Audit reveals Rs354bn irregularities in KP local govts over 22 years

• Auditor General manages to recover only Rs3.2bn out of Rs354bn.
• Tehsil Accounts Committees not operationalised, say experts.
• Audit paras to keep accumulating unless govt reforms framework.

PESHAWAR: The audit record of Khyber Pakhtunkhwa’s (KP) local governments from 2002 to 2024 has uncovered serious financial irregularities of Rs354.126 billion, The News reported on Tuesday.

The irregularities, however, remain unresolved to this day, largely due to the absence of any effective system or mechanism to address these audit objections.

So far, the office of the Auditor General has managed to recover only Rs3.232 billion, a fraction of the total irregularities identified over two decades. According to experts, the Pakistan Tehreek-e-Insaf (PTI) government failed to operationalise the Tehsil Accounts Committees and did not undertake any serious legislative reforms to empower the Public Accounts Committee to exercise oversight over the financial affairs of local governments.

The 2019 Amendment Act called for the establishment of Tehsil Accounts Committees and granted them the authority to scrutinise audit reports, budgets, and financial statements.

However, these committees have yet to be formed. In contrast, in provinces like Punjab, Sindh, and Balochistan, Public Accounts Committees regularly examine the audit paras related to local governments.

A senior government official has warned that unless urgent reforms are introduced in the accountability system, the volume of audit objections will continue to grow, and there will be no effective oversight of public funds. He added that the existing law provides no mechanism to settle audit paras before 2019, which highlights not only prolonged financial mismanagement but also the complete absence of a functional system for audit resolution.

A spokesperson for the Local Government Department stated that the provincial government has not received any audit reports of local governments from the Auditor General’s office. If any audit report is received, it will be forwarded to the relevant Tehsil Councils. He added that, under the law, the responsibility for reviewing audit reports rests with the Tehsil Accounts Committees.

Over 22 years, a total of 765 audit reports were issued, highlighting 18,090 audit paras involving massive misuse or mismanagement of public funds. According to the data, the total disputed amount pointed out in these audit reports stands at Rs354.126 billion. However, the amount recovered is only Rs3.232 billion. This means that a staggering Rs350.893 billion is still pending recovery.

In the financial year 2013-14, audit paras highlighted objections worth Rs7,502.791 million. Recovery stood at Rs121.567 million, while Rs7,381.224 million remained pending. In 2014-15, audit paras amounted to Rs3,290.469 million. Recovery was Rs105.965 million, and Rs3,184.504 million remained unaddressed.

The year 2015-16 saw audit observations worth Rs7,052.033 million. Recoveries were Rs62.374 million, with Rs6,989.659 million still outstanding. In 2016-17, audit paras reached Rs32,423.149 million. Only Rs280.691 million was recovered, leaving Rs32,142.458 million pending.

In 2017-18, auditors flagged Rs31,147.537 million in objections. Recovery stood at Rs128.939 million, while Rs31,018.598 million remained unrecovered. The following year, 2018-19, audit objections totalled Rs26,035.223 million. Recoveries were Rs100.491 million, with Rs25,934.732 million pending.

During 2019-20, audit paras amounted to Rs34,320.556 million. Only Rs221.295 million was recovered, and Rs34,099.261 million remained unsettled. In 2020-21, audit authorities pointed out Rs37,199.340 million in irregularities. Recovery stood at Rs134.208 million, with Rs37,065.132 million still pending.

A sharp spike was seen in 2021-22, with audit paras totalling Rs52,438.652 million. Recovery was only Rs0.573 million, leaving Rs52,438.079 million unaddressed. In 2022-23, audit objections reached Rs52,658.098 million. Recoveries stood at Rs62.196 million, and Rs52,595.902 million was still pending.

In the most recent financial year, 2023-24, auditors flagged Rs40,756.117 million in irregularities. Recovery was recorded at Rs1,251.555 million, while Rs39,504.562 million remains unresolved.

An official of the AG office told this correspondent that the consistent pattern of high-value audit objections and minimal recoveries year after year reflects deep-rooted inefficiencies in local governance and financial oversight. He warned that unless the government reforms the accountability framework, these audit paras will continue to accumulate, and public money will remain unaccounted for.

The silence of the KP government, coupled with its failure to operationalise the Tehsil Accounts Committees or the Public Accounts Committee, has effectively rendered the audit system toothless when it comes to local government finances. The Public Accounts Committee has no mandate to address this matter under the 2019 Act, which limits its jurisdiction over local government financial issues.