed out in April 2023, no reply was furnished.
The department was requested for holding DAC meeting. However, it was not convened till
finalization of this report.
Audit recommends to;

 Terminate the existing contracts
 Blacklist the contractor
 Initiate departmental inquiry against the responsible officers / officials for fixing responsibility.
 Reassess all the works carried out by the contractor for ascertaining the quality and quantity as per
specifications.
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PDP No. 628 (2021-22)
5.4.21 Unverifiable expenditure of various AIP schemes – Rs. 4,333.430 million
According to Clause 11 (I) of Auditor-General Power & Function Ordinance 2001, Where any
grant or loan is given for any specific purpose from the Consolidated Fund of Federal Government or of
any Province or of any district to any authority or body, not being a foreign State or international
organization, the Auditor-General may scrutinize the accounts by which the sanctioning authority satisfies
itself as to the fulfillment of the conditions subject to which such grants or loans were given and for this
purpose have the right of access, after giving reasonable previous notice, to the books and accounts of that
authority or body : Provided that the President, the Governor of a Province or the authority of a district, as
the case may be, is of the opinion that it is not necessary to do so in the best public interest.
Financial Year 2021-22, it was observed that advance payments were made to Pakistan Army Temporarily
Displaced Persons (TDP) Secretariat for the below mentioned schemes of Permanent Reconstruction in
FATA under the AIP totaling to Rs. 4,333.430 million. However, no details like bills/measurements/IPCs
etc. in support of the expenditure were available on record.
Amount
S. No. Scheme Name
(Rs. in million)
1 Thal Mir Ali Road 1,600.000
2 Bajaur Khar to Timergara Road 1,383.430
3 Bajaur Khar to Mohmand Road 1,350.000
Total 4,333.430
The lapse occurred due to violation of rules which resulted in unverifiable expenditure.
The department was requested for holding DAC meeting. However, it was not convened till
Audit recommends that detailed account of the expenditure incurred or savings (if any) may be
produced for verification.
PDP No. 629 (2021-22)
5.4.22 Irregular awarding of contract due to fictitious technical evaluation –

Rs. 557.000 million
According to Clause 29 of International Bidding Documents, the Procuring Entity, at any stage of
the bid evaluation, having credible reasons for or prima facie evidence of any defect in supplier’s or
contractor’s capacities, may require the suppliers or contractors to provide information concerning their
professional, technical, financial, legal or managerial competence whether already pre-qualified or not.
218
Financial Year 2021-22, it was observed that the contracts for the construction of the Haripur Bypass Road
Package-V (KM 20+650 to 24+480) and Package-VI were awarded to M/S Haji Raees Khan & Sons at the
cost of Rs. 337.00 million and
Rs. 220.000 million respectively in the bid evaluation meeting held in August 2015. However, in the same
evaluation process, the same firm was declared unsuccessful for the Dualization of Sherkot-Hangu Section
of Provincial Highway Package-IV for not having a valid PEC license. Hence, the Haripur Bypass Road
Package-V and VI were awarded to a firm having invalid PEC License.
Audit held the technical evaluations for Haripur Package-V & VI & Sherkot-Hangu Package-IV as
irregular.
The lapse occurred due to extending undue favor to the concerned contractors which resulted into
irregular awarding of contract.
The department was requested for holding DAC meeting, however it was not convened till
Audit recommends independent fact finding inquiry in the matter.
PDP No. 632 (2021-22)
5.4.23 Overpayment to contractor due to allowing inadmissible item of work in BOQ – Rs. 13.048
million
According to Section 3.7.1.1 of the Technical Specifications for Workmanship MRS-2019 & MRS-
2020 issued by Communication & Works Department, Khyber Pakhtunkhwa, the excavation and removal
of trees, roots and stumps including backfilling and compacting of holes and restoring the natural ground
to the acceptable condition shall be responsibility of the contractor for which no extra payment other than
notified under clearing and grubbing. Furthermore, as per 3.7.3, the unit rate for clearing and grubbing shall
be full compensation for all the work specified in this section and shall include all cost of furnishing and
compaction of material required for back filling of holes left by stumps and cost of restoration of area to its
original form and other obstructions removed.
According to Para 16.6.5.4 of the Technical Specifications for Workmanship MRS-2020 issued by
Communication & Works Department, Khyber Pakhtunkhwa, for all concrete structures, pre-stressed
concrete structures or portions thereof, no separate measurement or payment shall be made of false-work
supporting such structures. All false-work cost shall be considered as included in the contract prices paid
for various items of concrete work and no additional compensation would be allowed thereof.
Financial Year 2021-22, it was observed that the contractors in the below mentioned works executed
219
operation of clearing and grubbing, however, they were allowed separate payment against the item
compaction of natural ground resulting in overpayment of
Rs. 5,523,273/-;
220
Work Compaction of Natural
Clearing & Grubbing
Done in Ground
Contractor Work
Rs. in
Qty m2 Rs. Qty m2 Rs.
million
M/S Zhongmei Road connecting Sub- 220 133242.86 2,149,193 133242.86 2,654,197
Engineering Al- Division Wazir to
Mehreen Enterprises Bannu P-I (AIP)
(JV)
M/S Khattak Allied Imp/Wid of Nizampur- 273 35878.620 358,786 35878.620 1,793,931
Construction Kohat Road P-V
Company
-do- Upgradation & 570 47737.806 610,566 46,725.117 1,075,145
Rehabilitation of
Lawrencepur-Tarbela
Road (PSDP)
Audit held that as clearing & grubbing and compaction of natural ground were done on the same
RDs, hence restoration of the area to its original surface level was the responsibility of the contractor
without any extra payment as its cost was included in the clearing & grubbing item.
Similarly, the contract for construction of the AIP scheme, Road connecting Sub-Division Wazir
to Bannu Package-I was awarded to M/S Zhongmei Engineering Al-Mehreen Enterprises (JV) at the cost
of Rs. 447.952 million on MRS 2020. The contractor’s work done till IPC 8 was Rs. 311 million which
included payment of Rs. 7,524,747/- for 7212.310 m2 of the item “erection & removal of formwork with
plywood sheet finishing for RCC or Plain Cement Concrete” (06-47-d). However, as per MRS 2020
Technical Specifications, payment against the said item was not admissible.
The lapse occurred due to extending undue favor to the contractor which resulted in overpayment
of Rs. 13,048,020/- to contractor.
Audit recommends recovery of the overpaid amount.
PDP No. 634 & 635 (2021-22)
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5.4.24 Irregular awarding of contract due to fictitious technical evaluation –
According to instruction no. IB.29 Award of Contract of the KPPPRA standard form of bidding
documents for procurement of works (civil works) (for large contracts) over Rs.45 million, the Procuring
Entity, at any stage of the bid evaluation, having credible reasons for or prima facie evidence of any defect
in supplier’s or contractor’s capacities, may require the suppliers or contractors to provide information
concerning their professional, technical, financial, legal or managerial competence whether already pre-
qualified or not.
Financial Year 2021-22, it was observed that the contracts for the construction of the Circular Bypass Road
Bannu Package-I (KM 0+000 to 10+000) and Package-II (KM 10+000 to 20+000) were awarded to M/S
Khyber Grace (Pvt) Ltd at the cost of Rs. 555.868 million and Rs. 540.919 million respectively in the bid
evaluation held in Sept, 2018.
Later on in 2021, it was awarded contract for Package-II of Road Connecting Sub-Division Wazir
with Bannu Circular Road at cost of Rs. 311 million by awarding 27/32 marks in experience. However, in
2022 it was declared unsuccessful in technical evaluation for 13 Km Circular Bypass Road Package-VI
when it was awarded only 5/35 marks for experience. Hence, awarding experience marks in 2021 and not
awarding the same in 2022 also made the technical evaluation and tendering process of Circular Bypass
Road Package-VI as doubtful which was awarded to M/S Al-Mehreen Enterprises at the cost of Rs. 1,041.00
million.
The lapse occurred due to extending undue favor to the concerned contractors which resulted in
irregular awarding of contract.
When pointed out in April, 2023, no reply was furnished.
Audit recommends to conduct a fact-finding inquiry in the matter and fix responsibility against the
person(s) at fault.
PDP No. 637 (2021-22)
5.4.25 Excess payment to contractor due to incorrect application of location factor on item rate
contract – Rs. 10.848 million
With the introduction of MRS, the location factor was allowed with an aim to cover the cost faced
by the contractors due to the level of difficulty in material, equipment, and labour availability in the specific
district from its regional market. Hence, the location factor was not admissible on contracts awarded on
item rate basis.
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Financial Year 2021-22, it was observed that the contract for the improvement / widening of Nizampur
Kohat road (P-VI) was awarded to MS Amanullah Khan at cost of Rs. 361,622,092/- on item rate basis vide
work order dated 18.1.2016.
However, examination of Final IPC/Running bill revealed that Rs.10,848,662/- was paid to the
contractor on account of location factor @ 3% which was overpayment as being not admissible for contracts
awarded on item rate basis.
The lapse occurred due to violation of rules which resulted in excess payment to contractor.
Audit recommends recovery of the amount.
PDP No. 638 (2021-22)
5.4.26 Overpayment to contractor in price escalation due to incorrect current rates – Rs. 4.431
million
According to Clause 70.1 (d) of the Bidding Documents Volume-I, for price adjustment the current
indices or prices shall be those prevailing 28 days prior to the last day of the period to which a particular
monthly statement is related.
Financial Year 2021-22, it was observed that the following contractors were overpaid escalation of Rs.
4,431,693/- due to application of incorrect rates of bitumen, steel and diesel and allowing escalation for
unexecuted items (Annexure-VI);
S. No. Scheme Contractor Escalation IPC Reason for overpayment
1 M/S Khyber Circular Bypass 1,426,704 14- Incorrect current rate of
Grace Road Bannu 16 Bitumen
Package-II
2 M/S Al-Mehreen Circular Bypass 1,106,595 6-10 Incorrect current rates of
Enterprises Road Bannu & 15 Steel, Diesel
Package-VII
3 M/S Elum Wid/Imp & black 1,898,394 9 & Steel was not utilized in IPC
Construction Co toping of Swari- 11 9 & 11 but factor was over
Dewana Baba Road calculated
Package
Total 4,431,693
In case of Serial # 3, it was pertinent to mention that in escalation calculation for IPC # 11, the steel
factor for IPC # 9 was taken as 0.15 based on non-utilization but was later on changed to 0.228 in IPC # 14
which proved that the steel was not utilized in the first place.
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Audit held that the use of incorrect current rates resulted in overpayment of
Rs. 4,431,693/-.
The lapse occurred due to weak contract management which resulted in overpayment to contractor.
PDP No. 642, 643 & 644 (2021-22)
5.4.27 Loss to the government due to less deduction of income tax – Rs. 3.800 million
According to Section 153 (1) (c) of the Income tax Ordinance 2001, 7% income tax is recoverable
from the firm/person (in the case of person other than companies) rendering or providing services. While
as per section 80(2)(a) the “association of persons” includes a firm but does not include a company.
Financial Year 2021-22, it was observed that income tax @ 6.5% was deducted from M/S Khattak Allied
Construction although it is Association of Persons (firm) and not a company. This has resulted in Rs.
3,803,073/- less deduction of income tax.
Audit held the above non-deduction of Rs. 3,803,073/- as loss to the government.
The lapse occurred due to weak financial controls which resulted in loss to the government.
Audit recommends recovery from the concerned contractors/consultants.
PDP No. 668 (2021-22)
5.4.28 Loss to the government due to non-deduction of stone from Random Rubble Masonry (RRM)
1:6 in foundation – Rs. 1.731 million
According to MRS item No. 08-02-d-03, RRM includes 30% to 40% cost of stone. This read with
Para 220 and 221 of CPWA Code, the Sub Divisional Officer, before making payments to the contractor is
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required to compare the quantities in the bills and see that all the rates are correctly entered and that all the
calculations have been checked arithmetically.
During special audit of AIP/ADP Fund - Executive Engineer Highway Division North Waziristan
for the Financial Year 2021-22, it was observed that an amount of Rs. 1,731,376/- was overpaid to M/S
K.N Construction vide Voucher No. 06/RZK 5th RB dated 27.05.2021 in the work “Construction of Black
Toped Road Mattam Madi Khel Tehsil Garyum (05 KM)” for the item of work Dry Stone Masonry in
(1:6) as in foundation by allowing full rate and ignoring the available stone at site from excavation in rock
material requiring blasting. However, the cost of stone available and used was not deducted. Furthermore,
the soil test results regarding rock classification were also not provided for justification of unsuitability of
rocks as detailed below:
V # & date Qty available from RRM (1:6) Qty Paid Rate Required Diff (Rs) Overpaym
excavation in M3 executed in M3 (Rs) rate (Rs) ent (Rs)
06/ RZK 5th 996.370 2371.370 5746.81 4022.417 1723.893 1,717,635
RB dated
27.05.2021
Add Cost Factor @ 12% 206,116
Less10 % below on MRS -192,375
Net Overpayment 1,731,376
When pointed out in May 2023, no reply was furnished.
Audit recommends recovery and action against the person(s) at fault.
PDP No. 1542 (2021-22)
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5.4.29 Overpayment to contractors due to non-reduction of PC-I/TS/BOQ cost to the extent of 7%
- Rs. 277.175 million
In the wake of the 25th Constitutional Amendment in the Constitution of Pakistan 1973, FATA has
been merged in Khyber Pakhtunkhwa as notified by Government of Khyber Pakhtunkhwa Establishment
Department vide No.SO(E-I)/E&AD/9-126/2019 dated 08.01.2019.
Finance Department letter No. SO (Dev-II)/FD/12-6/14-5, dated 21.4.2015, provides that all Works
Department, while preparing cost estimate of Developmental projects falls within the exempted area, shall
frame the same on MRS but with 7% less cost to defray the amount added in the rates analysis of all works,
construction/supply items to meet WHT.
for the Financial Year 2021-22, it was observed that expenditure amounting to Rs. 2,857,286,771/- was
incurred against various schemes executed under ADP/AIP projects. The schemes were awarded to
contractors on MRS which includes taxes. Audit observed that neither the PC-I, TS and BOQ was reduced
to the extent of 07% as required, nor deduction was made from the payment to the contractors which
resulted into overpayment of Rs 200,010,073 as below;
S. No. FY AIP/ADP Exp Tax @7%
01 2019-20 1,255,024,508 87,851,715
02 2020-21 774,509,859 54,215,690
03 2021-22 827,752,404 57,942,668
Total 2,857,286,771 200,010,073
Similarly, Executive Engineer Building Division North Waziristan during the years 2019-20 to
2021-22, also incurred expenditure worth Rs. 1,102,357,220/-against various schemes executed under
ADP/AIP projects. The schemes were awarded to contractors on MRS which also includes taxes. Audit
observed that neither the PC-I, TS and BOQ was reduced to the extent of 07% as required, nor deduction
was made from the payment to the contractors which resulted into overpayment of Rs. 77,165,006/- as
detailed below;
S. No. FY Expenditure Tax @7%

1 2019-20 371,968,773 26,037,814
2 2020-21 333,125,866 23,318,811
3 2021-22 397,262,581 27,808,381
Total 1,102,357,220 77,165,006
The lapse occurred due to weak internal controls which resulted into overpayment to contractors.
Audit recommends inquiry into the matter for fixing responsibility, and effect recovery from the
quarter concerned.
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PDP No. 1543 & 1559 (2021-22)
5.4.30 Loss to the government due to non-deduction of DPR Charges – Rs. 8.800 million
According to the Directorate of Social Welfare, Special Education Women Empowerment

Peshawar letters No. DPR/Pub/PCRDP/559-63 dated 18.05.2012, No.DAB/DPR/DSW/1694 dated 04-03-
2014, the Section 11 of the Disabled Person (Employment and Rehabilitation) Ordinance 1981 and the rules
made there under, it is the legal responsibility of the principal officers of all the establishments/
organizations to deduct DPR Charges at the rate of Rs. 2,000 each per million from the bills/payments and
deposit the same in the Head No.G-12218- Fund for Rehabilitation of Disabled Persons.
for the Financial Year 2021-22, it was observed that expenditure amounting to Rs. 3,054,922,048/- was
incurred in various AIP/ADP schemes as well as Deposit-III schemes to the contractors but DPR charges
amounting to Rs. 6,109,844/- was not deducted from the payment made to the contractors which resulted
into loss to government of Rs.6,109,844/- (Rs. 3,054,922,048 x 0.2%) as detailed below;
DPR Charges
S. No. FY AIP/ADP Exp Deposit-III Exp Year Total
Not Deducted
01 2019-20 1,255,024,508 39,560,100 1,294,584,608 2,589,169
02 2020-21 774,509,859 57,545,146 832,055,005 1,664,110
03 2021-22 827,752,404 100,530,031 928,282,435 1,856,565
Total 2,857,286,771 197,635,277 3,054,922,048 6,109,844
Similarly, the Executive Engineer Building Division North Waziristan, during the years 2019-20
to 2021-22, also incurred expenditure worth Rs. 1,345,174,696/- in various AIP/ADP schemes as well as
from Deposit-III schemes to the contractors but DPR charges amounting to Rs. 2,690,349/- was not
deducted from the payment made to the contractors which resulted into loss to government of Rs.
2,690,349/- (Rs. 1,345,174,349 X 0.2%) as detailed below;
S. No. FY AIP/ADP Exp Deposit-III Exp Year Total DPR Charges
01 2019-20 371,968,773 41,859,954 413,828,954 827,658
02 2020-21 333,125,866 58,594,717 391,720,583 783,441
03 2021-22 397,262,581 142,362,578 539,625,159 1079,250
Total 1,102,357,220 242,817,249 1,345,174,696 2,690,349
Audit observed that DPR Charges at the rate of Rs. 2,000 per million, total amounting to
Rs.8,800,193/- were not deducted from the contractors.
The lapse occurred due to non-adherence to rules and weak internal controls which resulted into
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Audit recommends recovery of the DPR Charges besides inquiry and action the person(s) at fault.
PDP No. 1545 & 1564 (2021-22)
5.4.31 Overpayment to contractor due to non-deduction of available earth from borrow material -
Rs. 1.100 million
Para 220 and 221 of CPWA Code, the Sub Divisional Officer, before making payments to the
contractors is required to compare the quantities in the bills and see that all the rates are correctly entered
and that all the calculations have been checked arithmetically.
for the Financial Year 2021-22, it was observed that the work “Construction of BT Road Hakim Khel to
Bromi Khel Tehsil Mirali (03 Kms)” was awarded to the contractor at a bid cost of Rs. 52.763 million vide
work order dated 10.2.2021. The contractor was paid Rs.30.903 million vide voucher No.17/MRL dated
09.6.2022 up to 10th Running Bill.
On further comparison of the bill quantities with the PC-I / detail cost estimate, BOQ, MB, it was
noticed that the contractor was allowed the execution of an items of work i.e. “Embankment formation from
borrow excavation in common material including compaction by power roller” for a quantity 7819.87 M3
@ Rs.724.45 PM3, but the excavated available earth for a quantity of 1607.41 M3 was not deducted from
borrow material resulted into an overpayment of Rs.1,100,441/- (1607.41 x @ Rs.724.45 PM3 + 5% cost
factor (-)10% rebate) to the contractor concerned.
The lapse occurred due to weak internal controls which resulted in overpayment to contractor.
Audit recommends the matter to be enquired for fixing responsibility, effect recovery from the
concerned.
PDP No. 1546 (2021-22)
5.4.32 Overpayment to contractor on allowing PCC 1:3:6 instead of PCC 1:3:6 using 40% boulders
- Rs. 1.375 million
According to Para-56 CPWD Code, T.S is guarantee that the proposal are structurally sound and
that the estimates are accurately calculated and based on adequate data.
for the Financial Year 2021-22, it was observed that the work “Construction of black top road from village
Saidgai to Dewager Saidgai Teh: Ghulam Khan (12.5 KMs)” was awarded to the contractor at a bid cost of
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Rs.282.996 million vide work order No.1158/2-C/Miranshah, dated 5.3.2020 to be completed within 02
years i.e. up to 4.3.2022. The above contractor was paid Rs.290.073 million vide voucher No.22/MRL dated
22.6.2022 up to 33th running bill.
On further comparison of the bill quantities with the BOQ, TS and relevant MRS-2017, it was
noticed that an item of work i.e. PCC 1:3:6 using 50% boulders was provided in the PC-I/detail cost
estimate, BOQ, which was changed in the TS and incorporated as PCC 1:3:6 using 40% boulders, but on
verification with the bill, it was disclosed that the contractor was paid for PCC 1:3:6 i/c placing, compacting,
finishing &curing complete, for a quantity of 713.851M3 @ Rs.6302.26 instead of PCC 1:3:6 using 40%
boulders as approved in the TS (3490.25 PM3) to be used in abutment/ Span-culverts wings, high retaining
walls, breast walls and causeway etc; of different sizes @ Rs.4488.55 per M3 (MRS-2017), resulted into
an overpayment of Rs. 1,375,035/- (6302.26 (-) 4488.55 = 1813.71 PM3 x 713.851 M3 + 7% cost factor (-
) 0.75% contractor rebate) to the contractor concerned.
The lapse occurred due to weak internal controls which resulted into overpayment to contractor.
contractor concerned.
PDP No. 1550 (2021-22)
5.4.33 Non-recovery of liquidated damages on non-completion of work within stipulated time period
According to clause-47.1 of the contract agreement, that if the contractor fails to complete the
works within the time for completion, the contractor only liability to the procuring entity for such failure
shall be to pay the amount in the contract data for each day up to a maximum of 10% of bid cost.
for the Financial Year 2021-22, it was observed that the work “Construction of black top road from village
Saidgai to Dewager SaidgaiTeh: Ghulam Khan (12.5 KMs)” was awarded to the contractor at a bid cost of
Rs.282.996 million vide work order No.1158/2-C/Miranshah, dated 5.3.2020 to be completed within 02
years i.e. up to 4.3.2022. The above contractor was paid Rs.290.073 million vide voucher No.22/MRL dated
22.6.2022 up to 33th running bill. On further verification of the bill quantities with MB, it was noticed that
the contractor was failed to complete the work within stipulated time period of 02 years i.e. up to 4.3.2022
and was still in progress, but no recovery of liquidated damages in term of clauses of the contract agreement
could be imposed and recovered for Rs.28.299 M (282.99 M x 10%) from the contractor concerned.
Similarly, the XEN Highway Division North Waziristan also awarded a work “Construction of
BTR Dossali Garyam to Village Dossali” the contractor vide work order No.1185/2-C, dated 03.09.2020 at
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a cost of Rs.126.0186 million to be completed within 02 years i.e. up to 02.09.2022. The contractor was
paid Rs.85.160 million vide voucher No.04/MRL dated 09.02.2022, up to 9th running bill. On further
verification of the bill of quantities with MB, it was noticed that the contractor failed to complete the work
within stipulated time period of 02 years i.e. up to 2.9.2022 and was still in progress. Only 67% work was
completed but no recovery of liquidated damages in term of clauses of the contract agreement could be
imposed and recovered for Rs.12.60 M (126.0186 M x 10%) from the contractor concerned.
The lapse occurred due to weak internal controls and violation of contract agreement which resulted
into non-recovery of liquidated damages.
quarter concerned.
PDP No. 1551 & 1556 (2021-22)
5.4.34 Wasteful expenditure on account of provision of missing facilities and construction of

additional class rooms - Rs. 39.000 million
Para 96 of the GFR Vol.-I requires that money should not be spent hastily or in ill-considered manner
just because it is available or that the lapse of a grant could be avoided.
During special audit of AIP/ADP Fund - Executive Engineer Building Division North Waziristan
for the Financial Year 2021-22, it was observed that various sub-works under Education Sector for
“Provision of missing / basic facilities, raising of boundary wall and solarization in existing Educational
Institutions”, “Construction of Additional Class rooms in high enrolment Schools” and “Provision of basic
and other missing facilities in existing Schools” were administratively approved at a cost of Rs.158.444
million dated 23.8.2019 as was evident from the Progress Report for the month of 6/2020, against which a
progressive expenditure of Rs.39.00 million was made as per following break-up.
Released Progressive
S. No. ADP Code Description AA cost
amount Exp
1 285/180421 Provision of missing / basic facilities, 52.577 M 11.00 M 11.00 M
raising of boundary wall and 23.8.2019
solarization in existing Educational
Institutions
2 297/180228 Construction of Additional Class rooms 61.267 M 12.50 M 12.50 M
in high enrolment Schools 23.8.2019
3 334/170160 Provision of basic and other missing 44.60 M 15.50 M 15.50 M
facilities in existing Schools 23.8.2019
Total 158.444 M 39.00 M 39.00 M
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On further comparison of the monthly accounts for the month of 6/2020, with Form-64 of each
ADP, it was disclosed that the Schemes were awarded to different contractors in packages containing
numbers of Sub-works under the relevant description and incurred an expenditure of Rs.39.00 million (25%
of the approved cost).The contractors left the work incomplete on the grounds that no allocation of funds
under each ADP could be made in the succeeding months/years and the Schemes were dropped. This state
of affairs clearly indicates that not only the Government funds were wasted on incomplete schemes, but on
the other hand the pupils of the area were deprived from available facilities.
The lapse occurred due to mis-management by the Administrative Department which resulted into
wasteful expenditure.
Audit recommends the matter to be enquired for fixing responsibility, ascertaining the status of
work already executed.
PDP No. 1561 (2021-22)
5.4.35 Overpayment to contractor on allowing higher rate for PCC 1:4:8 in PC drain -Rs. 1.398
million
Para-209(d) of CPWA Code provides that as all payments for work or supplies are based on the
quantities recorded in the MB, it is incumbent upon the person taking the measurement to record the
quantities clearly and accurately. He will also work out and enter in the MB the figures for the contents or
area column. If the measurements are taken in connection with running contract account on which work
has been previously measured, is responsible to the last set of measurement?
According to Para-221 of CPWA code, that before signing the bill, the officer should compare the
quantities in the bill with those recorded in the measurement book and see that all the rates are correctly
entered and that all calculations have been checked arithmetically.
During special audit of AIP/ADP Fund - Executive Engineer Building Division North Waziristan
for the Financial Year 2021-22, it was observed that the work “Up-gradation and Rehabilitation of Younas
Khan Sports Complex was awarded to the contractor at a cost of Rs.226.8992 million vide work order
No.938/2-C, dated 17.5.2022 to be completed up to 30.6.2023. The contractor was paid Rs.24.963 million
vide voucher No.12/M, dated 17.6.2022 (1st Running bill).
On further comparison of bill quantities with MB, it was noticed that the contractor was allowed
for the execution of an item of work i.e. PCC 1:2:4 for a qty of 641.28 M3 @ Rs.8587.41 PM3, but on
verification of the record entry at page-2 of MB No.1305/M, the PCC work was executed in PCC 1:4:8 as
per actual work done at site, the rate of which was provided @ Rs.6498.08 in MRS-2021. Thus the
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contractor was overpaid a sum of Rs.1, 398,397/- (8587.41 (-) 6498.08 = 2089.33 x 641.28= 1,339,846/- x
1.05 x 0.6% rebate).
The lapse occurred due to weak internal controls of the management over the affairs of engineering
staff as well as accounts branch.
quarter concerned along-with overhauling the record of other items of work for taking similar action.
PDP No. 1566 (2021-22)
5.4.36 Overpayment to contractor due to non-reduction of rate for available rock/stone - Rs. 1.618
million
According to Para-221 of CPWA code, that before signing the bill, the officer should compare the
quantities in the bill with those recorded in the measurement book and see that all the rates are correctly
entered and that all calculations have been checked arithmetically.
During audit of the accounts of Executive Engineer C&W Division Battagram for the Financial
Year 2021-22, it was observed that the work “Improvement/Rehabilitation of Oghi Battagram Road (1-3
KM) was awarded to the contractor at an estimated cost of Rs.43.899 million (contract price of Rs.36.876
million with rebate of @ 16%) vide work order No.404/1-M, dated 24.2.2017 to be completed within 09
months i.e. up to 23.11.2017. The contractor was paid Rs.51.98 million vide voucher No.51/A dated
08.06.2022 up to 13th running bill.
On further comparison of the bill quantities with the relevant PC-I (2nd revised detail cost estimate),
it was noticed that the contractor was allowed the execution of an item of work i.e. RR stone masonry 30%
available at site acquired through earth cutting at a reduced rate of Rs.3758.80 PM3 (5369.72 x 30%(-) =
Rs.3758.80PM3) for a quantity of 474.645 M3 whereas the rate of the remaining quantity of 1107.51M3
was not reduced and was paid @ Rs.5369.72 PM3 instead of Rs.3758.80PM3 resulted into an overpayment
of Rs.1,618,545/- (3758.80 (-) 5369.72 = 1610.92 x 1107.51M3 x 8% x 16% rebate) to the contractor
concerned.
Audit observed that the lapse occurred due weak internal controls of the management for non-
reduction of rate of one and the same item of work paid on two different rates, resulted extension of undue
benefit to the contractor concerned.
When pointed out in June 2023, no reply was furnished.
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Audit recommends enquiry for fixing responsibility for allowing higher rate instead of reduced rate
and effect recovery from the quarter concerned.
PDP No. 855 (2021-22)
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5.4.37 Overpayment due to allowing inadmissible rate – Rs. 1.314 million
Para-4.5 of B&R provides that every officer making or ordering payment on behalf of Government
should satisfy himself that the work has been actually done in accordance with the bill submitted for
payment. He should inspect personally all the most important works before authorizing final payment, and
should check the measurements made by his subordinates.
Year 2021-22, it was observed that an amount of Rs. 937,112/- was overpaid vide V.No.22-EX dated
15.09.2021, in the work “Establishment of Government Girls Primary School Tariq Abad” for an item of
work “Structure backfilling using common material available at site (03-60-c). Due to misapplication of
rates government sustained loss and overpayment made to contractor.
Similarly, the Division overpaid an amount of Rs. 376,944vide V.No.37/A dated 05.04.2022, in
the work “Construction of RCC Bridge at Biari Bridge” for an item of work “RRM in ground Floor in CSM
1:6 (08-01-d-03). Due to misapplication of rates government sustained loss and overpayment made to
contractor as detailed below;
Name Item of work Rate as per Rate Difference Qty Amount Value with
Schedule 2016 Paid Paid M3 (Rs.) Cost Factor
Structure backfilling using 435.23 1949.27 1514.04 573.10 867,696 937,112
common material available at
site (03-60-c)
RRM in ground Floor in CSM 5369.72 5598.16 228.44 1527.85 349,022 376,944
1:6 (08-01-d-03)
Total 1,314,056
Audit observed that overpayment made due to allowing inadmissible rate for items of work causing
loss to government.
The overpayment occurred due to weak financial control which resulted into overpayment and loss
to government.
When pointed out in June 2023 the management stated that detail reply will be submitted after
scrutiny of record.
Audit suggests recovery besides action against the person (s) at fault.
PDP No. 868 (2021-22)
5.4.38 Overpayment due to allowing excess quantity of asphalt and prime coat than admissible – Rs.
4.260 million
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According to Para 56 of CPWD Code, if subsequent to the grant of technical sanction, material
structural alterations are contemplated, orders of the original sanctioning authority should be obtained, even
though no additional expenditure may be involved by the alterations.
Year 2021-22, it was observed that an amount of Rs. 3,565,698/- was overpaid vide voucher # 55/A dated
25-05-2022 in the work “Annual AOM&R of District Roads in District Battagram during the year 2021-22
SH: Tehsil Battagram Roads to the contractor M/s Deshan Construction Company by allowing excess
quantity of Asphaltic Wearing Course (Asphalt Batch Plant Hot Mixed) against Bituminous Prime Coat as
detailed below;
Item Name Qty Paid Paid Qty Asphaltic Diff Rate Overpayment Value with
in M2 equal in M3 Wearing paid Cost Factor
Course Qty
Paid
Bituminous 5080 5080 x0 .05 = 425.011 171.011 19,306.20 3,301,572 3,565,698
Prime Coat 254 m3
Similarly, the Division overpaid excess quantity of prime coat to the contractors in the in the
following road works as compared to the asphalt wearing course quantity resulted into overpayment of Rs
695,147 as detailed below.
Bill No & Asphalt Qty Prime coat qty Prime Coat Diff Rate O/Payment Value with
Date Paid in m3 to be paid m2 Qty paid paid Cost Factor
11/A dated 418.060 m3 418.06 /0 .05 = 9672.50 1311.30 195.29 256,084 276,571
16.05.2022 8361.2
68/A dated 1003.110 1003.110 /0.05 21323.41 1261.21 189.12 238,520 (C.F 262,372
20.05.2022 = 20062.20 + 2% above)
18/A dated 426.530 426.530/0.05 = 8758.00 227.40 189.12 43,006 46,446
08.02.2022 8530.60
10/A dated 100.83 100.83/0.05 = 2470.00 453.40 118.99 53,950 58,266
07.10.2021 2016.60
Grand Total 643,655
Add Cost Factor @8% 695,147
Audit observed that overpayment occurred due to weak financial control, which resulted in loss of
Rs. 4,260,845/- to the Government and favour to contractor.
scrutiny of record.
Audit recommends recovery besides depositing into treasury and action against the person(s) at
fault.
PDP No. 870 & 869 (2021-22)

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5.4.39 Overpayment due to allowing Cost Factor on Non Schedule items - Rs. 1.212 million
According to MRS 2017, 2019 & 2021 vide Notification dated 27.09.2021. Cost Factor is allowed
only on MRS Items and Factor cost is not allowed on Non-Schedule Item.
Para-4.5 of B&R provides that every officer making or ordering payment on behalf of Government
should satisfy himself that the work has been actually done in accordance with the bill submitted for
payment. He should inspect personally all the most important works before authorizing final payment, and
should check the measurements made by his subordinates.
Year 2021-22, it was observed that an amount of Rs. 1,211,994/- was overpaid on account of cost factor
against the non-scheduled items which is not allowed/paid resulted into overpayment and loss to
government as detailed below;
S# Bill No & date Item Name Paid Rate Item Value
1 08/A dated 10.05.2022 Establishment First class American Wood wrought 9022.82 2,266,623
of Model School Battagram joinery complete 1.5” thick (30%
reduced Deodar wood)
2 25/EX dated 20.09.2021 M&R Offic P/F Fiber Glass sheet 2970.00 34,778
3 -do S/F of UPS Battery 210 All 29,700.00 59,400
4 -do Installation of Solar Panel with 17,820.00 53,460
frame
5 -do S/F of UPS Battery 210 All 29,700 89,100
6 -do S/F Curtain Best quality 800.00 69,520
7 63/B dated 25.05.2022 GPS Shangai Electrification Items 219,455 219,455
8 15/Ex dated 23.08.2021 Shari Khwar Supply & insert grade-60 deformed 1,994,040 4,179,507
bridge reinforcement anchor rods set in non
shrunk grout using fosroc contexra
HF or approved equivalent use of
aluminum powder is expressly
prohibited in trimmed rock surface at
founding levels
9 28/A dated 05.04.2022 Qanjbori De-Watering from centre pair 1,800 324,000
Bridge
10 -do Supply & insert grade-60 deformed 1,994,040 4,143,315
reinforcement anchor rods set in non
shrunk grout using fosroc contexra
HF or approved equivalent use of
aluminum powder is expressly
prohibited in trimmed rock surface at
founding levels
11 37/A dated 05.04.2022 Biari Bridge Installation of Expansion joint as per 145,000 2,073,500
drawing specification
12 53/A dated 11.04.2022 DC Office P/R Partition i/c frame work sheet on 2,500 415,325
both side of frame plywood chip
wood ¼ thick
236
13 -do- 70 mm sq 4 Core PVC 5,200 405,600
14 -do- 25 mm Sq 4 Core PVC 1,790 121,720
15 -do- P /Making of manhole 24x24 inside 8,000 200,000
16 -do- Dadex/Beta polythene Pipe 250 125,000
17 -do- Computer Networking System - 185,800
18 -do- Telephone System - 183,818
Total 15,149,921
Cost Factor Paid @ 8% 1,211,994
Audit holds that overpayment occurred due to weak financial control, which resulted in loss to the
government.
scrutiny of record.
Audit recommends the matter to be inquired for fixing responsibility, affect recovery from the
concerned along with overhauling the record of other schemes for taking similar action.
PDP No. 873 (2021-22)
5.4.40 Loss due to non-deduction of available stone from Random Rubble Masonry (RRM) 1:6 in
foundation – Rs. 8.375 million
According to MRS item No. 08-02-d-03, RRM includes 30% to 40% cost of stone. This read with
Para1.58 of B&R Code, the divisional officers are immediately responsible for proper maintenance of all
works in their charge and for the preparation of projects and of designs and estimates, whether for new
works or repairs. It is also part of their duties to organize and supervise the execution of works and to see
that they are suitable and economically carried out with materials of good quality.
Year 2021-22, it was observed that an amount of Rs. 4,575,010/- was overpaid to various contractors in the
various work against the item of work RRM in foundation and plinth (1:6) by allowing full rate and ignoring
the available stone at site from excavation in hard rock requiring blasting. However, the cost of stone
available and used was not deducted. Furthermore, the soil test results regarding rock classification were
also not provided for justification of unsuitability of rocks as detailed below:
S# V # & date Qty available RRM (1:6) Qty Paid Require Diff (Rs) Overpay
from excavation executed in M3 Rate Rate ment (Rs)
in M3 (Rs) (Rs)
1 52/A dt: 25.05.2022 777.10 1409.43 5384.76 3769.332 1615.428 1,255,349
2 66/A dt: 26.05.2022 5862.45 301.67 6683.45 4678.415 2005.035 604,859
3 44/A dt: 24.05.2022 20,587.68 449.48 6683.45 4678.415 2005.035 901,223
4 19/EX dt: 23.08.2021 640.875 386.430 5369.72 3758.80 1610.92 622,506
5 23/EX dt: 23.08.2021 4220.00 431.45 5369.72 3758.80 1610.92 695,030
237
6 86/A dt: 14.04.2022 460.720 1034.30 6683.45 4678.415 2005.035 923,760
7 88/A dt: 14.04.2022 512.330 1063.010 5384.76 3769.332 1615.428 827,632
8 100/A dt:27.04.2022 1342.28 1222.75 6683.45 4678.415 2005.035 2,451,657
Sub Total 8,282,016
Add Cost Factor @ 8% 8,944,577
Less 21.51below on MRs against S.No.8 -569,539
Total 8,375,037
Audit observed that the lapse occurred due to weak internal financial controls which resulted in
loss to government.
scrutiny of record.
PDP No. 872, 874 & 877 (2021-22)
5.4.41 Overpayment on account of non-deduction of RR Stone Masonry by not multiplying the

required factor – Rs. 1.393 million
According to clause 7.2.10 & 7.4.12 of the technical specification of MRS, that stone shall be
measured in bulk: the unit of measurement shall be one hundred cubic feet. Actual stone contents shall be
obtained by multiplying the stack measurement with a factor of 0.75.
Year 2021-22, it was observed that the work “Upgradation of 50 Middle Schools to High Level (B&G) SH:
GGHS Bilandkot was awarded to the contractor on 23% below with Bid Cost of 33.593 million vide work
order No. 16213/ dated 23.09.2021. The contractor M/s Muhammad Qayyum & Co was paid Rs 16,382,498
vide Voucher No.76/A dated 14.04.2022 6th RB.
On further verification of bill quantities it was noticed that the contractor was allowed RR Stone
Masonry in 1:6 in boundary wall for a quantities of 506.62 m3 @ 11,000 per m3 but the stack measurement
at the prescribed factor was not taken resulted into overpayment of Rs 1,393,205 (506.62 x 0.75 = 379.97
(-) 506.62 = 126.66 x 11,000 = 1,393,205 to the contractor.
Audit observed that technical specification for multiplication with relevant factor for RR stone was
not made by extending undue favour to the contractor which resulted in to loss to government.
The lapse occurred due to weak internal controls which resulted into overpayment.
scrutiny of record.
238
Audit recommends inquiry for fixing responsibility and affecting recovery.
PDP No. 876 (2021-22)
5.4.42 Non-deduction of defray charges from the contractors - Rs. 22.089 million
According to Finance department KP notification No.SO (Dev-II)/FD/12-6/2014-15

dated21.04.2015, all provincial works department while preparing cost estimates of development projects
which fall in the tax exempted areas such as PTA, shall frame the same on market rate but with 7.5% less
cost to defray the amount added in the rate analysis of all works /constructions/supply items to meet
withholding tax.
During audit of the accounts of Executive Engineer C&W Division Lower Kohistan for the
Financial Year 2021-22, it was observed that the local office paid a sum of Rs. 247,500,922/- to various
contractors for different works but neither the estimates were reduced by 7.5% nor deduction of income tax
@7.5% amounting to Rs 18,562,569 was made from contractors, which is against the spirit of Finance
Department notification as stated above and the same needs to be recovered.
Similarly, Executive Engineer C&W Division, Upper Kohistan during the Financial Year 2021-22
paid a sum of Rs 47,023,891 to various contractors for different works but neither the estimates were
reduced by 7.5% nor deduction of income tax @7.5% amounting to Rs. 3,526,792 was made from
contractors, which is against the spirit of Finance Department notification as stated above and the same
needs to be recovered.
The lapse occurred due to non-observing the Government rules & regulations, which resulted in
loss of Rs. 22,089,361/- to the government.
When pointed out in June 2023, management stated that detail reply will be furnished after scrutiny
of record.
PDP No. 822 & 831 (2021-22)
5.4.43 Loss to the government due to execution of excessive quantities of asphalt -

Rs. 37.723 million
239
According to para 220 & 221 of CPWA code, the divisional officers before making payment to the
contractor is required to compare the quantities in the bill and see that are the rates are correctly entered
It is also part of their duties to organize and supervise the execution of works and to see that they
are suitable and economically carried out with materials of good quality read with approved design of 0.05
m thickness.
During audit of the accounts of Executive Engineer C&W Highway Division Khyber for the
Financial Year 2021-22, it was observed that local office awarded the contracts of 06 Nos developmental
schemes amounting Rs. 1466.674 million to different contractors (Annexure-VII).
On scrutiny of the relevant record, it was observed that prime coat quantity of 155060 m2 was
carried out at site. According to the thickness of Asphalt, Asphalt quantity of 8626.71 m3 was required
whereas contractor was paid for 11298.31 resulted into excess quantity of 2671.595 m3 of Asphalt
amounting to Rs. 37.723 million. The payment is over and above the payment required as per cross section
quantities entered in BOQ on standard 2” thickness of Asphalt.
The lapse occurred due to weak internal control and violation of rules which resulted into loss to
the government.
Audit recommends details inquiry and recovery of overpayment besides fixing of responsibility on
the person at fault.
PDP No. 679 (2021-22)
5.4.44 Non-transparent awarding of contract in violation of KPPRA – Rs. 2,479.980 million
According to KPPRA rules 2014, Chapter-V, rule-34, the procuring entity may decide the
response time for receipts of bids or proposal for prequalification from the date of publication of an
advertisement or notices, keeping in view the contract the contract complexity , and urgency, however,
under no circumstance the response time shall be fifteen days for national competitive bidding and thirty
days for international competitive bidding from the date of publication of advertisement.
Financial Year 2021-22, it was observed that developmental schemes worth Rs. 2,479 million were
advertised through e-tendering system. However, scrutiny of record revealed that the response time of 15
days allowed to contractor to offer their rates was not observed purposely. Bill of quantity was not
uploaded in specified time of 15 days before closing time. As per KPPRA rules 2014, the minimum
response time should be fifteen days, whereas local office awarded tenders for Rs 2,479 million by
240
uploading BOQ one to four days before expiry date of tenders resulting in violation of KPPRA rules. No
evidence of technical evaluation criteria or process adopted was provided. The tender were not opened and
finalized on the same day and the contracts were awarded 10-15 days after the tender closing dates.
The lapse occurred due to non-adherence to rules & regulations which resulted into non-
transparent awarding of contract.
Audit recommends details inquiry and fixing responsibility on person at fault.
PDP No. 675 (2021-22)
5.4.45 Overpayment due to allowing high rates - Rs. 1.914 million
According to MRS 2019 rate allowed for, item No. (03-03-f), Excavation surplus hard rock
material, is Rs 341.01/m3 read with para 220 & 221 of CPWA code, the divisional officers before making
payment to the contractor is required to compare the quantities in the bill and see that are the rates are
correctly entered and that all the calculations have been checked arithmetically.
Financial Year 2021-22, it was observed that local office overpaid Rs 1.914 million to contractor in the
work construction of road from Inzari kandow road to Spina Sooka top estimated cost of Rs 15.120 million
vide voucher No.05-K dated 22-06-2022 by allowing high rate for item of work excavation in surplus hard
rock material, as detailed below;
Qty Paid
S. Required Overpayment Add 5%
Item of work executed Rate Diff (Rs)
No. rate (Rs) (Rs) (Rs)
in M3 (Rs)
1 excavation in 7,180 595 341.01 253.99 1,823,648 1,914,830
surplus hard rock
material
Total 1,914,830
The rate allowed was on excessive side as not provided in MRS nor was allowed in other works.
The lapse occurred due to weak internal controls which resulted in loss to government.
241
Audit recommends details inquiry and recovery of overpayment besides fixing of responsibility on
PDP No. 773 (2021-22)
5.4.46 Overpayment on account of higher rates than TS – Rs. 16.702 million
According to approved Technical Sanction of the scheme, (section earth work), rate allowed for
item of work (3-70-C) Formation of embankment from borrow excavation in common material including
compaction is Rs 397.72/ M3. Read with Para 220 & 221 of CPWA code, the divisional officers before
making payment to the contractor is required to compare the quantities in the bill and see that are the rates
are correctly entered and that all the calculations have been checked arithmetically.
Financial Year 2021-22, it was observed that local office awarded contract of the scheme construction of
black top road from Dhora Nehar to Monomonnryee via Shegy Sar 8 KM with estimated cost of Rs 203.40
million and bid cost of 171.24 million to MS AQ builders Government contractor. Payment of Rs 136.552
million was made vide voucher No. 17-B dated 30.03.2022.
Further scrutiny of record revealed that local office overpaid Rs 9.466 million to contractor due to
allowing higher rate of item work “formation of embankment from borrow excavation in common material”
approved in technical sanction which resulted in overpayment and loss to public exchequer (Annexure-
VIII).
Similarly, local office overpaid Rs 7.236 million to contractor due to allowing excessive quantity
of item of work than approved Technical Sanction. The excessive quantities than technical sanction is undue
favor to contractor at the cost of public exchequer and loss to government.
The lapse occurred due to weak financial controls which resulted into overpayment.
The Department was requested for holding of the DAC meeting in June,2023. However, no DAC
meeting was convened till finalization of this report.
Audit recommends inquiry and affecting recovery.
PDP No. 684 & 686 (2021-22)
5.4.47 Fictitious payment against fake entries in measurement book - Rs 13.604 million
quantities recorded in the MB, it is incumbent upon the person taking the measurements to record the
area column read with Para-4.5 of B&R which also state that every officer making or ordering payment on
242
behalf of Government should satisfy himself that the work has been actually done in accordance with the
bill submitted for payment. He should inspect personally all the most important works before authorizing
final payment, and should check the measurements made by his subordinates.
Financial Year 2021-22, it was observed that payment of Rs. 13,604,233 was made under road work in 6 th
running for construction of BTR from Marble chowk to nava Kalli Mullagor 4.10 Km. The payment was
made against fake entries in the measurement book as during physical verification along with sub engineer
concerned to the site, no road work was carried out in KM-1 which makes the whole process doubtful. In
addition, payment was made for 19-20 feet wide road whereas actual width of the road is 14-16 feet approx.
The lapse occurred due to weak internal controls which resulted into fictitious payment.
The Department was requested for holding of the DAC meeting in June,2023. However, no DAC
PDP No. 695 (2021-22)
5.4.48 Overpayment due to application of higher rates in variation order then original contract rates
Financial Year 2021-22, it was observed that local office awarded the contract of the scheme Rehabilitation
of Main Jamrud By pass road kharki abad (1.590 KM) to M/S Pir Muhammad with a estimated cost of Rs.
70.59 million and bid cost of Rs. 57.030 million respectively. An up-to-date payment of Rs. 62.005 million
was made vide voucher No. 04-J dated 10.06.2022.
Further scrutiny of record revealed that local office overpaid Rs 2.631million to contractor due to
allowing high rate of item of work formation of embankment from borrow excavation in common material
approved in PC-1 and later on enhanced in variation order which is un due favor to contractor at the cost of
public exchequer. Detail as per following:-
Paid rate
(Rs) as Admissible Add cost Deduct
Qty paid Difference
Item of work per rate as per PC- Total (Rs) factor 2 % below rate
(m3) (Rs)
variation 1 (Rs) (Rs.) @ 19.25 %
order
243
Formation of 14,342.67 628. 40 405.62 222.78 3,195,260 3,259,165 2,631,775
embankment
from borrow
excavation in
common
material
Total (Rs) 2,631,775
Overpayment occurred due to weak financial control, which resulted into overpayment.
Audit recommends to inquire the matter and recover the overpaid amount.
PDP No. 697 (2021-22)
5.4.49 Overpayment due to allowing excessive quantities than cross section quantities entered in PC-
I – Rs. 3.553 million
Financial Year 2021-22, it was observed that local office awarded the contract of the scheme Rehabilitation
of marble industry road from main warsak road to Sher bridge Mullagori area was awarded to M/S Sarhad
Engineering electric company government contractor. An up to date payment of Rs 73.526 million was
made vide voucher No.12-J dated 15.06.2022.
Further scrutiny of record revealed that local office overpaid Rs. 3.553 million to contractor due to
allowing excessive quantities of item work than approved cross section quantities which resulted in
overpayment and loss to public exchequer. Detail as per following:
Description Item of work
Qty Paid Difference Rate Overpayment Add cost Deduct below
approved in quantity factor 2 rate @
cross %(Rs) 13.57% %
section
Road work Formation of 0 5130 5130* 785.64 4030333 4,110,940 3,553,085
embankment
from borrow
area
Overpayment occurred due to weak financial controls which resulted into overpayment.

244
Audit recommends to inquire the matter and recover the overpaid amount.
PDP No. 711 (2021-22)
5.4.50 Non-adjustment of Income Tax - Rs. 1.897 million
According to Finance department KP notification No.SO(Dev-II)/FD/12-6/2014-15

which fall in the tax exempted areas such as PTA, shall frame the same on market rate but with 7% less
withholding tax.
According to the Finance Department KP letter No. SO (Dev) FD/12-6/12-13 dated Peshawar the
20th June,2013, Cost estimates of those developmental schemes which falls in the Tax exempted area like
PATA are also framed on the same CSR without adjustment of the non- deductible income tax in those
areas. The payment to contractors on CSR basis with built provision of income tax without adjustment in
their invoices is overpayment by the amount equal to deductible income tax.
Financial Year 2021-22, it was observed that local office, incurred expenditure of Rs. 27.10 million in work
Rehabilitation of road from Zakiria Masjid to Haideri Kandow Landi kotal. But in built income tax MRS
@ 7% of Rs 1.897 million was not deducted from payments made to contractors nor adjustment was made
in detail cost estimates of the schemes, which resulted in loss to the Government and undue favor to
contractor as same was deducted from other contractors.
The lapse occurred due to weak internal controls and mismanagement which resulted into non-
adjustment of income tax.
The Department was requested for holding of the DAC meeting in June, 2023. However, no DAC
Audit recommends to recover the amount of income tax from the contractor concerned and
deposited into government treasury under proper head of account.
PDP No. 698 (2021-22)
245
5.4.51 Unauthorized payment out of lapsed deposits – Rs. 14.286 million
Para 395 of the CPWA Code provides that without special orders of the competent authority, no
security deposit should be repaid or retransferred to the depositor, or otherwise disposed of, except in
accordance with the terms of his agreement or bond.
Balances unclaimed for more than the three complete accounting years shall be credit to
government as lapsed deposits according to Para 399(iii) of CPWA Code.
Financial Year 2021-22, it was observed local office paid Rs 3,214,020 as refund of securities to various
contractors during 2021-22 (Annexure-IX). These unclaimed securities were required to be credited as
lapsed deposit into government revenue in the above-mentioned months instead the same were paid to the
contractors without sufficient justification and sanction of the competent authority. In addition, month wise
reconciliation with AG office as well District Account Office was not carried out. In addition payment
status of the deposit was also not clear as actual payee receipts and payment through cross cheque was not
verified.
The lapse occurred due to weak financial controls which resulted into unauthorized payment.
Audit recommends year wise reconciliation of the payment made from deposit II and details inquiry
for fixing of responsibility on the person at fault.
PDP No. 715 (2021-22)
5.4.52 Overpayment due to non-deduction of available material from stone RRM (1:6) in foundation
and plinth – Rs. 14.951 million
According to MRS 2019, item No. 08-01-d-03-a, RRM as in foundation and Plinth includes 30%
to 40% cost of stone. This read with Para1.58 of B&R Code, the divisional officers are immediately
responsible for proper maintenance of all works in their charge and for the preparation of projects and of
designs and estimates, whether for new works or repairs. It is also part of their duties to organize and
supervise the execution of works and to see that they are suitable and economically carried out with
materials of good quality.
According to MRS 2017, item No. 08-01-d-03-a, RRM as in masonry includes 30% to 40% cost
of stone. This read with Para1.58 of B&R Code, the divisional officers are immediately responsible for
proper maintenance of all works in their charge and for the preparation of projects and of designs and
estimates, whether for new works or repairs. It is also part of their duties to organize and supervise the
246
execution of works and to see that they are suitable and economically carried out with materials of good
quality
During audit of the accounts of Executive Engineer C&W Highway Division Haripur for the
Financial Year 2021-22, it was observed that local office awarded 06 developmental schemes costing Rs.
451.740 million were awarded to contractors, The contractors were overpaid Rs. 14.951 million by allowing
full rate of RRM and ignoring the available stone at site from excavation in hard rock material. The cost of
stone available was not deducted (Annexure-X).
In addition cutting in hard rock was paid without rock classification and grading on the basis of
geological survey reports and verified cross-section of the road supported with level book and recovery
schedule.
The lapse occurred due to weak internal controls which resulted into overpayment.
Audit recommends to recover the overpaid amount.
PDP No. 835 (2021-22)
5.4.53 Overpayment on account of roadway excavation – Rs. 2.882 million
According to the MRS 2019, Technical specifications for workmanship, the quantity for formation
of embankment from roadway excavation shall be the same as the quantity calculated for roadway
excavation. Furthermore, for payment purpose the formation of embankment from excavated material shall
include the cost of excavation.
Financial Year 2021-22, it was observed that contract for the “Construction/of Kharan to Kani Kot road”
was put to tender and awarded to M/S Tayyab Hussain Shah and allowed up to date payment of Rs. 85.161
million vide Vr. 28-H dated 06.06.2022.
Further scrutiny of record revealed that local office paid Rs. 40.103 million for 107322 m3
excavation including roadway excavation etc. However, out of this excavated material, 7069 m3 was used
in formation of embankment from roadway excavation, therefore, separate payment against 7069.24 m3
quantity of excavation was not admissible resulting in overpayment of Rs. 2,626,364/-
Similarly, that contract for the “Construction of road /street at malhat to satti” was put to tender
and awarded to M/S Zahid Iqbal with estimated cost of Rs 10.000 million and allowed up to date payment
of Rs. 8.039 million vide Vr. 1-KH dated 6.6.2022.
247
Further scrutiny of record revealed that local office paid Rs. 19.55 million for 4019.94 m 3
excavation including roadway excavation etc. However, out of this excavated material, 827.81 m3 was used
in formation of embankment from roadway excavation, therefore, separate payment against 827.81 m3
quantity of excavation was not admissible resulting in overpayment of Rs. 256,530.
The lapse occurred due to extending undue favor to the contractor which resulted into overpayment.
PDP No. 836 (2021-2022)
5.4.54 Non-collection of 10% performance security – Rs. 22.470 million

Non-forfeiture of bid security - Rs. 6.000 million
According to Standard Form of Bidding documents for procurement of works notified by KPPRA
vide KPPRA/M&E/SBDs/1-1/2015 dated 03.05.2016, special stipulation S.No 2 provides collection of 10
% performance security of the contract price.
According to clause 13.5 (C) read with IB 21 & 44 of the standard form of bidding documents for
procurement of works notified vide KPPRA /M&E/SBD/1-1/2015 dated 3.5.2016, the bid security may be
forfeited in case of the successful bidder fails to furnish to the performance security in the form and the
amount stipulated in the conditions of the contracts within 14 days after receipts of letter of acceptance.
Financial Year 2021-22, it was observed that contract for the “Construction of road Chungi No. 11 to village
Ali khan (By pass road) (7 Km)” was put to tender and awarded to M/S Trand Construction with estimated
cost of Rs. 224.755 million and allowed up to date payment of Rs. 36.548 million vide Vr.3-H dated
06.06.2022. The work was awarded vide work order No.11432/3-M dated 20.06.2020 to be completed
within 24 months. As per contract agreement 10 % performance security amounting to Rs 22.475 million
(10 x 224.755 million) was required to be collected from contractor but local office failed to collect the
performance security to protect the interest of Government and un due favour extended to contractor. In
addition 2 % bid security amounting to Rs 6 million (300.275x2%) required to be forfeited as contractor
failed to submit 10 % performance security
The lapse occurred due to weak contract management which resulted into non-collection of
performance security and non-forfeiture of bid security.
248
The Department was requested for holding of the DAC meeting in May,2023. However, no DAC
Audit recommends to justify the less collection of performance security.
PDP No. 838 (2021-22)
5.4.55 Loss to the government due to non- deduction of KPPRA sales tax from AOM&R contractors
According to Finance department Khyber Pakhtunkhwa Peshawar letter No. BO(Res-III) FD/2-2
/2019-20 /VOL-IV dated 07.07.2021, provides that 2% KPRA Sales Tax on construction services to be
included in the un approved ADP scheme with effect from 01.07.2021.
Financial Year 2021-22, it was observed that payment of Rs. 207.193 million was made to various
contractors for execution of AOM&R works during financial year 2021-2022. However, Audit observed
that KPPRA sales tax @ 2% as required under provision of above stated criteria was not recovered from
the contractors which resulted into loss of Rs. 4.143 million.
The lapse occurred due to weak internal control which resulted into loss to the government.
The Department was requested for holding of the DAC meeting in May, 2023. However, no DAC
Audit recommends to recover the government dues and deposit the same into the government
treasury.
PDP No. 842 (2021-2022)
249
Chapter – 6
ENERGY & POWER DEPARTMENT
6.1A) Introduction
The provincial government has planned to start work on gigantic energy projects to overcome
shortfall of energy besides providing inexpensive electricity to consumers, industries, and agriculture
sectors. Its mission is harnessing indigenous energy resources for sustainable economic growth in KP
through Hydropower Generation, Oil & Gas Sector & Renewable Energy. Its objective is to look after two
abundantly available natural resources in Khyber Pakhtunkhwa Hydropower and Oil & Gas (Hydrocarbons)
of:
 All relevant matters under Articles 154, 157, 158 & 161 of the Constitution and framing policies
for the Province in their respect.
 Grant and revocation of licenses to the private electric undertaking, certificates of competency to
electrical supervisors and licenses to electric contractors under the Electricity Act, 1910.
 Levy and collection of electricity duty under West Pakistan Finance Act, 1964.
 Monitoring of tariff of PESCO vis-a-vis other DISCOs for regulation of tariff.
 Administration of Sarhad Hydel Development Organization Act, 1983.
 All matters pertaining and auxiliary to Hydel power stations of WAPDA or any other publication /
private sector agency located in Khyber Pakhtunkhwa.
 Advising the Provincial Government on thermal, solar, wind, coal, nuclear, solar and any other
kind of energy and power generation.
 Close coordination with the Federal Govt. in respect of grant of licenses for oil and gas exploration
inKhyber Pakhtunkhwa and cooperation with such companies and organizations undertaking such
ventures in Khyber Pakhtunkhwa.
 Matters relating to extension of gas by SNGPL in Khyber Pakhtunkhwa.
 Matters relating to tariff on gas/CNG/petroleum products, royalty on gas and oil, gas development
surcharge.
 Planning, designing and erection of Power generation units and supply of electricity load to the
province as per its requirement.
 Representation of the Province on the boards of Directors of PESCO and other DISCOs in view of
hydro-electricity as major contributor to, and source of, energy.
 Formulate, regulate and review Provincial Power Policy.
250
 Investigation into fatal and non-fatal accidents due to electrocution.
Audit Profile of Energy & Power Department: (Rs. in million)

S No. Description Total Nos Audited
Audited FY 2022-23 Audited FY 2022-23
(Excluding FAP)
Authorities/Autonomous bodies etc
3 01 0 Nil N/A
under PAO
4 Foreign Aided Projects (FAP) 01 0 Nil N/A

A summary of grants/appropriations and actual expenditure in financial year 2022-23 is given
below:
Non-Development:
(Amount in Rs.)
Grant #
Total
and Name Grant Supplementary Re- Final Excess/
Original Grant Surrender Actual
of Type Grant Appropriation Grant (Savings)
Expenditure
Department
44-Energy
NC21 65,279,000 0 0 6,634,083 58,644,917 58,644,968 51
and Power
Total 65,279,000 0 0 6,634,083 58,644,917 58,644,968 51
251
Development:
(Amount in Rs.)
Grant # and Total
Grant Original Supplementary Re- Final Excess/
Name of Actual
Type Grant Grant Appropriation Surrender Grant (Savings)
Department Expenditure
Nil NC12/22 0 0 0 0 0 0 0
Total 0 0 0 0 0 0 0

(Rs. in million)
Total Actual
Expenditure
Non-Development 58,644 58,644 0 0
Development 0 0 0 0
Total 166,978 166,978 0 0
70,000,000
60,000,000
50,000,000
Amount in Rs.
40,000,000
30,000,000
20,000,000
10,000,000
0
44-Energy and Power
252
70,000
60,000
50,000
Rs. in million
40,000
30,000
20,000
10,000
0
253
6.1 (c) Issues in Energy and Power Department
Loss to the Government due to delay in completion of the project, irregular award of contracts,
consultancy and procurement related issues are reported in the Gorkin Matiltan Hydro Power Project
executed by PEDO. Non-recovery of taxes and DPR charges from contractors are also highlighted in the
observations. Irregular Mobilization advance was also given to the contractors. Non-recovery of electricity
charges from National Electric Power Regularity Authority is also a major issue resulting in delay in
collection of Government receipts. There were no details of the head-wise figures of the departmental own

audit of Energy & Power Department. Recoveries amounting to Rs. 1,377.093 million were pointed out by
audit. Summary of the audit observations classified by nature is as under:

Amount
(Rs. in million)
3 Irregularities -
5 Others

Total No. of
Audit Name of Full Partial Nil
S# actionable
Year Department compliance compliance compliance
points
1. 2009-10 Energy & Power 05 04 - 01
2. 2010-11 -do- 02 - - 02
3. 2011-12 -do- 09 06 - 03
4. 2012-13 -do- 01 01 - -
5. 2013-14 -do- 01 01 - -
6. 2014-15 -do- 13 05 - 08
7. 2015-16 -do- Nil - - -
8. 2016-17 -do- 20 6 5 9
6.4 Audit Paras

254
6.4.1 Loss to the government due to non-receipt of net hydel profit – Rs. 2,639.782 million
According to Article-161 (2) of the Constitution of Islamic Republic of Pakistan, the net profits
earned by the Federal Government, or any undertaking established or administered by the Federal
Government from the bulk generation of power at a hydro-electric station shall be paid to the province in
which the hydro-electric station is situated.
During audit of the accounts of Secretary Energy & Power Department Khyber Pakhtunkhwa for
the Financial Year 2022-23, it was observed that an amount of Rs. 0.218 million was received from the
Federal Government against the budgeted Net Hydel Profit (NHP) amount of Rs. 2,640.000 million (July
2022 to May 2023 i.e. 11 months), resulting into less / non-receipt of Rs. 2,639.782 million as net hydel
profit, as evident from the Finance Department’s letter No.BO(Rev-I)FD/5-5/2022-23/Vol-III dated
16.06.2023 & FPC meeting held on 08.12.2022.
The Energy & Power Department & PEDO did not have any data or information available as to
how NHP mechanism is worked out and calculation made regarding budgeted vs actual NHP.
The lapse occurred due to violation of rules and non-availability of data regarding calculation of
net hydel profit which resulted into loss to the government.
The department was requested vide letter dated 06.11.2023 and reminder dated 26.12.2023 for
holding DAC meeting. However, the DAC meeting was not convened till finalization of this report.
Audit recommends to implement the provisions of the Constitution in letter & spirit and recover
the amount of Rs. 2,639.782 million from the Federal Government.
PDP No. 48 (2022-23)
6.4.2 Less realization on account of own source receipts – Rs. 531.321 million
Para 8 and 26 of the General Financial Rules Volume I require each administrative department to
see that the dues of the government are correctly and promptly assessed, collected and paid into Government
Treasury.
During audit of the accounts of Secretary Energy & Power Department Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was observed that the local office realized revenue of Rs. 1,964.709 million
against the target of Rs. 2,496.00 million set by the Finance Department for own source receipts, resulting
into less realization of revenue amounting to Rs. 531.321 million, as detailed below;
(Rs. in million)
S. Budget Estimates for Receipts During the Shortfall in
Head of Account with Classification
No. 2022-23 period receipts
255
1 B03031-Fee Payable for Inspection of 91.600 68.467 23.133
Electrical Projects
2 B03033- Fee payable for the for the grant of 2.000 2.030 00
Certificate of Competency to Supervisor &
License to Electricity Contractor
3 B03034- Electricity Duty Payable by 2339.900 1857.267 482.633
WAPDA
4 B03035- Electricity Duty Payable for In 62.500 36.945 25.555
House Self Generation
Total 2496.00 1964.709 531.321
report.
Audit recommends to recover the amount.
PDP No. 58 (2022-23)
6.4.3 Loss to the government due to payment on lesser rate for Pre-COD units -
Rs. 2462.596 million
According to Para 26 of the General Financial Rules Volume-I, it is the duty of the Departmental
Controlling Officer to see that all sums due to government are regularly and promptly assessed, realized
and duly credited in the Public Account.
During audit of the accounts of Pakhtunkhwa Energy Development Organization - Daral Khwar
HPP District Swat, it was observed that NEPRA had determined the levelized tariff rate of Rs. 8.437 for
Daral Khwar HPP Project vide No. NEPRA/TRF-399/PEDO(DKHP)-2017/346-348 dated 09.01.2018 and
Commercial Operation Date (COD) was notified by the Central Power Purchase Agency Guarantee limited
(CPPA) with effect from 26.5.2021 vide No. CTO/CPPA-G/DGM (renewable) Daral Khwar HPP/19402-
13 dated July 27, 2021. Proper generation of electricity was started in April 2019 and exported 306,022,150
units however it was noticed that electricity generated units would be paid at the pre-COD rate of Rs. 1/-
instead of rate notified by NEPRA Rs. 8.437 due to which provincial government would sustain a loss of
Rs. 2275.886 million (8.437-1= 7.437 x 306,022,150).
Similarly, audit of the accounts of Ranolia HPS Chitral revealed that NEPRA has determine the
levelized tariff rate of Rs. 4.12 for Ranolia Hydropower project vide No. NEPRA/TRF-231/PHYDO-
2013/4264-4266 dated 29.4.2014 and Commercial Operation Date (COD) was notified by the Central
Power Purchase Agency Guarantee limited (CPPA) with effect from 12.9.2021 vide No. CTO/CPPA-
G/DGM (renewable) Ranolia HPP/25546-58 dated October 2021. Proper generation of electricity was
started in November 2019 and exported 59.846 units however it was noticed that electricity generated units
would be paid at the pre-COD rate of Rs. 1/- instead of rate notified by NEPRA Rs. 4.12/- due to which
provincial government will sustain a loss of Rs. 186.71 million (4.12-1= 3.12 x 59.846).
256
Audit held the Pre-COD rate should have been at par with the rate determined by the NEPRA.
The lapse occurred due to weak internal controls which resulted in loss of Rs. 2,462.596 million to
the government.
When pointed out in February 2022, the Management replied that the pre-COD sale tariff is not yet
finalized by NEPRA. However, petition has been moved by PEDO for determination of pre-COD sale tariff.
The case regarding modification has been submitted to NEPRA in which the pre-COD tariff will be also be
determined by the Authority.
In the DAC meeting held on 15.12.2022, it was decided that the matter may be referred to PAC for
deliberation.
Audit recommends to refer the loss to the PAC for deliberation.
PDP No. 278 & 281 (2020-21)
6.4.4 Loss to the government due to non-recovery of electricity charges - Rs. 1,377.093 million
According to the clause 9.6 of the contract agreement between the National Transmission and
Dispatch Company and PEDO, the power purchaser shall pay the power seller, the amount shown on an
invoice delivered in accordance with section 9.5 (a) less deduction for any disputed amounts shown in the
invoice, on or before the 30th day following the day the invoice is received by the power purchaser.
During audit of the accounts of Pakhtunkhwa Energy Development Organization - Malakand-III

Hydro Power Complex, it was observed that total verified claim of Rs. 3854.36 million was forwarded to
the National Transmission and Dispatch Company for payment against the electricity units exported.
However, the purchasing company paid an amount of Rs. 2503.18 only, against the total amount leaving a
balance of Rs. 1351.180 as outstanding on 30-06-2021. The Provincial exchequer suffered loss of revenue
due to non-receipt of outstanding amount against the company.
Similarly, audit of the accounts of Shishi HPS Chitral revealed that an amount of Rs. 25.913 million
was outstanding against PESCO from October 2017 to January 2022. However, the local office failed to
recover the amount till date of audit i.e. February 2022.
The management of PEDO and the administrative department was required to take up the issue at
the appropriate forum.
The lapse occurred due non-implementation of approved rates of tariff and lack of coordination
which resulted in loss of Rs. 1377.093 million to the government.
When pointed out in February 2022, the Management replied that CPPA-G release the outstanding
amount from time to time, subject to recoveries from DISCOs. Updated position for the concern financial
year will be shared later on.
257
In the DAC meeting held on 15.12.2022, it was decided that the department may verify the recovery
made. However, no progress was intimated to Audit till finalization of this report.
Audit recommends to take up the matter with appropriate authority for recovery of the outstanding
amount along with interest.
5.4.2 having financial impact of Rs. 4,275.546 million. Recurrence of same irregularity is a matter of serious
concern.
PDP No. 286 & 302 (2020-21)
258
Chapter – 7
ELEMENTARY & SECONDARY EDUCATION DEPARTMENT
7.1 A)Introduction
The Department of Education has been reorganized into two separate Departments w.e.f. July 2001,
i.e. Elementary & Secondary Education and Higher Education, Archives and Libraries. The Elementary
and Secondary Education Department is the biggest of all departments of Khyber Pakhtunkhwa. It has more
than 1,87,733 employees. About 4.381 million students are learning in more than 27,514 Government
institutions having more than 1,42,623 teachers.
of:
1. General Education:
(a) Primary Education
(b) Secondary Education, at the level of high/Higher Secondary Schools
2. Regulation, Registration and Supervision of Private Schools/Training Institutions.

3. BISEs, Text Book Board, Public Schools & Colleges/Cadet Colleges and Elementary Education
Foundation.
4. Grants of scholarships/stipends to students.
5. Administration of Compulsory Primary Education Act-1996.
6. Boys Scouts and Girls Guide Associations in Khyber Pakhtunkhwa
259
7. Service matters except those entrusted to Establishment and Administration Department and District
government.
8. Curriculum.
9. Syllabus.
10. Planning.
11. Policy.
Audit Profile of Education Department: (Rs. in million)

Expenditure Revenue/
Total
S No. Description Audited Audited FY Receipts Audited FY
Nos
2022-23 2022-23
1 Formations 12 8 24,205 1,542
(Excluding FAP)
3 40 8 8,211 N/A
under PAO
4 Foreign Aided Projects (FAP) N/A N/A N/A N/A

A summary of grants/appropriation of Education Department and expenditure by the department

in financial year 2022-23 is given below:
Non-Development:
(Amount in Rs.)
Grant # and
Department
46 -
Elementary
and NC21 9,052,094,000 2,061,369,000 - 4,889,681,669 6,223,781,331 6,233,488,763 -292,568
Secondary
Education
61 -
Elementary
and NC21 943,466,000 0 245,026,700 14,302,814 1,174,189,886 1,174,189,886 0
Secondary
Education
Total 9,995,560,000 2,061,369,000 245,026,700 4,903,984,483 7,397,971,217 7,407,678,649 -292,568
260
7,000,000,000
6,000,000,000
5,000,000,000
Amount in Rs.
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
0
46 - Elementary and Secondary Education 61 - Elementary and Secondary Education
-1,000,000,000
Development:
(Amount in Rs.)
Grant # and
Grant Original Supplementary Re- Total Actual Excess/
Department
53- Primary NC 12 4,946,167,945 0 298425000 2,646,230,718 2,598,362,227 2,598,362,227 0
53- Primary NC 22 323,000,000 145000000 240,361,149 227,638,851 227,638,851
53- Secondary
NC 12 340,001,000 40,214,519 299,786,481 299,786,481
Education
53- Secondary
NC 22 4,435,242,055 - -459,122,000 2,292,084,813 1,684,035,242 1,684,035,242 -
Education
53-
NC12 36,350,000 - 0 8,936,716 27,413,284 27,413,284 0
Administration
Total 10,080,761,000 0 -15,697,000 5,227,827,915 4,837,236,085 4,837,236,085 0
261
3,000,000,000
2,500,000,000
2,000,000,000
Amount in Rs.
1,500,000,000
1,000,000,000
500,000,000
0
53- Primary 53- Primary 53- Secondry 53- Secondry 53-
Education Education Admnistration
262
(Rs. in million)
Final Total Actual
Grant Expenditure
Non-
7,397.97 7,407.68 3.23 0.04%
Development
Development 4,837.24 4,837.24 4.77 0.10%
Total 12,235.21 12,244.91 8 0.07%
10,000.00
Rs. in million
5,000.00
It can be seen from the above variance analysis that the expenditure were made in excess on some
0.00
Non-Development
grants, while could not be utilized in others. This indicates inability of theDevelopment
7.1(c) Issues in the Elementary & Secondary Education Department
The major issue in the education department is lack and further compliance of administrative and
financial rules. In many instances, irregular appointment, irregular payment of allowances such as
accommodation, conveyance, orderly and other inadmissible allowances etc. were observed. Non-recovery
of electricity charges, student dues, affiliated dues. Non-imposition of liquidated damages and un-
authorized procurement of fixed assets is also reported. The head-wise figures of the departmental own
receipts is also sketchy. Many public sector universities under the Department of Higher Education are
facing financial crunch due to financial mismanagement.
audit of Education Department. This amount also includes recoveries of Rs. 15.075 million as pointed out
by the audit. Summary of the audit observations classified by nature is as under:
Overview of Audit Observations;
Amount
(Rs. in million)
3 Irregularities
B Procurement related irregularities
5 Others -
263
Amount in million
0 Reported cases of fraud, embezzlement

and misappropriation
Irregularities
85.23

164.914 0 Commercial Banks
issues
Others

Total No. of
points
1. 2007-08 Education 10 06 - 04
2. 2008-09 -do- 06 02 - 04
3. 2009-10 -do- 11 02 - 09
4. 2010-11 -do- 33 15 - 18
5. 2011-12 -do- 13 09 - 04
6. 2012-13 -do- 10 04 - 06
7. 2013-14 -do- 19 09 - 10
8. 2014-15 -do- 31 07 - 24
9. 2015-16 -do- 32 06 - 26
10. 2016-17 -do- 66 25 - 41
11. 2017-18 -do- - - - -
12. 2018-19 -do- 6 1 - 5
13. 2019-20 -do- 7 - - 7
264
7.4 Audit Paras
7.4.1 Loss to the government due to non-recovery of allowances – Rs. 2.562 million
All government accommodations shall be allotted subject to the deduction of house rent allowance
and 5% of the basic pay according to Rule-8 of Government of NWFP, S&GAD (Estate Office) Notification
No.EO/S&GAD/34-M dated 30/01/1980. The DDO shall be personally responsible for deduction of rent
from the pay bills of the Civil Servants in accordance with Para 8(2) of NWFP Residential Accommodation
at Peshawar (Procedure for allotment) Rules 1980. According to Para-17 of Notification No. SO
(Transport)/NP/ S&GAD/97 dated 13th March 1997 of the Government of Khyber Pakhtunkhwa S&GAD
Department, the Officers in use of government vehicles are not entitled to draw conveyance allowance.
According to Finance department notification n. FD(SOSR-II)/2-5/2021-22 (executive allowance) 20% of
the difference between the running basic pay and the initial basic pay will be deducted as part of “pay as
you go” pension contribution and shall be deposited under object head CO224`-Contribution of Pension &
Gratuities in Provincial Account-I (Non-Food).
During audit of the accounts of Secretary Elementary & Secondary Education Department Khyber
Pakhtunkhwa for the Financial Year 2022-23, it was observed that a sum of Rs. 2.562 million was
recoverable from various staff of Elementary and Secondary Education (Annexure-XI). As evident from
the pay slips of the employees the above mentioned are recoverable from above mentioned staff despite the
fact that the staff was allowed government vehicles, Government House, however recovery of 5%
maintenance charges, conveyance allowance and pension contribution on executive allowance was not
made. Moreover Mr. Muhammad Khalid Mateen from education department and posted as Superintendent
Elementary & Secondary Education, executive allowance was allowed to the Superintend which was not
allowed.
The lapse occurred due to non-implementation of the government orders which resulted into loss
to the government.
When pointed out in August 2023, the management replied that the cases will be re-examined and
recovery will be made if any and the record will be furnished to Audit. However, no progress was intimated
to Audit till finalization of this report.
Audit recommends to recover the amount besides fixing responsibility on the persons at fault.
PDP No. 3 (2022-23)
7.4.2 Unjustified release of Grants to various institutions - Rs. 115.655 million
According to para 54 of GFR, when proposals for a new grant-in-aid are placed before the Standing
Finance Committee, details should be furnished showing the purpose of the grant and the exact nature of
the conditions on which it is proposed to be made. To enable the Accountant General to compare such
265
purposes and conditions with those enumerated by the sanctioning authority in its subsequent orders of
sanction, the accountant-General should be supplied, when the sanction is conveyed to him under para. 51,
with relevant extracts from the Proceedings of that Committee read with 6 (i, vii & ix) and 9 of Grant-in-
Aid rule (Procedure for award of Grant in aid) that the grant sanctioned in the previous year has been
utilized for the object for which it was given. The sanction order shall clearly indicate the purpose of the
grant and the general and special conditions, if any attached to the grant, the grantee public entity shall be
required to submit performance report soon after the end of the financial year to the Government and any
public entity seeking Grant in aid from Government will be required to submit an application which includes
all relevant information such as articles of association, bylaws, audited statement of accounts, sources and
pattern of income and expenditure etc. enabling the approving authority to assess the suitability of the
institution or organization seeking grant.
During audit of the accounts of Directorate of Elementary & Secondary Education Peshawar for
the Financial Year 2022-23, it was noticed that a sum of Rs. 115.655 million was released to different
institutions in the shape of Grant Domestic, “Provision of Free & Quality Education to Poor Talented
Students”. Audit observed that the release of grant was unjustified because no codal formalities as required
under para 54 of GFR and procedure for award and the exact nature of the conditions on which it was
proposed to be made. No detail of grant sanctioned in the previous year was given, along with designated
account bank statement. The grantee public entities were required to submit performance report soon after
the end of the financial year to the Government along with relevant information such as Articles of
association, bylaws, audited statement of accounts, sources and pattern of income and expenditure etc.
enabling the approving authority to assess the suitability of the institution or Organization seeking grant.
The lapse occurred due to non-observance of rules which resulted in unjustified grants.
When pointed in November 2023, no reply was furnished.
Audit recommends to observe the rules and fix responsibility on the persons at fault.
PDP No. 77 (2022-23)
7.4.3 Loss to government due to non-forfeiture of 2% bid securities from the black listed firms –
Rs. 49.259 million
According to Rule 43 and 44 (2) (iv) of KPPRA Rules 2014, fraudulent practice means any act or
omission, including a misrepresentation, that knowing or recklessly misleads, or attempt to mislead, a party
to obtain a financial or other benefit or to avoid an obligation. Debarment of the firm/suppliers from the
current procurement process of financial year 2021-22 only or debarment of the firms/suppliers from the
current procurement process of financial year 2021-22 with forfeiture of CDR (Earnest money)
266
During audit of the accounts of Directorate of Elementary & Secondary Education Peshawar for
the Financial Year 2021-22, it was noticed that tender was floated for procurement of furniture for
government schools of Khyber Pakhtunkhwa under various clusters.
Scrutiny of record revealed that 18 bidders participated in the tender process for various clusters /
packages out of which 4 bidders / firms submitted fake and bogus documents, as detailed below;
S. No. Name of firm Cluster cost (m) CDR 2% (m)
1 Pakistan traders 656.667 13.133
2 Chand engineering works 875.068 17.503
3 Raza traders 687.906 13.758
4 Malakand & Haseeb engineering 243.267 4.865
Total 2462.908 49.259
It is further added that a committee was constituted by the directorate to scrutinize the tender
documents and if any firm found involved in submission of fake documents than the case be forwarded for
black listing. After thorough examination of tender documents the committee came up with the
decision/recommendation that (a) debarment of the above mentioned 4 bidders from the procurement of
financial year 2021-22 or (B) debarment of the above mentioned 4 bidders from the current procurement
process of financial year with forfeiture of CDR.
Audit holds that undue favor were extended to the bidders by non-forfeiture of bid securities from
the defaulter firms which put government into loss of Rs. 49.259 million.
The lapse occurred due to weak internal control & financial Mismanagement which resulted in loss
to the government.
When pointed in November 2023, no reply was furnished.
In the DAC meeting held on 23.10.2023, it was decided that the department may conduct a fact-
finding inquiry in the matter with members from Audit and Finance Department within one month.
However, no progress was intimated to Audit till finalization of this report.
PDP No. 590 (2021-22)
267
Chapter – 8
ENVIRONMENT, FORESTRY & WILDLIFE DEPARTMENT
8.1 A)Introduction
Climate Change Forestry, Environment & Wildlife Department is striving to improve the Forest,
Environment, and Wildlife through development & application of innovative technologies in Forest,
Environment and Wildlife and efficient management of natural resources through institutional
arrangements in the province.
Environment department is involved in provision of a better and improved environment to the

citizens of the province, through protection, conservation, and rehabilitation measures as well as prevention
and control of population and promotion of sustainable development. Its beneficiaries are general public
and the ecological system of the province.
of:
 Environment:
o Environmental Protection
o Energy Conservation
 Forests:
o Forest settlement.
o Re-afforestations.
268
o Range management.
o Erosion.
o Denudation.
o Cooperatives in Guzara Forests.
o Ecology and Environmental factors.
o Watershed Management.
o Applied Research in forestry.
o Forest Training.
 Wildlife.
o Protection, preservation, conservation and management of wildlife including all matters
falling within the purview of the 1Khyber Pakhtunkhwa Wildlife (Protection, Preservation,
Conservation and Management) Act, 1954, [Khyber Pakhtunkhwa] Act V of 1975).
o Habitat improvement.
o Conservation education and training.
o Applied research on wildlife and its habitat.
 Sericulture.
o Establishment of mulberry nurseries.
o Distribution of mulberry saplings, its plantation and cultivation.
o Import of phybried silk worm eggs and its isolation, etc.
o Production, hyberdization, distribution, etc. of silk worm eggs.
o Training of farmers and members of staff in the art of sericulture.
o Control of silk worm diseases.
o Control of mulberry diseases and insect pests.
o Production of silk yarn.
o Purchase of cocoons from ferrnuers.
o Development and expansion of sericulture.
o Improvement of socio-economic condition of farmers.
o Service matters, except those entrusted to the Establishment & Administration Department.
Audit Profile of Environment Department: (Rs. in million)

Total Exp audited FY Receipts audited FY
S. No. Description Audited
Nos 2022-23 2022-23
1 Formations 102 35 5,268 0
(Excluding FAP)
Authorities/Autonomous bodies
3 Nil Nil Nil N/A
etc under PAO
269
was as follows:
Non-Development:
(Amount in Rs.)
Grant #
Department
21-
Environment NC21 4,225,804,000 1,010 0 1,120,147,783 3,105,657,227 3,105,633,862 -23,365
and Forestry
22- Forestry
NC21 1,315,549,000 0 0 0 1,315,549,000 939,704,591 -375844409
(Wildlife)
61- Forestry NC21 1,161,181,000 0 -89550710 271,436,379 800,193,911 800,193,911 0
-
Total 6,702,534,000 1,010 -89,550,710 1,391,584,162 5,221,400,138 4,845,532,364
375,867,774
3,500,000,000
3,000,000,000
2,500,000,000
Amount in Rs.
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
0
21- Environment and Forestry 22- Forestry (Wildlife) 61- Forestry
-500,000,000
-1,000,000,000
270
Development:
(Amount in Rs.)
Grant #
Total
and Name Gra Re- Excess/
Original Supplement Final Actual
of nt Appropriati Surrender (Savings
Grant ary Grant Grant Expenditur
Departme Type on )
e
nt
50- NC2 3,360,564,0 1,934,554,1 1,426,009,8 1,426,009,8
- 0 -
Forestry 2 00 53 47 47
50-
NC2
Environm 29,815,000 - 0 21,305,914 8,509,086 8,509,086 0
2
net
50- NC1
18,961,000 - 0 18961000 0 0 -
Forestry 2
50-
NC1
Environm 7000000 - 0 3,500,002 3,499,998 3,499,998 -
2
net
3,416,340,0 1,978,321,0 1,438,018,9 1,438,018,9
Total 0 0 0
00 69 31 31
1,600,000,000
1,400,000,000
1,200,000,000
Amount in Rs.
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
50- Forestry 50- Environmnet 50- Forestry 50- Environmnet
Overview of expenditure against
Finalthe final grant:
Grant Total Actual Expenditure Excess/ (Savings)
(Rs. in million)
Total
Final
Grant Type Actual Excess/(Savings) Variance %
Grant
Expenditure
Non-
5,221.40 4,845.53 -375.867774 -7.20%
Development
Development 1,438.02 1,438.02 0 0.00%
271
Total 6,659.42 6,283.55 -375.867774 -5.64%
6,000.00
5,000.00
4,000.00
Rs. in million
3,000.00
2,000.00
1,000.00
0.00
-1,000.00
8.1(c) Issues in Environment Department

Environment, Wildlife and Forestry Department is a natural assets-based department. As such it is
the custodian of the three most important natural assets i.e. environment, wildlife and forestry. It has a
departmentalized accounting set up. The administrative and financial functions of the department are
governed by the West Pakistan Forest Manual 1962 sanctioned under the Forest Act 1927. However, the
departmental systems and procedures could not evolve with the latest requirements of public financial
management, project and financial accounting. It was noticed that in several Forest Divisions, the revenue
realized from the imposition of penalty has not been deposited in the Government Treasury on time. In
addition, it was noticed that illicit cutting of timber is still going on. But as the pursuance of court cases is
slow, the precious timber confiscated from the offenders is going to waste. Encroachment of the forest land
has also been observed. Assets and liabilities related to these natural and other physical assets cannot be
provided for. Non effective use of Forest Development Fund and its investment is also observed. There
were no details of the head-wise figures of the departmental own receipts collected by the department.

audit of Environment Department. This amount also includes recoveries of Rs. 238 million as pointed out
272
Amount
(Rs. in million)
3 Irregularities -
5 Others 170.524
Amount
(Rs. in million)
0 0 0

embezzlement and
170.524
217.923
misappropriation
Irregularities
2.986

3781.539

Commercial Banks

delivery issues
Total No. of
points
1. 2003-04 Environment 12 07 - 05
2. 2004-05 -do- 29 13 - 16
3. 2005-06 -do- 18 07 - 11
4. 2007-08 -do- 07 01 - 06
273
5. 2008-09 -do- 09 03 - 06
6. 2009-10 -do- 10 06 - 04
7. 2010-11 -do- 22 13 - 09
8. 2011-12 -do- 03 01 - 01
9. 2012-13 -do- 05 01 - 04
10. 2013-14 -do- 14 02 - 12
11. 2014-15 -do- 11 04 - 07
12. 2015-16 -do- 22 09 - 13
13. 2016-17 -do- 28 8 6 14
8.4 Audit Paras
8.4.1 Loss to the government due to non-recovery of additional profit earned on investment of TDR
- Rs. 4.931 million
According to Agreement executed with JS Bank by the Director B&A of CCFE&W Department
for investment of Rs. 1000.000 million in TDR, the JS Bank Ltd shall be responsible to refund principal
amount of TDR along with interest on the next day of its maturity.
During audit of the accounts of Secretary CCFE&W Department Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was observed that consequent upon an agreement with JS Bank an amount of
Rs. 1000.000 million was deposited with JS Bank in TDR for one year @ 14.50% per annum. The amount
was transferred to the JS Bank from the FDF account maintained with ABL on 3rd June 2022. According to
the agreement the JS Bank was bound to return the same amount along with interest on the next day of its
maturity which according the agreement was 3rd June 2023. But the JS Bank return the principal amount
along with interest amounting to Rs. 1,145.795 million on 12 th July 2023 i.e after lapse of nine (9) days of
maturity.
Audit observed that due to delay in repayment of nine (9) days, the FDF Fund was deprived of an
estimated income of Rs. 4.931 million till the end of September 2023 because the existing FDF account is
a Daily Product Account where the bank offers compound interest on the available balance on daily basis.
The Government was put into loss of Rs. 4.931 million (detail given below). The interest rate applied in the
analysis sheet was the same which the ABL offered during June 2022 to September 2023.
Transfer to IR – ABL interest rate Interest Remaining
Date O/Balance Remarks
FDF P.A per day amount Balance
03/06/2023 1,145,000,000 19.5% 0.00053425 5,505,411 1,150,505,410 Profit for 9 days
12/06/2023 1,150,505,411 1,145,794,520 19.5% 0.00053425 2,517 4,713,407 Profit for 1 day on
remaining Balance
01/07/2023 4,713,408 20.5% 0.00056164 52,945 4,766,352 Profit for 20 days
01/08/2023 4,766,353 20.5% 0.00056164 82,987 4,849,339 Profit for 31 days
01/09/2023 4,849,340 20.5% 0.00056164 81,708 4,931,047 Profit for 30 days

274
The department was requested vide letter dated 31.10.2023 followed by a reminder dated
report.
Audit recommends to recover the additional profit, inquire the matter and take action against the
person(s) at fault.
PDP No. 1 (2022-23)
8.4.2 Loss to the government due to non-recovery of lease rent and illegal mining compensation -
According to Section 105 “Power to lease out forests of the Forest Ordinance 2002 notified dated
10-06-2002, (1) The Forest Department may lease out the whole or any portion of a reserved forest,
protected forest, wasteland, or other forest placed under the management of a Forest Officer, for the
following purposes- (a) to plant trees, and increase production of forest produce; (b) to implement agro-
forestry and social forestry schemes for the benefit of the local communities; (c) to operate farms for
breeding of wildlife and conservation of biodiversity and nature reserves subject to any law for the time
being in force: Provided that no activities shall be allowed which are inconsistent with the principles of
forest conservancy and sustainable management or prejudicial to the rights and concession of the local
communities. The Department may cancel or modify such leases if it is of opinion that such cancellation or
modification is in the interest of forest conservancy.
Financial Year 2022-23, it was observed that contrary to Section 105 of the Forest Ordinance 2002, various
land belonging to the forest department was leased out by issuing 21 NOCs for mining operations in
reserved and protected forests w.e.f 2002 to 2013. The leases were cancelled in 2015 and ban was imposed
on all kind of leases in reserved and protected forests. Feeling aggrieved from the decision of the forest
department, writ petitions were filed, and in 2019 the Honorable Peshawar High Court referred the matter
to the Chief Secretary Khyber Pakhtunkhwa for giving opportunity of being heard to the parties. However,
the Peshawar High Court Bannu Bench also granted stay order on 25.05.2020 regarding Arbitration
Proceedings.
Audit raised the following observations:

1. Neither any enquiry was conducted nor responsibility fixed for leasing out the reserved and
protected land illegally.
2. Despite elapse of several years, the department failed to vacate the status quo which indicates the
inefficiency on the part of the Forest Department.
3. The firms are carrying out the mining activities, but neither the amount of surface rent was received
since 2015 nor compensation for illegal mining due to breach of lease agreements has been
recovered by the Department resulting into non-recovery of Rs. 3,776.608 million, as detailed
below;
S. Lease Compensation Compensation
Firm Material Lease expired on
No. area for 04 years for 8 years
275
till 2023
1. M/S Lucky Cement Laterite 274 Acre 15.6.2030 1,751,568,000 3,503,136,000
2. M/S Mehmood Laterite 324 Acre Till 2036 7,624,800 15,249,600
Construction 488.113 Expired in 2019
Company
3. Sahibzada Aziz Laterite 104.5 Till 2030 92,066,400 184,132,800
Ahmad Jan Acres
4. Rab Nawaz Bauxite 154.55 Expired in 2015 17,520,000 35,040,000
Acres
5. Baseer Ahmed Laterite 200 Acres Expired in 2015. 19,524,850 39,049,700
Khattak Breach of contract
by the lessee.
Total 3,776,608,100
Similarly, a piece of land measuring 12 Acres, 6 Kanals & 15 Marlas in the protected forest of
Malam Jaba has illegally been occupied by a Private company M/s Samsons Group of Companies Lahore
since 2015 but neither the department could be able to evacuate the illegal occupation nor collecting any
revenue/receipt from the company concerned.
report.
effecting recovery.
concern.
PDP No. 2 (2022-23)
276
8.4.3 Loss to the government due to irregular investment of FDF funds - Rs. 41.515 million
According to Finance Division Notification No.F.4(1)/2002-BR/I dated 2nd July, 2003 circulated
by the Government of KP vie letter No No.2/3-(F/L)/FD/201 9-20/VoI-Xl II Dated Peshawar the 22nd
October 2020, before making any investment under this policy, it would be necessary for public sector
entities set out in-house professional treasury management functions. Specifically, they would need to have
an Investment Committee (IC) with defined investment approval authority Transactions above the approval
authority of the IC will be subject to approval of the Board of Directors or an equivalent forum. The IC
should be assisted by an Investment Management Unit employing qualified staff with at least 3-5 years of
experience of managing investment in debt/equity instruments. However, it will be necessary for public
secretor enterprises to use the services of professional fund managers approved by SECP.
Financial Year 2022-23, it was observed that an investment of fund was made worth Rs. 4000 million
during the financial year 2022-23 with two different banks i.e ABL and JS banks amounting to Rs. 3000
million and Rs. 1000 million in TDRs at a fixed rate of 14.75% and 14.50% per annum respectively. The
accumulative profit allowed by the bank was Rs. 588.294 million. From detail analysis, it was observed
that;
i. The investment was made without having any Investment Management Unit (within the
department) employing qualified staff with at least 3-5 years of experience of managing
investment in debt/equity instruments
ii. The amount of Rs. 4,000.000 million would have earned a profit worth Rs. 629.809 million if
it was retained in the existing FDF account because the existing account is a Daily Product
Account where the bank offers compound interest on the available balance on daily basis. The
Fund was put to a loss of Rs. 41,515,435/- (629,809,435 – 588,294,000). The interest rate
applied in the analysis sheet was the same which the ABL offered during June 2022 to June
2023 (Annexure-XII).
iii. In term of FDF Rules 2006, initially the FDF amount was being deposited in the Government
Treasury. In a review meeting on issues of Environment Department held on 03-05-2012, the
Provincial Cabinet decided to transfer a certain amount out of the FDF to a profit bearing
account in a bank with an aim to gain profit on balance retain therein. Therefore, maintenance
of the fund account in ABL is itself an investment. Further investment without careful analysis
was irregular and irrational which resulted into huge loss to Government.
iv. Although the funds were invested upon the approval of the FDF management committee having
member from the Provincial Finance Department but according to above mentioned criteria,
the Department was required to obtain prior approval of special investment management unit
of the Finance Department which has not been done.
The irregularity was occurred due weak Administrative and Financial control which resulted in loss
to Government.
When pointed out in September 2023, the management replied that detail reply will be furnished
after consulting original record.
277
report.
PDP No. 7 (2022-23)
8.4.4 Overpayment on account of pay & allowances – Rs. 2.986 million
According to Government of Khyber Pakhtunkhwa Finance department (Regulation Wing) letter

No. FD (SOSR-II)8-7/2016-17 dated 02.02.2018, (1) The government of KPK has been pleased to sanction
executive allowance to the tune of 1.5 initial basic pay per month as per pay scale -2017. (2) PAS, PCS,
and PMS officers posted against scheduled post are allowed executive allowance equal to 1.5 of the basic
pay and are in receipts of such allowances other than regular allowances shall be entitled to one of the
allowances, whichever is more beneficial.
Financial Year 2022-23, it was observed that in contrary to the above notification, the following officer are
in receipt of executive allowance and Performance secretariat allowance simultaneously. Thus, resulting
into overpayment of Rs 2,986,965/- as per details below.
Statement showing over payment on A/C of Secretariat Performance Allowance
Special Allowances Overpayment
S.# Name Designation: BS P. No. Months
E.A S.A (7*8)
1 2 3 4 5 6 7 8 9
2 M. ABID MAJEED SECRETARY 21 44699 220,080 65,301 12 260,748
3 AQEEL JAVED SECTION OFFICER 17 45266 73,155 21,729 12 430,380
4 KHUDA BAKHSH SPL SECRETARY 19 286226 120,840 35,865 12 199,188
5 M. NAZAKAT SECTION OFFICER 17 499360 55,905 16,599 12 211,500
6 RASHID ALI SECTION OFFICER 17 685121 59,355 17,625 12 327,456
7 HALEEMA DY. SECRETARY 18 686190 83,355 27,288 12 266,112
8 ADNAN JAMIL DY. SECRETARY 18 756421 74,745 22,176 12 174,564
9 SANOVIA KAKAR SECTION OFFICER 17 951562 49,005 14,547 12 268,056
10 MINHAS UDDIN ADDL. SECRETARY 19 50097787 111,690 22,338 12 260,748
11 M. ADNAN PLAN: OFFICER 17 704371 45,550 21,729 12 327,456
12 SAMI UD DIN DEPUTY DIRECTOR 18 458301 57,525 27,288 12 260,748
Total 2,986,965
The lapse occurred due to weak internal controls and financial mis-management which resulted
into overpayment.
report.
278
Audit recommends to recover the excess amount.
PDP No. 8 (2022-23)
8.4.5 Less distribution of community and government share out of trophy hunting permits of
Markhor & Ibex - Rs. 30.532 million
Unauthorized retention of community share - Rs. 35.375 million
According to the Policy for Trophy Hunting in Khyber Pakhtunkhwa modified vide Forestry,
Fisheries & Wildlife Department notification No. SO(Tech)/FFWD/VIII-22/2002 dated 12.01.2002, 80%
of the revenue realized from issuing trophy hunting permits will go to the local communities for community
program. 20% of the proceed from trophy hunting will go to the Government token of proprietorship and
management charges.
During audit of the accounts of Chief Conservator Wildlife Khyber Pakhtunkhwa for the Financial
Year 2022-23, it was observed that a sum of Rs. 94,234,050/- was realized from issuing permits for trophy
hunting of Markhor and Ibex for the hunting season. As per the trophy hunting policy, the revenue realized
was required to have been distributed according to the share distribution formula of 80% and 20% for
community and government share respectively. However, less receipt was distributed as community and
government share amounting to Rs. 30,532,750/- as per details below.
Receipts realized 80% Community Share 20% Govt. Share Total
Required distribution 75,387,240 18,846,810
Distribution made 94,234,050 49,866,300 13,835,000
Difference 25,520,940 5,011,810 30,532,750
Furthermore, the bank statement for BoK account No. 2000704507, earmarked for this purpose,
illustrates a cumulative balance of Rs. 65.907 million as of November 2023. Upon subtracting the above
less distributed amount for the year 2022-23, it was evident that Rs. 35.375 million allocated to the
community share has been retained without proper justification, in clear violation of the Trophy Hunting
policy.
The lapse occurred due to weak internal controls which resulted into less distribution of community
and government share out of trophy hunting permits.
When pointed out in November-2023, no reply was furnished.
report.
Audit recommends to inquire the matter for fixing responsibility against the person(s) at fault
besides implementing the trophy hunting policy in letter & spirit.
PDP No. 22 (2022-23)
279
8.4.6 Unauthentic payment to VCCs due to non-preparation of management plan and non-devising
of audit mechanism - Rs. 49.866 million
According to serial No. (xiii) of the approved guidelines for community-based trophy hunting
programme circulated by the Government of Pakistan, Ministry of Climate Change vide No. LG&RD
Complex G-5/2 dated 27.10.2019. local communities shall get 80% of the revenue generated which shall
be used on community-based conservation activities strictly in accordance with the conservation and
management plans. An annual audit mechanism shall be put in place for ensuring transparency in utilization
of trophy amount as laid down in relevant rules and management plans.
During audit of the accounts of Chief Conservator Wildlife Khyber Pakhtunkhwa for the Financial
Year 2022-23, it was observed that a sum of Rs. 49.866 million was shown distributed to various Village
Conservation Committees (VCC’s) out of the trophy fund in light of trophy hunting policy, through a share
distribution formula of 80% and 20% for community and government share respectively. However, neither
any conservation & management plan was prepared nor audit mechanism devised to ensure transparency
in utilization of trophy amount as required under the approved guidelines mentioned above. Without a
management plan and audit mechanism the payment to communities is irregular and unauthentic.
The lapse occurred due to weak internal controls which resulted into unauthentic payment to VCCs.
When pointed out in November-2023, no reply was furnished.
report.
PDP No. 23 (2022-23)
8.4.7 Loss to the government due to non-installation of separate meters in residential colony - Rs.
31.382 million
GFR-26 provides that it is the duty of the controlling officer to see that all sums due to Government
are assessed, realized and duly credited in public account.
During audit of the accounts of Pakistan Forest Institute Peshawar for the Financial Year 2022-23,
it was observed that the institute has been receiving power through bulk meters, while power distribution
within its residential colony has been carried out using outdated check meters, installed in 1959.
Detailed examination of the monthly electricity bills for the financial year revealed that due to the
defective state of numerous check meters, a huge shortfall occurs between units consumed by the bulk
meters and units recovers from the residential colony and thus the government sustained recurring losses
each year. A comprehensive analysis of the financial losses being incurred due to the difference between
280
the payments made by institute and the amount recovered from the residential colony on account of
electricity was ascertain as Rs. 31.382 million only in one financial year i.e. 2022-23. Detail given below.
S. No. Month Total Bill Total Recovery Loss sustained
1 July, 2022 4,928,960 2,407,088 2,521,872
2 August, 2022 4,671,751 2,019,043 2,652,708
3 September, 2022 6,111,882 1,931,164 4,180,718
4 October, 2022 4,235,952 1,772,334 2,463,618
5 November, 2022 2,803,470 760,416 2,043,054
6 December, 2022 1,878,238 615,410 1,262,828
7 January, 2023 2,518,796 664,061 1,854,735
8 February, 2023 1,537,100 783,307 753,793
9 March, 2023 1,490,730 568,023 922,707
10 April, 2023 3,286,412 718,595 2,567,817
11 May, 2023 8,913,534 1,309,429 7,604,105
12 June, 2023 4,640,118 2,076,605 2,563,513
13 July, 2023 3,503,050 3,512,148 - -9,098
Total 50,519,993 19,137,623 31,382,370
It was also observed that the Institute used to collect the dues of the electricity in cash from the
users and then deposits WAPDA bills without maintaining any proper record. Therefore, suspect of
misappropriation cannot be ruled out.
The irregularity was occurred due to weak administrative control which resulted in loss to
Government.
When pointed out in November 2023, management replied that detail reply will be furnished after
consulting original record.
report.
Audit recommends installation of digital electric meters with direct supply from WAPDA besides
recovery of losses sustained by the Government, and action against the person(s) at fault.
PDP No. 29 (2022-23)
8.4.8 Illegal allotment of government accommodation to non-entitled persons and recurring loss
due to non-recovery of standard rent - Rs. 17.229 million
According to serial No. 3 and13 of Pakistan Forest Institute allocation rules, 1983, all employees
of the Institute shall be eligible for accommodation. If a house is occupied or retained unauthorized, action
may be taken against the defaulter under the Government Servant Conduct Rules and panel rent as
determined by the Director General shall be charged and recovered from the occupant for period of
unauthorized occupation.
During audit of the accounts of Pakistan Forest Institute Peshawar for the Financial Year 2022-23,
it was observed that residential accommodation have been allotted to non-entitled person(s)residing
281
illegally for the past so many years. Standard rent was required to have been recovered from the person(s)
as per the approved rates notified by Executive Engineer Building Division II C&W Department Peshawar.
However, neither any action has been taken against the illegal occupants nor standard rent has been
recovered which has resulted into recurring loss of Rs. 17.229 million (calculated for only 05 years) as
detailed below;
S. Covered Rent
Name Remarks Qtr No. Total
No. Area SFT P.M
1. Muhammad Ali Wildlife Dept. D-11 2,105 60,030 720,360
2. Mr. Daud Afridi Forest Dept. Cat-iii 1,500 22,810 273,720
3. Mr. Khalid Iqbal DC Abbottabad Cat-iii 1,500 22,810 273,720
4. Adnan Jamil D.S CCFE Cat-iii 1,500 22,810 273,720
5. Mr. Shafi Ullah Local Government Dept: Cat-ii 2,500 49,570 594,840
6. Faqir Said Pak-PWD F-8 900 8,250 99,000
7. Zia Khan Forest Dept: F-10 900 8,250 99,000
8. Samina Aamir Teacher in FMS G-23 550 5,430 65,160
9. Noor ul Amin Pak-PWD G-33 550 5,430 65,160
10. Shabir Ahmed Pak-PWD H-6 335 3,550 42,600
11. Pervez Masih DPL in Forest Education H-11 335 3,550 42,600
12. Molana Asghar Shopkeeper H-1 335 3,550 42,600
13. Iftikhar Hussain Social welfare dept: H-35 335 3,550 42,600
14. Azam Khan Pak-PWD H-37 335 3,550 42,600
15. M. Zahid -do- H-42 335 3,550 42,600
16. Bashir -do- H-43 335 3,550 42,600
17. Naveed Mali Dismissed H-45 335 3,550 42,600
18. Wife of Imtiaz DPL in Forest H-60 335 3,550 42,600
19. Nursery School Private Cat-ii 1 2,500 49,570 597,840
Total 3,445,920
Total for 5 years 17,229,600
The lapse was occurred due to weak internal controls which resulted in non-observance of rules
and regulations.
When pointed out in November 2023, management replied that detail reply will be furnished after
consulting original record.
report.
Audit recommends to recover the amount along with action against illegal occupants.
PDP No. 33 (2022-23)
282
Chapter – 9
Excise and Taxation Department

9.1 (A) Introduction
As per Rules of Business 1985, the department has been assigned the business of:
 Control of tobacco, opium, hemp, narcotics, liquor and intoxicating preparation,

Import license and contracts relating thereto and excise taxes thereon.
 Tobacco Bend Fees
 Assessment and collection of taxes on:
 Luxuries, amusements, bettings;
 Professions, trades, calling, employments;
 Urban immovable properties;
 Motor Vehicles;
 Capital gains
 Real Estate Agents and Motor Vehicle Dealers; and
 Historical Mosques
 Utilization of Tobacco Development Cess.
Audit Profile of Excise Department: (Rs. in million)

Total Exp audited FY Receipts audited FY
Nos 2022-23 2022-23
1 Formations Nil 35 252 5,492
(Excluding FAP)
3 Nil Nil Nil N/A
etc under PAO
283
284
9.1 (B) Comments on budget & accounts (variance analysis)

was as follows:
Non-Development
(Rs.)
Grant # Re-
and Name Grant Original Supplementary Surren Total Actual Excess/
of Type Grant Grant
Approp der
Final Grant
Expenditure (Savings)
Department riation
7- Excise
and 313,699, -
NC21 1,352,092,000 1,560 0 1,038,394,181 1,038,221,687
Taxation 379 172,494
Department
61- Excise
and 20,137,7
NC21 51,149,000 0 -3,999 31,007,286 31,007,286
Taxation 15 -
Department
333,837, -
Total 1,403,241,000 1,560 -3,999 1,069,401,467 1,069,228,973
094 172,494
1,200,000,000
Chart Title
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
7- Excise and Taxation Department 61- Excise and Taxation Department
-200,000,000
Development
(Rs.)
Grant #
Total
and Name Re- Excess/
Grant Original Supplementa Surrend Final Actual
of Appropriati (Saving
Type Grant ry Grant er Grant Expenditu
Departme on s)
re
nt
285
50- Excise
and
NC22/
taxation 0 0 0 0 0 0
12 -
Departmen
t
Total 0 0 0 0 0 0 0
Overview of expenditure against the final grant

(Rs. in million)
Total Actual
Expenditure
Non-
1,069.40 - 0.17 -0.02%
Development 1,069.23
Development - - 0.00%
-
Total 1,069.40 - 0.17 -0.02%
1,069.23
Chart Title
1,200.00
1,000.00
800.00
600.00
400.00
200.00
0.00
-200.00
9.1(c) Issues in Excise & Taxation department

The Excise & Taxation Department is a major revenue generation and enforcement department.
The departmental systems and procedures could not evolve with the latest requirements of public financial
management, revenue and financial accounting. It was noticed that the department failed to achieve its
targets of the revenue. In addition, it was noticed that departmental assets are going to waste. Assets and
liabilities related to these physical assets could not be provided to Audit for verification. The department is
noncompliant to audit and evaded accountability by not producing record. It also does not conduct DAC
meetings to settle observations on accounts.
286
audit of Environment Department. Summary of the audit observations classified by nature is as under:
287
Amount
(Rs. in million)
3 Irregularities -
5 Others -
9.3 Brief comments on the status of compliance with PACdirectives:-
SNo. Audit Name of Total No. of Full Partial Nil

Year Department actionable Compliance compliance compliance
points
1. 2002-03 Excise & Taxation 08 07 - 01
2. 2012-13 -do- 01 01 - -
3. 2013-14 -do- 03 - - 03
9.4.1 Non-production of confiscation record by Director Narcotics Control Wing
According to Rule 17 of GFR Vol-I read with Section 14 of the Auditor-General’s 2001, no such
information nor any books or other documents, to which the Auditor-General has a statutory right of access,
may be withheld from the Director General Audit.
During audit of the accounts of Directorate General Excise, Taxation & Narcotics Control Khyber
Pakhtunkhwa Peshawar for the Financial Year 2022-23, a request for the production of auditable records
was submitted to the Director General Excise through No. Audit/FAT/DG excise/2-22-23/01 dated 20-11-
2023. However, despite the requisition, no records were provided by the Director Narcotics control wing.
Subsequently, additional requests followed by reminders dated 29/11/2023 and 04/12/2023 were issued,
seeking details regarding the vehicles and other assets confiscated by the Narcotics control wing.
Regrettably, the requested records were not produced until the finalization of the audit report.
The lapse occurred due to violation of rules which resulted into non-production of record.
Audit recommends to take disciplinary action against the individual(s) for non-production of
auditable record.
288
PDP No. 8 (2022-23)
9.4.2 Wasteful expenditure on account of office rent - Rs. 17.604 million
According to Rule 10 (i) of GFR Vol-I, every public officer incurring expenditure from public fund
is expected to exercise the same vigilance in respect of expenditure incurred from public money as a person
of ordinary prudence would exercise in respect of expenditure of his own money.
Pakhtunkhwa Peshawar for the Financial Year 2022-23, it was noted that an amount of Rs. 17,604,798/-
was paid to the Administrator Auqaf for office building rent pertaining to the DG excise office. Upon
investigation, audit discovered that a new office for the Director General of Excise had been completed by
June 30, 2021. Additionally, the transfer of the building's possession had been duly completed by the Excise
and Taxation Department, including the Director General. However, despite taking possession of the new
building, the office relocation was not completed. Moreover, due to non-occupation and no proper care, the
newly constructed building is also facing deterioration.
The lapse occurred due to the violation of the principle of prudence which resulted into wasteful
expenditure of Rs. 17.604 million.
Audit recommends to inquire the matter for fixing responsibility for the loss to the provincial
exchequer.
PDP No. 9 (2022-23)
9.4.3 Missing / unauthorized retention / allotment of seized vehicles by Excise and Taxation
Department
According to Rule 13 (3) of the Khyber Pakhtunkhwa (Road Checking, Seizure and (1) Disposal
of Motor Vehicles) Rules, 2015, Vehicles with refitted or rewelded chasis sheet or plate, as the case may
be, shall not be put to sale by way of auction. Such vehicles shall be retained in the Department or allotted
to other Departments of Government for performance of official duties, by the Allotment Committee, in
accordance with the entitlement, after fulfilling all the codal formalities.
Pakhtunkhwa Peshawar for the Financial Year 2022-23, it was observed that the local office had seized
several new model cars, including V8, Honda Civic, Toyota Corolla, Prius, aqua and others, models from
2017 to 2022. However, upon visiting the warehouse, it was noted that these new model cars were not
parked in their designated area. The whereabouts of these seized vehicles, a request for the files and current
status of the vehicles was made on a test-check basis. Regrettably, the authorities didn’t produce the files
289
of the vehicles. However, a list of vehicles was produced. On detail scrutiny of the list. audit observed the
following;
 Out of the sample of 83, 55 number of vehicles were retained by the excise department without
proper authorization (Annexure-XIIIA)
 Within the sample of 83 vehicles, 11 were allotted to other departments without the necessary
approval from the allotment committee (Annexure-XIIIB)
 The disposal column for all seized vehicles in the Form B register remained blank, indicating
an absence of disposal records. However, these vehicles were not stored in the warehouse,
suggesting potential unauthorized retention or allocation without appropriate documentation
 Despite being initially seized in operational conditions on the road, a physical inspection of
the warehouse portrayed it as a neglected site resembling a junkyard. This discrepancy implies
potential unauthorized use of the seized vehicles by officials. Subsequently, these vehicles
were left to deteriorate in the warehouse after becoming obsolete
The lapse occurred due to a violation of rules and misuse of authority by the administration, which
resulted in the misuse/loss of government property.
Audit recommends to investigate the matter and fix responsibility besides provision of complete
record to Audit.
PDP No. 11 (2022-23)
9.4.4 Loss to the government due to lack of protective structure and delayed / non-auction of
confiscated vehicles
According to rule 04 and 13 of the of the Khyber Pakhtunkhwa (Road Checking, Seizure and
Disposal of Motor Vehicles) Rules, 2015, the confiscated vehicle shall be disposed of by way of sale in an
open auction, through an Auction Committee constituted by the Administration Department. The total
amount of the sale proceeds out of the auction of confiscated vehicles shall, after clearance of dues or taxes
of the Government or of Federal Government, if any, in the form of custom duty, sales tax, etc., be paid
into Government treasury in the relevant head of account. In case of confiscated non-custom or non-duty
paid vehicles, the successful bidder shall be responsible for clearance of all Federal and Provincial taxes
and duties leviable. The officer incharge of the warehouse after taking into possession of the seized vehicle,
under sub-rule (2) of rule 4, shall send the vehicle to the Forensic Science Laboratory, Peshawar for
chemical examination.
Pakhtunkhwa Peshawar for the Financial Year 2022-23, it was observed that that no auction of the
confiscated vehicles was carried out in the period under report. During the visit of the warehouse of the
vehicles, it was observed that there was no protective structure or shed installed, leaving all the vehicles
290
parked in the open. The auction of vehicles is frequently delayed for many years, resulting in the vehicles
being exposed to the elements, particularly the sun, for extended periods. As a result, the vehicles suffer
from rust, paint damage, and rapid deterioration due to prolonged exposure to harsh weather conditions.
This prolonged exposure to such conditions has led to a considerable loss in the value of the vehicles, which
will ultimately result in much lower revenue for the government once they are auctioned.
Furthermore, the "Form B" register revealed that a total of 296 vehicles were seized during FY
2022-23. Further scrutiny uncovered that an amount of Rs. 53,000 was expended under the head A03953 -
Investigation cost, specifically for the chemical examination cost of 53 vehicles. Upon a random inspection
of vehicle files, it was noted that in numerous instances, the Forensic Science Laboratory report was missing
and not attached along with Form A. Detailed information regarding these vehicles is provided in the
attachment. Without chemical examination through Forensic Science Laboratory, further disposal of the
vehicle, including releasing, cannot be done.
The lapse occurred due to non-observance of rules which resulted into a significant decline in the
physical condition of the vehicles while stored in the warehouse. This deterioration is expected to result in
reduced Government revenue upon eventual sale.
When pointed out in November 2023, it was replied by the department that vehicles are periodically
auctioned subject to availability of funds. The matter will be taken up with the Administration Department
for auction of the vehicles.
Audit recommends to investigate the matter for fixing responsibility on the person(s) at fault.
PDP No. 12 (2022-23)
291
Chapter - 10
FINANCE DEPARTMENT
10.1 A) Introduction
of:
1. Management of Public Funds i.e.

a. Supervision and control of Provincial Finances;
b. Preparation of Provincial Budget;
c. Preparation of supplementary estimates and demands for excess grants;
d. Appropriations and Re-Appropriations; except those relating to development budget which will be
sanctioned only with the prior concurrence of Planning and Development Department; and
e. Ways and Means
2. Public Accounts and Public Accounts Committee.
3. The framing of financial rules for guidance of departments and supervision of maintenance of
accounts.
4. To guide autonomous and semi-autonomous bodies, whether aided wholly or partly from provincial
revenue in the framing of various financial regulations under the relevant Acts/Ordinances
constituting the said body.
5. The framing of Civil Service Rules applicable to all Government servants and interpretation
thereof.
6. Floatation and administration of Provincial loans.
7. Examination and advice on matters affecting directly or indirectly the finance of the province.
8. Administration of public revenue saves as otherwise provided.
9. Assets and Liabilities Committee.
10. Communication of financial sanction.
11. Examination of all proposals for the increase or reduction of taxation.
12. Creation of new posts and examination of schemes of new expenditure.
13. Audit of receipts and expenditure.
292
14. Public Debts.
15. The Local Fund Audit Department.
16. Treasuries and Sub-Treasuries.
17. Electronic Data processing.
Audit Profile of Finance Department;

Audited FY Audited FY
S No. Description Total Nos Audited
2022-23 2022-23
(Rs in Millions) (Rs in Millions)
1 Formations 39 02 7,518 35,000
 SDA
2 01 01 42.759 N/A
 Etc
(Excluding FAP)
3 02 Nil N/A N/A
etc under PAO
4 Foreign Aided Projects (FAP) 01 01 115.000 N/A
Non-Development;
(Rs.)
Grant #
Re- Total
and Gra
Original Supplement Final Actual Excess/
Name of nt Apprioriati Surrender
Grant ary Grant Grant Expenditu (Savings)
Departme Type on re
nt
03 -
Finance,
Treasury, NC2 4,192,572,0 1,787,894,9 2,404,677,1 2,405,504,4
70 0
Local 1 00 62 08 41 827,333
Fund
Audit
- -
61 - NC2 9,411,016,0 2,721,940,8 578,826,61 107,654,04
0 6,110,248,49 471,172,5
Finance 1 00 91 5 3
4 72
61- NC2 -
112,930,000 0 -29,960,497 14,003,982 68,965,521 68,958,410
Treasuries 1 7,111
- -
13,716,518, 4,523,839,8 3,052,469,2 2,582,116,8
Total 70 6,140,208,99 470,352,3
000 35 44 94
1 50
293
3,000,000,000
2,500,000,000
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
0
03 - Finance, Treasury, Local 61 - Finance 61- Treasuries
-500,000,000 Fund Audit
-1,000,000,000
Development;
(Rs.)
Grant # and
Grant Original Supplementary Re- Final Total Actual Excess/
Name of Surrender
Department
50-Finance NC22 0 0 0 0 0 0
-
Total 0 0 0 0 0 0
-
Overview of expenditure against the final grant; (Rs. in millions)
Final Total Actual

Grant Expenditure
Non- -
-15.41%
Development 3,052.47 2,582.12 470.35
Development
- - -
-
Total -15.41%
3,052.47 2,582.12 470.35
294
3,500.00
3,000.00
2,500.00
2,000.00
1,500.00
1,000.00
500.00
0.00
Non-Development
-500.00
-1,000.00
10.1(c) Issues in Finance Department

The Finance Department is responsible for Public Financial Management in the province. However,
the departmental systems and procedures could not evolve with the latest requirements of public financial
management, revenue and financial accounting. It was noticed that the department failed to achieve its
targets of the revenue resulting in excess expenditure over the final grants. In addition, it was noticed that
financial assets are invested without proper evaluation and planning. Assets and liabilities could not be
provided to Audit for verification. The department is noncompliant to audit and evaded accountability by
not conducting DAC meetings to settle observations on its accounts.
audit of Finance Department. Summary of the audit observations classified by nature is as under:
Overview of Audit Observations; Amount in million

S.No Classification (Rs.)
3 Irregularities -
5 Others 3,644.998
295
296
Audit Name of Total No. of Full Partial Nil

S#
Year Department actionable points compliance compliance compliance
1. 2004-05 Finance 02 01 - 01
2. 2008-09 -do- 03 01 - 02
3. 2010-11 -do- 02 02 - -
4. 2013-14 -do- 08 07 - 1
5. 2014-15 -do- 02 01 - 01
10.4 Audit Paras
10.4.1 Loss to the government due to investment in long-term securities and their subsequent
premature encashment - Rs. 1,165.661 million
According to Rule 4 of the General Provident fund investment and Pension fund investment rules
1999, the Board may, in consultation with Government, invest any portion of the Fund which is not
immediately required for disbursement: (i) in Government securities; (ii) in Government guaranteed
securities/National Saving Schemes; (iii) in Profit-bearing deposits in Banks as per Government approved
list/policy; and (iv) in such other investments as the Board may think fit / beneficial.
During audit of the accounts of Secretary Finance Department Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was noticed in the record of investment cell of pension and GPI that in the 145 th
and 146th meeting of the investment committee funds amounting to Rs. 63,315 million were invested in
TDRs having maturity of one year. On further scrutiny it was revealed that in 147 th investment committee
meeting these TDRs were prematurely enchased on the plea that the interest rates are higher now and are
expected to increase further. The funds may earn more profit even after sacrificing Rs. 1,165,661,598 in
shape of penalties and cuts on agreed profits (Annexure-XIV).
The lapse occurred due to weak fund management and investment for longer period of time instead
of shorter period which resulted in less realization of revenue amounting to Rs. 1,165,661,598/-.
Audit recommends to inquire the matter for fixing responsibility on the person(s) at fault besides
formulation of proper investment plan and strengthening of the investment cell.
PDP No. 10 (2022-23)
297
10.4.2 Loss to the government due to delay in investment of general provident and pension funds -
Rs. 63.625 million
According to rule 4 of the General Provident fund investment and Pension fund investment rules
immediately required for disbursement: (i) In Government securities; (ii) In Government guaranteed
securities/National Saving Schemes; (iii) In Profit-bearing deposits in Banks as per Government approved
list/policy; and (iv) In such other investments as the Board may think fit/beneficial.
Financial Year 2022-23, it was observed in the record of investment cell of pension and GPI on test check
basis that in some cases funds after maturity of the TDRs were kept in the daily product accounts instead
of investing the same immediately. The rates of daily product being lower than the TDRs the fund sustained
a loss of Rs. 53,433,797/- (Annexure-XV). Furthermore, an amount of Rs. 10,000 million was kept in the
daily product account for 31 days for onward depositing it in the Government treasury instead of investing
the same in alternative investment opportunities. A loss of Rs. 10,191,780 was sustained for not investing
this amount.
The lapse occurred due to non-existence of proper investment plan, inefficient fund management
and delay in investment which resulted into loss of Rs. 63,625,577/- to the government.
Audit recommends to investigate the matter for fixing responsibility against the person(s) at fault
besides formulation of proper investment plan and strengthening of the investment cell for more efficient
utilization of funds.
PDP No. 11 (2022-23)
298
10.4.3 Loss to the government due to non-realization of interest of broken period –
Rs. 35.566 million
According to rule 4 of the General Provident fund investment and Pension fund investment rules
immediately required for disbursement: (i) In Government securities; (ii) In Government guaranteed
securities/National Saving Schemes; (iii) In Profit-bearing deposits in Banks as per Government approved
list/policy; and (iv) In such other investments as the Board may think fit/beneficial.
Financial Year 2022-23, it was noticed in the record of investment cell of pension and GPI that investments
of Rs. 17,309.220 million were made with Habib Bank Ltd for a period of three months with the maturity
date of 30.06.2022, however, these funds were kept withheld by the bank for additional 5 days. Interest of
Rs. 35.566 million was accrued for these additional 5 days. Further scrutiny of record revealed that the
transfer of funds was delayed for these additional five days due to non-availability of separate bank account.
This interest was claimed by the fund management cell but was not paid by the bank as the delay in fund
transfer was not on part of the bank.
Audit held that investment and encashment of TDRs is a routine activity of the investment cell.
The pre-requisites of encashment of TDRs should have been made in advance to avoid the loss of return
for intervening period.
The lapse occurred due to in-efficient fund management which resulted in loss to the government.
Audit recommends to fix responsibility and formulate proper fund management plan to avoid such
losses in future.
PDP No. 12 (2022-23)
10.4.4 Loss to the government due to unauthorized withdrawal from GPI fund -
According to rule (2) of the Government Provident fund rules 1999, the Fund shall be available and
utilized for payment to the subscribers of General Provident Fund.
Financial Year 2022-23, it was noticed in the record of investment cell of pension and GPI, it was observed
that an amount of Rs. 10,000 million was transferred from the fund to the provincial account-I. The 46th
meeting of the board approved the transfer of the said funds for onward payment of annual GPF interest to
the subscriber. Audit held that interest on GP fund is never paid to the subscriber in cash, rather it is added
299
with the existing GP fund balance of the subscribers. Withdrawal from the GP fund balance in the shape of
advances can be met from the receipts of annual subscription of the GP fund. The transfer of funds to
account-I is neither justified nor authorized, as the amount was transferred to the account-I and was not
paid to the subscribers of the General provident fund. Moreover, the GPI earned a profit of 7,591 million
in the FY 2022-23, which is less than the profit earned in the FY 2021-22. The total interest credited to the
subscribers of GP fund for the FY 2022-23 is 16,099 million, which shows that the funds are not strong
enough to cover-up the actual requirement of the interest payable to the subscribers. Due to withdrawal
from the GPI fund in September 2022, the fund was deprived from earning Rs. 1,461,923,073 of interest.
RoI of SBP Interest using monthly
Month Opening Balance
Monetary Policy) compounding
Oct-22 10,000,000,000 16.000% 133,333,333
Nov-22 10,133,333,333 16.000% 135,111,111
Dec-22 10,268,444,444 16.000% 136,912,593
Jan-23 10,405,357,037 17.000% 147,409,225
Feb-23 10,552,766,262 17.000% 149,497,522
Mar-23 10,702,263,784 20.00% 178,371,063
Apr-23 10,880,634,847 21.00% 190,411,110
May-23 11,071,045,957 21.00% 193,743,304
Jun-23 11,264,789,261 21.00% 197,133,812
Total 1,461,923,073
Audit held that withdrawal from the GPI resulted in reduction of the value of investment and loss
of future revenue which could have been earned from investing these funds.
The lapse occurred due to mismanagement of funds which resulted into loss to the government.
Audit recommends to investigate the matter and fix responsibility against the person(s) at fault for
drawing funds from the GPI Fund.
PDP No. 14 (2022-23)
10.4.5 Loss to the government due to unauthorized withdrawal from pension fund –
According to Rule 4 (2) of the pension fund act, the Fund shall be under the control of and operated
upon by the Board and shall be utilized for the payment of pension to the employees of Government. Further
according to rule 6 of the same act (2) No amount from the Fund shall be withdrawn unless it is approved
300
by the Board. Withdrawal of amount shall be permissible only under the joint signatures of the Chief
Secretary and the Secretary Finance in their capacity as Chairman and member of the Board.
According to Clause 3 of the pension fund act 1999, as soon as may be after the commencement of
this Act, Government shall establish a fund to be known as the Provincial Pension Fund. The Fund shall,
subject to the availability of resources, be enhanced from year to year by depositing, such amount in the
Fund as Government may, with particular reference to its overall liabilities towards payment of pension,
determine in respect of each year. For doing so the Fund shall be charged upon the Provincial Consolidated
Fund within the meaning of Article 121 (e) of the Constitution of the Islamic Republic of Pakistan.
Financial Year 2022-23, it was noticed in the record of investment cell of pension and GPI, it was observed
that an amount of Rs. 10,000 million was transferred from pension fund to the provincial account-I.
According to the actuarial study made by the finance department the pension fund deficit was Rs. 2,969,904
million on 30.06.2020. During the next three years the deficit increased further as no additional funds were
brought in from the consolidated fund, rather funds amounting 36 billion were drawn out of it since the
study was made. Moreover, out of the total funds transferred Rs 9,000 million was wrongly booked under
the C01902 (Dividends on investment), audit held that this withdrawal from pension fund should be treated
as liability rather dividend income.
Audit held that since creation of the fund in 1999, the pension fund was not properly managed by
the finance department as per the pension liability requirement of the Province. Instead of increasing the
volume of funds for bringing it at par of the pension liability, drawl from it is unjustified. Moreover, the
funds were transferred to the consolidated fund instead of payment to the pensioners, which is irregular and
un-authorized. Moreover, the drawl was made on the signature of Secretary Finance and Secretary
Administration instead of Chief Secretary. Due to drawl from the Pension fund in September 2022, the fund
was deprived from earning Rs. 1,177,160,961 of interest.
RoI(SBP Monetary
Month Opening Balance Loss
Policy)
Nov-22 1,000,000,000 16.00% 13,333,333
Dec-22 10,013,333,333 16.00% 133,511,111
Jan-23 10,146,844,444 17.00% 143,746,963
Feb-23 10,290,591,407 17.00% 145,783,378
Mar-23 10,436,374,786 20.00% 173,939,580
Apr-23 10,610,314,365 21.00% 185,680,501
May-23 10,795,994,867 21.00% 188,929,910
Jun-23 10,984,924,777 21.00% 192,236,184
Total 1,177,160,961
Audit held that withdrawal from pension fund resulted reduction in the value of investment and
loss of future revenue which could have been earned from investing these funds.
The lapse occurred due to in-appropriate and weak fund management which resulted into loss to
the government.
301
Audit recommends to investigate the matter and fix responsibility against the person(s) at fault for
drawing funds from the Pension Fund.
PDP No. 15 (2022-23)
10.4.6 Loss due to investment of RBDC funds in long term securities and their subsequent
premature encashment - Rs. 290.986 million
According to Rule 10 (i) of the General Financial Rules Volume-I, every government officer shall
exercise the same vigilance in respect of expenditure incurred from public moneys, as a person of ordinary
prudence would exercise in respect of expenditure of his own money.
Financial Year 2022-23, it was noticed in the record of RBDC funds that in the 36 th meeting of the
investment committee of RBDC funds held on 28th December, 2022, funds amounting to Rs. 13,000 million
were invested in TDR having maturity of one year. On further scrutiny it revealed that in 37 th investment
committee meeting this TDR was prematurely enchased on the plea that the interest rates are higher now
and are expected to increase further. The funds may earn more profit even after sacrificing Rs. 301,706,849
in shape of penalties and cuts on agreed profits.
Audit held that the interest rates were rising throughout the year and investment of funds for longer
period was not profitable at any point of time during the year. The funds should have invested on monthly
or 3 monthly period or should have invested with the condition of pre-mature encashment without penalty.
On detail analysis and comparison of the 3 months profit rates with the actual reduced rate at which the
TDR were prematurely enchased, it was revealed that the fund suffered a loss of Rs. 290,986,301 if invested
for 3 months.
The lapse occurred due to irrational investment, weak fund management and investment for longer
period of time instead of shorter period which resulted into loss of Rs. 290,986,301/- to the government.
Audit recommends to inquire the matter for fixing responsibility on the person(s) at fault besides
formulation of the proper investment plan.
PDP No. 16 (2022-23)

302
10.4.7 Unjustified retention of funds of foreign aided projects – Rs. 2,940.998 million
According to Section 2.03 (d) of the general conditions of IDA financing investment Dated July
14, 2017, each such application and accompanying documents and other evidence shall be sufficient in
form and substance to satisfy the Association that the Recipient is entitled to withdraw from the Financing
Account the amount applied for and that the amount to be withdrawn from the Financing Account shall be
used only for the purposes specified in the Financing Agreement. According to para 1 of the schedule-II of
the financing agreement with the IDA, for the Khyber Pakhtunkhwa Human Capital Investment Project, to
facilitate the carrying out of the project, the recipient shall make the proceeds of the financing available to
the project implementation entity under the same terms and condition as shall have been received from the
association and in accordance with the provision of this agreement.
Financial Year 2022-23, it was noticed that funds amounting to Rs. 1420.78 million and 1520.218 million
were transferred by the SBP to the revolving fund accounts of the projects Human Capital Investment,
Education and Health components (ADP No 200166 and 200159) on 28.09.2022 and 31.10.2022
respectively. The funds upon requested of the department were released by the finance department with
additional note that the release does not involve any release/credit to the project mentioned above. On detail
scrutiny of the record it was observed that However, despite the release letter of the Finance Department
and actual transfer of funds by the SBP/Donor, the budget was not punched in the SAP or were punched
but kept freezed, restricting the budget to be utilized for incurrence of expenditure. Despite of several
requests by the department for the punching/unfreezing of already released funds, the funds were kept
freezed till the end of May 2023. Due to delay in the punching/unfreezing of budget the project expenditure
were restricted to 1,014 million (26% of the total funds received from SBP 3773.175 million)
The lapse occurred due to violation of rules and weak financial management which resulted into
non-releasing of funds to the Foreign Aided Projects which further resulted in violation of agreement made
with the IDA and non-achievement of project objectives.
Audit recommends to inquire the matter and fix responsibility besides formulation of guidelines
for the release of funds for the Foreign Aided Projects.
PDP No. 23 (2022-23)
10.4.8 Irregular release of funds under the Public Interest Fund - Rs. 704.000 million
According to the guidelines issued by GoKP Local Government through notification No. PO(LG)2-
45/District ADP/2016-17 dated 08-06-2017 for implementation of developmental schemes under the 3%
public interest fund (PIF) share out of the Provincial Finance Commission; for such schemes Administrative
303
Approvals will be issued after approval of the PC-I in the District Development Committee and the basis
of approved schemes, the Finance Department will release funds directly to Account-IV of the concerned
district. Furthermore, section 53 (2) & 53 (3) of Local Govt Act 2013 require that while making
recommendations, the Finance Commission shall take into account the principles of fiscal need, fiscal
capacity, fiscal effort and fiscal performance of local governments and, the Finance Commission shall also
take into consideration poverty, population, lag in infrastructure and revenue base of local governments as
factors while formulating its recommendations.
Financial Year 2022-23, it was observed that Rs. 740 million was recommended as 2% PIF share of the
Chief Minister (CM) under the 12th PFC Award 2022-23. The said funds were allocated by the CM to
different schemes proposed by the District Administration of District Swat for which formalities of PC-I,
Administrative Approval and DDC approval etc.were not fulfilled, however, Finance Department released
the funds for these schemes to Account-IV. Even the district administration didn’t specifically mention
each scheme with sub-schemes cost estimates etc. in the summary moved for CM approval.
It is also important to mention that schemes in the same sectors and functions as demanded in this
PIF allocation were already included in Annual ADP 2022-23 (as per attached list) for District Swat with
budget estimates of Rs. 3,482 for which total release was Rs. 5,305 million. This led to the conclusion that
the release of Rs. 740 million was not made for specific sub-schemes with approved PC-I but the summary
was only moved to facilitate transfer of these funds from Account-I to Account-IV for district Swat.
Audit held that the allocation of PIF of Rs. 740 million was unjustified due to existing ADP schemes
in the same sectors and the release by Finance as irregular without approved PC-I and AAs.
The lapse occurred due to non-compliance of the spirit of the PFC and non-adherence to the rules
prescribed by the Local Government Department which resulted in irregular releases.
Audit recommends to inquire the matter for fixing responsibility for the lapse.
PDP No. 29 (2022-23)
10.4.9 Loss due to less deduction of Executive Allowance pension contribution –

Rs. 3.220 million
According to Finance Department (Regulation Wing) Khyber Pakhtunkhwa notification No.

FD(SOSR-II)2-5/2021-22 (Executive Allow) dated 07-07-2021; 20% of the difference between running
basic pay and the initial basic pay will be deducted as part of “pay as you go” pension contribution from all
officers drawing executive allowance.
304
Financial Year 2022-23, it was observed that the officers in BPS-17 and above who were entitled for the
executive allowance were paid the same, however, pension contribution was deducted on the basic salaries
of 30-06-2022 instead of the running basic pay which resulted in less deduction of Rs. 3,221,500/-.
Audit held less deduction of the pension contribution as loss to the government.
The lapse occurred due to misinterpretation of the rules which resulted in loss to the government.
Audit recommends to recover the amount from the concerned officers.
PDP No. 33 (2022-23)
10.4.10 Non-recovery of Pre-Audit Fee from the local government / autonomous bodies - Rs.
652.589 million
According to Rule-26 of G.F.R Vol 1, it is the duty of the Departmental Controlling Officer to see
that all sums due to government are regularly and promptly assessed, realized and duly credited in the
Public Account.
During audit of the accounts of Directorate of Local Fund Audit Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was observed that various officers / officials were posted in different autonomous
bodies and other local government bodies working in the province for the purpose of conducting Pre-Audit
of receipts and payments.
However, scrutiny of record revealed that the directorate not only failed to recover the balance Pre-
Audit fee for the current year amounting to Rs. 164.835 million but an amount of Rs. 478.753 million for
the previous years as well.
The lapse occurred due to weak internal controls which resulted in non-recovery of Rs. 652.589
million.
When pointed out in October2023, it was replied that Directorate of local fund audit is committed
to recover audit fee and follow/adopt a rigorous mechanism for its recovery. However, the audit fee arrears
are increasing due to extremely weak financial conditions of the TMA’s. However, it is assured that this
office will make strenuous efforts for the full recovery of audit fee. However, no progress was intimated to
Audit.
305
Audit recommends to conduct enquiry for fixing responsibility along with recovery of the arrears
from the quarters concerned.
PDP No. 114 (2022-23)
306
Chapter – 11
FOOD DEPARTMENT
of:
 Food procurement, rationing and distribution.
 Storage of food grain.
 Controls over the price and distribution of sugarcane
 Control over the price and distribution of sugar and other matters under the Sugar
Factories Control Act, 1950.
 Implementation of Sugarcane Development Cess Rules, 1964.
 Civil supplies
 Price of food items
 Service matter, except those entrusted to the Establishment and Administration
department.
Audit Profile of Food Department:

(Rs. in million)
Total
S. No. Description Audited Audited FY Audited FY 2022-
Nos
2022-23 23
1 Formations 245 18 11,580 44,737
2  SDA 05 01 99.954 N/A
(Excluding FAP)
307
3 01 Nil Nil N/A
under PAO
The Summarized position of actual expenditure 2022-23 against the total of grants/appropriation was as
follows:
Non-Development:
(Amount in Rs.)
Grant #
Gra Re- Total
and
nt Original Supplement Final Actual Excess/
Name of Apprioriat Surrender
Typ Grant ary Grant Grant Expenditur (Savings)
Departm ion
e e
ent
49- State
Trading -
NC1 96,579,000, 16,440,750,0 46,016,420, 67,003,329, 66,013,324,
in food 0 990,004,5
1 000 00 560 440 933
grains & 07
Sugar
49- State
Trading
NC1 1,100,000,0 1,100,000,0
in food 0 0 0 0
4 00 00 -
grains &
Sugar
-
97,679,000, 16,440,750,0 47,116,420, 67,003,329, 66,013,324,
Total 0 990,004,5
000 00 560 440 933
07
80,000,000,000
70,000,000,000
60,000,000,000
Amount in Rs.
50,000,000,000
40,000,000,000
30,000,000,000
20,000,000,000
10,000,000,000
0
308
49- State Trading in food grains & Sugar 49- State Trading in food grains & Sugar
-10,000,000,000
Development:
(Amount in Rs.)
Grant #
Total
and Name Re-
of Apprioriatio Surrender
Departmen n
e
t
50- Food NC22 70,256,000 41,594,908 28,661,092 29,547,886 886,794
- -
252,604,00 238,151,91
50- Food NC12 14,452,086 14,452,086 -
0 - - 4
252,604,00 238,151,91
Total - - 14,452,086 14,452,086 -
0 4
35000000
30000000
25000000
20000000
Amount in Rs.
15000000
10000000
5000000
0
50- Food 50- Food

#REF! #REF! #REF!
Overview of expenditure
#REF! against the final grant:
#REF!
(Rs. in million)
Total Actual
Expenditure
Non-
67,003.33 66,013.32 - 990.00 -1.48%
Development
Development 14.45 14.45 - 0.00%
Total 67,017.78 66,027.78 - 990.00 -1.48%
80,000.00
70,000.00
60,000.00
Rs. in million
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00 309
-10,000.00 Non-Development Development

11.1(c) Issues in Food Department
The Food Department is a major revenue generation and service delivery department. The departmental
systems and procedures could not evolve with the latest requirements of public financial management,
revenue and financial accounting. It was noticed that the department failed to safeguard government assets
against waste and fraud. In addition, it was noticed that records related to revenue from the trading activities
and sales could not be provided to Audit for verification. The department is noncompliant to audit and
evaded accountability by not producing record. It also does not implement DAC meetings decisions to settle
observations on accounts.
Audit observations amounting to Rs. 437.445 million were raised in this report during the current audit of
Food Department. This amount also includes recoveries of Rs. 201 million as pointed out by the audit.

S.No Classification (Rs.)
3 Irregularities -
5 Others 19.020
Total No. of
S# actionable
points
1. 2010-11 Food 40 - 13 27
2. 2011-12 -do- 12 - 09 03
3. 2012-13 -do- 06 06 - -
-do-
4. 2015-16 12 08 04 -
310
11.4 Audit Paras
11.4.1 Wasteful expenditure due to unnecessary purchase of vehicles - Rs. 24.292 million
According to the minutes of the meeting of the transport committee held on 24.8.2021 for purchase of
vehicles under the project “Strengthening of food department Khyber Pakhtunkhwa” duly circulated by
Finance Department letter No.BO-1/FD/5-14/2021-22/Transport Committee dated 28.10.2021, read with
FD letter No. No.BO-1/FD/5-14/2021-22/Transport Committee dated 23.08.2021, the forum recommended
to allow purchase of five vehicles for official use subject to fulfillment of all codal formalities including (i)
clearance by the FD, (ii) handing over the unserviceable/condemned vehicles to Administration Department
for Auction (iii) provision of quotations from the authorized dealers.
According to Rule 290 of CTR, no money should be drawn from treasury unless required for immediate
disbursement. It is not permissible to draw money from treasury in anticipation of demand or to prevent
lapse of budget grant.
During audit of the accounts of Secretary Food Department Khyber Pakhtunkhwa for the Financial Year
2021-22, it was observed that a sum of Rs. 24.292 million was shown incurred on the purchase of vehicles
under the project “Strengthening of food department Khyber Pakhtunkhwa ADP No. 573/210632”. The
clearance for vehicles was made by the FD on the condition that purchased vehicles will be used for official
duty by authorized officers and those vehicles which were unserviceable / condemned against which new
vehicles have been purchased will be handed over to the Administration Department for auction.
However, scrutiny of record revealed that the new vehicles were used by the officers having their own
official vehicles in running condition. Moreover, one luxurious vehicle Toyota Fortuner was purchased for
Minister Food in clear violation of the objectives of the project which was revamping the food department
to improve the workability and performance.
Audit held that the vehicles were purchased without actual demand just to utilize the project funds.
S. Cheque No. & date Supplier Item Amount Qty Total
No.
1. 2124938, 15.11.21 Indus Motor Company Toyota Fortuner 9892000 1 9,892,000
2. 2124939, 15.11.21 Ghandara Industries Isuzu D-Max 7200000 02 14,400,000
Total 24,292,000
S. Designation Vehicles Quantity

No.
1 Secretary Food AB-1867; AA-2658; and 3
Isuzu D-Max (applied for)
2 Additional Secretary Food AB-8620; AA-3420; and 3
Isuzu D-Max (applied for)
3 Minister Food Toyota Fortuner 1
The lapse occurred due to weak internal controls which resulted in wasteful expenditure.
When pointed out in January 2023, reply was furnished.
311
In the DAC meeting held on 15.06.2023, it was decided that the department may conduct a fact-finding
inquiry / investigation of the matter and fix responsibility against the persons at fault. However, no progress
was intimated to Audit till finalization of this report.
Audit recommends to investigate the matter and take appropriate action under the rules.
PDP No. 51 (2021-22)
11.4.2 Loss to Government due to irregular awarding of contract - Rs. 6.661 million
According to Paras 144 & 145 of GFR Vol-I read with para 29 of KP Procurement Rules 2003, all purchases
should be made in a very public and economical manner through wide publicity.
During audit of the accounts of Directorate of Food Khyber Pakhtunkhwa for the Financial Year 2021-22,
it was observed that the contract of transportation of imported sugar from Karachi to different districts of
the Khyber Pakhtunkhwa to National Logistic Cell (NLC). On scrutiny of record it was observed that the
said contract was awarded to the NLC without floating any tender. On comparison of the rates offered by
NLC with the rates offered by the different transporters for the transportation of wheat from Karachi to
different districts, it was observed that the rates offered by the transporters of wheat were substantially low.
On comparison of both the rates it was observed that a sum of Rs. 6,661,682 was paid in excess to the NLC.
Irregular award of contract resulted a Loss of Rs 6,661,682/- to the Government, as detailed below;
Rate of Wheat Total
S. No. District Rate of NLC Diff. Loss
Transporters Qty.
1 Peshawar 7366 6389 977 1499 1,464,523
2 Nowshehra 7245 6990 255 428 109,140
3 Charsada 7245 6540 705 585 412,425
4 Mardan 7487 6540 947 873 826,731
5 Swabi 7607 6540 1067 458 488,686
6 Buner 8211 8484 -273 253 (69,069)
7 Shangla 9298 9668 -370 435 (160,950)
8 Swat 7970 7279 691 652 450,532
9 Lower Dir 7970 7269 701 836 586,036
10 Upper Dir 9419 9845 -426 267 (113,742)
11 Haripur 7245 6665 580 283 164,140
12 Mansehra 7607 6791 816 487 397,392
13 Batagaram 8453 8699 -246 134 (32,964)
14 Kohat 6762 6189 573 313 179,349
15 Karak 6883 6500 383 199 76,217
16 Hangu 7245 6946 299 388 116,012
17 Bannu 6279 4971 1308 747 977,076
18 DI khan 5675 4671 1004 787 790,148
312
Total 10,000 6,661,682
When pointed out in March 2023, it was replied that the department was abruptly assigned the task of
transporting sugar and the department had no time to conduct tender as per financial rules for conducting
tenders. Therefore, the contract was assigned to NLC. The contractors hired for the transportation of wheat
were also engaged in transportation of wheat and they were not ready to allow their vehicles or
transportation of sugar.
Reply of the department was not satisfactory as the direct awarding of contract to NLC in excess of
prevailing rates resulted in loss to the exchequer.
The lapse occurred due to non-observance of rules which resulted in loss to the government
for holding DAC meeting, however it was not convened till finalization of this report.
Audit recommends to inquire the matter and fix responsibility against the person(s) at fault besides recovery
of the loss sustained.
PDP No. 65 (2021-22)
11.4.3 Wasteful expenditure due to non-implementation of Board’s decision regarding conversion

of existing vehicles into mobile labs – Rs. 55.397 million
According to minutes (Agenda-4) of the 8th meeting of Khyber Pakhtunkhwa Food Safety & Halal Food
Authority held on 09th April 2019 under the chairmanship of Additional Chief Secretary, the forum
supported the idea of transforming existing Suzuki Bolans into mobile testing vans for on spot testing of
milk and other food items to ensure the safe food to the public at their doorsteps.
During audit of the accounts of Khyber Pakhtunkhwa Food Safety and Halal Food Authority Peshawar for
the Financial Year 2021-22, it was observed that expenditure of Rs.55,396,572/- was incurred on the
purchase of 07 Numbers Toyota HIACE vehicles through M/S Toyota Frontier Motors vide Cheque No.
43502611 dated 05.09.2021. The vehicles were fabricated / converted into Mobile Testing Lab through
M/S Razmak Industries at the cost of Rs. 10,360,000/-
Further scrutiny of record revealed that the Authority Board in its 8th meeting held on 09th April 2019
supported and approved the transforming of existing Suzuki Bolans into Mobile Testing Vans for on-the-
spot testing of food items as a cost effectiveness initiative. However, the management set aside the Board’s
approval and purchased new 07 number of Toyota HIACE vehicles for conversion into mobile testing labs
which resulted into wasteful expenditure of Rs. 55,396,572/- besides non-utilization of existing Suzuki
Bolan Vans.
Furthermore, sufficient number of vehicles including Suzuki Bolan Vans were available on the strength of
the Authority in addition to the newly procured 07 No. Toyota HIACE vehicles as summarized below:
S. No Type of Vehicles No. of vehicles
313
1 Honda BRV 34
2 Honda City 05
3 Suzuki Cultus 11
4 Suzuki Bolan 12
5 Toyota HIACE 07
Total 69
The lapse occurred due to non-implementation of Board’s decision which resulted into loss to the
government.
When pointed out in February 2023, no reply was furnished.
In the DAC meeting held on 27.09.2023, it was decided that the department may provide the relevant agenda
item regarding superseding of the previous board decision to Audit for verification. However, no progress
Audit recommends to inquire the matter for fixing of responsibility.
PDP No. 596 (2021-22)
11.4.4 Non-realization of revenue due to non-renewal of expired licenses of food establishments –

Rs. 179.74 million
According to sections 1 (2), 15 of the Khyber Pakhtunkhwa, Food Safety and Halal Food Authority Act
2014, it shall extend to the whole of the province of Khyber Pakhtunkhwa. License means a license granted
under this Act. Any person desirous of obtaining a license for using any place for food business or
commencing any food business, shall apply to the Authority on payment of prescribed fees. The license
granted shall remain in force for a period of two years from the date of issue and may thereafter be renewed
on payment of such fee as may be prescribed.
the Financial Year 2021-22, it was observed that licenses were granted to the food establishments in the
province. These licenses were issued for a period of 02 years and were required to be renewed on payment
of prescribed annual fee. Record revealed that 18717 food establishment licenses were expired in the
province which were not renewed by the concerned establishments nor the Authority made effort for
renewal of licenses and realization of revenue from these licenses. The analysis of the soft data maintained
by the Authority revealed that the number of expired licenses was increased from time to time instead of
reduction in expired case which resulted in loss of Rs.179,740,000/- due to non-realization of licenses’
renewal fee as tabulated below:
License fee/ renewal fee outstanding (Rs.)

