No audit for assignment accounts being run by provincial government

Sindh government keeping large amount of funds in commercial banks

KARACHI: Financial indiscipline is rampant in the government departments of Sindh. The federal government has expressed reservations over expenses worth billions of rupees via assignment accounts and accounts in commercial banks being run by the provincial government departments.

The federal government held several meetings to address the issue, while the provincial government has also issued several directives in this regard, however, financial irregularities continue.

According to sources, the Sindh government has been spending billions of rupees via more than 100 assignment accounts that are created for specific projects which are for a limited period of time. No pre-audit is carried out for the accounts in question, hence, they are being misused. On one hand, the accounts do not go through audit and on the other hand, the funds that have not been used are also not returned to the government treasury at the end of every fiscal year as it should be. Instead, the funds are deposited in commercial banks.

According to official data, more than 28,000 commercial bank accounts are being operated by government departments. In August 2017, the federal government raised the issue of such accounts. The federal finance division sent letters to the Sindh treasury department requesting the details of the provincial government departments' accounts in commercial banks.

When the provincial treasury department investigated such accounts with the help of the State Bank of Pakistan (SBP), some astounding findings emerged.



Apparent irregularities

On April 25, 2018, Sindh Treasury Interim Secretary Asif Jehangir wrote a letter to the then chief minister Murad Ali Shah, informing him that there were 28,388 accounts of provincial government departments in commercial banks. The letter stated that till June 30, 2017, the amount of funds in those accounts exceeded Rs125 billion. It was also shared in the letter that the government departments had stashed more than 50% of the amount that was approximately Rs64 billion in current accounts.

This appeared to be an irregularity as the government departments are supposed to deposit their funds in saving accounts in banks because current accounts are for commercial entities, which the government is not. The former CM was also informed that the provincial government departments had also opened current accounts in the National Bank of Pakistan (NBP) and Sindh Bank.

According to the SBP, NBP is the only government-owned bank and all the other banks are considered commercial banks. However, the government of Sindh has allowed its departments to deposit their funds in Sindh Bank as well, which is a commercial bank.

The government departments and institutions can only open their accounts in commercial banks in those places where there is no branch of NBP nearby and even for this, the departments require a formal approval by the government.

According to data available with Daily Express, the Chief Minister Secretariat and 31 Sindh government departments and institutions deposited their funds in various commercial banks. Departments that deposited the largest funds were the education and local government departments.



There were deposits of Rs41 billion of the education department in commercial banks while Rs41 billion had been deposited by the local government department in commercial banks in June 2017. The Sindh Employees Social Security Institution had Rs6.11 billion in commercial banks while the health department had been keeping more than Rs4 billion. The agriculture department had been carrying over Rs63 million in commercial banks, while the social services and administration department had deposited Rs4 billion. Over Rs3 billion funds had been deposited by the Board of Revenue and the works and services department in commercial banks in June 2017. The department of culture and tourism had been keeping Rs1.37 billion whereas the industries department was carrying Rs1.12 billion in commercial banks. The CM Secretariat, in the meantime, had deposited Rs67 million in commercial banks.

According to the federal government sources, another matter of concern was the assignment accounts. Several assignment accounts have been created by the provincial government for various projects but they are not being audited.

Usually, funds not used by the government institutions are returned to the government treasury at the end of every fiscal year on June 30. However, funds in the assignment accounts are transferred to commercial bank accounts. According to sources, the number of assignment accounts being run by the Sindh government is more than 100. The Sindh Education Foundation and Sindh Solid Waste Management Board and 100 other institutions are being run through assignment accounts. The last provincial government allotted billions of funds for them.



On Jehangir's letter, the federal finance division launched an investigation into the Sindh government's commercial bank accounts, which found out that as of June 2017, of the Rs125 billion funds deposited in the commercial banks, Rs31 billion were kept in fund management houses, according to the government policy for expenses.

When contacted, Jehangir refused to comment on the matter.