ACKNOWLEDGEMENT

First of all I thanks to Almighty Allah for enabling me to complete this report.

Sir. Muhammad Nisar is my internship report supervisor, Without his guidance

and support, this report would not have been what it is.

I am thankful to My Friend Mr. Mushtaq Ahmad (AG Office) in helping me out

about all information concerned.

Furthermore, I would also like to thanks Sir. Idrees Ali Shah and Sir. Sabeeh

ullah for their guidance.

ASAD KHAN

1
CHAPTER-1
INTRODUCTION OF REPORT

This section of the report contains the introduction of the report, background of the
study, purpose of the study, scope, limitation, and methodology of the work as main
topic covered in this section.

This report is explanation of my two months internship carried out as a compulsory

component of my degree program at Agricultural University Peshawar.

This report contains information collected about the organization and the
responsibilities performed by Accountant General Khyber Pakhtunkhwa (AG Office)
during my internship. The objective of this report is to reflect upon the experiences
collected during my internship, and review Financial statement of Government of
Khyber Pakhtunkhwa.

1.1 Background of the study

AG Office Peshawar

Internship report is the most significant obligation for the completion of the degree of
BBA (Hons) Program at Agricultural University Peshawar.

I had done my internship in AG head office Peshawar and Specially my area of focus
was its Payroll department and General Provident Fund department (G.P Fund).

Accountant General is a provincial office of the Controller General of Accounts, which

has been performing delegated functions on behalf of Controller General of Accounts
ever since its inception. Created primarily for keeping and maintaining the accounts of
provincial government, this office has been performing functions in accordance with
provisions of the constitution of the Islamic Republic of Pakistan, 1973 and the
Presidential order, 2001.

The concept of keeping accounts and other related records in one form or other has
prevailed all through the ages. It is necessary to maintain records of incoming and
outgoing, being taken in any shape, time, circumstances and locations.

2
1.2 Purpose of the study
The main purpose of the study is to observe the practices and procedures being
followed in AG Office and deficiencies and problems faced by the management. And to
improve long report writing skills.

1.3 Scope of the study

During the internship my observation was focused on internal management matters of
AG Office. I started working as an internee in Payroll section, besides this I worked in
G.P Fund section too. So the main focus was on these two departments of AG Office.
As my area of specialization is finance, so my report revolves around analysis of
financial statement of Khyber Pakhtunkhwa.

1.4 Limitations
No matter how efficiently a study is conducted, it cannot be perfect in all aspects. This
study was conducted in accordance with the objectives of the study; the study may not
include broad explanation of facts and figures due to the nature of the study. Second:
limitation, which affects the study is the availability of required data was problem all
the documents and files are kept strictly under lock and key due to their confidential
nature. Third: the problem of short time period also makes the study restricted as one
cannot properly understand and thus analyze all the operations of an organization just
in eight weeks.

1.5 Methods of Study

1.5.1 Primary Data:
Data collected for the first time is called primary data. The methods used to collect such
data includes

Interviews with Organization's employees

Personal observations
1.5.2 Secondary Data

3
The data collected earlier by someone else which has gone through mathematical and
statistical techniques after collection is called secondary Data. Methods used to collect
secondary Data includes

AG manuals

Internet

CHAPTER-2
AN OVERVIEW OF ORGANIZATION

2.1 Overview of AGPR Office

The office of Accountant General KPK starts working as a small pay and account office
on 1st April, 1929. It was responsible for audit and account of both federal and
provincial transactions in NWFP at that time. It continued to function as such till 1973,
when its status was raised to that of Accountant General because of the tremendous
increase in the scope of its activities and load of work.

Apart from KPK and its adjacent tribal areas, the audit jurisdiction of this office also
covered northern areas (Gilgit & Baltistan). The audit of northern areas was however
transferred in 1974 to the Accountant General Pakistan Revenue, Islamabad. Similarly,
in the case of Frontier irregular corps (Scouts & Militia) the audit jurisdiction of this
office extended to Balochistan but from 1974 they have their own audit and account
office.

The "district account office" scheme was introduced in KPK in 1970. Initially it was
experimented in one district I.e, Mardan. By now there are 24 Districts and 7 Agencies
Accounts offices.

Till July 1979, this office was responsible for the audit & accounts of both Federal and
Provincial transactions in the province (including agencies).

On the information of sub-office of Accountant General of Pakistan Revenue in 1979

the audit and accounts of the Federal transactions were transferred to this office.

2.2 Separation of Audit & Accounts

4
Office of Accountant General KPK , till 30th June 1989 was responsible for the local
audit of Accounts of the Provincial government and its autonomous bodies and
corporations and performance of audit of projects etc.

The function of local audit of Accounts was however withdrawn from it and assigned to
newly established office of the Director General Audit KPK in July 1989. All the
accounting transactions both for the Federal as well as Provincial government were
under the administration and functional control of the Auditor General of Pakistan. The
separation of Audit & Accounts department were promulgate vide Auditor General
Ordinance 2001, and Controller General Ordinance 2001, since then the Accounts
department were independently kept under the newly created office of Controller
General of Accounts.