S. No. Date No. of expired licenses
1 20.09.2022 16916
2 14.10.2022 17406
314
3 24.10.2022 18157 17974 expired licenses x Rs.10000 per
4 22.11.2022 17883 license as an average rate =
Rs.179,740,000/-
5 30.11.2022 17974
Audit held that a well-equipped Authority with all the work force and logistics is mandated to enforce the
provisions of the Act and ensure its operations through licensing and product registration in the province
was established with the aim to provide halal, hygienic food of prescribed standards and also ensure
revenue. However, the management failed to renew the expired licenses and realize renewal fee from the
expired licenses.
The lapse occurred due to lack of progress review meetings for expediting the progress and enforcement of
provisions of the Act which resulted in loss to the Authority.
In the DAC meeting held on 27.09.2023, it was decided that the department may provide the current updated
status of renewed licenses to Audit for verification. However, no progress was intimated to Audit till
Audit recommends to take steps for recovery of outstanding dues besides fixing of responsibility.
PDP No. 597 (2021-22)
315
11.4.5 Loss to the government due to non-registration of Geo Tagged business -
Rs. 137.440 million
According to section 8(k) of the Khyber Pakhtunkhwa food safety and Halal Food Authority Act-2014, the
authority may levy fee for registration, licensing and other services.
the Financial Year 2021-22, it was observed that a survey was conducted by the authority in June 2020 for
Geo Tagging of business throughout KP. Resultantly a total of 85,826 numbers of various categories
including small, medium and large un-registered businesses were identified and Geo Tagged to be
registered with the authority. However, despite elapse of almost three years, only 58,338 businesses were
registered leaving 27,488 businesses remained un-registered. This resulted into recurring loss of Rs.
137.440 million (calculated with average fee of Rs. 5000) by depriving the authority from license
registration fees and renewal fees.
In the DAC meeting held on 27.09.2023, it was decided that the department may provide the breakup of
geo-tagged business to Audit for verification. However, no progress was intimated to Audit till finalization
of this report.
Audit recommends to expedite the registration process.
PDP No. 605 (2021-22)
11.4.6 Loss to the government due to less imposition of fine - Rs. 12.440 million
According to section 23 of the Khyber Pakhtunkhwa food safety and Halal Food Authority Act-2014, A
person, who sells or offers for sale any adulterated food or food which is not in compliance with the
provisions of this Act, the rules or the regulations; and/ or who manufactures or processes or keeps any
food under unhygienic or unsanitary conditions; and/ or who manufactures for sale, stores, sells, distributes,
imports or exports any food which is not of standard or misbranded, shall be liable to fine which shall not
be less than Twenty five thousand rupees and not more than one million rupees or in default of fine for
simple imprisonment for a term of three months. Read with section 28, If a person, who commits an offence,
prescribed under the rules, for which no penalty has been provided in the Act, shall be liable to fine which
shall not be less than fifty thousand rupees or more than three hundred thousand rupees.
the Financial Year 2021-22, it was observed that a total of 2373 numbers of manufacturers, stores,
distributers and sellers of food items were fined by the Food Inspection Teams in various divisions of
Khyber Pakhtunkhwa, ranging from
Rs. 4,000/- to Rs. 22,000/-, instead of Rs. 25,000/- at least, as required under Section 23 of Khyber
Pakhtunkhwa Food Safety and Halal Food Authority Act 2014, which requires imposition of fine of at least
316
Rs. 25,000/- in cases where the food items are found adulterated or not in compliance with the provision of
the Act, which resulted into a loss of
Rs. 12,440,694/- (Annexure-VI).
showing the fine imposed in accordance with the actual provision. However, no progress was intimated to
Audit till finalization of this report.
PDP No. 609 (2021-22)
11.4.7 Irregular and non-transparent awarding of contract - Rs. 7.705 million

Loss to the government due to non-obtaining / non-forfeiture of bid security -
Rs. 0.770 million
According to Section 30 Chapter-V of KPPRA Rules 2014, each procuring entity shall plan its
procurements with due consideration to transparency, economy, efficiency and timeliness, and shall ensure
equal opportunities to all prospective bidders in accordance with Section 22 of the Act.
the Financial Year 2021-22, it was observed that purchase order No. KP-FS&HFA/Pro/PO-FTEML/4103-
A dated 08-12-2021 was issued to M/S Sindh Medical Stores (SMS) Karachi for the supply of various
equipment’s for establishment of Mobile Food Testing Laboratories. Valuing Rs. 7,705,740/-. However, it
was observed that:
i. The supplier M/S SMS offered an item in his bid “Rapid Moister Analyzer” manufactured by
BOECO which was technically qualified however, later on it was informed that the item was not
available in the market as the manufacturer had stopped its manufacturing as was evident from the
minutes of the procurement committee meeting held on 22nd March-2022. Resultantly the firm
offered to supply alternative item model No. MOC63U, manufactured by M/S Shimadzu Japan. In
response the Director Technical confirmed that the equipment was better than the originally offered
item. However, the same model No. MOC63U offered by M/S Rays Technologies was rejected
during the technical evaluation process. It clearly shows that the whole evaluation process was
compromised and the technical evaluation committee neither assessed the original approved item
nor the alternate item.
ii. Out of the total contract two items i.e. Turbidity meter and pH meter valuing Rs. 1,932,840/- which
the supplier failed to deliver were actually not required at the time of technical evaluation process
and while placing the order as the same were available with various divisions from the purchases
made in 2019 as was evident from the minutes of the procurement committee meeting held on 29 th
March 2022.
317
iii. As per the supply order, 10% performance security amounting to Rs. 770,574/- was required to
have been submitted by the supplier within five days. But neither the security was submitted nor
any action had been taken against the firm at that stage. Later the firm failed to fulfill its contractual
obligations and the contract was terminated in April-2022. However, loss of Rs. 770,574/- has been
occurred due to non-forfeiture of performance security. It is also worth mentioning that the
technical proposal of the same firm was rejected due to corrupt and fraudulent practices (conditions
of contract ITB 34) during purchase of “strip readers”.
iv. Items worth Rs. 4,545,450 million were not delivered by the supplier, it was decided by the
purchase committee that the same will be re-tendered. Keeping in view the hike in inflation and
abnormal increase in the dollar rate, cost of the imported items will be enhanced substantially
putting financial burden on the public exchequer due to failure of supplier.
v. Neither the firm was black listed nor any legal action had been taken against the firm.
Audit held the whole tendering and technical evaluation process as compromised resulting into irregular
and non-transparent award of contract valuing Rs. 7.705 million on one hand, and on the other hand loss
has been occurred due to non-forfeiture of performance security.
The lapse occurred due to mis-procurement which resulted into irregular awarding of contract and loss to
the government.
like retendering documents and evidence of the forfeited amount etc. to Audit for verification. However, no
progress was intimated to Audit till finalization of this report.
PDP No. 610 (2021-22)
11.4.8 Loss to the government due to awarding of contract at higher rate - Rs. 4.869 million
According to Para 10(i) of GFR Vol-I, every public officer incurring expenditure from pubic fund is
expected to exercise the same vigilance in respect of expenditure incurred from public money as a person
During audit of the accounts of District Food Controller Shangla at Bisham for the Financial Year 2021-
22, it was noticed that Food Department awarded two contracts for transportation of wheat and sugar from
Port Qasim Karachi to PRC Shangla @ Rs.9688 per M.Ton and Rs.9386 per M.Ton respectively. Contract
for transportation of sugar was awarded to M/s NLC @ 9386 and contract for transportation of wheat
awarded to M/s Allied Haulage & Co @ Rs.9688 per M.Ton for same destination i.e. Port Qasim Karachi
to PRC Shangla. Period for awarding contract for transportation are same i.e. Dec 2021 onward. There is
difference of rate i.e. Rs.302/-(9688 – 9386) as following:
318
Qty transported 16,122.836 M.Ton
Rate paid Rs. 9688
Rate required to be paid Rs.9386
Difference Rs. 302/- per M.Ton
Total Amount overpaid Rs. 302 x 16,122.836 = 4,869,096/-
The lapse occurred due to violation of rules and regulations which resulted in loss to the government.
i.e. cabinet decision for sugar and wheat increase / decrease for price fluctuation. However, no progress
Audit recommends to investigate the matter for fixing of responsibility against the person(s) at fault besides
recovery of the overpaid amount.
PDP No. 1 (2021-22)
11.4.9 Suspected misappropriation - Rs. 2.321 million
According to Para 20 of GFR Vol-I, any loss of public money, departmental revenue or receipts etc. held
by or on behalf of government should be immediately reported, by the officer concerned, to his immediate
official supervisor as well as audit, showing the errors or neglect of rules. After full investigation report
should be submitted of the nature and extent of loss, showing the errors or neglect of rules by which such
loss was rendered possible, and the prospects of effecting recovery.
During audit of the accounts of District Food Controller Shangla at Bisham for the Financial Year 2021-
22, it has been noticed that a sum of Rs. 2,578,756/- was shown deposited by Dubair Flour Mill Bisham for
1038 bags of wheat @ 2484.35 per 100 kg. As per Challan No. 294, a sum of Rs. 257,856/- had been
deposited in the National Bank Alpuri Br. Shangla on 17-12-2021. Whereas local office issued 1038 Nos
of PP bags of wheat @ 2484.35. The local office did not provide the bank statement to verify the transaction.
It is therefore, apprehended that a sum of Rs. 2,320,900 (Rs.2,578,756 – Rs.257,856) was less deposited
which may be recovered and verified, as there is a difference in receipts of Department and AG office.
like original bills / documents and bank statement etc. to Audit for verification. However, no progress was
intimated to Audit till finalization of this report.
Audit recommends to investigate the matter for fixing of responsibility besides recovery of the amount less
deposited.
PDP No. 8 (2021-22)
319
Chapter – 12
HEALTH DEPARTMENT
Health Department KP is a public entity; guiding health policies, governing healthcare institutions
and leading healthcare interventions in Khyber Pakhtunkhwa. Towards decentralization and digitalization,
it aims to provide healthcare at your doorstep. Devolved into healthcare education and service provision,
the department; ensure and realizes supply and demand equilibrium, channelizing healthcare knowledge
attitudes and practices on modern scientific patterns, however, synchronizing learned techniques with
beliefs, local values and norms.
Statistically prioritized interventions; concentrating epidemics, outbreaks, mutations, and

precautions; being learnt, advised, intervened, supervised, and data-banked for future referrals. Striving
towards access, affordability, and appraisal; synergic initiatives being initiated; complementing all the
stakeholders, uplifting healthcare infrastructure, promoting public welfare.
of:
 Leadership and evidence-based direction setting for health sector.
o Heath policy and reforms.
o Health Planning, financing and budget.
 Health Support and Development.
o Health promotion
 Health education; and
 Community involvement and advocacy.
320
o Disease prevention and control;
 Communicable Diseases; and
 Non-communicable diseases.
o Occupational Health.
o Environmental Health.
o Curative and rehabilitative care.
 Primary, secondary and tertiary level curative services including mental health;
and
 Rehabilitative care.
o Health related preparedness and response to disasters.
 Health Regulation and Enforcement.
o Health personnel, facilities and services.
o Levying of fees and charges by medical professionals and facilities.
o Quality assurance and control.
o Facilities and services.
o Drugs control.
o Alternative systems of medicine.
o Food and sanitation;
 Prevention and control of adulteration in food; and
 Monitoring & reporting upon safe drinking water supply and sanitation services.
o Devices and technology.
 Management Support Services.
o Health human resources planning.
o Health human resource development;
 Provision of quality medical and allied education;
 Pre-service training of support medical and health profession; and
 In-service training of health human resource.
o Health human resources management.
o Logistics and procurement
o Internal audit and accounting in the Health Department.
o Legal services:
 Propose medico-legal advice and litigation;
 Propose law review, amendment, formulation relating to Health Department; and
 Facilitate Law Department in litigation related to Health Department.
 Monitoring and evaluation.
o Generation of evidence:
 Performance assessment;
 Information and communication systems; and
 Health, Medical and allied research.
o Knowledge management for evidence based decision making.
 Co-ordination on health related matters.
o Ministries, Departments, Local and International Partners and donors.
Audit Profile of Health Department:

(Rs. in million)
321
Total
S. No. Description Audited Audited FY Audited FY
Nos
2022-23 2022-23
1 Formations 139 18 63,461 99
2  SDA 09 03 349.514 N/A
(Excluding FAP)
3 14 02 5,279 N/A
etc under PAO
4 Foreign Aided Projects (FAP) 02 02 795 N/A
was as follows:
Non-Development:
(Amount in Rs.)
Grant # and
Department
13-Health NC21 160,938,335,000 7610 0 46177048576 114,761,294,034 114,829,309,265 68,015,231
61- Heallt NC21 17,267,972,000 0 652,559,679 8,403,845,104 9,518,686,575 9,518,519,493 -167,082
Total 178,206,307,000 7,610 652,559,679 54,580,893,680 124,279,980,609 124,347,828,758 67,848,149
140,000,000,000
120,000,000,000
100,000,000,000
Amount in Rs.
80,000,000,000
60,000,000,000
40,000,000,000
20,000,000,000
0
Development: -20,000,000,000 13-Health 61- Health
(Amount in Rs.)
Grant # Final Grant Total Actual Expenditure Excess/ (Savings)
Department
322
NC-
54-Health
22/ 18,625,908,000 0 -263000000 611,348,715 62,369,285 62,369,285 0
Services
NC12
60- Health
N12 936,718,000 - -195,640,056 3,406,996 228,098,948 228,098,948 -
services
60- Health
NC22 29,403,000 - 0 14,719,118 14,683,882 26,211,283 11,527,401
services
Total 19,592,029,000 0 -458,640,056 629,474,829 305,152,115 316,679,516 11,527,401
250,000,000
200,000,000
Amount in Rs.
150,000,000
100,000,000
50,000,000
0
54-Health Services 60- Health services 60- Health services

(Rs. in million)
Non-Development 124,279.98 124,347.83 67.848149 0%

Development 305.15 316.68 11.527401 4%
Total 124,585.13 124,664.51 79.37555 0%
140,000.00
120,000.00
100,000.00
Rs. in million
80,000.00
60,000.00
40,000.00
20,000.00
0.00
It can be seen from the above variance analysis that the Developmental budget amounting to Rs.
277.09 million could not be Grant
Final utilized. This
Totalindicates inability of the Excess/(Savings)
Actual Expenditure department to utilize the available funds
323
in the best public interest and hence many of the planned activities could not have been achieved. On the
other hand, expenditure exceeded over the final budget.
12.1(C) Issues in Health Department
During audit of the Health Department, it was observed that projects were being initiated without
fulfilling basic objectives and spending funds on procurement of medicine, equipment and salaries without
proper need assessments. It was further revealed in many cases that hospital receipts were not deposited in
Government treasury. In some cases, these receipts were irregularly disbursed to Medical Superintendent
and other staff. Cases of irregular, doubtful, and wasteful procurement of machinery and other fixed assets
were observed in many cases. Cases of irregular and fraudulent award of contracts are also reported. It was
observed that taxes at prescribed rates were either not deducted from suppliers or were not deposited in the
Government treasury.

audit of Health Department. This amount also includes recoveries of Rs. 1,405.077 million as pointed out
Amount
(Rs. in million)
3 Irregularities
C Management of Accounts with Commercial Banks 6.544
5 Others 1,855.573
324
Amount Non production of record
(Rs. in million)
embezzlement and
misappropriation
196.133
Irregularities
938.057
irregularities
1855.573

Commercial Banks
949.07
264.917
delivery issues
6.544
Others

S. No.
Year Department actionable points Compliance compliance compliance
4. 2001-02 Health 31 21 - 10
5. 2002-03 -do- 18 14 - 04
6. 2003-04 -do- 11 06 - 05
7. 2004-05 -do- 42 11 - 31
8. 2005-06 -do- 12 06 - 06
9. 2007-08 -do- 18 05 - 13
10. 2008-09 -do- 16 07 - 09
11. 2009-10 -do- 23 12 - 11
12. 2010-11 -do- 19 07 - 12
13. 2011-12 -do- 33 18 - 15
14. 2012-13 -do- 14 09 - 05
15. 2013-14 -do- 46 23 - 23
16. 2014-15 -do 27 14 - 13
17. 2015-16 -do- 39 12 - 27
18. 2016-17 -do- 52 13 - 39
325
12.4 Audit Paras
12.4.1 Wasteful expenditure due to irrational HR management – Rs. 9.152 million
According to section 6.9.1.1 and 6.5.1.1 “Provision of human resource for Emergency and
BEmONC services” of the respective revised PC-Is of the projects “Strengthening of All BHUs across KP
and conversion of 200 BHUs into 24/7 SBA facilities” and “Rehabilitation of all RHCs across KP and
conversion of 50 RHCs into 24/7 facilities”; three LHVs and two female ward attendants (Aya) are proposed
to be provided to each BHU and RHC selected for conversion to 24/7 maternal and service delivery center.
While in addition to three LHVs and two Aya, two Medical Technicians (MT) will be provided to each
RHC selected for conversion into 24/7 service delivery center.
During audit of the accounts of Directorate General Health Services (DGHS) Khyber Pakhtunkhwa for
the Financial Year 2022-23, it was observed that the PMU of Primary Revamp Project paid Rs.192 million
in salaries under project policy to LHVs, Medical Technicians and Female Ward Attendant for 24/7 BHUs
and RHCs. However, as per appointment and placement record available with the PMU, a number of
deficiencies were noticed in HR management as listed below which resulted in wasteful expenditure of Rs.
9,152,000/- (Annexure-XVII).
1. Complete appointment was made only on 49 BHUs out of 179 BHUs

2. At 47 BHUs, only LHVs were hired and Female Ward Attendant (Aya) was not hired, hence full
24/7 functionality was not guaranteed. Furthermore, at 10 of these BHUs, only one LHV was hired
3. Not even a single LHV was hired for 78 out of 179 facilities, hence, 24/7 functionality of these
BHUs was not possible
4. At three facilities 4 Ayas were hired in Oct, 2022 without hiring LHV who are essential staff for
functionality of 24/7 facility resulting in wasteful expenditure on salaries of these Aya from Nov,
2022 to Jun, 2023
5. Similarly, at 17 RHCs intended for 24/7 conversion, no LHV was hired but three Ayas in Oct, 2022
and 33 MTs in Dec, 2022 were hired at these facilities which again resulted in wasteful expenditure
on salaries of these Ayas and MTs
6. Ayas were not appointed at 20 out of 47 RHCs which compromised full 24/7 functionality
7. Only one LHV was hired at 3 RHCs, however, 2 MTs were hired at each of these facilities
indicating unnecessary deployment of 3 MTs at these facilities.
The lapse occurred due to irrational HR management which resulted in wasteful expenditure.
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PDP No. 124 (2022-23)
12.4.2 Wasteful expenditure due to supply of medicine to unstaffed 24/7 facilities –

Rs. 56.580 million
According to Para 10(i) and 10 (ii) of the Financial Propriety standards defined in the GFR Volume
I; Every public officer is expected to exercise the same vigilance in respect of expenditure incurred from
public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money
and that the expenditure should not be prima facie more than the occasion demands.
During audit of the accounts of Directorate General Health Services (DGHS) Khyber Pakhtunkhwa
for the Financial Year 2022-23, it was observed that the PMU of Primary Revamp Project paid Rs.
44,025,383/- to various medicine suppliers against supplies of medicines made to DHOs for further
distribution to BHUs and RHCs and supplies made through TCS under the project during 2021-22. From
scrutiny of the Medicines delivery plan and LHVs, Aya and MT deployment record, it was noticed that the
medicines were supplied to the districts irrespective of the fact that staffing at most of the 24/7 BHUs and
RHCs facilities was not done and these facilities were not functional for 24/7 operations.
On test check basis scrutiny of the stock registers of DHOs submitted to the PMU in July and Aug,
2023 that most of the medicine supplied in early 2022 was still available on stock with the concerned DHOs.
The stock registers further revealed that supply to the facilities was also not done properly as some
functional facilities were not provided the required stock and other without staff were supplied with the
medicine thereby indicating that the medicine purchase and its distribution to the districts was done
irrespective of the status of the 24/7 functionality of the BHUs and RHCs. This unnecessary purchase and
supply of medicines resulted in wasteful expenditure of Rs. 56,585,651/- (Annexure-XVIII).
It is pertinent to mention that these medicines also included ones with expiry dates starting from
Jan, 2024. Moreover, the medicine and equipment liabilities of Rs. 413 million were outstanding against
the project.
The lapse occurred due to improper procurement management which resulted in unnecessary
expenditure and accumulation of outstanding liabilities.
Audit recommends to inquire the matter to fix responsibility against the persons at fault and to
make an assessment for informed decision making.
PDP No. 127 (2022-23)
12.4.3 Wasteful expenditure due to unnecessary supply of equipment – Rs. 9.824 million
327
I; Every public officer is expected to exercise the same vigilance in respect of expenditure incurred from
for the Financial Year 2022-23, it was observed that different equipment for establishment of labor rooms
in 24/7 BHUs and RHCs under the Primary Revamp Project was purchased and supplied during 2021-22.
On test check basis, the stock registers of some DHOs were scrutinized which were submitted to PMU by
these DHOs in July and Aug, 2023. From scrutiny of these stock registers, it was revealed that stock of
most of the equipment supplied in 2022 remained undistributed. This indicated that likewise medicine, the
equipment and disposables were also supplied irrespective of the 24/7 functionality status of the BHUs and
RHCs (in case of Kohat and Hangu). However, in case of Abbottabad, the equipment was not fully
distributed despite the fact that the quantity supplied was approximately in accordance with the 24/7
functional facilities. The irrational supply of equipment and unjustified retention of the stock by the DHOs
concerned resulted in wasteful expenditure of Rs. 9,824,053/- (Annexure-XIX).
The lapse occurred due to improper procurement management which resulted in unnecessary
expenditure and accumulation of outstanding liabilities.
Audit recommends to inquire the matter for fixing responsibilities against the person(s) at fault and
that the current position of the stock from all DHOs may also be inquired.
PDP No. 128 (2022-23)
12.4.4 Excessive supply of syringes due to improper stock management – Rs. 31.435 million
According to Section 4.9.1 and 4.9.3 of the National Immunization Policy 2022, each dose of
immunization is administered through auto disable syringe which should not be re-used.
for the Financial Year 2022-23, it was observed that the immunization across the province was carried out
under National Immunization Policy by the EPI cell. As per the National Policy all EPI vaccines were
procured at federal level on behalf of provinces as pool procurement system and further distributed to the
provincial levels according to share of the provinces. Procurement of vaccines was carried out on annual
basis through a forecasting process in consultation with provinces based on target population for each
vaccine, available balances, estimate coverage target, number of doses administered per target and wastage
multiplying factor. The federal government at source deducted Rs. 2.68 billion as cost of this procurement
from financial share of the province (NFC/FFC award) as intimated by Federal Directorate of
328
Immunization, Ministry of National Health Services vide letter F.No. 1-19/2018-19/OP/EPI dated 26-12-
2023.
The supplies were made from federal government warehouse to the provincial governments’
warehouses according to applicable stock retention policy. The provincial health administration then made
district level supplies for onward distribution to facility levels. However, from the vaccine and syringes
issuance data provided by the EPI cell and stock registers, it was noticed that 2.6 million syringes of 0.5 ml
and 5 ml were issued in excess of vaccination requirements, valuing Rs. 31,435,551/- (Annexure-XX)
according to MCC rates as the exact cost at which these were charged to Khyber Pakhtunkhwa by the
Federal Government were not provided.
Audit held that despite excess District level supplies, the EPI cell kept issuing these syringes from
opening stock and stock received from the federal government at the start of the current financial year 2023-
24 which meant that at District and facilities level, excess stock of Rs. 31.43 million was accumulated
during 2022-23 which increased the risk of theft and unauthorized sale of these syringes in the market.
The lapse occurred due to improper stock management by the provincial EPI cell which resulted
into excess supply of items.
Audit recommends to inquire the matter for ascertaining factual position.
PDP No. 113 (2022-23)
12.4.5 Loss to the government due to supply of syringes at higher rates – Rs. 18.480 million
According to Clause 23 of the GFR Vol-I, every government officer should realize fully and clearly
that he will be held personally responsible for any loss sustained by Government through fraud or
negligence on his part and that he will also be held personally responsible for any loss arising from fraud
or negligence on the part of any other Government officer to the extent to which it may be shown that he
contributed to the loss by his own action or negligence.
for the Financial Year 2022-23, it was observed that the immunization across the province was carried out
under National Immunization Policy by the EPI cell. As per the National Policy all EPI vaccines were
procured at federal level on behalf of provinces as pool procurement system and further distributed to the
provincial levels according to share of the provinces. Procurement of vaccines was carried out on annual
basis through a forecasting process in consultation with provinces based on target population for each
vaccine, available balances, estimate coverage target, number of doses administered per target and wastage
multiplying factor.
329
The federal government at source deducted Rs. 2.68 billion as cost of this procurement from
financial share of the province NFC/FFC award as intimated by Federal Directorate of Immunization,
Ministry of National Health Services vide letter F.No. 1-19/2018-19/OP/EPI dated 26-12-2023. However,
it was observed that the rates charged for different gauge auto disable syringes were higher than the rates
of the same items offered by MCC suppliers in Khyber Pakhtunkhwa. Hence, the syringes were purchased
at higher rates resulting in loss of Rs. 18,480,904/- to the provincial exchequer as detailed below;
Rate
KPK MCC
charged by Difference Quantities
S.# Type of Syringe 2021-22 Loss
Federal in Rate Supplied
Rate
Ministry
1 0.5 ml 13 12 1 17,067,500 17,067,500
2 2 ml 14 9.9 4.1 139,800 573,180
3 5 ml 13 9.92 3.08 272,800 840,224
Total 18,480,904
It is understood that immunization vaccines are imported and could not be sourced locally or
nationally, however, the Auto Disable Syringes are available from local and national MCC suppliers at
beneficial rates and it required that the same should be purchased locally at cheaper rate as approved in
MCC list.
The lapse occurred due to weak financial and internal controls which resulted into loss to the
government.
Audit recommends that the provincial EPI may take-up the case with Finance Department for
onward discussion with the Federal Finance Division that Provincial EPI may purchase syringes from local
suppliers and that Finance Department may ensure funding for the same.
PDP No. 114 (2022-23)
12.4.6 Loss due to non-adjustment of existing surplus medical staff within the same district – Rs.
30.080 million
I; every public officer is expected to exercise the same vigilance in respect of expenditure incurred from
During audit of the accounts of Directorate of Health Services Merged Areas Khyber Pakhtunkhwa
for the Financial Year 2022-23, it was observed that recruitment of 486 nurses, paramedics and LHVs was
done in FY 2021-22 under the AIP scheme “Provision of Nurses, LHVs Paramedics and Medical
330
Technologists” for filling the gap of quality medical professionals in Merged Districts. These professionals
were hired at Rs. 120,000/month fixed pay for Nurses and Rs. 80,000/month for the Paramedics and LHVs
and were paid salaries of Rs. 357.58 million in FY 2022-23.
From the Gap Analysis provided in the PC-, it was noticed that the a few of the health facilities in
the Merged Districts of Khyber, Bajaur, Kurram and North Waziristan were overstaffed, however, instead
of adjusting the existing surplus medical staff of these health facilities within the same District, recruitment
under the project was done for these districts as proposed in the gap analysis involving salaries of Rs. 30.08
million paid to the fixed pay hired staff (Annexure-XXI).
Audit held that with proper HR management and adjustment of existing staff, the need for fixed
pay hiring could have been reduced which have resulted in savings to the Government.
The lapse occurred due to improper HR management which resulted in loss of Rs. 30.080 million
to the Government.
PDP No. 169 (2022-23)
12.4.7 Overpayment on account of user charges of diagnostic services - Rs. 25.624 million
According to Finance Department Notification No. BOVI/FD/1-1/2011-12 dated 29-04-2013, at

least 50% of the amount recovered from the Diagnostic Services rendered to the patients will be kept in a
separate account w.e.f 1st May 2013 to be maintained especially for the maintenance and repair of equipment
of diagnostic services.
During audit of the accounts of Saidu Group of Teaching Hospital Swat for the Financial Year 2021-
22, it was observed that a sum of Rs. 142.326 million was realized from the patients on account of diagnostic
services (including laboratory services, X-Ray, E.C.G, CT Scan and Ultra Sound etc.). However, instead of
depositing 50% of the receipts in a separate bank account particularly operated for maintenance and repair
of equipment, the local office distributed doctors’ shares on full amount of receipts and thus overpaid Rs.
25,624,037/- to the staff.
The lapse occurred due to violation of Finance Department’s notification ibid which resulted into
overpayment to the hospital staff.
When pointed out in August 2022, no reply was furnished.
331
Audit recommends to recover the amount and conduct inquiry regarding violation of Finance
Department’s notification.
PDP No. 145 (2021-22)
12.4.8 Overpayment to house officers on account of monthly stipend - Rs. 11.083 million
According to Finance Department Notification No. FD (SOSR-II)2-5/2021/ House Officers

Allowance: dated 12.07.2021, monthly stipend for house officers enhanced from Rs.53,632/- per month to
Rs.64,358/- per month in Category-A hospitals, and from Rs.63,000/- per month to Rs. 75,600/- per month
in Category-B hospitals w.e.f 01.07.2021.
According to Health Department Notification No.6-39/Notification/SPO/PC/H/VOL dated 28th

April 2017, Saidu Group of Teaching Hospital Saidu Sharif falls under Category-A at S.No.13. The Health
Department Khyber Pakhtunkhwa vide letter No. SOB-II/HD/1-7/SGTH/Swat/2020-21 dated 11.10.2021
further clarified the admissibility of stipend for house officers @ Rs. 64,358/- p.m.
22, it was observed that the house officers were being paid Rs. 75,600/- per month as stipend instead of Rs.
64,358/- per month thus violating the government’s notifications and rules which resulted into overpayment
of Rs. 11,083,446/-.
The lapse occurred due to violation of government notifications which resulted into overpayment
to the house officers.
Audit recommends to recover the amount and conduct inquiry regarding violation of Finance and
Health Departments’ notifications under intimation to Audit.
PDP No. 146 (2021-22)
12.4.9 Unauthorized advance payment on account of supply of medicine -

Rs. 20.000 million
According to Rule 213 (5) of the General Financial Rules Volume-I, advance made for public
expenditure will be held under objection until a detailed account duly supported by vouchers is furnished
in adjustment of them. Read with Treasury Rule 290, no money shall be drawn from the treasury unless it
is required for immediate disbursement. It is not permissible to draw money from the treasury in anticipation
of demands or to prevent the lapse of budget grants.
332
22, it was observed that a sum of Rs. 20,000,000/- was paid to M/S Arshad Medical Store vide Cheque No.
37174387 dated 04.04.2022. The payment was made on the basis of an application wherein the contractor
had claimed to have supplied medicine of more than Rs. 50.000 million, that his bills were pending for
payments, and that for more supply of medicine, he needs a loan of Rs. 20.000 million. However, further
scrutiny of record revealed that no such pending bills were lying in the local office and that the contractor
was already paid for the previous year’s liabilities.
Moreover, the advance payment was made by the hospital management without any sanction power
being delegated to the Medical Superintendent in the approved Delegation of Powers 2018, nor was
approval for advance payment obtained from the Finance Department.
The lapse occurred due to misuse of authority by the hospital management which resulted into
unauthorized advance payment.
Audit recommends to recovery the amount along with market interest rate and fix responsibility
against the person(s) at fault.
PDP No. 149 (2021-22)
12.4.10 Illegal payment on loan bases to the contractor - Rs. 0.800 million
According to Rule 213 (5) of the General Financial Rules Volume-I, advance made for public
expenditure will be held under objection until a detailed account duly supported by vouchers is furnished
in adjustment of them. Read with Treasury Rule 290, no money shall be drawn from the treasury unless it
is required for immediate disbursement. It is not permissible to draw money from the treasury in anticipation
of demands or to prevent the lapse of budget grants.
22, it was observed that a loan of Rs.800,000/- was paid to M/S Zainul Abideen & Sons vide Cheque
No.03688182 dated 09.05.2022. Further scrutiny of the attached application of the person revealed that he
was the contractor of C&W Department and had no concern with the hospital funds.
Moreover, no work was assigned to the contractor by the hospital management.
The lapse occurred due to misuse of authority by the hospital management which resulted in illegal
payment.
333
Audit recommends to recover the amount along with market interest rate and fix responsibility
PDP No. 150 (2021-22)
12.4.11 Overpayment to contractor due to payment of items on MRS-2021 & 2022 instead of MRS-
2013 rates – Rs. 3.594 million
According to Para 89 (c) of the CPWD code and Para 19 (iv) of the General Financial Rules
Volume-I, the agreement with the contractors must be in writing and should be precisely and definitely
expressed; it should state the quantity and quality of the work to be done, the specifications to be complied
with, the time within which the work is to be completed, the conditions to be observed, and the terms upon
which the payments will be made and penalties exacted. The terms of a contract once entered into should
not be materially varied without the previous consent of the authority competent to enter into the contract
as so varied. No payments to contractors by way of compensation or otherwise outside the strict terms of
the contract or in excess of the contract rates may be authorized without the previous approval ct the
Ministry of Finance.
During audit of the accounts of Ayub Teaching Hospital (MTI) Abbottabad for the Financial Year
2022-23, it was noticed that contract for the “leftover work of Ayub College of Dentistry Abbottabad” was
awarded to M/S Badiuz Zaman at the cost of Rs. 114.66 million (36% above on MRS-2013 & 34% above
on NSI) vide contract agreement executed on 09-07-2021. A payment of Rs.76.474 million was made to
the contractor till 8th running bill paid vide V. No. K042304-00161 dated 17-04-2023.
The scrutiny of 8th running bill revealed that certain items were paid as per MRS-2021 and 2022
rates despite the fact that NIT, bidding process, bid evaluation and contract award was made on MRS-2013
with 36% premium on SI and 34% above on NSI. It is worth mentioning that once the contract is awarded
on the particular MRS with agreed premium, then the base of MRS cannot be changed, however, in the
instant case certain items were paid on MRS-2021 & 2022 rates which resulted in overpayment of Rs.3.59
million to the contractor as summarized below:
(Amount in Rs.)
Rate Rate due as
paid as per MRS
Item Excess
Item Nomenclature Qty paid per 2013 with Overpayment
code rate
MRS- 36%
2021 premium
03-45-a Trench excavation upto 1.25m depth 908.88 647.27 435.5264 211.7436 192,450
03-45-b Trench excavation 1.25m – 2.5m depth 908.87 846.97 569.7176 277.2524 251,986
03-45-c Trench excavation exceeding 2.5m depth 4684.92 1100.07 925.6976 174.3724 816,921
10-46-a P/F of Ceramic Tiles 23.95 1626.41 1597.0752 29.3348 703
16-64 Bailing out water by mech: means 10729 45.98 17.3944 28.5856 306,695
06-05-i PCC 1:4:8 84.43 9237.44 6610.4432 2626.997 221,797
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06-06-b- RCC in raft 96.82 16727.1 11650.3584 5076.742 491,530
02
06-07-b S/F Steel G-60 9.48 267000 162481.131 104518.9 990,839
06-38-b Formwork – Vertical 314.39 1159.44 582.284 577.156 181,452
06-38-a Formwork – Horizontal 57.11 1004.07 512.448 491.622 28,077
03-45-b Trench excavation 1.25m – 2.5m depth 329.83 910.72 569.7176 341.0024 112,473
Total 3,594,923
The lapse occurred due to non-fulfilment of the contractual obligations by the consultants and lack
of due diligence on the part of the management which resulted in overpayment to the contractor.
Audit recommends to recover the overpaid amount besides inquiring the matter for fixing of
responsibility and disciplinary action against the person(s) at fault.
PDP No. 35 (2022-23)
12.4.12 Loss to the government due to non-imposition of liquidated damages –

Rs. 11.660 million
According to Clause 9 and 11 of the contract agreement executed with M/S Badi Uz Zaman on
09.07.2021, the time for completion of the work is 06 months from the day of signing of the contract
agreement. In case of failure of the contractor to complete the work within the stipulated time, liquidated
damages @ 0.5% of the contract value for each week of delay shall be imposed but not exceeding 10% of
the total project cost.
2022-23, it was observed that contract for the “Leftover Work of Ayub College of Dentistry Abbottabad”
was awarded to M/S BadiuzZaman at the cost of Rs.114.660 million (36% above on MRS-2013 & 34%
above on NSI) vide contract agreement executed on 09.07.2021. A payment of Rs.76.474 million was made
to the contractor till 8thRunning Bill vide V. No. K042304-00161 dated 17.04.2023. However, further
scrutiny of record revealed that the contractor failed to complete the project within the stipulated period of
time i.e. 09.01.2022, but liquidated damages amounting to Rs.11.660 million (10%) were not imposed on
the contractor.
Moreover, the consultant i.e. M/S NESPAK being design and construction supervision consultants,
failed to fulfil their contractual obligations, as evident from the Dean / CEO AMC letter dated 20.12.2022
which stated that significant delay occurred in the project due to poor response of M/S NESPAK. However,
the Works Directorate failed to initiate any proceedings against the consultant under Clause 3.1 of the
consultancy contract which warranted that the consultants shall perform the services with all due diligence,
efficiency and economy and in accordance with generally accepted professional techniques and practices,
observe the sound management practices.
335
Furthermore, the hospital management failed to get revalidated the Performance Bank Guarantee
submitted by the contractor as the same was expired on 29.06.2022.
The lapse occurred due to non-fulfilment of the contractual obligations by the contractor and
consultants and non-enforcement of the contract clauses by the management which resulted in loss to the
government.
Audit recommends to inquire the matter for fixing of responsibility besides imposing/ recovery of
liquidated damages on the contractor and consultants as well.
PDP No. 37 (2022-23)
12.4.13 Double payment to contractors for the same executed work – Rs. 3.812 million
According to Rule 23 of the General Financial Rules Volume-I, every government officer should
realize fully and clearly that he will be held personally responsible for any loss sustained by government
through fraud or negligence on his part or on the part of his subordinate.
2022-23, it was observed that contract for the “Leftover Work of Ayub College of Dentistry Abbottabad”
was awarded to M/S Badi uz Zaman at the cost of Rs. 114.66 million (36% above on MRS-2013 & 34%
to the contractor till 8thRunning Bill vide V. No. K042304-00161 dated 17.04.2023, for the following items
of work;
S. No. Item Qty. Rate Payment (Rs.)
1 Supply, installation, testing & commissioning 1 3,500,000 3,500,000
of transformer
2 Transformer Earthing 2 jobs 156127.5 312,255
Total 3,812,255
However, M/S NESPAK the Design and Supervision consultants of the project, while submitting
the revised BOQ vide letter dated 08.12.2021, stated that the Transformer may be deleted from the BOQ as
the same has already been installed at back side of building. However, still payment was made for the
already executed items which resulted into double payment of Rs. 3.812 million.
Audit held that payment of items of work to the contractor which were already executed by the
original contractor despite clear instructions of the consultants was a serious lapse on the part of the
Directorate of Works.
The lapse occurred due to violation of rules and regulations which resulted into double payment.
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Audit recommends to recover the amount from the contractor and fix responsibility on the person(s)
at fault.
PDP No. 42 (2022-23)
12.4.14 Inadmissible payment to consultant for design work – Rs. 4.025 million
According to the New Works Policy containing instructions of the Provincial Government of KP
dated 25.06.2013, the consultant firms shall be engaged for all new civil works with categorization in large
and small categories costing Rs.250.00 million or more and costing less than Rs.250.000 million
respectively. Normal life of project shall be 2-3 years.
2022-23, it was observed that the contract for the “Leftover Work of Ayub College of Dentistry Abbottabad”
was awarded to M/S BadiuzZaman at the cost of Rs.114.66 million (36% above on MRS-2013 & 34%
to the contractor till 8th Running Bill vide Voucher No. K042304-00161 dated 17.04.2023.
Further scrutiny of record revealed that the project was initially awarded to M/S United Contractor
Belogram Swat in 2011. The said contractor completed the building structure work. However, the project
could not be completed due to non-availability of funds. The leftover work of the project was tendered and
awarded to M/S Badi Uz Zaman on 09.07.2021. The consultancy contract for the said work was awarded
to M/S NESPAK at the cost of Rs.10.642 million as per following breakup;
Contract Cost
S. No. Component
(Rs. in million)
1 Planning, Engineering Design, preparation of tender 4.025
documents etc
2 Construction Supervision 6.617
Total 10.642
Audit held that the instant contract was awarded to M/S Badi Uz Zaman for the leftover work of
the Ayub College of Dentistry as the structure was constructed in 2011 by M/S United Contractor. Hence,
no design work was involved rather only supervision of work was required. As such, payment of Rs. 4.025
million for design work was not admissible.
The lapse occurred due to unnecessary hiring of consultants which resulted in inadmissible
payment.
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Audit recommends to recover the design component payment from the consultant.
PDP No. 43 (2022-23)
12.4.15 Loss to the government due to non-imposition of penalty – Rs. 2.688 million
According to clause 8, 9 and 12 of the Contract Agreement executed on 26-01-2022 by the

management of ATH with M/S Rehman Construction Co. for the construction of CT Scan Site at Accident
and Emergency Department at ATH, Abbottabad, the contract was awarded at the cost of Rs.22.403 million
to be completed in 04 months i.e. till 26-05-2022. If the contractor fails to complete the project within the
stipulated time frame, penalty @ 0.5% of the total contract value for each week of delay shall be imposed
not exceeding 10% of the total project cost. The contractor within 07 days will submit the Insurance
Guarantee from schedule bank equivalent to 10% of the total contract. Failure to submit a Performance
Guarantee within prescribed period shall result into forfeiture of bid security and cancellation of contract.
2022-23, it was observed that the contract for the construction of CT Scan Site at Accident and Emergency
Department at ATH was awarded to M/S Rehman Construction Co. at the contract cost of Rs. 22.403
million vide work order No. 6095/DD-P/ATH dated 29.12.2021. A payment of Rs.8.650 million was made
to the contractor till June 2023.
Further scrutiny of the relevant record revealed that the project was due for completion till
26.05.2022, however, after elapse of 13 months after the time due for completion, only 38.6% progress was
made. However, the hospital management failed to impose penalty of Rs. 2.240 million (10%) in terms of
Clause 9 of the contract. The hospital management further failed to forfeit 2% bid security of Rs. 448,000
upon non-submission of PG within the stipulated time.
The lapse occurred due to mismanagement and carrying out of the development work without
feasibility study and site selection prior to commencement of work which resulted in loss of Rs.2.688
million to the government besides non-completion of the project.
Audit recommends to conduct a fact-finding inquiry by the Administrative Department for fixing
of responsibility and disciplinary action against the person(s) at fault besides recovery of liquidated
damages and forfeiture of bid security.
PDP No. 45 (2022-23)
338
12.4.16 Non-recovery of losses sustained by the government due to misuse of authority – Rs. 3.470
million
According to Rule 3 and 4 (1) (a) (iii) of the KP E&D Rules, the Authorized Officer or Authority,
as the case may be, while considering to impose any major or minor penalty on the accused, shall also
consider to impose a minor penalty of recovery of peculiar losses caused to Government by negligence or
by breach of order of the accused civil servant. the competent authority, after inquiry, dismiss or remove
such person from service, compulsorily retire him from service or reduce him to lower post or pay scale, or
recover from pay, pension or any other amount payable to him, the whole or a part of any pecuniary loss
caused to the organization in which he was employed or impose one or more minor penalties.
According to Para 28 of the General Financial Rules, no amount due to Government should be left
outstanding without sufficient reason and where any dues appear to be irrecoverable the orders of
Competc8t authority for their adjustment must be sought.
2022-23, it was observed from the scrutiny of the Personal Files that an inquiry committee was constituted
to probe the allegations of misuse of authority and loss to the government due to non-deposit of taxes in the
civil work contracts. After detailed inquiry proceedings and personal hearings, a Show Cause Notice was
served to Mr. Israr Jahangiri (Sub Engineer). Findings of the inquiry report and Show Cause Notice proved
that the official committed misuse of official position by issuing supply order to M/S Shabbir Tiles without
approval from the competent authority and having no record in the accounts branch, resultantly the
government sustained a loss of 16% Sales Tax as the same was responsibility of the contractor of Gynae/
Paeds Block. All the 04 allegations levelled against the official were upheld as per findings of the Inquiry
Committee and it was proved that 04 different statements were made by the officials.
Though the official was downgraded from Senior Scale Sub Engineer (B.16) to Sub Engineer
(B.11) on the recommendations of the inquiry committee, however recovery of loss of Rs. 3.470 million
was not made from the official.
The lapse occurred due to non-implementation of the recommendations of the Inquiry Committee
which resulted into loss to the government.
PDP No. 48 (2022-23)
339
12.4.17 Loss to the government due to purchase of medical equipment at higher rates – Rs. 71.590
million
According to DGHS KP letter No. 1432-1507/Proc:Cell dated 29-11-2022 addressed to all the
Public Sector Health Institutions of KP, the process of Selection & Rate Contracting under framework
agreement for the procurement of machinery, equipment, instruments & other hospital supplies for the year
2022-23 has been completed and approved. All the health institutions shall place supply orders of the
required items directly to the firms.
2022-23, it was observed that payment of Rs. 73.750 million was made to M/S Trade Creditors on account
of supply of 50 Dental Units with Chairs at the rate of Rs. 1.475 million per unit, instead of purchasing the
same from the DGHS approved CRC list for 2022-23 at the rate of Rs. 850,000/- offered by M/S Ideal
Business Products (S. No. 56) which resulted in loss of Rs. 30.000 million (Rs. 1,475,000 – 850,000 = Rs.
600,000 x 50 units).
Similarly, an amount of Rs. 50.260 million was paid to M/S MEDILAND Pakistan on account of
supply of HD Endoscopy System with Scopes vide Cheque No. 134629 dated 18.10.2022, instead of
purchasing the same from the DGHS approved CRC list for 2022-23 at the rate of Rs.8.670 million offered
by M/S Friends Traders (S. No. 10) which resulted in loss of Rs. 41.590 million (Rs. 50.260 million – 8.670
million).
The lapse occurred due to mis-procurement which resulted into a loss of Rs. 71.590 million to the
government.
Audit recommends to recover the amount and inquire the matter for fixing of responsibility against
the person(s) at fault.
PDP No. 49 & 50 (2022-23)
12.4.18 Loss to the government due to non-deduction of GST on supply of goods to the hospital –
Rs. 16.43 million
According to FBR letter No. CIR-WHT/Federal/Provincial Hospitals/F-13/2022/457 dated 08-02-

2022, since the exemption on supply of goods made or to be made to hospitals run by the Federal or
Provincial Government has been withdrawn through the Finance (Supplementary) Act 2022, w.e.f. 15 th
January 2022, therefore according to the provision of section 3(7) of the Sales Tax Act 1990 read with Rule
150ZZI of the Sales Tax Rules 2006, it is the responsibility a Withholding Agent (all hospitals run by the
Federal or Provincial Governments or teaching hospitals of statutory universities) to deduct amount of Sales
Tax
340
2022-23, it was observed that payment of Rs.96.670 million was made to various vendors on account of
supply of Machinery and Equipment items. However, general sales tax at the prescribed rate of 17%
amounting to Rs.16.430 million was not deducted from the vendors despite the fact that exemption of GST
was withdrawn by the Government through Finance (Supplementary) Act 2022, as summarized below;
Total
S. Cheque Name of Gross Net GST
Head of Account Deduction
No & Date Contractors/firms Amount Amounts Recoverable
I/T, SD
134629/ Mediland Pakistan PVT Equipment for
1 50,260,635 2,613,031 47,647,604 8,544,308
16/11/22 Ltd Various Department
103086/
2 Allied Distributors Anaesthesia 9,906,400 121,064 9,785,336 1,684,088
07/09/22
130647/ Medical Equipment &
3 Plant & Machinery 29,160,000 1,661,800 27,498,200 4,957,200
15/03/23 System
130494/
4 Fuji Film Pakistan Ltd X Ray Film 2,492,400 89,944 2,402,456 423,708
27/03/23
130856/ Eastern Medical
5 Plant & Machinery 4,850,000 274,750 4,575,250 824,500
03/04/23 Technology Services
Total 96,669,435 4,760,589 91,908,846 16,433,804
The lapse occurred due to non-implementation of the provisions of the Finance (Supplementary)
Act 2022 which resulted in loss to the government.
When pointed out in December 2023, the management replied that the above items were exempted
from GST on the basis of undertaking furnished by the supplier or paid GST at the import stage.
The reply was not convincing as the exemption from sales tax was withdrawn by the government
w.e.f. 15.01.2022.
Audit recommends to recover the sales tax amount.
PDP No. 51 (2022-23)
12.4.19 Unauthorized payment on account of IBP incentive – Rs. 98.290 million
According to Section 7(I) MTI Act 2015 compliance to Government policies and standards and in
case of any deviation from the agreed standards or procedure shall obtained prior approval from the
Government.
During audit of the accounts of MTI Khyber Teaching Hospital Peshawar for the Financial Year
2021-22, it was observed that an amount of Rs. 98.290 million was shown paid to the doctors as IBP
incentive, without any provision in the MTI Act 2015. Moreover, the staff also collected an amount of Rs.
171.370 million as IBP share.
341
Audit held that allowing and making payment on account of IBP incentive by the BOG without
prior approval from the Government and in violation of the MTI Act was a serious lapse.
The lapse occurred due to misuse of authority which resulted in unauthorized payment.
The department was requested vide letter dated 15.08.2023 followed by reminders dated
04.10.2023 and 22.12.2023 for holding DAC meeting. However, the DAC was not convened till finalization
of this report.
Audit recommends to recover the amount besides conducting a detailed inquiry and fixing of
responsibility on the person(s) at fault.
PDP No. 1427 (2021-22)
12.4.20 Unauthorized payment to contractor on account of non-BOQ items -

Rs. 31.665 million
According to clause 18(c)(v)(c)(d) of Khyber Pakhtunkhwa Public Procurement of goods, works

and services rules, 2014 "subject to the conditions of contract, a procuring entity may, issue a variation
order to a contractor to include works which were outside the original scope of works to ensure interests of
Government and for reasons of economy, compatibility and efficiency provided that the value of variation
order is not more than fifteen percent of the original contract and there may be more than one variation
orders as long as the total value of all the variation orders remains within 15 percent of the original
contract".
2021-22, it was observed that the work “Replacement of HVAC System by New Energy Efficient System”
was awarded to M/S DWP Technology with bid cost of Rs. 484.000 million vide Acceptance Letter dated
01.03.2018 with the completion period of 12 months. A sum of Rs. 32.930 million was paid to the contractor
up to 9th IPC vide Cheque No. 227333 dated 23.05.2022. Further verification of record revealed that the
contractor was allowed non-BOQ items costing Rs. 104,265,777/-, instead of Rs. 72,600,000/- (Rs.
484,000,000 X 15%) as the Hospital Director was authorized to sanction non-BOQ items up to 15% of the
contract cost, resulting into unauthorized payment of Rs. 31,665,777/-, as detailed below;
342
S.No. Description Unit price Total Total NON
quantity BOQ
1 Supply of single core pvc power cable 630 mm2 20.428 3165 64,653,967
2 Supply of single core pvc power cable 240 mm2 9.133 448 4,091,716
3 Supply of single core pvc natural cable 300 mm2 10.584 991 10,488,441
4 Supply of single core pvc natural cable 240mm2 9.133 185 1,689,659
5 Supply of single core pvc earth cable 300 mm2 10.584 1062 11,239,883
6 Supply of single core pvc earth cable 95mm2 3.761 185 695,820
7 GI trunking for E/Cable 30 x 8” 12.101 211 2,553,229
8 GI trunking for E/Cable 18 x 8” 9.773 331 3,234,900
9 Main LT panel -01 (floor standing unit) 3318111 33181111 3,318,111
10 Main LT panel -02 (floor standing unit) 2300051 2300051 2,300,051
Total payment allowed for non-BOQ 104,265,777
Amount permissible to be sanctioned by HD 72,600,000
Unauthorized payment 31,665,777
The lapse occurred due to misuse of authority which resulted into unauthorized payment to the
contractor.
of this report.
Audit recommends to recover the overpaid amount besides fixing of responsibility against the
person(s) at fault.
PDP No. 1432 (2021-22)
12.4.21 Loss to the government due to frequent changes in the specification of Cath Lab - Rs.
25.740 million
According to Rule 23 of the General Financial Rules Volume-I, every government officer should
realize fully and clearly that he will be held personally responsible for any loss sustained by government
through fraud or negligence on his part or on the part of his subordinate.
2021-22, it was observed that the contract for supply of Cath Lab was advertised on 20.01.2021 which was
cancelled so that the same may re-advertised as per Rule 48 of KPPRA Rules 2014 with some changes in
the specifications and terms & conditions of the supply. The contract was re-advertised the second time on
22.04.2021 and the contract awarded to M/S Friends Traders at the cost of USD 975,000/- in the month of
November 2021. The award letter for opening of LC was issued on 25.11.2021 and the purchase order was
placed on 09.12.2021 with time limit for supply of the item as of 90 days after opening of LC.
343
Accordingly, an amount of Rs. 194.178 million was paid to M/S Meezan Bank vide Cheque No.
225849 dated 21.03.2022, after four months of opening of LC. However, further scrutiny of record revealed
that a sum of Rs. 25.740 million was further paid to M/S Meezan Bank vide Cheque No. 228021 dated
13.06.2022 due to increase in the dollar rates from 181 to 205, which put extra financial burden on the
government kitty.
Audit held that due to delay in the purchase process, the government sustained a loss of Rs. 25.740
million in the form of extra financial burden.
The lapse occurred due to weak administrative controls which resulted in loss to the government.
of this report.
Audit recommends to recover the loss sustained besides conducting detailed inquiry into the matter
and fixing of responsibility on persons(s) at fault.
PDP No. 1437 (2021-22)
12.4.22 Loss to the government due to non-recovery of stipends from the resigned Trainee
Medical Officers - Rs. 8.878 million
According to Clause 3, 11 & 12 of the training agreements made between the TMOs and PGMI, if
the first party (TMO) leave the training incomplete due to termination, resignation, below 80% attendance
or does not pass the exit examination, he/she shall be liable to refund all the stipend amount including all
the financial benefits received from PGMI.
2021-22, it was observed that the following Trainee Medical Officers (TMOs) submitted their resignations
before completion of their trainings. However, the hospital management failed to make the necessary
recovery of the stipend amount from them, which resulted into a loss of Rs. 8.878 million, as detailed below;
344
S. No. Name Designation Date of Period of payment Amount
Resignation
1 Dr. Hamad Ahmed TMO 31.12.2021 1/2020 to 12/2021 1,713,050
2 Dr. Muhammad Hanif Khan TMO 01.08.2021 07/2019 to 08/2021 3,298,864
3 Dr. Saimabibi TMO 01.07.2021 1/2020 to 7/20221 1,577,016
4 Dr. ShujaurRehman TMO 01.02.2022 01/2021 to 02/2022 1,252,328
5 Dr. Umair Ahmed TMO 31.01.2022 01/2021 to 02/2022 1,037,149
Total 8,878,407
The lapse occurred due to non-adherence of rules which resulted into loss to the government.
of this report.
PDP No. 1438 (2021-22)
12.4.23 Loss due to Illegal/unauthorized and unjustified appointment of Nursing Director -

Rs. 6.432 million
According to Section 4(d) read with Section 8(d) of MTI KTH Regulations, the selection committee
will make its selection and recommendation based entirely on merit and in a fair and transparent manner.
2021-22, it was observed that the Nursing Director KTH was appointed illegally, as his selection was
declared illegal by a high-ranking inquiry committee constituted by the Chief Secretary KP on the directions
of the Honourable Chief Justice Supreme Court of Pakistan regarding illegal appointment case in MTIs in
Khyber Pakhtunkhwa. The committee further recommended affecting of recovery amounting to Rs. 6.432
million from the Nursing Director.
However, further scrutiny of record revealed that the hospital management failed to recover the
amount from the Nursing Director till date, resulting into a loss of Rs. 6.432 million to the government.
The lapse occurred due to mismanagement and non-observing of rules and regulations which
resulted in a loss to the government.
of this report.
345
Audit recommends to recover the amount pointed out by the inquiry committee at the earliest
besides fixing of responsibility on the person(s) at fault.
PDP No. 1447 (2021-22)
12.4.24 Loss to the government due to non-recovery of rent – Rs. 2.016 million
According to Clause 13 of the terms and conditions of the work order for car parking, pharmacy
and canteen, the contractual period will start from the date of inauguration / operationalization of the subject
hospital. All the associated civil work in this regard will be liable on the contractor’s side. Read with Rule
26 of the General Financial Rules Volume-I, it is the duty of the Departmental Controlling Officer to see
Public Account.
During audit of the accounts of Women and Children Hospital Rajjar Charsadda for the Financial
Year 2021-22, it was observed that the contract for running the car parking, pharmacy and canteen was
awarded to M/S Said Alam vide Work Order dated 22.05.2017. The hospital was inaugurated and properly
operationalized with effect from July 2021. However, the hospital administration could not start recovery
of the rent from the contractor on account of the aforementioned facilities, which resulted into a loss of Rs.
2,016,993/-, as detailed below;
S. No. Facility Rent Months Amount
1 Car parking 70,888 11 779,768
2 Pharmacy 91,375 11 1,005,125
3 Canteen 21,100 11 232,100
Total 2,016,993
01.01.2024 for holding DAC meeting. However, the DAC was not convened till finalization of this report.
PDP No. 324 (2021-22)
12.4.25 Loss to the government due to non-recovery of outstanding dues -

Rs. 7.096 million
According to Work Order No. 1060, 1061 and 1062 dated 23.03.2020, the contract for Canteen,
Car Parking and PCO was awarded to the contractor on the condition that rent will be paid till the 5th of
each month in advance.
346
During audit of the accounts of District Headquarter Teaching Hospital MTI Bannu for the
Financial Year 2021-22, it was observed that a sum of Rs.7.096 million was outstanding against M/S Super
Saddat Construction Contractor on account of rent of Car Parking, Canteen and PCO for the period
01.03.2020 to 30.11.2022, after allowing 90% discount for the period of 9 months by the Chairman BOG
MTI w.e.f 01.5.2020 to 28.02.2021, as detailed below;
Monthly Period Discount (90%) Outstanding
Description Gross amount
Rent (Months) (for 9 Months) Amount
1 2 3 4 (2X3) 6 (2X90%X9) 7 (4-6)
Car Park 130,000 33 4,290,000 1,053,000 3,237,000
Canteen 130,000 33 4,290,000 1,053,000 3,237,000
PCO 25,000 33 825,000 202,500 622,500
Total 7,096,500
However, the hospital management failed to recover the amount from the contractor which resulted
into a loss of Rs. 7,096,500/- to the government.
Audit recommends to recover the amount besides fixing of responsibility against the person(s) at
fault.
PDP No. 1096 (2021-22)
12.4.26 Unauthorized payment due to purchase of medical gas equipment’s beyond the
required scope - Rs. 7.060 million
According to the SBD’s for the supply and installation for medical gas pipeline system, the required
capacity of Medical Compressed Air Station, FAD at 10Bar was 1400 L/min. Read with the Director
General Health Services Tentative Comparative Statement for Central Oxygen Supply system shared under
the emergency clauses of KPPRA Act & Rules in compliance to Rule 45 of KPPRA Rules 2014 to ensure
more transparency and equity in the bidding process. The following tentative rates were offered by M/S
Total Technologies for the mentioned medical gas related equipment’s;
Equipment / Machine Model/Make Amount
Medical Compressed Air Station G11, Beaconmedaes 4,190,000
During audit of the accounts of Bacha Khan Medical Complex (MTI) Swabi for the Financial Year
2021-22, it was observed that the contract for supply and installation of Medical Gas pipeline system was
awarded to M/S Total Technologies at the cost of Rs. 4,190,000/-. The specifications of the system were
“Medical Compressed Air Station, FAD at 10 Bar was 1400 L/min. Accordingly, M/S Total Technologies
offered Beaconmedaes Compressed Air Station Model G11 MED, with capacity of 1458 L/min at 10 Bar
output flow”.
347
However, further scrutiny of record revealed that the purchase order was placed for Model G22
MED having capacity of 3180 L/min at 10Bar output flow but with increased cost of Rs. 11,250,000/- which
resulted in unauthorized payment of Rs. 7,060,000/- (Rs. 11,250,000 – 4,190,000).
Moreover, the original financial bid of the firm was not available on record as well.
Audit held that purchase of the system with enhanced scope was not only deviation from the
approved specification/ABD’s/Requirement but also needs technical assessment as to whether upgradation
of one component in the whole system/package will affect the functioning of the whole compressed air
station due to compatibility issues or otherwise.
The lapse occurred due to violation of the standard bidding documents which resulted in
unauthorized payment.
Audit recommends to conduct inquiry in the matter for fixing of responsibility against the person(s)
at fault.
PDP No. 649 (2021-22)
12.4.27 Loss to the government due to non-recovery of outstanding dues from pharmacy
contractor – Rs. 13.034 million
According to Para 20 & 28 of the General Financial Rules, it is the duty of the departmental
Controlling officers to see that all sums due to Government are regularly and promptly assessed, realized
and duly credited in the Public Account. No amount due to Government should be left outstanding without
sufficient reason.
During audit of the accounts of Bacha Khan Medical Complex (MTI) Swabi for the Financial
Year2021-22, it was observed that the contract for establishment of pharmacy on public private partnership
basis in the Complex was executed with M/S Super Decent Trading on 03.01.2018 for a period of 10 years.
However, further scrutiny of record revealed that an amount of Rs. 18.213 million was outstanding
against the contractor on account of building rent, hospital share and utility charges, out of which Rs.5.179
million was recovered while the rest of the amount i.e. Rs.13.034 million remained outstanding till date.
The lapse occurred due to non-enforcement of the contract provisions which resulted in loss to the
government.
When pointed out in May2023, no reply was furnished.
348
Audit recommends to recover the amount of Rs. 13.034 million from the contractor.
PDP No. 651 (2021-22)
12.4.28 Unauthorized retention of residential accommodation after 10 years of retirement –

Rs. 3.600 million
According to Section 17 & 27 of the Khyber Pakhtunkhwa Residential Accommodation Rules at

Peshawar 2018, anallottee, upon his retirement, may retain the allotted residential accommodation for a
grace period of maximum six months from the date of his retirement, on payment of normal rent. Within
fortnight of the retirement, the allottee shall be responsible for reporting any such change to the Estate
Office. Where an allottee fails to report such a matter to the Estate Office, within stipulated time, his
allotment shall be cancelled, immediately, and a penalty, at the rate of rupees one hundred (100) per day
and charging of market rent for such intervening period shall be charged.
During audit of the accounts of District Head Quarter Hospital Wana South Waziristan for the
Financial Year 2021-22, it was observed that an Ex-SWMO retired from service about 10 years ago, as
evident from the allotment list of residential bungalows within the hospital premises. The concerned doctor
was entitled to retain the accommodation till 6 months of his retirement upon payment of normal rent.
However, the occupant neither vacated the residential bungalow after lapse of 10 years nor deposited the
rent at market rate amounting to Rs. 3.600 million approximately (Rs.30,000 X 12 months x 10 years).
Furthermore, the management was required to refer the matter to C&W Building Division, South
Waziristan to assess the actual market rent for recovery along with utility charges but no such steps were
taken by the management.
The lapse occurred due to weak administrative controls which resulted in unauthorized retention of
government accommodation.
Audit recommends to recover the amount besides conducting inquiry into the matter for fixing of
responsibility against the person(s) at fault.
PDP No. 634 (2021-22)
12.4.29 Overpayment due to non-deduction of conveyance allowance - Rs. 2.851 million
349
According to the judgment of Peshawar High Court circulated by Finance Department vide their
letter No. FD(SOSR-II)/8-52/2013 dated 02-04-2013, Govt servant provided with Govt residential
accommodation situated within their work premises are not entitled to conveyance allowance.
During audit of the accounts of District Head Quarter Hospital Wana South Waziristan for the
Financial Year 2021-22, it was noticed that residential accommodations were allotted to the various doctors,
nurses and technicians etc. within the hospital premises. However, conveyance allowance at the prescribed
rate was not deducted from the pay bills of these employees, which resulted into overpayment of Rs.
2,851,632/- (Annexure-XXII).
The lapse occurred due to weak financial controls which resulted in overpayment to the staff.
PDP No. 635 (2021-22)
12.4.30 Fraudulent withdrawal of medicine on fake patient’s IDs from patients of SSP – Rs.
4.882 million
According to Rule 23 of GFR Vol-I, every government officer should realize fully and clearly that
he will be held personally responsible for any loss sustained by Government through fraud or negligence
on his part or on the part of his subordinate.
During audit of the accounts of Qazi Hussain Ahmad Medical Complex MTI Nowshera for the
Financial Year 2021-22, it was observed that the contract of supply of medicine of the SSP patients was
awarded to Muhammad Pharmacy. The claims of Muhammad pharmacy were made on the patients visit
IDs. For verification the patient’s visit IDs were cross matched with the real time data provided by the State
Life Insurance Company (SLIC). Audit observed that in many cases the IDs were not traced in the patient’s
data of SLIC. For verification the list of untraceable IDs were provided to the hospital management for its
verification from HMIS, but these could not be verified till finalization of this audit. However, on sample
basis some of the cases were checked by the audit personally on HMIS but could not be traced. Moreover,
in some cases duplicate claims were also made on single patients visit ID.
Audit held that there was no control/verification mechanism over the claims of provision of
medicine by the Mohammad Pharmacy. Medicine were shown as issued to patients who never visited the
hospital as their record was not available in the data of SLIC and HMIS of QHAMC.
The cases were pointed out physically on sample basis. Despite repeated requests the data was not
provided in soft form for detail analysis. If the data were provided in soft form, more fake cases would have
been identified.
350
The lapse occurred due to weak verification mechanism of the claims of and extending undue
favour to the pharmacy which resulted in fraudulent withdrawal of funds.
Audit recommends to investigate the claims made by M/S Mohammad Pharmacy, inquiring the
matter and fixing of responsibility on the person (s) at fault.
PDP No. 1033 (2021-22)
12.4.31 Loss to the government due to non-recovery of hospital dues - Rs. 4.851 million
Para 26 of G.F.R Vol-I, it is the duty of the Departmental Controlling Officer to see that all sums
due to government are regularly and promptly assessed, realized and duly credited in the Public Account.
During audit of the accounts of Qazi Hussain Ahmad Medical Complex MTI Nowshera for the
Financial Year 2021-22, it was observed that a sum of Rs. 4,851,402/- was outstanding against the tenants
till date of audit, as detailed below;
S# Amount Due From Description Sub Total Total
Electricity bill 13,034
18,134
1. Photostate Shop Arrears 5,100
774,346
2. Cath Lab Arrears 653,734
3. New Hostel Electricity bill 366,608 366,608
444,070
4. Pharmacy-I Arrears 268,776
5. Canteen-I Electricity bill 295,602 295,602
6. Canteen-II Electricity bill 90,402 90,402
2,862,240
7. MRI-CT Scan Arrears 2,487,750
Total 4,851,402
However, the hospital management failed to recover these dues from the tenants. This amount
represents a long outstanding due that requires immediate attention and recovery.
351
PDP No. 1067 (2021-22)
352
12.4.32 Loss to the government due to excess withdrawal of Health Professional Allowance –
Rs. 22.848 million
According to Finance Department Notification No. FD(SOSR-11)8-18/2017 dated 23.02.2017, the

Governor of Khyber Pakhtunkhwa has been pleased to extend the incentive package regarding enhancement
of Health Professional Allowance for the following cadre of doctors working as institutional employees in
Medical Teaching Institutions (MTIs) in Khyber Pakhtunkhwa excluding Civil servants as per the rates
noted against each w.e.f. 01/01/2017:
 Professor, AP, Assistant Professor and SR Rs. 60,000/-
 Demonstrators & Lecturers Rs. 42,000/-
 District Specialists (Non attractive) Rs. 80,000/-
 District Specialists (Attractive) Rs. 60,000/-
 MO, Dental Surgeon, Assistant Anesthetist, JR Rs. 42,000/-
During audit of the accounts of Nowshera Medical College Nowshera for the Financial Year 2021-
22, it was observed that a sum Rs. 84,055,832/- was paid on account of Health Professional Allowance.
However, further scrutiny of record revealed that the rate of HPA for Medical Officers, Health Managers
and District Specialist was increased by the Finance Department vide notification dated 12.07.2021, and on
the analogy of this increase, the College also increased the HPA for its teaching staff in accordance with the
scales of Medical Officers, Health Managers and District Specialist, as detailed below:
Designation Enhanced Rate
Professor 88,000
Associate Professor 88,000
Assistant Professor 88,000
Demonstrator & Jr. Regis;trar 65,000
Audit held that as the notification for increase in the rate was only for the Medical Officers, Health
Managers and District Specialists not for the teaching staff of the institute, and that the teaching cadre of
the college was also entitled to Basic Science Teaching Allowance which was up to Rs. 57,000/- for
professors, thus the withdrawal of Health Professional Allowance at the rates of Medical Officers, Health
Managers and District Specialists was against the rules and as such an amount of Rs. 22,848,000/- was
overpaid to the health professionals from BPS-17 to BPS-20 in the College.
The lapse occurred due to weak internal controls which resulted into a loss to the government.
When pointed out May 2023, no reply was furnished.
PDP No. 1022 (2021-22)
353
12.4.33 Loss to the hospital funds due to non-imposition of penalty for late supply of
machinery & equipment’s - Rs. 3.920 million
According to the General Condition of contract agreement, penalty @ 1% per day up to maximum
of 10% of the total cost will be imposed on the contract in case of delay on the part of contractor beyond
the stipulated time period.
During audit of the accounts of District Headquarter Hospital (MTI) D.I. Khan for the Financial
Year 2021-22, it was noticed that supply order for the purchase and supply of Neuro Endoscopy Surgery
set was placed to MS Allmed Solutions Karachi vide No. 9233 dated 26.10.2021 at the cost of Rs. 32.900
million with the delivery period of 30 days. Further scrutiny of record revealed that the supplier/contractor
failed to comply with the agreement and the equipment was supplied on 05.04.2022. However, neither
penalty at the prescribed rate amounting to Rs. 3.290 million was recovered from the supplier/contractor
nor the extension of period was approved by the BOG/MC which resulted into a loss of Rs. 3.290 million
to the hospital.
The lapse occurred due to weak internal controls which resulted into loss to the hospital funds.
PDP No. 1263 (2021-22)
12.4.34 Loss to government due to non-recovery of car parking rent - Rs. 8.107 million
The para-8 of GFR Vol-I provides that it is the duty of the Revenue or Administrative Department
concerned to see that the dues of Government are correctly & promptly assessed, collected & paid into the
treasury.
During the audit of accounts of District Headquarter Hospital (MTI) D.I. Khan for the Financial
Year 2021-22, it was noticed that the auction committee awarded the contract of car parking to M/S Multi
vision @ Rs. 700000 per month (without tax) with the condition of advanced payment for two months. The
contractor neither deposited the advance payment of two month nor the car parking rent for the subsequent
nine months which resulted into a loss to the hospital for Rs. 7.700 million.
Audit held that non-recovery of outstanding rent for such a long period and huge amount was not
possible without the involvement of the hospital administration.
Moreover, the car parking monthly rent of Rs. 407,786 against MS Asraf Khan for the month of
June 2022, has not yet been deposited and remained outstanding.
354
The lapse occurred due to weak internal controls which resulted into loss of
Rs. 4,107,786/- to the government.
PDP No. 1264 (2021-22)
12.4.35 Loss to the government due to non-recovery of room rent and utility charges - Rs.
7.920 million
According to Para 28 of GFR Vol-I, no amount due to Govt. should be left outstanding without
sufficient reason and where any dues appear to be irrecoverable the orders of the competent authority for
their adjustment must be sought.
During audit of the accounts of District Headquarter Hospital (MTI) D.I. Khan for the Financial
Year 2021-22, it was noticed that a total of 36 Nos. of different TMOs / Doctors / MOs were residing in the
hostels of the DHQ but neither room rent and utility charges recovered from the occupants nor any formal
admission fee or allotment fee have been recovered since long despite the fact that each room has its own
air condition which resulted into non recovery of Rs. 7.920 million (36*10,000*22). However, the
management committee vide officer order No. 7184-93 dated 20.08.2021 ordered a flat rate of utility
charges from the paramedical staffs @ Rs. 10,000 per month and TMOs/MOs/HOs of Rs. 15,000 per month
which was implemented in the case of paramedical staff and deduction is being made from their monthly
salaries while no recovery from the doctors/TMOs/MOs were made till the date of audit. Similarly, 127
Nos. of TMOs / Doctors / Mos / Hos were residing in 77 rooms of MMTH D.I. Khan hostels but neither
the utility charges recovered from the occupants nor any formal admission fee or allotment fee have been
recovered since long.
Moreover, neither the private rooms occupied by the doctors were vacated despite clear directives
of the BOG nor the relevant record was provided to audit for verification.
The lapses occurred due to weak internal controls which resulted into loss to the government.
PDP No. 1266 (2021-22)

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12.4.36 Wasteful expenditure on account of salaries of contract staff - Rs. 51.540 million
According to monthly payroll for the month of June 2022, a sum of Rs. 4,070,256/- was paid to
contract staff.
During audit of the accounts of Health Foundation Khyber Pakhtunkhwa Peshawar for the Financial
Year 2021-22, it was observed that 26 Nos. contract staff was appointed during November 2021 to
March2022 on different positions. Further scrutiny of record and payroll revealed that these contract staff
were appointed on competitive and high pay packages, as detailed below;
S. No. of Monthly Annual
Designation
No. position pay pay
1 Director Internal Controls 1 345,000 4,140,000
2 Director (Projects) 1 350,000 4,200,000
3 Director Procurements 1 345,000 4,140,000
4 Director Contract Management 1 350,000 4,200,000
5 Deputy Director M&E 1 230,000 2,760,000
6 Deputy Director Accounts 1 170,000 2,040,000
7 Financial Analyst 2 250,000 6,000,000
8 Deputy Director Program 1 250,000 3,000,000
9 Assistant Director Accounts 1 125,000 1,500,000
10 Assistant Director Internal 2 125,000 3,000,000
Controls
11 IT Officer 1 100,000 1,200,000
12 Procurement Officer 2 100,000 2,400,000
13 M&E Officer 1 100,000 1,200,000
14 Project Officer 9 100,000 10,800,000
15 HR Assistant 1 80,000 960,000
Total 26 4,295,000 51,540,000
These contract staff are paid monthly pay package of R.s 4.295 million and Rs. 51,540,000
annually. But on the other hand, the foundation generated annual income of Rs. 16.040 million which
includes profit on investment of Rs. 14.110 million, an effort free income, therefore, Health Foundation has
its own net income of Rs. 1.931 million (Rs. 16,040,120 – 14,109,620).
Audit held that payment of Rs. 51.540 million during the financial year on account of pay and
allowances to the contract staff at the time when the Foundation generated a net income of Rs. 1.931 million
was nothing but extra financial burden on the foundation’s resources.
The lapse occurred due to financial mismanagement which resulted into wasteful expenditure.
When pointed out in May2023, no reply was furnished.
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Audit recommends to work out and re-consider the actual need of contract staff and bring it to
affordable level to minimize the recurring loss to the foundation’s fund.
PDP No. 1342 (2021-22)
12.4.37 Wasteful expenditure on repair of imported MP Lifts - Rs. 3.955 million
According to Clause 1 (e) of Chapter 3 of MTI Bannu Regulations dated 23.03.2017,

(Responsibilities of Hospital Director), that the Hospital Director is to act as the principal accounting officer
who shall be responsible and accountable for maintaining the financial discipline and transparency in MTI
Bannu. Read with responsibilities of the Finance Director, that he will advise the Hospital, Additional
Hospital and Medical Directors and the Dean on all financial matters, ensuring transparency and fiscal
probity.
During audit of the accounts of MTI Khalifa Gul Nawaz Teaching Hospital Bannu for the Financial
Year 2021-22, it was noticed that an agreement was executed with M/S AXCETECH Engineering for repair
of two numbers of MP Lifts in the hospital and awarded the work vide work order dated 21.10.2020 at a
bid price of Rs. 5.650 million to be completed in six months. Further scrutiny of record revealed that the
firm was allowed 70% payment amounting to Rs. 3.955 million on 23.02.2022 upon delivery of various
BOQ items/lift parts. But till date of audit neither the repair work was completed nor the lifts were
functionalized to facilitate the patients in the hospital.
Moreover, the warranty period of 3 years of the Lifts was almost expired before installation and
operationalization of the same.
Furthermore, the hospital management failed to impose liquidated damages upon the contractor for
late completion of the works as well.
The lapse occurred due to weak internal controls which resulted into wasteful expenditure.
When pointed out in June2023, no reply was furnished.
Audit recommends to inquire the matter at appropriate level for fixing responsibility and effect
recovery from the quarters concerned.
PDP No. 1497 (2021-22)
12.4.38 Loss to the hospital funds due to investment of funds without inviting rates - Rs. 3.564
million
According to Finance Department letter No. 2/3(F/L)FD/2016/Vol-X dated 07.011.2017, the

Government Departments should place/keep their funds with maximum of three banks having credit rating
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‘A’ in future. All heads of Government / Offices / Autonomous / Semi-Autonomous Bodes / Corporation
are hereby advised to ensure strict compliance with the above instructions of the Government in letter and
spirit.
During audit of the accounts of Bannu Medical College Bannu for the Financial Year 2021-22, it
was observed that a sum of Rs. 360.000 million was invested in BoK IBB Gowshala Branch at markup rate
of 7.00% for a period of one year. Further scrutiny of record revealed that the BoG in its 33 rd meeting held
on 09.08.2021, accorded approval for investment of the reserve funds of the College at 7.00% for one year
in Bank of Khyber without inviting markup rates from other commercial banks.
Audit held that the funds were invested on 01.09.2021 at markup rate of 7% per annum for one
year whereas KIBOR markup rate for investment of funds on 30.06.2021 was 8.08% for one year, meaning
thereby that the college sustained a loss of Rs. 3.890 million as detail below:
Markup earned on investment of funds @ 7% P.A = Rs. 25.200 million

Expected Markup if investment made at KIBOR rate 7.99% P.A = Rs. 28.764 million
Loss due to investment of funds at lesser rate = Rs. 3.564 million
The lapse occurred due to financial mismanagement and non-adherence to the Finance
Department’s instructions which resulted into loss to the hospital funds.
When pointed out in June2023, no reply was furnished.
Audit recommends to inquire the matter for fixing responsibility against the person(s) at fault.
PDP No. 1537 (2021-22)
12.4.39 Unauthorized payment on account of sub-standard medicines / disposables - Rs 1.185

million
According to Clause 6 of the Government’s MCC contract agreement, the purchasing agencies
shall arrange to obtain sample from each batch of the supplied drugs/medicines through notified Drug
Inspector concerned and send to the concerned Drug Testing Laboratory for Test/analysis as provided in
the Drug Act 1976. The supplied drugs/ medicines declared in contravention to any provision of the Drug
Act 1976 shall be re-supplied by the supplier within 07 days from the date of intimation to the supplier, free
of cost.
During audit of the accounts of District Headquarter Hospital Dir Upper for the Financial Year
2021-22, it was observed that expenditure of Rs. 1,185,800/- was incurred on purchase of disposables and
medicines, as detailed below:
S. No. Item Supplier Rate Qty Amount
1 IV Cannula G24 M/S Hashier Surgical Services 48.90 12000 586,800
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2 Disposable Syringe M/S Silver Surgical Complex 5.99 100000 599,000
5ML
Total 1,185,800
Further verification of DTL reports revealed that the disposables were declared as substandard by
the drug testing laboratory, whereas the local office paid the amount to the supplier instead of initiating
action against him.
The lapse occurred due to violation of the contract agreement which resulted into unauthorized
payment.
01.01.2024 for holding DAC meeting. However, the DAC was not convened till finalization of this report..
PDP No. 1362 (2021-22)
12.4.40 Overpayment to the staff on account of user charges - Rs. 1.229 million
As per Finance Department Notification NO.BOVI/FD/1-1/2011-12 dated 29.04.2013, read with

Health Department letter No.SOB-I/HD/1-25/2015-16/PAC/VOR dated 21-06-2021 “50% of the amount
recovered from diagnostic services rendered to the patient will be kept into separate account to be
maintained specifically for the maintenance and repair of equipment. This fund will only be utilized for the
said purpose and no other.
As per Health department notification dated 13.04.2005, user charges after deduction of 05% cost
of the material and 05% depreciation charges shall be distributed as under:
i. Govt Share 60%
ii. Doctors share 25%
iii. Paramedics share 10%
iv. Administrative share 02%
v. Repair expense 03%
During audit of the accounts of District Headquarter Hospital Dir Upper for the Financial Year
2021-22, it was observed that an amount of Rs. 2,766,003/-was paid to doctors and other staff on account
of user charges (receipts from diagnosing services) as detail given below;
Share Paid Required Difference
Doctor 1,868,921 1,038,289 830,632
Paramedics 747,568 415,316 332,253
Admn 149,514 83,063 66,451
Total 2,766,003 1,536,668 1,229,335
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Audit observed that an amount of Rs. 1,536,668/- was required to be paid to the staff on account of
user charges, whereas the hospital management paid Rs. 2,766,003/-which resulted into overpayment of
Rs. 1,229,335/-
The lapse occurred due to weak internal and financial controls which resulted into overpayment to
the staff.
Audit recommends to recover the excess paid amount.
PDP No. 1363 (2021-22)
12.4.41 Irregular awarding of contract for supply of incinerator - Rs. 20.600 million
According to Para 23 of GFR Vol-I, every government officer should realize fully and clearly that
he will be held personally responsible for any loss sustained by government through fraud or negligence on
his part or on the part of his subordinate.
According to para 12 (v) of contract agreement, in case of late delivery of goods beyond the periods
specified in the schedule of requirements and subsequent purchases order, a penalty @ 0.067% per day of
the cost of late delivered supply shall be imposed upon the supplier.
During audit of the accounts of King Abdullah Teaching Hospital Mansehra for the Financial Year
2021-22, it was observed that contract for supply and installation of incinerator was awarded to M/S IBPS
Pharmaceuticals vide purchase order dated 10.07.2021 at the cost of Rs. 20,600,000/-. Further scrutiny of
record revealed that the bids of the competing three firms were rejected on the ground that they failed to
provide CE certificate, whereas the same were available in their proposals.
Moreover, the inspection committee in their report dated 30.12.2021 found that installation of the
machine was not as per purchase order, which was also identified by the inquiry committee, as detailed
below;
 06 Nos of exhausts and 06 Nos of windows were replaced with AC.
 Wood doors were installed instead of iron doors.
 Drain house for washing and cleaning was not constructed.
 Water sewerage/drainage system including boring was not done.
 Ash duping pit with SS cover is missing.
 Trolly washing area with air compressor and washing facility was not available.
 Drive way and landscaping
 Bricks of the wall fallen after 4th process of burning after which the plant was closed
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 Civil work was done without BOQ/MB
The lapse occurred due to weak internal controls which resulted into irregular awarding of contract.
Audit recommends to investigate the matter for fixing responsibility on person(s) at fault.
PDP No. 1121 (2021-22)
12.4.42 Fraudulent withdrawal of funds on account of purchase of medicine -

Rs. 3.930 million
According to Para 23 of GFR Vol-I, every government officer should realize fully and clearly that
During audit of the accounts of District Head Quarter Hospital Batkhela for the Financial Year
2021-22, it was observed that expenditure the tune of Rs.3,930,800/- was incurred on purchase of medicines
as per details given below;
S. No. Supplier Product Name Amount
1 Astellas Pharmaceutical Astelabect 2 GM (Inj) 1,955,400
2 Astellas Pharmaceutical Astetaxm 250 MG (Inj) 297,700
3 Astellas Pharmaceutical Astexone 500 MG (Inj) 357,700
4 Arsons Pharmaceutical Adhesive (paper ) tape 1,320,000
Total 3,930,800
Further verification of record revealed that medicines at S. 1, 2 & 3 was manufactured in the month
of December 2021 as per invoice, whereas it was received in the hospital on 27-10-2021 in two months’
advance before the manufacture. Similarly, item at S. No. 4 was purchased from Arsons Pharmaceutical by
the local office whereas delivery challan attached with the bill is addressed to Hayatabad Medical Complex
Peshawar. The delivery challan was signed along with date by the official of the local office. Audit therefore
held that the same was misappropriated by the dealing hands.
The lapse occurred due to weak internal controls which resulted into fraudulent withdrawal of
funds.
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Audit recommends to recover the amount besides investigating the matter and fixing responsibility
on person (s) at fault.
PDP No. 673 (2021-22)
12.4.43 Overpayment to doctors on account of user charges - Rs. 3.469 million

As per Health department notification dated 13.04.2005, user charges after deduction of 05% cost of
the material and 05% depreciation charges shall be distributed as under:
i. Govt Share 60%
2021-22, it was observed that an amount of Rs. 6,938,664/- was paid to doctors on account of user charges
(receipts from diagnosing services) as detailed below:
Doctor Share
Description Remaining required Paid Difference
Lab 4,669,295 1,167,324 2,334,647 1,167,324
Blood Bank 672,614 168,154 336,307 168,154
Ultrasound male 733,698 183,425 366,849 183,425
X-Ray 3,132,541 783,135 1,566,270 783,135
Ultrasound Female 4,362,255 1,090,564 2,181,128 1,090,564
Physio 63,586 15,897 31,793 15,897
ECHO 98,325 24,581 49,163 24,581
ECG 145,015 36,254 72,508 36,254
Total 13,877,328 3,469,332 6,938,664 3,469,332
Audit observed that an amount of Rs. 3,469,332/- was required to be paid to the doctors on account
of user charges, whereas the hospital management paid Rs. 6,938,664/- which resulted into overpayment of
Rs. 3,469,332/-.
doctors.

362
Audit recommends to recover the amount and fix responsibility against the person (s) at fault.
PDP No. 676 (2021-22)
12.4.44 Overpayment to the paramedics on account of user charges - Rs. 1.387 million

As per Health department notification dated 13.04.2005, user charges after deduction of 05% cost
of the material and 05% depreciation charges shall be distributed as under:
i. Govt Share 60%
2021-22, it was observed that an amount of Rs. 1,387,733/- was overpaid to the paramedics on account of
user charges (receipts from diagnosing services) as detailed below:
Required Amount
Description Receipts Difference
Amount Paid
Lab 4,669,295 466,929 933,859 466,929
Blood Bank 672,614 67,261 134,523 67,261
Ultrasound male 733,698 73,370 146,739 73,369
X-Ray 3,132,541 313,254 626,509 313,254
Ultrasound Female 4,362,255 436,226 872,451 436,225
Physio 63,586 6,359 12,717 6,359
ECHO 98,325 9,833 19,665 9,833
ECG 145,015 14,502 29,003 14,502
Total 1,387,733
the paramedic staff.
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PDP No. 679 (2021-22)
12.4.45 Loss to the hospital funds due to less deposit of IBP receipts - Rs.13.955 million
According to Rule 38 of GFR Vol.-I states that the departmental authorities are primarily responsible
to see that all revenues are correctly and promptly assessed, realized and credited to government treasury.
During the audit of the accounts of Leady Reading Hospital (MTI) Peshawar for the Financial Year
2021-22, it was observed that Rs. 255,890,651/- was realized from IBP receipts as per statement provided
by the department. Further verification of bank statement revealed that the total amount credited into bank
was Rs. 117,935,409/- resulting into a different of Rs.13,955,193/-.
of this report.
PDP No. 445 (2021-22)
364
12.4.46 Loss to the hospital funds due to non-recovery of outstanding rent -
Rs. 4.955 million
According to Clause 8 of MTI Act 2015, all money received by an institution, as grant in aid by
Governments, donation, user charges, rents, fees or on any other account shall constitute the fund of the
institution concerned. All receipts shall be deposited in the bank in the name of the institution concerned.
Para 26 of G.F.R Vol-I requires that it is the duty of the Departmental Controlling Officer to see
Public Account.
During audit of the accounts of Lady Reading Hospital (MTI) Peshawar for the Financial Year
2021-22,it was noticed that rent amounting to Rs.4,955,969/- was outstanding against the following
contractors of various shops, canteens and car parking banks etc.
S. No. Particulars Dues
1 Public Toilets Cardiology 60,000
2 Public Toilets Gynae 40,000
3 Car and Cycle stand A&E, Gynae 110,110
4 FC Car Park 1,584,000
5 Khokha Photostate 856,229
6 Gynae Restaurant (Atifur Rehman) 662,106
7 Colony Shop (J.J Store) 42,000
8 MCB 120,000
9 Nursing Hostel Mess 474,804
10 H.O Hostel Mess 26,620
11 Old TMO Hostel Mess 476,740
12 New TMO Hostel Mess 503,360
Total 4,955,969
However, the hospital management failed to recover the outstanding amount from the contractors
till date of audit i.e. December 2022.
of this report.
PDP No. 447 (2021-22)
12.4.47 Loss to the hospital funds due to non-recovery of embezzled amount -

Rs. 1.787 million
365
According to Judgement under MTI Appeal No.57/2021, recommended recovery of amount of Rs.
950,000/- from Mr. Fajar Ali and Rs. 837,000/- from Mst. Nosheen Shahid.
During audit of the accounts of Leady Reading Hospital (MTI) Peshawar for the Financial Year
2021-22, it was observed that recommendation of recovery of Rs. 1,787,000/- was given by KP Medical
Teaching Institutions Appellate Tribunal in its judgement dated 01-06-2022 from the following employees
due to embezzlement in CathLab in Cardiology Department;
S. No. Name Amount
1 Mr. Fajar Ali 950,000
2 Mst. Nosheen Shahid 837,000
Total 1,787,000
However, no efforts were so far made by the hospital management regarding recovery of embezzled
amount till date of audit i.e. December 2022.
The lapse occurred due to non-implementation of the Appellate Tribunal judgment which resulted
into loss to the hospital funds.
of this report.
Audit recommends to recover the emblazed amount and appropriate action against the person at
fault.
PDP No. 450 (2021-22)
12.4.48 Overpayment due to non-deduction of 5% discount on supply of chemicals - Rs. 6.134

million
According to letter dated 05-10-2017 by the supplier M/S S. Ejazuddin & Co. it is to inform you
that we have participated in tender of pathology items for the year 2017-18 and we are offering 05%
discount on all quoted pathology products”.
Para 23 of the General Financial Rules Volume-I requires that every Government Officer should
realize fully and clearly that he will be held personally responsible for any loss sustained by Government
through fraud or negligence either on his part or on the part of his subordinate staff.
During audit of the accounts of Leady Reading Hospital (MTI) Peshawar for the Financial year
2021-22, it was observed that pathology items to the tune of Rs. 122,685,673/- was purchased from M/S S.
Ejazuddin & Co.
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Further verification of record revealed that discount @ 5% was offered by the supplier on the
purchase of pathology products which was not deducted from the bills of the concerned supplier, which
resulted into overpayment of Rs. 6,134,284/- (calculation given below);
Total amount of purchase = Rs. 122,685,673/-

Discount offered = 5%
Amount of discount = Rs. 122,685,673 X 5 / 100 = Rs. 6,134,284/-
Furthermore, discount offered by another supplier i.e. M/S Roche Pakistan was regularly deducted
by the hospital. However, the same was not deducted from M/S S. Ejazuddin & Co and undue favour was
given to the supplier.
of this report.
Audit recommends to recover the overpaid amount Rs. 6.134 million from the contractor.
PDP No. 482 (2021-22)
12.4.49 Loss due to purchase of Atracurium Besylate injections at rate higher than approved
rate – Rs. 2.790 million
According to paras 10 (i) & 145 of GFR vol-I, every public officer is expected to exercise the same
vigilance in respect of expenditure incurred from public money as a person of ordinary prudence would
exercise in respect of expenditure of his own money and purchases must be made in the most economical
manner and in accordance with the definite requirement of the public service.
2021-22, it was noticed that the hospital management purchased Atracurium Besylate Injections as detailed
below:
S. Particular Purchase MCC Overpay Qty Total Invoice Remarks
No. Price Price ment no &
date
1 Atracurium 200 138 62 15000 930000 1885311 Available in
Besylate Inj 20.01.022 MCC list with
10mg/ml, 5ml brand name
2 Atracurium 200 138 62 30000 1860000 222604 Efacurium
Besylate Inj 03.10.021 (surge
10mg/ml, 5ml Laboratories)
Total 2,790,000
Audit observed the following irregularities:
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1. The local office purchased Atracurium Besylate (10mg/ml, 5ml) injections @ Rs 200/ injection,
the same were available with MCC approved supplier @ Rs 138/injection, resulted into
overpayment of Rs 62/injection.
2. Due to negligence of hospital management loss of Rs 2,790,000 occurred.
3. MCC approved injections available at lower cost were ignored and the same were purchased from
choice supplier at higher price.
The lapse occurred due to weak internal control and financial mismanagement which resulted into
of this report.
The matter is reported to the higher ups for detail investigation and fixing of responsibility against
the person (s) at fault.
PDP No. 492 (2021-22)
12.4.50 Suspected misappropriation on cutting of floor for internal wiring - Rs. 7.776 million
Para 23 of the General Financial Rules Volume I requires that every Government Officer should
2021-22, it was noticed that a contract was awarded to MBE Services for floor cutting of internal wiring up
to 6 inches depth with its repairing digging/back filling with material cost without manholes @Rs.22000
per meter. Total quantity of work 353 meters was shown done and paid total amounting to Rs. 7,766,000/-.
The record revealed that the said work done by IT deptt, beside the fact that the local office have a complete
Civil Works Deptt and no involvement of them was found. No measurement book was prepared, no quality
quantity report of the same was found on record. No approved drawing designing, Bill of Quantity (BOQ)
was prepared. The same was physically checked with Mr. Jalal in colony side and it was found that no such
work was done on ground and in some area a one-inch-thick concrete was found, and most of the area was
filled with earth. It was observed that no such activities was found on ground and just for drawl of funds
the bills were prepared. the laps occurred due to collusion of contractor and quarter concerned.
of this report.
Audit recommends to inquire the matter and take necessary action.
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PDP No. 499 (2021-22)
12.4.51 Loss due to purchase of substandard stretcher trollies and wheel chairs on full price
- Rs. 6.212 million
As per email dated 21.05.2021”as communicated earlier too that the quality of goods in not as per
our requirement, mentioned in the SBD. However for good business relation we could only accept on 50%
cost.”
2021-22, it was noticed that a contract was awarded to M/S Thankful Agencies for supply of 250 number
of stretcher Trollies and 300 number of Wheel chairs and made payment Rs11225000/- vide cheque
No.228728 dated 24.06.2022. the purchase order for supply of said items was issued on 16.04.2019 with
the condition to supply the same in 30 days, but the attached record revealed that the same was accepted
after 03 years of supply order. In this regard a lot of correspondence was done through emails and in one of
the emails as mentioned in attached record forwarded by Manager Material Management (MMM) stated
that “as communicated earlier too that the quality of goods is not as per our requirement, mentioned in the
SBD. However for good business relation we could only accept on 50% cost.” Audit of the view that if the
supplier supplied substandard items than why the local office interested to purchase on 50% cost, it should
be returned and required to take action against the supplier under the Rules. But the local office purchases
the same for good business relation and put the public exchequer in loss. furthermore, the same was
purchased on full payment instead of 50% as mentioned in email and made payment in excess Rs.6212500/-
as the local office comparison of the bases of quality provided by him. It vital clear that the undue favour
was extended to the contractor on cost of public exchequer. The laps occurred due to collusion of both
parties.
of this report.
The matter is reported to the notice of higher ups for information and necessary action.
PDP No. 510 (2021-22)
12.4.52 Loss due to non-recovery of stipend from terminated TMO’s – Rs. 9.185 million
As per training agreement between Trainee Medical Officer (TMO) and post graduate medical
institution Clause-03 If the first party’s attendance is below 80% in any month that will lead to termination
of his/her training and he/she shall be liable to refund all stipends received by him/her.
Read with Clause 9 “the first party shall serve at least for a period of two years failing which he/she
shall refund the stipend along with fine as mentioned in Clause-4, no experience certificate shall be issued
to him/her.
369
Read with Clause 11 & 12 “if first party leave the training incomplete or completed but does not
pass the exit exam, he / she shall be liable to refund all stipend (including all financial benefits) from PGMI
received from the training”.
During audit of the accounts of MTI Hayatabad Medical Complex Peshawar for the Financial Year
2021-22, it was observed that Trainee Medical Officers (TMOs) were terminated/resigned before
completion of their mandatory trainings as detailed below:
S. No. Name Father name Designation Amount
1 Dr. Urooj Najeeb Najeeb Ullah TMO 1,801,538
2 Dr. Sami UlHaq Alam Khan TMO 647,837
3 Dr. Hamad Ahmad Ahmad Zeb TMO 1,750,596
4 Dr. Asfandiar Shah Rukh Hijaz Hijaz Ul Mulk TMO 714,857
5 Dr. Aisha Javaid - TMO 1,878,413
6 Dr. Faquiha Muhammad - TMO 623,109
7 Dr. Alia Abid - TMO 1,243,421
8 Dr. Muhammad Asad - TMO 525,998
Total 9,185,769
The following irregularities were noticed by the Audit:

1. Explanations, show cause notices were issued to the above named TMOs due to their willful
absence from duty without prior approval from the competent authority, later on they were
terminated from their trainings.
2. In light of the contract agreement/PGMI rules if the attendance of any TMO is below 80% in any
month that will lead to termination of his/her training and he/she shall be liable to refund all stipends
received by him/her.
3. As per clause 11& 12 if any Trainee leave the training incomplete or completed but does not pass
the exit exam, he/she shall be liable to refund all stipend (including all financial benefits) from
PGMI received from the training.
4. No recovery was made from the terminated TMOs which is against the contract agreement and
PGMI rules.
The lapse occurred due to non-observance of contract agreements & PGMI rules and extending
undue favour to the TMOs which resulted into loss of Rs. 9,185,769/-.
of this report.
The matter is reported to the higher ups for recovery amounting to Rs. 9.185 million besides fixing
of responsibility against the person (s) at fault.
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PDP No. 740 (2021-22)
12.4.53 Unauthorized payment of Eid Allowance to House Officers – Rs. 1.500 million
According to Finance Deptt. Notification No. FD (SOSR-II)2-5/2021/ House Officers Allowance:

dated 12.07.2021, monthly stipend for house officers from Rs.53632/- per month to Rs. 64,358/- per month
in Category-A Hospitals and from Rs. 63,000/- PM to Rs. 75,600/- per month in Category-B Hospitals w.e.f
01.07.2021.
According to Clause 7 (L) of the Khyber Pakhtunkhwa Medical Teaching Institutions Reforms Act
2015, the Board shall be responsible for the compliance to government policies and standards and in case
of any deviation from agreed standards or procedures shall obtain prior approval from Government.
2021-22, it was noticed that an amount of Rs 1,500,000/- was paid on account of Eid allowance to the house
officers vide Cheque No. 225340 dated 19.05.2022.
Audit held the following observations:

1. The house officers are only entitled for drawl of stipend @ rate as prescribed by the Finance
Department (as quoted above).
2. Award of Eid allowance to house officers amounting to Rs 1,500,000 is unauthorized as there is no
such provision in rules.
3. The payment of additional allowances to a specific group of employees is unjustified which creates
disparity among the employees.
4. The criterion for the admissibility of the said allowance was not known.
The lapse occurred due to weak internal and financial controls which resulted into unauthorized
payment.
of this report.
The matter is reported into the notice of higher ups for appropriate action.
PDP No. 743 (2021-22)
12.4.54 Loss due to purchase of defective operation microscope - Rs. 13.597 million
371
2021-22, it was noticed that a contract was awarded to M/s Latif Brothers for supply of Operation
Microscope Carl Zeiss, Germany for Otorhinolaryngology (ENT Deptt) on C&F basis. And made payment
of €68399/- Pak Rupee.13.597 million. The said items was shown imported from Germany and delivered
on 04.10.2021. but after laps of 18 months no Inspection was carried out by inspection committee and the
same item was sent to the concerned department without inspection. The Chairman of the ENT Department
vide letter dated 29.08.2022 informed that the current status of the microscope is not satisfactory for the
department of ENT”. Beside the facts and lapse of 18 months no action was taken by the local office and
the said machine was laying idle and not in working condition. The same was also checked physically and
snaps shots were taken and attached with para. In light of above facts it was observed that warranty period
of the said machine near to expiry but no efforts were done by local office for replacement of the same.
Furthermore, 100% payment was made to the contractor and 10% security was not retained by local office
as provision in KPRA Rules.
The lapse occurred due to negligence of local office which resulted into loss to the government.
of this report.
Audit recommends to inquire the matter and fix responsibility against the dealing hands and the
Inspection Committee for not conducting inspection after lapse of 18 months.
PDP No. 756 (2021-22)
12.4.55 Fraudulent withdrawal on purchase of laboratory chemicals - Rs. 1.623 million
Para 149 of GFR Vol.-I states that when materials are issued for departmental use, manufacture,
sale etc, the officer incharge of the store should see that an indent in prescribed form has been made by a
properly authorized person who examined it carefully with reference to the orders or instructions for the
issue of stores and sign it after making suitable alterations under his dated initials in the description and
quality of material.
2021-22, it was noticed that a contract was awarded to M/s Hoora Pharma for supply of Lab Chemicals and
372
made payment of Rs. 1,623,462/- vide Cheque No. 215063 dated 03.09.2021. The Lab chemicals were
supplied on 15.10.2020 as per delivery challan. The same was shown taken on stock register of main store
but no date of entry was given in stock register, as per stock register all the items were shown laying in
main store, on verification of the said items it was noticed that no such items were available on stock, the
store keeper concerned verbally replied that the same was issued to pathology department, on further
verification from the incharge of Pathology department no such items were supplied, which was clear from
the scrutiny of Expense register of Pathology Deptt. In light of above it vital clear that no such Lab
Chemicals were supplied and the payment was made on fake invoices.
The lapse occurred due to weak internal controls which resulted into fraudulent withdrawal of
funds.
of this report.
Audit recommends to inquire the matter and take appropriate action.
PDP No. 795 (2021-22)
12.4.56 Loss to the government due to allowing house subsidy at higher than approved rates
According to Finance Department, Khyber Pakhtunkhwa letter No.SOSR-IN/FD1-27/ 2018 dated

25-10-2018, the Provincial Cabinet in its meeting held on 15.10-2018 approved 50% enhancement of the
existing rates for self-hiring Residential accommodation (Housing Subsidy) as pet detail given below with
effect from 01-07-2018:
Entitlement-BS Revised Rental Ceiling per month

- Peshawar Abbottabad
1-2 Rs.3,390 Rs.2.373/
3-6 Rs 4,965/ Rs.3,476/
7-10 Rs.7,553/ Rs.5,286/-
11-13 Rs.11,040/ Rs.7,728/
14-16 Rs.13,958/ Rs.9,770/
17-18 Rs 18,4654 Rs.12,926/
19 Rs.24,083/ Rs 16,857/
20 Rs.30,390 Rs.21,273/-
21 Rs.36,578/ Rs.25,804/
22 Rs.45,900/- Rs.32,130/-
2021-22, it was noticed that payment of Rs. 72,360,864 /- (6030072 x12) was made on account of housing
subsidy (Annexure-XXIII).
373
The verification of record revealed that the payment for housing subsidy was made at the rate
admissible for Peshawar which is higher than the rate admissible in Abbottabad.
The payment of higher rates of housing subsidy per month than the approved rates of the Provincial
Government put the hospital exchequer into a loss of Rs. 21,104,196/- which needs immediate recovery.
The lapse occurred due to violation of standing orders of the Provincial government which resulted
into loss to the government.
of this report.
Audit recommends recovery of enhanced amounts of housing subsidy from the concerned.
PDP No. 846 (2021-22)
12.4.57 Unauthorized payment of housing subsidy to employees residing in rented houses –

Rs. 17.388 million
According to condition No. IV of the procedure /guideline for preparation / scrutinization of

housing subsidy cases, duly circulated by Administration Department, government of Khyber Pakhtunkhwa
vide letter No. EO(Admn) R-1/2014 dated 03-06-2014, the employee will be exclusive owner of the house
and not be co-owned by any other.
2021-22, it was noticed that an amount of Rs. 17,388,708/-was paid on account of housing subsidy to
various officers/officials (Annexure-XXIV).
The verification of record revealed that the concerned employees were living in rented houses and
were not the exclusive owners of the houses. Hence, the payment of housing subsidy is in violation of the
government stated and defined policy, therefore the payment is held un-authorized and needs recovery.
The lapse occurred due to weak management controls which resulted into unauthorized payment.
of this report.
Audit recommends recovery of the housing subsidy amount from the concerned,.
374
PDP No. 847 (2021-22)
375
12.4.58 Loss due to overpayment on account of cleaning of main holes of the hospital - Rs.
1.802 million
As per Khyber Pakhtunkhwa Market Rate System 2021, item code No (24-105-a) rate of cleaning
main hole is Rs.606.94.
2021-22, it was noticed that a contract was awarded to M/S Malik Sirajul Haq & Sons Construction for
cleaning of main holes of the hospital @ Rs.4950/- per main hole. For the said purpose a work order dated
07.05.2021 was issued for cleaning of 400 number of main holes, but as per attached bill 415 number main
holes were cleaned and made payment up to date i-e 11.01.2022 Rs.2054250/- (4950*415). But it was
pointed out that the said item of work was available at MRS 2021 as item code No (27-105-a) @ 606.94
each main hole. In presence of scheduled item awarding the same on open tender the public exchequer was
put in loss and made overpayment of Rs. 1,802,370/- (Rs. 4950 - 606.94= 4343.06*415). It seemed that
undue favour was extended to the contractor at the cost of public exchequer. The same needs a detail inquiry
and to fix responsibility against the dealing hands.
The lapse occurred due to ignoring MRS 2021 rate and weak financial controls which resulted into
of this report.
The matter is reported higher ups for information and to ensure recovery of overpaid amount.
PDP No. 863 (2021-22)
12.4.59 Non deduction of penalty due to non-completion of left over work of college of
dentistry & pre-fabricated building - Rs. 17.305 million
As per contract agreement clause 12: the completion period for the work under this contract is six
(06) months from the day of signing of this contract agreement.
As per contract agreement clause 09(i): wherein if the contractor fails to complete project as per
wok order and within the stipulated time frame specified in the schedule of requirement the penalty @0.5%
of the total contract value for each week of delay shall imposed not exceeding 10% of the total cost.
376
2021-22, it was noticed that a contract was awarded to M/S Badiuz Zaman Co. for construction of leftover
work at College of Dentistry and to M/S United Business System for construction of Pre-Fabricated IBP
Clinics at Ayub Teaching Hospital Abbottabad costing. Both of works were not completed in awarded time
as detail given below and no penalty was imposed on contractor.
Name of Name of Date of Date of Delay Contract Penalty @

contractor work commencement completion value 10%
M/s left over 17.06.2021 16.12.2021 17 months 114,661,031 11,466,103
BadiuzZaman work at (still not
Co. College of completed)
Dentistry
M/s United Pre- 01.02.2022 01.06.2022 12 months 58,397,887 5,839,789
Business Fabricated (still not
System IBP Clinics completed)
at Ayub
Teaching
Hospital
Abbottabad
Total 173,058,918 17,305,892
It required that penalty @ 10 % amounting to Rs.17,305,892/- was imposed and to be recovered

from the payments of contractor, which was not done. It seemed that undue favour was extended on the
cost of public exchequer. The laps occurred due to weak internal control and mismanagement of resources.
of this report.
Audit recommends to impose penalty for non-completion of work on time and recover the same
from the contractor.
PDP No. 870 & 871 (2021-22)
377
12.4.60 Suspected misappropriation on account of installation of HVAC System - Rs. 4.910
million
During audit of the accounts of Ayub Teaching Hospital (MTI) Abbottabad for the financial year
2021-22, it was noticed that a contract was awarded to M/S JV Unimix & Concept Building Solution Lahore
for upgradation & renovation (Civil, electrical & HVAC works) of casualty Operation Theatre & surgical
block ATH on cost of Rs.135610866.12 (1.16%) below on estimated cost. In this regard the contractor
executed work and installed/ upgraded different items and submitted their bills. The local office paid his
claim as submitted for payment. After completion it was observed that following items were claimed, but
not supplied and installed.
S. No Item Name Quantity Rate Amount

01 Humidifiers 4 1100000 4400000
02 De- Humidifier 4 24000 96000
03 Service Lite 4 6000 24000
04 Duct type heating coil 4 45000 180000
05 Plenum 1 35000 35000
06 Sight glass 4 2000 8000
07 Service Lock 4 5500 22000
08 Fan return 1 145000 145000
Total 4910000
In this regard an inquiry was also conducted wherein quarter concerned was proposed for
disciplinary action. It was observed that no proper mechanism regarding check and balance was found in
hospital and without confirmation and inspection a huge amount Rs.4910000/- was paid.
The lapse occurred due to weak internal controls which resulted in suspected misappropriation.
The department was requested for holding DAC meeting. However, the DAC was not convened
till finalization of this report.
Audit recommends to take appropriate action against the person(s) at fault besides to recover the
amount.
PDP No. 873 (2021-22)
12.4.61 Unauthorized payment of housing subsidy to employees residing in rented houses –

Rs. 10.878 million
378
According to condition No. IV of the procedure /guideline for preparation / scrutinization of
housing subsidy cases, duly circulated by Administration Department, government of Khyber Pakhtunkhwa
vide letter No. EO(Admn) R-1/2014 dated 03-06-2014, the employee will be exclusive owner of the house
and not be co-owned by any other.
During audit of the accounts of Ayub Medical College Abbottabad for the Financial Year 2021-22,
it was noticed that an amount of Rs. 10,878,192/- was paid on account of housing subsidy to various officers
/ officials (Annexure-XXV).
The verification of record revealed that the concerned employees were living in rented houses and
were not the exclusive owners of the houses. Hence, the payment of housing subsidy is in violation of the
government stated and defined policy, therefore the payment is held un-authorized and needs recovery.
The lapse occurred due to weak management controls which resulted into unauthorized payment.
of this report.
Audit recommends recovery of the housing subsidy amount from the concerned.
PDP No. 989 (2021-22)
12.4.62 Non-deduction of penalty due non completion of Pre-Fabricated building & Student
Teacher Canteen building at AMC - Rs. 20.972 million
As per contract agreement clause 12: the completion period for the work under this contract is four
months from the day of signing of this contract agreement.
As per contract agreement clause 09: wherein if the contractor fails to complete project as per wok
order and within the stipulated time frame specified in the schedule of requirement the penalty @0.5% of
the total contract value for each week of delay shall imposed not exceeding 10% of the total cost.
it was noticed that a contract was awarded to M/S Philanthrope Construction for construction of Pre-
Fabricated building and to M/S National RCC Works for construction of Student Teacher Canteen at Ayub
Medical College Abbottabad. Both of works were not completed in awarded time as detail given below and
no penalty was imposed on contractor.
Name of Name of Date of Date of Delay Contract Penalty @
contractor work commencement completion value 10%
M/s construction 03.02.2022 02.07.2022 11 169,123,500 16,912,350
Philanthrope of Pre- months
Construction Fabricated
Pvt Ltd building
379
M/s National construction 30.03.2018 30.03.2019 04 years 40,599,145 4,059,915
RCC Works of Student
Pvt Ltd Teacher
Canteen
Total 209,722,645 20,972,265
Non deduction of penalty amounting to Rs.20.972 million needs to be recovered and appropriate
action should be taken against the person at fault.
of this report.
Audit recommends detailed investigation into the matter and taking appropriate action.
PDP No. 990 & 991 (2021-22)
12.4.63 Non-recovery of utilities charges from the occupants of hostels - Rs. 2.378 million
According to rule (viii) of the procedures, rules and regulations for hostel accommodation at Molvi
Ameer Shah Memorial Hospital Peshawar, each room will be allotted to two/ three resident or more person
according to the size of the room.
According to rule (x) of the procedures, rules and regulations for hostel accommodation, the allottee
will be bound to pay room rent and all utilities charges fixed by the administration.
During audit of the accounts of Molvi Ameer Shah Memorial Hospital Peshawar for the Financial
Year 2021-22, it was observed that hospital management allotted double rooms and in some cases three
rooms to the residents of the nursing hostel and lady doctor, which is against the rules and regulations stated
above. Furthermore, the necessary deduction of electricity, Sui gas and air condition charges were not made
from the occupants on the basis of single room, which resulted into a loss of Rs. 2,378,000/-.
Moreover, on physical verification of both the hostel, it was found that all occupants were residing
with their families availing all facilities of the hospital without any contribution by the residents. It is worth
mentioned here that the residents are utilizing the hospital electricity which has been provided by the
government through an express line where no load shading prevail.
Audit held that the hospital management was required to accommodate at least two persons in one
room, but in the instant cases minimum two rooms to each person were allowed, hence the allotment was
unauthorized and the provincial exchequer was put to loss in the form of utility charges.
When pointed out in July 2022, no reply was furnished.
380
The lapse occurred due non-observance of hostel rules and regulations and weak financial
management which resulted into non-recovery of utility charges.
the DAC was not convened till finalization of this report.
Audit recommends recovery of the loss sustained by the hospital along with investigation on the
allotment of double rooms.
PDP No. 29 (2021-22)
12.4.64 Non-recovery of rent and utility charges from the hostels of outsiders -
Rs. 1.812 million
According to rule I of the procedures, rules and regulations for hostel accommodation at Molvi
Ameer Shah Memorial Hospital Peshawar, the applicant/ resident must be the employee of Molvi Ameer
Shah Memorial Hospital Peshawar.
According to rule xvi of the procedures, rules and regulations for hostel accommodation at Molvi
Ameer Shah Memorial Hospital Peshawar, all illegal occupants should vacate their rooms within one week
period and provost will issue notice for vacation on daily basis and shall apprise him about the dire
consequences.
Year 2021-22, it was observed that hospital management allotted 26 hostel rooms to the employees of other
departments which was against the hospital own rules and regulations as stated above. Furthermore, the
necessary deduction decided by the hostel committee in the form of room rent, electricity charges, Sui gas
charges and air condition charges was also not made from the occupants, which resulted into a loss of Rs.
1,812,950/-.
Audit held that the hospital management not only allotted unauthorized hostel rooms to outsiders
but necessary deduction was also not made from them, which become a huge burden on the provincial
exchequer.
The lapse occurred due non-observance of hostel rules and regulations and weak financial
management which resulted into non-recovery of rent and utility charges.
Audit recommends recovery of the loss sustain by the hospital along with investigation on the
allotment of rooms to outsiders.
381
PDP No. 30 (2021-22)
12.4.65 Loss due to construction of illegal general store and non-recovery of rent - Rs. 1.548
million
According to clause 5 of the contract agreement executed between the M/S MASMH and Sada
Bahar Traders for hospital canteen, the contractor will start paying monthly rent and utilities charges and
submit the total charges to the hospital on first of every month.
According to clause 4 of the contract agreement executed between the M/S MASMH and Sada
Bahar Traders for hospital canteen, the internal committee shall specify per month charges for air condition
if Sada Bahar Traders request for.
Year 2021-22, it was observed that hospital canteen was awarded to Sada Bahar Traders on the monthly
rent of Rs. 17,500/- along with Rs. 3,000/- electricity charges and Rs. 4,000/- Sui Gas charges. However,
the hospital management failed to collect the rent and other utilities charges from the contractor till the date
of audit, which resulted into a loss to the provincial government of Rs. 588,000 (Rs. 17,500+Rs. 3000+Rs.
4000=Rs. 24500 X24 months).
Furthermore, during physically verification of site, it was found that the contractor have illegally
constructed a full-fledged general store adjacent to the canteen for which the contractor under the existing
agreement was not allowed to construct any additional facility. Hence, the construction of general store
without paying any rent to the hospital is continuous loss to the hospital not only in terms of rent but also
the availing the free facility of all utilities charges.
Moreover, the contractor also installed 2 tons air condition in the vicinity of the canteen but neither
any monthly charges was fixed by the internal committee as was required under the contract agreement nor
was any charges recovered.
Audit held that monthly rent of Rs. 30,000/- amounting to Rs. 720,000/-(30,000 X 24 months) for
general store and Rs. 10,000/- per month for air condition amounting to Rs. 240,000/- must be recovered
from the contractor.
The lapse to the government occurred due non-observance of contract agreement and weak
financial management which resulted into loss to the government.
Audit recommends to recover the amount of rent.
382
PDP No. 31 (2021-22)
12.4.66 Irregular expenditure on account of civil work contract for Renovation and repair work
According to Para 3(a)(b) of Health Department’s guidelines and operational manual for Hospital
Management Committee (HMC) circulated vide No. SOB-II/HD/1-39/GEN.CORR/2020 dated 02-07-
2021. The HMC will identify the needs of the respective facility. Based on the needs identified the HMCs
will develop annual plan, budget (as per form 5A and 5B) and carry out repair and maintenance work or
any other task the committee may deem necessary for up-keep of the concerned health facility and for
delivery of quality health care services.
During audit of the accounts of Naseer Ullah Baber Memorial Hospital Peshawar for the Financial
Year 2021-22, it was observed that civil work (repair of office building) under the revamping program was
awarded to M/S Friends Engineering Services & Enterprises vide work order dated 06.08.2021, against
which the hospital management incurred an expenditure of Rs. 36,021,789/-, as detailed below;
S. No Cheque No Dated Contractor Name Amount
1 42412879 09-01-21 Friends Engineering 6,991,626
2 42412880 18/09/2021 Friends Engineering 3,651,659
3 42412884 28/10/2021 Friends Engineering 6,318,786
Total 36,021,789
Further scrutiny of record revealed that;

 The technical staff of the hospital management makes a detail of lists of petty items on the basis of
which the quotation was invited. However, no PC-1 and detail estimates were prepared after
changing the nature of work from petty repair to major repair and renovation, which leads to
doubtful tendering process.
 All the payment were made without making a single entry in the measurement book, in spite of the
fact that 2 civil engineers are regularly working and permanent employee of the hospital.
 Only Three contractors participated in the tendering process and surprisingly all of them submitted
the quotations on just one format, like submission of offer in English, same serial number of items
mentioned in quotation, similar font of print and same pattern of forwarding letters etc.
 The PEC registration certificate of the selected contractor was found expired on 30 June 2021,
which was not renewed till the date of audit.
 As per PEC registration certificate, the selected contractor was only authorized and specialized in
the field of Irrigation work, Solar and General Electric work.
 Proper contract agreement on stamp paper was not executed with the contractor, rather only one
pager agreement of the hospital pad was carried out.
383
 The BOQ was prepared without mentioning the path, means the actual site where the quantity of
works should be executed making the whole BOQ doubtful.
 Proper need assessment, annual plan, budget etc were not carried out as was required under the
HMC guidelines mentioned above.
 The incurring of huge repair and renovation expenditure of Rs. 36,021,789/- over the total hospital
area of 80 Marla and covered area of almost 56 Marla seems unjustified as the cost of per marla
comes to Rs. 643,246/-.(Rs. 36,021,789 /56 marla).
 The fund provided by the DGHS office was purposely allocated for the hospital building
infrastructure, but on ground, a sufficient amount was incurred on the construction of newly
building for which neither any approval from the competent authority was obtained nor proper
building health assessment survey from University of Engineering was conducted.
Audit held that neither below-&-above MRS procedure was followed nor was proper rate analysis
of the non-scheduled items carried out by the hospital administration, which was the primary responsibility
of the concerned technical staff, which makes the whole tendering process as irregular and doubtful.
The lapse occurred due to violation of rules and regulations which resulted into irregular
expenditure.
PDP No. 88 (2021-22)
12.4.67 Irregular conducting and awarding of auction - Rs. 2.136 million
According to Paras 154 and 159 of GFR Vol-I, an inventory of dead stock should be maintained in
all government offices showing the number of items received, the number of items disposed off and the
balance in hand for each kind of article. A physical verification of all stores should be made at least once in
every year.
During audit of the accounts of Naseer Ullah Baber Memorial Hospital Peshawar for the Financial
Year 2021-22, it was observed that the hospital management shown conducted a heavy auction of the
hospital machinery and equipment including 02 X-ray plants from which an amount of Rs. 2,136,100/- was
obtained and deposited into the government treasury. However, audit noticed the following shortcomings
in the auction process;
 Wide publicity of the auction process was not carried out in any daily newspaper, due to which
competitive bidding did not take place and resultantly the items were sold out on very lowest rate as
compared to the items mentioned in the lists.
 There is no mentioned in any stage of the auction process that how much bidders have participated
and how much rate was officered.
384
 No comparative statement of the auction process was prepared and signed by the committee
constituted for the purpose.
 No proper register was maintained to show the number and names of the persons participated in
the auction.
 The income tax amount on auction was shown deposited by the hospital instead of the person who
wins the bid of auction, meaning thereby that no fair competition took place.
 The purchase dates and condemns dates of items were not recorded in the list.
 There was no stock register maintained from where it could be found that these high value items
were properly struck off from the inventory stock of the hospital.
 The auction items were not condemned by the technical committee as required under the rules.
Audit held that the management conducted the auction without taking proper procedure and
observing the rules and regulations for obtaining the highest bids on the items
The lapse occurred due to violation of rules and regulations which resulted into irregular conducting
and awarding of auction.
Audit recommends investigating the matter and taking appropriate action.
PDP No. 13 (2021-22)
12.4.68 Overpayment on account of Science Teaching and Basic Science Allowances - Rs.
24.402 million
According to Government of KPK, Finance Department (Regulation Wing) Notification No

FD(SOSR-II) 8-18/2018/27236 dated 01-01-2020 read with Government KPK Health Department
Peshawar letter No. /SOB-I/HD/5-7/Allowance dated 15.01.2019, that the teaching faculty can avail only
one allowance either Health Professional allowance or Basic Science and Teaching allowance which one is
more beneficial to them but not the both at one and the same time.
During audit of the accounts of Khyber Girls Medical College Peshawar for the Financial Year
2021-22, it was observed that an amount of Rs. 35,164,000/- was paid on account of Health Professional
Allowance @ Rs 60,000 per head & per month to various teaching cadre/non-clinical staff doctors besides
allowing them Science Teaching and Basic Science Allowances as well. As per above mentioned criteria
the teaching faculty can avail only one allowance which is more beneficial to them, therefore, drawing
science teaching and basic science allowances along with HPA totalling to Rs. 24,402,499/- (Rs. 21,062,433
and Rs. 3,340,066) was unauthorized (Annexure-XXVI).
Audit was of the view that two allowances at the same time were not admissible.
385
The lapse occurred due to non-observance of government rules which resulted into loss to the
government.
Audit recommends recovery of overpayment from the concerned doctors and action against the
person(s) at fault.
PDP No. 610 (2021-22)
12.4.69 Unjustified payment on account of renovation of various hostels –

Rs. 127.600 million
According to Agenda Item No. 02 of the 48th IMC meeting held on 17.01.2019, it was directed to
prepare total estimation of repair and maintenance of the TMO Hostel with consultancy of Finance Section
and submit in IMC meeting for discussion and approval.
According to the Agenda Item No. 04 of the minutes of 50th IMC meeting held on 22.02.2019,
approval was accorded to carryout renovation of New TMO Hostel for an amount of Rs. 36.000 million, HO
Hostel for an amount of Rs. 28.000 million, and Nursing Hostel for an amount of Rs. 63.600 million; on the
plea that the same were decided to be presented before the IMC in its 48th meeting held on 17.01.2019.
During audit of the accounts of MTI Lady Reading Hospital Peshawar for the Financial Year 2020-
21, it was observed that in contrary to the above, the hospital administration executed renovation of New
TMO Hostel for an amount of Rs. 36.000 million, HO Hostel for an amount of Rs. 28.000 million, and Nursing
Hostel for an amount of Rs. 63.600 million, totalling to Rs. 127.600 million; on the plea that the same were
decided to be presented before the IMC in its 48th meeting held on 17.01.2019.
Furthermore, in the discussion on Agenda Item No. 02 on the Renovation of TMO Hostel in the
th
48 meeting of IMC, it was told to the forum that the renovation of the TMOs Hostel was carried out a year
ago, but due to ongoing construction of BRT, the hostel needs renovation on urgent basis.
Audit held that carrying out the renovation work of the hostels based on the initial discussion of
renovation of TMOs hostel only in the 48th IMC meeting was unjustified and irregular.
Audit further held that carrying out the renovation work in the Old TMO Hostel after one year, and
that on the basis of BRT ongoing work, was completely irrational and non-comprehendible.
The lapse occurred due to non-observance of rules and regulations which resulted in unjustified
payment.
386
When pointed out in April 2022, it was replied that the estimates of renovation of hostels are
prepared as per direction of IMC in its 48th meeting, and the project of hostel repair is approved in the 49 th
IMC meeting.
The reply was not convincing as the audit observation was not addressed to properly by the works
department.
In the DAC meeting held on 20 to 23.12.2022, it was decided that the department may conduct
inquiry in the matter. However, no progress was intimated to Audit till finalization of this report.
Audit recommends implementation of the DAC decision.
PDP No. 781 (2020-21)
387
12.4.70 Unauthorized payment against NSI in Beautification and Renovation of various
buildings - Rs. 61.421 million
According to Para 56 of the CPWD Code, for each individual work to be carried out, a properly
detailed estimate must be prepared for the sanction of competent authority, to be obtained before
construction of the work is commenced. It is a guarantee that the proposals are structurally sound, and that
the estimates are accurately calculated and based on adequate data.
21, it was observed that an amount of Rs. 87,380,471/- was paid to M/S Abdul Rehman and Co on account
of Beautification and Renovation of OPD Block including Radiology Department up to 33rdRunning Bill,
including an amount of Rs. 67,806,647/- as NSI items of work. However, the following non-scheduled items
of work, amounting to Rs. 61,421,285/-, were not included in the approved PC-I of the project, and were
executed by the hospital administration in contravention of the above quoted provision;
S. No. Item Rate Quantity Amount
1 Aluminum partition including lamination 10,550 270.07 2,849,239
2 P/F of acrylic sheet and stainless steel alphabets 2976.69 74 220,275
Removal existing supply and fixing of PVC false ceiling
3 5984.38 1492.38 8,930,969
including fitting aluminum tees angle
P/L of 1/4th thick wall tiles 12”x18” size in cutting
4 2855.39 4167.78 11,900,637
wastage
5 Granito floor tiles ¼” thick 24”x24” 3541.53 5745.86 20,349,136
6 Aluminum composite panel sheet 5359.92 940.65 5,041,809
7 Marble gola 1228.49 2690.67 3,305,461
8 P/F 4 ton ACs 265000 4 1,060,000
9 Stainless steel angle 2772.60 375 1,039,725
P/F of lead door including ¼” thick ply double lead
10 64351.97 17.56 1,130,021
sheet 3 mm thick
P/F of LED lights 24” of approved design with 36
11 8697 389 3,383,133
watt LED light
12 P/F of false ceiling fan 24” approved design 11515 192 2,210,880
Total 61,421,285
Audit held that the hospital administration carried out items of work which were not included in
the approved PC-I of the project, and left the items of work which were included in the approved PC-I,
which resulted in unauthorized payment to the contractor.
The lapse occurred due to violation of rules and regulations which resulted in unauthorized
payment.
When pointed out in April 2022, it was replied that the cost estimate and the BOQ include both the
scheduled and non-scheduled items. The contract was awarded to the contractor with a rate below on
engineering estimate. The scheduled items are quoted on above-below basis, with the non-scheduled items
quoted separately. The increase in work is because of increase in scope of work. The initial assessment of
preparing the cost estimate was done by the end users.
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department.
PDP No. 797 (2020-21)
12.4.71 Unauthorized payment for Beautification and Renovation of OPD Block - Rs. 13.869
million
According to Note 2 of Para 71 of the CPWD Code, read with Para 5.19 of the B&R Code, no
officer is entitled to pass any excess over a revised estimate sanctioned by a higher authority than himself.
21, it was observed that the contract for Beautification and Renovation of OPD Block including Radiology
Department was awarded to M/S Abdul Rehman and Co for a bid cost of Rs. 63,922,203/- vide work order
dated 23.02.2018, against the original PC-I cost of Rs. 76,026,800/- duly approved by IMC in its 38th meeting
held on 30.11.2017, vide Agenda Item No. 5 on 21.12.2018. However, the IMC in its 52 nd meeting held on
10.04.2019 vide Agenda Item No. 04, accorded approval of revision of the original cost estimate by an amount
of Rs. 11,400,000/-, totalling to a revised cost estimate of Rs. 87,400,000/-, as against granting the revision
on the bid cost of Rs. 63,922,203/-, which becomes 36.72% as against 15% revision.
Furthermore, the IMC while according the approval for revision of the cost estimate, stated that the
approval of 15% has been granted on the technical sanction, whereas, there was no technical sanction available
on record regarding the same work.
Moreover, the hospital administration accorded budget approval to balance work including 26
clinical rooms under the work Beautification and Renovation of OPD Block including Radiology Department
for an amount of Rs. 30,900,000/- on 09.04.2021, in addition to the previous revision up to Rs. 87,400,000/-,
which also needs to be investigated.
Audit held that payment to the contractor in excess of the 15% of bid cost i.e.
Rs. 13,869,937/- (Rs. 87,380,471 - Rs. 73,510,533 (Rs. 63,922,203 X 15%)) was unauthorized and irregular.
The lapse occurred due to weak internal controls which resulted in unauthorized payment.
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department.
PDP No. 798 (2020-21)
12.4.72 Unauthorized payment on account of Renovation of Nursing Hostel –

Rs. 21.209 million
According to the LRH Work Order No. 18504 dated 23.07.2019, the rate offered by M/S O&G
Construction for Renovation of Nursing Hostel, amounting to Rs. 40,888,122/- being the lowest i.e. 28.36%
below of the total project cost of Rs. 57,080,000/- was approved by the hospital administration.
21, it was observed that an amount of Rs. 62,097,251/- was paid to M/S O&G Construction on account of
Renovation of Nursing Hostel up to 22nd Running Bill, as against the approved bid cost of Rs. 40,888,122/-,
which resulted into an unauthorized payment of Rs. 21,209,129/- (Rs. 62,097,251 - 40,888,122).
The lapse occurred due to non-observance of the offered and approved rate/ cost of the project
which resulted in unauthorized payment.
department.
PDP No. 800 (2020-21)
12.4.73 Overpayment to contractor due to non-deduction of offered discount -

Rs. 6.198 million
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According to the minutes of purchase committee meeting held on 27.06.2019 and comparative
statement, the bid of M/S O&G Construction was selected being the lowest rates offered on the BOQ for the
work “Renovation of Nursing Hostel” with the quoted price of Rs. 40,888,122/- which was 28.36% below on
the Engineering Estimates.
Renovation of Nursing Hostel up to 22nd Running Bill, including an amount of Rs. 21,858,019/- as NSI items
of work. However, the rate of 28.36% below offered by the contractor in their bidding documents on the
engineering estimates was not applied at the time of payment, which resulted into an overpayment of Rs.
6,198,934/- (Rs. 21,858,019 X 28.36% below).
The lapse occurred due to non-observance of the approved rates of BOQ which resulted in
overpayment to the contractor.
department.
PDP No. 802 (2020-21)
12.4.74 Irregular awarding of contract for Renovation of Nursing Hostel - Rs. 40.888 million
According to Clause 3 of the KPPRA Notification No.KPPRA/M&E/Estt:/1-5/2016 dated

24.05.2016, the item rate system is replaced by the above-below system on BOQ based on MRS applicable.
All the tenders shall be processed according to the above-below system based on the Market Rate System.
During audit of the accounts of MTI Lady Reading Hospital Peshawar for the Financial Year 2020-21,
it was observed that the contract for Renovation of Nursing Hostel was awarded to M/S O&G Construction
at the bid cost of Rs. 40,888,122/- including an amount of Rs. 5,200,250/- as NSI items of work. Further
scrutiny of record revealed that;
 The rates were obtained from the contractors on the basis of item-rates instead of above-&-below on
the MRS rates. The practice of quoting bids on item-rates basis was discontinued from the year 2016.
 The consultant and the works department of the hospital carried out (and approved) the rate
analyses of the non-scheduled items at exaggerated rates i.e. Rs. 24,296,050/-, as compared to the
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rates offered by the contractors against the said items of work i.e. Rs. 5,200,250/-, which becomes
78.59% higher.
 Certain items of work were included by the selected contractor in the rates offered for the non-
scheduled items at much reduced rates than the ones approved in the PC-I, due to which the overall
cost offered was reduced by large percentages, and contracts won accordingly. However, during
execution of the project, the said items were ignored altogether, and other non-scheduled and non-
BOQ items were carried out, without obtaining approval from the competent authority.
 For instance, an item of work “drainage system including dismantling of old drainage” was offered
by the contractor at the rate of Rs. 600 per unit, as against the approved PC-I rate of Rs. 5,932,
which was not executed by the hospital later on. Similarly, an item of work “providing, fabricating
and fixing in position high stair hand ralling” was offered by the contractor at the rate of Rs. 500
per unit, as against the approved PC-I rate of Rs. 8,150, which was not executed by the hospital
later on. Similarly, an item of work “providing and fixing of ¾ inch thick Hazara plan black granite”
was offered by the contractor at the rate of Rs. 900 per unit, as against the approved PC-I rate of
Rs. 9,038 per unit, which was not executed by the hospital later on.
of the consultant and the works department, which makes the whole tendering process as irregular and
doubtful.
The lapse occurred due to violation of rules and regulations which resulted in irregular awarding
of contract.
department.
PDP No. 803 (2020-21)
12.4.75 Unauthorized expenditure on account of NSI - Rs. 19.812 million
According to Para 56 of the CPWD Code, the proposals in the estimates should be structurally
sound and that the estimates are accurately calculated and based on adequate data.
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According to the approved PC-1 prepared by the Wings Consultant for the “Renovation of Nursing
Hostel” only six NSI items valuing Rs. 12,390,084/- were included in the estimates.
21, it was observed that a payment of Rs. 19,812,894/- was made to the M/S O & G Construction Co Pvt
LTD up to 22nd running bill under the project “Renovation of Nursing Hostel” for execution of 19 different
NSI items related to civil work, as against the approved 06 number of civil work non-scheduled items.
However, the items of work executed and paid to the contractor does not covered a single item against the
original estimates prepared and approved by the consultant, which resulted into an unauthorized execution of
work.
The lapse occurred due to non-observance of the approved items of BOQ which resulted in
unauthorized expenditure.
department.
PDP No. 805 (2020-21)
12.4.76 Loss to the government due to non-deduction of offered discount - Rs. 5.833 million
work “Renovation of Old TMO Hostel” with the quoted price of Rs. 21,923,722/- which was 27.64% below
on the Engineering Estimates.
Renovation of Old TMO Hostel up to 9th Running Bill, including an amount of Rs. 21,106,987/- as NSI items
of work. However, the rate of 27.64% below offered by the contractor in their bidding documents on the
5,833,971/- (Rs. 21,106,987 X 27.64%).
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The lapse occurred due to non-observance of the approved rates of BOQ which resulted in loss to
the government.
department.
PDP No. 808 (2020-21)
12.4.77 Irregular and doubtful awarding of contract for Renovation of Old TMO Hostel - Rs.
21.923 million
According to Clause 3 of the KPPRA Notification No. KPPRA/M&E/Estt:/1-5/2016 dated

During audit of the accounts of MTI Lady Reading Hospital Peshawar for the Financial Year 2020-21,
it was observed that the contract for Renovation of Old TMO Hostel was awarded to M/S O&G Construction
at the bid cost of Rs. 21,923,722/- including an amount of Rs. 3,213,350/- as NSI items of work. Further
scrutiny of record revealed that;
75.49% higher.
execution of the project, the said items were ignored altogether.
 For instance, the following non-scheduled items of work were offered by the contractor at much
reduced rates as against the ones approved in the PC-I of the project. However later on, none of the
items was executed. Rather, a quantity of 3,822 m2of another item of work “supply and fixing of
PVC wall paneling” was executed at the rate of Rs. 2,500 per unit, as against the approved PC-I
quantity of 240 m2 and approved rate of Rs. 1,678 per unit.
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PC-I Contractor
Name of Item Diff.
Rate Rate
Providing and fixing of fiber glass shed of 3 ply fiber sheet 7,280 250 7,030
Drainage system including dismantling of old drainage line complete – up to 3,536 900 2,636
2 inch
Drainage system including dismantling of old drainage line complete – up to 5,932 400 5,532
2.5 inch
Providing and fixing of ¾ inch thick hazara plain black granite 9,038 650 8,388
Removal of existing and supplying and fixing of AluminumDumpa false 3,680 350 3,330
ceiling with 5 mm thickness complete
doubtful.
The lapse occurred due to violation of rules and regulations which resulted in irregular and doubtful
awarding of contract.
department.
PDP No. 809 (2020-21)
12.4.78 Loss to the government due to awarding of contract for Renovation of Old TMO Hostel
at higher rates - Rs. 1.867 million
According to the bidding documents of M/S Younas Builders submitted for Renovation of Old TMO
Hostel, a rate of 12.12% below on the scheduled and at par on the non-scheduled items was offered on MRS
2017.
21, it was observed that the contract for Renovation of Old TMO Hostel was awarded to M/S O&G
Construction with the offered rates of 6% above on scheduled items of civil works, 6% above on scheduled
items of public health works, and 6% above on scheduled items of electrical works, by ignoring the lowest
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rates of 12.12% below on the scheduled and at par on non-scheduled items offered by M/S Younas Builders,
which resulted into a loss of Rs. 1,867,263/-.
Further scrutiny of record revealed that the selected bidder offered the NSI rates of Rs. 3,213,350/- against
the engineer estimate of Rs. 12,516,318/-, which is 75.49% lower than the engineer estimate, against which
an amount of Rs. 21,106,987/- was paid up to 9th Running Bill.
Audit held that as the project was not restricted to the bid cost offered by the selected contractor, the
selection of M/S Younas Builders who offered 12.12% below on MRS and at par on NSI items was the most
feasible, which could have saved the loss aforementioned.
Audit further held that if the amount offered by the selected bidder as NSI items i.e. Rs. 3,213,350/-
is replaced with the amount paid to the selected bidder i.e. Rs. 21,106,987/-, the bid of the selected contractor
becomes higher than the rejected bidder, and the bid cost becomes Rs. 39,963,658/- (Rs. 18,856,671 MRS +
21,106,987 NSI), as against the rejected bid of Rs. 27,177,949/-.
The lapse occurred due to violation of rules and regulations which resulted in loss to the
government.
When pointed out in April 2022, it was replied that the bid cost of the selected bidder was lower
than the rejected bidder. The cost of the project was enhanced as per the demand of end user. The non-
scheduled items executed at site because of demand of end user form time to time. The initial assessment
of preparing the PC-I was at that time the end user, which were transferred from time to time.
department.
PDP No. 810 (2020-21)
12.4.79 Overpayment to contractor due to non-deduction of offered discount offered by HO

Hostel contractor - Rs. 3.291 million
work “Renovation of HO Hostel” with the quoted price of Rs. 17,926,434/- which was 28.77% below on the
Engineering Estimates.
Renovation of HO Hostel up to 8th Running Bill, including an amount of Rs. 11,707,845/- as NSI items of
396
work. However, the rate of 28.77% below offered by the contractor in their bidding documents on the
3,291,075/- (Rs. 11,707,845 X 28.11% below).
The lapse occurred due to non-observance of the approved rates of BOQ which resulted in
department.
PDP No. 814 (2020-21)
12.4.80 Loss to the government due to awarding of contract for Renovation of HO Hostel at
higher rates - Rs. 2.773 million
According to the bidding documents of M/S Dilawar Khan and Sons submitted for Renovation of HO
Hostel, a rate of 14% below on both scheduled and non-scheduled items was offered.
21, it was observed that the contract for Renovation of HO Hostel was awarded to M/S O&G Construction
with the offered rates of 7% above on scheduled items of civil works, 6% above on scheduled items of
electrical works, and 10% above on scheduled items of public health works, by ignoring the lowest rates of
14% below on all the scheduled and non-scheduled items offered by M/S Dilawar Khan and Sons, which
resulted into a loss of Rs. 2,773,304/-.
Further scrutiny of record revealed that the selected bidder offered the NSI rates of Rs. 2,646,165/-
against the engineer estimate of Rs. 10,946,405/-, which is 75.82% lower than the engineer estimate, against
which an amount of Rs. 11,707,845/- was paid up to 8th Running Bill.
Audit held that as the project was not restricted to the bid cost offered by the selected contractor, the
selection of M/S Dilawar Khan and Sons who offered 14% below on both MRS and NSI items was the most
feasible, which could have saved the loss aforementioned.
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Audit further held that if the amount offered by the selected bidder as NSI items i.e. Rs. 2,646,165/-
is replaced with the amount paid to the selected bidder i.e. Rs. 11,707,845/-, the bid of the selected contractor
becomes higher than the rejected bidder, and the bid cost becomes Rs. 26,988,113/- (Rs. 15,280,268 MRS +
11,707,845 NSI), as against the rejected bid of Rs. 21,646,199/-.
The loss occurred due to violation of rules and regulations which resulted in loss to the government.
When pointed out in April 2022, it was replied that the bid cost of the selected bidder was lower
than the rejected bidder. The cost of the project was enhanced as per the demand of end user. The non-
scheduled items executed at site because of demand of end user form time to time. The ini;tial assessment
of preparing the PC-I was at that time the end user, which were transferred from time to time.
department.
PDP No 816 (2020-21)
12.4.81 Irregular awarding of contract for Renovation of New TMO Hostel -

Rs. 19.274 million
According to Clause 3 of the KPPRA Notification No. KPPRA/M&E/Estt:/1-5/2016 dated

21, it was observed that the contract for Renovation of New TMO Hostel was awarded to M/S O&G
Construction at the bid cost of Rs. 19,274,912/- including an amount of Rs. 2,974,430/- as NSI items of work.
73.26% higher.
execution of the project, the said items were ignored altogether.
 For instance, an item of work “providing and fixing of ¾ inch thick hazara plain black granite” was
offered by the contractor at the rate of Rs. 600 per unit, as against the approved rate of Rs. 9,038
398
per unit. Similarly, an item of work “Drainage system including dismantling of old drainage line
complete – up to 2.5 inch” was offered by the contractor at the rate of Rs. 350 per unit, as against
the approved rate of Rs. 5,932 per unit. The said items of work were not executed altogether by the
contractor altogether later on.
 The rates of 15.55% below on MRS and NSI quoted by M/S Danish Malik and Co was not accepted
by the hospital administration. Rather the rates of 2% above on MRS and at par on NSI were
selected.
doubtful.
The lapse occurred due to violation of rules and regulations which resulted in irregular awarding
of contract.
When pointed out in April 2022, it was replied that the engineering estimates/ PC-I are prepared on
the basis of MRS and NSI. BOQs are offered to the contractors with above/ below on MRS and NSI as a
blank for putting their rates. Comparative statements are prepared wherein above/ below on the PC-I are
quoted.
department.
PDP No. 819 (2020-21)
12.4.82 Irregular payment on account of appointment of Pharmacists – Rs. 10.602 million
According to Clause 15 of the LRH Recruitment Policy for Non-Medical Employees, the existing
selection criteria will be replaced by a new criteria w.e.f 01.10.2016, with 20 marks for qualification (03
additional marks for one step higher qualification, and 05 additional marks for two steps higher qualification),
20 marks for relevant experience, 10 optional marks for reputed health institution experience, 10 optional
marks for additional relevant training certificate above required qualifications, 10 marks for references for
managerial or higher posts, and 30 marks for interview.
21, it was observed that an amount of Rs. 10,602,576/- (Rs. 49,086 X 18 pharmacists X 12 months) was
paid to 18 numbers of pharmacists at the rate of Rs. 49,086/- per month on account of their salaries.
However, scrutiny of the recruitment record revealed that the selection criteria aforementioned was
completely violated, by ignoring and not awarding the marks under the component “experience”, despite
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the fact that the same was mentioned as preferable in the advertisement published for the said posts, and as
was required under the recruitment policy aforementioned.
Furthermore, 10% weightage was given to the written test, as against the same being used for
screening of applicants, as was required under Clause 17 of the recruitment policy aforementioned.
Audit held that a completely modified selection criteria was adopted by the hospital administration
against the approved recruitment policy, due to which transparent and fair recruitment for the said posts
could not be carried out.
The lapse occurred due to weak internal controls which resulted in irregular payment.
When pointed out in April 2022, it was replied that the position was advertised with the required
degree as Pharm-D with 1 year experience preferable and accredited hospital experience was not
compulsory, hence no additional marks were awarded to the experience. However, they have been preferred
in the interview. Furthermore, 10% weightage was given to the written test decided by the selection
committee.
The department admitted the irregularity of violating the approved recruitment policy.
In the DAC meeting held on 20 to 23.12.2022, it was decided that the department may obtain ex
post facto sanction from the Board of Governors for non-compliance of the approved criteria. However, no
PDP No. 828 (2020-21)
12.4.83 Unauthorized payment on account of appointment of Locum Consultant Anaesthesia

- Rs. 9.900 million
According to Clause 7-10 of the approved recruitment policy of the hospital, the requisition for the
vacant or new post will be made by the concerned department head to the appointing authority, which will
be forwarded to the HR Department. The new post or vacancy will be circulated in the newspapers for a
minimum of fifteen days. The managerial or higher-level posts may be advertised twice at maximum, and
in case of no response from suitable candidates, the post may be filled through head hunting with subsequent
approval of the Chairman Board of Governors. The recruitment and selection committees will be composed
of the hospital/ medical/ nursing director as its chairman, with the head of the department concerned,
representative of the human resources department, and a co-opted member as its members.
21, it was observed that Dr. Javed Mazhar was appointed as Locum Consultant Anaesthesia vide
appointment order dated 05.09.2016, and an amount of Rs. 9,900,000/- (Rs. 150,000 X 66 months) was
paid to her on account of her remuneration, at the rate of Rs. 150,000/- per month. Audit observed that;
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 The consultant was appointed without conducting any competitive process and obtaining any
approval from the competent forum.
 The contract of consultant was extended for a period of one year vide office order 20.10.2017,
presumably on the written instructions given to Haji WarisSahb on a piece of paper.
 The HRMO vide his Note Sheet Para No. 6 regarding renewal of contract stated that there are 32
medical officers/ consultants and 09 faculty working in the Anesthesia Department. However, the
contract of the consultant was even extended for a period of one year.
 The contract of the consultant was extended for a period of five years 05 times up to 08.09.2021.
 During the renewal of contract of the consultant for 2021-22, the Director HR sought the comments
of the HOD regarding his extension or otherwise. However, the HOD did not commented and rather
stated vide Note Sheet Para No. 07 about the attachment of the performance appraisal of the
consultant.
 The Director HR vide Note Sheet Para No. 9 stated that his services may be regularized as
Anesthetist due to scarce resources in the specialty concerned.
 The Medial Director accordingly retained the consultant as Anesthetist on regular MTI contract
with effect from 09.09.2021 vide office order dated 07.09.2021, without advertising the post or
constituting the recruitment and selection committees as required under the rules aforementioned.
Audit held that appointment and extension of contract of a consultant on the recommendations of
the Director HR rather than the HOD, without considering the need for the hospital was irregular and the
payments made to him as unauthorized.
The lapse occurred due to violation of rules and regulations which resulted in unauthorize payment.
When pointed out in April 2022, it was replied that Anaesthesia being rare and unattractive specialty
and deficient consultant. To cope with the deficiency trained and qualified Anaesthesia are desired need at
all time. So, the services of Dr. Masood Javed Mazhar - Anaesthetist, a qualified and having vast experience
were hired w.e.f 09-09-2016 initially on one year contract extended from time to time and due to exigencies
of the services he was retained as Anaesthesia on Regular MTI Contract w.e.f 09-09-2021
The reply was not convincing as there was no provision in the rules and regulations of the institution
for the said appointment.
inquiry regarding availability of the same cadre posts during the period of extension of the consultant.
PDP No. 831 (2020-21)
12.4.84 Irregular expenditure due to unauthorized execution of item of work -

Rs. 6.024 million
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According to the original BOQ, a quantity of 25,000 meter of an item of work “OM4, (24 Core)
2.6mm loose tube, steel wire strength member, steel tape armored, PE jacket (DIGITUS Germany or
Equivalent) was approved by the Hospital Administration for the establishment of ICT infrastructure at Lady
Reading Hospital at the rate of Rs. 950/- per meter, along with a quantity of 2,000 meter of an item of work
“Optical Fiber Cable, SM Duct Buried, 24 Fiber, Single mode G652-D Compliant” at the rate of Rs. 121/-
per meter.
21, it was observed that a quantity of 27000 meter of an item of work “Optical Fiber Cable, SM Duct
Buried, 24 Fiber, Single mode G652-D Compliant” was shown executed by the contractor M/S National
Telecommunication Corporation (NTC) in their final bills at the rate of Rs. 223.14 per meter for an amount
of Rs. 6,024,845/-, instead of the above approved quantities of items of work, which held the execution of
work as irregular and unauthorized.
Audit held that in spite of the fact that NTC charged a 14% (2% estimation fee and 12%
establishment charges) on the total project cost amounting to Rs. 12,719,372/-, it failed to ensure quality of
work which is evident from the fact that 100% deviation from the original scope of work occurred.
The lapse occurred due to weak internal controls which resulted in irregular expenditure.
PDP No. 843 (2020-21)
12.4.85 Unauthorized payment on account of Civil Works - Rs. 20.021 million
According to the Final Capital Cost Estimate Bill submitted by M/S NTC vide letter dated
31.01.2020, an amount of Rs. 1,5089,263/- was included as cost of Civil/ Electrical Work.
21, it was observed that an amount of Rs. 92,152,529/-was paid to the National Telecommunication
Corporation (NTC) for the establishment of ICT infrastructure at Lady Reading Hospital. The payment
made to the contractor also included an amount of Rs. 20,021,588/- paid on account of Services under the
component Laying of OFC Cable Network. However, on scrutiny of record, it was revealed that all the
items included and paid under the services category were completely civil work items, as evident from the
Handing/ Taking report of NTC dated 09.01.2020. Furthermore, audit also raised the following observation;
 A quantity of 10,000 meter of PVC Pipe 4” Dia 3mm for Data Center Cables was shown
utilized at the rate of Rs. 289.48 per meter for an amount of Rs. 2,894,800/-. However, a
quantity of only 200-meter excavation in Kacha trench and 4000 meter in Pacca trench for
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laying PVC duct was executed. Hence, utilization of 5,800 meter (10,000 m –4,200) of PVC
pipe valuing Rs. 1,678,984/- (5,800 m X Rs. 289.48) was held doubtful.
 A quantity of 2,350 meter of Road boring of depth 5’ beneath road was shown executed at
the rate of Rs. 1,185.56 per meter for an amount of Rs. 2,786,088/-. However, necessary NOC
from the concerned government department was not found obtained.
 A quantity of 14,369 meter of Attachment of PVC Pipe in Duct with Pulling of Fiber was
shown executed at the rate of Rs. 503.861 per meter for an amount of Rs. 7,239,979/-
Furthermore, a quantity of 2,400 meters of an item of work Attachment of Runway/ Tray
Duct was also executed at the rate of Rs. 948.451 for an amount of Rs. 2,276,282/-, which
makes the payment so made as doubtful, as no proper measurement book showing their path
was found available on record.
 A quantity of 5,100 meter of Repair of Paccawas shown executed at the rate of Rs. 414.943
per meter for an amount of Rs. 2,116,209/-. However, only a quantity of 4,000 meter of an item
of work Excavation in Pacca Trench was executed. Hence a quantity of 1,100 meter of an item
of work Repair of Pacca amounting to Rs. 456,437/- (Rs. 1,100 X 414.93 m) was held doubtful.
 A quantity of 14,369 meter of Attachment of PVC Pipe in Duct with Pulling of Fiber was
shown executed at the rate of Rs. 503.861 per meter for an amount of Rs. 7,239,979/- However,
no proper measurement book showing their path was found available on record.
Audit held that the total amount of Rs. 20,021,588/- paid by the hospital management on account
of services, in addition to the already included civil and electrical works of Rs. 1,508,262/- was completely
unauthorized.
The lapse occurred due to non-observance of rules and regulations which resulted in unauthorized
payment.
PDP No. 846 (2020-21)
12.4.86 Loss to the government due to non-imposition of penalty and non-forfeiture of

performance security - Rs. 9.600 million
According to Contract agreement executed for 3 years between M/S Security Solution Pvt Ltd
Peshawar and LRH Peshawar on 1st may 2020, any failure to meet the requirement of the contract including
failure to complete the satisfactorily, failure to deploy minimum manpower, failure provide/use material,
shall result in deduction of proportionate amount from the bill.
21 it was observed that the management of MTI LRH awarded the security services contract to M/s Security
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Solution Pvt Ltd Peshawar vide work order dated 27-04-2020 for providing 221 guards at the rate of Rs.
18,100 per month. However, the hospital administration after the lapse of one year issued a charge sheet
type letter dated 31-05-2021 to the company describing the complete non-failure of the firm to abide the
requirement of the approved agreement resulted losses of millions to the hospital. The company was also
failed to provide and establish communication system with base and UHF/VHF radio sets in one-year
period. In addition to this, the administration conveyed 10 other shortcomings on the part of company and
lastly terminate the contract agreement vide letter dated 21-10-2021.
Furthermore, after the termination of contract agreement with the firm, the management hired the
services of another company at the rate of Rs. 21,000/- per person.
Audit held that the management neither implement the necessary mandatory clauses of the
agreement from the company nor was able to implement and imposed the penalty and forfeited the
performance security which resulted a loss of Rs. 9,600,240/- (18,100 X 221 = 4,000,100 X 12 = 48,001,200
X 10%) (Security 48,001,200 X 10%).
PDP No. 867 (2020-21)
12.4.87 Unauthorized payment on account of Anaesthesia Allowance, Critical Care

Allowance and Incentive Allowance – Rs. 404.718 million
According to the Finance Department KP notification No.FD(SOSR-II)8-18/2016 dated

07.01.2016, the provincial cabinet of Khyber Pakhtunkhwa approved the enhanced Health Professional
Allowance w.e.f 01.01.2016 at the prescribed rates subject to the condition that the existing allowances for
doctors (Anaesthesia Allowance and special packages in selected hospitals) shall be discontinued except
the non-practicing allowance.
According to Rule 8 (e) of the Khyber Pakhtunkhwa Provincial Medical Teaching Institutions Rules
2015, the institutional management committee shall devise and maintain adequate system to ensure that
firstly the MTI can identify, implement and monitor opportunities for cost improvements and income
generations programs, and secondly to be informed of the financial consequences of changes in policy, pay
awards, and other events and trends affecting budget.
During annual audit of the accounts record of MTI Lady Reading Hospital Peshawar for the
Financial Year 2020-21, it was observed that employees of the hospital were allowed Anaesthesia
Allowance. However, analysis of the HR data revealed that some of the employees were getting the
Anaesthesia Allowance along with Health Professional Allowance, total amounting to Rs. 4,680,000/-,
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which was against the spirit of the above-mentioned notification and thus resulted into unauthorized
payment and loss to the hospital funds.
Moreover, some of the employees working in the ICU of the hospital were allowed Critical Care
Allowance @ 10,000 per month total amounting to Rs. 11,280,000/-. However, neither the criterion for the
admissibility of the said allowance was known nor was there any justification of payment of an additional
allowance for working in a specific section / department. The payment of additional allowances to a specific
group of employees creates disparity among the employees, encourages favouritism and discourages
rotation of duties.
Furthermore, a number of employees were paid incentive allowance amounting to Rs.

388,758,924/- at different rates. However, neither the said allowance was consistent with the present
structure of government pay and allowances nor was the criterion for admissibility of the incentive
allowance known. The analysis of the HR data also revealed that the said allowance was not consistent, for
instance, the allowance paid to the Assistant Professors was ranging from Rs. 89,319/- pern month to Rs.
389,414/-.
Audit held that payment of the said allowances total amounting to Rs. 404,718,924/- was neither
covered in the MTI rules and regulations nor in the government policy and procedures for hospitals.
The lapse occurred due to non-adherence to rules which resulted in unauthorized payment.
In the DAC meeting held on 20 to 23.12.2022, it was decided that the department may obtain
opinion of the Finance Department regarding the admissibility of the said allowances in light of the MTI
Act. However, no progress was intimated to Audit till finalization of this report.
PDP No. 907 (2020-21)
12.4.88 Doubtful expenditure on account of repair and maintenance of transformers – Rs.

