1.1 There are two types of public works within the audit jurisdiction of the Auditor-General of Pakistan. Firstly, there are civil works relating to the development and enhancement of the national infrastructure, such as civil airports, hospitals, bridges, canals, embankments, schools and colleges. Secondly, there are works relating to the Armed Forces which are undertaken directly or indirectly for defence purposes.
1.2 Public projects are prioritised according to their importance and approved by the federal and provincial governments. The civil works pertaining to the defence department are authorised by the Military Engineer Services (MES) in consultation with the armed services chiefs.
1.3 Audit checks are uniform in both the above types of works and projects, although specialised agencies have been established to audit the expenditure on public works in various executive organisations. The Director General Audit (Works) is mainly responsible for the audit of public works in federal projects, while the expenditure of the defence services is audited by the Director General Audit, Defence Services. Provincial expenditure on civil works is audited by the respective Directors General of Audit.
The basic goals of public works and projects in Pakistan are:
a) to construct and maintain the basic infrastructure in the country for socio-economic uplift of the nation
b) to undertake activities for public benefit through the creation of tangible assets.
The public works and projects include the construction of highways and roads, bridges, main canals, feeder canals, tertiary and other subsidiary links, embankments and drainage works, office buildings, residential buildings, other buildings and structures, urban and rural water supply and drainage schemes, airports and the development of housing schemes.
The investment criteria for public works and projects are based on the following :
a) priorities set by the government, based on available resources and national needs •
b) priorities set by donor agencies.
Before the preparation of cost estimates for public works and projects, feasibility studies are prepared by the agencies concerned in the planning and execution of these undertakings .
Projects are approved by ECNEC and CDWP through the Planning Division of Federal Government and through the Planning and Development Department of the Provincial Government. Specific requests are placed before the government concerned.
After these requests have been voted on by the Assembly, the Prime Minister/Chief Ministers approve a schedule specifying the:
The approved schedule is laid before the Assembly, but is not open to discussion or vote in the Legislature.
The budget estimates for public works and projects are prepared by the departments concerned. Consequently, the Finance Division/Department examines and advises on all proposals for such undertakings in the budget estimates. After the schedule of expenditure has been approved by the President/Governor, the Finance Division/Department advises the Heads of Departments of the amounts voted by the Assembly. The accounts of public works and projects are maintained in standard formats approved by the government in consultation with the Auditor-General of Pakistan. The relevant accounts are closed as soon as possible after actual completion.
The organisation of the various entities connected with the construction of public works and projects includes:
(a) Public Works Department
(b) Autonomous Bodies
| NHA | - | NHA Council |
| - | Chairman/Board | |
| - | Members | |
| - | General Manager | |
| - | Project Directors | |
| - | Deputy Directors | |
| CDA | Chairman/Board | |
| - | Members | |
| - | Director General | |
| - | Director | |
| - | Deputy Director | |
| CAA | - | Chairman/Board |
| - | Executive Committee | |
| - | Director General | |
| - | Director | |
| - | General Manager | |
| - | Corporate Manager | |
| - | A.P.M. | |
| LDA/MDA/FDA | - | Administrative Secretary |
| - | Director General | |
| - | Managing Director |
(c) World Bank Aid Projects
6.2.1. Initially, administrative approval of a particular project is given by the competent authority as per the delegation of financial powers. Administrative approval is essential for regulating budgetary sanctions and structural soundness. The authorities competent to give administrative approval in the case of government departments are :
6.2.2. A detailed estimate, containing the bill of quantities and detailed drawings and designs, is prepared by the relevant Executive Engineer and submitted to the authority concerned for technical sanction of the estimate. Technical sanction is accorded by the authority competent to do so as per the delegation of financial powers.
6.2.3. Tenders are then invited on a competitive basis, by the competent authority as per the delegation of financial rules and powers.
(a) Preparation of Tenders Documents
Tender documents are prepared by the Executive Engineer for publication through the press in the form of DNIT (Demand Notice of Invitation of Tenders) as detailed below:
(b) Invitation and Evaluation of Tenders
Tenders are evaluated according to merit. The decision to award the contract is made accordingly:
6.2.4. After the tendered rates have been approved by the competent authority, the work is awarded to the contracting firm on the basis of the lowest bid. Agreements between the departments and the contractors, along with the bills of quantities, are then executed.
6.2.5. The supervision of public works and projects is carried out:
In some of the larger projects, consultants are also appointed as Engineers-in-Charge. They are responsible for overall supervision and execution of the projects, assisted by local engineers.
6.3.1. Financial Accounting
The financial accounting system for the control of public works and projects has the following features:
6.3.2. Internal Controls
The adequacy of internal controls and the extent to which these are exercised, varies from department to department in the government accounting system. However, the Public Works Department has administrative controls, budgetary controls, accounting controls and financial controls.
6.3.3. Internal Audit
The internal controls include internal audit which operates independently within departments. In the Public Works Department an effective control system has been provided to detect errors and prevent fraud. Pre-payment checks are also applied by accounts staff experienced in this area.