The Accountant General Khyber Pakhtunkhwa Peshawar being a provincial office of

the Controller General of Accounts is, therefore, primarily entrusted with delegated
power that devolved on Controller General of Accounts vide Article 169 of the
constitution. As such, this office is required to perform the following function on behalf
of the Controller General of Accounts.

2.3 Functions of AG Office

1. Maintenance and keeping of main as well as subsidiary accounts of the
government of KPK and any authority established by the government of KPK
as the case may be.

2. Preparation of Annual reports as Appropriation and Finance reports with

concurrence of the Auditor General of Pakistan for onward submission to the
Governor of KPK province or to the President of Pakistan in case of Federation.

3. Pre-Audit or check of all bills/claims of the Provincial government pertaining to

a given financial year through Payroll funds and Pension sections.

4. Besides all the three main functions, the Accountant General also perform the
following functions.

a. General supervision of various sections of main office at Peshawar, monitoring

and coordination of 24 Districts and 7 Agencies Accounts offices in KPK.
b. Finalization of Pension cases.
c. Maintenance of G.P Fund Accounts.

5
d. Pre-Audit of personal claims of all gazzetted/non-gazzetted employees.
e. Maintenance of deposit register, personal ledger account and refund of lapsed
deposit of non-devolved departments.
f. Payment of various loans and advances, civil advances and permanent
advances and issue of cheques after processing claims on this account at State
Bank of Pakistan, at Peshawar.
g. Compilation of monthly accounts.
h. Consolidation of Accounts (Budget head wise).
i. Preparation of monthly civil accounts after consolidation and its submission to
Finance department.
j. Preparation of finance accounts of Provincial government of KPK of each
financial year and their submission to Finance department as well as Controller
General of Accounts, Islamabad.
k. Preparation of Appropriation accounts of Provincial government of KPK of
each financial year and their submission to Finance department as well as
Controller General of Accounts, Islamabad.
l. Discussion of finance accounts and appropriation accounts in the meeting of
Public accounts committee government of KPK.
m. Earmarking of funds for House building Advances, Motor Car advances,
scooter advances and cycle advances.
n. Issuance of NOC and to authorize opening of assignment accounts at National
Bank of Pakistan and PLA's at District (Agencies) Accounts offices in KPK.
Monitoring of District government accounts and devolution plan and
submission of various M.I.S reports to Controller of Accounts and Auditor
General of Pakistan.
o. Maintenance of Financial rules and regulations and their circulation among
Districts/Agencies accounts offices in KPK and various of main office at
Peshawar.
p. Maintenance of Computer cell at Peshawar as well as in some
District/Agencies accounts offices established for computerization of Payroll,
G.P Fund & Accounts.
q. Introduction of new Accounting Model (NAM) as well as computerization
under project for improvement of Financial Reporting and Auditing (PIFRA).

6
2.4 Sub-Division of work

Departments of Accountant General Office KPK:

1. Administration branch.
2. Record section.
3. W.A.D section.
4. Book section.
5. Pension section.
6. General Provident Fund section.
7. Payroll section.
8. Gazzetted audit department (G.A.D).
9. Treasury audit department (T.A.D).
10. Central Fund.
11. Court cases cell/Legal cell.
12. Computer department.
13. Personal and establishment department.
14. Foreign aid.
15. Accounts department.
16. Computer account department.
17. Report appropriation.
18. Budget section.
19. Cheque section.

7
 2.5 Hierarchy of AG Office

Ministry of Finance

Finance Revenue Economic Affair Statistic Planning &

Division Division Division Division Development
Division Division
Auditor General
of Pakistan

AGPR AG/AGPR
Islamabad Azad Jammu &
Kashmir

AG/AGPR AG/AGPR
Punjab
Punjab Sindh

AG/AGPR AG/AGPR
Balochistan KPK

7 Agencies 24 District
Accounts Accounts
Offices Offices

Controller General of
Accounts

8
2.6 Staff Structure of AG Office

9
 CHAPTER-3
PAYROLL SECTION

3.1 Payroll
Payroll refers to the process by which employees receive their salary.
Payroll function involves balancing and reconciling payroll data and depositing and
reporting taxes.

The payroll section takes care of wage deductions, record keeping and verifying
reliability of pay bills, salaries of government employees. Payroll activities performed
by following persons;

 Junior Auditor

 Senior Auditor

 Assistant Accounts Officer

 Accounts Officer

 Deputy Account General

Payroll section of AG Office manage two type of Accounts that is;

3.1.1 Human Resource Accounts

The payroll section of AG is responsible for Pre-Audit of personal claims of all

Gazzetted/Non-gazzetted government servants of non-devolved departments and
serving in Peshawar district on account of pay and allowances and contingent charges.

