The Federal Board of Revenue (FBR) Member Enforcement and Accounting, Muhammad Fayyaz Khan on Thursday said the Auditor General of Pakistan (AGP) has framed Rs 928 million audit objections on account of non-performing loans (bad debts) provisioning, which was allowed by the government as a policy decision in the past.
During review of the audit report (1994-95) on direct taxes by the special committee of the Public Accounts Committee (PAC), FBR Member Enforcement said that on the instructions of the government in 1981 the public sector banks were allowed provisioning for non-performing loans (bad debts) on the certification of the State Bank of Pakistan (SBP). Resultantly, the taxation officers allowed such provisions in the past. As a matter of policy decision in the past, the bad debts of public sector certified by the SBP were allowed.
The FBR team further justified that the record of around Rs 1 billion has not been misplaced, instead Rs 928 million is related to the provision of bad debts allowed by the government in the past. The issue came to the light when officials of the Auditor General of Pakistan (AGP) informed the committee that the tax record involved in audit paras is not available for past years and approximately record of Rs 1 billion has not been submitted by the FBR for verification to audit. Out of Rs 1 billion amount, but Rs 928 million is related to the provisioning of bad debts pertaining to public sector banks, Fayyaz Khan added. FBR Audit team headed by Fayyaz Khan managed to convince the committee about the factual status behind the figure of Rs 1 billion of untraceable record. Major chunk of the involved amount was related to the above mentioned provisions related to the banks.