The loopholes in communication and correspondence between Punjab Civil Secretariat and the Accountant General (AG) Office are a temptation to commit fraud for any body related to drawing and disbursement of annual grants, supplementary grants/payments, and gets dishonest. According to a report prepared by a senior National Accountability Bureau officer, it was the flawed drawing & disbursement system that tempted former Section Officer Shahnawaz and former Transport Department cashier Shamshad Gulzar and others to misappropriate Rs 401.155 million from the funds allocated to the Lahore Mass Transit System Project.
According to the report, there are more than 40 departments of the Punjab government and usually each department is headed by a secretary-level officer. The Punjab government’s Finance Department allocates the budget for every department, which are subsequently released to department-wide annual grants and supplementary grants, intimation of each grant/ release is communicated to the departments and the officer of the Punjab accountant general, by the finance department. Inherently, the department secretary is conferred with the powers of principal accounting officer (POA) and drawing and disbursement officer (DDO) of his department, which he can delegate to any section officer, deputy secretary or another higher officer.
As per prevalent practice, almost all secretaries have delegated their powers of DDO to their section officer (general).
Secretaries usually sanction expenditures on the noting side of the file and DDO’s sign sanction orders on behalf of secretaries narrating that “competent authorities had been pleased to sanction such expenditures”. Just like a federal government section officer signs notifications on behalf of the prime minister.
The dilemma is that most AG Office officials accept sanction orders communicated by the DDO, without demanding the copy of the noting side of the file or without the specimen signature of the secretary concerned.
Currently all the transactions/bills passed are entered in a computerised database, prepared under the name of Project to Improve Financial Auditing and Reporting (PIFRA) System.
At the end of every month, the expenditure statement of every department is printed. Instead of dispatching the same, through registered mail, to some responsible officer of the client department, AG Office staff sent it to the cashier or DDO of a department by hand, for reconciliation purpose. The flaw in the system is that the DDO forwards and encashes bills to the tune of billions of rupees and himself reconciles accounts with AG Office. This means if the DDO is dishonest, he will reconcile bogus payments withdrawn by himself.
As it stands, the department cashier collects cash from the State Bank of Pakistan against any large bill, and carries it to the National Bank of Pakistan, makes the pay order and then pays the contractors/suppliers. The monthly monitoring of the whole system by the Finance Department is conspicuously absent.
To avoid any misappropriation specimen signature of head of department, POA secretary should be furnished to the AG office with the Finance Department and the specimen signature of DDO should also be available in the AG Punjab office. The department secretary should be required to personally sign the office order communication expenditure sanction orders, especially when the sum exceeds a pre-set limit.
On the other hand, AG Office should not entertain the sanction orders conveyed under signature of DDO, endorsing that “competent authority has been pleased to sanction the expenditures”, which they accept as per prevalent practice, rather they should demand sanction order signed by secretary concerned.
The report recommended that section 4.49 of Subsidiary Treasury Rule, government of the Punjab should be strictly implemented by the AG Office on payments above Rs 100,000 to contractors, consultants or suppliers through cross cheques instead of handing over cash to departmental cashiers.
AG Office should dispatch (through registered mail) the computerised schedule of payment (monthly expenditure statement) directly to departmental secretary concerned for reconciliation and, despite handing it over to DDO and Secretary, should depute an officer of level of additional secretary or deputy secretary for reconciling, on monthly basis, “what competent authority sanctioned during the preceding month” and “what departmental DDO withdrew through the AG Office”.
AG Office should send monthly expenditure statement (schedule of payment) of every department to the finance department for monitoring purposes.
AG Office, finance department and client department should make their inter-correspondence through registered mail, instead of delivering the same by hand, through special messengers.
The finance department monitoring wing, after collecting expenditure statements generated by AG Office, should ascertain the current balance of every department and should communicate the same ( through registered mail) to the audit officer concerned of AG Office and departmental secretary.
A Rs 401.1553 million scam in the Lahore Mass Transit System Project happened only due to miscommunication on part of finance department. The finance department had failed to communicate the non-surrender of Rs 270 million, announced by the secretary transport, to him and AG Office.
The report suggested that without cleaning up the correspondence and communication system, misappropriation by corrupt officers from the national exchequer for projects such as the Lahore Mass Transit System cannot be prevented.