3.1.2 Financial information accounts

Payroll section of AG Office is also responsible for Pre-Audit of claims of government

in the form of bills with all supporting documents to the AG/DAO's for payment.

The pre-payment audit function helps the Accounts offices to independently check the
appropriations and classification required for proper and accurate accounting and
control on unauthorized/Irregular disbursements.

10
3.2 Payroll different sections
Payroll-1: It deals with the claims of following departments at District level.

 Excise and Taxation department.

 City district department
 Deputy Commissioner, Peshawar.
 C&W highway division, Peshawar.
 District sports office, Peshawar.
 WS&S department.
 Town administration, Peshawar.
 Civil defense office, Peshawar.
 Revenue and state department, Peshawar.
 Human resource development, Peshawar.
 Government high school, Peshawar.

Payroll-2: It deals with the claims of following departments at District level.

 District officer (Female) school & literacy department.

 All government Girls high & higher secondary schools, Peshawar.

Payroll-3: It deals with the claims of following departments at District level.

 District officer (Male) schools & literacy department.

 All government Boys high & higher secondary schools, Peshawar.
 Institute for blind, Peshawar.
 City district government works & services department, Peshawar.
 Social welfare department, Peshawar.

Payroll-4: It deals with the claims of following departments at District level.

 Executive district officer health department.

 Government high school for deaf, Peshawar.
 Institute for blind (Girls), Peshawar.
 Government I.D children hospital, Peshawar.
 Social welfare department, Peshawar.
 District officer Labor department, Peshawar.
 District officer Agriculture extensions, city district government, Peshawar.
 District soil conservationists, Peshawar.
 District officer Fisheries, Peshawar.
 Municipal Corporation, Peshawar.
 Rehabilitation center for Drug addicts, Peshawar.
 Welfare home for children beggars, Peshawar.
 Interrogated social development center, Peshawar.
 Vocational training center for disabled persons, Peshawar.
 National special Education center, Peshawar.

Payroll-5: It deals with the claims of following departments at Provincial level.

11
  Governor house, Peshawar.
 Chief Minister's secretariat, Peshawar.
 Establishment & Administration department, Peshawar.
 KPK public service commission, Peshawar.
 Home & tribal affairs department, Peshawar.
 Anti-corruption, Peshawar.
 Local government elections & rural development department, Peshawar.
 Pakistan academy for rural development, Peshawar.
 Peshawar high court, Peshawar.
 Senior civil judge, Peshawar.
 Inter provincial coordination department, Peshawar.
 Environment department, Peshawar.
 Provincial highways and bridges, Peshawar.
 Commissioner Peshawar division, Peshawar.
 Provincial building maintenance cell, work & services department, Peshawar.
 Research and development, Peshawar.

Payroll-6: It deals with the claims of following departments at Provincial level.

 Police department, Peshawar.

 Advocate General, Peshawar.
 Public prosecutions, Peshawar.
 Agriculture department, Peshawar.
 Public safety commission, Peshawar.
 Live stock and rural development department, Peshawar.
 Law department, Peshawar.
 Provincial transport authority, Peshawar.
 Government technical and vocational training center for women, Peshawar.

Payroll-7: It deals with the claims of following departments at Provincial level.

 Provincial assembly Khyber Pakhtunkhwa, Peshawar.
 Revenue & estate department, Peshawar.
 Secretary excise & taxation department, Peshawar.
 Secretary works and services department, Peshawar.
 Irrigation department, Peshawar.
 Directorate of information technology, Peshawar.
 Small Dams organization, Peshawar.
 Provincial disaster management authority, Peshawar.
 Communication and work department, Peshawar.

Payroll-8: It deals with the claims of following departments at Provincial level.

 Secretary Education department, Peshawar.

 Directorate of schools & colleges, Peshawar.
 Local government department, Peshawar.
 Information department, Peshawar.
 Museum, Peshawar.

12
  Mines and minerals department, Peshawar.
 Peshawar high court, Peshawar.
 Directorate of technical education, Peshawar.
 Archives and libraries department, Peshawar.
 Stationary and printing department, Peshawar.
 Industries ecommerce and Labor department, Peshawar.
 Environment protection agency, Peshawar.
 Directorate of fisheries, Peshawar.
 Transport department, Peshawar.
 Higher education department, Peshawar.

Payroll-9: It deals with the claims of following departments at Provincial level.

 Secretary health department, Peshawar.

 Directorate health, Peshawar.
 Government city hospitals, Peshawar.
 Police hospitals, Peshawar.
 Lady reading hospital, Peshawar.
 Provincial health services academy, Peshawar.
 Population welfare department, Peshawar.
 Public health schools, Peshawar.
 Nursing schools, Peshawar.

Payroll-10: It deals with the claims of following departments at Provincial level.

 Secretary excise and Taxation department, Peshawar.

 Directorate sports and culture, Peshawar.
 Treasury office, Peshawar.
 Directorate of labor, Peshawar.
 Food department, Peshawar.
 Provincial health services academy, Peshawar.
 Population welfare department, Peshawar.