5.405 million
21, it was observed, while scrutinizing the expenditure statement, that an amount of Rs. 437,737/- was spent
by the hospital administration on account of repair of transformers. However, an amount of Rs. 4,967,350/-
has also been expended during the last three financial years by the hospital administration under the same
head, as evident from the expenditure statements, tabulated below;
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FY Head of Expenditure Amount
2017-18 Repair of transformers 2,259,446
2018-19 Repair of transformers 1,879,416
2019-20 Repair of transformers 828,488
Total 4,967,350
Audit held that huge expenditures totalling to Rs. 5,405,087/- have been incurred on the repair of
transformers repeatedly, and chances of double drawl and doubtful expenditure cannot be ruled out.
Audit further held that the hospital administration expended the amount on repair of transformers
without involving the PESCO authorities.
The lapse occurred due to weak internal controls which resulted in doubtful expenditure.
In the DAC meeting held on 20 to 23.12.2022, it was decided that the department may recover the
amount from the quarter concerned i.e. PESCO besides referring the matter to PAC for delay in action.
PDP No. 913 (2020-21)
12.4.89 Doubtful expenditure on account of purchase of IT equipment –

Rs. 200.071 million
During annual audit of the accounts record of MTI Lady Reading Hospital Peshawar for the
Financial Year 2020-21, it was observed, while scrutinizing the expenditure statement, that an amount of
Rs. 101,097,141/- (Rs. 11,744,276 + 8,307,625 + 81,045,240) was spent by the hospital administration on
account of purchase of computer hardware and switches etc. However, an amount of Rs. 98,974,064/- has
also been expended during the last three financial years by the hospital administration on the purchase of
computer hardware and switches etc., as evident from the expenditure statements, tabulated below;
FY Head of Expenditure Amount

2017-18 purchase of computer hardware and switches 32,169,996
Total 98,974,064
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It is worth mentioning here that Deputy Director IT has been given the additional charge of
Secretary to BOG since last three years, and chances of conflict of interest and the officer being influencing
the decisions of the forum related to purchase of IT related equipment cannot be ruled out.
Audit held that huge expenditures totalling to Rs. 200,071,205/- have been incurred on the purchase
of IT related equipment/ items repeatedly, and chances of double drawl and doubtful expenditure cannot be
ruled out.
The lapse occurred due to weak internal controls which resulted in doubtful expenditure.
In the DAC meeting held on 20 to 23.12.2022, it was decided that the department may conduct a
joint inquiry in the matter with members from the Health Department, KP Information Technology Board
and Audit. However, no progress was intimated to Audit till finalization of this report.
PDP No. 914 (2020-21)
12.4.90 Wasteful expenditure on account to of purchase of medical equipment -

Rs. 61.761 million
According to Para 145 of the General Financial Rules Volume-I, the purchases must be made in the
most economical manner in accordance with the definite requirements of the public service. At the same
time, care should be taken not to purchase stores much in advance of actual requirements.
21, it was observed that an amount of Rs. 35,833,775/- equivalent to USD 203,200/- and Rs. 25,927,575/-
equivalent to USD 147,000/-, totalling to Rs. 61,761,350/- was paid through LC account to M/S Mediland
Pakistan vide Cheque No. 194866 dated 05.08.2019 on account of supply of Endoscopic Ultra Sound and
Video Endoscopy respectively.
However, the equipment items were not installed and operationalized by the hospital administration
till date of audit, after a lapse of 31 months, thereby raising serious questions on the need and demand of
the items, resulting into a wasteful expenditure with no utility to the public at all.
In the DAC meeting held on 20 to 23.12.2022, it was decided that the department may conduct an inquiry
in the matter. However, no progress was intimated to Audit till finalization of this report.
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PDP No. 927 (2020-21)
12.4.91 Loss to the hospital funds due to unnecessary blockage of hospital money - Rs. 2.980
million
According to Rule 8 (d) of the Khyber Pakhtunkhwa Provincial Medical Teaching Institutions
Rules 2015, all receipts of an institution shall be deposited in the bank in the name of the institution
concerned.
21, it was observed that an account number BOK SDA 05155-00-2 was opened on 25.10.2005 in the Bank
of Khyber for cost of material and depreciation, and an amount of Rs. 2,980,407/- was shown as a closing
balance. However, the said account remained dormant since long, without carrying out any transaction.
Audit held that the account became dormant due to non-carrying out any transaction, and the
balance amount of Rs. 2,980,407/- was not brought into the knowledge of the higher ups for making part
of the regular budget for utilization.
The lapse occurred due to weak internal controls which resulted in loss to the hospital funds.
In the DAC meeting held on 20 to 23.12.2022, it was decided that the department may show the
utilization of the account and affecting recovery of the loss sustained. However, no progress was intimated
to Audit till finalization of this report.
PDP No. 942 (2020-21)
12.4.92 Irregular expenditure on account of purchases due to non-transparent tendering

process - Rs. 73.403 million
According to the bid evaluation criteria of the LRH MTI for purchase of IT equipment, qualifying
marks were 49 out of 100 marks consisting of 70 marks for technical qualification and 30 marks for financial
qualification with the condition that the lowest bidder will get full marks.
21, it was observed that a sum of Rs. 73,403,621/- was paid to M/S Computer Marketing Co. Pvt Ltd (CMC)
vide cheque No. 214828 dated 3.6.2021, for purchase of IT equipment. However, it was observed that;
 Bid documents of the M/S CMC were not available on record.
 In the tender opening meeting held on 05-03-2019, M/S CMC did not participate.
 Technical evaluation sheet of M/S CMC was not available on record.
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 Other firms M/S DWP Technologies and M/S Mega Plus which participated in the tendering
process were declared technically disqualified in “all in one systems” in the final report. However,
these firms were awarded 93 and 81 marks in the technical evaluation sheets of other computer
equipments/laptops under the same tendering process.
 The Management Committee (MC) in its meeting held on 30.6.2020 also refused to give approval
of the said payment due to non-fulfillment of codal formalities and incomplete bills.
Audit held that the whole tendering process was dubious just to provide undue benefit and favourto
the selected firm M/S CMC by compromising transparency in the tendering process which is irregular and
needs justification.
The lapse was occurred due to weak internal controls which resulted in irregular expenditure.
joint inquiry in the matter. However, no progress was intimated to Audit till finalization of this report.
PDP No. 946 (2020-2021)
12.4.93 Loss due to unjustified awarding of contract for maintenance of networking system -
Rs. 9.238 million
According to the mandate of the MIS Department LRH MTI, the computer department is
responsible for:
 Providing day to day support with the routine running of the computer systems in hospitals
 Supports the hardware and software which is in use with the hospital
The IT department is responsible for:
 All Networks, computer and health information system and to ensure that the systems and
equipment improves hospital efficiency, patient safety and information interoperability.
During audit of the accounts of MTI Lady Reading Hospital Peshawar for the financial year 2020-
21,it was observed that contract for “Network maintenance, 2019-22” was awarded to M/S MBE Services
vide letter No. 17026-10MMD/LRH/MTI dated 12.07.2019 at Rs. 384,948/ per month. A sum of Rs.
9,238,752/- (384948 x 24 months) was paid accordingly to the firm during the period w.e. f 07/2019 to
06/2021. However, audit held that the expenditure is a recurring loss and extra financial burden on the
institute because a fully functional MIS department is working in the institute with the responsibility to run,
provide day to day support, and maintain the networks, hardware and software, and computer systems etc.
So, in presence of the MIS Department, awarding contract for the maintenance of network systems of the
institute is irrational, un-justified and beyond understanding.
The lapse was occurred due to weak internal controls and extending undue favour to the firm which
resulted in recurring loss to the hospital funds.
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fact-finding inquiry in the matter for making cost and benefit analysis of outsourcing or own hiring of the
network maintenance services. However, no progress was intimated to Audit till finalization of this report.
PDP No. 960 (2020-21)
12.4.94 Doubtful expenditure on account of utilization of cardiac stents -

Rs. 3.372 million
According to Rule 23 of the General Financial Rules Volume-I, every public officer is personally
responsible for any loss sustained by government through fraud or negligence on his part or on the part of
his subordinates.
21, it was observed that a sum of Rs. 66.637 million was transferred to Cardiology Department BOK
Account No. 3438-00-9 in the month of March 2021 for the stents consumed in Cath Lab charged from the
Sehat Sahulat Procedures during the Year 2018-19. However, sample scrutiny of record of the patients of
Cardiology Department treated for the cardiac stents from the Sehat Sahulat Card revealed that stents /
items shown consumed on the patients through Sehat Sahulat procedures were not matching with the items
shown issued and utilized in the stock register.
1. In some cases, the quantity of DES Stents of various types shown consumed in the stock register
were more than the quantity shown consumed in the Sehat Sahulat procedures meaning thereby
that excess quantity was shown consumed in the stock register without actual utilization.
2. Similarly, in some instances, the quantity of DES stents shown consumed in the Sehat Sahulat
Procedures was more than the actual quantity shown consumed in the stock register meaning
thereby that excess quantity of DES stents was claimed in the Sehat Sahulat procedures.
Audit held that mismatch of the stents and other cardiac items was a serious lapse which resulted
in doubtful expenditure on account of DES stents amounting to Rs. 3,372,000/- (Annexure-XXVII).
The lapse was occurred due to weak internal controls over the concerned staff which resulted into
doubtful expenditure.
In the DAC meeting held on 20 to 23.12.2022, it was decided that the department may provide
this report.
PDP No. 968 (2020-21)
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12.4.95 Doubtful expenditure due to unverified utilization of cardiac items -
Rs. 159.921 million
According to Para 13 of GFR Vol 1, every controlling officer must satisfy himself not only that
adequate provision exists within the departmental organization for systematic internal checks calculated to
prevent and detect errors and irregularities in the financial proceedings of its subordinate officers but also
that the prescribed checks are effectively applied. Each head of the department will get the accounts of his
office and those of the subordinate disbursing officers inspected at least once in every financial year to see
whether effective system of internal checks exists for securing regularity and propriety in the various
transactions including receipts and issue of store etc.
21,it was observed that a separate fund account was maintained for the affairs of the cardiology department
and a fund of Rs. 58.282 million was separately allocated and an expenditure of Rs. 159.921 million
incurred from the said account on account of purchase of various cardiac items like Stents, Sprinter Balloon,
Injections, PCI Kits, ECG Stickers, Redial Sheath etc. during the year.However, no major procedures like
open heart surgeries etc. were conducted in the cardiology department despite availability of trained
personnel.
Moreover, majority of the procedures involving utilization of stents and other cardiac items were
funded from the Sehat Sahulat Program.
Furthermore, details of patients and patient registers etc. were demanded time and again for
comparison with the items shown utilized in various sections of the cardiology department like Cath Lab,
Echo, ETT, Holter and Nuclear etc., but the same were not provided to Audit.
It is worth mentioning here that CRC Center in Hayatabad Medical Complex and Peshawar Institute
of Cardiology were established in District Peshawar.
Audit held that in presence of CRC Center and PIC and introduction of MTI / BOGs in the hospitals,
the maintenance of separate account was a serious lapse on part of the hospital management.
Audit further held that incurring expenditure on the purchase of cardiac items despite the fact that
the procedures were funded from Sehat Sahulat Program and subsequent non-production of patient record
was a serious lapse on part of the hospital management and makes the expenditure incurred as doubtful.
The lapse was occurred due to weak internal controls which resulted in doubtful expenditure.
In the DAC meeting held on 20 to 23.12.2022, it was decided that the department may provide
relevant record of utilization of funds of cardiology department to Audit for verification. However, no
PDP No. 970 (2020-21)
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12.4.96 Loss to the government due to non-imposition of penalty upon HVAC System
According to the work order dated 20.03.2018 issued to M/S DWP Technologies for Replacement
of HVAC System by New Latest Energy Efficient System, the time for completion of work is 12 months
after execution of the contract agreement on 26.03.2018.
According to Clause No. 11.1 and 22 of the terms and conditions of the contract agreement, the
supplier shall make delivery of the goods which is maximum 90 days from the date of issuance of this
contract on 26.03.2018 or opening/ establishment of LC. In case of late delivery, penalty as specified in the
SCC shall be imposed upon the supplier.
2020-21, it was observed that the contract for Replacement of HVAC System by New Latest Energy
Efficient System was awarded to M/S DWP Technologies for an amount of Rs. 484,000,000/- vide work
order dated 20.03.2018. However, further scrutiny of record revealed that the contractor failed to complete
the project within the due course of time.
Furthermore, the supply and installation of the system could not be completed till date i.e. June
2022.
Audit held that the hospital administration should have imposed penalty upon the contractor at the
prescribed rates amounting to Rs. 48,400,000/- (Rs. 484,000,000 X 10%).
When pointed out in June 2022, it was replied that the audit note has been discussed with the
hospital administration, and detailed reply will be furnished after complete verification of record.
In the DAC meeting held on 02.02.2023, it was decided that the department may provide
justification / reasons of extension in time period by the Board of Governors. However, no progress was
Audit recommends imposition of penalty and affecting recovery at the earliest.
PDP No. 1244 (2020-21)
12.4.97 Irregular expenditure on account of operation and purchase of medicine for Retail
Pharmacy - Rs. 43.579 million
According to Agenda Item No. 04 of the 22nd BOG meeting held on 04.03.2017, it was decided to
establish the Retail Pharmacy for providing medicines to the patients within the premises of the hospital.
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During audit of the accounts record of MTI Khyber Teaching Hospital Peshawar for the Financial
Year 2020-21, it was observed that the Retail Pharmacy was established in the hospital for facilitating the
patients by providing medicines in the hospital’s vicinity in the Year 2020, after a lapse of almost 04 years
of the approval of the establishment of the same by the Board of Governors in its 22nd meeting held on
04.03.2017. Accordingly, an amount of Rs. 43,579,311/- was expended on the purchase of medicines for
the retail pharmacy. Further scrutiny of record revealed that;
 The Pharmacy Department vide letter dated 09.11.2019 intimated that the desired out-patient
pharmacy can be established, which shall not only provide services but the same will be pilferage
free, having auditable documented record keeping as well, which is essential besides the services
delivery. However, the auditable record like the demand generation, supply order, delivery
challans, inspection reports, payment vouchers, and the contract agreements etc. could not be
maintained by the Retail Pharmacy staff.
 A separate bank account for the Retail Pharmacy was not opened by the hospital administration as
was decided vide Agenda Item 14.5 of the minutes of the 81st BOG meeting held on 09.12.2020. It
is worth mentioning here that the said bank account was said to have been opened, as evident from
the meeting for newly established retail pharmacy held on 15.01.2021.
 The hospital administration and the board of governors vide Agenda Item No. 14 of the 81 st BOG
meeting held on 09.12.2020 decided to establish the pharmacy to provide quality medicines/
disposables/ medical devices to the patients on discounted rates and generate a profit margin for
the institution as well, which was against the approval granted by the Health Department vide letter
dated 24.12.2020, wherein it was intimated that the retail pharmacy should be run by the hospital
administration on “no profit no loss” basis.
 The hospital administration failed to generate profit from the operations of the retail pharmacy
despite the fact that a mark rate of 7.5% was decided to be fixed on the sales of the pharmacy
medicines, as was decided in the meeting for newly established retail pharmacy held on 15.01.2021.
 The hospital administration and the board of governors vide Agenda Item No. 14 of the 81 st BOG
meeting held on 09.12.2020 decided to provide pharmacy services in two shifts, which was against
the approval granted by the Health Department vide letter dated 24.12.2020, wherein it was
intimated that the pharmacy shall be operational round the clock i.e. 24/7.
 The Retail Pharmacy purchased all the medicines and disposables from M/S Takhtbai Medicose
directly, as against purchasing the same either from the MCC approved list of suppliers or by
adopting internal tender system, as was decided in the SOPs formulated by the hospital and
directions given by the Health Department vide letter dated 24.12.2020.
 The pharmacy staff could have adopted proper tendering system for the purchase of medicines for
the Retail Pharmacy, as was observed by the Internal Audit Department of the hospital vide Para
No. 9.15 of the Internal Audit Report for the period July 2018 to June 2019, regarding selection of
M/S Takhtbai Medicose for supply of medicines to the IBP Pharmacy.
 The pharmacy staff purchased the medicines and disposables from M/S Takhtbai Medicose,
including the local purchase items, as against purchasing the LP medicines from the LP supplier
selected for the routine hospital pharmacy, as was required under the SOPs developed.
 The purchases and sales were made without obtaining approval from the Formulary Committee,
the Medical Director and the Hospital Director, as was required under the SOPs developed.
 The retail pharmacy staff neither finalized the terms and conditions nor executed proper contract
agreements with the selected suppliers, as was required under the SOPs developed.
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 The pharmacy staff could not provide evidence regarding conducting the routine sales through the
HMIS Software, instead of manual sales, as was required under the SOPs developed.
 The Finance Department of the hospital failed to prepare the monthly report including the Profit
and Loss Statement, Balance Sheet and Cash Flow Statement, as was required under the SOPs
developed.
 The Finance Department of the hospital failed to submit the monthly analysis regarding sales made,
receivables generated, amount released and the actual pharmacy consumption; and in respect of the
Sehat Sahulat Card Patients, as was required under the SOPs developed.
 The Internal Audit Department failed to conduct semi-annual and annual internal audit of the retail
pharmacy and submit the report to the hospital administration and the Board of Governors, as was
required under the SOPs developed.
 The Chief Internal Audit was directed by the Hospital Director vide letter dated 27.01.2021 to carry
out audit of the retail pharmacy, specifically in light of the observations raised by the Associate
Hospital Director vide his letter dated 11.11.2021. However, the Auditor failed to carry out the said
audit till date of Audit.
Audit held that the whole affairs of the retail pharmacy were administered poorly, which resulted
in non-achievement of the objectives of the establishment of the pharmacy and resulted into a loss in terms
of revenue and profit forgone due to the poor operations as well.
The lapse occurred due to violation of rules and regulations which resulted in irregular expenditure.
In the DAC meeting held on 02.02.2023, it was decided that the department may provide relevant
record like market price verification and profit and loss of the retail pharmacy for verification. However,
Audit recommends investigating the matter, fixing responsibility and taking appropriate against the
person(s) at fault.
PDP No. 1314 (20220-21)
12.4.98 Unauthorized expenditure on account of purchase of medicines for retail pharmacy -

Rs. 14.933 million
According to the SOPs formulated by the hospital for running the affairs of the retail pharmacy, the
medicines for the retail pharmacy can be purchased from either the MCC approved list of suppliers or by
adopting internal tender system. Similarly, the LP medicines for the retail pharmacy can be purchased from
the LP supplier selected by the hospital for the routine hospital pharmacy.
According to the Health Department KP letter dated 24.12.2020, the retail pharmacy shall be run
by the hospital administration according to rules and regulations.
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During audit of the accounts record of MTI Khyber Teaching Hospital Peshawar for the Financial
Year 2020-21, it was observed that an amount of Rs. 7,466,805/- was paid to M/S Takhtbai Medicose on
account of supply of medicines to the retail pharmacy during the period w.e.f January to June 2021, as
evident from the system generated list of procurements made, totalling to Rs. 14,933,610/- (Rs. 7,466,805
X 2 (for the whole period of 12 months)). However, the purchases were made without adopting the approved
list of the MCC or internal tendering system, in violation of the rules afore mentioned.
It is worth mentioning here that the Internal Audit Department of the hospital had raised Para No.
9.15 of the Internal Audit Report for the period July 2018 to June 2019 while reviewing the accounts of the
IBP Pharmacy, regarding selection of M/S Takhtbai Medicose for supply of medicines to the IBP Pharmacy,
wherein it was recommended that market surveys should have been conducted and quotations called for the
local purchase of medicines to ensure price efficiency and quality of the products.
Audit held that purchasing the medicines from M/S Takhtbai Medicose without adopting internal
tendering system was completely unauthorized and extending undue favour towards the choice contractor
by the hospital administration.
Audit further held that as per the analogy of the internal audit recommendations regarding selection
of the firm for IBP Pharmacy, the contract for the supply of medicines to the retail pharmacy also should
have been tendered to obtain economical rates and the best quality products.
expenditure.
In the DAC meeting held on 02.02.2023, it was decided that the department may provide relevant
record like market price verification and profit and loss of the retail pharmacy for verification. However,
Audit recommends investigating the matter, fixing responsibility and taking appropriate against the
persons at fault.
PDP No. 1317 (2020-21)
12.4.99 Loss to the government due to unauthorized payment on account of Institutional

Performance Allowance – Rs. 30.240 million
According to Clause 7(1)(a) & (l) of the MTI Act 2015, the Board of Governor shall be responsible
for ensuring that the objectives of the Medical Teaching Institution within the overall ambit of the
government policy are achieved, and that the government policies and standards are complied with, and
obtaining prior approval from government in case of any deviation.
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2020-21, it was observed that an amount of Rs. 30,240,000/- was allowed and paid to the employees of the
hospital on account of Institutional Performance Allowance. However, there was no provision for the said
allowance to be paid to the employees of the hospital.
Furthermore, neither the hospital administration nor the board of governors seek prior approval for
deviation from the provincial government for deviation from their policies and standards in allowing the
said allowance.
The lapse occurred due to non-adherence to rules which resulted in loss to the government.
In the DAC meeting held on 02.02.2023, it was decided that the department may seek guidance
from the Health Department regarding the admissibility of the said allowance. However, no progress was
Audit recommends recovery besides looking into the matter for the previous years and calculating
(and affecting recovery) the amount of the said allowances from the employees since its initiation.
PDP No. 1338 (2020-21)
12.4.100 Loss to the hospital fund due to purchase of medicines at higher rates -
Rs. 6.560 million
According to Clause No. B & C of the DGHS Peshawar letter No. 2655-2754/DDC/DGHS/KP
dated 16.10.2020, the purchasing entities shall place supply orders of the needed items directly to the
suppliers. The purchasing entities shall keep in view and shall be responsible to vigilantly act upon the
terms and conditions as agreed by the suppliers as per their contract agreements.
2020-21, it was observed that the hospital management purchased 38 different medicines and disposables
items from the open market at much higher rates than the one approved by the MCC management of the
KP Government, which resulted into a loss of Rs. 6,560,087/- (Annexure-XXVIII).
Audit held that the hospital was bound to purchase all those medicines and disposables, which are
available and approved by the MCC management keeping in view the financial propriety of the public fund.
The lapse occurred due to non-compliance of the recommendation of the inquiry report which
resulted in loss to the hospital funds.
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In the DAC meeting held on 02.02.2023, it was decided that the department may conduct inquiry
in the matter in consultation with Director General Drugs, Health Department. However, no progress was
Audit recommends recovery of the loss sustained by the hospital due to purchase of medicines on
higher rates.
PDP No. 1279 (2020-21)
12.4.101 Loss to the government due to less recovery of room rent and utility charges from
hostel occupants – Rs. 250.769 million
According to Agenda Item No. 06 of the minutes of 29th MTI LRH Peshawar’s Board of Governors
meeting held on 20-08-2020, it was decided by the Board of Governors that no free electricity or gas facility
would be provided to the residents of hostels or other residential places of the hospital. Proper meters should
be installed and charges should be paid by the residents for their relevant premises. This should be done
immediately. Furthermore, the Board also decided that the Electrical Engineer should review all the
electrical installations within and outside the hospital and develop policy to reduce consumption and present
the same to the Board. The same should be done for gas supply.
2020-21, it was observed that payment to the tune of Rs. 241,073,258/- (Annexure-XXIX-A) was made
on account of electricity charges and Rs. 12,390,970/- (Annexure-XXIX-B) on account of gas charges,
totalling to Rs. 253,464,228/-, for different hostels of the hospital. However, the management deducted a
very meagre amount of Rs. 2,694,431/- (Annexure-XXIX-C) from the occupants at the nominal rates of
Rs. 300 as electricity charges, Rs. 300 as gas charges, and Rs. 2,000 as AC charges, resulting into less
recovery of Rs. 250,769,757/-, which resulted into a loss to the provincial government.
Audit further observed the following;

 The rates at which the utility charges are deducted are the ones which were en vogue in the Year
2007-08, and the hospital administration and the board of governors badly failed to revise the same
according to the prevailing prices of these utilities.
 There were no SOPs in line with the provincial government criteria regarding the entitlement of
employees to the AC facility, due to which almost all the staff residing in the hostels, including
paramedics, nurses and doctors etc. were allowed the said facility, due to which there was such a
huge gap between payments made as utility charges and the recoveries affected thereon.
 There were no controls or internal check system to monitor the operations of the ACs and utilization
of the utilities, due to which most of the occupants were using window/ general ACs instead of split
ACs.
 The AC facility was allowed to the occupants for five months only and deductions made for these
five months accordingly, whereas on ground, there was no mechanism in place to check as to
whether the same are used during these five months only or otherwise.
 Neither separate check meters were installed in the hostels nor was there any plan available to do
the same in the near future, on the analogy of the system adopted by the Board of Governors MTI
LRH Peshawar.
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 The hospital administration failed to develop a policy to reduce the consumption of the utility
charges, as was decided and initiated by the Board of Governors MTI LRH Peshawar.
 The Finance Department KP releases one-line budget to the hospital every year, without monitoring
and checking as to where and how the said budget is utilized by the hospital administration.
 As the hospital administration paid an amount of Rs. 253,464,228/- on account of utility charges
of a total of 905 occupants, thereby costing Rs. 280,070/- per head to the hospital funds, which is
greater than the utility charges of a house occupied by a full family, and thus completely unjustified.
The lapse occurred due to non-adherence to rules which resulted in loss to the government.
When pointed out in June 2022, it was replied that the audit note has been discussed with the hospital
administration, and detailed reply will be furnished after complete verification of record.
In the DAC meeting held on 02.02.2023, it was decided that the department may provide record
regarding recovery made against the expenditure to Audit for verification. However, no progress was
Audit recommends to recover the amount less recovered from the occupants of the hostels.
Audit further recommends the hospital administration to look into the matter for the previous years and
calculate (and recover) the amount on the said accounts from the employees as well.
PDP No. 1281 (2020-21)
12.4.102 Overpayment on account of purchase of machinery - Rs. 10.942 million
According work order No.4556/HMC dated 23/03/2020, clause 08, the firm will provide 10% Bank
Guarantee for a period of 05 years (starting from the date of installation) which will be released after
successful completion of warranty/guarantee period or in case of non-provision 10% may be retained from
the bill.
2020-21, it was noticed that contract for the supply of 15 No ICU ventilators was awarded to M/S Friends
Traders vide PO No.4556/HMC date 23/03/2020.
Audit observed the following:

 The items were available in the approved MCC list @ Rs. 2,495,000/- which was ignored and
purchase was made @ Rs. 2,895,000/- resulting into overpayment of Rs. 6,000,000/- (400,000 *
15).
 Instead of security @ 10% in shape of bank guarantee or retention money amounting to Rs.
4,342,500/-, the firm gave an affidavit, which was treated as bank guarantee by the local office in
violation of the rules ibid. Hence undue favour was extended to the contractor and interest of the
government was compromised for vested interests of the dealing hands.
 Contract agreement was not signed within the stipulated period of time i-e 20 days. The PO was
issued on 23/03/2020 while the contract was signed on 10/02/2021. Therefore, the 2% bid security
418
amounting to Rs. 868,500/- was required to have been forfeited and contract awarded to next lowest
bidder, which was not done. Hence the merit and transparency was compromised.
Audit therefore held that the contract was awarded unfairly and undue favour was given to the
supplier, resulting into an overpayment or Rs. 10,342,500/-
The lapse occurred due to weak internal controls and financial mismanagement which resulted in
relevant record like justification of rate, bid security i.e. bank guarantee and original contract agreement
etc. to Audit for verification. However, no progress was intimated to Audit till the finalization of this report.
Audit recommends investigating the matter and fixing responsibility on person (s) at fault.
PDP No. 1083 (2020-21)
12.4.103 Unjustified expenditure on account of hospital waste disposal - Rs. 4.849 million
According to work order No. 51394/HMC dated: 05-04-2016, Hospital purchased Incinerator from
M/S Pak Glorious. Read with contract agreement executed with supplier, that Warranty/Guarantee will be
03 years with parts and services from the date of installation and 03 years free maintenance services without
parts a total of 06 years and after sales service and parts availability for 10 years.
2020-21, It was noticed that Rs. 4,849,714/- was shown incurred on account of Hospital waste disposal and
paid to M/S ARAR Services as detailed below, due to non-functioning of the incinerator installed at hospital
as detailed below:
Cheque Date Amount
210976 05-03-2021 1,605,897
211849 15-03-2021 1,394,219
212170 18-05-2021 1,430,911
213377 10-06-2021 418,687
Total 4,849,714
Audit held that parts provision and free maintenance was the responsibility of the supplier i.e. M/S
Pak Glorious, but the local office did not enforce the contract clauses and went for outsourcing the services
of M/S ARAR which is negligence on the part of the local office and waste of public money. Moreover, the
services of M/S ARAR were engaged without any tender and fulfilling any codal formalities. Therefore,
the expenditure so incurred is un-justified and irregular.
The lapse occurred due to weak internal control systems which resulted in unjustified expenditure.
419
relevant record like advertisement and comparative statement etc. to Audit for verification. However, no
progress was intimated to Audit till the finalization of this report.
PDP No. 1088 (2020-21)
12.4.104 Loss to the hospital funds due to non-recovery on account of electricity charges - Rs.
32.467 million
According to para 26 of GFR Vol-I, It is the duty of the Departmental Controlling Officer to see
that all sums due to government regularly and promptly assessed, realized and duly credited to the public
account.
2020-21, it was noticed that Rs. 30,840,277/- was shown incurred on account of electricity charges of
residential buildings of MTI HMC.
Audit observed that no recovery was made from the residents/occupants of these accommodation
and they were availing the facility free of cost which is totally unjustified and un-authorized. Further
verification revealed that from 01-08-2021, check meters in few flats were installed who consumed
electricity of Rs. 1,626,738/- as calculated by the Facility Management Department, but no payment was
made by occupants till date of audit.
The lapse occurred due to weak internal control systems which resulted in loss to the hospital funds.
In the DAC meeting held on 13.12.2022, it was decided that the department may make complete to
recover the amount. However, no progress was intimated to Audit till finalization of this report.
PDP No. 1093 (2020-21)
12.4.105 Non-recovery of liquidated damages from absconder scholar – Rs. 1.000 million
According to clause-v of the agreement signed between the scholar and Ayub Medical College,
Abbottabad, in the event of breach of any of the aforesaid terms not arising from unavoidable circumstances
the fellow/scholar binds himself firmly to pay on demand a sum of Rs.one million as liquidated damages
to the Ayub Medical College Abbottabad. The agreement further stated that the sureties jointly and severally
420
agreed to stand bound by the agreement and undertake to pay the amount without question and without
reference to him.
it was observed that Muhammad Taimur Khan worked as lecturer in Dentistry Department of the college,
was awarded fellow ship/scholarship for doing MPH Program at Nova Southeastern University, Florida,
USA and was granted 703 days leave. The teacher was required to complete the course within two years
and was due to report for his duties on 26-12-2019.
Audit observed that the concerned teacher did not return to join AMC and serve the college for five
years in terms of clauses of the agreement but found absconder. The BoG in its 61th meeting held on 02-
04-2021 removed him from service without recovery of liquidated damages from those sureties who signed
the agreement along with Muhammad Taimur Khan.
The lapse occurred due to violation provisions of contracts agreements which resulted in loss to the
government.
When pointed out in August, 2021, the Management of the college replied that the matter case was
put in the BoG meeting dated 02-04-2021 and major penalty was imposed on the officer (Removal from
Service). Since he is still abroad and matter will be dealt according to agreement/Bond.
The reply was not satisfactory. The absconder scholar breached the provisions of the signed
agreement hence, in pursuance of agreement clauses referred ibid, liquidated damages from the sureties,
who signed the agreement, was required to be recovered but was not done.
In the DAC meeting held on 27.12.2021, it was decided that recovery may be made from defaulter
scholar.
During the verification of record dated 22.12.2023, the department failed to initiate recovery from
the sureties of the ex-lecturer, hence the matter was referred to PAC.
Audit recommends immediate recovery of liquidated damages from the concerned who gave
sureties on behalf of the absconder scholar, under intimation to Audit.
PDP No. 121 (2020-21)
12.4.106 Overpayment on account of ARA 2013 & ARA 2015 – Rs. 2.166 million
According to Finance Department Notification No. FD (PRC)1-1/2016 dated: 19.7.2016, 15%

Adhoc Relief 2013 and 10% AR 2015 were merged into basic pay and were frozen on 30.6.2016.
During audit of the accounts of Khyber Girls Medical College Peshawar for the Financial Year
2020-21, it was noticed that various employees who were paid Adhoc Relief Allowances 2013 and 2015
amounting to Rs. 2,166,053/-, freezed after 01.07.2016 (Annexure-XXX). These employees were not
entitled to draw this allowance.
421
The lapse occurred due to non-observance of government rules which resulted into loss to the
government.
When pointed out in March 2022, no reply was furnished.
In the DAC meeting held on 21.12.2022, it was decided that the department may get the recovered
amount verified from Audit. However, no progress was intimated to Audit till finalization of this report.
Audit recommends to recover the amount at the earliest and compliance to the DAC directives
besides initiating inquiry against the delinquents.
PDP No. 750 (2020-21)
422
12.4.107 Loss to the government on account of unauthorized Institutional Performance
Allowance in lieu of HPA – Rs. 6.876 million
According to section-7(l) of the MTI Act2015, the Board shall be responsible for compliance to
Government and Board policies and base standards and any deviation from agreed standards or procedures
shall obtain prior approval from the Government.
According to Finance Department Regulation Wing Khyber Pakhtunkhwa Notification No.

FD(SOSR-II/8-18/2016) dated 07.01.2016 and even number dated 15.04.2016 and 23.02.2017, the
Incentive Allowance in the shape of HPA was approved for the medical professionals (civil servants and
institutional employees), paramedics and nursing staff.
During audit of the accounts of Khyber Medical College Peshawar for the Financial Year 2020-21,
it was observed that the Board of Governors allowed Institutional Performance Allowance in lieu of Health
Professional Allowance to all the non-medical staff of the College @ Rs. 3,000 per month to the staff from
BPS-1 to 10 and Rs. 4,000 per month to the staff in BPS-11 and above.
Audit held that neither the provincial government had extended the incentive of HPA to the non-
medical employees working in the Health Department (civil servants and institutional) nor any other
allowance in lieu of HPA was granted. Only medical professionals, paramedics and nurses were allowed
the said allowance as per notification quoted above. Hence, the withdrawal of Rs. 6,876,000/- as detailed
below is thus held irregular and unauthorized;
No of Employees up to BPS-10 No of Employees above BPS-10
143 No @Rs 3,000 per month 36 No @Rs 4,000 per month

Overpayment Overpayment
Rs 3,000 x 143 x 12=Rs 5,148,000 Rs 4,000 x 36 x 12=Rs 1,728,000
Total Overpayment= Rs 5,148,000+Rs 1,728,000 Rs 6,876,000
The lapse occurred due to weak internal controls and violation of government rules which resulted
When pointed out in March 2022, no reply was furnished.
In the DAC meeting held on 21.12.2022, it was decided that the department may obtain clarification
from the Finance Department. However, no progress was intimated to Audit till finalization of this report.
Audit recommends recovery and compliance to the DAC directives under intimation to Audit.
PDP No. 759 (2020-21)
423
12.4.108 Fraudulent withdrawal of funds due to non-receipt of ordered items -
Rs. 6.236 million
According to Para 23 of GFR Vol I, every public officer is personally responsible for any loss
sustained by government through fraud or negligence on his own part or on the part of subordinate
During audit of the accounts of Mufti Mehmood Memorial Teaching Hospital MTI D.I. Khan for
the Financial Year 2019-20, it was observed that an expenditure of Rs.9,509,147/- was incurred on account
of purchase of Medicines, Chemicals & disposable items (Annexure-XXXI). Out of the purchases of Rs.
9,509,147/-, medicines, chemicals and disposables amounting to Rs.6,236,544/- were neither taken on stock
register nor received in the main store.
Upon verification of pages Nos. stock registers recorded on invoices, audit observed the following:
1. In some cases, the page No. of the stock register recorded on invoices was not found due to the fact
that the mentioned page No. was not available in stock register due to less number of total pages in
stock register.
2. In some instances, some other item was found on page record on invoice. (irrelevant/fake entry)
3. In some cases, page of the stock was found blank and the bill were passed.
4. In some cases, entries were not found on stock register
Audit held that neither these medicines, chemicals and disposables amounting to Rs. 6,236,544
were taken on register nor expenses through wards/units were made meaning thereby that these bills were
passed on by recording fake entries on bills. Further verification of expense registers of each ward/unit, it
was found that no item was found issued from main store to units/ wards thus mis-appropriated.
The lapse occurred due to weak internal and financial controls which resulted into fraudulent
withdrawal of funds.
When pointed out in August2020, no reply was furnished.
In the DAC meeting held on 10.01.2024, it was decided that complete recovery may be made
besides administrative action against the official. However, no progress was intimated to Audit till
Audit recommends detail inquiry in the matter and fixing responsibility against the person(s)
involved besides complete to recover the amount.
PDP No. 626 (2019-20)
12.4.109 Irregular execution of Financing Agreement in excess of actual fund requirement and
PC-I estimation – Rs. 1358.370 million
According to Section 6.14 & 8.12 and certificate of the Manual for Development Projects Revised
Edition 2019, Ministry of Planning, Development and Reform, Government of Pakistan, the financial
424
phasing of a project is to be given for each fiscal year related to the physical work proposed to be
undertaken, keeping in view the implementation of similar projects in the past. Funds utilization capacity
of executing agency should be kept in view while determining financial phasing of the project. The PD&R
Division has to ensure that the PC-I has been prepared correctly and according to the prescribed procedure.
In case, the PC-I is found sketchy and deficient, it is returned to the sponsors by PD&R Division, if
considered necessary, make a consolidated enquiry from the sponsors with respect to deficiencies in the
proforma and seek clarification or additional information in the pre-CDWP meeting. Certified that the
information/data provided in the PC-I is correct and authentic. The cost estimates have been correctly
assessed and have neither been underestimated nor overestimated.
During financial attest audit of KP Human Capital Investment Project – Health Component (D680-
PK/6714-PAK) for the Financial Year 2022-23, it was observed that Financing Agreement of the project
was signed between Islamic Republic of Pakistan and International Development Association for the total
financing of USD 200 million. Out of total financing, USD 85 million was allocated for health component
and accordingly PC-I of Rs.13,260.00 million was framed on the basis of USD to PKR equivalency of
Rs.156.
Scrutiny of the PC-I revealed that activity wise cost estimation was prepared/ approved wherein
funds were allocated to each component of the project (P.13) which covered all the capital and revenue cost
of the project that were associated with the project objectives. However, it was noticed that USD 5.031
million i.e. Rs.784.880 million were in excess of the actual cost and the same were classified as
“Unallocated amount” against which no activity was planned/ required and the same was calculated on the
basis of Rs.156 per USD, as such the same amount is now equivalent to Rs.1358.37 million (5.031 x
Rs.270/USD).
Audit held that the Financing Agreement was executed without working the project actual fund
requirements which created the probability of misuse of unallocated fund. The excess amount of Rs.1358.37
million escalated the project liability in terms of principal amount repayment along with 0.5% Commitment
Charges, 0.75% Services Charges and 1.25% Interest Charges but neither the project management while
preparing the PC-I, the PDWP/ CDWP/ ECNEC forum while approving the PC-I took notice of it.
The lapse occurred due to execution of Financing Agreement without proper estimation which
created liability in addition to probable misuse of unallocated funds.
Audit recommends to inquire the matter for fixing of responsibility and disciplinary action against
the person(s) found at fault besides making corrective action.
PDP No. 28 (2022-23)
425
12.4.110 Loss to the government due to non-utilization of withdrawn credit amount – Rs.
32.740 million
According to Article II section 2.01 of the Project Agreement, the Project Implementing Entity
declares its commitment to the objectives of the Project. To this end, the Project Implementing Entity shall
carry out the Project in accordance with the provisions of Article V of General Conditions and the Schedule
to this Agreement, and shall provide promptly as needed the funds, facilities, services and other resources
required for the Project.
According to Article II sub-section 2.04 & 2.05 of the Financing Agreement (D680-PK/6714-PAK)
executed for KP Human Capital Investment Project between World Bank and Government of Pakistan, the
Service Charge is three-fourths of one percent (3/4 of 1%) pr annum on the withdrawn Credit Balance. The
Interest Charge is one and a quarter percent (1.25%) per annum on the Withdrawn Credit Balance.
During financial attest audit of KP Human Capital Investment Project – Health Component (D680-
PK/6714-PAK) for the Financial Year 2022-23, it was observed that total fund of Rs.2071.711 million was
received from the World Bank against which expenditure of Rs. 434.579 million was made, leaving an
unutilized balance of Rs.1637.13 million during the last 02 years.
The following irregularities were observed:

i. Apart from non-utilization of the withdrawn balance for the achievement of project objectives
and non-carrying out civil work will not only result in delayed completion of works but also
enhance the project cost in shape of escalation and price hike.
ii. Liability of Rs.32.74 million was created in shape of Service Charges and Interest on the
withdrawn balance which could not be utilized by the management as worked out below:
(Rs. in million)
Unutilized Service
S. Funds Funds Interest Total
FY Withdrawn Charges
No. received utilized (1.25%) liability
balance (3/4 of 1%)
1 2021-22 451.443 123.496 327.947 2.46 4.10 6.56
2 2022-23 1,620.268 311.083 1,309.185 9.82 16.36 26.18
Total 2,071.711 434.579 1,637.132 12.28 20.46 32.74
Audit held that the project management was required to assess its spending capabilities and
withdrawal should have been restricted to its actual fund requirements instead of unnecessary withdrawals
which could not be utilized but created liability of Rs.32.74 million.
The project management should have made comparative analysis of liability as commitment
charges was 1/2 of 1% i.e. 0.5% on the Unwithdrawn Financing Balance only, on the other hand Service
Charges and Interest Charges were 3/4 of 1% and 1.25% respectively i.e. 2% on the withdrawn fund.
The lapse occurred due to ill-planning and slow execution of the project activities which created
liability on withdrawn balance which was not utilized.
426
Audit recommends to inquire the matter for fixing of responsibility and recovery of liability amount
from the person(s) at fault.
PDP No. 29 (2022-23)
427
Chapter – 13
HIGHER EDUCATION DEPARTMENT
The Department of Education has been reorganized into two separate Departments w.e.f. July 2001,
i.e. Elementary & Secondary Education and Higher Education, Archives and Libraries. Presently the
following Directorates are under the administrative control of the Department:
 Directorate of Higher Education
 Directorate of Archives & Libraries
 Directorate of Commerce and Management
Higher Education, Archives and Libraries Department established to provide affordable quality
education which emphasis on transferring skills and ensuring conducive learning environment with a view
to develop knowledge-based economy. The Department constantly endeavors to promote higher education
and to ensure increase intake by upgrading learning facilities and standards through introduction of market-
oriented courses, expansion of facilities/infrastructure, provision of better trained teaching staff/faculty and
managers. In achieving these goals, the department employees 7118 teaching staff at 310 colleges catering
to 258,400 enrolled students (154,373 male and 104,027 female). In 2021-22, out of total number of degree
colleges 130 are female colleges. Enrollment of female students stands at 41 percent in degree colleges.
Functioning through Directorate of Higher Education and Directorate of Archives and Libraries, the
department is also supported by seven autonomous/semi-autonomous bodies place under HED.
428
Functions
 College & University Education.
 Formulation of policies relating to Higher Education.
 Improvement of Quality/Standard of Higher Education.
 Regulation, Registration and Supervision of Private Higher Education Institutions / Universities
in the Private Sector.
 Preparation of draft Acts/Ordinances as per need for the approval of Provincial Assembly / Chief
Executive of the Province.
 Financial Management (Recurring/non-recurring Budget) and Auditing of the Provincial Level
releases to Higher Education Department.
 Processing of Pension, GP Fund and Promotion Cases.
 Processing of Development Projects.
 Monitoring and review of Annual Developmental Plan
 Coordination with the Federal Government, other Provincial Departments and concerned
Directorates.
 Inter Provincial admissions on reciprocal basis.
 Performance evaluation reports of Provincial level Officers of Higher Education Archives and
Libraries Department.
 Processing disciplinary cases/inquiries.
 Posting/Transfers of Officers of Provincial Cadre (B-17 and above).
 Processing the cases of short and long-term foreign visits/training and award of Scholarships for
approval of the competent forum.
 Attending to the Provincial/National Assemblies and Senate business.
 Dealing with the matters of autonomous bodies.
 Prime Minister, President, Chief Minister’s and Governor’s Directives.
 Section Officer (C-I, C-II, C-III) deal with official business and administrative affairs of Professors
(BPS-20), Associate Professors (BPS-19), Assistant Professor (BPS-18) and Lecturer (BPS-17) of
Government college Cadre of Higher Education Department.
 The department also deals with the matter of the public sector university.
 Processing appointment of Vice Chancellor of Public Sector University
 The Department serves as an administrative Department of Public sector University.
 Take initiative to Established new Universities and sub-campuses.
 Works on the complaints received against the private sector Universities.
 The Department also deal with the establishment cases of the autonomous bodies working under
the department.
 Cases of various award including Civil Presidential awards.
 Principal of policy of Higher Education department
 Provincial Assembly Business.
 Notifications of Holidays and sharing the same with all the attached formation of Higher Education
Department.
 Sharing pf information Government within and with attached formations of the department.
 Matters related with Accountant General Office.
 To works as Drawing and disbursing office of the department.
 Arrangement of Pre-PAC, PAC, DAC meetings.
 Appropriation Accounts and Finance Accounts.
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 Financial grants to retired employees.
 Pension contribution of employee.
 Advance Paras of attached Departments & Public Sector Universities.
 All the matters related to:
o Supreme Court
o High Court
o Lower Cour
Audit Profile of Education Department: (Rs. in million)

Expenditure Revenue/
Total
S No. Description Audited Audited FY Receipts Audited FY
Nos
2022-23 2022-23
1 Formations 423 11 31,042 297
(Excluding FAP)
3 40 8 8,211 N/A
under PAO
4 Foreign Aided Projects (FAP) N/A N/A N/A N/A

A summary of grants/appropriation of Higher Education Department and expenditure by the

department in financial year 2022-23 is given below:
Non-Development:
(Amount in Rs.)
Grant # and
Department
12 - Higher
Education
NC21 23,140,381,000 3010 0 4,411,671,557 18,728,712,453 18,730,805,659 2,093,206
Achieves
and Libraries
61- Higher
Education,
NC21 2,774,572,000 0 8,821,943 1,266,961,110 1,516,432,833 1,516,255,617 -177,216
Archives and
Libraries
Total 25,914,953,000 3,010 8,821,943 5,678,632,667 20,245,145,286 20,247,061,276 1,915,990
430
20,000,000,000
15,000,000,000
Amount in Rs.
10,000,000,000
5,000,000,000
0
12 - Higher Education Achieves and 61- Higher Education, Archives and
Libraries Libraries
-5,000,000,000
Development:
(Amount in Rs.)
Grant # and
Department
53-
General/University/ NC 12 3204318000 0 0
54,030,416 1,366,656,996 1,891,691,420 1,891,691,420
Colleges/ Institute
53-
-
General/University/ NC22 3,449,352,000 0 7,085,334
38,333,416 1,999,285,645 1,411,732,939 1,418,818,273
Colleges/ Institute
Total 3,449,352,000 0 -38,333,416 1,999,285,645 1,411,732,939 1,418,818,273 7,085,334
431
2,000,000,000
1,800,000,000
1,600,000,000
1,400,000,000
Amount in Rs.
1,200,000,000
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
53- General/University/ Colleges/ Institute 53- General/University/ Colleges/ Institute

(Rs. in million)
Non-
1,516.43 1,516.26 -0.177216 -0.01%
Development
Development 1,411.73 1,418.82 7.085334 0.00%
Total 2,928.17 2,935.07 6.908118 0.24%
2,000.00
1,500.00
Rs. in million
1,000.00
500.00
0.00
-500.00
It can be seen from the above variance analysis that the expenditure were made in excess on some
grants, while could not be utilized in others. This indicates inability of the
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13.1(c) Issues in the Higher Education Department
The major issue in the Higher Education Department is lack and further compliance of
administrative and financial rules. In many instances, irregular appointment, irregular payment of
allowances such as accommodation, conveyance, orderly and other inadmissible allowances etc. were
observed. Non-recovery of electricity charges, student dues, affiliated dues. Non-imposition of liquidated
damages and un-authorized procurement of fixed assets is also reported. The head-wise figures of the
departmental own receipts is also sketchy. Many public sector universities under the Department of Higher
Education are facing financial crunch due to financial mismanagement.
audit of Education Department. This amount also includes recoveries of Rs. 687.964 million as pointed out
433
Amount
(Rs. in million)
3 Irregularities
5 Others 617.068
Classification of irregularities
0 Reported cases of fraud, embezzlement

and misappropriation
Irregularities
344.149
617.068
249.072 Procurement related irregularities

0 Commercial Banks
469.885 Value for money and service delivery
issues
Others
13.3 Brief comments on the status of compliance with PACdirectives:-

Total No. of
points
14. 2007-08 Education 10 06 - 04
15. 2008-09 -do- 06 02 - 04
16. 2009-10 -do- 11 02 - 09
17. 2010-11 -do- 33 15 - 18
18. 2011-12 -do- 13 09 - 04
19. 2012-13 -do- 10 04 - 06
434
20. 2013-14 -do- 19 09 - 10
21. 2014-15 -do- 31 07 - 24
22. 2015-16 -do- 32 06 - 26
23. 2016-17 -do- 66 25 - 41
24. 2017-18 -do- - - - -
25. 2018-19 -do- 6 1 - 5
26. 2019-20 -do- 7 - - 7
13.4 Audit Paras
13.4.1 Unjustified payment on account of pay and allowances of Director General QAP - Rs. 15.480
million
According to PC-I Page 12, terms of reference for Director General, the age of the Officer should
not be more than 60 years. According to advertisement the age of the officer should be 50-60 years. In the
light of judgement of the Honorable Peshawar High court decision dated 19.02.2020 in WP NO. 5673-
P/20119, no officer beyond 60 years shall be re-employed.
During audit of the accounts of Secretary Higher Education Archives & Libraries Department
Khyber Pakhtunkhwa (Quality Assurance Program) for the Financial Year 2022-23, it was observed that
Director General (QAP) BPS-20 was appointed at the age of 62 years being a retired professor vide
appointment letter no. CPO(HE)/SQ/QAP/M-40/2017-18/264-70 dated 04.2.2019 which is not only against
the honorable Peshawar High Court decision but also against the PC-I requirement and NIT conditions. The
officer took over the charge of the post on 6.2.2019 and drawn Rs. 15.480 million with effect from 6.2.2019
to 5.9.2023 @ Rs. 360000/- per month for 43 months.
The lapse occurred due to weak internal controls which resulted in unjustified appointment and
payment thereof.
When pointed out in September 2023, the management replied that the appointment was made on
the basis of revised project policy 2008 in which there is no limit of age. As the age limit was mentioned
50-60 years in PC-I which was covered by issuing corrigendum.
The reply was not satisfactory because amendment in PC-I could not be done by issuing
corrigendum.
Audit recommends to investigate all appointments made in the project and fix responsibility on the
persons(s) at fault.
PDP No. 47 (2022-23)
435
13.4.2 Non deduction of income tax from the teaching staff – Rs. 99.664 million
According to Finance Act 2015, deduction of income tax from filer 10% &15% from non-filer is
mandatory from the payments on a/c of services rendered/Payment of Honoraria/cash award.
During audit of the accounts of Directorate of Higher Education Khyber Pakhtunkhwa for the
Financial Year 2021-22, it was noticed that a sum of Rs 996.647 million was paid to the teaching staff
(regular & hired) on account of remunerations/ honorarium for BS program in various colleges, However,
income tax on services at the prescribed rate i.e. @ 10% amounting to Rs. 99.664 million was not deducted
from the quarter concerned.
Audit held that prescribed tax should have been recovered from the teaching staff before making
the payment which was not done.
The lapse occurred due to lack of internal control & financial mismanagement.
When pointed out, no reply was furnished.
Audit recommends to recover the tax amount besides fixing responsibility on the persons at fault.
PDP No. 602 (2021-22)
13.4.3 Loss to the government due to defective work and over payment – Rs. 247.301 million
According to Clause 3.4 of the Contract for Consulting Services executed between the university
and the consultant; the consultants are liable for the consequences of errors and omissions on their part or
on the part of their employees in so far as the design of the project is concerned. If the client suffers any
losses or damages as a result of proven faults, errors or omissions in design of the project, the consultants
shall be liable to pay to the client the proportionate fee received.
According to Clause 3.1.1 of the said Contract, the consultants shall perform the services & carry
out their obligations with due diligence, efficiency, & economy; shall observe sound management practices;
and employ appropriate advanced technology & safe methods. The consultants shall at all times support
and safeguard the client’s legitimate interests in any dealings with subordinates or third parties.
During audit of the accounts of Abdul Wali Khan University Mardan for the Financial Year 2019-
20, it was noticed that the consultant M/S Associated Consulting Engineers (ACE) Limited carried out a
complete analysis of the measurement and work done of various ongoing projects in the university and
established an amount of Rs. 247,301,151/-, which includes an overpayment of Rs. 128,418,021/- and Rs.
118,883,130/- as defective work done, by various contractors.
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Audit held that since the works were supervised by the same consultant for ensuring quality and
quantity of work done therefore, penalty should have been imposed by the university administration upon
the consultant for negligence which led to the said overpayment and defective works. However, the
university administration did not impose the penalty for the overpayment and defective work.
When pointed out in October 2020, it was replied that the matter will be taken up with the consultant
for the perusal of relevant record and documented evidence shows that the consultants were disengaged
during the period under discussion.
The documentary evidence of the disengagement of the consultant could not be shown to Audit.
For the above-mentioned overpayment and defective work pointed out, either the consultant or the officers
who disengaged the consultant, were responsible.
In the DAC meeting held on 09.03.2021, it was decided that the PAC may decide the fate of the
Para.
Audit recommends to investigate the matter, fix responsibility and affect recovery from the
consultant or the persons at fault at the earliest.
PDP No. 130 (2019-20)
13.4.4 Overpayment on account of pay and allowances of the Vice Chancellor -

Rs. 5.904 million
According to the Higher Education Commission Letter No.1-11/HEC/A&C/2011/100 dated 19-12-

2011, revised vide notification dated 15-10-2015, the basic salary of the vice chancellor appointed through
search committee may be fixed at the level; he was drawing salary under BPS/ TTS/ MP Scale prior to the
appointment as VC or at initial stage of TTS professor (whichever is higher). However, fresh appointment
of the VCs previously working in the private sector may be made at the initial pay of the TTS (copies
enclosed).
20, it was noticed that Dr. Mohammad Khurshid Khan was appointed as a vice chancellor of the University
for three years vide notification dated 13-07-2017. In light of the above notification, he was required to be
paid a monthly salary of Rs. 292,500/- + vice chancellor allowance @ 20% amounting to Rs. 58,500/- in
addition to special compensatory/ special diaspora allowance of Rs. 600,000/- per month as approved vide
the Finance Department letter dated 26-02-2018. However, contrary to the prescribed limits, the Vice
Chancellor was paid a salary of Rs. 31,174,400/- at different monthly rates from October 2017 to April
2020, followed by arrears payment of Rs. 3,260,000/- vide Cheque No. 13650904 dated 09-03-2018.
Resultantly, a total amount of Rs. 34,434,400/- was paid against the permissible amount of Rs. 28,530,000/-
(Rs. 951,000 X 30 months), which resulted into an overpayment of Rs. 5,904,400/-, which is a clear
violation of the limit determined by the provincial government.
437
Audit held that the amount was paid in excess of the salary fixed by the government.
The lapse occurred due to violation of rules and regulations which resulted in overpayment.
When pointed out in October 2020, it was replied that the office of the honorable chancellor has
taken cognizance on the matter concerned. However, the inquiry report pertaining to the same has not been
shared with the University as yet. The same will be shared with Audit at the earliest, as and when received.
The department admitted that the chancellor has already taken action in the matter and initiated an
inquiry, thereby establishing the fact that the ex-vice chancellor has been overpaid on account of his pay
and allowances.
In the DAC meeting held on 09.03.2021, it was decided that the University may make complete
Audit recommends to recover the amount from the ex-vice chancellor.
PDP No. 118 (2019-20)
13.4.5 Overpayment to the consultant – Rs. 8.570 million
According to the consultancy agreement clause -6.3(special conditions of consultancy contract),

the consultant remuneration for detail design and preparation of tender documents shall be at a lump sum
rate of 2% of the cost of work stated in letter of award to the contractor. such remuneration shall tentatively
amount to Rs 56.969 million if based on the estimated cost of works referred in sub class SC-6-2(b).
However, this tentative amount of consultant /reason remuneration shall be finally computed and adjusted
@2% of the contract amount stated in the client’s letter of award for respective construction contract
package.
During audit of the accounts of University of Engineering & Technology Peshawar for the
Financial Year 2017-18, it was observed that M/S NESPAK was entitled for Rs. 56.874 million for
remuneration of detailed design at the prescribed rate of 2 % of the total cost of civil works of Rs. 2843.707
million on the submission of detailed design for the work awarded till June 2018, whereas the consultant
had already drawn Rs. 65.446 million and submitted Invoice Number 72 without ascertaining the cause /
reason for delayed submission of detailed design and tender documents, which resulted into overpayment
of Rs. 8.570 million to the consultant as detailed below;
Description Work Payment due up Amount Drawn Overpayment
to June 2018
Detailed design 2% 2843.707 million 56.874 million 65.446 million 8.570 million
The lapse occurred due to violation of PC-I which resulted into overpayment to the consultant.
438
In the DAC meeting held on 19.10.2020, it was decided that the University may make complete
Audit recommends to recover the amount from the consultant at the earliest and fix responsibility
on the persons at fault.
PDP No. 307 (2017-18)
13.4.6 Loss to the university funds due to less realization of bank profit on investment – Rs. 1.486
million
According to the letter no F.NO. UOS/TR/2019/3321 dated 30.4.2019, sum of Rs 294 million
invested in term deposit in the UBL Swabi @ 7.8%.
During audit of the accounts of University of Swabi for the Financial Years 2017-19, it was noticed
that an amount of Rs. 294.000 million was invested in M/S UBL with the interest rate of 7.8% w.e.f Oct
2018 to March 2019 for a period of 6 months. Further scrutiny of record revealed that the University
withdrew the investment on 29.3.2019 two days before the maturity period. The bank statement does not
reflect any profit of March 2019 due to which the University sustained a loss of Rs. 1.486 million.
The lapse occurred due to weak internal controls which resulted in loss to the university funds.
When pointed in September 2019, no reply was furnished.
In the DAC meeting held on 20 & 21.12.2021, it was decided that the University may make
complete recovery of the amount. However, no progress was intimated to Audit till finalization of this
report.
PDP No. 106 (2017-19)
13.4.7 Loss to the government due to non-recovery of provincial sales tax on services - Rs. 2.417
million
According to Khyber Pakhtunkhwa Sales Tax on services special procedure withholding regulation
2015 section 4 (1), withholding agent is required to deduct an amount equal to one fifth of the total sales
tax.
that an amount of Rs. 16.116/ million was shown paid to M/S Allied Engineering on account of Planning
and Designing of work “Construction of Academic Block 1,2,3,4, Multipurpose and Canteen etc.”
However, the required taxes i.e. 1/3rd should be have been deducted at source and 2/3rd be paid by the firm
in its respective tax returns. Further scrutiny of the relevant record revealed that neither the deduction was
439
made at source nor tax returns of the firm shown to Audit for verification amounting to Rs. 2.417 million,
as detailed below;
S. No. Consultant Scheme funded Payment (M) 15% STS (M)

1 Allied Engineering HEC funded 9.66 1.449
2 -do- HED fund 6.456 0.968
Total 16.116 2.417
Audit held that payment to the consultant was required to have been allowed after deduction /
verification of sales tax on services amounting to Rs. 2.417 million in accordance with the prevailing rules
and regulation of the province.
The lapse occurred due to non-adherence to rules and financial mismanagement which resulted in
report.
Audit recommends to recover the amount from the consultant at the earliest.
concern.
PDP No. 119 (2017-19)
13.4.8 Unauthorized payment on account of inadmissible item of work – Rs. 1.097 million
According to Para 26 of GFR Vol-I, it is the duty of the department concerned to see that all sums
due to Government are regularly and promptly assessed, realized and duly credited in the public Account.
According to Item No. 03-05-a of MRS-2016, the rate of clearing and grubbing is included in the
rate of an item “formation of embankment”
that contract for the construction of External Development Package A & B was awarded to the M/S Zahir
Shah with the bid cost of Rs. 210.267 million and allowed up to date payment of Rs. 210.264 million up to
7th IPC. The 7th Running Bill of both the packages included payment of clearing and grubbing which is
included in the formation embankment for the following items;
Unauthorized
Item of work Qty Rate Amount
Payment
Package A
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Main building
Formation of embankment 292260.14 9.518 2781732
Clearing & Grubbing 167828.20 2.163 363012 363012
Car Parking
Formation of embankment 399371 9.518 3801213
Clearing & Grubbing 101446.20 2.163 219428 219428
Package B
Formation of embankment 362276.36 9.518 3448146
Clearing & Grubbing 238005 2.163 514805 514805
Total 1,097,245
The lapse occurred due to non-adherence to rules and financial mismanagement which resulted into
report.
PDP No. 120 (2017-19)
13.4.9 Loss to the university funds due to non-imposition of penalty on contractor for incomplete work
due to Government are regularity and promptly assessed, realized and duly credited in the public Account.
According to the 1st time extension letter No. AEC/PM/UOS-17 dated 21.6.2017, addressed to the
Director P&D, the consultant / Project Manager categorically wrote “we reached at the conclusion that there
are delays from the contractor side due to insufficient staff”. According to the 2 nd time extension note sheet,
the Civil Engineer at site wrote that there is some fault on part of the contractor that has caused delay in
completion of the project.
that contract for Construction of Academic Block 1, Auditorium / Multipurpose Hall & Guest House
(Package 1) was awarded to M/S Sahil Builders at the bid cost of Rs. 261.111 million on item rates basis
and allowed up to date payment of Rs. 261.100 million up to 15th IPC. Further scrutiny of record revealed
that the work could not be completed in the due course of time and two times extensions were granted even
though the delay was on the part of the contractor, without imposing any penalty upon the contractor. This
resulted in non-completion of the scheme and non-recovery of penalty amounting to Rs. 26.111 million
(10% of the estimated cost) as detailed below;
Commencement Date Completion Date Bid Cost (M) Payment (M) Penalty @10% (M)
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24.12.2015 23.5.2017 261.111 230.100 26.111
The lapse occurred due to violation of rules which resulted into loss to the university funds.
report.
Audit recommends to recover the amount from the contractor at the earliest.
PDP No. 123 (2017-19)
13.4.10 Overpayment due to non-deduction of voids from formation embankment – Rs. 1.023
million
According to the MRS 2017, 5% voids be deducted from the compaction of formation
embankment.
that the contract for Construction of External Development Package A& B was awarded to the M/S Zahir
Shah at the bid cost of Rs. 210.267 million and allowed up to date payment of Rs. 210.264 million up to 7 th
IPC. Further scrutiny of the bill revealed that the contractor was paid for an item of work “formation of
embankment from borrow excavation in common material including compaction by power roller (95% to
100%) and embankment of formation in ordinary soil & compacted mechanical means 95% to 100 % max
mod AASHTO dry density”.
However, deduction of voids @ 5% was not made which was required as the loose soil / earth needs
to be compacted. This resulted in loss of Rs. 1,023,301/- as summarized below;
5% voids
Item no
Package IPC Particulars Qty deduction Rate Loss
in bill
required
A (Road work) 7 2 formation of embankment from 312496.64 15624.8 20.117 314,324
borrow excavation in common
material including compaction by
power roller
-do- -do- 4 embankment formation ordinary 292260.14 14613 9.518 139,086
soil
B(Road work) -do- 2 formation of embankment from 395172.42 19758.6 20.117 397,484
borrow excavation in common
material including compaction by
power roller
-do- -do- -do- embankment formation ordinary 362276.36 18113.8 9.518 172,407
soil
Total 1,023,301
The lapse occurred due to non-adherence to rules and weak internal controls which resulted into
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report.
PDP No. 128 (2017-19)
13.4.11 Unjustified payment on account of NPA / Technical Allowance - Rs. 2.868 million
According to HEC letter No.F.P.2-157/HEC/2009/580 dated 04.08.2009 read with the Finance
Department Government of Khyber Pakhtunkhwa letter No.SOSR.III/FD/1-27/2003 dated 23.04.2003 and
Government of NWEP Higher Education Department letter No.SOA/FE/5-8/AA/AP/FA (1994-95) dated
18.09.2004, in order to maintain uniformity and standardization of allowances, facilities and perks etc in
public sector universities, it is requested that the respective Vice Chancellors may please be directed that
the payment of admissible allowances/facilities in excess of prescribed rates or extending additional
allowances/incentives to faculty/staff other than admissible under the BPS scheme may not be allowed.
During the audit of the accounts of Abdul Wali Khan University Mardan for the Financial Year
2021-22, it was observed that a sum of Rs. 2,868,600/- paid on account of Non-Practicing Allowance and
Technical Allowance to Doctors & Engineering staff respectively. In this connection it is pointed out that
non-practicing allowancing is admissible to the medical staff of hospitals where the staff engaged in
emergency duties and 24 hours OPD and entertaining thousands of patients. Whereas local office paid NPA
to Doctors who are performing duty only for one shift in university premises. Therefore, there is no
justification for paying NPA to University employee. On the other hand, Technical Allowance @ 150% of
basic pay paid to Engineering staff. The Executive/Technical allowance has been paid by Provincial
Government to staff having schedule post and to the engineers working in works department. As no
executive allowance is admissible in autonomous bodies/universities therefore, there is no justification of
technical allowance to university employees.
Due to allowing NPA and Technical allowance to 04 staff, the university did not maintain
standardization and uniformity of the allowance which is in violation of above orders. It is therefore,
suggested to stop the said allowance and recover a sum of Rs. 2,868,600/- from concerned officers.
The lapse occurred due to violation of rules and regulations which resulted in unjustified payment.
In the DAC meeting held on 23.12.2022, Para was referred to the decision of Finance Department.
However, no decision was provided to Audit.
Audit recommends to recover the amount and fix responsibility against the person(s) at fault.
PDP No. 233 (2021-22)
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13.4.12 Overpayment on account of pay & allowances - Rs. 3.375 million
According to Rule 28 of the General Financial Rules Volume-I, no amount due to Government
should be left outstanding without sufficient reason.
According to the Higher Education Commission Islamabad letter Ref.Dir.QA/AWKU/HEC/TTS –

153/77/419 dated 05.08.2019, the appointments on tenure track system were endorsed, but with no advance
increment allowed by the Commission.
2021-22, it was observed that Mr. Muhammad Hamayun was appointed as TTS Associate Professor on 12-
10-2011 with 02 number of advance increments. The officer concerned was then appointed as Professor on
13-10-2015 with zero advance increment. The pay was fixed at Rs.292,500/- on 13-10-2015 in next above
stage of Associate Professor. But the said pay was fixed after giving` 02 advance increment which is not
admissible. As HEC endorsed appointment as professor with zero advance increments. It is therefore,
suggested that a sum of Rs. 1,607,320/- may please be got recovered.
Similarly, Dr. Muhammad Ajaz appointed at Assistant Professor (TTS) on 19-08-2014 with 04
advance increments. Later on, the officer was appointed at Associate Professor (TTS) on 01-10-2018. The
pay was required to be fixed next above. Whereas the local office fix, the pay for Associate Professor and
given him 04 advance increment. There is no such provision of advance increment. HEC endorsed appoint
with zero advance increments. It is therefore, suggested that a sum of Rs. 1,767,664/- overpaid may please
be got recovered.
The lapse occurred due to violation of rules and regulations which resulted in overpayment.
In the DAC meeting held on 23.12.2022, Para referred to the final decision of Higher Education
Commission. No progress has been reported till finalization of this report.
PDP No. 228 (2021-22)
13.4.13 Irregular expenditure on account of Orderly Allowance - Rs. 5.208 million
According to Higher Education Commission Letter No.F.P.2-156/HEC/2021-22/600 dt.19-5-2021,

Orderly Allowance is admissible only to administrative positions.
2021-22, it was observed that an amount of Rs. 5,208,000/- was paid on account of Orderly Allowance @
Rs.14000/- per month to the teaching staff of BPS-20 and above. As per above order, orderly allowance is
admissible to officers of BPS-20 and above on administrative position whereas the local office paid orderly
allowance amounting to Rs.5,208,000/- to teaching cadre.
444
The lapse occurred due to violation of rules and regulations which resulted in irregular expenditure
and loss to the government.
In the DAC meeting held on 23.12.2022, Para was referred to final decision of PAC.
Audit recommends to recover the amount besides fixing responsibility on persons at fault.
PDP No. 234 (2021-22)
13.4.14 Loss to the government due to non-recovery of long outstanding dues from defaulted
faculty members - Rs. 124.367 million
2021-22, it was observed that a sum of Rs. 29,129,656/- shown long outstanding dues from defaulter who
did not complete MS / M. Phil / PhD Studies and joined the university & Rs. 95,238,276/- from the faculty
member who completed their Ph.D but did not join university. University selected their teaching staff for
PhD programs with a view to utilize these scholars in future but a number of scholars completed their
program from best universities of world but did not join back, due to which students were deprived from
quality education. Audit held that sums spent on these faculty members may be recovered in order to
provide for other faculty members to avail the opportunity and enrich the students.
The lapse occurred due to violation of rules and regulations which resulted in loss to the
government.
In the DAC meeting held on 23.12.2022, the department directed complete recovery.
Audit recommends to recover the amount and fix responsibility against the person(s) at fault.
concern.
PDP No. 241 (2021-22)
13.4.15 Irregular expenditure from GP Fund/Pension Fund - Rs. 122.740 million
According to Gomal University Financial Rules, the Finance and planning committee will advise
the Vice Chancellor on the matter related to the Finances of the University and review periodically the
financial position of the university, to advise the Syndicate on all matter relating to planning, development
finance investments and accounts of the University.
445
During audit of the accounts of Gomal University D.I. Khan for the Financial Year 2021-22, it was
observed that recoveries/balance of GP Fund and Pension Contribution by local office was as under;
S. No. Particulars Amount deducted

1 GP Fund 53,392,566
2 Pension Contribution 170,533,597
Total deduction 223,926,163
Less: closing balance in both the accounts 1,185,452
Less: investment made 100,000,000
Net available for investment 122,740,711
As per rules the above deduction of GP Fund and Pension contribution amount required to be
invested either for short or long term. Contrarily, the University made investment of Rs.100.000million
from the aforementioned accounts. Due to non-investment of the above deduction/contribution, a huge
liability is being created day by day.
The lapse occurred due to lack of financial management which resulted into irregular expenditure.
Audit recommends to investigate the matter and make appropriate investment of the funds.
PDP No. 520 (2021-22)
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13.4.16 Non-recovery of long outstanding dues from defaulted faculty members -
Rs. 2.018 million
22, it was observed that a sum of Rs.2,018,206/- was shown as long outstanding dues from defaulters who
proceeded to abroad on study leave for higher education but did not rejoin the University. The local office
calculated outstanding due which are pending till date, as detailed below;
1. Ms. Shafaq Hussain, Lecturer Department of Economic Rs.1,022,108/-
2. Dr. Imran Khan, Asstt. Professor Rs. 996,098/-
Total Rs. 2,018,206/-
The lapse occurred due to lack of financial management which resulted in violation of government
rules.
Audit recommends to recover the amount of the outstanding dues from the defaulter faculty
members.
PDP No. 526 (2021-22)
13.4.17 Irregular expenditure on account of Orderly Allowance - Rs. 13.309 million
According to Para 11 and 12 of GFR Vol-I, each head of a department is responsible for enforcing
financial order, strict economy at every step and observing all relevant financial rules and regulations by
his own office and by subordinate disbursing officers.
According to Higher Education Commission letter No.F.P.2-156/HEC/2021-22/600 dt.19-5-2021,

During audit of the accounts of Gomal University D.I Khan for the Financial Year 2021-22, it was
observed that an amount of Rs. 1,848,000/- was paid on account of Orderly Allowance @ Rs.14000/- per
month to the teaching staff of BPS-20 and above. As per above order, orderly allowance is admissible to
officers holding administrative positions. Whereas the local office paid orderly allowance amounting to
Rs.1,848,000/- to teaching cadre, as detailed below;
S. No. Name of Teacher Designation BPS Orderly Period Amount
Allowance
1 Dr.TabassumNasir Professor 21 14000 12 months 168000

2 Dr.A.Haleem Shah Professor 21 14000 12 months 168000
3 Dr.AsmaSaeed Asso: Prof 20 14000 12 months 168000
4 Dr.Saeed Ahmed Professor 21 14000 12 months 168000
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5 Dr.RubinaNaz Asso: Prof 20 14000 12 months 168000
6 Dr.Ziaud Din Asso: Prof 20 14000 12 months 168000
7 Dr.M.ZahidAwan Professor 21 14000 12 months 168000
8 Dr.ShumailaHashim Asso: Prof 20 14000 12 months 168000
9 Dr.M.SaleemJillani Professor 21 14000 12 months 168000
10 Dr.M.NaimatUllah Professor 21 14000 12 months 168000
11 Dr.M.Safdar Khan Asso: Prof 20 14000 12 months 168000
Total 1848000
It was further added that orderly allowance amounting to Rs. 11,461,200/- paid to pensioners as
evident from pension roll. In this connection it was stated that the said allowance is neither allowed to
present teachers nor retired employee of Grad B-20 and above of teaching staff.
The lapse occurred due to lack of financial management which resulted in violation of government
rules.
Audit recommends to recover the amount from the faculty members.
PDP No. 521 & 522 (2021-22)
13.4.18 Irregular payment of orderly allowance – Rs. 1.610 million
According to Higher Education Commission letter No.F.P.2-156/HEC/2021-22/600 dt.19-5-2021,

During audit of the accounts of Shaheed Benazir Bhutto University Sheringal for the Financial
Year 2021-22, it was observed that a sum of Rs.1,610,000/- was drawn on account of Orderly allowance
and shown paid to the below mentioned 5 faculty members and Treasurer of the university in BPS-20 &
above for which they were not entitled as the allowance was sanctioned only for officers working in the
civil secretariat.
S# Name of employees Designation BPS Total
1 Dr. Farhat Ali khan Professor 21 14000
2 Mr. MidrarUllah Associate Professor 20 14000
3 Dr. ShafiqurRahman Associate Professor 20 14000
4 Dr. Abdul Khaliq Jan Associate Professor 20 14000
5 Dr. Shujahat Ahmed Associate Professor 20 14000
One month total unauthorized amount 70000
23 months July 2021 to May 2023 total amount 70,000 * 23= 1,610,000
Audit worked out Orderly Allowance for the period from July, 2021 to May ,2023 only, actual
amount of the Orderly Allowance recoverable from the Employees may be calculated from the actual date
of drawl.
Audit held the payment of Orderly Allowance of Rs.1,932,000/- as irregular.
448
The lapse occurred due to violation of rules and regulations which resulted in overpayment to the
employees.
Audit recommends to recover the amount from the faculty members.
PDP No. 489 (2021-22)
13.4.19 Loss to the government due to damaged work – 17.55 million
According to clause 49.1 of the special stipulations of the contract between Shaheed Benazir Bhutto
University Sheringal and M/S Imran Construction Co for construction of Multipurpose Hall; the contractor
shall rectify any defects found out within 365 days of the issuance of the taking over certificate.
Year 2021-22, it was observed that the contract for the Construction of Multipurpose Hall under the project
“Development of University of Dir, Sheringal” was awarded to M/S Imran Construction Co at the cost of
Rs. 70.69 million (8.5% above MRS-2017) dated 30-07-2019. The contractor was paid against work done
of Rs. 73.33 million till IPC # 12 which included payment of Rs. 15,395,130/- (as detailed below) for steel
trusses and steel sheets for execution in the Rafter work for snow protection and Sheesham wood flooring
for sports gymnasium as detailed below;
S.# Item Quantity Rate Rs. Amount Rs.
1 Fabrication of heavy steel work with angle, tees, sheet iron 48233.35 kg 147.070 / kg 7,093,678
etc for making trusses, girders etc + Erection and fitting in
position iron trusses, staging of water tanks, etc
2 Small iron work, such as gusset plates, knees, bends, stirrups, 1242.38 kg 154.5 / kg 192,026
straps, rings etc excluding erection
3 Supply & fix corrugated galvanized GI sheet with GI bolts, 21260.90 sft 108.49 / sft 2,306,595
nuts, limpet etc. complete : 26 BWG
4 Supply & fix Plain galvanized GI sheet with GI bolts, nuts, 1688.68 sft 151.35 / sft 255,592
limpet etc. complete : 26 BWG
5 Shisham wood block flooring 1" thick out to required size, 4778.56 sft 638.53 / sft 3,051,254
fixed on a layer of bitumen base
Sub-Total 12,899,145
Add Factor 10% 14,189,060
Total after premium 8.5 % 15,395,130
The multipurpose hall roof collapsed in snowstorm dated 05-01-2022 and commitment was made
by the Design and Supervision Consultant ACE limited vide their letter dated 21-02-2022 that they along
with the Contractor will restore the collapsed roof and other structures in a couple of months. However,
during site visit it was observed that the steel angle irons, sheets, sheesham etc. were dumped at the site and
the work was still not restored till date of audit i.e. June 2023 as evident from the attached pictorial
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evidences. Furthermore, consultancy cost for Multipurpose Hall at 2.97% of the PC-I Cost was Rs. 2.160
million till June 2022.
Audit held the payment of Rs. 17.550 million as loss to the university because the required work
was not restored and that the multipurpose hall was still dysfunctional which made the whole expenditure
of Rs. 73.330 million as wasteful.
PDP No. 482 (2021-22)
13.4.20 Loss due to non-deduction of income tax at source from other districts employees -
Rs. 2.282 million
Section 11 & 12 read with Section 149 of Income Tax Ordinance 2001 provides that salaries of all
Government Servants whose salary exceed Rs.600,000/- per annum shall be liable to at source deduction
of Income Tax at the prescribed rates. Furthermore, FBR has clarified vide S.RO.1213(I)2018 dated 5-10-
2018 the deduction or collection of withholding tax on income tax shall not apply to individual domiciled
in the tribal areas (FATA-PATA) only.
Year 2021-22, it was observed that employees belonging to non-tax-exempt districts were paid gross
salaries of Rs. 58,882,879/-, however, income tax at source was not deducted from their salaries which
resulted in loss of Rs. 2,281,608/- to the government (Annexure-XXXII).
It is worth mentioning here that District Account Offices of tax-exempt regions i.e. PATA/FATA
regularly deduct income tax at source from salaries of government servants serving in those tax-exempt
districts.
The irregularity occurred due to weak internal controls and non-adherence to government rules.
Audit recommends to recover the income tax amount.
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PDP No. 483 (2021-22)
13.4.21 Overpayment to contractor due to allowing inadmissible item of work in BOQ – Rs.
4.21 million
According to para 16.6.5.4 of the Technical Specifications for Workmanship issued by

Communication & Works Department, Khyber Pakhtunkhwa, for all concrete structures, pre-stressed
concrete structures or portions thereof, no separate measurement or payment shall be made of false-work
supporting such structures. All false-work cost shall be considered as included in the contract prices paid
for various items of concrete work and no additional compensation would be allowed thereof. Furthermore,
according to MRS rate analysis the rates of RCC in roof slab, beam, column & other structural members,
insitu or precast Type A, B & C are inclusive of the rate of Wood-Partal.
Year 2021-22, it was observed that the contractors for different schemes were allowed payment of Rs.
4,210,751/- against different items of formwork/falsework Erection and removal of steel Form work for
RCC or Plain Concrete vertical (06-39-b) with execution of RCC and PCC works However, as per
Technical Specifications of MRS, payment against the said item was not admissible.
Work
Formwork Net Rate after
Done in O/P
S.# Scheme/Work Contractor (vertical) factor and
million / (Rs.)
Qty Paid Rebate/Premium
Up to RB
1 Construction of Academic M/S Insaf Construction Company 145.72 / 17th 8873.48 71.36 633,283
Block
2 Construction of Boys Hostel M/S AkhunzadaFazalJamil& Co 124.4 / 21st 6018.84 71 427,435
3 Construction of Multipurpose M/S Imran Construction Co 73.33 / 12th 1931.61 85.65 165,442
Hall
4 Construction of Central Library M/S Insaf Construction Company 61.28 / 9th 2405 86.84 208,850
5 Construction of Community M/S NajeebUllahMeraShangal 60.88 / 17th 4795 71 340,445
Center Co
6 Administration Block Extension M/S Tribal Global Construction 68.21 / 15th 3481 71 247,151
7 Civil work component for Micro M/S Star Construction Company 40.13/3rd 33097 66.1 2,188,115
Hydel Power Station
Total 4,210,721
Audit held the payment of Rs. 4,210,721/-- as unjustified and overpayment.
The lapse occurred due to extending undue favor to the contractors which resulted into
overpayment to contractor.
451
PDP No. 484 (2021-22)
13.4.22 Overpayment of the tax defray amount – Rs. 17.19 million
According to Finance Department letter No. SO (Dev-II)/FD/12-6/14-5, dated 21.4.2015, provides

that all Works Department, while preparing cost estimate of Developmental projects falls within the
exempted Area, shall frame the same on MRS but with 7% less cost to defray the amount added in the rates
analysis of all works, construction/supply items to meet WHT.
Year 2021-22, it was observed that various construction contracts under the project “Development of
University of Dir, Sheringal” were awarded to Provincially Administered Tribal Areas (PATA) resident
contractors who were exempt from income tax, therefore, the BOQs of these schemes were accordingly
adjusted for 7% tax defray i.e. 7% of the tax amount included in MRS based BOQs was deducted. After
award of contracts to these exempt entities, 7% deduction for the tax defray was done in the start but was
later on stopped in the future IPCs which resulted in outstanding tax defray amount of Rs. 17,004,786/-
from these contactors as given below;
Rs. million
S.# Construction of Contractor BOQ Contract Cost 7% Tax 7% tax Tax defray Work Done
Cost defray defray outstanding / IPC
required recovered
1 Community M/S 72.7 60.88 5.09 1.29 3.80 60.88 / 17th
Center NajeebUllahMeraShangla&
Co
2 Girls Hostel M/S Bashir Ahmad & Sons 126.35 109.28 8.84 2.47 6.37 108.64 / 17th
3 Administration M/S Tribal Global 73.16 61.23 5.12 1.10 4.02 68 / 15th
Block Construction
(Extension)
4 Micro Hydel M/S Star Construction 43.7 39.30 2.81 0 2.81 40.13 / 6th
Power Station Company
(Civil Works)
Total 21.86 4.86 17.00
It is pertinent to mention that deduction of defray amount is not deduction of income tax amount
from the contactor but it is the deduction of amount allocated for withholding tax in the MRS rates of the
items listed in the BOQ. Hence, if an entity is exempt from tax then it should be paid the net of tax rate for
the MRS item and that is why deduction of this tax amount is provided for in the BOQ.
Audit held non-deduction of the full defray amount as loss to the university.
The lapse occurred due to weak contract management which resulted into of overpayment of tax
defray amount.
The department was requested vide letter dated 11.07.2023 for holding DAC meeting. However, the
DAC meeting was not convened till finalization of this report.
452
PDP No. 488, 492, 496 & 501 (2021-22)
13.4.23 Non-deduction of KPRA Sales Tax on Services - Rs. 3.135 million
According to Khyber Pakhtunkhwa Revenue Authority (KPRA) No.2 (13)/KPRA/MISC-ADMN-

MATTERS/2016/129 dated 29.11.2019 provides that the KP Sales Tax on services may be deducted at full
rate (19.50%) and pay to KP Government exchequer under head “B-02386”.
During audit of the accounts of Institute of Management Sciences Peshawar for the Financial Year
2021-22, it was observed that anamountof Rs. 3.135 was paid to M/S Pakistan Education and Research
Network (PERN) on account of internet services. Further scrutiny of the paid vouchers revealed that the
payment was made without deduction of sales tax on services @ 19.5% amounting to Rs. 3,135,135 as
detailed below;
Voucher No & date Period Amount paid KPRA tax @ 19.5% (Rs)
24752 dated 03.08.2021 July to Sept 2021 3,600,818 702,160
27475 dated 05.11.2021 Oct to Dec 2021 3,941,849 768,661
28499 dated 30.12.2021 January to March, 2022 4,199,489 818,900
32263 dated 08.06.2022 April to June, 2022 4,335,458 845,414
Total 14,861,191 3,135,135
The lapse occurred due to weak internal control which resulted in violation of government rules
and loss of potential revenue to the Provincial exchequer.
PDP No. 432 (2021-22)
13.4.24 Loss to the institute funds due to non-recovery of outstanding dues from Afghan
National Students - Rs. 154.813 million
According to Higher Education Commission vide their letter No. HEC/HRD/2016/6692 dated
22.12.2016 requested the Director IM Sciences Peshawar to start releasing monthly living /maintenance
allowance to Afghan students from University’s funds who are studying under HEC’s scholarship program.
HEC will make payment to the university as soon as funding is received from Government of Pakistan.
During audit of the accounts of Institute of Management Sciences Peshawar for the Financial Year
2021-22, it was noticed that the institution was imparting education to 243 Afghan national students on
scholarship basis, sponsored under the HEC scholarship program. Audit observed that balance amount of
453
Rs. 154,813,139 was outstanding against the HEC up to 30.06.2022, since inception of the program. The
institute bears the extra expenditure since long which causes increase in the fee structure each year for the
local students.
The lapse occurred due to weak administrative and financial control which resulted into loss to the
institution and the foreign national students are being facilitated at the cost of the local students.
PDP No. 438 (2021-22)
454
13.4.25 Irregular and non-transparent investment of funds - Rs. 30.000 million
Non-recovery of loan - Rs. 1.020 million
According to para 3 (e) of the Government of Pakistan Finance Division (Budget wing ) letter No
F.4(1)2002-BR-II dated 02.07.2003, regarding deposit of working balance and investment of surplus fund,
the working balance limit of each organization should be determined with the approval of the
Administrative Ministry in consultation with the Finance Division.
Finance Department letter No. 2/3-(F/L)/FD/2019-20/Vol-XIII, dated 22nd October, 2020, clearly
directed that at least 20% of the total investment be made with BOK. Moreover, investment being a
sensitive, technical & risky issue therefore all concerned be directed to get advice of the finance department
(KP, Fund management).
According to private funds rules/policy where there is no provision for any item in these rules, the
principal in-charge of the concerned colleges/institutes shall obtain prior approval of the administrative
authorities.
During audit of the accounts of Government Degree Frontier College for Women Peshawar for the
Financial Year 2021-22, it was noticed that a total sum of Rs. 30,000,000/- was invested by the college
management in long term deposit i.e. in form of Term Deposit Receipt with National Bank of Pakistan on
24.05.2021.
The investment so made is held irregular & non transparent on the following grounds;
1. The limits of the working balances and investments were not got approved from the administrative
department concerned (Education department) in consultation with the Finance Department as
required under the aforementioned provision of rules. Moreover, services of approved professional
fund managers (SECP) were also not used in the investment, rather than the investment task was
simply entrusted to a committee having no expertise/idea in investment,
2. No approval/sanction of the Director Higher Education Department was obtained, nor was any
member from directorate /finance included in the investment process committee.
3. No contract agreement was executed showing clear terms/conditions of investment nor was any
certificate of the deposit amount shown to Audit.
4. In view of the instruction of the finance department 6,000,000 @ 20% of the total investment i.e.
30,000,000 was required to be invested with BOK which has not been done.
Furthermore, it was also noticed that a sum of Rs. 1,020,615 was drawn from the college Pupils’
fund and paid to various degree colleges/DHE on loan basis which are still outstanding against them as
detailed below;
455
Cheque/Vr. No. Date Amount (Rs) Payee
6334674 05.10.2019 520,115 Director Higher Education KPK, Peshawar
6334672 05.10.2019 500,000 GDC Koh-e- Daman Peshawar
75967509 25.09.2018 500.000 GGDC Hayatabad.
Total 1,020,615
The lapse occurred due to weak controls and financial mismanagement which resulted into irregular
investment of funds and non-recovery of loan.
The matter is reported for investigation and appropriate necessary action.
PDP No. 425 & 426 (2021-22)
13.4.26 Loss due to non-accepting of the lowest rates – Rs. 4.550 million
According to section 30 of the Khyber Pakhtunkhwa Public Procurement Rules 2014, Each
procuring entity shall plan its procurements with due consideration to transparency, economy, efficiency
and timeliness, and shall ensure equal opportunities to all prospective bidders.
During audit of accounts of Pak-Austria Fachhochschule Institute of Applied Sciences Haripur for
the Financial Years 2020-22, it was observed that payment of Rs.32,665,500/- was made to M/S
TEXITECH for supply of 255 laptops vide work order No. PAF-IAST/2020/31 dated November 16, 2020.
Scrutiny of record revealed the following lapses:
i. The 1st two lowest rates of Rs.110,300 per unit by M/S Wise Tech and Rs.113,027 per unit by M/S
Telecard Limited was not accepted on the plea of non-compliance to manufacturer’s authorization,
power of attorney and weight of 1.625 kg instead of 1.5 kg. The contract was awarded to M/S
TEXITECH @ Rs.128,145 per unit, resulting in loss of Rs.4,550,475/- (128145 – 110300 = 17845
x 255) due to ignoring the lowest rates.
ii. Required specification clearly indicated the screen size, weight and thickness, but the selected
supplier showed his inability to supply the items of required specifications rather offered to supply
the units with 15.6” screen instead of 14”, 1.70 kg weight instead of 150 kg and 18.9 mm thickness
instead of 18 mm. The supplied items did not confirm the ordered items and it was communicated
that these specs are advanced than the ordered one which were accepted by the management without
carrying out market-based analysis as heavy, more thickness and large screen units are having less
price in the market than the smart units. Besides that, one of the reason for declaring the lowest
bidders being non-responsive was also these specs which were supplied by M/S TEXITECH.
iii. The inability of the bidder to deliver the ordered items and then changing specification indicated
that though the bidder was the authorized dealer but he offered rate for the items which were not
456
available with him in stock. This state of affairs depicted that the supplier was already selected but
tender process was conducted as a formality. The condition of authorized dealership was not a
fruitful condition as those declared non-responsive on the ground of non-production of authorized
dealership evidence even though offered lowest rate and the successful bidder with high rate had
no difference in service delivery.
The lapse occurred due to mis-procurement which resulted into loss to the government.
In the DAC meeting held on 12 & 13.01.2023, the forum marked the Para for independent inquiry.
The department conducted internal inquiry and the report thereof was shared with Audit, however,
Audit did not agree with the findings & recommendations of the internal inquiry report due to the reasons
recorded and shared with the department vide Verification Report.
Audit recommends fixing of responsibility on the person(s) at fault and recovery of loss from the
members of the procurement committee.
PDP No. 86 (2021-22)
13.4.27 Unjustified release of liquidated damages – Rs. 2.857 million
According to clause 1.3, 1.5, 1.7 of the contract agreement, the goods will be offered under this
contract are to be of the quality and specification mentioned in Schedule-II. If the supply of the ordered
items is not in accordance with the requirements as specified in the contract, the PAF-IAST shall have the
full authority to cancel the orders and to take any such action that will be deemed fit in the circumstances.
In case of delay by the contractor (due to its direct and/ or sole fault) as per contract on in the event of non-
fulfillment of the delivery as per schedule, liquidated damages up to 10% will be levied.
According to clause 1.13, in case of any dispute, the matter will be referred to a sole Arbitrator to
be appointed by the first party (PAF – IAST) in accordance with the Arbitration Act 1940. The arbitration
shall be held in Haripur/ Islamabad and the language shall be English/ Urdu only.
the Financial Years 2020-22, it was observed that payment of Rs.32,665,500/- was made to M/S Texitech
for supply of 255 laptops vide work order No. PAF-IAST/2020/31 dated November 16, 2020.
Scrutiny of record revealed the following lapses:
i. The successful bidder M/S TEXITECH failed to complete the supply within the agreed timeline
and submitted request for waiver off from liquidated damages on the plea of COVID-19 pandemic.
This excuse was not justified as already communicated vide letter No. PAF-IAST/2021/32 dated
17-02-2021 with the remarks that tender process was initiated during pandemic and bidders agreed
to the timelines of the contract agreement keeping in view the ground realities. Moreover, the
supply and demand issue was not communicated to the institute. The liquidated damages were once
imposed, deducted from the payment but later on released the deducted amount without any
457
arbitration process rather an internal committee was constituted for justifying the delay. Hence,
liquidated damages of Rs.2,856,630/- needs to be recovered back from the supplier.
ii. The bid of M/S TEXITECH was accepted and communicated on 16-11-2020 with the direction to
submit performance guarantee and sign the contract agreement within 10 days. The contract was
signed on 25-11-2020 but seemed that contract was replaced wherein the original date was
mentioned as 25-11-2020 but was tempered as 15-02-2021 just to cover the delay time and
safeguard the supplier from contract clause of liquidated damages.
iii. The liquidated damages for Rs.2,856,630/- once deducted from the bill on merit and as per terms
& conditions of the contract but later on released on the request of the supplier being influential
personality. The deduction of liquidated damages established that delay was on the part of the
supplier but interestingly released.
iv. The abnormal delay in supply, changing specification once agreed and supply ordered placed, also
questioned the after sale service of the brand “LENOVO”
v. The successful bidder submitted request for release of earnest money of Rs.780,000/- prior to
ensuring supply, indicated that earnest money was released prematurely instead of its retention till
successful completion of defects liability period.
vi. No justification was available on record for resolving the dispute through internal committee
instead of arbitration as per provision of contract.
The lapse occurred due to mis-procurement which resulted into unjustified release of funds.
In the DAC meeting held on 12 & 13.01.2023, the forum marked the Para for independent inquiry.
Audit recommends fixing of responsibility and recovery of loss from the person(s) at fault.
concern.
PDP No. 87 (2021-22)
13.4.28 Overpayment to faculty on account of stipend - Rs. 6.624 million
According to approved PC-I, faculty members proceeding for foreign training will be entitled for
stipend @ 1200$ per month/person.
the Financial Years 2020-22, it was observed that 23 faculty members were nominated for foreign training
at Austria for the period of four (04) months w.e.f 01.04.2021 to 31.07.2021.
458
As per provision of the PC-I, each faculty member proceeding for foreign training was entitled for
stipend @ 1200$ per month/person for the period of four (04) months of the training. Accordingly, payment
of Rs.16,891,200/- (1200$ x 4 x 23 = 110400$ x 153 conversion rate) was made to the trainees in advance.
Scrutiny of record revealed that the training was concluded in three months and the faculty
members joined back their respective posts. Audit holds the view that payment of stipend was made on the
estimation of four (04) months training duration whereas the actual duration of the foreign training was
three (03). Resultantly, the excess paid stipend of 1200$ was required to be recovered from the 23 faculty
members but no such recovery was made from them. This resulted in overpayment of 27600$ (1200$ x 23)
which needs immediate recovery/ adjustment in their monthly pay at the prevailing conversion rate i.e.
Rs.6624,000/- (27600x240) from the concerned.
Audit contention was further strengthened as payment of Rs.1,635,000/- was paid to A.K
International Travels & Tours on account of cancellation charges of already booked return tickets and
reissuance charges as the subject training was concluded prematurely though TA was paid to the nominees
for a tentative period of 04 months.
The lapse occurred due to weak internal & financial controls which resulted into overpayment.
In the DAC meeting held on 12 & 13.01.2023, the Para was marked for verification of record by
Audit. However, no progress was intimated to Audit till finalization of this report.
Audit recommends recovery of the overpaid amount as provisions of PC-I regarding foreign
training and stipend payment were quite clear.
PDP No. 89 (2021-22)
13.4.29 Unauthorized payment on account of salary to faculty during foreign training - Rs.
10.679 million
According to approved PC-I, faculty members proceeding for foreign training will be entitled for
stipend @ 1200$ per month/person. The trainees will be entitled to Rs.130,000/- per month fixed pay.
the Financial Years 2020-22, it was noticed that 24 faculty members were nominated for foreign training
at Austria w.e.f 01.04.2021. The foreign training was projected for four months which was actually
concluded in three months.
As per approved PC-1 (Non-ADP Scheme), each trainee was entitled for monthly fixed salary of
Rs.130,000 in addition to stipend of USD 1200 per month/person. Contrarily, it was noticed that that
trainees were paid full pay & allowances along with stipend @ USD 1200 per month. This was a clear
violation of the PC-I and resulted in overpayment of Rs.10,679,343/- (approximately)to the trainees as
tabulated below:
No. of trainees Pay/ month Pay for three Pay due @ Rs.130,000/pm for 3 Overpayment (Rs.)
months paid months
459
24 6,679,781 20,039,343 9,360,000 10,679,343
The above amount is calculated on the basis of one month pay while the actual overpayment in the
matter needs to be ascertained for recovery.
Audit holds the view that the overpayment on account of pay & allowance in deviation from
approved PC-I was due to weak financial management.
In the DAC meeting held on 12 & 13.01.2023, the Para was marked for verification of record like
PC-I of the ADP Scheme and salary package etc. by Audit. However, no progress was intimated to Audit
Audit recommends recovery of the overpaid amount as provisions of PC-I regarding foreign
training and salary payment were quite clear.
PDP No. 91 (2021-22)
13.4.30 Unauthorized payment on account of Conveyance Allowance – Rs. 7.168 million
According to judgment of Peshawar High Court circulated by Finance Department vide their letter
No. FD(SOSR-II)/8-52/2013 dated 02-04-2013, Govt servant provided with Govt residential
accommodation situated within their work premises are not entitled to conveyance allowance.
According to section 6 (b) (ii) of the Statutes of PAF – IAST, Conveyance Allowance shall be
admissible to all employees, except those provided official transport or living within the premises of the
Institute, @ 10% of initial of the relevant basic pay scale maximum up to Rs.20,000/- per month however
those employees who are provided only pick & drop service shall be charged conveyance rates to be
assessed as per staff car rules of the Institute.
the Financial Years 2020-22, it was noticed that Rs.7,165,727/- was paid to the officers/ officials of the
university on account of conveyance allowance. However, residential accommodations were provided to
them within the premises of the university. Hence, the conveyance allowance of Rs.7,165,727/- paid to the
staff residing within the premises of the university, was not admissible to them (Annexure-XXXIII).
Audit is of view that payment of conveyance allowance @ 10% of basic pay maximum upto
Rs.20,000 per month paid to regular staff in salary was not admissible and further to state that conveyance
allowance at rates of equivalent posts was required to be deducted from the salaries of those contract
employees drawing fixed salary as their pay package is all inclusive but contrary to that neither payment of
conveyance allowance was stopped nor deducted from the contract employees.
The lapse occurred due to weak management of the Estate Office matters and deviation from the
statutes of the institute, Finance Department and judgment of the Hon. High Court which is leading towards
financial loss to the government and contempt of court.
460
In the DAC meeting held on 12 & 13.01.2023, Audit did not agree with the justification of the
management and stressed on recovery. However, no progress was intimated till finalization of this report.
Audit recommends recovery of the conveyance allowance.
PDP No. 94 (2021-22)
461
13.4.31 Unauthorized payment of House Rent Allowance to the officers provided with
residential accommodation – Rs. 21.924 million
According to Section 6(1) of Chapter-10 of the Statutes of the Institute, House Rent Allowance @
30% of initial basic pay shall be admissible to those employees who are not provided residential
accommodation by the Institute. Further if the house of lower category is allotted to any employee then the
payment of HRA will be assessed by the Housing Committee constituted by the Executive Council.
the Financial Years 2020-22, it was noticed that 23 staff members appointed on special pay scale or fixed
pay package were provided furnished residential accommodations in the Institute at very nominal rent
which was not assessed by the Housing Committee to be constituted by the Executive Council. This resulted
in loss of Rs.21,923,821/- despite the fact that full furnished accommodation along with electricity,
generator facilities and other installation were provided in the accommodation.
The lapse occurred due to weak internal controls which resulted into unauthorized payment.
In the DAC meeting held on 12 & 13.01.2023, the forum marked the Para for verification of record
in support of management’s reply. However, no progress was intimated to Audit till finalization of this
report.
Audit recommends proper assessment of the house rent to be assessed by the Housing Committee
and recovery of less paid house rent in light of the assessment as per statutes.
PDP No. 95 (2021-22)
13.4.32 Irregular appointment of Advisor/ Faculty – Rs.39.456 million
According to chapter-2 – Faculty Service Rules of the Statutes of the PAF-IAST Haripur,
Appointments on all the Faculty Positions (Tenure Track & Teaching Track) are to be handled by Search
Committees constituted by the competent authority and shall be made on the basis of advertisements
appearing in leading newspapers as well as on websites of the Institute, mandatory written test (for Lecturers
only), presentation and interviews in the prescribed manner.
According to Higher Education Department, KP letter No. SO(U-V)/HE/6-3/SBBWUP/Misc2021

dated 05.11.2021, appointment/ rehiring of superannuated persons shall not be made in future without
proper approval of competent authority in accordance with the relevant laws/ rules.
According to Statutes of the PAF-IAST Haripur, there is neither provision for the post of the
Advisor nor any mechanism prescribed for the recruitment of the Advisor.
According to section 67 of the Statutes of the PAF-IAST Haripur, in all tenure track and teaching
track cases (professorial ranks only) the Dean will forward the case along with his/her summary
recommendation as well as the recommendation of the FAPTC to the Rector for further processing to
Selection Board.
462
According to section 76 of the Statutes of the PAF-IAST Haripur, for all teaching track and special
appointment positions (Except adjunct faculty), if either the Dean and/or the FAPTC delivers a
recommendation in support of the candidate’s appointment, the Dean will forward the candidate’s dossier
and any additional documents to the Rector for further submission to Selection Board. In the case of adjunct
faculty, the final appointment will be made by the Rector.
According to section 85/4.4.1 read with section 88/5.4 of the Statutes of the PAF-IAST Haripur,
for all cases of appointment with tenure or appointment to full Professor (with or without tenure), final
approval of a candidate’s appointment lies with the Executive Council. After the Rector considers the
candidate for appointment, the Rector will deliver a formal recommendation to the Selection Board who
will then vote to either recommend or reject the candidate’s appointment. Decisions of the Selection Board
will be forwarded to the Executive Council for approval. The appointment approval authority for the
Professorial rank is the Executive Council.
the Financial Years 2020-22, it was observed that management of the Institute appointed following officers
in the Institute on contract basis ignoring the rules/ laws/ instructions as contained in the Statutes of the
institute as well as government instructions issued from time to time for the rehiring of superannuated and
other persons.
Name of
S. Age at time of Salary Total
Contract Designation Date of Joining
No. appointment PM Salary (Rs.)
Employee
1 Mr. Anwar Amjad Advisor-IT 01.12.2019 49 years 450,000 10,800,000
(02 years)
2 Mr. Waseem Advisor-IL 03.02.2020 55 years 450,000 5,400,000
Sohail Hashmi (01 years)
3 Dr. M. Ashraf Professor 01.06.2020 71 years 428,750 7,717,500
Jahanian (1.5 years)
4 Mr. M. Ishfaq Advisor RE 29.09.2020 70 years 450,000 9,450,000
Khattak (1.9 years)
5 Dr. Qamar Malik Professor 27.04.2021 63 years 428,750 6,088,250
(1.2 years)
Total 39,455,750
Audit observed the following irregularities:
i. The appointments at S. No. 01 & 02 were made as Advisors though there is no provision for
the recruitment of Advisors in the Statutes of the institute.
ii. Approval of the competent authority i.e. Chancellor was not obtained for appointments at S.
No 3 to 5 in violation of Higher Education Department instructions endorsed vide letter quoted
above, which warrants that the appointment/ re-hiring of superannuated persons shall not be
made in future without proper approval of competent authority.
iii. Hiring was made by Rector through internal hiring committee in violation of the Statutes
provisions which warrant that appointments will be made by the Executive Council on the
recommendations of Selection Board.
463
iv. All above officers were hired equivalent to BPS 20 and 21 through Internal Hiring Committee
of the Institute which is headed by Director Establishment who himself is Grade 20 officer.
Hence, the Committee was not mandated to make hiring of officers in BPS. 20 and 21.
v. No experts from the market or provincial government were engaged in these appointments
vi. No appointment criteria for the appointment was approved from Board of Governors rather a
committee comprising junior officers was constituted to appoint persons on senior positions.
vii. Such kind of positions filled on market-based salaries, should be advertised as mentioned in
the Statutes but in these cases, appointments were made ignoring Statutes and Government
instructions.
viii. The initial pay granted are not in conformity with the Project Policy of KP Government though
funds were provided by the provincial government.
ix. Despite restrictions in the Statutes, these officer except S. No 2 were given extension which is
worst example of favoritism and it seems that no efforts were made for fair competition rather
handpicked persons were appointed.
Audit held that these appointments along with payment of Rs.39,455,750/- are irregular and
unjustified.
The lapse occurred due to violating the government instructions, statutes of the institute and weak
management of HR policy which resulted into irregular appointment.
In the DAC meeting held on 12 & 13.01.2023, the forum marked the Para for detailed inquiry in
light of observations raised by Audit.
PDP No. 106 (2021-22)
13.4.33 Overpayment to PTCL on account of IT equipment due to allowing dollar conversion

According to clause 18.1 of the contract agreement executed by Pak-Austria Fachhochschule

Institute of Applied Sciences, Haripur with M/S PTCL for the supply, installation, deployment &
commissioning of campus network etc. the prices of campus network (Wired and Wireless) Data Center,
IP Surveillance and VDIs delivered under the contract will remain same throughout the project completion
period in consideration of and as the full compensation for the contractor’s performance of the works,
completion of the works and fulfillment and discharge of other obligations under the contract, PAF – IAST
shall pay the contractor the sum being the contract price as further set out in Schedule – III.
464
the Financial Years 2020-22, it was observed that contract for supply, installation, deployment &
commissioning of campus network etc. was awarded to M/S PTCL.
Scrutiny of record revealed that two bidders viz. M/S PTCL and Jaffar Business Systems were
technically qualified and M/S PTCL was declared lowest in the financial evaluation and accordingly
contract awarded.
Record showed that USD to PKR conversion rate was Rs.163.60 per USD at the time of tender/
bidding process which was based for declaring M/S PTCL the lowest offering rate. Contrarily, payments
were allowed at the conversion rate of Rs.167.20 per USD which was inadmissible and led to overpayment
as neither the bidding documents have provision for USD conversion nor the 2 nd lowest firm submitted
USD to PKR conversion rates. The project was concluded with total payment of Rs.337,892,594 which was
based on USD to PKR conversion rate of Rs.167.60 as such overpayment of Rs.8,064,262/- was made due
to conversion factor. (337892594/167.60 x 163.60 = 329828332 - 337892594)
The lapse occurred due to mis-procurement which resulted into overpayment to PTCL.
In the DAC meeting held on 12 & 13 January, 2023 the forum marked the Para for verification of
payment vouchers along with all supporting document as well as confirmation of dollar conversion rates.
Audit recommends to recover the overpaid amount from M/S PTCL besides fixing of responsibility
on the person(s) at fault.
PDP No. 114 (2021-22)
13.4.34 Unauthorized release of already deducted liquidated damages to M/S PTCL for delay
in completion of task – Rs. 25.068 million
As per prevailing policy of the Pak-Austria Fachhochschule Institute of Applied Sciences, Haripur,
all the penalties will be deposited in the Student Financial Aid account for the financial assistant of the
students through scholarships.
the Financial Years 2020-22, it was observed that contract for the supply, installation, deployment &
commissioning of campus network etc. was awarded to M/S PTCL. The project was concluded with total
payment of Rs.337,892,594/- to the PTCL.
Perusal of record revealed that M/S PTCL did not complete the task within the stipulated period,
accordingly, penalty of Rs.25,068,266/- (10%) was imposed and deducted vide bill No. 3421/15-03-2021.
The penalty amount was transferred to the Students Financial Aid account which is maintained for the
students’ scholarships.
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The penalty amount deducted from the vendor, was indicated as receipts in the budget for the
financial year 2021-22 and was approved by the F&PC, Executive Council and finally from the Board of
Governors in its meeting held on 21-06-2021. But the deducted amount was released in the next financial
year to the vendor without approval of the Board of Governors. This is a serious lapse as the amount of
liquidated damages was booked as revenue on the approval of F&PC, EC and BOG but released by the
management without obtaining approval of the BOG.
Audit held that liquidated damages once deducted, established sufficient and enough grounds that
delay was on the part of the contractor. The penalty was imposed as per contract clause, as such release of
already deducted liquidated damages to the vendor, was in violation of contract by the institute itself that
too without approval of F&PC, EC and BOG.
The lapse occurred due to misuse of authority which resulted in loss to the government.
In the DAC meeting held on 12 & 13.01.2023, the forum directed that since the penalty was
imposed after approval of Executive Council and Board of Governors, as such approval may be obtained
from the same forum for release of deducted liquidated damages, otherwise, recovery be made. However,
Audit recommends implementation of DAC decision of recovery to be made while fixing

responsibility on the persons at fault.
PDP No. 115 (2020-21)
13.4.35 Inadmissible payment of stipend to a faculty for postdoctoral training – Rs. 3.905
million
According to section 8 (O) Study Leave of the Statutes of the Pak-Austria Fachhochschule Institute
of Applied Sciences, Haripur, study leave can be granted for post-doctoral degree with the approval of
Executive Council subject to availability of leave at his credit in addition to study leave.
According to section 4 (h), of the Statutes of the Pak-Austria Fachhochschule Institute of Applied
Sciences, Haripur, those faculty proceeded on special training mandatory after appointment in the Institute
shall be paid fixed salary as per policy of the Institute in addition to stipend if any for the training period.
According to Economic/ Austerity Measures for Financial Year 2021-22, approved by Provincial
Cabinet in its meeting held on 19-06-2020 and circulated by Finance Department, KP vide BO.I/FD/5-
8/2020-21/Austerity Measures dated 30-07-2020, there shall be a complete ban on:
i. Participation in workshops/seminars and training abroad involving provincial funds.
ii. Holding seminars and workshops in Five Star Hostels involving provincial funds.
iii. Treatment aboard on Provincial Government’s expenses.
the Financial Years 2020-22, it was observed that Dr. Maqbool Khan (Assistant Professor) was invited for
postdoctoral training at SCCH Austria w.e.f. 02 August 2021 to 01 August 2022 i.e. for one year.
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The officer was paid stipend of Rs.3,904,704/- (@ 1200$ per month) for 18 months, as per
following breakup:
S. No Cheque No. & Date Amount
1 235552290/28-07-2021 1,166,400
2 58953448/31-01-2022 1,269,504
3 4172544/30-06-2022 1,468,800
Total 3,904,704
Perusal of relevant record revealed the following irregularities:
i. There was no provision for payment of stipend to the faculty for postdoctoral degree, training
& research program. The provision of stipend is only for special mandatory training after
appointment in the institute. While the instant training/ research work was not a mandatory.
ii. Statutes provides that study leave can be granted for postdoctoral degree/ training etc. with the
approval of the Executive Council. The faculty proceeded for postdoctoral training without
obtaining study leave and that too without approval of the Executive Council or Board of
Governors rather the case was approved by an internal committee.
iii. As the Statutes provides that study leave can be granted for postdoctoral and on the other hand
no stipend/ honorarium is admissible during leave of any kind.
The lapse occurred due to weak administrative and financial controls which resulted into
inadmissible payment.
In the DAC meeting held on 12 & 13 January, 2023 the forum marked the Para for inquiry.
Audit recommends recovery from the faculty besides fixing of responsibility on the person(s) at
fault.
PDP No. 116 (2021-22)
13.4.36 Inadmissible payment of stipend to faculty members for postdoctoral training – Rs.
5.054 million
of Applied Sciences, Haripur, study leave can be granted for Post-Doctoral degree with the approval of
467
the Financial Years 2020-22, it was observed that Dr. Waqar Mehmood (Associate Professor) and Dr.
Arshad Ahmed (Assistant Professor) were invited for postdoctoral training at SCCH Austria w.e.f. October
2021 for one year.
The officers were paid stipend of Rs.5,054,400/- (@ 1200$ per month) for one year, as per
following breakup:
S. No Cheque No. & Date Amount
1 241803672/01-10-2021 2,433,600
2 70679238/14-04-2022 2,620,800
Total 5,054,400
Perusal of relevant record revealed the following irregularities:
i. There was no provision for payment of stipend to the faculty for postdoctoral degree, training
& research program. The provision of stipend is only for special mandatory training after
appointment in the institute. While the instant training/ research work was not a mandatory
one.
ii. Statutes provides that study leave can be granted for postdoctoral degree/ training etc. with the
Governors rather the case was approved by an internal committee.
iii. As the Statutes provides that study leave can be granted for postdoctoral and on the other hand
no stipend/ honorarium is admissible during leave of any kind.
In the DAC meeting held on 12 & 13.01.2023, the forum marked the Para for inquiry.
fault.
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PDP No. 117 (2021-22)
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13.4.37 Inadmissible expenditure on behalf of faculty members proceeded on postdoctoral
training – Rs. 1.565 million
of Applied Sciences, Haripur, study leave can be granted for Post-Doctoral degree with the approval of
the Financial Years 2020-22, it was observed that Dr. Maqbool Khan (Assistant Professor), Dr. Waqar
Mehmood (Associate Professor) and Dr. Arshad Ahmed (Assistant Professors) were invited for
postdoctoral training at SCCH Austria w.e.f. 02 August 2021 and October 2021 respectively, for a period
of one year.
Perusal of record revealed that expenditure of Rs.1,564,924/- was incurred by the institute on
account of postdoctoral of the above-mentioned faculty members as per breakup.
S. No Object Expenditure (Rs.)
1 Health insurance 783,633
2 Bills reimbursement 285,791
3 Air Tickets 495,500
Total 1,564,924
In this regard, the following irregularities were observed:

i. Statutes provides that study leave can be granted for postdoctoral degree/ training etc. with the
Governors.
ii. As the Statutes provides that study leave can be granted for postdoctoral and on the other hand,
no payment/ expenditure is admissible except monthly pay during leave of any kind.
iii. There was no provision for payment of health insurance charges & other expenditure on
account of faculty being on leave or proceeding for postdoctoral degree, training & research
program. The provision for incurring expenditure on behalf of faculty is only for mandatory
training after appointment in the institute. While the instant training/ research work was not a
mandatory one.
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inadmissible expenditure.
In the DAC meeting held on 12 & 13.01.2023, the forum marked the Para for inquiry.
fault.
PDP No. 118 (2021-22)
13.4.38 Loss due to non-transparent procurement and avoiding the lowest financial bid – Rs.
5.415 million
According to Khyber Pakhtunkhwa Public Procurement Regulatory Authority (KPPRA)

Procurement Rules 2014, circulated vide Finance Department (Regulation Wing) letter No. SO(FR)/FD/9-
7/2013 dated: 03-02-2014, Chapter-II "Methods of Procurement of Goods " single stage, one envelope
procedure should be used where cost is the only determining factor. Each bid shall comprise one single
envelope containing financial proposal or offer and required information in accordance with the bid
solicitation documents. This shall be the standard method of procurement of goods for simple and routine
nature and where no technical innovation is involved;
Single stage, two envelops procedure shall be used where bids are to be evaluated on technical and
financial grounds and price is taken into account after technical evaluation. Bid shall comprise a single
package containing separate envelopes. Each envelope shall contain separately the financial proposal and
technical proposal;
the Financial Years 2020-22, it was observed that payment of Rs.20,629,966/- was made to M/S Abid
Rafique and Company for supply of equipment for heat treatment laboratory under lot # 6.
Perusal of bidding documents revealed that lowest bid of Rs.15,214,920/- offered by M/S
Engineering and Technical Services was ignored and awarded the contract to M/S Abid Rafiq and Company
at the bid cost of Rs.20,629,966/- This resulted in loss of Rs.5,415,046/- to the government due to non-
award of tender to the lowest bidder.
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i. Single stage single envelope method was used and as per KPPRA rules it should be used where
cost is the only determining factor, as such the lowest bid was required to be accepted but
ignored.
ii. The lowest offer bid of M/S Engineering and Technical Services was ignored though the firm
qualified in the initial eligibility evaluation. Both the firms offered China made item but still
the lowest bidder was shown disqualified in the Technical Evaluation.
iii. In case of technical nature and complicated items, two envelopes procedure was required to be
adopted and financial bid of the technically disqualified bidder was required to be returned
unopened but still financial bid was opened. This indicated that there were no solid reasons for
rejection of lowest bidder but still contract awarded to the choice firm.
iv. Dr. Muhammad Zubair Khan, Assistant Professor (Convener Procurement Committee)
submitted the financial evaluation to the procurement committee wherein lowest bid of M/S
Engineering and Technical Services for Rs.15,214,920/- was clearly mentioned. Once the firm
was technically disqualified then how his financial bid was written down in the financial
evaluation.
The lapse occurred due to mis-procurement which resulted in loss to the government which resulted
In the DAC meeting held on 12 & 13.01.2023, the forum marked the Para for inquiry in light of
observations raised by Audit.
Audit recommends recovery of loss from the person(s) at fault.
PDP No. 131 (2021-22)
13.4.39 Non-transparent procurement due to awarding the contract to the choice firm – Rs.
12.965 million
Technology Links (Pvt) Ltd. for supply of material testing lab equipment under lot # 1.
Perusal of bidding documents revealed that defective evaluation of bids submitted by various
bidders was carried out wherein all the firms were declared disqualified/ non-responsive one way or the
other and awarded the contract to M/S Technology Links being the choice firm. The tender process was
adopted as a formality which was managed due to the following reasons:
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i. 05 bidders participated in the bidding process, out of which only the above bidder was declared
responsive and rest were declared non-responsive which was not correct. M/S Engineering and
Technical Services was declared non-responsive in the instant procurement (Lot-1) for the
reason that company is not in operation for last 05 years and the financial bid was shown
returned unopened. Whereas, in the evaluation of Lot-6, the same firm was shown in operation.
This contradiction shows that evaluation process was managed and defective.
ii. Another firm viz. Analytical Measuring Systems was shown technically disqualified and
declared non-responsive in the comparative statement of lot-1, whereas, in the detail
evaluation, the firm secured 70.428 marks against the passing criteria of 70 marks. This
contradiction further strengthened audit contention that procurement process was managed for
awarding the contract to the choice firm.
The actual loss could not be ascertained by audit as financial bids of 04 bidders were shown
returned unopened and not available to evaluate the financial impact of defective tendering process.
The lapse occurred due to mis-procurement which resulted into non-transparent procurement.
In the DAC meeting held on 12 & 13.01.2023, the management was directed to produce the record
of Lot-1 and 6 for comparison and verification. However, no progress was intimated to Audit till finalization
of this report.
Audit recommends fixing of responsibility on the person(s) at fault besides recovery of loss.
PDP No. 133 (2021-22)
13.4.40 Non-deduction of GST and Income Tax – Rs. 55.930 million

income tax at the rate of 4% shall be deducted from the payments of a filer contractor/ company.
According to terms & condition of the purchase order dated 02-06-2022, payment/ deduction will
be made as per Income Tax ordinance in force at time.
During audit of the accounts of Pak-Austria Fachhochschule Institute of Applied Sciences Haripur
for the Financial Years 2020-22, it was observed that total payment of Rs. 258,203,621/- was made to
different suppliers for supply of different items. However, further scrutiny of record revealed that the
university administration failed to deduct the general sales tax and income tax at the prescribed rates
amounting to Rs. 55,930,365/- from the payments made to them, as detailed below;
S. No. Contractor Work Amount Paid GST I.T Total
1 M/S Technology Links Supply of Stock & 44,758,000 6,503,300 3,133,060
9,636,360
Stores
2 M/S Associated Instrument Supply of Physics 8,653,235 2,941,475 346,129
3,287,604
Distributed Lab Equipment
3 M/S Global Marketing Stock & Stores/ Lab 103,861,540 17,656,461 4,154,462
21,810,923
Services Equipment
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4 M/S H.A Shah & Sons Supply of Molecular 100,930,846 17,158,244 4,037,234
21,195,478
Biology Equipment
Total 258,203,621 55,930,365
The lapse occurred due to mis-procurement and weak financial controls which resulted into non-
deduction of taxes.
In the DAC meeting held on 12 & 13.01.2023, the management was directed to provide evidence
of deduction of GST and Income Tax upon delivery of the items to the institute. However, no progress was
Audit recommends recovery of taxes and subsequent deposit to government treasury.
PDP No. 134, 137, 138 & 139 (2021-22)
13.4.41 Non-transparent procurement due to awarding the contract to the choice firm – Rs.
20.473 million
Technology Links (Pvt) Ltd. for supply of material testing lab equipment under lot # 2.
Perusal of bidding documents revealed that defective evaluation of bids submitted by various
bidders was carried out wherein all the firms where declared disqualified/ non-responsive one way or the
other and awarded the contract to M/S Technology Links being the choice firm. The criteria for evaluation
was irrational and designed one. The tender process was adopted as a formality which was managed due to
the following reasons:
i. 05 bidders participated in the bidding process, out of which only the above bidder was declared
responsive and rest were declared non-responsive which was not correct. M/S Analytical
Measuring System was disqualified and the financial bid was shown returned unopened.
Whereas, in the evaluation, the firm secured 70.428 marks against the passing marks of 70.
Even incorrect score was assigned as the actual score was 72.428 marks.
ii. M/S Technology Links (successful bidder) was given 5 marks for 5 operational offices while
M/S Analytical System was given 3 marks for 4 operational offices.
iii. M/S Technology Links (successful bidder) was given 7 marks for 375.1 million financial
strength while M/S Analytical System was given 0 marks for 151.35 million financial strength.
iv. The irrational requirement of relevant experience, experience in public sector and experience
in education sector was repeated set in the technical evaluation for awarding maximum score
to the choice firm viz. M/S Technology Links.
474
The actual loss could not be ascertained by audit as financial bids of 04 bidders were shown
returned unopened and not available to evaluate the financial impact of defective tendering process.
The lapse occurred due to mis-procurement which resulted into non-transparent procurement.
In the DAC meeting held on 12 & 13.01.2023, the management was directed to produce the record
of Lot-1 and 6 for comparison and verification. However, no progress was intimated to Audit till finalization
of this report.
Audit recommends fixing of responsibility on the person(s) at fault besides recovery of loss.
PDP No. 135 (2021-22)
13.4.42 Illegal appointments through Internal Hiring committee – Rs. 70.155 million
As per section 1(iii) of chapter 5 of the Statutes, Contract staff paid from contingencies or on work
charged basis or persons employed occasionally for consultancy or on part-time basis or on fixed term
contract whose appointments are governed by the letters of their appointment shall be hired through Internal
Hiring Committee to be headed by the Director Establishment of the Institute. The appointments shall be
maximum for one year which is not extendable. The Director Establishment with the approval of Rector
shall initiate the process of appointment through advertisement or head-hunting basis.
the Financial Years 2020-22, it was observed that the Institute made certain appointments on one year term
through head hunting citing various reasons that abstain the Institute to advertise the position. Total
payment of Rs. 70,154,580/-was made on account of monthly salary for one year term (Annexure-
XXXIV).
The following irregularities were observed by Audit:
i) The spirit of statutes is that “Fixed term Contract” means the appointment made against the
budgeted post by the Rector on the recommendation of the Internal Hiring Committee under
specific agreement for a fixed period not exceeding one year;
ii) The Internal Hiring Committee shall be responsible for processing of applications and conducting
interviews or test or the both as may be decided by the competent authority for fixed term contract
hiring of the staff.
The narrative of above clause is that persons with high experience in different fields will be hired
as consultant with specific task for a limited period but contrary to that:
a. Budgeted positions were filled and no efforts were made to advertise these positions
b. All these positions have been filled through head hunting but ironically only one candidate was
hunted for each position thus merit was discouraged
c. Filling of positions of Assistant Professor, Lecturers and Deputy Director through Internal Hiring
Committee makes no sense as these positions can be easily filled through open merit but it seems
that these people were accommodated as they cannot be appointed or compete on merit thus so
called slogan of merit in the institute was exposed.
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d. No agreement was signed with these appointees for assigning them special tasks and their
periodical reports
e. The record reveals that these appointees are not eligible for these positions if compete on merit due
to one or other reasons
f. Some of the appointees have been granted salary package even more the ceiling of PC-1 on the
recommendation of the Internal Hiring Committee which was not mandated to do so as market base
salaries are determined by the Executive Council in light of Section 20 of the Act of the institute.
g. Most of the officers have been rehired by the same Internal Hiring Committee after 2 days gap
which is against the spirit of Statutes wherein it is stated that these appointments are not extendable
beyond one year.
h. Most of the appointed officers are more than 60 years of age so their appointments need approval
of Chancellor which was not sought.
i. No Job description or special tasks were assigned or completion reportswere available for record.
j. It was necessary to monitor the performance of these high paid officers on quarterly basis and
should have been submitted to Executive Council for ratification but nothing done
k. Some of the officers have left the Institute but no record of their performance and achievement of
targets was available.
l. Some staff positions have also been filled through Internal Hiring Committee and it is apprehended
that those failed in merit were adjusted through this mean.
Audit held all these appointments as illegal and wastage of public money and accommodation of
chosen one.
In the DAC meeting held on 12 & 13.01.2023, the forum marked the Para for detailed inquiry.
Audit recommends immediate termination of the contract of all mentioned employees and if
necessary, these positions may be advertised in newspapers for appointment on merit. Moreover, salary
paid over and above the limit of PC-1 may recovered.
PDP No. 144 (2021-22)
13.4.43 Overpayment to contractor due to allowing MRS-2019 rates instead of MRS-2016

rates – Rs. 7.390 million
According to Government of Khyber Pakhtunkhwa, Communication and Works Department, MRS

Cell notification No. MRS Cell/C&W/6-1/D&S/2019-20 dated 01-06-2017 “The Market Rate System
Document 2019, is approved with effect from 01-10-2019. All the departments generally and Nation
Building Departments shall especially follow the MRS Document 2019 for preparation of PC-I and
execution of works in the province by observing the following criteria:
i. The rates of newly updated MRS-2019 will be applicable on unapproved schemes only.
476
ii. Projects already approved by respective competent forum shall be immediately put to tender
without its revision on MRS-2019.
iii. Projects already approved by respective competent forum shall be immediately put to tender
without its revisal on MRS-2019
According to the terms & conditions No.6 of the NIT provides, the tenders shall be processed
according to “Above/ Below System” based on the Market Rate System 2016.
the Financial Year 2020-21, it was observed that contract for the construction of road & allied work
(Package-2) was awarded to M/S Bakht Rawan. An up-to-date payment of Rs.40,896,153/- was paid till
IPC-04.
Scrutiny of record revealed that:
i. The PC-I was prepared for carrying out civil work on the basis of MRS-2016 and accordingly
approved by the competent forum.
ii. The Engineer’s estimate as envisaged in the PC-I was prepared on MRS-2016.
iii. Comparison of paid bill with PC-I revealed that all the items were paid on the basis of MRS-2019
despite the fact that PC-I was approved on MRS-2016. The management was bound to carry out
bidding process on MRS 2016 and make payments on MRS-2016. This resulted in overpayment of
Rs. 7,390,474/-to the contractor (Annexure-XXXV).
The lapse occurred due to weak management of the developmental works which resulted in
In the DAC meeting held on 12 & 13.01.2023, the forum directed to conduct detailed investigation/
inquiry into the matter.
Audit recommends recovery from the contractor besides fixing of responsibility on the person(s)
at fault.
PDP No. 145 (2021-22)
477
13.4.44 Overpayment to contractors due to allowing MRS-2017 rates instead of MRS-2016
According to Government of Khyber Pakhtunkhwa, Finance Department, CSR Cell notification

No. FD/CSR Cell/1-7/Rates/2017 dated 01-06-2017 “The Market Rate System Document 2017, is approved
with effect from 01-06-2017. The rates of newly updated MRS-2017 will be applicable on unapproved
schemes only. Projects already approved by respective competent forum shall be immediately put to tender
without its revision on MRS-2017”
According to the terms & conditions No.6 of the NIT provides, the tenders shall be processed
according to “Above/ Below System” based on the Market Rate System 2016.
the Financial Year 2020-21, it was observed that contract for the construction of Academic Block C1 was
awarded to M/S Bakht Rawan and paid Rs.254,311,013, till IPC 10.
1. The PC-I was prepared for carrying out civil work on the basis of MRS-2016 and accordingly
2. The Engineer’s estimate as envisaged in the PC-I was prepared on MRS-2016.
3. Comparison of paid bill with PC-I revealed that all the items were paid on the basis of MRS-2017
bidding process on MRS 2016 and make payments on MRS-2016. Contrarily, payments were
allowed on MRS-2017 which is almost 10% higher than MRS-2016 rates. This resulted in
overpayment of Rs.28,256,779/-to the contractor.
at fault.
PDP No. 146 (2021-22)
13.4.45 Loss to government due to allowing MRS-2017 rates instead of MRS-2016 rates – Rs.
45.993 million
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Cell notification No. FD/CSR/1-7/Rates/2017 dated 01-06-2017 “The Market Rate System Document
2017, is approved with effect from 01-06-2017. All the departments generally and Nation Building
Departments shall especially follow the MRS Document 2017 for preparation of PC-I and execution of
works in the province by observing the following criteria:
the Financial Year 2020-21, it was observed that contract for the construction of high school was awarded
to M/S Muhammad Ishaq & Sons. An up-to-date payment of Rs.92,118,916/- was paid till IPC-07.
Scrutiny of relevant file revealed that the PC-I of the project was approved as ADP vide S. No.
675/170030 for the year 2017-18, this indicated that estimates were prepared on MRS-2016 and accordingly
tendered. After issuance of MRS-2017, the management issued corrigendum and asked the contractors to
submit rates on MRS-2017 despite clear directions that new MRS-2017 is for unapproved schemes and
already approved schemes shall be put to tender without its revision on new MRS.
PC-I revealed that estimated cost of the high school was Rs.50.00 million but due to its
unauthorized revision on MRS-2017, the contract cost was enhanced to Rs.95,993,450/- This resulted in
excess cost of the project to the tune of Rs.45,993,450/- (95.993 – 50) which was also above the PC-I
provision based on MRS-2016 estimations.
at fault.
PDP No. 149 (2021-22)
13.4.46 Overpayment to contractor due to allowing MRS-2019 rates instead of MRS-2016


Cell notification No. MRS Cell/C&W/6-1/D&S/2019-20 dated 01-06-2017 “The Market Rate System
Document 2019, is approved with effect from 01-10-2019. All the departments generally and Nation
479
Building Departments shall especially follow the MRS Document 2019 for preparation of PC-I and
execution of works in the province by observing the following criteria:
iii. Projects already approved by respective competent forum shall be immediately put to tender
without its revisal on MRS-2019
the Financial Year 2020-21, it was observed that contract for the construction of external development work
was awarded to M/S Bakht Rawan. An up-to-date payment of Rs.25,615,155/- was paid till IPC-03.
1. The PC-I was prepared for carrying out civil work on the basis of MRS-2016 and accordingly
2. The Engineer’s estimate as envisaged in the PC-I was prepared on MRS-2016.
3. Comparison of paid bill with PC-I revealed that all the items were paid on the basis of MRS-2019
bidding process on MRS 2016 and make payments on MRS-2016. This resulted in overpayment of
Rs.5,123,031/-(25615155 x 20%) to the contractor as MRS-2019 rates are 20% higher than MRS-
2016.
at fault.
PDP No. 150 (2021-22)
13.4.47 Overpayment to contractor due to non-deduction of rebate on NSI –

Rs. 1.740 million
According to the contractors’ bids, comparative statement and work order No. PAF-
IAST/PD/2019-941 dated 29-05-2019, the lowest rate offered by M/S Bakht Rawan for the construction of
Boys Hostel-2 was approved @ 10% below on schedule and non-schedule items.
480
the Financial Year 2020-21, it was observed that contract for the construction of Boys Hostel - 2 was
awarded to M/S Bakht Rawan @ 10% rebated rate offered by the contractor and duly accepted vide work
order No. PAF-IAST/PD/2019-941 dated 29-05-2019.
It is worth mentioning here that the contractor’s bid accepted being lowest was 10% below on
schedule items and non-schedule items. Scrutiny of 12th/final bill revealed that the work was concluded at
the cost of Rs.133,624,801/- The final bill included Rs.17,404,661/- on account of non-schedule item but
10% rebate was not deducted from the NSI payment. This resulted in overpayment of Rs.1,740,466/-
(17404661 x 10%)
In the DAC meeting held on 12 & 13.01.2023, the forum directed to produce the record for
verification of Audit. However, no progress was intimated to Audit till finalization of this report.
Audit recommends recovery.
PDP No. 151 (2021-22)
481
13.4.48 Overpayment to contractor due to unjustified change in the nature and quantity of
already executed item – Rs. 5.903 million
Doubtful enhanced quantity execution of cladding on the top floor –

Rs. 8.673 million
According to Para 56 of the CPWA code "BOQ/Estimates- as its name indicates, it amounts to no
more than guarantee that the proposals are structurally sound and that the estimates are accurately calculated
and based on adequate data"
Malik Bakht Rawan. The work was shown completed at the total cost of Rs.306,302,285/- as 12th& final
IPC was paid vide bill No. 5197/22.06.2022.
Comparison of the 12th/Final IPC with 10th running bill revealed that nature and quantity of already
executed items of work viz. aluminum cladding and curtain wall paid vide 10 th running bill was changed/
enhanced in the final bill. Though mostly quantity are changed/enhanced in the final bill which is a routine
practice but changing nature of the already executed items was beyond consideration. The unjustified
change in nature and quantity of already executed items resulted in overpayment of Rs. as tabulated below:
IPC Aluminum cladding Curtain wall Total

Qty Payment Qty Payment Qty Payment
10th 4095.25 53647762 1124.16 12253344 5219.41 65901106
12th/final 4603.991 60312282 1054.316 11492044 5658.307 71804326
Furthermore, 10th running bill showed that the floor-wise quantity of aluminum cladding was
irrational as quantity of cladding on top floor was much more than the quantity of ground to 5 th floor though
the height & covered area of the top floor was less than the other floors. This made the payment of
Rs.8,672,894/- against the top floor doubtful as tabulated below:
Floor Qty Payment (Rs.)

Ground 494.14 6,473,234
1st 542.39 7,105,309
2nd 540.68 7,082,869
3rd 506.10 6,629,923
4th 479.47 6,281,070
5th 614.59 8,051,064
Top 662.05 8,672,894
In the DAC meeting held on 12 & 13.01.2023, the forum directed to produce the measurement
books for verification of Audit. However, no progress was intimated to Audit till finalization of this report.
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Audit recommends recovery of the overpaid amount due to changing nature of the executed item
at a later stage.
PDP No. 153 (2021-22)
13.4.49 Overpayment to contractor due to non-deduction of rebate on NSI –

Rs. 12.833 million
According to the contractors’ bids, comparative statement and work order No. PAF-
IAST/PD/2019-942 dated 29-05-2019, the lowest rate offered by M/S Bakht Rawan for the construction of
Academic Block C1 was approved @ 10% below on schedule and non-schedule items.
awarded to M/S Bakht Rawan @ 10% rebated rate offered by the contractor and duly accepted vide work
order No. PAF-IAST/PD/2019-942 dated 29-05-2019.
It is worth mentioning here that the contractor’s bid accepted being lowest was 10% below on
schedule items and non-schedule items. Scrutiny of 11 th running bill revealed that Rs.128,332,244/- was
paid on account of non-schedule items on which 10% rebate was not deducted from the payment. This
resulted in overpayment of Rs.12,833,224/- (128332244 x 10%)
In the DAC meeting held on 12 & 13.01.2023, the forum directed to produce the record for
verification by Audit. However, no progress was intimated to Audit till finalization of this report.
PDP No. 154 (2021-22)
483
13.4.50 Loss to the government due to doubtful cost enhancement – Rs. 7.858 million
the Financial Year 2020-21, it was observed that contract for the construction of external water supply and
sewerage work was awarded to M/S Cemcon (Pvt) Ltd. The following payment status was extracted from
the record:
Particulars PC-I cost BOQ Technical Sanction

External water supply (SI) 27,599,617 24,411,862 12,630,515
External water supply (NSI) 0 0 459,126
External Sewerage 9,443,178 8,352,491 27,532,781
Total 37,042,795 32,764,353 40,622,422
The cost enhancement of the project to the tune of Rs.7,858,069/- (40.622 – 32.764) was doubtful
and not based on actual site realities on the following grounds:
i. The PC-I was based on site survey and feasibility report. M/S MAK Engineering Services was
full time engaged as consultant for design and supervision phases, in addition to Deputy
Manager (Works). The contractor’s bid was 11.55% below the Engineer’s estimate/PC-I.
Hence, it was expected that saving of Rs.4,278,442/- (37.043 – 32.764) will be available on
completion of project. But doubtful cost enhancement was made to draw the saving amount,
despite the fact that distance from overhead tank to blocks/ buildings was known to the
Engineer.
ii. The technical sanction for the enhanced cost of Rs.7,858,069/- was prepared by the contractor
M/S Simcom (Pvt) Ltd despite the fact that Deputy Manager (Works) and consultant was
engaged in the project. The TS prepared and submitted by the contractor’s was on his own
choice items and enhanced scope of work.
book, technical sanction, PC-I and enhancement of scope of work for verification of Audit. However, no
Audit recommends to conduct independent inquiry for fixing of responsibility and recovery of
expenditure incurred beyond scope of work.
PDP No. 157 (2021-22)

13.4.51 Overpayment to contractor due to allowing illogical increase in quantities in final bill
484
the Financial Year 2020-21, it was observed that contract for the construction of three bedded flats was
awarded to M/S M.Y. Brothers. The project was concluded with final payment of Rs.60,003,447/- through
12th& final IPC.
Comparison of 11th& 12th/ final IPCs revealed that unnecessary/ illogical increased quantities of
certain items were paid in final bill probably to draw the amount of savings under the project. Audit holds
the view that quantities of the preliminary items of work related to earth work were enhanced in the final
bill merely to draw the anticipated savings. Hence, payment of Rs.2,504,139/- as tabulated below was
illogical as well as overpayment:
Floor Item Qty in Qty in 12th& Excess Qty Rate Overpayment
IPC 11 final IPC (Rs.)
Sub structure Structural backfill borrow 1413.879 2619.738 1205.859 1127.8 1,359,968
Form work 326.65 344.232 17.582 552.5 9,714
Ground floor RCC 1:1:5:3 111.141 121.32 10.179 9538.28 97,090
Steel 20.406 20.71 0.304 111598.88 33,926
PCC 1:4:8 0 86.398 86.398 5481.08 473,554
PCC 1:2:4 33.61 102.898 69.288 7257.86 502,883
V DPC 0.5” thick 31.23 46.84 15.61 611.86 9,551
Box type chowkat 494.111 509.144 15.033 1160.97 17,453
Total 2,504,139
The final bill mostly reflects the final stage work i.e. emulsion paint, polishing of marble and door,
electric work etc. whereas in the instant case, structural backfill in sub-structure was allowed which
indicated that no additional quantities were executed but paid.
book, technical sanction, PC-I and enhancement of scope of work for verification of Audit. However, no
PDP No. 164 (2021-22)
13.4.52 Irregular expenditure on construction of Admin Block beyond PC-I scope of work –
Rs. 92.618 million
According to the PC-I approved for the establishment of Pak – Austria Fachhochschule Institute of
Applied Science & Technology for Rs.8601.919 million, there was provision for construction of ground
floor, first floor, second floor and top floor.
485
awarded to M/S Bakht Rawan and paid Rs.257,596,956 till IPC-10.
Scrutiny of 10th IPC and its comparison with PC-I revealed that expenditure of Rs. was incurred on
the additional floors which were beyond the scope of the PC-I. The approved PC-I had provision for ground,
first and second floor, whereas IPC 10 revealed expenditure on third, fourth and fifth floor which were
beyond the scope of PC-I. Hence, expenditure of Rs.92,617,929/- stands irregular as summarized below:
S. No Floor Schedule items Non-Schedule items Total expenditure

expenditure expenditure
1 Third Floor 17,158,119 12,438,740 29,596,859
2 Fourth Floor 17,579,313 12,048,658 29,627,971
3 Fifth Floor 19,423,273 13,969,826 33,393,099
Total 54,160,705 38,457,224 92,617,929
Furthermore, design and facilities in the floors of the Academic block were same, then variation/
excess expenditure of Rs.3,765,128/- on fifth floor was doubtful and needs proper justification.
Audit opines that PC-I was based on site survey and feasibility report, duly approved by the
competent forum. The drastic variation from scope of work worth Rs.92,617,929/- was irregular as in case
of non-approval of the additional scope of work in the revised PC-I by the respective competent forum,
what will be the fate of the matter.
The lapse occurred due to non-observing the approved scope of work which resulted in irregular
expenditure.
In the DAC meeting held on 12 & 13.01.2023, the department was directed to produce revised PC-
I dealing the subject matter to Audit for verification. However, no progress was intimated till finalization
of this report.
Audit recommends independent inquiry for fixing of responsibility on the person(s) at fault as no
such revised PC-I was available/ produced.
PDP No. 169 (2021-22)
13.4.53 Non-deduction of sales tax on services - Rs. 3.926 million
Sales Tax on Services was devolved to provinces through 18th Constitutional Amendment. Khyber
Pakhtunkhwa Revenue Authority (KPRA) was created through Khyber Pakhtunkhwa Finance Act 2013 in
order to administer and collect Sales Tax on Services.
According to Sr. No. 4 of the Second Schedule to the Khyber Pakhtunkhwa Finance Act 20z13 as
amended vide Finance Act 2019, rate of sales tax on Telecommunication and similar, allied and ancillary
services is 19.50%.
486
During audit of the accounts of Kohat University of Science & Technology Kohat for the financial
year 2021-22, it was noticed that an amount of Rs. 20,137,503 was paid to PERN internet for the provision
of internet/broadband services. On scrutiny of the bills, it was observed that sales tax on services amounting
to Rs. 3,926,813 was not deducted from the bills of the service provider. Detail is given below;
Date Voucher Number Amount Sales Tax on Services
30/06/2021 3-2202-PV-21-08-0023 4,617,106 900,336
3/8/2021 3-1102-PV-21-10-0200 4,958,014 966,813
8/2/2022 3-1102-PV-22-02-0120 5,195,959 1,013,212
30/06/2022 JV-22-06-0015 5,366,424 1,046,453
Total 20,137,503 3,926,813
Audit held that after the 18th amendment sales tax on services should have been deducted and
withheld by the university.
The lapse occurred due to weak financial controls which resulted into non-deduction of sales tax
on services which further resulted in loss to provincial government.
When pointed out in June 2023, it was stated that the university was not directly availing the service
from the service provider therefore, withholding was not required. However, audit didn’t agree because
KPRA has clarified that universities should withhold this tax.
Audit recommends recovery of the sales tax on services from the concerned service provider.
PDP No. 583 (2021-22)
487
13.4.54 Misappropriation of receipts realized from soil testing - Rs. 5.457 million
According to clause 6.2.1 of UET Financial Statutes, the money received in cash or financial
instruments will be deposited in the University’s bank account (s) and recorded in the Bank Book on daily
basis. If due to unavoidable circumstances, collection cannot be deposited on the day they are received, the
matter will be brought into the notice of the Additional Director Finance who shall arrange for safe custody
of the same.
Financial Year 2021-22, it was observed that a sum of Rs. 5,457,325/- (Rs.
1,845,310+1,822,100+1,789,915) was realized on account of commercial testing in Soil Mechanics &
Highway Engineering lab w.e.f 19-03-2021 to 14-09-2021.
Upon comparison of receipts generated from these tests with bank statement it was revealed that
the cash collected was not deposited in the relevant bank and mis-appropriated by the dealing hands.
Furthermore, these amounts of income of Rs. 5,457,325/- (Rs. 1,845,310 + 1,822,100 + 1,789,915)
were not deposited into relevant bank account but were drawn through three cheques and distributed
through Directorate of Finance according to devised formula.
Audit held that there is no proof available with the Civil Engineering Department for deposit of
receipts from soil tests into bank account. The Civil Engineering Department instead of verifying the
deposits into relevant bank account, drew three cheques total amounting to Rs. 5,457,325/- and sent to
Directorate of Finance for distribution which shows their concern for shares only.
The lapse occurred due to the worst internal controls and financial mis-management on the part of
Civil Engineering Department which resulted into misappropriation of receipts.
When pointed in April 2023, no reply was furnished.
Audit recommends detail fact finding inquiry into the matter and fixing responsibility against the
person (s) at fault under Rules beside recovery of loss.
PDP No. 392 (2021-22)
488
13.4.55 Non-deduction/Non-deposit of Sales Tax on Services on account of Testing Services -
Rs. 6.924 million
According to Finance Act-2013 amended through the KP Finance Act, 2021, Second Schedule
working Tariff-2021-22, Sales Tax on testing services shall be charged @ 5% without any input adjustment.
Financial Year 2021-22, it was observed that MoU was signed between PESCO and UET Peshawar on 1st
February 2022 for outsourcing the process of written/skill as well as physical tests for recruitment of
officers/officials of different categories in BPS-5 and above.
On further verification of record, it was noticed that the testing process for recruitments was
finalized on 28.05.2022 and a sum of Rs. 145,410,780 was realized/accumulated through online admission
bank account of UET as 50% direct charge from applicants being application fee for different categories of
staff as detail below:
S.No. Particulars/Description Rate per 50% No. of online Amount
candidate applications
1 BPS-16 & 17 Rs. 1360 680 16,146 10,979,280
2 BPS-6 to 15 Rs. 1105 553 192,078 106,219,134
3 BPS-5 Rs. 977.50 489 57,694 28,212,366
Total amount received from online applications 145,410,780
However, Sales Tax on Testing Services on the funds generated from online applications @ 5%
amounting to Rs. 6,924,323 (Rs. 145,410,780 X 5/105) was neither deducted nor deposited into Govt
Treasury.
The lapse occurred due to weak internal controls and financial mis-management which resulted
into non-deduction and non-deposit of taxes.
When pointed in April-2023, no reply was furnished.
Audit recommends the matter to be inquired at appropriate level and deposit of Sales Tax.
PDP No. 394 (2021-22)
489
13.4.56 Loss to government due to unauthorized payment of Medical Allowance at higher rate –
Rs. 103.978 million
According to the Federal Government Notification medical allowance @ Rs.1500/- is

permissible to BPS-1 to 16. Similarly, Rs.1848, Rs.2421, 3690 4378 is permissible to BPS-17,18,19& 20
respectively.
According to Prime Minister Secretariat Higher Education Commission (HEC) Wing letter
No.F.P-2.157/ III/HEC/ 2009/580, dated 4th August 2009, variations in payments of additional allowances
in excess of prescribed rates and extending additional allowances/incentives to faculty/staff by public sector
universities create recurring financial burden in form of pay and allowances and advised the Governors of
the Provinces to direct Vice Chancellors that facilities in excess of prescribed rates or extending additional
allowance/incentives to faculty/ staff other than admissible under the BPS scheme may not be allowed, in
case any financial implication beyond the approval of the HEC and Government of Pakistan shall be
responsibility of the concerned university.
Financial Year 2021-22, it was observed that a sum of Rs.103.978 million was drawn on account of Medical
Allowance under head AO1217 and shown paid to employees of the University. The rate of medical
allowance was required to have been paid at the rate prescribed by the Federal Government from time to
time. But verification of record revealed that the medical allowance was paid in excess than the rates
prescribed by the Federal Government, this resulted into recurring loss of Rs.103.978 million and the
university also put into deficit of 1141.581 as evident from the Utilization Report.
Audit is of the view that the irrationalized allowances were required to have been at par with
the allowances of Civil Servants of Federal and Provincial Government to avoid its financial collapse of
the university in near future.
The loss occurred due to financial mismanagement and non-adherence to rules / regulations.
which resulted into loss to the government.
Audit recommends to inquire the mater and fix responsibility along with recovery of the amount.
concern.
PDP No. 395 (2021-22)
13.4.57 Loss due to non-recovery of dues from defaulter scholars - Rs. 92.852 million
490
According to Clause-15 of terms and conditions of Deed of Agreement executed between
University of Engineering & Technology Peshawar and scholar, the employee shall be bound to serve the
University for a period of five years after his/her return from abroad on successful completion of
study/training and such period shall commence from the date AWARDEE join duty in the University,
against any suitable post of which the University shall be the sole judge, and upon such terms and conditions
as the University may prescribed read with Clause18, that in case of breach of any of terms & conditions
as well as the terms, rules and conditions governing the scholarship award and grant of study leave, and or
his/her failure to return to the University within the specified period, and failure to serve the University for
the specified Bond period, he/she binds himself/herself firmly to pay on demand (a) All amounts paid to
him/her or his/her dependents, pertaining to, and during the course of the study abroad, in any currency,
converted to equivalent Pakistani rupees in addition to liquidation damages of Rs. 1.00 million.
Financial Year 2021-22, it was observed that 53 Nos. faculty members were sent to various foreign
countries for higher studies/PhDs and following amounts were paid to their concerned foreign universities
on account of tuition fee and stipend & air tickets etc to Scholars as detail below:
Pak Rupees US Dollar UK Pounds AUD Dollar Euro Canadian Dollar
96,852,464 3,738,710 294,987 47,109 75,778 68,778
Scrutiny of record revealed that these scholars did not return to Pakistan after completion of their
PhDs for serving the University of Engineering & Technology Peshawar for 05 years as required under
provisions of Deed of Agreement signed between University and Scholars.
Thus the University sustained a heavy financial loss on the one hand and brain drain on the other
beside loss to students in shape of enriched teaching classes.
The lapse occurred due to non-adherence to Rules/Regulations and weak internal controls which
resulted into loss to the government.
PDP No. 407 (2021-22)
13.4.58 Loss to the government due to non-utilization of withdrawn credit amount and
creating liability of Service Charges & Interest – Rs. 22.573 million
According to Article II section 2.01 of the Project Agreement, the Project Implementing Entity
declares its commitment to the objectives of the Project. To this end, the Project Implementing Entity shall
carry out the Project in accordance with the provisions of Article V of General Conditions and the Schedule
491
to this Agreement, and shall provide promptly as needed the funds, facilities, services and other resources
required for the Project.
According to Article II sub-section 2.04 & 2.05 of the Financing Agreement (D680-PK/6714-PAK)
Service Charge is three-fourths of one percent (3/4 of 1%) pr annum on the withdrawn Credit Balance. The
Interest Charge is one and a quarter percent (1.25%) per annum on the Withdrawn Credit Balance.
During audit of the accounts of KP Human Capital Investment Project - Education Component
(D680-PK/6714-PAK) for the Financial Year 2022-23, it was observed that total fund of Rs.1879.831
million was received from the World Bank against which expenditure of Rs.751.202 million was made,
leaving an unutilized balance of Rs.1128.629 million during the last 02 years.
The following irregularities were observed:
iii. Apart from non-utilization of the withdrawn balance for the achievement of project objectives
and non-carrying out civil works, resulting into delayed completion of works, it will also
enhance the project cost in shape of escalation and price hike.
iv. Liability of Rs.22.573 million was created in shape of Service Charges and Interest on the
withdrawn balance which could not be utilized by the management as worked out below:
(Rs. in million)
Service
Unutilized
S. Funds Funds Charges Interest Total
FY withdrawn
No received utilized (3/4 of (1.25%) liability
balance
1%)
1 2021-22 459.051 54.815 404.235 3.032 5.053 8.085
2 2022-23 1420.781 696.387 724.394 5.433 9.055 14.488
Total 1879.832 751.202 1128.629 8.465 14.108 22.573
Audit held that the project management was required to assess its spending capabilities and
withdrawal should have been restricted to its actual fund requirements instead of unnecessary withdrawals
which could not be utilized but created additional liability of Rs.22.573 million.
The project management should have made comparative analysis of liability as commitment
charges was 1/2 of 1% i.e. 0.5% on the Unwithdrawn Financing Balance only, on the other hand Service
Charges and Interest Charges were 3/4 of 1% and 1.25% respectively i.e. 2% on the withdrawn fund.
The lapse occurred due to ill-planning and slow execution of the project activities which created
liability of Service Charges and Interest on withdrawn balance which was not utilized.
When pointed out in October 2023, the management replied that the World Bank has already
withdrawn the commitment and service charges for the financial year 2022-23.
Audit did not agree with the justification of the management as no documentary evidence was
produced. Moreover, commitment charges are payable on un-withdrawn amount whereas services and
interest charges are payable on withdrawn amount. The withdrawn amount was in much excess of the actual
requirements and spending capability of the project, which could not be utilized.
492
Audit recommends inquiring the matter for fixing of responsibility and recovery of liability amount
from the person(s) at fault.
PDP No. 58 (2022-23)
13.4.59 Irrational and contradictory Credit & Grant amount and percentage in terms of
allocation and utilization as mentioned in the Financing Agreement and PC-I
According to Section III (A) of the Schedule-2 to the Financing Agreement (D680-PK/6714-PAK)
total approved Credit amount was 100,700,000 SDR and Grant of 45,800,000 SDR, as such the percentage
of credit and grant was 68.737% and 31.262% respectively.
According to Project Appraisal Document (PAD), US$1 = SDR 0.73185
According to section 4 (a) of the Modified PC-I of the project, the total funding of the project was
US$115 million i.e. Credit of US$87.77 million and Grant of US$27.23 million which comes to
Rs.18,910.255 million as per USD to PKR conversion rate of Rs.164.437.
(D680-PK/6714-PAK) for the Financial Year 2022-23, it was observed that total fund of Rs.1879.831
million was received from the World Bank against which expenditure of Rs.751.202 million was made,
leaving an unutilized balance of Rs.1128.629 million during the last 02 years.
Scrutiny of expenditures incurred by the project revealed that all the expenditures were made by
utilizing 58% of Credit amount and 42% Grant amount as per provision of Section III (A) of column 3 &
4.
Audit held that allocation and release of funds as per Credit ratio of 68.737% and Grant ratio of
31.262% was approved in Section III (A) of column 1 & 2 but utilization ratio was 58% Credit and 42%
Grant which indicated that irrational & contradictory strategy for funds utilization was given in the
Financing Agreement. As such, in every 100 rupees, utilization of credit will be restricted to 58 rupees
though funds will be available which will not only adversely effect the fund utilization capacity of the
project but also enhance the loan liability in terms of service charges and interest charges which are paid
only on the Credit amount as credit utilization period will be prolonged.
Similarly, the PC-I was approved for US$115 million which was inclusive of Credit of US$87.77
million and Grant of US$27.23 million, this indicated that ratio of Credit was 76.32% while Grant was
23.67% which again did not tally with the provisions of the Financing Agreement.
The lapse occurred due to contradictory provisions in the Financing Agreement and PC-I which
resulted into irrational utilization.
When pointed out in October 2023, the management replied that the audit observation is noted and
the same will be communicated to the World Bank to correct the figures in Financing Agreement.
493
Audit recommends expediting the matter for timely remedy.
PDP No. 59 (2022-23)
13.4.60 Unauthorized execution of C&WD Specialized activities, contracts award and

expenditure by PMU on the basis of invalid approval obtained from Executive
Committee instead of PSC – Rs. 95.000 million
According to the approved PC-I of the Khyber Pakhtunkhwa Human Capital Investment Project (D680-
PK/6714-PAK), the Communication and Works Department will carry out the necessary procurement,
contracting, quality assurance and supervision oversight of civil works for the project. In order to support
C&W in this function, the following technical assistance will be provided by the project:
 Procurement Specialist
 Civil Engineer
 Environmental Safeguards Specialist
According to section 68 (Procurement capacity risk within the Department of Health and E&SED) of
the Project Appraisal Document (PAD) of the World Bank, for works procurements and of works contract
management will be mitigated by making use of C&W which is mandated to undertake civil works in KP.
Based on the requisition issued by the E&SED and Health Department, C&W Department will initiate the
procurement process and handover the completed facilities to the satisfaction of both the owner
departments.
According to Para 1A of the Central Public Works Department Code, all original works and special
repairs relating to Central Civil Buildings and Communications shall be executed through the Agency of
the Public Works Department, Central or Provincial, as the case may be.
During audit of the accounts of KP Human Capital Investment Project - Education Component (D680-
PK/6714-PAK) for the Financial Year 2022-23, it was observed that an expenditure of Rs. 95.00 million
was incurred by PMU under the civil works component as per following breakup:
(Rs. in million)
S. No Particulars Cost Expenditure
1 Contracts of 06 packages awarded under provision of Additional 1244.571 66.50
Classroom
2 Contracts of 06 packages under upgradation of Primary to 1142.483 19.00
Middle school
3 Contracts of 06 packages under upgradation of Middle to High 1322.522 9.5
school
Total 3709.576 95
The following irregularities were observed in deviation from approved PC-I:
i. As per approved PC-I, the procurement, contracting, quality assurance and supervision
oversight of civil work was the responsibility of the C&W Department with the technical
494
support of Procurement Specialist, Civil Engineer and Environmental Safeguards Specialist.
Contrarily, the civil work contracting was carried by PMU though the activities were specialist
in nature and mandate of C&W Department as per approved PC-I.
ii. As per CPWD code, original civil work and repair work is the mandate of the Public Works
Department, Central or Provincial as the case may be.
iii. The PAD also provides that C&W Department will initiate the procurement process and
handover the completed facilities to the satisfaction of both the owner departments.
iv. The meeting of the PSC was held under the chairmanship of Secretary P&DD which was
invalid as Secretary P&DD was the chairman of the Executive Committee which was not
mandated to approve major changes in the project strategy rather the PSC under the
chairmanship of ACS P&DD was mandated to approve such changes as per approved TORs of
the committee given in the PC-I.
v. The deviation from PC-I and PAD was regularized by obtaining approval from the Project
Steering Committee on the plea that the implementation of civil work which is to be done
through a Project Management Team under the C&W but no further modality nor monetary
benefits are identified. Instead of developing the modalities for execution of work through
C&W as conceived in the PC-I and PAD, the specialized function was taken from the C&W
and assigned to the PMU without devising strategy for undertaking such specialized activities
by project staff.
The lapse occurred due to violating the provisions of PC-I, PAD and CPWD code which resulted
in taking risk by assigning the specialized activities to the project staff.
When pointed out in October 2023, the management replied that as per TORs of the PSC mentioned
in the PC-I with section – D, approval of any major changes in the project strategy in accordance with the
defined objectives. Furthermore, as per World Bank regulations, the procurement will be processed by
procurement entity, in the subject case, PMU is the procuring entity instead of C&W Department.
Audit did not agree with the reply of the management as the change in strategy was in contradiction
to Project Appraisal Document and PC-I which clearly provides that for works procurements and works
contract management will be mitigated by making use of C&W which is mandated to undertake civil works
in KP.
Audit recommends inquiring the matter for fixing of responsibility on the person(s) at fault for
gross deviation from approved provisions of PC-I & PAD and obtaining invalid approval from the
Executive Committee instead of PSC.
PDP No. 60 (2022-23)
13.4.61 Non-transparent appointment of Education Specialist – Rs. 3.200 million
According to section 3 (vii) (xi) of the KP PIP 2022, Selection Committee (Para-7) shall interview
the qualified and eligible candidates and shall devise a merit list on the basis of weightages assigned to each
component of the scoring matrix: academic qualification, higher qualification, relevant experience, test
495
score, professional skills as well as marks obtained in the interview. The appointing authority shall approve
appointment, in order of merit, on the recommendations of the Selection Committee.
According to Section 7 of the KP PIP 2022, recruitment to the project posts shall be made on the
recommendations of Selection Committees. Composition of Selection Committee for appointment to posts
in different pay scales or equivalent posts will be as under:
For posts in BS-19 and above or equivalent posts:
 Additional Chief Secretary Khyber Pakhtunkhwa (Chairman)

 Secretary Establishment or his nominee not below the rank of AS (Member)
 Secretary Finance or his nominee not below the rank of AS (Member)
 An expert from the Technical Department or public Sector University (Member)
 Representative of P&D Department not below the rank of Additional Secretary (Member)
 Secretary of the concerned sponsoring Department (Member/ Secretary)
According to section 6 (iii) of the KP Project Implementation Policy 2022, Selection for all the
project posts will be based on merit on such criteria which shall be determined by the selection committee.
Without prejudice to the generality of the aforesaid, the selection criteria shall be based on academic
qualification, higher qualification, relevant experience etc. in accordance with any of the criteria given in
tabulated form from (a) to (d) options.
According to section 2 (iv) of the KP Project Implementation Policy 2022, Negotiable Pay Package:
Special Pay Package as determined by the administrative department shall be included in the PC-I with full
justification for such positions which are (a) either specialized in nature, (b) Unique in terms of
qualification, experience and availability of such services in market are either scarce or monopolized and
(c) highly paid. In the instant case, BPS system shall not apply. Furthermore, approval of such positions
shall be granted by the committee headed by the Additional Chief Secretary, Planning & Development,
Khyber Pakhtunkhwa.
(D680-PK/6714-PAK) for the Financial Year 2022-23, it was observed that Mr. Zakir Abbas was appointed
as Education Specialist vide Officer of Appointment PMU/KP-HCIP/E&SE/19/Proc/Consultant/410 dated
20-01-2023 under the project and paid Rs. 3.20 million (Rs.400,000 x 8 months). Total of 20 candidates
applied for the post out of which 07 candidates were shortlisted for interview as per below given marks
awarded on the basis of qualification, experience and trainings:
S. No Name Total score prior to interview

1 Syed Husnain Haider Rizvi 80
2 Imran uddin 80
3 Fayyaz Ali Khan 75
4 Mujahid Azam 70
5 Zulfiqar 70
6 Zakir Abbas 65
7 Abdul Munif 63
Scrutiny of record revealed the following irregularities:
496
i. The recruitment was made through Executive Committee of the PC-I / committee required for
recruitment to the post of B.17 & 18 as per Project Policy which was invalid justification as pay for
the position of Specialist was Rs.400,000 per month as such the post falls within the scope of
Negotiable Pay Package post and cannot be treated as equivalent to BPS.18. Approval of the
positions and pay was obtained from the PSC to be headed by the ACS P&DD as such recruitment
to the post of Specialist was required to be approved from the committee headed by the ACS P&DD
as defined in section 7 of the KP PIP 2022. The Secretary E&ESD was not competent to accord the
approval.
ii. Incorrect totaling/ average interview marks were derived i.e. 8.25 marks to candidate at S. No. 1
above instead of 8.66.
iii. The selection was made only on the basis of interview marks by setting aside the qualification,
experience and training marks as given in the above table, in violation of the procedure defined as
option (a) to (d) in section 7 of the KP PIP 2022 which was incorrect as order of merit was required
to be maintained on aggregate basis as tabulated below:
S. No Name Total score Interview Total Order of
prior to marks marks Merit
interview
1 Syed Husnain Haider Rizvi 80 8.25 88.25 1st
2 Imran uddin 80 7.42 87.42 2nd
3 Fayyaz Ali Khan 75 7 82 3rd
4 Mujahid Azam 70 A A A
5 Zulfiqar 70 A A A
6 Zakir Abbas 65 8 73 4th
7 Abdul Munif 63 6 69 5th
The candidate at S. No.1 regretted to join the post; subsequently the candidate at S. No. 2 and 3
were eligible for offer of appointment. Contrarily, the project management issued offer of appointment to
candidate at S. No. 6 which was against the KP Project Policy.
Based on above findings, Audit held that the recruitment process was non-transparent and managed
for selection of already decided candidate which made un-authorized the recruitment to the specialized post
and expenditure of Rs.3.20 million as well.
Moreover, 08 positions of the Specialists including Procurement Specialist at the monthly

remuneration of Rs.440,000 each were hired under the project with annual expenditure of Rs.41.520 million
but such serious lapses indicated that the expenditure on hiring of Specialists was wasteful.
The lapse occurred due to deviation from rules/ regulations and violating the merit policy which
resulted in unauthorized appointment as well as expenditure.
When pointed out in October 2023, the management replied that the observation needs a detailed
proper reply and will be furnished after scrutiny of record.
497
Audit recommends inquiring the matter for fixing of responsibility and disciplinary action against
the person(s) found at fault and termination of the contract of the Specialist.
PDP No. 63 (2022-23)
498
Chapter – 14
HOME & TRIBAL AFFAIRS DEPARTMENT
The Home and Tribal Affairs Department occupies a central position regarding law and order issues
of the Province. It is the supreme policy making body for peace building and rule of law. It is the parent
body for Police, Prisons, Prosecution, Probation and Reclamation and Civil Administration at divisional
and district level. Historically, Home and Tribal Affairs Department has played a strategically important
role in maintaining law and order and giving policy directions to its implementing arms.
In the changed security paradigm, the Home Department has responded with unflinching
commitment and has taken a strategic approach. In order to cope with these challenges, the Police
Department has been transformed into a modern fighting force having its own specialized combat,
intelligence and investigation departments in the shape of Counter Terrorism Department (CTD), Elite
Force and Rapid Response Force. Similarly, new Prison Security Force introduced to deal with the
heightened scale of threats. The Prosecution Department is also being remodeled and strengthened to
effectively meet the challenges of the day. The Home Department maintains a close liaison with the Armed
Forces and other paramilitary forces to combat the menace of terrorism, kidnapping for ransom, extortion,
and suicide attacks. The coordination between the institutions of police, prosecution, judiciary, and
correctional services has been functionalized.
of:
499
 Public Order and internal security.
 Political intelligence and censorship.
 Administration of Justice, constitution and organization of courts except the High Court.
 Criminal Law and Criminal Procedure.
 Evidence and Oaths.
 Arms, ammunition.
 Explosives.
 Public amusement control over places, performances and exhibition.
 Crime report.
 All matters connected with police establishment and administration report:
o Police Rules.
o Police works.
o Grant of Gallantry Awards.
 Prisons, reformatories and similar institutions, classification and transfer of prisoners, state,
political prisoners, Good Conduct Prisoners and Probational Release Act.
 Extradition and Deportation.
 Passport and Permits.
 Compensation for loss of property or life due to civil commotion or while on duty.
 Rent control and requisitioning of property.
 Smuggling.
 Clubs, excluding garrison clubs.]
 Collective fines
 Hoarding and black marketing.
 Civil Security Schemes.
 Commutation and remission of sentences, mercy petitions.
 Preventive detention and administration of Press Laws.
 Prosecutions in respect of newspapers and other publications.
 Border incidents at Chitral and Upper Dir.]
 Pilgrims and pilgrimages.
 Political pensions, mutiny allowances and Jagirs.
 Homeguards and territorial forces.
 Question of domicile and application for Nationality certificates.
 Registration of aliens.
 Recovering of missing persons.
 Enemy property and schedule of persons and firms specified as enemy.
 Enforcement of provisions of Motor Vehicles Act, 1939 and thereunder relating to control
of traffic and inspection and checking of Motor Vehicles for the purposes of traffic control.
500
 Protection of key points and vital installation.
 Afghan Refugees and allowances.
 Represenations
o Representation in criminal cases;
o Appeals and application for enhancement of sentences and conviction; and
 Public Prosecutors, Appointment, Transfer and Leave etc.
 Defense of pauper accused in the courts and fees to pleader for such defence.
 All matters pertaining to administration of Provincially Administered Tribal Areas
including preparations of annual budget (non-development and development) for those
areas.
 Extension of Law to Provincially Administered Tribal Areas.]
 Reservation of seats in various services for Tribal people of Provincially Administered
Tribal Areas and recruitment of tribes in the Army.
 Budget for levies and Khasadar is released by the SAFRON through Home Department.
Audit Profile of Home & Tribal Affairs Department:

(Rs. in million)
Total Audited FY
S. No. Description Audited Audited FY
Nos 2022-23
2022-23
1 Formations 245 18 35,210 2,150
2  SDA 05 01 99.954 N/A
(Excluding FAP)
Authorities/Autonomous bodies etc Nil
3 01 Nil N/A
under PAO
was as follows:
501
Non-Development:
(Amount in Rs.)
Grant # and
Department
08-Home and 1,769,542,000 433307000 0 223,552,535 1,979,296,465 1,979,490,300 193,835
NC21
TA
09-Jails and
Convict's NC21 3,795,911,000 1,416,379,000 0 4,618,069,344 4,622,735,106 4,665,762
594,220,656
Settlement
-
10-Police NC21 67,064,326,000 3,228,674,000 0 5,658,550,841 64,834,449,159 64,770,053,653
64,395,506
61- Home NC21 735,188,000 0 -15,173,985 180,489,429 539,524,586 537,177,032 -2,347,554
61-Jails and
Convict's NC21 397,216,000 0 53,375,352 19,596,530 430,994,822 428,666,214 -2,328,608
Settlement
-
Total 73,762,183,000 5,078,360,000 38,201,367 6,676,409,991 72,402,334,376 72,338,122,305
64,212,071
70,000,000,000
60,000,000,000
50,000,000,000
Amount in Rs.
40,000,000,000
30,000,000,000
20,000,000,000
10,000,000,000
0
08-Home and 09-Jails and 10-Police 61- Home 61-Jails and
TA Convict's Convict's
-10,000,000,000 Settlement Settlement
502
Development:
(Amount in Rs.)
Grant #
Final Grant
of Type Grant Grant Appropriation Surrender Expenditure (Savings)
Department
50 - Home 250,571,000 0 -5,000,000 153,061,804 92,509,196 151,303,780 58,794,584
NC22
& TA
50 - Home 133,939,000 0 -4,343,878 97,595,483 31,999,639 62,819,412
NC12 30,819,773
& TA
Total 384,510,000 0 -9,343,878 250,657,287 124,508,835 214,123,192 89,614,357
160,000,000
140,000,000
120,000,000
Amount in Rs.
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
50 - Home & TA 50 - Home & TA
503
(Rs. in million)
Non-Development 72,402.33 72,338.12 -64.212071 -0.09%
Development 124.51 214.12 89.614357 71.97%
Total 72,526.84 72,552.25 25.402286 0.04%
80,000.00
70,000.00
60,000.00
Rs. in million
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
-10,000.00
14.1(C) Issues in Home & Tribal Affairs Department
It was observed during the audit of various District Police Offices that the receipts realized from
fines & fees are not timely deposited into the Government Treasury according to the Treasury Rules.
Similarly, the funds are withdrawn and then withheld in designated accounts without being utilized for the
purposes, they are earmarked for. It has also become a routine practice in various offices of Home
Department to withdraw pay and allowances through DDOs instead of being directly credited to the bank
accounts of the concerned officials. In the DPO Mohmand it was observed that un-authorized payments
were made to the Malak and Khasadars. Procurement related issues and doubtful award of the contract of
Petrol Pump is also reported. There were no details of the head-wise figures of the departmental own

504
udit of Home & Tribal Affairs Department. This amount also includes recoveries of Rs. 89 million as
505
Amount
S. No. Classification (Rs. in million)
3 Irregularities
5 Others 36.393
Irregularaties by classification
00
1.568
20.667 Reported cases of fraud, embezzlement and
36.393 misappropriation
0 Irregularities
Management of Accounts with Commercial Banks
Value for money and service delivery issues
83.036 Others

Total No. of
S# Audit Year actionable
points
01 2002-03 Home & TA 18 08 - 10
02 2003-04 -do- 12 09 - 03
03 2004-05 -do- 37 25 - 13
04 2005-06 -do- 04 03 - 01
05 2007-08 -do- 04 03 - 01
06 2008-09 -do- 12 05 - 07
506
07 2009-10 -do- 13 07 - 07
08 2010-11 -do- 39 10 - 29
09 2011-12 -do- 27 15 - 12
10 2012-13 -do- 12 06 - 06
11 2013-14 -do- 19 08 - 11
12 2014-15 -do- 18 09 - 09
13 2015-16 -do- 21 14 - 07
14 2016-17 -do 32 8 - 24
14.4 Audit Paras
14.4.1 Fraudulent withdrawal on account of pay and allowances - Rs. 2.020 million
According to para 23 of GFR vol I, every Government officer should realize fully and clearly that
During audit of the accounts of District Police Officer Abbottabad for the Financial Year 2022-23,
it was noticed that a sum of Rs. 2,019,749/- was disbursed as pay allowances to an individual named Ajab
Noor, holding the designation of Constable, with CNIC # 2170850872491, purportedly in service at the
local office since January 2017.
Scrutiny of record revealed that an individual with an identical name, Ajab Noor, had been
employed in the Health Department as a Clinical Technician, possessing CNIC # 2170850872497, since
February 2013. Intriguingly, both salaries were being credited to the same bank account, identified as
#000231654751. Notably, it was identified that a singular digit of the CNIC had been altered to generate a
seemingly unique personnel number for both CNICs.
Audit held the withdrawal of pay and allowances by Ajab Noor (Constable) from the local office
as fraudulent.
The lapse occurred due to weak internal controls which resulted in fraudulent withdrawal on
account of pay and allowances.
When pointed out in December 2023, no reply was given.
The department was requested vide letter dated 05.01.2024 for holding DAC meeting.
However, no DAC meeting was convened till finalization of this report.
Audit recommends to investigate the matter through a fact-finding inquiry and fix responsibility on
the person(s) at fault besides recovery of the amount.
PDP No. 19 (2022-23)
507
14.4.2 Unauthorized distribution of rent / receipts from the government property -
Rs. 31.776 million
According to Para-12 of GFR Vol-I, the controlling officer should see that all sums due to
government are assessed, realized and duly deposited into public account.
During audit of the accounts of District Police Officer D.I. Khan for the Financial Years 2021-22
and 2022-23, it was noticed thatreceipts amounting to Rs. 31.776 million were realized from the below
mentioned Govt. property was irregularly distributed among PPO, RPO and DPO @ 25%, 20% and 25%
respectively instead of depositing the receipts into treasury, as detailed below;
New Advance Rent up

Advance Agreement 1st Year 2nd 3rd 4th
Market Name agreeme Rent in to Total
Rent date rent Year Year Year
nt Rs 12/2023
YaqoobShaheed 1,900,000 1.05.2019 126,000 121650 121950 135010 01.05.202 1900,000 648500 4,953,110
Market (Shop 3
No. 1 to Shop No.
19
Madadgar 4,280,000 01.07.2019 1440000 1440000 1440000 1440000 01.07.202 4800000 211000 15,051,000
Market (Shop 3
No. 1 to No. 10)
Cabins (50 Nos.) ---- --- --- ---- 2474400 4368000 ----- ---- 4404400 11,246,800
Service Station ---- ---- ----- ---- 180,000 180000 ----- ---- 165000 525,000
Total 31,775,910
When pointed out in December 2023, the management did not furnish any reply.
Audit recommends to recover the disbursed amount and deposit it in the government treasury and
also stop further distribution.
PDP No. 7 (2022-23)
14.4.3 Irregular payment on account of allotment of official vehicles with divers and POL /
repair to the non-entitled persons - Rs. 5.061 million
According to Para 10(i) of GFR Vol-I, every public officer incurring expenditure from pubic fund
508
According to Government of Khyber Pakhtunkhwa Finance Department (Regulation Wing)
Notification No. FD (SOSR-II)4-199/2013 dated 16-03-2015, there is no such provision of providing
Official Vehicles to families of Shuhadas.
During audit of the accounts of DIG Telecommunication Khyber Pakhtunkhwa for the Financial
Year 2021-22, it was noticed that 05 Nos of Official Car were shown allotted to the Shuhada’s families. In
this connection an expenditure of Rs. 5,061,277/- was incurred on account of POL/repair and salaries of
drivers. Therefore, allotment of vehicles with drivers and expenditure on POL/repair stand irregular and
needs clarification.
The lapse occurred due to weak internal controls which resulted into violation of rules and loss to
the government of Rs. 5.061 million.
When pointed out, the management did not furnish any reply.
In the DAC meeting held on 21.11.2023, it was decided that the department may provide
the relevant record to Audit for verification within a month. However, no progress was intimated
Audit recommends to recover the vehicles along with drivers besides recovery of the loss.
PDP No. 403 (2021-22)
14.4.4 Overpayment on account of Adhoc Relief Allowance - Rs. 1.736 million
According to Section 3 of the Khyber Pakhtunkhwa Employees (Regularization of services) Act,

