The Ministry of Finance (MoF) has come under scathing criticism for due diligence negligence after its Audit Report 2010-11, covering fiscal year 2009-10, revealed that it paid Rs7.4 billion to Oil Marketing Companies (OMCs) for Price Differential Claims (PDCs) without proper cross checking.The audit report, made exclusively available to Pakistan Today, makes for shocking reading and notes that the ministry has failed to develop institutional capacity to verify PDCs or to apply standard verification procedures. Therefore, it has to rely on third-party services for authenticating claims, which the report said would encourage unrecorded liability or overpayment of claims.Audit authorities maintain that the ministry did not carry out necessary due diligence and ignored the imperatives entailed by prudence while making a payment of Rs7.4 billion in FY2009-10 in violation of the provisions of rules. The payments to OMCs on provisional basis and without certification of claims may have resulted in excess payments, the report added. During the review of record, audit report noted that the subsidy paid to OMCs on provisional basis amounted to Rs7.4 billion during 2009-10.The finance ministry engaged services of a chartered accountant firm to establish the validity of PDCs submitted by OMCs and petroleum companies. However, there was no mechanism to counter check the report. The consultants were paid Rs15.3 million for services rendered from May 2007 to August 2009 on this account. Auditors also pointed out that the PDC claims of OMCs for the period from April 6, 2006 to June 30, 2008 amounted to Rs209.6 billion, out of which Rs190.2 billion had been paid.Federal audit authorities have also revealed that the ministry of finance incurred an expenditure of Rs5 million on account of entertainment during the financial year 2009-10. The audit report also illustrates that there was no record of any scheduled meeting held on the dates for which claims for payment on account of entertainment were submitted.The audit report says that Item No.9 (38) (i) (ii) of Systems of Financial control and Budgeting 2006 provides for light refreshment not exceeding Rs30 per head at a meeting convened for official business. The expenditure sustained on receptions, lunches and dinners up to Rs40,000 in each case, may be incurred by ministries or divisions subject to the condition that expenditure per head including taxes and soft drinks etc should not, in any case, exceed Rs1,200. Item No.9 (38) (iii) provides for the serving of lunch boxes to participants, not exceeding Rs200 per head, in meetings which are beyond office hours.Casting serious doubts on the expenditure of above Rs5 million in one year on entertainment by the finance division, audit authorities say that there were no lists of participants available in the record. “The bills were in the names of officers instead of Ministry of Finance. The claims were neither verified by the Section Officer (General) nor by the officers concerned,” the report emphasised.
