The Pac In Public Accountability Accounting Essay

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Under the basic Westminster model the Parliament divides itself into various committees to efficiently undertake its wide range of oversight responsibilities. From its earlier days, the model saw the need for a committee to oversee government's financial operations and from this the PAC evolved. It is the 150-odd years of Westminster parliamentary history which has been the foundation of the Public Accounts Committee in Pakistan. The Public Accounts Committee (PAC) is one of the most important institutions to ensure legislative accountability. Its role and responsibilities have been laid out in the "Rules of Procedures and Conduct of Business in the National Assembly". These rules specify that the PAC should look into the legality and regularity of income and expenditure of government departments along with the reports of the Auditor-General. As per his constitutional mandate, the Auditor-General of Pakistan submits audit reports on the accounts of the Federation and Provinces to the President and Governors respectively. The President/ Governor cause them to be laid before the National/Provincial Assemblies, which in turn refer these reports to the respective Public Accounts Committees. The Principal Accounting Officers are called upon to appear before these Committees to satisfy the public representatives with reference to the observations of the Auditor General made in his reports with regard to the public spending incurred through them. The Public Accounts Committees are required to submit annual reports for the deliberation, and consideration of the respective assemblies.

The Parliament, through its PAC, is reliant on the Auditor General for most of the information it requires to carry out its particular mandate. There are many examples across many countries where an Auditor General has extended the scope of his work in order to accommodate the PAC's needs which go beyond the conventional financial audit. This has given rise to various types of compliance and performance audits. While a PAC might not have the powers to instruct government, by becoming 'formidable' in the eyes of the public it gains an authority that causes government to nonetheless treat its directives as instructions. However, there is a need to further expand the oversight role of the PAC, its legislative mandate to enforce the implementation of its recommendations.


The constitutional right granted to Auditor General Pakistan for checking the tax payer's money spent by Federal Ministries and Departments recklessly are examined and during the year 2007-2008 reported to PAC which exercises its powers on behalf of National Assembly. Besides examination of Auditor General's Reports, the PAC took notice of issues of public importance pertaining to following Ministries/Division:-

Alleged corruption in EOBI

Unprecedented price hike of Oil and Gas

Construction of Islamabad Expressway and installation of five overhead bridges (CDA).

Purchase and misuse of vehicles by Government Departments.

Written off loans during last 8 years and disregard of procedure, rules and regulation for awarding of loans by the commercial Banks/National Bank of Pakistan, including under Saeban Loan Scheme.

Irregular Appointment of Consultants by various organizations.

Pakistan Railway Land under illegal occupation of Army/Rangers/Janbaz force etc.

Allotment of Railway land to Royal Palm Club.

Hajj arrangements for Pakistan Pilgrims in Makkah & Madina in 2010.

National Assembly/ Senate Co-operative Housing Society Scam

Land Scams regarding CDA allotment of Plots/Encroachment etc.

Irregular payment in Steel Mills of House Rent Allowance in addition to provision of official accommodation.

Reported sale of Pakistan Embassy building Tokyo, Japan in 2007 on a throwaway price.


Primary Jurisdiction

The primary jurisdiction of the Auditor General is to audit the Government accounts and the accounts of all government departments, organizations and agencies as well as directly or indirectly allied institutions or corporations. The Auditor General also audits grants and funds provided by the Government under special orders or conditions.

In the addition the Auditor General, now through the Controller, acts as the accounting controller determining the procedure for maintaining accounts by the Government and its departments and all other defined organizations which fall within the jurisdiction of the audit to be carried out by the Auditor General. In pursuance of its primary jurisdiction the Auditor General has been given the power and

authority to inspect and investigate all accounts relating to the Government and determine during audit any mal administration, misconduct or misappropriation of public funds.

Secondary Jurisdiction

The Auditor General has a secondary jurisdiction which not having been defined under the Constitution has been introduced through the Ordinance of 2001 and prior thereto through notifications issued in this respect. Under this jurisdiction the Auditor General can also audit the accounts of any organization or body corporate at the request of the President of Pakistan or a Governor of a Province.