2018 which commenced on 07-03-2018; employees appointed on adhoc basis against civil posts and
holding such civil posts till commencement of this act, shall be deemed to have been validly appointed on
regular basis from the date of commencement of this Act. This read with Part-11 (Allowances) of Finance
Department Khyber Pakhtunkhwa Notification No. FD (PRC) 1-1/2016 dated 19-07-2016, the Adhoc
Relief Allowances 2013,2014 and 2015 have been merged in the basic pay scales 2016 and the same shall
cease to exist w.e.f 01-07-2016. (Fixation of pay and allowances) Compare with regularization notification.
During audit of the accounts of Coordination Unit Police Department Khyber Pakhtunkhwa for the
Financial Year 2021-22, it was observed that the Provincial Government notified regularization of services
of 54 employees working under the "Project Coordination Unit KP Police Department", meaning thereby
that these employees were regularly appointed w.e.f 07-03-2018.
However, from scrutiny of monthly payrolls, it was revealed that the employees aforementioned
were in receipt of the Adhoc Relief Allowances 2013 and 2015. Thus, an amount of Rs.1,736,400/-was
overpaid to these employees.
The lapse occurred due to violation of rules and regulations which resulted in overpayment of Rs.
1.736 million to the employees.
509
When pointed out in March 2023, the management replied that recovery will be made after scrutiny
of record.
In the DAC meeting held on 17.01.2024, the DAC agreed with the audit and directed to
recover the amount from the employees.
Audit recommends to recover the overpaid amount besides fixing responsibility on the persons at
fault.
PDP No. 424 (2021-22)
14.4.5 Non-deduction of KP Sales Tax on Services – Rs. 1.066 million
According to serial no.14 of the Second Schedule of Khyber Pakhtunkhwa Finance Act 2013 as
amended through Finance Act, 2021; two (2%) percent services tax shall be levied on construction services
rendered in respect of the construction of buildings and consultancy services for design and supervision of
such projects funded under the ADP.
During audit of the accounts of Coordination Unit Police Department Khyber Pakhtunkhwa for the
Financial Year 2021-22, it was observed that different construction works were awarded under the ADP
scheme titled “F/S and Construction of Police Stations and Police Posts in Malakand Division”. The
consultants and contractors were paid various bills during the year, however, KPRA sales tax on services
was not deducted from their bills resulting in loss to the government as given below;
Gross Work STS
Sr.# Firm Name Work Name
Paid Rs. @ 2%
1 M/S NESPAK F/S and Construction of Police Stations and Police 7,000,000 140,000
Posts in Malakand Division
2 M/S Nazeer& Sons Construction of Police Post at Matta Swat 12,289,510 245,790
Construction Company
3 M/S Karwan Builders Construction of Utror Police Station 13,436,043 268,720
4 M/S Karwan Builders Construction of Kalam Police Station 4,000,000 80,000
5 M/S malikpaindakhel Construction of police line muraday upper swat 8,120,443 162,408
construction co package-1
6 M/S Hamayun builders Construction of police post mandoor swat 3,348,931 66,978
9 M/S Hamayun builders Construction of police post GabinJaba swat 5,089,936 101,798
Total 53,284,863 1,065,694
The lapse occurred due to weak financial controls which resulted into non-deduction of Rs.
1,065,794/-.
When pointed out in March 2023, the management replied that recovery will be made after
consulting the record.
In the DAC meeting held on 17.01.2024, the DAC directed that record may be verified
from the audit however, no record was produced for verification till finalization of report.
510
concern.
PDP No. 425 (2021-22)
14.4.6 Less realization of shops rent - Rs. 5.151 million
According to para 26 of GFR Vol-I, it is the duty of the department concern to see that all sums
due to government are regularly and promptly assessed, realized and duly credited in the Public Account.
During audit of the accounts of District Police Officer Bannu for the Financial Year 2021-22, it
was observed that property/shops were given on rent to various tenants on monthly rent basis in different
periods, as detailed below;
Rate in
S. No. Detail of shops Nos Period Months Amount
Rs.
1 Welfare project shops 14 13000 1-8-21 to 30-06-22 11 months 2,002,000
2 Shopping plaza 14 18000 1-11-21to 30-6-22 8 months 2,016,000
-do- 01 21000 -do- 8 months 168,000
-do- 02 27000 -do- 8 months 432,000
3 Temporary chicken market 35 3300 1-2-22 to 30-6-22 5 months 577,500
4 Shop at market 01 3000 1-11-21 to 30-6-22 8 months 24,000
5 Shop adjacent DPO office 01 500 1-7021 to 30-6-22 12 months 6,000
Total 5,225,500
Bidding documents such as advertisement for auction, financial offers received, comparative
statements, award letter and contracts, securities of shop holders/lessees and details of member of the
auction committee along with minutes and other supporting documents were not provided to audit to verify
the whole process.
On further verification of DAO reconciliation statement, only an amount of 73941/- was shown
deposited out of 5,225,500/-. The non realization of building/shops rent amounting to
Rs. 5,151,559/- needs justification.
The laps occurred due to weak financial controls which resulted in loss to the government of Rs.
5,151,559/.
When pointed out in May 2023, no reply was given by the management.
511
Audit recommends to recover the amount and conduct inquiry for fixing responsibility against
persons involved.
PDP No. 450 (2021-22)
14.4.7 Illegal retention of undisbursed salaries - Rs. 4.291 million
According to Para 283 (3) of the CTR, un-disbursed pay or allowance may not be kept under any
circumstances and be deposited in treasury.
During audit of the accounts of District Police Officer Bannu for the financial year 2021-22, it was
observed that a sum of Rs. 77,477,763/- was received from 1-07-2021 to 28-02-2022 as reflected in
Register-20 on account of pay and allowances of khasadar. The Register-20 further revealed that out of the
amount received Rs.77,477,763/- against which a sum of Rs.73,186,597/- was disbursed leaving a balance
of Rs. 4,291,170/- as un disbursed as detailed below;
S. No. Month Amount in Amount
Reg: 20 Disbursed
1 07/2021 69,814,784 67,120,642
2 08/2021 2,694,142 2,694,142
3 09/2021 344,704 215,160
4 10/2021 302,267 302,267
5 11/2021 2,654,340 2,654,340
6 12/2021 557,040 131,296
7 01/2022 425,740 00,000
8 02/2022 684,750 68,750
9 03/2022 No record No record
10 04/2022 -do- -do-
11 05/2022 -do- -do-
12 06/2022 -do- -do-
Total 77,477,767 73,186,597
Total Amount Received as per Register= Rs. 77,477,767

Total Amount disbursed = 73186597
Difference = Rs. 4291170
Moreover, salary record for the month of 03,04,05& 06 FY-2021-22 was not provided for
verification.
On further verification, it was revealed that all the payments were made through DDO instead of
vender numbers of concerned staff.
The un-disbursed salaries amounting to Rs. 4,291,170/- were required to be deposited in

Government treasury which was not done and retained by the local office in violation of the above quoted
rule.
512
The lapse occurred due to weak internal controls which resulted in violation of rules/regulations
that resulted into loss to the government.
When pointed out in 2021-22, no reply was furnished by the department.
no DAC meeting was convened till finalization of this report.
Audit recommends to conduct a detailed inquiry in the case for fixing of responsibility besides
recovery of the undisbursed amount.
PDP No. 468 (2021-22)
14.4.8 Less realization of 35% government share on account traffic fine - Rs. 1.787 million
According to paras 26 & 28 of GFR vol I, it is the duty of the departmental controlling officer to
see that all sums due to government are regularly and promptly assessed, realized and duly credited in the
public account, no amount due to government should be left outstanding without sufficient reason.
During audit of the accounts of District Police Officer Bannu for the Financial Year 2021-22, it
was observed that according to reconciliation of receipts statement, the traffic fine was Rs.13,473,962/-
during the year while record of the local office was showing Rs.32, 703,000/- for 9 months as detailed
below;
S. No. Month Amount
01 07/2020 3,953,800
02 08/2020 3,800,900
03 09/2020 4,130,400
04 10/2020 4,181,100
05 11/2020 4,061,500
06 12/2020 4,055,800
07 01/2021 2,934,700
08 02/2021 1,613,500
09 03/2021 3,971,300
Total 32,703,000
Due to non-availability of 3 months receipts collected as traffic fine, audit could not certify the
actual figures of 35% govt. share deposited into govt. treasury during the year.
Audit held that if receipts figure for 9 months is Rs.32,703,000/- then average per month receipts
would be Rs.363,366/- (Rs.32,703,000/- divided by 9 months) and total receipts during the year would be
Rs.43, 603,999/- (Rs.363, 366/- multiplied by 12 months) thus resulting into less realization of Rs.1,
787,437/- as detailed below:
Total collection of fine for 9 months = 32,703,000/-

Average per month (32703000/9) = 363,366/-
513
Total receipts (363366 X 12) = 43,603,999/-
35% Govt: share (43603999 X 35%) = 15,261,399/-
Amount reconciled as per statement = 13,473,962
Less realization 35% govt: share = 1,787,437
The lapse occurred to weak financial controls which resulted into loss to the government.
However, the DAC meeting was not convened till finalization of this report.
Audit recommends that less realization of 35% Govt: share amounting to Rs.1787437/- needs to be
recovered and deposited into Govt: treasury besides investigating the matter for fixing of responsibility.
concern.
PDP No. 457 (2021-22)
14.4.9 Unauthorized payment on account of Risk Allowance - Rs. 1.132 million
According to para (i) of the Government of Khyber Pakhtunkhwa Finance Department Notification
No.FD(SOSR-II)8-26/2009 dated 30.04.2009, all Uniformed Police Personnel will be granted one initial
pay per month as Risk Allowance w.e.f. 01.01.2009. Further read with notification even no dated
24.01.2011, regarding increase in Risk Allowance of Uniformed Police Personnel i.e. equal to one and a
half of the initial of their respective pay scales.
During audit of the accounts of Law & Order Buner for the Financial Year 2020-21, it was observed
that a sum of Rs. 1,132,860/- was paid to the widows of shuhada on account of Risk Allowance in pay &
allowances (Annexure-XXXVI).
Further verification of record revealed that risk allowance was only admissible to the uniformed
police personnels who performed duties, served the nation in security and take risk of their lives. As the
shuhada already sacrificed their lives in serving the nation, bringing peace and got martyred in the divine
path. Risk has already been eliminated from their lives, therefore, their widows were not entitled to draw
risk allowance.
In the DAC meeting held on 15.02.2023, the Para was referred to PAC for decision.
514
8.4.11 and 8.4.18 having financial impact of Rs. 13.712 million. Recurrence of same irregularity is a matter
of serious concern.
PDP No. 196 (2020-21)
14.4.10 Loss to the government due to non-recovery of outstanding government dues - Rs.
76.819 million
Para 26 of General Financial Rules Volume I requires that it is the duty of the
Departmental Controlling Officer to see that all sums due to Government are
regularly and promptly assessed, realized and duly credited in the Public Account.
Para 28 of GFR Vol.-I states that no amount due to government should be left
outstanding without sufficient reason and where any dues appear to be irrecoverable
the orders of competent authority for their adjustment must be sought.
During audit of the accounts of Law & Order Kohat for the financial year 2020-21, it was noticed
that police force was deployed to Pakistan Railways during various years. However, the DPO Kohat did
not recovered a huge sum of Rs.76,819,529/- from the beneficiary in lieu of pay & allowances paid by the
DPO Kohat to the deployed personnel’s 02 HC’s & 10 constables. The amount is outstanding from
30.06.2012 to 30.06.2021.
The lapse occurred due to weak internal controls and financial mis-management.
In the DAC meeting held on 13, 14 & 16.09.2022, the Para was referred to PAC for decision.
Audit recommends to recover the outstanding government dues.
PDP No. 307 (2020-21)
14.4.11 Overpayment on account of Adhoc Relief Allowances - Rs. 2.217 million
515
According to Part-II (Allowances) of Government of Khyber Pakhtunkhwa Finance Department
(Regulation Wing) Notification No. FD (PRC) 1-1/2016 dated 19-07-2016, the adhoc relief allowances of
2013, 2014 and 2015 have been merged in basic pay scale 2016 and shall cease to exist w.e.f 01-07-2016.
During audit of the accounts of Law & Order Kohat for the financial year 2020-21, it was observed
that an amount of Rs.2,217,810/- was paid to the officers/ officials on account of Adhoc Relief Allowance
2013 and 2015.
Further verification of record revealed that adhoc relief allowances 2013, 2014 and 2015 admissible
to government employees/civil servant announced by Federal/Provincial Government was merged in Basic
pay Scale 2016 w.e.f 01-07-2016 and from that period onward the said allowances were not admissible to
any newly appointed Provincial or Federal Government employee. However, the officers / officials of Law
& Order Kohat were appointed after 01.07.2016, and they were in receipt of 2013 and 2015 Adhoc Relief
Allowances, resulting into inadmissible payment of Rs. 2,217,810/- (Annexure-XXXVII).
The lapse occurred due to weak internal controls and financial mis-management which resulted in
In the DAC meeting held on 13, 14 & 16.09.2022, it was decided that the department may make
complete recovery. However, no progress was intimated to Audit till finalization of this report.
PDP No. 317 (2020-21)
14.4.12 Misappropriation due to less deposit of traffic fines in government treasury – Rs.
1.568 million
According to Provincial Assembly Secretariat Notification No.13169 and Finance Act 2008, 35%
of the traffic fine collected shall be credited to government treasury, 35% shall be distributed among the
staff as incentive @ 1:12:22, 05 % shall be allocated for cash reward and 25% shall be allocated for traffic
training and education and for the purchase of machinery and equipment.
During audit of the accounts of District Police Officer Mansehra for the Financial Year 2019-20, it
was observed that a sum of Rs. 1,558,609/- were mis-appropriated on account of 35% government share,
required to be deposited in to the government treasury but was not done.
Verification of the record revealed that Rs. 134,769,000/- on account of traffic fines were deposited
wherein 35% government share Rs. 47,169,150/- was required to be deposited in to government treasury
but astonishingly Rs. 45,610,541/- were deposited in to government treasury as evident from the receipts
reconciliation statement duly reconciled with treasury/DAO, leaving a balance of Rs. 1,568,609/- which
was mis-appropriated and needs recovery.
misappropriation of funds.
516
In the DAC meeting held on 30.11.2021 and 01, 02 & 07.12.2021, it was decided that the
department may make complete recovery of the amount mentioned within 15 days as it is a clear case of
embezzlement. However, no progress was intimated to Audit till finalization of this report.
Audit recommends to investigate the matter and fix responsibility on the person (s) at fault besides
depositing all the traffic fines into the government treasury.
PDP No. 6 (2019-20)
14.4.13 Loss to the government due to non-deduction of income tax - Rs. 2.830 million
According to Provincial Assembly Secretariat Notification No.13169 and Finance Act 2008, 35%
of the traffic fine collected shall be credited to government treasury, 35% shall be distributed among the
staff as incentive @ 1:12:22, 05 % shall be allocated for cash reward and 25% shall be allocated for traffic
training and education and for the purchase of machinery and equipment.
According to Commissioner Income Tax (TOE&CII) medium tax payer until Peshawar under letter
No 56 dated 13-07-2006 has made deduction of income tax mandatory @6% on the services rendered for
government.
During audit of the accounts of District Police Officer Mansehra for the Financial Year 2019-20, it
was observed that an amount of Rs. 47,169,150/- was realized by the Traffic Branch on account of 35%
share of the traffic staff. The amount was drawn from the bank account and distributed amongst traffic staff
at the ratio of 1:12:22, but it is astonishing to note that income tax @6% Rs 2,830,149/- were not deducted,
put the government in to loss, the amount of income tax needs to be recovered from the concerned.
The lapse occurred due to weak internal controls and non-observance of rules/regulations.
In the DAC meeting held on 30.11.2021 and 01, 02 & 07.12.2021, it was decided that the
department may provide the relevant record like the amount actually distributed amongst the traffic officials
supported by payee’s receipts in order to calculate & subsequently deduct & deposit the Income Tax as per
the prevailing rules within 15 days. However, no progress was intimated to Audit till finalization of this
report.
Audit recommends to recover the tax amount.
concern.
PDP No. 10 (2019-20)
14.4.14 Unauthorized retention of government arms and ammunition – Rs. 4.210 million
517
According to IGP Policy and guidelines issued vide No.PPO/2471-3521, dated 16-12-2013, the
arms will be issued on his request from District Kot to the Police officer not less than the rank of SP/DSP
during his stay in the District, but the same will be returned at the time of his transfer or retirement. If any
officer not returned the arm at the time of his transfer or retirement, then DPO of the District concerned
will report to the DIG, Head Quarter and he will report to IGP and Departmental action will be started
against him
During audit of the accounts of District Police Officer Charsadda for the financial year 2020-2021,
it was noticed that arms and ammunitions costing Rs 2,000,000 were allotted to various officers/officials,
as detailed below. All these officers/officials were transferred from District Police Office Charsadda but till
date the arms/ammunition etc costing Rs 4,210,000 has not yet been recovered from them.
S. Price
Name Rank Arms & Ammunitions
No. (Approx)
01 Feroz Shah Khan DIG SMG No 48000419 200,000
02 Farooq Azam Khan ASP 02 Nos 303 rifles M5711 & K 60,000
6690
03 Iftikhar Shah Khan SP Glock Pistol MR 640 400,000
04 Riaz Khan SP Glock Pistol MR 733 400,000
05 Riaz Khan SP SMG 8027 200,000
06 Riaz Khan SP Grenad COVF 3471 150,000
07 ShehzadNadeem SP Glock Pistol MRC 617 400,000
08 Raza Muhammad DSP SMG No 4472 200,000
Khan
09 Usman Khan DSP Pistol 9mm No 14008697 400,000
10 Luqman Khan DSP SMG No 26098432 200,000
11 Saeed Khan DSP Glock Pistol MR 645 400,000
12 NoorUllah Khan DSP Pistol 9mm No 15016593 400,000
13 Niaz Muhammad DSP SMG No 3902149 200,000
Khan
14 Inam Jan Khan DSP Glock Pistol 646 400,000
15 NasrUllah Khan DSP Pistol P 7 No 85700 200,000
Total 4,210,000
The lapse occurred due to weak internal controls which resulted in unauthorized retention of arms
and ammunition.
When pointed out in September 2021, no reply was furnished by the management.
In the DAC meeting held on 13, 14 & 16.09.2022, it was decided that the department may make
complete recovery of the arms and ammunition. However, no progress was intimated to Audit till
Audit recommends to recover the arms and ammunition and take necessary action against the
defaulters.
PDP No. 147 (2020-21)
518
519
Chapter – 15
HOUSING DEPARTMENT
of:
 Administration of Khyber Pakhtunkhwa Provincial Housing Authority Act, 2005.
 Planning and execution of schemes under “Housing for all” and “Housing for Government
Employees” and other Housing Schemes from time to time.
 Coordinating, Development Control and Policies with other Government agencies including Local
Areas Authorities and Cantonment Boards.
 Formulation of Policies and Control with regard to Urban Growth and Development.
 Area Development Schemes and New Townships.
 Housing Loans and Investments.
 Preparation of schemes for approval of PDWP, CDWP and ECNEC etc
 Execution of works as deposit works.
 Service matters, except those entrusted to Establishment and Administration Department.
Audit Profile of Housing Department:

(Rs. in million)
Total
Nos
2022-23 23
2  SDA 05 01 99.954 N/A
(Excluding FAP)
520
3 01 Nil Nil N/A
under PAO
was as follows:
Non-Development:
(Amount in Rs.)
Grant #
Re- Total
and Name Gran Excess/
Original Supplementa Final Actual
of t Apprioriatio Surrender (Savings
Grant ry Grant Grant Expenditur
Departme Type n )
e
nt
41- 154,941,00 102,752,26 55,331,09
NC11 3,142,354 0 55,331,094
Housing 0 0 4 -
154,941,00 102,752,26 55,331,09
Total 3,142,354 0 55,331,094
0 0 4 -
60,000,000
50,000,000
Amount in Rs.
40,000,000
30,000,000
20,000,000
10,000,000
0
41- Housing
521
Development:
(Amount in Rs.)
Grant #
Total
and Name Grant Original Supplementary Re- Final Excess/
Surrender Actual
of Type Grant Grant Apprioriation Grant (Savings)
Expenditure
Department
50- Housing NC12 388,132,364
623,340,000 - - 235,207,636 241,331,521 6,123,885
Total
623,340,000 - - 388,132,364 235,207,636 241,331,521 6,123,885
Chart Title
300,000,000
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
0
50- Housing

(Rs. in million)
Non-Development 55.33 55.33 - 0.00%

Development 235.21 241.33 6.12 0.00%
Total 290.54 296.66 6.12 2.11%
300
250
200
Rs. in million
150
100
50
0 522

15.1(C) Issues in Housing Department
The Housing Department is responsible for provision of housing facilities in the province.
However, the departmental systems and procedures could not evolve with the latest requirements of public
financial management, revenue and financial accounting. It was noticed that the department failed to
achieve its targets of the revenue resulting in excess expenditure over the final grants. In addition, it was
noticed that assets are invested without proper evaluation and planning. Assets and liabilities could not be
provided to Audit for verification. The department is noncompliant to audit and evaded accountability by
not conducting DAC meetings to settle observations on its accounts.
audit of Housing Department. This amount also includes recoveries of Rs. 89 million as pointed out by the
audit. Summary of the audit observations classified by nature is as under:
Amount
(Rs. in million)
3 Irregularities
5 Others 34.192
523
Amount(Rs. in million)
00 20.667
1.568
34.192 Reported cases of fraud, embezzlement and
5.831
0 misappropriation
Irregularities
Management of Accounts with Commercial Banks
Value for money and service delivery issues
Others
182.992
Total No. of
points
11 2013-14 -do- Nil Nil Nil Nil
14 2016-17 -do Nil Nil Nil Nil
15.4 Audit Paras
15.4.1 Non-execution of core activities / functions
According to the Khyber Pakhtunkhwa Provincial Housing Authority Act 2005, the department has
to perform the following activities / functions;
 Facilitate and land availability through various innovative measures, develop a comprehensive land
information system to cater for the planning and development, requirement for a period of five to
ten years.
 Mobilize resources and generate funds in order to provide finance for housing specially to the low-
income groups
524
 Develop packages in which prime state land occupied by Katchi Abady, shall be offered to the
private developers for commercial use, provided they arrange finance up-gradation or relocation of
Katchi Abady.
During audit of the accounts of Secretary Housing Department Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was observed that the above-mentioned functions have not been
performed/initiated by the department till date of audit i.e. September 2023 which were their prime
responsibilities.
Audit held that the core functions of the Housing Department were required to have been performed
by the management which was not done.
The lapse occurred due to violation of Rules of Business & Act which resulted in non-execution of
the core functions.
report.
PDP No. 24 (2022-23)
15.4.2 Blockage of public money due to irrational demand – Rs. 100.000 million
According to Para 95 of GFR Vol-I, all anticipated savings should be surrendered to Government
immediately they are foreseen but not later than 31st March of each year in any case, unless they are
required to meet excesses under some other unit or units which are definitely foreseen at the time. However,
savings accruing from funds provided after 31st March shall be surrendered to Government immediately
they are foreseen but not later than 30th June of each year. No savings should be held in reserve for possible
future excesses.
During audit of the accounts of Secretary Housing Department Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was observed that local office demanded funds to the tune of Rs 55.00 million
under head of account A-08501 (Loan to Non-Financial Institutes) during the start of financial year. Later
on, re-appropriation was done and budget/released was enhanced up to limit of Rs 100.000 million.
Scrutiny of record revealed that no expenditure was carried out during the financial year and on the
very last day of the financial year (30.6.2023), the local office surrendered Rs 100.00 million to the Finance
Department without any cogent reason.
Audit held that if it was not required then why it was demanded in the original as well as revised
budget and kept unspent which resulted into not only blockage of public money when government is
525
stressing on the austerity measures and imposing 30-35 % cut on the budget /expenditure but also deprived
other needy departments to utilize the funds.
The lapse occurred due to weak internal controls and violation of Rules which resulted in
unnecessary blockage of government funds.
When pointed out in September, 2023, no reply was furnished by the management.
report.
PDP No. 22 (2022-23)
15.4.3 Loss to the government due to non-recovery of installments from Allottees of Flats and non-
imposition of penalty @2% per month – Rs. 82.992 million
According to Para 8 and 26 of the General Financial Rules Volume-I, each administrative
department to see that the dues of the government are correctly and promptly assessed, collected and paid
into Government Treasury.
During audit of the accounts of Provincial Housing Authority Peshawar for the Financial Year
2021-22, it was observed that the local office failed to recover outstanding installments from allottees of
High-Rise Flats, Phase-V Hayatabad since long and non-imposition of penalty @2% per month, which
resulted in loss to the Authority amounting to Rs 82,992,194/- (Annexure-XXXVIII).
The lapse occurred due to weak financial controls which resulted into loss to the government.
When pointed in March 2023, the management stated that recovery will be made and will be shown
to Audit.
01.01.2024 for holding the DAC meeting. However, no DAC meeting was convened till finalization of this
report.
Audit recommends to recover the installments along with penalty.
PDP No. 217 (2021-22)
15.4.4 Overpayment to contractor by allowing rate higher than the approved rate analysis - Rs.
5.831 million
526
According to Para 296 of CPWA Code, a schedule of rates for each kind of work commonly
executed should be maintained in the division and kept up to date. It should be prepared on the basis of the
rates prevailing in each locality and necessary analysis of the rates for each description of work and for
varying conditions thereof, so far as may be practicable, be recorded.
2021-22, it was observed that the work “Construction of Housing Scheme for Govt: Servants and General
Public at Jalozai District Nowshera (Self- Finance), SH: “Construction of Parks” was awarded to the
contractor at a bid cost of Rs.245.619 million against the E/cost of Rs.307.986 million (rebate @20.25%)
vide letter of acceptance No.DG/PHA/Tech/Jalozai/Parks/1342, dated 21.2.2020 to be completed within
one year. The contractor was paid Rs.131.317 million up to 7 th running bill.
On further verification and comparison of TS quantities with the bill, it was disclosed that the work
contained various non-schedule items of work including the item of work i.e. “Providing & Fixing of wall
grill, complete as per drawing” the rate of which was approved through rate analysis in TS @ Rs.3648/-
PM2, but the same was allowed @ Rs.5673.19 PM2 in the bill which resulted into an overpayment of Rs.5,
831,107/- to the contractor as detailed below:
S# Block No. Quantity Rate paid To be paid Difference Amount (Rs)
in Rs in Rs
1. A, central park 558.24 5673.19 3648/- 2025.19 1,130,542
2. A (A-03) 288.00 5673.19 3648/- 2025.19 583,255
3. B (B-01) 210.24 5673.19 3648/- 2025.19 425,776
4. B (B-02) 248.948 5673.19 3648/- 2025.19 504,167
5. B (B-03) 282.96 5673.19 3648/- 2025.19 573,048
6. C (C-02) 394.6304 5673.19 3648/- 2025.19 799,202
7. D (D-01) 364.27 5673.19 3648/- 2025.19 737,716
8. D (D-04) 231.37 5673.19 3648/- 2025.19 468,568
9. E (E-07) 300.63 5673.19 3648/- 2025.19 608,833
Total 5,831,107
When pointed in March 2023, no reply was furnished by the management
report.
Audit recommends to recover the amount from the contractor and inquire the matter for fixing of
responsibility.
PDP No. 216 (2021-22)
15.4.5 Loss to the government due to non-recovery of income tax –Rs. 4.712 million
527
As per Director General PHA letter No. DG/PHA/Fin/Income Tax/1641 dated: 14.11.2022, the
contractor was not enlisted with FBR during the period.
2021-22, it was observed that the local office deducted income tax amounting to Rs. 4,712,254/- from a
contractor M/S Raja Sabir Khan & Co @7.5% instead of @15% amounting to Rs. 4,712,254/- (Rs.
62,830,055 X 7.5%) being non-filer as the contractor was not enlisted with FBR during the period. Director
General PHA also intimated the contractor through letter for depositing the said amount into government
treasury but the contractor failed to deposit the amount, which resulted in loss to the government amounting
to
Rs. 4,712,254/-.
to Audit.
report.
Audit recommends to recover the amount and take action against the person(s) at fault.
PDP No. 218 (2021-22)
15.4.6 Irregular auction of dismantling of buildings – Rs. 20.650 million

Less deposit of income tax – Rs. 2.123 million
According to Para 23 of GFR Vol-I, every Government officer should realize fully and clearly that
2021-22, it was observed that the local office awarded contract of demolishing of 23 numbers of bungalows
at Nishter Abad Peshawar through open auction / biding for
Rs. 20,650,000/- to Mr. Ghulam Shabir S/O Marra. Audit observed the following discrepancies:
1. The bungalows were auctioned along with materials while these were old bungalows and
had a lot of iron and wood. The dismantled material should have been auctioned separately
to generate more revenue.
2. Neither the pictures nor the video were available to verify the open auction.
3. The contract was sublet to the private people.
4. Completion report was also not available as per DG PHA letter dated: 16.7.21.
5. Signature in application does not tally with attendance/bid sheet/CNIC.
6. Sanction from Competent Authority was not obtained.
528
7. The bidder was not filer.
Moreover, income tax amounting to Rs 2,006,500 @10% was deducted instead of Rs 4,130,000
@20% being non filer, thus Rs 2,123,500 was less deducted, which needs recovery.
The lapse occurred due to weak internal controls which resulted in irregular auction.
to Audit.
report.
Audit recommends to recover the amount and inquire the matter for fixing of responsibility against
PDP No. 220 (2021-22)
529
Chapter – 16
INDUSTRIES DEPARTMENT
of:
Audit Profile of Industries Department:

(Rs. in million)
Total
Nos
2022-23 23
2  SDA 05 01 99.954 N/A
(Excluding FAP)
3 01 Nil Nil N/A
under PAO
530
531
was as follows:
Non-Development:
(Amount in Rs.)
Grant #
Total
Surrender Actual
of Type Grant Grant Appropriation Grant (Savings)
Expenditure
Department
25- -40,923
NC21 973,932,000 970 0 283,093,573 690,839,397 690,798,474
Industries -
-40,923
Total 973,932,000 970 0 283,093,573 690,839,397 690,798,474
-
800,000,000
700,000,000
600,000,000
Amount in Rs.
500,000,000
400,000,000
300,000,000
200,000,000
100,000,000
0
25- Industries
Development:
(Amount in Rs.)
Grant #
Department
50- -
NC22 517,815,468
Industries 1,342,021,000 - 5,000,000 819,205,532 826,237,825 7,032,293
50-
NC12 741,285,000
Industries 1,285,662,000 - 34,730,000 579,107,000 579,107,000 -
532
Total
2,627,683,000 - 29,730,000 1,259,100,468 1,398,312,532 1,405,344,825 7,032,293
900,000,000
800,000,000
700,000,000
600,000,000
500,000,000
400,000,000
300,000,000
200,000,000
100,000,000
0
50- Industries 50- Industries

(Rs. in million)
-
Non-Development 690.84 690.80 -0.01%
0.04
Development 1,398.31 1,405.34 0.00%
7.03
Total 2,089.15 2,096.14 0.33%
6.99
1600
1400
1200
Rs. in million
1000
800
600
400
200 533
0
-200
16.1(C) Issues in Industries Department
Amount
(Rs. in million)
3 Irregularities -
4 Value for money and service delivery issues -
5 Others -
Total No. of
points
01 2016-17 Industries Nil Nil Nil Nil
Department
2017-18 Nil Nil Nil Nil Nil
2018-19 Nil Nil Nil Nil Nil
14 2019-20 Nil Nil Nil Nil Nil
16.4 Audit Paras
16.4.1 Non-achievement of objectives by Industries Department
According to Clause 3 of the Roles of Business 1985, the business of government shall be
distributed amongst several departments in the manner indicated in Schedule-II. Read with Clause 4 (2) of
the said roles, the Secretary shall be the official head of the department and shall be responsible for its
534
efficient administration and discipline, and for proper conduct of business allocated to the department under
Role 3 which are as follows;
 Planning development and control of industries, including cottage industries.
 Industrial Research
 Industrial training (including training of demonstration parties).
 Industrial exhibition within the country etc.
During audit of the accounts of Secretary Industries, Commerce and Technical Education
Department Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that the department
failed to conduct the following business as provided in the schedule of their rules of business;
 Industrial Research
 Industrial training (including training of demonstration parties)
 The Provincial Advisory Panels for Industries
 Chambers and Associations of Commerce and Industry
 Registration of essential personnel
 Preparation of short and long-term programs for manpower development & employment promotion
 War injuries schemes & war injuries compensation insurance
The lapse occurred due to weak administrative controls which resulted in poor performance.
Audit recommends to take steps for accomplishment of the business allocated to the department in
their rules of business.
PDP No. 21 (2022-23)
535
Chapter – 17
IRRIGATION DEPARTMENT

The Irrigation Department is headed by Secretary Irrigation who is assisted at Secretariat level by
Additional Secretary, Deputy Secretary (Tech) and PMC. In all the technical matters, the Secretary is
assisted by the Planning & Monitoring Cell which prepares the draft proposals for Annual Development
Program and Public Sector Development Plan. The PMC prepares plans, liaison with Federal Government
and Donors Agencies regarding new schemes and also monitor progress of implementation of the existing
portfolios. Execution of the water sector schemes and their operation are carried out by attached
departments. There are three attached departments of the Irrigation Department which are headed by their
respective Chief Engineers.
of:
 Irrigation
o Rivers and reverine surveys;
o Construction and maintenance of canals;
536
o Tube-Wells and other water utilization schemes in areas other than those declared
as "Local Areas" under the Soil Reclamation Act, 1952;
o Embankment;
o Drainage other than field drains in areas declared as "Local Areas" under the Soil
Reclamation Act, 1952; and
o Storage of water and construction of water reservoirs.
 Barrage construction work and all matters connected therewith.
 Water logging schemes in areas other than those declared as "Local Areas" under the Soil
Reclamation Act, 1952.
 Land Reclamation Schemes in areas other than those declared as "Local Areas" under Soil
Reclamation Act, 1952.
 Flood Control Schemes. .
 Administration of the Canal and Drainage Act, 1873 (VIII of 1873).
 Booking of irrigation where Minor Canal and Drainage Act is applicable.
 Matters pertaining to distribution of river supplies.
 Inland water-ways and inland navigation.
Audit Profile of Irrigation Department:

(Rs. in million)
S Total Expenditure Audited Revenue/Receipts

Description Audited
No. Nos FY 2022-23 Audited FY 2022-23
1 Formations 54 5 57,450 0
2  SDA Nil Nil N/A Nil
(Excluding FAP)
3 Nil Nil Nil N/A
4 01 01 1,259 N/A
(FAP)
was as follows:
537
538
Non-Development:
(Amount in Rs.)
Grant #
of Type Grant Grant approrpiation Expenditure (Savings)
Department
24-Irrigation NC21 6,055,715,000 1,605,868,000 0 1,117,726,616 6,543,856,384 6,543,629,174 -227,210
61-Irrigation NC21 283,974,000 - 12,921,910 74,883,318 222,012,592 221,935,169 77423
Total 6,339,689,000 1,605,868,000 12,921,910 1,192,609,934 6,765,868,976 6,765,564,343 -149,787
7,000,000,000
6,000,000,000
5,000,000,000
Amount in Rs.
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
0
24-Irrigation 61-Irrigation
-1,000,000,000
Development:
(Amount in Rs.)
Grant #
of Type Grant Grant approrpiation Expenditure (Savings)
Department
55-
Construction NC12
12,867,000,000 3,721,893,030 0 877,672,264 15,711,220,766 15,714,648,946 3,428,180
of irrigation & 22
works
60-Merged
NC12 2,113,734,000 - -207,453,092 1,683,582,851 222,698,057 227,058,057 4,360,000
Areas
60-Merged
NC22 59,850,000 - 9,399,092 30,353,511 38,895,581 49,135,391 10,239,810
Areas
Total 15,040,584,000 3,721,893,030 -198,054,000 2,591,608,626 15,972,814,404 15,990,842,394 18,027,990
18,000,000,000
16,000,000,000
14,000,000,000
Amount in Rs.
12,000,000,000
10,000,000,000
8,000,000,000
6,000,000,000
4,000,000,000
2,000,000,000
0
55-Construction of 60-Merged Areas 60-Merged Areas
irrigation works 539
(Rs. in million)
Total Actual
Expenditure
Non-
6,765.87 6,765.56 -0.149787 0.00%
Development
Development 15,972.81 15,990.84 18.02799 0.11%
Total 22,738.68 22,756.41 17.878203 0.08%
18,000.00
16,000.00
14,000.00
12,000.00
Rs. in million
10,000.00
8,000.00
6,000.00
4,000.00
2,000.00
0.00
-2,000.00
It can be seen from the above variance analysis that the budgets could not be utilized with some
amount remaining unspent. This indicates inability of the department to utilize the available funds in the
best public interest and hence many of the planned activities could not have been achieved.
17.1(C) Issues in Irrigation Department

During audit, it was noticed that contract management mechanism was very poor. The field offices
of the Irrigation Department did not fulfill the contractual obligations i.e. obtaining Performance Securities
from the contractors in violation of contract agreement which provides that failure of the successful bidder
to furnish performance security shall constitute sufficient grounds for the annulment of the award and
forfeiture of the bid security.
The department also does not comply with the basic rules of the contract award. As a consequence
of poor contract management, there has been considerable cost and time over run in different development
schemes across the province. Like C&W, the Technical Sanctions for development schemes are prepared
at belated stage to cover up the variations in cost, specifications, and estimates. As a matter of policy, the
Technical Sanctions must be awarded before the commencement of work. There were no details of the
head-wise figures of the departmental own receipts collected by the department.
540
Audit observations amounting to Rs. 20,448.022 million were raised in this report during the
current audit of Irrigation Department. This amount also includes recoveries of Rs. 1164.590 million as

Amount
(Rs. in million)
3 Irregularities -
5 Others 3145.320
Amount (in million) Non production of record
0 0 Reported cases of fraud,

3145.32 embezzlement and
misappropriation
651.657 Irregularities
irregularities

Commercial Banks
16651.045 Value for money and service
delivery issues
541
S. Name of Total No. of Full Partial Nil
Audit Year
No. Department actionable points compliance compliance compliance
1. 2011-12 Irrigation 18 06 - 12
2. 2012-13 -do- 10 07 - 03
3. 2013-14 -do- 14 10 - 04
4. 2014-15 -do- 07 03 - 04
5. 2015-16 -do- 23 16 - 07
6. 2016-17 -do- 29 18 5 6
17.4 Audit Paras
17.4.1 Irregular payment to WAPDA on account of restoration of flood damages –

Rs. 350.00 million
According to Para 89 (c) of the CPWD code, the agreement with the contractors selected must be
in writing and should be precisely and definitely expressed; it should state the quantity and quality of the
work to be done, the specifications to be complied with, the time within which the work is to be completed,
the conditions to be observed, the security to be lodged, and the terms upon which the payments will be
made and penalties exacted, with any provisions necessary for safeguarding the property entrusted to the
contractor.
According to Para 1 (A) – Section-I Introductory of the CPWD code, all original works and special
repairs, relating to Central Civil buildings and communications shall be executed through the Agency of
the Public Works Department, Central or Provincial, as the case may be.
During audit of the accounts of Secretary Irrigation Department Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was observed that an amount of Rs.350.00 million was released to M/S WAPDA
for the restoration of damages inflicted to Chashma Right Bank Canal (CRBC) as per below given breakup:
S. No. Cheque No. Dated Payee Amount
1 2467569 15.09.2022 Chief Engineer OMR, CRBC WAPDA 100.00
2 2494668 16.11.2022 -do- 250.00
Total 350.00
The scrutiny of available record revealed the following discrepancies:

 Contract Agreement was not executed with M/S WAPDA for scope of work, cost of work,
terms and conditions etc.
 Flood damages report was not available to ascertain the actual damages occurred and the
required cost.
 PC-I in support of expenditure was not available.
 The provincial share of expenditure was not ascertained as the CRBC right side falls within
the territory of the Khyber Pakhtunkhwa province while lift side falls in Punjab province.
542
 The amount of Rs.350.00 million was released on the demand of the WAPDA but post
completion reconciliation was not carried out with WAPDA to ascertain the actual
expenditure and retrieve the savings.
 Complete vouchers were not available for scrutiny.
 No justification for release of funds for restoration of flood damaged CRBC was available
though WAPDA’s mandate is the installation of high transmission line, electricity along
with connection etc. The construction/ maintenance of civil work/ infrastructure is the
mandate of Irrigation Department and C&W Department as per Rules of Business 1985 as
amended from time to time.
 Progress Report of the work showing physical and financial status was not available.
 The amount was charged to the head of account “Others” being non-developmental head
despite the fact that the amount was re-appropriated from ADP being developmental
budget. The booking of developmental expenditure under the non-developmental head is
against the financial rules and resulted in incorrect expenditure final figures of the
developmental and non-developmental expenditure at the provincial level.
The lapse occurred due to violation of rules which resulted in irregular expenditure.
When pointed out in August 2023, the management did not furnish any reply.
Audit recommends to inquire the matter for corrective action and fixing of responsibility on the
person(s) at fault.
PDP No. 1 (2022-23)
17.4.2 Loss to the government due to non-recovery of tender form fee from the contractors – Rs.
34.330 million
According to recommendations of the cabinet sub-committee constituted for improvements in the

tender process and e-bidding system and approved by the Chief Minister, KP duly circulated to the
Administrative Secretaries of the Works Department vide SO(c)/CMS/KPK/2021 dated 05-04-2021 read
with Chief Engineer (Centre) C&W Department letter No.CEC/GS/2-1/1750 dated 05-05-2021 , at the time
of implementation of E-bidding system, tender form fee was eliminated by the then authorities, however,
the same may be revived and be remitted by each participating contractor online along with earnest money.
Non-refundable bidding entry fee @ 0.03% of tender cost may be revived and collected along with earnest
money.
According to Para 8 of the General Financial Rules, Subject to such general or specific instruction
as may be issued by Government in this behalf it is the duty of the Revenue or Administrative Department
543
concerned to see that the dues of Government are correctly and promptly assessed collected and paid into
the treasury.
Financial Year 2022-23, it was observed that tenders worth Rs.9173.3760 million for developmental works
were placed for bidding through e-bidding system by the irrigation divisions. However, the requisite tender
form fee / bidding entry fee @ Rs.0.03% of the tender cost was not recovered from the bidders as no such
receipts were reported to the Administrative Department. This resulted in loss of Rs.34.33 million to the
government in the schemes/ projects selected on sample basis.
Audit held that Chief Engineer and the Administrative Department were required to monitor the e-
bidding system to ascertain the recovery of dues.
The lapse occurred due to non-implementation of the directives/ instructions/ rules which led to
non-recovery of the tender form fee.
When pointed out in August 2023, the management stated that the matter will be referred to
concerned office for reply.
Audit recommends to recover the amount from the contractors and inquire the matter for fixing of
responsibility against the person(s) at fault.
PDP No. 2 (2022-23)
17.4.3 Loss to the government due to non-recovery of water user charges from PEDO private sector
hydropower projects and Abiana charges – Rs. 235.921 million
According to Para 28 of General Financial Rules, no amount due to government should be left
outstanding without sufficient reason and where any dues appear to be irrecoverable the orders of competent
authority for their adjustment must be sought.
According to Para 09 of the summary moved by the Irrigation Department, KP to the Chief
Minister, KP for the enhancement of water user charges for PEDO Private Sector Hydropower Projects
(HPPs) – the water user charges is recoverable at the rate of Rs0.15/KWh.
Financial Year 2022-23, it was noticed from the scrutiny of Receipts Reconciliation Statement for June
2023 that an amount of Rs.129.620 million was realized from PEDO private sector hydropower projects on
account of water user charges against the target of Rs.79.00 million for 2022-23. Moreover, no outstanding
amount for recovery was shown on record. However, scrutiny of receipts statement and comparison with
previous year audit observation revealed that an amount of Rs.180.141 million was still outstanding for
recovery on account of water user charges from PEDO private hydropower project as elaborated below:
544
S. No. Particulars Amount Remarks
(Rs. in M)
1 Un-recovered balance for 2021-22 74.716 As per Para 03 Audit Note for
FY 2021-22
2 Outstanding dues: 2014-15 to 2020-21 156.045 -do-
3 Budget estimates/ target for FY 2022-23 79.00 –
4 Total recoverable amount 309.761 –
5 Amount recovered during 2022-23 129.620 –
6 Net outstanding amount 180.141 –
In addition to above, the following irregularities were observed:

 The amount for recovery of water user charges is calculated at the rate of Rs.0.15 per unit,
however, neither detail statistics of units produced by the PEDO private hydropower
projects (HPPs) was obtained by the department to ascertain the actual recovery amount
nor any contract agreement was signed rather it was informed that the recovery amount @
Rs.0.15 per unit is calculated as per NEPRA policy but copy of the same was not available.
 As per the summary dated 23-05-2023 moved by the department to the Chief Minister,
Khyber Pakhtunkhwa for enhancement of water user charges for PEDO private sector
hydropower projects (HPPs) from Rs.0.15/Kwh to Rs.1.10/Kwh, revealed that the existing
rate is applied since 2008 which was not revised/ enhanced during last 15 years despite the
fact that NEPRA tariff has been revised from time to time. This resulted in recurring loss
to the provincial government every year due to non-taking up the matter for revision of
rates.
Moreover, Receipts Reconciliation Statement for June 2023 revealed that a target of Rs.88.00
million was assigned for recovery of receipts under the head “CO-3434 Others – Irrigation Works” (Abiana)
against which recovery of Rs.32.22 million was reported, leaving an outstanding balance of Rs.55.78
million.
In addition to non-recovery of outstanding government dues of Rs.55.78 million i.e. 63.39% less
realization of recovery, cogent reasons were not recorded by the Canal Collector for shortfall in recovery.
The lapse occurred due to mismanagement of the recovery affairs which resulted in non-recovery
of government non-tax revenue as well as causing recurring loss to the government.
When pointed out in August 2023, the management did not furnish any reply.
Audit recommends to investigate the matter and fix responsibility for non-recovery of government
dues.
545
PDP No. 3 (2022-23)
17.4.4 Loss due to non-transparent awardof contracts – Rs. 5.173 million
According to Miscellaneous Provisions of the Khyber Pakhtunkhwa Public Procurement Rules

2014 notified by Finance Department, KP vide No. SO (FR)/FD/9-7/2010/Vol-II dated 03.02.2014, the
procuring entity may decide the response time for receipt of bids or proposals including proposals for pre-
qualification from the date of publication of an advertisement or notice, keeping in view the contract’s
complexity, and urgency. However, under no circumstances the response time shall be less than fifteen days
for national competitive bidding and thirty days for international competitive bidding from the date of
publication of advertisement or notice in the national newspaper. Each procuring entity shall plan its
procurements with due consideration to transparency, economy, efficiency and timeliness, and shall ensure
equal opportunities to all prospective bidders in accordance with section 22 of the Act.
According to Para 19 (vi) of the General Financial Rules, whenever practicable and advantageous,
contracts should be placed only after tenders have been openly invited and, in cases where the lowest tender
is not accepted, reasons should be recorded.
Financial Year 2022-23, scrutiny of the e-bidding system/ data revealed the following irregularities:
i. 05 No. of tenders were floated for the developmental works by the Charsadda Irrigation
Division with tender closing date of 15-02-2023. However, these tenders were cancelled
without cogent reasons despite significant rebate rate offered by the lowest bidders. These
05 contracts were retendered and awarded at the higher rates, even 04 contracts were
awarded to the same contractors but at higher rates than previously offered rates. This
resulted not only in loss of Rs.5.173 as per enclosed statement but also made the tendering
process doubtful.
ii. 12 No. tenders worth Rs.19.0005 million for developmental works were placed for bidding
through e-bidding system by the irrigation divisions. The BOQs were uploaded on 22-07-
2022 with BOQ expiry/ closing date of 11-08-2022. However, comparative statements of
these tenders revealed that tenders were opened on 08-08-2022 i.e. 04 days before closing
date of tenders. This indicated that the tendering process was managed by the procuring
entities as the prospective bidders were deprived from participation in tendering process
and deprived the government from obtaining the competitive/ economical rates. As such,
tenders award of Rs.19.0005 million was non-transparent.
iii. In 37 No. of cases, tenders worth Rs.842.4736 million for developmental works were
placed for bidding through e-bidding system by the irrigation divisions. However, scrutiny
of the comparative statements of the contracts revealed that BOQs were uploaded at a
belated stage with 02 to 07 days of response time, in violation of KPPRA Rules which
warrants that response time shall not be less than 15 days in any circumstances and
procurements shall be planned to ensure equal opportunities to all the prospective bidders.
546
Hence, the award of contracts worth Rs.842.4736 million through e-bidding system was
irregular due to less response time.
Audit held that the delayed uploading of BOQs by the irrigation divisions restricted the competition
and deprived the government from economical and realistic rates. Moreover, the Chief Engineer and the
Administrative Department were required to monitor the e-bidding system to ensure transparency in tender
awards but no such controls were observed by the Audit.
The lapse occurred due to mis-procurement and non-transparent tendering process which resulted
in loss to the government.
When pointed out in August 2023, the management stated that the matter will be referred to
concerned office for reply.
Audit recommends inquiring the matter for fixing of responsibility and recovery of loss from the
person(s) at fault.
PDP No. 4 (2022-23)
547
17.4.5 Doubtful Payment to contractor on account of transported material – Rs. 25.925 million
During audit of the accounts of Executive Engineer Irrigation Swat No. 01 for the Financial Year
2022-23, it was observed that contract for developmental scheme Removal of Debris and Restoration of
Protection along with Local Khwars was awarded to M/S Swat Construction with an estimated cost of Rs.
79.000 million and bid cost of Rs. 63.200 million respectively. An up-to-date payment of Rs. 30.623
million was made to the contractor vide Voucher No. 26-S dated 12.06.2023.
Similarly, contract for the developmental scheme Improvement of Gaga Civil Channel Mingora
District Swat awarded to M/S Muhammad Ilyas Khan with an estimated cost of Rs. 25.000 million. An up-
to-date payment of Rs. 21.197 million was made to the contractor vide Voucher No. 28-S dated 27.02.2023
Further scrutiny of record i.e. PC-I and the paid voucher revealed that the local office paid Rs.
23.728 million to the contractor on account of transportation of earth for a quantity of 26188.71 M 3 @ Rs.
906.07/M3 and 2722.99 M3 @ Rs. 806.94/M3 and Rs. 2.197 million respectively.
However, Audit observed that visual photograph of and re-measurement of transported material at
dumping site of material was not done and during physical verification it was confirmed that no material
was available at dumping site and fictitious payment was made to compensate contractor.
The lapse occurred due to weak financial control which resulted in doubtful payment.
Audit recommends detailed inquiry into the matter and fixing of responsibility on the person(s) at
fault.
PDP No. 89 (2022-23)
548
17.4.6 Irregular award of contract for AOM&R works - Rs. 9.000 million
Rule 32 of Khyber Pakhtunkhwa Public Procurement of Goods, Works and Services Rules 2014
provides that (1) Each procuring entity shall constitute committees, in accordance with delegation of
financial powers, separately for procurement of goods, works and services. (2) The committees shall have
a representative each from the accounts or finance or planning sections of the procuring entity apart from
others and;
According to S/No.1(1) II, powers of Irrigation department, delegation of powers rules 2018, CE
has full powers to accord TS in ordinary repair of irrigation works, whereas SE has the power up to 2.00
million and XEN up to 0.4 million. Furthermore, S/No. 11(2) of ibid provide that Powers to accept tender
are Equivalent to Grant of Technical Sanction in relevant Category.
During audit of the accounts of Executive Engineer CRBC Irrigation Division D.I. Khan for the
Financial Year 2020-21, it was observed that bids were invited for various AOM&R Contracts worth Rs.
9.000 million without constitution of proper procurement committees as provided in the Khyber
Pakhtunkhwa Public Procurement of Goods, Works and Services Rules 2014. Audit observed that the
Procurement Committee was constituted by the Executive Engineer while it was required to have been
constituted and notified by the S.E. The award of AOM&R contracts without proper procurement
committee is therefore, held irregular, as detailed below;
Name of Work / E/cost Rs Contractor
S# Name of Lowest Bidder Bid Cost
Sub Work in (M) Premium
1 ShorKot Section M/S Ustrana Construction Co: 1.500 43% below 855,000
2 Gomal Section -do- 1.500 43% below 855,000
3 Fateh Section -do- 1.500 43% below 855,000
4 Naivela Section -do- 1.500 40% below 900,000
5 Mahra Section -do- 1.500 40% below 900,000
6 Ramak Section -do- 1.500 40% below 900,000
Total 9.000 3,735,000
When pointed out in March 2021, management did not furnish any reply.
relevant notification. However, Audit did not agree with the forum, and directed for conducting inquiry in
the matter. However, no progress was intimated to Audit till finalization of this report.
Audit recommends inquiry into the matter and fixing responsibility against the persons at fault.
PDP No. 414 (2020-21)
549
17.4.7 Mismanagement of funds under the developmental scheme - Rs. 40.876 million
A Developmental Scheme “Preparation of Revenue Chakbandi in respect of Gomal Canal

Network” was approved by the DDWP on 25.01.2016 at estimated cost of Rs. 51.88 million with
an aim to prepare Revenue Chakbandi to generate Revenue in Shape of Abiana (Water Rate) to be
levied on the Irrigators from Gomal Zam Canal Network.
During Audit of accounts of Executive Engineer Gomal Zam Irrigation Division D.I. Khan
for the Financial Year 2020-21, it was observed that a Developmental Scheme “Preparation of
Revenue Chakbandi in respect of Gomal Canal Network” was approved by the DDWP on
25.01.2016 at estimated cost of Rs. 51.88 million with an aim to prepare Revenue Chakbandi to
generate Revenue in Shape of Abiana to be levied on the Irrigators from Gomal Zam Canal
Network. Audit observed the following;
i. Out of the 54 numbers staff approved in PC-I in 11 different cadres i.e. Revenue
Consultants, Zilladar, Patwaries, H.V.C, V.C, Computers Operators, Junior Clerk
Hawaldars, N/Q, Security Guard and Drivers, only 37 persons in three cadres i.e. Patwaries,
Naib Qasid and Drivers were deployed and the savings from these eliminations were
diverted to unnecessary objects.
ii. The scheme was not completed despite lapse of the completion period.
iii. PC-I of the scheme contained provision of TA/DA amounting Rs. 1,600,000/- for project
staff / establishment which was enhancedto Rs 4,000,000 in the 2 nd revised estimate thus
the increase was 150% of the PC-I provision. Audit held that when the required
establishment was reduced then how TA/DA budget was enhanced so abnormally for the
reduced staff.
iv. There was provision of Rs. 5,040,000 for purchase of vehicles which was excluded without
any cogent reason.
v. For running and maintenance of above project vehicles, there was provision for POL and
repair work worth Rs. 7,600,000 in the PC-I which was also enhanced to Rs. 12,000,000
in the 2nd revised estimates despite the fact that the procurement of vehicles was deferred.
The amount was shown spent on the existing vehicles of the division for which sufficient
provision was already being kept in the regular budget.
vi. Against the provision of Rs. 2,500,000 (which was revised up to 32.747) million for repair
/renovation of existing building in (Tank, Kulachi & D.I. Khan) for official use i/c XEN
Residence & Provision of alternate Solar Energy System, the divisional office shown
expenditure of Rs. 698,766 during 2015-16 after which no such expenditure was incurred
under this head. Further detail of expenditure was also not produced to audit.
vii. Against the provision for the miscellaneous office machinery and equipment huge amount
of 5.626 was shown spent by the division, but where about of these items was not shown
to Audit.
550
The lapse occurred due to weak administrative and financial controls which led to
mismanagement and misappropriation of funds.
In the DAC meeting held on 26.01.2023, it was decided that the department may conduct
an independent inquiry in the matter. However, no progress was intimated to Audit till finalization
of this report.
Audit recommends enquiry into the matter and fixing responsibility against the person(s)
at fault.
PDP No. 210 (2020-21)
17.4.8 Loss to the government due to non-deduction of KP Sales Tax on Services -

Rs. 3.039 million
Finance Department Government of Khyber Pakhtunkhwa levied 2% sales tax on works &
services from July 2020 vide notification No. BO(Res-III)/FD/2-2//2019/Vol-I dated 31.07.2020.
During audit of the accounts of Executive Engineer Gomal Zam Irrigation Division D.I.
Khan for the Financial Year 2020-21, it was noticed that the local office did not recover 2% sale
tax on works and services amounting to Rs. 3.039 million from the contractors to whom payment
worth Rs. 165.006 million.
The irregularity occurred due to weak internal control due to which the Government
sustained a loss of Rs. 3.039 million.
In the DAC meeting held on 26.01.2023, it was decided that the department may make
complete recovery of the amount. However, no progress was intimated to Audit till finalization of
this report.
Audit suggests recovery of the amount.
PDP No. 220 (2020-21)
17.4.9 Non-production of record of Developmental Project worth- Rs. 16,065.44 million
551
Section 14 (3) of the Auditor-General’s (Functions, Powers and Terms and Conditions of
Service) Ordinance, 2001 provides that any person or authority hindering the auditorial functions
of the Auditor-General of Pakistan regarding inspection of accounts shall be subject to disciplinary
action under relevant Efficiency and Discipline Rules, applicable to such person.
During audit of the accounts of Directorate General Small Dams Khyber Pakhtunkhwa for
the Financial Year 2022-2023, it was observed that the expenditure record of 22 no of schemes
pertaining to developmental schemes in merged area amounting to Rs 3405.913 million against
estimated cost of 16065.414 million under by Project Support Unit (PSU) was not produced to
audit for verification. The record was demanded through audit requisition No.AO (inspection)/01
dated 31.10.23 followed by 1st reminder dated 06.11.23, and 2nd reminder dated 15.11.23 but no
record was produced with the plea that Payments of contractor pertaining to PSU small dams
merged area processed through Accountant General Khyber Pakhtunkhwa and issued cheques to
contractors/ consultant and all original record in the custody of Accountant General Office
Peshawar including verified passed vouchers and IPCs etc. Reportedly, inquiries related to
projects in merged area were in process/completed by the administrative office. -
The lapse occurred due to obstructing the fulfillment of constitutional obligation by the
audit department which resulted in non-production of record.
The department was requested vide letter No. Audit/DAC/DG Small Dams/2022-23/1523
dated 05.01.2024 for convening the DAC meeting. However, no meeting was convened till
Audit recommends detail inquiry and fixing of responsibility against the persons at fault.
PDP No.7 (2022-23)
17.4.10 Unauthentic payment on account of remuneration of consultant - Rs. 14.200 million
Clause 3.10 of the contract agreement between Directorate General small dams and Pakistan
Engineering Services for construction and supervision of different small dams provides that the consultants
shall keep accurate and systematic accounts and records in respect of the services in accordance with
internationally accepted accounting Principles and in such form and detail as well as clearly identify all
relevant time changes and cost and the basis thereof and (ii) shall permit the client or its designated
representatives periodically and up to one year from the expiration or termination of this contract , to
inspect the same and make copies thereof as well as to have them audited by the auditors appointed by the
client.
552
During audit of the accounts of Directorate General Small Dams Khyber Pakhtunkhwa - Planning
and Construction Division Abbottabad for the Financial Year 2022-23, it was observed from the scrutiny
of different invoices of M/S PES that Rs. 14.200 million was paid on account of remuneration of key expert
and non-key expert consultants in different projects.
Audit observed the following;

1. An amount of 14.20 million was claimed by PES Consultant as remuneration of key expert
without verifying and obtaining actual payee receipts. Consultant did not submit the actual
payee receipts, proof of payment of remuneration and bank statement of the employees to
verify their actual presence at site as evidence of payment at the rate claimed from
government. In addition, amount was drawn by designations without mentioning the names
of employees.
2. Consultant staff was paid by the employer on account of pay and allowances but being withholding
agent incometaxwas not deducted from the salaries which resulted in loss to government of Rs
509,791.
The lapse occurred due to financial mismanagement and weak internal controls, which resulted in
unauthentic payment to consultants.
Audit recommends detail inquiry in the matter and recovery of income tax amounting to Rs. 14.200
million.
PDP No. 8 (2022-23)
17.4.11 Loss to the government due to overpayment on account of PCC 1:2:4 and PCC 1:3:6
contractors, is required to compare the quantities in the bills and see that all the rates are correctly entered
and Construction Division Abbottabad for the Financial Year 2022-23, it was observed that contract for the
“Construction of Chapra Dam, Haripur” was awarded to M/S National RCC Works Pvt. Ltd. at the contract
cost of Rs.659.986 million. The contract was awarded @ 10% rebate on the estimated cost of Rs.733.318
553
million. A payment of Rs.344.401 million was made to the contractor till IPC No. 18 vide Voucher No.
8SD/06-03-2023.
The scrutiny of voucher No.8-SD IPC No.17 dated 06.03.2023, PC-I, original estimated cost and
revised detailed cost estimates revealed that an item of work “PCC 1:2:4 with quantity of 5733.42 m3 @
6,758.12/m3 was paid up to 17th running bill for item already executed. In 18th IPC quantity was optimized
and adjusted for the height factor. Against the deduction of 3738.93 m3, a quantity 5468 m3 quantity was
paid resulting into overpayment of 39.561 million.
In addition, due to allowing extra labour, an amount of Rs 14.788 million was also overpaid in item
of work PCC 1:3:6 (roller compacted concrete 2000 PSI).
The lapse occurred due to non-fulfillment of the contractual obligations by the supervisory
consultants which resulted in loss to the government.
Audit recommends recovery of Rs.54.349 million from the contractor besides fixing of
responsibility and action against the supervisory consultants.
PDP No. 11 (2022-23)
17.4.12 Overpayment due to allowing location factor on Non-Schedule Items -

Rs. 1.445 million
According to Finance Department CSR cell Notification No.FD/CSR cell/1-7/rates/2016 dated

8.4.16, location factors for various areas were notified to be applied on schedule items.
work “Construction of Ichar Nullah Dam district Mansehra” was awarded to M/S Kasteer International vide
work order No. 4651/SD/GD/7-G(i) Ichar Nullah dated 13.09.2017 with a bid cost of Rs. 846.71 million
(9.9% above MRS-2016) against the total estimated cost of Rs. 770.438 million. An up-to-date payment of
Rs 1060.82 million was made vide voucher No.08-SD dated 15.09.2022.
Scrutiny of bill No. 8-SD- dated 15.9.2022 revealed that 8% location factor was paid on Non-
Schedule Items which was un-justified as the location factor is applicable only on scheduled items. This
resulted into overpayment of Rs.1.445 million.
The lapse occurred due to weak financial controls which resulted in overpayment to contractor.
554
Audit recommends recovery of Rs.1.445 million from the contractor and fixing of responsibility
PDP No. 14 (2022-23)
17.4.13 Overpayment due to non-adjustment of available material at site and allowing excess
quantities verified in IPC – Rs. 10.025 million
According to CSR 2012, item No. (06-36-b), PCC 1:3:6 mass concrete less form work using 30 %
boulders includes 30% to 40% cost of stone.
According to verified IPC No. 26 a quantity of 7090. 99 was verified for item of work PCC 1:3:6
mass concrete less form work using 30 % boulders.
“Construction of Kiyala Dam, Abbottabad” was awarded to M/S Haji Pasham Khan at the contract cost of
Rs.706.411 million. The contract was awarded @ 16.13% rebate on the estimated cost of Rs.842.269
million based on CSR-2012.
Further comparison of bill, MB and TS revealed that the local office overpaid Rs 9.459 million by
allowing full rate of PCC 1:3:6 mass concrete less form work using 30 % boulders for quantity of 7235.99
m3, while ignoring the available stone at site from excavation in hard rock material for a quantity of 9791.54
m3. The cost of stone available was not deducted from the payments of PCC 1:3:6 mass concrete less form
work using 30 % boulders, resulting in overpayment to contractor.
and recovery schedule.
Moreover, 7,235 m3 quantity was allowed instead of verified quantity of 7090.99 m3 in IPC 26
resulting in loss of Rs 566,706 (7235.99-7090.99= 144 x3820.57+3%). Moreover, Technical sanction of
the scheme was also not produced.
The lapse occurred due to weak financial controls and violation of rules which resulted in loss to
the government.
555
Audit recommends details inquiry in the case and recovery of overpayment amounting to Rs.
10.025 million.
PDP No. 18 (2022-23)
17.4.14 Loss to the government due to overpayment on account of lead for transportation of
earth - Rs. 2.315 million
Para-221 of the CPWA Code provides that the Sub Divisional Officer should compare the
quantities in the bill with those recorded in the MB and see that all the rates are correctly entered and that
all calculations have been checked arithmetically read with Para-4.5 of B&R which state that every officer
making or ordering payment on behalf of Government should satisfy himself that the work has been actually
done in accordance with the bill submitted for payment. He should inspect personally all the most important
works before authorizing final payment, and should check the measurements made by his subordinates.
During audit of the accounts of Executive Engineer Irrigation Division Mardan for the Financial
Year 2022-23, it was observed that the sub-work “Improvement/clearance of drains in UC Sikandaray,
GuliBagh and Par Hoti was awarded to the contractor at bid cost of Rs.6.964 million with 0.02% rebate,
vide work order No.1795/55-M, dated 31.8.2022. The contractor was paid Rs.8.00 million on first and final
bill Voucher No.11-M, dated 25.1.2023.
On further comparison of the bill quantities, it was noticed that the contractor was allowed for the
execution of an item of work i.e. Earth excavation in ashes, sand, shingle & soft soil or silt clearance by
mechanical means undressed lead up to 15m with an extra lead up to 1 KM” for a quantity of 9655.33 M3
at composite rate @ Rs.828.74 PM3 amounting to Rs. 8,001,758/- and was paid accordingly (page-88 to
93 MB No.425). On verification and calculation of the composite rate, it was noticed that a higher composite
rate @ Rs.828.74 PM3 was allowed to the contractor instead of actual composite rate @ Rs.588.87PM3 as
worked out below which resulted into an overpayment of Rs. 2,315,754/- (828.74 (-) 588.87 = 239.89PM3
x 9655.33 x 0.02% rebate) to the contractor concerned.
S# MRS-2022 item code Description Amount (M)
1. 03-02-b Earth excavation in ashes, sand shingle & soft soil or silt 89.25
clearance upto 15m
2. 03-19-a 15m extra lead up to 250m (5.61 x 15) 84.15
3. 03-20-a 250m to 500m lead 234.12
4. 03-20-b 100m extra lead beyond 500 to 1KM 181.35
500-1000/100= 5 x @ Rs.36.27
Total composite rate for transportation up to 15m to 1 KM 588.87
556
The lapse occurred due to weak internal controls and incorrect application of composite rate for
transportation of earth which resulted into an overpayment to the contractor.
When pointed out in December 2023, the management replied that rate is calculated from multiple
items on basis of actual lead / item of work duly approved in the Technical Sanction, however, detail reply
will be furnished after consultation of original record.
Reply was not convincing as the lead for extracted earth was recorded as one (1) KM in the bill as
well as in the MB No. 425 pages 88-93. However, the contractor was allowed excess rate that resulted into
overpayment of Rs. 2.3015 million.
The department was requested vide letter dated 05.01.2024 for convening the DAC
meeting. However, no meeting was convened till finalization of this report.
Audit recommends inquiry in the matter and fixing of responsibility against person(s) at fault
besides recovery of the loss.
PDP No. 45 (2022-23)
17.4.15 Loss to the government due to overpayment by allowing higher rate on account of
execution of formwork – Rs. 1.773 million
During audit of the accounts of Executive Engineer Irrigation Division Mardan for the Financial
Year 2022-23, it was observed the work “Construction of lining and protection wall of Canal along with its
beautification in Distt: Mardan” SH: Lining/Improvement of DistyNo.9 RD:70500-78000 was awarded to
the contractor at estimated cost of Rs.36.572 million with a rebate of 18.50% vide work order No.162/2-
M(W/O), dated 2.2.2022 to be completed up to June, 2024. The contractor was paid Rs.24.820 million vide
voucher No.3-M, dated 5.10.2022 (1st Running bill).
On further comparison of bill quantities with BOQ, work order and relevant MRS, it was noticed
that the contractor was allowed for the execution of an item of work i.e. “Erection and removal of Form-
work with plywood sheet finishing for PCC in any shape position vertical (labor rate)” for a quantity of
3026.32 M2 @ Rs.1074.04 PM2 amounting to Rs. 3,250,389/- On verification of MB No.439 page-58
narrated the abstract of cost entry with ply wood sheet finishing (labor rate) under item code 06-47-d, but
was allowed the composite rate of Rs.1074.04 PM2 instead of correct rate @ Rs.355/- PM2 (for labor rate)
which resulted into an overpayment of Rs. 1,773,476/- (1074.04 PM2 (-) 355/- PM2 = 719.04 PM2 x
3026.32 = Rs. 2,176,045/- x 18.50% rebate) to the contractor concerned.
557
When pointed out in December 2023, the management replied that formwork is paid as composite
item of work including both markets + labour, however, detail reply will be furnished after consultation of
original record.
Reply was not correct as only labour rate was allowed as per BOQ and MB at Page 58 @ 355/-
under item code 06-47-d.
PDP No. 46 (2022-23)
17.4.16 Loss to the government due to overpayment on account of extra width for granular
subbase using pit-run gravel & composite rate for formwork - Rs. 1.047 million
quantities recorded in the MB, it is incumbent upon the person taking the measurement s to record the
area column. If the measurements are taken in connection with running contract account on which work
has been previously measured, is responsible to the last set of measurement read with Para-4.5 of B&R
which also state that every officer making or ordering payment on behalf of Government should satisfy
himself that the work has been actually done in accordance with the bill submitted for payment. He should
inspect personally all the most important works before authorizing final payment, and should check the
measurements made by his subordinates.
During audit of the accounts of XEN Irrigation Division Mardan, for the Financial Year 2022-23,
it was observed that work “SH: Construction of black-top road along Narai Drain from Sattar Abad to
MuqbaraChowk Ibrahim Khan Kali in UC KhazanaDheri” was awarded to contractor at bid cost of
Rs.18.347 million with a rebate of 10% vide work order No.127/2-M(D), dated 12.3.2022 to be completed
within 18 months. The contractor was paid Rs.17.830 million vide voucher No.9-D, dated 12.09.2022 (6th
Running bill).
On further comparison of bill quantities with BOQ/TS, work order and relevant MB, it was noticed
that the contractor was allowed for the execution of an item of work i.e. Granular sub-base using pit run
gravel for a quantity of 1938.53M3 @ Rs.1351.29 PM3 for Rs.2,619,516/- calculated on the basis of 22
feet road width in MB No.416 at page-197 with a quantity of 13458 cft or 381.09 M3 in shoulders by
enhancing the width up to 28 feet, but on verification with relevant TS estimate, it was noticed that the total
width of the road was 18 feet excluding 3 feet shoulder on each side with 16 feet carriage as reflected in
558
the relevant X-section drawing for total width of 22 feet including shoulders. Hence the extra width was
allowed which resulted into an overpayment of Rs.514,963/-(381.09 M3 x @ Rs.1351.29 PM3).
Similarly, the contractor was also allowed the composite rate for erecting and removing form work
for a quantity of 2125.56 M2 on composite rate of Rs.432.74PM2 instead of labor rate @ 182.30PM2 which
resulted into a further overpayment of Rs. 532,352/- (432.74 (-) 182.30=250.44PM2 x2125.56 M2) totaling
Rs.1.047 million (514,963+532,352) to the contractor concerned.
When pointed out in December 2023, the management replied that road items are paid as per actual
site measurement and approved drawing. Shoulders are laid as component of road work and formwork is
paid as composite item of work including both material + labour. However, detail reply will be furnished
after consultation of original record.
Reply was not convincing as the item of work was required to have been restricted to the approved
width of road. The rate of formwork was also required to be allowed on rental basis with other work with
similar specification.
The department was requested vide letter No. Audit/DAC/IRR/2022-23/1532 dated 05.01.2024 for
convening the DAC meeting. However, no meeting was convened till finalization of this report.
PDP No. 47 (2022-23)
17.4.17 Loss to the government due to overpayment on account of non-deduction of RCC pipe
from PCC 1:3:6 - Rs. 1.054 million
it was observed the sub-work “Rehabilitation of CPR along KalpaniDisty RD-42000 to 44150 left side”
was awarded to the contractor at bid cost of Rs.36.268 million with a rebate of 27.99% vide work order
No.661/2-M(W/O), dated 10.3.2020. The contractor was paid Rs.5.912 million up to 3 rd running bill
(Voucher No.17-M, dated 7.06.2022.
On further comparison of the bill quantity with relevant MB, it was noticed that the contractor was
allowed for the execution of an item of work i.e. PCC 1:3:6 for a quantity of 174.32 M3 @ 7058.77 for Rs.
559
1,230,484/- around the RCC pipe 18” for a quantity of 71.32 M, but pipe area/dia was not deducted from
PCC 1:3:6 quantities at page-144 of MB No.410 which resulted into an overpayment of Rs. 1,053,521/-
(18” +3”=21/12=1.75x1.75=3.0625) – (18”/12=1.5x1.5=2.25) =0.8125x3.14xlength of 234 feet=596.99/4=
149.25M3x@ Rs.7058.77PM3).
The lapse occurred due to weak internal controls which resulted in loss to government
When pointed out in December 2023, the management replied that the contention of Audit team
was correct and recovery will be made.
PDP No. 50 (2022-23)
560
17.4.18 Loss to the government due to overpayment on account of earth excavation through
application of incorrect rateby mechanical mean - Rs.1.608 million
According to MRS-2021 item code 03-02-b, the rate for earth excavation in ashes, sand, soft soil
or silt clearance by mechanical mean undressed lead up to 15m was provided @ Rs.86.46 PM3 and @
Rs.85.04PM3 (MRS-2020).
it was observed that some contractors were allowed the execution of an item of work i.e. Earth excavation
in ashes, sand, soft soil or silt clearance by mechanical mean undressed lead up to 15m carried out under
AOM&R for a quantity of 23,635 M3 @ Rs.157.75PM3 & Rs.143.28 PM3 instead of correct rate @
Rs.86.46 PM3 & 85.04PM3, which resulted into overpayment of Rs. 1,608,450/- to the contractors.
When pointed in December 2023, the management replied that payment was made according to
approved tender rates duly approved in T.S, however, detail reply will be furnished after consultation of
the original record.
Reply was not correct as the silt clearance was done through mechanical means, therefore, the
correct rate as per relevant MRS was not allowed.
besides recovery of the loss. Moreover, other similar nature cases of AOM&R may also be examined
throughout the department for corrective measures.
PDP No. 58 (2022-23)
17.4.19 Loss to the government due to overpayment on account of house rent allowance – Rs.
5.833 million
According to Government of Khyber Pakhtunkhwa, Finance Department Notification No.

FD(SOSR-II)2-5/2021/H.R Allow: dated 07.07.2021, the Government of Khyber Pakhtunkhwa has been
pleased to increase the rate of house rent allowance to the civil servants, Khyber Pakhtunkhwa w.e.f
01.6.2021.
During audit of the accounts of XEN Warsak Canals Division Peshawar for the Financial Year
2022-23, it was observed that the local office overpaid a sum of Rs 5,833,470 to the officials on account of
house rent allowance. The officials were regularly paid HRA beyond their authorized rates which needs
recovery.
The lapse occurred due to weak internal controls, which resulted in loss to government.
561
When pointed out in December 2023, management stated that recovery will be made and will be
shown to Audit.
The department was requested vide letter No. Audit/DAC/IRR/2022-23/1534 dated

05.01.2024 for convening the DAC meeting. However, no meeting was convened till finalization
of this report.
Audit recommends recovery of Rs.5.833 million from the officials.
PDP No. 67 (2022-23)
17.4.20 Non-deduction of withholding tax from the contractor - Rs. 61.114 million

withholding tax.
2022-23, it was observed that, the local office paid a sum of Rs 814,861,000 million to a contractor M/S
M. Younas Builder Pvt: Ltd: for the work “Const: and Reh: of Warsak left bank Canal division District
Mohmand (AIP) ADP No. 2465/200056 (2020-21)” during the year but neither the estimates were reduced
by 7.5% nor deduction of income tax @7.5% amounting to Rs 61,114,575 was made from contractor as the
contractor was not a bona fide resident of Mohmand District and his CNIC and domicile belongs to District
Peshawar, which is against the spirit of Finance Department notification as stated above and the same needs
to be recovered.
The lapse occurred due to non-observing the government rules & regulations, which resulted in
loss to government.

of this report.
PDP No. 69 (2022-23)
17.4.21 Non-recovery of outstanding arrears of Abyana –Rs. 160.055 million
562
Government of Khyber Pakhtunkhwa Irrigation department letter No. 7-AO/IRR/AR/2019-20
provides that competent authority is pleased to notify that irrigation department will collect abyana till
closure of current financial year as stop gap arrangement.
2022-23, it was observed that a sum of Rs 161,914,741 was outstanding on account of abyana. However,
the local office realized a sum of Rs 1,859,421 till 2022-23 resulting into less realization of Rs 160,055,320
till date which needs to be recovered.

of this report.
PDP No. 70 (2022-23)
17.4.22 Loss to the government due to non-recovery of tender form fee from the contractors
–Rs. 5.099 million
According to recommendations of the cabinet sub-committee constituted for improvements in the

tender process and e-bidding system and approved by the Chief Minister, KP duly circulated to the
Administrative Secretaries of the Works Department vide SO(c)/CMS/KPK/2021 dated 05-04-2021 read
with Chief Engineer (Centre) C&W Department letter No.CEC/GS/2-1/1750 dated 05-05-2021 , at the time
of implementation of E-bidding system, tender form fee was eliminated by the then authorities, however,
the same may be revived and be remitted by each participating contractor online along with earnest money.
Non-refundable bidding entry fee @ 0.03% of tender cost may be revived and collected along with earnest
money read with non-refundable bidding entry fee @ 0.03% of the tender cost along with 02% earnest
money and stamp duty in shape of call deposit separately may be furnished (in original) to procuring entity
office as recommended by the sub-committee of the cabinet notified vide section officer (confidential) chief
Minister Secretariat KPK Peshawar No. SO(C)/CMS/KPK/2020-21, Dated 21-04-21.
2022-23, it was observed that tenders for the following developmental works were placed for bidding
through e-bidding system by the division. However, the requisite tender form fee / bidding entry fee @
Rs.0.03% of the tender cost amounting to Rs 5,099,379 was not recovered from the bidders which resulted
into loss of Rs. 5,099,379 to the government exchequer. Moreover, the local office did not maintain tender
register, which makes the whole tender process doubtful/ unauthentic.
563
The lapse occurred due to non-implementation of the instructions/ rules which resulted into loss to
the government of Rs. 5.099 million.

of this report.
PDP No. 73 (2022-23)
17.4.23 Overpayment to contractor due to execution of item of work other than approved in
TS – Rs. 1.076 million
According to Para-56 CPWD Code, T.S is guarantee that the proposals are structurally sound and
that the estimates are accurately calculated and based on adequate data read with Para-4.5 of B&R provides
that every officer making or ordering payment on behalf of Government should satisfy himself that the
work has been actually done in accordance with the bill submitted for payment. He should inspect
personally all the most important works before authorizing final payment, and should check the
measurements made by his subordinates.
During audit of the accounts of Executive Engineer Irrigation Division-2 Swabi for the Financial
Year 2021-22, it was observed that the sub work “Improvement and widening of Canal Patrol Road PMC
RD 77000 to 97000 in reaches” was awarded to the contractor at a bid cost of Rs 42.80 million. The
contractor was paid Rs 49.449 million up to 8th running bill vide Voucher No.10-P, dated 20.1.2022.
On further comparison of the bill quantities with TS and MB, it was observed that an item of work
i.e. “Formation of embankment from roadway excavation in granular material including compaction
modified AASHTO 90% by power roller” was provided in TS for a quantity of 2816.71/M3 to be executed
at site but on comparison of recorded entry at page 35 of MB No. 83, the same item of work was executed
as Road way excavation in surplus un-suitable common material for the same quantity to avoid the
deduction of the same from borrow excavated material paid for a quantity of 6167.10 M3. This has resulted
into an overpayment of Rs. 1,076,687/- (437.52 (-) 819.77 = 382.25 PM3 x 2816.71) to the contractor on
execution of item of work not approved in the TS.
When pointed out in August 2022, management did not furnish any reply.
564
Audit recommends recovery of the amount and action against the person(s) at fault.
PDP No. 11 (2021-22)
17.4.24 Non-whereabouts of the excavated material costing - Rs. 50.956 million
According to section 3.2.1.1, 3.2.4 & 3.9.5.2 of the Technical Specifications 2020 for
conducting appropriate laboratory tests. The materials obtained from the excavations may be disposed of
in any of the following manners: -
i. Finds like antique relics, coins, fossils, which normally cannot be used in the work or
deposited with Government store under directions of the Engineer in Charge.
ii. Suitable excavation material may be used in raising dams, embankments, ramps, rail
and road formations or refilling the voids of foundations after the erection of the
structure.
iii. Excavated material considered unsuitable for any of the above usages or rendered
surplus, is usually dumped in spoil banks properly dressed under the directions of the
Engineer in Charge.
During audit of the accounts of Executive Engineer Peshawar Canals Division Peshawar for the
Financial Year 2022-23, it was observed that contract for the “Silt Clearance of canals” was put to tender
and awarded to various Govt: Contractors and up to date payment of Rs. 50.956 million was allowed.
Out of the excavated material, nothing was shown used/sold in the open market by the local office.
Whereabouts of the excavated silt material quantity of valuing Rs. 50.956 million was not known in
violation of the above instructions which states that silt material shall remain the property of the
Government and surplus excavated material may be deposited with government store. Furthermore,
dumping site for silt material was also not shown to audit.
The lapse occurred due to weak monitoring & supervision of the site activities and non-enforcement
of the above provisions which resulted in loss to the government.
Audit recommends that inquiry should be initiated for fixing responsibility against person at fault
as well as recovery of the differential amount.
PDP No. 101 (2022-23)
565
17.4.25 Illegal enhancement of contract agreement - Rs.1651.960 million
According to KPPRA rule 2014, chapter III, clause C (i) & (v) sub clause c& d that the value of
variation order is not more than 15% of the original contract and there may be more than one variation
orders as long as the total value of all orders remain within 15% of the original contract.
During the audit of the accounts of Executive Engineer Peshawar Canals Division Peshawar for the
Financial Year 2022-23, it was observed that the work “Construction of flood embankment on right side of
the Kabul River (Reach-3) District Nowshera” ADP# 1210 (2014-15) was awarded to Haji Pasham Khan
Govt. Contractor at a bid cost of Rs.818.12 million being the lowest bidder in 2015-16 with a completion
period of 24 months and period of completion was extended further from time to time. The scheme was
later on enhanced from Rs.818.12 million to a bid cost of Rs.2470.08 million resulting a difference of Rs.
1651.96 million (2470.08-818.12) i.e. 201.92 % enhancement. vide letter No.366/79-M dated 01/12/2015
which is a violation of the above rule.
Audit is of the view that enhancement of work more that 15% of the total estimate is just to oblige
the contractor which needs justification.
The lapse occurred due to weak internal controls which resulted in violation of rules.
Audit recommends investigation of the matter for fixing of responsibility against the person at fault.
PDP No. 102 (2022-23)
17.4.26 Non-imposition of penalty on the contractors for delay in execution of works-Rs.

633.026 million
According to clause 2 of contract agreement executed with the contractor, liquidated damages for
delay equal to 1 % of the contract price per day subject to maximum of 10% of the contract price stated in
the letter of acceptance would be recoverable.
Financial Year 2022-23, it was observed that the following schemes were awarded to the Govt. contractors,
which should have been completed within their stipulated time frame as clearly mentioned in the work
order.
Vr. No. & Bid cost Penalty
Project Contractor Comm: date Compl: date
Date (M) @10% (M)
Construction of Flood structure Haji Pasham Khan Agr: #57 1261.431 14-10-2017 13-1-2019 126.143
along & Co dt:14-07-17
JabbaDaudzai&ZangalKoroona,
Shah Alam
566
Construction of Flood M/S CEMCON Agr:62dt: 1073.09 22-05-2018 21-05-2020 107.309
Embankment on Kabul River Pvt Ltd 22/5/18
Motorway Interchange
Construction of Flood Haji Pasham Khan Agr”48 dt: 17- 2311.67 15-01-2015 14-01-2017 231.167
Embankment on Kabul River & Co 12-2014
R/S (Reach-3)
Construction of Flood Haji Aurangzeb Agr:62 dt: 17- 849.18 13-01-2015 12-01-2017 84.918
Embankment on Kabul River Khan & Co 12-2014
R/S (Reach-2)
Construction of Flood Haji Aurangzeb Agr:63 dt: 17- 834.89 13-01-2015 12-01-2017 83.489
Embankment on Kabul River Khan & Co 12-2014
R/S (Reach-1)
Total 633.026
Audit held that instead of imposing penalty, extension was granted to these contractors again and
again and the extension period has exceeded the 72 months in the above schemes which inflicted a loss in
the shape of increase of salinity and conversion of fertile agricultural into barren land.
The lapse occurred due to weak internal control and violation of rules which resulted in loss to the
government.
When pointed out in August 2021-22, the management did not furnish any reply.
Audit recommends that penalty should be imposed on the contractors for over delaying the schemes
and the amount be recovered from them.
PDP No. 103 (2022-23)
17.4.27 Doubtful payment on account of clearing, grubbing and compaction of natural

ground - Rs. 8.897 million
According to para-1.58 of B&R code, Divisional officers are immediately responsible for proper
maintenance of all works in their charge and for the preparation of projects and of designs and estimates,
whether for new works or repairs. It is also part of their duties to organize and supervise the execution of
works and to see that they are suitable and economically carried out with materials of good quality.
Financial Year 2022-23, it was observed that “construction of Flood Embankment on Right side of Kabul
River Reach-3 was awarded to M/s Pasham Khan and was allowed an up-to-date payment of Rs. 2191.431
million up to 77th running bill including a sum of Rs.8.897 million on account of clearing and grubbing
and compaction of natural ground which was considered as loss to the Govt. because the said contractor
also executed excavation in foundation of building, bridges etc. Therefore, in the presence of execution of
later item of works, the expenditure of Rs. 8.897 million carries no justification. Moreover, in the MRS
567
dully approved by the competent forum, it is clearly mentioned that clearing and grubbing is included in
formation of embankment.
Item of work Rate Qty Amount in Rs.
Clearing & Grubbing 17.48 272523.162 4,763,704.87
Compaction of natural Ground 15.17 272523.162 4,134,176.37
Total 8,897,881.24
Audit held that execution of unnecessary item of works was allowed to oblige the contractor which
needs justification.
The lapse occurred due to weak internal controls and violation of rules.
When pointed out in 2022-23, the management did not furnish any reply.
Audit recommends investigating the matter for fixing of responsibility against the persons at fault
as well as recovery of Rs. 8.897 million.
PDP No. 104 (2022-23)
17.4.28 Misappropriation due to dumping of stone without proper utilization-Rs. 993.834

million
According to Para 23 of GFR Vol-I, every Government officer should realize fully and clearly that
his part and that he will also be held personally responsible for any loss arising from fraud or negligence
on the part of any other government officer.
Financial Year 2022-23, it was observed that local office allowed an aggregate amount of Rs. 993.834
million to different contractors on account of “supply and dump at site without boat i/c handling within 100
M stone or boulders”. The relevant record like MBs etc. was verified but neither further handling was made
nor Material At Site (MAS) accounts for future use of the dumped stones was maintained from which it
could be ascertained that the procures or supplied stone was subsequently utilized in the attached schemes.
Furthermore, all the schemes where in the item of work was shown carried out were the flood protection
works wherein such kind of dumping could not be done therefore, it was apprehended that the same or
value thereof misappropriated by the dealing hands. Some of the details and instances of the supply and
dumping of stone or boulders at site were attached. Besides RDs wise detail, original and work done x-
sections including cut and fill areas where the stone filling was executed were also not provided to Audit
for scrutiny.
Audit held that such like procurement without further proper use of stone is just the wastage of
public resources.
568
Misappropriation occurred due to non-observance of the rules and procedures which resulted into
When pointed out in 2022-23, no reply was furnished.
Audit recommends that to investigate the matter for fixing the responsibility and recovery of the
misappropriated amount from the person responsible.
PDP No. 107 (2022-23)
17.4.29 Loss to the government due to overpayment by allowing quantities other than
approved design/x-section- Rs. 19.611 million
Financial Year 2022-23, it was observed that the Executive Engineer overpaid Rs. 19.611 million to the
contractors by allowing quantities of item of work other than the approved BOQ in the work “Construction
of Flood Embankment on right side of Kabul River R-I & R-II”.
The lapse occurred due to weak internal control, which resulted in loss to Government.
Audit recommends recovery of the amount and fixing of responsibility against the person(s) at
fault.
PDP No. 108 (2022-23)
17.4.30 Overpayment to contractor due to incorrect composite rate determination –

Rs. 21.072 million
According to CSR-2012, the approved rates of the following items are given below:
S. Rate per
Item code Item of work
No. unit (Rs.)
1 06-05-h Plain Cement Concrete including placing, compacting,finishing & curing 5117.11
(Ratio 1:3:6)
569
2 06-12-a Extra labour for laying concrete (plain or reinforced) From20' upto 40' height 525.48
3 06-12-b Extra labour for laying concrete (plain or reinforced) Forevery extra10' 262.74
height
During audit of the accounts record of Planning and Construction Division Abbottabad, DG Small
Dams, Khyber Pakhtunkhwa for the financial year 2021-22, it was observed that contract for the
“Construction of Kiyala Dam, Abbottabad” was awarded to M/S Haji Pasham Khan Government
Contractor at the contract cost of Rs.706.411 million vide Acceptance No. 1773/SD/DG/136-D dated 27-
05-2013. The contract was awarded @ 16.13% rebate on the estimated cost of Rs.842.269 million based on
CSR-2012. A payment of Rs.655.834 million was made to the contractor till IPC No. 32 vide Voucher No.
13SD/09-06-2022.
The scrutiny of IPC No. 32 and its comparison with PC-I, TS and CSR-2012 revealed that a
composite rate for the maximum height of the dam i.e. 130 feet was determined for the execution of PCC
1:3:6 along with extra labour for a height up to 130 feet and the same maximum slab rate was applied on
the total quantity of the item executed from the height of 40 to 130 feet. This was contradictory to the
mechanism as laid down in the CSR-2012 for determination of rate for certain heights i.e. extra labour
charges @ Rs.525.48/M3 for a height of 20 – 40 feet and Rs.262.74/M3 for every 10 feet height to be added
to the base rate of Rs.5117.11/M3 for PCC 1:3:6. The uniform application of rate from 40 to 130 feet height
instead of bifurcating the height in to the slabs of 10 feet admissible height limit resulted in overpayment
of Rs.21.072 million as worked out in the enclosed statement.
It is further added that the same incorrect rate was given in the PC-I, BOQ and technical sanction
and during all these stages, the management / consultants failed to rectify the rate even not during allowing
payments to the contractor.
The lapse occurred due to defective estimations by the management and non-fulfillment of the
contractual obligations by the supervisory consultants which resulted in overpayment.
When pointed out in March 2023, the management stated that the detailed reply will be furnished
after scrutiny of record.
Audit recommends recovery from the contractor besides fixing of responsibility and action against
PDP No. 136 (2021-22)
17.4.31 Overpayment to contractor due to excess brought forward of the amount to the next EPC
570
According to Para 42 of the Central Public Works Account Code, the responsibility for the
correctness, in all respects, of the original records of cash and stores, receipts and expenditure, as
also for seeing that complete vouchers are obtained rests with the Divisional Officer, who will,
before submitting the monthly accounts, carefully examine the books, returns and papers from
which the same are compiled.
“Construction of Kiyala Dam, Abbottabad” was awarded to M/S Haji Pasham Khan Government
Contractor at the contract cost of Rs.706.411 million vide Acceptance No. 1773/SD/DG/136-D dated 27-
05-2013. The contract was awarded @ 16.13% rebate on the estimated cost of Rs.842.269 million based on
CSR-2012. The contractor was paid escalation of Rs.58.182 million till EPC No. 9 based on IPCs No. 1 –
29.
The scrutiny of EPC No. 1 to 7 and 9 revealed that incorrect and excess amount was brought
forward to the next EPCs which enhanced the amount required for payment in the current EPC and
ultimately led to overpayment of Rs.8.238 million.
Audit held that once escalation claim was calculated against a particular IPC keeping in view the
work done value and base / current rates and paid accordingly then how the same amount was enhanced in
the next EPCs?
consultants and weak internal controls by the management which led to overpayment.
Audit recommends immediate recovery of overpaid amount from the contractor and action against
PDP No. 137 (2021-22)
17.4.32 Overpayment to the contractor due to allowing quantities in excess of 3rd time revised
PC-I provisions – Rs. 22.872 million
According to section 4.1 & 4.13 of Manual for Development Project issued by Planning
Commission of Pakistan, the physical and financial scope of a project, as determined and defined in the
project document (PCI), is appraised and scrutinized by the concerned agencies before submitting it for
approval of the CDWP/ECNEC. Once approved by the competent authority the executing agency is
571
supposed to implement the project in accordance with the PC-I provisions. The project preparation has
continued to suffer from the weaknesses i.e. inadequacy of data, unrealistic cost estimates, over-estimation
of benefits, lack of coordination with the related agencies, incorrect assumption of availability of inputs,
lack of proper implementation schedule. To avoid cost over-runs and repeated revisions of the scheme, it
is extremely important that a project is prepared with due care and based on surveys, investigations and
feasibility studies, the time taken in its examination (and also execution) will be greatly reduced.
“Construction of Jhangra Dam, Abbottabad” was awarded to M/S Muhammad Khel Government
Contractor at the contract cost of Rs.381.574 million vide Work Order No. 292/DD(P&C) dated 20-02-
2013. The contract was awarded at the rebate rate of 0.10% below on the Engineer’s estimate. A payment
of Rs.625.061 million was made to the contractor till IPC No. 28A vide Voucher No. 24SD/16-03-2022.
The scrutiny of record revealed that the PC-I of the project was revised from original to 3rd time
revised PC-I and resultantly the cost of the project enhanced to Rs.698.17 million from the original
approved cost of Rs.381.574 million. Comparison of the IPC No. 28A with 3 rd time revised PC-I revealed
that excess quantities were allowed against the certain items despite the fact that all the site requirement
were already incorporated during revision of the PC-I. The payments on account of quantities in excess of
3rd time revised PC-I was in contradiction to the certificate by Engineers that the quantities and rates have
been checked and found correct. This resulted in overpayment of Rs.22.872 million as worked out below:
S. Item of work Qty Qty Excess Rate per Overpayment
No approved paid paid Qty. unit (Rs.) (Rs.)
1 Reinforced cement concrete (06-06- 5195.39 5400 204.61 8394.84
1,717,668
d-03)
2 MS Reinformed G-60 (06-07-b) 389.61 403.702 14.092 118397.38 1,668,456
3 Structural backfill using common 2466.68 4949.95 2483.27 295.8
734,551
material at side (03-60-c)
4 P/F # 10 anchor bars etc. (NSI) 3500 9250 5750 3000 17,250,000
5 PCC 1:3:6 40% boulders (06-36-b) 0 414.22 414.22 3490.25 1,445,731
6 Formwork (06-38-b) 0 137.87 137.87 406.72 56,074
Total 22,872,480
The lapse occurred due to weak internal controls which resulted in overpayment to the contractor.
Audit recommends recovery of overpaid amount from the contractor and fixing of responsibility
572
PDP No. 138 (2021-22)
17.4.33 Overpayment due to allowing duplicate items - Rs. 295.006 million
According to para-23 of G.F.R. Vol.I, every government officer is responsible for any loss
sustained by the public exchequer through fraud or negligence on his part or on the part of his
subordinates.
During annual audit of the accounts record of the Planning and Construction Division Abbottabad,
DG Small Dams for the Financial Year 2021-22, it was observed that contract for the work “construction
of Ichar Nullah Dam district Mansehra” awarded to M/S Kasteer International vide work order No.
4651/SD/GD/7-G(i) Ichar Nullah dated 13.09.2017 with a bid cost of Rs. 846.71 million (9.9% above MRS-
2016) against the total estimated cost of Rs. 770.438 million.
Scrutiny of bill No. 32 SD dated 16.6.2022 based on IPC No. 14 dated 27.04.2022 revealed that
incorrect rate of Rs. 5488.17/m3 for an item (06-05-h+06-12-a) “providing, placing and compact, roller
compacted concrete 2000 psi in spillway overflow section etc; vertical height 20 to 150ft” was applied in
the PC-I and upto 13th IPC. The rate was corrected to Rs. 6258.94/m3 in the revised PC-I and accordingly
in the IPC-14 and payment was made to the contractor on the corrected rates. However, the payment already
made on the incorrect rates was not adjusted/recovered from the contractor which resulted into overpayment
of Rs. 295.006 million as detailed below:
S. No Item of work Qty paid Rate Amount
1. Providing, placing and compact, roller compacted 12528.36 5885.45 73735036.4
concrete 2000 psi in spillway overflow section etc;
vertical height 20 to 40ft
2. -do- 40-50ft 6021.50 5488.17 33047015.7
3. -do- 50-60ft 5608.51 5488.17 30780456.3
4. -do- 60-70 ft 5273.67 5488.17 28942797.5
5. -do- 70-80 ft 5043.11 5488.17 27677445.0
6. -do- 80-90 ft 4665.56 5488.17 25605386.4
7. -do- 90-100 ft 4038.93 5488.17 22166334.5
8. -do- 00-110 ft 3339.26 5488.17 18326426.6
9. -do- 110-120 ft 2751.04 5488.17 15098175.2
10. -do- 120-130 ft 2109.59 5488.17 11577788.6
11. -do- 130-140 ft 1298.11 5488.17 7124248.4
12. -do- 140-150 ft 168.56 5488.17 925085.9
Total 295006196.5
The lapse occurred due to weak internal controls.
573
Audit recommends immediate recovery.

PDP No. 139 (2021-22)
17.4.34 Overpayment to contractor due to allowing escalation against unspecified items – Rs.
89.480 million
According to Standard Procedure and formula for price adjustment, Pakistan Engineering Council
March 2009 edition, Part-2 Formula (3) & Parameters 1 (f) provides that, the specific elements for
highway and building construction would typically be HSD, Labour unskilled, Cement, Steel and
Bitumen. While computing Price Adjustment, base and current prices of the representative
elements have to be used in the same way as they are mentioned in the PEC bidding documents.
For example, Grade-40 half inch dia Steel is the representative cost element for all types of steel;
similarly un-skilled labour is the representative cost element for all types of labour etc.
During audit of the accounts record of Planning and Construction Division Abbottabad, Peshawar,
Kohat and Mardan, DG Small Dams, Khyber Pakhtunkhwa for the financial year 2021-22, it was observed
that under the following contracts, the contractors were paid escalation against unspecified/ inadmissible
items i.e. Skilled Labour and Plant & Machinery of the contractor which was in contradiction to PEC
guidelines as escalation was not admissible on the skilled labour. Similarly, Plant & Machinery is the asset
of the contractor not a consumable item in the project. The payment of escalation for these 02 inadmissible
components resulted in overpayment of Rs.89.48million as summarized below:
S. Name of work Contractor EPC Total Escalation paid against Total Para
No. No. Escalation inadmissible components Overpayment No.
paid Skilled Plant &
Labour Machinery
10% 17%
1 Construction of Chapra M/S National RCC 02 37.841 10.217 05
Dam, Haripur Works 10% 17%
2 Construction of Kiyala M/S Haji Pasham 09 58.182 15.127 10
Dam, Abbottabad Khan 10% 16%
3 Construction of M/S Haji Pasham 07 59.680 16.505 28
Latambar Dam Karak Khan 10% 17%
4 Construction of Satti M/S Bannu 05 6.888 15% - 1.505 33
Kalli Dam Bannu Construction
5 Construction of Bada M/S Sarwar 07 270.971 10% 17% 8.423 47
Dam Swabi Construction
6 Construction of Marobi M/S Atif Khan 03 117.940 15% 17% 37.703 58
Dam in district Khattak
Nowshera
Total 551.502 89.48
574
Furthermore, fixed portion was kept on the minimum level of 35% and variables portion at 65%
which favored the contractor. it was also not known that how the base and current rates were determined
for the plant and machinery of the contractor with respect to the current condition of the plant & machinery.
The lapse occurred due to weak management / supervision of the project by the supervisory
consultant / management and violation of the PEC guidelines which resulted in overpayment to the
contractor.
Audit recommends recovery of overpaid amount from the contractor and action against the
person(s) at fault.
PDP No. 140, 145, 163, 168, 182 & 193 (2021-22)
17.4.35 Overpayment due to allowing inadmissible items to enhance the rate -

Rs. 49.147 million
According to page 24 of the revised PC-I of the PSDP “Construction of small dams in district
Mansehra” sub-work “Construction of Manchura Dam project district Mansehra” the construction materials
for the embankment are available in the vicinity of the project area which will be obtained from excavation
and borrow areas.
of Manchura Dam district Mansehra” awarded to M/S Khyber Grace Pvt. Work order No. 5158/SD/DG/7-
G (i)/Manchura dated 17.11.2017 with a bid cost of Rs. 1415.63 million (10.5% below on MRS-2016)
against the total estimated cost of Rs. 1581.709 million.
Scrutiny of bill No. 1-SD dated 02.9.2021 revealed that a sum of Rs. 90,761,071/- was paid for
execution of an item of work in the main dam embankment “Provide, Place and compact course filter in
chimney drain vertical/horizontal on down stream of fine filer including leveling moistening and screening
etc” for a quantity of 48,789 cubic meter @ Rs. 1860.28 per Cu-M.
The original rate of the item as per MRS-2016 was Rs. 852.99 and a quantity of 68,766/- was
estimated for the item in the original PC-I. However, in the revised PC-I the rate was enhanced to Rs.
1860.33 by adding various transportation leads upto 46kms.
Audit held that the original rate was a composite rate of the item including cost of provision of
material to the site along with labour, equipment’s (water tank, front end loader, dump truck) and overhead
575
charges as such transportation lead etc; was the responsibility of the contractor but the management
enhanced the rate in the revised PC-I through addition of extra transportation lead of 46kms which was un-
justified. Moreover, as per the PC-I all the material for embankment were available in the project vicinity
and payment of lead upto 46kms was beyond understanding. This resulted into an overpayment of Rs.
49,147,041/- as per details below.
Rate Required Rate Paid Difference Qty Overpayment

852.99 1860.33 1007.34 48,788.93 49,147,041
The lapse occurred due to financial mis-management.
Audit recommends recovery of overpaid amount from the contractor and action against the
person(s) at fault.
PDP No. 141 (2021-22)
17.4.36 Overpayment to contractor due to allowing quantity beyond the approved scope of
work in the revised technical sanction – Rs. 21.175 million
According to Para 56 and 73 of the CPWD Code, in cases where a substantial section of a project
sanctioned by a higher authority than himself has been abandoned, or where material deviations
from the original proposals are expected to result in substantial savings, the Superintending
Engineer must revise the amount of the estimate and intimate both to the Audit Officer and to the
Divisional Officer that the amount of the expenditure sanction should be reduced accordingly. As
its name indicates, it amounts to no more than a guarantee that the proposals are structurally sound,
and that the estimates are accurately calculated and based on adequate data.
“Construction of Chapra Dam, Haripur” was awarded to M/S National RCC Works Pvt. Ltd. at the contract
cost of Rs.659.986 million vide Acceptance No. 3551/SD/DG/7-G(i)/Chapra dated 05-04-2017. The
contract was awarded @ 10% rebate on the estimated cost of Rs.733.318 million. A payment of Rs.264.241
million was made to the contractor till IPC No. 16 vide Voucher No. 21SD/09-06-2022.
The project cost was revised several times for adjustment of cost due to rebate of the contractor
(10%), inclusion of certain unforeseen item, increase/ decrease of certain items as per actual site
requirements as per following cost break up:
576
(Rs. in million)
Approved PC-I
Approved Estimated Cost Approved Bid Cost Revised Estimated Cost
Cost
888.873 817.041 659.986 974.786
The scrutiny of IPC No. 16, PC-I, original estimated cost and revised detailed cost estimates
revealed that an item of work “PCC 1:2:4” up to 20’ height was originally provided in the PC-I/ estimates
with a quantity of 11691 M3. However, during course of execution, the quantity of item was optimized /
reduced to the extent of 1994.83 M3 from 11691 M3 as per site requirement. Contrarily, the said item was
paid for a quantity of 5128.16 M3. This resulted in overpayment of Rs.21.175 million to the contractor due
to allowing quantity in excess of actual site requirement as worked out below:
Qty. paid till IPC Qty. optimized as per site Excess Qty. Rate per M3 Overpayment (Rs.)
No. 16 requirement
5128.16 M3 1994.83 M3 3133.33 M3 6758.12 21,175,420
Furthermore, the revised technical sanction was accorded in August 2022 while the above excess
quantity was paid till June 2022, indicated that excess quantity was allowed prior to approval of the revised
technical sanction. The quantity in excess of the site requirement was unjustified and was an overpayment.
The lapse occurred due to weak internal controls on the part of the management and non-fulfillment
of the contractual obligations by the supervisory consultants which resulted in overpayment.
Audit recommends recovery from the contractor besides fixing of responsibility and action against
PDP No. 142 (2021-22)

17.4.37 Wasteful expenditure due to selection of disputed site - Rs. 743.665 million
According to planning commission manual for developmental project serial No.(iii) Reasons for
selection of location. In this connection it may be noted that many projects have suffered tremendously in
the past from cost over-runs and delay in implementation due to hasty selection of site. The project also
suffers due to delay in acquisition of land. Therefore, the availability of land needs to be assured. In
selecting the location, area and population to be served by the project, the income and social characteristics
of the population will have to be kept in view. Similarly, the economic characteristics of the area i.e. present
facilities and availability of inputs and regional development needs will also have to be taken into
consideration.Read with para 86 of the CPWD code, when land is required for public purposes the officer
of the Public Works Department should, in the first instance, consult the Chief Revenue Officer of the
577
district, and obtain from him the fullest possible information as to the probable cost of the land, together
with the value of buildings, etc., situated on the property, for which compensation will have to be paid. The
information thus obtained, an estimate should be framed by the Public Works officer and submitted for
sanction.
against the total estimated cost of Rs. 1581.709 million with completion in 730 days. A sum of Rs. 743.665
million were shown paid to the contractor vide Vr No. 1-SD dated 02.09.2021. However, it was observed
that:
1. The progress report of the project showed that the work on the dam had stopped since
Januarry-2021 due to land issues with only 66% completion.
2. A law suit was also filed against the Government by the locals for illegal occupation of
their land by the local administration.
3. Audit held that wasteful expenditure of Rs. 743.665 million has been incurred due to
selection of disputed site because on one hand the fate of the project depends on the
decision of the court and on the other hand the construction work has stopped from the last
two years and the work already carried out is losing its value day by day due to
environmental effects.
4. Moreover, cost overrun on account of contractor escalation and consultant due to enormous
delay in the completion of the project will put extra burden on the public exchequer besides
depriving the general public from the benefits of the project.
Audit recommends enquiry for fixing responsibility.
PDP No. 143 (2021-22)
17.4.38 Overpayment to contractor due to irregular payment as per CSR-2012 instead of

CSR-2008 – Rs. 69.817 million

Cell Notifications endorsed with each of the CSR/ MRS “All the departments generally and Nation Building
578
Departments shall especially follow the new MRS Document for preparation of PC-I and execution of
works in the province by observing the following criteria:
i. The rates of newly updated MRS will be applicable on unapproved schemes only.
ii. Projects already approved by respective competent forum shall be immediately put to
tender without its revision on new MRS.
iii. Projects already approved by respective competent forum shall be immediately put to
tender without its revision on new MRS.
“Construction of Jhangra Dam, Abbottabad” was awarded to M/S Muhammad Khel Government
Contractor at the contract cost of Rs.381.574 million vide Work Order No. 292/DD(P&C) dated 20-02-
2013. The contract was awarded at the rebate rate of 0.10% below on the Engineer’s estimate. The scrutiny
of record revealed that the PC-I of the project was revised from original to 3 rd time revised PC-I and
resultantly the cost of the project enhanced to Rs.698.17 million from the original approved cost of
Rs.381.574 million. The contractor was paid Rs.625.061 million till IPC No. 28A vide Voucher No.
24SD/16-03-2022.
The scrutiny of pre-bid meeting minutes held on 29-11-2012 revealed that estimates/ PC-I of the
project was prepared on CSR-2008, accordingly PC-I was approved and NIT was floated. The bidders also
sought clarification about admissibility of CSR during the pre-bid meeting and the chair informed that the
competent forum i.e. PDWP approved the PC-I which was based on CSR-2008, hence, the bidders may
quote bids as per site and their observations on workable prices. However, IPC No. 28-A revealed that all
the items were paid on CSR-2012 which was gross violation from the approved parameter of the PC-I and
resulted in overpayment of Rs.69.817 million approx. (698.17 million x 10%) as the rate of CSR-2012 are
10% higher than CSR-2008.
Furthermore, in case revised PC-I was approved from the PDWP forum based on updated CSR
then how the contract was awarded to the same contractor without rebidding process.
The lapse occurred due to mismanagement of the project activities which resulted in irregular
payment as well as overpayment to the contractor.
Audit recommends to inquire the matter and ensure recovery due to payment of work on CSR-2012
instead of CSR-2008.
579
PDP No. 146 (2021-22)
17.4.39 Abnormal and un-justified increase in the cost of a project despite substantial rebate
rate - Rs. 200.536 million
According to clause-73 of CPWD code, where material deviations from the original
proposals are expected to result in substantial savings, the Superintending
Engineer must revise the amount of the estimate and intimate both to the Audit
Officer and to the Divisional Officer that the amount of the expenditure sanction
should be reduced accordingly.
DG Small Dams for the Financial Year 2021-22, it was observed that PC-I of the project “Construction of
Chamak Maira Dam, District Abbottabad” was approved with an estimated cost of Rs. 1130.538 million
with completion in 24 months. The contract for civil work portion was awarded to M/S Raja Adalat Khan
& Sons vide work order No. 3016/DD/(P&C)/Chamak Maira Dam dated 02.11.2021 with a bid cost of Rs.
775.8099 million (19.34% below on Schedule and 30.20% below on Non-schedule items on MRS 2017)
against the total cost of Rs. 975.0910 million.
The detailed estimates (T.S) was required to have been prepared on the basis of the reduced amount
of Rs. 929.556 million but rather, exaggerated quantities and cost of items were added just to adjust the
savings of Rs. 200.536 million made in the civil work portion of the dam due to the rebate of the contractor.
Such as:
i. The cost of the relocation/Access road was enhanced from the PC-I cost of Rs. 25.621
million to Rs. 67.767 million by adding exaggerated quantities of excavation and RRM
which was not included in the original PC-I. Hence the scope of work was changed on the
plea that the same has been done on the request and demand of the locals in support of
which nothing was available on record.
ii. The cost of land acquisition was enhanced from Rs. 62.901 million to Rs. 92.500 million
on the plea that the same has been done keeping in view the cost of land of the other same
nature projects in the district which is not justified specially when it was claimed by the
management in the T.S that the locals have agreed to provide the land free of cost for the
access road.
iii. The cost of consultancy supervision was increased from Rs. 24.164 million to Rs. 47.126
million on the presumption that the scheme will not be completed in the self determined
stipulated time period of 24 months duly incorporated in the contract agreement, which is
un-justified and un-professional.
iv. Against the provision of 6.5% escalation/price adjustment percentage of the PC-I
amounting to Rs. 63.381 million, the cost of the escalation was enhanced to Rs. 197.884
million which is more than 20% of the cost on the assumption that the price of the material
580
will increase many folds in future. This is un-justified and against the provision of the PC-
I price adjustment limit and in contradiction with section 4.12 of the Planning Commission
Manual for Developmental project wherein it is categorically mentioned that the executing
agency should implement the project in accordance with PC-I provisions and has no
authority to change/modify the main approved parameters of the project on its own.
The lapse occurred due to estimation on exaggerated quantities and cost of items.
Audit recommends to inquire the matter for fixing of responsibility and recovery of the cost due to
unnecessary cost enhancement.
PDP No. 147 (2021-22)
17.4.40 Overpayment due to allowing premium and location factor on Non-Schedule Items -
Rs. 3.905 million
According to Khyber Pakhtunkhwa Public Procurement Regulatory Authority letter No.

KPPRA/M&E/Suggestions/4-16/2014-15/540 dated 22.05.2015, the departments are advised to
rationalize/revise the cost estimates in PC-1s after careful market analysis by bringing them down for
justification and matching to the market rates, needs and availability in light of the instructions issued by
Chief Minister vide letter No. SO.III/CMS/KPK/5-1/2015/P&D Department/3034-35 dated 02.03.2015.
of Ichar Nullah Dam district Mansehra” awarded to M/S Kasteer International vide work order No.
4651/SD/GD/7-G(i) Ichar Nullah dated 13.09.2017 with a bid cost of Rs. 846.71 million (9.9% above MRS-
2016) against the total estimated cost of Rs. 770.438 million.
Scrutiny of bill No. 32 SD dated 16.6.2022 based on IPC No. 14 dated 27.04.2022 revealed that on
overpayment of Rs. 3.905 million (detailed below) was made to the contractor due to the following reasons.
i. Premium of 9.9% was paid on the Non-Schedule Items which was un-justified as the rate
analysis of NSI items is done as per prevailing market rates. This resulted in overpayment
of Rs. 2,160,140/-
ii. Similarly, 8% location factor was also paid on the Non-Schedule Items which was also un-
justified as the location factor is applicable only on scheduled items. Thus, resulting into
overpayment of Rs. 1,745,568/-
581
S. No Item of work Unit Qty paid Rate Amount
1. 1 Supply and ifx steel rack Nos 01 60000 60000
2. 2 28” dia steel gate wall Nos 01 3782000 3782000
3. 3 Drilling 4” dia bore for grout curtain M 621.76 4500 2797920
4. 4 Providing and filling cement slurry /bentonite Bags 1122 1200 1346400
grout
5. 5 Providing and placing 3” perforated pvc pipe in M 586 270.73 158647.8
standard gravel shrouding course
6. 6 Drilling 4” dia bore hole consolidation grouting M 1142.94 4500 5143230
7. 7 Providing and filling cement slurry/bentonite Bags 750 1200 900000
grout
8. 8 Providing and filling no. 8 anchor bars i/c cost of M 1097.23 5137.54 5637063
steel drilling etc;
9. 9 Drilling 6” dia hole for relief wells M 365.75 4500 1645875
10. 10 Providing and laying cut joint test disinfect pvc M 365.75 788.70 288467
pipe 4”
11. 11 Supply and fix steel trash track Nos 01 60000 60000
Total 21,819,602.8
A: Premium 9.9% 2,160,140
B: Area factor 8% 1,745,568
Total overpayment (A+B) 3,905,708
The lapse occurred due to financial mis-management which resulted in overpayment to the
contractor.
Audit recommends recovery from the contractor and fixing of responsibility against the person(s)
at fault.
PDP No. 150 (2021-22)
17.4.41 Overpayment due to allowing location factor on Non-Schedule Items -

Rs. 5.831 million
According to Finance Department CSR cell Notification No.FD/CSR cell/1-7/rates/2016 dated

8.4.16, location factors for various areas were notified to be applied on schedule items.
582
Scrutiny of bill No. 1-SD dated 02.9.2021 revealed that 8% location factor was paid on Non-
Schedule Items which was un-justified as the location factor is applicable only on scheduled items. This,
resulted into overpayment of Rs. 5,831,996/-as per details below.
S. No Item of work Unit Qty paid Rate Amount

1. 1 Drilling 4” dia bore for medium and hard rock Rft 2820 4500 12690000
2. 2 Providing and filling cement slury through bore Bags 643 1200 771600
hole including pressure test
3. 3 Grouting of bentonite cement slurry in 910mm M 3056.08 10,265.39 31371853
dia bore
4. 4 Relief holes 4” dia in medium hard rock Rft 6237 4500 28066500
Total 72899953
Overpayment (8% location factor) 5,831,996
The lapse occurred due to financial mis-management.
at fault.
PDP No. 152 (2021-22)
17.4.42 Overpayment due to execution of excess quantity of relief holes over and above the
approved design - Rs. 2.146 million
According to the revised PC-I of the project “construction of Manchura Dam district Mansehra, the
drawings/design of drainage arrangement plan showed a quantity of 384 numbers of relief holes 4” in
medium hard rock, with the depth of 15 feet along the spillway. Accordingly, a quantity of 5760 Rft @
Rs.4500 per Rft amounting to Rs. 25.920 million was approved.
583
Scrutiny of bill No. 1-SD dated 02.9.2021 with the revised PC-I revealed that the drawings/design
of drainage arrangement plan showed a quantity of 384 numbers of relief holes 4” in medium hard rock,
with the depth of 15 feet along the spillway. Accordingly, a quantity of 5760 Rft @ Rs.4500 per Rft
amounting to Rs. 25.920 million was approved.
However, excess quantity of item was paid in contradiction to the approved drawings/design thus resulting
into an over payment of Rs. 2.146 million.
Qty required Qty paid Diff Rate Amount
5,760 Rft 6,237 Rft 477 4500 2,146,500
at fault.
PDP No. 154 (2021-22)
17.4.43 Overpayment due to application of incorrect unit of measurement -

Rs. 28.327 million
According to serial No.3.16.9 and 3.16.10 of the bidding documents of the work “Manchura Dam
project” payment will be made for the number of cubic meter measured as provided at the contract unit
price per cubic meter for Slush grout and Grout curtain. Read with bill No. 32SD dated 16.6.2022 of the
project “Construction of Ichar Nullah dam district Mansehra” awarded to M/S Kasteer International vide
work order No. 4651/SD/GD/7-G(i) Ichar Nullah dated 13.09.2017 with a bid cost of Rs. 846.71 million
(9.9% above MRS-2016) against the total estimated cost of Rs. 770.438 million. The cost of the project
was enhanced to Rs. 1,847.441 million in the revised PC-I in September-2021 where in the following NSI
items were paid @Rs. 4500 per cubic meter.
S. No Item of work Unit Rate
1. Drilling 4” dia bore hole for grout curtain in rock M 4500
2. Relief holes 4” dia in medium hard rock M 4500
584
Scrutiny of bill No. 1-SD dated 02.9.2021 that the quantities of the following NSI items were paid
in Rft instead of converting them in Cubic Meter as was done in the above mentioned Ichar dam project
which was approved and revised in the same years on MRS-2016. Audit held that the rates of the NSI were
determined keeping in view the market rates. How the rate of the same NSI items was done in the same
years with the same MRS in same area, but with different units of measurements due to which the per cubic
meter rate of the item was enhanced many folds resulting into an overpayment of Rs. 28,327,500/-
S. Item of work Unit Qty Qty Rate Amount Amount Diff

No paid in required required paid
Rft in cubic
meter
1 Drilling 4” dia bore hole Rft 2820Rft 860m 4500 3,870,000 12,690,000 8,820,000
for grout curtain in rock
2 Relief holes 4” dia in Rft 6237Rft 1902m 4500 8,559,000 28,066,500 19,507,500
medium hard rock
Total 12429000 40,756,500 28,327,500
at fault.
PDP No. 155 (2021-22)
17.4.44 Less deduction/ deposit of Income Tax – Rs. 82.068 million
According to Para 1.62 of the West Pakistan Buildings & Roads Department Code applicable to
all departments of Buildings, Road, irrigation, Communication, the Divisional Officer is
responsible for the correctness in all respects, of the original records of cash and stores, receipts &
expenditure and for seeing that complete vouchers are obtained. The Divisional Accountant is
responsible to the Divisional Officer for the correct compilation of the accounts of Division from
the data supplied to him.
Dams, KhyberPakhtunkhwa for the financial year 2021-22,it was observed from the comparison of the
585
expenditure reported for the year and income tax deducted/deposited during the year that income tax was
less deducted/ deposited for Rs.82.068 million as elaborated below:
S. Income Tax Income Tax req. Less deduction of
Month Expenditure (Rs.)
No deducted (Rs.) @ 7% (Rs.) I/ Tax (Rs.)
1 Jul-21 - - - -
2 Aug-21 138,489,635 9,751,554 9,694,274 (57,280)
3 Sep-21 227,699,237 7,707,819 15,938,947 8,231,128
4 Oct-21 - - - -
5 Nov-21 28,693,489 1,015,602 2,008,544 992,942
6 Dec-21 76,682,730 2,486,067 5,367,791 2,881,724
7 Jan-22 2,947,279 84,098 206,310 122,212
8 Feb-22 40,308,573 2,751,387 2,821,600 70,213
9 Mar-22 396,175,664 7,335,871 27,732,296 20,396,425
10 Apr-22 510,822,263 7,679,262 35,757,558 28,078,296
11 May-22 55,478,068 3,946,121 3,883,465 (62,656)
12 Jun-22 457,772,943 10,628,672 32,044,106 21,415,434
Total 1,935,069,881 53,386,453 135,454,892 82,068,439
The lapse occurred due to financial mismanagement which resulted in loss to the government due
to less-deduction/ deposit of income tax.
Audit recommends recovery / deposit of income tax in to government treasury.
PDP No. 157 (2021-22)
17.4.45 Overpayment to the contractor due to allowing higher rate through V.O. despite
availability of rate in MRS, BOQ and PC-I – Rs. 6.359 million
According to section IB.12 – Bid Prices of the Bidding Documents, unless stated otherwise in the
Bidding Documents, the contract shall be for the whole of the works as described in sub-clause
1.1 hereof, based on the unit rates and / or prices submitted by the bidders.
During audit of the accounts record of Planning and Construction Division Kohat, DG Small Dams,
KhyberPakhtunkhwa for the financial year 2021-22,it was observed that contract for the “Construction of
Latambar Dam, Karak” was awarded to M/S Haji Pasham Khan & Co. at the bid cost of Rs.591.461 million
586
vide work order No.525/DD(P&C)/SD/32-D dated 20-10-2016. The award of contract was made at the
premium rate of 8.75% above on the estimated cost of Rs.543.873 million which was based on MRS-2015.
A payment of Rs.555.601 million was made to the contractor till 35th running bill vide Voucher No. 7C/08-
03-2022.
The scrutiny of 35th running bill and its comparison with PC-I, BOQ and MRS-2015 revealed that
the below mentioned schedule item was given in the PC-I, BOQ duly signed by the contractor and MRS-
2015 @ Rs.10,593/M3. However, the rate of the agreed item was enhanced through variation order which
was incorrect and led to overpayment of Rs.6.359 million as worked out below:
Item Admissible
Paid Excess
code rate as per Qty paid
Item rate rate
MRS- PC-I, BOQ M3
(Rs.) (Rs.)
2015 and MRS
Reinforced cementconcrete work as in
dams,spillways,weirs,barrages, cross drainageworks and
other hydraulicstructures using crushedstone
aggregate(screening &washing)and coarse sand 5328.60
06-06- i/ccostofall labour and materialand all kinds of + 540.99
10,593 11560.24 967.24
d-03 formworks, molds, shutteringlifting/pumping, curing, =
rendering and finishing theexposed surface, cast in 5869.59
situ/precast excluding the cost ofsteel reinforcement and
labour for bending binding alsoexcluding cost ofadditives
which have to be paid separately.Type C (1:2:4)
Overpayment (5869.59 M3 x Rs.967.24) 5,677,302
Location Factor 3% 170,319
Sub-total 5,847,621
Premium8.75% 511,667
Total overpayment (Rs.) 6,359,288
When pointed out in March 2022, the management stated that the detailed reply will be submitted
Audit recommends recovery of overpaid amount from the contractor.
PDP No. 159 (2021-22)
17.4.46 Cost overrun due to deviation from the approved parameters of the approved PC-I –
Rs. 101.325 million
587
According to section 4.12 & 4.13 (Chapter-4) of the Manual for Developmental Project, Planning
project document (PC-I), is appraised and scrutinized by the concerned agencies before submitting it for
supposed to implement the project in accordance with the PC-I provisions. It has no authority to change
and modify the main approved parameters of the project on its own, beyond permissible limit of 15%.
However, if at some stage modifications/changes become imperative then project authorities should revise
the project and submit it for the approval of competent authority.
KhyberPakhtunkhwa for the financial year 2021-22,it was observed that contract for the “Construction of
Latambar Dam, Karak” was awarded to M/S Haji Pasham Khan & Co. at the bid cost of Rs.591.461 million
vide work order No.525/DD(P&C)/SD/32-D dated 20-10-2016. The award of contract was made at the
premium rate of 8.75% above on the estimated cost of Rs.543.873 million which was based on MRS-2015.
A payment of Rs.555.601 million was made to the contractor till 35th running bill vide Voucher No. 7C/08-
03-2022.
The scrutiny of 35th running bill revealed that the contractor was paid Rs.140.089 million for the
construction of the Asphaltic Road under “Access Road” component. Comparison with tendered BOQ and
approved PC-I revealed that provision of PCC road was approved at the cost of Rs.38.764 million not the
Asphaltic Road.
On inquiring, it was informed that design of the PCC road was modified to Asphaltic Road which
was covered in the Revised Technical Sanction granted on 25-07-2022.
Audit did not agree with the justification of the management on the following grounds:
i. PC-I being based on site survey and feasibility survey was prepared by the department
itself, accordingly, provision of PCC road was made and approved from the competent
forum i.e. CDWP. Later on, the PCC road was changed to Asphaltic Road and got
regularized through technical sanction from the Chief Engineer. The basic parameters
of the PC-I having cost overrun of Rs.101.325 million (140.089 – 38.764), was changed
without approval of the CDWP forum which was contradictory to the instructions
quoted above.
ii. 35th running bill quantities of “Access Road” were exactly reflected in the revised
technical sanction through copy-paste. This indicated that no site survey for design
suitability and soundness was conducted rather the items and quantities executed by
the contractors were paid and submitted for accord of technical sanction.
iii. Audit opines that in case PCC road was not feasible then why the same was proposed
in the PC-I which was duly approved and circulated for bidding process.
The lapse occurred due to violating the instructions of the Planning Commission, deviation from
the parameters approved by the CDWP which resulted in cost overrun of Rs.101.325 million.
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Audit recommends fixing of responsibility against the persons(s) at fault including Design and
Supervision Consultants and recovery of the cost overrun.
PDP No. 160 (2021-22)
17.4.47 Excess payment due to allowing excess lead for disposal of excavated material - Rs.
7.631 million
According to page 156 of the PC-I of the project “construction of Khattak Banda Dam District
Kohat, there was provision of 2.5 km lead included in the following items of work in Main Dam and
spillways.
S.No Code Description
1. 03-78-c Excavation for core trench of Dam Embankment/Spillway/Intake & Outlet
Structure and Irrigation System upto a minimum depth of 35 ft in shingle gravel
including removing of excavated material by machinery in 1 KM radius
2. 03-19-b, 03-20-a Disposal of excavated material within 1.5 KM
&b
During annual audit of the accounts record of the Planning and Construction Division Kohat, DG
Small Dams for the Financial Year 2021-22, it was observed that contract for the work “construction of
Khattak Banda Dam District Kohat” was awarded to M/S Kasteer International Pvt: Ltd vide work order
No. 478/DD/SD/40-D dated 16.12.2020 with a bid cost of Rs. 1079.0014 million, 13.70% below on MRS-
2019.
Scrutiny of the bill No. 10-C dated 27.5.2022 revealed that against the provision of total lead of the
excavated material of 2.5 km in the PC-I which was based on feasibility level design of dam & other
ancillary works keeping in view the regional geology, topography and actual requirements of the site, the
contractor was allowed 3.5 km lead which resulted into excess payment of Rs. 7.631 million as per details
below.
S.No Code Description Rate Slabs Total Remarks

per slab Rate
1 03-20-b Every 100m from 1000 29.25 05 146.25 Initial 1000m is already
to 1.5km included in item code No.
2 03-20-c Every 500m beyond 26.59 02 53.18 03-78-a
1.5km to 2.5 km
Required Rate 199.43
589
Rate Paid for 3.5km lead 252.61
Difference 53.18
Qty of disposed off material 143500
Excess payment 7631330
The lapse occurred due to weak contract management.
Audit recommends enquiry for fixing responsibility and effecting recovery at the earliest.
PDP No. 161 (2021-22)
590
17.4.48 Overpayment due to allowing premium on NSIs – Rs. 3.062 million
According to the Detailed Cost Estimate and Variation Order No. 02 of the project “Construction
of Satti Kalli Dam Bannu” read with IPC No. 30, the 9% contractor premium is applicable only on MRS
items. The location factor @ 3% is applicable except market rate items.
KhyberPakhtunkhwa for the financial year 2021-22, it was observed that contract for the “Construction of
Satti Kalli Dam, Bannu” was awarded to M/S Bannu Construction at the bid cost of Rs.752.59 million
against the estimate cost of Rs.690.457 million, vide work order No. 433/DD(P&C)/SD/31-D dated 26-08-
2016. The contract was awarded on the contractor’s premium of 9% on MRS items (MRS-2013). A
payment of Rs.602.098 million was made to the contractor till IPC No. 30 vide Voucher No. 11C/09-06-
2022.
Scrutiny of the IPC No. 30 revealed that 9% premium / 3% location factor was also calculated /
paid on the NSI/ market items despite clear notes in the TS and IPC No. 30 that 9% premium and 3%
location factor are applicable on MRS items. This resulted in overpayment of Rs. 3.062 million as worked
out in the enclosed statement.
consultants as well as weak internal controls by the management which resulted in overpayment to the
contractor.
Audit recommends recovery from the contractor besides fixing of responsibility.
PDP No. 162 (2021-22)
17.4.49 Excess payment due to allowing items of work with higher rates having no provision
in the PC-I - Rs. 9.588 million
According to page 156 of the PC-I of the project “construction of Khattak Banda Dam District
Kohat, the following items of work for excavation were included in Main Dam and spillways.
S.No Code Description Qty (m3) Rate Amount
1. 03-78-c Excavation for core trench of Dam 100,698.90 238.38 24,004,603
Embankment/Spillway/Intake & Outlet Structure and
Irrigation System upto a minimum depth of 35 ft in
shingle gravel including removing of excavated
material by machinery in 1 KM radius
591
2. 03-78-c Excavation for core trench of Dam 43,156.67 637.01 27,491,231
Embankment/Spillway/Intake & Outlet Structure and
Irrigation System upto design depth in medium
hardrock requiring 50% blasting including removing
of excavated material.
Total 51,495,834
2019.
Scrutiny of the bill No. 10-C dated 27.5.2022 revealed that a sum of Rs. 21,338,680/- was shown
paid for an item of work “Excavation for core trench of Dam Embankment/Spillway etc; in medium hard
rock requiring 20% blasting including removing of excavated material” for a quantity of 49,292.4m3 @ Rs.
432.9 per m3. However, it was observed that:
i. The item was neither included in the PC-I nor in the BOQ and was later on included in the
revised T.S by decreasing the quantity of less costly item of excavation i.e. “in shingle
gravel” having rate of Rs. 238.38m3.
ii. Audit held that PC-I was based on feasibility level design of the dam and prepared after
detailed geology and geotechnical investigation of the command area ascertained after
detailed surface geological mapping and borehole drilling along the proposed dam axis and
spillway site. Hence the quantities and items of work were selected for excavation keeping
in view the terrain of the region.
iii. By including an item of work of excavation having higher rate neglected the geotechnical
investigation of the region due to which on one hand the total cost of excavation has
increased from 51.495 million to 63.625 million and on the other hand resulted into excess
payment of Rs. 9.588 million in the current bill as per details below.
iv.
Item Rate Pai Diff Qty Excess
required d payment
(shin (20
gle gravel) %
blasting)
Excavati 238.3 432 194. 49,29 9,588,3
on 8 per m3 .9 per m3 52 2.4 58
592
Audit recommends inquiry for fixing responsibility and effecting recovery at the earliest.
PDP No. 167 (2021-22)
17.4.50 Wasteful expenditure due to changing the original scope of work of access road from
the approved design - Rs. 17.813 million
According to planning commission manual for developmental project serial No. 3.1 The selection
of a sound project to achieve the given target of economic development in a particular sector is very
important for attainment of Plan objectives. Development projects, especially large and complex ones, often
meet with difficulties during their execution process. A feasibility study is, therefore, a pre-requisite for
preparation of a major development project on sound lines, and is not ruled out even for a minor one. It is
basically an in-depth "three-in-one" study consisting of the technical, financial and economic viability of a
project.
2019.
Scrutiny of the bill No. 10-C dated 27.5.2022 revealed that a sum of Rs. 17,813,743/- was paid for
an item of work in the access road “compaction of earth with power road roller 95% to 100% max AASHTO
dry density” for a quantity of 65,774m3 @ Rs. 270.83 per m3. However, it was observed that:
i. The item was neither included in the PC-I nor in the BOQ and was later on included in the
revised T.S by changing the original scope of work.
ii. The PC-I was based on feasibility level design of the dam and prepared keeping in view
the actual requirements of the site. The access road was designed as “Kacha” road mainly
involving excavation, granular sub-base using pit run gravel and protection walls on the
side of the road facing the brook as the site area is mostly sandy gravels and clay at places.
However, in the revised T.S the scope of the work was completely changed by neglecting
the terrain of the region. The above item was included and all the items of work relating to
protection walls were deleted.
iii. Audit held that huge expenditure on compaction of earth was merely wastage of funds
because on one hand retaining walls were excluded from the sides of the road to divert the
593
funds to compaction and on the other hand being Kacha Road, the soil will compress and
shear when load is applied to it with the passage of time so the compaction of such road is
useless that is why the item was not included in the original design.
Audit recommends inquiry for fixing responsibility and recovery at the earliest.
PDP No. 169 (2021-22)
17.4.51 Overpayment to the consultants due to allowing inadmissible components related to

main office – Rs. 3.145 million
According to Section 14 of the Standard Form of Bidding Documents for Procurement of

Consultancy Services, notified by KPPRA vide KPPRA/M&E/SBDs/1-1/2015 dated 03-05-2016,
the financial proposal shall list all costs associated with the assignment including remuneration for
the staff and reimbursable expenses.
KhyberPakhtunkhwa for the financial year 2021-22,it was observed that contract for the “Consultancy
Services for Feasibility Study, Detail Design and Construction of Satti Kalli Dam, Bannu” was awarded to
M/S Consulting Associates at the bid cost of Rs.19.720 million which was enhanced through multiple
variations to Rs.45.630 million. The record revealed that total payment of Rs.40.40 million was made to
the consultants till invoice No. 65 for the month of January 2022.
The scrutiny of invoice No. 65 revealed that an amount of Rs.3.145 million was paid to the
consultants for the office rent and utility charges of the Peshawar Office, in addition to Rs.6.915 million
being paid for the rent and utility charges of the site office at Bannu.
Audit held that the project was under construction in District Bannu and the payment of Rs.6.915
million as rent and utility charges of the site office for the supervisory consultants was justified, but payment
of Rs.3.145 million for the Peshawar office was illogical and unjustified and was held as overpayment. On
inquiring, it was informed that the same was in-line with the tender floated for the purpose which indicated
that defective provision of Peshawar office was made in the tender. The Peshawar office rent and utility
charges were the fixed expenditure of the consultant firm which was their own responsibility and the said
office was not dedicated to the instant project, as such its expenditure was inadmissible.
594
The lapse occurred due to defective BOQs and tender process which resulted in overpayment to
the consultants.
Audit recommends recovery of overpaid amount from the consultants.
PDP No. 170 (2021-22)
17.4.52 Loss due to less-recovery of excess paid premium - Rs. 16.572 million
According to clause-12.1 of the SBD Instruction for tenderers, unless stated otherwise in the tender
documents, the contract shall be for the whole of the works as described in sub-clause 1.1 based on the unit
rates and/or prices submitted by the tenderer.
Small Dams for the Financial Year 2021-22, it was observed that contract for the work “Construction of
Zamir Gul Dam District Kohat” was awarded to M/S Sarwar & Co. Pvt. Ltd vide letter No. 1730/SD/DG/10-
D dated 22.05.2013 with a bid cost of Rs. 670.840 million 24% above CSR-2008. The cost of the project
was enhanced to Rs. 987.77 million in the first revised PC-I and again to Rs. 1128.22 million in the 2 nd
revised PC-I. It was further noticed that:
i. During the tendering process NIT was floated initially for constructing of two dams i.e.
Kundal Dam Swabi and Zamir Gul Dam Kohat. Kundal dam was Earth Core Rock Filled
Dam (ECRD) and was awarded to M/S Sarwar Constructor at a premium of 19.5% above
CSR-2008. However, the Zamir Gul Dam being Concrete Gravity Dam (CGD) was
awarded at a premium of 24% on CSR-2008.
ii. The PC-I was initially approved for construction of Concrete Gravity Dam (CGD) at site
as per the feasibility study carried out by NESPAK but was later on changed to Earth Core
Rock Fill Dam (ECRD) in the revised PC-I due to technical reasons.
iii. As both the dams were put to tendering process in the same NIT hence it was later on
decided that as the type of the Zamir Gul Dam has also changed to ECRD the premium of
the contractor will be made at par with the Kumdal Dam i.e. 19.5%.
iv. Accordingly, deduction at 4.5% amounting to Rs. 14,478,775/- was made from the bill No.
6-C dated 09-06-2022 of the contractor of Zameer Gul Dam but only on few selected items.
v. Audit held that as the type of the dam was changed to ECRD then why the deduction of
excess premium was made only on selected items but rather was required to have been
595
recovered from all the items of work. Which was not done, hence resulting into less
deduction of premium amounting to Rs. 16.572 million as per details below.
S. Total Recover Recover Less

No amount y required @ y made recovery
4.5%
1. 690,039,1 31,051,7 14,478,7 16,572,9
26 61 74 86
The lapse occurred due to weak contract management which resulted in loss to the government.
Audit recommends immediate recovery from the contractor and action against the management.
PDP No. 171 (2021-22)
17.4.53 Cost overrun on account of multiple revisions of PC-I due to defective estimation -
Rs. 484.450 million
According to planning commission manual for developmental project serial No.4.14, The cost
estimates of a project have to be prepared with a lot of care so that these are not revised again and again
and implementation is not delayed due to non-availability of provision of funds and revised sanction of the
competent authority.
Small Dams for the Financial Year 2021-22, it was observed that the project “Construction of Zamir Gul
Dam District Kohat” was initially approved for Rs. 643.77 million. It was further noticed that:
i. The PC-I was initially approved for construction of Concrete Gravity Dam (CGD) at site
as per the feasibility study carried out by NESPAK with an estimated cost of Rs. 643.77
million, but was later on changed to Earth Core Rock Fill Dam (ECRD) in the revised PC-
I due to defective feasibility study and other technical reasons. The cost was also enhanced
to Rs. 987.77 million in the revised PC-I.
ii. Due to defective estimation and continuous change in the scope of work, the PC-I was
again revised and again the cost was enhanced to Rs. 1128.22 million in the 2 nd revised
PC-I.
596
iii. Audit held that if the initial design and type of the dam was not feasible as per the
geotechnical investigation carried out by the consultant M/S Consultant Associates and the
management then the revised PC-I was required to have been prepared keeping in the view
the actual requirements and correct estimates. But the same was not done and the PC-I was
revised for 2nd time with enhanced cost. Moreover, the T.S was also revised in November-
2022 even after the revision of the 2nd time revised PC-I in June-2022.
iv. The inefficiency of consultant and management can be seen in the various revisions in the
cost estimates. This indicated that the design and estimates were defective due to poor
planning, non-diligence and preparation on the part of the consultant and management.
v. This resulted in cost overrun of Rs. 484.45 million due to inaccurate estimation on one
hand and on the other hand 07 years delay in the completion of the project due to which
the objectives of the project has badly suffered.
vi. In addition to cost overrun, the abnormal delay is resulting additional financial burden on
the government exchequer in the form of high escalation claims of the contractor.
The lapse occurred due to inaccurate cost estimation and design which resulted in cost overrun.
Audit recommends to inquire the matter for fixing of responsibility against the person(s) at fault as
the construction of small dams is the core function of the department and multiple revisions in the PC-Is
with cost overrun reflected inefficiency of the department.
PDP No. 173 (2021-22)
17.4.54 Cost overrun due to non-observing PC-I timelines and unjustified cost enhancements
resulting in extra Burdon on provincial government in PSDP project - Rs. 58.628
million
According to planning commission manual for developmental project serial No.4.14, The cost
estimates of a project have to be prepared with a lot of care so that these are not revised again and again
and implementation is not delayed due to non-availability of provision of funds and revised sanction of the
competent authority.
Small Dams for the Financial Year 2021-22, it was observed that contract for the PSDP project
“Construction of Pezu Dam District Kohat” awarded to M/S Tribal Global Construction Pvt. Ltd. with a
597
bid cost of Rs. 545.024 million 17% below MRS-2017 vide work order No. 52/DD/SD/35-D dated
17.02.2021 with construction period of 24 months.
Further scrutiny of the record revealed that the PC-I of the project was approved for Rs. 758.462
million. The cost of the project was decreased to Rs. 740.521 million in the original cost estimates prepared
keeping in view the actual site requirements. However, the cost was again enhanced to Rs. 799.149 million
in the 2nd time revised cost estimates due to increase in the cost of various items however, Audit opines that
the cost has enhanced due to inclusion of exaggerated quantities and delay in the PC-I time lines as
explained below, just to adjust the savings of Rs. 86.96 million made in the main items of the dam like Dam
embankment, spillways and intake & outlet structures.
i. The cost of the irrigation system including affiliated structures was enhanced from the
original PC-I cost of Rs. 35.449 to Rs. 90.367 million by including exaggerated quantities
of excavation in the main canal although the length of the canal was decreased from 16+290
to 15+008.
ii. The cost of chowkidar hut was enhanced from the original cost of Rs. 2.584 million to Rs.
13.467 million which was un-justified and based on exaggerated estimation.
iii. In the DDWP meeting held on 28.01.2020 it was decided by the chair that although as per
policy the cost of land is borne by the beneficiary of the project i.e. the K.P Government
but in the instant case to avoid delay in the completion of the project the cost of land of Rs.
11.46 million will be charged to Federal PSDP. In response to the urgency of the matter
the local office took 15 months to write to the District Administration Lakki Marwat vide
letter No. 95/DD/SD/35/D(LA) dated 05.04.2021 for the acquisition of land for the project.
The legal process took another 7 to 8 more months but due to delay of the initial 15 months
by the local office the cost of land has increased to Rs. 39.578 million.
iv. Due to delay in the completion of the project the cost of consultant and escalation has also
increased many folds i.e. from Rs. 86.774 to Rs. 178.29 million.
v. Moreover, the DDWP in its meeting categorically decided that in case of increase of the
cost of the project beyond Rs. 758.462 million, the Government of KP will bear the cost
from its own resources. By increasing the cost to Rs. 799.149 million extra burden of Rs.
40.687 was put on the provincial exchequer.
The lapse occurred due to inaccurate cost estimation and design which resulted in cost overrun.
598
Audit recommends to inquire the matter for fixing of responsibility against the person(s) at fault as
the construction of small dams is the core function of the department and multiple revisions in the PC-Is
with cost overrun reflected inefficiency of the department.
PDP No. 179 (2021-22)
17.4.55 Loss to the government due to allowing full rate for an item of work despite
availability of rock – Rs. 30.530 million
According to section 3.2.1.1, 3.2.4, 3.9.5.2 & 3.9.7.3 of the Technical Specifications 2020 for
conducting appropriate laboratory tests. Measurement shall be made as under:
Formation from Borrow = A – B – C, where
A = Total Embankment Quantity
B = Roadway Excavation Quantity
C = Structural Excavation Quantity
The contractor will be supposed to use material from Roadway Excavation irrespective of haulage
distance. However, if contractor, for his own convenience, uses the material from borrow, the payment will
still be made under the respective item.
During audit of the accounts record of Planning and Construction Division Mardan, DG Small
Dams, KhyberPakhtunkhwa for the financial year 2021-22, it was observed that contract for the
“Construction of Bada Dam, Swabi” was awarded to M/S Sarwar Construction (Pvt) Ltd. at the bid cost of
Rs.1060.937 million vide work order No.608/DD/(P&C)/Bada dated 02-02-2017. The estimated cost of the
project was Rs.977.254 million being based on MRS-2013, against which the approved bid was 8.56%
above.
A payment of Rs.1,275.560 million was made to the contractor till IPC 12B vide Voucher No.
1C/07-06-2022. The scrutiny of the bill revealed that quantities of 243,643.809 M3 medium hard rock and
17281.182 M3 hard rock were available from excavation against which expenditure of Rs.108.943 million
was made. The rock available from excavation/ cutting could be utilized in the item of work “Providing &
laying stone pitching for top layer on slope”. However, the contractor only utilized a quantity of 5995.13
M3 at the rate of Rs.1335.60/M3, while the additional quantity 17,138.96 M 3 of the same item was paid at
the full rate of Rs.2975.46/M3 due to not adjusting the quantity of rock available at site and paid Rs.51.013
million. This resulted in loss of Rs.30.530 million due to allowing full rate and non-adjustment of the
available rock as tabulated below;
599
Item Qty paid Rate paid Rate req. Excess rate Loss (Rs.)
M3 (Rs.) (Rs.) (Rs.)
Providing & laying stone pitching for 17138.96 2976.46 1335.60 1640.86 28,122,634
top layer on slope
Add) Contractor premium 8.56% 2,407,297
Total loss 30,529,931
consultants and weak internal controls by the management which resulted in loss to the government.
Audit recommends recovery of the amount from the contractor and fixing of responsibility and
action against the supervisory consultants.
PDP No. 180 (2021-22)
17.4.56 Overpayment to contractor on account of escalation due to allowing it against

unutilized items – Rs. 22.060 million
According to Part I – Procedure, sections C 1 & 5 and Part-II (4) of the Standard Procedure and
Formula for Price Adjustment, Pakistan Engineering Council Guidelines 2009 edition, except
labour and POL, if any other adjustable item(s) is not used in a particular billing period then the
ratio of current date price and base date price for that particular adjustable item(s) shall be
considered as one. The billed amount of the Works for each calendar month will be obtained from
the checked bills submitted by the Contractor. In case the billed amount is for more than one
month, the amount of the bill shall be segregated for actual work done in each month. The co-
efficient for each specified adjustable element shall be determined by the user proportionate to its
ratio in the total amount of the Engineer’s Estimate, in accordance with the procedure B-1 given
under Part 1.
Dams, KhyberPakhtunkhwa for the financial year 2021-22, it was observed that escalation of Rs.270.971
million was paid to M/S Sarwar Construction (Pvt) Ltd. under the project “Construction of Bada Dam
Swabi” through EPC No. 7 against IPC 01 to 12. Perusal of the escalation bill revealed that overpayment
of Rs.22.060 million was made to the contractor, as summarized below and worked out in the enclosed
statement:
600
Escalation Paid (Rs.) Escalation Due (Rs.) Overpayment (Rs.)
270,971,380 248,911,111/- 22,060,269/-
Recalculation of escalation bill showed overpayment due to the following reasons:

i. Steel was not consumed in IPCs No. 1 – 6, 11 & 12 but still escalation was calculated
for steel against the PEC guidelines which categorically states that “except labour and
HSD, if any other adjustable item is not used in a particular billing period, then no price
adjustment shall be calculated for the unconsumed items”.
ii. The contractor did not claim escalation on steel due to the fact that steel was not
consumed in these IPCs. But the consultant enhanced the claim through hand writings
in the printed IPCs of the contractor. It indicated that the consultant failed to fulfill his
contractual obligations as given in the section 3.1.1 – Standard of Performance which
states that “The Consultant shall Perform the Services and carry out their obligations
hereunder with all due diligence, efficiency and economy, inaccordance with generally
accepted professional standards and practicesand shall observe sound management
practices.
iii. The work done for 6 -8 months was accounted for escalation calculations instead of
segregation in to respective billing months. The accumulation of work done and its
multiplication to the higher current rates resulted in overpayment. It was violation of
PEC guidelines which states that in case the billed amount is for more than one month,
the amount of the bill shall be segregated for actual work done in each month.
iv. Construction schedule was not submitted by the contractors as required under section
A-3 of the guidelines of Pakistan Engineering Council.
contractor.
PDP No. 181 (2021-22)
601
17.4.57 Loss to the government due to allowing unnecessary item of work in the clubbed pay
item – Rs. 39.998 million
“Construction of Kundal, Swabi” was awarded to M/S Sarwar Construction (Pvt) Ltd. vide Acceptance of
Tender No. 1351/SD/DG/14-D dated 02-04-2013. A payment of Rs.1820.625 million was made to the
contractor till IPC 33B vide Voucher No. 2C/ 07.09.2021.
The scrutiny of the bill revealed payment of the following items of work:
S. MRS item code Item Qty paid Rate per Amount (Rs.)
No M3 M3
1 03-09-a Excavation as in shingle / gravel 290,375.2 187.20 54,263,409
2 03-17-b + 03-18-a + Disposal of excavated rock extra lead 227608.7 161.09 36,665,490
03-18-b up to 1KM
3 03-04-c + 03-17-b + Providing, placing and compacting 238,791.4 566.40 135,251,437
03-18-a + b + 03-27 sandy gravel material for upstream &
downstream 1.5 km lead
Total 226,180,336
Further verification of paid items with MRS revealed that shingle / gravel quantity of 290,375.2
3
M available from excavation for which 01 KM lead was also paid (S. No. 1 & 2). The item at S. No. 3 was
paid by including shingle gravel from borrow pit excavation (03-04-c) which was incorrect and
inadmissible as shingle / gravel was already available at site and no further borrow pit excavation was
required. The shingle / gravel quantity of 290,375.2M3could have been used in item No. 3 by excluding the
cost of item 03-04-c to the tune of Rs.167.50/M3 which was not done. This resulted in loss of Rs.39.998
million (238,791.4 x 167.50) to the government.
602
PDP No. 183 (2021-22)
17.4.58 Loss to the government due to allowing full rate for an item of work despite
availability of rock – Rs. 27.518 million
“Construction of Kundal, Swabi” was awarded to M/S Sarwar Construction (Pvt) Ltd. vide Acceptance of
Tender No. 1351/SD/DG/14-D dated 02-04-2013. A payment of Rs.1820.625 million was made to the
contractor till IPC 33B vide Voucher No. 2C/ 07.09.2021.
The scrutiny of the bill revealed that quantity of 1,306,460 M3 rock was available from excavation
against which expenditure of Rs.446.378 million was made. The rock available from excavation/ cutting
could be utilized in the item of work “Providing & laying stone pitching for top layer on slope”. However,
the contractor was paid at the full rate of Rs.1831.63/M3 due to not adjusting the quantity of rock available
at site and paid Rs.53.911 million. This resulted in loss of Rs.27.518 million due to allowing full rate and
non-adjustment of the available rock as tabulated below:
Item Qty paid Rate paid Rate req. Excess rate Loss (Rs.)
M3 (Rs.) by (Rs.)
603
reducing
40% (Rs.)
Providing & laying stone pitching for 29433.114 1831.63 1098.978 732.652 21,564,230
top layer on slope
Add) Contractor premium 19.5 % 5,953,337
Total loss 27,517,567
PDP No. 184 (2021-22)
17.4.59 Wasteful expenditure due to selection of disputed site - Rs. 84.304 million
According to planning commission manual for developmental project serial No.(iii) Reasons for
selection of location. In this connection it may be noted that many projects have suffered tremendously in
the past from cost over-runs and delay in implementation due to hasty selection of site. The project also
suffers due to delay in acquisition of land. Therefore, the availability of land needs to be assured. In
selecting the location, area and population to be served by the project, the income and social characteristics
of the population will have to be kept in view. Similarly, the economic characteristics of the area i.e. present
consideration.Read with para 86 of the CPWD code, when land is required for public purposes the officer
of the Public Works Department should, in the first instance, consult the Chief Revenue Officer of the
district, and obtain from him the fullest possible information as to the probable cost of the land, together
with the value of buildings, etc., situated on the property, for which compensation will have to be paid. The
information thus obtained, an estimate should be framed by the Public Works officer and submitted for
sanction.
During annual audit of the accounts record of the Planning and Construction Division Mardan, DG
Utla Dam” was awarded to M/S Qalander Bux Abro & Co. vide work order No. 5153/DD/SD/Utla Dam
dated 25.10.2018 with a bid cost of Rs. 1248.051 million (8.90%) above CSR-2017 with time limit of
02years with upto date payment of Rs. 84,304,501 vide VR No. 21-C dated 23.06.2022. However, it was
observed that:
604
i. Last payment on actual work done was made to the contractor vide IPC No. 2 in September-
2020. The work had stopped since September-2020 due to the protest of the local
community because the scope of work and area of the required land was changed in the
revised PC-I to which the local community was not taken into confidence. The department
failed to acquire land through district administration before commencement/revision of the
project.
ii. A law suit was filed in Peshawar High Court against the Government by the locals for
illegal occupation of their land by the local administration. The honorable court decided
for interim relief of the community and the respondents were restrained from taking further
land of the petitioners.
iii. Audit held that wasteful expenditure of Rs. 84.304 million has been incurred due to
selection of disputed site because on one hand the fate of the project depends on the
decision of the court and on the other hand the construction work has stopped from the last
three years and the work already carried out is losing its value day by day due to
environmental effects.
iv. Moreover, cost overrun on account of contractor escalation and consultant due to enormous
delay in the completion of the project will put extra burden on the public exchequer besides
depriving the general public from the benefits of the project.
PDP No. 185 (2021-22)
605
17.4.60 Non-fulfilment of the contractual obligations by the design consultant and less recovery
of penalty for defective design - Rs. 3.689 million
According to clause 3.1 and 3.4 of the consultancy contract agreement, the consultant shall perform
the services and carry out their obligations with all due diligence, efficiency and economy in accordance
with generally accepted professional techniques and practice and shall observe sound management practice
and employ appropriate advance technology and safe methods. If the client suffers any losses or damages
as a result of proven faults, errors or omissions in the design of a project, the consultant shall make good
such losses or damages, subject to the condition that the maximum liability as aforesaid shall not exceed
twice the total remuneration of the consultants for design phase in accordance with the terms of the contract.
Small Dams for the Financial Year 2021-22, it was observed that consultancy contract for the Feasibility
Study & Detail Design of Utla Dam District Swabi was awarded to the design consultant M/S CAMEOS.
The contract for the construction of Dam based on the same Feasibility Study and Detail Design was
awarded to M/S Qalandar Bux Govt contractor. However, during the review of the design by the supervisory
consultant of the project i.e. M/S Pakistan Engineering Supervision, serious objections were raised on the
design of the project. Through a series of high level meetings and hydrology studies carried out by the
supervisory consultant duly authenticated by WAPDA, it was categorically decided that the original design
prepared by M/S CAMEOS was flawed and not according to the actual site requirements.
The design of the project was revised and a revised PC-I was prepared. A penalty of Rs. 4.765
million was imposed on the design consultant for the defective design of the project which warranted
revision of the PC-I, as per the clauses of the contract agreement. Resultantly Rs.1.076 million was forfeited
from the consultant’s security. However, balance amount of Rs. 3.689 million remained unrecovered which
needs immediate attention.
When pointed out in March 2022, the management replied that Rs.1.076 million was forfeited out
of Rs.4.765 million penalty. Other offices of the Irrigation Department/ Small Dams have been requested
for the recovery of the remaining amount of Rs.3.689 million.
Audit recommends immediate recovery from the consultant.
PDP No. 186 (2021-22)
17.4.61 Unjustified excess payment on account of construction of Aqueducts -

Rs. 49.822 million
606
According to Paras 56 and 58 of CPWD Code provide that technical sanction is a guarantee that
the proposals are structurally sound and that the estimates are accurately calculated and based on adequate
data.
Kundal Dam District Swabi” was awarded to M/S Sarwar Constructors Nowshera. vide work order No.
1472/SD/DG/14-D dated 15.4.2013 with upto date final payment of Rs. 1,820,625,498 vide VR No. 2-C
dated 07.09.2021. The bill included payment of Rs. 79,864,037 on account of construction of “Aqueducts”
along the canal road. However, it was observed that:
i. The item was initially not included in the original PC-I which was later on included in the
revised PC-I with an estimated cost of Rs. 74.737 million.
ii. In the revised T.S which was prepared on the basis of actual site requirements, the cost of
the Aqueducts was reduced to Rs. 30.042 million.
iii. Payment of Rs. 79.864 million was made on account of construction of Aqueducts in the
final bill of the contractor.
Audit held that the cost of the Aqueducts was reduced in the revised T.S keeping in view the actual
site requirements. Hence, payment of Rs. 79.864 million against the revised T.S cost of Rs. 30.042 million
was un-justified and resulted into excess payment of Rs. 49.822 million which clearly showed that saving
in the overall project were adjusted by paying excess quantities above the actual site requirements.
The lapse occurred due to deviating the approved scope of work which resulted in excess payment.
PDP No. 187 (2021-22)
607
17.4.62 Overpayment due to excess brought forward to next EPC – Rs. 5.326 million
According to Para 42 of the Central Public Works Account Code, the responsibility for the
correctness, in all respects, of the original records of cash and stores, receipts and expenditure, as
also for seeing that complete vouchers are obtained rests with the Divisional Officer, who will,
before submitting the monthly accounts, carefully examine the books, returns and papers from
which the same are compiled.
During audit of the accounts record of Planning and Construction Division Peshawar, DG Small
Dams, KhyberPakhtunkhwa for the financial year 2021-22, it was observed that escalation of
Rs.142,716,834/- was paid to M/S Atif Khan Khattak Govt: Contractor under the project “Construction of
Marobi Dam in district Nowshera” through EPC No. 4 based on IPC No. 01 to 14.
The scrutiny of EPC No. 1C, 2, 3, 3A and 4 revealed that incorrect and excess amount was brought
forward to the EPC which enhanced the amount required for payment in the current EPC and ultimately led
to overpayment of Rs.5,325,802/- as summarized below:
EPC No. 1C EPC No. 2 EPC No. 3 EPC No. 3A EPC No. 4
(15SD/ (16SD/ (17SD/ (22SD/ (25SD/
IPC Overpayment
06.06.22) 06.06.22) 06.06.22) 17.06.22) 20.06.22)
No. (Rs.)
Escalation Escalation Escalation Escalation Escalation
amount amount amount amount amount
1 695,112 844,064 873,855 873,855 873,855 178,743
2 1,474,783 1,960,791 2,027,827 2,027,827 2,027,827 553,044
3 2,775,960 2,775,959 2,794,590 2,794,590 2,794,590 18,630
4 4,961,274 4,961,274 4,961,274 4,961,274 4,961,274 -
5 2,628,595 2,628,595 2,628,578 2,628,578 2,628,578
6 3,631,826 3,631,801 3,631,801 3,631,801 3,631,801 (17)
7 10,294,859 10,290,633 10,532,197 10,532,197 10,532,197 (25) 237,338
8 3,118,784 3,118,784 3,256,435 3,256,435 3,256,435 137,651
9 8,123,191 8,123,204 8,541,926 8,541,926 8,541,926 418,735
10 14,805,339 14,805,339 15,574,353 15,574,353 15,574,353 769,014
11 20,109,405 21,590,330 21,590,330 21,590,330 1,480,925
12 15,562,721 17,094,485 17,094,485 17,094,485 1,531,764
13 24,432,504 24,432,504 24,432,504 -
14 24,776,679
52,509,723 88,812,570 117,940,155 117,940,155 142,716,834 5,325,802
consultants and weak internal controls by the management which led to overpayment.
608
PDP No. 1190 (2021-22)
17.4.63 Overpayment to contractor on account of escalation due to allowing it against

unutilized items – Rs. 21.558 million
According to Part I – Procedure, sections C 1 & 5 and Part-II (4) of the Standard Procedure and
Formula for Price Adjustment, Pakistan Engineering Council Guidelines 2009 edition, except
labour and POL, if any other adjustable item(s) is not used in a particular billing period then the
ratio of current date price and base date price for that particular adjustable item(s) shall be
considered as one. The billed amount of the Works for each calendar month will be obtained from
the checked bills submitted by the Contractor. In case the billed amount is for more than one
month, the amount of the bill shall be segregated for actual work done in each month. The co-
efficient for each specified adjustable element shall be determined by the user proportionate to its
ratio in the total amount of the Engineer’s Estimate, in accordance with the procedure B-1 given
under Part 1.
Dams, KhyberPakhtunkhwa for the financial year 2021-22, it was observed that escalation of
Rs.117,940,155/- was paid to M/S Atif Khan Khattak Govt: Contractor under the project “Construction of
Marobi Dam in district Nowshera” through EPC No. 3 against IPC 01 to 13.
Perusal of the escalation bill revealed that overpayment of Rs.21,557,861/-was made to the contractor, as
summarized below and worked out in the enclosed statement:
Escalation Paid (Rs.) Escalation Due (Rs.) Overpayment (Rs.)
117,940,155/- 96,382,294/- 21,557,861/-
Recalculation of escalation bill showed overpayment due to the following reasons:

i. Steel was not consumed in IPC No. 1 – 6, 8, 10, 12 & 13 but still escalation was
calculated for steel against the PEC guidelines which states that except labour and POL,
if any other adjustable item(s) is not used in a particular billing period then the ratio of
current date price and base date price for that particular adjustable item(s) shall be
considered as one.
ii. Similarly, cement was not used in IPC No. 1 - 3 but still escalation was calculated for
cement.
iii. Construction schedule was not submitted by the contractors as required under section
A-3 of the guidelines of Pakistan Engineering Council.
iv. The work done for 6 -8 months was accounted for escalation calculations instead of
segregation in to respective billing months. The accumulation of work done and its
multiplication to the higher current rates resulted in overpayment. It was violation of
609
PEC guidelines which states that in case the billed amount is for more than one month,
the amount of the bill shall be segregated for actual work done in each month.
contractor.
PDP No. 191 (2021-22)
17.4.64 Non-imposition of liquidated damages for non-completion of the project within

stipulated time – Rs. 57.255 million
Irregular award of contract on the basis of toss between the bidders –
Rs. 572.55 million
According to Letter of Acceptance issued to M/S Raja Adalat Khan & Son for the construction of
Jaroba Dam project vide No. 3717/SD/DG/7-G(i) Jaroba dated 27-04-2017 read with special
stipulation No. 43.1, 47.3 and 48.2, the contract was awarded at the bid cost of Rs.572.55 million
i.e. 10% below on estimated cost of Rs.636.171 million. Time for completion of the project was
730 days with penalty of Rs.347,986/- for each day of delay in completion of the works subject to
a maximum of 10% of the contract cost.
“Construction of Jaroba Dam, Nowshera” was awarded to M/S Raja Adalat Khan at the contract cost of
Rs.572.55 million on 27-04-2017. The stipulated time for completion was 2 years and was due for
completion on 27-04-2019. The contractor was paid Rs.355.997 million till IPC 18.
Perusal of record revealed the following irregularities:

i. The contractor failed to complete the project till 27-04-2019 and 90% physical work
was shown completed in the Progress Report for June, 2022. Despite lapse of 3 years
and 2 months, neither the project could be completed nor liquidated damages of
Rs.57.255 million (572.55 x 10%) was imposed. Furthermore, time extensions requests
were submitted by the contractor nor evaluated/ recommended by the supervisory
610
consultants and granted by the management with cogent reasons of fault not being on
the part of the contractor.
ii. Bidding record revealed that 04 bidders offered rate of 10% below and contract was
awarded on the basis of selection of bidder through toss instead of re-tendering.
However, there was no rules provisions regarding the process of toss for award of
contract.
iii. 02 bidders namely M/S Haji Aurangzeb Khan Gandapur and M/S Brothers
Constructions & Builders were not prequalified on the plea of not completing dam
project of Rs.250 million in the last 10 years. However, there was no evidence
regarding fulfillment of the same condition by the successful bidder.
The lapse occurred due to non-enforcement of the contract clauses as well as defective bidding
process which resulted in non-imposition of the liquidated damages.
Audit recommends to impose/ recover liquidated damages from the contractor and inquire the
bidding process.
PDP No. 192 (2021-22)
17.4.65 Overpayment to contractor due to non-freezing of current rates in escalation on

expiry of original contract period – Rs. 20.793 million
According to Part I – Applicability sections 3 & 4 (i) of the Standard Procedure and Formula for
Price Adjustment, Pakistan Engineering Council Guidelines 2009 edition, in case of default on the part of
the contractor causing delay in original scheduled completion, the rate of Price Adjustment will be frozen
at the original scheduled date of completion; however, Price Adjustment will be applicable till actual
completion. While computing Price Adjustment beyond the scheduled completion period, in the event the
rate is reduced, then that reduced rate will be applied. Construction schedule should be provided by the
contractor as required in the contract.
During audit of the accounts record of Planning and Construction Division, Peshawar, DG Small
“Construction of Jaroba Dam, Nowshera” was awarded to M/S Raja Adalat Khan at the contract cost of
Rs.572.55 million on 27-04-2017. The stipulated time for completion was 2 years and was due for
completion on 27-04-2019. The contractor was paid Rs.355.997 million till IPC 18 on account of work
done, in addition to escalation payment of Rs.53.394 million till EPC No.4.
611
Perusal of record revealed that the work could not be completed within stipulated time as IPC No.
18 bill was paid vide voucher No. 20SD/08-06-2022.
Audit held that current rates were required to have been frozen at the at the expiry of the original
completion period i.e. 27-04-2019. Contrarily, contractor was paid escalation at the unfrozen current rates
despite the fact that 03 years & 2 months elapsed after the stipulated completion time. Making escalation
payment at the unfrozen current rates resulted in overpayment of Rs.20.793 million as summarized below
and worked out in the enclosed statement.
Particulars Amount (Rs.)

