Audit report: No records, no distribution and no Ushr
AGP points out corruption, mismanagement in Zakat collection, disbursement.
AGP points out corruption, mismanagement in Zakat collection, disbursement. PHOTO: FILE
ISLAMABAD:
The audit report 2009-10 of the Central Zakat Fund, National Level Health Institution and Zakat deduction agencies underscores large-scale corruption, irregularities, mismanagement and financial indiscipline in Zakat collection and disbursement.
Billions of rupees are deducted compulsorily by banking, financial and other institutions from individual bank accounts every year on the very first day of Ramazan since 1980.
However, reports by the Auditor General of Pakistan show that the money collected in the name of Zakat is not reaching the deserving.
But former deputy National Assembly speaker Faisal Kareem Kundi and a leader of the Pakistan Peoples Party (PPP) – the political party that had headed the previous government – defended the Central Zakat Fund (CZF) and its working. Talking to The Express Tribune, praising the role of the Zakat Distribution Committees he called them “remarkable”. Deserving persons are provided financial assistance from Zakat funds, he claimed.
However, the audit in its report for 2009-10 indicates a balance of Rs14.103 billion accumulated in the CZF account maintained by the State Bank of Pakistan on June 30, 2009. All the funds collected are supposed to be distributed by this date as it marks the end of the fiscal year.
The Zakat and Ushr Ordinance, 1980, was promulgated through presidential decree as part of Zia ul Haq’s Islamisation policy. The Zakat deducted is collected in the CZF that is managed by the Central Zakat Council (CZC). Capital in the CZF is released to the Provincial Zakat Funds (PZFs), national health institutions, the Islamabad Capital Territory and emergency relief.
Subsequently, the Provincial Zakat Councils (PZCs) release funds from the respective PZFs to the District Zakat Fund (DZF) to distribute money for the financial assistance of deserving individuals.
Open cheques, no records
The requirement of the distribution of Zakat funds through crossed cheques is a secure method to ensure that an actual payee has received the payment. However, the audit report showed that health welfare committees disbursed funds to suppliers of medicines either in cash or through open cheques. This is a violation of the Zakat and Ushr Rules and Procedure, rule 157.
Meanwhile, in many cases of Zakat exemption, the audit report revealed that the relevant record is not properly documented or even available by the Zakat-deducting agencies. Very often Zakat exemption requests are made on plain paper, with notarisation, and banks accept photocopies of affidavits – a violation of Stamp Act, 1899.
Another control mechanism in place is the reconciliation of accounts in which two sets of records (usually the balances of two accounts) are kept to make sure they are the same and ensure the accuracy of transactions.
The Central Zakat Administration (CZA), however, is not following the reconciliation process. Besides, the CZA is also not reconciling their funds distributed to various provinces and districts on a regular basis, the audit report stated. During a check, the Auditor General Pakistan observed discrepancies in the department’s and the banks’ figures.
There are certain cases in which no record was produced by the health welfare committees to the audit.
‘No Ushr’
According to District Zakat Councils records, no Ushr (tax on crops) has been calculated or collected from the agricultural landowners since 1990.
The provincial revenue departments are responsible to assess and collect Ushr from every landowner or leaseholder under the Act.
No comments either
Officials in the ministry of religious affairs, zakat and ushr were not willing to comment on the audit report. However, one official concerned said that the ministry has already submitted a report in response to the audit observations to the National Assembly’s Public Account Committee (PAC). “Zakat and Ushr has become a provincial subject after the 18th Amendment,” he said. However, the audit report in question is of the fiscal year 2009 and 2010 which was before the 18th Amendment was promulgated.
Published in The Express Tribune, September 14th, 2013.
The audit report 2009-10 of the Central Zakat Fund, National Level Health Institution and Zakat deduction agencies underscores large-scale corruption, irregularities, mismanagement and financial indiscipline in Zakat collection and disbursement.
Billions of rupees are deducted compulsorily by banking, financial and other institutions from individual bank accounts every year on the very first day of Ramazan since 1980.
However, reports by the Auditor General of Pakistan show that the money collected in the name of Zakat is not reaching the deserving.
But former deputy National Assembly speaker Faisal Kareem Kundi and a leader of the Pakistan Peoples Party (PPP) – the political party that had headed the previous government – defended the Central Zakat Fund (CZF) and its working. Talking to The Express Tribune, praising the role of the Zakat Distribution Committees he called them “remarkable”. Deserving persons are provided financial assistance from Zakat funds, he claimed.
However, the audit in its report for 2009-10 indicates a balance of Rs14.103 billion accumulated in the CZF account maintained by the State Bank of Pakistan on June 30, 2009. All the funds collected are supposed to be distributed by this date as it marks the end of the fiscal year.
The Zakat and Ushr Ordinance, 1980, was promulgated through presidential decree as part of Zia ul Haq’s Islamisation policy. The Zakat deducted is collected in the CZF that is managed by the Central Zakat Council (CZC). Capital in the CZF is released to the Provincial Zakat Funds (PZFs), national health institutions, the Islamabad Capital Territory and emergency relief.
Subsequently, the Provincial Zakat Councils (PZCs) release funds from the respective PZFs to the District Zakat Fund (DZF) to distribute money for the financial assistance of deserving individuals.
Open cheques, no records
The requirement of the distribution of Zakat funds through crossed cheques is a secure method to ensure that an actual payee has received the payment. However, the audit report showed that health welfare committees disbursed funds to suppliers of medicines either in cash or through open cheques. This is a violation of the Zakat and Ushr Rules and Procedure, rule 157.
Meanwhile, in many cases of Zakat exemption, the audit report revealed that the relevant record is not properly documented or even available by the Zakat-deducting agencies. Very often Zakat exemption requests are made on plain paper, with notarisation, and banks accept photocopies of affidavits – a violation of Stamp Act, 1899.
Another control mechanism in place is the reconciliation of accounts in which two sets of records (usually the balances of two accounts) are kept to make sure they are the same and ensure the accuracy of transactions.
The Central Zakat Administration (CZA), however, is not following the reconciliation process. Besides, the CZA is also not reconciling their funds distributed to various provinces and districts on a regular basis, the audit report stated. During a check, the Auditor General Pakistan observed discrepancies in the department’s and the banks’ figures.
There are certain cases in which no record was produced by the health welfare committees to the audit.
‘No Ushr’
According to District Zakat Councils records, no Ushr (tax on crops) has been calculated or collected from the agricultural landowners since 1990.
The provincial revenue departments are responsible to assess and collect Ushr from every landowner or leaseholder under the Act.
No comments either
Officials in the ministry of religious affairs, zakat and ushr were not willing to comment on the audit report. However, one official concerned said that the ministry has already submitted a report in response to the audit observations to the National Assembly’s Public Account Committee (PAC). “Zakat and Ushr has become a provincial subject after the 18th Amendment,” he said. However, the audit report in question is of the fiscal year 2009 and 2010 which was before the 18th Amendment was promulgated.
Published in The Express Tribune, September 14th, 2013.