WORKING PAPER OF ADVANCE PARAS FOR DEPARTMENTAL ACCOUNTS COMMITTEE

MEETING
GOVT. POSTGRADUATE COLLEGE OF SCIENCE, FAISALABAD FOR THE PERIOD
01.07.2014 TO 30.06.2016
Period of Total Audit Observation Decisio Reply of the DDC Comments
Audit & Amount n of (Principal) Govt.
Para No. Involve last Postgraduate
D.A.C College of Science,
Meetin Fsd
g any
1 2 4 5 6

Irregular payment to Directorate

colleges Rs. 349447
As per rule 2.10 (a) 1 of PFR Vol –I same
vigilance should be exercised in respect of
expenditure incurred from Govt. revenues
as a person of ordinary prudence would
exercise in respect of expenditure of his
own money. Moreover, Rule 2.10 (b) 4,
money actually paid is under no
circumstances kept out of account a day
longer than is absolutely necessary even if
it has been paid without proper sanction.
During audit of Govt. Post Graduate
College of Science, Faisalabad for the
period 2014-16, it was observed that an
amount to the stated extent (detail
attached) was taken as loan from library
security fund of the college and paid to
Directorate colleges Faisalabad irregularly
in violation of above stated rule as
Director of colleges Fsd is separate entity
having separate budget. Audit
recommends that irregular payment
recover immediately from the concerned
under report to audit. In response to
original audit observation raised in May
2017, the management noted the
observation for compliance, however
necessary action may be taken as desired
above.
Non deposited of income tax on account
of remuneration paid to teaching staff
out of 2nd shift Rs. 181644 and less
deduction of income tax Rs. 45480.
As per section 153 of Income Tax
Ordinance 2001, every person making a
payment in full or part including a
payment by way of advance to a resident
person for the rendering of or providing of
services ; shall, at the time of making the
payment, deduct tax from the gross
amount payable (including sales tax, if
any) at the rate specified in Division III of
Part III of the first schedule – 6% in 2014-
15 and 10% in 2015-16 in all services
other than companies Taxpayers.
During audit of Govt. Post graduate
college of science, Faisalabad for the
period 2014-16, it was observed that
college management had paid an amount
of Rs. 3027400 to teaching staff as
remuneration out of 2nd shift fund but
Income tax for the year 2014-15 and
2015-16 respectively amounting to Rs.
181644 was deducted but not deposited
into Govt. Treasury. Further, it was noted
that income tax amounting to Rs. 45480
was less deducted for the year 2015-16 the
detail are as under:
Sr. Fin Tot Ta Ta Ta Ta
No. anc al x x to x x
ial Am Rat be De less
Ye oun e to ded duc ded
ar t be uct ted uct
Pai ded ed ed
d uct
ed
1 201 189 6% 113 113
4- 040 424 424 0
15 0
2 201 113 10 113 682 454
5- 700 % 700 20 80
16 0
 302 227 181 454
740 124 644 80
0
Audit is of the view that weak internal
controls on Taxation resulted in non-
deduction of income tax on payment made
to service providers. Audit recommends
that the position may be clarified,
recovery affected from the concerned and
amount deposited into Govt. treasury
under report to audit. In response to
original audit observation raised in may
2017, the management noted the
observation for compliance, however
necessary action may be taken as desired
above.
Non Deduction of PST on services
rendered from security agency Rs.
129075/-
According to Sr. No.27 of second
schedule of Punjab sales Tax on Services
Act 2012, 16% sales tax on services
provided by security agency shall be
applicable.
During audit of Govt. Postgraduate
college of Science, Faisalabad for the
period 2014-16,it was observed that
payment of Rs. 214069 and Rs. 592650
was made on account of services rendered
for security agency i.e. National Police
Foundation security Services (PVT)
ltdduring financial year 2014-15 and
2015-16 respectively. But, PST @16% on
services rendered, which calculated to Rs.
129075, was less deducted on the eve of
payments released to services provider,
which is loss to the Govt.. The details are
as Under:
Sr.No. Financi Paymen 16%
al Year t made PST
to
security
1 2014-15 214069 34251
2 2015-16 592650 94824
Total 806719 129075