Escalation due as per frozen current rates on expiry of original period 32,601,390/-
Escalation paid 53,394,318/-
Overpayment 20,792,928/-
The lapse occurred due to violation of the PEC guidelines which resulted in overpayment to the
contractor.
Audit recommends recovery of the overpaid amount from the contractor and action against the
supervisory consultants.
PDP No. 194 (2021-22)
17.4.66 Overpayment to contractor on allowing higher rate than approved

PC-I / estimate - Rs. 3.034 million
According to Para-56 CPWD Code, T.S is guarantee that the proposal are structurally sound and
that the estimates are accurately calculated and based on adequate data.
During audit of AIP/ADP funds for the financial year 2020-21, the record of the XEN Irrigation
Division North Waziristan revealed that the work “Construction of Main Cannel of Kand Small Dam in
Shera Tala Mir Ali District” was awarded to the contractor at a rebate of 26% below vide work order dated
23.12.2019 with estimated cost of Rs 36.74 million. The contractor was paid Rs.21.924 million vide
voucher No.23, dated 16.6.2021 (7th& final bill).
On further comparison and verification of the bill quantities with the TS, MB etc; it was noticed
that the contractor was allowed for the execution of an item of work i.e. earth excavation in irrigation
channel /drains and disposal up to 25m & dressing in soft soil” @ Rs.684.30 PM3 for a quantity of 3019.00
612
M3 for Rs.2,065,950/- instead of Rs.212.74 PM3 as already provided in TS, which resulted into an
overpayment of Rs.1,423,640/- (684.30 (-) 212.74 = 471.56 X 3019.00) to the contractor concerned.
Similarly, the quantity of the above item of work was also enhanced from the estimated quantity of
665.50 M3 to 3019.00 M3 without any justification, which also created doubt and resulted into an
overpayment of Rs.1,610,500/- (2353.5M3 x Rs 684.30) to the contractor concerned.
staff.
When pointed out in May 2023, management stated that detail reply will be submitted in due course
of time after scrutiny of record.
The matter is reported for recovery and action against the person(s) at fault.
PDP No. 1397 (2021-22)
17.4.67 Doubtful expenditure on special repair of small dams – Rs. 6.920 million
According to Para 96 of the GFR Vol.-I, money should not be spent

hastily or in ill-considered manner just because it is available or that the lapse of a
grant could be avoided.
During Special Audit of AIP funds of XEN Irrigation Division, North Waziristan for the financial
year 2019-22, it was observed that an expenditure of Rs.6,920,000/- was incurred on the special repair of
the following small dams:
Vr. No. Name of work Contractor Expenditure

71/17.06.20 Special M&R to kand dam, Mir Ali Atta Global 4,685,000
72/17.06.20 Special M&R to Misri Khel small dam Dawar Lodhi 2,235,000
Total 6,920,000
The special repair/M&R expenditure of Rs.6,920,000/- above was doubtful as construction work
in the same small dams were in process as following payments for regular construction were also incurred
apart from above payments:
Vr. No Name of work Contractor Expenditure

76(i)/18.6.20 Const: of Misri Khel small dam in Mir Ali Atta Global 9,250,000
613
77/18.6.20 Const: of Kand small dam in Shera Tala Mir Ali Atta Global 16,271,508
Total 25,521,508
Incurrence of expenditure on construction of small dam and special repair of the same small dams,
simultaneously needs to be inquired for appropriate action.
Audit recommends inquiryin the matter and action against the person(s) at fault.
PDP No. 1402 (2021-22)
17.4.68 Overpayment to contractors on allowing excess drilling than MS pipe -

Rs. 1.112 million
According to paragraph 296 of CPWA Code, a schedule of rates for each kind of work commonly
executed should be maintained in the division and kept up to date. It should be prepared on the basis of the
rates prevailing in each locality and necessary analysis of the rates for each description of work and for
varying conditions thereof, so far as may be practicable, be recorded.
During special audit of AIP/ADP fund for the financial year 2021-22, the record of the XEN
Irrigation Division South Waziristan revealed that the sub work “Construction of tube well for Malik Khair
Muhammad Kikarai Kach Madi Jan Tehsil Taiza” was awarded to the contractor vide work order dated
25.09.2021. The contractor was paid Rs.2.82 million vide voucher No.08, dated 22.12.2021 (Ist running
bill).
On further verification of the bill quantities with MB etc; it was noticed that the contractor was
allowed drilling for bore hole for tube well for a depth of 125 M (70+55) @ Rs.10,952.63 PM &
Rs.13,459.12 PM totaling Rs.1,506,936/- (766,684+740,252) but on comparison it was disclosed that the
MS blind pipe and Brass Strainer was installed in tube well bore hole for a quantity of 47 M (15+32) @
Rs.6,481.63 & Rs.27,604.37 totaling Rs.980,564/- thereby meaning that an excess of 78 M drilling in bore
hole (125 (-) 47 ) was allowed to the contractor duly recorded in MB No.171 at page-108 & 109, which
resulted into an overpayment of Rs.1,112,800/- (78 M x @ Rs.13,459.12 x 1.06 cost factor) to the contractor
concerned.
Moreover, how it was possible that the quantity of Brass Strainer pipe for 32 M was far in excess
than MS blind pipe of 15 M which was also doubtful.
614
Similarly, it could not be got confirmed that as to whether the MS blind pipe of 10” dia was installed
or otherwise PVC pipe of the same dia was fixed.
staff, which resulted in loss to government.
When pointed out in May 2023, management neither discussed nor replied to the audit observation.
Audit recommends the matter to be enquired for fixing responsibility besides recoveryand action
PDP No. 1377 (2021-22)
17.4.69 Overpayment to contractor on allowing higher rate of PCC 1:3:6 with 30% boulders
instead of PCC 1:3:6 with 40% boulders as per actual record entry in MB - Rs. 1.674
million
Overpayment to contractor on application of incorrect & higher rate on allowing

PCC 1:3:6 with 30% boulders other than actual work done -
Rs. 1.266 million
As per MRS-2020, rates for PCC 1:3:6 in mass concrete less form work using 40% boulders were
approved under Code 06-44-b @ Rs.4976.82 PM3.
Para-221 of the CPWA Code provides that the SDO should compare the quantities in the bill
with those recorded in the MB and see that all the rates are correctly entered and that all calculations have
been checked arithmetically.
During special audit of AIP/ADP fund for the financial year 2021-22, the record of the XEN
Irrigation Division South Waziristan revealed that the sub work “Construction of Check Dam for the land
of Ahmad Kadai” was awarded to the contractor at a cost of Rs.25.628 million vide work order dated
20.9.2021. The contractor was paid Rs.25.628 million vide voucher No.03, dated 21.6.2022 (3 rd running
bill).
On further comparison of the bill quantities with the TS, MB, it was noticed that the contractor was
paid for an item of work i.e. PCC 1:3:6 with 30% boulders @ Rs.5432.81PM3 for a quantity of 3496.465,
instead of PCC 1:3:6 with 40% boulders @ Rs.5432.82 PM3 as the said item was carried out with 40%
boulders as verified and confirmed from the record entries at page-22,28 & 30 of MB No.181 (copies of
relevant pages are enclosed for ready reference). This has resulted into an overpayment of Rs.1,674,071/-
(5432.81 - 4976.82=455.99 x 3496.465M3 x 1.05 cost factor) to the contractor concerned.
615
Similarly, the sub work “Construction of Check Dam for the land of Shayan Tora Payal” was
awarded to the contractor at a cost of Rs.20.620 million vide work order dated 20.9.2021. The contractor
was paid Rs.20.620 million vide voucher No.02, dated 21.6.2022 (3 rd running bill).
On further comparison of the bill quantities with the TS, MB, it was noticed that the contractor was
paid for an item of work i.e. PCC 1:3:6 with 30% boulders @ Rs.5432.81PM3 for a quantity of 2644.30M3,
which was physically executed as PCC 1:3:6 with 40% boulders the rate of which was provided in MRS-
2020 @ Rs.5432.82 PM3 as verified and confirmed from the record entries at page-6,12,45,49-50 of MB
No.181 (copies of relevant pages are enclosed for ready reference). On application of incorrect and higher
rate the contractor was overpaid a sum of Rs.1,266,063/- (5432.81 (-) 4976.82=455.99 x 2644.30M3 x
1.05). This has resulted into an overpayment of Rs.1,266,063/- to the contractor concerned.
staff, which resulted in loss to government.
When pointed out in May 2023, management neither discussed nor replied to the audit
observations.
Audit recommends the matter to be enquired for fixing responsibility besides recoveryand action
PDP No. 1378 & 1380 (2021-22)
616
17.4.70 Suspected/ unauthentic expenditure on account of removal of trees and where about
of trees – Rs. 6.258 million
According to Para 23 of GFR volume-I, every Government officer should realize fully and clearly
that he will be held personally responsible for any loss sustained by Government through fraud or
negligence on his part or on the part of his subordinate.
During Special Audit of AIP funds of XEN Irrigation Division, Khyber for the financial year 2019-
22, it was observed that payment of Rs 6,258,317 was made to a contractor for an item of work “Removal
of trees girth over 600mm” vide voucher No. 10-K dated: 28.12.2021 in a work “Remodeling and extension
of Bara River Canal System Package-III”. Audit holds that neither the where about of trees was known to
audit during physical verification nor any sign of trees found except bushes everywhere on the embankment
of whole river/canal as can be verified from pictures. Audit also observed the following:
i. Where about of the removed trees / Acknowledgement of trees by Forest Department and
its auction was not available.
ii. Site survey by Forest Department showing number of trees requiring removal was not
available.
iii. Inventory report of removed trees along with stems was not available.
iv. Payment of compensation to Forest Department in lieu of trees removal was not available.
v. NOC of Forest Department for removal/ cutting of trees was not available.
vi. No pictures were taken/ available before and after the trees cutting process, which also creates
doubts.
Undue benefit was extended to the contractor and chances of misappropriation could not be ruled
out. Government was thus put into loss of Rs 6,258,317 as per the following details:
S# Name of Work Girth of tree No of trees Rate Amount (Rs)
1 Remodeling and extension of Bara River 600mm 2090 2994.4 6,258,317
Canal System Package-III 1
Total 6,258,317
Irregularity occurred due to weak internal control, which resulted in loss to the government.
When pointed out in April 2023, management stated that detail reply will be submitted in due
course of time after scrutiny of record.
Audit suggests inquiry besides recovery and action against the person(s) at fault.
PDP No. 1250 (2021-22)
617
17.4.71 Non recovery of DPR charges from contractors for Rehabilitation of Disable Person
- Rs. 4.269 million
According to Directorate of Social Welfare & Women Development Department Peshawar letter
No. DPR/Pub/PCRDP/559-63 dated 18-05-2012 and Section-11 of the Disable Person (Employment and
Rehabilitation Ordinance 1981 and Rules 1991), the deduction of DPR Fund for rehabilitation of disable
persons from the bills/payment @ Rs. 2000/- each per million and deposit the Head No. G-12218 "fund for
rehabilitation of disabled persons".
During Special Audit of AIP funds of XEN Irrigation Division, South Waziristan for the financial
year 2019-22, it was observed that payment of Rs 610.44 million was made to various contractors for
difference works. However, DPR charges at the rate of Rs. 2000/- per million, amounting to Rs. 1,220,880
was not deducted from contractors resulting in loss to government.
Similarly, XEN Irrigation Division, North Waziristan during the financial year 2019-22 made
payment of Rs 768.061 million to various contractors for difference works. However, DPR charges at the
rate of Rs. 2000/- per million, amounting to Rs. 1,536,122 were not deducted resulting into non deposit of
Rs 1,536,122.
Furthermore, XEN Irrigation Division, Khyber during the financial year 2019-22 made payment of
Rs 1,295.381 million to various contractors for difference works. However, DPR charges at the rate of Rs.
2000/- per million, amounting to Rs. 1,077,799 were deducted instead of Rs 2,590,000 resulting less deposit
of Rs 1,512,201.
The lapse occurred due to non-adherence to the provisions of rules and weak internal controls,
which resulted into non recovery of DPR charges.
Audit recommends recovery of DPR charges.
PDP No. 1394, 1415 & 1268 (2021-22)
618
17.4.72 Non-deduction of defray charges from the contractors - Rs. 96.057 million

withholding tax.
During the course of special audit of AIP funds of Executive Engineer, Irrigation Division North
Waziristan for the Financial Year 2019-22, it was observed that the local office paid a sum of Rs 670.324
million to various contractors for different works, but neither the estimates were reduced by 7.5% nor
deduction of income tax @7.5% amounting to Rs 50.274 million was made from contractors, which is
against the spirit of Finance Department notification as stated above and the same needs to be recovered.
Detail is given below:
ADP No. Name of Scheme Expenditure
195191-Construction of Check Dams / Storage Reservoirs on need basis across Merged
2322 275.576
Districts (AIP). PDWP /10-08-2019
195195 - Construction/ Improvement of irrigation Channels/Water Ponds on need basis
2324 308.343
(AIP). PDWP / 10-08-2019
195196 - Need Assessment and Construction of New Solar tube Wells & Solarization of
2325 68.322
existing Tube Wells (AIP). PDWP /10-08-2019
195199 - Institutional Strengthening, Capacity Building & Construction of official setup
2328 18.083
of Irrigation Department (AIP). PDWP /04-01-2021
Total 670.324
7.5% withholding tax= 670.324 x 7.5%= 50.274
Furthermore, during the course of special audit of AIP funds of Executive Engineer, Irrigation
Division South Waziristan for the Financial Year 2019-22, it was observed that the local office paid a sum
of Rs 610.44 million to various contractors for different works but neither the estimate was reduced by
7.5% nor deduction of income tax @7.5% amounting to Rs 45.783 million was made from contractors,
which is against the spirit of Finance Department notification as stated above and the same needs to be
recovered.
The lapse occurred due to non-observing the Government rules & regulations, which resulted in
loss of Rs. 96.057 million to the government.
When pointed out in June 2023, management stated that detail reply will be furnished after scrutiny
of record.
PDP No. 1408 & 1393 (2021-22)
619
620
Chapter – 18
LABOUR DEPARTMENT
18.1 (A) Introduction:
The labour department is the custodian of the guaranteed rights of the workers like right to
organize, right to collective bargaining, participation in the affairs of the respective organization, health &
safety, minimum wages, compensation, etc. For realization of its role, it enforces various labour laws. The
implementation of labour laws ensures compliance of the international labour standards and thus contributes
to achieving GSP, GSP+ and GSP++ status by securing higher position in the grading system applied by
the granting countries, regions and organizations. It also enforces international system of weights and
measures in the province. Besides, it carries out awareness raising drive in the workers, employers and
other stakeholders on labour issues, labour laws and contemporary issues.
As per Rules of Business 1985 (amended to date), the department has been assigned the
following business;
1. All matters affecting labour in general:

(a) Welfare and conditions of labour;
(b) Labour Laws, both Federal and Provincial; and
(c) Labour Legislation (Provincial).
2. All cases relating to Weights and Measures Act.
3. Administration of Labour Courts and Labour Appellate Tribunals.
4. Administration of Minimum Wages Boards.
5. Social Security Scheme.
621
6. Legislation relating to welfare of labour, conditions of labour, provident fund, employers
liability and workmen’s compensation, health insurance, workers children education, trade
unions, industrial relations and labour disputes.
7. Labour Conference, Tripartite Labour Conference, Standing Labour Committee and Bonus
Commission.
8. Education of workers in the essentials of trade unions, including education in respect of
their rights and obligations.
9. Matters relating to Workers’ Education.
Audit Profile of Labour Department:

(Rs. in million)
S Total Expenditure Audited Revenue/Receipts

Description Audited
No. Nos FY 2022-23 Audited FY 2022-23
2  SDA Nil Nil N/A Nil
(Excluding FAP)
3 Nil Nil Nil N/A
4 01 01 1,259 N/A
(FAP)
was as follows:
622
Non-Development:
(Amount in Rs.)
Grant #
Department
30 - Labour
NC21 605,328,000 2,410 0 102,584,320 502,746,090 502,882,977
Welfare 136,887
61 - Labour NC21 46,751,000 0 159,391 34,110,034 12,800,357 12,800,357
-
Total 652,079,000 2,410 159,391 136,694,354 515,546,447 515,683,334
136,887
600,000,000
500,000,000
Amount in Rs.
400,000,000
300,000,000
200,000,000
100,000,000
0
30 - Labour Welfare 61 - Labour
Development:
(Amount in Rs.)
Grant #
Total
Surrender Actual
Expenditure
Department
50- Labour
NC22 333,144,000 0 0 182,184,712 150,959,288 150,959,288
Welfare -
Total 333,144,000 0 0 182,184,712 150,959,288 150,959,288 0
623
20,000,000,000
15,000,000,000
Amount in Rs.
10,000,000,000
5,000,000,000
0
55-Construction of irrigation works 50- Labour

(Rs. in million)
Total Actual
Expenditure
Non-
515.55 0.14 0.03%
Development 515.68
Development 150.96 - 0.00%
150.96
Total 666.51 0.14 0.02%
666.64
600
500
400
Rs. in million
300
200
100
0
624
18.1 C) Issues in Labour Department
The department did not furnish the initial management replies at the time of exit meetings
besides failing to convene the DAC meetings on time. The department could not maintain the minutes of
the meetings chaired by the Secretary for record. Furthermore, the department failed to install and
operationalize the lab tests machinery in the hospitals under the Employees Social Security Institution.

audit of Labour Department. Summary of the audit observations classified by nature is as under:

Amount
(Rs. in million)
3 Irregularities -
5 Others -
Amount (in million) Non production of record
0 Reported cases of fraud,

Irregularities

Commercial Banks
issues
27.78 Others
625
S. Name of Total No. of Full Partial Nil

Audit Year
No. Department actionable points compliance compliance compliance
7. 2011-12 Labour Nil Nil Nil Nil
8. 2012-13 -do- Nil Nil Nil Nil
18.4 Audit Paras
18.4.1 Non-provision / maintenance of minutes of meetings chaired by the Secretary Labor
According to the Khyber Pakhtunkhwa Rules of Business 1985 notified vide Establishment &
Administration Department Notification No. SO(O&M) S&GAD/3-3/1985 dated 06.04.1985.
1. All matters affecting labor in general
2. All cases relating to Weights and Measures Act.
3. Administration of Labor Courts and Labor Appellate Tribunals.
4. Administration of Minimum Wages Boards.
5. Social Security Scheme.
1. Legislation relating to welfare of labour, conditions of labour, provident fund, employers’ liability
and workmen’s compensation, health insurance, workers children education, trade unions,
industrial relations and labor disputes.
6. Labor Conference, Tripartite Labor Conference, Standing Labor Committee and Bonus
Commission.
7. Education of workers in the essentials of trade unions, including education in respect of their rights
and obligations.
8. Matters relating Workers’ Education.
According to Section 14 (3) of the Auditor-General’s (Functions, Powers and Terms and
Conditions of Service) Ordinance, 2001 provides that any person or authority hindering the auditorial
functions of the Auditor-General of Pakistan regarding inspection of accounts shall be subject to
disciplinary action under relevant Efficiency and Discipline Rules, applicable to such person.
During audit of the accounts of Secretary Labor Department Khyber Pakhtunkhwa for the Financial
Year 2022-23, it was noticed that the Secretary Labor was entrusted with additional duties which were as
under;
1. Chairman (WWB) Worker Welfare Board
2. Chairman (WCEB) Worker Children Education Board
3. Commissioner, (ESSI) Employees Social Security Institute
The Secretary labor chaired the meeting of the above offices. In this connection Audit requested
for provision of the minutes of meetings, decisions taken during the meetings and any other instructions
626
issued, but the department failed to provide such a record. It was further added that according to Rules of
Business, the labour legislation and other issues relating to welfare of labor, health insurance, salary issues
etc. were required to have been highlighted but no correspondence / record in this regard was provided to
Audit.
The laps occurred due to weak internal controls and non-observance of rules / regulations which
resulted into non-provision of maintenance of minutes of meetings and other record.
Audit recommends providing all the requisitioned record to Audit besides taking appropriate action
against the person(s) at fault for non-provision of the record.
PDP No. 14 (2022-23)
18.4.2 Wasteful expenditure on account of purchase of PCRs - Rs. 27.780 million
According to PC-1 “Establishment of Clinical Laboratories (Grade A) and X-Ray Facilities at

Service Outlets of Khyber Pakhtunkhwa (Employees Social Security Institution” (ESSI)”, the main
objective is to ensure best and advanced laboratory technology in the field of health services to secured
workers of the institution. Further to reduce the financial burden on ESSI as a handsome amount of money
is being spent on the hired panel laboratories in the private sector to provide testing facilities to the secured
workers of the institution.
According to bidding documents, the firm/supplier will be responsible for complete installation and
commissioning of the machine.
During audit of the accounts of Secretary Labor Department Khyber Pakhtunkhwa for the Financial
Year 2022-23, it was noticed that under Project titled “Establishment of Clinical Laboratories (Grade A)
and X-Ray Facilities at Service Outlets of Khyber Pakhtunkhwa (Employees Social Security Institution
(ESSI)”, a contract for supply of fully automatic PCR (03 Nos) with all accessories was awarded to M/S
Jam Sons @ Rs.13,890,440/- each. In this connection a sum of Rs.27,780,880/- was paid to the supplier
vide Cheque No.045018 dt.28-6-22 and No.045025 dt.16-8-2022. The 03 Nos of PCR machines were
delivered to the concerned hospitals. During visit of the Employee Social Security Institution Medical
Centre at Peshawar, where one of the machines was supplied, it was noticed that only delivery of the said
machine was made but was not installed till date i.e. 09.08.2023. Due to defective/incomplete specification
given in the PC-I, the machines were not operational/installed and a huge amount of money was spent on
the hired panel laboratories in the private sector.
Audit held that as per bidding documents, the supplier was bound to install /operationalize the
machines which was not done.
627
The lapse occurred due to defective planning and financial mismanagement which resulted into
loss to the govt.
Audit recommends to conduct a fact-finding inquiry into the matter, recover the amount and fix
responsibility against person(s) at fault.
PDP No. 15 (2022-23)
628
Chapter-19
LAW DEPARTMENT
19.1 A). Introduction:
Law, Parliamentary Affairs and Human Rights Department deals with the legal matters
relating to government business. It includes tendering advice to other Government Departments and deal
with the legislative matters including taking action for promulgation of Ordinances, moving bills and laying
the ordinances before the Provincial Assembly for enactment, pursuing litigation cases before courts on
behalf of Government, whenever and wherever is necessary and printing of Acts, rules and Orders. It
includes tendering advice to other Government Departments and deal with the legislative matters including
taking action for promulgation of Ordinances, moving bills and laying the ordinances before the Provincial
Assembly for enactment, pursuing litigation cases before courts on behalf of Government, whenever and
wherever is necessary and printing of Acts, rules and Orders.
following business;
(1) The Law Department shall be consulted by the Departments.-

(a) on all legal questions arising out of any case;
(b) on the interpretation of any law;
629
(c) before instituting criminal or civil proceedings in a court of law in which Government
is involved; and
(d) whenever criminal or civil proceedings are instituted against Government.
(2) For any proposed legislation, the Law Department shall be consulted in accordance with
the provisions contained in these rules.
(3) Except as provided for in sub-rule (4), the Law Department is not, in respect of legislation,
an originating office and its proper function is to put into correct form all proposed
legislation. It is for the Administrative Department concerned to consider the desirability
of legislation and all points connected therewith. After it has reached its conclusions, it
shall refer the case to the Law Department with a memorandum indicating precisely the
lines on which it is proposed to legislate which should include:-
(a) a statement in the form of series of propositions detailing the provisions required to
be made, or preferably, a draft bill; and
(b) a statement giving the objects and reasons for such provisions.
The Law Department, apart from giving shape to the draft legislation, shall advise the
Administrative Department whether any sanction is required under existing statutory provisions
and whether any further legal requirements are to be compiled with. The Law Department shall
also advise whether the proposed law disregards or violates, or is not in accordance with the
principles of Law making, whether a reference should be made to the Council of Islamic Ideology
for advice, if not already done, and if so, what shall be the terms of that reference. The
Administrative Departments shall, after obtaining the approval of the Cabinet in terms of rule 19,
return the draft legislation to the Law Department for further action in terms of rule 29.
Note: Legislation means a bill or ordinance or an amendment thereto.
(4) Legislation relating to the codification of substantive law or for the consolidation of
existing enactments, or legislation of a purely formal character, such as repealing and
amending bills and short title bills, may be initiated in the Law Department. It shall,
however, consult the Administrative Departments concerned which shall consider the
draft legislation in its bearing on administration, make such enquiries and consultations
as may be necessary, and tender advice to the Law Department accordingly.
(5) The Law Department shall be consulted by the Administrative Departments before the
issue of the following:
(i) any order, rules, regulations, notification, or bye-law in the exercise of statutory
power; and
(ii) any sanction authorizing a subordinate authority to issue any order, rules, regulations,
notification or bye-law under a statutory power.
The Law Department shall advise whether the proposed draft is strictly within the power conferred
by the Legislature and is in the correct form.
(6) No Department shall consult the Advocate-General, except through the Law Department,
630
and in accordance with the procedure laid down by that Department. The Departments
should draw up specific points on which the opinion of the Advocate-General is desired.
(7) If there is disagreement between the views of the Advocate General and the Law
Department, the views of both the Law Department and the Advocate General should be
conveyed verbatim to the Department concerned, and if the Department concerned does
not accept the view of the Law Department, the case shall be submitted to the Minister
for Law for a decision, who may, in his discretion, take such a case to the Cabinet.
(8) Bills requiring assent or sanction of the President shall be referred to the Federal
Government by the Law Department.

(Rs. in million)
Total
Nos
23 23
(Excluding FAP)
3 Authorities/Autonomous bodies etc under PAO Nil Nil Nil N/A
was as follows;
631
Non-Development:
(Amount in Rs.)
Grant # and
Grant Original Re- Total Actual Excess/
Name of Supp. Grant Surrender Final Grant
Department
11-
Administration NC21 7,742,300,000 1,936,407,000 0 709,012,757 8,969,694,243 8,971,321,689
1,627,446
of Justice
11-
-
Administration NC24 2,043,289,000 531,245,000 0 259,293,904 2,315,240,096 2,315,216,689
23,407
of Justice
61-
-
Administration NC21 1,278,172,000 0 56,936,231 524,549,851 810,558,380 810,551,904
6,476
of Justice
Total 11,063,761,000 2,467,652,000 56,936,231 1,492,856,512 12,095,492,719 12,097,090,282
1,597,563

8,969,694,243
8,971,321,689
2,315,216,689
2315240096
810,558,380
810,551,904
1627446
Amount in Rs.
11-Administration of Justice 11-Administration of Justice 61- Administration of Justice
Development:
(Amount in Rs.)
Grant # and
Name of Surrender
Department
50-
Administration NC22 0 0 0 0 0 0 -
of Justice
Total 0 0 0 0 0 0 -
632
633
(Rs. in million)
Total Actual
Expenditure
Non-
12,095.49 12,097.09 1.60 0.01%
Development
Development - - -
Total 12,095.49 12,097.09 1.60 0.01%
14,000.00
12,000.00
10,000.00
Rs. in million
8,000.00
6,000.00
4,000.00
2,000.00
0.00
19.1(c) Issues in Law Department
The department released funds to different bar associations, but the payments were made on simple
receipts, in advance and on estimated cost. No APRs, bills and vouchers etc. were submitted by the bar
associations.
audit of the Law Department. Summary of the audit observations classified by nature is as under:
634
Amount
(Rs. in million)
3 Irregularities 323.500

5 Others -
Amount in Millions Non-productionof record
0
embezzlement and
misappropriation
Irregularities
irregularities
Procurement related
irregularities
Management of Accounts
with Commercial Banks

323.5 delivery issues
Others
635
Total No. of
points
1 2001-02 Law Department - - - -
2 2002-03 -do- - - - -
3 2003-04 -do- - - - -
4 2004-05 -do- - - - -
5 2005-06 -do- - - - -
6 2008-09 -do- - - - -
7 2009-10 -do- - - - -
8 2010-11 -do- - - - -
9 2011-12 -do- - - - -
10 2012-13 -do- - - - -
11 2013-14 -do- - - - -
12 2014-15 -do- - - - -
13 2015-16 -do- - - - -
14 2016-17 -do- - - - -
15 2017-18 -do- - - - -
16 2018-19 -do- - - - -
19.4 Audit Paras
19.4.1 Non-performance of basic functions of Law department
According to Rules of Business 1985, functions of Law Department have been defined.
During audit of the accounts of Secretary Law, Parliamentary Affairs and Human Rights
Department Peshawar for the Financial Year 2022-23, it was observed that the following functions were
not performed by Secretary Law Department, as detailed below;
1. Matters relating to legal practitioners including scales of fees.
2. Matters relating to approval of appointment, determination of fee and termination of services of
legal advisors, legal consultants, legal counsels or special counsels and engagement of legal
practitioners by the statutory bodies or any Administrative Department or its attached
Departments.
3. Salaries, Allowances and privileges of Speaker and Deputy Speaker of the Provincial Assembly.
4. Salaries, Allowances and privileges of member of the provincial assembly.
5. Review of human rights situation in the province.
6. Co-ordination of activities of government departments, in respect of human rights.
7. Initiatives for harmonization of legislation, regulations and practices with the international human
rights convents and agreements to which Pakistan is a party and monitoring their implementation.
636
8. Obtaining information, documents and reports on complaints and allegations of human rights
violations from government department and other agencies.
9. Refer and recommend investigations and inquiries in respect of any incident of violation of human
rights.
10. Representation of Province in international bodies, organizations and conference relating to human
rights in consultation and in conjunction with Foreign Affairs Division.
11. Developing and conducting information programmes to foster public awareness of human rights,
laws and remedies available against the abuse of human rights.
12. Formulating programs of teaching of human rights at educational institutions.
13. Provision of facilities for professional and teaching at home and abroad relating to human rights
issues.
Audit held that non-existence of one of the basic functions of Law department is a question mark
on the seriousness of the top management towards the implementation of Rules of Business.
The lapse occurred due to non-implementation of Rules of Business in its true spirit.
When pointed out in September 2023, it was stated that detailed reply will be furnished after
consulting the relevant record.
Audit recommends to justify the matter.
PDP No. 5 (2022-23)
19.4.2 Unauthentic payment to Bar Associations - Rs. 323.500 million
Para 96 of the GFR Vol.-I requires that money should not be spent hastily or in ill-considered
manner just because it is available or that the lapse of a grant could be avoided.
Para 207(3) of GFR requires the sanctioning authority to insist on obtaining an audited statement
on the accounts of body or institutions concerned in order to see that the grant-in-aid is justified and ensure
that any previous grant was not spent for the purpose for which it was not intended.
According to Clause-II of the terms and conditions for grant-in-aid vide Law, Parliamentary Affairs
& Human Rights Department Notification No.So(G)/LD/1-1/2012/17523-28 dated 17-05-2016, “as advised
by the Ministry of Law & Justice, Govt. of Pakistan vide Office Memorandum No.185-2016-Law-I dated
10-03-2016, the accounts of the bar associations receiving grant-in-aid from the provincial government
shall be audited every year by an auditor who is Charted Accountant as provided under Section 18 of the
Legal Practitioners and Bar Council Act1973. Bar associations shall submit audited statement to the
provincial government in the month of April every year. Read with Clause III, the grant-in-aid may be
released on case-to-case basis subject to provision of audit report from charted accountant.
637
During audit of the accounts of Secretary Law, Parliamentary Affairs and Human Rights
Department Peshawar for the Financial Year 2022-23, it was observed that the local office paid a sum of
Rs. 8,500,000/- to various Bar Associations on account of grant-in-aid on simple receipts during the Year
2022-23 and Rs. 315,000,000/- during the Year 2021-22 (Annexure-XXXIX). Audit observed the
following irregularities;
 All the payments were made on simple receipts, in advance and on estimated cost.
 Neither APRs, bills, vouchers were submitted by the bar associations nor produced to Audit.
 Audit reports from Charted Accountant firms for utilization of grant-in-aid were not submitted by
concerned Bar Associations as per above mentioned criteria.
 No details about compulsory taxes deduction and its deposit into government treasury were
submitted by the bar association nor demanded by the local office.
 No progress reports were submitted by the bar councils to the quarter concerned.
 No monitoring was conducted by the Law Department to know whether the grant was utilized for
the purpose mentioned in the demand letter or otherwise.
 No physical verification was conducted by the local office.
The lapse occurred due to weak internal controls and deviation from government instructions which
resulted into doubtful and unauthentic expenditure.
Audit recommends to inquire the matter and take appropriate action against the person(s) at fault
besides recovery of the amount.
PDP No. 1&2 (2022-23)
638
Chapter-20
LIVESTOCK DEPARTMENT
of:
 Agricultural Education and Research including Agricultural University.

 Experimental and demonstration farms.
 Improvement of Agricultural methods.
 Protection against insects and pests and prevention of plant diseases.
 Government gardens, including Botanical and Zoological gardens.
 Agricultural Engineering, mechanized cultivation and soil conservation.
 Improvement of varieties, its nutritional requirements and maintenance of soil fertility in
research wings.
 Improvement of Livestock.
 Prevention of animal diseases.
 Veterinary Training and Research.
 Prevention of cruelty to animals.
 Zoological Survey.
639
640
Audit Profile of Livestock Department;
Nos 2022-23 2022-23
1 Formations 37 20 10,851 174
 Assignment
Account
2  SDA Nil Nil Nil Nil
 Etc
(Excluding FAP)
3 01 01 1937.69 N/A
4 Nil Nil Nil N/A
(FAP)

Grant # and
Type Grant Apprioriation Expenditure (Savings)
Department
19- Animal
NC21 2,550,001,000 739,094,000 0 449,154,242 2,839,940,758 2,839,952,261
Husbandry 11,863
20-
NC21 44,619,000 858,000 0 37,226,759 37,226,759
Cooperation 8,250,241 -
-
23- Fisheries NC21 306,718,000 100 0 50,495,534 256,222,566 256,150,550
72,016
61- Animal -
NC21 368,315,000 0 172,652,061 9,954,695 531,012,367 530,917,078
Husbandry 95,289
-
61- Fisheries NC21 47,474,000 0 6,909,824 8,490,796 45,893,028 45,757,004
136,024
Total 3,317,127,000 739,952,100 179,561,885 526,345,508 3,710,295,478 3,710,003,652 -303,329
641
3,000,000,000
2,500,000,000
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
0
19- Animal 20- Cooperation 23- Fisheries 61- Animal 61- Fisheries
Husbandry Husbandry
-500,000,000
Development; (Rs.)
Grant #
Total
and Name Re-
of Appropriatio Surrender
Departmen n
e
t
60-Animal 189,517,00 145,961,30 43,555,69
NC22 0 0 48,536,704
Husbandry 0 3 7 4,981,007
189,517,00 145,961,30 43,555,69

Total 0 0 48,536,704
0 3 7 4,981,007
642
60,000,000
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0
60-Animal Husbandry
643
Final Total Actual

Grant Expenditure
-
Non-Development 0.00%
6,541.13 6,540.81 0.33
Development 1.26%
3,865.63 3,914.45 48.82
Total 0.47%
10,406.76 10,455.26 48.49
7,000.00
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
0.00
-1,000.00
audit of the Livestock Department. Summary of the audit observations classified by nature is as under:

Amount
(Rs. in million)
3 Irregularities -
644
5 Others -
Amount (in million)

201.79 Non production of record

Irregularities

1,511.40
1,263.17 Procurement related irregularities

Commercial Banks
issues
Others
Total No. of
points
Livestock
1 2001-02 14 14 - -
Department
2 2002-03 -do- 12 11 - 01
3 2003-04 -do- 06 06 - -
4 2004-05 -do- 03 01 - 02
5 2005-06 -do- 04 03 - 01
6 2008-09 -do- 14 05 - 09
7 2009-10 -do- 32 09 - 23
8 2010-11 -do- 25 08 - 17
9 2011-12 -do- 20 08 - 12
10 2012-13 -do- 08 07 - 01
11 2013-14 -do- 12 06 - 06
12 2014-15 -do- - - - -
13 2015-16 -do- - - - -
14 2016-17 -do- 09 3 4 2
15 2017-18 -do- - - - -
16 2018-19 -do- 3 - - 3
645
646
20.4 Audit Paras
20.4.1 Non-availability of progress reports/monitoring mechanism against Livestock Policy 2018
According to KP Livestock Policy 2018, the following are the objectives that the Policy aims to achieve:
 To ensure efficient delivery of services in the livestock sector in order to improve health, efficiency,
and productivity of livestock with sustainable use of natural resources
 To conserve, improve and develop local livestock breeds
 To promote the production of safe and healthy food
 To promote one health approach to minimize the incidence of zoonoses.
During audit of the accounts of Secretary Livestock, Fisheries and Cooperative Department for the
Financial Year 2022-23, it was requested, via questionnaires, to furnish essential information regarding the
progress of key performance indicators aligned with the Livestock policy. These indicators encompassed a
wide range of critical areas, including budget allocation, utilization rates, population growth, export
percentages, market dynamics, policy implementation, productivity, conservation efforts, and various other
aspects vital to the Livestock sector. However, it was revealed that neither the Livestock, Fisheries, and
Cooperative Department nor the Agriculture Department had provided any data or insights regarding the
advancement of these indicators, which are directly derived from the Livestock Policy of 2018.
Notably, the audit revealed that an impressive sum of Rs 14.590 billion was expended on the developmental
side of the Livestock Department since the inception of the Livestock Policy 2018. Despite this substantial
financial commitment, both the departments failed to provide any concrete evidence of progress pertaining
to the projects undertaken for the implementation of the Livestock Policy. In the absence of concrete
progress data at the administrative level regarding the substantial financial investments made in the
Livestock sector is a cause for deep concern. Nevertheless, neither the Agriculture Department nor the
Livestock Department possesses any reports/ data of the outcomes stemming from the implementation of
these significant investments. Audit held that in the absence of this important information through
monitoring mechanism, the administrative department would not be in a position to steer the progress on
the KPIs and further decisions making for improvement livestock sector would be compromised.
The lapse occurred due to weak internal control and weak management of Livestock Policy 2018 which
resulted in non-availability of progress reports/monitoring mechanism against Livestock Policy 2018.
The department was requested vide letter dated 30.10.2023 for holding DAC meeting. However, no DAC
Audit recommends to inquire the matter and fix responsibility against the person(s) at fault. Moreover, a
comprehensive and transparent reporting mechanism must be established to track and communicate
progress on the Livestock Policy's key performance indicators.
PDP No. 14 (2022-23)
647
20.4.2 Non transparent award of contract for supply of vaccine, medicine and non-forfeiture of bid
security - Rs. 917.062 million
According to para 33.1 of the SBDs, “within twenty days of the receipt of notification of award
from the procuring agency, the successful bidder shall furnish the performance security form provided in
the bidding documents, or in another form acceptable the procuring agency. Read with para 33.2, failure
for the successful bidder to comply with the requirement of ITB clause 32 or ITB 33.1 shall constitute
sufficient grounds for the annulment of the award and forfeiture of the bid security, in which event the
procuring agency may make the award to the next lowest bidder or call for new bids.”
According to advertisement for the purchase of vaccine, the purchase value of vaccine was
approximately 50.00 million. The vaccine was required to be purchased from manufacture/authorized
dealer having valid registrations/license issued by the Drug Regulatory Authority Pakistan. According to
para 10 of terms and conditions for the purchase of vaccine, in addition to call deposit mentioned at S.No.05,
the manufacture/authorized dealer will deposit 10% performance security. According to para 21 of terms
and conditions for the purchase of vaccine, the firm will provide an affidavit on judicial stamp paper that
he will pay the required vaccine testing fee of the laboratory.
During audit of the accounts of Director General (Extension) Livestock & Dairy Development Department
Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that Rs. 307,895,358/- (Annexure-
XL-A) and Rs.609,166,685/- (Annexure-XL-B) was incurred on account of purchase of vaccine and
medicine respectively.
Audit observed that;

 Performance security amounting to Rs. 91,706,204/- was not submitted by the firms for supply of
vaccine and medicine in violation of SBDs.
 Bid securities of all the firms who have not submitted performance securities were required to have
been forfeited which was not done by the local office.
 For supply of imported vaccine M/S Gul traders, Sarhad Traders and Bangash Traders were not the
authorized dealers therefore, the bids of these firm were required to have been rejected, however
instead of rejection the local office awarded the contracts to these suppliers.
 Advertisement was floated for the purchase of vaccine amounting to Rs. 50.00 million, whereas
the local office purchased vaccine for Rs. 307.895 million.
 Contract agreements were signed with Bangash Traders, Sarhad Traders and Gul Traders for the
supply of vaccine amounting to Rs.50 million, whereas the local office purchased vaccine from
Bangash, Sarhad and Gul traders amounting to Rs. 130,962,800/ Rs. 110,634,575/- and Rs.
43,384,185/- respectively.
 As per stock book of HQ, the vaccine (HSV and BQV) was utilized after lying for the period of 08
months, and repeated orders were placed for the supply of vaccine.
 Advertisement was floated for the purchase of medicine amounting to Rs. 100.00 million, whereas
the local office purchases medicine for Rs.609.166 million.
648
 Dates of DTL reports of medicine amounting to Rs. 83,285,668/- were tempered in order to justify
that the DTL was conducted before the issuance of medicine and payment of bills.
 DTL reports of medicine amounting to Rs. 63,998,225 purchased under the project “Establishment
of Civil Veterinary Dispensaries in Rented Building in Khyber Pakhtunkhwa were missing, audit
is of the view that either the DTL was not conducted or conducted after the payment.
 Inspection of medicine amounting to Rs. 324,998,010/- was not conducted.
 Contract agreements for supply of medicine were signed with the firms without mentioning the
amount of contract. Similarly contract agreement of M/S Gul Traders for supply of vaccine is still
lying unsigned.
 National Accountability Bureau was not informed as required under the rule ibid because the
contract exceeds the limit of Rs. 50 Million.
 Schedule of requirement was not mentioned in the tender documents.
 The demand for vaccine and medicine from the quarter concerned was not taken and all the
vaccine were purchased without keeping the needs and requirements.
 The utilization of the vaccine and medicines was not available on record.
The lapse occurred due to weak internal controls and non-observance of rules/regulations.
When pointed out in November 2023, no reply was given by the department.
Audit recommends to investigate the matter and fix responsibility against person (s) at fault.
PDP No. 106 & 107 (2022-23)
649
20.4.3 Unfair awarding of contract for supply of Holstein Friesian Heifers and non-forfeiture of bid
security - Rs. 270.180 million
According to para 33.1 of the SBDs, “within twenty days of the receipt of notification of award
from the procuring agency, the successful bidder shall furnish the performance security form provided in
the bidding documents, or in another form acceptable the procuring agency. Read with para 33.2, failure
for the successful bidder to comply with the requirement of ITB clause 32 or ITB 33.1 shall constitute
sufficient grounds for the annulment of the award and forfeiture of the bid security, in which event the
procuring agency may make the award to the next lowest bidder or call for new bids.” The amount of
performance security as percentage of the contract price shall be 5% as per GCC clause 7.1
Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that Rs. 270,180,000/- was incurred
on the purchase of Pregnant Holstein Friesian from M/S Agristock Solutions under the project “Community
Dairy and Meat Development in KP.”
Audit observed that;

 Performance security amounting to Rs. 13,509,000/- was not obtained from the supplier in order to
safe guard the interest of government and violation of SBDs.
 Loss due to non-forfeiture of bid security amounting to Rs. 20,000,000/- as the supplier failed to
submit the performance security.
 If the bid security was forfeited and contract was awarded to the next bidder, it would have saved
Rs. 14,870,000 (805,000-790000=15000*342=5,130,000-20,000,000 = 14,870,000)
 National Accountability Bureau was not informed as required under the rule ibid because the
contract exceeds the limit of Rs. 50 million.
 Amount of contract was not mentioned in the contract agreement.
 All the inspections reports were undated.
Audit therefore held that undue favor was extended to the contractor.
The lapse occurred due to violation of standard bidding documents.
PDP No. 108 (2022-23)
20.4.4 Irregular payment on account of appointment of Poultry Marketing Specialist - Rs. 1.740
million
650
According to advertisement for the post of Poultry Marketing Specialist qualifications was,
 DVM registered with PVMC/B.SC (Hons) Agriculture or equivalent qualification.
 10 years’ Experience
Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that Mr. Muslim Shah was appointed
as poultry marketing specialist vide Notification No.SO (LFC) AD/1-14/2022 dated 07/07/2022 on fixed
pay of Rs. 145,000/month under the project “Semi Environmentally Controlled Poultry Housing System
and revival/ revitalization of existing poultry farms in KP”
The selected candidate got 54 marks in academic/experience and 08 marks was obtained in interview
(maximum marks 08). The total marks of selected candidate were 62 (54+08). Similarly, another candidate
got 66 marks in academic/ experience having DVM degree and 16 years of experience. However, the
candidate was rejected on the ground that he was unable to answer any of the question asked by the
interview panelists. The appointment is irregular on the ground that the total marks of candidate selected
for the post were less than the unselected candidate after giving him zero marks in interview.
Audit is of the view that undue favor was extended to the selected candidate.
The lapse occurred due to violation of rules and regulations.
Audit recommends to investigate the matter and take appropriate action against the person (s) at fault.
PDP No. 115 (2022-23)
651
20.4.5 Irregular payment on account of appointment of various staff - Rs. 12.420 million
According to para 6 of advertisement in Urdu, test and interview call letters will be issued to the candidate
after scrutiny of applications for the post. Read with para 7, No T.A/DA will be admissible for test and
interview.
During audit of the accounts record of Director General (Extension) Livestock & Dairy Development
Department Khyber Pakhtunkhwa for the FY 2022-23, it was observed that the following officers/officials
were appointed under the project Establishment of KP University of Veterinary & Animal Sciences at Swat
and an amount of Rs. 12,420,000/- was paid on account of their pay and allowances (Annexure-XLI).
The appointment held irregular because:
 All the posts were filled directly without conducting the test.
 The construction of the building is in process, however, the Director works, Civil Engineer,
Biomedical engineer, material engineer, Computer operators, junior clerk, driver and office boys
were appointed in advance without any work/ job. Therefore, the appointment of the above staff is
illogical.
 NOC from surplus pool was not obtained.
 The marking details of the selected candidates were as follow;
Name Designation Academic & Interview Total Remarks

Experience Marks Marks
Jawad Ali Electrical Engineer 71.5 6 77.5 Selected
Inam Ullah 75 5 80 Not Selected
Muhammad Shehrayar Civil Engineer 77.5 4 81.5 Not Selected
Farid Ullah 74.5 5 79.5 Not Selected
Liaqat Ali 71.5 7 78.5 Selected
Saqib Ali HR Officer 67 7 74 Selected
Dr. Dilwar 74 2 76 Not selected
Audit therefore, held that the appointment of the above officers/officials is irregular.
The lapse occurred due to violation of selection criteria.
PDP No. 116 (2022-23)
20.4.6 Loss to the government due to purchase of vaccine at higher rate - Rs. 74.929 million
652
According to DG (Research) Livestock & Dairy Development KP order No. DG(R)/Accts
(77)/2018/11436-86 dated 28-11-2018, the revised rate for various Vaccine was:
S. No. Name of Items Existing rate Revised rate
01 FMD Vaccine (50 ml) 1200 2550/- per 50 ml pack (25 doses)
02 FMD Vaccine (10m) -- 600/- per 10 ml pack (05 doses)
03 Hemorrhagic Septicemia Vaccine 140 140 (15 doses)
04 Black Quarter Vaccine 180 225 (60 doses)
05 Enterotoxaemia Vaccine 200 250 (100 doses)
Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that expenditure to the tune of Rs.
93,728,550 /- was incurred on the purchase of various vaccines from private suppliers as per details given
below:
Name of Supplier VRI Total
Office Rate Qty Diff. Amount
Vaccine Rate Rate Qty.
FLF FMD 6950 288 278 102 176 7200 1,267,200
Directorate Black Quarter Vaccine 236 5500 110 3.75 106.25 275000 29,218,750
Directorate HSV 4000 260 80 9.33 70.67 13000 918,710
Directorate FMD 6950 2877 278 102 176 71925 12,658,800
Directorate HSV 4000 1360 80 9.33 70.67 68000 4,805,560
Directorate Black Quarter Vaccine 236 1100 110 3.75 106.25 55000 5,843,750
Community Dairy and Meat
Development FMD 6950 72 278 102 176 1800 316,800
Control of Livestock Disease HSV 4000 630 80 9.33 70.67 31500 2,226,105
Control of Livestock Disease Black Quarter Vaccine 236 450 110 3.75 106.25 22500 2,390,625
Control of Livestock Disease FMD 6950 957 278 102 176 23925 4,210,800
Control of Livestock Disease HSV 4000 250 80 9.33 70.67 12500 883,375
Control of Livestock Disease Black Quarter Vaccine 236 100 110 3.75 106.25 5000 531,250
Total 74,929,725
The verification of record revealed that vaccines were purchased from private supplier at higher rate than
the rate offered by the VRI KP and VRI Punjab, resulting in loss to Government worth Rs. 74,929,725/-.
653
Audit recommends to investigate the matter and fix responsibility on person(s) at fault besides
PDP No. 105 (2022-23)
20.4.7 Non-implementation of KP Food Security Policy 2021
According to para 6.1.6 of the KP Food Security Policy 2021, key policy measures are:
 Promotion of Cold & Warm Water Fisheries through Public Private Partnership
 Provision of cold reapers and other transport / storage facilities on subsidized rates
 Strengthening of Government hatcheries
 Promotion of Environment friendly practices in potential areas
 Special financial support for Fisheries business in the province
 Introduction and support to the value addition / processing of fish & fish products
 Involvement of Model Farm Services Centers in Fisheries promotion in the province
 Involvement and support to women farmers and entrepreneurs
During audit of the accounts of Directorate General Fisheries for the Financial Year 2022-23, it was
observed that a substantial amount of Rs. 1,121,221,168/- had been expended since the inception of the KP
Food Security Policy 2021. However, Audit observed the following;
 It was evident that the department had not taken significant steps to promote cold and warm water
fisheries through public-private partnerships.
 No initiatives were undertaken to provide cold reapers and other storage facilities at subsidized
rates, which are essential for the development of the fisheries sector within the province. This lack
of attention to such critical infrastructure hampers the growth and sustainability of the industry.
 The KP Food Security Policy 2021 mandated the strengthening of government hatcheries.
However, we found that the number of hatcheries had decreased from 12 to 11 during the Financial
Year 2022-23, which is in direct contradiction to the policy's objectives. This reduction could
potentially affect the province's capacity to sustain its fisheries resources.
 Another issue was the department's exclusive focus on increasing fish species production without
adequate attention to value addition and processing of fish and fish products. The policy had
outlined the establishment of processing units and cold storages, which, unfortunately, remained
unrealized. The absence of these facilities impedes the growth and diversification of the fisheries
sector.
 The department failed to establish Model Farm Services Centers for fisheries promotion in the
province, as stipulated in the policy. Such centers are vital for disseminating best practices, training,
and technical support to fishery stakeholders, and their absence is a missed opportunity for industry
development.
 In contrast to the Agriculture and Livestock sectors, the Fisheries Department lacks state-of-the-art
laboratories and research centers necessary for research and development of fish species and their
diseases. This deficiency necessitates the reliance on the department's own laboratory for minor
fish disease diagnosis, while advanced diagnostics require referral to the Veterinary Research
654
Institute. This not only hinders timely and effective disease management but also demonstrates a
lack of dedicated research infrastructure for the fisheries sector.
 KP is the only province in Pakistan where all three types of waters—Cold, Semi-Cold, and Warm
Water—are available. Each type of water presents unique opportunities for breeding various fish
species. Additionally, the Fisheries Department possesses a substantial workforce. However, due
to insufficient fund allocation, the potential of this sector remains underutilized, preventing the
province from harnessing its full capabilities.
The lapse occurred due to ill planning and underutilization the optimum potential of the fisheries
department.
When pointed out in November 2023, no reply was given.
Audit recommends the following:

 The Fisheries Department should urgently invest in critical infrastructure and facilities, such as
cold storage and processing units, to support the growth of the fisheries sector in KP.
 Increase funding allocation to fully harness the potential of the province's diverse water resources,
focusing on multi-species breeding and hatchery expansion, while prioritizing the establishment of
Model Farm Services Centers for capacity-building and technical support.
 Collaborate with key stakeholders, review the KP Food Security Policy 2021 periodically, and
implement a robust monitoring and evaluation system to ensure policy objectives are met,
contributing to enhanced food security and economic development in the region.
PDP No. 69 (2022-23)
655
20.4.8 Loss of potential revenue due to non-allocation of funds under AIP -
According to Tribal Decade Strategy 2020-30, planned investment outlay of Tribal Decade Strategy in
fishing sectors in 2019-20, 2020-21, 2021-22 and 2022-23 were Rs. 367 million in first three financial years
each and Rs. 400 million in FY 2022-23 for the development of fisheries sectors in merged districts through
the following actions;
 Preparing and implementing a fisheries management plan for conservation of fish biodiversity.
 Promoting fish farming and fisheries resources.
 Increasing the natural fish population in water bodies.
 Improving marketing infrastructure and improving access to micro-credit.
 Mobilizing local communities and linkages with public and private-sector services for technical
assistance and inputs.
 Improving the access of extension services and develop a follow-up mechanism for monitoring.
 Adopting measures to conserve natural fish resources and improving aquatic health.
 Building capacity of small farmers and enabling them to transition into large scale commercial
farming.
 Supporting fish farmers so as to make them climate change and disasters risk resilient
 Strengthening linkages of fisheries sector with water sector, agriculture sector and forestry sector
for a more coordinated and integrated natural resources and ecosystems-based development
approach
During audit of the accounts of Directorate of Fisheries Department (Merged Areas) for the Financial Year
2022-23, it was observed that a sum of Rs. 1,501,000,000/- was required to have been invested in the
fisheries sectors of merged districts under Tribal Decade Strategy starting from the FY 2019-20 to 2022-
23. However, further scrutiny of record revealed that not a single rupee was spent under AIP since the
inception of the Tribal Decade Strategy 2020-30. The merged districts, endowed with cold waters in the
upper reaches conducive for trout, and warm waters in the lower reaches favoring carp varieties such as
Grass, Mori, Silver, Rohu, and Thaila, present a prime opportunity for economic development through
pisciculture. With 934 kilometers of rivers and streams, 31 small dams, irrigation canals, and springs, the
potential for intensive fish farming is substantial. However, institutional weaknesses have impeded efforts
to harness this potential, resulting in underutilization of the aquatic resources.
Audit held that despite a considerable increase in the workforce of the Fisheries Department from 44 to
163, following the merger of FATA with Khyber Pakhtunkhwa, the operational output in terms of revenue
generation has not reflected a corresponding growth. Audit brought to light that increase in human resources
did not translate into increased operations or the completion of significant projects to enhance departmental
revenue. Instead, the creation of new posts occurred without a commensurate increase in operational
productivity.
Moreover, as per the Tribal Decade Strategy, there were 31 small dams in the merged districts. However,
the local office had been leasing out fishing rights for only one dam once every three years, thereby missing
out on the potential revenue that could be generated from the remaining dams.
656
The lapse occurred due to non-implementation of Tribal Decade Strategy which resulted in loss of potential
revenue.
Audit recommends implementation of Tribal Decade Strategy for the fisheries sector, requesting relevant
forum for allocation of funds as planned under TDS and enhance operational efficiency by aligning the
increased workforce with strategic initiatives for revenue generation, ensuring the regular leasing of fishing
rights for all small dams, thereby maximizing potential revenue streams.
PDP No. 74 (2022-23)
20.4.9 Unjustified expenditure due to irrational creation of posts - Rs. 187.630 million
According to para 10(i) of GFR Vol-I, every public officer incurring expenditure from public fund is
expected to exercise the same vigilance in respect of expenditure incurred from public money as a person
During audit of the accounts of Directorate General Fisheries for the Financial Year 2022-23, it was noticed
that the Fisheries Department, with a total sanctioned strength of 2509 personnel, distributed across
provincial and district levels, revealed a significant allocation of positions at the district level. Notably,
District Swat stood out, as it had an Assistant Director Fisheries office in Madyan with a sanctioned strength
of 107 personnel and another in Mingora with 313 sanctioned personnel. Of particular concern was the
creation of a new office for the Deputy Director Fisheries in Matta, which had an astonishingly large
sanctioned strength of 583 personnel, amounting to 23% of the entire department's strength.
Upon further examination, it was observed that most of the dams for fish farming were in District Karak
and Kohat, and hatcheries in District Chitral and Dir. Matta lacked both fish hatcheries and dams, which
is not justified on any ground and chances political interference behind the decision making cannot be ruled
out. The fiscal implications of this unjustified staffing decision were substantial, imposing an annual burden
of Rs. 187,630,104/- on the already strained public exchequer.
Furthermore, record relating to fresh appointment made were also not produced to Audit.
The lapse occurred due to ill planning which resulted in unjustified/irrational creation of post involving
annual salaries in millions of rupees.
657
Audit recommend to investigate the matter and fix responsibility on the person(s) at fault.
PDP No. 68 (2022-23)
20.4.10 Overpayment on account of civil work activities – Rs. 1.000 million
According to Market Analysis 2021, 22% was added to the actual price of items which constitutes
(contractor profit + (overhead + material + labor + equipment + taxes)).
According to the page 11 of the approved PC-, Development of Reservoirs for Fisheries in KP, the All the
civil works will be carried out by the beneficiary and not through contractor/sub-contractor, whereas Soil
Conservation Department will only provide technical inputs and will ensure the quality of works.
During audit of the accounts of Directorate General Fisheries Department Khyber Pakhtunkhwa for the
Financial Year 2022-23, it was observed that an amount of Rs. 10,000,000/- was paid to the Soil
Conservation department and on farm water management for the establishment Carp Fish farms in private
sector. However, further scrutiny of record revealed that the project management was only deducted 12%
contractor profit from the MRS schedule of 2021 in the PC-I instead of the approved and applicable rate of
22%, which resulted into an overpayment of Rs. 1,000,000/- (Rs 10,000,000 X 10%).
Audit held that the management was required to deduct the total 22% (contractor profit + overhead + material
+ labor + equipment + taxes) from the overall MRS rate as was done in the similar project for Development
of Cold Water Fisheries in Khyber Pakhtunkhwa.
The lapse occurred due to non-observance of rules and regulations which resulted into overpayment to the
contractor.
PDP No. 81 (2022-23)
20.4.11 Loss to the government due to decrease in revenue / production trend –

Rs. 10.397 million
According to Para 23 of GFR vol I, every Government officer should realize fully and clearly that he will
be held personally responsible for any loss sustained by Government through fraud or negligence on his
part or on the part of his subordinate.
During audit of the accounts of Director Cattle Breeding and Dairy Farm Harichand for the Financial Year
2022-23, the production of semen by the Semen Production Unit and its revenue was compared with the
658
last four years, the production of semen was decrease each year instead of increase, which is a serious
question mark on the performance of SPU and its management, the details of last five-year production and
revenue was given below;
Year Semen Production Rate Revenue
2018-19 391,484 80 31,318,720
2019-20 298,065 80 23,845,200
2020-21 301,341 80 24,107,280
2021-22 278,360 80 22,268,800
2022-23 261,510 80 20,920,800
Decrease of Rs. 10,397,920 (31,318,720-20,920,800) was noticed by the audit during the comparison of
last five years, despite the fact that all other factors remained constant during the period mentioned.
The irregularity occurred due to weak internal controls, which resulted into decrease of production and
revenue.
When pointed out in December 2023, the management did not furnish reply.
PDP No. 98 (2023-23)
659
Chapter -21
Local Government Elections & Rural Development Department
21.1A) Introduction
The Local Government, Elections and Rural Development Department is working to respond to the
specific needs of the citizens of Khyber Pakhtunkhwa falling within the ambit of local governance. The
Department has been assigned the responsibility to implement the Khyber Pakhtunkhwa Local Government
Act 2013 to achieve the stated objectives of the local government reforms introduced by the Government
of Khyber Pakhtunkhwa. The Department also has regulatory and administrative functions to ensure that
the local governments throughout the province perform their roles and functions within the policy
framework introduced under the new law.
Vision of the department is to enhance the local governments’ ability to generate revenue and
optimally utilize development funds while meeting the needs of their respective administrative units,
including the ability to deliver municipal services and provide infrastructure. Policy of the department is to
enable cities and towns in the province to become engines of economic growth, to create efficient
mechanisms for governance of urban and rural areas that can facilitate the flow of goods and services, to
address inter-jurisdictional and intra-jurisdictional issues between cities, towns and villages, to build the
capacity of local governments to provide municipal infrastructure, facilities and services.
The department pursue objectives to encourage local government institutions as an obligation and
a principle of policy, decentralization of government administration on the axis of expeditious disposal of
business for convenience of the public, devolution of political, financial and administrative authority and
responsibility to elected representatives in local governments. The strategic interventions include;
660
improving citizen participation and bringing the state closer to the citizen, outlining a framework for shared
commitments of the government and development partners, developing a common understanding of the
local gov;8ernment system, setting the context for delivery of assistance of development partners for
strengthening local government system, overseeing the placement of systemic arrangements, resource
allocation and support institutions, contributing through exchange of experience and lessons learnt.
of:
 All matters connected with the Administration of the 3Khyber Pakhtunkhwa Local Government
Ordinance, 2001.
 North- West Frontier province Public Property (Removal of Encroachment) Act, 1977.
 Muslim Family Law Ordinance, 1962.
 Hackney Carriage Act, 1879 and Stage Carriage Act, 1861.
 Conciliation Courts Ordinance, 1961.
 Special Marriage Act, 1872.
 Fire Brigade.
 Census.
 Burning and burial grounds and Muslim grave-yards not taken over by the Auqaf Department.
 Matter pertaining to the Election for the Provincial and National Assemblies.
 Provincial Election Authority and Provincial Election Tribunal concerning Local Councils.
 Matters relating to Referendum on a national issue.
 Village Police.
 Rural Works Programme and Rural Uplift.
 German Aid Financial Project (Pakistan Academy for Rural Development), and Budget and
Accounts matter of Pakistan Academy for Rural Development (PARD) and Pakistan Provincial
Services Academy (PPSA) development plans and development funds pertaining to Local Councils
and Local Bodies.
 Grant-in-Aid for Local Councils.
 Processing of ADP through District Coordination Committees.
 Water supply and Sewerage Schemes of Local Councils.
 USAID Financial Project.
 Asian Development Bank Assisted Projects (Farm to Market Roads through Local Councils).
 World Food Programme.
 UNICEF Programme.
 Women Programme and Overseas Women Foundation.
 Adult Education.
 Village/Union Council Library Programme.
 Local Council Reforms/Local Government Commission.
 Matters relating to KachiAbadi.
 Village Electrification Programme.
 Registration of Births, Deaths and Marriage.
661
 Slaughter houses under the Local Councils and Local Bodies (other than those in Cantonments).
 Local Councils Services including Engineering and Health Services for Local Councils.
 High/Low Selection Boards (LCS) and other matters relating to the Local Councils Services.
 Service matters of the defunct Village Aid and B.D. Department.
 Delegation of additional power to Local Councils.
 Privileges and Protocol of Local Councillors.
 Ponds and Prevention of cattle trespass.
 Pre-partition claims relating to Local Bodies.
 Seminars, conventions and publications concerning Local Councils.
 Local Councils contribution to Provincial Government.
 Local Taxation and Local Rates.
 Education Cess on Octroi.
 Education Cess on Export Tax.
 Urban Property Tax payable to Local Councils.
 Aerial Spray Surcharges on Gur.
 Local Government Pool Fund.
 Local Government Research Statistics and Evaluation.
 Foreign delegations/training of Local Councillors.
 Construction and minor repair of Basic Health Units and Primary Schools, Maktabs through Local
Councils.
 Arrangements of Horse and Cattle Shows and Fairs.
 Jashan-i-Khyber.
 Coordination of Nation Building Departments through District Coordination Committees.
 Management of Nazool Land.
 Service matters except those entrusted to Establishment & Administration Department.
662
Audit Profile of Local Govt. Department:
(Rs. in million)
Total Expenditure Revenue/Receipts
Nos Audited FY 2022-23 Audited FY 2022-23
1 Formations 15 01 11,136 0
2 04 Nil Nil N/A
 SDA
Authorities/Autonomous bodies etc under
3 11 Nil Nil N/A
PAO
4 Foreign Aided Projects (FAP) 02 02 1,068 N/A

was as follows:
Non-Development:
(Amount in Rs.)
Grant #
and Grant Original Supply: Re- Final Total Actual Excess /
Surrender
Name of Type Grant Grant appropriation Grant Expenditure (Savings)
Department
17-Local
NC21 12,559,710,000 320 0 5,397,456,094 7,162,254,226 7,162,242,512 (11,714)
Government
Total 12,559,710,000 320 0 5,397,456,094 7,162,254,226 7,162,242,512 (11,714)
8,000,000,000
7,000,000,000
6,000,000,000
Amount in Rs.
5,000,000,000
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
0
17-Local Government
-1,000,000,000
Final Grant Total Actual Expenditure Excess / (Savings)
663
Development:
(Amount in Rs.)
Grant #
and Name Grant Original Supply: Re- Final Total Actual Excess /
Surrender
of Type Grant Grant approrpiation Grant Expenditure (Savings)
Department
Local 2,543,541,000 0 167,988,187 1,454,541,063 1,256,988,124 1,256,988,124 0
NC12
Government
Total 2,543,541,000 0 167,988,187 1,454,541,063 1,256,988,124 1,256,988,124 0
1,400,000,000
1,200,000,000
1,000,000,000
Amount in Rs.
800,000,000
600,000,000
400,000,000
200,000,000
0
Local Government (NC22)
Overview of expenditure against the final grant

(Rs. in million)
Non-Development 7,162.254 7,162.242 0 0
Development 1,256.99 1,256.99 0 0
Total 8,419.244 8,419.232 0 0
8,000.00
7,000.00
6,000.00
Rs. in million
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
0.00
664
21.1 C) Issues in Local Government Department
The major issue in the Developmental Authorities is violation of approved building plans that too
without realizing the penalty. Similarly, restoration charges were not recovered on restoration of cancelled
allotments. Many issues in the receipts of these formations were observed. Cases of non-auction of the
plots/ flats and illegal allotments / relocation of plots were made which deprived these authorities from the
revenue. There were no details of the head-wise figures of the departmental own receipts collected by the
department.

audit of various developmental authorities of the Local Government and Rural Development Department.
This amount also includes recoveries of Rs. 1,054.509 million as pointed out by the audit. Summary of the
audit observations classified by nature is as under:
Amount
(Rs. in million)
3 Irregularities
C Management of Accounts with Commercial Banks 1,183.376
5 Others 1529.637
Amount
(Rs. in million)
0 23.962

0

1529.637
817.682
embezzlement and
misappropriation
0
1,183.38
Irregularities
161.587
665
21.3 Brief comments on the status of compliance with PAC directives: -
Total No. of
S Audit Name of Full Partial
actionable Nil compliance
No. Year Department compliance compliance
points
Local
1. 2008-09 4 1 - 3
Government
2. 2009-10 -do- 2 1 - 1
3. 2010-11 -do- 20 2 - 18
4. 2011-12 -do- 9 2 - 7
5. 2012-13 -do- 6 1 - 5
21.4 Audit Paras
21.4.1 Loss to the government due to non-deduction of taxes and non-imposition of penalty – Rs.
7.257 million
According to According to Section 153(1) (c) of the Income Tax Ordinance 2001, income tax is
required to be deducted at the prescribed rates from the service provider bills by the withholding agent and
deposited into government treasury as soon as possible.
According to the Working Tariff to the Second Schedule to the KP Finance Act 2013, issued vide
Notification No: BO(Res-III) FD/2-2/2019-20/Vol-I dated 05.08.2020, the KP Sales Tax on Services on
various services shall be deducted at the prescribed rates i.e. 2% from various service providers.
During audit of the accounts of Secretary Local Government, Elections and Rural Development
Department Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that the local office
executed an agreement with M/S Liaison Corporation (Consultant) on 17.09.2021 with the completion date
of 16.12.2022 for the project “Support to Local Government System” at the cost of Rs. 90,000,000/-.
Accordingly, the local office paid a sum of Rs. 32,987,520/- to the consultant but the consultant neither
completed the scheme till completion period i.e. 16.12.2022 nor till date of audit i.e. 30.06.2023, resulting
into unnecessary blockage of public money.
Moreover, the local office neither deducted the government taxes from the payments made to the
consultant nor imposed penalty for non-completion of the scheme in time which resulted in loss of Rs.
7,257,254/- to the government, as detailed below;
Object Head Cheque # Date Amount (Rs)
A03970 (Others) 2287586 23.12.21 18,000,000
A03970 (Others) 2322081 16.03.22 14,987,520
Total payment 32,987,520
Income Tax (10%) 3,298,752
Sales Tax on Services (2%) 659,750
Penalty (10%) 3,298,752
666
Loss 7,257,254
The lapse occurred due to weak internal and financial controls, which resulted in non-completion
of the project on one hand and loss to the government on the other.
When pointed out in August 2023, management stated that detailed reply will be given after
scrutiny of record.
Audit recommends to inquire the matter and fix responsibility at the person(s) at fault.
PDP No. 1 (2022-23)
21.4.2 Irregular awarding of contract for improvement of streets – Rs. 76.255 million
According to Clause 7 (VII) of the terms and conditions of the NIT published on 14.04.2021, the
technical proposals / bids of the contractors / firms will be evaluated in accordance with the laid down
evaluation criteria i.e. the firms / contractors having their own asphalt plant and paver machine for road
works and other related machinery and concrete batch plant.
During audit of the accounts of Peshawar Development Authority Peshawar for the Financial Year
2021-22, it was observed that the Directorate of Roads-II awarded the contract for Improvement of Roads,
Street Pavements and Drains in UC-Daag and UC-Kaneeza to M/S Hafiz Hayat Ullah & Brothers for Rs.
76,255,367/- (2% below the bid cost of Rs. 77,811,600) vide work order dated 26.07.2021. The other two
competing firms were technically disqualified on the basis of non-availability of asphalt plant, their
financial bids returned un-opened and resultantly a single bidder was technically qualified, his financial bid
opened and contract awarded. However, further scrutiny of record revealed that the 9 th Final Bill did not
include any asphalt related item being executed on ground, instead, the streets were improved through PCC
related works.
Moreover, the availability of asphalt plant with the contractor was not the mandatory requirement
in evaluating the technical proposal as evident from the NIT referred to above.
Audit held that as the directorate management carried out the PCC related works, therefore, the
management should have either not rejected the technical proposals on the basis of non-availability of
asphalt plants or the work should have been re-advertised for getting economical rates.
Audit further held that returning the financial bids of the competing firms unopened resulted into a
loss of Rs. 6,224,928/- (10% rebate approximate average below rate prevailing in the authority management
– 2% below offered by the selected bidder = 8% below X Rs. 77,811,600) to the authority funds.
The lapse occurred due to violation of rules and regulations which resulted in fraudulent awarding
of contract.
667
When pointed out in June 2023, it was replied that detailed replies will be furnished after checking
the relevant record.
The department was requested vide letter dated 22.09.2023 for holding the DAC meeting. However,
PDP No. 452 (2021-22)
21.4.3 Unauthorized payment due to irregular awarding of consultancy contract –

Rs. 114.460 million
According to Section 14 (1) of CHAPTER III of Khyber Pakhtunkhwa Public Procurement

Regulatory Authority Regulations 2014, the procuring entity shall use open competitive bidding as the
principal method of procurement for the procurement of goods over the value of Rs. 100,000/ rupees one
hundred thousand.
According to the administrative approval accorded and issued by the local government department
vide letter dated 19.07.2021, PDA should ensure vigorous supervision through skilled staff at site for
optimal implementation of the project and also to provide timelines / work schedule to the P&D Department
so that timely implementation is ensured and the project be tracked accordingly.
2021-22, it was observed that the Directorate of Roads-II paid an amount of Rs. 114,460,082/- to M/S
NESPAK vide 8th Running Bill dated 03.05.2023 on account of consultancy services under the scheme
Construction of Bus Terminal at Northern Bypass / Motorway Junction Peshawar. However, further
scrutiny of record revealed that the directorate management failed to adopt open tendering system for hiring
of the consultancy services.
Moreover, there was no (consultancy) work order available in the file to determine the actual cost
of awarding of the consultancy contract.
Furthermore, had the proposal given in the summary to the Chief Minister Khyber Pakhtunkhwa
on 21.12.2015 regarding construction of state-of-the-art bus terminal on the new proposed site through
Public Private Partnership been agreed to, payment to the consultant by the provincial government could
have been avoided altogether by charging the same to the private contractor and the provincial kitty could
have been saved from the cost incurred on the consultancy charges.
It is worth mentioning here that the consultancy firm could not carry out detailed feasibility study
for submission to the provincial government as to whether the bus terminal should be constructed by the
provincial government or through public private partnership and the resulting cost vs benefits of opting
either of the two options.
668
Audit held that making payments to the consultancy firm without adopting open tendering system
and issuing proper work order was a serious lapse which not only makes the payments to the consultant as
unauthorized but chances of complications in carrying out the consultancy assignment cannot be ruled out.
Audit further held that as the PDA was required to ensure vigorous supervision of the scheme
through its skilled staff, there was no need to hire the services of the consultancy firm, and the said tasks
should have been performed through the PDA’s staff.
payment.
PDP No. 453 (2021-22)
21.4.4 Overpayment on account of hot rolled deformed bars – Rs. 43.716 million
According to Rule 209 (d) of CPWA code, all payments for work or supplies are based on the
quantities recorded in the measurement book, it is incumbent upon the person taking the measurement to
record the quantities clearly and accurately.
2021-22, it was observed that the Directorate of Roads-II paid an amount of Rs. 819,596,018/- to M/S
Probuilt Construction vide 8th Running Bill dated 30.08.2022 on account of executing different items of
work under the scheme Construction of Detour Road Hayatabad Remaining Portion (Phase-II). However,
further scrutiny of record revealed that the directorate management utilized 512.80 ton “Hot Rolled
Deformed Bars Grade-60” against 2407.40 M3 of “RCC” resulting into excess utilization of 267.12 tons of
hot rolled deformed bars which resulted into overpayment of Rs. Rs. 43,716,714/- to the contractor as
detailed below;
Steel req.
Component RCC exec Steel exec. Diff. Rate Amount
@ 1.30
Sub Structure 1595.74 285.34 162.85 122.49 163,656.5 20,047,059
Super Structure 523.38 176.53 53.41 123.12 163,656.5 20,149,236
Culverts 288.28 50.93 29.42 21.51 163,656.5 3,520,419
Total 2407.40 512.80 245.68 267.12 43,716,714
contractor.
669
Audit recommends to inquire the matter and fix responsibility at the person(s) at fault besides
recovery of the overpaid amount.
PDP No. 467 (2021-22)
21.4.5 Doubtful payment on account of AWC – Rs. 5.902 million
According to Clause 60.1 of the general conditions of the contract, the contractor shall be entitled
to payment against the value of permanent works executed. Read with Rule 397 of the Federal Treasury
Rules Volume-I, no payment can be made to the contractor except for work actually done or supplies
actually received.
During audit of the accounts of Peshawar Development Authority Peshawar - Directorate of Roads-
II for the Financial Year 2021-22, it was observed that an amount of Rs. 11,854,473/- was paid to M/S Al
Mehreen Enterprises on account of executing an item of work “AWC” for a quantity of 634.21 M 3 at the
rate of Rs. 18,691.45 vide 4th& Final Bill under the scheme Upgradation / Widening of Approach Road to
Bacha Khan International Airport. However, further scrutiny of record revealed that a quantity of 6368.57
M2 of another complementary item of work “bituminous tack coat” was executed, meaning thereby that an
amount of Rs. 5,902,582/- (6368.57 M2 / 20 = 318.42 M3 – 634.21 M3 = 315.79 M3 X Rs. 18,691.45) paid
to the contractor was doubtful.
Moreover, the contractor failed to execute the item of work “ABC” despite the fact that the same
was included in the approved technical sanction for which a quantity of 5160.03 M2 of bituminous prime
coat was also carried out for an amount of Rs. 975,865/-.
The stance of Audit was further strengthened from the fact that in the technical sanction a quantity
of 13,895 M2 of bituminous tack coat was approved for executing a quantity of 694.75 M3 of AWC (13,895
M2 / 20 = 694.75 M3).
The lapse occurred due to violation of rules and regulations which resulted in doubtful payment.
670
PDP No. 479 (2021-22)
21.4.6 Wasteful expenditure on account of RCC Planters – Rs. 13.481 million
According to Clause 5 of the revised PC-I of the project Beautification of Peshawar Canals
Peshawar, the objectives of the project are to convert the eye sore image of the canal into a pleasant view
and the general public will have a clean environment. Beautification of the canal will improve the aesthetic
view of the entire city.
2021-22, it was observed that the Directorate of Horticulture paid an amount of Rs. 13,481,844/- to M/S
Malik Masroor & Co. vide 5th running bill dated 07.01.2022 on account of RCC Planters under the work
Beautification of Peshawar Canals under ADP Scheme. However, further scrutiny of record revealed that;
 There was no provision for carrying out the RCC Planters in the original PC-I of the project.
 In the justification for revision of the PC-I of the project, the reasons given were that as there is a
conflict between the current ADP Scheme and another ADP Scheme carried out by the Irrigation
Department, the scope of work needs to be revised to include “provision of RCC Planters”.
However, the scope of work and the cost summary did not include the said provision.
 The project was restricted to (and closed) an amount of Rs. 13,481,844/- despite the fact that the
PC-I of the project was revised for an amount of Rs. 97.665 million due to unknown reasons.
 The RCC Planters (and the seasonal plants) did not serve the purpose of initiation of the project.
 The conversion of the scheme from beautification to provision of RCC planters was also not
feasible on the grounds that the seasonal plants in the RCC planters needs plenty of water in hot
weather.
 There was no approved drawing of the revised scope of work i.e. the RCC Planters.
 The nature of the scope of work of the project was changed on the mere visit of the Secretary Local
Government without obtaining any visit report from the secretary office.
 The physical verification of site at Warsak Gravity Canal revealed that plantation of big trees was
already carried out alongside the canal and there was no need to place the RCC Planters behind
these plants as they were not visible.
 In most of the cases, the planters were empty and no plants were found planted in them.
 The purpose of converting the eye sore image of the canals to pleasant view could have easily been
achieved by merely planting seasonal (and other) plants in the small pits in the available land
alongside the canal.
 There was no documentary evidence regarding reservations raised by the Irrigation Department on
the basis of which the scope of work was completely changed.
Audit held that neither the PDA Authorities nor the Chief Infrastructure P&D Department pointed
out the issues while preparing / approving the original and revised PC-I of the project which resulted into
non-achievement of the main project objectives and that the expenditure being incurred was held wasteful.
671
PDP No. 488 (2021-22)
21.4.7 Loss to the authority funds due to non-forfeiture of CDR and awarding of contract at higher
rate - Rs. 4.396 million
2021-22, it was observed that the Directorate of Electrical carried out bidding for Conversion of Solar Based
LED Lights to Conventional System starting from Kohat Road Flyover to Pir Zakori Bridge Wherein M/S
Sardar Muhammad & Company offered 18.20% below rate (the lowest rate). Further scrutiny of record
revealed that the contractor submitted a fake 8% additional security amounting to Rs. 6,800,000/-, as
evident from the directorate letter dated 31.05.2021. However, the directorate management failed to forfeit
the 2% CDR submitted with the financial proposal amounting to Rs. 1,700,000/- till date of audit i.e. June
2023.
Moreover, the directorate management awarded the contract to M/S Pak Friends Construction &
Developers vide work order dated 07.07.2021 at the cost of Rs. 71,638,770/- (15% below) instead of the
lowest rate of 18.20% below amounting to Rs. 68,941,781/-, which resulted in loss of Rs. 2,696,989/- to
the authority funds.
Audit held that the directorate management should have awarded the contract to the second lowest
at the risk-&-cost of the lowest bidder and thus should recover the amount from the defaulted contractor.
The lapse occurred due to violation of rules and regulations which resulted in loss of Rs.
4,396,989/- to the authority funds.
672
Audit recommends to recover the amount from the contractors at fault.
PDP No. 500 (2021-22)
673
21.4.8 Overpayment on account of LED Lights - Rs. 25.451 million
According to Clause 6 of the NIT published in the newspapers on 07.03.2021, any item not included
in the BOQ and required at site shall be paid in accordance with MRS 2020 prevailing markets on the
approval of the competent authority. Read with MRS Cell C&W Department notification dated 01.07.2020,
the competent authority is pleased to approve the Market Rate System 2020 with effect from 01.07.2020.
According to Observation 4 of the electrical directorate letter dated 12.10.2021, LED lights being
principal item of the project, is recommended to be replaced with the approved brand i.e. PHILIPS updated
model as per standard specifications provided with the tender documents from original manufacturer to
ensure original warranty / quality.
2021-22, it was observed that the Directorate of Electrical paid an amount of Rs. 38,099,913/- to M/S Pak
Friends Construction & Developers on account of executing an item of work “Supply and Erection of LED
Road Light Fixture (120-130 Watt)” for a quantity of 430 lights at the rate of Rs. 88,604.45 vide 2 nd Running
Bill dated 15.07.2022 under the scheme Conversion of Solar Based LED Lights to Conventional System
starting from Kohat Road Flyover to Pir Zakori Bridge. However, further scrutiny of record revealed that
the rate of the said item of work was Rs. 29,415.00 in MRS 2020 and the directorate management made
payment on MRS 2019 instead of MRS 2020 which resulted into overpayment of Rs. 25,451,463/- (Rs.
88,604.45 - 29,415.00 = 59,189.45 X 430 lights) to the contractor.
It is worth mentioning here that the scheme was administratively approved on 10.07.2020 well after
the issuance of MRS 2020 which was issued on 01.07.2020 and that the technical sanction of the scheme
was approved and notified vide order dated 22.11.2021.
It is further worth mentioning here that the LED Lights installed were of “Butterfly Brand” instead
of the approved PHILIPS Brand as well.
The lapse occurred due to violation of rules and regulations which resulted into overpayment to the
contractor.
Audit recommends to recover the overpaid amount from the contractor.
PDP No. 501 (2021-22)
21.4.9 Fraudulent payment on account of jersey barriers - Rs. 3.512 million
674
According to Para 208, 209 (d), 220 & 221 of the CPWA Code, payments for all works should be
made on the basis of measurements recorded in the measurement book.
2021-22, it was observed that the Directorate of Electrical paid an amount of Rs. 3,512,000/- to M/S Pak
Friends Construction & Developers on account of executing an item of work “removal and reinstallation of
jersey barriers safely” for a quantity of 4000 barriers at the rate of Rs. 878.09 vide 2 nd Running Bill dated
15.07.2022 under the scheme Conversion of Solar Based LED Lights to Conventional System starting from
Kohat Road Flyover to Pir Zakori Bridge. However, further scrutiny of record revealed that the rate analysis
of the item was calculated as “equipment hydraulic crane” on hourly basis at the rate of Rs. 1756.18 per
hour without adding any labor cost, contractor profit, overhead and taxes etc., with each barrier taking half
an hour to be removed and reinstalled by the crane at the rate of Rs. 878.09 per 0.5 hour.
Moreover, the site visits of the scheme revealed that the jersey barriers were not available at the
site meaning thereby that the barriers were just removed and not reinstalled, and there were no whereabouts
of the removed barriers as well.
The lapse occurred due to violation of rules and regulations which resulted into fraudulent payment.
Audit recommends to investigate the matter and fix responsibility against the person(s) at fault
besides recovery of the amount from the contractor.
PDP No. 502 (2021-22)
21.4.10 Wasteful expenditure on account of beautification and illumination -

Rs. 5.656 million
2021-22, it was observed that the Directorate of Electrical awarded the contract for Beautification and
Illumination of Hayatabad Peshawar to M/S Pak Friends Construction & Developers vide work order dated
13.09.2021 at the cost of Rs. 5,656,274/-, with the completion period of 03 months. However, further
scrutiny of record and physical visit of the site revealed that there was no such scheme executed on ground.
Moreover, there was no record of the special audit report despite the fact that the director general
of the authority had directed for conducting the said audit as evident from the DG Secretariat letter dated
27.12.2022.
675
Furthermore, the selected contractor did not submit the bid through registered courier service as
was required.
Audit held that incurring expenditure and making payment for such an unnecessary component at
the time when the government was facing challenges for paying the salaries to its employees was lavish
and wasteful on part of the authority management.
The lapse occurred due to violation of rules and regulations which resulted in loss to the authority
funds.
besides taking appropriate action against the officers / officials involved.
PDP No. 509 (2021-22)
21.4.11 Doubtful payment on account of supply of below-specification LED Light Drivers -

Rs. 2.348 million
According to Clause 4 of the NIT published 18.11.2020, the bid shall be received through registered
courier services and bids received by hand not through registered courier service and late shall not be
entertained.
2021-22, it was observed that the Directorate of Electrical paid an amount of Rs. 2,348,018/- to M/S Swat
Electric Power Company on account of executing an item of work “Supply and Erection of LED Drivers
(180 Watt) - NSI” for a quantity of 100 drivers at the rate of Rs. 23,480.18 vide 2nd& Final Bill under the
scheme Providing and Installation of LED Road Lights on Ring Road from Hayatabad to Kohat Road
Flyover (ADP Scheme). However, further scrutiny of record revealed that;
 The directorate management failed to carry out the rate analysis of the said item of electrical work,
instead the rate analysis of the item was carried out by the contractor himself.
 The rate analysis carried out by the contractor was defective as there was no mention of the
material cost, labor, overhead and taxes etc.
 The sanction of the non-scheduled item was granted vide order dated 19.07.2021 without any
proper need assessment and justification.
 The sanction was granted and payment was made for “180 Watt” LED Drivers whereas the
contractor had provided “150 Watt” items as evident from the inquiry report.
676
It is worth mentioning here that these drivers were not installed in the similar nature schemes
executed on Ring Road from Kohat Road Flyover to Pir Zakori Bridge and Zoo Road from University Road
to Agriculture Bazar as evident from their bills.
The lapse occurred due to violation of rules and regulations which resulted in doubtful payment.
PDP No. 512 (2021-22)
21.4.12 Suspected misappropriation on account of LED Lights and Drivers -

Rs. 3.138 million
According to the 2nd& Final Bill of the scheme, a quantity of 32 double arm poles and 08 single
arm poles were installed and paid for to the contractor.
2021-22, it was observed that the Directorate of Electrical paid an amount of Rs. 8,860,445/- to M/S Swat
Electric Power Company on account of executing an item of work “Supply and Erection of LED Road
Light Fixtures (120-130 Watt)” for a quantity of 100 lights at the rate of Rs. 88,604.45 vide 2 nd& Final Bill
under the scheme Providing and Installation of LED Road Lights on Ring Road from Hayatabad to Kohat
Road Flyover (ADP Scheme), as against installation of 72 numbers of lights (32 double arm poles X 2
lights = 64 + 8 single arm poles = 72 lights), which resulted in a difference of Rs. 2,480,924/- (28 lights
(100 lights – 72 lights) X Rs. 88,604.45 per unit rate)).
Similarly, the directorate management also paid an amount of Rs. 2,348,018/- on account of
“Supply and Erection of LED Drivers (180 Watt) - NSI” for a quantity of 100 drivers at the rate of Rs.
23,480.18 vide 2nd& Final Bill under the same scheme, as against installation of 72 numbers of drivers (32
double arm poles X 2 drivers = 64 + 8 single arm poles = 72 drivers), which resulted in a difference of Rs.
657,445/- (28 drivers (100 drivers – 72 drivers) X Rs. 23,480.18 per unit rate)).
Audit held that as the total slots available for installation of lights and drivers were 72 only, making
payment in excess of 72 slots, was against the rules and regulations and chances of misappropriation cannot
be ruled out.
The lapse occurred due to violation of rules and regulations which resulted into a total suspected
misappropriation of Rs. 3,138,369/-.
677
PDP No. 513 (2021-22)
21.4.13 Illegal establishment and operation of private housing societies and non-recovery on
account of penalty – Rs. 562.500 million
According to Clause 35 of the PDA Act 2017, whoever develops a scheme or society within the
Authority areas, without prior written approval of the Authority or contravenes the provision of this Act,
rules and regulations, shall be liable to imprisonment for a term which may extend to three (03) years or a
fine which may extend to rupees five (05) million or with both.
According to Clause 41 (b) & 42 (5) of Chapter-VIII of the Khyber Pakhtunkhwa Local
Government (Private Housing Schemes Management and Regulation) Rules 2021, a private promoter or
developer shall ensure to undertake development works, after issuance of approval of design and
specifications. If a private promoter or developer fails to develop a private housing scheme, within the
stipulated period, or development works are not in conformity with the approved design and specifications,
then the department may take over the development works of the private housing scheme and take action
against the deviations or violations as per law.
2021-22, it was observed that the Directorate of Building Control Agency regulated the operations of the
private housing societies situated within the jurisdiction of the authority management by registering 08
private housing schemes since its establishment. On the other hand, a total of 225 different private housing
societies were illegally established and operating in District Peshawar. However, the authority management
failed to impose penalty upon the owners of the societies at the prescribed rate of at least 2.5 million per
owner amounting to Rs. 562,500,000/- (Rs. 2,500,000 X 225 illegal societies).

 Almost all of the illegally operating societies were established on the fertile land, violating the
provincial government directives regarding utilization of agriculture / fertile land for housing
purposes.
 The housing societies were ranging from 10-100 kanals with construction activities completed in
most of the cases.
 The directorate management failed to stop the development activities in the illegally operating
housing societies and issued notices / reminders to the owners only.
678
 The directorate management failed to take up the issue with the administrative secretary for further
taking up the matter with the provincial cabinet / decision makers for taking action against the
violators and taking necessary measures for stopping the illegal practice in future.
 The directorate management failed to coordinate with the Urban Policy & Planning Unit P&D
Department KP regarding granting NOCs to the 08 private housing societies as per their policy for
master planning / urban planning of the major cities in the province.
 The authority management failed to notify and convene meetings of the Land Use and Building
Control Committee decided to be constituted in the 2nd PDA Board meeting held on 01.10.2019 to
initiate and ensure comprehensive master development planning for the authority area; prepare and
ensure compliance of the annual development program for the authority area; and to prepare and
recommend measures for the face lifting and beautification of the authority area.
The lapse occurred due to violation of rules and regulations which resulted in illegal establishment
and operation of the housing societies and non-recovery of penalty.
besides taking up the matter with the quarters concerned for stopping the illegal practice.
PDP No. 530 (2021-22)
21.4.14 Loss to the authority funds due to non-imposition of surcharge - Rs. 7.128 million
According to Clause B (1) of the terms and conditions of the Directorate of Estate Management
letter dated 13.01.2022, the allottee shall deposit the balance 3/4 th of the bid amount within 30 days of the
issuance of the allotment letter. In case the allottee failed to deposit the requisite 3/4 th amount within the
stipulated period, he will be liable to pay surcharge in addition to the original amount at different rates
ranging from 5-15%.
2021-22, it was observed that the Directorate of Estate Management allotted Commercial Plot No. A
Opposite HMC Phase-IV measuring 1.33 Kanal to Mr. Asad Khan S/O Mughal Baz vide allotment letter
dated 13.01.2022. Further scrutiny of record revealed that the allottee failed to deposit the requisite 3/4th
amount within the stipulated period of time of one month i.e. up to 13.02.2022 and the directorate
management failed to impose surcharge for late deposit at the prescribed rates amounting to Rs. 7,128,756/-
, as detailed below;
Challan Rate of Surcharge
Date Amount Formulae
No. Surcharge Amount
93060 18.02.22 53,500,000 5% P.A per day 296,260,000*3/4*5%/360*5 154,302
679
93202 24.02.22 30,000,000 5% P.A per day 296,260,000*3/4*5%/360*11 339,465
92822 02.03.22 6,000,000 5% P.A per day 296,260,000*3/4*5%/360*19 586,348
77382 11.03.22 10,500,000 5% P.A per day 296,260,000*3/4*5%/360*28 864,092
62507 25.04.22 60,000,000 15% P.A per day 296,260,000*3/4*15%/360*12 1,110,975
62508 30.04.22 50,000,000 15% P.A per day 296,260,000*3/4*15%/360*17 1,573,881
62505 10.05.22 12,195,000 15% P.A per day 296,260,000*3/4*15%/360*27 2,499,694
Total 7,128,756
funds.
Audit recommends to investigate the matter and take appropriate action against the person(s) at
fault besides recovery of the amount.
PDP No. 541 (2021-22)
According to Clause A (1) of the terms and conditions of the Directorate of Estate Management
letter dated 13.01.2022, the allottee shall deposit the balance 3/4 th of the bid amount within 30 days of the
ranging from 5-15%.
2021-22, it was observed that the Directorate of Estate Management allotted Commercial Plot No. E1
Opposite HMC Phase-IV measuring 15.6 Marla to M/S Rabbani Associates vide allotment letter dated
13.12.2022. Further scrutiny of record revealed that the allottee failed to deposit the requisite 3/4 th amount
within the stipulated period of time of one month i.e. up to 13.01.2023 and the directorate management
allowed payment of the 3/4th amount in 04 equal installments instead of imposing surcharge for late deposit
at the prescribed rates amounting to Rs. 3,163,070/-, as detailed below;
Challan Rate of Surcharge
Date Amount Formulae
No. Surcharge Amount
147 31.01.23 45,187,500 5% P.A per day 241,000,000*3/4*5%/360*17 426,717
156 03.03.23 45,187,500 10% P.A per day 241,000,000*3/4*10%/360*20 1,004,166
Nil 10.04.23 45,187,500 15% P.A per day 241,000,000*3/4*15%/360*23 1,732,187
Total 3,163,070
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Audit held that there was no provision for allowing the payments on installment basis in the general
terms and conditions for auction of commercial plots, hence making payments in installments was against
the auction rules.
funds.
fault besides imposition of penalty and recovery of the amount.
PDP No. 542 (2021-22)
21.4.16 Loss to the authority funds due to late allotment of commercial plot -
Rs. 320.727 million
According to Clause 1 (g) of the Terms and Conditions for Auction of Commercial Plots, the
acceptance of the highest bid would be subject to approval of the Director General PDA who reserves the
right to accept or reject the bid assigning cogent reasons.
2021-22, it was observed that the Directorate of Estate Management initiated the auction process for
allotment of Commercial Plot No. H Opposite HMC Phase-IV measuring 1 Kanal in February 2018,
wherein Mr. Sheraz Khan offered the highest bid of Rs. 220,500,000/- (USD 2,004,545 @ 110 prevailing
market rate). However, further scrutiny of record revealed that the highest bid of Mr. Sheraz Khan was
rejected on a minor issue that there was a difference between the amounts written in figures and in words,
as evident from Para No. 16/N dated 08.03.2018.

 The directorate management vide letter dated 30.03.2018 intimated the bidder that his bid was
rejected due to difference between the amounts written in figures (Rs. 220,500,000) and in words
(Rs. 200,000,000), whereas the amount in words was Rs. 200,500,000/- instead of Rs.
200,000,000/- as claimed by the directorate management.
 The highest bidder had clarified vide his application dated 30.03.2018 that his bid offered was Rs.
220,500,000/-.
 The legal opinion given by the CSLC also clarified that as the bidder had clarified the rate offered
and that the adjacent plot was auctioned at the rate much lower than the instant bid, there is no
reason for rejection of the bid.
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 The Honorable Peshawar High Court Peshawar vide its judgment dated 30.11.2022 disposed of
the petition in terms of remitting it to the Director General PDA for looking into it and deciding
the same strictly in accordance with law expeditiously.
 The authority management after wasting 5 years, allotted the plot to the same bidder at the same
original bid cost of Rs. 220,500,000/- vide allotment letter dated 23.01.2023 (which was initially
rejected by the directorate management).
 It is worth mentioning here that another 1 Kanal Plot No. G was allotted to another bidder vide
allotment letter dated 16.03.2018 at the bid cost of Rs. 171,000,000/-, bid cost much lower than
the instant bid, in the same tendering process.
Audit held that non-allotment of the commercial plot in February 2018 and depositing the amount
in January 2023 resulted into loss of Rs. 320,727,200/- (Rs. 270 exchange rate in Jan 2023 – 110 exchange
rate in Feb 2018 = 160 exchange rate difference X USD 2,004,545) to the authority funds in terms of dollar
disparity.
funds.
PDP No. 544 (2021-22)
21.4.17 Loss to the authority funds due to non-auctioning of Fun Land in Tatara Park - Rs.
36.750 million
2021-22, it was observed that the Directorate of Estate Management initiated the auction process of the Fun
Land in Tatara Park on 24.11.2015 wherein Muhammad Jamil Qari offered the highest bid of Rs.
12,575,000/- and thus allotted the Fun Land vide office order dated 18.12.2015. However, further scrutiny
of record revealed that;
 Muhammad Jamil Qari failed to deposit the guarantee amount of Rs. 5,000,000/- in the authority’s
account and the directorate management thus cancelled the allotment instead of allotting the same
to the second highest bidder.
682
 The directorate management initiated second auction process on 22-24.06.2016, wherein Mian
Muhammad Jamil offered the highest bid of Rs. 6,100,000/- which was rejected vide letter dated
30.06.2016.
 Mian Muhammad Jamil offered to take over the contract at the bid cost of Rs. 12,575,000/- which
was accepted but on temporary basis instead of leasing out the same. The allotment was subject to
the condition that the same will be put to yet another auction and the current bidder will vacate the
Land in case of receipt of another higher bid.
 The directorate management initiated third auction process on 04.08.2016, wherein Mr. Saleem
Khan offered the highest bid of Rs. 13,500,000/- along with the affidavit that if another bidder
offered higher bid then he may just be allowed to en-cash his call deposit only.
 The directorate management initiated fourth auction process on 20.09.2016, but in the meanwhile
Mian Muhammad Jamil who was not just the highest bidder in the second auction process but
deposited an amount of Rs. 13,000,000/- in advance as well, filed a civil suit and got a statuesque.
 The directorate management initiated fifth auction process on 08.02.2019, wherein once again Mian
Muhammad Jamil’s firm Fun Land Amusement Co. obtained qualifying marks only, but the
committee recommended to re-advertise the case.
 The directorate management initiated sixth auction process on 28.03.2019, wherein once again
Mian Muhammad Jamil’s firm Fun Land Amusement Co. offered the highest bid of Rs. 5,250,000/-
(as yearly rent) with 10% increase every year and the committee recommended the bid for approval.
However, the Director Estate Management vide Para No. 228/N dated 30.07.2019 ordered to keep
the case pending as Minister Local Government might order an inquiry.
 An inquiry was also conducted to probe the delay in awarding the contract in August 2019 which
found multiple discrepancies in the auction proceedings of lease of Tatara Park, however, instead
of fixing responsibility against the person(s) at fault, the inquiry committee recommended re-
auction of the same.
 The directorate management initiated seventh auction process on 23.01.2020 as per remarks in Para
251/N dated 23.01.2020 instead of conducting or waiting for a detailed inquiry, so that to avoid
delay in the auction of the Land in Tatara Park for the interest of general public.
It is worth mentioning here that the directorate management failed to award the contract of the Fun
Land to any of the highest bidders till date of audit i.e. June 2023 despite the fact that the auction process
was carried out 7 times and that the highest bidders deposited the amount in the authority’s account in
advance as well.
Audit held that non-awarding of contract of the Fun Land not only resulted in loss of Rs.
36,750,000/- (Rs. 5,250,000 yearly rent offered X 7 years) to the authority funds but the general public was
also deprived of the entertainment services as well.
683
PDP No. 549 (2021-22)
21.4.18 Suspected misappropriation on account of Toll Plaza, Car Parking and Itwar Bazar
receipts - Rs. 20.824 million
According to Rule 26 of the General Financial Rules Volume-I, it is the duty of the Departmental
Controlling Officer to see that all sums due to government are regularly and promptly assessed, realized
and duly credited in the Public Account.
2021-22, it was observed that the Directorate of Estate Management awarded the contracts for operating
different sites to different contractors and shown realized the receipts from these contracting out in their
yearly abstract of receipts. However, further scrutiny of record revealed that a sum of Rs. 20,824.235/- was
also realized by the directorate management from the operating the following sites through their own staff
for different periods, which was not reflected in the yearly abstract of receipts, as detailed below;
S. No. Particulars Period Amount
1 Ring Road Toll Plaza 19.05.22 to 16.08.22 8,487,400
2 HMC Car Parking 21.10.22 to 31.03.23 4,814,330
3 Itwar Bazar Stall and Car Parking 04.07.21 to 22.05.22 7,522,505
Total 20,824,235
Audit held that non-reflecting of the receipts realized in the yearly abstract was a serious lapse on
part of the directorate management and chances of misappropriation by the dealing hands cannot be ruled
out.
The lapse occurred due to violation of rules and regulations which resulted in suspected
misappropriation.
Audit recommends investigating the matter and taking appropriate action against the person(s) at
fault.
PDP No. 553 (2021-22)
684
21.4.19 Irregular allotment of plot to Muhammadi Hospital and non-recovery of cost of
additional land - Rs. 162.500 million
According to the Summary for Governor Khyber Pakhtunkhwa dated 16.03.1985, the Governor
directed for allotment of 04 Kanal Plot in Hayatabad to the Pakistan Heart Foundation for charitable
purposes.
During audit of the accounts of Peshawar Development Authority Peshawar - Directorate of Estate
Management for the Financial Year 2021-22, it was observed that plot No. 560-A at Sector P-2 Phase-IV
measuring 4 Kanals initially was allotted to M/S Pakistan Heart Foundation vide Summary to the Governor
Khyber Pakhtunkhwa dated 16.03.1985 at the cost of Rs. 55,650 per Kanal as utility plot and an amount of
Rs. 222,600/- was deposited as plot price as evident from the agreement signed on 19.02.1986. However,
further scrutiny of record revealed that instead of utilizing the plot for establishing a charitable institution,
rented out the same for dental clinic as evident from the draft Para-wise Comments prepared for submitting
before the Senior Civil Judge Peshawar.

 8.2 Kanals of additional land was allotted to the Foundation despite the fact it failed to make use
of the initially allotted land measuring 4 Kanals and to supply the required plans for the utilization
of the existing allotted land, as evident from Para No. 13 of the Summary for Chief Minister Khyber
Pakhtunkhwa dated 10.09.1988.
 The directorate management failed to ensure establishment of International Medical Research
Center Pakistan Heart Foundation despite allotment of the plot in 1985 and taking possession on
20.06.1996, as evident from the brief at Page No. 239 regarding allotment of the plot.
 The directorate management failed to impose surcharge upon the allottee for non-completion of
construction work on the plot as was required under Clause 6 of the agreement signed with the
foundation.
 Finally, the allotment was cancelled, after serving several notices, vide letter dated 03.08.2018,
after wasting 33 years. However, the directorate management failed to vacate the plot and take
possession.
Moreover, an amount of Rs. 162,500,000/- (Rs. 650,000 cost of the additional 8.2 Kanal land
allotted to the foundation X 250 net exchange rate (270 current exchange rate – 20 exchange rate in May
1988)) was outstanding against the allottee, as evident from Para No. 13 of the Summary for Chief Minister
Khyber Pakhtunkhwa dated 10.09.1988, however, the directorate management failed to recover the same
till date of audit i.e. June 2023.
Audit held that allotting plot to the foundation for charitable purposes when in fact the same was
not used as a charitable institution and its non-vacation / possession back by the authority management was
a serious lapse on part of the management.
The lapse occurred due to violation of rules and regulations which resulted in fraudulent awarding
of plot.
685
fault besides recovery of the outstanding amount and the surcharge amount levied on the foundation for not
completing the construction within the stipulated period of time.
PDP No. 555 (2021-22)
21.4.20 Loss to the authority funds due to irregular allotment of plot to Muhammad Medical
Complex - Rs. 67.401 million
According to the Summary for Chief Minister Khyber Pakhtunkhwa dated 18.09.1991, the
Hematology and Blood Transfusion Center will provide special treatment to the patients suffering from
fatal diseases like cancer, blood diseases, hereditary diseases (Thalassemia and Hemophilia),
Chemotherapy etc. The Center will comprise of OPDs with Treatment Rooms; Inpatient Wards for male
and female and children; ICU for BM Transplantation, Leukemia and Aplastic Anemia; Radiotherapy Unit
with X-Ray and Irradiation Treatment Room for BM Transplantation and Radiotherapy; Laboratories; OTs
for BM Transplantation and General Surgery; Blood Coagulation Laboratory; Hemophilia Center; Blood
Bank & Blood Transfusion Center for Thalassemia patients; Pharmacy and other required administrative
units.
During audit of the accounts of Peshawar Development Authority Peshawar - Directorate of Estate
Management for the Financial Year 2021-22, it was observed that plot No. 3, 4 & 4A at Sector B-3 Phase-
V total measuring 14.82 Kanals was allotted to Mrs. Simin Mahmod Jan vide allotment letter dated
09.05.1993 at the cost of Rs. 172,320/- per Kanal, along with allotting the 3 Kanal land under high tension
line free-of-cost, for construction of Hematology and Blood Transfusion Center.
However, further scrutiny of record revealed that;

 The allottee failed to construct the requisite center for provision of the above mentioned services
and the authority management cancelled the allotment of plot vide letter dated 27.07.1995.
 The allotment was restored on 25.02.1996 with extension in the completion period up to
15.05.1997. However, the allottee once again failed to construct the building within the extended
period of time.
 The allottee illegally occupied the plot with effect from 15.05.1997 to 22.04.2019 untill the
authority management cancelled allotment of plot the second time vide letter dated 22.04.2019.
The plot is still under the custody of the allottee for unauthorized use.
 The plot was sub-divided by the allottee by establishing different businesses like Umar Pharmacy,
MMC Canteen, Private Doctors Clinics and Car Parking etc. as admitted vide Para 537/N dated
10.05.2023 and a handsome revenue in terms of rent amounting to Rs. 14,400,000/- (Rs. 600,000
686
monthly rent approximately X 24 months) was generated by the allottee from the authority’s
property, hence the same needs to be recovered and deposited into authority funds.
 The directorate management failed to recover the restoration charges from the allottee amounting
to Rs. 35,400,000/- as mentioned in Para No. 540/N dated 10.05.2023 as well.
Audit held that as the plot was used for commercial purposes, the same should have either been
vacated by the authority management or should have been allotted initially at the commercial rate prevailing
in authority at the time of allotment in 1993 i.e. Rs. 1,360,000/- per Kanal as mentioned in the Summary to
the Governor for Khyber Pakhtunkhwa dated 16.03.1985 in allotment of another Plot No. 560-A at Sector
P-2 Phase-IV, which would have resulted in extra realization of an amount of Rs. 17,601,418/- as detailed
below;
Rate of commercial plot as per auction on 20.05.1984 Rs. 1,360,000
Multiply by total area of plot allotted 14.82 Kanal
Equals Rs. 20,155,200
Less actual cost at which the plot was allotted (Rs. 2,553,782)
Equals (extra realization of revenue) Rs. 17,601,418
Plus rent generated Rs. 14,400,000
Plus restoration charges Rs. 35,400,000
Equals Rs. 67,401,418
funds.
PDP No. 556 (2021-22)
According to Clause 9 (b) of the contract agreement executed with the contractor, the mode of
payment will be on advance in four equal installments within six months i.e. Rs. 36,250,000/- + government
taxes each as per following schedule;
 1st installment of Rs. 36,250,000 + government taxes within 07 days of signing contract
agreement.
 2nd installment of Rs. 36,250,000 + government taxes after 02 months of 1 st installment.
 3rd installment of Rs. 36,250,000 + government taxes after 04 months of 1 st installment.
 4th installment of Rs. 36,250,000 + government taxes after 06 months of 1 st installment.
687
In case the contractor fails to deposit installment in the stipulated time, the contractor will have to
pay surcharge on the due / outstanding amount as per government prevailing rates.
According to Clause B (1) of the terms and conditions of the Directorate of Estate Management
letter dated 13.01.2022, the allottee shall deposit the balance 3/4th of the bid amount within 30 days of the
ranging from 5-15%.
2021-22, it was observed that the Directorate of Horticulture awarded the contract for collection of
advertisement charges of billboards / hoarding boards to M/S Mikab Advertisersvide work order dated
13.12.2021 at the offered rate of Rs. 145,000,000/- for a period of three years. However, further scrutiny of
record revealed that instead of collecting the installments as per the approved schedule, the directorate
management approved and issued a new schedule for payment of the installments.
Audit held that as the contractor failed to deposit the installments within the stipulated periods of
time, surcharge at the rate of Rs. 14,500,000/- (Rs. 145,000,000 X 10% approximately) should have been
imposed.
funds.
fault besides imposing surcharge upon the contractor.
PDP No. 560 (2021-22)
21.4.22 Overpayment to the contractor on account of excavation in open cut – Rs. 3.269
million
According to Clause 60.1 of the general conditions of the contract, the contractor shall be entitled
to payment against the value of permanent works executed. Read with Rule 397 of the Federal Treasury
Rules Volume-I, no payment can be made to the contractor except for work actually done or supplies
actually received.
2021-22, it was observed that the Directorate of Water & Sanitation RMT paid an amount of Rs. 5,302,042/-
to M/S Green Crown vide 1st Running Bill on account of executing an item of work “excavation in open
688
cut for sewer & main hole except shingle, gravel & rock up to 2 meter to 5 meter” for a quantity of 14362.45
M3 at the rate of Rs. 369.16 under the scheme Providing / Laying 72” dia RCC Pipe Missing Link between
Zone-4 and Zone-5 RMT. However, further scrutiny of record revealed that a quantity of 5904.78 M 3 of
another complementary item of work “excavation in open cut for sewer & main hole except shingle, gravel
& rock up to 2 meter” was executed, meaning thereby that an amount of Rs. 3,269,712/- (5904.78 M3 X 1.5
times = 8857.17 M3 X Rs. 369.16) was overpaid to the contractor.
The stance of Audit was strengthened from the fact that quantities of the aforementioned items
were approved in the technical sanction and awarded to the contractor in the ratio of 1:1.5 as well.
Audit recommends inquiring the matter and fixing responsibility against the person(s) at fault along
with recovery of the amount.
PDP No. 567 (2021-22)
21.4.23 Unauthorized payment on account of technical allowance - Rs. 35.047 million
According to the Finance Department Khyber Pakhtunkhwa Notification No. FD (SO-SRII)8-

7/2018-19 dated 19.10.2018, the technical allowance at the specified rate is approved for the engineers
serving against the sanctioned posts in the C&W, Irrigation, PHE and Local Government Departments with
effect from November 2018. Read with clarification issued by the Finance Department in response to the
Local Government Department letter No. FD/SOSR-II/8-7/2-17/06 dated 03.07.2020, the Finance
Department allowed technical allowance to only four works departments i.e. C&W, Irrigation, PHE and
Local Government Departments, therefore, the engineers working in the local area authorities (autonomous
bodies) are not entitled to the said allowance.
During audit of the accounts of Peshawar Development Authority Peshawar - Directorate of

Administration & Finance for the Financial Year 2021-22, it was observed that an amount of Rs.
35,047,356/- was paid to different engineering staff on account of their technical allowance, in violation of
the above mentioned rules and regulations, which makes the payment as unauthorized.
payment.
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PDP No. 569 (2021-22)
21.4.24 Irregular payment on account of pay and allowances of chief security officer - Rs.
5.655 million
According to Clause 8 (1 & 2) of the PDA Act 2017, the Authority may appoint such officers,
officials and employees, as it considers necessary for the efficient performance of its functions on such
terms and conditions as may be prescribed by regulations (framed under this act). The Authority may
appoint advisors, experts and consultants on such terms and conditions as the Authority may specify from
time to time.

Administration & Finance for the Financial Year 2021-22, it was observed that the authority management
appointed a Chief Security Officer in the project “Safe City Hayatabad” in the Year 2016, as evident from
the Curriculum Vitae submitted by the officer for regularization of his services. Accordingly, an amount of
Rs. 5,655,066/- (Rs. 92,706 X 61 months) was paid to the officer on account of his pay and allowances till
date of Audit i.e. June 2023.
However, further scrutiny of record revealed that he was selected as the Chief Security Officer
(BPS-7) in the DSC meeting held on 24.04.2017 and appointed vide offer letter dated 08.05.2017 on
temporary basis. His services were regularized as Chief Security Officer (BPS-17) vide office order
31.05.2018.

 The officer was given the charge of Secretary PDA vide office order dated 24.08.2017, in violation
of Clause 9 (6) of the PDA Act 2017, wherein the Director General was mentioned to act as
Secretary of the Authority.
 He was further given the charges of PSO to DG, Deputy Director (Coordination), Deputy Director
(Administration) and Public Information Officer instead of assigning the duties of looking after
the security of Hayatabad as was mentioned in the minutes of the DSC meeting held on 24.04.2017.
 The PUDB Rules were amended for the officer vide notification dated 29.12.2016 to include the
post of chief security officer on initial recruitment basis, at the time when he was serving as chief
security officer in the Safe City Project under PDA.
 The record of his working as chief security officer in the project “Safe City Hayatabad” was
missing in his personal file.
 The Section Officer (Establishment) Local Government Department vide letter dated 08.02.2021
requested the DG PDA Peshawar to provide a detailed report regarding alleged bribery and misuse
690
of authority by the officers of PDA Peshawar including the chief security officer. However, no
inquiry against the said officer was conducted till date of audit i.e. June 2023.
Audit held that the PUDB Rules were amended to include the post of chief security officer to
accommodate the already hired officer working in the project without vide publicity of the post.
The lapse occurred due to violation of rules and regulations which resulted in irregular payment.
When pointed out in June 2023, it was replied that detailed replies will be furnished after checking the
relevant record.
Audit recommends investigating the matter and taking appropriate action against the person(s) at fault
PDP No. 572 (2021-22)
21.4.25 Irregular payment due to unauthorized regularization of services – Rs. 776.980

million
According to Clause 48 (1 & 2) of the PDA Act 2017, the government may, by notification in the
official gazette, make rules and regulations for carrying out the purposes of this Act.

Administration & Finance for the Financial Year 2021-22, it was observed that the services of 1824 contract
/ work charge employees were regularized vide office orders dated 13.11.2018; 09.08.2018; and 31.05.2018
under Section 49 (1) of the PDA Act 2017. However, further scrutiny of record revealed that services of
these employees were regularized without framing service rules under the PDA Act 2017. Accordingly, an
amount of Rs. 776,980,896/- ((Rs. 34,264 X 1640 BPS-1 employees X 12 months = 674,315,520) + (Rs.
46,497 X 184 BPS-10 employees X 12 months = 102,665,376)) was paid to these regularized work charge
employees on account of their pay and allowances during the year.

 The services of the employees were regularized on the basis of Clause 49 of the PDA Act 2017,
which provides for adoption of the employees serving with the affairs of the Authority and were
holding various posts till the enactment of this Act, instead of providing for regularization of the
work charge employees.
 There was no mention of regularization of the services of the work charge employees in the
preamble of the Act, which stipulates the establishment of Peshawar Development Authority only.
 The authority management regularized services of these employees without verifying the
documents and other pre-requisites of the post as required under the office order of regularization
of their services.
691
 Almost 90% of the staff regularized vide the above office order was in BPS-1, which did not exist
in the sanctioned strength of the authority at the time of regularization.
 Most of the employees were shown recruited on work charge basis in the Years 2016 and 2017 just
before enactment of the PDA Act 2017 and regularization of the services in 2018, hence chances
of recruitment of staff during preparation of the case for regularization cannot be ruled out.
 The authority management did not carry out any proper scrutiny under a notified committee for
their suitability for regularization against the posts keeping in view the factors like their
qualifications, experiences, domicile, quotas and other indicators necessary for ensuring merit in
the recruitment process.
 Three officers of the authority management were promoted to the posts of Additional Director
Generals vide 20.01.2023 by the defunct PUDB instead of the same being approved by the currently
operational high-powered PDA Board.
Audit held that regularizing the services of the employees by the authority management without
any provision for regularization of the work charge employees and without framing their own rules and
regulations under the PDA Act 2017 was a serious lapse on part of the authority management.
Audit further held that promotion of the officers by the defunct PUDB after enactment of the PDA
Act 2017 and notification of the Board of Authority of PDA vide Notification dated 09.03.2018 under the
chairmanship of the Chief Minister KP was against the rules and regulations.
The lapse occurred due to violation of rules and regulations which resulted in irregular
regularization of services of the contract / work charge employees.
fault.
PDP No. 573 (2021-22)
21.4.26 Non-recovery on account of damages done by BRT contractors - Rs. 360.384 million
According to Clause 6 (2) (q) of the PDA Act 2017, the Authority shall recover all the arrears of
taxes, rents and other money within the Authority’s areas, claimable by it as arrears of land revenue. Read
with the Director W&S / RMT PDA Peshawar letter No. 07/D(W&S/BCA)RMT / PDA / 229-234 dated
05.06.2020, the Director Finance was requested to immediately start recoveries from the BRT contractors.
2021-22, it was observed that an amount of Rs. 360,384,000/- was outstanding against the BRT contractors
692
on account of damages done to the authority’s assets as evident from the Director W&S / RMT letter
referred to above, as detailed below;
Amount
Contractor Reaches Directorates
(Rs. in M)
Horticulture 42.218
Electrical 16.415
SGEC-MAQBOOL CALSONS JV Reach-I
Electrical / Solar Line 2.450
Machinery 1.927
CR21G-MAQBOOL CALSONS JV Reach-II Reach-II 76.558
W&S 104.477
Horticulture 5.240
Road-III 16.445
CR21G-MAQBOOL CALSONS JV Reach-III
Electrical 16.415
Machinery 1.927
Building 6.312
ANHUI-MAQBOOL JV Lot-I Building 70.000
Total 360.384
However, the Finance Directorate failed to recover the amount from the BRT contractors till date
of audit i.e. June 2023.
Furthermore, the Directors BRT Reach-I, II, III and Building failed to intimate the outstanding dues
against the BRT contractors to the quarter concerned for incorporating in the detailed list of the outstanding
dues to be recovered from the contractors, as required under the Deputy Director Coordination PDA
Peshawar letter No. 165/DD(Coord)PIU-BRT/PDA/93 dated 09.06.2020.
The lapse occurred due to weak internal controls which resulted in non-recovery of the outstanding
dues from the contractors.
Audit recommends determining the whole amount of the outstanding dues and its early recovery
from the contractors at fault.
PDP No. 579 (2021-22)
21.4.27 Loss to the authority funds due to non-imposition of penalty upon the contractors for
submission of fake and unauthentic bank guarantees - Rs. 535.460 million
responsible for any loss sustained by government through fraud or negligence on his own part or on the part
of subordinate disbursing officers.
693
2021-22, it was observed that the following contractors submitted fake and unauthentic bank guarantees
amounting to Rs. 535,460,375/-, as detailed below;
Contractors Scheme Directorate Nature Guarantee No. Amount
Younas New General Road-II Mobilization HMBL/LG/04/54/1500096/2022 22,193,528
Builders Bus Stand Advance
Younas New General Road-II Performance HMBL/LG/04/54/1500021/2021 184,790,200
Builders Bus Stand Guarantee
Al-Noor New General Performance 735LOGT220740001 143,686,437
Builders Bus Stand Guarantee
Total 535,460,375
However, further scrutiny of record revealed that the authority management neither imposed any
penalty upon the contractors for submitting fake bank guarantees nor took any action against its own staff
for allowing the submission of such fake guarantees.
Audit held that the authority management should have imposed at the rate of at least 10%
amounting to Rs. 53,546,075/- (Rs. 535,460,375 X 10%) upon the contractors for submitting fake bank
guarantees and indulging in fraudulent practices.
funds.
Audit recommends imposing penalties at the prescribed rates upon the contractors besides its early
recovery.
PDP No. 581 (2021-22)
21.4.28 Non-achievement of development objectives by the authority management
According to the PDA Notification dated 06.04.2021, the PDA Board in its 4 th meeting held under
the Chief Minister KP on 29.01.2021 approved construction of Northern Section of Ring Road (Missing
Link) with the direction to complete the scheme within 01-year time positively.
2021-22, it was observed that the authority management failed to initiate and complete work on the
construction of Northern Section of Ring Road (Missing Link) till date of audit i.e. July 2023.
694
 The authority management failed to resolve the land ownership / occupation issues in Regi Model
Town due to which Zone-I, II and V remained disputed sine long despite the fact that the PDA
Board in its 4th meeting had already directed to remove and vacate the land from the illegal occupant
i.e. Muslim Khan within one month time, which shows the non-seriousness of the authority
management towards the development of public housing scheme where the general public has
invested their hard earned money.
 The PDA Board shifted the development of New Peshawar Valley from PHA to PDA Peshawar
for accelerated development of the scheme. However, the authority management failed to complete
the scheme within the stipulated period of time and the PDA Board in its 10th meeting held on
26.12.2022 decided to develop the scheme on PPP basis.
 The Minister Finance / Health participated in the 4th, 6th, 7th, 9th and 10th PDA Board Meetings held
on different dates in violation of the Local Government Department Notification dated 09.03.2018
which was held unauthorized which further makes the decisions taken as unlawful.
Audit held that the authority management should have initiated / completed the development
schemes well on time as the management has no issues of finance, law & order, human resources and land
settlement as evident from the fact that the PDA Board is chaired by the Chief Minister KP with members
from all the relevant departments.
The lapse occurred due to violation of rules and regulations which resulted in non-achievement of
development objectives.
Audit recommends investigating the matter and fixing of responsibility against the person(s) at
fault.
PDP No. 585 (2021-22)
21.4.29 Unauthorized expenditure on account of POL due to unauthorized allotment of

vehicles – Rs. 4.736 million
According to Rule 11 of the General Financial Rules Volume-I, each head of the department is
responsible for enforcing financial order and strict economy at every step. He is responsible for observing
of all relevant financial rules and regulations both by his own office and by subordinate disbursing officers.
695
According to Clause 4(1) of the Staff Car Rules 1980, each division/ department having a staff car
shall detail an officer to be called the officer-in-charge who shall be responsible for the proper utilization
and upkeep of the car and the maintenance of record of the staff car.
2021-22, it was observed that the Directorate of Machinery & Equipment allotted 06 different vehicles to
the following officers / officials and incurred expenditure to the tune of Rs. 4,736,670/- on account of their
POL. However, further scrutiny of record revealed that these officers / officials were not entitled to the
vehicles of the authority management on the grounds mentioned against each, as detailed below;
Vehicle No. Allottee POL / Amount Remarks

Repair
AB-5800 & BD- Minister Local Govt. POL 1,388,496 Not authorized as Minister
9226 is entitled for E&A Dept.
vehicle
AB-5800 & BD- Minister Local Govt. Repair 495,669 Not authorized as Minister
9226 is entitled for E&A Dept.
vehicle
AB-1134 Secretary Local POL 1,049,550 Not authorized as Secretary
Govt. is entitled for E&A Dept. /
Departmental vehicle
BD-8670 Consultant PDA POL 302,955 Not authorized
GAA-566 & AB- DG PDA POL 1,500,000 Not authorized for 02
1070 vehicles
Total 4,736,670
Audit held that incurring expenditure on account of POL and repair of the vehicles allotted to the
above mentioned officers / officials was a serious lapse.
The lapse occurred due to weak internal controls which resulted in unauthorized expenditure.
Audit recommends inquiring the matter and fixing responsibility against the person(s) at fault
PDP No. 587 (2021-22)
21.4.30 Unauthorized utilization of security vehicles – Rs. 200.000 million
696
According to Para 149 of the General Financial Rules Volume-I, when materials are issued from
stock, a written acknowledgment should be obtained from the person to whom they are ordered to be
delivered or dispatched, or from his duly authorized agent.

Machinery & Equipment for the Financial Year 2021-22, it was observed that the provincial government
initiated “safe city project” by providing funds for the purchase of 10 Toyota Hilux 2016 vehicles costing
Rs. 200,000,00/- (Rs. 2,000,000 X 10 vehicles) for patrolling the Hayatabad region. The project was closed
by the provincial government, however, the security vehicles were issued to the officers / officials of the
authority instead of surrendering back to the provincial government for further utilization in the home
department / security purposes.
Furthermore, neither receiving of these vehicles nor their issuing to the officers / officials of the
authority were taken on stock by the authority management.
The lapse occurred due to weak internal controls which resulted in unauthorized utilization of
vehicles.
Audit recommends inquiring the matter and fixing responsibility against the person(s) at fault.
PDP No. 591 (2021-22)
21.4.31 Loss to the authority funds due to non-recovery of rent of shops - Rs. 31.320 million
Para 8 and 26 of the General Financial Rules Volume I require each administrative department to
see that the dues of the government are correctly and promptly assessed, collected and paid into Government
Treasury.
During audit of the accounts of Urban Areas Development Authority Bannu for the Financial Year
2020-21, it was observed that two commercial plazas in Phase-II of the Authority were available. The
commercial markets comprised of about 220 Shops and 70 rooms of various sizes. These markets are
situated right in front of Khalifa Gul Nawaz Hospital which is not only a very busy market for medicines
and other health related entrepreneur but also for other businesses such as hotels, restaurants and various
stores for daily used commodities due to heavy influx of general public for treatment in the hospital. But
the Authority failed to recover a single penny from these commercial markets since its construction. When
the administration of the authority was asked about the factual position of these markets, it was informed
that the issue of these markets is under trail in the NAB for the last too many years, therefore, all the relevant
record pertaining to these markets is in the custody of the NAB authorities. Therefore, nothing in black in
white was produced to Audit for verification. However, approximate expected earnings for the last three
697
years were calculated which comes to Rs. 31.320 million and had not been recovered by the BDA and the
authority was deprived from huge amount of income.
Rooms / Shops Avg. Rent P.M Months Total
290 3000 36 3,1320,000
The lapse occurred due to weak administrative controls which resulted into loss to the authority
funds.
In the DAC meeting held on 03.01.2023, it was decided that the PAC may decide fate of the Para.
Audit recommends high level departmental inquiry into the matter fixing of responsibility against
the person(s) at fault and recovery of dues.
PDP No. 335 (2020-21)
21.4.32 Loss to the authority funds due to illegal occupation of land by private persons - Rs.
62.040 million
According to allotment regulations all residential plots will be put to auction after draw and all the
commercial plots in the scheme will be disposed of by auction as notified.
2020-21, it was observed that a plot measuring 6.33 Kanal in Phase-I Sector-B of the housing scheme right
in from of the BDA office was reserved for government Boys School. The approximate rate of the plot as
per government approved rates within the same area is Rs. 62,040,330. The piece of land is illegally
occupied by a private person and have illegally constructed a building where a private school had been
opened and in operating condition. When the administration of the authority was asked for provision of the
relevant record regarding the allotment of the plot, it was informed that this office has no record available
in this regard as this is an illegal occupation. It was astonishing to note that no action has been taken by the
authority against the illegal occupation of the BDA property till date.
The irregularity incurred due to weak administrative and financial control and lake of interest
towards the affairs of the official business of the authority which resulted into loss.
In the DAC meeting held on 03.01.2023, it was decided that the PAC may decide fate of the Para.
Audit recommends appropriate action by the management, inquiry into the matter and fixing of
resistibility against the person(s) at fault.
PDP No. 338 (2020-21)
698
21.4.33 Loss to the authority funds due to non-recovery of non-user charges – Rs. 34.520
million
Recovery of non-user charges at the prescribed rates by made from the allottees in case of non-
construction of their plots according to clause-II of the building regulations read with Para 1 of the standing
orders of PUDB dated: 19.10.2001.
2020-21, it was observed that the authority did not recover non user charges worth Rs. 34,520,050/-
outstanding against various allottees during 2020-21.
Non recovery of non-user charges was occurred due to weak internal control which resulted into
compliance of rules and loss to authority.
Audit recommends complete recovery.
PDP No. 339 (2020-21)
21.4.34 Loss to the authority funds due to non-recovery of water charges - Rs 3.466 million
Para 8 and 26 of GFR Vol-I states that each administrative department to see that the dues of the
government are correctly and promptly assessed collected and paid into government treasury.
2020-21, it was observed that the authority management failed to recover water charges amounting to Rs.
3,466,837/- outstanding against various water users during the year.
The irregularity occurred due to weak internal control which resulted due to non-recovery of outstanding
due and loss sustained by the authority.
In the DAC meeting held on 03.01.2023, it was decided that the department may make complete recovery
of the amount. However, no progress was intimated to Audit till finalization of this report.
699
PDP No. 341 (2020-21)
21.4.35 Loss to the authority funds due to non-recovery of rent of shops - Rs. 3.521 million
2020-21, it was observed that the authority has rented out number of shops suited in the commercial areas
of sector A,B,C& D of Phase-I of the BDA housing scheme. The owners of the shops did not deposit the
monthly rent regularly and thus an amount of Rs. 3,521,631/- on account of Rent was reported as outstanding
against these shops. Neither any earnest efforts were made by the administration of the authority for the
recovery the outstanding due on account of rent of shops nor action was taken against the defaulters for
cancellation of their lease agreements and vacation of the shops.
The irregularity occurred due to weak internal control which resulted due to non-recovery of
outstanding due and loss sustained by the authority.
PDP No. 342 (2020-21)
21.4.36 Loss to the authority funds due to non-recovery of outstanding rent of multipurpose
hall from the defaulter as arrears of land revenue - Rs. 3.367 million
According to clause-2(b),3 & 8 of the undertaking on stamp paper dated 10.1.2012 of the tenant of
Multi-purpose Hall (Shadi Hall) that in case of non-deposit of monthly rent beyond 30 up to 60 days, 20%
surcharge will be charged and on completion of 03 years’ contract period, 25% increase will be made in
monthly rent. Electricity and Water charges will also be paid on monthly basis, read with Para-8 and 26 of
GFR Vol-I, that each administrative officer to see that the dues are correctly and promptly assessed,
collected and paid in relevant account.
2020-21, it was observed that the multi-purpose hall in Bannu town ship was rented out to the tenant @
Rs.30000/- PM w.e.f 12/2011 to 11/2014 for three years. But the tenant was failed to deposit the outstanding
dues of Rs.3,367,692/- as per detail given below:
S# Period Months Rate PM Amount
1. Net outstanding amount calculated by the 0 0 1,469,250
department up to 8/2019
2. 9/2019 to 11/2020 15 46875 703,125
3. Surcharge @ 20% 0 0 140,625
4. 12/2020 to 2/2022 15 58594 878,910
700
5. Surcharge @ 20% 0 0 175,782
Total 3,367,692
Moreover, the department did not calculate the water charges since the award of the contract till
evacuation of multi-purpose hall up to 2/2022, the outstanding amount would be much more as calculated
above.
Audit is of the view that presently the authority is facing financial constraint and already in deficit,
which requires strict action toward the recovery of long outstanding dues from the defaulters meeting the
expenditure on staff pay and allowances & operational cost of the authority.
The lapse occurred due to weak internal controls towards the recovery of land revenue, which is
also in violation of Land Revenue Act, 1967.
PDP No. 343 (2020-21)
21.4.37 Unjustified award of contract – Rs. 582.639million

Unauthorized payment on account of mobilization advance - Rs. 50.690 million
Non-recovery of interest on mobilization advance, due to non-commencement of work
According to Minconsult DN BHD joint venture Creative Engineering consultant letter NO.
KPCIP/PMCSC/PMU/002 dated 23.11.2022 addressed to Director Technical PMU LGE&RDD Peshawar
advised that 58% plantation work IFPMU approves de-scoping to the extent of executing only the plantation
component on Ring Road Mardan and some beautification works on N-45, the contract amount will reduce
from Rs. 582.639 million (executed value) to Rs. 244.71 million equivalents to a scope reduction/ cost value
58%. In other words, the contractor will execute works of Rs. 244.71 million which is 42% of the signed
contract agreement. Contract agreement was executed with M/S Reliable-JHK (JV) (M/S Reliable
Engineering services (Pvt) – M/S JHK Construction Company (Joint venture) for the work Urban/Green
space initiatives- Ring Road Green Belt and N-45 National High Way, Mardan for Rs. 582.639 million vide
letter No. LGE&RDD/KPCIP/2022/2707-2719 dated 13.5.2022.
During financial attest audit of Khyber Pakhtunkhwa Cities Improvement Project- ADB loan No.
4160-PAK, ADB Loan 8412-PAK (Co-financing AIIB L0214A) ADB Grant 0816 and Government of
Khyber Pakhtunkhwa for the financial year 2022-23 revealed that Contract agreement was executed with
M/S Reliable-JHK (JV) (M/S Reliable Engineering services (Pvt) – M/S JHK construction company (Joint
venture) for the work Urban/Green space initiatives- Ring Road Green Belt and N-45 National High Way,
Mardan for Rs. 582.639 million vide letter No. LGE&RDD/KPCIP/2022/2707-2719 dated 13.5.2022 and
701
15% mobilization advance amounting to Rs. 87.395 million was paid to the contractor for the said work.
Following points need justification: -
 The contract agreement was executed for Rs. 582.639 million instead of Rs. 244.71 million as
required under de-scoping report.
 15% mobilization Rs. 87.395 million was allowed on full contract amount instead of on de-scoped
amount 244.71 million which comes to Rs. 36.71 million, so an overpayment of Rs. 50.69 million
(87.395- 36.71) was made.
 Time for completion of work was 15 months however as per progress for the month of September
2023, the work was not executed till the date of audit November 2023, i.e 17 months after contract
agreement.
 Interest on mobilization advance amount to Rs. 22.435 million was not recovered.
The lapse occurred due to non-existence of internal control system and inefficiency of the
management which resulted in non-commencement of work and loss to the government.
When pointed out in November 2023, the management did not furnish any reply.
Audit recommends disciplinary proceedings for fixing of responsibility, for unjustified execution
of contract agreement, recovery of overpayment of excess mobilization advance amounting to Rs. 50.69
million and interest on mobilization amounting to Rs. 22.435 million for non-execution of work
PDP No. 156 (2022-23)
702
21.4.38 Overpayment due to allowing price adjustment having less than 18 months’ project
life - Rs. 11.686 million
Under clause 2.3 of the ADB Guidance Note for Price Adjustment, in such like short-term
contracts, price adjustment is not allowed. Under 2.2(ii) and 2.5(ii)(a) and note 1 and 2 under clause 1.3 of
Price adjustment guidance note on procurement of ADB Price adjustment may be apply for works contract
with long periods. Price adjustment provisions may also be used in consulting and non-consulting service
contracts to adjust remuneration rates for the effects of inflation for contracts with duration of 18 months.
Khyber Pakhtunkhwa for the financial year 2022-23 revealed that Package No. OCB/KPCIPcw-01
Development of urban/Green spaces and Parts lot-2-woman Business Development and community centers
and Sports complex Kohat was awarded to M/S Reliable JHK JV at the cost of Rs. 389.954 million with
time completion of 365 days. Ist IPC was paid for Rs. 90.363 million including price adjustment of Rs.
11.686 million which was not admissible as per ADB Guidance notes. Therefore, escalation was not
admissible to the contractor on the ground that time completion of the project was 365 days.
The lapse occurred due to extending undue benefit to the contractor at the cost of Government
interest/resources.
Audit recommends recovery from the quarter concerned
PDP No. 159 (2022-23)
21.4.39 Unauthorized payment on account of remuneration of consultant’s employees - Rs.

14.454 million
According to the approved PC-I of the project, the following packages of salary were provided by
M/S Creative Consultant Company to their employees from the payments made by the Client;
Designation Creative salary package PC-I Package
Sub Engineer 160000 85000
AdmnAsstt, 135000 70000
Comp Op 120000 70000
Sr. Urban Planner 400000 300000
During financial attest audit of Khyber Pakhtunkhwa Cities Improvement Project- ADB loan 4160-
PAK, ADB loan 8412-Pak (Co-Financing AIIB 1.0214A) ADB Grant 0816 and Government of Khyber
Pakhtunkhwa for the financial year 2022-23, it was observed that the Project Management Unit entered into
an agreement with Minconstant in J.V with Creative Engineering Consultants. According to this agreement,
703
the later will provide human resource and consultancy services for the implementation of the project. Audit
observed that the CEC paid huge salaries to their employees on behalf of the PMU which are greater than
the rate mentioned in the PC-I and event than the monthly remuneration of the project employees.
This list is not exhaustive. Officers/officials receiving comparatively more remuneration than the
due amount which may be investigated and similar action be taken
Audit is of the view that monthly remuneration of all employees of the CEC and PMU may be paid
@ mentioned in the PC-I
The lapse occurred due to non-presence of internal auditor who could check the excess payment.
Audit recommend recovery and steps be taken to pay the salary at par with the PC-I and PMU
employees.
PDP No. 161 (2022-23)
21.4.40 Unauthorized payment due to allowing higher pay package than provided for in the
PC-I – Rs. 8.179 million
According to PC-I of the project following detail of salaries are provided without concurrence of
Finance Department.
S. No. Name Post Rate of PC-I
01- Syed Sarmad Ali Shah Community Liaison Specialist 300000
02- Qazi Raees Ahmad Finance & Accounts Officer (Reporting) 140000
03- Mubarak Ali Procurement Assistant 70000
04- Syed Usman Ali Shah Administration Assistant 70000
05- Sajjad Ahmad IT Officer 200000
06- Moazzam Ali M&E Officer 140000
07- Muhammad Siddique GIS Officer 140000
08- Waqas Jan MIS Officer 140000
09- Gohar Ali GIS 140000
10- Muhammad Waqas Awan GIS Officer 140000
11- Sameer Ali Shah MIS Officer 140000
12- Neelam Naz Gender Co-Ordinator 140000
13- Farhat Parveen -do- 140000
14- Shaila Gul -do- 140000
15- Mis Ayesha Admn Officer 140000
704
Pakhtunkhwa for the financial year 2022-23, it was observed that the PMU hired human resources for
various positions mentioned in the PC-I. The appointees were issued offer letters wherein all conditions
besides their monthly remuneration were mentioned. However, the above officers/officials were found
receiving their monthly remunerations over and above the rate mentioned in the PC-I.
The lapse occurred due to non-implementation of PC-I salaries duly approved by the ECNEC and
CDWP and non-obtaining of revenue clearance from Finance Department.
Audit recommends recovery and responsibility may be fixed on person(s) concerned.
PDP No. 163 (2022-23)
21.4.41 Loss to the government due to ignoring the lowest quoted rates - Rs. 5.723 million
According to Para-23 of GFR Vol-I, every government officer should realize fully and clearly that
Pakhtunkhwa for the financial year 2022-23, it was observed that the Project Management Unit called for
quotation for I/T equipment in Two separate batches. Audit has the following observations.
1- The procurement committee issued purchase orders for the required items to A. Com Distributors
who quoted the highest rate rather than to Paragon Office Solution, the lowest offered.
2- The administration did not call for the deposit of CDR which is supported to bid documents @ 2%
of the Estimated Cost in order to safeguard the government interest at any stage or process.
3- Among the required items, the Committee procured Eighty (80) no. of Laptops (30 no. & 50 no.)
through separate quotations, ignoring the market policy that the greater the quantity, the lesser will
be the cost.
Laptop Desktop Laser Jet Scanner Mouse & Diff.

Printer Key
board
A. Com Distributor 312000 288000 105000 315000 6500
Paragon Office 255500 - 91500 271200 4600
Solution
Difference 56500*80 13500*8 43800*4 1900*8
4520000 108000 175200 15200 4,818,400
705
Similarly, Government sustained a loss of Rs. 0.905 million due to ignoring lowest rate in the
procurement of furniture and fixture.
The lapse occurred due to non-adherence to the procurement rules which caused a loss of Rs 5.723
million
Audit recommends that the responsibility may be fixed on the dealing hands who inflicted losses to
government.
PDP No. 170 (2022-23)
21.4.42 Loss due to creation of liability of interest and service charges - Rs. 2.156 million
Non-utilization of budget due to inefficiency of staff – Rs. 107.783 million
According to clause 06 project administrative manual Chief Quantity Surveyor will be responsible
for measurement of all type of quantities and preparation of measurement sheet in accordance with
approved drawings for the purpose of preparing interim and final payment certificates; • He/she will be
responsible for preparing the Bills of Quantities and the Engineer’s Estimates for the individual subprojects;
• The Chief quantity surveyor shall review detailed estimates for quantities (considering designs and mass
haul diagram) and project cost for the entire project (civil works packages wise), including the cost of
environmental and social safeguards proposed and market rate for the inputs or the local schedule of rates.
Standard interest on loan and services charges may be imposed on the amount lying unutilized.
Khyber Pakhtunkhwa for the financial year 2022-23 revealed that according to Not para 12 of the Finance
Statement Rs. 107,783,500/- were not utilized on the purpose for which this amount was received and huge
amount is lying in the closing balance as evident from the financial statement. Moreover 2% interest as on
loan and services charges (1.25% and .75%) which comes to Rs. 2.156 million.
The lapse occurred due to lack of planning and defective budgeting system.
Audit recommends recovery and appropriate action.
706
PDP No. 172 (2022-23)
21.4.43 Loss to the government due to non-recovery of income tax - Rs. 2.325 million
According to income tax slab if the annual income of an individual exceeds Rs. 12.000 million a
sum of Rs. 2955000/- plus 35% of the amount above Rs. 12.000 million will be deducted under income tax
head
PAK, ADB loan8412-Pak (Co-Financing AIIB 1.0214A) ADB Grant 0816 and Government of Khyber
Pakhtunkhwa for the financial year 2022-23, it was observed that the Project Director received a sum of
Rs,15400000/-(for 11 months) on account of monthly remuneration @ Rs.1400000 Per Month. According
to the income tax slab, a sum of Rs. 4.635 million was required to the deducted as income tax on yearly
salary of Rs, 15400000/-. However, the project authority has deducted Rs. 2.310 million leaving a balance
of Rs. 2.325 million.
The lapse occurred due to non-implementing the income tax slab.
PDP No. 174 (2022-23)
21.4.44 Overpayment due to allowing higher rates to the consultant – Rs. 7.950 million
According to submission No.1 of individual consultant environment specialist estimate for the
remuneration was approved as Rs. 13.860 million equals to 80729 US$ @ Rs. 35000/-per day for 396
working days.
Khyber Pakhtunkhwa for the financial year 2022-23 revealed that contract agreement in submission -2 was
carried out with Mr. Dr. Abdul Qayyum Environment special for 100000 US$ as per detail given below: -
Expense Quantity Unit Rate Amount Total
Renumeration 396 WD $234 $92664 $92,664
Out of packet 50 WD $110 $5,500 5,500
expenses (per
Diem
Contingency $1,836 $1,836
Total Maximum $100000 x 218.10 =21810000/- $100,000
707
Audit observed an overpayment of Rs. 7.950 million made to the consultant because there was no
provision for out of packet expenses and contingency which was later included in the contract agreement
and working days was approval as Rs. 35000/- equal to $160.476 per working day. Detail of overpayment
is as under:
$ 234- 160.476 = 73.523 x 396 = 29115.508 + 5500 + 1836 = 7409.523 x 218.10 = Rs. 7.950 million
The lapse occurred due to extending undue favor to the candidate.
Audit recommends recovery of Rs. 7.950 million.
PDP No. 176 (2022-23)
21.4.45 Loss to the government due to less deduction of income tax - Rs. 1.541 million
According to rate analysis of MRS 2020, 7.5% income is included in all MRS rates.
Khyber Pakhtunkhwa for the financial year 2022-23 revealed that a sum of Rs. 1.541 million less deducted
from the contractors as per detail given below). Verification of record revealed that the works were awarded
on MRS 2020 however 7% tax was deducted from the contractor instead of 7.5% as applicable on MRS
2020.
The lapse occurred due to extending undue benefit to the contractor at the cost of Government
interest/resources
Audit recommends recovery from the quarter concerned
PDP No. 177 (2022-23)
708
Chapter - 22
Mines & Mineral Development Department
Minerals Development Department has a clear vision for Khyber Pakhtunkhwa.

Through rigorous reform attitude in the legal framework by updating polices & laws to
international standards and improving capacity building of the department’s human resources,
Minerals Development Department is committed to participate in the socio-economic uplift of the
province.
Minerals Department pledges to maintain transparency and ensure ease of doing

business for the investors interested in the mineral sector of the province. The Minerals Department
has made it a mission to bring in the mineral sector to the mainstream business platform while
enabling KP’s people to benefit from these natural resources by partaking their fair share in the
improvement of their life style and thereafter improving their province economic stature.
of:
 Development of Mineral Resources.
709
 Consideration of applications and grant of licenses and leases.
 Regulation and monitoring of mining operations and activities in the mineral sector,
including collection of royalties.
 Negotiating mineral agreements and consulting the Federal Government when considered
necessary by Mineral Investment Facilitation Authority (MIFA).
 Facilitating access to private or public lands and reserve forest areas for the purpose of
mineral exploration or development of mineral resources.
 Maintenance of up-to-date master plans showing positions of all exploration licenses and
leases granted, renewals, assignments and surrenders of mineral titles, relinquishment of
acreage etc. and make this information public through regular
 Geological Survey for mineral exploration/resource mapping, including assessment of
mining concession.
 Safety of mines and workers and welfare of mine workers and enforcement of Act and
rules and regulation made thereunder.
 Any other function related to management and development of mineral resources of the
province.
Audit Profile of Mines & Minerals Development Department:

(Rs. in million)
Expenditure
Total Revenue/Receipts
S. No. Description Audited Audited FY
Nos Audited FY 2022-23
2022-23
1 Formations 42 Nil 605 2,903
2  SDA 04 Nil Nil N/A
(Excluding FAP)
3 Nil Nil Nil N/A
etc under PAO
was as follows:
710
Non-Development:
(Amount in Rs.)
Grant # and
Type Grant Grant Apprioriation Expenditure (Savings)
Department
26-Mineral 935,193,000 774,352,990 0 846,389,632 863,156,358 863,224,289 67,931
NC21
Development
61-Mineral 153,629,000 0 6,634,000 62,378,808 97,884,192 97,873,778 -10,414
NC21
Development
Total 1,088,822,000 774,352,990 6,634,000 908,768,440 961,040,550 961,098,067 57,517
1,000,000,000
900,000,000
800,000,000
700,000,000
Amount in Rs.
600,000,000
500,000,000
400,000,000
300,000,000
200,000,000
100,000,000
0
26-Mineral Development 61-Mineral Development
-100,000,000
Development:
(Amount in Rs.)
Grant #
Total
Surrender Actual
Expenditure
Department
50-Mines
and NC22 193,800,000 0 20,000,000 66,777,858 147,022,142 147,022,142 0
Minerals
50-Mines
and NC12 85,000,000 0 -20,000,000 59,914,427 5,085,573 5,085,573 0
Minerals
Total 278,800,000 0 0 126,692,285 152,107,715 152,107,715 0
711
160,000,000
140,000,000
120,000,000
Amount in Rs.
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
50-Mines and Minerals 50-Mines and Minerals

(Rs. in million)
Non-Development 961.04 961.10 0.06 0.00%
Development 152.11 152.11 - 0.00%
Total 1,113.15 1,113.21 0.06 0.00%
1200
1000
Rs. in million
800
600
400
200
0

712
22.1(C) Issues in Mines & Minerals Development Department
During audit of the Mines & Minerals Department it was observed throughout the province that
outstanding lease amounts were not recovered from the lease holders and unauthorized persons. In many
cases it was also observed that auction money was not deposited in the government treasury. Moreover, no
punitive action was taken against these lessees to either recover the amount or cancel their lease agreements
forthwith, to safeguard government interest. There were no details of the head-wise figures of the
departmental own receipts collected by the department.

Audit observations amounting to Rs. 16,943.928 million were raised in this report during the
current audit of Mines and Minerals Development Department which comprises recoveries of Rs.13,144
million the same amount as pointed out by the audit. Summary of the audit observations classified by nature
is as under:

Amount
(Rs. in million)
3 Irregularities -
5 Others 1,838.056
Amount
(Rs. in million)

1,838.06
embezzlement and
0
misappropriation
Irregularities

13,143.86

Commercial Banks
713

S.No.
Year Department actionable points compliance compliance compliance
01 2014-15 Mines & Minerals Nil - - -
02 2015-16 -do- Nil - - -
03 2016-17 -do- 15 3 - 12
04 2017-18 -do- - - - -
05 2018-19 -do- 01 - - 01
22.4 Audit Paras
22.4.1 Loss to the government on account of illegal mining - Rs. 1179.009 million
According to the para 5 of the approved PC-I of the project “Assessment Study & Establishment
of Mines Monitoring & Surveillance units in Minerals Bearing Areas of KP” The project is designed to put
in place an effective monitoring and surveillance mechanism in the Province including Merged Areas by
establishing 35 district offices to control illegal mining and to implement the regulation of mines and the
mining activities.
According to “Monitoring & Surveillance Unit” Minerals Development Department Khyber

Pakhtunkhwa, District Wise Report (Murasalas/FIRs & Assessment).
During audit of the accounts of Secretary Mines and Minerals Department Khyber Pakhtunkhwa
Peshawar for the Financial Year 2022-23, it was observed that Rs. 1179.009 million was assessed on
account of illegal mining by Monitoring & Surveillance Unit, Minerals Development Department as per
detail attached with original para.
The verification of record revealed that the amount is still outstanding against various offender, but
the department did not make stern efforts to recover the outstanding amount, resulting in loss to government.
Moreover, a total of 6668 number of Murasalas were pointed out by the Monitoring & Surveillance
Unit of the Mines & Mineral Department, wherein 3921 number of Murasalas were converted into FIRs,
whereas 2742 No of Murasalas are still pending and not converted into FIRs.
Further verification revealed that legal advisory funds amounting to Rs.20.00 million was provided
in the approved PC-I, which was not utilized for such purpose and still these Murasalas were not converted
into FIRs and undue favor was extended to the offenders.
Audit held that the Murasalas involved handsome amount of revenue, if converted into FIRs
government would have realized the revenue involved which was not done and government was put loss.
714
When pointed out in August 2023, it is stated that the para pertains to DG Mines and Mineral as
section 56 of Mines and Minerals Act of KP empowers Director Licensing or his nominees for such
recoveries.
Audit recommends to investigate the matter and fix responsibility on the dealing hands besides
recovery of the amount under intimation to audit.
PDP No. 01 (2022-23)
22.4.2 Non-recovery of outstanding government dues - Rs. 819.195 million
According to rule 65 of the Khyber Pakhtunkhwa Mines and Minerals Act 2017, the
holder of a mineral title, other than the holder of a lease for minor mineral and
reconnaissance license, who has won or mined any mineral or group of minerals in the
course of any exploration or mining operations carried out by him shall pay to the
Government, in respect of any such mineral or group of minerals disposed of by him,
royalty as determined under this Act.
During audit of the accounts of Secretary Mines and Minerals Department Khyber Pakhtunkhwa
Peshawar for the Financial Year 2022-23, it was observed that Rs. 819,195,897/- was assessed by the mine
and mineral department as outstanding dues against the lease holders as per details given below:
Amount Judgment
S. No. Lease Holder Lease No.
Outstanding Date
1 Fazal Qadar MDW/DR/PL-LIMESTONE (21)/2019 39,472,780 09.03.2023
2 M/S Kohat Cement Limited MDW/KT/ML-Limestone (17)/1986 750,411,690 10.20.2022
3 Amjad Khan MDW/DN/ML-Bauxite (1)/2012 318,800 02.03.2023
4 Sareer Khan MDW/MR/ML-Dolomite (3)/1970 322,785 21.07.2023
5 Nabi Shah MDW/KT/PL-Limestone (150)/2018 1,603,460 15.06.2023
All Crush Plants Owner in
6 MDW/AD/BU-Assessment/2020 103,080 07.09.2022
District Bannu
7 Abdul Sareer MDW/SNA/ML-Soapstone(11)/2021 814,427 15.06.2023
8 Ayanullah MDW/DR/Assessment File-2019 20,959,250 12.01.2023
9 MS. Lucky Cement Factory MDW/BU/ML-Limestone (47)/1993 2,026,105 20.10.2022
10 Khan Pervaiz MDW/PR/ML-Limestone(79)/93 1,210,000 20.10.2022
11 Khan Pervaiz MDW/PR/ML-Coal(12)/1978 1,953,520 06.10.2022
Total 819,195,897
The verification of record revealed that the lease holders challenged these assessments for review
which were dismissed and upheld the department’s assessment, however no recovery was made till the date
of audit i.e. August, 2023.
715
When pointed out in August 2023, it is stated that the requisite reply will be submitted after
consulting the relevant record.
Audit recommends to recover the outstanding dues.
PDP No. 03 (2022-23)
22.4.3 Unauthorized leases granted by the Appellate Tribunal on account of JV / profit sharing
mode and recurring loss worth millions of rupees
Fraudulent awarding of mineral lease tittle to the defaulter firm and non-black listing &
forfeiture of security of the firm – Rs. 6.00 million
According to the Mines & Mineral Act, 2017 (amended 2019) vide Clause No. 102 A Sub-Section
5, Appellate Tribunal shall hear appeal against the order of licensing authority in relation to small scale
mining, large scale mining and minor minerals in the manner as may be prescribed. The composition of
Appellate Tribunal is as under:-
1) Secretary to Government of Mines Development Department (Chairperson)
2) A representative of Law Department not below the rank of BPS 19 (Member)
3) A technical person having expertise in Mines and Mineral to be nominated by the Chairman from
time to time (Member)
According to the Article 10 of the Act, MTC with approval of authority may grant license for any
period, for any organization under terms and condition as deemed appropriate in public interest.
According to the Serial No. 6 of the offer letter that you will clear outstanding government dues if
any before allotment of mineral tittle.
During test audit of the accounts record of the Directorate General Mines & Mineral Peshawar for
the financial year 2022-23, it was noticed that 25 JVs / profit sharing lease approvals were granted by the
Appellate Tribunal against the decision of licensing authority rather than hearing appeal in original manner
that was restoration of Prospective Licensing (PL) and Mining Licensing (ML).
Furthermore, neither the Appellate Tribunal has the authority to grant JV nor has power to change
the tittle or mode of lease. In all JVs granted, the Appellate Tribunal has decided 17% profit share to Mines
& Mineral Department and 3% share for Corporate Social Responsibility (CSR) out of the net profit but
nothing is available under what calculation and mechanism profit ratio was decided or derived. Had this
ratio being fixed by 50% of the net profit than the government would be earning huge revenue but
government interest was not protected by the dealing hands.
716
Further scrutiny revealed thatappellate tribunal granted Jvs to the various firms with the condition
to pay advance net profit share to the government for the first year and deposit bank guarantee but contrary
to this the firms did not deposit advance net profit share and bank guarantee worth Rs 50.3 million.
Similarly, annual rent amounting to Rs 19,753,874 has also been outstanding against the firms.
(Amount in Million)
S. No. JV No. Firm Name BG Advance Annual Total
NP Share Rent Amount
1 DGMM/DR/ML(JV)-copper(00007) M/s Luqman JV 5 10 0 15
M/s Adenzai
2 FDA/MCC/KRM/PL-softstone(48) M/s Ihsan JV M/s 1 1.03 0 2.03
Mega Parachinar
3 DGMM/CL/ML(SS)base metal M/s Ikram JV M/s 0 10 0 10
group(0646)/2022 MIGCO
4 DGMM/JV cell/cl/nephrite/40/2022 M/s Imran Ali JV 3 0 19.735 19.77
M/s north range
5 DGMM/CL /ML/copper/0822/2022 M/s Muhammad 0 10 0 10
Siddiq JV
Hazaratud Din
6 DGMM/JV cell/cl M/s shahdabijaz JV 0 10 0 10
M/s inno mines
Total 9 41.03 19.735 66.8
Audit held that due to not fulfillment of the Appellate Tribunal decision the lease was not required
to be awarded and security was required to be forfeited of Rs 6 million along with debarring the firm into
black list which was not done.
The lapse occurred due to violation of Act.
When pointed out in November, 2023, no reply was given.
Audit recommends to stop and cancelled the lease and production granted under J.V/sharing mode
and conduct inquiry for fixing responsibility against the person /committee’s as well as executing agencies
by using excess and unlawful powers.
PDP No. 22 & 23 (2022-23)
22.4.4 Loss to government due to non-deposit of advance net profit share –

Rs. 583.000 million
Non-cancellation of JV granted and non-black listing & forfeiture of security –
Rs. 20.000 million
According to the Article 10 of Mines and Mineral Act, 2017, amended in 2019, notwithstanding,
anything contained in this Act, the Mineral Title Committee with the approval of authority (MIFA) may
grant license and mining lease for any such period for any un-granted area under any term and conditions
717
to such public and private organization as deemed appropriate in the public interest. Provided that on the
initiate of government or where proposal is received from any public or private organization for the grant
of mining right of any area on the basis of profit sharing with government.
According to the Sub-Section-2 of Section 4 (function of MIFA authority) stipulates that the
authority may delegate any of its powers to the Committee of Members.
According to the minutes of meeting MIFA/MTC the party shall pay as advance profit share before
execution of work.
According to the Section 59 of the mines mineral Act. a person and firms may be black listed by
the licensing authority for noncompliance of offer.
During test audit of the accounts record of the Directorate General Mines & mineral Peshawar, for
the Financial Year 2022-23, it was noticed that huge numbers joint venture/profit sharing lease were granted
by the MTC under Article 10 Mines and Minerals Act, 2017 by using delegation of power of mineral
investment facilitation authority vide minutes dated 31.10.2022.
Scrutiny of record revealed that vide agenda 2 (B) regarding delegation of power under sub Section
-2 of Section 4 of the Khyber Pakhtunkhwa Mines and Minerals Act, 2017, the forum was misguided by
the Secretary and DG Mines that under Sub- Section (2) of the Section 4 of the said Act, the authority has
been empowered to delegate its power to the Committee of Members in order to expeditiously dispose of
the grant of joint ventures/profit sharing agreements cases under Section-10 of the said Act, the department
propose that authority may delegate its power to mineral title committee which was granted accordingly.
Further scrutiny revealed that 20 numbers JV/profit sharing leases were granted by MTC from
31.10.2022 to 31.3.2023 which stands unauthorized and irregular and also evident from the letter no
SO(APP)/MDD)/6-14/MIFA/2022/4506-10 dated 31st march,2023 addressed to DG Mines and Mineral by
the Section officer (appeal) o/o Secretary Mines and Minerals regarding stoppage of approval of JV on the
behalf of authority because as per Sub- Section 2 of Section 4 of the Act ibid , the authority can delegate
its power only to the Committee of Members of the authority which has been clearly enumerated in Section
4 of the Act ibid, therefore, mineral titles committee cannot assume or to be delegated with power of the
mineral investment facilitation authority.
Furthermore, MTC has directed various firms to deposit advance net profit share of Rs. 583.000
million to the government but the same was not deposited by the firms which put government into loss of
Rs. 583.000 million (Annexure-XLII).
Audit held that due to non-deposit of advance net profit share department had sufficient ground to
cancel the lease and forfeited the performance security amounting to Rs 20 million and debar the firms
/company but the same was not done.
The irregularity occurred due to weak internal controls and financial mis-management.

