Daily Times

At the beginning of the year, Prime Minister Imran Khan expressed “no confidence and serious reservations on the performance of the office of Auditor General of Pakistan”. Indeed, he noted “that corruption worth 180 billion has been unearthed in the institution”. Most of the work related to addressing audit reports ultimately proves fruitless in terms of actual revenues for the exchequer; thereby leading to a huge wastage of public resources and working hours.

Internal and foreign audits of Pakistan’s embassies and consulates make a mockery of the concept of accountability.

Every year, teams from the Audit and Accounts group that are independent of the Foreign Office’s Chief Accounts Office (CAO) audit the accounts of diplomatic missions abroad. Those involved mostly have no idea of the workings of diplomatic missions or financial procedures prevailing in host countries. Many of the obsolete financial regulations they want to enforce have no relevance. And yet they are sent for long durations to produce audit reports.

An interesting fact mostly unheard outside the Foreign Office is that original records are sent by embassies/consulates to the CAO; a foolproof method termed ‘monthly cash account’ that sees only copies being retained at diplomatic missions. Yet CAO audit teams conduct regular in-person audits of the diplomatic missions, interestingly, these are called internal audits.

And yet the so-called foreign audit teams are sent abroad to conduct audits of copies and not originals which are all available only in Islamabad.

Auditors’ overseas trips are little more than free holidays for AGP officers and staff, mostly scheduled during the summer. This rotten system should not be allowed to continue by a government wanting to root out systematic corruption for good

What transpires during these visits are the stuff of nightmares. Before leaving the country, the head of the audit team usually asks the deputies to visit the Foreign Office to make a draft audit report by reviewing original documents and accounts. That done, the time for government-paid fun and frolic and pampering abroad begins. Embassies are hoodwinked into providing free food and board at five-star hotels and local fine dining restaurants; complete with chauffeur driven cars. For those who drink and smoke, additional requirements are to be met. And worst of all, auditors may ask for indulgences of ‘another kind’.

Many diplomats have personally told me of scandalous incidents involving transgression by auditors. Such as the audit team leader who had his entire extended family accompany him while forcefully ensuring free visas and stay. Non-compliance by one embassy was met with unfavourable audit paras. Another incident saw one team put in an inappropriate request relating to how he wanted to enjoy the trip. This cannot be mentioned here.

While the government has been exercising extreme austerity, the cost of such audit teams has only increased over the years. The main reason being that their length of stay in each place has been stretched inordinately. Previously, audit teams used to spend three days at an embassy or consulate — now many remain abroad for up to one-and-a-half months at a time. Just to audit two or three embassies. This costs the national exchequer tens of thousands of dollars in TA/DA (travel allowance and dearness allowance) alone. Unofficial embassy expenditures may add up to even more. Furthermore, these visits are usually followed by that of foreign audit team after a matter of mere months.

And what is the end result of all this activity that incurs tremendous foreign exchange costs while greatly disrupting embassy and consulate work? Typically, an audit report of around 20-30 audit paras that boldly suggests recoveries to the tune of millions. Impressive, certainly, but largely prepared before the visit commences. A closer look at these reports reveal to the discerning eye that most paras are simply procedural in nature, which are to be settled without a rupee in recoveries. For instance, a furniture purchase made from a renowned store like IKEA or METRO, with computerised receipts, can be deemed irregular because three quotations were not obtained from different stores for the same item.

What remains in place are archaic rules unchanged from the British era, when all procurements were made through contractors. This is not to mention financial limits set in rupees that have often stayed unchanged for decades. All of which provide ample opportunity to the auditors to fill up their reports with seemingly strong but factually frivolous objections, resulting in more time-wasting paperwork. Incidentally, many a time it has happened that embassy officials provide evidence potentially settling an objection there and then only for the auditors to insist this be sent at a later date; in response to the formal report. So that their para numbers remain impressive.

A former diplomat who worked in top administrative posts at the Foreign Office shared that as per his calculation, the so-called foreign and internal audits have not produced recoveries over the last twenty years that could cover even half the cost of sending all them abroad. And this does not take into account the informal costs borne by the embassies and consulates which ultimately also have to come from the national exchequer.

It was also shared with me that all of Pakistan’s diplomatic missions run on a budget tantamount to the annual cost of one US embassy in a major capital. About sixty percent of that budget is earned by the embassies and consulates themselves as consular revenue. Equally important, about ninety percent of the budget comprises basic salaries, foreign allowance, rent and school fees, which are all fixed and have little room for irregularity. Whatever is left amounts to perhaps ten percent of total expenses and has been looked at on a monthly basis by the seasoned auditors permanently posted at the CAO.

If the Prime Minister’s Office (PMO) is willing to bring about a sea of change then it should begin probing the cost of foreign and internal audit teams over the last decade and actual recoveries made, as in amount deposited to the exchequer resulting from these visits. Moreover, internal and foreign auditing in the future should be carried out by the CAO and Foreign Audit Directorate where all original financial records of embassies/consulates are available. Any additional ledgers/logbooks or cashbooks could be despatched via diplomatic bags. Videoconferencing could also be used where needed. Notably, financial rules and regulations must be revised in keeping with the objective conditions prevailing abroad, with a view to reducing unnecessary paperwork. Similarly, budget allocations must be incentivised by including them in the evaluation reports of heads of missions/chanceries.

For as things currently stand, auditors’ overseas trips are little more than free holidays for AGP (Auditor General of Pakistan) officers and staff, mostly scheduled during the summer. This rotten system should not be allowed to continue by a government wanting to root out systematic corruption for good.

The writer is Associate Editor (Diplomatic Affairs), Daily Times. He tweets @mhassankhan06