A suggestion to Punjab government from the office of the Auditor General of Pakistan (AGP) advises the provincial government to stop providing funds to various public sector companies through SDAs (Special Drawing Allowance). The advice comes, as the AGP is suspicious of irregularities in funding process and fears that some of the officials draw double salaries, which is a crime.

It comes as a surprise to know that allocating funds through SDA mandates no internal audit. In any organization, internal audit activity helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and government processes.

While, there is a difference of opinion on the procedure of release of funds to these public companies between the AGP and Finance Minister, the argument of AGP makes more sense that government’s prerogative on releasing funds is subject to principles of economy and efficiency.

It is clearly a sign of poor governance on the part of the provincial government. This is nothing but negligence as the Punjab government has failed to ensure that these companies carry out an internal audit. As the funds given through SDA are not audited, it is natural to fear that irregularities will be found if an audit is carried out.

The current audit being carried out by the AGP has revealed irregularities in federal departments as well. It cannot be the case that the provincial government does not understand the significance of audit process. Without any mechanism of internal audit, no detection or prevention of fraud is possible. No tests of internal controls or monitoring compliance with company policy and government regulations can be ensured.

Punjab government needs to direct all such companies to carry out internal audits. It is a legal obligation that all public companies need to fulfil. All such companies must submit their records and accounts not only to audit teams for verification but also to the AGP office.