3.2 Duties of Payroll section

The duties performed by payroll department is mainly consists of two information
3.2.1 Human resource information
Verification/Approval of source-1 when for the first time documents of newly enrolled
government employee is checked. Source-1 includes following documents;

a. Job advertisement.
b. Selection committee form.
c. Salary package/offer made to employee.
d. Appointment order.

13
 e. Arrival report of designated department.
f. Medical certificate (if required for specific job).
g. CNIC of employee.
h. Certificate of release of pay.

After verification of all these documents (source-1), Personal number is issued to the
employee. This personal number is helpful to check the record/details of employee.

3.2.2 Source/From 2-3

Source 2-3 is used if any Arrears (Overpayment or Prepayment) occurs.

3.3 Financial Information

Payroll Section of AG Office also Perform activities of finance of different government

department. They Pre-Audit expenses from departments and check allocated budget for
them. Any bill passed through this section required following process;

a. Token number is attached and checked.

b. Pay-number is checked.
c. DOE number of concerned department.
d. Concerned auditor Pre-Audit the bill.
e. Payment order is checked by Senior Auditor then Assistant Accounts Officer
then Accounts Officer.
f. Then bill comes to junior Auditor and checked.
g. Bill is printed out.
h. Bill is signed by (Jr. Auditor, AAO, AO)
i. Bill is then SEALED and sent to Cheque section.

14
 CHAPTER-4
GENERAL PROVIDENT FUND SECTION
Monthly deduction is made of a certain portion of the Employees salaries as a
compulsory contribution in order to encourage saving habits. The government on these
saving accounts also pays interest with a higher rate as compared to banks and other
financial institutions, that is 11.70%

It is the responsibility of Controller General of Accounts to maintain the Employees

record. On behalf of Accounts General Pakistan Revenue the Additional Accountant
General (PR) maintains the G.P Fund Accounts of the employees working under the
audit jurisdiction of Province.

The Accountant General (PR) keeps the following accounts of the subscriber.

 Allotment of G.P Fund Accounts number to the Subscriber.

 Maintenance of G.P Fund Accounts of Federal government's
servants/employees.
 Monthly posting of deductions in the Ledger/Broad sheets, its compilation as
well as closing of monthly/yearly basis.
 Issuance of Balance sheets, Annual Account statement of G.P Fund.
 Dealing with the refundable/non-refundable advances from the G.P Fund as
well as that of final payment cases of government employees.
 Transfer of G.P Fund Accounts/balances to the DAOs in whose jurisdiction the
subscriber transferred.

4.1 Different Sections of G.P Fund

Fund-1: Maintenance of G.P Fund Accounts of subscribers of following departments.

 Education department (District)

 Health department (District)
 Agriculture department (District)

Fund-2: Maintenance of G.P Fund Accounts of following departments.

 Environment department.
 Agriculture department.
 Health department.

Fund-3: Maintenance of G.P Fund Accounts of following departments.

 Police department.

15
  Irrigation department.
 Excise department.
 Works & services department.

Fund-4: Maintenance of G.P Fund Accounts of following departments.

 Establishment and General administration department.

 Judiciary
 Education department.
 Labor commerce and industries.

4.2 Opening of G.P Fund Account

The subscriber opens an account with AG Office concerned just like an account with
commercial Bank. In AG Office it is known as opening a G.P Fund Account for the
subscriber. The Auditor concerned opens a page for the subscriber and then record and
maintain the monthly deductions on the page. It's all manual.

The G.P Fund wing of this office also deals with the refundable/non-refundable
advances and as well as the final payment in case of retiring.

All such matters are operated in G.P Fund wing. Monthly contributions are recorded in
the respective ledger along with calculations of Annual interest. In this way balances of
the subscribers are kept updated. The updating of G.P Fund balances Provide an
opportunity to the Subscriber that they can easily draw money from their GP Fund
Accounts according to their needs. However, the government has laid down some rules
on GP Fund. It is the property of the subscriber but they cannot withdraw all the money
from their accounts. They can only be allowed to withdraw 80% of the total money in
their account. The G.P Fund wing of the office is providing the service to the Provincial
government employees/subscriber like a bank. But operations in this wing are carried
out manually which are unable to cope with the needs of increasing number of
subscribers. The auditors all the time remain busy to locate the old worn out record of
the subscribers and sometimes fail to find it.

In routine, the government employees are transferred from one district/agency to

another in pure public interest. On transfer, from one place to another , the subscriber
have to shift all the money from the account (G.P Fund Account) to the place where
he/she is moving. Transfer of Balance is done through credit memos and SEALED
Authorities. Credit memos are just a letter, which shows the balances of the subscriber.

