ISLAMABAD: The Auditor General of Pakistan (AGP) has raised serious concerns over the Capital Development Authority (CDA)’s financial management practices, highlighting an unjustified retention of Rs1.58 billion by Drawing and Disbursing Officers (DDOs) and a non-reconciled cash balance of Rs30.71 billion.
This has called into question the CDA’s compliance with established accounting protocols and the transparency of its financial dealings, according to the audit report for 2023-24.
As per the audit findings, the retention of closing balances by DDOs has been escalating over the past three financial years, reflecting a significant increase.
According to the Procedure Manual Part-III CDA (Accounting Procedure), cash accounts are required to be fully closed and verified on June 30 every year.
However, the audit observed a deviation from these guidelines, with CDA divisions holding substantial closing balances.
In the financial year 2019-20, the CDA retained Rs0.25 billion with its DDOs. This amount saw a significant increase in 2020-21, reaching Rs1.38 billion—an addition of Rs1.13 billion from the previous year. In 2021-22, the retained amount further rose to Rs1.58 billion, marking an additional increase of Rs0.2 billion.
This persistent retention of unverified cash raises red flags regarding financial discipline and control within the CDA.
In addition to the retained balances, the report outlines a cash balance discrepancy of Rs30.71 billion as of June 30, 2022. This total comprises Rs29.139 billion in bank balances (including treasury bills) and Rs1.6 billion retained by DDOs. However, these balances were not supported by reconciled figures in each bank account, casting doubts on the authenticity of the reported cash balances.
The audit team emphasised that such un-reconciled figures compromise the accuracy of CDA’s financial statements.
The report criticised the CDA for failing to provide essential documentation required for audit verification. These included a breakdown of DDOs’ balances, cash book closing details, justification for retaining these balances, and the period for which funds have been held. Despite the audit pointing out the issue in June 2023, there has been no response from the CDA’s side.
Furthermore, several attempts by the audit department to schedule a Departmental Accounts Committee (DAC) meeting were ignored. The DAC meetings that were held in December 2020 and November 2022 had previously instructed CDA management to submit reconciled figures, but no follow-up action has been observed.
The audit report recommends stringent disciplinary action against those responsible for this financial irregularity. It urges the CDA to enforce strict financial discipline and reduce the reliance on retained DDO balances. The report also emphasises the need for CDA to adhere to the established accounting protocols and maintain transparency in its financial transactions.
This is not the first time such issues have been highlighted. The report notes that similar financial discrepancies were observed in the Audit Report of 2019-20, with an impact of Rs9.23 billion. The recurrence of these irregularities over multiple years has become a matter of serious concern for the audit authorities, who see this pattern as indicative of systemic weaknesses within the CDA’s financial oversight mechanisms.
Copyright Business Recorder, 2024