Audit report flags billions in financial irregularities across federal bodies

• Auditors question utilisation of Rs75bn allocated for development. 
• Rs1.92tr foreign loan liabilities remain unrecovered.
• Pemra questioned over Rs87m in unrecovered dues.
  

ISLAMABAD: The Auditor General of Pakistan has identified widespread financial mismanagement in its 2025–26 audit of the federal government’s civil accounts, uncovering billions of rupees in irregular expenditures, poor oversight, unrecovered receivables, and governance failures across ministries, divisions, and autonomous bodies.

The 399-page report reveals that the Higher Education Commission recorded 31 paras, followed by the Trade Development Authority of Pakistan (18), Ministry of Food Security (17), Ministry of Science and Technology (16), National Heritage and Culture Division (12), Pakistan Agricultural Research Council (12), Pakistan Atomic Energy Commission (12), Ministry of National Health (11) and Education Division (10), The News reported.

Other entities facing audit scrutiny include the Cabinet Division (2 paras), Communications Division (5), Defence Division (5), Economic Affairs Division (2), Information Division (2), Inter-Provincial Coordination (8), Maritime Affairs (6), NAB (2), National School of Public Policy (1), Planning Ministry (1) and Religious Affairs (3).

One of the most significant observations concerns the Cabinet Division, where auditors questioned the utilisation of Rs75 billion allocated for federal and provincial development schemes under the Sustainable Development Goal Achievement Programme (SAP), commonly known as MPs’ schemes.

The audit noted that the Cabinet Division failed to obtain mandatory monthly progress reports and completion certificates from executing agencies. In the absence of scheme-wise and region-wise data, auditors said they could not verify whether the allocation and utilisation of funds were consistent with the objective of balanced regional development. Despite repeated audit queries, the Cabinet Division did not respond.

Auditors have recommended establishing a centralised digital monitoring system for tracking allocation and utilisation of SAP funds. The report also notes that although the Toshakhana Act was notified in 2024, rules and regulations for its implementation have yet to be framed.

The Economic Affairs Division (EAD) faces one of the largest financial observations in the report. Audit scrutiny revealed that Rs1.927 trillion in principal, interest and exchange-risk liabilities under foreign relent loans remained outstanding and unrecovered from various state-owned entities as of June 30, 2025. The management did not provide any response to audit observations.

In the education sector, auditors highlighted that 298 acres out of 1,709 acres allotted to Quaid-e-Azam University by CDA have remained under illegal occupation by private settlers for nearly 50 years. The report urges the university administration to actively pursue vacation of the encroached land.

The university also failed to deposit Rs177 million in deducted income tax into the government treasury. QAU cited a severe financial crisis and informed auditors that Rs83m had subsequently been deposited with FBR.

Audit further pointed out the retention and investment of Rs356m in scholarship funds instead of their utilisation, although the university maintained that the funds were being used according to donor conditions.

Another observation concerns Rs281m invested by various QAU centres without an approved policy, to which no reply was furnished.

Separately, the Centre of Excellence in Molecular Biology, Lahore, invested Rs500m instead of surrendering unutilised funds to the government at the close of the financial year. No explanation was provided to auditors.

The Information Division came under scrutiny over the non-recovery of Rs87m in outstanding fees and fines by Pemra.

The Karachi Dock Labour Board (KDLB) under the Ministry of Maritime Affairs faces several major observations, including: non-recovery of Rs433m in cess; recurring losses of Rs1.9bn due to expenditures exceeding income; irregular payment of Rs343m in bonuses; irregular selection of hospitals and laboratories and payments amounting to Rs620m.

The audit report records observations of Rs324m against NAB, including Rs277m spent from the regular budget on law officers and experts instead of the Recovery and Reward Fund. Non-deposit of Rs46m in recoveries into the government treasury. NAB, however, did not concede any wrongdoing.

The Ministry of National Food Security faces significant observations, including: non-recovery of Rs1.9bn in cotton standardisation fees; wasteful expenditure of Rs193m on aircraft spare parts; Rs355m spent on non-transparent recruitment of contractual employees; non-reconciliation of receipts amounting to Rs4.4bn; the report notes that an aircraft of the Plant Protection Department crashed in 2020, but despite the passage of five years, the inquiry has still not been completed.

Auditors also observed that 15 deregistered aircraft remained idle for years and were not auctioned, causing a loss of over Rs42m.

The Ministry of National Health Services faces audit observations including: procurement of vaccines worth Rs1.1bn at higher rates due to non-compliance with a federal cabinet decision; irregular procurement of medicines worth Rs508m by the Federal Government Polyclinic Hospital; fraudulent payment of consultants’ share amounting to Rs28m at Sheikh Zayed Medical Complex Lahore.

The National Heritage and Culture Division faces several significant observations: irregular investment of Rs681m in treasury bills by the Quaid-i-Azam Mazar Management Board: investment of Rs865m by the National Academy of Performing Arts without Finance Ministry concurrence; non-recovery of Rs27m from CDA for construction of the Pakistan National Council of Arts building; non-recovery of Rs145m in utility charges from Iqbal Academy Pakistan.

Within the Pakistan Atomic Energy Commission (PAEC), auditors highlighted: unutilisation of Rs2.8bn from the Water Disposal Fund by Chashma Nuclear Power Plant; spot purchases worth Rs61m; non-adjustment of Rs936m paid in advance for items that had not been delivered.

The sole audit para against the Planning and Development Division concerns the Pakistan Bureau of Statistics’ failure to obtain audited statements and adjustment accounts involving Rs3.1bn from district administrations.

The Ministry of Religious Affairs was found not to have obtained audited statements and adjustment accounts involving Rs45bn, raising serious concerns regarding accountability and verification of expenditures.

One of the largest observations in the report concerns the Ministry of Science and Technology. The audit finds: Rs59bn loss due to failure by the Pakistan Standards and Quality Control Authority (PSQCA) to impose late-payment charges; non-deposit of Rs1.7bn surplus funds into the Federal Consolidated Fund; failure to withdraw Rs7.3bn investments from the National Bank of Pakistan despite maturity; maintenance of 45 unauthorised bank accounts with balances of around Rs3bn outside the Federal Consolidated Fund.

The Trade Development Authority of Pakistan (TDAP) is facing 18 audit observations. Key findings include: irregular retention of Rs513m income from Karachi Expo Centre in commercial banks; outstanding liabilities of Rs1.56bn payable by the Export Development Fund; excess expenditure of Rs1.2bn on international exhibitions; wasteful expenditure of 31,320 euros due to lack of participation in Intertex Portugal 2025 despite incurred costs; failure to recover possession of prime Expo Centre land allegedly encroached upon by PIA and Sindh Police.

The audit report paints a troubling picture of weak financial controls, poor record-keeping, delayed recoveries, unauthorised investments, procurement irregularities and failures in oversight across multiple federal entities. Several departments either failed to respond to audit observations or defended practices that auditors considered irregular, leaving major accountability questions unresolved.

Originally published in The News