16
Transfer of balances to other DAOs/Government through credit memos or SEALED
Authorities sometimes caused nuisance to the Subscriber as most of the times the
documents go missing in the transit and the subscriber are pushed from pillar to post
and face greater hardships. To overcome this problem a complete computerized record
of database of G.P Fund is required to be maintained and all the DAOs/ Government
are to be interconnected with one another through computer so that a quick transfer of
balances and other information can be ensured. By way of these alterations the G.P
Fund wing can add more to the value of organization.

4.3 Withdrawal of Temporary Advances from the G.P Fund

A temporary advance under Rule 15 of the G.P Fund (KPK), Rules May be made to the
Subscriber from the amount standing at his credit in his G.P Fund Account subject to
the following conditions:

i. Advances will be granted only if the sanctioning authority is satisfied that the
pecuniary circumstances of the applicant justify it and that it will be expended
on the following objects or otherwise.
ii. To pay expenses incurred in connection with the prolonged illness of the
applicant himself or any person actually dependent on him.
iii. To pay for the overseas passage for reasons of health or education of the
applicant or any person actually dependent on him.
iv. To pay obligatory expenses on a scale appropriate to the applicant status in
connection with marriages, funeral or ceremonies, which by his religion it is
incumbent on him to perform.
v. To meet other expenditures which are considered by the sanctioning authority to
be essential and unavoidable.
vi. The sanctioning authority shall recorded writing the reasons for the advance.
vii. The amount should not be exceeded three months pay or half of the amount at
the credit of the subscriber in the fund, whichever is less.
viii. A second advance cannot be granted unless the amount already advance does
not exceed two-third of the amount admissible under, above or until at least 12
months after the final repayment of all previous advances together with interest
thereon.

4.4 Advances for Construction/Purchase of House

17
An advance for Construction or purchase of a house for occupation by the subscriber
himself or his family or for making addition to or alteration in an existing house, owned
by the subscriber, whether or not constructed or purchased with a house building
advance, may be granted to him from the amount standing to his credit.

Account at the discretion of the appropriate authority subject to the following

conditions.

 The advance shall in no case exceed thirty-six months pay of the subscriber or
80% of the amount at the credit of the subscriber in the account or whichever is
less.
 Advance granted for Construction of a house shall be paid in two equal
installments.
 If the first installment is not utilized for the purpose of constitution of the house
within eight months of its withdrawal, it shall be refunded unless the
sanctioning authority extend this period.
 For the purpose of withdrawal of the second installment the subscriber shall be
required to give under his hand a certificate to the effect that he has actually
utilized the first installment on the construction of the house.

4.5 Authority for final Payment

For final payment the refund order is passed by the AGPR/branch officer of G.P Fund
section, prepared in duplicate and a note stating the amount to be withdrawn the officer
authorized to draw and the inward number of the letter of application for refund is kept
in the remark column of the Ledger folio of the subscriber concerned under the initial
of the Gazzetted officer. The authority for payment should hold for three months. Any
delay in payment after the issuance of the necessary authority should be investigated.

4.6 Final Payment of G.P Fund

In case of retirement the G.P Fund deposits will be paid to the officer on his personal
receipt and proper identification.

A subscriber to the G.P Fund Account may on application made to the competent
authority be permitted to withdraw finally the amount standing to his credit in the funds
six months before is retirement. Thus when a subscriber was preceded on leave

18
preparatory to retirement and while or such leave has been permitted to retire or been
declared by a competent medical authority to be unfit for further service or he desired
payment within six months before his retirement, the amount standing to his credit in
the account upon application made by him in that behalf of the accounts officer
becomes payment to the Subscriber.

4.7 Payment in another Province

When final payment of G.P Fund deposits of subscriber is desired from treasury in
another Province/circle of Account the following particulars should be furnished to the
account office with a view to facilitate the identification of the payee:

 Personal mark of identifications

 Thumb and finer impression of the left hand.
 Specimen signatures.

4.8 Mode of payment in case of Death of the subscriber

On the death of the subscriber before the amount standing to his credit has become
payable or where the amount has become payable before payment has been made

1) When the subscriber leaves a family.

a. If a valid nomination made by the subscriber in accordance with the provision
of Rules submits, the amount standing to his credit in the fund, the whole
amount or the part thereof to which the nomination related would be pay to his
nominee or nominees in the proportion specified in the nomination.
b. If no such nomination in favor of member or members of the family of the
subscriber subsist or if such nomination relates only to a part of the amount
standing to his credit in the account, the whole amount or the part thereof, to
which the nomination does not relates, as the case may be, shall not
withstanding any nomination purporting to be in favor of any person other than
the members of the family, become payment to the members of his family in
equal shares.

2) Provided that no share shall be payable to:

a. Sons who have attained legal majority.

b. Sons a deceased son who have attained legal majority.

c. Married daughters whose husbands are alive.

19
 d. Married daughters of a deceased son whose husband is alive.

Provided further that the widow or widows and the child or the children of a deceased
son shall receive between them in equal parts only the share which that son would have
received if he had survived the subscriber and had been exempted from the provision of
above.