In addition the Auditor General now also has the power to audit stocks and stores of all government departments and therefore, its power and extent of audit has been enhanced to cover all areas of a standard corporate audit. The most important secondary jurisdiction available to the Auditor General is that of reporting and advising improvements and imposition of control systems in the financial and accounting management so to minimize the loss and wastage of public funds.

Factors which make AGP Ineffective in Eradicating Corruption

The AG's Department stands at the pinnacle of the financial accountability pyramid, by reporting to the legislature on the government's stewardship of public funds and assets. However, the ability of the AG's Department to act as a watchdog over financial integrity and to detect individual cases of corruption has been undermined by a number of factors [1] :-

First, the AG's Department lacks modern methodologies to uncover corruption. The AG's Department has tended to focus on transaction based audit, which is necessarily retrospective and sample based. The poor state of financial controls, outdated and complex financial rules and procedures and culture of non-compliance all mean that audit queries necessarily focus on minor, even petty, issues. More significant issues, including corruption, are missed. As a result of this, the credibility of the audit function is low, and officials rarely attach much importance to it. Parliament, the public and the media have also not yet learnt to accord the audit function the respect it deserves, for the same reason. The Department is now taking steps to increase its relevance and earn respect, by expanding into modern methodologies and reporting formats: special audits, foreign aided project reports, revenue audit, performance audit, and issue oriented studies. Clearly, there is still some way to go to develop the requisite capacity, particularly in systems audit, performance audit and forensic auditing, to have a discernable impact on corruption. The Department is following International Organization of Supreme Audit Institutions best practice in its reform agenda, and upgrading capacity via the Project to Improve Financial Reporting and Auditing. The AG's Department is also undertaking a range of innovative initiatives aimed at improving the control environment within departments.

Secondly, allegations about collusion between auditors and bureaucrats to cover up irregularities persist. The low pay, poor working conditions and lack of professionalism - indeed the same issues that pervade the public service - expose auditors to temptations of corruption. Furthermore, auditors suffer from low morale. Their work is unfairly dismissed as petty and irrelevant by many, and their reports are rarely considered by the PAC in time for any action to be taken. If they believe their work is of little value, resistance to temptation is likely to be low".

Thirdly, the technical proficiency of auditors has been variable, but low overall, particularly in areas where specialist expertise is required to uncover corruption, for example in construction, as well as in auditing techniques. The Audit and Accounts Training Institute was not able to offer a high standard of training due to lack of resources. Capacity issues are also being addressed via PIFRA, and the Department has now introduced certification by an independent professional entity as the basis for departmental promotion in addition to revamping the training syllabus for Inter Departmental Cadre officers.

Fourthly, there is the issue of independence on a number of counts. Until 2001, when the audit and accounts functions were separated, the audit function lacked independence. Even now, the AG's Department is an attached department of the Finance Division, which leads to a conflict of interest situation where a principal auditee becomes the controlling ministry. This is despite the Constitutional provision for the AG's Department to be an independent entity reporting direct to the President.

Challenges To Auditor General Pakistan

As a part of the changing world, we endeavour to constantly anticipate, recognize and respond to changes occurring in our environment. The following is a snapshot of the challenges The OAGP faces.

Responding to an increase in the expectation of stakeholders for transparency and accountability

Globalization and information technology revolution has increased flow of information to the general public. Moreover, media has become more assertive on issues of accountability. Empowered with information, the stakeholders, especially the citizens of Pakistan, now expect more from the OAGP. Consequently, the OAGP has to constantly diversify its product and services to meet this demand.