718
Audit recommends to investigate the matter at high appropriate level and fix responsibility against
PDP No. 24 (2022-23)
22.4.5 Non-recovery of government dues from the defaulters – Rs. 4,316.908 million
According to the minutes of MTC meeting from 21.9.2022 to 13.9.2023 regarding outstanding dues
form contractor and declared defaulter under Section 70 of the Khyber Pakhtunkhwa Mines and Mineral
Act, 2017.
During test audit of the accounts record of the Directorate General Mines & Mineral Peshawar, for
the Financial Year 2022-23, it was observed that the local directorate awarded/granted mineral title lease
to various contracts/firms at various intervals. After issuance of the work order, the lessee has to pay
government dues i.e annual rent, royalty etc to the Mines and Mineral Department but the Directorate has
failed to collect the government dues from the concerned lessees and have been declared defaulter after
fulfilling due course of action (Annexure-XLIII).
The lapse occurred due to weak internal control & financial mismanagement.
expediting the recoveries from the defaulters to minimize the government losses.
PDP No. 25 (2022-23)
22.4.6 Non-recovery of assessed amount against illegal mining of minor minerals - Rs. 12.339 million
According to Section 56 of Mines & Mineral Act, 2017, (1) If any person, directly or indirectly,
starts prospecting, exploring or mining and mineral outside the area granted to him under a mineral title or
in any area for which he has not obtained a mineral title or unauthorized transportation of minerals or if any
person obstructs free access of a holder of a mineral title to the licensed or leased area or directly or
indirectly tries to interfere with the prospecting or mining operations by a holder of a mineral title, he shall
be punishable with imprisonment for a term of minimum six months which may extend up to five years and
with a fine of minimum five hundred thousand which may extend up to two million provided that owner of
a land may level the land or make excavation of mineral for agriculture or building purposes other than
commercial mineral extraction or marketing subject to prior approval of the Director General. (2) The
719
Licensing Authority shall appoint a technical committee to assess the losses incurred due to obstruction,
hindrance, or closure of the prospecting, exploration or mining operations caused by any person, and shall
proceed to recover the assessed losses from such person, which in case of default, shall be recovered as
arrears of land revenue.
During audit of accounts record of DG Mines & Minerals for the financial year 2022-23, it was
observed thatwork order for minor minerals of District Peshawar as one unit was issued to Contractor Abdul
Nabi on 19.05.2021 for Rs. 57.100 million for a period of one year i.e 19.05.2021 to 18.05.2022 which was
extended twice i.e once upto May-2023 and secondly upto May-2024.
Scrutiny of record revealed that an application was written by contractor Abdul Nabi on 08.03.2023
addressed to DG Mines KP stating therein that he is facing financial loss due to illegal mining from
neighboring districts on boundaries (Camp Korona, PastunGarhi, Khyali and Sardaryab) in river beds. In
response to query, the Assistant Director Mines & Minerals Charsadda commented that 57 Nos. Murasalas
have been lodged against the persons involved in illegal mining in river beds and assessment of Rs.
12,339,365 has been carried out and served notices for payment of assessed amounts. However,
responsibility for taking action against illegal transportation was shifted to the field staff of District
Peshawar and Nowshera.
Audit held neither these Murasalas were converted into FIRs nor recoveries of the assessed amounts
were made till date of Audit i.e Novembe-2023.
The lapse occurred due to weak internal control & financial mis-management.
recovery of the assessment amounts on account of illegal mining.
PDP No. 26 (2022-23)
22.4.7 Loss to government due to authorizing less annual rent than required rate – Rs. 147.095
million
According to the gazette notification dated 1.3.2023, Mines and Mineral Act, 2017, annual fee/rent
of 1 acre will be Rs. 10,000.
During test audit of the accounts record of the Directorate General Mines & mineral Peshawar, for
the Financial Year 2022-23, it was noticed that a various leases were granted to various firms under joint
venture /profit sharing agreement.
720
Scrutiny of record reveled that Assistant Director concerned while issuing allotment letter rate was
quoted 200/ acre for annual rent rather than Rs 10000 /acre which resulted into less recovery of Rs 147.095
million on account of annual fee, as detailed under;
Mineral Title Firm Rate quoted in Rate Amount
Annual Rent required Due (m)
DGMM/cl/ml ss M/s Raza shah 200 10,000 18.094
MDW/CL/ML –quartz M/s Arkari 200 10,000 49.978
MDW/cl/ML-gemstone01 M/s Imran 200 10,000 19.726
MDW/cl/ML-gemstone02 M/s Imran 200 10,000 39.958
MDW/cl/ML-nephrite2 M/s Imran 200 10,000 9.390
MDW/cl/ML-nephrite3 M/s Imran 200 10,000 9.949
Total 147.095
Audit held that undue favor was extended to the firms by the dealing hands on the cost of
government kitty which needs justification
The irregularity occurred due to weak internal controls and financial mis-management.
Audit recommends to investigate the matter and fix responsibility again the person at fault along
with recovery and strict disciplinary action.
PDP No. 27 (2022-23)
22.4.8 Non-recovery of outstanding Govt dues from Royalty Contractor of Mardan Division - Rs.
63.922 million
According to Section-77 of Mines & Minerals Act, 2017, surrender, expiry or determination of a
mineral title, the licensee or the lessee, as the case may be, shall be responsible for payment of all
outstanding dues and other charges which, in the event of non-payment, shall be recoverable as Arrears of
Land Revenue.
observed that contract for Royalty collection for Mardan Division was granted to contractor M/S Swabi
Construction & Mines (SMC) Pvt Ltd at bid price of Rs. 285,000,000 for the period w.e.f 01.07.2022 to
30.06.2023.
Scrutiny of further record revealed that the firm deposited 25% down payment amounting to Rs.
71,250,000/-, 10% Security of Rs. 28,500,000/- and Professional Tax of Rs. 100,000/-.
The Work Order was issued to the Firm/contractor on 28.06.2022 to deposit the remaining amount
in three equal installments of Rs. 71,250,000/- on 30.09.2022, 30.12.2022 and 31.03.2023 respectively with
721
the condition that in case of failure Security amounting to Rs. 28,500,000/- shall be forfeited in favor of
Government and Work Order shall be processed for cancellation without any further delay.
However, the Firm/contractor failed to deposit the due installments in time and an amount of Rs.
65,766,749 was outstanding against the Firm/contractor out of which the Firm/contractor deposited a sum
of Rs. 2,040,000 leaving a balance of Rs. 63,726,479 as outstanding dues against the Firm/contractor. The
Mineral Title Committee vide agenda item NO. 62 dated 12.07.2023 declared the Firm/contractor defaulter.
Further, the Firm/contractor also collected an amount of Rs. 65,250/- on account of Royalty beyond
their contact jurisdiction, therefore, an amount of Rs. 195,750 (three times of the amount collected) was
also outstanding against the firm.
Therefore, total outstanding dues against the Firm/contractor was Rs. 63,922,229 ( Rs. 63,726,479
+ Rs. 195,750).
The lapse occurred due to violation of Rules and extending undue favor to contractor.
Audit recommends immediate recovery of outstanding Govt dues amounting to Rs. 63,922,229
million.
PDP No. 31 (2022-23)
22.4.9 Non-recovery of outstanding dues against minor mineral contractor - Rs. 29.468 million
According to Section-77 of Mines & Minerals Act, 2017, surrender, expiry or determination of a
mineral title, the licensee or the lessee, as the case may be, shall be responsible for payment of all
outstanding dues and other charges which, in the event of non-payment, shall be recoverable as Arrears of
Land Revenue.
During audit of accounts record of DG Mines & Mineral for the financial year 2022-23, it was
observed that mining lease for mineral minerals for District Peshawar was granted to Mr. Abdul Nabi.
Scrutiny of record revealed that a sum of Rs. 29,468,312 (Rs. 11,299,424 for 2022-23 and Rs.
18,168,888 for 2023-24) was outstanding against the contractor as detail below:
S. No. Particular Amount outstanding Remarks
1. Lease money 2022-23 2,939,998 Till 20.05.2023
2. Withholding Tax 2022-23 6,691,605 Till 20.05.2023
3. Sales Tax 2022-23 1,667821 Till 20.05.2023
4. Lease Money 2023-24 16,222,222 2023-24
5. Withholding Tax 2023-24 1,622,222 2023-24
722
6. Sales Tax 2023-24 324,444 2023-24
Total 29,468,312
The contractor was asked vide letter No. 25255/DGMM/MM/PR/Auction-2020-21 dated

07.11.2023 to deposit all the outstanding dues within one month from the date of issuance of letter. In case
of failure to deposit the outstanding Govt dues, the same will be recovered under arrears of Land Revenue
Act.
Audit recommends detail inquiry in the matter against the person(s) at fault along with recovery of
outstanding dues under intimation to Audit.
PDP No. 32 (2022-23)
22.4.10 Loss to the government due to non-recovery of outstanding dues against small dams
and M/S Matracon - Rs. 534.862 million
According to Sub- Section (1,2,3,4) of Section 56 of KP Mineral Governance Act 2017, if any
person, directly or indirectly, starts prospecting exploring or mining any mineral outside the area granted
to him under mineral title or in any area for which he has not obtained a mineral title or unauthorized
transportation of minerals or if any person obstructs free access of a holder of a mineral title to the licensed
or leased area or directly or indirectly tries to interfere with the prospecting or mining operation by a holder
of mining title , he shall be punishable with imprisonment for a term of minimum of six months which may
extend up to three years or a fine minimum five hundred thousand which may extend upt to two million or
with both. The licensing authority shall have the power to stop unauthorized work in such manner as if may
deem fit and recover in addition to the penalty, the pit-mouth value of the mineral so excavated from the
person responsible for such un-authorized work.
observed that evaluation/assessment of claims on account of unauthorized mining/transportation of
minor/major minerals against Small Dams and M/S MATRACON were carried out by the regional offices
amounting to Rs. 3,075,324,339 as per the break up.
Date till Assessed
Name of the Party Assessment Carried out by the office
assessment amount
Small Dams Kohat, Nowshera, Swabi, Abbottabad, 28.11.2018 427,321,645
Haripur, Karak
M/S MATRACON (PHA Contractor) Karak, Kohat, Bannu and LakkiMarwat 107,540,846
Total 534,862,491
723
Audit recommends immediate recovery of outstanding Govt dues on account of un-authorized

mining amounting to Rs. 534,862,491 under intimation to Audit.
PDP No. 34 (2022-23)
22.4.11 Non-recovery of Annual Rent along with fine in District Peshawar -

Rs. 6.440 million
According to Section 56 (1) of Mines & Minerals Act, 2017, if a holder of a mineral title persists
in violating any of the terms and conditions of the mineral title or the provisions of this Act and fails to
rectify the violation within such period as may be fixed by the Licensing Authority, the mineral title shall,
subject to notice, be cancelled. (2) If any dues payable under a mineral title are not paid within three months
next after the due date, the Licensing Authority may, subject to notice, revoke the mineral title and take
possession of the premises comprised therein read with Section -77 On the surrender, expiry or
determination of a mineral title, the licensee or the lessee, as the case may be, shall be responsible for
payment of all outstanding dues and other charges which, in the event of non-payment, shall be recoverable
as arrears of land revenue.
observed while going through lease files of District Peshawar that a sum of Rs. 6,440,136 was outstanding
against lease holders of District Peshawar on account of Annual Rent since 2009 but no efforts were made
to recover the same as detail below:
Name of Annual Outstanding
File No. Amount of Annual Rent Fine
Lease holder Rent Since amount
Sultan MDW/PR/ML/Bentonite(10)/2008 2017 60,000 550,000 610,000
Muhammad
Imran Khan MDW/PR/ML/Bentonite(14)/2009 2009 717,174 600,000 1,317,174
M/S Phonix MDW/PR/ML/Bentonite(1)/97 2009 1,488,752 820,000 1,317,552
Chemical (Rs. 988,721 deposited)
-Do- MDW/PR/ML/Bentonite(02)/98 2009 20,47,400 820,000 1,878,679
(Rs. 988,721 deposited)
Sultan MDW/PR/ML/Bentonite(16)/2009 2009 716,731 600,000 1,316,731
Muhammad
Total 6,440,136
Audit held that the Licensing Authority should have revoke the mineral title and took possession
of the premises as required under Section -56(2) which was not done and the contractors were given undue
favor.
724
Audit recommends immediate recovery of Annual Rent along with fine under intimation to Audit.
PDP No. 36 (2022-23)
22.4.12 Less recovery of receipt due to non-award of contract - Rs. 250.749 million
According to Minutes of the meeting regarding reserve price fixation of royalty for the financial
year 2021-22 dt. 26-3-2021, the proposed reserved price for 03 Nos of Divisions i.e. Peshawar,
Kohat&D.I.Khan are as under:
1. Peshawar Rs.116,987,585/-
2. Kohat Rs.128,580,396/-
3. D.I.Khan Rs.103,664,289/-
During the audit of accounts record of Directorate General, Mines & Minerals for the financial year
2021-22, it was noticed that royalty contract for above 03 Divisions were not awarded to contractor due to
which the local office directed to collect the royalty fee through their own staff. As per record provided by
local office a sum of Rs. 250,749,553/- (detail below).has been less recovered against the proposed reserved
price
Sl. # Division Proposed reserved Recovery made by Difference
price local office
1. Peshawar Rs.116,987,585/- Rs.51,767,907/- Rs.65,219,678
2. Kohat Rs.128,580,396/- Rs.38,555,265 Rs.90,025,131
3. D.I.Khan Rs.103,664,289/- Rs.8,159,545/- Rs.95,504,744
Total Rs.349,232,270/- Rs.98,482,717/- Rs.250,749,553/-
As per record of local office a sum of Rs. 98,482,717/- was recovered. The same is 28% of proposed
reserved price. The local office also established check posts to enhance recovery and stop illegal mining
but even then only 28% amount of reserved price shown recovered. The matter needs serious attention of
higher ups to conduct high level inquiry and fixing the responsibility for non-recovering of Rs.
250,749,553/- on a/c of royalty.
When pointed out in May 2023, it was replied that detail reply will be given after consultation of
relevant record.
725
Audit recommends investigation into the matter and fixing responsibility on the dealing hands
besides recovery/regularization of the amount.
PDP No. 655 (2021-22)
22.4.13 Non-recovery of outstanding dues on account of illegal mining -

According to D.G Mines & Minerals letter NO.33772/MDW/CDN/6 (5) 2017 (FWO) dt. 28.11.22
M/S FWO/NLC were involved in un-authorized mining/transportation of minerals and utilized the same in
construction of Swat Expressway and CPEC western route at D.I.Khan without permission from the
Licensing Authority.
During the audit of accounts of Directorate General Mines & Minerals Khyber Pakhtunkhwa for
the financial year 2021-22, it was noticed that M/s FWO was involved in un-authorized
mining/transportation of minerals and utilized the same in construction of Swat Expressway and M/s NLC
involved in un-authorized mining and utilized the same in CPEC western route at D.I. Khan. Similarly,
during the construction of small Dam, the contractors utilized a huge quantity of major mineral and Minor
minerals without fulfilling the legal decimation/approval of the Department. The local office assessed the
amount (detail below) and approach the above 03 departments to deposit the same into the Govt treasury.
But lapse of considerable time period no single penny has been shown recovered. Due to non-recovery of
huge amount the provincial Govt. is deprived from the revenue.
1. M/s Frontier Works Organization (FWO) Rs.2,141,810,799.70
2. M/s National Logistic Cell (NLC) Rs.398,651,048.00
3. D.G Small Dams KP Rs.427,321,645.00
Total: Rs.2,967,783,492/-
It was further added that a sum of Rs. 115,291,622/- established on a/c of un-authorized mining by
local community’s persons. In this connection District Collector Peshawar has been approached vide letter
No.1460/DGMM/MM/PR/Assessment Recovery dt.24.1.2023 to recover the outstanding dues from
defaulters but no recovery made till audit.
It was therefore suggested to take appropriate action at high level and recovered a sum of
Rs.3,083.075 (M).
726
PDP No. 656 & 659 (2021-22)
22.4.14 Loss to Government due to non-recovery of long outstanding dues -

Rs. 257.207 million
According to letter No.15377/MDWR&R/HQ/Reg:/Pre-Qualification/2022-23 dt.20-5-2022, D.G

Mines & Mineral reject registration request being defaulter in term of Rule-06 of the KP Royalty Auction
Rules 2017.
During the audit of accounts record of Directorate General, Mines & Minerals for the financial year
2021-22, it was noticed that a sum of Rs. 138,648,056/- shown long outstanding and declare defaulter by
local office. It was therefore suggested to recover said amount.
Mr. Nawazish Ali S/o Khan Pervaiz Rs.3,092,500/-
Mr.Shujat Ali S/o Nusrat Iqbal Rs.135,555,556/-
Total: Rs.138,648,056/-
It was further added that Mr. Israrul HQ S/o Sahib Jamal was awarded royalty contract for
Malakand Division. The contractor failed to deposit 3rd installment amounting to Rs. 41,850,000/-. Further
the local office also imposed Rs. 418,500/- as 10 % fine.
Similarly a sum of Rs.75,551,000/- and Rs.739,500/- as 2nd and 3rd installment and annual rent
respectively is outstanding against Mr. Gul Wali Shah. The same needs recovery.
The matter needs serious attention of higher ups.
The lapse occurred due to weak internal controls and financial mis-management.
When pointed out in May 2023, it was replied that detail reply will be given after consultation of
relevant record.
PDP No.657 &658 (2021-22)
727
22.4.15 Loss on account of illegal mining Rs. 1,838.056 million
According to “Monitoring & Surveillance Unit” Minerals Development Department Khyber

Pakhtunkhwa, District Wise Report (Murasalas/FIRs & Assessment).
During audit of the accounts of Directorate General Mines and Minerals Development Khyber
Pakhtunkhwa for the Financial Year 2020-21, it was noticed that Rs. 1,850,303,530/- were assessed on
account of illegal mining by Monitoring & Surveillance Unit, Minerals Development Department till March
2022.
Audit observed that only Rs. 12,247,395/- were recovered by the department and Rs.
1,838,056,135/- is still outstanding against the various offender, but the department did not make stern
efforts to recover the outstanding amount, resulting in loss to government. It was apprehended by audit that
the illegal mining was done with consent of the department as a large number of inspectors were posted
and check posts established by the department.
When pointed out in April, 2022, it was stated that detail reply will be furnished after consulting
the record.
In the DAC meeting held on 24.07.2021, it was decided that para stands till immediate complete
recovery.
Audit recommends investigation into the matter and fixing responsibility on the dealing hands
besides recovery of the amount under intimation to audit.
PDP No. 357 (2020-21)
22.4.16 Loss to the Government due to non-recovery of outstanding dues Rs. 3,075.32 million.
According to KP Mineral Governance Act, Section 56 sub section (1,2,3,4) if any person, directly
or indirectly, starts prospecting exploring or mining and mineral outside the area granted to him under
mineral title or in any area for which he has not obtained a mineral title or unauthorized transportation of
minerals or if any person obstructs free access of a holder of a mineral title to the licensed or leased area or
directly or indirectly tries to interfere with the prospecting or mining operation by a holder of mining title ,
he shall be punishable with imprisonment for a term of minimum of six months which may extend up to
three years or a fine minimum five hundred thousand which may extend upto two million or with both. The
licensing authority shall have the power to stop unauthorized work in such manner as if may deem fit and
recover in addition to the penalty, the pit-mouth value of the mineral so excavated from the person
responsible for such un-authorized work.
During audit of the accounts record of Director General Mines and Minerals Development
Department Khyber Pakhtunkhwa Peshawar for the Financial Year 2020-21, it was noticed that Huge
quantity of major and minor mines were used without taking the mineral department into loop by the
728
following contractors. Evaluation/assessment of claims on account of unauthorized mining/transportation
of minor/major minerals were carried out by the local office amounting to Rs. 3,075,324,338/- as per details
given below. However, no action was taken by the local office against these contractors for recovery of
such amount and put a huge loss to government as royalty from mining is one of the major source of revenue
of the province.
Sr.No Contractor Name Assessed Amount

01 Frontier works organization (FWO) 2,141,810,799
02 National Logistic Cell (NLC) 398,651,048
03 Small Dams 427,321,645
04 M/S Matracon 107,540,846
Total 3,075,324,338
Non recovery of the royalty from the parties is the violation of the MSG Act. 2017.
When pointed out in April, 2022, it was stated that detail reply will be furnished after consulting
the record.
In the DAC meeting held on 24.07.2021, it was decided that para stands till complete recovery.
Audit recommends that matter may be taken with the Chief Secretary for possible solution and
recovery of the un-authorized mining/transportation
PDP No. 358 (2020-21)
22.4.17 Loss to government due to non-recovery of outstanding dues of excise duty on

minerals - Rs. 547.283 million
According to Rule 44(1) of the Khyber Pakhtunkhwa Excise Duty on Minerals (Labour Welfare)
Rules, 1969; any amount of duty of excise which remains unpaid the date specified the demand notice any
amount of penalty which is imposed on an owner for violation of any of the provision of these rules shall
be recovered as arrears of land revenue and shall be credited to the government treasury.
During audit of the accounts of Commissionerate of Mines Labour Welfare Khyber Pakhtunkhwa
Peshawar for the financial year 2021-22, it was observed that a sum of Rs.547,283,595/-was outstanding
on account of excise duty against various contractors/lease owners.
Audit held that the amount was outstanding since long but the department failed to recover the
amount from contractors.
The lapse occurred due to non-implementation of the rules and regulations, which resulted in loss
to government.
729
When pointed out in June 2023, the management replied that necessary actions have been taken for
recovery of outstanding dues from the defaulters. Record will be provided to DAC.
Audit recommends to take action against the person(s) at fault besides recovery of the amount.
PDP No. 879 (2021-22)
730
Chapter-23
PLANNING & DEVELOPMENT DEPARTMENT

of:
 Planning development and control of industries, including cottage industries.

 Industrial Research
 Industrial training (including training of demonstration parties).
 Industrial exhibition within the country.
 Survey of industries.
 Trade and commerce, within the Province, including Government commercial undertakings,
Merchandise Marks Act, railway freight, import and export, trade control, capital issue, Insurance
Act, Registration of Accountants, Auditors Certificate Rules, Partnership Act, trade condition
reports, trade enquiries and agreements.
 All cases relating to Boilers Act, Patent and Designs Act, Explosive Act and Companies Act.
 Registration of Joint Stock Companies, Firms, Societies.
 Store Purchase Department, purchase of stores and capital goods including stores for Government
Presses and Public Works Department.
 The Provincial Advisory Panels for Industries and Minerals.
 Chambers and Associations of Commerce and Industry.
731
Audit Profile of Planning & Development Department;
S Total Audited FY 2022- Audited FY
Description Audited
No. Nos 23 2022-23
(Rs in Million) (Rs in Million)
1 Formations 13 01 39,948 0
 SDA
2 Nil Nil Nil N/A
 Etc
(Excluding FAP)
3 Nil Nil Nil N/A
4 11 07 2443.398 N/A
(FAP)
Non-Development;
(Rs.)
Grant # and
Grant Original Supplementary Re- Final Total Actual Excess/
Name of Surrender
Type Grant Grant Apprioriation Grant Expenditure (Savings)
Department
04 - Planning
&
-
Development NC21 895,308,000 30 0 118,647,110 776,660,920 740,648,990
36,011,930
and Bureau of
Statistics
61 - Planning -
NC21 81,201,000 0 106,692,131 1 187,893,130 187,861,636
&Developmen 31,494
61- Bureau of
NC21 10,163,000 0 380,372 6,559,840 3,983,532 3,983,532
Statistics -
-
Total 986,672,000 30 107,072,503 125,206,951 968,537,582 932,494,158
36,043,424
732
Development;
(Rs.)
Grant # and Total
Name of Surrender Actual
Type Grant Grant Apprioriation Grant (Savings)
50-Planning &
NC22 0 0 0 0 0 0
Development -
Total 0 0 0 0 0 0 -
1200
1000
800
Amount in Rs.
600
400
200
0
Developmental Non Developmental
-200
Final Grant Total Actual Expenditure Excess /(Savings)
Overview of expenditure against the final grant; (Rs. in million)
Total Actual
Expenditure
Non-Development 968.54 932.49 - 36.04 -3.72%
Development - - -
Total 968.54 932.49 - 36.04 -3.72%
733
900,000,000
800,000,000
700,000,000
600,000,000
Amount in Rs.
500,000,000
400,000,000
300,000,000
200,000,000
100,000,000
0
-100,000,000 04 - Planning & Development 61 - Planning & Developmen 61- Bureau of Statistics
and Bureau of Statistics
It can be seen from the above variance analysis that the budgets could not be utilized and 11.45%
of the funds have been left unspent. This indicates inability of the department to utilize the available funds
in the best public interest and many plans might have been left unachieved.
23.1 (C) Issues in the Planning & Development Department
The main issue in the planning and development department was that they incurred millions of
expenditure of regularized projects out of ADP. Some of the projects have not achieved their objectives and
have been given un-justified extensions.
audit of Planning & Development Department. Summary of the audit observations classified by nature is
as under:

Amount
(Rs.)
3 Irregularities -
5 Others 2113.079
734

S#
Year Department actionable pointscompliance compliance compliance
Planning &
1. 2001-02 08 06 - 02
Development
2. 2003-04 -do- 04 03 - 01
3. 2004-05 -do- 08 02 - 06
4. 2007-08 -do- 05 01 - 04
5. 2008-09 -do- 08 05 - 03
6. 2011-12 -do- 10 05 - 05
7. 2012-13 -do- 24 11 - 13
8. 2013-14 -do- 02 01 - 01
9. 2014-15 -do- 03 01 - 02
10. 2015-16 -do- 00 00 - 00
11. 2016-17 -do- 00 00 - 00
23.4 Audit Paras

23.4.1 Wasteful expenditure on initiation of projects for discharge of functions of the P&DD –
Rs.733.90 million
According to Rules of Business 1985, the functions are entrusted to Planning & Development
Department:
i. Planning and Development including policy, procedure and coordination work relating to the
preparation of the Provincial Annual Development Programme and its review.
ii. Processing of all development schemes, programmes and proposals submitted by other
Departments including autonomous bodies and making recommendations to Government
thereupon; Secretariat functions of the Provincial Development Working Party.
iii. Maintaining liaison with the National Planning Agencies.
iv. Dealing with Autonomous and Semi-Autonomous Bodies in regard to development planning
programmes and projects in N.W.F.P.
v. Foreign Aid.
vi. Coordination of technical assistance from abroad including training facilities; expert advisory
services and equipment.
vii. Coordination of training of Local Officers and private sector candidates in foreign countries.
Secretariat functions of the Provincial Selection Committee for training abroad.
viii. Arrangement of the services of foreign experts/advisors including Secretariat functions of the
Provincial Screening Committee for the appointment of foreign expert/advisors.
ix. Economic research and matters relating to the Board of Economics Enquiry.
x. Coordination of Provincial statistics in general and all matters relating to the Bureau of Statistics.
735
xi. General Economic appraisal evaluation of progress and performance of Development Schemes and
Programmes and their critical appraisal.
xii. Initiation of measures for giving a suitable publicity to the Development plans and educating the
public on the results achieved from time to time.
xiii. Matters relating to the Regional Development Projects, N.W.F.P.
xiv. Price Stabilization Policy.
xv. Protocol functions in connection with visits of foreign economics missions and delegations; etc.
xvi. Appropriation and re-appropriation of development grants provided in the budget.
During audit of the accounts record of Planning & Development Department, Khyber Pakhtunkhwa
for the Financial Year 2022-23, it was observed that 33 No. of projects were initiated by the P&D
Department with expenditure of Rs.733.90 million incurred by these projects during a single financial year.
Audit raised the following observations:
i. With the total strength of 636 Officers/ officials on regular side of the P&D Department, the
department is under obligation to perform its duties as entrusted in the Rules of Business 1985.
However, the department further initiated number of projects from time to time for discharge
of its mandatory function/ role under the Executive pillar of the system. During the Financial
Year 2022-23, there were total of 33 projects initiated by the department and incurred
expenditure of Rs.733.90 million in addition to its regular expenditure of Rs.463.662 million
on account of pay & allowances and operating expenses. The expenditure of Rs.733.90 million
incurred by 33 projects was unjustified and wastage of government resources as these projects
did not generate any asset/ infrastructure and were revenue nature projects. The functions
performed through these projects, were the basic functions of the P&D Department itself.
ii. All the projects were revenue side projects which did not generate any asset/ infrastructure but
a source for the P&D Department to engage the contingent staff without proper recruitment
process and ultimately regularize the staff through Regularization of Services Act 2018 and
2022.
iii. Chief of Section supported by officers/ officials in Health, Education, Infrastructure, Rural
Development, Foreign Aid Projects are working on the regular side of the department and their
services could be utilized in planning, development, review, appraisal, critical analysis and
coordination work of ADP etc. Contrarily, P&D Department initiated projects like GIS,
Development of Regional GDP, Extension of M&E, Institutional Support to P&DD. Instead of
initiation multiple projects which are resulting in overlapping of projects and resources, the
existing department was required to be strengthened through the laid down mechanism i.e. SNE
and proper recruitment process.
Audit held that initiating of these 33 projects and expenditure of Rs.733.90 million was wastage of
resources and indicate conflict of interest committed by the P&DD which is facilitating initiation of projects
for itself which was contradictory to the provisions of the GFR which provides that “No authority should
exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its
736
own advantage. Public moneys should not be utilized for the benefit of a particular person or section of the
community unless.”
The lapse occurred due to conflict of interest and misuse of authority which resulted in wasteful
expenditure.
When pointed out in September 2023, the management stated that proper reply will be shared with
the Audit as and when response is received from concerned sections/ units.
Audit recommends to inquire the matter for fixing of responsibility against the person(s) at fault
and corrective action.
PDP No. 19 (2022-23)
23.4.2 Cost overrun due to multiple revisions of the PC-I without justification–
Rs. 566.98 million
According to section 4.1, 4.13 & 4.14 of Manual for Development Project issued by Planning
project document PC-I is appraised and scrutinized by the concerned agencies before submitting it for
supposed to implement the project in accordance with the PC-I provisions. The project preparation has
continued to suffer from the weaknesses i.e. inadequacy of data, unrealistic cost estimates, over-estimation
of benefits, lack of coordination with the related agencies, incorrect assumption of availability of inputs,
lack of proper implementation schedule. To avoid cost over-runs and repeated revisions of the scheme, it
is extremely important that a project is prepared with due care and based on surveys, investigations and
feasibility studies, the time taken in its examination (and also execution) will be greatly reduced. The cost
estimates of a project have to be prepared with a lot of care so that these are not revised again and again.
During audit of the accounts record of Planning & Development Department (M&E), Khyber
Pakhtunkhwa for the Financial Year 2022-23, it was observed that PC-I of the “Extension of M&E system
to Districts in KP” was approved at the cost of Rs.1196.285 million which was revised time and again as
below:
PC-I Period Approved cost (Rs.)
Original 2020-2023 1196.285
1st Revised 2021-2024 1411.318
2nd Revised 2022-2025 1978.299
Scrutiny of record revealed the following irregularities:

i. The 2nd revised PC-I for Rs.1978.299 million showed justification / reasons for revision of cost
due to price hike in market, increase in dollar conversion rate, increase in the prices of vehicles
and delayed appointments due to COVID-19. However, detail of HR positions and comparison
with 1st time revised PC-I revealed that 50 HR positions were enhanced in the attachments to
737
PC-I which were not brought in to the notice of PDWP while obtaining approval for the 2 nd
revised PC-I.
ii. The reason of COVID-19 for revision to 2nd time was not justified as the 1st time revision was
made in post COVID-19 scenario.
iii. The time and again revisions resulted in time and cost overrun of Rs.566.98 million (1978.299
– 1411.318).
iv. In addition to above project, regular set up of M&E with annual expenditure of Rs. and another
project “Establishment of M&E System in KP” was annual expenditure of Rs.23.279 million
were also in place. Running different projects for the one and same purpose of monitoring, is
resulting in duplication of developmental schemes and the objectives of monitoring could have
been achieved by strengthening the existing M&E system instead of running similar projects.
v. The monitoring and evaluation services were extended to the districts without proper analysis
of the targets achieved and impact created at the divisional level under the project.
The lapse occurred due to non-observing the instructions for preparation of PC-I which resulted in
cost overrun.
PDP No. 22 (2022-23)
23.4.3 Non-preparation of PC-IVs / non-maintenance of record and non-retrieval of assets of

projects
According to section vii – Chapter 7 of the Manual for Developmental Projects, Planning
Commission of Pakistan, the project/ programme completion report on PC-IV form is to be furnished by
every Project Director/Executing Agency only once soon after a project or programme is adjudged to be
completed. The PC-IV includes the full history of the project emphasizing the risks taken and the mistakes
committed along with the remedial measures adopted and the experience gained thereby. It serves as a guide
to those who are charged with the execution and supervision of similar projects in future. Ideally the
completion report should begin before the works are completed, and the events are fresh in mind. As far as
possible, the completion report should be ready at the time the project is completed or very soon thereafter.
According to minutes of Transport Committee meeting, Administration Department, KP circulated

vide SOT(AD)3-20/2013 dated 07.10.2015, Provincial Government has imposed complete ban on purchase
of vehicles as a measure of austerity which can be relaxed by the Chief Minister, KP on case-to-case basis.
The case of purchase of vehicle may be moved after obtaining non-availability certificate from
738
Administration Department. All the closed projects vehicles must be handed over to Administration
Department and may not be retained by any government department or its subordinate office.
According to Government of Khyber Pakhtunkhwa, P&D Department Notification

SO(Estt:)P&D/052/8-19/MAF/2019 dated 04-02-2020, in post-merger scenario, the competent authority on
the recommendation of Establishment Department and committee constituted by ACS PDD, 11 No. of
projects of Merged Areas were allocated SDU and 25 No. of projects to P&D Department, KP.
for the Financial Year 2022-23, it was observed that 36 No. of projects were in progress in the Erstwhile
FATA at the time of merger in to Khyber Pakhtunkhwa. To review the existing roles and responsibilities
of Directorate of Projects and restructuring/ integration in the post-merger scenario, on the recommendation
of Establishment Department and a committee constituted by Additional Chief Secretary, P&DD, 11
projects were allocated to SDU while 25 projects to P&D Department.
Moreover, record of these 36 projects along with PC-Is, PC-IVs in case of completion along with
vehicles and other assets was requested to ascertain the assets and No. of vehicles procured under these
projects with their current status as well as achievement of the projects’ objectives. It was informed that
assets/ vehicles of these projects were taken on the strength of P&DD and allotted to the officers as per
their entitlement. However, plea of the management was not correct as 86 vehicles were available (P&DD
+ ISPD) and also available from the closed projects executed in the settled districts but whereabouts of the
vehicles of these 36 projects of Erstwhile FATA was not known.
Furthermore, no evidence of handing over of the assets/ vehicles of these projects to the
Administration Department (Transport Wing) was available.
The lapse occurred due to non-implementation of the rules/ policies which resulted in non-
preparation of PC-IVs of the completed projects and missing of vehicles of these projects.
Audit recommends fact finding inquiry for ascertaining the actual No. of vehicles along with their
status for recovery of assets/ vehicles besides disciplinary action against the person(s) at fault.
PDP No. 24 (2022-23)
23.4.4 Loss due to missing of 04 REVO vehicles,IT equipment and other assets of the closed project
– Rs.68.00 million
According to minutes of Transport Committee meeting, Administration Department, KP circulated

vide SOT(AD)3-20/2013 dated 07.10.2015, Provincial Government has imposed complete ban on purchase
739
of vehicles as a measure of austerity which can be relaxed by the Chief Minister, KP on case-to-case basis.
The case of purchase of vehicle may be moved after obtaining non-availability certificate from
Administration Department. All the closed projects vehicles must be handed over to Administration
Department and may not be retained by any government department or its subordinate office.
for the Financial Year 2022-23, it was observed that a project “FATA Water Resource Development
Project” (FWRDP) was closed / completed on 30-06-2023. Soon after completion of the project, all the
assets including vehicles were required to be handed over to the Administrative Department/ Administration
Department as it was already intimated to all the departments to not retain the vehicles of the closed projects.
The list of vehicles provided by the management of FWRDP and handing / taking certificates revealed that
04 REVO vehicles were missing as were handed over to the P&D Department but were not shown in their
list of 86 No. vehicles (39 main P&DD + 47 ISDP). This resulted in missing of 04 vehicles worth Rs.68.00
million (Rs.17.00 x 4) approximately as tabulated below:
S. No. Vehicle type Reg. No. Remarks
1 Corolla 2015 AB-1265 Under the use of Director SDU.
2 REVO 4x4 AB-1266 Handed over to P&DD.
4 REVO 4x4 AB-1268 Handed over to Administration Department
5 REVO 4x4 AB-1269 Chief Coordinator (P&DD)
7 REVO 4x4 AB-1271 Islam Zeb
The vehicle at S. No.1 was retained by SDU, S. No. 4 handed over Administration Department
while vehicle at S. No. 5 was shown at the strength of the P&DD under the use of Chief Coordinator.
However, four No. of REVO 4x4 vehicles (S. No. 2, 3, 6 & 7) were missing while the project management
informed that the vehicles were handed over to the Deputy Secretary – Administration, P&DD.
Moreover, the lists provided by the project management revealed that the following assets were
handed over to P&D Department but these assets were neither issued to another fresh project nor current
status was known:
S. No. Item Qty
1 Dell Laptop Inspiron 5000 series 15
2 Printer 05
3 Photocopier 02
4 Panasonic fax machine 01
5 Multimedia projector in-focus with plotter 01
6 DC Inverter AC 10
7 Generator 25 KV 01
8 Digital camera 02
9 Safe for cash 01
10 Furniture (Sofa set, chairs, office tables) 70
Audit held that PC-IV/ assets list are not shared during the course of Audit and the actual No. of
missing vehicles will be much more.
740
The lapse occurred due to non-implementation of the rules/ policies which resulted in missing as
well as misuse of vehicles of the completed projects.
Audit recommends facts finding inquiry for complete overhauling of closed projects’ assets for
retrieval of the vehicles/ loss from the person(s) at fault besides disciplinary action.
PDP No. 27 (2022-23)
23.4.5 Loss to government due to non-implementation of the austerity measures and non-observing
of the revised POL ceilings – Rs.32.885 million
According to the Austerity Measures approved by the Chief Minister, Khyber Pakhtunkhwa and
endorsed to all the Administrative Secretaries by Finance Department and Administration Department vide
SO(T)AD/4-5/Transport Rules/2022 dated 17-06-2022, revised POL ceilings were approved by imposing
35% cut as follow:
S. Designation Current 35% cut in Liters per Remarks
No. ceiling month (Revised ceiling)
1 CS, ACS 225 146 For local duties and official
tours may be claimed
separately.
2 Administrative Secretaries 200 130 -do-
3 All Secretariat Officers above 130 85 -do-
Dy: Secretaries
4 Deputy Secretaries 110 72 -do-
5 Economist, Environmentalist, 110 72 -do-
Sr. Planning Officer
According to Transport Committee of Government of Khyber Pakhtunkhwa, Administration

Department, meeting minutes circulated vide SOT(AD)/3-20/2013 dated 07-10-2015, only the Transport
Committee of KP is mandated to confer authorization of vehicles for officers and pool/ general/ operational
duties etc. The authorization of vehicles for officers and pool of all the departments has been determined
by the Transport Committee. Use of vehicles in excess of authorized strength is subject to accountability
under the law and rules.
for the Financial Year 2022-23, it was observed that an expenditure of Rs.58.475 million (Rs.36.451 ISPD
& Rs.22.024 Reg. budget) was incurred on the POL of 86 No. of vehicles (47 ISPD + 39 Reg. side) during
the year.
741
Scrutiny of the POL expenditure and its comparison with vehicles’ pool and sanctioned strength of HR
revealed the following irregularities which resulted in loss to the government due to non-implementation
of the Austerity Measures and non-observing the revised POL ceilings:
i. POL expenditure of Rs.58.475 million on 86 vehicles mean expenditure of Rs.679,942/- per vehicle
in a financial year. As such POL expenditure of Rs.56,662/- was made per vehicle per month
(679,942 / 12). The average POL rate per liter was Rs.248/liter based on PSO archives data
(enclosed). The government imposed 35% cut as Austerity Measures for the financial year 2022-23
keeping in view the financial hardships in the province. Most officers of the department were entitled
to 70-100 liter per month, as such the total expenditure on POL was required to be restricted to
Rs.25.59, contrarily, expenditure of Rs.58.475 million which led to excess expenditure and loss of
Rs.32.885 million to the government as worked out below:
Vehicles POL ceiling Months Average POL Total Actual Excess exp: /
on average rate for the expenditure expenditure Loss (Rs. in
year required incurred (Rs. in million)
Approx. million)
86 100 liters 12 Rs.248 25.59 million 58.475 * 32.885
* the expenditure was purely incurred on POL, repair expenditure of Rs.20.918 million (14.494+6.424) was made in
addition to POL expenditure.
The lapse occurred due to non-implementation of the Transport Rules and directives of the Chief
Minister, KP in the matter which resulted in loss to the government.
Audit recommends inquiring the matter for recovery of loss and fixing of responsibility on the
person(s) at fault.
PDP No. 28 (2022-23)
742
23.4.6 Unauthorized retention of 07 government vehicles
According to Transport Committee of Government of Khyber Pakhtunkhwa, Administration

Department, meeting minutes circulated vide SOT(AD)/3-20/2013 dated 07-10-2015, only the Transport
Committee of KP is mandated to confer authorization of vehicles for officers and pool/ general/ operational
duties etc. Use of vehicles in excess of authorized strength is subject to accountability under the law and
rules.
According to Rule 9 (i) & (iii) of the Khyber Pakhtunkhwa Government Staff 'Vehicles (Use and
Maintenance) Rules 1997, all the Government Officers irrespective of their ranks/status shall be entitled to
use only one vehicle for official duty. The Officers of Provincial Government, who are holding charge of
more than one department/ organization and are in possession of more than one vehicle, by virtue of their
offices/ posts etc. will not be entitled to use the additional Vehicles.
During audit of the accounts record of Planning & Development Department (SDU), Khyber
Pakhtunkhwa for the Financial Year 2022-23, it was observed that 29 vehicles were placed at the disposal
of SDU/ DOP. List of vehicles revealed the following irregularities:
i. Vehicle No. DZ-935 (Toyota Hilux Vigo 2014) and No. BA-3697 (Toyota Corolla 2008) were
retained by the Ex-Director General SDU, however, neither name of the officer was recorded
on record nor period of retention on transfer was known though vehicle No. AB-1265 was
allotted to the incumbent Director SDU.
ii. Vehicle No. A-2762 (Toyota Corolla 2014) and No. A-4656 (Toyota Double Cab 2003) were
retained by the Ex-DG DOP, though vehicle No. AB-2750 (Toyota Rivo 2019) was allotted to
the incumbent DG DOP. Again, the management neither mentioned name of Ex-DG DOP nor
year of transfer and illegal retention of excess vehicle were recorded.
iii. Vehicle No. BB-7153 (Suzuki Cultus) was allotted to PS to Director SDU for which he was
not entitled.
iv. Vehicles bearing No. NX-175 (Suzuki Jimny 2007) and A-2955 (Suzuki Cultus 2013) were
shown at the pool of the department for which authorization of Transport Committee,
Administration Department was not available.
v. Transport Committee Authorization for 29 vehicles was not available.
Audit held that the officers, upon their transfer, were required to return the vehicles as official
vehicles would have been allotted to them from their current posting at respective department, it resulted in
not only misuse of government vehicles but dual vehicles from different departments simultaneously.
The lapse occurred due to ill management of the transport affairs and non-implementation of the
Transport Rules which resulted in misuse of official vehicles.
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Audit recommends inquiring the matter for retrieval of vehicles besides fixing of responsibility.
PDP No. 40 (2022-23)
23.4.7 Overpayment to contractors on account of enhancement charges – Rs. 3.036 million
According to Para-209 (d) of CPWA code, all payments for work or supplies are based on the
quantities recorded in the measurement book, it is incumbent upon the person taking the measurement to
record the quantities clearly and accurately.
During audit of the accounts of Planning and Development Department Khyber Pakhtunkhwa –
Karak Area Development Project (Kohat Division Development Program) for the financial year 2021-22,
it was observed that an amount of Rs. 3,036,147/- was paid to the following contractors on account of 15%
enhancement charges and Rs. 110,000/- as advertisement charges at the rate of Rs. 10,000/- (Annexure-
XLIV).
However, scrutiny of payment bills revealed that all these aforementioned payments to the
contractors were added at the end of the bills after the actual work was done and measurements taken.
The lapse occurred due to weak internal controls which resulted in overpayment to contractors.
When pointed out in March 2023, the management stated that the observation has been forwarded
to the executing agency for necessary reply which will be forwarded to Audit as and when received.
In the DAC meeting held on 12-14.12.2023, it was decided that the para stand for justification of
the variation, otherwise recovery may be made. However, no progress was intimated to audit till finalization
of this report.
Audit recommends inquiring the matter for fixing responsibility besides affecting recovery of the
overpaid amount.
PDP No. 688 (2021-22)
23.4.8 Overpayment due to non-deduction of overhead charges - Rs. 1.872 million
According to the Market Rate System 2021 issued vide Finance Department Khyber Pakhtunkhwa
Notification 28.09.2021, 24% is added in the actual price of items which constitutes (contractor profit +
(overhead + material + labour + equipment + taxes)).
Karak Area Development Project (Kohat Division Development Program) for the financial year 2021-22,
it was observed that an amount of Rs. 41.603 million was allocated and paid to the Agriculture Department
Karak (Soil Conservation Cell) for soil conservation in District Karak. However, the executing department
made the payments to the farmers on MRS-2021 which includes 24% overheads / contractors’ profit and
government taxes including 2% KP Sales Tax on Services. Further scrutiny of record revealed that the
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department made a total deduction of 19.5% (7.5% income tax + 12% overhead & contractors’ profit)
instead of deducting the 24% overhead, contractors’ profit and sales tax on services which resulted in less
deduction of Rs. 1,872,135/- (24% - 19.5% = 4.5% X Rs. 41.603 million).
Audit held that the 24% overhead and contractors’ profit was included in the Market Rate System
for awarding the works to the government contractors, and the farmers were not entitled to receive the said
overhead, hence the same should have been deducted from the payments made to the farmers.
farmers.
In the DAC meeting held on 12-14.12.2023, it was decided that recovery of the overpaid amount
@ 2.5% will be made from the contractor. However, no progress was intimated to audit till finalization of
this report.
PDP No. 696 (2021-22)
23.4.9 Excess payment on account of excess quantities of works - Rs. 2.889 million
According to Rule 395 of the Federal Treasury Rules Volume-I, payments of all works done shall
be made on the basis of measurements recorded in the measurement book kept for the purpose. Claims for
such payments shall be prepared by the claimant themselves in authorized forms of bills and no payment
may be authorized unless the correctness of claim in respect of quantities and rates as well as the quality of
the work done have been accepted.
Hangu Area Development Project for the financial year 2021-22, it was observed that two works
“Construction of Ibrahimzai Irrigation Channel Scheme District Hangu” was awarded to M/S Junaidur
Rehman Construction and “Construction / improvement of Left Bank Canal of Naryab District Hangu” to
M/S Haji Niaz Muhammad & Sons. Further scrutiny of record revealed that an amount of Rs. 2,889,932/-
was paid to the contractors vide their final bills for different items of work shown executed in excess of the
quantities mentioned in the PC-IV of the schemes (Annexure-XLV).
The lapse occurred due to weak internal controls which resulted in excess payment to the
contractors.
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In the DAC meeting held on 12-14.12.2023, it was decided that recovery of the excess payment
will be made. However, no progress was intimated to audit till finalization of this report.
PDP No. 729 (2021-22)
23.4.10 Doubtful withdrawal of funds on account of pumping machinery –

Rs. 2.578 million
According to the approved PC-I of the scheme “solarization of the existing WSS and other works
at water supply scheme MerobakDarbarMela U/C Kach PK-83 District Hangu, a quantity of 7.95 WHP of
an item of work solar submersible pump complete including supply & installation, testing and
commissioning of solar submersible (ISO – 9906 Certified coupled with all allied accessories) was included
in the approved PC-I at the rate of Rs. 73356.75 per WHP costing Rs. 583,520/-.
Hangu Area Development Project for the financial year 2021-22, it was observed that an amount of Rs.
2,578,244/- was paid to M/S JDS Construction Company on account of supply and installation of a solar
based submersible pump and supply, installation and commissioning of solar system at the rate of Rs.
2,403,244/- and Rs. 175,000/- respectively.
However, further scrutiny of record revealed that the sales invoice submitted by the supplier was
doubtful on the following grounds;
 The supplier showed the manufacturing of pumps, turbine pumps, centrifugal pumps and solar at
Village Zaim Tehsil Tangi District Charsadda in its sales invoice wherein such a ISO Certified
manufacturing plant was not found existing.
 The sales invoice and sales tax invoice showed three different addresses i.e. Village Zaim Tehsil
Tangi District Charasadda for JDS Engineering Works & Construction Company, RashakaiMardan
for JDS Marble Factory and RashakaiMardan for JDS Engineering Works & Construction
Company.
 The sales invoice and sales tax invoice were found to have been printed on two different letter
heads as evident from the fact the former showed the address being pasted at the lower end of the
invoice whereas the latter had no such address.
 The NTN number shown on the sales invoice and sales tax invoice did not exist in the online
verification portal of FBR.
 The project management failed conduct the factory acceptance test (FAT) of the major components
of the solar pumping system at the manufacturing facility as required under clause 5 of the supply
order dated 08.03.2021 issued to the supplier.
 No documentary evidence of the ISO certification could be found available with the bills.
 The amount was paid to the supplier for supply of solar pumps on lump sum basis instead of making
payment on the basis of scheduled rate of WHP as approved in the PC-I.
746
The lapse occurred due to violation of rules and regulations which resulted in fraudulent withdrawal of
funds.
In the DAC meeting held on 12-14.12.2023, it was decided that proper registration of the contractor
business in the relevant field and all other relevant document will be produced to audit. However, no
progress was intimated to audit till finalization of this report.
PDP No. 736 (2021-22)
23.4.11 Loss to the government due to non-execution of works and non-blacklisting of

According to Clause 7.4 of the contract executed between the contractor and the local office, if the
contractor fails to complete the works within the time for completion, the contractor’s liability for such a
failure shall be to pay the amount stated in the contract data for each day for which he fails to complete the
works. If the contractor abandons the works, refuses or fails to comply with the client’s instructions or fails
to proceed expeditiously, the procuring entity may terminate the contract by a second notice leaving behind
the contractor’s equipment to be used for the completion of the works at the risk and cost of the original
(defaulter) contractor.
Sustainable Development Unit for the financial year 2021-22, it was observed that the Highway Division
Bajaur awarded contract for the Blacktopping of Dhand Azghan Road to M/S Ittemad& Co. at the rate of
29.13% - below for a bid cost of Rs. 17.314 million vide work order No.84/3-M dated 19.01.2021.
Accordingly, an amount of Rs. 6,020,593/- was paid to the contractor up to 5th Running Bill.
Further scrutiny of record revealed that the contractor failed to complete the work within the
stipulated period of time. Resultantly, an amount of Rs. 12,663,794/- was returned by the local office to the
donor agency without taking any action against the defaulter contractor.
Moreover, the local office failed to carry out the said work by the second lowest contractor i.e. M/S
Watan Builder Bajaur with a rate of 27.20% below and bid cost Rs. 17.893 million, at the risk and cost of
the original (defaulter) contractor.
When pointed out in March 2023, the management stated that the balance fund has been returned
to the donor agency and the firm has been recommended for blacklisting to the higher ups.
The department admitted the loss incurred due to non-execution of work and surrender of funds.
747
In the DAC meeting held on 12-14.12.2023, it was decided that recovery of the penalty from the
contractor will made along with necessary for blacklisting of contractor. However, no progress was
intimated to audit till finalization of this report.
Audit recommends fixing of responsibility against the person(s) at fault besides expediting the
blacklisting process of the contractor.
PDP No. 753 (2021-22)
23.4.12 Fraudulent payment on account of purchase of livestock medicines –

Rs. 21.999 million
According to Rule 13 of the General Financial Rules Volume-I, it is the responsibility of the
controlling authority to apply internal check to prevent and detect error and irregularity in the financial
proceeding of its sub-ordinate officers and to guard against waste and loss of public money.
Sustainable Development Unit for the financial year 2021-22, it was observed that an amount of Rs.
21,999,970/- was paid to the following suppliers on account of supply of livestock medicines under the
project Special Integrated Area Development Project North Waziristan Tribal District;
S. No. Supplier SO Date Invoice Date Receiving Date Amount
1 Mallard Pharma 26.01.22 24.01.22 02.02.22 3,490,250
2 IntervacPharma 26.01.22 24.01.22 02.02.22 439,500
3 WimitsPharma 26.01.22 24.01.22 02.02.22 4,969,600
4 Classic Natural Lab 26.01.22 24.01.22 02.02.22 1,483,500
5 Aviceena Lab 26.01.22 24.01.22 02.02.22 9,372,360
6 Nawl Pharma 26.01.22 24.01.22 02.02.22 540,000
7 Leads Pharma 26.01.22 24.01.22 02.02.22 1,195,000
8 AttabakPharma 26.01.22 24.01.22 02.02.22 509,760
Total 21,999,970
However, further scrutiny of record revealed that the supply orders were shown issued to all the
firms on a single day i.e. 26.01.2022, whereas the payments to the suppliers were approved and passed on
24.01.2022 (two days before the supply orders were issued). And surprisingly, all the livestock medicines
were shown received from all the suppliers on a single day i.e. 02.02.2022, as evident from their delivery
challans.
Audit held that the whole process of purchasing the livestock medicines carried out by the District
Director Livestock & Dairy Development North Waziristan seems dubious and mere utilization of funds
was made.
The lapse occurred due to weak internal controls which resulted in fraudulent payment.
When pointed out in March 2023, no reply was furnished by the department.
748
In the DAC meeting held on 12-14.12.2023, it was decided that necessary document pertaining to
the purchase livestock medicines from start to end for verification to audit. However, no record was
produced to audit for verification till finalization of this report.
Audit recommends fixing of responsibility against the person(s) at fault besides recovery of the
amount.
PDP No. 759 (2021-22)
23.4.13 Loss to the government due to non-completion of works and unauthorized award of
contract for additional work – Rs. 81.458 million
According to Section 33 (2) (b) of the KPPRA Act 2012, a procuring entity can issue repeat order to
the same bidder not exceeding 15% of the original procurement. Read with the work order issued by the
C&W Department Haripur vide letter No. 2368/3-M dated 09.04.2019, the stipulated time limit for
completion of works is 18 months.
Sustainable Development Unit for the financial year 2021-22, it was observed that the C&W Division
Haripur awarded the contract for Construction of Suspension Bridge and Approach Roads Dartian to M/S
Al-Mehreen Enterprises vide work order No. 2368/3-M dated 09.04.2021 at 6% above on MRS-2017 for
an amount of Rs. 138,626,254/-, with a completion period of 18 months. Further scrutiny of record revealed
that the original PC-I of Rs. 142,690,000/- was revised by including certain items of work totaling to Rs.
224,148,401/- which resulted in increase of Rs. 81,458,401/- which was 57.09% of the original PC-I cost.
However, the local office instead of retendering the additional work being more than 15% of the original
PC-I cost, continued the same through the existing contractor.
Moreover, the contractor failed to complete the works within the stipulated period of time without
any cogent reasons. Resultantly, the PC-I of the project was revised for an amount of Rs. 224,148,401/-
which resulted in additional cost of Rs. 81,458,401/-. The reasons and justification given by the project
management for the revision of the PC-I were not plausible. For instance, the reason given for increase in
cost of earthwork from Rs. 14,107,397/- to Rs. 24,510,450/- was the change in soil classification as per site
condition and to achieve better gradients the quantities also increased. This reason was not plausible as the
change in soil classification has nothing to do with increase in the quantities of the earthwork items.
It is worth mentioning here that there was neither any issue of funds on the part of the donor agency
nor was there any dispute on the land for the said scheme as evident from the District Coordination
Committee meeting held on 07.03.2018 wherein it was mentioned vide Para 5 of the minutes that the local
owners of the land are agreed to donate the land free-of-cost in favor of the government / scheme.
Audit held that had the contractor completed the project within the stipulated period of time, there
would have been no revision in the PC-I, thus no additional cost of the project, and no loss to the
government.
749
The lapse occurred due to weak internal controls which resulted in loss to the government and irregular
awarding of contract for additional work.
In the DAC meeting held on 12-14.12.2023, it was decided the department may investigate the
matter through a fact-finding inquiry and fixing responsibility under intimation to audit. However, no
outcome of the findings was shared with audit till finalization of this report.
amount paid in excess of the original tender cost.
PDP No. 763 (2021-22)
23.4.14 Loss to the government due to non-imposition of penalty upon the contractor – Rs.
13.862 million
According to Serial No. 7 (a) of the Appendix-A (Clause 47.1 of the special stipulations), the
project management shall impose liquidated damages at the rate of Rs. 5,000 for each day of delay in
completion of the works subject to a maximum of 10% of the contract price stated in the letter of acceptance.
According to the 4th recommendation of the consultant at Page No. 43 of AiD Consultant’s Annual
Progress Report 2022, if the contractor is unable to perform significantly, the line department may be
advised for liquidated damages as per Clause 47.1 of the contract agreement and where needed for contract
cancellation.
Sustainable Development Unit for the financial year 2021-22, it was observed that the C&W Division
Haripur awarded the contract for Construction of Suspension Bridge and Approach Roads Dartian to M/S
Al-Mehreen Enterprises vide work order No. 2368/3-M dated 09.04.2021 at 6% above on MRS-2017 for
an amount of Rs. 138,626,254/-, with a completion period of 18 months. Accordingly, an amount of Rs.
128,766,138/- was paid to the contractor up to 19th Running Bill.
Further scrutiny of record revealed that the contractor failed to complete the works within the
stipulated period of time without any cogent reasons. However, the project management failed to impose
penalty at the prescribed rate amounting to Rs. 13,862,625/- (Rs. 138,626,254 X 10%) upon the contractor.
The stance of Audit was further strengthened from the AiD Consultant’s Annual Progress Report
2022 wherein it was stated at Page No. 42-43 that the first two U-Bolts of the left bank anchorage block
has broken while the other 18 bolts on left bank and 06 on right bank anchorage block have failed. The
consultant further stated that the contractor shows weak capacities ranging from their inability to plan or
deploy the required human, equipment and other resources to weak planning and management of schedules.
It is worth mentioning here that the C&W Division Haripur submitted vide letter No. 8735/1-A
dated 07.02.2023 that there is no inquiry being conducted by any entity regarding the failure of the
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suspension bridge, whereas the consultant vides their Annual Progress Report 2022 at Page No. 06 admitted
that the failure of the U-Bolts / Suspension Bridge was investigated and the design of the main anchorage
system was revised accordingly.
In the DAC meeting held on 12-14.12.2023, it was decided the department may investigate the
matter through a fact-finding inquiry and fixing responsibility besides recovery under intimation to audit.
However, no outcome of the findings and recovery were shared with audit till finalization of this report.
Audit recommends imposition of penalty upon the contractor and early recovery.
PDP No. 765 (2021-22)
23.4.15 Loss to the government due to non-imposition of penalty upon the contractors – Rs.
10.549 million
According to Clause 1 of the instructions to bidders in the NIT dated 22.05.2019, each lot shall be
completed within 18 months from the date of signing of the contract agreements. Read with the standard
form of contract agreements executed with the works contractors, if the contractor fails to complete the
work within the time for completion, the contractor’s only liability to the procuring entity for such failure
shall be to pay the amount stated in the contract data for each day for which he fails to complete the works.
According to Clause 6 of the Instructions to Bidders in the NIT dated 22.05.2019, the electronic
bid should be submitted electronically on or before the fixed date & time.
According to Para 178 of GFR Vol 1 and Para 56 of CPWD code, no work shall be commenced or
liability created without obtaining administrative approval and technical sanction of the competent
authority.
Sustainable Development Unit for the financial year 2021-22, it was observed that the TMA Haripur
awarded various contracts for construction / repair of the water supply schemes in District Haripur for an
amount of Rs. 210,999,547/-, as detailed below;
Scheme Lot Contractor Bid Cost WO Comp. Penalty
Date Date
MohallahBabu: Tube Lot-1 Peshawar 32,791,248 20.09.19 20.03.21 1,639,562
Well / Pumping Construction
Machinery Chamber /
Chowkidar Hut /
Compound Wall and
Water Supply Pipeline
(WSS)
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Zafar Park: WSS Lot-2 Syed Yaqoob Shah 45,769,893 20.09.19 20.03.21 2,288,495
GHS No. 2: WSS Lot-3 Shah & Sons 36,641,005 20.09.19 20.03.21 1,832,050
Saddar Bazar: WSS Lot-4 Mehboob Khan 43,737,556 20.09.19 20.03.21 2,186,878
Wazir
Awan Colony: WSS Lot-5 Qalandar Bux 25,676,110 20.09.19 20.03.21 1,283,806
Abro & Co.
Chungi: WSS Lot-6 Sitara Engineering 26,383,735 20.09.19 20.03.21 1,319,187
& Construction
Total 210,999,547 10,549,978
Further scrutiny of record revealed that the contractors failed to complete the works within the
stipulated period of time despite the fact that there was no issue of funds allocation and releases from the
donor agency. However, the local office failed to impose penalty at the rate of at least 5% amounting to Rs.
10,549,978/- (Rs. 210,999,547 X 5%) upon the contractors.
Moreover, the contractors were shown to have participated in the bidding process by submitting
their bids electronically. However, the local office prepared and maintained a self-generated comparative
statement instead of the e-bidding system-generated comparative statement which creates doubts about the
bidding process.
Furthermore, the local office failed to obtain the technical sanction for the above-mentioned
schemes initiated in the Year 2018-19.
It is pertinent to mention here that none of the works have been completed by the contractors till the date
of audit i.e. March 2023, as evident from the AiD Consultant’s Annual Progress Report 2022 (Page No. 51)
wherein the consultant stated that the line departments are reluctant for handing / taking over of the schemes.
In the DAC meeting held on 12-14.12.2023, it was decided that the copy of KPPRA may be produced to
audit for change of criteria in case of performance guarantee. However, no progress was intimated to audit
Audit recommends imposing penalties upon the contractors and their early recovery.
PDP No. 786 (2021-22)
23.4.16 Overpayment to contractors due to non-deduction of 7% defray cost –

Rs. 12.147 million
According to the Finance Department Khyber Pakhtunkhwa Notification No. SO(Dev-II)/FD/12-

6/2014-15 dated 21.04.2015, all the Provincial Works Departments, while preparing cost estimates of
developmental projects which fall in the tax-exempt areas such as FATA / PATA, shall frame the same on
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Market Rate System-2015 but with 7% less cost to defray the amount added in the rate analysis of all works
/ construction / supply items to meet withholding tax.
Sustainable Development Unit for the financial year 2021-22, it was observed that different irrigation and
public health engineering works were awarded to different contractors under Torghar Area Development
Project and an amount of Rs. 173,536,434/- was paid to the contractors. However, neither deduction @ 7%
was made from the cost estimates to defray the amount already added in the rate analysis of the works /
construction / supplies to meet withholding tax nor was income tax deducted from the contractors’ claims
on the plea that the contractors are exempted from income tax deduction because of executing the works in
the tax-exempted area which resulted in overpayment of Rs. 12,147,550/-, as detailed below;
Office name Final / Running Bills Amount
Irrigation Division Torghar Final Bills 27,574,200
Irrigation Division Torghar 2nd Running Bills 12,557,069
Irrigation Division Torghar 1st Running Bills 15,017,131
PHE Division Torghar Final / Running Bills 95,656,239
PHE Division Torghar 1st Running Bills 13,636,310
Total payments 173,536,434
Defray cost (@7%) 12,147,550
The lapse occurred due to non-observance of rules / instructions which resulted in overpayment to
the contractors.
In the DAC meeting held on 12-14.12.2023, it was decided that the para stand till verification of
recovery of the overpayment to contractors due to non-deduction of 7% defray cost. However, no progress
was intimated to audit till finalization of this report.
amount.
PDP No. 770 (2021-22)
23.4.17 Loss to the government due to non-utilization of funds – Rs. 4.855 million
responsible for any loss sustained by government through fraud or negligence on his own part or on the part
of subordinate disbursing officers.
During audit of the accounts of Planning and Development Department Khyber Pakhtunkhwa – Sustainable
Development Unit for the financial year 2021-22, it was observed that different public health engineering
works were awarded to different contractors under Torghar Area Development Project and an amount of
Rs. 118,388,034/- was paid to the contractors. However, further scrutiny of record revealed that an amount
753
of Rs. 4,855,105/- could not be utilized by the project management and was returned back to the donor
agency, as detailed below;
Office name Final / Running Bills Amount
PHE Division Torghar Final / Running Bills 95,656,239
Total payments 118,388,034
Unspent / returned amount 4,855,105
Audit held that the non-utilization and returning back of the grant amount to the donor agency was
a serious lapse on part of the project management and the executing agency as well.
In the DAC meeting held on 12-14.12.2023, it was decided that the para stand till verification of
record relating to justification of delay and lapse. However, record was provided to audit till finalization of
this report.
Audit recommends fixing of responsibility against the person(s) at fault and taking appropriate
action.
PDP No. 771 (2021-22)
23.4.18 Overpayment to contractors due to non-deduction of 7.5% cost to defray the amount
added in MRS – Rs. 1.114 million
Non-deduction of DPR charges – Rs.29,719/-

According to Government of Khyber Pakhtunkhwa, Finance Department Notification No. SO(Dev-
II)/FD/12-6/2014-15 dated 21-04-2015, “All the Provincial Works Departments, while preparing cost
estimates of developmental projects which fall in the tax-exempt areas such as PATA, shall frame the same
on Market Rate System-2015 but with 7% less cost to defray the amount added in rate analysis of all works/
construction/ supply items to meet withholding tax. The instruction shall be applicable to all new contracts
of the project to be undertaken in tax exempt area. All relevant department/ offices/Authorities shall ensure
to incorporate the above provisions in preparation of cost estimates prior to processing Administrative
Approval of the project”
During audit of accounts record of the Planning & Development Department, Khyber Pakhtunkhwa
for the Financial Year 2020-21, it was observed that payment of Rs.14,859,719/- was made to various
contractors for executing DWSS works through PHE Division Bajaur out of Bajaur Area Development
Project (INL). Scrutiny of record revealed that 7.5% deduction was neither made in the cost estimates/
Technical Sanction nor from payments to the contractors, to defray the amount already added in rate
analysis of all works/ construction/ supply to meet withholding tax.
754
It is worth mentioning that 7.5% additional cost is already added in MRS/ Rate Analysis and Bajaur
erstwhile FATA is the tax exempted area, the management of executing agency was required to reduce the
rates by 7.5% on MRS rates to meet the withholding tax. But no such deduction was made which resulted
in overpayment of Rs.1,114,479/- Furthermore, DPR charges amounting to Rs.29,719/- was also not
deducted, this resulted in overpayment of Rs.1,144,198/- as tabulated below:
S. Name of Work Contractor Gross I/Tax DPR 0.2% Total
No Payment 7.5% recovery
1 DWSS DabarSalarzai Shah
3,347,469 251,060 6,695 257,755
Rehman
2 DWSS DoparaiSalarzai Hazrat Gul 2,983,152 223,736 5,966 229,703
3 DWSS KarosarBarang Hazrat Gul 3,921,029 294,077 7,842 301,919
4 DWSS Batmalai Shah Wali 4,608,069 345,605 9,216 354,821
Total 14,859,719 1,114,479 29,719 1,144,198
The lapse occurred due to non-implementation of the above instruction which resulted in
overpayment.
In the DAC meeting held on 10 & 15.08.2022, it was decided that the department may provide the
relevant record regarding provision of 7% defray in MRS 2015 and 2018, otherwise recoveries be made
from the concerned. However, no progress was intimated to Audit till finalization of this report.
Audit recommends immediate recovery and fixing responsibility on the person(s) at fault.
PDP No. 525 (2020-21)
755
23.4.19 Overpayment to contractors due to non-deduction of 7.5% cost to defray the amount
added in MRS – Rs.16.237 million
Non-deduction of DPR charges – Rs.432,996/-

estimates of developmental projects which fall in the tax-exempt areas such as PATA, shall frame the same
on Market Rate System-2015 but with 7% less cost to defray the amount added in rate analysis of all works/
construction/ supply items to meet withholding tax. The instruction shall be applicable to all new contracts
of the project to be undertaken in tax exempt area. All relevant department/ offices/Authorities shall ensure
to incorporate the above provisions in preparation of cost estimates prior to processing Administrative
Approval of the project”
During audit of accounts record of the Planning & Development Department, Khyber Pakhtunkhwa
for the Financial Year 2020-21, it was observed that payment of Rs.216,498,002/- was made to various
contractors for executing construction of road through C&W Khyber out of Khyber Area Development
Project (INL). Scrutiny of record revealed that 7.5% deduction was neither made in the cost estimates/
Technical Sanction nor from payments to the contractors, to defray the amount already added in rate
analysis of all works/ construction/ supply to meet withholding tax.
It is worth mentioning that 7.5%% additional cost is already added in MRS/ Rate Analysis and
Khyber erstwhile FATA is the tax exempted area, the management of executing agency was required to
reduce the rates by 7.5% on MRS rates to meet the withholding tax. But no such deduction was made which
resulted in overpayment of Rs.16,237,350/- Furthermore, DPR charges amounting to Rs.432,996/- was also
not deducted, this resulted in overpayment of Rs. 16,670,346/- as tabulated below:
S. Gross I/Tax @ DPR @ Total
Scheme Contractor
No. Payment 7.5% 0.2% recovery
LalayKas Bar Bagh to Barghawo Zaib Afridi
1 26,842,221 2,013,167 53,684 2,066,851
in Tirah
2 Saokha to Landawar in Tirah Gul Builders 18,901,344 1,417,601 37,803 1,455,403
3 Shalman road to Ogdara Gul Ahmad Afridi 51,341,975 3,850,648 102,684 3,953,332
4 Stori Khel in Upper Bara Ahmad & Afridi 37,148,237 2,786,118 74,296 2,860,414
Bagh to PirMela Via Alif Khan & Sons
5 17,252,801 1,293,960 34,506 1,328,466
MeshryJomatTirah
Dwatoi road to Takhtakai phase- Zaib Afridi
6 39,106,046 2,932,953 78,212 3,011,166
II
7 Shulober road to Donga Kalay Zaib Afridi 25,905,378 1,942,903 51,811 1,994,714
Total 216,498,002 16,237,350 432,996 16,670,346
The lapse occurred due to non-implementation of the above instruction which resulted in
overpayment.
756
In the DAC meeting held on 10 & 15.08.2022, it was decided that the department may provide the
relevant record regarding provision of 7% defray in MRS 2015 and 2018, otherwise recoveries be made
from the concerned. However, no progress was intimated to Audit till finalization of this report.
Audit recommends immediate recovery and fixing responsibility on the person(s) at fault.
PDP No. 527 (2020-21)
757
Chapter-24
POPULATION WELFARE DEPAERTMENT
24.1 A) Introduction:
The national population program started in 1965, passing through changes in its approach
and initiatives; In 2002 the program has been decentralized under the administrative control of province.
The approved population policy in year 2002. Is on ground to reduce the unmet need and enhance
accessibility to family planning services.
Many initiatives have been taken by the department to enhance the accessibility. Increase
the Contraceptive Prevalence Rate. Lowering Total Fertility Rate (TFR) and population growth rate:
The programme is having three main components i.e. Administrative Organization

Component (Provincial set-up. District set-up and Tehsil set-up)/
Service Delivery Component (Reproductive Health Services Centers, Mobile Service

Units. Family Welfare Centers and Male Mobilizers)/
Support component (Information Education and Communication, Training, Logistic.

Monitoring/Evaluation and Management Information System)/
The Family Planning /Reproductive Health services are provided by the programme/non-
programme service delivery i.e. Family Welfare Centers. Reproductive Health Services Centers/ Training
centre. Mobile Service Units. Male Mobilizers and the non-programme service delivery i.e. Outlets of the
Provincial Line Departments. (Health & NGOs), Registered Medical Practitioners, Hakeem and
Homeopaths.
758
Keeping in view the demographic indicators of the province, the network of service
delivery is being increased with emphasis on underserved rural and peri-urban areas to meet the challenges
of MDGs regarding fertility reduction, Increasing the contraceptive prevalence rate, and reducing, the
population growth rate as envisaged in the current plan
To ensure coordination and reviews of the programme. Provincial Technical Coordination

Committee headed by Secretary and a District Technical Committee in each district headed by the DCO &
Executive District Officer Health are functional and meet periodically to review the performance and take
measures for further improvements.
The main focus areas are implementation of standard operating procedures (SOPs), focused
advocating FP services to gain political and opinion leaders support, strengthening monitoring/evaluation,
Enhancing public private partnership, intersect oral coordination to expand services to meet FP
International Conference goal 2020 of universal accessibility to FP services.
Pakistan FP 2020 commitments:
Work toward achieving universal access to reproductive health and raising the
Contraceptive prevalence Rate to 55% by 2020.
Pakistan will continue its 2011 commitment with the provinces for all public and private
health facilities to offer birth spacing services.
The amount spent on family planning, estimated as US $ 151 million in 20011/12 will be
increased to nearly US $ 200 million in 2012-13, and further in future years.
The federal government accesses the contraceptive requirements as US $ 186 million over
the period 2013 to 2020, which will need to be provided for Contraceptive Services will be included in the
essential service package of two provinces in the 2012, with the others following in 2013. Supply chain
management, training and communication campaign will be strengthened.
Family planning will be priority for over 100,000 Lady Health Workers, who cover 70%
of rural areas.
Public-private partnerships and contracting out mechanisms will help scale up success and
work with religious leaders and men to promote the benefit of birth spacing will continue.
The strategic plan aims at decreasing TFR, increasing the CPR and supports improvement
in existing structure and system being implemented with the outputs i.e. policy planning, administration
and management. Monitoring and evaluation system enhanced technical capacity and addressing socio-
cultural issues. To achieve this implementation plan has been developed. Budget provision proportionally
made with maximum share to the service delivery component particularly and management followed by
support components as a strategic intervention as reflected in the Integrated Development Strategy KP.
759
following business;
1. Promotion of Population Welfare motivational services by establishing contracts with the clients at
all levels.
2. Promotion of Family Health Services, Clinical and Non-clinical contraception through Family
Welfare Centres and those reproductive Health Service Establishments located in the Provincial
Government Hospitals and particularly provision of Services for rural areas.
3. Promotion of Population Welfare Motivation and Services through line departments of the
Provincial Government.
4. Supply of contraceptives and medicines to the desirous clients in urban and rural areas of the districts
through agencies involved in the programme.
5. Implementation of publicity and communication strategy.
6. Promotion of community involvement and active participation in Population Welfare Programme
Activities.
7. Coordination of Population Welfare Programme activities with other nation building departments
at district and local levels.
8. Setting up of Advisory Management Committees at Family Welfare Centres level and Population
Welfare Councils at district and Provincial levels as provided in the Population Welfare Plan
198184.
9. Any other activity of the Population Welfare Programme that the Provincial Government may
specify.
10. Planning and development policies for the Population Welfare Programme in the Province.
11. Monitoring activities and evaluation of the Population Welfare Programme.
12. Mainstreaming Population factor in development planning process at Provincial and district
levels.
13. Forecasting, acquiring and storing contraceptives dispatching supplies of contraceptives to
stakeholders.
(a) Organizing and operating information and education services for the furtherance of
Population Welfare Programme objectives; and
(b) Training in the field of Population Planning in Pakistan and abroad.
14. Technical coordination and the formulation of policy governing the manufacture, use and quality
control of contraceptive material in the Province under the Population Welfare Programme.
15. Research in different aspects of the programmes such as clinical, social, communication and
demography.
16. Promotion of Population Welfare activities through:
(a) Public sector institutions;
(b) Social marketing of contraceptives and infrastructure institutions;
(c) Non-Governmental Organizations, Registered Medical Practitioners, Hakims and
Homeopaths; and
(d) Public Private Sector Organization (PPSO).
760
17. Coordination with the Departments of Federal Government and Departments for:
(a) The systematic introduction of Population Education; and
(b) The introduction of financial and regulatory incentives and disincentives favouring
Population Planning.
18. Administration of Regional Training Institutes and Multi-purpose Service Centre.

(Rs. in million)
Total
Nos
23 23
1 Formations 2 2 1,428 575
(Excluding FAP)
3 Authorities/Autonomous bodies etc under PAO Nil Nil Nil N/A
was as follows;
Non-Development:
(Amount in Rs.)
Grant #
and Name Grant Original Supp. Re- Final Total Actual Excess/
Surrender
of Type Grant Grant Appropriation Grant Expenditure (Savings)
Department
28-
Population NC21 695,481,000 620 0 180457331 515,024,289 515,093,768 69,479
Welfare
61-
Population NC21 29,689,000 0 0 8,236,423 21,452,577 21,440,429 -12,148
Welfare
Total 725,170,000 620 0 188,693,754 536,476,866 536,534,197 57,331
761
515,024,289
515,093,768
21,452,577
21,440,429
69,479
Amount in Rs.
28- Population Welfare 61- Population Welfare
Development:
(Amount in Rs.)
Grant # and
Name of Surrender
Department
NC-
50- Population
22/ 0 0 0 0 0 0 0
Welfare
NC12
Total 0 0 0 0 0 0 0

(Rs. in million)
Total Actual
Expenditure
Non-
536.48 536.53 0.057331 0%
Development
Development 0.00 0.00 0 -
Total 536.48 536.53 0.057331 0%
600
500
400
Rs. in million
300
200
100 762
0

24.1(c) Issues in Population Welfare Department
There were instances of blockage of government money due to non-utilization of assets and
equipment items. Moreover, the department could not deduct government taxes in some cases as well.
Besides, the department could not furnish initial management replies during the exit meetings and convene
DAC meetings in time.
audit of the Population Welfare Department. Summary of the audit observations classified by nature is as
under:
Amount
(Rs. in million)
3 Irregularities -

5 Others 26.609
763
Amount in Millions Non-productionof record
0
embezzlement and
misappropriation
Irregularities
26.609
29.378
irregularities
Procurement related
irregularities

Commercial Banks
Total No. of
points
Population
1 2001-02 Welfare - - - -
Department
2 2002-03 -do- - - - -
3 2003-04 -do- - - - -
4 2004-05 -do- - - - -
5 2005-06 -do- - - - -
6 2008-09 -do- - - - -
7 2009-10 -do- - - - -
8 2010-11 -do- - - - -
9 2011-12 -do- - - - -
10 2012-13 -do- - - - -
11 2013-14 -do- - - - -
12 2014-15 -do- - - - -
13 2015-16 -do- - - - -
14 2016-17 -do- - - - -
15 2017-18 -do- - - - -
16 2018-19 -do- - - - -
24.4 Audit Paras
764
24.4.1 Loss to the government due to non-deduction of taxes and non-imposition of penalty –
Rs.26.609 million
Para 144 of the General Financial Rules Volume I provides that Open Tender System should be
adopted in order to obtain economical and lowest rates. In case of acceptance of higher rates, justification
must be recorded on the comparative statement.
According to supply orders placed time to time, the procuring agency shall send samples from each
batch to the DTL (Drug Testing Laboratory) KP/ Central Drug Testing Laboratory Karachi for testing. The
joint inspection committee constituted by the procuring agency shall inspect the quality, specifications of
goods after receipt of standard quality report from DTL concerned. In addition, the procuring agency, if
required, may send samples up to 05 batches abroad to a WHO prequalified lab for testing purposes. The
cost of the lab tests shall be borne by the supplier.
According to Article 153 of Income Tax Ordinance 2001, deduction of income tax on prescribed
rate is mandatory. Rule 379 of Federal Treasury Rules Volume 1 prohibits the drawl of money from
Government Treasury in advance of the supply received.
During the course of audit of DG Population Welfare Department Peshawar for the financial year
2022-23, it was observed that the local office and Health Department jointly made NIT for the purchase of
contraceptives on single stage two envelop bidding procedure and paid a sum of Rs 183,749,989 to different
suppliers under Head A-06470 (Others) during the year. However, the local office failed to provide
auditable record like bidding documents, stock register, list of end users, DTL reports, demand from health
centers and inspection reports etc.
Moreover, the local office failed to deduct the government taxes amounting to Rs 5,248,936/- and
sales tax Rs 6,262,309/-, which resulted in loss to government exchequer as detailed below:
Amount Income Tax Sales Tax

S# Name of supplier Total
paid @4.5% (Rs.)
1. M/S Aries Pharmaceutical Lab 36,837,113 1,657,670 6,262,309
2 M/S Zafa Pharmaceutical 7,053,182 35,266 -
3 M/S Zafa Pharmaceutical 68,442,144 342,210 -
4 Green Star Marketing, Karachi 57,471,150 2,586,202 -
5 Green Star Marketing, Karachi 13,946,400 627,588 -
Total 183,749,989 5,248,936 6,262,309 11,511,245
Furthermore, the local office placed supply order No. P.No.6 (2)/Joint Proc/2021-22 dated
26.10.2022 to the firm at Serial No. 4 for supply of contraceptives amounting to Rs. 208,452,109/-. The
supplier supplied contraceptives amounting to Rs. 57,471,150/- only,and failed to supply items amounting
to Rs. 150,980,959/- till date of audit i.e. November 2023. However, the local office neither imposed/
recovered penalty @10% amounting to Rs. 15,098,095/- nor the supplier’s performance guarantee was
forfeited as per Clause-6 of the supply order, which is serious lapse on the part of the procuring agency.
The lapse occurred due to weak internal controls, which caused irregular procurement and loss of
Rs. 26,609,340/-to government.
765
When pointed out in November 2023, management stated that detail reply will be submitted after
scrutiny of record.
Audit recommends to take corrective measures besides recovery of the amount.
PDP No. 49 & 50 (2022-23)
24.4.2 Blockage of government money due to dumping of furniture and other store items – Rs.
29.378 million
According to Rule 145 and 148 of GFR Vol-I, purchases must be made in the most economical
manner in accordance with the definite requirement of the public services. Care should be taken not to
purchase store much in advance of actual requirements. All materials received should be examined,
counted, measured or weighed as the case may be when delivery is taken and they should be taken in charge
by a responsible government officer who should see that the quantities are correct and their quality good,
and record a certificate to that effect.
During the course of audit of DG Population Welfare Department Peshawar for the financial year
2022-23, it was noticed that the local office paid a sum of Rs 14,505,053 vide cheque No. 2405763 dated:
13.6.2022 and Rs 14,873,736 vide cheque No. 2405764 dated: 13.6.2022 to M/S Abdal Trading Company
on account of purchase of furniture & fixture for the project “Establishment of 260 Family Welfare Centers
in Khyber Pakhtunkhwa” under Head A-03970 (Others).However, the local office dumped the stock items
in the basement of the office and neither inspection was carried out by the inspection committee nor was
issued to the centers after elapse of more than 20 months, which is doubtful and government money was
unnecessarily blocked for so many months. The said furniture and other store item’s warranty has also been
expired and are devaluing day by day.
S# Name of Item Quantity Rate Total Payment (Rs)
1. Examination Table 200 9300 1,860,000
2 Steps for Table 200 1150 230,000
3 Bed/Couch 200 13800 2,760,000
4 Folding Screen 400 4900 1,960,000
5 Office Table 400 1100 4,400,000
6 Benches with Disk 800 4700 3,760,000
7 Rack 273 3300 900,900
8 Revolving Stool 400 1950 780,000
9 Cupboard 600 20500 12,300,000
10 Chair 1200 1950 2,340,000
11 Wooden Stool 400 1088 435,200
12 Racks 127 3300 419,100
Total 32,145,200
The lapse occurred due to weak internal controls, which resulted in unnecessarily blockage and loss
to government.
766
When pointed out in November 2023, management stated that detail reply will be submitted after
scrutiny of record.
Audit recommends to inquire the matter and take action against the person(s) at fault.
PDP No. 52 (2022-23)
767
Chapter – 25
PUBLIC HEALTH ENGINEERING DEPARTMENT
The main function of the Public Health Engineering Department (PHED) is to provide safe
Drinking Water and Sanitation services to the residents of the urban and suburban areas in the province.
of:
 Public Health Engineering works pertaining to government buildings and Government
Residential Estates.
 Construction and maintenance of Rural Drinking Water Supply and Sanitation Schemes
including Sewage Treatment Plants and Solid Waste Management.
 Determination of rates of supply to consumers in bulk and otherwise and prescribed tariff
(only in the case of private/public undertakings).
 Levy and collection of fees, etc. for supply of water for drinking purposes.
 Levy and collection of fees, etc. for provision of Sanitation services including Sewage
Treatment and Solid Waste Management.
 Engineering trainings and skill development courses other than:
o Engineering University;
768
o Engineering Colleges; and
o Engineering Schools.
 Laying standards and specifications for various types of water supply & sanitation projects
including Sewage Treatment and Solid Waste Management.
 Laying standards and specifications for various types of construction materials/equipment
used in water supply & sanitation projects including Sewage Treatment and Solid Waste
Management like various types of pipes, pumping machinery & other allied equipments.
 Planning and designing of water supply & sanitation projects including Sewage Treatment
and Solid Waste Management financed from Provincial and / or Federal Funds.
 Research and material testing pertaining to PHE sector projects.
 Execution of PHE works on behalf of other agencies/department as Deposit Works.
 Water Quality Monitoring/Mapping including maintenance of water quality data base.
 Services matters, except those entrusted to Establishment and Administration Department.
Audit Profile of Public Health Engineering Department:

(Rs. in million)
Expenditure
Total Revenue/Receipts Audited
S. No. Description Audited Audited FY 2022-
Nos FY 2023-23
23
(Excluding FAP)
3 Nil Nil Nil N/A
4 Nil Nil Nil -
(FAP)
was as follows:
769
Non-Development:
(Amount in Rs.)
Grant # and
Type Grant Grant appropriation Expenditure (Savings)
Department
16-Public
Health NC21 9,614,499,000 1,334,798,972 - 17 10,949,297,955 10,947,051,975 -2,245,980
Engineering
61- Public
1,137,686,000 0 603,332,393 392,633,733 1,348,384,660 1,348,375,810 -8,850
Health NC21
Engineering
10,752,185,000 1,334,798,972 603,332,393 392,633,750 12,297,682,615 12,295,427,785 -2,254,830
Total
12,000,000,000
10,000,000,000
8,000,000,000
Amount in Rs.
6,000,000,000
4,000,000,000
2,000,000,000
0
16-Public Health Engineering 61- Public Health Engineering
-2,000,000,000
Development:
(Amount in Rs.)
Grant # and
Department
52-Public Health 8,776,925,000 0 - 3,715,048,569 5,061,876,431 5,062,270,476 394,045
NC12/22
Engineering
60-Merged Areas NC12/22 1,065,665,000 0 -10,000,000 910,264,896 145,400,104 145,400,104 0
9,842,590,000 0 -10,000,000 4,625,313,465 5,207,276,535 5,207,670,580 394,045

Total
770
6,000,000,000
5,000,000,000
4,000,000,000
Amount in Rs.
3,000,000,000
2,000,000,000
1,000,000,000
0
52-Public Health Engineering 60-Merged Areas

(Rs. in million)
Non-Development 12,297.68 12,295.43 -2.25483 -0.02%

Development 5,207.28 5,207.67 0.394045 0.01%
Total 17,504.96 17,503.10 -1.860785 -0.01%
14,000.00
12,000.00
10,000.00
Rs. in million
8,000.00
6,000.00
4,000.00
2,000.00
0.00
-2,000.00
It can be seen from the above variance analysis that the budgets could not be utilized and 05.61 %
of the funds have been left unspent. This indicates inability of the department to utilize the available funds
in the best public interest and hence many of the planned activities could not have been achieved.
771
25.1 (C) Issues in Public Health Engineering Department
During audit of the Public Health Engineering Department, it was noticed that poor contract
management mechanism was in practice as the developmental schemes could not be completed within the
stipulated time but the department neither granted time extensions based on justified grounds nor penalty
was imposed on the contractors. Huge government revenue was outstanding against the consumers on
account of water charges but the department did not take concrete steps to realize the water charges.
Instances of non-deduction of taxes were observed and reported to the management for corrective action
but response was awaited on the part of the management. There were no details of the head-wise figures of
the departmental own receipts collected by the department.
audit of Public Health Engineering Department which comprises recoveries of 2725.929 million. Summary
of the audit observations classified by nature is as under:

Amount
(Rs. in million)
3 Irregularities -
5 Others -
Amount
(Rs. in million)

10.72
embezzlement and
0
misappropriation
Irregularities

2,755.23
772
Total No. of
S.No. Audit Year actionable
Department Compliance Compliance Compliance
points
1 2014-15 PHE 10 04 - 06
2 2015-16 -do- 03 - - 03
25.4 Audit Paras
25.4.1 Loss to government due to non-recovery of outstanding arrears of water charges–

According to Para 26 & 28 of GFR Vol-I, it is the duty of department concerned to see that the
dues of Government are correctly and promptly assessed, collected and paid into treasury and no amount
should be left outstanding without sufficient reasons.
During audit of the accounts of Secretary Public Health Engineering Department Khyber
Pakhtunkhwa for the Financial Year 2022-23, it was observed different divisions of PHE department are
under the administrative control of local office failed to realize arrears of outstanding water charges from
consumers amounting to Rs 2,748.48 million (Annexure-XLVI).
Non-recovery of dues occurred due to weak financial and administrative controls which resulted in
loss to government.
The department was requested vide letter No. Audit/DAC/1242 dated 30.10.2023 for convening
the DAC meeting. However, no meeting was convened till finalization of this report.
Audit recommends to recover Rs. 2,748.48 million from the concerned.
PDP No.13 (2022-23)
773
25.4.2 Wasteful expenditure on account of pay and allowances for ghost employees - Rs.10.720
million
Wasteful expenditure on appointment of staff - Rs.6.267 million
According to Para 23 of GFR Vol.-I, every Government officer is personally responsible for any
loss sustained by Government through fraud or negligence either on his part or on the part of his subordinate
staff.
During audit of the accounts of Executive Engineer PHE Nowshera for the Financial Year 2021-
22, it was observed that it was noticed that 18 numbers employees having designation of Operator, Valve
Man and chowkidar are drawing pay and allowances regularly, however they were posted nowhere, because
as per list of employees posted in the water schemes provided by the local office in which all other
employees are posted in the relevant water schemes except these 18 employees as in the said list instead of
mentioning the name of water supply schemes, “various: it means they were posted nowhere and ghost
employees. while drawing pay and allowance of Rs 10,720,680/- were incurred on pay and allowances of
Valve man, Pump Operator and Chowkidar. Thus, the expenditure on non-functional schemes is wasteful
and a great national loss and great lethargy of concerned staff. Moreover, it was noticed that 24 numbers
employees having designation of Operator/cum/Chowkidar, Valve Man and chowkidar were appointed
during the period and posted in various water supply schemes (Annexure-XLVII). Audit observed that
these appointments are unjustified because 18 number of ghost employees are drawing pay and allowances
regularly and similarly many other staff posted are drawing pay and allowance against nonfunctional
schemes. Local office was required to be posted these employees on the schemes on which new
appointment has been made. However instead of taking such action, had appointed further 23 number fresh
employees were appointed and paying the salary of Rs. 6.387 million.
Wasteful expenditure occurred due to weak financial control, which resulted in loss to the
government treasury.
When pointed in May 2023, however, no reply was furnished.
In the DAC meeting held on 02.11.2023, it was decided that the Superintending Engineer PHE
Circle may conduct physical verification / investigation to check whether 18 numbers of employees are
working on the non-functional schemes or otherwise and report be shared with Audit. However, no progress
Audit recommends to depute a special audit team to conduct special audit of all appointed during
last five years and detailed investigation and fixing the responsibility on the person(s) concerned.
PDP No. 371 & 372 (2021-22)
25.4.3 Less deduction of income tax - Rs. 5.207 million
According to rate analysis of MRS 2020 and 2021, circulated vide no. MRS Cell/C&W/6-
1/D&S/2019-20 dated 01.7.2020, the rate of income 7.5% and 2% KEPRA Tax is included in all MRS
rates.
774
According to provision of Section-II of the appendix II of the Khyber Pakhtunkhwa, Finance Act
No. PA/KPK/Bills/2014/340 dated 02.4.2014, the Provincial Government has levied the subject tax from
2014-15 for all contractors/consultants & supplier who during the preceding financial year supplied to the
Federal or any Provincial Government or any local authority in District, Goods, Commodities or rendered
services to the value are liable to pay the tax at the prescribed rate of Rs. 4000/- to 100000/-.
During audit of the accounts of Executive Engineer PHE Nowshera for the financial year 2021-22,
it was observed that a sum of Rs. 3.677 million was less deducted from the contractors (Annexure-
XLVIII). Verification of record revealed that the works were awarded on MRS 2020 and 2021 however
6.5% and 7% tax were deducted from the contractor instead of 7.5% as applicable on MRS 2020 and 2021.
Moreover, Professional tax amounting to Rs. 1.530 million was not deducted from the contractors on the
prescribed rate already provided in the above-mentioned Act.
The lapse occurred due to extending undue benefit to the contractor at the cost of Government.
When pointed in May 2023, however, no reply was furnished.
In the DAC meeting held on 02.11.2023, it was decided that the department may seek clarification
from FBR Peshawar, the tax amount of Rs. 1.530 million may be recovered and report be shared with Audit.
Audit recommends to recover the income tax amount.
PDP No. 374 & 375 (2021-22)
25.4.4 Loss to the government due to less-deduction of Sales Tax on Services– Rs. 1.542 million
According to KPRA Notification No.BO(Res-III)FD/2-2/2019-20/Vol-I dated 05.08.2020 Second

Schedule S.No-13 “Services provided by persons engaged in contractual execution or performance of works
including(repair, maintenance, renovation, up-gradation or janitorial works) or furnishing supplies
(excluding transactions involving contractual supply of goods only without any component of services
relating to such goods). The rate of tax is 5% on such activities.
During audit of the accounts of Executive Engineer PHE Division Karak-I for the Financial Year
2021-22, it was observed that expenditure amounting to Rs.105,575,200/- was incurred on account of
different civil works during the financial year. Accordingly, an amount of Rs. 2,856,667/- was required to
have been deducted as KP SalesTax on Services @ the prescribed rates. However, a total of Rs. 1,314,784/-
was deducted as the said tax, resulting into a difference of Rs. 1,541,883/-, as detailed below;
S# Head of Account Payment(Rs.) Tax
1. Total up-to-date payment from ADP @2% 33,784,126 675,683
2. Total Payments from Deposit-II I@2% 46,952,331 939,047
3. Total M&R Payments @5% 24,838,743 1,241,937
Sub Total 105,575,200 2,856,667
Tax deducted 1,314,784
775
Total KP Sales Tax on Services 1,541,883
The lapse occurred due to weak financial and administrative controls which resulted into loss to
the government.
In the DAC meeting held on 23 & 24.05.2023, it was decided that the department may make
report.
Audit recommends to recover the government dues.
PDP No. 50 (2021-22)
25.4.5 Wasteful expenditure on non-materialized schemes due to selection of disputed sites – Rs.
5.853 million
According to section 4.7 (iii) – Chapter 4 and section 7.16 (ii) – Chapter 7 of the Manual for
Developmental Project, Economic Affairs Division states that, many projects have suffered tremendously
in the past from cost over-runs and delay in implementation due to hasty selection of site. The projects also
suffer due to delay in acquisition of land. Therefore, the availability of land needs to be assured. In selecting
the location, area and population to be served by the project, the income and social characteristics of the
population will have to be kept in view. Similarly, the economic characteristics of the area i.e., present
consideration. Selection of proper location of the project are amongst the reasons for slow implementation.
Before conceiving a project, the sponsoring authorities should decide about the location of the project
keeping in view the availability of land. Such locations should be avoided where problems are likely to
occur later on.
During audit of accounts record of the Executive Engineer PHE Division, Khyber for the financial
year 2021-22, it was observed that expenditure of Rs.5,853,000/- was incurred on the below mentioned
schemes. However, the schemes could not be materialized after lapse of considerable time due to selection
of disputed sites:
Completion AA cost Expenditure

S. No. Scheme WO Date
period (M) (Rs.) (Rs.)
1 Gravity based WSS Shen Tang Choora 09.02.2016 24 6,457,000 4,427,000
Jamrud
2 DWSS Bhai Garhi Stori Khel 29.05.2019 36 7,345,000 0
3 DWSS Sheen Tang Ali Masjid Jamrud 21.06.2019 24 5,155,000 0
4 DWSS Lashora Jamrud 01.08.2020 18 5,898,000 1,426,000
5 DWSS Hadi Gul Kali Landikotal 28.09.2021 9 6,071,000 0
6 DWSS Jamrud Ali Masjid 28.09.2021 9 4,219,000 0
7 DWSS Darbar Zakha Khel Tirah 29.05.2019 24 4,264,000 0
776
Total 39,409,000 5,853,000
Audit held that:

i. These schemes were identified, approved and commenced without site clearance and
resulted in wasteful expenditure of Rs.5,853,000/- on the non-materialized schemes due
to site disputes.
ii. The allocation of Rs.39,409,000/- was made for the schemes on disputed sites which
blocked the government funds.
iii. The benefits of the drinking water supply schemes could not be shifted to the deserving
community.
iv. Due to inclusion of schemes on disputed sites in the ADP, deserving public of other areas
were deprived from the DWSS.
The lapse occurred due to hasty selection of sites.
When pointed out, management stated that detail reply will be furnished after
scrutiny of record however, no reply was provided till finalization of this report.
Audit recommends to inquire the matter and ensure early resolution of the site disputes otherwise
recoveries be made from the person(s)/ authority at fault in identification of site.
PDP No. 163 (2021-22)

25.4.6 Unjustified expenditure on monthly electricity bills of Tube Wells without realizing water
charges - Rs.27.034 million
According to sections 3, 4 & 6 of the Khyber Pakhtunkhwa Rural Drinking Water Supply Scheme
Act 1985, Department means Public Health Engineering Department of Government. Subject to availability
of funds, there shall be executed and administered schemes for the supply of water for drinking purposes
in rural areas. Government shall perform all functions and exercise all powers as may be necessary to
implement and administer the schemes, including the power to impose and collect rates, fees and charges
for water supply, in such manner as may be prescribed. The Department shall maintain proper account of
the receipts and credit the same to the Provincial revenue under the proper head of account. Any rate, fee
or charge imposed for water supply under this Act but not paid by the due date specified in that behalf shall
be recoverable from the person or persons against whom it is outstanding as arrears of land revenue. All
connections of water supply shall be subject to payment of water charges at such rate as Government may
from time-to-time fix or determine.
777
year 2021-22, it was observed that an expenditure of Rs.27,033,602/- was incurred on payment of electricity
bills of tube wells located in the areas of Bara, Jamrud, Tirah and Landikotal. The electricity charges of
tube wells were met out from the recurring budget allotted to the division but neither any receipts on account
of water charges were realized from the users nor any mechanism was developed for its recovery through
any agency.
Hence, the expenditure of Rs.27,033,602/- was unjustified without recovery of water charges.
The lapse occurred due to slackness on the part of the management which resulted in wasteful
expenditure.
Audit recommends recovery of water charges from the users.
PDP No. 165 (2021-22)
778
25.4.7 Overpayment to contractors due to non-deduction of 7% cost to defray the amount added in
MRS - Rs.31.135 million

estimates of developmental projects which fall in the tax exempted areas such as PATA, shall frame the
same on Market Rate System-2015 but with 7% less cost to defray the amount added in rate analysis of all
works/ construction/ supply items to meet withholding tax. The instruction shall be applicable to all new
contracts of the project to be undertaken in tax exempt area. All relevant department/ offices/Authorities
shall ensure to incorporate the above provisions in preparation of cost estimates prior to processing
Administrative Approval of the project”
year 2021-22, it was observed that payment of Rs.490,167,233/- was made to various contractors for
executing DWS Schemes. Scrutiny of record revealed that income tax at prescribed rate was deducted only
from the contractors belonging to settle area whereas contracts were mostly awarded to the contractors
belong to Erstwhile FATA/ merged area. Record showed that 7% deduction was neither made in the cost
estimates/ Technical Sanction nor from payments to the contractors, to defray the amount already added in
rate analysis of all works/ construction/ supply to meet withholding tax.
It is worth mentioning that 7% additional provision is already added in MRS/ Rate Analysis of each
item and Khyber erstwhile FATA/ merged area is tax exempted area, the management was required to
reduce the rates by 7% on MRS rates to meet the withholding tax. But no such deduction was made which
resulted in overpayment of Rs.31,135,315/- as tabulated below:
S. Component Expenditure Income Tax deducted Income Tax Income Tax

No. (Rs.) during the year (Rs.) due during the short
year (Rs.) deducted (Rs.)
1 ADP 144,115,233
2 AIP 346,052,000 3,176,391 34,311,706 31,135,315
Total 490,167,233
The lapse occurred due to non-implementation of the above instructions which resulted in
overpayment.
Audit recommends recovery of the taxes.

779
PDP No. 166 (2021-22)
25.4.8 Un-authorized retention of old balances in deposit account instead of credit to government
treasury – Rs.126.320 million
According to Para 399 (iii) of CPWA Code that in the Month of June each year, the balances
unclaimed for more than three complete accounts years should be credited to Government as lapse deposits.
year 2021-22, it was observed that an amount of Rs.126,319,847/- was lying in the deposit account since
2012. These unclaimed balances were required to have been credited to government treasury as required
under CPWA code. Contrarily, these old and unclaimed balances were retained in the deposit account of
the division instead of credit to government treasury as per enclosed statement till June 2022.
The irregularity occurred due to weak management of the deposit account.
Audit recommends credit of all lapse balances into government treasury.
PDP No. 168 (2021-22)
25.4.9 Non-forfeiture of additional security – Rs.2.154 million
According to the Khyber Pakhtunkhwa Public Procurement Regulatory Authority

Notification No. KPPRA/M&E/Estt:/1-13/2017-18 dated 27-06-2018, 8% additional security of
the successful bidder shall be forfeited in case the successful bidder repudiates the contract or fails
to submit performance guarantee.
year 2021-22, it was observed that contract for the construction of DWSS Ali Masjid to Landikotal was
awarded to M/S Muhib Construction Co.
Perusal of record revealed that the successful contractor failed to commence the work and the
department cancelled the contract by forfeiting 2% bid security of Rs.2,124,250/- However, the additional
security of Rs.2,154,000/- which was also required to be forfeited as the contractor repudiated the contract,
was released to the contractor through voucher No. 3J/06-06-2022 instead of forfeiture.
780
The lapse occurred due to weak management of affairs of the division.
Audit recommends recovery of the released security and its deposit to government treasury.
PDP No. 174 (2021-22)
781
Chapter-26
PROVINCIAL ASSEMBLY

The Khyber Pakhtunkhwa Assembly is the unicameral legislative body of the Khyber Pakhtunkhwa
province in Pakistan. It was established under Article 106 of the Constitution of Pakistan. The Assembly
has 124 elected members, 99 General/regular seats, 22 seats reserved for women and 3 sears for non-
Muslims, committed to achieve excellence in the best parliamentary practices and legislation.
There are three main functions performed by the Assembly i-e Legislation, management of public
money and policy making. After the first meeting of the Assembly, the members take an oath. The
Assembly elects, from amongst its members, a Speaker and a Deputy Speaker. After the election of the
Speaker and the Deputy Speaker, the Assembly cannot transact any other business unless it elects the Chief
Minister. The Chief Minister is elected in a special session, summoned by the Governor on a day specified
by the President.
782
Audit Profile of Provincial Assembly;
Nos 2022-23 2022-23
 SDA
2 Nil Nil Nil Nil
 Etc
(Excluding FAP)
Authorities/Autonomousbodies etc under

3 Nil Nil Nil N/A
PAO

Grant #
of Type Grant Grant Apprioriation Expenditure (Savings)
Department
01-
Provincial NC24 1,398,055,000 51,916,000 0 28,742,274 1,421,228,726 1,421,228,726 0
Assembly
01-
Provincial NC21 430,105,000 0 0 263,594,173 166,510,827 166,510,827 0
Assembly
Total 1,828,160,000 51,916,000 0 292,336,447 1,587,739,553 1,587,739,553 0
783
1,600,000,000
1,400,000,000
1,200,000,000
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
01-Provincial Assembly 01-Provincial Assembly
784
Development; (Rs.)
Grant #
Total
Surrender Actual
Expenditure
Department
50-
Provincial NC22 0 0 0 0 0 0 0
Assembly
Total 0 0 0 0 0 0 0
Total Actual
Expenditure
Non-
1,587.74 1,587.74 - 0.00%
Development
Development - - - 0.00%
Total 1,587.74 1,587.74 - 0.00%
1,800.00
1,600.00
1,400.00
1,200.00
Rs. in million
1,000.00
800.00
600.00
400.00
200.00
0.00
It can be seen from the above variance analysis that the budgets could not be utilized and 0% of the
funds have been left unspent. This indicates inability of the department to utilize the available funds in the
best public interest and hence many of the planned activities could not have been achieved.
26.1 (C) Issues in Provincial Assembly Secretariat
785
During audit of the Provincial Assembly Secretariat, it was noticed that irregular promotions,
upgradations and appointment were being made without transparency.
786
26.4 Audit Paras
26.4.1 Unverified / irregular promotions / upgradations
According to the judgement of Supreme Court of Pakistan in a civil appeal no 101 and 102-P 2011,
the upgradation cannot be made to benefit a particular individual in term of promoting him to a higher post
and further proving him with the avenues of lateral appointment or transfer or posting. In order to justify
the upgradation, the Government is required to establish that the department needs re-structuring reforms
or to meet the exigency of service in the public interest. In the absence of the pre-conditions, upgradation
is not permissible.
During audit of accounts record of Secretary Provincial Assembly Khyber Pakhtunkhwa for the
financial year 2021-22, it was noticed in the data extracted from SAP that some of the employees were
given rapid promotions in same financial year. During the course of audit, it came in the notice that some
of the employees were also upgraded/re-designated on recommendation of the parity committee approved
by the finance committee meeting held on 17th February 2022. However, audit didn’t verify the cases of
double promotions that whether these employees were given double promotions or were promoted once
along with upgradation/re-designation as the TORs/recommendations of the parity committee and personal
files of the employees were not produced to audit for verification. On analysis of the data extracted from
SAP audit observed the following on sample cases.
 In some cases, the employees were first promoted on time scale (personal) basis and then re-designated
and regularly promoted in the said higher scale. Salary of the employees were first enhanced to next
stage and one premature. At the time of regular promotion/re-designation and 2 additional increments
were also given (S. No.1 to 5 of Annexure-XLIX).
 In some cases, it was observed that employees were given rapid promotions from BPS 1 and 2 to BPS
11 in the same year. (S No 6 to 8 of the annexure)
 In some cases, officers were regularly promoted/upgraded. However, the increments were given twice.
The reason could not be verified as no record was produced to audit. (S No 9 to 11 of the annexure).
Audit held that the upgradation and re-designation was made to benefit some of cadres like personal
staff and secretaries were favored in promotions and up-gradation.
The lapse occurred due to non-adherence to rules.
In the DAC meeting held on 13.09.2023, it was decided that department will produce complete
record relating to employees upgraded and promoted along with their personal files to audit. However, no
record was produced to audit till finalization of this report.
Audit recommends production of complete record and corrective measures.
PDP No. 546 (2021-22)
787
Chapter-27
Social Welfare, Women Empowerment and Zakat & Usher Department

of:
 Provision of Social Services to the various educational institutions meant for special persons.
 Collection of Zakat and Usher and its fair distribution amongst the deserving community
 Establishment of Zakat Committees
Audit Profile of Social Welfare Department;
Nos 2022-23 2022-23
(Rs in Millions) (Rs in Millions)
 SDA N/A N/A N/A N/A
2
 Etc
(Excluding FAP)
3 Nil Nil Nil N/A
4 Nil Nil Nil N/A
(FAP)
788
Grant #
Department
32 - Social
NC21 3,124,989,000 110 0 1,517,179,850 1,607,809,260 1,609,164,902
Welfare 1,355,642
61- Social
Welfare and -
NC21 107,847,000 0 -16,555,837 118,576 91,172,587 91,124,167
Special 48,420
Education
Total 3,232,836,000 110 -16,555,837 1,517,298,426 1,698,981,847 1,700,289,069
1,307,222
1,800,000,000
1,600,000,000
1,400,000,000
1,200,000,000
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
32 - Social Welfare 61- Social Welfare and
-200,000,000
Special Education
789
Development;
(Rs.)
Grant # and Total
Name of Surrender Actual
Type Grant Grant Apprioriation Grant (Savings)
50-Social
Welfare and
NC22 671,682,000 0 -23,327,000 443,759,218 204,595,782 220,425,484
Women 15,829,702
Development
50-Social
NC12 413,170,000 0 23,327,000 160,487,018 276,009,982 276,009,982
Welfare -
60 - Social
Welfare NC22 153,362,000 0 -43,746,000 75,004,195 34,611,805 34,636,954
25,149
Measures
Total 1,238,214,000 0 -43,746,000 679,250,431 515,217,569 531,072,420 15,854,851
300000000
250000000
200000000
150000000
100000000
50000000
0
50-Social Welfare and Women 50-Social Welfare 60 - Social Welfare Measures
Development
Overview of expenditure against the final grant; (Rs. in millions)
Non-Development 1,698.98 1,700.29 1.31 0.08%

Development 515.22 531.07 15.85 3.08%
Total 2,214.20 2,231.36 17.16 0.78%
790
1,800.00
1,600.00
1,400.00
1,200.00
1,000.00
800.00
600.00
400.00
200.00
0.00
27.2 Classified Summary of Audit Observations.
Social Welfare Department. Summary of the audit observations classified by nature is as under:

Amount
(Rs.)
3 Irregularities -
5 Others 173.564

S#
Year Department actionable pointscompliance compliance compliance
Social
12. - - - - -
Welfare
791
27.4 Audit Paras
27.4.1 Non-monitoring of developmental schemes – Rs.1,419.990 million
According to Notification vide No.SOG (SWD)/6-6/distribution of work/2022/dt. 31-8-2022, Job

description of Senior Planning Officer is to supervise and monitor the annual development program and
comprehensive developmental strategy. Further, Planning Officer has the important mandate to formulate
and contribute with policy level inputs for the sectoral development policies of department.
According to P&DD letter vide No. C/COORD/P&D/ADP/Guidelines/2022-23 dt. 21-12-21,

Administrative Secretary/Department may also ensure that proposed project are duly approved by the
relevant forum. This is absolutely critical, and the line department should gear up to make sure that they
have the required capacity dedicated to this task.
During audit of the accounts of Secretary Social Welfare, Zakat and Ushr for the Financial Year
2022-23, it was noticed from the ADP 2022-23 of the Social Welfare Department that 23 ongoing and 19
new projects were assigned. An allocation of Rs.1,419.990 million was also made. Audit observed the
following;
 Quarterly progress reports in r/o of the projects were not maintained by the department. Which
resulted in cost overrun.Mostly the projects were not completed in time and extension in this regard
given. Due to which cost of civil work increased. Proper justification for extension alongwith
documentary evidence and impact of cost was not produced to audit.
 Maintenance of financial control of each scheme of the respective Sector/Section in terms of cost,
allocation, releases, expenditure etc. required for verification.
 Planning officer will design tools for effective guidance and supervision of all social welfare
related developmental activities and programs. Monitoring unit established in local office neither
monitor developmental schemes nor reports available.
Keeping in view the responsibility and job descriptions of SPO/PO, all the projects especially the
works related projects should be completed in time otherwise inflation effect the cost of the project.
Concrete efforts by Planning Officers required to compete all the projects in time otherwise placement of
SPO/PO in field offices were just wastage of time and money.
The lapse occurred due to poor internal and financial controls, which resulted into non-monitoring
of developmental schemes.
Audit recommends a detailed justification of above points.
PDP No. 5 (2022-23)

792
27.4.2 Substandard/unauthorized execution of work - Rs. 3.264 million
Doubtful awarding of contract - Rs.8.000million
According to Para 95 of CPWD Code read with para 23 of GFR Vol-1, Engineer is strictly
prohibited to deviate from sanctioned design in the course of execution of work. Every Government officer
is personally held responsible for loss to public exchequer due to negligence on his part or on the part of
his subordinate. Paras-56 & 58 of CPWD Code provides that technical sanction is a guarantee that the
proposals are structurally sound & that the estimates are accurately calculated and based on adequate data.
Proper detailed drawing & design have been sanctioned.
During audit of the accounts of Secretary Social Welfare, Zakat and Ushr for the Financial Year
2022-23, it was observed that a contract for Alteration & Renovation work of two Model Hostels for State
Children (Zamung Kor) was awarded to M/S Mother Construction Company. During the scrutiny of IPC-
2 and 4, it was observed that a sum of Rs.3,264,700/- was paid against item of work MRS-11-34 “supply
& apply acrylic wall coating 2mm thick of approved quality over plastered surface’’. The said item was not
included in BOQ. As per original BOQ, the said item was replaced with Item 10-51 “Providing and Fixing
of Ceramic Tiles 12`x 24` of Imported Approved Quality with jointing and finishing complete in all
respect’’, which resulted in unauthorized payment on account of substandard work.
It was further added that another contract for Renovation & Developmental works of two Model
Hostels for State Children (Zamung Kor) were awarded to M/S Mother Construction Company. The
contract was awarded @ 15% below for an amount of Rs.5,999,894/- against the estimated cost of
Rs.7.000million. Scrutiny of the documents revealed that undue benefit was given to the contractor and
enhanced the cost of contract to Rs.8.000million. Whereas, the work was required to be get completed
within the offered price of Rs. 5.990million.
Moreover, the performance security bond was also not verified from the concerned bank/company.
Audit recommends recovery besides fixing the responsibility on person at fault.
PDP No. 4 (2022-23)
27.4.3 Irregular expenditure on account of Grant-in-Aid - Rs. 170.300 million
According to Para 10(i) of GFR Vol-I, every public officer incurring expenditure from pubic fund
According to MoU between Social Welfare Department Party I, Deputy Commissioner Peshawar,
Party II and Concerned NGOs/Foundations Party III, payment has been made to for provision of
rehabilitation services for the drug addicts identified by Party I & II i.e. Social Welfare Department and
793
D.C Peshawar respectively. All the operations will be verified by Party II. The foundations/NGO will
submit the utilization report of all the grants received from government as well as progress reports to Party
I and II. The D.C office will notify a Monitoring Team who submits their recommendations to Party I on
fortnightly basis. This monitoring team will verify the claims and work done.
During audit of the accounts of Directorate of Social Welfare, Special Education & Women
Empowerment Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that a sum of Rs.
170,300,000/- was paid to different NGOs (Annexure-L) under the head of Account A-5270-090 Others
(Grant-in-Aid). In this connection it was pointed out that recommendation of the monitoring teams
nominated by DC Office and details of drug addicts identified as per MoU were not available.
Moreover, the payments were made on account of purchase of fixed assets and rent of building etc.
by the NGOs, which was not provided for in the MoU.
The lapse occurred due to weak internal controls which resulted in irregular expenditure.
Audit recommends conducting inquiry and taking appropriate action against the person(s) at fault.
PDP No. 31 (2022-23)
27.4.4 Loss to the government due to non-deposit/investment of DPR charges -

Rs. 247.019million
According to para 148 of GFR Vol-I, all material received should be examined, counted, measured
or weighed as the case may be when delivery is taken and they should be taken in charge by a responsible
officer who should see that the quantities are correct, their quality good and record a certificate to that effect
and record them in the appropriate stock register.
During audit of the accounts of Directorate of Social Welfare, Special Education & Women
Empowerment Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that the local office
received a sum of Rs.933,232,702/- on account of DPR charges, with an opening balance of
Rs.366,869,041/-, totaling to Rs.1,300,101,743/-, which was shown deposited into the National Bank of
Pakistan Account No.3312358365 on 13.12.2022. However, the local office failed to invest the said amount
in TDRs or other profitable deposits, and as such a loss of Rs. 247,019,331/- (Rs. 1,300,101,743 X 19%
average standard rate) was sustained by the government.
The lapse occurred due to weak financial controls which resulted into loss to the government.
Audit recommends investing the amount in profitable deposits at the earliest.

794
PDP No. 33 (2022-23)
795
Chapter – 28
SPORTS, YOUTH AFFAIRS, ARCHAEOLOGY & MUSEUMS

DEPARTMENT
of:
 Sports.
 Archaeology.
 Excavation, Exploration/Survey, Conservation, restoration and rehabilitation.
 Museums.
 Youth Affairs.
 Service matters except those entrusted to Establishment and Administration Department
796
Audit Profile of Sports Department;
Expenditure
Revenue/Receipts
Audited FY
Total Audited FY 2022-
S No. Description Audited 2022-23
Nos 23
(Rs in
(Rs in Million)
Million)
1 Formations 11 02 2,845 0
 Assignment
Account
 Etc
(Excluding FAP)
3 01 01 5,589 N/A
4 01 01 520 N/A
(FAP)
was as follows:
Grant #
Total
Surrender Actual
Expenditure
Department
38 - Sports,
Culture,
NC21 1,932,155,000 2,420 0 1,217,891,823 714,265,597 714,712,755
Tourism & 447,158
Museums
61 - Sports,
Culture,
NC21 36,384,000 0 -1,857,782 15,971,001 18,555,217 18,555,217
Tourism & -
Museums
Total 1,968,539,000 2,420 -1,857,782 1,233,862,824 732,820,814 733,267,972
447,158
797
Development (Rs.)
Grant #
Department
50 - Sports,
-
Tourism, NC22 5,113,301,000 0 -528,575,000 3,594,678,914 990,047,086 987,108,237
2,938,849
Archeology
50 - Sports,
Tourism, NC12 6,422,818,000 0 124,516,000 4,983,930,551 1,563,403,449 1,563,403,449
-
Archeology
-
Total 11,536,119,000 0 -404,059,000 8,578,609,465 2,553,450,535 2,550,511,686
2,938,849
Overview of expenditure against the final grant; (Rs. in million)

Non-Development 732.82 733.27 0.06%

0.45
-
Development 2,553.45 2,550.51 -0.12%
2.94
-
Total 3,286.27 3,283.78 -0.08%
2.49
3,000.00
2,500.00
2,000.00
1,500.00
1,000.00
500.00
0.00
-500.00
798
28.1 (C) Issues in the Sports Department
There were issues of contract awarding in the department. In some cases, the department made
advance payments on the basis of fake measurements. The department could not submit initial management
replies during the exit meetings.
audit of Sports and Culture Department. This amount also includes recoveries of Rs. 220.232 million as
pointed out by the audit Summary of the audit observations classified by nature is as under:

Amount
(Rs.)
Reported cases of fraud, embezzlement and
2 -
misappropriation
3 Irregularities
Management of Accounts with Commercial
C 12.598
Banks
4 Value for money and service delivery issues 0
5 Others 8519.093

Total No. of
Audit Full Partial Nil
S. No. Name of Department actionable
Year compliance compliance compliance
points
1 2001-02 Sports & Tourism 14 14 - -
2 2002-03 -do- 12 11 - 01
3 2003-04 -do- 06 06 - -
4 2004-05 -do- 03 01 - 02
5 2005-06 -do- 04 03 - 01
6 2008-09 -do- 14 05 - 09
7 2009-10 -do- 32 09 - 23
8 2010-11 -do- 25 08 - 17
9 2011-12 -do- 20 08 - 12
10 2012-13 -do- 08 07 - 01
11 2013-14 -do- 12 06 - 06
12 2014-15 -do- - - - -
13 2015-16 -do- - - - -
14 2016-17 -do- 8 6 - 2
799
28.4 Audit Paras
28.4.1 Non-functionalization of Provincial Sports Management Committee
According to the section-11 of the Sports & Youth Policy 2018, there shall be management
committee for all sports facilities in the province. The Department of sport shall notify these committees
with certain TORs while the provincial committee shall perform the following functions: i. Providing
strategic guidance and recommendations to the Department of Sports on matters and other issues relating
to Sports and Physical recreation activities. ii. Designing and ensuring proper implementation of suitable
Programmes for general participation in sports and sports played at international level competition. iii.
Administrating the Provincial Sports Fund. The committee shall have the provision of financial and
technical assistance to Community Sporting Organizations, Schools and Community Coaching
Programmes, Individuals, Public Education in Sports and Physical Activities and National Sports
Organizations on the basis of established criteria. iv. Decision regarding categorization of established sports
facilities. V. Decision regarding established standards for both regional and national recreational rounds
and sports facilities in association with Sports department. vi. Decision regarding legislation of codes of
practice for (a) housing developers, (b) institutions involved in sports and fitness trainings, for example
health spas, coaching schools and gyms, and safety in sporting facilities. vii. Decision regarding standards
for provincial Coaching Programmes and for coaching certifications viii. Collaborating with Department
of Sports & Youth Affairs, the Educational Sector and other relevant agencies to initiate sports as a
discipline at University level thus leading to establishment of Sports University. ix. Advise the government
regarding players' character building, issues of the Sportspersons, drugs prevention viz-a-viz sports
medicines.
During audit of the accounts record of the Secretary Sports & Youth Affair Department Khyber
Pakhtunkhwa for the financial year 20222-23, it was noticed that Provincial Sports Management Committee
was constituted and notified vide notification No. SO(S)2-39/sports policy/2020 dated 26-08.2020 in the
light of sports policy Khyber Pakhtunkhwa 2018 but neither meeting of the said committee was convened
till the date of audit i-e 15.08.2023 (for more than 03 Years) nor the specified functions were performed by
the provincial sports management committee.
The lapse occurred due to weak internal controls which resulted into non-functionalization of
Provincial Sports Management Committee.
When pointed out in August 2023, it was stated by the Department that the detailed reply will be
furnished to the DAC after consulting for relevant record.
Audit recommends to implement the said policy in letter and spirit.
PDP No. 40 (2022-23)
800
28.4.2 Fictitious payment to contractor due to fake measurement for non-executed work - Rs. 69.148
million
According to rule 395 FTR Volume-1, provides, the payments of all works done shall be made of the
basis measurements recorded in measurement book kept for the purpose, read with Para-397 of the Federal
Treasury Rules Vol-I Prohibits payment to contractors without actual work done, read with Para-209 (d) of
CPWA code provides that all payments for work or supplies are based on the quantities recorded in the
measurement book, it is incumbent upon the person taking the measurement to record the quantities clearly
and accurately.
During the audit of accounts record of the Director General Sports & Youth Affairs, Khyber
Pakhtunkhwa for the financial year 2022-23, it was noticed that the contract of Establishment &
Rehabilitation of Jamrud Sports complex, awarded to MS A.Q Builders and the contractor has been paid
up to 6th IPC/RB for Rs. 191.152 million which included a fictitious payment of Rs. 69.418 million on the
basis of fake measurement of non-executed work. The fictitious payment was also confirmed during site
visit of the team (Pictures & Videos for ready reference).
Items of Work Quantity Rate Total Payment

Hostel Building
Providing and fixing of floor tiles 24x24 725.97 4358.04 3,163,806
Providing and fixing of bath room tiles 10x20 218.50 3629.17 792,974
Supply and fixing of double glazed aluminum 117.10 15396.89 1,802,976
French polishing on new work 149.30 938.39 140,102
S/F of suspended false ceiling with dumps 2x2 630.24 7785.00 4,906,418
Electrification of hostel (SI+NSI) -- -- 8,130,943
Sub Total-I 19,011,737
Gymnasium
Providing and fixing of floor tiles 24x24 107.5 4358.04 468,489
Supply and fixing of double glazed aluminum 123.79 15396.89 1,905,981
Providing and fixing of aluminum cladding of 750.96 52419.14 39,364,677
approved color
S/F of suspended false ceiling with dumps 2x2 436.99 7785.00 3,401,967
Electrification of Gymnasium (SI+NSI) -- -- 7,639,380
Sub Total-II 50,406,024
Grand Total 69,417,761
Moreover, the payment on the basis of fake measurement by the SDO/Engineers (MB Attached)
and its verification by the consultant in IPC under mines the role and function of the consultant and sub-
engineer concerned.
The lapse occurred due to weak internal and financial mismanagement.
When pointed out in December 2023, it was stated by the department that the detailed reply will be
furnished to DAC after the scrutiny of relevant record.
801
Audit recommends to inquire the matter and recover the amount.
PDP No. 34 (2022-23)
28.4.3 Overpayment due to non-deduction of 7% withholding tax from the contractors - Rs. 49.086
million
According to the Notification No. SO(DEV-II)/FD/12-6/2014-15 Dated Peshawar 21.04.2015, that

all provincial works departments while preparing the cost estimates of Development projects which fall in
the tax exempted areas such as PATA, shall frame the same on the Market rate system but with 7 % less
cost to defray the amount added in rate analysis of all works/construction/supply items to meet withholding
tax.
Pakhtunkhwa for the financial year 2022-23, it was noticed thatexpenditure to the tune of Rs. 701.228
million was incurred on account of Establishment & Rehabilitation of Sports Facilities in MNDs and the
amount was paid to various contractors without deducting the withholding tax / defrayed amount @ 7%, in
compliance with the above-mentioned notification which resulted into overpayment to the tune of Rs.
49.086 million (Rs. 701.228 million X 7%) to contractors. The details given below;
802
Name of work Contractor RB Payment
Upgradation of Jamrud sports complex MS AQ Building 6th 191,152,067
Rehabilitation of Mulagori Sports Complex MS Hamesh Gul & 4th 64,752,603
Sons
Upgradation of Kalya sports complex Orakzai Mehboob Ali Affridi 6th, &7th 104,429,142
Upgradation of Jinah Civil Stadium Parachinar Mehboob Ali Affridi 7th 144,990,384
Kala khel sports complex Khyber Mehboob Ali Affridi 5th 51,214,937
Provision of missing facilities for existing grounds in --- --- 144,689,000
Swat
Total 701,228,133
The lapses occurred due to weak internal controls.
PDP No. 35 (2022-23)
28.4.4 Loss to the government due to incorrect rate analysis - Rs. 9.300 million
Para-221 of CPWA code provides that before signing the bill, the sub-divisional Officer should
compare the quantities in the bill with those recorded in the measurement book and see that all the rates are
correctly entered and that all calculations have been checked arithmetically.
According to MRS 2020 analysis 19.5% were added for contractor profit, Income tax and Overhead
(10% + 7.50% +2%).
Accounts record of the Director Works, Sports Department Khyber Pakhtunkhwa for the year 2022-
23 revealed that the work, “Provision of 3D Squash Court at Hayat Abad Sports Complex Peshawar” was
awarded to M/S AQ Builders at Estimated cost of Rs.99.40 million (at par on the BOQ items) vide wor k
order No.EW(STY&M)/1-4/2021 dated 22-03-2021 with a completion period of 18 months. Expenditure
to the tune of Rs.62,830,000/- was shown incurred vide 2nd running bill cheque No.060389 dated
23/06/2022 on execution of 07 Nos non-scheduled items.
Further verification of rate analysis of non-schedule items revealed that according to MRS 2020
(analysis), contractor profit of 10% and Overhead (Material+Labour& Equipment) @ 2% was required to
be added while analyzing the rate but the local office added 22.5%, excluding income tax, which caused
loss of Rs.7.00 million to govt; exchequer.
803
Moreover, in the rate analysis, two items i.e. installation charges and overhead (MLE) were
included which serves the same purpose, causing double payment to contractor for one item, resulting in
loss to public exchequer Rs. 2,300,000/-.
S. Name of Item (NSI) Contractor Profit + OH (MLE) Loss Installation
No. Charged 22.5% Required 12% Charges
01 S/F of Glass Front Wall 3,215,790 1,715,088 1,500,702 500,000
02 S/F of Glass Side Walls 6,982,964 3,724,263 3,258,701 1,000,000
03 S/F of Glass Back Wall 826,695 452,904 373,791 500,000
04 S/F of Sports Floor 1,378,218 735,050 643,168 250,000
05 S/F of Tin made of Alu Sheet 166,058 88,564 77,494 50,000
06 S/F of Lighting system 1,092,857 637,500 455,357 -
07 Central Air Conditioning System 1,653,061 964,285 688,776 -
Total 15,315,643 8,317,654 6,997,989 2,300,000
The lapse occurred due to weak internal control.
When pointed out in December 2023, it was stated by the department that detailed reply will be
furnished to DAC after the scrutiny of auditable record.
Audit recommends to inquire the matter and recover the amount.
PDP No. 39 (2022-23)
28.4.5 Loss to the government due to allowing /awarding high-rate - Rs.11.725 million
Para-10(i) read with Para-11 of GFR provides that every public officer is expected to exercise the
same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence
would exercise in respect of expenditure of his own money.
Each head of a department is responsible for enforcing financial order and strict economy at every
step. He is responsible for observance of all relevant financial rules and regulations both by his own office
and by subordinate disbursing officers.
Accounts record of the Director Works, Sports Department, Khyber Pakhtunkhwa for the year
2022-23 revealed that contract for the work, “Extension of Male Gymnasium at Hayat Abad Sports
Complex” was awarded to M/S Khaki Builders at a total cost of Rs.99.93 million with one year completion
period i.e. up to 30-06-2023 vide work order No.EW(STYA&M)/1-4/2021 dated 24-06-2021. Expenditure
to the tune of Rs.114.917 million were incurred up to 06th running bill.
804
Further verification revealed that the contractor was paid Rs.14875000/- for execution of a non-
schedule item of work, “Providing & Fixing of Floor Matt of approved quality” for a quantity of 3500 nos
@ Rs.4250/- per piece.
The rate of same item of work was paid in another work, “Establishment of female indoor Gym at
Swat” @ Rs.900/- per sft. Thus the rate of Rs.4250/- is on very high side as compared to Rs.900/- per sft.
Rate analysis, duly approved from the competent authority were not produced to Audit. The item
was neither provided nor fixed as the structure work of extended portion was in progress.
Due to allowing exorbitant rates the public exchequer was put to sustain loss of Rs.11.725 million
(4250 -900=3350 x 3500)
Audit recommends inquiry and appropriate action under intimation to audit.
PDP No. 43 (2022-23)
805
28.4.6 Loss to the government due to allowing higher rate of NSI - Rs.2.550 million
23 revealed that the contract for the work, “Mini Sports Complex at Swat” was awarded to M/S Nasurllah
Khan & co at 10% above on schedule and non-schedule items. Expenditure to the tune of Rs.86.482 million
were incurred up to 4th Running bill. Non-schedule item of work, S/F of Pioneer Company, Parkin Company
& TECHNO 50KVA Diesel Generator set fully automatic with all accessories” was awarded to contractor
at the rate of Rs.5500000/- + 10% above. The item can be supplied any time after the completion of work,
through specialized contractors adopting open tender at economic rate instead of including in the BOQ.
Further verification revealed that the rate of same kind and specification of generator was analyzed
as Rs.3500000/- in the work, Extension of Male Gymnasium at Hayatabad Sports Complex”. This shows
that the rate analysis of Generator in the Mini Sports Complex was incorrect and resulted in loss of Rs.2.55
million (5500000 -3500000=2000000 + 10% above).
Audit recommends inquiry and recovery under intimation to audit.
PDP No. 44 (2022-23)
28.4.7 Loss to the government due to non-recovery of penalty - Rs.32.940 million
According to agreement 10% liquidated damages shall be recovered from the contractor if he fails
to complete the work within stipulated time period.
23 revealed that the work, “Provision of 3D Squash Court at Hayat Abad Sports Complex Peshawar” was
awarded to M/S AQ Builders at Estimated cost of Rs.99.40 million (at par on the BOQ items) vide work
order No.EW(STY&M)/1-4/2021 dated 22-03-2021 with a completion period of 18 months. Expenditure
to the tune of Rs.62,830,000/- was shown incurred vide 2nd running bill cheque No.060389 dated
23/06/2022 on execution of 07 Nos non-scheduled items.
The time period for the completion of work was 18 months (22-09-2022) but even after elapse of
33 months the contractor has not completed the work. The contractor has given under taking that he may
be penalized Rs.5.00 million if he failed to hand over the completed work of 3D Squash Court up to
09/2023.
806
The works, “provision of hockey turf at Abbottabad and Nowshera” were awarded to M/S KAM
Traders at total cost of Rs.115.21 million and Rs.123.75 million respectively vide work order
No.EW(STYA&M)1-4/2021 with completion period of 12 months.
Scrutiny of the record revealed that the work was required to be completed in 05/2022 but the same
are still in progress even after elapse of two and a half years.
As per agreement the contractor is liable to pay 10% liquidated damages amounting to Rs.32.940
million (9.940 + 23.00) due to failure in completing the work within stipulated time period.
When pointed out in December 2023, it was stated by the department that detailed reply will be furnished
to DAC after the scrutiny of auditable record.
PDP No. 46 (2022-23)
28.4.8 Loss to the government due to less deduction of income tax from securities -
Rs. 9.041 million
Rule 28(2) of CTR provides that a govt; officer supplied with funds for expenditure shall be
responsible for such funds until an account of them has been rendered to the satisfaction of the Accountant
General and of the Audit Officer concerned. He shall also be responsible for seeing that payments are made
to persons entitled to receive them.
Rule 205 of CTR provides that a govt; officer entrusted with the payment of money shall obtain for
every payment he makes, including repayment of sums previously lodged with the government, a voucher
setting forth full and clear particulars of the claim and all information necessary for its proper classification
and identification in the accounts. Every voucher must bear or have attached to it, an acknowledgement of
the payment signed by the person by whom, or in whose behalf, the claim is put forward.
Accounts record of the Director Works, Sports Department Khyber Pakhtunkhwa for the year 2022-23
revealed that a sum of Rs.9,041,744/- was shown paid on account of income tax to FBR and DG sports
from Designated Account No. 2008027504 maintained for Security and CDRs of the contractors.
S. No. Cheque No. Date Amount Particulars
01 48369189 23-01-2023 1,596,000 Less recovery from AQ Builders
02 48369190 27-01-2023 5,504,000 Less recovery from KAM Traders-2445679/-,
Swallow Intrn-658402/-,
Seven Star -274996/-, Hamesh Gul -1310070/-,
Obaidullah co-820297/-
807
03 48369192 19-06-2023 420,624 Shown paid to DG Sports
04 48369193 19-06-2023 1,521,120 Shown paid to DG Sports
9,041,744
The security of AQ Builders and KAM Traders was released but the income tax Rs.4041679/- paid
from the security account at S. No. 01 & 02 (1596000+2445679) was not shown deducted from their
retention moneys.
The security register has no record of deductions of retention money made from M/S Seven Star
and Hamesh Gul contractor. The charging of income tax Rs.1585066/- (274996 + 1310070) to security
account is unauthorized.
Payment at S.No.03 & 04 amounting to Rs.,1,941,864/- was made to DG Sports instead of FBR
without mentioning the names of contractors to whom account the less deduction of income tax was
charged.
Amount of Rs.420624/- was drawn in cash instead of crossed cheque and income tax deposit
challan was not shown to audit.
PDP No. 49 (2022-23)
28.4.9 Overpayment to the contractor on account of escalation for non-executed work - Rs. 34.290
million
According to Para 23 of GFR Vol-I provides that every public officer is personally responsible for
any loss sustained by government through fraud or negligence on his own part or on the part of subordinate
Pakhtunkhwa for the financial year 2022-23, it was noticed that the contract of Establishment &
Rehabilitation of Jamrud Sports complex, awarded to MS A.Q Builders and the contractor has been paid
upto 6th IPC/RB for Rs. 191.152 million which included an amount of Rs. 34.290 million on account of
escalation in IPC-5th& 6th for the non-executed work. The non-execution of work was confirmed during
physical verification and site visit of the audit teams. Pictorial evidences are attached.
808
Moreover, the overpayment on account of non-executed work in the 6th IPC/RB was also verified
by the consultant and record by the sub-engineer/SDO concerned in MB as well which under mines the
seriousness of the consultant and sub-engineer.
Audit recommends inquiry for ascertaining the factual position beside recovery of overpayment.
PDP No. 64 (2022-23)
809
28.4.10 Overpayment to the contractor due to non-deduction of sale tax -
Rs. 3.990 million
The Government of Pakistan Collectorate of Sales Tax and Central Excise Peshawar letter No.
ST(Tech) Govt./31/2000/12379 dated 19-10- 2001 provides that all government departments are required
to purchase taxable goods from persons registered with Sales Tax Department and against Tax Invoice
showing name and address of the supplier’s/recipients description, quantity and value of goods with amount
of Sale Tax charged.
During the audit of accounts record of the General Sports & Youth Affairs, Khyber Pakhtunkhwa
for the financial year 2022-23, it was noticed that the contract of Up-gradation of Football Stadium at
Qayum Stadium Peshawar, awarded to MS Swallow International and the contractor has been paid up to
5th IPC/RB for Rs. 164.888 million. The contractor purchased 4000 Nos. of stadium chairs @ Rs. 5700 per
chair and included a sum of Rs. 3.990 million as sale tax in the invoice but instead of deducting the sale tax
amount from the contractor the amount was paid to the contractor which resulted into overpayment of Rs.
3.990 million to contractor.
The lapse occurred due to weak internal control,
Audit recommends recovery of overpayment.
PDP No. 70 (2022-23)
28.4.11 Loss to the government due to irregular awarding of contract - Rs.70.834 million
According to Para 1 of Chapter II of KPPPRA Rules 2014, Open tendering open competitive
bidding as principal method of procurement, the procuring entity shall use open competitive bidding as the
principal method of procurement for the procurement of goods over the value of Rs. 100,000 (rupees one
hundred thousand).
During audit of the Directorate General Sports Peshawar, for the financial year 2022-23, it was
noticed that the ADP Scheme “Up-gradation of Hayatabad Sports Complex” was awarded to NM/S
National Logistic Cell (NLC) at 15% above the BOQ/Estimate directly without open tender system and
without competition. The award of contract directly on single source basis at 15% above the estimate stands
irregular and un-authorized, thereby resulting into undue burden over the public exchequer and financial
loss. The Contractor was extended favour at the cost of the public exchequer. The 9th Running Bill indicated
that an amount of Rs.70,834,042 was paid to the Contractor on account of 15% above the estimate.
810
Further, Detailed Cost Estimate/Technical Sanction was not provided to the audit team. The cost
of the Original PC-I was Rs.500 million. The total work done up to 9th Running Bill was Rs.745.041 million
without the approved revised PC-I.
The loss occurred to award of award of contract without open tender at 15% above and extension
of undue favour.
Audit recommends inquiry for ascertaining the factual position and recovery of loss.
PDP No. 74 (2022-23)
28.4.12 Loss to the government due to manipulation of bidding process and incorrect
evaluation - Rs. 7.184 million
According to Para-23 of GFR Vol-I, provides that every public officer is personally responsible for
During the audit of accounts record of the Director General Sports for the financial year 2022-23,
it was noticed that expenditure to the tune of Rs. 26.723 million incurred on account of purchase of fitness
equipments under the project “Establishment of Female indoor sports facilities at divisional level in Khyber
Pakhtunkhwa” from contractor MS Shoaib Sports company vide various work orders Nos. and date. The
scrutiny of bidding and evaluation process revealed that undue favor was extended to the contractor at the
cost of public money which resulted into a loss of Rs. 7.184 million. The financial marks of the first three
high value items were not awarded to MS SK Business Corporation and straight away excluded the
contractor by manipulation and mutual understanding by the bid evaluation committee while in previous
years the equipment of the same specification was provided by SK business corporation.
Moreover, the CDR of the contractor MS Shoaib Sports company for Rs. 2.390 million (CDR#
01426435 dated 14.03.2023) was sent to the bank concerned on 17.04.2023 but no reply was given by bank
till the date of audit i-e 30.11.2023. The local office made payment to the said contractor of Rs. 19.592
million (75% of the total claim) without duly verifying the CDR of the contractor and security bond against
the advance payment.
The loss of Rs. 7.184 million is brought to the notice for further investigation in detail and inquiry
against the person at fault.
811
Audit recommends inquiry for ascertaining the factual position and recovery of loss.
PDP No. 79 (2022-23)
28.4.13 Overpayment to the contractor due to non-deduction of compulsory taxes - Rs. 3.270
million
According to the Income Tax ordinance 2001, the income tax should be deducted from the
contractor at the prescribed rate.
During the audit of accounts record of the Director General Sports for the financial year 2022-23,
it was noticed that a sum of Rs. 29.725 million paid to the consultant/contractor for the provision of event
management services for various activities under the project “Promotion and Sustainability of Sports
activities in Khyber Pakhtunkhwa” as per details given below but the compulsory taxes at the prescribed
rates were not deducted from the contractor which resulted in overpayment of Rs.3,269,750/-.
S. No. Consultant/ Contractor Cheque No. Amount 3% IT 8% STS
1 Young Leader 1124002 10,000,000 300,000 800,000
2 // 117122 15,000,000 450,000 1,200,000
3 // 1124078 4,725,000 141,750 378,000
Total 891,750 2,378,000
When pointed out in December 2023, it was stated by the department that the recovery if any will
be made from the contractor and progress will be shown to audit.
PDP No. 80 (2022-23)
28.4.14 Overpayment due to non-deduction of 7% withholding tax from the contractors - Rs.
5.049 million
According to the Notification No. SO(DEV-II)/FD/12-6/2014-15 Dated Peshawar 21.04.2015, that

all provincial works departments while preparing the cost estimates of Development projects which fall in
the tax exempted areas such as PATA, shall frame the same on the Market rate system but with 7 % less
812
cost to defray the amount added in rate analysis of all works/construction/supply items to meet withholding
tax.
During the audit of accounts record of the Directorate of Youth Affairs, Khyber Pakhtunkhwa for
the financial year 2022-23, it was noticed thatexpenditure to the tune of Rs. 72.133 million was incurred on
account of Establishment of Jawan Markaz Mohmand under the AIP Scheme “Youth Development Package
& Establishment of Youth Facilities in NMDs” and the amount was paid to M/S Hamesh Gul & Sons
without deducting the withholding tax / defrayed amount @ 7%, in compliance with the above-mentioned
notification which resulted into overpayment to the tune of Rs. 5.049 million (72.133*7%) to contractor.
The matter is brought to the notice for recovery under intimation to audit.
The lapses occurred due to weak internal controls.
When pointed out in November 2023, it was stated by the Department that the overpayment to
contractor will be recovered and progress will be shown to audit.
PDP No. 6 (2022-23)

28.4.15 Loss to the government due to non-investment of endowment fund balance - Rs.
24.560 million
According to the section-4 (Control and Management of the Fund) of the Khyber Pakhtunkhwa
Youth Welfare Endowment Fund Act, 2019, the fund shall be under the administrative control of the
Committee and shall be kept in such and invested in such manner as may be determined by the committee.
During the audit of accounts record of the Directorate of Youth Affairs, Khyber Pakhtunkhwa for
the financial year 2022-23, it was noticed that endowment fund with seed money of Rs. 230.205 million
was established in February 2021 the amount was transferred to Bank account No. 0000832007 BoKRaast
saving account. The huge amount was rationally invested in TDRs/fixed deposit for maximum return which
resulted into a loss of Rs. 24.560 million,as detailed below;
Total %age of KIBOR 1st July
Year Principle Difference Loss
Profit return 2021,2022
2021-22 231,654,623 9,956,788 4.30% 8.07 % 3.77% 8,733,379
2022-23 240,533,479 22,269,795 9.26% 15.84% 6.58% 15,827,103
Total 24,560,482
The lapse occurred due to weak internal control and mismanagement of financial resources.
When pointed out in November 2023, it was stated by the Department that the detailed reply will
be furnished to DAC after the scrutiny of relevant record.
813
Audit recommends inquiry and fixing of responsibility.
PDP No. 7 (2022-23)
28.4.16 Irregular transfer of government rest houses from tourism department to GDA to
facilitate unauthorized outsourcing of government assets –
Rs. 57.000 million
According to Chief Minister Directives addressed to Secretary to Government Sports, culture and
Tourism department Peshawar, letter No. SO-II /CMS/KPK/6-1/207 /951 dated 16.01.2017, all the rest
houses in the Galiyat area may be handed over to Galiyat Development authority for proper upkeep and
utilization.
According to BOA meeting chaired by Chief Minister KP dated 22.06.2017, the chair showed
extreme displeasure on running of government rest houses by the GDA. The chair of the view that BOA is
un-necessary delaying the out souring and GDA need not to run the rest houses or make any improvement
in investments.
During audit of accounts record of the DG GDA for the Fy 2021-2022, it was observed that the
following 14 rest houses were rented out on long term rental basis for Rs 57.00 million. The rest houses
were handed over from tourism department to GDA for proper upkeep and utilization in result of BOA
meeting chaired by Chief Minister KP dated 22-06-2017. Tourism Department already uplifted the facilities
and generated approx. 20.00 million besides providing facilities to thousand s of tourist and also relieving
the parent’s departments from O&M expenditure of 40-50 million per annum.
S.No Rest houses Amount ( Rs)
1 Shimla rest House Nathia Gali 1,752,312
2 Secretariat Cottage 1,355,562
3 Additional Cottage 1682,220
4 Ress Khana 6,533,944
5 Vidia Rest Nathia Gali 1,355,562
6 Retreat House Nathia Gali 8,142,420
7 Inspection BanglownathiaGali 4,334,493
8 Forest Rest House Donga Gali 4,009,158
9 Fan Rest House Nathia Gali 2,843,375
10 Forest Rest House Nathia Gali 4,393,000
11 C&W Rest House Thandianai 1,557,000
12 Forest rest house Thandiani 2,170,000
13 Forest Rest house Barrian 8,125,000
14 Chand view rest house muree 8,780,000
Total 57,034,046
The following irregularities were noticed.

814
 Audit is of the view that the rest houses being government property was unauthorisely handed over
to GDA in result of meeting chaired by the CM instead of chairman of the board. As after
amalgamation of GDA ACT on 12/08/2016 board meeting under the chairmanship of Chief
Minister is irregular and unauthorized.
 Rest houses were transferred to GDA for proper upkeep and utilization, but the BOA for out source
of the government assets with mollified intention.
 The rest houses were outsourced at thrown away prices without conducting market survey as long
term rent agreement was made on rates much below the market rates and without considering
capital value of the assets.
 GDA property Raees Khana in main Nathia Gali Bazar was awarded to Zahoor Ahmed of IV Tours
without bidding process as no EOI was called for the same and factitious tender process was shown
to facilitate the illegal process.
 The rest houses were illegally outsourced by GDA without approval of cabinet and government of
KPK and revenue of 57.034 million were realized by GDA. However, revenue generated were not
transferred to Provincial Government by GDA administration.
The lapse occurred due to weak financial controls.
report.
Audit recommends transfer of funds to provincial government.
PDP No. 394 & 395 (2021-22)
28.4.17 Irregular leasing of land for development of 4-star hotel in Nathia Gali –
Rs. 852.000 million
According to Government of Khyber Pakhtunkhwa Revenue and Estate department letter No.
Rev:IV/4/S. land lease policy /2015/19213-62 dated 24.08.2015, In case of leasing the determination of the
lease money will be worked out on market rate basis and the rates so determine / recommended would be
subject to the approval of the board of revenue Khyber Pakhtunkhwa for a period of 15 years, further
extendable for 15 years.
According to GDA Auction regulation rules 2019, point II, in mega projects the lease period will
normally be 33 years or 66 years or 99 years.
According to KPPRA rules 2014, Chapter-V, each procuring entity shall plan its procurements with
due considerations to transparency, economy, efficiency and time lines and shall ensure equal opportunities
to all prospective bidders.
815
During audit of the accounts record of the DG GDA for the financial year 2021-22, it was noticed
that a lease agreement was executed on 21st June 2021 between GDA and BARON (PVT) Limited for the
development of a 4-star or higher category hotel in Nathia Gali. The agreement stipulated that the lessor
(GDA) would grant a long-term lease of approximately 22 Kanal of land, commonly known as Shangrila
Pines Hotel Nathiagali, including all structures, equipment, fittings, and fixtures, to the lessee (Baron PVT
Limited) for a period of 99 years, with total amount of Rs 852.000 million including upfront amount of Rs
306.720 million and remaining amount in equal installment compromising on 20-year period. However,
during the examination of the relevant records, the audit observed the following irregularities:
 Lease agreement and GDA auction Guidelines are not vetted from law department Khyber
Pakhtunkhwa.
 Necessary approval of provincial government was not obtained.
 The EOI advertisement required bidders to submit a non-refundable tender processing fee of Rs
50,000 with their profile/prequalification documents. It was observed that 10 bidders were shown
participated however proof of deposit of processing fee by other bidders is not available on record,
raising doubts about the fairness and transparency of the bidding process.
 In Pre-qualification meeting held on 12.03.2020, scrutiny of attendance sheet revealed that
successful bidder i did not attended meeting for opening of prequalification documents.
 Reserve price of the bid was not made nor calculated through market survey.
 After prequalification out 0f 8 bidders, 04 bidders were successfully qualified for RFP. In RFP
submission and closing date only BARON hotel have submitted technical proposal and later on his
financial bid 852 million was accepted. The bidding was required to be re –advertised as per the
opinion of Zahid Jamil & Co chartered accountant firm and representative of Local Government,
but the recommendation was ignored on the plea that re-advertisement will considerably delay the
process.
 According to caluse-05 of contract agreement all existing structures, fitting, fixtures equipment
laying in the premises will be the property of lessee and clause 06 provides that lessor will provide
adequate supply of water, electricity supply though grid, sewerage / drain lines, construction of
carpeted road to hotel entrance. In existing facilities hotel Shagirila Pines Nathiagali was handed
over to the bidder without considering the values of the building existing structures, fitting, fixtures
and equipment installed. The burden of facilities was shifted to GDA resulting loss to authority.
 Heritage substance of the hotel was not considered and no NOC was obtained from the archeology
department.
 According clause 5 (H) the bidder have to submit schedule of construction but no supervisory
mechanism was devised at GDA level to supervise the construction activates to ensure timely
completion as per PEC standards.
 The auction process was made through illegal auction committee constituted by Director General
Gallyiat Development Authority instead of BOA.
 The process was not approved from board.
The lapse occurred due to improper contract management.
816
02.01.2024 for holding DAC meeting.However, the DAC meeting was not convened till finalization of this
report.
Audit recommends revision of the contract and fixing responsibility.
PDP No. 396 (2021-22)
28.4.18 Irregular awarding of contract of Forest Rest House Nathia Gali –

Rs. 4.393 million
Loss of Rs. 21.965 million
According to approved minutes of BOA dated 3.12.2020, rest houses shall be outsourced through
competitive process for the period of 15 years with further extension of 5 years. Contrary to above rent
agreement was made for period of 15 years and 10 years
According to the clause 6 of the contract agreement between GDA Abbottabad and M/S Gallian
trading corporation, for long term rent agreement for Forest Rest House Nathiagali, bidder shall pay 50%
of the total rent within 30 days from date of agreement (July every year) and remaining 50 % shall be
payable within next 6 months.
During audit of accounts record of the DG GDA for the FY 2021-22, it was observed that the
agreement for long term rent agreement of Forest Rest house Nathiagali was made between GDA and M/S
Gallion Industries &Trading Corporation on 25th June 2021. Forest rest house measuring 02 kanal and 15
marla was allotted to M/S Gallian trading corporation for the period of 15 years which shall be further
extendable for 10 years with mutual consent at annual rent amounting to Rs 4,393,000 and increase of 10%
after every three years. During scrutiny of the relevant record audit observed the following observations:
 Contrary to above criteria rent agreement was made for period of 15 years and further extendable
for 10 years without the approval of BOA resulted in loss to the authority.
 No market survey was made for rent assessment nor was rent calculated on the basis of capital
value of the property, which includes land cost and building value.
 2 % call deposit of quoted rent was required in shape of pay order /demand draft to ascertain the
original bids offered by the bidders. 05 contractors were shown participated as per comparative
statement but financial bids and call deposits of other bidder as proof of participation was not
available on record. Which make the whole process non transparent.
 The successful bidder was in conflict of interest with GDA in Elite Hotel case in violation of
Instruction to bidder at S NO 3.4.
 According to GCC clause 6 fixed security was required to be deposited for existing inventory and
facilities, no such security was obtained from the bidder and whereabouts of existing inventory and
facilities was not known.
 The contract was advertised and awarded on the basis of annual rent of forest rest house having
limited structure and rooms, accordingly rates were offered. After bidding process successful
bidder was illegally allowed for demolition and construction of new building without the approval
817
of competent authority. i.e. BOA. Audit is of the view that if contract was advertised for
reconstruction there might be a chance of attractive bidding. Whereabouts of demolished building
/inventory was not assessed and were taken away by the contractor/GDA staff.
 Expenditure on pay and allowances of the existing staff of forest rest house was not considered
while approving the bid.
 BOA approval was not sought for reconstruction and BOA recommendation for period of 15 year
and 05 years was manipulated and ignored.
 Note parts regarding tender /NIT, financial bidding is missing nor available in the file.
 Withholding tax @ 5 % amounting to Rs 219,650 (4,393,000x5%) was not deducted from
successful bidder.
 Details of rooms, furniture and fixture and inventory record was not available on record.
report.
PDP No. 397 (2021-22)
28.4.19 Irregular awarding of contract of Forest Rest House Thandiani –

Rs. 32.550 million
According to standard bidding documents for out sourcing forest rest house thandiani condition
No.04, initially only the envelops marked Technical proposal shall be opened, technical proposal is to
determine the technical strength of bidder and evaluation of the firms or its JV partner before the opening
of financial bid.
During audit of accounts record of the DG GDA for the FY 2021-22, it was observed that the rent
agreement for outsourcing of forest rest house thandiani was made between GDA and M/S Ploutus on 2 nd
November 2021. According to the agreement the total area allotted is 8 kanal and6 marla at forest rest house
thandiani at annual rent of 2,170,000 for a period of 15 years which shall be further extendable for two term
of five years.During scrutiny of the relevant record audit observed the following shortcomings:
 Rent agreement was made at thrown away price of 2,170,000 for 8 kanal and 06 marla land without
considering the capital value of the rest house which resulted in loss to government as market rate
assessment was not made.
 According to approved minutes of BOA dated 3.12.2020, rest houses shall be outsourced through
competitive process for the period of 15 years further extension of 5 years with good construction
standards. Contrary to above long-term agreement for rent was made with successful bidder for the
818
period of 15 years and 10 years with mutual consent of both parties. Undue favor was extended to
successful bidder for five years.
 The agreement was not approved from BOA.
 BOA approval was not sought for extended period of 05 years.
 Fraudulent award was made to the bidder against blank technical evaluation sheet as out of 09
number bidder participated in bidding process, firms were debarred from tender process by tagging
“Non responsive” without any proof on record and award was made without any comparative
statement.
 Bidding documents fee and 2% call deposit/ demand draft of offered rent was not available on
record to ascertain the fair competition.
 Details of rooms, furniture and fixture and inventory record was not available on record.
report.
PDP No.398 (2021-22)
819
28.4.20 Irregular auction of Leasing out 110 Kanal land for modernization of Ayubia chairlift
According to KPPRA rules 2014, Chapter-V, each procuring entity shall plan its procurements with
due considerations to transparency, economy, efficiency and time lines and shall ensure equal opportunities
to all prospective bidders.
During audit of accounts record of the DG GDA for the FY 2021-22, it was observed that the lease
agreement for modernization of Ayubia chair lift resort was awarded to MS Monal group/ A-cube private
limited. According to agreement lesser (GDA) and lessee (MS Monal group/ A-cube private limited) has
agreed to take on long term lease of all the land measuring about 110 Kanal along with all structures,
equipment fittings and fixtures etc. for duration of 42 years (inclusive of 02 years of grace period) for Rs
450 million as up-front payment. Two years grace period was allowed for construction and no rent will be
charged during grace period. After grace period the lessee will pay advance annual rental amount of Rs
96 million per annum. During scrutiny of the relevant record audit observed the following shortcomings:
 The agreement was made without vetting the contract agreement from law department and legal-
council of the authority. As per model term and condition of contract of Provincial government
minimum 25% of the bidding amount needs to be deposited. Where in the contract the clause of
deposit of ¼ was omitted purposely and contract was made according to the bidder requirement.
 Up front amount of Rs 450.00 million was not deposited by the successful bidder with the plea of
conflict of land with forest department and the authority suffers a huge loss from the last two years.
 The successful bidder Monal group offered upfront payment of 450 million and annual rent of 96
million and 2nd bidder i.esamson offer upfront amount of Rs 610 million and annual rent of 71
million. The bid was awarded to monal group on the basis of NPV of the installment and ignored
the future value of upfront payment.
 According to advertisement for (EOI), the bidders required to submit Rs 50,000 with their profile/
prequalification documents. Scrutiny of attendance sheet revealed that 10 Nos bidders submitted
their documents and Rs 450,000 (09x50000) required to be collected but where about of said
amount was not known as no record relating to Rs 450,000 was available on record to ascertain that
fair competition was held and bidding was made in fair and transparent manner.
 Pre-qualification meeting was held on 16.09.2020, a committee was constituted by Director
General instead of authority i.e (BOA) for evaluation of received proposal. Prequalification sheet
is not supported with relevant documentary evidences of successful bidder required for evaluation
criteria 1.e Detail profile , certificate for registration or incorporation, registration with FBR,
SECP , Documentary proof and detail of installed chairlifts, audited financial statements for last
two years and above, copies of MOU or other documents or partnership deed, litigation history in
which court decision against the applicant and undertaking of the applicant has never been
blacklisted/ defaulted.
 Screening sheet for technical evaluation was not supported by documentary evidences i.e
conceptual master plan, Environmental Impact Assessment (EIA capability) financial capability,
management capability. Record was not available on record.
820
report.
PDP No. 402 (2021-22)

28.4.21 Non-recovery of outstanding dues of the authority – Rs. 96.560 million
According to section 7 (1) of GDA ACT 2016“ Notwithstanding anything contained in any other
law for the time being in force, the authority may levy and collect a tax with the prior approval of
Government, however, the authority may subject to prior publication in the official Gazette may collect a
user charges or a fee or payment in respect of services or facilities extended or made available by the
authority to the public, including fee or charges on account of conservancy, maintenance of public area of
facilities within the Galiyat areas.
During audit of the director General Galiyat Development Authority for the Financial Year 2021-
22, it was observed that the authority did not realize arrears as well as the current dues of GDA which
accumulated to Rs. 96.56 million as evident from record of the GDA Taxation Department (Annexure-LI).
Non-recovery of various dues occurred due to weak financial and administrative controls.
report.
Audit recommends expediting the recovery.

PDP No. 403 (2021-22)
821
Chapter – 29
SCIENCE & TECHNOLOGY AND INFORMATION TECHNOLOGY

DEPARTMENT
Audit Profile of Science Technology & Information Technology Department:

(Rs. in million)
Total
S. No. Description Audited Audited FY Audited FY
Nos
2022-23 2022-23
1 Formations 1,498 -
2  SDA 349.514 N/A
(Excluding FAP)
3 5,279 N/A
etc under PAO
4 Foreign Aided Projects (FAP) 795 N/A
822
The Summarized position of actual expenditure 2022-23 against the total of grants/appropriation was as
follows:
29.1(C) Issues in Science Technology & Information Technology

Department
There were issues of contract awarding in the department. In some cases, the department failed to
operationalize / rent out the BPO ready spaces for revenue generation. The department could not submit
initial management replies during the exit meetings.