When the subscriber leaves no family, if a nomination made by him in accordance with
the rules in force in favor of any person or persons subsits, the amount standing to his
credit in the account or the part thereof to which the nomination relates shall become
payable to his nominee or nominees in the proportion specified in the nomination.

CHAPTER-5

20
REVIEW OF THE FINANCIAL STATEMENTS OF KHYBER PAKHTUN

GOVERNMENT OF KHYBER PAKHTUNKHWA

Statement of Cash Flows
For the Year Ended 30 June 2017

2017 2016 Variations

Rupees in Rupees in Percentage

Million Million Change

CASH FLOW FROM OPERATING ACTIVITIES

Taxation – Transfers from Federal 292, 940 285,080 2.75%

Governments

Taxation-Provincial Government own 15, 516 12,840 20.84

collection

Non Tax Revenue and Other Receipts 56,400 63,610 -11.33

Grants and Aid Receipts 25,867 26,037 -0.653

Trading Activities Receipts 12,260 13,508 -9.24

Operating payments (192,562) (171,242) 12.45

Servicing Debt Payments (6,419) (5,778) 11.09

Transfers Payments (53,148) (59,595) -10.81

District Governments- Receipts 455 984 -58.76

District Governments- Receipts Expenditure (119,205) (78,116) 57.13

Cash from Operating Activities 32,104 87,328 -63.23

CASH FLOW FROM INVESTING

ACTIVITIES

Investment Recovery 15,000 15,021 -0.14

21
 2017 2016 Variations

Rupees in Rupees in Percentage

Million Million Change

Recovery of Loans and Advance 267 85 214.11

Expenditure on Physical Assets (5,391) (2,619) 94.38

Expenditure on Civil Works (64,404) (52,959) 21.61

Payments of Loans and Advances (73) (73) 0.00

Investments (21,007) (10,400) 101.99

Payment of District Government Capital (4,873) (845) 476.66

Expenditure

Cash Used in Investing Activities 80,481 51,790 55.4%

CASH FLOW FROM FINANCING

ACTIVITIES

Receipt of Foreign Debt 2,489 2,638 -5.64

Receipt of Domestic Debt 4,282 2,687 59.35

Principal Repayment of Debt (9,516) (16,955) -43.87

Net Receipt of Public Account 12,081 14,759 -18.14

Cash from Financing Activities 9,336 3,129 198.37

DECREASE IN CASH AND CASH EQUIVALENTS (39,041) 38,667 0.967

CASH AND CASH EQUIVALENTS AT 73,497 34,830 111

THE BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT 34,456 73,497 -53.11
THE END OF THE YEAR

5.1 Cash Flows

The net cash flow for the year have Decreased by Rs. 77,708 Millions. Decreasing balance of
cash and cash equivalents at the end of the year from Positive balance of Rs. 73,497 Million
last year to a balance of Rs. 34,456 Million. Cash used in Operating Activities decreased by

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-63.23%. The Outflow from Investing Activities has increased by 55.4%. The Cash Flow from
Financing Activities have increased by 198.37%.

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5.2 Receipts and Payments

5.2.1 Taxation

During the year Actual Tax receipts were Rs. 308,456 Million as compared to Rs. 297,920
Million for the previous financial year, which represents 3.53% increase. Out of total tax
collections for the financial year 2016-17.

The provincial government receive Rs. 292,940 Million from Federal government. These
transfers are made from all heads of taxes in accordance with the NFC Award.

Direct Tax

Direct Taxes were Rs. 119,934 Million contributes 40.25% out of total tax collections. Direct
taxes are major source of revenue after Sales tax. Direct Tax of KPK consists of

i. Income tax- Agriculture

ii. Property tax
iii. Land Revenue
iv. Tax on Trade, Professions
v. Capital value tax on immovable property

The net collection of direct tax has been increased by Rs. 9,511 Million as compared to
previous year (8.61% change)

Indirect Tax

Indirect Tax were 188,522 Million contributes 63.28% of total tax. Indirect Taxes are the largest
contributors to Total tax revenue. Indirect Taxes of KPK comprises of

i. Receipt under Motor vehicle Act

ii. Sales tax
iii. Stamp duties
iv. Provincial Excise
v. Other indirect taxes

The net collection of indirect taxes has been increased by Rs. 1,025 Million as compared to
previous year (0.546% change)

5.2.2 Borrowings

Total borrowing were Rs.6,771 millions, increased by 27.15% compared to 2016.

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Domestic Debt

Domestic debt contributes 63.24% of total borrowing, increased by Rs. 1,595 Million
compared to previous year. During the year domestic debt receipts amounted Rs. 4,282
Million which is raised during the year.

