The Auditor General of Pakistan (AGP) has termed Wapda's internal audit system as flawed and inefficient, giving way to financial irregularities.
The Auditor General, in its audit report for 2003-04, presented in the National Assembly, said that in spite of prevalent security system, cases of theft, misappropriation and mismanagement have been reported, which show that either there is some flaw in the existing internal control system or the system is not being implemented in an efficient manner to protect and maintain the Wapda's assets.
He also criticised the utility for violating important clauses of agreements, which ultimately inflict financial loss to the national exchequer. According to the audit report, the Auditor General has unearthed five cases of poor contract management involving payment of claims made to contractors without due process, delay in project completion, and overrun expenditure of Rs 3.669 billion.
"The contract management is another area of which needs management's attention as lack of proper implementation of financial controls, important clauses of agreements are not enforced leading to financial loss to the organisation," the audit report added.
The Auditor General is of the view that unsatisfactory financial performance of the companies, non-recovery of huge amount of receivables from the private consumers and violation of financial rules results in week internal controls and lack of efficient financial management.
Thirteen cases of ineffective internal controls have been reported such as payment to the contractors through open cheques, non-adjustment of advances for land acquisition and non-recovery of revenue and capital cost of Rs 1.635 billion, it added.
Five cases have also been unearthed regarding lapses in financial management on account of payment of demurrage charges, expenditure beyond approved budget, and giving credit to the consumers without adjusting the energy units of Rs 172 million.
Fourteen cases pertaining to weak procurement and inventory management in the water and power sectors have also been reported which include theft/shortage, non-return of material, non-utilisation, non-disposal and non-account of material and purchase of defective meters of Rs 137 million.
Interestingly, what the Auditor General has observed in its report is that in most of the cases the utility did not care to answer the objections raised in the audit report or the management failed to produce relevant record till the finalisation of the audit report.
The Auditor General has recommended that Wapda should prevent delay in completion of projects under Vision-2025 to avoid cost escalation and deferment as envisaged.
Adherence to international accounting standards for provision of doubtful debts, optimisation of inventory procurement and utilisation are necessary steps to push the utility in the right direction.
He also observed that proper account of stores particularly serviceable material, correct application of tariff, regularisation of unauthorised extension of load and removal of material from defaulters' premises are also some of the measures, should be taken by the utility for transparent and better management.