The World Bank (WB) has asked the Federal Board of Revenue (FBR) to carry out physical verification of all fixed assets purchased under Tax Administration Reforms Program (TARP), to figure out actual amount in dollars.
Sources told Business Recorder on Friday that the WB mid-term review mission has submitted a report on the financial management of funds spent on the reform project. The mission was of the view that the board should take immediate steps to store missing data on fixed assets.
According to WB, the board should devise an effective system for streamlining the process of making payments to vendors operating under the TARP. In order to track payment process and ensure efficiency, a mechanism needs to be put in place to record the date when an invoice is first submitted by the vendor to the regional tax official. This will enable the financial management team at Islamabad to be aware of payments in the pipeline and prepare their cash plans accordingly.
The WB has recommended that except a few routine payments, all payments require unanimous approval of a payment committee comprising FBR Members. The committee would ensure that all relevant supporting documentation, verifications and approvals are in place. The board should ensure reducing time for making payments ie number of days between submission of invoice and receipt of payment by the vendor.
Details showed that the mission carried out a review of the financial management arrangements in place and its adequacy for effectively handling transactions during the remaining period of the project. There was a visible progress on financial management related issues agreed during the December 2006 mission's review.
Some of the progress include that books of accounts are written up to date. But the audit certificate for the previous financial year was submitted with a four-month delay. The financial statements, however, were prepared well in time.
The WB said that the Financial Monitoring Reports (FMRs) due for the quarters during July 2006 to June 2007 were delayed. These required revisions, which were done during the mission visit.
Comments on variances between actual and planned figures, required as per legal covenants was not included. Steps had been taken towards improvement of payment process and maintenance of a fixed asset record.
The mission opined that there was a need of physical verification and tagging exercise for the fixed assets. An accounting software is now installed and all project financial data since its inception has been uploaded. Due to the system's limitation, only rupee data was available in soft form.
However, this is not the primary source of information and a manual cashbook was being maintained in parallel which contains both rupee and dollar amounts in accordance with the Government Rules. The financial management rating of the project was assessed as 'moderately satisfactory' and financial management risk continued to be 'modest', the WB added.