Foreign Debt

Foreign Debt contributes 36.76% of total borrowing, decreased by Rs. 149 million. During the
year foreign debt receipts amounted Rs. 2,489 Million raised during the year

5.2.3 Recovery of Loans and Advances

Receipts by recovery of loan and advances amounted Rs. 267 million, increased by Rs. 182
millions as compared to 2016 Rs. 85 million. Change of 214.11%

5.2.4 Payments

Total payment made during the year amounted Rs. 476,598 Million as compared to Rs.
398,582 Million for previous year. Amount increased by Rs. 78,016 Million (19.75%)

Salaries and Employee Benefits

Payments made during 2017 were Rs. 109,135 Million as compared to previous year Rs.
94,452 Million. Total amount difference is Rs. 14,683 Million (15.54% change)

Operating Expenses

Total amount payed during 2017 were Rs. 83,427 Million as compared to previous year Rs.
76,790 Million. Total amount difference is Rs. 6,637 Million (8.64% change)

Investments

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Total amount during the year were Rs. 21,007 Million as compared to previous year Rs. 10,400
Million. Total amount difference is Rs. 10,607 Million (101.99% change)

5.3 The Budget 2016-17

The Budget is the principal document by which the government sets out its financial plan for
each financial year namely how much the plan will cost (I.e Expenditures), and how much and
in what way money will be raised to finance the expenditure (I.e Revenue).

Capital and Revenue are the two major categories of receipts disclosed in the financial
statements. An amount of Rs. 457,383 Million was budgeted as revenue receipts against which
actual receipts collected were Rs. 402,983 Million. Capital receipts budgeted were Rs. 32,940
Million and actual receipts were Rs. 22,038 Million.

Total revenue payment of an amount of Rs. 382,575 Million was budgeted against which actual
payment made were Rs. 330,387 Million. Capital payments budgeted were Rs. 273,121 Million
and actual payment were Rs. 152,078 Million.

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 CHAPTER-5
SWOT ANALYSIS

"S.W.O.T is defined as Strength, Weaknesses, Opportunities and Threats". It shows the

overall department's performance, efficiency, capabilities, shortcomings and challenges
faced by the department.

The certain features of S.W.O.T with regard to AGPR, Peshawar are detailed below:

5.1 Strengths
1. The power/functions of the Auditor General are derived from the constitution
of Islamic Republic of Pakistan 1973, under Articles 191 to 198 in which the
Auditor General is entrusted, subject to certain specified reservations, the duty
of keeping the accounts of federation as well as of provinces. Auditor General
takes oath of his office for the period of five years. He has the powers privileges
equal to the Minister of State.
2. There is nationwide network of Audit and Accounts offices under the control of
the Auditor General of Pakistan who deals in audit and accounts activity.
3. The accounts group officers i.e Pakistan audit and accounts services are
inducted through FPSC, who provides new blood to the audit and accounts
superior services.
4. There are five Audit and Accounts institutes, which trains the staff and officers
to uplift their audit and accounting skills.
5. There are fundamental and supplementary rules, audit manuals, Government
accounting Volume-1 to 4, General financial rules, public works codes, service
rules, pension rules, G.P Fund rules, manual of standing orders of Auditor
General of Pakistan, all these helps and assist in the day to day working of the
field offices.

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 6. The annual finance accounts of the federation are presented to the President of
Pakistan and to the Governors of the province in case of Provincial finance
accounts.
7. The public accounts committee is chaired by the members of National
Assembly who are veteran politicians and have the skills, knowledge and
experience of Audit and Accounts business. The audit report is prepared by the
office of Auditor General of Pakistan obtained from the field offices which is
based on the audit paras comprising of serious irregularities committed by the
government departments. These audit paras are discussed before principal
accounting officer i.e, Secretary of the concerned ministry, Auditor General of
Pakistan and government Functionaries i.e Finance division representatives.

5.2 Weaknesses

1. Public Accounts committee do not take strict action against the officials who are
involved in serious irregularities, so the officials cannot be apprehended which
creates an atmosphere of lawlessness in government departments.
2. The work load has enormously increased due to which the proper control is
lacking, causes delays and unnecessary resultant loss of public trust and
credibility.
3. The staff of the department is not fully equipped to face the modern computer
technology, which are now being trained to some extent to serve the department
better in the future.
4. The promotion policy is very slow for the staff, which creates disharmony and
distress in the departments.
5. There is a big gap between the salary package of government and private
sectors, which is also cause of discontented and insecurity for the
officials/officers.

5.3 Opportunities
1. To grow as a disciplined audit and accounts institution for the government to
control financial irregularities.
2. The project for improvement in financial reporting and Auditing can bring
accuracy in the preparation of government reports and returns. It can also
provide accurate reports to the donor agencies i.e IMF, World Bank. These can
also create an atmosphere of trust and confidence for the attraction of other
countries.

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 3. The audit department can also control excess use of funds, morose of sanctions,
improper use of delegation of power, unauthorized expenditures, irregularities
by some executive and politicians.
4. To adopt new techniques to facilitate the government servants who attend the
audit offices for service matters like:-
i. Easy disbursement of salaries on 31st of each month through computer.
ii. Instant drawl of G.P Fund advances through computer.
iii. Quick transfer of accumulated balance to the government servants service
locations in the province and country.
iv. To open customer service centers to facilitate the clients for quick
information about their service record.
v. The transfer of pay and allowances, G.P Fund balance, pension cases
finalization should be done through computer networking in the whole
province and in the country.