Ensuring timely accountability by the PACs

The AGP carries out audits and prepares the statutory audit reports annually. However, the accountability of those involved in fraud, waste and abuse of the public fund depends on the existence and effectiveness of the PACs. The present PAC of the National Assembly has effectively been able to reduce chronic delays in disposing of the audit reports. It has created a new precedent by completing the workload of three years within a span of ten months during the last year. The committee completed the scrutiny of the audit reports for the year 2005-06 by working for 37 days in seven sessions. Two sub-committees discussed and completed the audit reports for the years 1989-90 and 1991-92. The PAC and its sub-committees held meetings even when the National Assembly was in session, setting a new example of efficiency and keenness to perform effectively. However, accountability system needs to be strengthened further to ensure that those found involved in misuse of the public office are made to pay back.

Unfortunately, the constitution of the PAC has not been a priority item with governments in the provinces. As a result, there is a significant backlog of pending audit reports with the current PAC as indicated below:




10 Years


18 Years


13 Years


23 Years

Coping with the increase in the use of information technology tools in Public Sector operations

The use of information technology tools has increased manifold in recent years. Audit must respond to this shift in the modus operandi of the public sector by changing the way it operates. Resultantly, the OAGP has formulated the guidelines for the procurement of hardware and software and also the Information System Audit Guidelines. These set of guidelines would ensure the better scrutiny of the IT related equipment as well as the Information System procedures. This entails creating a cadre of IS-auditors and moving away from the traditional auditing incrementally.

Handling the public-private partnership and NGOs in public service delivery

Increasingly, the governments worldwide are depending on the public-private partnership and the NGOs as an alternative to traditional delivery mechanism. Already, a Public Private Partnership Policy has been notified by the Federal Government. This is new area both for the government and the AGP and demands that the OAGP not only builds its capacity for audit of activities carried out through public-private partnerships but also guides the government in effective utilization of this arrangement for the improved service delivery.

Building partnership culture with auditees

The core values of OAGP put emphasis on building partnership culture with auditees. However, the AGP is yet to reach the stage where the auditors and the auditees can work as partners in improving government's operational effectiveness.

Institutionalizing performance benchmarking

The AGP has implemented the QMF and other measures to improve its performance. This represents significant progress at the policy level. However, when performance comes under closer scrutiny, it is bound to ignite resistance from the forces that support the status quo. The OAGP is countering this situation through various change management activities but a lot remains to be done.

Sustaining reforms under PIFRA

PIFRA has contributed a lot in the development of the public sector auditing in the OAGP. It has undertaken a marathon of reforms and revision of the audit procedures in order to align them with the international best practices. Development of the FAM, sectoral guidelines, the QMF and the steps toward the acquisition of AMIS are part of the auditing reforms under PIFRA. The World Bank has extended the project closing date to December 2013. The progress made under PIFRA needs to be consolidated so that reforms momentum can be sustained even after the project comes to a close. Among other things, it calls for building capacity to carry out the audits as per FAM and other guidelines developed and circulated in FAOs. Frequently, audit reports do not mirror the effect of the guidelines and the manuals prepared under the auditing reforms. These guidelines and manuals are means to an end and not an end in themselves. The capacity building of officers is key to the sustainability of the auditing reforms under PIFRA.

Recruiting and Retaining the best

The OAGP is a knowledge-based organization. However, its best people are tempted to leave the organization for other public sector organizations and the private sector where they are offered much higher pay packages. The OAGP has invested significantly in its workforce over the years but its compensation structure does not support retention of its best workers. What is more, dwindling fiscal space has made it difficult that the AGP can get additional incentives for its workforce from the government.

Strengthening internal accountability and controls within government

While the OAGP points out instances of waste, fraud, and abuse of the resources, its work covers only a small fraction of the total government transactions. Thus, the government agencies need to have a strong internal accountability and control mechanism to prevent occurrence of irregularities in the operations and implementing directives of the AGP. The Government of Pakistan has introduced the scheme of the Chief Finance and Accounts Officers (CFAOs) to ensure professional management of the public resources. However, the CFAOs remain to be firmly and effectively embedded in the organizational hierarchy of the federal government.

Conclusion and Recommendations.

The weak accountability mechanism is the major cause of corruption in government departments and public sector corruption is also considered to be the major obstacle in the process of economic development of a country.