ST&IT department. This amount also includes recoveries of Rs. 37.905 million as pointed out by the audit.
Amount
(Rs. in million)
3 Irregularities
5 Others 59.076
823
Amount Non production of record
(Rs. in million)
embezzlement and
misappropriation
Irregularities
59.076
90.185
irregularities
Procurement related
irregularities
61.041
Commercial Banks
173.883

0
delivery issues
Others
29.3 Brief comments on the status of compliance with PACdirectives: -

S. No.
Year Department actionable points Compliance compliance compliance
19. 2001-02 Health 31 21 - 10
20. 2002-03 -do- 18 14 - 04
21. 2003-04 -do- 11 06 - 05
22. 2004-05 -do- 42 11 - 31
23. 2005-06 -do- 12 06 - 06
24. 2007-08 -do- 18 05 - 13
25. 2008-09 -do- 16 07 - 09
26. 2009-10 -do- 23 12 - 11
27. 2010-11 -do- 19 07 - 12
28. 2011-12 -do- 33 18 - 15
29. 2012-13 -do- 14 09 - 05
30. 2013-14 -do- 46 23 - 23
31. 2014-15 -do 27 14 - 13
32. 2015-16 -do- 39 12 - 27
33. 2016-17 -do- 52 13 - 39
824
825
29.4 Audit Paras
29.4.1 Non-fulfillment of the core functions under the Rules of Business
According to the Government of Khyber Pakhtunkhwa Rules of Business, 1985 Schedule-II; the main
functions of the Science & Technology and Information Technology Department are;
1) Launching of R&D Program and up-gradation of its infrastructure.
2) Restructuring of R&D Organizations.
3) To initiate Science & Information Technology Projects in the Province in Agriculture, Housing,
Industry, Health, Education, Forestry, Energy, Pharmaceuticals and small Cottage Industry
including pilot plant studies
4) To advise provincial Govt. Departments and other institutions on the introduction and usage of
Information Technology.
5) Coordination with public & private sector for promotion of IT.
6) Promotion of IT Education and Training.
7) Interfacing with National and International IT Markets and Industry.
Read with Part-A rule 5(2), the business of the Department shall be disposed off by or under the authority
of the Secretary. He/she shall be responsible to the Minister for the proper conduct of business and for
ensuring that the sanctioned policy of the Minister is duly executed.
During audit of the accounts of Secretary Science & Technology and Information Technology
Department Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that the department
lacked proper systems & procedures to record and document fulfillment of its various functions given in
the rules of business. For this purpose, the attached questionnaire was shared with the department to help
audit understand the level to which the department has attained its objectives (functions). However, the
department was unable to provide any reliable data and documents in this regard.
The province’s present IT and Research & Development scenario is indicative of the fact that the
department was unable to fulfill its various functions such as launching RD programs and restructuring
RD organizations, launching Science and IT projects in other departments, digitization processes and
paper-less environment etc. Similarly, no impact studies were performed for analysis of any IT or Science
projects if any initiated as per Rules of Business.
Audit held that the department was not performing according to the roles assigned to it in the rule of
business.
The lapse occurred due to improper management which resulted into non-performance of the core functions.
The department was requested vide letter dated 01.09.2023 followed by reminder letters dated 26.12.2023
and 01.01.2024 for holding DAC meeting. However, the DAC meeting was not convened till finalization
of this report.
826
Audit recommends to take appropriate action in the matter.
PDP No. 6 (2022-23)
29.4.2 Wasteful expenditure due to non-hiring of consultancy for impact analysis -

Rs. 41.730 million
According to PC-I of the project “Revamping and Rejuvenation ST & IT Department”; a consultancy shall
be hired to study the impact of the interventions and activities performed by the Directorate of Science and
Technology and KP IT Board in the last 10 years. Detail TORs of the consultant were approved in the PC-
I.
During audit of the accounts of Secretary Science & Technology and Information Technology Department
Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that the project record of
“Revamping and Rejuvenation of ST & IT Department” headed by the Chief Planning Officer that a sum
of Rs. 41,720,633/- was incurred on the project operations against the budgeted cost of Rs. 48,583,000/-.
However, an important activity of the project i.e. hiring of consultant to calculate the impact of the
interventions and activities carried out in last ten years by the Department was totally ignored and sidelined.
While the budget was incurred on procurement of machinery & equipment, developmental works of
renovation of offices, salaries of staff etc. which also included certain un-necessary activities.
Audit held the expenditure of Rs. 41,720,633/- incurred on this project as wasteful because due to non-
engaging of the consultant, the project failed to achieve its core PC-I objectives as listed below;
1. To know the objectives & outcomes of the completed projects in the last 10 years as envisaged in
the PC-I
2. An impact analysis report in terms of the improvement in performance of the department,
facilitation of Academia, Industry, Target area and group and general public
3. Study and report the planned and actual recurring cost of each project of the ST&IT sector
completed during the last 10 years and its cost benefit analysis
4. Study and report the planned and actual physical output of each project of the ST&IT sector and
planned and actual income of the completed projects during the last 10 years
5. Study the planned and actual cost per unit produced and market analysis of same product available
6. Track the beneficiaries of the project and report current status
7. Submission of PC-IV for actual objective achieved vs. targeted
8. Submit recommendations and comparative analysis of the regional and international best practices
The lapse occurred due to non-compliance of an important component of the project.
When pointed out in August, 2023, it was stated that the Project Director is on ex-Pakistan leave and detail
reply will be submitted his return from abroad.
of this report.
827
Audit recommends fixing responsibility on the management due to failure in hiring of consultant for this
very important component.
PDP No. 3 (2022-23)
29.4.3 Misuse of project vehicles - Rs. 8.810 million
According to PC-I of the project “Revamping and Rejuvenation of ST & IT Department” 03 vehicles were
purchased for the following officers/purpose;
Description Purpose/Allottee No Cost Rs. in

million
1800 CC car Honda model 2021 Head of Advisory Committee (Secretary ST 1 4.5255
& IT)
1300 CC car Toyota Yaris Gli model 2021 For planning officers 1 2.6865
1000 CC car Suzuki Alto AGS VXL For monitoring purpose 1 1.5980
model 2021
During audit of the accounts of Secretary Science & Technology and Information Technology Department
Khyber Pakhtunkhwa for the Financial Year 2022-23, it was observed that the project record of
“Revamping and Rejuvenation of ST & IT Department” headed by the Chief Planning Officer that the
project vehicles were miss-used and allotted to un-authorized person. The 1800 CC Honda car (model 2021)
was purchased for the Head of Advisory Committee (Secretary ST & IT), however, till date of audit
Advisory Cell was not established whose role was to establish linkages with industries, academia in
Science, Technology and IT Sector with Government to improve Digital Transformation and to develop
eco-system as outlined in the PC-I of the Project.
Similarly, the 1300 CC Toyota Yaris (model 2021) was purchased for the planning officers of the
department; however, it was retained by the Chief Planning Officer who was already allotted a corolla car
from the regular side. Moreover, a 1000 CC Suzuki Alto AGS (model 2021) was purchased for the
monitoring purpose whereas the vehicle was allotted to a BPS- 17 Planning Officer although BPS-17
officers are not entitled to retain official vehicle in the case of Planning Officer. Furthermore, monitoring
activities of the projects of the KP IT Board and Directorate of S&T could not been done.
The lapse occurred due to mis-use of project vehicles and violation of relevant rules.
When pointed out in August, 2023, it was stated that the Project Director is on ex-Pakistan leave and detail
reply will be submitted his return from abroad.
of this report.
Audit recommends fixing responsibility for the lapse.
PDP No. 4 (2022-23)

828
29.4.4 Loss to the public exchequer on account of renting of office - Rs. 8.487 million
According to Para 10 read with para 23 of GFR Vol-I, every public officer is expected to exercise the same
vigilance in respect of expenditure incurred from public moneys as person of ordinary prudence would
exercise in respect of expenditure of his own money. Public moneys should not be utilized for the benefit
of a particular person or section of community. Moreover, every government officer will be personally
responsible for any loss or fraud on his part or on the part of his subordinate.
During audit of the accounts of Directorate of Science & Technology and Information Technology for the
Financial Year 2022-23, it was observed that the earlier the rent agreement for office building was made @
Rs.434,760/- per months between the Deans Management Deans Trader Center and DOST on 01.07/2020.
The rent agreement was valid for the period of 36 months from July 2020 to Sept.2023. But on 31st March,
2021 the rent agreement was cancelled and another agreement was made with Muhammad Yousaf Khan
(lesser) by Dr. Khalid Khan (Ex-Director DOST) @ monthly rate of Rs. 700,000/- for bungalow No.20 old
Jamrud Road University Town for 5 years. Audit observed that cancelation of old rent agreement and
execution of new agreement on higher rate of (Rs.700,000-434,760= Rs. 265,240) put the public exchequer
to loss of Rs. 265,240 X 32 months= Rs.8,487,680/- for nothing.
Audit further observed that Deans Trader Center was located at Peshawar Cantt and was near to the
Secretariat, Accountant General Office and SBP Peshawar which not only affect the official business and
also consume higher energy cost (Fuel). During Audit it was noticed that again the DOST is shifting to
Peshawar Cantt due to several issues in the existing rented building in university town which is merely
wastage of government resources.
The lapse occurred due to vested interest of the then management which resulted into loss to the public
exchequer.
When reported to the management, it was stated that detailed reply will be furnished to DAC.
Audit recommends investigating the matter and fixing responsibility on the Ex-Director Dr. Khalid Khan.
PDP No. 146 (2022-23)
29.4.5 Irregular awarding of consultancy contract to the UET - Rs. 48.545 million
According to KPPRA Rules 3-(2)(c), the direct sourcing to a government organization for provision of
works, goods or services under a cost plus or fixed contract provided that the Public Sector Organization
shall not involve a private sector enterprise as a partner or in the form of a joint venture or a sub-contractor.
The government organizations shall be totally government owned and controlled or semi-autonomous and
autonomous agencies under the administrative control of Federal Government or Provincial Government
829
According to clause 3 of the KPPRA Act 2012, All public procurement shall be conducted in such a manner
as provided in this Act, rules and regulations made under this Act and shall promote the principles of
transparency, economy, value for money, accountability and swift grievance handling.
During audit of the accounts of Directorate of Science & Technology and Information Technology – the
ADP Scheme Building Provincial STI System for the Financial Year 2022-23, it was observed that the
consultancy contract for Master Planning & Designing of KP ST&IT Museum at Mardan was directly
awarded to the UET Peshawar under KPPRA Rules 3-(2)(c) without any competition for Rs. 48.545 million.
The cheque for advance payment of Rs. 12,136,000 was made on the name of Dean Faculty of CAN Engg:
instead of university Main treasury account.
Audit raised the following observation to it;

1. The Technical Proposal and Financial Proposal submitted by the UET was in association with
Architect Firms (1618 Architects Address: 761 Wilmslow Rd, Didsbury, Manchester M20 6RN,
United Kingdom) and independent International Consultant. This clearly means that UET engaged
private sector architects who are employee of these international consultant firms and also some of
them are foreign national for execution of the consultancy contract which is violation of the KPPRA
Rules 3-(2)(c). Audit confirmed that 65% of the revenue was taken away by the Dean CAN
Engineering who further distributed the same with all the stake holders (private architects and UET
employees) and the government money was gone into private hands.
2. NOCs from the employers were not obtained by these Architects working in international and local
organization to work in association with UET Peshawar for consultancy contracts.
3. The UET failed in providing payment detail of 65% share to the professors and private consultants
from the payment received, whether the payment was made in foreign currency to the international
architects working in association with the UET or otherwise.
4. There are a lot of other Govt. Sector Engineering Sciences Universities like
(Ghulam Ishaq Khan Institute of Engineering Sciences) existed then why competition was not held
to make the process more transparent and have more economical rates.
5. UET Peshawar is an Academia and could not be in a position to perform consultancy without
involvement of the private sector architects. Hence direct award of consultancy contract under
KPPRA Rules 3-(2)(c) is not applicable in the instant case.
6. KPPRA Sale tax on services @ 5 % was not deducted from the advance payment made for Rs.
12,136,000 x 5%= 606,800/-
7. Performance guarantee was not obtained from the UET.
8. The financial proposal quoted by the UET was not supported with detailed breakdown of the HR
and administration cost (remuneration of the staff, perdiem, housing and transportation services
and equipment vehicle cost). There was a provision for 50.000 million and the UET Peshawar
submitted bid costing Rs. 48.545 million.
9. The consultancy was quoted for Master Planning & Designing of KP ST&IT Museum, however,
supervision at site, checking and recommendation of bill of quantity was not covered in the
agreement or in the TORs.
10. The stamp duty for agreement was issued on the name of a private personAmjrRaza instead of
UET.
830
The lapse occurred due to violation of KPPRA rules (3-2-C) and favoring a specific bidder which resulted
into un-economical expenditure.
Audit recommends inquiry into the matter recovery of the advance payment and re-tendering of the
consultancy contract to achieve economical rates.
PDP No. 147 (2022-23)
831
29.4.6 Illegal retention of official vehicle - Rs.3.00 million
During audit of the accounts of Directorate of Science & Technology and Information Technology for the
Financial Year 2022-23, it was observed that Assistant Director (E&A) of the DG Science & Technology
and IT Department vide Letter No. Dirtt/S&T/KP/PF /9047 dated 07.08.2022 directed the Ex-Director Dr.
Khalid Khan that you have been using the official vehicle Toyota Corolla AB 1898 illegally as the said
vehicle has been allotted to the DG S&T on 28.11.2022 and you were earlier communicated vide letter of
even no. dated 28.11.2022 for returning of the said vehicle to office within 02 days as you remain absent
from duties since 06.08.2021. He was further directed to deposit a sum of Rs. 3,000,000/- vide treasury
challan on account of monthly rent for the illegal use of the govt. the car @ Rs. 125000 as per market rate
On further inquiry, the DG ST&IT time and again reported Dr. Khalid Khan to the Administrative
Department that the incumbent is neither regularly attending his office nor taking interest in his official
responsibilities. An inquiry was initiated by the Administrative Department for his willful absence since
06.08.2021 till date of audit i.e. November 2023, but no disciplinary action could have been initiated against
the officer under the E&D rules, 2011 and during the period of his absence he has regularly drawn his
salaries as well.
The non-initiating of action under E&D rules during the period of absence was due to mutual connivance
of the then management for favoring him to safely retire from service.
The lapse occurred due to weak internal control over the official business of the DG ST&IT.
Audit recommends investigating the matter besides recovery of rent of motor car for illegal use and recovery
of pay and allowances for the absent period and taking disciplinary action against the responsible for not
initiating action under E&D rules well on time.
PDP No. 149 (2022-23)
29.4.7 Revenue loss due to non-renting of BPO ready space for operators - Rs.15.699 million
According to Para 23 of GFR Vol-I, every government officer will be personally responsible for any loss
or fraud on his part or on the part of his subordinate.
832
According to Para 26 of GFR Vol-I, it is the duty of the departmental controlling officer to see that all sums
During audit of the accounts of Khyber Pakhtunkhwa Information Technology Board Peshawar for the
Financial Year 2022-23, it was observed that 550 BPO (Business process outsourcing) seats ready space
facilities were established in a project “Digital Jobs in KP” financed by MTDF. Each seat shall be offered
on monthly rent of 55 $ to the BPOs/online operated firms. The project has been closed on 30.06.2022 and
the now the expenditure were started from one liner budget of the MD KPITB. 350 seats (BPO) were
allocated to Peshawar office and 200 to Abbottabad office. Out of 350 BPO seats in Peshawar only 146 to
151 seats were rented out by the BPO operators which resulted into loss of revenue amounting to
Rs.15,699,733/- Audit observed that there is full fledge marketing department who was primarily
responsible for renting of these 350 ready space to national and international companies but no stern efforts
were made and revenue loss was observed. Moreover, this also resulted into less creation of job and revenue
loss for government.
Description Revenue
Revenue of 350 BPO seats on optimum level 29,551,044
Revenue generated for 146 to 151 seats as per actual 13,851,311
Revenue loss 15,699,733
The lapse occurred due to negligence on the part of the management.
When reported to the management it was stated that detail reply will be furnished to DAC.
The department was requested vide letter dated 05.01.2024 for holding DAC meeting.However, the DAC
The matter needs to be inquired as to why the well-established spaces having the entire infrastructure were
not rented out to companies.
PDP No. 200 (2022-23)
29.4.8 Wasteful expenditure on the development & renovation of BPO (ready facility) Abbottabad
Non-realization of revenue from BPO ready space - Rs. 16.866 million
According to PC-I of the project “Digital Jobs in KP” financed MTDF; under the component (BPO Ready
Space) the KPITB will finance infrastructure and services with the objective of (i) attracting investment
and growth in the BPO sector (ii) promoting job opportunities through outsourced work. KPITB will
finance infrastructure and services with the objective of attracting investment and growth in the BPO Sector,
promoting job opportunities thorough outsourced work. KPITB will finance goods and services designed
to prepare BPO ready space for use by international or national operators. The propose facilities will have
all required technical and physical infrastructure for BPO operations; typically, this shall include the
following.
1. Physical space
833
2. Furniture and fixture
3. Heating/cooling
4. Necessary IT infrastructure
5. Internet connectivity
6. Utilities
7. Power back up
8. Any other standard industry requirement.
Financial Year 2022-23, it was observed that a sum of Rs.95,083,671/- was incurred on the capital nature
expenditure (LEDs, 211 Laptops, workstation, office chair, conference table, Diesel Generator, ACS,
electrification cost, renovation cost etc) for establishment of 200 BPOS (ready space facility) in Abbottabad
in the project “Digital Jobs in KP” financed by MTDF. The project was closed on 30.6.2022 and now the
MD KPITB incurring expenditure for rent of building, pay and allowances of staff, utilities charges on
revenue nature expenditure from the budget of KPITB. The monthly rent of the building is Rs.525,000/-
but the ready space of 200 seats was neither rented to national or international companies during the project
period nor in the current year. The non renting of ready space of 200 seats besides of incurring of
expenditure on the revenue and capital nature expenditure will render the operations non sustainable.
It was further noticed that these 200 BPO seats may earn revenue of Rs.16,886,311/- based on M/S Sybrid
Private actual revenue generated. Audit observed that there is a full fledge marketing department who was
primarily responsible for renting these BPO ready spaces. However, the marketing department has not been
able to properly and effectively market these spaces resulting in delays in job creation and leading the
operations to being non sustainable.
The lapse occurred due to weak internal control over the affairs of the BPO facility at Abbottabad.
Audit recommends that stern efforts be made by the management for renting it to BPO besides disciplinary
action be taken against the marketing department and to take all necessary measures to ensure that the
spaces are offered to BPO operators so that the operations are made self-sustainable and further revenue
loss is avoided.
PDP No. 201 (2022-23)
29.4.9 Loss to government due to non-recovery of service charges - Rs.5.931 million
According to Para 23 of GFR Vol-I, every government officer will be personally responsible for any loss
or fraud on his part or on the part of his subordinate.
834
According to Para 26 of GFR Vol-I, it is the duty of the departmental controlling officer to see that all sums
Financial Year 2022-23, it was observed that 55 seat (ready space facility) were rented to M/S SMSAMI
since Oct, 2020 @ 55 USD till Sept, 2021 and onward as per actual cost (physical space, furniture and
fixture, IT infrastructure, internet connectivity, utilities, power back up). The M/S SAMSAMI did not
deposit its monthly services charges since January, 2021 till December, 2021 for Rs.5,635,511/-. Another
company M/S Touchstone Communication also failed in depositing its monthly services as per invoice
submitted for Rs. 296,104/-.
Audit held that recovery of the principal amount along with the markup of 20% be made from these
companies amounting to Rs.1,186,323/- (Rs.5,931,615 X 20%).
The lapse occurred due to negligence and giving undue favor to the companies on the cost of the public
funds.
Audit recommends immediate recovery of the outstanding rent along with markup of 20% per annum from
the firm concerned.
PDP No. 203 (2022-23)
29.4.10 Wasteful expenditure on account of Consultancy and Salaries -Rs.10.901 million
During audit of the accounts of Khyber Pakhtunkhwa Information Technology Board Peshawar - ADP
Scheme Pilot Citizen Facilitation Center Peshawar for the Financial Year 2022-23, it was observed that a
sum of Rs.10,901,470/- was incurred on the payment of salaries, developmental cost of application
(consultant) and miscellaneous expenditure as detailed below:
Breakup of Expenditure of Pilot CFC, Peshawar
S.No. Head of Account Amount (Rs.)
1 Human Resource Cost 5,798,581
2 IT Equipment Cost 350,000
3 Development cost of Application 4,507,272
4 Miscellaneous Cost 177,680
5 Advertisement, Publicity & Awareness 40,169
835
Total 10,901,470
The project was started in November, 2021 and till date i.e. 30 th June, 2023 a sum of Rs.22, 095,846/- was
incurred on the project different activities. This project was the part of the Government Digital Policy 2018-
23 initiatives. The consultancy contract for the development of CFC Software, acceptability testing and
deployment to provide nineteen (19) services of Six Govt. offices (i.e. Local Govt. & Rural Development
Department, Revenue & Estate Dept., Excise, Taxation & Narcotics Control Dept., Home & Trial Affairs
Dept., Respective DC Offices) to the citizens of KP was awarded to National Engineering Services of
Pakistan (NESPAK) for Rs.26,513,370/- with a contract period of twenty (20) months from the date of
commencement (Eight (08) months System designing, development and deployment time and twelve (12)
months post deployment support). The consultancy contract was awarded on 11 th March, 2022 and ended
on 10th November, 2023 but during the period no software for end-to-end process automation, digitization,
and offering of the 19 services through a single integrated platform (web, mobile based, and through citizen
facilitation centers) could be developed.
Audit observed that public money was wasted on the hiring of nine (09) numbers of officers and officials
for which a sum of Rs.12,436,994/- incurred on salaries and consultant (NESPAK) have been paid for
Rs.6,362,07/- till date i.e. 30th June, 2023 but neither software was developed nor public was offered the
mentioned services during the project life.
Non development of software put public exchequer to extra payment of salaries in extension period of the
project.
When reported to the management, it was stated that detail reply will be furnished later on to DAC.
The lapse occurred due to negligence laxity on the part of management.
Audit recommends investigating the matter and taking disciplinary action against the responsible(s).
PDP No. 207 (2022-23)
29.4.11 Financial loss due to purchase on higher rates - Rs. 2.749 million
According to Para 23 of GFR Vol-I, “Every Government officer should realize fully and clearly that he
would be held personally responsible for any loss sustained by Government through fraud or negligence on
his part and that he will also be held personally responsible for any loss arising from fraud or negligence
on the part of any other Government officer to the extent to which it may be shown that he contributed to
the loss by his own action or negligence”.
During audit of the accounts of Khyber Pakhtunkhwa Information Technology Board Peshawar - Merged
Area Digital Connect for the Financial Year 2020-21 & 2021-22, it was noticed that financial loss of
Rs.2,749,101/- was made due to purchase of IT equipment at higher rate. The verification of record revealed
836
that lowest bid of Rs.7,029,830, offered by M/S Panasonic Office Product, was not accepted and purchases
were made at higher rate of Rs.9,778,931, offered by M/S Tech Art Pvt. Ltd., which resulted into financial
loss to the public exchequer.
The lowest financial offer was not accepted on the plea that:
1. The bidder was not registered with the Security & Exchange Commission of Pakistan, but this
condition was actually not mentioned in the evaluation criteria of the bidding documents.
2. Undertaking was not attached with the bid, but the undertaking on stamp paper was actually
attached with the firm’s bid.
Further, the IT equipment offered by the lowest bidder were found as per specification, so rejection of the
lowest bid was, therefore, un-justified. The Public exchequer was put into financial loss of Rs.2,749,101.
The irregularity was made due to weak internal controls.
When pointed out in April 2023l, it was stated that reply will be given after consulting the record.
Audit recommends inquiry into the matter.

PDP No. 1046 (2021-22)
29.4.12 Blockade of public money - Rs. 9.778 million
According to Para-145 of GFR Vo-I, Purchases must be made in the most economical manner in accordance
with the definite requirements of the public service. Stores should not be purchased in small quantities.
Periodical indents should be prepared and as many articles as possible obtained by means of such indents.
At the same time, care should be taken not to purchase stores much in advance of actual requirements, if
such purchase is likely to prove unprofitable to Government.
During audit of the accounts of Khyber Pakhtunkhwa Information Technology Board Peshawar - Merged
Area Digital Connect for the Financial Year 2020-21 & 2021-22, it was noticed that expenditure of Rs.9.778
million was incurred over the IT equipment for the seven (07) digital connects across the newly merged
districts. An amount of Rs.9,778,931 was paid to M/S Tech Art vide cheque No.2401166 dated 30.06.2022,
on the purchase of IT equipment (21 Smart PC, 11 Laptop, 7 printers and 7 copiers/printers), which the
purchases were made for the seven digital connects Verification of record revealed that:
1. The digital connects were not established/functional so far, the IT equipment was lying in store, so
purchases were made much in advance, which was not justified, and tantamount to blockade of
public money.
2. The terms and conditions of the financial bid revealed that the items were covered with one year
warranty, where the warranty period would get expired after two months. But the equipment was
still lying in store till the date of audit i.e. 21.03.2023.
3. The equipment was received on 15.07.2022, however, Payment was made on 30.06.2022 in
advance although there was no provision in PC-I.
4. 21nossmart PCs were not recorded on the stock register
837
The irregularity was due to ill management of the project implementation.
Audit recommends that the matter may be inquired.
PDP No. 1047 (2021-22)
838
29.4.13 Ineffective implementation of the project early age programming -
Rs. 25.987 million
According to page 3 of the PC-I, objectives of the project “Early Age Programming & IT Essentials of
Govt. Schools of Merged Districts of Khyber Pakhtunkhwa” were:
1. To establish eight (08) IT labs in Govt. Schools of two merged districts (Khyber &Orakzai) of
Khyber Pakhtunkhwa
2. To introduce computer programming in eight (08) Govt. Schools (4 boys & 4 girls) across two
newly merged districts (Khyber &Orakzai) of Khyber Pakhtunkhwa
3. Capacity Building of existing IT Teachers of eight (08) Govt. Schools of two newly merged
districts (Khyber &Orakzai) of Khyber Pakhtunkhwa
4. Training of 1000 students of class IV to class VIII of eight (08) Govt. Schools newly merged
districts (Khyber &Orakzai) of Khyber Pakhtunkhwa on block-based computer programming.
5. To raise awareness about early age programming and IT essentials.
During audit of the accounts of Khyber Pakhtunkhwa Information Technology Board Peshawar - Early Age
Programming & IT Essentials for the Children of Government Schools of Merged Districts for the Financial
Year 2020-21 & 2021-22, it was observed that expenditure of Rs.32.358 million was incurred over
implementation of the project out of which Rs. 25.987 million was spent on the establishment of eight (08)
computer labs. Audit observed that objectives set in the PC-I were not effectively achieved. On visit of the
schools in district Khyber, audit observed the following:
1. Computer lab at Govt. Girls High School (GGHS) Gulabad, district Khyber was established but it
was unutilized for the last one year, as there was no IT teacher posted in the school, similarly, IT
teacher was also not posted in GHS Jan Khan Killi Bara, district Khyber.
2. Similarly, IT teacher was also not posted in GGHS Mawaz kali Bara, district Khyber. Computer
lab was also non-functional. Power batteries were damaged. So, the whole lab out of order.
3. No evidence/efforts for capacity building of existing IT Teachers of eight (08) Govt. Schools of
two newly merged district (Khyber &Orakzai) of Khyber Pakhtunkhwa was found on record.
4. Training of students of girls schools in district Orakzai was not carried out and IT teacher was also
not posted, so objectives of the IT lab could not be achieved.
5. Detailed record/progress reports, about training of students, were not provided to the audit team,
so the actual number of students trained could not be verified.
6. There were two IT labs at GHS Ghiljo, one established by the KP IT Board, and another by the
department of Elementary & Secondary Education, so there was duplication of resources incurred
in the same station.
Objectives of the project could not be effectively achieved due to poor implementation of the project.
Audit recommends that the matter may be inquired responsibility be fixed the person at fault.
839
PDP No. 1040 (2021-22)
29.4.14 Doubtful selection of consultant costing - Rs. 9.747 million
According to clause 24 of the KPPRA, the procuring entity shall not hire a consultant for an assignment in
which there is possibility of conflict of interest. If a consultant has been engaged by the procuring entity to
provide goods or works for a project, it shall be disqualified from providing consulting services for the
same project. Similarly, consultant should not be hired for any assignment which by its nature, may be in
conflict with another assignment of the consultant.
During audit of the accounts of Khyber Pakhtunkhwa Information Technology Board Peshawar for
the Financial Years 2020-21 & 2021-22, it was observed that contract for consultancy services for
employable digital skills training for the youth of merged areas of Khyber Pakhtunkhwa was awarded to
M/S Tech Valley JV M/S DEMO JV M/S Data Point for the provision of consultancy services at the cost
of Rs. 9,747,630/-.
Further scrutiny of the contract agreement revealed that the consultancy firm, which shown their
team composition of staff at Attachment–C of the Form Tech-05, for executing the activities also included
the name of Mr. Dr. Shahbaz Khan at S. No. 1, as a Project Director, who remained the Managing Director
of the KP IT Board from the period 16 July 2016 to 16 July 2020.
Audit held that selection of the consultancy firm which is being managed by the ex- MD of the KP
IT Board is a clear conflict of interest and violation of the rules mentioned above which needs justification.
The lapse occurred due to non-observance rules and regulations.
The matter is reported for investigation and appropriate action under the rules.
PDP No. 1041 (2021-22)
29.4.15 Non/Less deduction of taxes - Rs. 2.972 million
According to Government of Khyber Pakhtunkhwa, Revenue Authority (KPRA), Notification

No.KPRA/Withholding –Regulation/DC/2020/2105 dated 06-10-2020, it is the responsibility of the
Government Department to withhold 100% sales tax on service from the payment made to the service
providers, irrespective of the fact that whether such service provider is registered with KPRA or not in
respect of service mentioned in the second schedule to KP Finance Act, 2013 and deposit it in the
Government Account under the Head B-02386 in terms of para 5 of the aforesaid regulation.
As per Government rules, stamp duty was required to be deducted @ of 1% and DPR Fund @ Rs.2000 per
million from the payment made to contractors/suppliers.
840
According to the Financial Proposal of M/S CNS, the bid amount was inclusive of all taxes.
During the audit of the accounts of ICT Infrastructure Khyber Pakhtunkhwa Peshawar for the Financial
Year 2021-22, it was observed that an amount of Rs.13.876 million Was paid to M/S CNS, Package-III &
IV, on account of annual maintenance of the data Centre. However, the KPRA tax on services was either
not deducted or it was less deducted. Detail is below:
S. No. Cheque No Date Amount Paid Tax due Tax ded. Diff.
1 2320245 03.03.2022 4,425,862 663879 - 663879
2 2253679 02.11.2011 6,110,138 916520 159395 757125
3 239934 22.06.2022 3,340,800 501120 100224 400896
Total 13,876,800 2,081,519 259,619 1,821,900
Similarly, an amount of Rs. 107.864 million was paid to the contractor on account of supply of various
items, however, stamp duty @ of 1% and DPR Fund @ of Rs.2000 per million amounting to Rs. 1,078,647/-
and Rs. 72,000/- respectively was not deducted from the bill. This resulted into loss to the public exchequer.
Detail is below:
S.N. Name of Date Cheque No. Gross Stamp DPR
Supplier Amount Duty Fund
1 Premier 22.06.2022 239934 27,962,806 279628 20000
System
2 -do- 23.12.2021 2287178 40,674,000 406740 8000
3 03.03.2022 2320244 13,058,000 130580 0
4 2252971 - Premier 12,293,277 122932 24000
5 2320245 03.03.2022 CNS Engineering 4,425,862 44258 8000
6 2253679 02.11.2021 CNS Engineering 6,110,138 61101 12000
7 239934 22.06.2022 Wide Band 3,340,800 33408 0
Total 107,864,883 1,078,647 72,000
The KPRA tax on services @ of 15% amounting to Rs.1821900/-, stamp duty @ 1% for Rs.1078647/- and
DPR @ 2000/- per million amounting to Rs.72000 /- as required to be deducted from the concerned
contractors bill. Non/less deduction of the tax on services resulted into loss of revenue to the public
exchequer.
When pointed out in March, 2023, it was replied that detailed reply will be given after consulting of record.
Audit recommends for recovery.
PDP No. 648 & 649 (2021-22)
29.4.16 Loss to public exchequer due to irregular appointment of Managing Director - Rs.19.285
million
841
According to para 1 of the advertisement dated 24-06-2020 for the post of Managing Director, candidate
must be a person of eminence in information technology with at least 10 years of post-qualification
experience including 5 years in senior management position with medium or large public or private
organization or entrepreneurial setups in IT showing career progression in senior corporate management
and leadership with focus on governance projects planning and execution, people and strategic
management.
According to para 6 of the advertisement dated 24-06-2022 for the post of Managing Director, candidate
must have graduate degree (16 years of education including 4 years’ university education, throughout first
division) in IT, computer sciences, or related engineering discipline from reputed and accredited institution.
According to para (8) (e) of 6 of KPITB Act 2011, the search and scrutiny committee for the appointment
of MD shall comprise of five members who shall be members of the board.
During performance audit of the accounts of Khyber Pakhtunkhwa Information Technology Board
Peshawar for the Financial Years 2016-17 to 2020-21, it was observed that Managing Director was
appointed with pay package of Rs. 1,015,000/- per month w.e.f from 13-10-2020 and Rs. 19,285,000/ was
paid till the date of audit i.e. May 23, 2022.
The appointment was held illegal because:

 The member at serial No.03 of search and scrutiny committee constituted for the appointment of
Managing Director i.e. Secretary P&D was not the member of board which was mandatory by the
law. The same was clarified by Law department vide letter No. SO(OP-I)/LD/15-I/2012-Vol-
XXI/5120 dated 31-08-2020.
 The membership of the board member of search and scrutiny committee at serial 04 Dr. Sadaqat
Jan, Dean of Faculty of Engineering, UET Mardan had expired on 17 June 2020 and was not
renewed whereas the committee had been constituted on 13-08-2020.
 As per evaluation sheet, the selected candidate is ineligible as the selected candidate has done Ph.
D in Electrical Engineering from Brunel University London, UK and B.Sc Electrical Engineering
from UET Peshawar, whereas required qualification for the said post was 16 years of education
including 4 years’ university education-throughout first division- in IT, computer sciences, or
related engineering discipline. According to HEC, degree in Electrical Engineering is not
equivalent to degree in IT or Computer Science.
 As per evaluation sheet, the selected candidate did not have the relevant experience while his name
put into the list of the applicants, fulfilling the mandatory criteria of experience for the post.
 Educational and experience certificates were requested in written as well as verbal however, the
same was not provided to audit for verification.
The lapse occurred due to violation of KPITB Act.
In the DAC meeting held on 28.12.2022, the Para was marked for verification of record. However, no
progress was intimated to Audit till finalization of this report
Audit recommends implementation of the DAC directives.
842
PDP No. 74 (2021-22)
29.4.17 Loss to public exchequer due to illegal appointments of Directors - Rs. 59.090 million
According to para 1 of advertisement for the post of Director Finance & Accounts dated 04-06-2020,
minimum qualification required was at least CA/ACMA/Foreign Equivalent Qualification or Degree in
Accounts or Finance or Business Administration with specialization in Accounts or Finance or any other
relevant qualification (at least 16 years of education) from recognize university with at least 10 years of
overall experience with at least 05 years post-CA/ACMA/Foreign Equivalent Qualification in a leading
public or private sector organization. OR at least 10 years, progressively relevant post qualification
experience in a leading public or private sector organization for degree holder in Accounts or Finance or
Business Administration with specialization in Accounts or Finance.
According to para 3 of advertisement for the post of Director Legal Affairs dated 04-06-2020, the minimum
qualification required was at least LLB from a university/Institution recognize by the HEC with 05 years’
relevant experience, Professional Certification as appropriate & member of Khyber Pakhtunkhwa bar
council.
During Performance audit of the Khyber Pakhtunkhwa Information Technology Board for the Financial
Years 2016-17 to 2020-21, it was observed that the following Directors were appointed on contract basis
by the KPITB as per details given below:
Amount in Rs.
S. No. Name Designation Period Salary Total
P.M
1 M. Munaim Contract employee, as Director Accounts & Finance 10 372,230 372,2300
w.e.f12.01.2017
Regular employee, as Director Accounts & Finance 54 440,000 23,760,000
2 M.Asad Contract employee, as Legal Adviser w.e.f 03.06.2014 41 207,235 8,496,635
Regular as Director Legal Affairsw.e.fNovember 2017Till 54 428,000 23,112,000
date
Total 59,090,935
Audit observed the following deficiencies:

 The Director Finance and Accounts was initially appointed as contingent staff on 12-01-2017
and from 01-11-2017 the service was regularized at the monthly salary of Rs. 440,000/- without
any advertisement and proper procedure for initial recruitment. The officer was awarded 20
marks out of 20 for the qualification of CA/ACMA or equivalent foreign degree of 16 years’
regular qualification, who obtained the ACCA degree in April 2012 and last date of submission
of Job application was 22/12/2016. In this case, the candidate lacked the required experience
of 10 years overall and 05 years post CA/ACMA, making the candidate ineligible for the said
post. Furthermore, there is duplication of experience period mentioned by the officer and
supporting experience certificate from ex employer i.e. NW Hospital. The CV transpired that
the officer worked as “Finance Manager” from June, 2014 to 22/01/2016 while certificate
reflects Senior Manager Finance and Administration.
 Similarly, the Director Legal Affairs was regularized from 01-11-2017 at the monthly salary
of Rs. 428,000/- without any advertisement and adopting proper procedure for initial
recruitment.
843
 In interview of Legal Adviser (nomenclature change to “Director Legal Affaires” Notification
No.2278-82 dated June 04,2020), despite the fact that the candidate had obtained the Secondary
School Certificate (SSC) with grade “C” third class, the recruitment committee gave him 10
marks instead of 08 which is in violation of the criteria. Similarly, Higher Secondary School
Certificate (HSC) with grade “D” for which he was entitled for 08 marks as per criteria instead
of 10 marks. Moreover, there is no evidence available for 5 years’ experience in his personal
file.
 The relevant educational documents and experience certificates were not verified from the
organization concerned as required under the rules.
 The posts of Director Accounts & Finance and Director Legal Affairs were not approved from
the board.
 The officers were selected in hurry, setting aside all the required norms and rules just to favor
the blue eyed.
Audit, therefore, held that the process of short listing and selection was not transparent and resultantly merit
had been compromised.
In the DAC meeting held on 28.12.2022, the Para was marked for verification of record within 15 days.
Audit recommends implementation of the DAC directives.
PDP No. 76 (2021-22)
844
Chapter – 30
TOURISM AND CULTURE DEPARTMENT
The Sports, Tourism, Archaeology, Museum, Culture & Youth Affairs Department is mandated to
administer the operations and development of the following. Providing state of the art sports facilities Youth
Development Promotion and development of culture Preservation and conservation of archaeological sites
Tourism Sector enablement and tourism Value Chains to attract national and international tourists.
of:
 Tourism.
 Archaeology.
o Excavation.
o Exploration/Survey.
o Conservation, restoration and rehabilitation.
845
 Museums.
 Culture
 Youth Affairs.
 Service matters except those entrusted to Establishment and Administration Department.
Audit Profile of Tourism Department: (Rs. in million)

Revenue/Receipts
S. Total Expenditure Audited FY 2022-
Description Audited
No. Nos Audited FY 2022-23 23
1 Formations 11 02 2,845 0
(Excluding FAP)
3 Authorities/Autonomous bodies etc under PAO 01 01 - N/A
4 Foreign Aided Projects (FAP) 01 01 - N/A
was as follows:
Non-Development:
(Amount in Rs.)
Grant # and
Grant Original Supplementary Re- Final Total Actual Excess /
Name of Surrender
Type Grant Grant appropriation Grant Expenditure (Savings)
Department
38-Sports,
Culture, Tourism NC21 1,932,155,000 2420 714,265,597 714,712,755 447,158
- 1,217,891,823
and Museum
61- Sports,
Culture, Tourism NC21 36,384,000 0 -1,857,782 15,971,001 18,555,217 18,555,217 0
and Museum
Total 1,968,539,000 2,420 -1,857,782 1,233,862,824 732,820,814 733,267,972 447,158
846
847
Development:
(Amount in Rs.)
Grant # and
Grant Original Supplementary Re- Total Actual Excess /
Department
50-Sports NC22 5,113,301,000 0 -528,575,000 3,594,678,914 990,047,086 987,108,237 -2938849
50-Sports NC12 6,422,818,000 0 124,516,000 4,983,930,551 1,563,403,449 1,563,403,449 0
Total 11,536,119,000 0 -404,059,000 8,578,609,465 2,553,450,535 2,550,511,686 -2,938,849
848
1,800,000,000
1,600,000,000
1,400,000,000
1,200,000,000
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
50-Sports 50-Sports
-200,000,000
800,000,000
700,000,000
600,000,000
Amount in Rs.
500,000,000
400,000,000
300,000,000
200,000,000
100,000,000
0
38-Sports, Culture, Tourism and Museum 61- Sports, Culture, Tourism and Museum
849
(Rs. in million)
Total Actual
Expenditure
732.82 733.27 0.447158 0.06%
Non-Development
2,553.45 2,550.51 -2.938849 -0.12%
Development
3,286.27 3,283.78 -2.49 -0.08%
Total
3,000.00
2,500.00
2,000.00
Amount in Rs.
1,500.00
1,000.00
500.00
0.00
-500.00
30.1 (C) Issues in the Culture & Tourism Department
During audit of the Tourism Authority Khyber Pakhtunkhwa, it was observed that staff of the
Tourism Corporation was irregulary absorbed in the KP Tourism Authority. Millions of assets were
procured without any procurement plan. More than 600 million of budget was available in different ADP
schemes but were not surrendered to the Government. Assets and liabilities were not properly transferred
to the tourism Authority resulting in mis-appropriation of millions of funds. Investment of the idle funds
was also delayed resulting in millions of loss to government. There were no details of the head-wise figures
of the departmental own receipts collected by the department.
audit of Tourism, Sports and Culture Department. This amount also includes recoveries of Rs. 43.271
million as pointed out by the audit Summary of the audit observations classified by nature is as under:
850
Amount
S. No. Classification (Rs. in million)
3 Irregularities -
5 Others 4.294
Amount
(Rs. in million)

embezzlement and
4.294
misappropriation
0
Irregularities
167.924

360.985

0

Commercial Banks
851
30.3 Brief comments on the status of compliance with PAC directives: -
Total No. of
S. No. actionable
points
1 2001-02 Sports & Tourism 14 14 - -
2 2002-03 -do- 12 11 - 01
3 2003-04 -do- 06 06 - -
4 2004-05 -do- 03 01 - 02
5 2005-06 -do- 04 03 - 01
6 2008-09 -do- 14 05 - 09
7 2009-10 -do- 32 09 - 23
8 2010-11 -do- 25 08 - 17
9 2011-12 -do- 20 08 - 12
10 2012-13 -do- 08 07 - 01
11 2013-14 -do- 12 06 - 06
12 2014-15 -do- - - - -
13 2015-16 -do- - - - -
14 2016-17 -do- 8 6 - 2
30.4 Audit Paras
30.4.1 Unjustified expenditure on account of fabrication of 4X4 firefighting vehicles –

Rs. 31.553 million
According to Section V, clause 5.59 of the World Bank Procurement Regulations for IPF
Borrowers, lack of competition shall not be determined solely on the basis of the number of
Bidders/Proposers. Even when only one Bid/Proposal is submitted, the process may be considered valid,
if:
a. The procurement was satisfactorily advertised;
b. The qualification criteria were not unduly restrictive; and
c. Prices are reasonable in comparison to market values.
(KITE) – DoT Component for the Financial Year 2022-23, it was observed that an amount of Rs.
57,495,000/- was paid to M/S Ahmad Madix Lahore on account of purchase of Prototype 4x4 Fire Fighting
Vehicles at the rate of Rs. 11,499,000/- per unit which included the unit price of vehicle amounting to Rs.
5,188,484and Rs. 6,310,616 for locally fabricating of fire fighting vehicle.
Further scrutiny of record revealed that the selection of firm was made on single source bid wherein
two firms formed joint venture i.e. M/S Toyota Frontier Motors and M/S Ahmed Medix for provision and
fabrication of 4x4 firefighting vehicles. As the fabrication cost of the vehicle exceeded more than 100% of
852
the original cost of the vehicle, therefore, Audit held that the management failed to consider the price
reasonability in comparison to market values so that to safeguard the interest of the project’s fund.
Moreover, the project management also made an advance payment of Rs. 57,495,000/- to M/S
Indus Motors for which neither any provision in the contract agreement existed nor in the bid offered by
the supplier.
The lapse occurred due to non-observance of the rules and regulations which resulted in unjustified
expenditure.
When pointed out in October 2023, the project management stated that detailed reply will be
submitted at DAC forum.
PDP No. 10 (2022-23)
30.4.2 Wasteful expenditure on account of purchase of heavy vehicles Rs. 136.374 million
According to para 10(i) of GFR Vol-I, every public officer incurring expenditure from public fund
According to objectives of the PC-I, the proposed development objective of KITE project is to open
up new tourist destinations and areas, improve the provincial infrastructure, enhance tourism assets, and
strengthen institutional capacity in support of sustainable tourism development in KP.
(KITE) – DoT Component for the Financial Year 2022-23, it was observed that a sum of Rs. 136,374,671/-
was paid on account of procurement of different vehicles for Rescue stations and Development Authorities
at GabeenJaba, Kalash and Kumrat.
Audit held that these areas, characterized by rugged terrain and limited infrastructure, posed a
significant challenge to conventional vehicle usage, as they were primarily accessible via narrow jeep
tracks. The existing tracks were ill-suited for the operation of these vehicles, necessitating substantial roads
construction and infrastructure development before their utilization could even be contemplated.
Furthermore, when inquiring about the practicality and usage of these newly acquired vehicles from
the project management, it was revealed that the responsibility for their operation and maintenance had
been transferred to the respective rescue stations and development authorities in GabeenJaba, Kalash, and
Kumrat. Audit is deeply concerned about the probability that these vehicles may remain idle due to the
853
impracticality of their use in these terrains, rendering the substantial financial allocation for their acquisition
wasteful.
Audit further held that the procurement of these vehicles for the rescue stations and development
authorities in GabeenJaba, Kalash, and Kumrat, without a commensurate plan for road development or a
clear strategy for their operation, is an unjustifiable and unwise allocation of resources, indicative of
financial mismanagement within the KITE project.
The lapse occurred due to ill planning which resulted in wasteful expenditure on account of
purchase of heavy vehicles.
PDP No. 17 (2022-23)
30.4.3 Loss to the government due to selection of contractor at higher rates – Rs. 17.852 million
According to clause 15.1 of the bidding documents, prices shall be quoted in PKR or any fully
convertible currency, singly or in combination of up to three foreign currencies.
(KITE) – DoT Component for the Financial Year 2022-23, it was observed that a contract for the purchase
of Wheel Loader (5 Ton) with Snow Blower, Angle Blade & Angle Sweeper Snow Brush was awarded to
M/S Rawal Industrial Equipment at the cost of Rs. 72,540,000/-. However, further scrutiny of record
revealed that the project management ignored the lowest rate of M/S Global Technologies i.e. Rs.
54,687,916/- and declared the bid non-responsive due to offering the rates in US Dollars, which resulted
into a loss of Rs. 17,852,084/- to the government.
Firm Bid Price Price in PKR Remarks
M/S Rawal Industrial Equipment Rs. 72,540,000 72,540,000
M/S Global Technologies USD. 344,100 54,687,916 Prevailing market
rate at the time of
bidding was Rs.
158.95 per dollar
Difference (Loss) 17,852,084
The lapse occurred due to violation of the standard bidding documents and extending undue favor
to the selected bidder which resulted in loss to the government.
854
Audit recommends to fix responsibility against the person(s) at fault besides recovery of the
amount.
PDP No. 21 (2022-23)
30.4.4 Doubtful supply on account of 4X4 firefighting vehicles costing – Rs. 57.495 million
As per clause 5.38 of the World Bank Procurement Regulations for IPF Borrowers, firms
participating in Bank-financed contracts may form joint ventures with domestic and/or foreign firms to
enhance their qualifications and capabilities. A joint venture may be for the long term (independent of any
particular procurement), or for a specific procurement. All the partners in a joint venture shall be jointly
and severally liable for the entire contract.
According to Para148 of the General Financial Rules Para Vol I 148 GFR, all materials received
should be examined, counted, measured or weighed as the case may be when delivery is taken and they
should be taken in charge by a responsible government officer who should see that the quantities are correct
and their quality good, and record a certificate to that effect.
(KITE) – DoT Component for the Financial Year 2022-23, it was observed that an amount of Rs.
57,495,000/- was paid to M/S Ahmad Madix Lahore on account of purchase of Prototype 4x4 Fire Fighting
Vehicles at the rate of Rs. 11,499,000/- per unit. Further scrutiny of record revealed that a four members’
committee carried out the technical inspection of the said vehicles on 11-08-2021 at Rescue 1122 HQ
Peshawar which pointed out 19 different serious deficiencies related to the quality and quantity. The 2 nd
meeting of the said committee was held on 19.11.2021 wherein the committee reported that out of the
nineteen observations raised in the previous meeting, only nine were rectified with the rest of the
observations remaining unaddressed.
However, the project management instead of rectifying the same deficiencies through the supplier,
constituted another inspection committee of three members (one member from Punjab Emergency services)
vide KITE letter dated 02-02-2022. The committee carried out the technical inspection on 16-05-2022 by
giving a simple overall satisfactory certificate of the performance of the vehicles without considering the
deficiencies pointed out by the previous inspection committee which was signed only by the two members
instead of all the three members.
Furthermore, the project management failed to take up the issue of the deficiencies with the co-
ventures as they were jointly responsible under the rules mentioned above.
855
The lapse occurred due to non-observance of the rules and regulations which resulted in doubtful
supplies.
Audit recommends investigating the matter and taking appropriate action.
PDP No. 22 (2022-23)
30.4.5 Loss to government due to award of contract at higher rates - 87.928 million
According to para 23 of GFR Vol-I, every government officer should realize fully and clearly that
(KITE) – DoT Component for the Financial Year 2022-23, it was observed that the initial advertisement
for the procurement of snow removal vehicles was issued on 14.10.2020. M/S Global Technology was
shortlisted and subsequently issued letter of acceptance at a contract price of USD 518,500, equivalent to
Rs. 82,680,010. The successful bidder i.e. M/S Global Technology communicated their inability to provide
the requisite item and requested a re-advertisement of the tender. However, the project management failed
to offer the contract to the second lowest bidder i.e. M/S Rikans International at the bid cost of USD 565,675
at the risk-&-cost of the defaulter bidder along with forfeiting their CDR.
Consequently, the project management re-advertised the tender on 14.10.2021 and awarded the
contract to M/S Rikans International at a contract price of USD 799,200 which resulted in loss of USD
280,700 (USD 799,200 lowest bid in second tender - USD 518,500 lowest bid in the first tender).
An analysis of the procurement process reveals that if the contract had been awarded to M/S Rikans
International, the second lowest bidder during the initial tender, significant cost savings amounting to Rs.
87,938,345 ((USD 799,200 rate offered by Rikans Int. in second bidding x 222.899) = Rs. 178,140,880 –
(USD 565,675 rate offered in first bidding x 159.46) = Rs. 90,202,535) could have been achieved.
Moreover, the letter of acceptance was issued to the contractor on 02.02.2021 and the defaulter
supplier refused to enter into contract on 15.04.2021. Therefore, the management failed to sign contract
with M/S Global Technology despite a lapse of two months and obtain 10 percent performance to
materialize the supply of snow removal vehicles.
856
Audit held the project management neither forfeited the bid security, which amounted to Rs.
1,653,618 (2% of the initial contract value), from the defaulter supplier, M/S Global Technology, nor took
any measures to blacklist the company.
The lapse occurred due to weak procurement management and extending undue benefit to the
supplier which resulted in loss to government due to award of contract at higher rates contract.
Audit recommends conducting a fact-finding inquiry and fixing responsibility on person(s) at fault.
PDP No. 27 (2022-23)
857
30.4.6 Non-supply of snow removal vehicles – Rs. 160.926 million
Non-imposition of liquidated damages – Rs. 16.092 million
According to the letter of acceptance dated 17.1.2022, equipment /good must be delivered within
the agreed time lines of three to six months from the contract singing date.
According to the contract agreement clause GCC 27.1, the maximum liquidated damages shall be
10 % of the total contract value in case of late supply.
During special audit of the Project Director Khyber Pakhtunkhwa Integrated Tourism Development
Project, DOT component revealed that Rs 160.926 million (90% of the total payment) was paid to M/s
Rikans international vide cheque No.274930292 dated 24.11.22 for supply of 6 No’s snow Removal
vehicles for establishment of rescue 1122 at various districts.
Scrutiny of record revealed that contract was executed on 31.1.2022 between the supplier and the
Project Management. As per letter of acceptance the maximum time to reach the supplies to the purchaser
country was 31.7.2022 but contrary to this supplier did not supply the snow removal vehicles till date of
audit i-e April, 2023 despite lapse of considerable time. Audit held that neither any action has been taken
against the supplier nor liquidated damages was imposed for non-supplies which needs justification.
The lapse occurred due to weak internal controls and financial mismanagement.
When pointed out department replied that detailed reply shall be furnished after checking the
record.
report.
The matter needs to be inquired for fixing responsibility along with imposing liquidated damages
on supplier.
PDP No. 1193 (2021-22)
30.4.7 Expected loss on account of execution of pre-fabricated toilet work due to deviation from the
approved design – Rs. 7.855 million
According to the approved advertisement the height of pre-fabricated toilet was 8 feet 6 inches later
on addendum made the said height was enhanced to 10 feet and 6 inches
During special audit of the Project Director Khyber Pakhtunkhwa integrated tourism development
project, DOT component, it was noticed that the contract for supply and installation of pre-fabricated toilet
was awarded to contractor M/s Frontier works with the contract cost of Rs 64.115 million and allowed up-
to- date payment of Rs 25.259 million for 73 toilets.
858
Scrutiny and verification of record revealed that as per advertisement and approved design the
height of the pre- fabricated toilet was 8 feet and 6 inches which was later on changed and enhanced to 10
feet and 6 inches through addendum. However, on physical verification it was observed that the height of
pre-fabricated toilet was 9 feet and 4 inches which resulted into expected loss of Rs 7.855 million due to
below specification of work. detail is as under: -
Per
No of unit
Per Specification Actual Difference
Contract toilet to cost in Expected
Particular toilet required to work in square
cost be per loss
cost be executed done feet
installed square
approx.
Fabricated 64.115 90 0.712 5.5 feet width 5.5. 6.6 /square 87278 7.855
toilet million 10.6 feet feet feet million
approx. height width
9.4 feet
height
The lapse occurred due to violation and non-adherence of rules & regulation.
record.
report.
The matter is reported for detail inquiry and fixing responsibility against the person at fault along
with recovery of differential amount.
PDP No. 1194 (2021-22)
30.4.8 Loss to the government due to non-deduction of GST - Rs. 4.294 million
According to SRO 661 (07) of the Sales Tax Department, 1/5 th GST should be deducted at source
from the supplier concerned & intimated to sales tax department on Proforma with their dated invoices.
According to the contract agreement clause 17.2 for good manufactured within the purchaser’s
country, the supplier shall be entirely responsible for all taxes, duties, license, fees etc.
project, DOT component, it was noticed that the contract for supply and installation of pre-fabricated toilet
was awarded to contractor M/s Frontier works with the contract cost of Rs 64.115 million and paid Rs
25.259 million for installation of 73 units.
859
On checking of record, it was found that sales tax at the rate of 17 % i-e Rs 4.294 million
(25.259x17/100) was not deducted from the claim of supplier so far despite the fact that the price quoted
by the bidder was lump sum price and inclusive of all taxes which was also evident from the contract clause
quoted above.
The lapse occurred due to weak internal control & financial Mismanagement.
record.
report.
Audit recommends recovery from the supplier.
PDP No. 1195 (2021-22)
30.4.9 Non-obtaining 10% performance securities – Rs 23.896 million
According to clause 13.5 (c) read with IB. 21 & 44 of the standard form of bidding documents for
procurement of works notified vide No. KPPRA/M&E/SBDs/1-1/2015 dated 03-05-2016, the bid security
may be forfeited in case the successful bidder fails to furnish the required performance security. The
successful bidder shall furnish to the procuring entity a performance security in the form and the amount
stipulated in the conditions of contract within a period of 14 days after receipt of letter of acceptance. Failure
of the successful bidder shall constitute sufficient grounds for the annulment of the award and forfeiture of
the bid security. The performance security will be needed in case the contract value is equal to or exceeds
Rs.20.00 million.
project, C&W component,it was noticed that contract for conservation and development museum and
Archeological sites under 6 lots/packages were awarded to the M/s Younas builders and allowed upto date
payment to Rs 87.428 million as per detailed given below: -
Bid 10%
S. Lot
Scheme Cost Performance
No. No.
(Rs) Security (Rs)
Conservation and development of Archeological site Bhamala,

1 1
Haripur 46.827 4.6827
2 2 Development & improvement of Dir Museum Chakdara 27.856 2.7856
3 3 Development & improvement of Hund Museum Swabi 51.265 5.1265
Conservation and development of Archeological site
5 5
ShapulaStupa district Khyber 25.075 2.5075
860
Conservation and development of of main kalam Mosque and
6 6
Udigram Mosque district swat 69.859 6.9859
Total 238.963 23.8963
Scrutiny of record revealed that performance securities worth Rs. 23.896 million i.e. 10% of the
accepted costs was not obtained from the successful bidder or obtained but not produced to audit for
scrutiny.
Audit is of the view that performance security was required to be obtained before commencement
of work from the contractor which was not done.
The lapse occurred due to weak internal controls & financial mismanagement.
When pointed out department replied that detail reply will be furnished after checking the record.
report.
The matter is reported for justification and corrective measures.
PDP No. 1203 (2021-22)
30.4.10 Excess payment to the contractor over & above BOQ cost on stone chipping work –
Rs. 2.009 million
According to the approved BOQ. Providing, laying and restoration Stone chipping qty 2544cft
amounting to Rs 712,320 was provided.
project, DOT component, it was noticed that the contract for supply of material skilled /unskilled for
conservation of archaeological remains Shapula district Khyber was awarded toM/s Shah brother with the
contract cost of Rs 30.44 million and allowed upto date payment of Rs 15.803 million.
On Comparison and verification of record it was observed that approved quantities of an item Providing,
laying and restoration Stone chipping was 2544 cft in the approved design and cross sections but contrary
to this contractor was allowed a quantity of 9719 cft by the site supervisor and Archeology Engineer which
resulted into excess payment of Rs 2.009 million for the 7175cft (9719-2544=7175 cft x280) than the
required. Furthermore,neither TS was obtained nor original MBs were produced to authenticate the record
entries.
Audit held that incurring of expenditure was required to be executed within approved cost and
quantities which was not done.
The irregularity occurred due to weak internal control and financial mismanagement.
861
When pointed out, the department replied that detailed reply will be furnished after checking the
record.
report.
The matter requires fact finding inquiry and fixing responsibility against the person at fault
alongwith recovery.
PDP No. 1198 (2021-22)
30.4.11 Unauthorized payment to the contractor - Rs 3.024 million
According to KPPRA rule only 15 % variation is allowed over & above the bid cost.
According to the Government of Pakistan, Planning & Development Division letter

No.21(40)/PIA/PC/200 dated 26-05-2007 “The executing agency should start preparing the
revised scheme immediately when it is known that the cost of the scheme is going to rise beyond
permissible limit of 15%”
project, DOT component, it was noticed that the contract for supply & installation of illumination of
Peshawar Museum and Sehti house was awarded to the contractor M/s Hussain Metal stone with the
contract cost of Rs 8.061 million and allowed upto date payment of Rs 11.085 million.
However, Scrutiny of record revealed that contractor was only entitled upto the payment of Rs
9.270 million as 15 % over and above the contract cost of Rs 8.061 million but contrary to this contractor
was paid Rs 11.085 million which resulted an over payment of Rs 3.024 million. As per above quoted rule
a separate tender was required to be re-advertisedfor excess work which was not done.
The lapse occurred due to weak internal controls and financial mismanagement.
When pointed out department replied that detail reply will be furnished after checking the record.
report.
The matter is reported to inquire the matter for fixing of responsibility on the person(s) at fault and
recovery of loss.
862
PDP No. 1209 (2021-22)
863
Chapter - 31
TRANSPORT DEPARTMENT
Transport Department is responsible for the supervision and control of Provincial
Transports, preparation of Provincial Budget, formulation and interpretation of Financial Rules,
Civil servants Rules related to pay, Allowances and Pension, Management of Public Debit,
Banking, coordination of National and Provincial Transport Commissions, Administration of
Local Fund Audit and Treasuries.
Major services of the Transport Department are Administration of Motor vehicle ordinance 1965
and rules framed there under, issuance of route permits, fixation of fare rates, issuance of driving licence
and classification of transport routes.
of:
 Administration of Motor Vehicle Ordinance, 1965 and Rules framed thereunder.
864
 Administration of Directorate of Transport 2Khyber Pakhtunkhwa, Provincial Transport
Authority, District Regional Transport Authorities & 3Khyber Pakhtunkhwa Road
Transport Board.
 Inspection and checking of the documents of Motor Vehicles.
 Inspection & Certification of road worthy vehicles.
 Service matter except those entrusted to the Establishment and Administration Department.
 Formulation of Transport Policy & Planning.
 Research & Development (R&D).
 Data Collection.
o Vehicle Registration Data,
o Route permits statistics
o Accident Data.
o Traffic Courts.
o Origin-Destination Studies.
 Assistance in Legislation.
o Updating of Highway Code.
o Review of Traffic Laws.
o Review of Traffic Safety Provisions.
o Review of Motor Vehicle Laws Rules.
 Directorate of Transport 4Khyber Pakhtunkhwa, Provincial Transport Authority, District
Regional Transport Authorities & 5Khyber Pakhtunkhwa Road Transport Board.
 Coordination with other Government Departments Agencies both in public and private
sectors.
 Monitoring and evaluation of Transport related projects.
 Issuance of route permits for stage carriages and contract carriages.
 Route Permits, fare/freights, matters relating to traffic speeds, loading, parking and halting
places, exemption cases of vehicles under Motor Vehicles Ordinance and Rules Grouping
of stage carriages.
 Payment of compensation in accident cases of Private Public Sectors and allied matters.
 Chapter VII and VIII of Motor Vehicles Act, 1939.
 Policy regarding students’ concession and Nationalization & Privatization of Road
Transport.
 Maintenance/Management of Public Bus Stands throughout the Province.
 Classification of routes for public service vehicles.
 Settlement of terms and conditions for public service vehicles.
 Settlement of disputes among the District Regional Transport Authorities.
 Operation of Pak-Afghan Bus Service.
865
 Operation of Mass transit system in 1Khyber Pakhtunkhwa.
 Attract Private investment in Transport Sector.
866
Audit Profile of Transport Department: (Rs. in million)
Total Expenditure Audited FY Revenue/Receipts
Nos 2021-22 Audited FY 2021-22
1 Formations 43 04 2,845 0
 Assignment
Account
2 Nil Nil Nil N/A
 SDA
(Excluding FAP)
3 02 01 - N/A
4 02 02 - N/A
(FAP)

was as follows:
Non-Development:
(Amount in Rs.)
Grant # and
Grant Original Supply: Re- Final Total Actual Excess /
Name of Surrender
Type Grant Grant appropriation Grant expenditure (Savings)
Department
45- Transport NC21 4,993,402,000 49,351,000 0 1,754,120,961 3,288,632,039 3,287,652,201 (979,838)
Total 4,993,402,000 49,351,000 0 1,754,120,961 3,288,632,039 3,287,652,201 (979,838)
3,500,000,000
3,000,000,000
2,500,000,000
Amount in Rs.
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
0
45-Transport
-500,000,000
867
Development:
(Amount in Rs.)
Grant # and Name Grant Original Supply: Re- Final Total Actual Excess /
Surrender
of Department Type Grant Grant appropriation Grant Expenditure (Savings)
50-Tansport NC22 113,988,000 10 27,114,442 1,822,385 188,916,608 188,951,568 34,960
Total 113,988,000 10 27,114,442 1,822,385 188,916,608 188,951,568 34,960
200,000,000
180,000,000
160,000,000
140,000,000
Amount in Rs.
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
50-Tansport

(Rs. in million)
Total Actual
Expenditure
Non-Development 3,288.632 3,287.652 -0.979 0.00%
Development 188.916 188.951 -.35 0.00%
Total 3,477.548 3,476.603 -1.329 0.00%
868
3,500.00
3,000.00
2,500.00
Rs. in million
2,000.00
1,500.00
1,000.00
500.00
0.00
-500.00
31.1(C) Issues in Transport Department
During audit of the Transport Department, it was observed that irregular expenditure were made
on procurement of Intelligent Transport System (ITS) equipment. It was also observed that millions of
recoveries were outstanding against different bus terminal. Another important issue in the transport
department was that fleet for the BRT buses were not supplied till the date of audit. On revenue receipt side
it was observed that route permit fee and penalty on the late depositors were not fully collected. There were
no details of the head-wise figures of the departmental own receipts collected by the department.

audit of Transport Department. This amount also includes recoveries of Rs. 33.581 million as pointed out
Amount
(Rs. in million)
3 Irregularities
C Management of Accounts with Commercial Banks 8.914
5 Others 82.01
Amount
(Rs. in869
million)

3.5
0
0
23.943

embezzlement and
Total No. of
Name of Partial Nil
S# Audit Year actionable Full compliance
Department compliance Compliance
points
1 2014-15 Transport Nil - - -
2 2015-16 -do- Nil - - -
3 2016-17 -do- Nil - - -
31.4 Audit Paras
31.4.1 No-execution of core responsibilities by the department
According to the Khyber Pakhtunkhwa Rules of Business 1985, the Secretary Transport
Department has to perform the following activities;
 Monitoring and evaluation reports of the transport related projects
 Approval granted regarding compensation in death cases of private public sectors and
allied matters.
 Private investment made in transport sector
 Maintenance/Management of Public bus stands throughout the province
During audit of the accounts of Secretary Transport & Mass Transit Khyber Pakhtunkhwa
Peshawar for the Financial Year 2022-23, it was observed that no evidence was found available on record
which could authenticate the performance of the following core functions / activities by the department;
 Monitoring and evaluation reports of the transport related projects
870
 Approval granted regarding compensation in death cases of private public sectors and
allied matters
 Private investment made in transport sector
 Maintenance/Management of Public bus stands throughout the province
The lapse occurred due to weak internal controls & financial Mismanagement which resulted in
non-execution of the core functions / responsibilities by the department.
The department was requested vide letter dated 05.09.2023 followed by reminder letters dated
26.12.2023 and 01.01.2024. However, the DAC meeting was not convened till finalization of this report.
PDP No. 16 (2022-23)
31.4.2 Unauthorized utilization & retention of government vehicles and non-recovery of rental value
According to section 9 of Services and General Administration Department Notification

No.SO(T)NP/S&GAD/97 dated 13.3.1997 all the Government officers irrespective of their ranks/status
shall be entitled to use only vehicle for official duty.
According to minutes of the meeting of the Transport Committee held on 12.10.2015 in the
administrative department Serial No. 3(V) that use of two vehicles by virtue of holding the charge of more
than two posts is not allowed under any circumstances.
During audit of the accounts record of the Secretary Transport & Mass Transit Peshawar for the
FY 2022-23, it was observed that it was observed that Administrative Department allotted two vehicles to
Ex-Ministers who resigned from their Minister-ship but the status of vehicles showed that 14 more vehicles
from various projects and Transport Department were under the use of Ex-Ministers which stands as illegal
& un-authorized use and retention of government vehicles (Annexure-LII).
Similarly, Mr. Manzoor Ahmed Ex Secretary Transport was transferred from the department since
long but the following official vehicles were not returned till date and were under his use. Furthermore,
some officers/officials were using government vehicles for which they were not entitled.
S. Vehicle Monthly
Name Designation Vehicle Months Amount
No. No. Rent
1 AA3746 Ex-secretary Corolla 1600 cc 50,000 12 600,000
2 AB1462 Manzoor Do Corolla Gli 50,000 12 600,000
3 Double Cabin Ahmed Do Double cabin 50,000 12 600,000
PS to Secretary 40,000 12 500,000
4 AA1458 Transport Suzuki Cultus
871
Administrator Suzuki bolan 40,000 12 500,000
5 CMVFC PBT van
Total 2,800,000
Audit held that allotment of extra/un-authorized vehicles means additional burden on the
government kitty on account of POL and repair when Provincial Government is stressing hard on use of
austerity measures and imposed 30 to 35 % cut on the expenditure.
Furthermore, rental value amounting to Rs. 9.00 million (Rs. 6.20M and Rs. 2.80M) for using
government vehicles under their use should be recovered from the Ministers/officers/official concerned.
The lapse occurred due to weak internal controls & financial mismanagement.
When pointed out in August, 2023, no reply was given.
The department was requested vide letter dated 05.09.2023 followed by reminder letters dated
26.12.2023 and 01.01.2024. However, the DAC meeting was not convened till finalization of this report.
recovery of the rental value.
PDP No. 13 & 15 (2022-23)
31.4.3 Loss to the govt. due to non-auction of PBT for the last three years - Rs. 66.343 million
During the audit of accounts record of the Directorate of Transport & Mass Transit Department,
Khyber Pakhtunkhwa for the financial year 2021-22, it was noticed that a loss of Rs. 66.343 million due to
non-auction of PBT Peshawar at the competitive rates for the last three year. The record revealed that the
initial bidding process of the PBT was started on 04.06.2018, where the contractor Muhammad Usman
offered highest bid of Rs. 135,330,000 per year, but on the same time the court ordered stay of the bidding
process and after vacating of court stay order all the bidders have shown no interest and refunded their call
deposits. Then the bidding process was restarted on 24.12.2018, where the contractor Dilawar khan quoted
highest bid for Rs. 103,500,000 and the contract awarded to the contractor w.e.f 14.02.2019 to 13.02.2020.
After the completion of contract period bidding process started where the minimum rate of 113,850,000
was fixed, the contractor M/S Nadeemullah quoted the highest bid of Rs. 250,000,000 and the 2 nd highest
bidder was Dilawar Khan who quoted Rs. 113,850,000 but later on he failed to deposit the ¼ amount of the
total bid and instead of awarding contract to the next bidder the committee extended the contract to the
existing contractor i-e Dilawar Khan @ of Rs. 287,500 per day (103,500,000/360) who enjoying the same
price/rate for the last three years i-e till the date of audit without enhancing the rate. At last, the contract of
PBT, won by the contractor Farmanullah who was the son of Dilwar Khan who are also not intended to
deposit the ¼ of the total bid despite of repeated reminders.
872
It worthwhile to mention here that all the participants in the above-mentioned bidding process were
closed relatives of each other who protected their interest at the cost of Govt. loss along with manipulating
the administration in their favor. The details of the loss given below.
13.02.2021 13.02.2022 to
13.02.2020 14.02.2021 14.02.2022 Total loss
To 14.02.2023
Period of 1st year 10% 2nd year 10% 3rd year
contract increase increase
Expected 113,850,000 11,385,000 125,235,000 12,523,500 137,758,500
recovery/revenue
Actual receipts 103,500,000 103,500,000 103,500,000
Loss 10,350,000 21,735,000 34,258,000 66,343,000
The matter is brought to high level joint inquiry for fixing of responsibility and recovery from the
contractor.
When pointed out in March 2023, it was stated by the department that detailed reply will be
furnished in DAC, after the scrutiny of relevant record.
dated 28.08.23, 26.12.2023 and 01.01.2024, respectively, for holding the DAC meeting. However, no DAC
PDP No.670 (2021-22)
31.4.4 Loss due to double payment on account of purchase of fume extractor (external filtration) for
laser engraving machine - Rs. 3.500 million
According to the supply/work order vide No. Dir/TPT/TIS/Dl/HW-LEM/4-2/19/4372-74 dated

28.06.2019, to MS Orbit Technologies, for the supply of 02 Nos. of Laser engraver Machine, Model
S5200LX (specification details as per RFP/Contract), read with Para 23 of GFR Vol-I provides that every
public officer is personally responsible for any loss sustained by government through fraud or negligence
on his own part or on the part of subordinate disbursing officers.
During the audit of accounts record of the Project Director “Establishment of Transport Inspection
Stations in Khyber Pakhtunkhwa” for the financial year 2021-22, it was noticed that 02 Nos. of laser
engraver machine model S5200LX were purchased from the M/S Orbit Technologies but the contractor
supplied only one external filtration machine (complimentary part of the same machine and details available
on company website) instead of two systems. Later on, a sum of Rs. 3.500 million paid to the supplier on
account of another filtration machine which inflicted a loss to the Govt. exchequer due to double payment.
873
The matter is brought to the notice for joint inquiry for fixing of responsibility and recovery of the
double payment.
PDP No.671 (2021-22)
31.4.5 Non-recovery of Peshawar Bus Terminal rent - Rs. 12.075 million
According to G.F.R-8 Vol-I require that, it is the duty of the Revenue or Administrative Department
concerned to see that the dues of Government are correctly & promptly assessed, collected & paid into the
treasury.
Khyber Pakhtunkhwa for the financial year 2021-22, it was noticed that recovery of Rs. 12075000/- (42
day @ Rs. 287,500) on account PBT rent (daily rent basis) from the contractor Dilwar khan neither
recovered nor deposited into the PBT account.
The non recovery of outstanding rent from the contractor is brought to the notice for early recovery.
The lapse occurred due to weak internal control and financial mismanagement.
PDP No.672 (2021-22)
31.4.6 Loss due to short receipts/short recovery of revenue - Rs. 3.592 million
874
According to Para-7 of CTR, all money received by Govt. on a/c of revenues shall without delay
be paid in full into Govt. Treasury &. Receipts should not be utilized towards expenditure, read with Para
23 of GFR Vol-I provides, that every public officer is personally responsible for any loss sustained by
government through fraud or negligence on his own part or on the part of subordinate disbursing officers.
During the audit of accounts record of the Directorate of Transport Khyber Pakhtunkhwa for the
financial year 2021-22, it was noticed that receipts/revenue to the tune of Rs. 3.592 million shortly deposited
by the VETS. The record revealed that total 90,461 Nos. of VETS stickers were purchased and issued to
various VET stations, out of which some 77,232 Nos. of stickers were shown returned back (closing
balance) and 13229 Nos. of stickers issued/sold out, along with 77600 Nos. of VET certificates @ Rs. 200
per sticker/certificate. Thus revenue/receipts to the tune of Rs. 18.165 million should have been generated
and deposited but only Rs. 14,572,800 was deposited into bank which resulted in a short receipt of Rs.
3.592 million, as detailed below;
Total nos. of Less closing Total Nos. of Total Actual Short
stickers/certificates balance as stickers issued revenue receipts receipts
on
30.06.2022
90461 77232 13229*200 2,645,000 --- ---
886 books of 100 pages 110 books 77600*200 15,250,00 --- --
Total 18,165,000 14,572,800 3,592,200
The short deposit is brought to the notice for early recovery.
Audit recommends investigating the matter and fixing responsibility on person(s) at fault.
PDP No. 673 (2021-22)
31.4.7 Unauthorized deduction of withholding tax - Rs. 8.914 million
According to section-49 of Part-IV of the Income Tax Ordinance 2001, Exemption and tax
concession, the income of the Provincial Govt. in Pakistan shall be exempted from tax under this ordinance.
Khyber Pakhtunkhwa for the financial year 2021-22, it was noticed that a sum of Rs. 8,913,996 on account
of withholding tax on profit from PBT bank account No. 3086090447 (NBP), was irregularly deducted by
the bank in violation of the above mentioned rules.
875
Bank Account No. Dated Particulars Amounts
Account # 3086090447 17.07.2021 PBT Rs. 3,974,243
// 15.01.2022 // Rs. 4,939,753
Total Rs. 8,913,996
Moreover, the receipts should have been deposited into treasury through challan instead of
depositing into designated bank account.
The unauthorized deduction of withholding tax is brought to the notice for recovery.
PDP No. 679 (2021-22)
31.4.8 Unjustified/unnecessary payment from PBT account/fund - Rs. 14.943 million
During the audit of accounts record of the Directorate of Transport and Mass Transit, Khyber
Pakhtunkhwa for the financial year 2021-22, it was observed that only 13 Nos. of employees allowed to
continue their services under PBT fund/account vide order No. DIR/TPT/2-25/Bill-Act/230-33, dated
09.11.2020, whose services were regularized as per PBT regularization act 2017, but the local office
recruited another batch Nos. 110 employees of various cadre/posts under the PBT fund/account without
any justification (As the PBT was rented out to the Contractor MS Dilawar Khan) and a sum of Rs. 14.943
million paid to them as salaries during the period under report. Moreover, the recruitment process i-e
recruitment & selection process, merit list, the place of duty & attendance etc were also not provided to
audit for verification.
The matter is brought to the notice for high level inquiry and fixing of responsibility on the person
at fault.
The lapse occurred due to weak internal control and mismanagement.
876
Audit recommends investigating the matter and fixing responsibility on person(s) at fault.
PDP No. 681 (2021-22)
877
Abbreviations and Acronyms
ADP Annual Development Program

BISP Benazir Income Support Program
CHE Catastrophic Health Expenditures
CNIC Computerized National Identity Card
GDP Gross Domestic Product
FA Foreign Aid
IBP Institution-Based Practice
KfW Kreditanstalt für Wiederaufbau
KP Khyber Pakhtunkhwa
LSCS Lower Segment Caesarean Section
MTI Medical Teaching Institute
NADRA National Database and Registration Authority
OOP Out of Pocket
OPD Outpatient Department
PMC Pakistan Medical Commission
PMDC Pakistan Medical and Dental Council
PMT Poverty Means Test
PSR Premium Stabilization Reserve
SDGs Sustainable Development Goals
SHPI Social Health Protection Initiative
SLIC State Life Insurance Company
SOP Standard Operating Procedure
SSP Sehat Sahulat Program
WHO World Health Organization
UHC Universal Health Coverage
UN United Nations
878
1. Introduction:
Sustainable Development Goal’s # 3 emphasizes on good health, ensuring healthy lives and to
promote well-being for all by 2030. However, provision of quality healthcare for all has become a major
source of concern universally. Out-of-pocket (OOP) payments is the major burden of health financing in
low-income countries and particularly in South Asia, where on average 62 percent of the households finance
healthcare from their own pockets. Moreover, the goal provides for achievement of universal health
coverage, including financial risk protection, access to quality essential healthcare services and access to
safe, effective, quality and affordable medicines and vaccines for all.
The primary goal of Sehat Sahulat program is to improve the health status of the targeted population
through increasing access to quality health services and to reduce poverty through reduction of out of pocket
payments for healthcare expenditures in KP.
This Impact Audit assesses the impact of Sehat Sahulat Program in Khyber Pakhtunkhwa. The
Government of Khyber Pakhtunkhwa initially launched Social Health Protection Initiative (SHPI) with the
brand name "Sehat Sahulat Programme" phase-I focusing on the provision of free of cost health insurance
to families living below the poverty line in 04 districts of Khyber Pakhtunkhwa i.e. Mardan, Malakand,
Kohat and Chitral, targeting 21% of the population i.e. 100,000 Households during 2013 for which PC-I
worth Rs.1399.156 million (ADP share of Rs.165.90 million and Foreign Aid share of Rs.1233.256 million)
was approved. The PC-I for phase-I was revised to Rs. 3366.148 million. Later on, the SSP was converted
to current side from the developmental side on 20-09-2017. Since late 2020, the services of the program
were extended to 100% population of all the districts of Khyber Pakhtunkhwa.
1.1 Background:
Public health expenditures in Pakistan were only 1.1% of GDP as per Economic Survey of Pakistan
for the year 2018-19 which was raised to 1.4% in 2022-23 which was still very low as compared to 5%
advocated by the WHO. As a result, the public health infrastructure is not sufficient to serve the entire
population, and so is the achievement of the Sustainable Development Goal # 3. As detailed in the 2017-
2018 National Health Account report, 83 percent of the population had been using private health facilities
due to lack of access and quality of health services at government hospitals.
The high OOP payments cause households to reduce their spending on other basic needs and are
responsible for pushing households into chronic poverty. Therefore, controlling Catastrophic Health
Expenditures (CHE) could significantly reduce poverty. In line with best international practices, the
Government of Pakistan launched a specific intervention called the Sehat Sahulat Program (SSP) for
provision of indoor health facilities. Initially, insurance coverage of Rs.25,000 per person per annum was
approved, which was enhanced phase-wise and revised to Rs.1.00 million per family per year in the UHC
phase.
State Life Insurance Corporation (SLIC) is paid a certain premium amount against each household
to the healthcare providers in the public as well as private sector.
Role of the Program:

879
The SSP is a milestone in social welfare reforms, ensuring that all the citizens, especially the under-
privileged have access to indoor medical healthcare in a swift and dignified manner without incurring out-
of-pocket expenses. The SSP provides the following treatment packages:
1. Inpatient services (all medical and surgical procedures)

2. Emergency treatment requiring admission
3. Maternity consultancy and services (normal delivery and C-Section)
4. Cardiology services
5. Cancerous services
6. Neurological services
7. Infectious diseases
2. Overview:
The Government of Khyber Pakhtunkhwa is committed to improve health status of its population.
Social Health Protection is one of the flagship imitative of Government of Khyber Pakhtunkhwa. The
program was launched with the objectives of enhancing the access of the population to quality healthcare
services, reduce out of pocket expenditure for healthcare services, incrementally achieve Universal Health
Coverage with pre-pooling financial mechanism and to improve the quality of healthcare services of
hospitals by retaining & utilizing additional funds generated by hospitals through the scheme.
For the implementation of the program, about 126 hospitals from public and private sector are
empanelled in Khyber Pakhtunkhwa which are providing free of cost treatment to 100% population of the
province. The premium amount is paid to the SLIC and the empanelled hospitals get reimbursement of
medical expenditure of the SSP patients from the SLIC.
For the program, services of NADRA were acquired under contractual arrangements according to
mutually agreed Terms of Reference (TORs) between the Health Department KP and NADRA. A
Centralized Management Information System (CMIS) was established with the support of NADRA through
which all the information regarding enrollment, admissions, and treatment in hospitals, claims data and
customer’s grievances data was collected and processed.
880
Details of premium paid to SLIC and NADRA payments are given below:
(Amount in Rs.)
Year Premium payment to Payment to NADRA Total
SLIC
2020-21 13,056,561,942 526,775,060 13,583,337,002
2021-22 13762,095,076 0 13,762,095,076
2022-23 25,000,000,000 35,758,829 25,035,758,829
Total 51,818,657,018 562,533,889 52,381,190,907
881
3. Scope and methodology:
a. Scope:
The scope of the impact audit was limited to the general assessment of one intervention in the
Khyber Pakhtunkhwa during the Universal Health Coverage phase. Further the audit included study of 10
hospitals for detail data analysis regarding the intervention. The contract agreements executed with SLIC
under the program were scrutinized. Reduction in out of pocket expenditure by the general public was the
objective of the program which was examined from different third party surveys to observe the reduction
in Out-of-Pocket expenses. The data of claims of public and private sector hospitals was analyzed to observe
the provision of healthcare services by these hospitals whether public confidence built on public sector
hospitals.
b. Methodology:
The impact audit analyzed the number of Caesarean section surgeries versus normal deliveries
carried out in 10 public and private sector empanelled hospitals in the province by using the Time Series
Analysis for UHC phase. However, there were certain limitations faced during the impact audit i.e. data of
pre-intervention of SSP was not available in the hospitals as partial record was digitized in that period which
did not provide the information of procedures performed.
4. Audit Findings
4.1 Enhanced ratio of Caesarean section surgeries instead of normal deliveries
Condition with: During the Impact Audit, data of 10 public and private sector hospitals in the UHC phase
(January 2021 to September 2023) was analyzed with special focus on the ratio/ percentage of Caesarean
Section surgeries instead of normal delivery. The revelation was abnormal hike in ratio of Caesarean Section
surgeries as percentage of C-Section was 47.43% whereas normal deliveries were 52.56% as summarized
below:
Total delivery cases Normal Delivery Cases Caesarean surgeries

S. Hospital
No Name No. of Expenditure No. of Expenditure No. of Expenditure
%age %age
cases (Rs.) cases (Rs.) cases (Rs.)
1 8779 4844 55 3935 45

LRH 196,525,990 80,035,420 116,490,570
2 1484 858 58 626 42
NWGH 32,223,920 14,113,920 18,110,000
3 3403 1752 51 1651 49
MMC 72,592,880 27,115,120 45,477,760
4 287 111 39 176 61
DHQ CHD 5,333,000 1,387,500 3,945,500
5 2202 1235 56 967 44
Jalil Int. Swat 39,864,030 17,680,950 22,183,080
Hangu Med.
6 327 2 1 325 99
Com. 7,029,600 27,600 7,002,000
ATH
7 2194 485 22 1709 78
Abbottabad 53,501,020 7,409,900 46,091,120
882
Chinar
8 984 278 28 706 72
Hospital ATD 21,747,610 4,075,390 17,672,220
Faizan Med.
9 Com. 6444 4082 63 2362 37
109,295,740 54,969,940 54,325,800
Battagram
DHQ
10 347 257 74 90 26
Battagram 5,677,310 3,541,060 2,136,250
Total 26451 543,791,100 13904 210,356,800 52.56 12547 333,434,300 47.43
This indicated that the empanelled hospitals preferred Caesarean Section surgeries as compared to
normal deliveries for financial gains as the average package cost per normal delivery case was Rs.15,129/-
whereas, per Caesarean Section surgery cost was Rs.26,575/-
Condition Without: The study “The C-Section Epidemic in Pakistan” referring to Pakistan Demographic
and Health Survey (PDHS) showed a rapid increase in the rates of C-Section deliveries, from 14% in 2012-
13 to 22% in 2017-18. World Health Organization recommends that C-Section rates higher than 10% are
not associated with a reduction in maternal or neonatal mortality (WHO 2015). Current rates of C-Section
surgeries exceeded the World Health Organization recommendations, suggesting that Pakistan is part of a
trend worldwide of having C-Sections for non-medical reasons. This indicated that with the intervention of
the SSP, the C-Section percentage raised to 47.43% as compared to 22% in the base year 2017-18 though
22% C-Section surgeries rate was termed as point of concern by WHO.
Moreover, Third Party Evaluation (P.85) of the SSP conducted in May 2023 by Department of
Community Health Sciences, Aga Khan University, Karachi, mentioned that Lower Segment Caesarean
Section (LSCS) was the most commonly performed Bellwether procedure. Of all the LSCS, 83.4% were
carried out in private hospitals. The higher package cost sends a strong incentive for hospitals to opt for
Caesarean section.
Cause: The main cause of the high percentage of C-Section surgeries instead of normal deliveries was the
high financial gains by the empanelled hospitals and non-adherence to monitoring of clinical indicators and
regulatory intervention.
Effect: The extensive use of C-Section can increase the probability of negative impacts on mother and child
physical and mental health. A normal delivery after the C-Section trial gets risky. Having a previous C-
Section puts the mother at a higher risk of C-Section for subsequent births. With these high rates of C-
Section, the empanelled hospitals are unduly exposing women to major surgery for multiple times.
Performing C-Section on non-medical reasons for financial gains or time management indicates mal-
practicing at the physicians end.
883
Intended outcome: The provision of free indoor healthcare facilities to the SSP users was the intended
outcome of the program which was achieved.
Unintended outcome: The increased percentage of C-Section surgeries was an unintended outcome which
arose due to higher package cost than the normal delivery.
4.2 Change in the formula for settlement of PSR negative balance
Condition with: A payment of Rs.629.685 million was made to SLIC on account of premium of Rs.1,700/-
per family per year in respect of target population in pre-UHC phase while paid Rs.51,818.657 million in
UHC phase @ Rs.2818 per family per year as per following breakup:
Phase Period Premium payment to

SLIC
Pre-UHC 2013-2020 629,684,611
UHC 2020-21 13,056,561,942
-do- 2021-22 13,762,095,076
-do- 2022-23 25,000,000,000
Total 52,448,341,629
Since 2013, various Agreements were executed with SLIC in pre-UHC phase. In UHC phase,
contract agreement was executed on 20-08-2020 for extending the services to 100% population of the KP.
Phase Particulars Period Contract Agreement Premium rate (Rs.) per

execution date Household
1st PC-I KfW assisted 05 years (2013 to 19.01.2015 Rs.1700 per household
(04 districts) BISP score 2018) every year
based/ targeted population
Revised PC-I KfW assisted 09 years (2013 to 16.08.2016 Rs.1499 per household
(all districts of KP) BISP 2022) every year
Pre-
score based/ targeted
UHC
population
PC-I Phase-II 02 years (2016-17 20.08.2019 Rs.1998 per household
All the districts of KP BISP to 2017-18) every year
score based/ targeted
population
Revised PC-I Phase-II 02 years (2016-17 20.08.2020 Rs.2849 per family every
All the districts of KP (100% to 2017-18) year
coverage)
UHC
Supplemental Agreement. 21.03.2022 Rs.2818 per family every
All the districts of KP (100% year
coverage)
884
There was requirement of maintaining a Premium Stabilization Reserve (PSR) to protect the
program from adverse claims deviation. At the end of each Program Policy year, the available PSR balance
was settled as per below given formula:
PSR balance at the Contract dated Contract dated Contract dated Contract dated
end of the year 16.08.2016 20.08.2019 20.08.2020 21.03.2022
Govt. SLIC Govt. SLIC Govt. SLIC Govt. SLIC
Share share Share share Share share Share share
+ PSR Balance 80% 20% 85.1% 14.9% 85% 15% 85% 15%
- PSR Balance 0% 100% 0% 100% 0% 100% 100% 0%
The agreed PSR formula for the settlement of PSR negative balance at the end of each Program
Policy year was already decided while carrying out bidding process and award of contract to the SLIC. As
per agreed formula, 100% responsibility for the negative balance of PSR was on the part of the SLIC in
contract agreements executed in 2016, 2019 and 2020. However, the same agreed formula was drastically
changed to 100% responsibility for the PSR negative balance to the government through Supplemental
Agreement executed on 21.03.2022. This drastic change in distribution formula for PSR negative balance
at the end of each year will result unprecedented financial burden on the government at the end of coming
financial years.
The SLIC obtained the contracts through competitive bidding process for the sake of business
which may result in profit or loss for the organization being integral part of any business. The change in
settlement of agreed PSR formula for negative balance was made to protect SLIC from the loss which is an
integral part of any business. This means there is minimal financial risk for SLIC.
Condition without: Basically the program was initiated for poor and needy people selected on the BISP
PMT score. The extension of program to 100% population of the province in UHC phase emerge the
scenario of negative PSR balance for the first time. To protect the SLIC from loss due to negative PSR
balance, change in distribution formula agreed since 2013 was made. Had the program been restricted to
poor and targeted population of the province, the change in agreed distribution formula for PSR negative
balance would not have happened.
Cause: The extension of program to 100% population of KP, caused change in the distribution formula for
PSR negative balance.
Effect: The drastic change in the formula of PSR negative balance has shifted 100% liability from SLIC to
government which will create financial burden at the end of the coming financial years which will put the
future sustainability of the program at stake. Moreover, continuity of the program cannot be ensured with
high expenditure by the government due to extension of program services to the 100% population of the
province since late 2020 without working the financial plans for the viability of the program. The
comparison of average yearly expenditure during pre-UHC and UHC phase is given below:
(Amount in Rs.)
Phase Period Premium payment Average yearly
to SLIC premium cost
Pre-UHC 2013-2020 629,684,611 89,954,944
UHC 2020-23 51,818,657,018 17,272,885,673
885
Unintended outcome: The change in agreed formula for settlement of PSR negative balance was an
unintended output which emerged in UHC phase and will create financial liabilities for the government
without having viable financial support plan.
4.3 Reduction in out of pocket expenditure:
Reducing poverty through reduction in out-of-pocket payments by target population/ general public
for health expenditures in KP, was amongst the main objective of the program. Catastrophic Health
Expenditures (CHE) are the high share of health payments in total consumption/ income. The high OOP
payments cause households to reduce their spending on other basic needs, compel them to take out loans,
fall into debt, compromise and forgo treatment, and are responsible for pushing households into chronic
poverty. Therefore, controlling CHE can significantly reduce poverty
Condition with: An amount of Rs.51.819 million was injected by government on account of premium
payment to SLIC during the 03 years for provision of inpatients free healthcare services to the citizens of
the KP province, as summarized below:
Year Premium payment to SLIC

2020-21 13,056,561,942
2021-22 13762,095,076
2022-23 25,000,000,000
Total 51,818,657,018
As per Third Party Evaluation of the SSP conducted in May 2023 by Department of Community
Health Sciences, Aga Khan University, Karachi, there was a significant reduction in medical care
component of mean out-of-pocket expenditure for inpatient services in respect of SSP users. The mean out-
of-pocket expenditure for SSP users was Rs.6,551 (medical and non-medical expenses), which was
significantly lower than the mean expenditure of Rs. 34,639 (medical and non-medical expenses) for SSP
nonusers.
Moreover, the report showed that the level of catastrophic health expenditure by households was
significantly lower for SSP users (14%) as compared to SSP nonusers (35%). This has contributed to higher
perceived economic well-being among SSP users.
The reduction in OOP payments and CHE is helpful in achieving the Sustainable Development
Goal 3 of the 2030 Agenda for Sustainable Development i.e. to ensure healthy lives and promoting well-
being of all. As such, the program intervention is in line with the global commitment made by all countries
at the UN General Assembly in 2015 to achieve Sustainable Development Goals (SDGs) by the year 2030
through providing Universal Health Coverage (UHC).
Condition without: As evident from the above referred report, the average per head yearly health
expenditure for SSP user is Rs.6,551/- while the same for SSP nonusers is Rs.34,639/- which is a sign of
relief for the poor patients and it could not be made possible without intervention of the program.
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Cause: The reduction in out-of-pocket payments and catastrophic health expenditure as noticed from the
comparison of SSP users and SSP non-users is attributed to the intervention of the program which is a
positive impact.
Effect: The program intervention improved the spending capacity of the public on other daily life needs as
their out of pocket expenditure reduced significantly and contributed towards achievement of Goal 3 of the
2030 Agenda for Sustainable Development.
Intended output: The reduction in out-of-pocket expenditure was the intended output of the program.
4.4 Non-gaining of patients’ confidence by public hospitals relative to private hospitals:
The KP MTI Act 2015 was passed by the legislature to provide autonomy to the Government owned
Medical Institutions in the Khyber Pakhtunkhwa and to regulate on sound physical and technical footings
the services being rendered by these institutions and to improve performance, enhance effectiveness,
efficiency and responsiveness for the provision of quality healthcare services.
The Sehat Sahulat Program was launched to enhance stewardship of the Department of Health. The
objective of the program included improvement in quality of healthcare services of public sector hospitals.
Accordingly, the hospitals were allowed to retain and utilize 75% of the funds generated by hospitals
through the SSP. Out of 75% funds, 60% funds were allowed for utilization to improve quality standards in
the respective health institution while 25% will be used as Incentive Payments to Doctors providing services
to insured patients. These funds were in addition to regular pay & allowance, medicine & drugs and other
operating budget released by government as well as receipts from IBP.
Condition with: However, analysis of SSP data of 87 public and private sector hospitals based in 05
districts (Peshawar, Charsadda, Swat, Swabi and Lower Dir) covering 1042855 admissions from the
perspective of inpatients treated under the program along with financial impact revealed that 68.1% public
preferred treatment in private hospitals while 31.9 % availed treatment in public sector hospitals during the
period October 2020 to March 2023. Similarly, total claims of the private hospital were Rs.22.189 billion
which formed 72.9% of the total cost while public sector hospitals were Rs.8.231 billion which formed
27.1% of the total claims. The variation in percentages of patients treated and claimed amount was due to
high package cost for the private hospitals which enhanced claimed amount and resulted in excess payment
of Rs.1.47 billion (Total claimed amount Rs.30.420 billion x 68.1% = Rs.20.72 billion – Rs.22.19 billion).
Summary of patients treated in public and private hospitals in terms of percentages and cost is given below
and detailed in the enclosed (Annexure-LIII):
(October 2020 to March 2023)
Private Sector Hospital Public Sector Hospital Total
S. Hospit
N al Total Total
% Total Claim % % Total % Admissi
o District Admissi Admissi Claim (Rs.)
age (Rs.) age age Claim (Rs.) age ons
on on
1 Peshaw 61. 14,374,607,8 69. 38. 6,229,063,2 30. 20,603,671,0

ar 348544 6 95 8 217406 4 02 2 565950 97
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Charsad 58. 66. 41. 33.
2
da 23958 2 408,305,504 7 17208 8 204,060,030 3 41166 612,365,534
3 74. 3,954,606,02 75. 25. 1,279,432,9 24. 5,234,039,00

Swat 156349 1 4 6 54614 9 77 4 210963 1
4 66. 1,873,856,74 81. 33. 18. 2,295,527,34

Swabi 72349 3 6 6 36693 7 421,670,595 4 109042 1
5 Lower 94. 1,577,372,81 94. 1,674,424,89

Dir 108734 0 7 2 7000 6.0 97,052,074 5.8 115734 1
68. 22,188,748,9 72. 31. 8,231,278,8 27. 30,420,027,8

709934 1 86 9 332921 9 78 1 1042855 64
The above analysis showed that with the intervention of the SSP program, patients preferred
treatment in private hospitals relative to public hospitals due to less waiting time and getting treatment from
the choice physicians/ surgeons/ consultants. The less waiting time and 68.1% flow of the patients to the
private sector hospitals indicated that the public has less confidence/ trust on government hospitals as
compared to private sector hospitals despite numerous reforms in Health Sector including autonomy
through MTI Act and incentive of 25% out of receipts from the SSP to the doctors and 60% for improving
quality standards in the respective public sector health institution.
Condition without: Prior to SSP, the patients preferred treatment in public sector hospitals as evident from
the Bureau of Statistics KP reports “Development Statistics of KP for the years 2020, 2021 & 2022”. In the
UHC phase, the inflow of patients to public sector hospitals was declined:
Year No. of patients treated
(Indoor & Outdoor)
2017 28,384,623
2018 30,710,782
2019 28,557,178
2020 29,141,829
2021 25,713,041
The attributed reason for decline in patients’ inflow to public sector hospitals was providing health
coverage to 100% population of KP and empanelment of large number of private sector hospitals where
patients are at liberty to get treatment from their choice physicians/ surgeons.
Cause: The data of 05 districts showed that 80% of the empanelled hospitals were from private sector while
20% were public sector hospitals. The Health Care Commission, Khyber Pakhtunkhwa has never been
involved in the empanelment of hospitals and this function has entirely been given to SLIC. SLIC empanels
health facilities based on their own standards while the HCC has its own standards for licensing.
Effect: The intervention of the program did not improve the healthcare quality of the public sector hospitals
despite autonomy given through MTI Act and future discontinuation of the program will result in high OOP
payments due to public trends towards private sector hospitals.
Unintended output: The non-gaining of patients’ confidence by the public sector hospital was an
unintended output.
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Recommendations:
1. Spending resources on a surgical procedure for non-medical reasons should be a grave concern for
health policymakers, managers, and practitioners. Close monitoring of clinical indicators and
regulatory intervention is required to discourage the C-Section for non-medical reasons and a
standard medical board consisting of District Gynecologists be formed for devising SOP to decide
the requisite procedure on case to case basis.
2. Change in agreed formula of 2015 for distribution of PSR balance at the year end through
supplemental agreement executed in March 2022 may be withdrawn as the initial formula was
agreed consequent upon award of contract to SLIC through competitive bidding process, any
change in formula without competitive bidding is irregular and will result in unprecedented liability
for the government in the coming financial years.
3. HCC should be involved in the empanelment of health facilities to bring parity in the empanelment
of public and private hospitals in each district with regular accountability mechanism for public
sector hospitals for improvement in service delivery and gaining public confidence/ trust. The
involvement of HCC will bring greater independence and transparency in the empanelment of
hospitals under the SSP KP and will ensure the empanelment of private hospitals as per
PMDC/PMC standards/ protocols.
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Chapter 33
Thematic Audit KP
Foreign Debt
Management
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1.1 Introduction
Provincial government’s take loans for financing activities where their own resources fall short.
The debt of the province of Khyber Pakhtunkhwa is managed by the Debt Management Unit of the Finance
Department. Total debt is sum of domestic and foreign loans taken by the Provincial Government. A
significant portion of foreign debt was historically utilized for developmental schemes or the mega projects.
However, in the past few years, some of the loans have also been taken for supporting operational
expenditures of the Province. As per the debt bulletin of Khyber Pakhtunkhwa, there is no domestic debt
of the province. However, transfers from the public account to the consolidated fund account are made
which also is a debt on the consolidated fund but not recorded as such. As of June 30, 2023, the foreign
debt of the province was Rs. 530,330 million, which is 46.55 % greater than Rs 359,330 million as on 30 th
June 2022. This sharp increase in foreign debt requires insights into management practices related to foreign
debt in order to mitigate adverse effects in future. Managing foreign debt means not only using the borrowed
money wisely but also making sure that the province can repay it without compromising its future
developmental needs. The foreign debt of Khyber Pakhtunkhwa therefore needs to be examined with regard
to terms of the financing, procedures adopted during finalization of the agreements and efficient utilization
of the finances. Most importantly the debt servicing and liquidity position of the province at the time of
repayment of debt also needs to be analysed.
1.2 Background
In the financial year 2016-17, the province had recorded a revenue generation of Rs. 398 billion
against an outstanding foreign debt of Rs. 90.8 billion. The debt servicing during the period was Rs. 5.8
billion with a debt-to-revenue percentage of 22.81% and revenue-to-debt servicing percentage of 1.48%.
The current and development expenditures of the province in the corresponding period were Rs 330.387
million and 152,078 million respectively. The Government adopted a policy of seeking foreign loans from
World Bank, Asian Development Bank and other consortiums for the robust development of the province.
By June 2022, foreign debt stood at Rs. 359 billion. Total outstanding and disbursed foreign debt of Khyber
Pakhtunkhwa increased to Rs. 530, billion and the ratio of total foreign debt to total revenue has also
increased from 41% to 60%. One of the factors of such an increase in foreign debt is the depreciation of
local currency with respect to the currencies in which the loans were taken. Devaluation in the local
currency also increased debt servicing costs from Rs. 14,437 million (FY 2021-22) to 27,463 million (2022-
23). This increase in the foreign debt and debt servicing raises important questions. Why did Khyber
Pakhtunkhwa take this money? Where did they spend it? Also, how did this affect their ability to repay the
debt? It's important to find out if this money they borrowed is manageable or if it might cause problems in
the future and if this borrowing helped make more money for the province or made things harder financially.
This increasing reliance on external borrowing for budgetary support and funding infrastructure
projects underscores the significance of conducting a rigorous audit to ensure alignment between borrowed
funds and the province's developmental goals. The backdrop of this audit lies in the need to evaluate and
strengthen KP's management of foreign debt within the broader context of fiscal sustainability, economic
growth, and governance. The Khyber Pakhtunkhwa Debt Management Act of 2022 is a crucial framework
that guides how the provincial government handles its borrowing and manages its debts. This Act lays down
rules and regulations to ensure that borrowing and debt management are done responsibly and transparently.
It outlines procedures for borrowing money, sets limits on how much debt the government can take, and
establishes mechanisms for effective monitoring and reporting of debt-related activities. The Act also aims
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to promote fiscal discipline by requiring the government to develop strategies for sustainable debt
management and regular assessment of the risks associated with borrowing.
A comparison of the Total Revenue, Total value of Foreign Debt and Debt Servicing of last 7 years
is given below.
Ratio of foreign Ratio of Debt

Total Revenue of Total Value Debt
FY debt to total Servicing to total
KP of Debt Servicing
revenue revenue
2016-17 398,030.000 90,810 5,880.934 22.81% 1.48%
2017-18 450,769.000 160,709 7,751.851 35.65% 1.72%
2018-19 471,943.000 193,685 9,805.110 41.04% 2.08%
2019-20 591,064.000 261,333 12,105.963 44.21% 2.05%
2020-21 739,835.000 294,397 12,838.161 39.79% 1.74%
2021-22 872,704.000 359,330 14,437.949 41.17% 1.65%
2022-23 886,355.000 530,130 27,463.195 59.81% 3.10%
Revenue-Debt Comparison
1,600,000.00
1,400,000.00
1,200,000.00
1,000,000.00
800,000.00
600,000.00
400,000.00
200,000.00
0.00
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Total Revenue of Khyber Pakhtnkhwa Ratio of foreign debt to total revenue

Ratio of Debt Servicing to total revenue
The above graph shows comparison of the total revenues with the debt servicing and total outstanding debt
of the Province. As evident the gap between revenues and total outstanding debt increases with the passage
of time.
A comparison of the current and developmental expenditure to total debt over the last year also shows that
the value of total outstanding debt is rapidly increasing w.r.t the total expenditure of the province, reducing
the fiscal space.
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Percentage of
Total
Capital Revenue total
FY Value of Total Expenditure
Expenditure Expenditure expenditure
Debt
w.r.t Total debt
2016-17 90,810 152,078 330,387 482,465 19%
2017-18 160,709 138,773 379,098 517,871 31%
2018-19 193,685 150,666 392,110 542,776 36%
2019-20 261,333 199,487 489,041 688,528 38%
2020-21 294,397 313,770 582,532 896,302 33%
2021-22 359,330 470,909 675,523 1,146,432 31%
2022-23 530,130 449,817 732,875 1,182,692 45%
Percentage of debt w.r.t Total expenditure

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Percentage of debt w.r.t Total expenditure
1.3 Establishing the Audit Theme

1.3.1 Reasons of selection
This thematic audit is crucial owing to the substantial impact that external borrowing can have on
KP's fiscal health, economic stability, and overall development trajectory. It seeks to analyse the
acquisition, utilization, and repayment strategies of foreign debts, aiming to identify areas for improvement,
ensure effective utilization of borrowed funds, mitigate associated risks, and enhance transparency in
reporting and governance. This audit aims to look closely at how the Province is handling the money it
borrowed. The theme of debt management in Khyber Pakhtunkhwa summarizes a comprehensive
examination of the province's fiscal landscape, emphasizing the complex relationship between debt
dynamics and economic resilience. This theme examines the trajectory of debt accumulation, its
categorization, and patterns over the past seven years, aiming to relate the implications of debt utilization
on the province's financial stability, cash flow requirements, long term solvency and debt servicing. The
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main objective is to furnish stakeholders with informed insights essential for shaping prudent fiscal policies
and adopting sustainable economic development within Khyber Pakhtunkhwa.
1.3.2 Purpose/ Objectives
This thematic audit was conducted with the aim to evaluate the foreign debt management by the
Government of Khyber Pakhtunkhwa. Some specific objectives of the audit is given below.
 To examine that the debt taken conforms to the provisions of Khyber Pakhtunkhwa Fiscal
Responsibility and Debt Management Act 2022.
 To examine that the total debt is within the limits provided in the Debt Management Act 2022
and the overall capacity to pay back.
 To examine that the required policies and procedures have been approved and complied with for
the foreign debt management.
 To examine that the debt taken is further utilized for the intended purposes as per the loan
agreement with the lender.
 To examine that the figures of total debt reported are correct and true.
1.3.3 Scope
The scope of audit is limited to the management aspects of foreign debt as maintained and
controlled by the Finance Department of the Government of Khyber Pakhtunkhwa. Due to absence of
detailed data, the audit was based on the available of seven years i-e 2016-17 to 2022-23. The loan
agreements, cash flows, expenditure statements and detailed analysis of debt management was carried out
for the loans taken during the most recent two financial years i.e. 2021-22 and 2022-23.
2 Legal frame work governing the Theme

The theme for this audit has been selected from the Khyber Pakhtunkhwa Fiscal Responsibility and
Debt Management Act 2022 and the debt bulletin 2022 and 2023. The main objective of this act was to
devise and implement the policies for effective debt management of the Khyber Pakhtunkhwa. The specific
objectives of the Act are given below.
 Establishing principles and objectives of sound fiscal and debt management.

 Defining the purposes of borrowing.
 Preparation of medium term fiscal framework.
 Establishing and implementing fiscal and debt limitation.
 Establishing a debt management unit.
 Defining standards of reporting for Government finance statistics and public sector debt statistics
3. Stakeholders and governmental organizations identified as directly/indirectly involved
 Economic Affairs Division for entering debt agreements on behalf of Government of Khyber
Pakhtunkhwa.
 Secretary to Government Finance and Planning & Development Department for budget preparation
and planning developmental expenditure.
 Provincial Assembly for approval of the budget of Khyber Pakhtunkhwa.
4. Role of important organizations
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Debt Management Unit, working under the Secretary to Government for Finance Department has
been assigned the following functions by the Fiscal Responsibility and debt Management Act 2022.
 Prepare annual borrowing plan, which shall be in line with the medium-term debt management
strategy. It shall be published along with the Annual Budget Statement.
 Formulate and implement a process for raising domestic debt through various sources such as
Government securities, bank loans etc. The process shall be finalized and modified, from time to
time, as deemed necessary with prior approval of Secretary of the Department.
 Raise domestic debt through domestic Government securities, bank loans or any other domestic
borrowing instruments.
 Raise external debt through commercial sources, including debt securities, such as bonds, sukuks,
bank loans or any other commercial borrowing instruments.
 Coordinate with the Planning and Development Department of Government, in raising external
debt through multilateral or bilateral sources and provide advice to Planning and Development
Department of Government on financial terms and conditions of external debt.
 Propose guidelines to the Department and the Planning and Development Department of
Government, regarding raising of external debt through multilateral and bilateral sources.
 Advise Secretary of the Department in evaluation of requests for guarantees by Government/
 Maintain consistent and authenticated record of public debt and guarantees.
 Prepare a comprehensive debt bulletin on semi-annual basis.
 Monitor compliance with the limits for debt and guarantees provided under this Act.
 Ensure that debt sustainability analysis is carried out in accordance with the international standards,
at least once in five years; provided that, if Government is non-compliant with the fiscal or debt
imperatives under this Act; the debt sustainability analysis shall be carried out at least once in three
years.
5. Field Audit Activity
5.1. Methodology
The field audit team has used a mix of the quantitative and qualitative approaches in gathering audit
evidence, by observations, field visit, documents scrutiny, holding discussions and interviews with the
experts. The documents reviewed by the field audit team during the thematic audit are given in the
references.
6 Strategic and Planning Issues / Significant Audit Observations
As a result of the thematic audit of Khyber Pakhtunkhwa Foreign Debt Management, certain
observations were raised which are produced as under.
6.1 Lack of Future Borrowing Estimates and Debt Projections
According to rule 6 (1) the of the Khyber Pakhtunkhwa Fiscal Responsibility and Debt
Management Act, 2022 Government shall prepare a three-year medium-term fiscal framework, aligned with
the medium-term national macro-fiscal framework, approved in accordance with Fiscal Responsibility and
Debt Limitation Act, 2005. (4) The medium-term fiscal framework shall include (d) Estimates of primary
balance, fiscal balance and borrowing requirements; and (e) medium-term projections of public debt and
guarantees.
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According to rule 8 of the Khyber Pakhtunkhwa Fiscal Responsibility and Debt Management Act,
2022 Medium-term debt management strategy.---(1) Government shall approve a medium-term debt
management strategy for managing the public debt and guarantees, covering a minimum of three years and
may update it on annual basis in line with the medium-term fiscal framework. The medium-terms debt
management strategy alongwith annual budget shall be presented to the Provincial Assembly of Khyber
Pakhtunkhwa. (2) The medium-term debt management strategy shall discuss- (a) debt portfolio of
Government; (b) future borrowing requirements of Government as outlined in the medium-term fiscal
framework; (c) key quantitative targets for public debt along-with the justification for setting those targets
and their comparison with the existing figures.
During thematic audit of Khyber Pakhtunkhwa's foreign debt management for the audit year 2023-
24, it was noticed from the medium-term budget estimates for service delivery in the fiscal year 2022-23
that the estimated debt, borrowing requirements, and medium-term projections of public debt in these
estimates were not incorporated. The audit requested essential records, including the province's fiscal
responsibility, medium-term debt management strategy, and annual borrowing plan, to analyze future debt
requirements. However, these documents were unavailable as they did not exist. It was observed that the
Government of Khyber Pakhtunkhwa had not formulated any plan to determine the necessary foreign debt
to address their financial deficit. The absence of a proper borrowing plan resulted in spontaneous debt
acquisition by the province. In the fiscal year 2022-23, the province negotiated four loans totaling Rs.
89,221 million. However, disbursements for three out of these four loans were not made due to non-existent
project implementation units. Similarly, the funds released for the remaining loan were not utilized for the
intended project due to the absence of a project implementation unit. The lack of proper planning needs
assessment, and the absence of functional project implementation units hindered the execution and
utilization of funds for their intended purposes.
The lapse occurred due to weak financial planning and non-observance of rules which resulted in
unplanned debt accumulation, ineffective fund utilization and potential long-term liquidity issues.
Audit recommends corrective measures.
6.2 Obtaining Loans without Project Preparation Rs 353,140 million
2022, the Government may borrow or give guarantees for any or all of the following purposes: (a) finance
the fiscal deficit; (b) repay, refinance, reschedule, restructure, prematurely retire or swap existing debt; (c)
meet temporary cash or liquidity needs during a financial year; (d) make investment in financial assets; (e)
make investment in non-financial assets i.e. development expenditure; and (f) any other purpose
Government may deem appropriate.
During thematic audit of the foreign debt management of Khyber Pakhtunkhwa for the audit year
2023-24, it was observed in the debt bulletin as on the 30th June 2023, that in some of the loans no
disbursement was made in the financial year 2022-23. On further scrutiny of these loan agreements audit
observed the following.
 Loan Agreement: "IDA-7149 Rural Accessibility Project" for Rs. 77,106 million, reflecting in the
Debt Bulletin as of June 30, 2022, this loan remains undisbursed as of June 30, 2023. The primary
reason for non-disbursement pertains to clause 3.01 in the loan agreement. The lender has mandated
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the executing agency to establish a project implementation unit, a requirement that remains
unfulfilled.
 The agreement for Loan: "IFAD-RETP KP Rural Economic Transformation Project (RETP)" for
Rs. 23,020 million was signed in December 2021, includes Clause 8 outlining the Borrower's
(Government of Khyber Pakhtunkhwa) commitment to provide counterpart financing for the
project. This entails EUR 25,460,000, with EUR 8,000,000 allocated for taxes, duties, and project
management expenses, and EUR 17,460,000 to be sourced through ongoing projects under the
provincial Annual Development Plan (ADP). Regrettably, no such arrangement has been
established to date, resulting in the project's non-initiation.
 Two Loan Agreements: "Emergency Flood Assistance" and "KP Water Resource Management",
totaling Rs. 18,444 million, were signed with the ADB in December 2022. However, these proceeds
remained undisbursed until June 2023 due to the absence of a project management unit.
Audit held that the KP Government engages in loan agreements without adequate prior planning
for project activities. In the aforementioned cases, although agreements were signed, the significant lapse
of time without any disbursement highlights the absence of a project executing agency. This absence
hampers the utilization of the loan amount and prevents engagement in the services for which the loan was
originally acquired.
The lapse occurred due to ill planning and weak financial management, resulting in delays and
hindering the proper utilization of the loans for their intended purposes.
6.3 Irregular/Unjustified retention of funds from ongoing projects Rs. 10,084.329 Million
According to section 2.03 (d) of the general conditions of IDA financing investment Dated July 14,
2017, each such application and accompanying documents and other evidence shall be sufficient in form
and substance to satisfy the Association that the Recipient is entitled to withdraw from the Financing
Account the amount applied for and that the amount to be withdrawn from the Financing Account shall be
used only for the purposes specified in the Financing Agreement. According to para 1 of schedule-II of the
financing agreement with the IDA, for the Khyber Pakhtunkhwa Human Capital Investment Project, to
facilitate the carrying out of the project, the recipient shall make the proceeds of the financing available to
the project implementation entity under the same terms and condition as shall have been received from the
association and in accordance with the provision of this agreement. A similar clause is also inserted in most
of the ADB loan agreements stating that the proceeds of the loan are available to the program executing
agency upon terms and conditions acceptable to ADB and shall ensure the cause program executing agency
ensures that the proceeds of the loan are applied to the financing of expenditure in accordance with the
provision of the loan agreement and the program agreement.
During the thematic audit of Khyber Pakhtunkhwa's foreign debt management for the 2023-24 audit
year, it was noted in the debt bulletin as of June 30, 2023, that a total of 70,201 million rupees were
disbursed across various loans in the fiscal year 2022-23. Upon closer examination and comparison of the
figures in the debt bulletin with the financial statements of individual projects, it was observed that out of
the total funds of Rs. 31,988 million, an amount of 24,900 million was released to the projects, while the
remaining 10,084 million was retained by the finance department for utilization within the consolidated
fund account. Audit held that the retention of funds in the consolidated fund might adversely impact the
progression of project activities. Moreover, the complete disbursement of loans leaves no provision for
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further financial support toward the remaining project activities, as the allocated funds have previously been
expended in the consolidated fund (Annexure-LIV).
The lapse occurred due to violation of loan agreements and weak financial management which
resulted in violation of agreements made with the lenders and delay in the achievement of project objectives.
Audit recommends inquiring the matter, fixing responsibility and formulation of guidelines for the
release of funds for the Foreign Aided Projects.
6.4 Understatement of receipts of Foreign aided projects Rs. 21,715 million
2022, the objectives of this Act includes (a) identification of major fiscal risk, faced by Government and
the measures to mitigate those risks; (b) sustainability of fiscal operations and public sector debt; and (c)
transparency in Government finance statistics and public sector debt statistics.
According to para 11.4 of APPM, all loan monies received must be recorded as a capital receipt in
the Federal or Provincial Consolidated Fund. This includes any direct loans from donors to beneficiaries
within the Government. Cash transactions arising from liabilities (eg. loan receipts, repayments of interest
and principal) shall be recorded in the Sub Ledger and General Ledger of the respective DAO/AG/AGPR
offices. The related non-cash transactions arising from liabilities (eg. loan liability, loss or gain on
exchange), shall also be recorded for incorporation into the Annual Accounts.
2023-24, it was noticed in bulletin as on 30th June 2023, that a sum of Rs. 70,423,201,250 was collected
from foreign loans during the FY 2022-23. On analysis of the data extracted from SAP and further
verification from the financial statements of Government of Khyber Pakhtunkhwa prepared by Accountant
General Khyber Pakhtunkhwa it was observed that the total foreign debt received by the Provincial
Government KP was Rs 48,708 million. It shows that the 21,715 million of foreign debt was taken by the
finance department but was not taken into accounts, resulting in understatement of foreign debt by Rs.
21,715 million
The lapse occurred due to weak financial reporting.
When pointed out it was stated that detailed reply will be furnished later on.
6.5 Non-formulation and implementation of the process of domestic debt
According to rule 11 (1) (6) of the Khyber Pakhtunkhwa Fiscal Responsibility and Debt
Management Act, 2022, without prejudice to the generality of the foregoing powers, the Debt Management
Unit shall also formulate and implement a process for raising domestic debt through various sources such
as Government securities, bank loans etc. The process shall be finalized and modified, from time to time,
as deemed necessary with prior approval of the Secretary of the Department and raise domestic debt through
domestic Government securities, bank loans or any other domestic borrowing instruments.
According to rule 8 (2) c, of the Khyber Pakhtunkhwa Fiscal Responsibility and Debt Management
Act, 2022, The Government shall approve a medium-term debt management strategy for managing the
public debt and guarantees, covering a minimum of three years and may update it on annual basis in line
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with the medium-term fiscal framework. The medium-terms debt management strategy along with annual
budget shall be presented to the Provincial Assembly of Khyber Pakhtunkhwa. The medium-term debt
management strategy shall discuss (ii) proportion of external and domestic debt;
2023-24, it was noticed in the debt bulletin as of 30th June 2022 and 2023 revealed a policy of refraining
from acquiring domestic debt due to perceived higher costs compared to foreign loans. The claim was
supported by the calculation and comparison of the costs of domestic loans with foreign debt. In the dent
Bulletin as on 30th June 2022, the cost of Domestic Debt was taken 15.35% (KIBOR plus Spread) and the
cost of foreign loans was taken at 9% (Average interest plus foreign exchange depreciation of 7%).
However, such a comparison was not made in the FY 2022-23. The calculation indicated a foreign exchange
currency depreciation of 33.87%, significantly exceeding the highest KIBOR rate of 23.27% on 27 th June
2023, marking a differential of more than 10%. This discrepancy strongly suggested that the cost of
domestic debt might have been lower during the fiscal year 2022-23. Despite this revelation, no explicit
policy or implementation strategies were devised or executed to leverage the seemingly more favorable
domestic debt options, indicating a notable gap in the debt management framework of the province.
The lapse occurred due to violation of rules and weak financial management which resulted in
costly acquisition of debt, increase in the foreign exchange fluctuation risk and ineffective debt
management.
Audit recommends formulation and implementation of the strategy of obtaining domestic debt,
6.6 Non establishment of Project management/implementation Unit for the loans already
disbursed during the year Rs. 8,954.887 million
According to section 3.01 of the contract agreement between the Islamic Republic of Pakistan and
Asian Development Bank on 4th November 2022 for the Health System Strengthening Program, the
borrower shall make the proceeds available to the program executing agency upon terms and conditions
acceptable to ADB and shall ensure and cause the program executing agency to ensure, that the of the loan
are applied to the financing of expenditure on the program in accordance with the provision of this loan
agreement and the program agreement.
2023-24, it was noticed in the debt bulletin as on 30th June 2023, that loan amounting to Rs. 8,954.887
million was obtained for two projects of health department as detailed below.
Actual loan Funds retained

S.
Title of Project PAO/ Funding realized as per by the Finance
No.
Debt Bulletin Department
899
Khyber Pakhtunkhwa Health
Health
1 Systems Strengthening Program ADB
Deptt.
(4222, RBL) 6,225,000,000 6,225,000,000
National Health Support Program Health World
2
7149/TFOB8491/TFOB8974 Deptt Bank 2,729,886,600 2,729,886,600
Total 8,954,886,600 8,954,886,600
The financial attest audit reports for the mentioned projects in the same financial year indicated
that projects reported no receipts or expenditures, indicating that the funds allocated were not disbursed to
these projects. Further investigation revealed that the executing agencies responsible for these projects were
not established till the date of audit i-e November 2023. This revelation suggests a delay or failure in setting
up the necessary executing agencies for these projects within the stipulated timeframe. Consequently, the
allocated funds remained unutilized, impacting the progress and implementation of the projects. This
situation raises concerns about project management, execution timelines, and resource utilization, requiring
immediate attention and corrective measures to ensure efficient and timely project implementation in the
future.
The lapse occurred due to violation of loan agreement and weak financial management which
resulted in non-utilization of funds for the intended purposes.
Audit recommends justification and corrective measures.
6.7 Delay in project execution resulting in un-necessary commitment charges
According clause 2.03 of the loan agreement between Islamic Republic of Pakistan and Asian
Development Bank for Pehur High Level Canal Extension Project on 9th June 2017, the borrower shall pay
a commitment charges of 0.15 % p.a. Such charges shall accrue on the full amount of the loan less amounts
withdrawn from time to time.
2023-24, it was observed in the data provided by the debt management unit that some loans remained
undisbursed despite expiry of the grace period. On further analysis it was also observed that in certain loans
the lenders are also charging commitment charges on the undisbursed loans. On test check basis it was
observed that in the loan agreement of Pehur High Level Canal (Loan No3470) an amount of Rs. 14,987
million remained undisbursed despite expiry of grace period on April 2022. Commitment charges @ 0.15%,
amounting to Rs 22.480 million are applicable on the undisbursed balance.
The lapse occurred due to delay in project execution.
6.8 Unjustified capitalization of interest and commitment charges resulting in increase in foreign
debt Rs 4,927 million
900
2023-24, it was observed in the disbursement schedules of the loans on test check basis that in certain loans,
instead of payment of interest charges of the grace period were capitalized and added in the original loan.
Detail is given below.
Exchange
Total rate as on Amount
Loan Capitalization Capitalization
Name of the loan capitalization 3oth Capitalized
No in 2021-22 ($) in 2022-23 ($)
($) June in Rs
2023
3470 Pehur High Level Canal 261,085 1,181,618 1,442,703 249 359,233,047
3476 Access to Energy 1,629,625 7,283,821 8,913,446 249 2,219,448,054
Provincial Roads
3601 Improvement 680,252 2,696,930 3,377,182 249 840,918,318
Provincial Roads
3602 Improvement 135,837 135,837 249 33,823,413
Additional Financing for
KP Provincial Road
3756 Improvement Project 290,336 1,886,225 2,176,561 249 541,963,689
Balakot Hydro Power
4057 Project 483,556 2,317,923 2,801,479 249 697,568,271
Cities Improvement
4160 Project 943,098 943,098 249 234,831,402
Total 3,344,854 16,445,452 19,790,306 4,927,786,194
Audit held that capitalization of interest charges is not justified as the grace period is basically for
the payment of the principal amount. Capitalizing the interest charges, which is the operating cost is not
justified, as this capitalization neither increases cash flows nor increases assets but converts operating cost
into long-term debt.
The lapse occurred due to weak financial management which resulted in unnecessary debt
accumulation of foreign debt.
Audit recommends corrective actions.
7 Departmental Responses
Observations were communicated to the secretary to Government Finance Department Vide Letter
No.Audit/FAT/Thematic Audit/2022-23/2 Dated 09.01.2024, however, no replies were given.
8 Conclusion
Based on the thematic audit of the Khyber Pakhtunkhwa Debt Management the following
conclusions were drawn.
901
 Due to the absence of medium-term projections, fiscal responsibility documents, and a clear debt
management strategy resulted in spontaneous debt acquisition without proper planning.
 Several loans remained undisbursed due to the absence of project implementation units, leading to
funds being unutilized for their intended purposes.
 Retention of a substantial portion of disbursed loans within the consolidated fund account has the
potential to negatively impact project progression due to limited financial support for ongoing
activities.
 Discrepancies in reporting and accounting for foreign debt led to an understatement of Rs. 21,715
million, highlighting potential inefficiencies in financial reporting and management.
 Failure to establish executing agencies for allocated projects within the stipulated timeframe led to
unutilized funds and raised concerns about project management, execution timelines, and resource
utilization.
9 Recommendations
Based on the issues highlighted audit recommends the following.
 Audit recommends immediate development and implementation of a comprehensive medium-term

debt management strategy and fiscal responsibility framework for proper projection of debt
acquisition and utilization.
 Prioritize the establishment of project implementation units to facilitate the timely and effective
execution of projects funded by loans, ensuring compliance with loan agreement requirements.
 Ensure transparency and accountability in the utilization of disbursed funds, minimizing retention
in the consolidated fund and ensuring adequate allocation for ongoing project activities.
 Strengthen financial reporting mechanisms to accurately account for all borrowed funds, reducing
discrepancies and understatement of foreign debt.
 Enforce strict timelines for establishing executing agencies for allocated projects to prevent delays
and ensure efficient fund utilization.
Implementing these recommendations will foster better debt management, streamline fund
utilization, and improve project execution efficiency, ensuring effective utilization of borrowed funds for
the province's development.
902
1. INTRODUCTION
1.1 Background
Khyber Pakhtunkhwa Lissaail-e-Wal Mahroom Foundation has evolved from Tanzeem Lissaail-e-
Wal Mahroom which was special initiative of the Provincial Government launched as developmental
project in 2006-07 for providing relief to the indigent and dispossessed segments of the Society including
orphans, widows, person with disability and the poor. The Tanzeem had Governing Council which was
working directly under the Chief Minister Secretariat for operational purposes, while for budgetary
allocation it was placed initially in the Health Sector (Health Department) and subsequently under the Social
Welfare Sector (Social Welfare Department). The Tanzeem would provide social welfare oriented services
in three sectors i.e. Education Sectors, Health Sectors and Social Welfare Sector. Gradually its welfare
activities /operations expanded significantly, requiring higher quantum of funding. As a result, the then
Chief Minister Khyber Pakhtunkhwa in June 2011announced/approved allocation of Rs. 600 million for
three years i.e Rs.200 million per year and accordingly the allocated fund released every year (i.e 2011-12,
2012-13 and 2013-14).
In July 2015 Tanzeem Lissaail-e-Wal Mahroom was merged with the "Khyber Pakhtunkhwa
Deserving Widows and Special Person Welfare Foundation' (a nascent entity established in 2014) & re-
designated as Khyber Pakhtunkhwa Lissaail-e-Wal Mahroom Foundation (LWMF) through the Khyber
Pakhtunkhwa Lissaail-e-Wal Mahroom Foundation Act, 2015. Subsequently, a new Board was constituted
& notified on 11.05.2017 for three years, the terms of which expired on 10.05.2020 and since then
foundation is operating with-out constitution of the board till date. Since its re-designation in July 2015, the
Lissaail-e-WalMahroom Foundation through its different welfare schemes provided relief/support to
entitled beneficiaries including orphans, widows, indigent & dispossessed persons under the three sectors.
During the period (2015 to 2018) the Foundation faced shortage of funds because against the actual
requirements/proposed budget, less allocation were made by the Finance Department and still lesser
releases were made by the Finance Department whereas; not a single rupee was released in the F.Y 2017-
18. Financial problem linger on even beyond June 2018. Persistent hyperinflation static quantum of annual
allocation (Rs. 200 Million per annum) and release of a meager amount of fund had an adverse impact on
the capacity and service delivery of the foundation. Resultantly, foundation welfare activities/operations
had to be curtailed and scaled down significantly as detailed below:
(Rs in million)
S. Financial Proposed Allocated Release %age of
No. Year Budget Budget Budget released
1. 2015-16 209.72 0 36.00 18%
amount
2. 2016-17 229.39 200 20.00 10%
3. 2017-18 247.44 200 0 0%
4. 2018-19 256.30 200 100 50%
5. 2019-20 284.18 200 100 50%
6. 2020-21 247.188 200 100 50%
7. 2021-22 276.00 276 138 50%
8. 2022-23 276.00 276 69 25%
Total 2026.218 1552.00 563.00
903
1.2 Functions of the Foundations
The Foundation is working for the welfare of orphans, widows, the disabled, and dispossessed
persons and individuals within the province. Its operations span three critical sectors: Health, Education,
and Social Welfare.
a. Health Sector:
 Providing FMT up to Rs. 20,000/- per patient for a period of one year in specific hospitals
 Zakat forms &proforma for treatment cost estimate and focal person, verification certificates are
issued to the patient on the basis of OPD Chit & valid CNIC.
 Verification by the Chairman Local Zakat Committee concerned & Physicians/Focal Persons on
prescribed proforma.
 After fulfillment of coddle formalities Patient Information proforma is filled by the official
concerned at LSWM foundation.
 After the approval of MD, formal sanction is issued in favor of the patient for provision of FMT/
Paraplegic facility.
 Payments to the hospitals are processed through cross cheque, by submission of bills of respective
hospitals to the Foundation monthly basis.
b. Social Welfare Sector:

 Selection of Tailoring & Garments Centers for Six months courses through Advertisement in daily
Newspapers.
 Centers are selected on the basis of trainer's vocational Qua1ification, availability of space for
training, water & electricity, and location/environment.
 Selection of trainees (i.e. orphan, disabled, widows and deserving poor) on the basis of elaborate
instructions issued on the prescribed proforma to the T&G Centers.
 Inspection and surprise visits of the T&G centers are made by the officials of the foundation and
SDC during the course of training.
c. Education Sector:
 Selection of Primary Level deserving orphan awardees are made through DEO’s of the respective
districts on Union Councils basis. One male and one female student is selected from each UC.
 Payment of stipends through Cross/Order Cheque on the basis of updated list of selected orphan
students.
 Distribution programs are held in the districts by the respective DEO/focal person in coordination
with the foundation.
 Stipend given to the awardee @ Rs. 1000/- per month (Rs. 12000/- per annum)
 Selection of Post-Matric orphans & deserving awardees on merit, through advertisements in daily
Newspapers, on Tehsil basis; 05 male und 05 female entitled students selected from each tehsil.
 Career Stipends @ Rs. 4000/- per month is admissible to all selected awardees.
904
 Rs. 10,000/- Honoraria is admissible to the nominated Focal person of the LSWM Foundation in
educations Sector.
In the health sector, patients receive free medical treatment (FMT) for a one-year period in
designated hospitals, encompassing the costs of medicines and surgeries. The education sector focuses on
providing financial assistance to impoverished or orphaned students at both pre and post-matric levels.
Within the realm of social welfare, the Foundation has established tailoring and garments centers across the
districts, offering six-month training program to female citizens, enhancing their skills for sustainable
development and livelihood.
Never the less the foundation has managed to provide relief /support to a total of 41785 entitled
beneficiaries from the 2015-16 and onward through its various schemes in the all three sectors including
Educations (11162 orphan awardees both male/female), Health (16720 poor patients both male/female,
9748 flood affected and Social Welfare (5155 female trainees including orphans, widows indigent etc.
As per section-05(1) of the LWM Foundation Act, 2015the Board of Directors of Khyber
Pakhtunkhwa Lissaail-e-WalMahroom Foundation consists of the following members headed by a
Chairperson;-
1. Secretary to Government of Khyber Pakhtunkhwa, Zakat, Ushr, Social Welfare, Special

Education and Women Empowerment Department;
2. Secretary to the Governmentof Khyber Pakhtunkhwa, Establishment Department;
3. Secretary to Government, of Khyber Pakhtunkhwa,Finance Department;
4. Chairman, Khyber Pakhtunkhwa Zakat and Ushr Council;
5. Chairperson, Khyber Pakhtunkhwa Commission on the status of women;
6. Four persons to be appointed by the Chief Minister for a period of three years on the
recommendation of Search Committee from amongst the known philanthropists, retired civil
servants in BPS-20 and above from PCS/PMS/PAS and members from civil society; and
7. Managing DirectorLissaail-e-WalMahroom Foundation (Member-cum-Secretary)
The term of last Board of Directors was expired on 10 th May 2020 and no new Board of Directors
constituted till date which needs re-constitution.
2. Financial outlay of the foundation:
2.1 Endowment Fund

According to Section-15 of Lissaail-e-WalMahroom Foundation Act, 2015 there should be to fund
to be known as Khyber Pakhtunkhwa Endowment Funds which can be used only for the welfare of the
indigent & dispossessed persons. Endowment fund consists of grants, contributions, donations, trusts
and bequests by;
 Federal Government
 Provincial Government
905
 International and local donor agencies
 Conditional grant
 Fifty percent (50%) of the annual income from investment of endowment fund
 Ten (10%) of unconditional grants; and
In the BOK the Foundation has endowment of Rs. 500 Million invested in RFC Account
(invested in 2014 and 2016)
2.2 General Fund

According to Section-16 of Lissaail-e-WalMahroom Foundation Act, 2015 there should be to
fund to be known as General Fund which is used for the administrative expenditure of the
foundation and welfare operations for the indigent & dispossessed persons in the manner as
prescribed by the board. The General Fund consists of grants, contributions etc; by the following;
 Federal Government
 Grant-in-aid by government of such amount as I may deem fit to allocate every year.
 Donations, financial assistance and funds by international and local donor agencies
 Ninety percent (90%) of unconditional grant
 Fifty percent (50%) of the annual income from investment of endowment fund; and
The source of the General Fund is Government of Khyber Pakhtunkhwa, who released the fund
through Finance Department in shape of Grant-in-Aid which is kept in a separate bank account. Detail of
General Fund received in the last three years as tabulated below:
(Amount in million)
S.No Financial Year Proposed Allocated Release %age of released
Budget Budget Budget amount
1. 2020-21 247.188 200 100 50%
2. 2021-22 276.00 276 138 50%
3. 2022-23 276.00 276 69 25%
Total 799.188 752.00 307
3. Objectives of the Foundation:
The following objectives were laid down in the LWM Foundation Act, 2015.
1. Enhance the availability of specified facilities to the indigent and dispossessed persons in
health, education and social welfare sectors;
2. Further synergize the welfare activities of the charity organizations and evolve a partnership
with more private charities;
3. Protect the indigent and dispossessed persons by facilitating the provision of health care,
education, skill development and entrepreneurship; and
4. Encourage and support philanthropist individuals and institutions to improve their activities
and interventions.
4. AUDIT OBJECTIVES
906
The objective of the Citizen Participatory Audit (CPA) is active participation of citizens and civil
society society/groups and organizations in the audit process to:
1. Assess the impact of the Khyber Pakhtunkhwa Lissaail-e-WalMahroom Foundation's initiatives

on the targeted indigent and dispossessed persons/individuals in the health, education, and social
welfare sectors.
2. Examine the efficiency and effectiveness of the financial assistance provided to patients, students,
and individuals in terms of achieving the foundation's objectives.
3. Evaluate the foundation's efforts in fostering partnerships with private charities and charity
organizations to synergize welfare activities and enhance overall outcomes.
4. Scrutinize the measures in place to protect indigent and dispossessed persons, focusing on the
facilitation of healthcare, education, skill development, and entrepreneurship.
5. AUDIT SCOPE AND METHODOLOGY
Citizen Participation:
 Involve citizens and beneficiaries/members of civil societies in the audit process through discussion
and interviews to gather firsthand experiences and feedback.
Financial Audit:
 Review the financial outlay and budget allocations over the past years to ensure transparency and
adherence to financial regulations.
 Examine the management, release and utilization of funds against proposed budgets to determine
financial efficiency.
Program Evaluation:
 Analyze the implementation and outcomes of health, education, and social welfare programs to
gauge their effectiveness.
 Assess the reach and impact of financial assistance and training programs for orphans, widows,
disabled individuals, and other targeted groups.
Partnership Assessment:
 Evaluate the collaborations with private charities and charitable organizations, assessing the extent
to which partnerships enhance the foundation's welfare activities.
Compliance Review:
 Ensure compliance with the Khyber Pakhtunkhwa Lissaail-e-WalMahroom Foundation Act 2015.
 Verify that the foundation follows established procedures for the composition of Board and other
key appointments.
Documentation Analysis:
907
 Scrutinize official documents, reports, and records related to the foundation's activities and
interventions.
 Cross-reference the financial statement, proposed budget, allocation, and release figures with the
actual financial transactions.
6. AUDIT LIMITATIONS
While the audit team has made commendable efforts to involve members of civil societies in the
domains of education, health, and social welfare, the overall efficacy of the Citizen Participatory Audit
is hampered by the team's restricted activities primarily limited to interviews and discussions.
The time and resource constraints have hindered the audit team's ability to conduct extensive field
surveys in education, health, and social welfare sectors. The team's focus on interviews and discussions
may limit the depth of analysis in scrutinizing various aspects of education, health, and social welfare
initiatives taken by the foundation. By primarily relying on interviews and discussions, there is a risk
of overlooking critical issues that might not be adequately addressed through these methods alone.
Lack of data collection by the foundation such as the impact of policies on marginalized
communities or the effectiveness of welfare programs, may not receive the attention they deserve.
7. Citizen/Beneficiaries Feedback
7.1 Health Sector
The audit team interviewed the citizens and the beneficiaries of the foundations and it was told by
the beneficiaries’ that they are satisfied with services they availed. However, while interviewing the doctor
at Hayat Medical Complex, it was told that the facilities and services are already available in the Govt
Hospitals especially in the teaching hospitals of the KP; therefore, the patients should directly approach to
hospital rather than using indirect channels for approaching hospitals. On the one side this will not only be
time saving but on the other it will be helpful to save the patient’s life.
7.2 Education Sector
The audit team interviewed the civil society and the beneficiaries of the foundations and it was
retrieved from their opinion regarding Khyber Pakhtunkhwa Lissaail-e-WalMahroom Foundation's
activities pertain to education sector. The citizens expressed reservations about its performance especially
over the last three years. The promise to provide financial assistance to impoverished or orphaned students
at both pre-Matric and post-Matric levels has faced challenges in execution. The eligibility criteria and
disbursement processes seem opaque, leading to a lack of clarity on how assistance is reaching to the most
deserving individuals. There is a pressing need for a comprehensive review to ensure that the foundation's
efforts in the education sector align with the intended goals and effectively address systemic shortcomings.
908
Furthermore, over 1400 students of 2021-22 of both categories are still waiting for their stipends
due to non-availability of full time Managing Director, as the post is vacant since March 2023. The
additional charge is given to the Secretary Social Welfare who could not spare time for the foundation
activities due to busy schedule.
7.3 Social Welfare Sector
The audit team interviewed the civil society and the beneficiaries of the foundations and it was
derived from their opinion that Khyber Pakhtunkhwa Lissaail-e-WalMahroom Foundation's efforts in the
realm of social welfare were commendable, citizens acknowledged the positive step of establishing tailoring
and garment centers. However, concerns arise regarding the effectiveness of the six-month training
program, especially for female citizens. The impact of these skills on sustainable development requires
careful scrutiny. The foundation must ensure that these initiatives genuinely empower individuals and
contribute tangibly to their socio-economic well-being. A thorough assessment of the training programs
and their outcomes is essential for the foundation to achieve its social welfare objectives effectively.
8. AUDIT FINDINGS AND RECOMMENDATIONS
8.1 Organization and Management
8.1.1 Non preparation of annual Financial Statements of the Foundation

According to section 20(1) of the Khyber Pakhtunkhwa Lissaail-e-WalMahrrom Foundation Act
2015, notified by the Provincial Assembly vide their letter No.PA/KP/Bills/2015/225, dated 03.07.2015.
The Managing Director shall prepare Annual financial statements of the Foundation within thirty days of
closing of the respective financial year and submit these Statements along with audit report there upon to the
Board within ninety days of the close of financial year.
During Citizen Participatory Audit of the office of the Managing Director Lissaail-e-WalMahroom
Foundation for the financial year 2022-23, it was noticed that the management of the foundation did not
prepare the annual financial statements since the establishment of the foundation i.e. 2015 which is a
mandatory requirement of the of the Act.
Audit is of the view that non preparation of annual financial statements of the foundation is a
seriousirregularity on the part of the management and due to non-preparation of financial statement true and
fair picture of the accounts could not be ascertained which could lead to misappropriation.
The lapse occurred due to weak financial control of the management which resulted into non
preparation of annual financial statement since its establishment.
When pointed out in December, it was replied that the said audit observation will be taken up with
the Secretary Social Welfare for hiring of an Auditor/CA Firm regarding preparation of financial statement
since inception of the Foundation till date.
Audit recommends inquiry into the matter besides action against the person at fault.
8.1.2 Non preparation of Annual Report of the Foundation for laying before the Provincial Assembly
909
According to section 21 of the Khyber Pakhtunkhwa Lissaail-e-WalMahrrom Foundation Act 2015,
notified by the Provincial Assembly vide their letter No.PA/KP/Bills/2015/225, dated 03.07.2015. The
Board shall prepare Annual Report of the Foundation which shall be submitted to Secretary to Government,
Zakat, Ushr, Social Welfare, Special Education and Women Empowerment Department for laying before the
Provincial Assembly.
During Citizen Participatory Audit of the of the office of the Managing Director Lissaail-e-
WalMahroom Foundation for the financial year 2022-23, it was noticed that the management of the foundation
did not prepare the Annual Report of the foundation since its establishment i.e. 2015 which is a mandatory
requirement of the of the Act.
Audit is of the view that non preparation of annual report of the foundation is a serious irregularity
on the part of the management and due to non-preparation of the report it could not be laid before the
Provincial Assembly.
Audit observed that the lapse occurred due to weak internal controls which led to the non-preparation
of an annual report since the establishment of the foundation. This oversight has resulted in a situation where
the legislature remains uninformed about the foundation's activities. The absence of a comprehensive annual
report has hindered transparency and accountability, leaving key stakeholders unaware of the foundation's
operational details and financial performance.
When pointed out in December-2023, it was replied that Report discussed today on 26.12.2023.
However, a detailed brief regarding annual report is already been prepared and handover to the audit team for
perusal. The said report will be placed before the board of Directors for approval as and when constituted and
after that the annual report will be placed before the Provincial Assembly.
Audit recommends inquiry into the matter besides action against the person at fault.
8.1.3 Non transfer of Un-Conditional Grant to LWM Endowment Fund Account worth Rs.20.70
million
According to Clause-15 of the LWM Act, 2015 notified by the Provincial Assembly vide their letter
No.PA/KP/Bills/2015/225, dated 3.7.2015, that there shall be a fund to be known as KP LWM Foundation
Fund, which shall consist of grants, contributions, donations, trusts and bequests by:-
a. Federal Government.
b. Provincial Government.
c. International and local donor agencies.
d. Conditional grant.
e. 50% of the annual investment of Endowment fund;
f. 10% of un-conditional grant.
During Citizen Participatory Audit of the record of the Managing Director LWM Foundation for
the financial year 2022-23 revealed that an Account bearing No.PLS-07718-003 in BOK Islamic Banking
Branch Hayatabad is being operated specifically as Endowment Fund Account consist of profit returns on
investments + Interest accrued on PLS mode, of the amount so remitted by the Govt. Out of the total
profit/return on investment, 50% will be utilized for the welfare of the indigent and dispossessed persons.
910
But on comparison and verification of record, it was disclosed that the LWM Foundation received a sum
of Rs.207.00 million as Grant-in-Aid (Un-conditional grant) during the period but 10% of the un-
conditional grant amounting to Rs.20.700 million (207.000 x 10%) was not transferred to the specific fund
Account resulted into non-transfer of grant to the relevant bank account in violation of the clauses of the
Act as per detail given below;
S.No. Cheque No. & Dated GIA Amount
1. 2225660 dated 16.09.2021 69,000,000
2. 2322215 dated 17.03.2022 69,000,000
3. 2466497 dated 12.09.2022 69,000,000
Total 207,000,000
Audit is of the view that if the amount had not been transferred to the designated bank account,
there was a potential for higher profits through investment in fixed RIBA-Free Certificates. This additional
profit could have been utilized for program activities, a course of action that was neglected, thereby
violating the distribution guidelines outlined in the Act. The failure to align with the stipulated provisions
has resulted in a missed opportunity to maximize financial gains for the foundation's program initiatives.
The lapse occurred due to non-observance and implementation of the Rules already framed.
When pointed out in December-2023, it was replied that The Board of Directors of Khyber
Pakhtunkhwa Lissaail-e-WalMahroom Foundation was expired in May, 2020 and no new Board of
Directors is constituted due to amendment of Act 2015, the audit observation/proposal will be placed before
the Board of Directors as and when constituted, and reinvestment will be done as per the decision of the
newly constituted Board of Directors. The contention of audit admitted by the management of the
foundation. The Act may follow in true letter & spirit and 10% amount out of unconditional grant amount
may transfer for foundation welfare activities.
The matter needs to be enquired for taking appropriate action and fixing the responsibility under
intimation to audit.
8.1.4 Non achievement of core objectives due to failure to evolve partnership with private charities
According to the Khyber Pakhtunkhwa Lissaail-e-WalMahroom Foundation Act-2015 duly
notified vide No. PA/Khyber Pakhtunkhwa/bills2015/225 dated 03.07.2015, the core objective of the
foundation were:
a. Enhance the availability of specified facilities to the indigent and dispossessed persons in health,
education and social welfare sectors;
b. Further synergize the welfare activities of the charity organizations and evolve a partnership with
more private charities;
c. Protect the indigent and dispossessed persons by facilitating the provision of health care, education,
skill development and entrepreneurship; and
d. Encourage and support philanthropist individuals and institutions to improve their activities and
interventions.
911
During Citizen Participatory Audit Accounts record of the Managing Director, Lissaail-e-
WalMahroom Foundation for the financial year 2022-23 revealed that the foundation was aimed to improve
the availability of specified facilities to the indigent and dispossessed persons in health, education and social
welfare by not only working on its own but also by involving and evolving partnership with more private
charities to further synergize the welfare activities. However, since its inception in 2015, no efforts have
been made to involve more charity organizations. Audit held that:
1. Without collaboration and synergy, the foundation may struggle to maximize its impact on welfare
activities. Working in isolation may result in limited resources, expertise, and outreach, ultimately
reducing the effectiveness of their initiatives. Moreover, without such collaborations, the
foundation may struggle to maintain its initiatives over time, risking the continuity of support for
the communities it serves.
2. Partnering with private charities could provide additional resources, both financial and human.
Without these partnerships, the foundation might face resource constraints, hindering its ability to
address the diverse and complex needs of the beneficiaries.
3. The lack of progress in achieving this objective might lead to stagnation in the foundation's impact
and reputation. Donors and stakeholders may question the foundation's ability to adapt and evolve,
potentially affecting future funding and support.
The lapse occurred due to weak internal controls by ignoring the core objectives of the foundation.
When pointed out in December-2023, it was replied that Public-private partnerships involve
collaboration between a government agency and a private-sector company that can be used to finance, build,
and operate projects. Financing a project through a public-private partnership can allow a project to be
completed sooner or make it a possibility in the first place. Khyber Pakhtunkhwa Lissaail-e-WalMahroom
Foundation has been working in Health, Education and Social Welfare Sectors for providing relief to the
indigent & dispossessed segments of the society including patients suffering from different eye diseases.
Private Institution has been collaborating with LSWM Foundation since inception of the Foundation. They
administered Cataract surgeries of the indigent & dispossessed segments of the society as per
MOU/Agreement duly signed between LSWM Foundation and the Organization/institutions concerned
where they are strictly bound to work as per MOU.
Reply is not correct as the foundation failed to involve private charities besides the cataract
surgeries and other areas have completely been ignored.
Audit recommend that strenuous efforts may be made to enhance the welfare activities by involving
private charity organizations.
8.1.5 Irregular expenditure without Board’s approval Rs. 194.826 million

According to section-17 of the Khyber Pakhtunkhwa Lissail-e-WalMahroom foundation Act-2015
duly notified vide No. PA/Khyber Pakhtunkhwa/bills2015/225 dated 03.07.2015, The Managing Director
shall, in respect of each financial year, prepare and place before the Board for approval, the budget of the
Foundation. The budget shall comprise of-
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(a) Regular Budget, representing the expenditure to be incurred on administration and organization of
the Foundation which shall include salaries of officers, staff and other expenditure of the
Foundation;
(b) A Program Budget, representing the disbursements planned to be made on various programs and
activities for the welfare of indigent and dispossessed persons in, the achievement of objectives of
the Foundation; and
(c) A Receipts Budget, indicating the probable sources from where the funds shall be pooled to meet
the Regular Budget and the Program Budget.
During Citizen Participatory Audit accounts record of the Managing Director, Lissaail-e-
WalMahroom Foundation for the financial year 2022-23 revealed that expenditure to the tune of Rs.
194.826 million has been incurred by the foundation on account of salaries, contingencies and social welfare
activities as per details below:
S.No Year Amount
1 2021-22 90,841,157
2 2022-23 103,985,044
Total 194,826,201
As per section-17 of the Foundation’s Act, the Managing Director was liable to place the budget
before the Board for approval. However, since May, 2020 the Board has not been re-constituted nor any
Board meeting held. Hence, expenditure without the approval of the Board of Rs. 194.826 million is
irregular and un-authorized.
The lapse occurred due to weak internal controls. When pointed out in December-2023, it was
replied that budgetary proposals for financial year 2021-22 & 2022-23 could not be approved in time due
to expiry of the Board of the Directors on 11.05.2020. The activities of the LSWM Foundation continued
in the public interest. The last Board of Directors also approved the budget of financial year 2020-21.
When pointed out in December-2023, it was replied that the financial expenditure incurred for
carrying out activities of the Foundation in the Health, Education & Social Welfare Sectors including
administrative expenses for the welfare of the orphans, widows and indigent and dispossessed persons
which are required to be Ex-post Facto Sanction by the Board of Directors LSWM Foundation as and when
constituted.
The reply of the foundation is not convincing expenditure without Board approval which is
mandatory requirement of the act.
Audit recommends that the Board may be re-constituted at the earliest along with approval of the
expenditure incurred.
8.1.6 Non distribution of funds under education stipend program to deservingorphans/ students at
pre and post-Matric levels Rs. 27.839 million
According to the Khyber Pakhtunkhwa Lissaail-e-WalMahroom foundation Act-2015 duly notified
vide No. PA/Khyber Pakhtunkhwa/bills2015/225 dated 03.07.2015, the core objective of the foundation
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were to (a) Enhance the availability of specified facilities to the indigent and dispossessed persons in health,
education and social welfare sectors, (c) Protect the indigent and dispossessed persons by facilitating the
provision of health care, education, skill development and entrepreneurship read with Education Stipend
Policy notified vide No. LWMF/2019-20 dated April-2020 that stipend of Rs. 1000/per month per student
will be admissible to the selected awardees or as approved by BOD at the primary level and career stipends
at Rs. 4000/- per month is admissible to all selected students at Post-Matric Level.
WalMahroom Foundation for the financial year 2022-23 revealed that various education stipend programs
were initiated as per the foundation’s education policy, aimed to provide monthly stipends, amounting to
Rs. 1000, to underprivileged or orphaned pre-matric level students. Additionally, career stipends of Rs.
4000 per student have been introduced for post-matriculation levels, benefiting students across different
districts including both male and female students.
However, it was observed that funds amounting to Rs. 27,839,000 allocated for the aforementioned
education programs have remained undistributed since July 2021, despite the availability of funds.
S.No Batches of students No. of students Period Months Amount
1. Batch-VII Primary Level (2021- 1425 July-2021-Dec-2022 18 25,650,000
22)
2. Batch-2018-19 Primary Level 95 July-2021-June-2021 12 1,140,000
3. Batch 2019-20 Post-Matric Level 17 Various - 789,000
4. -do- 06 Various - 260,000
Total 27,839,000
Audit held that the management failed to fulfill its core objectives and the reason of its existence
on one hand but on the other hand the already financially struggling orphan students were deprived from
the provision of financial assistance exacerbating their already challenging circumstances which is alarming
and beyond understanding.
The lapse occurred due to weak internal controls by denying financial assistance to the
underprivileged/orphan students.
When pointed out in December-2023, it was replied that the post of Managing Director was laid
vacant due to transfer of the then Managing Director Mr. Khayyam Hassan Khan vide Notification dated
31.03.2023. All the administrative as well as welfare activities of the foundation are completely stopped
because of non-availability of sanctioning authority for 05 months (April, 2023 to August, 2023). This
office addressed a letter to Secretary Social Welfare regarding posting of Managing Director LSWM
Foundation. The Govt. of Khyber Pakhtunkhwa now authorized Secretary Social Welfare Department to
hold additional Charge of the post of Managing Director Khyber Pakhtunkhwa Lissaail-e-WalMahroom
Foundation vide Establishment Department Govt. of Khyber Pakhtunkhwa Notification No. SO(E-
1)E&AD/9-115/2023 dated 30-08-2023.
The pending file/cases as mentioned in the audit paras are submitted to the worthy Secretary Social
Welfare for perusal and approval. After the approval the same may be distributed amongst the orphan
students concerned.
Audit contention admitted and till December 2023 the payment is undisbursed.
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Audit recommends enquiry into the matter for fixing responsibility along with immediate release
of funds to the deserving students already deprived.
8.1.7 Non implementation of skill development activities despite availability of funds of Rs. 92.497
million
education and social welfare sectors. (b) Protect the indigent and dispossessed persons by facilitating the
provision of health care, education, skill development and entrepreneurship. Read with skill development
regulations notified vide No. LSWMF/2019-20 dated April, 2020 that the number of training centers will
be 02 per district, 03 in case of district as divisional headquarter and 04 in case of Peshawar as Provincial
Capital. Each batch will consist of 20 trainees per center and the foundation will pay 10,000/- stipend to
each trainee at the end of the course through cross cheque or order cheque whichever is convenient.
WalMahroom Foundation for the financial year 2022-23, it was revealed that the Board of Directors
approved a skill development policy notified vide (No. LSWMF/201-20/) dated April 4, 2020 in an effort
to empower the underprivileged. The policy aimed to offer skill development training to those in need, with
plans for the establishment of two training centers in each district, spanning a six-month training period.
Divisional headquarters were scheduled to host three centers, while the provincial capital, Peshawar, was
to accommodate four centers.
In line with this policy, 45 training centers were set up across various districts in 2020-21, followed
by an additional 47 in 2021-22. However, an examination of records revealed that no skill development
activities were carried out post the expiration of the 2021-22 batch in February 2023despite the availability
of funds amounting to Rs. 92.149 million in March-2023, i.e. 50% from the established endowment fund's
profits, no further initiatives were undertaken. This was not only a clear deviation from the foundation's
stated objectives but also stands in violation of the stipulated skill development policy depriving the
underprivileged and poor citizen from the benefits of the programs and financial assistance.
The lapse occurred due to weak internal controls by ignoring the core objectives of the foundation.
When pointed out in December-2023, it was replied that the post of Managing Director was laid
vacant due to transfer of the then Managing Director Mr. Khayyam Hassan Khan vide Notification dated
31.03.2023. All the Administrative as well as welfare activities of the foundation are completely stopped
because of non-availability of sanctioning authority for 05 months (April, 2023 to August, 2023). This
office addressed a letter to Secretary Social Welfare regarding posting of Managing Director LSWM
Foundation. The Govt. of Khyber Pakhtunkhwa now authorized Secretary Social Welfare Department to
hold additional charge of the post of Managing Director vide Establishment Department Govt. of Khyber
Pakhtunkhwa Notification No. SO(E-1)E&AD/9-115/2023 dated 30-08-2023.
However, the case may be submitted to the Managing Director/Secretary Social Welfare for
approval after fulfilling of all the coddle formalities. The reply of the foundation is not convincing as no
skill development center was constituted till December 2023.
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Audit recommends that strenuous efforts may be made to achieve the objectives of the foundation
in letter & spirit.
8.1.8 Irregular and un-authorized establishment of training centers involving funds allocation of
Rs. 3.072 million
education and social welfare sectors. (b) Protect the indigent and dispossessed persons by facilitating the
provision of health care, education, skill development and entrepreneurship. Read with skill development
regulations notified vide No. LSWMF/2019-20 dated April, 2020, that the number of training centers will
be 02 per district, 03 in case of district as divisional headquarter and 04 in case of Peshawar as provincial
capital. Each batch will consist of 20 trainees per center and the foundation will pay 10,000/- stipend to
each trainee at the end of the course through cross cheque or order cheque whichever is convenient. A sum
of Rs. 18000/- per month will be paid as salary of instructors.
WalMahroom Foundation for the financial year 2022-23, revealed that the Board of Directors approved a
skill development policy notified vide No. LSWMF/201-20/ dated April 4, 2020. The policy aimed to offer
skill development training to those in need, with plans for the establishment of two training centers in each
district, spanning a six-month training period. Divisional headquarters were scheduled to host three centers,
while the provincial capital, Peshawar, was to accommodate four centers.
However, scrutiny of record revealed that contrary to the skilled development policy guidelines,
more training centers were established against the required limit at various districts, district headquarters
and Provincial capital, Peshawar. This not only resulted in irregular and un-authorized allocation of funds
of Rs. 3.072 million to those training centers in respect of stipends, instructors’ salary and training materials
etc., but citizens of other districts in need of skilled development and financial assistance were denied their
rightful share of funds, which were instead diverted to other districts.
Moreover, all the trainings were focused on tailoring and garments (T&G) targeting only female
citizens, and other trainings programs such as basic driving and mechanical driving programs approved in
the policy focusing male citizens were completely ignored.
The lapse occurred due to weak internal controls due to which policy guidelines were violated.
When pointed out in December-2023, it was replied that the number of centers increased in
Haripur& Peshawar was only because of its population and need basis.
Irregularity admitted. Audit recommends a fact-finding enquiry into the matter for fixing
responsibility and action under the rules.
8.2 Financial Management
8.2.1 Non-deposit of bank profit into the Government Treasury - Rs. 20.030 million
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According to the Provincial Government policy circulated vide Finance Department letter No. 2/3-
(F/L)FD/2007-08/ Vol: IX dated 10.02.2014, profit earned on the Profit & Loss Sharing Accounts should
be deposited in government treasury under the following heads of account:-
C01 Total income from property
C018 Total interest on loan –Others
C01803 Interest realized on investment of Cash Balance
During Citizen Participatory Audit it was observed that Managing Director Lissaail-e-
WalMahroom Foundation operated Interest Bearing Account vide No. 000212908001 in the Bank of
Khyber for the government of Khyber Pakhtunkhwa grant/funds on 08.04.2016. The Bank statements
revealed that profit of Rs 20,029,986(7,010,048 + 13019,939) was earned on this account during the year
2022-23.
Audit observed that the profit earned was required to be deposited into the Provincial Government
Account. Contrarily, the same was retained in the bank account. The non-deposit of profit into government
treasury was held unauthorized.
The lapse occurred due to weak financial controls of the management and violation of rules which
resulted into retention of profit amount outside the government treasury.
When pointed out in December-2023, it was stated that Khyber Pakhtunkhwa Lissaail-e-
WalMahroom Foundation was established in 2015 through an Act called the Khyber Pakhtunkhwa Lissaail-
e-WalMahroom Foundation Act, 2015 (KP ACT No. XXVI) Passed by the provincial assembly. According
to the Section 15 of the LSWM Foundation Act, 2015 Endowment funds consist of grants, donations, trusts
and bequests by the Federal Government, Government international and local donors agencies and
conditional grants. The Foundation is statutory body and the only source of its revenue is the profit occurred
on the bank deposits. In case of the directions of the Finance Departments are complied with there would
be no fund left to run this organization. The case has already been taken up with Finance Department vide
this office letter No. LSWMF/2015-16/114-15 dated 28.09.2016.
Reply is not correct as a separate account has been maintained to run the activities of the foundation.
Audit recommends calculation of profit amount since 08.04.2016 and timely transfer of the amount
of profit into the government besides action against the person(s) held responsible for keeping the amount
outside the government treasury.
8.2.2 Un-authorized drawl of Corporate Allowance worth-Rs1.119 million

According to Para-3 of the Finance Department (Regulation Wing) notification No.FD (SOSR-
II)/8-7/2016-17, dated 2.2.2018, the officers posted against scheduled post and are in receipt of such
allowances other than regular allowances shall be entitled to one of the allowance which is more beneficial.
During Citizen Participatory Audit audit of the office of the Managing Director Lissaail-e-
WalMahrrom Foundation for the financial year 2022-23, it was noticed that the post of Managing Director
was declared as scheduled post by the Establishment Department and the PMS/PAS officers posted against
this post were allowed the perks and privileges of the scheduled posts including the Executive Allowance,
deputation allowance and other regular allowances, but they were also allowed Corporate allowance @
20% of his running basic pay which is purely meant for those employees who were appointed under the
917
Khyber Pakhtunkhwa Lissaail-e-WalMahroom Foundation Act 2015. It was also clarified by the
Establishment Department vide their letter as noted above that those officers posted against the scheduled
post and are in receipt of such allowances other than the regular allowances shall be entitled to one of the
allowance which is more beneficial but even then the officers were allowed both the facilities which is
against the rules and regulations of the Govt as well as framed under the Act. This has resulted into un-
authorized drawl of Corporate Allowance of Rs 1,119,134 as detailed given below:
Name of officer Period Corporate Allowance Total amount
Khayyam Hassan Khan April 2022 to March 2023 42,050 504,600
Managing Director BPS-21 (12 Months)
Syed Kamran Shah September 2020 to March 32,344 614,534
Managing Director BPS-21 2022 (19 Months)
Total 1,119,134
Audit is of the view that the officers posted against the post were already enjoying perks and
privileges of the Civil Secretariat PMS/PAS cadre posts, were not eligible to draw the corporate allowance
approved for the employees of the foundation appointed under the Act due to which the drawl on this
account was thus held irregular and un-authorized.
The lapse occurred due to non-observance and implementation of Govt rules and procedure.
When pointed out in December-2023, it was stated that the Board of Directors in its 4th meeting
held on 23.12.2015 decided that corporate allowance @ 20% of running basic pay is allowed to the
deputationist also. Reply is irrelevant as the officers mentioned are neither the foundation’s employees nor
deputationist.
Audit recommends recovery besides the matter needs to be enquired for taking appropriate action
8.2.3 Irregular drawl of Executive Allowance worth-Rs. 8.707 million
According to clause-11 of the KP Lissaail-e-WalMahroom Foundation Act-2015 circulated vide

No.PA/KP/Bills/2015/225, dated 3.7.2015 followed by clause-7 of KP LWMF Rules-2017 issued by the
Department vide notification No.SO-III(SW)/4-39, dated 28.2.2017 that:
i. There shall be a Managing Director of the Foundation, who shall be appointed by Govt: on such
term and conditions, as may be prescribed by rules: provided that till the framing of the rules, Govt;
may appoint an officer of Govt; not below the rank of Additional Secretary as M.D of the
foundation for a period of six months.
ii. The Managing Director shall be appointed by Govt; for a period of three years extendable for
further two years;
a) Any person to be appointed as MD shall at least 2nd class Master Degree in Social Science or
professional Degree of LLB or MBA from a recognized University and having at least 15 years’
experience in Admn: for management etc; and shall not be less than 45 years and not more than 60
years.
b) The salary and allowances of the MD shall fixed equal to the salary, allowances and other perks
and privileges of a BPS-20 of the Govt: servant.
918
During Citizen Participatory Auditfor the financial year 2022-23, the record of the Managing
Director Lissaail-e-WalMahroom Foundation revealed that the appointment procedure of managing Director
for the foundation was prescribed within the LWMF Act-2015 and also elaborated in the rules made
thereunder as mentioned above, but on comparison, it was noticed that the post of MD and Social welfare
Manager was declared as Scheduled posts against which the PMS/PAS officers are being drawing their
salaries including Executive Allowance amounting to Rs. 8,706,570 (detailed below) without the
amendment in the laid down criteria provided in the Act-2015 by the Provincial Assembly in absence of
which the drawl of Executive Allowance @ 150% of the basic pay in addition to pay and allowances was
thus held irregular as detailed below;
S.No Name & Designation Monthly Rate Period Total

01 Khayyam Hassan Khan 205,080 April 2022 to March 2,460,960
Managing Director BPS-21 2023 (12 Months)
02 Syed Kamran Shah 242,580 September 2020 to 4,609,020
Managing Director BPS-21 March 2022 (19
Months)
03 Muhammad Farooq 96,270 01.08.2022 to 481,350
Welfare Manager BPS-18 December 2022 (05
months)
04 Muhammad Abbass Khan 96,270 01.05.2021 to 1,155,240
Welfare Manager BPS-18 30.04.2022 (12
Months)
Total 8,706,570
Audit is of the view that had the positions were filled in accordance with the provisions contained
in Lissaail-e-WalMahrrom Foundation Act-2015 and rules framed thereunder, the foundation would have
been saved from the recurring loss in shape of executive allowance.
When pointed out in December-2023, it was replied that the procedure regarding the appointment
of Managing Director of the Khyber Pakhtunkhwa was amended in 2019 at clause 2 sub section (1) There
shall be a Managing Director of Foundation, who shall be posted by the Government from amongst the
officer in BPS-20 & BPS-21 from PAS/PMS/PCS”
In light of the above amended Act, 2019 the post of Managing Director is a schedule post vide
notification No. SO (E-I) E&AD/1-1/2018 dated 25.09.2018. The post of the Welfare Manager is also a
schedule post which was approved by the BOD in its 7th meeting held on 12.07.2019 and copy of the
Establishment department vides notification No. SO (E-I) E&AD/9-128/2019 dated 11.06.2019 regarding
the schedule post of Welfare Manager.
The matter needs to be enquired for taking appropriate action.
8.2.4 Wasteful Expenditure on one and the same free medical treatment worth Rs.10.999 million
919
According to clause 4 (a) and (c) of the Lissaail-e-WalMahrrom Foundation Act-2015, provide that
to enhance the availability of specified facilities to the indigent and dispossessed persons in health,
education and social welfare sectors; and to protect the indigent and dispossessed persons by facilitating
the provision of health care, education, skill development and entrepreneurship.
During Citizen Participatory Audit of the Managing Director Lissaail-e-WalMahrrom Foundation
for the financial year 2022-23 it was revealed that a sum of Rs.41,559,395 was incurred on health care
activities during the period 2021-22 & 2022-23 including a sum of Rs. 10,999,933 was paid to the following
four teaching hospitals for free medical treatment of the individual’s concerned.
S.No Name of the Hospital 2021-22 2022-23 Total Amount
1. LRH 2,142,906 2,774,585 4,917,491
2. KTH 2,647,639 0 2,647,639
3. HMC 1,486,738 1,330,063 2,816,801
4. Ayub Medical Complex 618,002 0 618,002
Total 6,895,285 4,104,648 10,999,933
The incurrence of expenditure was wasteful on the following grounds: -

1. The Provincial Govt released funds on account of free medical treatment under object heads
purchase of emergency drugs and medicines, LP under ADP, free angiography, angioplasty, electro
physiology, under GIA and free provision of medicines, drugs and other lab facilities procedures
free of cost to the admit patients under regular medicines, being provided by the hospital
management. In addition, free medical treatment under Sehat Saholat Programme including
different surgeries/procedures were allowed through Sehat Card, therefore, the incurrence of
expenditure by the foundation through the above hospitals were mere duplication on one and the
same free medical treatment object.
2. There is no liaison at departmental level for provision of different facilities to be provided to the
indigent and dispossessed persons under the ‘free medical treatment’ except to release the funds to
hospitals management for onward payment to medicines contractor. No bifurcation of the diseases
at LWM Foundation level for sponsoring treatment and hospital management could be made
separated as no defined policy exist.
The lapse occurred due to non-observance and implementation of laid down procedure.
When pointed out in December-2023, it was replied that Provincial Government provides medical
facilities through Sehat card in hospitals only for admission cases or OT while the LSWM Foundation
Provides FMT facility to the outdoor poor patients who have been referred by LRH, KTH, HMC have not
provided medical treatment through Sehat Card or other funds. The FMT Facility is only for OPD Patients
which is referred by the above hospitals focal persons. The LSWM Foundation provide only medicine
sanction as prescribed by the RMO/Doctor concerned. The reply of the department is not convincing as
these hospitals have million of rupees for the purchase of medicines from MCC and LP as well.
Audit recommends the matter to be enquired for taking appropriate action in this regard under
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8.2.5 Non deduction of Income Tax from bills of L.P contractor worth Rs.1.870 million
According to the Deputy Commissioner Inland Revenue, Regional Tax Peshawar letter No.DCIR
(Unit-48/WHZ/2017-18/04, dated 1.7.2017, I/tax @ 4.5% for filler and 7.75 % for non-filler was levied
upon to be deducted.
During Citizen Participatory Audit for the financial year 2022-23, the record of the Managing
Director LWM Foundation revealed that an amount of Rs.50,447,600 was drawn and paid to different
Hospital of public and private sector organizations on account of Free Medical Treatment (FMT) as detail
given below, but on comparison and verification of the Local purchase medicines bills of the contractor, it
was noticed that these bills were honored on the basis of gross amount of the bills instead of net amount
after deduction of income tax at the prescribed rate, resulted into non deduction of income tax amounting
to Rs.1,870,173 (41,559,395 x 4.5%) as detail given below:
S.No Name of the Hospital 2021-22 2022-23 Total Amount
1. LRH Peshawar 2,142,906 2,774,585 4,917,491
2. KTH Peshawar 2,647,639 0 2,647,639
3. HMC Peshawar 1,486,738 1,330,063 2,816,801
4. Ayub Medical Complex Abbottabad 618,002 0 618,002
5. HabibPhysiothraphy Complex Peshawar 0 600,000 600,000
6. Paraplegic Centre Peshawar 1,344,200 943,800 2,288,000
7. Dar-Ui-Rehmat Medical Complex Charsadda 5,160,000 3,426,462 8,586,462
8. Khyber Eye Foundation Peshawar 5,525,000 4,285,000 9,810,000
9. Mehmood Eye Hospital D.I.Khan 4,045,000 3,030,000 7,075,000
10. Dar-Ui-Rehmat Medical Complex Charsadda 1400,000 800,000 2,200,000
(Prosthetic & Orthotic Appliances)
Total 24,369,125 16,508,475 41,559,395
Audit is of the view that the paying authority was required to deduct the prevailing taxes from the
claims of the contractor/organization concerned for onward transmission into relevant head of account of
income tax department, but the foundation was found in continues practice of releasing gross bill’s amount
to the quarter concerned which is against the Finance Act.
The lapse occurred due to non-observance and implementation of Govt: rules/procedure.