5.4 Threats
1. The rules and regulations adopted in the department are mostly of British time,
which are century old and cannot serve the purpose of modern times. These
need review, modification and standardization.
2. The modern technology i.e computerization, internet, e-mail are required to be
adopted to fulfill the modern day requirements. Extra efforts and resources are
required to meet the modern day requirements/needs.
3. The salary structure is low as compared to the private sector which creates
financial distress for the officials/officers, who cannot perform their duty
satisfactory.
4. Slow promotion policy is also of cause of disturbance for the officials, who look
for bright future and leaves the services to the private sector.
5. The non-availability of power with the department to apprehend government
officials involved in over drawls misuse of authority, excess drawls of funds,
which can be save in the exchequer.
6. The government plans to exercise its powers for downsizing, rightsizing to
curtail the existing strength, which is already overloaded due to heavy work.

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 CHAPTER-6
PROBLEMS AND RECOMMENDATIONS

6.1 Problems
From a general analysis of structural and financial aspects of the office of
Accountant General, it is now clear that the magnitude of services to be performed by
this office incompatible with its practical management. The system on which the
organization is based has depleted with the passage of time. It therefore demands
immediate reforms. Keeping in view the basic purpose or function of the AGPR, a
comprehensive reform plan has been suggested.

1. Lack of Information Technology

AG Office Peshawar has been working on an age-old system of keeping manual

records with a result that surplus men are being employed to perform the job of ever
growing requirements of the organization. The situation is further aggravated by the
fact that government has imposed ban on future recruitment. Nevertheless, such
measures can be compensated by the adoption of Information Technology. One of the
cause of lack of public trust is the slow functional process, delayed procedure, in-exact
irreconcilable accounting records that stem from the non-adoption of Information
Technology.

2. Problems in G.P Fund Section

AG Office Peshawar is using manual system for all the above functions. In this
regard there is no maintenance of G.P Fund record of the subscriber. The subscriber
When needed to withdraw some money from his G.P Fund for personal use, when he
visited to the office, he finds no record of his account. For which he has to take their
monthly deduction schedule from their parent department. This is also a source of
corruption for the employees of AG Office.

3. Insufficient Financial Resources

Any organization, for its day to day transaction, needs money; this office faces
the lack of financial resources. One cannot expect it to execute its job efficiently and
effectively. This office faces the shortage of budget, which has suffered its activities a

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lot. The officers of Finance Division several times contacted for the purpose, but no
proper response were given with regard to budget allocation.

Means of communication facilitate plays an important role in the effective performance

of any organization. Lack of transportation facilities and Telecommunication means has
adversely affected the activities of this office.

The working Conditions of the office plays a vital role in its overall performance.
Furthermore there is no separate conference hall for the office use, normally AG's
conference hall is taken for official purpose. The office building is situated far away
from the main road and often employees come to office late.

6.2 Recommendations

1. Government does not lead to the pay lead to the problems faced by the
employees of the Audit Department. With the passage of time the work load has
been increased enormously, the available staff cannot cope up with the heavy
load of work, which affects the work efficiency and performance of the
officials.
2. The pay structure of the officials is very low from that of private sector, due to
which the employees are not financially sound and cannot perform their duties
with satisfaction.
3. The rules procedures and codes available in the department for the official use
are of British times, and cannot serve the purpose of present day needs. The
complexity of rules and procedures make the working environment more
difficult for the employees as well as for the agencies, who applies for any legal
financial benefits.
4. The strict government instructions for financial discipline and effective control
of funds serve the purpose to some extent. But hinders the smooth working of
office business, and give extra power to the executive which delay the work.
5. The national projects are interrelated with political influences and Priorities is
given to the National projects for the versed interest by the politicians. The rule
of merit is ignored, which creates unhealthy environment for government
departments as well as for audit authorities
6. The working culture in government offices is not of standard due to political,
regional and social priorities.

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7. The manual system of accounts and payments is being computerized, both
systems are now running parallel to each other, which are creating disturbance
for the time being but will give fruit in future.
8. The load of work has been increased enormously, due to which the work
efficiency and output is not up to the standard.
9. The department of Auditor General deals in financial discipline which is
maintained by its field offices. The people interacting with it for personal work
do not see with positive look due to control by the Audit Authorities on their by
financial matters, as framed according to rules and regulations.

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 CONCLUSION

During my short period of internship in AG Office Peshawar, I got conclusion

that AG Office Peshawar plays an important role in the financial management of

Provincial Government. As all the employees working in the Federal

Government Organizations, their salary, pension and other salary related work is

performed here. In short I found this department very important but one thing

that is very bad is poor management and lack of responsibilities which could be

removed by keeping proper check on the performance of each Section, and

provide opportunities for Training and Development of Employees.

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