6.4. Quality Control
The quality control of public works and projects has three distinctive features:
Quality control is exercised during execution of the work through the implementation of approved tests. Close supervision and monitoring are also involved. For quality assurance, several testing and research facilities are available for the Public Works Departments, viz. Building Research Laboratory, Road Research Laboratory, PCSIR Laboratories and University and other Technology Research Institutes.
Public works projects are monitored by several entities, including the executive departments involved, the Planning and Development Department (Monitoring Wing), the Finance Department, and donor agencies.
The necessary construction machinery and equipment are supplied by the contractors themselves inmost cases, in accordance with the terms and conditions of the contract. Only in isolated cases do departments agree to procure or supply construction machinery and equipment for contractors.
In the Public Works Department material is procured for either stock purposes or for actual work sites. Where work sites are involved, the contractors quote composite rates (comprising labour and material) and organise the material themselves. Where works are carried out departmentally, only labour rates are paid. The required material is used out of available stock by debiting its cost to the relevant work.
Public works and projects undertaken by contractors are managed and monitored at the government's expense. However, works and projects undertaken on behalf of non-government agencies are handed over to the sponsoring agency for management and maintenance.
Public works and projects are operated, maintained and utilised by the appropriate public sector .entity and not necessarily the construction agency involved. In this regard, the Public Works Department may construct undertakings on behalf of other departments and instrumentalities.
In Pakistan, there is some competition by the public sector with private contractors for public works and projects. The three public enterprise contractors involved are the Frontier Works Organisation (FWO), National Tubewell Construction Corporation (NTCC) and National Construction Ltd.
There are no privately owned public projects in Pakistan. In the absence of a government policy of privatisation, public works and projects remain in the public sector.
The various funding agencies exercise general but not direct oversight of foreign-aided projects. However, the acceptance of individual bids and award of contracts must be approved by the funding agency involved.
In order to ensure adequate financial control and meet accountability requirements of the Public Works Department, auditing is conducted in the following forms:
The auditors examine the relevant accounts within the general framework of legality, regularity and propriety.
The audit mandate of the Auditor-General of Pakistan is derived from the following sources:
The main objectives of government auditing, including the audit of public works and projects are:
Audit procedures for auditing the accounts of the Public Works Department have been laid down in various codes and manuals. In the financial audit, the methodology followed is the traditional one. Test checks are carried out for sampled transactions. In the case of performance auditing, economy, efficiency and effectiveness are evaluated. In addition to the examination of documents, site visits are also carried out.
The mandate of the Auditor-General does not extend to policy. Accordingly, the Audit Department is not associated with the investment decisions of the federal or provincial governments.
The Auditor-General conducts a design audit on completion of work and after the relevant expenditure has been incurred. Although such audits are not carried out in association with financial audits, they are conducted on selected works and project designs in conjunction with performance auditing.
The audit of estimates is carried out in respect of public works and projects selected for detailed analysis.
The audit of contracts and progress payments is conducted to ascertain whether the procedures involved have been in accordance with the accounting system of the Public Works Department and as approved by the Auditor-General.
The audit of propriety is carried out in accordance with generally accepted auditing practices. The objective is to ensure that the standards for public expenditures have been appropriate.
Value for money or performance audits of selected works and projects are conducted to ascertain how economically, efficiently and effectively financial, human and physical resources are managed during execution of these undertakings. Furthermore, the auditors involved determine whether the accountability requirements have been met.
The audit of construction machinery, equipment and materials is conducted in accordance with statutory requirements. Auditors have free access to the accounting records of stores and materials kept in any office of the Public Works Department.
There is no audit provision for the technical examination of public works and projects in the audit mandate of the Auditor-General of Pakistan. Moreover, the Pakistan Audit Department has neither the expertise nor facilities to carry out such examinations.
The executive department maintain proper accounts of the tangible assets arising from the construction of public works and projects. The operation, maintenance and utilisation of these assets are audited on a regular basis.
Appropriate accounts are maintained in respect of costs recovered and revenue generated from services provided by the Public Works Department. These accounts are subject to audit under existing audit procedures.
The accounts of public works and projects undertaken by public enterprise contractors are audited by the Auditor-General in exactly the same manner as in the case of public works and projects undertaken by private sector contractors..
As mentioned previously, there is no privately-owned public works or projects in Pakistan.
The Planning and Development Department has created research and development cells to focus on the improvement of human resources. In-house training courses are being developed and conducted to foster the technical skills of auditors.
Reports on the audited accounts are prepared on a monthly and an annual basis. A monthly Civil Account in respect of the federal and provincial governments is compiled by the various Accountants Generals. This periodic account is submitted to the Auditor-General for transmission to the respective governments. The annual accounts comprise Appropriation Accounts, Finance Accounts and Combined Finance and Revenue Accounts.
The dual responsibility of keeping the public accounts of the Federation and of the Provinces and of conducting the relevant audits, has impaired the independence of the public sector auditing functions. The following are some of the problems and limitations involved:
There are problems in adhering to the completion dates for audits. The post-audit of monthly accounts and the annual local audit are planned for May/June each year, while the finalisation of audit results is completed from July to April. Audit Reports in respect to the Federal/Provincial Governments are printed and submitted to the Auditor-General of Pakistan for presentation to the President/Governor by March.