Corruption represents a major hurdle on the road to good governance. There are several manifestations of the corruption facing the government circles in Pakistan .

In Pakistan, various legal and institutional mechanisms are in place to check the growth of corruption. Parliament is empowered to check each and every penny being spent on any areas mentioned in the budget. Public Accounts Committee of the National Assembly, lower house of Parliament, in particular and the standing committees are also robust organs of public accountability. Besides parliamentary oversight, there are many legal anti-corruption instruments on the statute book for example: Pakistan Penal Code, 1860, Prevention of Corruption Act, 1947, Public Representatives (Disqualification) Act, 1949, Elected Bodies (Disqualification) Ordinance, 1959, Anti- Corruption Establishment Act, Federal Investigation Agency Act, Ehtesab Act and the National Accountability Ordinance 1999. In addition to these anti-corruption agencies, accountability bodies also exist to check the menace of corruption. These bodies are Public Accounts Committee (PAC) , Auditor General Pakistan (AGP) Department, and the office of Ombudsman have also been tasked of eliminating corruption.

The Public Accounts Committee has not acted as an effective check on the executive. First,

there is the issue of impartiality and effectiveness. The practice of appointing the PAC Chairman

from within the ranks of the party in power, contrary to best practice, has contributed to this.

There is no code of ethics for PAC members. In any case, the PAC proceedings have tended to

be bureaucratic, intermittent, retrospective and non-transparent exercises, focusing on minor

procedural breaches some 6 to 10 years prior, rather than recent significant irregularities which

can realistically be redressed by challenging serving bureaucrats. There is a huge backlog of

work for PAC. The PAC, consisting of politicians, has not always had the technical capacity to

tackle complex issues. The most critical problem faced by PAC is that it has no enforcement or

implementation powers. It is just a recommendatory body and is dependent upon the executive

for the implementation of its recommendations. PAC's focus and lack of expertise appears t

have convinced the executive, the media and civil society of its irrelevance, and resulted in widespread non- compliance. A number of reforms have been introduced recently aiming to improve the efficiency, effectiveness and transparency of the Committee, for example, by introducing sub- committees to speed up consideration of Audit Paras and opening the PAC proceedings to public scrutiny°.


The Auditor General's Department must increase its relevance and effectiveness. It should transform its role from one of undertaking retrospective transaction/compliance audit to validating management assertions about internal controls and the financial governance environment, (by undertaking system audits), and about the efficiency and effectiveness of resource utilization (

undertaking performance audits). It is already preparing for this role by its design of Corruption Rating Index (CRI), Financial Governance Rating (FGR), Accountability Index and Internal Quality Rating for departments. The Department must continue to take measures to ensure that its work has the widest possible audience.

PIFRA plans for widespread upgrading of proficiencies and professionalism, which is most welcome. This emphasis must be matched by significantly improved pay for auditors. This can only be achieved by delinking the Auditor General's Department from the civil service pay structure on the basis that it is a constitutional body, allowing it to set terms and conditions for staff The Department must then use its new corporate planning tools to determine efficient resource allocation to enable the increased pay.

The third major strategic area for the Auditor General's Department is independence. The Department must cease to be an attached department of the Ministry of Finance and have administrative and financial autonomy.

The Federal and provincial PACs must be strengthened to mirror the improvements in the audit function bringing issues before it. The PACs' impartiality and effectiveness should be enhanced through appointment of its chairman from the opposition and specifying a time frame for appointment of PACs after a new government takes over. Mechanisms to ensure speedy disposal of audit paras include sub-committees, an advance annual timetable and a prioritization mechanism.

It is critical that the PAC never again falls behind in reviewing the audit paras, as this undermines the entire public accountability process. An implementation mechanism is critical: PAC ought to have strengthened legal powers of enforcement. A panel of experts will increase PAC's technical expertise, and highlight issues of corruption for the PAC. Transparency, via openers to the media and live coverage, should be a requirement for all PACs.