When pointed out in December-2023, it was stated that the Private hospital/organizations are
mostly working as welfare organization and as per their statements that they are exempted from the Income
Tax. In reply of the para the hospitals mentioned in the table of the said para, a letter addressed to RMOs
of the said hospitals regarding the confirmation of the Income Tax deduction from LP contractor.
Audit recommends recovery besides the matter to be enquired at appropriate level for immediate
action along with overhauling the record of previous years as well as succeeding year payment and
necessary action towards recovery be taken under intimation to audit.
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8.2.6 Non-deposit of bank profit into the Government Treasury - Rs. 7.989 million
According to the Provincial Government policy circulated vide Finance Department letter No. 2/3-
(F/L)FD/2007-08/ Vol: IX dated 10.02.2014, profit earned on the Profit & Loss Sharing Accounts should
be deposited in government treasury under the following heads of account:-
C01 Total income from property
C018 Total interest on loan –Others
C01803 Interest realized on investment of Cash Balance
During Citizen Participatory Audit it was observed that Managing Director Lissaail-e-
WalMahroom Foundation operated Interest Bearing Account vide No.PLS-0095707010000246 in the
Muslim Commercial Bank University Town Branch on 25.05.2007. The Bank statements revealed that
profit of Rs 7,988,726(11,412,466-3,423,740{Tax on Profit}) was earned on this account during the period
July 2021 to June 2023.
Audit observed that the profit earned was required to be deposited into the Provincial Government
Account. Contrarily, the same was retained in the bank account. The non-deposit of profit into government
treasury was held unauthorized.
The lapse occurred due to weak financial controls of the management and violation of rules which
resulted into retention of profit amount outside the government treasury. When pointed out in December-
2023, it was replied that as per amended Act, 2022 the 50 % Endowment Fund will be transferred to PLS
Account for utilization of program cost activities and administrative purpose and remaining 50% fund will
be reinvested in the BOK Branch Hayatabad Peshawar against the RIBA Free Certificate as per BODs
approval.
The Foundation is statutory body and the only source of its revenue is the profit occurred on the
bank deposits. In case of the directions of the Finance Departments are complied with there would be no
fund left to run this organization. The case has already been taken up with Finance Department vide this
office letter No. LSWMF/2015-16/114-15 dated 28.09.2016.
Reply is irrelevant as the amount is lying in the PLS account since 2020 as idle and profit earn
needs to be credit to the government.
Audit recommends calculation of profit amount since opening of account and timely transfer of the
profit into the government treasury besides action against the person(s) held responsible for keeping the
amount outside the government treasury.
8.2.7 Unauthorized retention & non transfer of balances to the foundation activities account - Rs.
54.135 million
According to Clause-15(1) of the Lissaail-e-WalMahroom Act, 2015 notified by the Provincial

Assembly vide their letter No.PA/KP/Bills/2015/225, dated 03.07.2015, that there shall be a fund to be
922
known as Khyber Pakhtunkhwa Lissaail-e-WalMahroom Foundation Fund, which shall consist of grants,
contributions, donations, trusts and bequests by:-
b. Government.
c. International and local donor Agencies.
e. 50% of the annual income from investment of endowment fund;
g. Others
During Citizen Participatory Audit of the Managing Director Lissaail-e-WalMahroom Foundationit

was revealed that the management of the foundation operated Interest Bearing Account vide No.PLS-
0095707010000246 in the Muslim Commercial Bank University Town Branch Peshawar. The account was
meant for foundation activities and funds in this account are transferred from endowment fund account
(50% of profit RFC).
On further verification of bank statement for the last three years it was noticed a sum of Rs
54,135,121 was lying on 30.06.2023 without any activity in the account. Only profit of Rs 11,412,466 was
gain on this accountand Rs 3423740 was deducted as income tax on profit. Audit also observed that another
account vide No.PLS-07718-003 maintained in BOK Islamic Branch Hayatabad which is being operated
specifically as Endowment Fund Account consist of profit returns on investments + Interest accrued on
PLS mode, of the amount so remitted by the Govt. Out of the total profit/return on investment, 50% will be
utilized for the welfare of the indigent and dispossessed persons. At the end of June 2023, the closing
balance in this account was Rs 162,427,020. Audit observed that:
 The management of the foundation maintained two accounts at a time for the project activities i.e
in BOK & in MCB which is against the spirit of the LWM Act 2015.
 More than three years over 54.00 million rupees remained idle without carrying out any activities,
on one side, rupee value was devaluated and on the other poor & needy people of the community
deprived at large.
 The amount remained in PLS account with marginal interest on PLS account though it gained profit
but income tax was charged @30% amounting to Rs 3,423,740. If the amount was kept in the RFC
account it would have earned more profit on fixed RIBA free Certificate, and could be expended
upon the program activities, which was not done by violating the distribution provided in the Act.
The lapse occurred due to non-observance and implementation of the Rules already framed.
When pointed out in December-2023, it was replied that As per amended Act, 2022 the 50 %
Endowment Fund will be transferred to PLS Account for utilization of program cost activities and
Administrative purpose and remaining 50% fund will be reinvested in the BOK Branch Hayatabad
Peshawar against the RIBA Free Certificate as per BODs approval. The reply of the department is not
convincing as the amount is lying in the bank before amendment in the act.
923
Audit recommends to draw the idle amount and re-invest in the RFC account in order to obtain
maximum benefit from the deposit besides the matter needs to be enquired for taking appropriate action
and fixing the responsibility under intimation to audit.
8.2.8 Difference between the cash book and bank figure worth-Rs. 4.243 million
Para 89 (3) (viii) of GFR Vol-I provides that the head of the department and the Accountant
General, will be jointly responsible for the reconciliation of the figures given in the accounts maintained by
the head of the department with those that appear in the Accountant General’s books.
During Citizen Participatory Audit of the Managing Director Lissaail-e-WalMahrrom Foundation

for the financial year 2022-23, it was noticed that the management of the foundation maintained a cash book
for the accounts of foundation welfare activities maintained in Bank of Khyber University Road. The
closing figure and cash book shows a variation of Rs.4,243,342 as detailed below;
Closing date Cash Book Banks Figure Difference
30.06,2023 158,183,677 162,427,019 4,243,342
Audit observed that the lapse occurred due to weak financial managerial controls of the
management which resulting into non-reconciliation of balances with banks causing differences in the
closing balances.
When pointed out in December-2023, it was replied that Khyber Pakhtunkhwa Lissaail-e-
WalMahroom Foundation has been working in Health, Education and Social Welfare Sectors for providing
relief to the indigent & dispossessed segments of the society including orphans, widows, persons with
disability and the poor under the administrative control of Social Welfare Department. The LSWM
Foundation distributed thousands of cheques amongst the orphan students/awardees across Khyber
Pakhtunkhwa in which most of the cheques are lying pending un-cashed with the students concerned and
will be clear the difference between bank and cash book figure as an when the students cash their cheques
from the concerned banks.
Audit recommends timely reconciliation of the balances with bank besides justification action
against the person at fault.
8.2.9 Non transfer of 50% of the annual income from investment of Endowment Fund account
worth Rs. 106.310million
According to Clause-15(1) of the Lissaail-e-WalMahroom Act, 2015 notified by the Provincial
Assembly vide their letter No.PA/KP/Bills/2015/225, dated 03.07.2015, that there shall be a fund to be
known as Khyber Pakhtunkhwa Lissaail-e-WalMahroom Foundation Fund, which shall consist of grants,
contributions, donations, trusts and bequests by:-
b. Provincial Government.
c. International and local donor agencies.
924
e. 50% of the annual income from investment of endowment fund;
g. Others
During Citizen Participatory Auditfor the F.Y2022-23, the record of Managing Director Lissaail-
e-WalMahroom Foundation revealed that an Account bearing No.PLS-07718-003 in BOK Islamic Banking
Branch Hayatabad is being operated specifically as Endowment Fund Account consist of profit returns on
investments + Interest accrued on PLS mode, of the amount so remitted by the Govt. In this regard an
amount of Rs 611,963,634 was lying in the RFC account which was deposited on different dates with
maturity time of five years and one year as detailed below:
S# RFC No.& date Date of Maturity Maturity Amount

Period
01 0007019 dt:26.09.2014 26.09.2019 5 Years 250,000,000
02 0008170 dt:20.01.2016 20.01.2021 5 Years 12,000,000
03 0008171 dt:26.01.2016 26.01.2021 5 Years 250,000,000
04 0008176 dt:13.04.2016 13.04.2021 5 Years 8,000,000
05 0008188 dt:31.07.2017 31.07.2022 5 Years 20,368,494
06 0008200 dt:07.12.2018 06.12.2019 1 year 15,727,409
07 0010160 dt:02.08.2019 02.08.2020 1 year 28,361,049
08 0010166 dt: 17.04.2020 16.04.2025 5 Years 27,506,682
Total Investment in RFC Account 611,963,634
Audit observed the following:

 After promulgation of Lissaail-e-WalMahroom Foundation Act 2015, the Board was notified on
11.05.2017 for a period of three years. The term of the Board was expired on 10.05,2020 and since
then neither board was re-constituted nor can’t welfare activities be undertaken in the absence and
without approval of Board.
 Till 30th June 2023, as per bank statement of RFC account, amount of Rs 212,620,620 was earned on
above investments. However, as per Act, out of the total profit/return on investment, 50% will be
utilized for the welfare of the indigent and dispossessed persons, which was not done since April
2020, causing affecting the foundation welfare activities on the one side and on the other
beneficiaries/poor/orphans of the community were deprived/suffered at large of the benefit of the
fund.
 The management of the foundation initially invested Rs.500.00 million in the RFC account in 2014
& 2016 and furthermore, re-investment of Rs. 111.964 million was made till April 2020, as 50%
of the annual income from investment of endowment fund. However, after April 2020 Rs 212.621
million was earn as profit till June 2023 and as per LWM Act 2015, 50% amount of Rs 106.310
was require to be re-invest in the RFC account and remaining 50% amount was require to be
transfer in the BOK for the purpose of welfare activities. Due to lapse of the management neither
50% amount was invested in the RFC account no 50% amount was transferred in BOK for the
welfare activities of the foundation.
925
Audit is of the view that in the absence of Board all activities and expenditures are held irregular
as nothing can be done without the approval of board. Moreover, profit earned on RFC account neither
invested nor utilized in the welfare activities. had the amount was transferred to the specific Bank Account,
it would have earned more profit on fixed RIBA free Certificate, and could be expended upon the program
activities, which was not done by violating the distribution provided in the Act.
The lapse occurred due to non-observance and implementation of the Rules already framed which
resulted non transfer of 50% amount for investment on the one side and on the other welfare activities of
foundation were not carried out causing beneficiaries of the funds deprived at large.
When pointed out in December-2023, it was replied that the same will be placed before the Board
of Directors for approval as and when constituted.
The matter needs to be enquired for taking appropriate action and fixing the responsibility under
8.2.10 Loss to the foundation due to payment of sales tax on exempted items Rs. 1.283 Million
According to the clarification made by the Deputy Commissioner, Regional Tax Office Peshawar,
vide their letter No. ST/Corporate Zone/Audit-l/Misc/04 dated 31.08.2021, that supply of sewing machines
of the household type are exempted from the levy of sales tax under entry at serial No. 92 Table-I of the
sixth schedule to the sales tax Act. 1990 read with SRO 501(l)2013 dated 12.06.2013.
WalMahroom Foundation for the financial year 2022-23, revealed that a sum of Rs. 8.836 million was paid
to M/S Hizbullah Khan & Sons for the supply of 940 sewing machines @ Rs. 9,400/- per machine,
purchased for 47 tailoring and garments (T&G) centers established at various districts for the skilled
development of unprivileged and/or orphan female citizens.
Upon scrutiny of record, it was observed that the bill included 17% sales tax amounting to Rs.
1,283,863/- despite the exemption of sewing machines from sales tax. 1/5 th of the sales tax amounting to
Rs. 256,773/- was deducted at source from the bills however, 4/5th of the sales tax amounting to Rs.
1,027,090/- was overpaid to the contractor. It could not be ascertained that whether the same has been
recovered by the Sales Tax department or else.
The lapse occurred due to weak internal controls resulting in overpayment to the contractor.
When pointed out in December-2023, it was stated that reply will be submitted after scrutiny of
record.
Audit recommends recovery besides action against the person(s) at fault.
8.3 Procurement and Contract Management
8.3.1 Doubtful expenditure on account of free medical treatments by private hospitals Rs. 15.675
Million
926
According to serial No.2 (xiii) of the Khyber Pakhtunkhwa Lissaail-e-WalMahroom foundations
regulations for Free Medical Treatment and Diagnoses, notified vide No. LSWMF/2019-20 dated April,
2020, xiii. Auditable record pertaining to the patients treated, as required will be provided to the LWM
Foundation duly signed by the head /administrator of the concerned private welfare hospital/organization.
Read with serial No. X of the MOU signed between the foundation and the private hospitals, that auditable
record shall be provided by the party-II, including OPD slip along-with-OT form and lists of patients will
be provided in soft and hard form. If failed amount of respective cataract surgery/surgeries shall be deducted
from the monthly bill accordingly.
WalMahroom Foundation for the financial year 2022-23, revealed that a sum of Rs. 15,675,000 million
was paid to the following private eye hospitals for carrying out Cataract surgeries of poor and needy patients
@ Rs. 5000/- per patient.
S.No Name of Hospital Payment Payment Total
2021-22 2022-23
1. Khyber Eye Foundation 5,525,000 3,825,000 9,350,000
2. Mehmood Eye Hospital D.I Khan 4,045,000 2,280,000 6,325,000
Total 15,675,000
However, record revealed that all the payments were sanctioned solely on the basis of OPD slips
from the hospital prescribing the cataract surgery. No document to authenticate that the surgeries have
actually been carried out including OT forms duly signed by the surgeon showing the surgical procedures,
laboratory and diagnostic test results and post-surgery examination reports etc; were neither obtained nor
available without which the payment to hospitals remained un-verified and doubtful.
The lapse occurred due to weak internal controls due to which huge payments were made without
the required record.
When pointed out in December-2023, it was replied that in this regard the matter was discussed
telephonically with the administration of the said organization regarding provision of OT record duly signed
by the surgeon showing the surgical procedure of surgery as well as a letter in this regard is also intimated
to the said organizations. The reply of the department is not convincing as all payments were made on OPD
slip rather than full record.
The matter is reported for obtaining the required documents from the concerned hospitals or affect
recovery under intimation to Audit.
9. Overall Assessment
i. Relevance
Lissaail-e-WalMahroom Foundation was established in line with the Government of Khyber
Pakhtunkhwa polices and Act of parliament.
ii. Efficacy
The foundation’s efficacy will be more effective if polices are followed in letter & spirit
927
iii. Efficiency
The data revealed that there are inbuilt internal control weaknesses in the foundation due to which
the objectives of the foundation were not achieved. The assetswere not managed and utilized for
the achievement of the intended objectives. The Board was not reconstituted since May 2020,
which hindered the decision making in various key issues related to timely distribution of assistance
funds to the selected Pre and postMatric level students. Social welfare activities have not been
started for the current year due to non-reconstitution of Board and adhocism of the key posts.
iv. Economy:
The economy aspect of the foundation was not satisfactory as the funds were managed
uneconomically while making investments with the banks. Though sufficient funds were available,
they were not utilized on the intended welfare activities.
v. Effectiveness:
It was observed that though the foundation managed to establish rules in all the three intended
sectors i.e. Health, Education and Social Welfare. Initially effective programs were initiated in all
the three sectors. However, data from the last three years showed that the foundation was not able
to effectively execute its programs. In education sector funds remained undistributed among the
students at pre & post matric levels due to non-posting of Managing Director on regular basis. The
financial assistance in the health sector was focused mainly at the main hospitals of Peshawar with
little focus on other districts, though some MOU’s have been signed with various eye foundations
and philanthropist at Charsadda and D.I Khan. No skill development activities were carried out
post the expiration of the 2021-22, batches despite the availability of funds. Due to non-existence
of Board and non-posting of Managing Director on regular basis. The foundation is unable to call
applications for stipends from the deserving students in the year 2022-23. Moreover, no efforts
have been made to encourage the private charities and other social welfare organizations to
synergize its activities with the foundation in other areas beside Cataract surgeries.
vi. Compliance with rules

The act of the foundation not been followed in letter & spirit.
i. Performance rating of the foundation

The performance of the foundation is moderate.
ii. Risk rating of the foundation

High.
10. CONCLUSION
10.1 Key issues for the future: Issues that could limit the foundation performance and achievement of
objectives are as under:
 Inefficiency to initiate welfare projects
 Non implementation of health, education and welfare activities
928
 Failure to establish partnership with private charities
 Non reconstitution of the Board of Directors
 Foundation’s funds may be managed in the efficient manner to increase the profits
 Ineffective funds distribution mechanism to the poor and depressed citizens
 Lack of mechanism to evaluate the impact of the welfare projects initiated by the foundation.
 Poor internal control system
10.2 Lessons learned

 Efforts may be made to initiate welfare projects and extend welfare activities
 Education, Health and Social Welfare policies may be followed in letter & spirit.
 Board may be reconstituted for smooth and effective running of the foundation’s activities
 Funds may be distributed to the needy and poor students at the earliest.
 Overpayments may be recovered from the officers/officials
 Proper record in respect of payments made to hospitals and eye foundations may be maintained
before making payments
929
AUDIT REPORT
ON
THE ACCOUNTS OF
REVENUE RECEIPTS
GOVERNMENT OF KHYBER PAKHTUNKHWA
AUDIT YEAR 2023-24
930
REVENUE RECEIPTS GOVERNMENT OF KHYBER PAKHTUNKHWA
Chapter - 1
SECTORAL ANALYSIS
The major revenue collecting departments of the Government of Khyber Pakhtunkhwa are
Excise, Taxation & Narcotics Control Department, Khyber Pakhtunkhwa Revenue Authority,
Revenue & Estate Department and Transport & Mass Transit Department. Revenue target of Rs.
51,388 million was set for these departments for the financial year 2022-23. Against this target,
revenue amounting to Rs. 41,897 million was collected by the aforementioned departments during
the year, which was 19 percent less than the target.
The main sources of the tax and non-tax revenue are Sales Tax on Services, Stamp Duty,
Land Revenue, Infrastructure Development Cess, Property Tax, Motor Vehicle Tax, and Tobacco
Development Cess.
1. Performance of Tax Collecting Departments.
As per Finance Account 2022-23, total receipt collection of the above mentioned four
departments was Rs. 41,897 million in year 2022-23 against
Rs. 42,878 million during previous year 2021-22. Hence, tax collection during the Financial Year
2022-23 decreased by 2%.
(Rs. in million)
Actual Actual Variation
Percentage
Department Receipts Receipts Excess (+)
of Variance
2021-22 2022-23 Short (-)
Excise, Taxation & Narcotics
3,194.16 4,511.22 1,317.05 41.23
Control
Khyber Pakhtunkhwa Revenue
30,341.96 30,646.12 304.17 1.00
Authority (KPRA)
Revenue & Estate 8,657.01 5,968.40 -2,688.61 -31.06
Transport & Mass Transit 575.60 770.99 195.38 33.94
Total: 42,768.73 41,896.72 -872.01 -2.04
A comparison of budget estimates and actual receipts of each Department for the financial
year 2022-23 is tabulated below:
931
(Rs. in million)
Revenue Actual Variation
Percentage
Department Estimate Receipts Excess (+)
of Variance
2022-23 2022-23 Short (-)
Excise, Taxation & Narcotics 5,692.00 4,511.22 -1,180.78 -20.74
Control
Khyber Pakhtunkhwa Revenue 35,000.00 30,646.12 -4,353.88 -12.44
Authority (KPRA)
Revenue & Estate 9,970.00 5,968.40 -4,001.60 -40.14
Transport & Mass Transit 676.00 770.99 94.99 14.05
Total: 51,338.00 41,896.72 -9,441.28 -18.39
The above table shows that Excise, Taxation & Narcotics Control Department, Khyber
Pakhtunkhwa Revenue Authority and Revenue & Estate Department were unable to achieve their
revenue targets. The shortfall of Revenue & Estate Department was 40 % which was a substantial
amount. Only Transport Department surpassed its target by 14%.
The comparison of the budget estimates and actual receipts for the year 2022-23 is also
depicted in the following bar chart:
54,000
51,338
52,000
50,000
Receipts Collection vs Target
41,897
48,000
46,000
44,000
42,000
35,000
40,000 Budget Estimates

38,000
30,646
36,000
Rs. in million
Actual Receipts
34,000
32,000
30,000
28,000
26,000
24,000
22,000
20,000
18,000
16,000
9,970
14,000
12,000
5,968
5,692
10,000
4,511
8,000
6,000
771
676
4,000
2,000
0
Excise & Taxation Finance (KPRA) Revenue & Estate Transport Total
(Data Source: Estimates of Receipts 2022-23 Vol-II Finance Deptt. KP & Finance Account KP 2022-23)
932
Three out of four tax collecting departments were unable to achieve their targets. It shows
poor fiscal planning. It also indicates that proper survey was not carried out while preparing the budget
estimates. Finance Department and tax collecting departments need to set revenue targets after
detailed analysis, keeping in view of capacity and potential of departments responsible for tax
collection.
Audit has highlighted certain procedural, systemic and regularity weaknesses within the
tax collecting departments. Financial and administrative weaknesses of revenue collecting
departments resulted in accumulation of a huge amount of arrears on account of Property Tax,
Motor Vehicles Tax, Water Rates (Abiana) and Route Permit Fee. No concrete steps have been
taken for recovery of these arrears. Property Tax from PESCO and Provincial Government share
of Property Tax from most of the cantonment boards within the province was not recovered. No
improvement has been noticed in Motor Vehicle Tax collection.
The tax collecting machinery of the province needs to revisit the entire operations process
of tax collection and administration. This may lead to enhanced performance through a more
systemic integrated planning and execution into tax administration.
933
2. Revenue vs Expenditure 2022-23
A comparison of the revenue and expenditure of major revenue collecting departments i.e.
Excise, Taxation & Narcotics Control, KPRA, Revenue & Estate and Transport Department for
the financial year 2022-23 is given below in tabulated form:
(Rs. in million)
Excess of Cost
Sr. Revenue Expenditure
Department Revenue over Benefit
No. (2022-23) (2022-23)
expenditure Ratio
Excise, Taxation &
1 4,511.22 1,038.22 3,473.00 1:4
Narcotics Control
Khyber Pakhtunkhwa
2 30,646.12 525.78 30,120.35 1:58
Revenue Authority (KPRA)
3 Revenue & Estate 5,968.40 1,324.65 4,643.75 1:4
4 Transport & Mass Transit 770.99 3,287.65 -2,516.67 1:0.2
The above data is depicted in bar chart below to have better understanding.
Revenue vs Expenditure 2022-23

30,646
35,000
30,120
Revenue
Expenditure
30,000 Excess of Revenue
25,000
Rs. in million
20,000
15,000
10,000
5,968
4,644
4,511
3,473
3,288
1,325
5,000
1,038
771
526
0
Excise & Taxation KPRA Revenue Transport
-2,517
-5,000
(Data Source: Finance Account and Appropriation Account of Govt. of KP 2022-23)
3. Revenue vs Expenditure 2021-22
A comparison of the revenue and expenditure of major revenue collecting departments i.e.
Excise, Taxation & Narcotics Control, KPRA, Revenue & Estate and Transport Department for
the financial year 2021-22 is given below in tabulated form:
934
(Rs. in million)
Excess of Cost
Sr. Revenue Expenditure
Department Revenue over Benefit
No. (2021-22) (2021-22)
expenditure Ratio
Excise, Taxation &
1 3,194.16 1,030.00 2,164.16 1:3
Narcotics Control
Khyber Pakhtunkhwa
2 30,341.96 516.35 29,825.61 1:58
Revenue Authority
3 Revenue & Estate 8,657.01 2,252.00 6,405.01 1:3
4 Transport & Mass Transit 575.60 4,985.00 -4,409.40 1:0.1
Revenue vs Expenditure 2021-22

30,341.96
29,825.61
35,000.00 Revenue
Expenditure
Excess of Revenue
30,000.00
25,000.00
20,000.00
Rs. in million
8,657.01
15,000.00
6,405.01
4,985.00
10,000.00
3,194.16
2,252.00
2,164.16
1,030.00
516.35
5,000.00
575.6
0.00
Excise & Taxation Finance (KPRA) Revenue Transport
-5,000.00
-4,409.40
-10,000.00
(Data Source: Finance Account and Appropriation Account of Govt. of KP 2021-22)
A comparison of the cost benefit ratios of the above departments for the financial years
2022-23 and 2021-22 show that actual receipts collected by these Departments slightly increased
the benefits against the actual cost incurred on the function of these departments. However,
Transport & Mass Transit Department is consistently spending more than its earnings. In case of
KPRA, actual cost incurred on the function of the Authority slightly reduced the benefits.
****
935
Chapter - 2
EXCISE, TAXATION AND NARCOTICS CONTROL

DEPARTMENT
2.1 Introduction
The Excise, Taxation and Narcotics Control Department is primarily engaged in collection
of various provincial taxes, duty, fees and cess items.
2.1 A) Main functions of Excise, Taxation & Narcotics Control Department
 Collection of Property Tax according to the assessment of property units.

 Assessment and collection of Motor Vehicle Registration Fee and Motor Vehicle Tax from the
owners of vehicles.
 Issuance of Registration Marks and Certificates to Motor vehicles.
 Issuance of Duplicate Registration Certificates of the vehicles, Change of Ownership, Change of
Engine Number, etc.
 Assessment and collection of tax on Professions, Trades, Calling and Employments.
 Assessment and collection of Hotel Tax.
 Assessment and collection of Tobacco Development Cess.
 Collection of License Fee from Real Estate Agents & Motor Vehicle Dealers
 Assessment and collection of Provincial Excise Duty.
 To seize Intoxicant Liquors, Narcotics and illegal/smuggled Vehicles.
 Collection of Advance Income Tax on behalf of Federal Government at the time of registration
/ transfer of a vehicle and collection of Motor Vehicle Tax respectively.
Table A: Audit Profile of Excise, Taxation & Narcotics Control Department

Revenue Receipts Audited
Sr.
Description Total No. Audited FY 2022-23
No.
(Rs. in million)
1 Formations 32 05 1865.07
936
2.1 B) Comments on Budgeted Receipts (Variance Analysis)
During the financial year 2022-23, the Excise, Taxation & Narcotics Control Department
collected revenue worth Rs. 4,511 million which was 79% of the budget estimates of Rs. 5,692
million.
A comparison of budget estimates and actual receipts for the year 2022-23 is tabulated
below. The variation between the budget estimates and actual receipts is depicted in both absolute
and percentage terms.
Table B: Variance Analysis of Excise, Taxation & Narcotics Control Department

(Rs. in million)
Budget Actual %age of Excess (+)
Sr. Category of Head of Variance
Estimates Receipts Total Short (-)
No. Receipts Account %age
2022-23 2022-23 Receipts (Col.5-4)
1 2 3 4 5 6 7 8
1 Property tax B01301 3,036.00 1,968.89 43.64 -1,067.11 -35.148
2 Professional Tax B016 800.00 764.51 16.95 -35.49 -4.4366

Provincial Excise B026 35.50 35.24 0.78 -0.26 -0.7265
3
Duty
Motor Vehicles B02801 0 412.25 9.14 412.25 -
4
Registration Fee
Motor Vehicle Tax B02803 1,337.00 789.21 17.49 -547.79 -40.972
5
(Token Tax)
Reg. Fee Real B03053 19.50 13.28 0.29 -6.22 -31.917
6
Estate/MV Dealers
7 Hotel Tax B03056 0 48.27 1.07 48.27 -
Tobacco B03080 464.00 479.58 10.63 15.58 3.35695
8
Development Cess
Total : 5,692.00 4,511.22 100.00 -1,180.78 -20.74
The above figures show that actual receipts were 21 % less than the estimates of receipts.
It shows poor fiscal planning. It also indicates that proper survey/ research was not carried out
while preparing the budget estimates. This issue needs to be looked into by the Department.
The following bar chart presents visual depiction of budget estimates and actual receipts
of the Excise, Taxation & Narcotics Control Department.
937
5692.00
6000.00 Receipts Collection vs Target
5900.00
5800.00 2022-23
5700.00
5600.00
5500.00
5400.00
5300.00
5200.00
5100.00
4511.22
5000.00
4900.00
4800.00 Budget Estimates
4700.00
4600.00
4500.00
4400.00 Actual Receipts
4300.00
4200.00
4100.00
4000.00
3900.00
3800.00
3700.00
3600.00
3036.00
Rs. in million
3500.00
3400.00
3300.00
3200.00
3100.00
3000.00
2900.00
2800.00
2700.00
2600.00
1968.89
2500.00
2400.00
2300.00
2200.00
2100.00
2000.00
1900.00
1337.00
1800.00
1700.00
1600.00
1500.00
1400.00
1300.00
800.00
789.21
764.51
1200.00
1100.00
1000.00
479.58
464.00
900.00
412.25
800.00
700.00
600.00
500.00
35.24
48.27
19.50
13.28
400.00
35.50
0.00
0.00
300.00
200.00
100.00
0.00
Property tax Prov. Excise MV Tax Hotel Tax Total
Tax Catagory
Registration Fee on Motor Cars, Jeeps, Vans, and Pickups etc. having engine power up to
2500cc was reduced to Rs. 1 by the Government in 2021-22. However, MV Registration Fee on
Motor Cars, Jeeps, Vans, Pickups etc. having engine power above 2500cc, Motorcycles, Trucks,
Buses, and other commercially used vehicle was recoverable at the rate of 1 %. Revenue amounting
to Rs. 355 million was collected under the head MV Registration Fee during the year. However, no
revenue estimate was given for the aforementioned Fee which needs justification. Similarly Target
for Hotel Tax was also not set by the Finance Department in Receipts Estimates for 2022-23 which
also needs justification.
Table C: Receipts estimates and revised estimates for 2021-22 & 2022-23
938
The budgeted receipts estimates and revised estimates for the years 2021-22 & 2022-23 for
Excise, Taxation & Narcotics Control Department are given below. In both years the department
failed to achieve its targets.
(Rs. in million)
Budget Revised Actual Percentage
Year Variation
Estimates Estimate Receipts of Variance
2021-22 5,655 5,361 3,194 -2,167 -40
2022-23 5,692 5,692 4,511 -1,181 -21
Table D: Comparison of Revenue collected during 2021-22 & 2022-23
A comparison of revenue collected during the financial years 2021-22 & 2022-23 is given
below in tabulated form and bar chart:
(Rs. in million)
Revenue Revenue
Sr. Head of Excess (+) Variance
Category of Receipts Collected Collected
No. Account Short (-) %age
2021-22 2022-23
1 Property Tax B01301 1,474.65 1,968.89 494.24 33.52
2 Professional Tax B01601 124.10 764.51 640.41 516.04
3 Provincial Excise Duty B026 39.74 35.24 -4.50 -11.33
Motor Vehicles
4 B02801 355.60 412.25 56.65 15.93
Registration Fee
Motor Vehicle Tax
5 B02803 744.98 789.21 44.23 5.94
(Token Tax)
Reg. Fee Real
6 B03053 17.05 13.28 -3.77 -22.14
Estate/MV Dealers
7 Hotel Tax B03056 17.63 48.27 30.64 173.74
Tobacco Development
8 B03080 420.41 479.58 59.17 14.07
Cess
Total : 3,194.16 4,511.22 1,317.05 41.23
939
Comparison of Revenue collected during 2021-22 & 2022-23
4,511.22
4,800.00
4,300.00 Revenue 2022-23

Revenue 2021-22
Excess / Short
3,800.00
3,194.16
3,300.00
2,800.00
Rs. in million
1,968.89
2,300.00
1,474.65
1,800.00
1317.05
1,300.00
789.21
764.51
744.98
640.41
494.24
479.58
800.00
420.41
412.25
355.60
124.10
59.17
56.65
48.27
44.23
39.74
35.24
30.64
17.63
17.05
13.28
300.00
-3.77
-4.50
-200.00
Property Prof. Tax Prov. MV Reg. MV Tax Reg. Fee Hotel Tax Tobacco Total
tax Excise Fee REA/MVD Dev. Cess
Comparison of the revenue collected during 2021-22 and 2022-23 shows that recovery of
the revenue increased during 2022-23 in all heads of receipts except Provincial Excise Duty and
Registration Fee of Real Estate Agents & Motor Vehicle Dealers. Overall revenue collected during
2022-23 was 41% more than 2021-22 which is a substantial increase and show good performance
of the tax collecting authorities.
Table E: Comparison of Expenditure and Revenue for 2021-22 & 2022-23
940
A comparison of revenue and expenditure of the Excise, Taxation & Narcotics Control
Department for the financial years 2022-23 and 2021-22 is given below in tabulated form and bar
chart:
(Rs. in million)
Excess of Revenue Cost Benefit
Year Revenue collected Expenditure
over expenditure Ratio
2021-22 3,194.16 1,030.00 2,164.16 1:3.1
2022-23 4,511.22 1,038.22 3,473.00 1:4.35
Revenue
Expenditure
4,511.22
Excess
5,000.00
4,500.00
3,473.00
4,000.00
3,194.16
3,500.00
Rs. in million
3,000.00
2,164.16
2,500.00
2,000.00
1,038.22
1,030.00
1,500.00
1,000.00
500.00
0.00
2021-22 2022-23
941
A comparison of the cost benefit ratios of the Excise & Taxation Department for the
financial years 2021-22 and 2022-23 exhibits that receipts collected by the Department increased
the benefits against the cost incurred on the function of the department.
2.1 C) Issues in the Excise, Taxation & Narcotics Control Department
A major issue in Excise, Taxation & Narcotics Control Department is non-recovery of

Property Tax which resulted in accumulation of huge amount of arrears. Millions of rupees on
account of Property Tax are outstanding against PESCO. Similarly in many cases Provincial
Government share of Property Tax has also not been recovered from the Cantonment Boards in
the Province. This is due to weak internal controls and in-efficiency of the department. Audit has
raised many observations regarding this issue over the years but no concrete steps have been taken
by the department for recovery of these arrears.
Another longstanding issue in Excise Department is non-recovery of Motor Vehicle Tax

(Token Tax). As per record of every ETO a large number of Motor Vehicles are defaulters.
According to Excise authorities, these vehicles are paying Motor Vehicle Tax in other Districts of
the Khyber Pakhtunkhwa and in some cases in other provinces. However, the department has not
developed any system to ascertain that whether these vehicles are actually paying tax and in which
ETO or province. This issue is depriving the province a huge amount of revenue.
Audit observations amounting to Rs. 447.25 million were raised in this report during audit
of Excise, Taxation & Narcotics Control Department. The pointed out amount also include arrears
and observation relating to the previous year. The entire amount pointed out by the audit is
recoverable. Summary of the audit observations classified by nature is as under:
Table F: Overview of the Audit Observations

Sr. Amount
Classification
No. (Rs. in million)
2 Reported cases of fraud, embezzlement & misappropriation -
3 Irregularities -
A Non/short-recoveries 447.25
4 Others -
Total 447.25
942
2.3 Brief Comments on the Status of Compliance with PAC Directives
Table G: The status of compliance with PAC directives:

Sr. Audit Report Total Paras Paras Paras Percentage of
Remarks
No. Year Paras Discussed Settled Stand compliance
1 2002-03 12 12 0 12 0% -
2 2003-04 15 15 3 12 20 % -
Yet to be discussed
3 2004-05 14 - - - - in PAC
4 2005-06 14 14 6 8 43 % -
Yet to be discussed
5 2006-07 15 - - - - in PAC
6 2007-08 15 - - - - -do-
7 2008-09 10 10 0 10 0% -
8 2009-10 10 10 3 7 30 % -
Yet to be discussed
9 2010-11 13 - - - - in PAC
10 2011-12 18 - - - - -do-
11 2012-13 10 10 2 8 20 % -
Yet to be discussed
12 2013-14 10 - - - -
in PAC
13 2014-15 8 - - - - -do-
14 2015-16 9 - - - - -do-
15 2016-17 15 - - - - -do-
16 2017-18 11 - - - - -do-
17 2018-19 19 - - - - -do-
18 2019-20 10 - - - - -do-
19 2020-21 9 - - - - -do-
20 2021-22 8 - - - - -do-
21 2022-23 8 - - - - -do-
Total 237 71 14 57 20 %
Compliance with the PAC directives is poor mainly because of the lack of pursuance by
the Department. It is worth mentioning here that partial recoveries have been affected by the
Department. However, paras would be considered for settlement once complete recoveries are
affected and verified.
2.4 AUDIT PARAS
2.4.1 Non-realization of Property Tax-Rs. 131.29 million
According to Section 16 of the Urban Immovable Property Tax Act, 1958, any sum due on
account of Property Tax which remains unpaid after the due date without sufficient cause to the
satisfaction of the collector is required to be recovered as arrears of land revenue.
943
During the financial years 2021-22 & 2022-23, Excise & Taxation Offices in various
districts did not recover Government revenue on account of Property Tax amounting to Rs. 131.29
million related to the years 2020-21 to 2022-23 . Detail of offices is given below:
Sr. No. Excise and Taxation Office PDP No./Year Amount pointed out (Rs.)
1 ETO Mardan 145/2021-22 23,345,390
2 ETO Bannu 172/2021-22 2,079,548
3 ETO D.I.Khan 183/2021-22 4,035,408
4 ETO Haripur 222/2021-22 2,756,185
5 ETO Abbottabad 19/2022-23 6,224,481
6 ETO III, Peshawar 40/2022-23 58,185,477
7 ETO II, Peshawar 43/2022-23 18,181,622
8 ETO Mardan 64/2022-23 16,484,935
Total: 131,293,046
The loss occurred due to inefficiency of the department and weak internal controls.
When pointed out it was replied by the management that recovery would be made from the
defaulters.
The loss was reported to the department in December 2022, January 2023 and January 2024.
The department was requested to convene DAC meeting followed by the reminder dated 04-01-
2024. However, the meeting was not convened till finalization of this Report.
Audit recommends prompt recovery of outstanding tax from defaulters.
Note: The issue was also reported earlier in the Audit Reports for the Audit Years 2022-23, 2021-
22, 2020-21 and 2019-20 vide paras number 2.4.2, 10.4.2, 2.5.1 and 2.4.1 having financial impact
of Rs. 538.01 million. Recurrence of same irregularity is a matter of serious concern.
2.4.2 Non-realization of Property Tax from Semi-Government Organization, Autonomous
Bodies and Institution-Rs. 162.47 million
According to Sr. No.2 of Schedule-II to the Urban Immovable Property Tax Act 1958 as
amended vide Khyber Pakhtunkhwa Finance Act 2022, Buildings and Lands acquired for the use by
Government, Semi-Government, Non-Governmental Organizations, Development Financial
Institutions, Corporate Bodies, Autonomous Bodies, Authorities, Boards, Private Limited Companies,
Public Limited Companies, Public Sector Commercial Organizations, private commercial organizations
or Banks shall be assessed and taxed at the rate of sixteen percent of the actual annual rent. In case
building other than those exempted under section 4 of the Act, which are owned and occupied by such
organizations, tax shall be levied on the assessed annual rental value of such buildings on the rate
prescribed hereinbefore.
During the financial year 2022-23 Excise & Taxation Offices did not recover Property Tax
from Semi-Government Organization, Autonomous Bodies, and Institutions etc. This caused non-
realization of Property Tax amounting to Rs. 78.63 million as detailed below:
944
(Amount in Rupees)
Sr. Excise and PDP Amount
Assessee
No. Taxation Office No./Year pointed out
1 ETO Mardan 146/2021-22
PESCO 35,165,375
2 ETO Bannu 171/2021-22
PESCO 9,201,340
3 ETO D.I.Khan 186/2021-22
PESCO 2,788,161
4 ETO Haripur 223/2021-22
PESCO 267,516
5 ETO Abbottabad 18/2022-23
PESCO 12,485,232
6 ETO II, Peshawar 44/2022-23
PESCO 21,206,120
7 ETO Mardan 65/2022-23
PESCO 2,729,222
8 ETO Abbottabad 20/2022-23
District Council Abbottabad 430,501
ETO III, 41/2022-23
Trade Development Authority of Pakistan, 68,612,570
Peshawar Pakistan Mineral Development
9
Corporation, Peshawar Development
Authority (PDA), BISE Peshawar, PESCO
10 ETO II, Peshawar 45/2022-23 National Highway Authority 5,125,941
11 ETO II, Peshawar 46/2022-23 Zarai Taraqiyati Bank 2,073,600
12 ETO II, Peshawar 47/2022-23 Occupants of Auqaf Properties 2,388,496
Total: 162,474,074
The lapse occurred due to non-enforcement of rules and resulted in loss to the government.
When pointed out it was replied by the management that efforts are underway for recovery
of the amount.
The matter was reported to the department in December 2022, January 2023 and January
2024 with request to convene DAC meeting followed by the reminder dated 04-01-2024. However,
the meeting was not convened till finalization of this Report.
Audit recommends recovery of the outstanding Property Tax.
22, 2020-21 & 2019-20 vide paras numbers 2.4.1, 2.4.4, 10.4.1, 10.4.6, 2.5.2 & 2.4.4 having
financial impact of Rs. 1,085.69 million. Recurrence of same irregularity is a matter of serious
concern.
2.4.3 Non-realization of 15% Provincial Government share of Property Tax from

Cantonment Boards-Rs. 24.48 million
According to Presidential Order No.13 of 1979, dated 22.08.1979, fifteen percent share of
net proceeds of Property Tax collected by a cantonment board within its limits is payable to the
Provincial Government concerned.
During the financial years 2021-22 & 2022-23, under mentioned Excise & Taxation Offices
did not realize an amount of Rs. 24.48 million on account of 15% Provincial Government share of
Property Tax from the Cantonment Boards:
945
Excise and Taxation 15% Prov. Govt. share recoverable
Sr. No. PDP No./Year
Office for 2021-22 & 2022-23 (Rs.)
1 ETO Mardan 147/2021-22 1,000,000
2 ETO Bannu 179/2021-22 1,035,414
3 ETO D.I.Khan 185/2021-22 441,336
4 ETO Abbottabad 17/2022-23 22,000,000
Total 24,476,750
The lapse occurred due to non-enforcement of rules and resulted in loss to the Provincial
Government exchequer.
When pointed out, it was replied by the management that the matter would be taken up
with the cantonment board authorities for recovery of the Provincial Govt. share of Property Tax.
The matter was reported to the department in December 2022 and January 2024 with request
to convene DAC meeting followed by the reminder dated 04-01-2024. However, the meeting was
not convened till finalization of this Report.
Audit recommends prompt recovery of Provincial Government share of Property Tax from
Cantonment Boards.
22, 2020-21 & 2019-20 vide paras numbers 2.4.3, 10.4.3, 2.5.4 & 2.4.3 having financial impact of
Rs. 129.12 million. Recurrence of same irregularity is a matter of serious concern
2.4.4 Non-realization of Hotel Tax-Rs. 108.71 million
According to Section 4 of the NWFP Finance Ordinance, 2002 read with Section 7 of the
Khyber Pakhtunkhwa Finance Act 2019 & 2021, there shall be levied and collected every year a
tax on hotels, payable by the owner or management thereof at the rate of ten percent of the room
rent per lodging unit per day available in the hotel concerned.
During audit of record in Excise & Taxation Office IV Peshawar for the financial year
2022-23, it was noticed that in certain cases Hotel Tax was assessed and entered into demand
register but recovery was not made from the owner or management of hotels. This caused non
realization of government revenue Rs.108,705,775 as detailed in the Annexure “A”.
When pointed out, it was replied by the management that efforts would be made to recover
the pointed out amount.
946
The matter was reported to the department in January 2024 with request to convene DAC
meeting followed by the reminder dated 04-01-2024. However, the meeting was not convened till
finalization of this Report.
Audit recommends prompt recovery of outstanding Government dues.
21 & 2019-20 vide paras numbers 10.4.5, 2.5.3 & 2.4.2 having financial impact of Rs. 91.24 million.
Recurrence of same irregularity is a matter of serious concern.
(PDP No. 49/2022-23)
2.4.5 Short realization of Tobacco Development Cess-Rs.9.56 million
Tobacco Development cess is levied under Section II of Khyber Pakhtunkhwa Finance Act,
1996 as amended vide Finance (third amendment) Ordinance 2003 and Khyber Pakhtunkhwa
Finance Act, 2019. The Cess is to be collected directly from the tobacco factories on the basis of
tobacco quota fixed for the factory by the Pakistan Tobacco Board in terms of Recovery of
Tobacco Development Cess rules, 2004. In case of default in payment of cess or any part thereof
by 31st May, the defaulter shall be liable to pay a penalty @ 25 % in addition to the cess due.
During the financial years 2021-22 & 2022-23, Excise & Taxation Officer Mardan did not
fully recovered Tobacco Development Cess from Universal Tobacco Company by 31 st May. This
caused non realization of Tobacco Development Cess and penalty amounting to Rs. 9.56 million
as detailed below:
Sr. No. Excise and Taxation Office PDP No./Year Amount Recoverable (Rs.)
1 ETO Mardan 148/2021-22 7,312,500
2 -do- 66/2022-23 2,250,000
Total 9,562,500
Audit held that Cess and penalty was short recovered due to non-enforcement of rules and
resulted in loss to the Government.
When pointed out, no reply was given by the management.
Audit recommends immediate recovery of the pointed out Government revenue.
947
2.4.6 Non-realization of Professional Tax-Rs. 5.56 million
According to Section 7 of the Khyber Pakhtunkhwa Finance Act 1990 read with Section 3
of the Khyber Pakhtunkhwa Finance Act 2019, there shall be levied and collected a tax, for each
financial year, from persons engaged in professions, trades, callings or employment, according to
the rates specified in Appendix-II of the Khyber Pakhtunkhwa Finance Act, 2019.
During audit of record in Excise & Taxation Offices for the financial years 2021-22 &
2022-23, it was noticed that Professional Tax was assessed and brought into demand registers but
yet not recovered from assesses in certain cases. This caused non-realization of Government
revenue amounting to Rs. 5.56 million as detailed below:
(Amount in Rupees)
Sr. Excise and Taxation Amount Amount Balance
PDP No./Year
No. Office Assessed Recovered Recoverable
1 ETO Bannu 174/2021-22 935,000 - 935,000
2 ETO D.I.Khan 184/2021-22 922,000 - 922,000
3 ETO Abbottabad 21/2022-23 1,075,000 - 1,075,000
4 ETO IV, Peshawar 50/2022-23 2,435,000 - 2,435,000
5 ETO Mardan 71/2022-23 196,000 - 196,000
Total 5,563,000 - 5,563,000
When pointed out, it was replied by the management that efforts would be made to recover
the pointed out professional tax.
Audit recommends prompt recovery of outstanding Government dues.
22, 2020-21 & 2019-20 vide paras numbers 2.4.6, 10.4.7, 2.5.5 & 2.4.8 having financial impact of
Rs. 37.15 million. Recurrence of same irregularity is a matter of serious concern.
2.4.7 Non-realization of Motor Vehicle Tax-Rs. 5.18 million
According to Section 3 of the Motor Vehicles Taxation Act, 1958, Motor Vehicle Tax is
leviable on every motor vehicle at specified rate. Failure to pay the tax within the stipulated period
without sufficient cause attracts levy of penalty under Section 9 of the Act ibid. The unpaid tax
along with penalty is recoverable as arrears of land revenue under section 11 of the Act ibid.
Besides, registration of defaulting vehicle is also liable to be suspended or canceled under section
34 & 35 of the Motor Vehicles Ordinance, 1965.
948
During the financial years 2021-22 & 2022-23, Excise & Taxation Offices in the under
mentioned Districts did not recover Motor Vehicle Tax amounting to Rs. 5.18 million as detailed
below:.
Sr. No. Excise and Taxation Office PDP No./Year Amount pointed out (Rs.)
1 ETO Mardan 149/2021-22 572,750
2 ETO Bannu 175/2021-22 506,686
3 ETO D.I.Khan 188/2021-22 3,270,125
4 ETO Haripur 224/2021-22 313,907
5 ETO Abbottabad 22/2022-23 169,262
6 ETO Mardan 67/2022-23 343,500
Total 5,176,230
The lapse occurred due to non-enforcement of rules and resulted in loss to the government
exchequer.
defaulters.
The loss was reported to the department in December 2022, January 2023 and January 2024.
The department was requested to convene DAC meeting followed by the reminder dated 04-01-
2024. However, the meeting was not convened till finalization of this report.
Audit recommends prompt recovery of outstanding tax from defaulters.
22, 2020-21 & 2019-20 vide paras numbers 2.4.5, 10.4.8, 2.5.9 & 2.4.10 having financial impact
of Rs.111.91 million. Recurrence of same irregularity is a matter of serious concern.
*****
949
Chapter-3
KHYBER PAKHTUNKHWA
REVENUE AUTHORITY
3.1 Introduction
Khyber Pakhtunkhwa Revenue Authority (KPRA) was established through enactment of

the Khyber Pakhtunkhwa Finance Act, 2013 in wake of 18th amendment in the Constitution of
Islamic Republic of Pakistan. Its primary objective is to oversee and manage the collection of
Sales Tax on Services (STS) within Khyber Pakhtunkhwa. In the year 2022, Government of
Khyber Pakhtunkhwa introduced two new Acts, namely ‘The Khyber Pakhtunkhwa Sales Tax
on Services Act, 2022’ and ‘The Khyber Pakhtunkhwa Revenue Authority Act, 2022’. As a
result, these Acts replaced ‘The Khyber Pakhtunkhwa Finance Act, 2013’. This restructuring has
led the KPRA to be governed exclusively by these Acts regarding Sales tax on Services. The
KPRA is working under the administrative control of the Finance Department
3.1A). Main functions of the KPRA
 Administer and collect Sales Tax on services

 Collect Infrastructure Development Cess.
 Administer and collect such other duties, taxes and levies as are assigned to it.
 Implement with the approval of the government, tax administration reforms.
 Promote voluntary tax reforms.
 Implement policies and programs for awareness and facilitation of taxpayers, stake holders
and employees in order to improve the performance of the authority.
 Conduct tax audits to ensure compliance with tax laws.
 Widen the tax base.
Table A: Audit Profile of Khyber Pakhtunkhwa Revenue Authority

Revenue Receipts
Sr.
Description Total No. Audited Audited FY 2022-23
No.
(Rs. in million)
1 Formations 1 1 30,646.12
950
3.1 B). Comments on Budgeted Receipts (Variance Analysis)
During the financial year 2022-23, the Khyber Pakhtunkhwa Revenue Authority collected
an amount of Rs. 30,646.12 million which was 87.56 % of the budget estimates of Rs. 35,000
million.
below. The variation between the budget estimates and actual receipts is depicted in both absolute
and percentage terms.
Table B. Variance Analysis

(Rs. in million)
Sr. Category of Head of Variance
Estimates Receipts Total Short (-)
No. Receipts Account %age
2022-23 2022-23 Receipts (Col.5-4)
1 2 3 4 5 6 7 8
KP Sales Tax
1 B02386 32,000.00 27,155.77 88.61 -4,844.23 -15.14
on Services
Infrastructure
2 B03030 3,000.00 3,490.35 11.39 490.35 16.34
Cess
Total 35,000.00 30,646.12 100.00 -4,353.88 -12.44
The above figures show that actual receipts were 12.44 % less than the estimates of receipts.
The Authority was unable to achieve the target. The major reason of shortfall was non-transfer of Sales
Tax to Government of Khyber Pakhtunkhwa by FBR on account of cross adjustment of input tax. This
issue needs to be looked into by the higher authorities.
The following bar chart shows budget estimates and actual receipts of the Khyber
Pakhtunkhwa Revenue Authority.
951
The budgeted receipts estimates and revised estimates for the years 2021-22 & 2022-23 of
Khyber Pakhtunkhwa Revenue Authority are given below. In the year 2022-23, KPRA was unable
to achieve the target.
(Rs. in million)
Budget Revised Actual Percentage of
Year Variation
Estimates Estimate Receipts Variance
2021-22 27,000.00 30,000.00 30,341.96 341.96 1.14
2022-23 35,000.00 35,000.00 30,646.12 -4,353.88 -12.44
952
(Rs. in million)
Revenue Revenue
Sr. Category of Head of Excess (+) Variance
Collected Collected
No. Receipts Account Short (-) %age
2021-22 2022-23
KP Sales Tax on
1 B02386 27,489.36 27,155.77 -333.59 -1.21
Services
2 Infrastructure Cess B03030 2,852.60 3,490.35 637.75 22.36
Total : 30,341.96 30,646.12 304.17 1.00
The above data is depicted in bar chart below to have better understanding
Comparison of Revenue collected during 2021-22 & 2022-23
30,646.12
30,341.96
36,000.00
27,489.36
27,155.77
32,000.00 Revenue 2021-22

Revenue 2022-23
28,000.00 Excess / Short
24,000.00
20,000.00
16,000.00
12,000.00
3,490.35
8,000.00
2,852.60
637.75
304.17
4,000.00
0.00
-333.59
-4,000.00
Sales Tax on Services Infrastructure Cess Total
Comparison of the revenue collected during 2022-23 and 2021-22 shows not much
difference between the total revenue recovered during the two years. Recovery of Sales Tax on
services decreased slightly in 2022-23 whereas recovery of Infrastructure Cess increased during
953
the current year. Overall revenue collected during 2022-23 was only 1% more than 2021-22 which
was a negligible increase and needs attention of the KPRA authorities.
A comparison of revenue and expenditure of the Excise, Taxation & Narcotics Control
Department for the financial years 2021-22 & 2022-23 is given below in tabulated form and bar
chart:
(Rs. in million)
Year Revenue collected Expenditure
2021-22 30,341.96 516.35 29,825.61 1:58
2022-23 30,646.12 525.78 30,120.35 1:58
Revenue
Expenditure
30,646.12
30,341.96
30,120.35
29,825.61
35,000.00 Excess
30,000.00
25,000.00
Rs. in million
20,000.00
15,000.00
10,000.00
5,000.00
525.78
516.35
0.00
2021-22 2022-23
954
A comparison of the cost benefit ratios of the KPRA for the financial years 2021-22 and
2022-23 shows that actual receipts collected by the Departments slightly reduced the benefits
against the actual cost incurred on the function of the department. It shows poor financial planning
and subsequent execution and follow-up in order to meet the budgetary targets.
3.1 C) Issues in the Khyber Pakhtunkhwa Revenue Authority
During receipts audit of the Khyber Pakhtunkhwa Revenue Authority it was observed that
sales tax on services was not assessed or under assessed by certain registered service providers.
Penalty on non and late filers of monthly returns of Sales Tax on services was also not imposed or
recovered.
In some cases Sales Tax on services deposited by the registered persons in various branches
of National Bank of Pakistan in Sindh, Punjab, Islamabad and Khyber Pakhtunkhwa was not
transferred into the account of Government of Khyber Pakhtunkhwa despite the lapse of a
considerable period. There are chances that this revenue might have been transferred into the
accounts of Federal Government or other Provincial Governments.
It was observed that input tax adjustments were claimed by many registered persons in
their monthly returns against purchase invoices issued by service providers but these invoices were
not traceable in the monthly returns of those service providers. It seems that either these invoices
were not issued by the services providers or sales made through these invoices were concealed to
avoid payment of Sales Tax.
Another issue was that in some cases Sales Tax withheld by the withholding agents was not
deposited into Government Treasury. Almost all withholding agents provide to KPRA only figures
of the withheld tax without mentioning rate of tax and value of services on which tax was withheld.
This inaccurate and unreliable data/information makes it difficult to cross match the withholding
agents’ data with service providers’ data and chances of tax evasion could not be ruled out.
A huge amount of Sales tax assessed vide assessment orders against defaulter and pointed
out by internal tax audit was not recovered despite the lapse of a considerable time.
Another important issue is that FBR is not carrying out reconciliation of the cross input tax
adjustment in time which resulted in non-payment of a huge amount of tax to Government of KP.
955
Audit observations amounting to Rs 15,680.68 million were raised in this report during
audit of Khyber Pakhtunkhwa Revenue Authority for the financial years 2022-23 and 2021-22.
Entire amount pointed out by the audit is recoverable. Summary of the audit observations classified
by nature is as under:
Table D: Overview of the Audit Observations

Sr. Amount
Classification
2 Reported cases of fraud, embezzlement & misappropriation -
3 Irregularities -
A Non/short-recoveries 13,838.87
B Non/Short Assessment 2,841.81
4 Others -
Total 15,680.68
Audit Paras on revenue receipts accounts of the Khyber Pakhtunkhwa Revenue Authority
have not yet been discussed in PAC. Nevertheless, due to non-discussion of audit paras by PAC
over the years, the impact of audit has ratcheted down and so have benefits for the citizens.
956
3.4 AUDIT PARAS
3.4.1 Non/Short assessment of Sales Tax on services Rs. 2,779.55 million
According to Sr. No. 14 of the Second Schedule of Finance Act 2021, Sales Tax on services
provided by construction contractors, architects, civil engineers, land or property surveyors,
construction consultants, designing and supervision consultants, is chargeable at the rate of 2% in
case of Government funded construction projects including ADP/PSDP funded projects and
construction of hydropower projects. As per Finance Act 2019 the rate of Sales Tax for such
services was 15 % during 2020-21.
During audit of the Sales Tax on services record in KPRA for the financial years 2021-22 &
2022-23, it was noticed that China Gezhouba Group Co, China Gansu Co. & M.M. Pakistan Pvt.
Ltd. provided services to WAPDA and SK Hydro Co. and charged sales tax on services at the rate
of 1%. Audit held that rate of Sales Tax on services for category in which these companies fall was
2% in the year 2021-22 and 15% in the year 2020-21 for the government funded construction
projects. Charging tax at the rate of 1% resulted in short assessment of Sales Tax on services.
Furthermore, M/S CGGC-Descon JV provided services to WAPDA for construction of Mohmand
Hydropower Project. Scrutiny of the monthly returns of M/S CGGC-Descon JV and withholding
CPRs of WAPDA revealed that services worth Rs. 24.36 billion were provided to WAPDA during
2021-22 and 2022-23. However, Sales Tax on these services was neither paid by M/S CGGC-Descon
JV nor withheld by the WAPDA. Detail of the aforementioned cases is given detailed below:
(Amount in Rupees)
Sr. PDP No./ Amount
Name of Service Providing Company
No. Year Pointed Out
1 253/2021-22 China Gezhouba Group Company Ltd. (KNTN 3113338-0) 2,181,257,307
2 254/2021-22 China Gansu International Co. Ltd. (KNTN 7441411-4) 57,208,950
3 255/2021-22 M.M. Pakistan Pvt. Ltd. (KNTN 0817113-7) 53,981,844
4 75/2022-23 CGGC-Descon JV (NTN 5387927-5) 487,104,795
Total: 2,779,552,896
The lapse occurred due to non/short assessment of sales tax on services and resulted in loss
to the government.
When pointed out it was replied by the management that case of China Gezhouba Group
pertains to the regional Collectorate North and response would be provided once the observation
is discussed with the relevant regional Office. In the cases China Gansu International Co. and
M.M. Pakistan Pvt. Ltd, management stated that examination of the data is in process and response
would be submitted once the analysis is completed. In case of CGGC-Descon JV, necessary action
will be initiated as per law as soon as possible.
957
The matter was reported to the KPRA in June 2023 and January 2024. The KPRA was
requested to convene DAC meeting followed by the reminder dated 01-01-2024. However, the
meeting was not convened till finalization of this Report.
Audit recommends investigating the matter and recovery of Government revenue.
3.4.2 Loss due to non-imposition/recovery of penalty on non and late-filers of monthly

returns of Sales Tax on services-Rs. 912.48 million
According to Sr. No. 3 of the table given in Section 53 of the Khyber Pakhtunkhwa Sales Tax
on Services Act, 2022, where any person fails to furnish a return within due date as specified under
Section 2(x)(ii) i.e. 18th day of the month following the end of the tax period, or such other date as the
Management Committee may, by Notification in the official Gazette, specify, he shall be liable to a
penalty of nine thousand rupees per tax period or a fraction thereof provided that if a return is filed
within ten days of the due date, he shall pay a penalty of three hundred rupees for each day of default.
During audit of the Sales Tax on services record in KPRA for financial years 2021-22 & 2022-
23, it was noticed that KPRA did not impose/recover penalty on registered persons who failed to file
their monthly returns or filed after the due date, i.e. 15th day of the month following the end of the tax
period as required under the Act. This caused non-realization of penalty Rs. 912.48 million as detailed
below:
Sr. No. PDP No./Year Category No. of cases Amount Pointed Out (Rs.)
1 247/2021-22 Non-Filers 30,409 152,045,000
2 260/2021-22 Late-Filers 28,283 141,415,000
3 85/2022-23 Non-Filers 12,300 619,024,775
Total: 70,992 912,484,775
The lapse occurred due non-enforcement of the provisions of law and resulted in loss to the
Government.
When pointed out it was replied by the management that the observation contains data
which was relevant to all regional offices. Proper response would be provided once the data is
examined and action will be taken as per law.
The matter was reported to the KPRA in June 2023 and January 2024 with request to convene
DAC meeting followed by the reminder dated 01-01-2024. However, the meeting was not convened
till finalization of this Report.
Audit recommends taking action for imposition and recovery of penalty from the non/late-
filers of monthly returns of sales tax on services.
958
Note: The issue was also reported earlier in the Audit Reports for the Audit Years 2021-22 &
2019-20 vide paras numbers 11.4.3 & 3.4.1 having financial impact of Rs. 550.96 million.
3.4.3 Loss due to non-transfer of Sales Tax on services into account of Government of
Khyber Pakhtunkhwa-Rs. 391.94 million
According to Rule 7 of the Treasury Rules and Rule 26 of G.F.R, duty of the departmental
Controlling officers to see that all sums due to Government are regularly and promptly assessed,
realized and duly credited in the Public Account.
During audit of the accounts record of KPRA for financial year 2021-22, while comparing
bank branch wise report and computerized payment receipts with AG office data, it was noticed
that an amount of Rs. 391.94 million deposited by the registered persons in various branches of
National Bank of Pakistan in Sindh, Punjab, Islamabad and Khyber Pakhtunkhwa on account of
KP Sales Tax on Services had not been transferred into the account of Government of Khyber
Pakhtunkhwa despite the lapse of a considerable period.
The lapse occurred due to weak financial management and resulted in loss to the Provincial
Government exchequer.
When pointed out it was replied by the management that record would be consulted and
detailed reply would be submitted.
The matter was reported to the KPRA in June 2023 and requested to convene DAC meeting
followed by the reminder dated 01-01-2024. However, the meeting was not convened till finalization
of this Report.
Audit recommends that action be expedited for transfer of the pointed out amount into
the account of Provincial Government.
2019-20 vide paras numbers 11.4.3 & 3.4.5 having financial impact of Rs. 71.66 million.
(PDP No. 263/2021-22)
3.4.4 Loss due to unauthentic input tax adjustment by Pak Telecom Mobile Limited Rs.
449.95 million
959
According to Section 16(1), of the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, a
person required to pay tax under this Act shall be entitled to deduct from the payable amount, the
amount of tax payable or already paid by him to Government on the receipt of taxable services used
exclusively in connection with taxable services provided by such person subject to the condition that
he holds a true and valid tax invoice not older than six tax periods, showing the amount of tax earlier
charged on the services so received; provided that the Management Committee may disallow or
restrict such adjustment in case of any service or person or class of services or persons as it may
deem appropriate.
During audit of the accounts record of KPRA for the financial year 2022-23, record of
computerized monthly returns revealed that:
a) Pak Telecom Mobile Limited (NTN 1161581-8) received services from Huawei
Technologies Pakistan Pvt. Ltd (NTN 1417959-8) during 2022-23 and input tax adjustment was
claimed against these invoices. However, some of these invoices involving Sales Tax on services
Rs. 238,962,414 were not disclosed in the monthly returns of Huawei Technologies. It seems that
either these invoices were not issued by the Huawei Technologies or sales made through these
invoices were concealed to avoid payment of Sales Tax. Detail of these invoices is given in the
Annexure “B”.
b) Pak Telecom Mobile Limited claimed input tax adjustments of Rs. 242,683,382 against the
purchase invoices issued by Pakistan Telecommunication Company Limited (NTN 0801599-6)
during the period from July 2022 to May 2023. However, as per monthly returns of the PTCL,
services involving Sales Tax Rs. 31,693,998 were provided to Pak Telecom Mobile during the same
period. There was a huge difference of Rs. 210,989,384 between the records of both companies. It
seems that either these invoices were not issued by the PTCL or sales made through these invoices
were concealed to avoid payment of Sales Tax on services. Detail of these invoices is given in the
Annexure “C”.
The lapse occurred due to unauthentic input adjustment by Pak Telecom Mobile Ltd or
concealment of sales by Huawei Technologies and PTCL which resulted in loss of Rs. 449.95
million to government exchequer.
When pointed out it was replied by the management that necessary action as per relevant
provision of law will be initiated very soon.
The irregularity was reported to the KPRA in January 2024 with request to convene DAC
meeting. However, the meeting was not convened till finalization of this Report.
Audit recommends that matter may be investigated and Sales Tax be recovered from the
concerned registered person(s).
960
(PDP No. 76 & 77/2022-23)
3.4.5 Loss due to non-imposition of Default Surcharge on late payment of Sales Tax on
services-Rs. 168.48 million
According to Section 54 of the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, if
a registered person does not pay the tax due or any part thereof, whether willfully or otherwise, on
time or in the manner specified under this Act, rules or notifications or procedures issued there
under, he shall, in addition to the tax due and any penalty under Section 53, pay default surcharge
at the rate of twelve percent (12%) per annum amount of tax or charge or the amount of refund
erroneously made.
During audit of record for the financial years 2021-22 & 2022-23, in the office of KPRA, it
was noticed that certain registered persons did not pay the sales tax on services within due date i.e. 15th
day of the month following the end of the tax period, as required under the Act ibid but no action had
been initiated by the Authority against these registered persons regarding imposition of default
surcharge on late payment of tax as detailed below:
Sr. No. PDP No./Year No. of Cases Amount Pointed Out (Rs.)
1 248/2021-22 355 108,896,382
2 86/2022-23 283 59,581,944
Total 638 168,478,326
The lapse occurred due to non-implementation of the provision of Sales Tax on Services
Act.
Non-imposition of default surcharge resulted in loss of Rs. 168.48 million to Government.
When pointed out it was replied by the management that proper response will be extended
once the data is examined in totality.
The matter was reported to the KPRA in June 2023 and January 2024with request to
convene DAC meeting followed by the reminder dated 01-01-2024. However, the meeting was
Audit recommends imposition and recovery of Default Surcharge on late payment of Sales
Tax on services
Note: The issue was also reported earlier in the Audit Report for the Audit Year 2019-20 vide
para numbers 3.4.6 having financial impact of Rs. 20.93 million. Recurrence of same irregularity
is a matter of serious concern.
961
3.4.6 Loss to Government due to non-disclosure of Debit Notes in the Sales Tax returns Rs.
162.33 million
According to Sr. No. 45 of KPRA Sales Tax on services Regulation 2017, where a
registered person has issued a tax invoice for taxable service, and such service or part thereof has
been canceled or where for any valid reason, the value of service or the amount of sales tax
mentioned in the invoice needs to be revised, the service provider and service recipient shall be
entitled to make corresponding adjustments against output tax and input tax respectively by issuing
Credit and Debit Notes. The adjustments which lead to reduction in output tax or increase in input
tax can only be made if the corresponding Debit Note or Credit Note is issued within 180 days of
rendering of service.
During audit of the accounts record of KPRA for the financial years 2021-22 and 2022-23,
scrutiny of the monthly sales tax on services returns of different taxpayers revealed that they had issued
credit notes showing sales returns by the buyers or cancellation of the previous sales invoices. On cross
examination of the buyer’s returns it was observed that debit notes for the cancelled purchases had not
been issued by the buying entities. Audit held that the seller reduced the tax liability by reducing the
value of sales but the buyer after claiming input tax adjustment didn’t cancel the transaction. On the
contrary non-existence of the reciprocal debit note in the returns of buyer may also depict that the
transaction of the credit note is not genuine. This resulted into loss of Rs. 162.33 million as pointed out
below:
Sr. No. PDP No./Year Amount Pointed Out (Rs.)
1 269/2021-22 119,893,577
2 79/2022-23 42,432,378
Total 162,325,955
The lapse occurred due to non-observance of rules by the tax payers.
Non-disclosure of debit notes resulted in irregular adjustment of input tax and loss to the
Government.
When pointed out it was replied by the management that they need few days’ time to
examine the matter and file detailed response.
The matter was reported to the KPRA in June 2023 and January 2024 and requested to
convene DAC meeting followed by the reminder dated 01-01-2024. However, the meeting was not
convened till finalization of this Report.
Audit recommends that matter may be investigated and the omission may either be justified
or the pointed out Sales Tax be recovered from the registered persons.
962
3.4.7 Loss due to non-deposit of withheld Sales Tax by WAPDA Rs. 103.75 million
According to Rule 8 (3) of the Khyber Pakhtunkhwa Sales Tax on Services (Withholding)
Regulation, 2020, withholding agents shall deposit withheld tax amount by the 15" day of the
following month in which payment is made to the service provider.
During audit of the accounts record of KPRA for the financial year 2022-23, it was noticed
that China Gezhouba Group Company Ltd. (NTN 3113338-0) and FC NWFP Security Services
Pvt Ltd. (NTN 2919792-9) provided services to WAPDA during 2022-23. As per rules 100% Sales
Tax on these services was withheld by WAPDA. However, Sales Tax Rs. 103,753,616 shown
withheld by WAPDA, in the monthly Sales Tax returns of the above mentioned service providers
for April and June 2023 was not found deposited into Government Treasury by WAPDA upto
October 2023. Detail is given in the Annexure “D”.
The lapse occurred due to non-observance of rules by WAPDA and resulted in loss of
Rs. 103.75 million to government.
When pointed out it was replied by the management that that necessary action will be taken
as per law.
Audit recommends early recovery of pointed out Sales Tax from WAPDA.
(PDP No. 78/2022-23)
3.4.8 Loss due to less withholding of sales tax on services from unregistered service
provider Rs. 82.42 million
According to Regulation 5 of the Khyber Pakhtunkhwa Sales Tax on Services (Withholding)

Regulation, 2020, services provided by persons either not registered with the KPRA or if registered,
are inactive/non-active as per Active Taxpayers’ List of the Authority as available on its official
website shall be compulsorily liable to full withholding at applicable tax rates across the board.
During audit of the Sales Tax on services record in KPRA for financial years 2021-22 &
2022-23, it was noticed while scrutiny of the computerized data provided to Audit, that in certain
cases withholding agents / registered persons did not withhold full amount of Sales Tax on services
provided by unregistered persons. Only 50% or less than 50% Tax was withheld from unregistered
persons which caused loss of Rs. 82.421 million as detailed below:
Sr. No. PDP No./Year Amount Pointed Out (Rs.)
1 249/2021-22 58,136,644
963
2 80/2022-23 24,285,072
Total 82,421,716
The irregularity occurred due to non-observance of rules by withholding agents and service
providers and resulted in loss to the Government.
When pointed out it was replied by the management that proper response in this regard
would be filed once the relevant data is examined and necessary action as per law will be initiated.
Audit recommends recovery of the pointed out amount.
3.4.9 Unauthentic withholding of Sales Tax Rs. 242.02 million due to non-declaration of
services in monthly returns by Power Construction Corporation of China Limited
According to Section 39 of the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, every
registered person shall furnish, not later than the due date, a true, correct and properly filled-up return
in the prescribed form to the Management Committee or any other office through the computerized
system or any other manner or mode as may be specified by the Management Committee, indicating
the tax due and paid during a tax period and such other information, as may be specified.
During audit of the accounts record of KPRA for the financial year 2022-23, analysis of
the withholding agents’ data disclosed that WAPDA withheld Sales Tax amounting to Rs. 242.02
million on services provided by Power Construction Corporation of China (NTN 4207650-1).
Scrutiny of the monthly Sales Tax returns of Power Construction Corporation revealed that these
services were not declared in the returns submitted with KPRA. In fact the Company did not show
any sales in its 11 months returns. Only in the return of October 2022, services worth Rs. 1,703.02
million were shown provided to WAPDA on which entire amount of Sales Tax Rs. 34.06 million
@ 2% was shown withheld by WAPDA. However, this amount was also not traceable in the data
provided by WAPDA. It is worth mentioning here that WAPDA did not provide to KPRA value
of services and rate at which tax was withheld. Without declaration of sales in the monthly returns
by M/S Power Construction Corporation and provision of detail by WAPDA, value of services
provided and rate at which Sales Tax was charged and withheld by WAPDA could not be
confirmed.
The lapse occurred due to non-disclosure of services in monthly returns by the company and
resulted in unauthentic recovery / withholding of Sales Tax.
964
When pointed out it was replied by the management that observation noted. Further probe
will be made.
Audit recommends that matter may be inquired into for facts findings and appropriate
action.
(PDP No. 84/2022-23)
3.4.10 Loss due to non-deposit of withheld Sales Tax by PDA Rs. 64.74 million
According to Rule 8 (3) of the Khyber Pakhtunkhwa Sales Tax on Services (Withholding)
Regulation, 2020, withholding agents shall deposit withheld tax amount by the 15" day of the
following month in which payment is made to the service provider.
During audit of the accounts record of KPRA for the financial years 2021-22 & 2022-23,
scrutiny of the monthly sales tax on services returns of MM Pakistan, Probuilt Construction and
National Engineering Services Pakistan Pvt. Ltd revealed that they provided services to Peshawar
Development Authority (PDA). PDA withheld Sales Tax on these services. However, on
comparison of the said withheld tax in the returns of PDA, it was observed that PDA did not deposit
this withheld tax into Government Treasury. Detail is given below:
Tax Withheld but

Sr. PDP
Service Provider not deposited by
No. No./Year
PDA
M.M. Pakistan Pvt. Ltd. (KNTN 0817113) 59,552,319
1 256/2021-22
Probuilt Construction Pvt. Ltd. (KNTN 7973835)
M.M. Pakistan Pvt. Ltd. (KNTN 0817113) 5,184,983
2 82/2022-23
National Engineering Services Pakistan (KNTN 801470)
Total 64,737,302
The lapse occurred due to non-observance of rules and resulted in non-deposit of Rs. 64.74
million into government exchequer.
When pointed out it was replied by the management that proper detailed response will be
submitted once the data relevant to the observation is examined and analyzed.
965
Audit recommends investigating the matter and deposit of withheld tax into Government
revenue.
3.4.11 Loss due to claiming unjustified exemption from Sales Tax on services Rs. 63.68 million
According to Sr. No. 14 of the Second Schedule of the Finance Act 2013 as amended vide
Finance Act 2021, Sales Tax on services provided by construction contractors, architects, civil
engineers, land or property surveyors, construction consultants, designing and supervision
consultants, and allied or ancillary professions (Service code: 9815.3000) is chargeable at the rate of
2% without any input adjustment in case of Government funded construction projects including
ADP/PSDP funded projects and construction of hydropower projects. In case of other than
Government funded construction projects, the tax is chargeable at the rate of 5% without any input
adjustment. The same clause provides further that some of the services will be exempt i.e. (i)
construction work for industrial estates and under international agreements and foreign grants (ii)
Residential construction for Naya Pakistan Housing Scheme (iii) ADP programs initiated or
completed before 30th June 2021.
During audit of the Sales Tax on services record in KPRA for financial year 2021-22, it was
noticed that some companies falling under service code 9815.3000 provided services to unregistered
persons having no proper NTN. Sales Tax at the rate of 5% was applicable on these services but the
companies declared these services exempt from tax. Exemption is allowed in certain contractual
works on behalf of Government Departments and claiming exemption on the assumption that these
unregistered procuring entities are Government Departments was not justified. It was further
observed that M/S Natracon Technologies provided services to National Transmission and Dispatch
Company but in certain cases 2% Sales Tax was not imposed. This caused non recovery of tax Rs.
63.68 million as detailed below:
(Amount in Rupees)
Amount
Sr. PDP Service
Name of Company Pointed
No. No./Year Code
Out
Cemcom Pvt. Ltd. (KNTN 0660575-3)
1 251/2021-22 M Younas Builders (KNTN 5070595-4) 9815.3000 59,850,709
M Younas Builders Pvt. Ltd. (KNTN 5414954-5)
2 252/2021-22 Natracon Technologies Pvt. Ltd. (KNTN 4371493-5) 9815.3000 3,825,509
Total: 63,676,218
The lapse occurred due claiming unjustified exemption and resulted in loss to the
government.
When pointed out it was replied by the management that observation is based on huge
number of transactions. Response would be provided once the details are examined in light of
relevant provision of law
966
The matter was reported to the department in June 2023 and requested to convene DAC
Audit recommends that the matter may be investigated and the omission may either be
justified or the pointed out Sales Tax be recovered from the concerned registered person.
3.4.12 Short Assessment of Sales Tax on Other Telecommunication Services due to incorrect
According to Sr. No. 4(n) of the Second Schedule of Finance Act 2021, Sales Tax on
telecommunication and all other similar, allied, ancillary or auxiliary services was chargeable at the
rate of 19.50%
During audit of Sales Tax on service record for the financial year 2021-22, in the office of
KPRA, it was noticed while scrutiny of the monthly returns of Sales Tax on services of M/S Nokia
Solutions & Networks Pakistan (Pvt) Limited (KNTN 2811966-5) that the Company had provided
services falling under category of “Other Telecommunication Services” which were chargeable to
sales tax at the rate of 19.5%. However, the tax was assessed at the rate of 15% which caused short
assessment of Rs. 59,470,124 as detailed in the Annexure “E”.
The lapse occurred due to applying incorrect rate of Sales Tax by the registered person and
resulted in loss to the government.
When pointed out it was replied by the management that analysis is in process by corporate
sector/wing of KPRA. Detail response would be provided after completion of the analysis in light
of relevant provision of law.
Audit recommends that the omission may either be justified or pointed out amount may be
recovered from the concerned service provider.
(PDP No. 259/2021-22)
3.4.13 Loss due to availing unauthorized exemption of Sales Tax on Services by Pak Qatar
Family Takaful Limited Rs. 8.83 million
According to Sr. No.26 of the Second Schedule to the KP Finance Act, 2013 as amended
vide KP Finance Act 2021 and KP Sales Tax on Services Act, 2022, “in case of health insurance
services and services in respect of Government sponsored Sehat Card Plus program, the tax shall
be charged at the rate of One Percent (1%) without any input tax adjustment. However, Finance
967
Department KP fully exempted Health insurance services including Sehat Card Plus Programme
vide Sr. No. (b) of Notification No. BO (Rev-l1)/FD/3-2/2022 dated 10th August 2022.
During audit of the accounts record of KPRA for the financial year 2022-23, it was noticed
while checking computerized monthly return of Pak Qatar Family Takaful Limited (NTN 2840091)
that the company did not assess Sales Tax on insurance services provided to various clients during
August 2021 to July 2022. Sales Tax was not exempt during this period on insurance services. This
caused non recovery of Tax amounting to Rs. 8,830,264. Detail is given in the Annexure “F”.
The lapse occurred due to availing undue exemption on services by the company and resulted
in loss of Rs. 8.83 million to government.
When pointed out it was replied by the management that observation noted to the extent of
period falling in year of audit and action will be taken for relevant period. Audit may revise its
observation beyond their scope of the audit period. KPRA will take action on its part
Entire amount pointed out by Audit is recoverable. Audit recommends expeditious

recovery from the concerned company.
(PDP No. 81/2022-23)
3.4.14 Loss due to non-disclosure/deposit of withheld Sales Tax on services Rs. 7.73 million
According to Rule 7 of the KPRA Sales Tax Withholding Regulations 2020, the persons
who are registered with the Authority as regular taxpayer and are compliantly paying the
Provincial tax on services at standard rate of 15% or higher rate shall be entitled to take admissible
input tax adjustment in their monthly tax returns in case of services received by them from persons
other than unregistered or inactive registered persons subjected to full withholding under these
regulations.
During audit of the Sales Tax on services record in KPRA for the financial year 2021-22 it
was noticed that M/S CMPAK and Pak Telecom claimed input tax adjustments on invoices issued
by Engro Enfrashare. On comparison of Annexure A of the monthly returns of CMPAK and Pak
Telecom with the Annexure C of monthly returns of Engro Enfrashare, it was observed that sales
tax amounting to Rs 7,731,922 was withheld by the CMPAK and Pak Telecom from Engro
Enfrashare but was not disclosed in their returns. Detail is given in the Annexure “G”.
968
The loss occurred due to non-disclosure of withheld Sales Tax and resulted in loss of
government revenue
When pointed out it was replied by the management that they needs time for examination
and filing response.
of this Report.
Audit recommends investigating the matter and recovery of the Government revenue.
(PDP No. 250/2021-22)
3.4.15 Non-imposition of penalty and default surcharge on FKC Logistics for tax fraud Rs.
3.37 million
According to Sr. No. 8 of the table given in Section 53 of the Khyber Pakhtunkhwa Sales
Tax on Services Act, 2022, Where a person knowingly, intentionally, deliberately or fraudulently
submits a false, fake, untrue or forged document to the Management Committee or any of officer of
the Authority, such person shall be liable to pay a penalty of one hundred thousand rupees or one
hundred percent of the tax payable for the tax period or periods to which the offence relates,
whichever is higher. According to Section 54 of the Act ibid, if a registered person does not pay the
tax due or any part thereof, whether willfully or otherwise, on time or in the manner specified under
this Act, rules or notifications or procedures issued there under, he shall, in addition to the tax due
and any penalty under section 53, pay default surcharge in case of tax fraud at the rate of 24% per
annum, of the amount of tax evaded, till such time the entire liability, including the amount of default
surcharge, is paid.
noticed that M/S FKC Logistics, a Govt. carriage contractor produced fake exemption letter of
Sales Tax on services to District Food Controller Malakand for taking exemption on transportation
of wheat for Food Department in January and February 2023. An inquiry was initiated by the
KPRA in this regard. In the inquiry, it was established that FKC Logistics has committed tax fraud
involving Sales Tax Rs. 2,903,499. Amount of tax was recovered from the FKC Logistics but
penalty and default surcharge were not imposed on the defaulter as detailed below:
Tax Amount of Penalty @ 100% Default Surcharge @ Total Amount
Period Tax Evaded of the Tax 24% upto 22-11-2023 Recoverable
February 2023 Rs. 2,903,499 Rs. 2,903,499 Rs. 464,560 Rs. 3,368,059
The lapse occurred due to non-enforcement of the provisions of Act and resulted in loss of
government revenue.
969
When pointed out it was replied by the management that action will be taken as per law.
The matter was reported to the KPRA in January 2024 with request to convene DAC
Audit recommends imposition / recovery of penalty and default surcharge from the
concerned as per relevant provisions of law upto the date of payment of entire liability.
(PDP No. 83/2022-23)
3.4.16 Non/less withholding of Sales Tax on services by M/S China Gezhouba Group
Company- Rs. 2.82 million
According to the Rule 5(v) of the Khyber Pakhtunkhwa Sales Tax on Services (Withholding)
Regulation 2020, services liable to tax under the Act at reduced rate (less than the standard rate of
15%) shall be compulsory liable to full withholding at applicable rates.
noticed that M/S China Gezhouba Group Company received services from various service
providers whose services were taxed at reduced rates i.e. less than the standard rate of 15%. These
services were liable to full withholding as per above rule. However, the Company being a
withholding agent had not withheld or partially withheld the amount of Sales Tax on these services.
This led to non/less withholding of sales tax Rs.2,816,120.
Audit held that the lapse occurred due to non-observance of rules and resulted in loss to the
Government.
When pointed out it was replied by the management that they needs some time to evaluate
the observation. Analysis is initiated and response would be submitted once reached to the
conclusion.
of this Report.
Audit recommends justification / recovery of the tax involved.
(PDP No. 257/2021-22)
3.4.17 Short Assessment of Sales Tax on Franchise Services due to application of incorrect
According to Sr. No. 10 of the Second Schedule of Finance Act 2021, Sales Tax on
Franchise Services (Service Code 9823.0000) was chargeable at the rate of 15%.
970
During audit of Sales Tax on service record for the financial year 2021-22, in the office of
KPRA, it was noticed while scrutiny of the monthly returns of Sales Tax on services of M/S Gas &
Oil Pakistan Limited (KNTN 3935947-6) that the company had provided services falling under
category of “Franchise Services (9812.6390)” which were chargeable to Sales Tax at the rate of 15%.
However, the Company assessed Tax at the rate of 10% which caused short assessment of Sales Tax
Rs. 2,789,228. Detail is given in the Annexure “H”.
The lapse occurred due to application of incorrect rate of Sales Tax by the Company and
resulted in loss to the government.
When pointed out it was replied by the management that data relevant to the observation
pertains to all regional offices. Detailed response would be submitted in few days’ time.
Audit recommends that the omission may either be justified or pointed out amount may be
recovered from the concerned service provider.
(PDP No. 258/2021-22)
3.4.18 Non-transfer of Sales Tax to Government of Khyber Pakhtunkhwa by FBR on

account of cross adjustment of input tax Rs. 4,353 million
According to MOU between KPRA and FBR, within 30 days of the end of each quarter a
joint committee of FBR and KPRA officers shall prepare a statement showing net effect of the
cross adjustments of input tax made during the quarter and the party with positive balance will
compensate the party with negative balance. Sales Tax is a value added tax in which a taxpayer is
entitled to deduct the tax paid on input for providing taxable services, from the output tax payable
on such services. KPRA allows input tax adjustment to its registered tax payers (paying sales tax
on services) in their returns on account of sales tax (on goods) paid to FBR and vice versa.
During audit of record for the financial year 2022-3, in the office of KPRA, it was noticed that
reconciliation of the cross adjustment of input tax for the financial years 2021-22 and 2022-23 was not
finalized despite the lapse of a considerable time. As per summary of the working provided by the
FBR, KPRA had sent a claim of Rs. 4,353 million to FBR on account of cross adjustment of input tax
as mentioned below. However, this claim was not entertained by the FBR.
Sr. No. Financial Year Amount Receivable from FBR
1 2021-22 Rs. 3,944 million
2 2022-23 Rs. 409 million
Total Rs. 4,353 million
971
The lapse occurred due to non-implementation of MOU provisions by FBR.
Non-transfer of Sales Tax by FBR to Khyber Pakhtunkhwa deprived the Provincial

Government of huge amount of revenue.
When pointed out by Audit it was replied that KPRA is actively pursuing the case with
FBR. Only delay in payment on part of FBR is involved.
The matter was reported to the KPRA in January 2024 with request to convene DAC
Audit recommends that reconciliation of cross adjustment of input tax should be carried
out with FBR on top priority basis to find out the actual amount of revenue recoverable from FBR
besides making efforts for recovery of Provincial Government revenue.
(PDP No. 89/2022-23)
3.4.19 Non-realization of the Sales Tax on services assessed vide assessment orders against
defaulter Rs. 3,857.78 million
According to section 27 of the Khyber Pakhtunkhwa Sales Tax on Services Act 2022 “Where
on the basis of any information acquired during an audit, inquiry, inspection or otherwise, an officer
of the Authority, not below the rank of Assistant Collector, is of the opinion that a registered person
has not paid the tax due on taxable services, provided by him or has made short payment or a
withholding agent fails to withhold the tax or withholds the same but fails to deposit the same in the
prescribed time and manner, the officer shall determine the amount in default and make an assessment
of the tax actually payable by that person.
During audit of the accounts record of KPRA for the financial year 2022-23, it was
noticed that a huge amount of tax was recoverable from service providers and withholding agents
in the light of assessment orders passed by the Authority. However, the defaulters did not deposit
the same and an amount of Rs. 3,857,784,524 was not realized. Detail of these cases is given in
the Annexure I.
The lapse occurred due to non-observance of rules and resulted in non-realization of

government revenue.
When pointed out by Audit no reply was furnished by the management.
972
Audit recommends that action may be taken under the law against defaulters for
expeditious recovery of the pointed out amount.
(PDP No. 87/2022-23)
3.4.20 Non-recovery of Sales Tax on services detected by the Internal Tax Audit Rs. 1,963.55
million
According to Rule 15 (3) of the Khyber Pakhtunkhwa Sales Tax on Services (Audit) Rules,
2019 the authorized officer or audit team, which has conducted the audit, shall be responsible to
follow up the adjudication process at adjudicating stage, appeal stage and in courts if the registered
person has gone for litigation prior to or after availing the remedies under the Act.
According to Rule 3(1) of the Khyber Pakhtunkhwa Sales Tax on Services Arrears
(Recovery) Rules, 2019 where any arrears have become due for recovery either in consequence of
adjudication order or otherwise, the Referring Officer may instead of referring the case to the
Recovery Officer himself act as Recovery Officer and proceed to recover the arrears by invoking the
provisions of Section 87 of the Act in sequential order or otherwise.
During audit of the Sales Tax on services record in KPRA for financial years 2021-22 &
2022-23, it was noticed that internal tax audit teams of KPRA detected an amount of Rs. 1,963.55
million on account of Sales Tax on services which was recoverable from the service providers /
withholding agents in the light of internal audit findings. However, this detected amount of tax
had not been recovered from the defaulters as detailed in the Annexure J.
Audit held that the lapse occurred due to non compliance of the provisions of law and a
huge amount of government revenue remained unrecovered.
When pointed out it was replied by the management that show cause notice had already been
issued and adjudication proceedings have been initiated in the case of PESCO. For the reaming cases,
need some time for filing proper response.
The matter was reported to the department in June 2023 and January 2024 with request to
convene DAC meeting followed by the reminder dated 01-01-2024. However, the meeting was not
convened till finalization of this Report.
Audit recommends that action may be expedited towards adjudication and recovery of the
pointed out Sales Tax on services.
(PDPs No. 267/2021-22 & 88/2022-23)

*****
973
Chapter - 4
REVENUE AND ESTATE DEPARTMENT
4.1 Introduction
The Board of Revenue was the successor of the office of the Financial Commissioner. It
was originally constituted under the provisions of the West Pakistan Board of Revenue Act, 1957,
which on dissolution of One Unit in 1970 became the Board of Revenue, Khyber Pakhtunkhwa.
The Revenue and Estate Department is the controlling authority in all matters connected
with the administration of land, collection of Government dues including land taxes, land revenue,
preparation of land records and other matters relating thereto. Senior Member Board of Revenue
is incharge of the Department.
The Revenue and Estate Department is the custodian of the rights of the land holders and
is the highest revenue court in the province with Appellate/Provisional jurisdiction against orders
of subordinate revenue officers/courts including collectors. All Revenue Officers and Revenue
Courts are subject to the general superintendence and control of the Revenue and Estate
Department. The Department itself is subject to the administrative control of the Provincial
Government.
4.1 A) Main functions of the Revenue & Estate Department
 Assessment and collection of Land Revenue, Agriculture Income Tax, Land Tax and Capital
Value Tax on transfer of immovable property.
 Land surveys and record of rights, including restrictions over transfer of title.
 Laws regarding land tenure, relations between landlords and tenants, special remission of land
revenue and remission under sliding scales.
 Compulsory acquisition of land, Land Acquisition Act and Rules made thereunder.
 Matters connected with the recruitment, training, pay, allowances, promotions, leave, postings
and transfers of revenue staff.
 Registration of document including collection of Registration Fees.
 Stamps and Court Fees, Judicial and non-Judicial.
 Revenue Settlement and Re-assessment.
 Preparation of Gazetteers, Land Laws.
 Territorial adjustment and changes, Boundary Dispute, Land Commission.
 Land Settlement.
974
 Collection of Advance Income Tax on behalf of Federal Government on transfer of immovable
property.
Table A: Audit Profile of Revenue & Estate Department
Sr. Revenue Receipts Audited

Description Total No. Audited FY 2021-22
No.
(Rs. in million)
1 Formations 160 8 434.57
During the financial year 2022-23, Revenue & Estate Department, Government of Khyber
Pakhtunkhwa collected an amount of Rs. 5,968 million which was only 60% of the budget
estimates of Rs. 9.970 million.
below. The variation between the budget estimates and actual receipts is depicted in both
absolute and percentage terms.
Table B: Variance Analysis of Revenue & Estate Department

(Rs. in million)
Sr. Head of Variance
Category of Receipts Estimates Receipts Total Short (-)
No. Account %age
2022-23 2022-23 Receipts (Col.5-4)
1 2 3 4 5 6 7 8
Tax on Agriculture B01175 114.00 92.77 1.55 -21.23 -18.63
1
Income
Fee for Registering B01311, 86.00 76.74 1.29 -9.26 -10.77
2
Documents 12,20
3 Land Revenue B014 4,400.00 1,578.65 26.45 -2,821.35 -64.12
4 Capital Value Tax B017 0 1.93 0.03 1.93 -
5 Stamp Duty B027 4,400.00 3,393.11 56.85 -1,006.89 -22.88
6 Water Rates (Abiana) C03431 450.00 240.72 4.03 -209.28 -46.51
7 Others C038 520.00 584.47 9.79 64.47 12.40
Total : 9,970.00 5,968.40 100.00 -4,001.60 -40.14
The above figures highlight that actual receipts were 40% less than the budget estimates. The
Board of Revenue could not achieve its revenue targets which shows poor fiscal planning. This needs
to be looked into by the concerned revenue collecting authorities.
The following bar chart shows budget estimates and actual receipts of the Revenue and
Estate Department.
975
Receipts Collection vs Target 2022-23
9970.00
10000.00
Budget Estimates
Actual Receipts
8000.00
5968.40
Rs. in million
6000.00
4400.00
4400.00
3393.11
4000.00
1578.65
2000.00
584.47
520.00
450.00
240.72
114.00
92.77
86.00
76.74
1.93
0.00
0.00
Tax on Fee for Land Capital Stamp Water Others Total
Agriculture Registering Revenue Value Tax Duty Rates
Income Documents (Abiana)
Tax Catagory
The budgeted receipts estimates and revised estimates for the years 2021-22 & 2022-23
are illustrated below. Budget estimates in 2021-2 were revised downwards and department
achieved this revised target. However, the department failed to achieve the target in 2022-23 and
there was a shortfall of Rs. 4,002 million.
(Rs. in million)
Budget Revised Actual Percentage
Year Variation
Estimates Estimate Receipts of Variance
2021-22 9,999 8,489 8,657 168 2
976
2022-23 9,970 9,970 5,968 -4,002 -40
(Rs. in million)
Revenue Revenue
2021-22 2022-23
1 Tax on Agriculture Income B01175 117.07 92.77 -24.31 -20.76
2 Fee for Registering Documents B01311, 73.08 76.74 3.65 5.00
12 & 20
3 Land Revenue B014 2,888.42 1,578.65 -1,309.76 -45.35
4 Capital Value Tax B01701 23.39 1.93 -21.45 -91.73
5 Stamp Duty B027 4,909.32 3,393.11 -1,516.21 -30.88
6 Water Rates (Abiana) C03431 175.66 240.72 65.06 37.04
7 Others C03824 470.07 584.47 114.40 24.34
Total : 8,657.01 5,968.40 -2,688.61 -31.06
977
Revenue 2021-22
Revenue 2022-23
Excess / Short
8,657.01
9500.00
9000.00
8500.00
8000.00
7500.00
5,968.40
7000.00
6500.00
4909.32
6000.00
5500.00
5000.00
3393.11
4500.00
2888.42
Rs. in million
4000.00
3500.00
3000.00
1578.65
2500.00
2000.00
584.47
1500.00
470.07
240.72
175.66
117.07
114.40
1000.00
92.77
76.74
73.08
65.06
23.39
3.65
1.93
500.00
0.00
-21.45
-24.31
-500.00
-1000.00
-1500.00 Agri. Reg. Fee Land CVT Stamp Duty Abiana Others
-1309.76
Income Tax Revenue

-1516.21
-2000.00
-2500.00
-3000.00
-2,688.61
Comparison of the revenue collected during 2021-22 & 2022-23 shows that overall
recovery of the revenue decreased by 31% during 2022-23. There was a decrease of 1,309.76
million in collection of Land Revenue and 1,516 million in Stamp Duty. This was a substantial
decrease which shows poor fiscal planning and performance.
A comparison of revenue and expenditure of the Revenue & Estate Department for the
financial years 2021-22 & 2022-23 is given below in tabulated form and bar chart:
978
(Rs. in million)
Year Revenue Collected Expenditure
2021-22 8,657.01 2,252.00 6,405.01 1:3
2022-23 5,968.40 1,324.65 4,643.75 1:4
Revenue
Expenditure
Excess
10,000.00
8,657.01
9,000.00
8,000.00
6,405.01
5,968.40
7,000.00
6,000.00
4,643.75
Rs. in million
5,000.00
4,000.00
2,252.00
3,000.00
1,324.65
2,000.00
1,000.00
0.00
2021-22 2022-23
(Data Source: Finance Account & Appropriation Account KP 2022-23)
In the year 2022-23 both revenue and expenditure show a downward trend. However,
comparison of the cost benefit ratios for the financial years 2021-22 and 2022-23 shows that
receipts collected by the Departments moderately increased the benefits against the cost incurred
on the function of the department.
4.1 C) Issues in the Revenue & Estate Department
979
Millions of rupees on account of Water Rates (Abiana) remained pending for recovery and
the department has not taken concrete steps for recovery of this outstanding amount. Recurrence
of typical irregularities like non-assessment and short assessment of government revenue on
account of Mutation Fee, Stamp Duty and Advance Income Tax on transfer of immovable property
continued as before. No remedial measures have been taken to check their recurrence.
Audit observations amounting to Rs. 315.05 million were raised in this report during audit
of Revenue & Estate Department. The pointed out amount also include observations relating to
2021-22. The entire amount pointed out by the audit is recoverable. Summary of the audit

Sr.
Classification Amount
3 Irregularities -
4 Others -
Total 323.29
Sr. Audit Total Paras Paras Paras Percentage of

Remarks
No. Report Year Paras Discussed Settled Stand compliance
1 2002-03 5 5 2 3 40% -
2 2003-04 4 4 3 1 75% -
Yet to be discussed
3 2004-05 5 - - - - in PAC
4 2005-06 6 - - - - -do-
5 2006-07 5 - - - - -do-
6 2007-08 12 12 10 2 83% -
980
7 2008-09 13 13 7 6 54% -
Yet to be
8 2009-10 4 - - - - discussed in PAC
9 2010-11 6 - - - - -do-
10 2011-12 8 - - - - -do-
11 2012-13 5 5 2 3 40% -
Yet to be
12 2013-14 6 - - - - discussed in PAC
13 2014-15 5 - - - - -do-
14 2015-16 9 - - - - -do-
15 2016-17 7 - - - - -do-
16 2017-18 9 - - - - -do-
17 2018-19 9 - - - - -do-
18 2019-20 7 - - - - -do-
19 2020-21 8 - - - - -do-
20 2021-22 4 - - - - -do-
21 2022-23 15 - - - - -do-
Total 125 39 24 15 62%
Compliance with the PAC directives is satisfactory. It is worth mentioning here that partial
recoveries have been affected by the Department. However, paras would be considered for
settlement once complete recoveries are affected and verified. Nevertheless, due to non-discussion
of audit paras by PAC over the years, the impact of audit has ratcheted down and so have benefits
for the citizens.
981
4.4 AUDIT PARAS
4.4.1 Non-recovery of Water Rates (Abiana)-Rs. 257.11 million
According to Section 45 of the Canal and Drainage Act 1873, any sum lawfully due and
certified by the Divisional Canal Officer to be so due, which remains unpaid after the day on which
it becomes due, shall be recovered as arrears of land revenue.
During the financial years 2021-22 and 2022-23, Revenue Offices under Deputy
Commissioners of different districts did not initiate proceedings against the defaulters for recovery
of outstanding Water Rates (Abiana) amounting to Rs. 257.11 million for the crops seasons of
Rabi 2020-21 & Kharif 2021 as detailed below:
(Amount in Rs.)
Sr. No. Name of Office PDP No./Year Amount pointed out
1 Tehsildar Swabi 163/2021-22 14,333,934
2 Tehsildar Charsadda 170/2021-22 21,425,132
3 Tehsildar D.I.Khan 218/2021-22 20,657,650
4 Naib Tehsildar Tehkal, Peshawar 229/2021-22 1,412,229
5 Tehsildar Mattni Peshawar 270/2021-22 1,685,284
6 Naib Tehsildar Chamkani Peshawar 276/2021-22 7,716,619
7 Tehsildar Badaber Peshawar 283/2021-22 6,065,485
8 Naib Tehsildar Dalazak Peshawar 295/2021-22 886,167
9 Tehsildar Takht Bhai Mardan 327/2021-22 31,973,605
10 Tehsildar Abbottabad 347/2021-22 65,642,953
11 Tehsildar Settlement Mansehra 353/2021-22 435,729
12 Naib Tehsildar Mathra Peshawar 359/2021-22 5,851,058
13 Tehsildar City, Peshawar 375/2021-22 204,243
14 Deputy Commissioner Buner 12/2022-23 68,472
15 Deputy Commissioner Abbottabad 31/2022-23 78,750,000
Total: 257,108,560
The lapse occurred due to non-enforcement of rules and in-efficiency of the department.
Non-realization of Water Rates resulted in loss to the government.
When pointed out, it was replied by the management that recovery would be effected after
checking the record.
The matter was reported to the department during December 2022 to January 2024. In the
DAC meetings held on 21-02-2023, 23-05-203, 18-07-2023, 08-08-2023 and 10-08-2023 directions
were issued to recover the amount. However, no progress was reported till finalization of this report.
Audit recommends expeditious recovery of the outstanding Government dues.
982
4.4.2 Short-assessment/realization of Advance Income Tax on sale & purchase of immovable
property-Rs. 49.48 million
According to Section 236C & 236K of the Income Tax Ordinance 2001 any person
responsible for registering or attesting transfer of any immovable property shall at the time of
registering or attesting transfer collect from the seller and purchaser an Advance Tax at the rate of
1% of the fair market value. Further, as per Rule-1 of Tenth Schedule to the Ordinance, tax from
persons not appearing in the active taxpayers’ list, shall be increased by hundred percent of the rate.
During the financial years 2021-22 and 2022-23 Revenue and Registration Office under
Deputy Commissioners in different districts did not assess/ deposited Advance Tax on sale and
purchase of immovable property in fifty-nine cases. This caused short assessment of Rs. 49.48 million.
Detail is given in the Annexure K.
The lapse occurred due to non-observance of rules and resulted in loss to the government
exchequer.
When pointed out by Audit it was replied by the management that detail reply will be
furnished after scrutiny of the record.
were issued to recover the amount and produce record to Audit for verification. An amount of Rs.
11.93 million was recovered and got verified from Audit. No further progress was reported till
Audit recommends expeditious recovery of Government revenue.

(PDPs No. 140, 142, 159, 160, 165, 168, 210, 216, 230, 231, 232, 234, 236, 237, 271, 272, 274, 277, 279, 281,
284, 285, 287, 289, 291, 292, 293, 297, 307, 308, 312, 313, 322, 323, 325, 330, 331, 340, 342, 345, 346, 351,
356, 357, 358, 371, 372, 373, 374, 377, 379, 382, 384, 385 / 2021-22 & 14, 16, 33, 34 / 2022-23)
4.4.3 Short-assessment/realization of Mutation Fee- Rs.13.43 million
According to Sr. No. 8 of the Government of Khyber Pakhtunkhwa, Revenue & Estate
Department Notification No. TOSD/Mutation Fee/2014/ 26365-402 dated 29-06-2018 Mutation
Fee is recoverable at the rate of 2% of the value on transfer of property through a mode other than
those mentioned at Sr. No 1 to 7 of the said Notification. Mutation fee was required to be charged
on the recorded value of land transferred or on the value notified by the District Collector,
whichever is high.
During the financial years 2021-22 and 2022-23, Revenue Offices under Deputy
Commissioner in different districts calculated value of the land transferred at lower rates than the
983
notified rates of District Collector. Further, Mutation Fee was not recovered on exchange of other
than agriculture land. This caused short assessment of Mutation Fee Rs. 13.43 million as detailed
in the Annexure “L”.
exchequer.
When pointed out by Audit it was replied by the management that reply would be furnished
after consulting the record.
were issued to recover the amount and produced record to Audit for verification. An amount of Rs.
0.16 million was got verified from Audit. No further progress was reported till finalization of this
report.
Audit recommends expeditious recovery of the pointed out amount.
(PDPs No. 157, 58, 164, 167, 217, 273, 278, 280, 286, 290, 294, 324, 328, 344, 349, 350, 352, 360, 370, 383 /
2021-22 & 9, 10, 11 / 2022-23)
4.4.4 Short-assessment of Stamp Duty on transfer of immovable property-Rs. 3.27

million
According to Section 27-A of the Stamp Act, 1899, where any instrument chargeable with
ad valorem duty under clause (b) of Article 23 or clause (b) of Article 31 of Schedule-I relates to
land only or land with any building or structure thereon, the value of the land shall be calculated
according to the valuation table notified by the collector in respect of land situated in the area or
locality concerned.
During the financial years 2021-22 and 2022-23, Registration Offices under Deputy
Commissioners in different districts calculated value of the land transferred at the rates lower than
that notified by the District Collector. This caused short assessment of Stamp Duty amounting to
Rs. 3.27 million as detailed below:
(Amount in Rs.)
Sr. PDP No./ Amount Amount Balance
Name of Office
No. Year pointed out verified Recoverable
1 Sub Registrar Haripur 139/2021-22 831,626 60,700 770,926
984
2 Sub Registrar D.I.Khan 212/2021-22 64,899 14,226 50,673
3 Sub Registrar I, Peshawar 235/2021-22 1,082,009 0 1,082,009
4 Sub Registrar II, Peshawar 309/2021-22 168,133 0 168,133
5 Sub Registrar Bannu 311/2021-22 187,163 0 187,163
6 Sub Registrar Mardan 332/2021-22 164,804 0 164,804
7 Sub Registrar Abbottabad 341/2021-22 840,910 625,018 215,892
8 Sub Registrar Mansehra 378/2021-22 298,282 0 298,282
9 DC Battagram 15/2022-23 57,329 0 57,329
10 DC Abbottabad 35/2022-23 271,419 0 271,419
Total 3,966,574 699,944 3,266,630
exchequer.
When pointed out by Audit it was replied by the management that reply would be furnished
after consulting the record.
were issued to recover the amount and produced record to Audit for verification. An amount of Rs.
0.69 million was got verified from Audit. No further progress was reported till finalization of this
report.
Audit recommends expeditious recovery of the pointed out amount.
*****
985
Chapter - 5
TRANSPORT & MASS TRANSIT DEPARTMENT
5.1 Introduction
5.1 A) Main functions of the Transport & Mass Transit Department
 Administration of Motor Vehicle Ordinance, 1965 and Rules framed thereunder.

 Administration of Directorate of Transport Khyber Pakhtunkhwa, Provincial Transport
Authority, Regional Transport Authorities.
 Inspection & Certification of roadworthy vehicles.
 Formulation of Transport Policy & Planning.
 Updating of Highway Code.
 Review of Traffic Laws.
 Review of Traffic Safety Provisions.
 Monitoring and evaluation of Transport related projects.
 Issuance of route permits for stage carriages and contract carriages.
 Route Permits, fare/freights, matters relating to traffic speeds, loading, parking and halting
places.
 Maintenance/Management of Public Bus Stands throughout the Province.
 Classification of routes for public service vehicles.
 Settlement of disputes among the Regional Transport Authorities.
 Settlement of terms and conditions for public service vehicles.
 Operation of Mass Transit system in Khyber Pakhtunkhwa.
Table A: Audit Profile of Transport & Mass Transit Department

Revenue Receipts
Sr.
Description Total No. Audited Audited FY 2021-22
No.
(Rs. in million)
1 Formations 33 4 325.84
986
During the financial year 2022-23, the Transport & Mass Transit Department, Government
of Khyber Pakhtunkhwa collected an amount of
Rs. 770.99 million which was 114% of the budget estimates of Rs. 676 million.
A comparison of budget estimates and actual receipts for the year 2022-23 is tabulated below.
The variation between the budget estimates and actual receipts is depicted in both absolute and
percentage terms.
Table B: Variance Analysis of Transport & Mass Transit Department

(Rs. in million)
Budget Actual %age of Short (-)
Sr. Head of Variance
Category of Receipts Estimates Receipts Total Excess (+)
No. Account %age
2022-23 2022-23 Receipts (Col.5-4)
1 2 3 4 5 6 7 8
1 Receipt from bus and
B02804 16.50 19.49 2.528 2.99 18.13
truck services
Motor Vehicles
2 B02811 90.00 103.04 13.365 13.04 14.49
Fitness Certificate Fee
Motor Vehicles Route
3 B02812 360.00 349.23 45.296 -10.77 -2.99
Permit Fee
Driving License Fee
4 C0355A 209.50 299.23 38.811 89.73 42.83
(LTV, HTV, PSV)
Total : 676.00 770.99 100.00 94.99 14.05
The above figures show that actual receipts were 14% more than the estimates of receipts.
The Department achieved the overall revenue target but recovery of Route Permit Fee was 3%
less than the estimates.
The following bar chart shows budget estimates, and actual receipts of the Transport &
Mass Transit Department.
987
Receipts Collection vs Target
770.99
800.00
676.00
700.00 Budget Estimates
Actual Receipts
600.00
Rs. in million
500.00
360.00
349.23
400.00
299.23
300.00
209.50
200.00
103.04
90.00
100.00
19.49
16.50
0.00
Receipt from bus Motor Vehicles Motor Vehicles Motor Driving Total
and truck services Fitness Certificate Route Permit Fee License Fee
Fee (LTV, HTV,
PSV)
Tax Catagory
The budgeted receipts estimates and revised estimates of Transport & Mass Transit
Department for the years 2021-22 & 2022-23 are illustrated below. The department was unable to
achieve the target during 2021-22.
(Rs. in million)
Budget Revised Actual Percentage of

Year Variation
Estimates Estimate Receipts Variance
2021-22 640 640 576 -64 -10
2022-23 676 676 771 95 14
988
(Rs. in million)
Revenue Revenue
2021-22 2022-23
Receipt from bus and truck
1 B02804 15.21 19.49 4.29 28.19
services
2 Motor Vehicles Fitness
B02811 28.03 103.04 75.02 267.64
Certificate Fee
3 Motor Vehicles Route Permit
B02812 338.27 349.23 10.95 3.24
Fee
Motor Driving License Fee
4 C0355A 194.09 299.23 105.13 54.17
(LTV, HTV, PSV)
Total : 575.60 770.99 195.38 33.94
Revenue 2021-22
770.99
Revenue 2022-23
Excess / Short
800
700
575.6
600
500
Rs. in million
349.23
338.27
299.23
400
300
195.38
194.09
105.13
103.04
200
75.02
28.03
19.49
100
15.21
10.95
4.29
0
Bus and Truck MV Fitness Fee Route Permit Fee Driving License Total
Services Receipts Fee
Comparison of the revenue collected during 2021-22 and 2022-23 shows that overall
recovery of the revenue increased by 34% during 2022-23.
A comparison of revenue and expenditure of the Transport & Mass Transit Department for
the financial years 2021-22 and 2022-23 is given below in tabulated form and bar chart:
989
(Rs. in million)
Year Revenue Collected Expenditure
2021-22 575.60 4,985.00 -4,409.40 1:0.1
2022-23 770.99 3,287.65 -2,516.67 1:0.2
Revenue
Expenditure
Excess
4,985.00
6000.00
3,287.65
4000.00
Rs. in million
2000.00
770.99
575.60
0.00
2021-22 2022-23
-2000.00
-2,516.67
-4000.00
-4,409.40
-6000.00
A comparison of the cost benefit ratios for the financial years 2021-22 and 2022-23 shows
improvement in revenue collection as well as reduction in expenditure incurred in 2022-23.
However, despite that the cost incurred on operational activities surpassed the revenue generated.
5.1 C) Issues in the Transport & Mass Transit Department
Non-recovery of Route Permit Fee resulted in accumulation of huge amount of arrears. This
was due to weak internal controls and in-efficiency of the department. Audit has raised many
observations regarding this issue over the years but no concrete steps have been taken by the
990
department for recovery of these arrears. License Fee from Bus Stands, Goods forwarding Agencies
and 3% share of Provincial Government due from local authorities (TMAs/MCs) on account of
auction of bus stands has not been assessed and realized which resulted in loss to the Government.
Audit observations amounting to Rs 17.38 million were raised in this report during audit
of Transport & Mass Transit Department. The pointed out amount also include arrears and
observation relating to the previous year. The entire amount pointed out by the audit is recoverable.

Sr. Amount
Classification
3 Irregularities -
4 Others -
Total 17.38
Sr. Audit Report Total Paras Paras Paras Percentage of

Remarks
No. Year Paras Discussed Settled Stand compliance
1 2002-03 1 1 0 1 0% -
2 2003-04 1 1 0 1 0% -
Yet to be discussed
3 2004-05 2 - - - -
in PAC
4 2005-06 3 - - - - -do-
5 2006-07 2 - - - - -do-
6 2007-08 3 3 0 3 0% -
7 2008-09 2 2 0 2 0% -
Yet to be
8 2009-10 1 - - - -
discussed in PAC
9 2010-11 2 - - - - -do-
10 2011-12 3 - - - - -do-
991
11 2012-13 3 3 0 3 0% -
Yet to be
12 2013-14 2 - - - -
discussed in PAC
13 2014-15 1 - - - - -do-
14 2015-16 2 - - - - -do-
15 2016-17 3 - - - - -do-
16 2017-18 3 - - - - -do-
17 2018-19 3 - - - - -do-
18 2019-20 3 - - - - -do-
19 2020-21 3 - - - - -do-
20 2021-22 1 - - - - -do-
21 2022-23 3 - - - - -do-
Total 40 10 0 10 0%
Compliance with the PAC directives is very poor mainly because of the lack of pursuance
by the Department. It is worth mentioning here that partial recoveries have been affected by the
Department. However, paras would be considered for settlement once complete recoveries are
affected and verified. Nevertheless, due to non-discussion of audit paras by PAC over the years,
the impact of audit has ratcheted down and so have benefits for the citizens.
992
5.4 AUDIT PARAS
5.4.1 Loss due to non-realization of License renewal Fee -Rs. 8.23 million
According to Rules 197, 253 & 254 of Motor Vehicles Rules 1969, annual license renewal
fee from motor vehicles’ body building workshops, bus stands and goods forwarding agencies is
recoverable at the rates fixed by the Transport Department.
During the financial years 2021-22 & 2022-23 Regional Transport Authorities did not realize
license renewal fee from bus stands, goods forwarding agencies and motor vehicles’ body building
workshops which caused non realization of government revenue amounting to Rs. 8.23 million as
detailed below:
Sr. No. Secretary Transport Authority AP No. Amount pointed out (Rs.)
1 RTA Peshawar 197/2021-22 80,000
2 RTA D I Khan 317/2021-22 150,000
3 RTA D I Khan 318/2021-22 56,000
4 RTA D I Khan 319/2021-22 32,000
5 RTA Bannu 336/2021-22 585,000
6 RTA Bannu 337/2021-22 20,000
7 RTA Abbottabad 26/2022-23 1,300,000
8 RTA Abbottabad 29/2022-23 150,000
9 RTA Peshawar 55/2022-23 3,850,000
10 RTA Peshawar 57/2022-23 300,000
11 RTA Mardan 61/2022-23 1,560,000
12 RTA Mardan 63/2022-23 150,000
Total 8,233,000
The lapse occurred due to non-enforcement of rules and in-efficiency of the department and
resulted in loss to government.
When pointed out, it was replied by the management that recovery of Government dues
would be affected from the defaulters.
The matter was reported to the department during December 2022 to January 2024. The
department was requested to convene DAC meeting followed by the reminder dated 04-01-2024.
However, the meeting was not convened till finalization of this Report.
Audit recommends expeditious recovery of the license renewal fee from defaulters.
21 & 2019-20 vide paras number 4.4.3, 2.5.5 & 6.4.3 having financial impact of Rs. 4.69 million.
5.4.2 Loss due to non-realization of Route Permit Fee and Penalty Rs. 8.02 million
993
Under Section 60 of the Motor Vehicles Ordinance 1965 read with
Rules 71, 85 & 91 of the Motor Vehicles Rules 1969, route permit is issued for a
specific period. The same is required to be got renewed one month before the expiry
of its validity on payment of prescribed fee. In case of default exceeding three
months, registration of the vehicle is liable to be suspended / cancelled under Section
34(1) (b) of the Motor Vehicles Ordinance 1965.
During the financial years 2021-22 & 2022-23, following Transport Authorities neither
recovered Route Permit Fee & Penalty from the defaulters nor suspended/canceled registration of
the defaulting vehicles. This caused non-realization of Government revenue amounting to Rs. 8.02
million as detailed below:
Sr. No. Secretary Transport Authority PDP No. Amount pointed out (Rs.)
1 RTA Peshawar 196/2021-22 1,267,400
2 PTA Peshawar 240/2021-22 895,150
3 PTA Peshawar 241/2021-22 86,000
4 RTA D I Khan 316/2021-22 527,300
5 RTA Bannu 335/2021-22 228,300
6 RTA Abbottabad 28/2022-23 580,050
7 RTA Peshawar 54/2022-23 2,140,950
8 RTA Mardan 60/2022-23 1,357,000
9 PTA Peshawar 72/2022-23 640,950
10 PTA Peshawar 73/2022-23 298,800
Total 8,021,900
The lapse occurred due to non-enforcement of law and resulted in loss to the government
exchequer.
defaulters.
Audit recommends expeditious recovery of Government dues from defaulters.
22, 2020-21 & 2019-20 vide paras number 4.4.1, 23.4.10, 5.5.1 & 6.4.1 having financial impact
of Rs. 15.72 million. Recurrence of same irregularity is a matter of serious concern.
994
5.4.3 Non-realization of 3% Provincial Government share from TMAs on account of
auction of Bus Stand-Rs. 1.13 million
According to Rule 259(3c) of the Motor Vehicles Rules 1969, such additional sums not
exceeding 3% of the gross receipts from fees as may be agreed between the RTA & the local
authority (Municipal Committee) should be recovered from the concerned TMA and deposited
into Provincial Government Treasury.
During the financial years 2021-22 & 2022-23, Regional Transport Authority
Abbottabad did not recover 3% of the gross receipts of auction of Bus Stands from TMAs and
MCs amounting to Rs. 1.13 million. Other Regional Transport Authorities mentioned below
did not provide figures of 3% recoverable from local authorities:
Sr. No. Secretary Transport Authority PDP No./Year Amount pointed out (Rs.)
1 RTA D I Khan 320/2021-22 Figures not provided
2 RTA Bannu 338/2021-22 Figures not provided
3 RTA Abbottabad 27/2022-23 1,129,065
4 RTA Peshawar 58/2022-23 Figures not provided
5 RTA Mardan 62/2022-23 Figures not provided
The lapse occurred due to non-observance of rules and resulted in loss to the provincial
government.
When pointed out it was replied by the management that matter would be taken up with
the concerned TMAs and progress would be intimated to Audit.
Audit recommends recovery of Provincial Government share from TMAs.
2019-20 vide paras number 4.4.2 & 6.4.2 having financial impact of Rs. 7.95 million. Recurrence
of same irregularity is a matter of serious concern.
995
AUDIT REPORT
ON
THE ACCOUNTS OF
PROVINCIAL ZAKAT FUND
AND
DISTRICT ZAKAT COMMITTEES
KHYBER PAKHTUNKHWA
AUDIT YEAR 2023-24

996
PROVINCIAL ZAKAT FUND AND DISTRICT ZAKAT COMMITTEES
KHYBER PAKHTUNKHWA
CHAPTER– 1 PROVINCIAL ZAKAT FUND

1.1 Introduction
A. Poverty Alleviation and Social Safety Division releases Zakat fund to Provincial Zakat
Councils as per provincial share on population basis, after making direct lump sum releases to Gilgit
Baltistan Zakat Fund (GBZF), Islamabad Capital Territory (ICT), natural calamities/emergency relief and
others administrative/non-administrative, special Eid grants out of total budget. In addition to regular
Zakat disbursement programmes, funds are also allocated on account of Educational Stipends.
Provincial Zakat Administration (PZA), Khyber Pakhtunkhwa releases funds
to DZCs and the Provincial Level Health Institutions/hospitals in Khyber Pakhtunkhwa
Province for onward disbursement amongst mustahiqeen (through Local Zakat Committees),
Deeni Madaris and Educational Institutions (General and Technical Education) with the
approval of PZC. The summary of auditable formations alongwith expenditure audited is as
follows:
B. Comments on Budget & Accounts

Statement of accounts of the Provincial Zakat Fund Khyber Pakhtunkhwa for
the financial years 2021-23 is as under:
(Rs. in millions)
Particulars FY 2021-22 FY 2022-23

Opening Balance 289.834 568.223
Total Collections / Receipts 1,570.373 2,066.536
Total Available Funds 1,860.207 2,634.759
Disbursements Made 1,291.222 111.627
Closing Balance 568.223 2,523.132
A sum of Rs. 4,494.966 million was available with the Provincial Zakat Council, Khyber
Pakhtunkhwa during the year 2021-23, out of which
Rs. 1,402.849 million (31.21% of total) was released to the 32 DZCs and 14 PLHIs in the Khyber
Pakhtunkhwa Province.
C. Audit profile of Provincial Zakat Administration, Khyber Pakhtunkhwa
(Rs. in millions)
997
Sr. No. Description Total Nos. Audited Expenditure audited FYs
2021-23
1 Formations 47 06 844.757
Audit observations amounting to Rs. 2,898.714 million were raised as a result of audit. This
amount includes recoverable amount of Rs. 5.300 million as pointed out by the audit. Summary of audit
(Rs. in millions)
Sr.No. Classification Amount
1 Irregularities 2,812.000
A HR/ Employees related irregularities -
C Financial Management 2,812.000
2 Value for money and service delivery issue 5.300
3 Others (Weak Internal Controls) 81.414
No PAC meeting has ever been held on the Audit Reports of Provincial/ District Zakat Funds.
Audit recommends that Audit Reports of Provincial/ District Zakat Fund may be placed before the
respective PACs regularly.
1.4 AUDIT PARAS
1.4.1 Non-utilization of Zakat Funds lying in Provincial Zakat Fund–
Rs. 2,523 million
Section 8 of Khyber Pakhtunkhwa Zakat and Ushr Act 2011, specifies

priority for utilization of Zakat as under:
a. Assistance to needy eligible to receive Zakat under Shariah;
b. Assistance to needy person affected by Natural Calamities;
c. Expenditure on collection, disbursement & Administration of Zakat;
d. Investment in any non-interest bearing instruments as is permitted under
Shariah;
e. Any other purpose permitted by Shariah.
The Management of PZF Khyber Pakhtunkhwa Peshawar received budget amounting to Rs.
1,740 million for Financial Year 2022-23 from Central Zakat Fund and Zakat Collecting Agencies.
Audit observed that a sum of Rs. 2,523 million remained unutilized till 30.06.2023 in Account No.
03 of Provincial Zakat Fund (PZF) Khyber Pakhtunkhwa maintained with State Bank of Pakistan
Peshawar.
Audit held that non-utilization of funds was not justified as the poor beneficiaries of the province
were deprived from Zakat due to non-utilization of zakat funds. This also indicates that institutions
responsible for disbursement of Zakat were not working optimally as per the requirements of the Khyber
Pakhtunkhwa Zakat and Ushr Act, 2011.
The initial audit observation was issued on 06.09.2023. The management

replied that the funds were not utilized because the Khyber Pakhtunkhwa Zakat
Council did not exist, the apex body which deals with matters pertaining to Zakat
funds. The previous Council completed its tenure on 04.11.2022, whereas Zakat
funds for the FY 2022-23 were received at a very belated stage i.e. 08.03.2023 from
the Federal Government.
The matter was discussed in DAC meeting held on 24.01.2023. The forum
directed to refer the matter to Khyber Pakhtunkhwa Zakat Council for
decision/action.
Audit recommends to fix the responsibility against the person(s) at fault.
Moreover, adopt remedial measures and proper mechanism for disbursement of
Zakat funds among the eligible beneficiaries in a timely manner.
{Para no. 1 of the AIR of PZF for the Audit Year 2023-24}
1.4.2 Non-investment of surplus / idle funds in non-interest bearing instruments – Rs. 289.00
million
Section 8(d) of Khyber Pakhtunkhwa Zakat and Ushr Act, 2011 provides that the moneys in a Zakat
Fund including Ushr proceeds shall, inter alia, be utilized for investment in any non-interest bearing
instruments as is permitted under Shariah.
Provincial Zakat Administration had a total available Zakat funds at its disposal during the financial
year as Rs. 1,860.207 million.
Audit observed that an amount of Rs. 289.00 million remained available during the whole financial
year with the administration of PZF, which was not invested in any non-interest bearing instruments.
Audit held that non-investment of surplus/idle funds resulted into loss to Zakat fund, which could
otherwise be invested in non-interest bearing instruments, as permitted under Shariah, to increase the Zakat
funds balances.

replied that during this period management was not in a position to proceed without
the consultation of Khyber Pakhtunkhwa Zakat Council which did not exist since
November 2022.
The reply was not tenable, as investment in non-interest bearing instruments
have not been made for a considerable period, resulting in losses in the form of
profits.
The matter was discussed in the DAC meeting held on 24.01.2023. The forum
decision/action.
Audit recommends that the surplus money in the Fund may be invested in accordance with the
Zakat Act to earn profits on the investment.
1.4.3 Irregular disbursement of Marriage Assistance in the accounts other than that of the
beneficiaries account – Rs. 42.21 million
Para 5.5 of Khyber Pakhtunkhwa Zakat Disbursement Procedure states that

Payment of Marriage Assistance will be made through a crossed cheque, drawn in
the name of beneficiary only.
The management of Provincial Zakat Fund (PZF) Khyber Pakhtunkhwa
released an amount of Rs. 133.80 million against different beneficiaries as Marriage
Assistance during financial year 2021-22.
Audit observed that the payments were not released into the beneficiaries’ own accounts, as
depicted from Zakat Management Information System (ZMIS), which shows 1,407 cases of Marriage
Assistance @ Rs. 30,000 each credited in 587 accounts only instead of respective 1407 accounts.
Details of all cases were provided to the management with the Audit and Inspection Report (AIR).
However, a few cases on sample basis are given in
Annexure-II.
Audit held that the payment of more than one cases of Marriage
Assistance into single accounts was irregular and raised suspicions about the
payments.
The initial audit observation was issued on 16.02.2023. The management replied that in majority
of cases as reported by the DZOs, opening bank accounts had become an uphill task due to non-cooperation
from the bank authority. Therefore, LZCs issued order/open cheques in such cases. One account number
mentioned by Audit is the Account number of the concerned LZC. Moreover, department has proposed
changes in the mode of disbursement along with other several changes in the existing Zakat & Ushr Act
2011. It is assured that the payment to the beneficiaries will be through biometric once the process is
matured.
The reply was not tenable as it was a violation of Khyber Pakhtunkhwa Zakat Disbursement
Procedure.
The matter was discussed in DAC meeting held on 24.01.2023. The forum directed to refer the
matter to Khyber Pakhtunkhwa Zakat Council for decision/action.
Audit recommends that the matter may be thoroughly investigated and detailed findings along with
record be shown to audit. Furthermore, payments of Marriage Assistance should only be made through
cross cheques deposited into the beneficiaries’ bank accounts.
1.4.4 Irregular payment of Guzara Allowance – Rs. 19.740 million

Para 1.2 of Khyber Pakhtunkhwa Zakat Disbursement Procedure states that the KPZC
while preparing budget for each FY will make allocation for Guzara Allowance. After approval of
the Khyber Pakhtunkhwa Zakat & Ushr Council, PZA will release funds through crossed cheque
under Guzara allowance to the DZCs for onward disbursement to the LZCs on population basis.
The management of Provincial Zakat Fund (PZF) Khyber Pakhtunkhwa released an amount of Rs.
758.988 million to different beneficiaries as Guzara Allowance during financial year 2021-22.
Audit observed as under:
i. 8 persons obtained Marriage Assistance twice each at the rate of Rs. 30,000 from the same
or different LZCs during FY 2021-22. Details are provided in Annexure-IIIA.
ii. Guzara Allowance amounting to Rs. 108,000 was paid to 09 such beneficiaries who had
not applied for Guzara allowance as their names were not found in applied list. Details are
provided in Annexure-IIIB.
iii. Payment of Guzara Allowance was made to extra beneficiaries in 60 selected LZCs of 14
DZCs, with more than 10 extra cases on average amounting to Rs. 19.572 million. Details
are provided in Annexure-IIIC.
Audit held that the irregular and unequal disbursement of Guzara Allowance amounting to
Rs. 19.740 million resulted in depriving other deserving beneficiaries.
replied that detailed response will be provided in the DAC.
The matter was discussed in DAC meeting held on 24.01.2023. The forum
decision/action.
Audit recommends that matter may be inquired and appropriate action be taken
accordingly.
1.4.5 Irregular appointment of Chairmen Local Zakat Committees –

Rs. 19.464 million
Section 15(4) of Khyber Pakhtunkhwa Zakat and Ushr Act 2011, states that a person who is a
member of a team constituted for the selection of members of a Local Committee shall not be eligible to be
a member of such Local Committee or a person who is a salaried employee of government or of a local
authority otherwise than as Pesh Imam of a local mosque or a teacher of a local school, or of a corporation
set up, owned or controlled by Government, shall not be eligible to be member of Local Committee.
The Zakat & Ushr Council and management of 32 DZCs constituted 4,119 Local Zakat Committees
(LZCs) during the financial year 2020-21 for a period of 3 years.
Audit observed that 111 salaried employees of government were appointed as Chairmen LZCs and
an amount of Rs. 19.464 million was disbursed by such LZCs during the financial year 2021-22.
Details are provided in Annexure-IV.
Audit held that appointment of 123 salaried employee of government as Chairmen LZCs
constituted a violation of Zakat Act. Moreover, the performance of such LZCs was also affected due to lack
of sufficient time to perform the functions of LZCs as such Chairmen were in service of government during
same period.

replied that tenure of LZCs has been expired. Code of conduct was in process to
restrain such practice in future. In some LZCs, retired government employees
(premature retirees) were appointed.
The matter was discussed in the DAC meeting held on 24.01.2023. The forum
decision/action.
Audit recommends that matter may be investigated and appropriate action be taken accordingly.
Moreover, salaried employees of the government may not be appointed as Chairmen of the LZCs as
regulated under the Zakat and Ushr Act.
1.4.6 Irregular disbursement of Zakat fund to serving/retired government employees - Rs. 5.30
million
Para 1.2 of Khyber Pakhtunkhwa Zakat Disbursement Procedure states that before certifying
istehqaq, the beneficiary will furnish the declaration that he/she is not in receipt of financial assistance
from any other poverty alleviation program of the government and that presently he/she possesses neither
any source of income nor any employment to provide for the subsistence of himself/herself and his/her
family.
The management of Provincial Zakat Fund (PZF) Khyber Pakhtunkhwa released an amount of Rs.
892.212 million to different beneficiaries as Guzara Allowance and Marriage Assistance during financial
year 2021-22.
Audit observed that an amount of Rs. 5.298 million was paid to 419 beneficiaries. These 419
beneficiaries were either serving or retired government employees or were their dependents and were also
registered as Zakat beneficiary with Zakat department.
Details are provided in Annexure-V.
Audit held that the payment of Guzara Allowance to government

servants and to their dependents, who were non-mustahiqeen, was irregular and not
justified.
The initial audit observation was issued on 16.02.2023. The management replied that concerned
accounting offices have been contacted with a request to deduct the mentioned amount at the source. They
had been further requested to deposit all the recovered amount in PZF. Moreover, Chairmen LZCs
recommended that such government employees were no longer part of the Zakat system. However,
progress of recovered amount from Accountant Office would be presented before the Departmental
Accounts Committee (DAC).
The matter was discussed in the DAC meeting held on 24.01.2023. The forum directed to refer
the matter to Khyber Pakhtunkhwa Zakat Council for decision/action.
Audit recommends initiating strict action against such delinquent LZCs who
determined the istehqaq of non mustahiqeen besides taking appropriate action to
block such beneficiaries in future and recovery of the amount paid.
CHAPTER - 2 DISTRICT ZAKAT COMMITTEES
2.1 Introduction
A. Provincial Zakat Council/Administration, Khyber Pakhtunkhwa issues lump sum amount
directly to 36 District Zakat Committees constituted in each District of Khyber Pakhtunkhwa on
population basis. The DZC provides Zakat Funds to LZCs and various institutions for
disbursement to Mustahiqeen under various regular and special Zakat programmes, like Guzara
Allowance, Educational Stipend, Deeni Madaris, Health Care, Social Welfare/Rehabilitation and
Marriage Assistance to unmarried Mustahiq women.
B. Comments on Budget & Accounts
A total amount of Rs. 1,740.876 million was released by Provincial Zakat Council Khyber
Pakhtunkhwa to 33 Districts during the year 2022-23, out of which 06 Districts, as detailed below having
total available budget of Rs. 1,320.431 million were audited, which was 76% of total formations.
(Rs. in millions)
S Name of Fi O R Tot Disburse C
r. No. District Zakat nancial pening eceipts al Available ment losing
Committee Years Balance Balance
1 DZC Abbottabad 2017-22 7.480 343.998 351.478 347.94 3.538

2 DZC Battagram 2017-23 0.927 155.988 116.915 116.857 0.037
3 DZC Charsadda 2016-23 0 399.399 399.399 399.359 0.040
4 DZC Kohat 2020-23 4.474 276.444 280.918 280.155 0.763

5 DZC Shangla 2018-23 - 93.898 93.898 93.898 -
6 DZC Swat 2021-23 0.005 77.818 77.823 70.578 0.034
C. Audit Profile of District Zakat Committees, Khyber Pakhtunkhwa

(Rs. in millions)
Sr. Description Total Nos. Audited Expenditure audited FYs 2016-23
No.
1 Formations 33 6 1,308.787
Audit observations amounting to Rs. 90.484 million were raised as a result of audit. This amount
includes recoverable amount of Rs. 11.095 million as pointed out by the audit. Summary of audit
(Rs. in millions)
Sr.No. Classification Amount
1 Irregularities 7.141
A HR/ Employees related irregularities -
C Financial Management 7.141
2 Value for money and service delivery issue 3.954
3 Others (Weak Internal Controls) 79.389
2.3 Brief comments on the status of compliance with PAC Directives
No PAC meeting has been held since 2005 on the audit reports of District Zakat Committees. Audit
recommends that audit reports of District Zakat Committees may be placed before the respective PAC
regularly.
2.4 AUDIT PARAS
2.4.1 Payment of Guzara Allowance to beneficiaries other than those recommended in ZMIS /
Change of beneficiaries - Rs. 37.308 million
As per instruction issued by Provincial Zakat Administration vide letter No.SO (ZBU)/ZRF/2018-
19/Vol-II/1287-1337 dated 05-01-2021, that Verification of Credentials of Zakat Beneficiaries
recommended by Local Zakat Committee, on the new procedures of screening and selection of Khyber
Pakhtunkhwa Zakat Council (KPZC) in its 63rd meeting held on 01.12.2020 decides to carry out verification
of credentials of Mustahiqeen-e-Zakat recommended by Local Zakat Committee to the District Zakat
Committee will not be changed without any suitable reasons/decisions of whole Members of Local Zakat
Committee by resolutions.
DZC Abbottabad provided data regarding selection of Mustahiqeen-e-Zakat for payment of Guzara
through Zakat Management Informtion System (ZMIS). The selected beneficiaries were communicated to
DZC and instructions were issued to LZCs by DZC for payment of Guzara Allowance to these selected
beneficiaries. Later on, another list of beneficiaries was provided through ZMIS as a revised list.
Audit observed that the Local Zakat Committees of DZC Abbottabad disbursed Guzara Allowance
amounting to Rs. 37.308 million to 3,109 beneficiaries during the financial year 2020-21 whose names
were not available in the revised list provided in ZMIS.
Audit held that the payment of Zakat Fund to individuals not recommended by the Provincial Zakat
administration or not on the ZMIS list resulted in depriving the Mustahiqeen of assistance from the Zakat
Fund.
The initial audit observation was issued to the management of DZC Abbottabad on 23.12.2022.
The management replied that the PZA head quarter directed to disburse the Guzara Allowance Fund. This
Office issued Guzara Allowance Fund to the Chairman LZCs along with list of Mustahiqeen-e-Zakat
through ZMIS programmer. After fifteen days IT department of ZMIS Program KPK changed the list of
mustahaqeen Zakat. The DZC Abbottabad decided to consider previous list of mustahaqeen e Zakat whose
payment was already released received from the Chairmen LZCs Minutes of the meeting held on
21.01.2022 of DZC Abbottabad.
The matter was discussed in DAC meeting held on 24.01.2023. The forum directed to refer the
Audit recommends that the matter be investigated to fix responsibility and recover the amount.
{Para no. 9 of the AIR of DZC Abbottabad for the Audit Year 2022-23}
2.4.2 Payment in cash/through open cheques instead of crossed cheques on account of Marriage
Assistance - Rs. 25.783 million
Para 5.5 of Zakat Disbursement Procedure regarding Marriage Assistance to unmarried mustahiq
women states that payment will be made through a crossed cheque, drawn in the name of beneficiary only.
The Chairmen of LZCs of following DZCs disbursed Zakat Fund to beneficiaries during the years
2016-22.
Audit observed that disbursement of Zakat Fund amounting to Rs. 25.783 million was made in
cash through open cheques instead of crossed cheques.
(Rs. in millions)
Sr. No. DZC Para No. Amount
1 Abbottabad 06 1.840
2 Charsadda 05 3.253
3 Kohat 07 14.070
4 Shangla 02 6.620
Total 25.783
Audit held that the cash payment through open cheque was irregular resulting in non-verifiable
disbursement and chances of misuse cannot be ruled out.
The initial audit observations were issued to the management of resepetive DZCs.
The management of DZC Abbottabad replied that the cheques were either withdrawn in the Branch
Account, or the bank issued open cheques.
The management of DZC Charsadda replied that the beneficiaries did not have individual bank
accounts and the banks refused to open accounts for such meagre amounts and therefore, the Chairmen
Local Zakat Committees were requested by the concerned beneficiaries to convert the same into order
cheques. Moreover, all the concerned beneficiaries had acknowledged the receipt of Rs. 30,000 each.
The management of DZC Kohat replied that the bank branches were reluctant to open accounts for
Zakat beneficiaries and were demanding deposits of
Rs. 1,000 to Rs. 5,000 for account opening. Additionally, due to cultural restrictions in the rural areas,
female were facing problems while opening accounts in the banks and undergoing biometric verification.
The point has been noted for future consideration.
The management of DZC Shangla replied that all the chairmen of Local Zakat Committees in
Shangla were instructed to disburse the marriage assistance through crossed cheques, drawn in the
beneficiaries’ own name.
The reply was not tenable as it violated the Zakat Disbursement Procedure.
The matter was discussed in the DAC meeting held on 24.01.2023. The forum directed to refer the
Audit recommends that the matter be investigated for fixation of responsibility and verification of
payment made to beneficiaries besides taking up the matter with SBP for easy and free opening of accounts
for Zakat beneficiaries.
Note: The issue was reported earlier also in the Audit Report for the Audit Year 2021-22 vide para no. 2.4.2
having financial impact of Rs. 71.001 million. Recurrence of same irregularity is a matter of serious
concern.
2.4.3 Withdrawal of Zakat Fund through self cheques in the name of Chairmen LZCs- Rs. 16.298
million
Section 9(3) of Khyber Pakhtunkhwa Zakat and Ushr Act, 2011 provides that a Local Committee
may disburse or incur expenditure from the Local Zakat Fund as may be prescribed through crossed
cheques or any mode prescribed and approved by the Zakat and Ushr Council.
The Chairmen of certain LZCs of DZC Abbottabad and Charsadda had withdrawn a sum of Rs.
16.298 million during the financial years 2016-22 from the accounts of Local Zakat Committees through
self cheques.
(Rs. in millions)
Sr. No. DZC Para No. Amount
1 Abbottabad 12 14.103
2 Charsadda 08 2.195
Total 16.298
Audit held that withdrawal of the amount through self-cheques and disbursement through cash was
not prescribed and approved by the Zakat and Ushr Council, resulting in irregular and unverifiable
expenditure.
The initial audit observation was issued to the management of DZC Abbottabad and DZC
Charsadda on 23.12.2022 and 12.09.2023 respectively.
The management replied that the Chairmen LZCs issued crossed cheques in the name of Manager
of concerned bank branches for further transferring the amount into each Mustahiqeen-e-Zakat Bank.
The management of DZC Charsadda replied that the banks refused to withdraw the amount
individually, and therefore, they withdrew the whole amount through self cheques, and disbursed it among
the beneficiaries. The beneficiaries also acknowledged the receipt of payment.
The matter was discussed in the DAC meeting held on 24.01.2023. The forum directed that a Fact-
Finding Inquiry may be conducted at Provincial Zakat Administration (PZA) level within one month.
Audit recommends implementation of DAC directives besides complete verification of payment
made to beneficiaries.
Note: The issue was reported earlier also in the Audit Report for the Audit Year 2021-22 vide para no. 2.4.7
having financial impact of Rs. 3.15 million. Recurrence of same irregularity is a matter of serious concern.
2.4.4 Non-recovery/refund of amount lying with Technical Institutes -
Rs. 7.141 million
A District Committee may make disbursements and transfer funds from

District Zakat Fund to a Local Zakat Fund or to an institution or incur other
administrative expenditure subject to such conditions as may be prescribed and may,
whenever directed by the Zakat and Ushr Council, transfer any funds surplus to its
need to the Provincial Zakat Fund. A Local Committee may disburse or incur
expenditure from the Local Zakat Fund as may be prescribed through crossed
cheques or any mode prescribed and approved by the Zakat and Ushr Council
Provided that a Local Committee may, if so required by the Zakat and Ushr Council
or the District Committee, transfer any funds surplus to its needs from the Local
Zakat Fund to the Provincial Zakat Fund or, as the case may be, District Zakat Fund
District Zakat Committee (DZC) Charsadda and Shangla released Zakat Fund amounting to Rs.
7.141 million to Technical Educational Institutions during the financial year 2017-18.
Audit observed that a sum of Rs. 7.141 million is lying unutilized with Technical Institutes since
long time which was not recovered.
(Rs. in millions)
Sr. No DZC Para No. No. of Institutes Amount

1 Charsadda 12 05 5.433
2 Shangla 09 02 1.708
Total 7.141
Audit held that non-retrieval of funds was not justified and may lead to loss to Zakat Fund.
The initial audit observation was issued to the management of DZC Charsadda and DZC Shangla
on 12.09.2023 and 07.11.2023 respectively.
The management of DZC Charsadda replied that 4 out of 5 colleges agreed to refund the subject
amount. However, the principal of the Foot Wear Institute of Technology Charsadda asserted that they
could not refund the amount as the institute had already spent Rs.134400 in making payments to the teachers
and purchase of raw materials.
The management of DZC Shangla replied that Pioneer institute of Advanced Skills Sanila imparted
technical education to Mustahiqee-e-Zakat students. Funds to the institution were banned by the Zakat head
office, which after correspondence from DZC shangla, still had not been allowed to the institution from the
joint account of DZO and head of the institution. The funds may be allowed to be released to the institution.
The matter was discussed in the DAC meeting held on 24.01.2023. The forum directed that the
amount may be recovered and deposited in Provincial Zakat Fund under intimation to audit within one
month.
Audit recommends implementation of DAC directive.
2.4.5 Irregular disbursement of Zakat Fund to serving/retired government employees - Rs. 3.954
million
Para 1.2 of Khyber Pakhtunkhwa Zakat Disbursement Procedure states that before certifying
istehqaq, the beneficiary will furnish the declaration that he/she is not in receipt of financial assistance from
any other poverty alleviation program of the government and that presently he/she possesses neither any
source of income nor any employment to provide for the subsistence of himself/herself and his/her family.
The management of the following three District Zakat Committees (DZCs) paid Zakat Fund to
different beneficiaries as Guzara Allowance during financial year 2016-22.
Audit observed that 964 beneficiaries were paid Rs. 3.954 million during financial years 2016-22.
These beneficiaries were government servants or spouses of government servant and were also registered
as Zakat beneficiary with Zakat department. Details are as follows:
(Rs. in millions)
Sr. No DZC Para No. No. of Beneficiaries Amount
1 Abbottabad 02 868 2.766
2 Charsadda 02 43 0.552
3 Kohat 03 53 0.636
Total 3.954
Audit held that the payment of Guzara allowance to government servants or spouses of
government servant was irregular and not justified.
The initial audit observations were issued to the management of respective DZCs.
The management of DZC Abbottabad replied that this office lacks the mechanism to check out the
data of serving/retired Government Employees.
The management of DZC Charsadda replied that neither this office nor the Local Zakat Chairmen
have the necessary software, mechanism, or the means to approach the office of Accountant General to find
out the credentials of the concerned individuals. Moreover, in this regard, a letter had also been sent to the
Assistant Administrator Audit to address the matter of recovery with the concerned authorities.
The management of DZC Kohat replied that the determination of istehqaq for the beneficiaries was
carried out by the Chairmen of the LZCs concerned and was verified by the relevant Group secretaries, as
demonstrated to the audit. Such an option was not provided in the Audit dashboard during the financial year
2020-21. The internal audit cell approved these beneficiaries in the Zakat Management Information System
(ZMIS), and according to the selected list of beneficiaries generated by ZMIS, crossed cheques were issued
to LZCs for onward payment to these selected beneficiaries.
The replies were not tenable, as Zakat funds were disbursed amongst ineligible beneficiaries.
The matter was discussed in the DAC meeting held on 24.01.2023. The forum directed that the
matter be referred to Khyber Pakhtunkhwa Zakat Council for decision/action.
Audit recommends to initiate strict action against such delinquent LZCs who determined the
istehqaq of non mustahiqeen besides taking appropriate action to block such beneficiaries in future and
recovery of the amount paid.
Note: The issue was reported earlier also in the Audit Report for the Audit Year 2021-22 vide paras no.
1.4.2 and 2.4.8 having financial impact of Rs.12.432 million. Recurrence of same irregularity is a matter of
serious concern.

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CONSOLIDATED AUDIT REPORT

PREFACE ....................................................................................................................... viii

Department of Auditor-General of Pakistan (DAGP) is mandated to conduct audit of 2,664

b. Recoveries at the instance of audit

i. Understanding the business processes with respect to control mechanism.

d. Key Audit Findings of the Report

i. Human Resource / Employment related irregularities – Rs. 1,885 Billion.

Sectorial analysis for the year 2022-23

1.1 SARHAD MINERALS LTD (SML), PESHAWAR

1.1.6 AUDIT PARAS

According to Clause-xiv of the excavation agreements “penalty @ Rs 10 & Rs 20 per

According to KP-GFR Chapter-2 Clause-19 (ix), “provisions must be made in contracts

According to Rule-4(3) of Corporate Governance Rules – 2013, “the chief executive is

1.1.6.4 Loss due to non-imposing/deduction of levy - Rs 1.73 million

1.2.6 AUDIT PARAS

1.2.6.2 Irregular retention of KP-TEVTA funds by the defunct KP-STVET – Rs 102.65

1.2.6.5 Non-surrender of savings of institutes to the government – Rs 30.689 million

1.2.6.6 Irregular award of work of feasibility report at higher rate –

1.2.6.7 Misappropriation of tuition fee of DIT – Rs 7.071 million

1.2.6.9 Irregular expenditure on purchase of books in-violation of proper procedure – Rs

1.2.6.14 Non-recovery of outstanding training dues from NAVTTC -

1.2.6.15 Non-recovery of training charges from Auqaf Department -

1.2.6.17 Loss due to non return of KP-TEVTA vehicle by KP-STVET -

Audit recommends compliance of DAC directives.

1.2.6.19 Non-compilation of annual accounts for the years 2015-16 to

Audit is of the view that non-preparation/compilation of annual accounts as well as other

1.3.3 Compliance of PAC directives

1.3.6 AUDIT PARAS

1.3.6.5 Non-cancellation of commercial and industrial plots due to non-setting up industries

1.3.6.9 Loss due to irregular transfer of plot - Rs 6.533 million

1.3.6.11 Loss due to irregular transfer of commercial plot worth -

b) Comments on Audited Accounts

c) Ccompliance of PAC Directives

According to Rule – 10(2) of KP Civil Servant Appointment, Promotion and Transfer

1.4.6.3 Loss to Government exchequer due to non-deduction of tax – Rs 3.432

1.4.6.4 Un-justified/doubtful payment on account of short supply store - Rs 29.35

1.4.6.5 Loss due to shortage of inventory stock - Rs 8.34 million

Budget and Accounts (Variance Analysis) for the year 2022-23

Sectorial analysis for the year 2022-23

Audit Profile of “TCKP”

2.1 Tourism Corporation Khyber Pakhtunkhwa

2.1.2 Comments on Audited Accounts

2.1.6 AUDIT PARAS

2.1.6.2 Irregular expenditure after winding up of Corporation - Rs 114.75 million

2.1.6.3 Loss due to missing of TCKP vehicles - Rs 59.06 million

2.1.6.5 Doubtful adjustment of advance without original vouchers - Rs 9.94 million

1. General Provident Investment Fund

Budget and Accounts (Variance Analysis) for the year 2022-23

Sectorial analysis for the year 2022-23

Audit Profile of “HDF”

3.1 Hydel Development Fund (HDF), Peshawar

3.1.2 Comments on Audited Accounts

3.1.3 Compliance of PAC directives

3.1.6 AUDIT PARAS

3.1.6.2 Non-deposit of profit in provincial consolidated fund amounting to - Rs 5,481.99 million

3.1.6.5 Revenue loss due to non-vigilance of management - Rs 19.19 million

3.1.6.6 Irregular hiring of fund manager/manager operations - Rs 7.61 million

3.1.6.7 Loss due to fraudulent transactions - Rs 2.07 million

CLIMATE CHANGE, ENVIRONMENT AND