AGP report: FBR creating hurdles in audit, inspection of taxes

Report states FBR not cooperating, latter says auditor-general has no jurisdiction.

ISLAMABAD: In two separate annual audit reports, the auditor general of Pakistan complained of bureaucratic inefficiency, saying the Federal Board of Revenue (FBR) authorities were creating obstacles in the conduct of its audit. The audit reports were on direct and indirect taxes accounts of the federal board of revenue, for the audit year 2010-2011.

The reports revealed that 16 of the FBR tax-collecting authorities in Karachi, Rawalpindi, Quetta and Hub, Lahore, Islamabad, Peshawar, Hyderabad, Abbottabad, Sukkur, Faisalabad, Multan and Sialkot did not produce auditable records despite requests from audit officers.

The Regional Tax Offices of Lahore and Karachi, according to the report, refused to produce the record of 1,449 taxpayers’ cases out of a total of 4,949 such cases.

Non-cooperation, however, was not the only complaint expressed by the auditor-general. The report also stated that audit teams remained almost idle during their visit to field formations of FBR which are created to discover new tax payers. Not only did the audit teams return empty-handed, but as a result the government also had to incur the heavy costs of salaries, travelling and daily allowances.

“Non-Production of record is a serious violation of law and hindrance in performance of audit function of the auditor-general of Pakistan,” the report pointed out, adding, “The responsibility for preventing audit offices from performing their statutory duties by not providing the requisite record needs to be fixed”.

The lapse was pointed out to FBR from April to December 2010, but to no avail according to the report.

The FBR, on the other hand, had earlier countered these accusations by questioning the authority of the auditor general in conducting its internal audit. In a circular issued on September 8 2010, the FBR denied the jurisdiction of audit by the department of the auditor-general of Pakistan under the 1990 Sales Tax Act.

The auditor general’s report further countered this circular, stating that it was issued even though the law and justice division had already given its opinion in 2008 that the auditor general did in fact have such jurisdiction. It also directed that the FBR should ensure production of all auditable accounts and that appropriate action should be taken against all those who hindered audit activity.

According to the Auditor-General’s Functions, Powers and Terms and Conditions of Service) Ordinance 2001, the officer in charge of any office or department should provide all available facilities for audit inspection. Any person or authority hindering the functions of the auditor general regarding inspection of accounts shall be subject to disciplinary action under relevant efficiency and discipline rules.

Published in The Express Tribune, December 21^st, 2011.