Audit of PTI donations trashes transparency claims Umar Cheema Wednesday, October 22, 2014 From Print Edition – The News ISLAMABAD: An audit of PTI donations has laid bare the transparency claims of the party leadership as it found money stashed in un-authorised bank accounts under the watch of top fund managers who not only refused access to full information, the audit of expenses was not allowed either. A reading of the audit report may sink the donors into despair for the simple reason that no proper record of donation was maintained and money instead was stacked into the private accounts of four PTI employees who failed to explain their fat bank statements of Rs19 million, disproportionate with their 36-month combined salary income of Rs3.7 million during the audit period. This is a story of their accounts in one bank only. They admitted having accounts in other banks but didn’t share the requisite information. Neither the audit team was allowed approaching the State Bank of Pakistan for tracing their accounts in other banks nor was any detail volunteered despite the admission about employees’ accounts in other banks. The auditors also noted that there was no segregation of duties regarding cash receipts as account manager was handling cash and was responsible for recording it also. “Also, no authorisation, on vouchers relating to donation, was available in evident to review the work done by Accounts Manager,” reads the audit report. This first-ever forensic audit turned out to be sham. It was not volunteered by the top leadership. PTI’s former vice president Akbar S Babar, an anti-corruption crusader within the party, pressured the leadership into conducting the audit as he had some documentary evidence to establish that unauthorised bank accounts were being used to misuse donation money. However, despite his repeated demand, PTI didn’t allow the audit of expenses whereas the record demanded by auditors was not handed over eventually leaving them to investigate only on the basis of the documented irregularities pointed out by Babar. The limited scope of audit and non-provision of requisite information forced the auditors to declare that the entire procedure could not be termed ‘either an audit or a review made in accordance with international standards on auditing or international standards on review engagements.” Despite the questionable handling of donations and indictment served by the audit report, neither the key fund managers (secretary finance Sardar Azhar Tariq, additional secretary general Saifullah Niazi, vice president Amir Kiani, Col (R) Younas and Dr. Humayun Mohmand) nor account officers (whose bank accounts swelled with loads of unexplained money) have been changed. The above-said fund managers were the cheque-signing authority before the audit and continue even now. The News repeatedly tried to contact Sardar Azhar Tariq who neither attended the call nor responded to the text messages. Saifullah Niazi and Amir Kiani were also contacted. They sidestepped questions saying that Azhar was the right person to answer about audit report. Both assured this correspondent of bringing Azhar in contact but didn’t answer the calls/text messages when reminded of their commitment. The audit was conducted for the period from January 1, 2010 to December 31, 2012 and it was completed by the end of 2013. The auditors noted at the beginning of the report: “It is worth mentioning that during the performance of our field work, we were not allowed to take photocopies of bank statements along with other data including financial statements with us. These were shown to us but no record was allowed to be retained by us.” The report has also noted reservation of the complainant, Babar: “The complainants advised the auditor to refuse to become part of an audit exercise that is extremely limited in scale and scope and which undermines the credibility of the entire audit exercise.” As for the audit observations are concerned, the report noted suspicious transaction of Rs19 million in PTI employees bank accounts. “We initially identified an amount of unusual credits of Rs19 million, other than monies received on the Party’s behalf as donations, in the personal bank accounts of employees which could not be reconciled,” it said. Bank statements of the four employees working at PTI’s central secretariat were examined as Babar had blown the whistle. The auditors could verify record of their accounts only in one bank, as they were not allowed to approach other banks. “It is worth noting here that we circularized KASB Bank Limited only as we were not allowed to write letters to other banks in which employees had accounts. All the bank statements of employee accounts were provided by the employees on their own in the shape of photocopies,” the report said. Questions have been raised about the bank statements of employees. It was observed that the unusual credits in their bank statements was not commensurate with their declared and known sources of income. “Needless to add that total gross salaries of the 4 employees for the period of audit i.e.36 months amounts to Rs3.7 million. Therefore, the amount of unusual credits of Rs12.4 million appeared to be highly significant,” reads the report. The employees failed to satisfy the auditors about these funds in their accounts in one bank. “We are of the view that employees were not able to justify the amounts deposited in their personal bank accounts beyond their known and documented source of income other than monies received on the Party’s behalf” Also, neither the employees nor the party allowed the auditors to directly approach the State Bank of Pakistan for checking the accounts of employees in other banks despite the admission they have accounts in other banks as well. The auditors were first told that money in private bank accounts of the employees was of donations received from a country wherefrom donors couldn’t transfer directly but no reconciliation was provided to the auditors by funds managers. During the course of our engagement, reads the audit report, we also observed that reconciliation provided to us was not either signed by the sender, reviewer nor the secretary finance or any member of the then Central Finance Board (CFB). “It is to be noted that neither the then CFB nor finance team asked respective employees to submit a reconciliation of amounts received and deposited as per CFB approval. Also, no minutes of the CFB meetings were provided in which these transactions were discussed,” the report notes. All of the above reveal, the report goes on to say, the lack of review procedures to ensure accountability among employees who have been given the responsibility of handling donations. “Needless to add that the lack of system could be associated to employees but for the then CFB members, it seems it would be more appropriate to say that they had no accounting background,” said the report. The auditors also noted that there was no segregation of duties regarding cash receipts within the accounts department. “We observed that Accounts Manager was handling cash and was responsible for recording it also. In addition, we noted that the person who was introduced at the start of our assignment as Internal Auditor later during our assignment was appointed as Chief Financial Officer (CFO),” reads the audit report. Also, no authorisation, on vouchers relating to donation, was available in evident to review of work done by Accounts Manager, the report says. Both of the above were noticed in the case of transactions in general and especially in case of donations received through employees, it said. “As regards conflict of interest, it is felt that CFB should have dissociated the finance team from the assignment during the course of the audit.” The faulty arrangements with regard to inherent risk of cash lead us to the conclusion that the internal control system was not well designed. “Although the instructions were to receive the money by wire, and no such amount was received through wire, we were informed that majority of money was received through cash, but no evidence of person handing over the money, in shape of CNIC or signature was retained as directed by CFB,” according to the report. We feel that the Party was growing in volume as regards donations. Hence, no attention was paid to systems, it notes. At the end, the auditors note that the entire exercise of auditing should not be taken as audit. “Because the above procedures do not constitute either an audit or a review made in accordance with International Standards on Auditing or International Standards on Review Engagements, we do not express any assurance on donation receipt for the period covered in our assignment,” the report reads.
Posted on: Wed, 22 Oct 2014 05:35:43 +0000
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