Audit is of the view that weak

supervisory and financial internal
controls led to less deduction of PST on
services. The Position may be clarified,
recovery effected from the parties
concerned and amount deposited into
Govt. treasury under report to audit. In
response to original audit observation
raised in May 2017, the management
note the observation for compliance,
however necessary action may be taken
as desired above.
Irregular /doubtful expenditure
incurred on pending liabilities of
previous years 2011-2012 without
obtaining sanction of competent
authority Rs. 578925/-
Para 17.18 of PFR VOL-I says that under
no circumstances may charges incurred be
allowed to stand over to be paid from the
grant of another of another year.
Furthermore, under Govt. Rules vide para-
17.17 of PFR VOL-I every DDO shall
maintain a register of liabilities in Form
PFR 27 in which he should enter all those
items of expenditure for:-
 Payment is to be made by or
through an other officer.
 Budget allotment or sanction of a
higher authority is to be obtained:
or
 Payment would be required partly
or wholly during the next financial
years
 Supporting stock register of
procurements were also not made
available to audit.
During audit of Govt. Post graduate
college of science, Fsd for the period
2014-16, it was observed that above
rules have not been followed by the
DDO concerned and an amount of
Rs.578925 had been drawn from Govt.
treasury in 2015-16 which was spent
to clear pending liabilities of previous
years 2011-12 on account of Medical
charges AO1274 (detail is enclosed),
without obtaining sanction of the
competent authority which is irregular
in the light of rules position stated
above. The absence of liability register
in form PFR-17.17 ( For each object
head) and non production of stock
 register has also rendered the whole
expenditure doubtful. Therefore, a
detailed scrutiny of all payments of
previous years needs to be carried out.
The irregularity may be justified and
matter got regularized from the
competent authority under intimation
to audit, besides needful to be done
with regard to special audit. In
response to original audit observation
raised in May 2017, the management
stated that detail reply will be
submitted later on after scrutiny of
record, however necessary action may
be taken as desired above.

Loss to Govt. due to non auction of

Canteen Rs. 235334/- approximately
As per rule 4.7 (1) of PFR Vol-I, it is
primarily the responsibility of the
departmental authorities to see that all
revenue, or other debts due to Govt.,
which have to be brought to account, are
correctly and promptly assessed, realized
and credited to Government account.
During audit of Govt. Postgraduate
college of science, Faisalabad for the
period 2014-16, it was observed that a
canteen was running its business in the
premises of College. The canteen contract
was awarded amounting to Rs. 353000 per
annum (3 installments @117,667) to Mr.
Arif Riaz S/O Mushtaq Hussain
(H.NO.P-96 K Gulistan Colony, Fsd)
W.e.f July 14 to June 2015 during 2014-
15. The contractor paid first installment @
117,667) on 09-12-2014 and after that the
contractor withdraw canteen contract. It
was noticed that the college management
did not re-tender/reauction the said
canteen for the remaining period which
causes loss to Govt. amounting to Rs.
235334(117667@2) Audit was of the
view that non auction of canteen resulted
loss of Rs. 235334 approx. The position
may please be clarified, matter probed
into and loss be made good under
intimation to audit. In response to original
audit observation raised in May 2017, the
management stated that detail reply will
be submitted later on after scrutiny of
record, however necessary action may be
taken as desired above.
Un-acknowledged distribution of
magazines and whereabouts of
remaining 1260 magazines Rs. 182700/-
As per Rule 15.5 of PFR VOL-I, when
materials are issued from stock, a written
acknowledgment should be obtained from
the person to whom they are ordered to be
delivered or dispatched, or from his duly
authorized agent. During audit of Govt.
Postgraduate college of Science, Fsd for
the period 2014-16, it was observed that
college magazine (Kawish 2015) were
printed for Rs461970. The details are as
Under:
Sr.N B.N Fir NO. Rate Am
o. O. m of ount
& Na Mag
date me azin
e
1 134 Uni 270 145 391
&15 que 0 500
.4.1 Publ
5 ishe
rs
Cho
wk
urdu
Baz
ar
Lhr

Following Lapses were noticed:

 Stock entry of the magazine were
not entered in the stock register.
 The 2700 nos. of magazines were
printed out of which 2000 received
by the distributed person out of
which 1440 were shown
distributed whereabouts of
remaining 1260 magazines among
the students were un
acknowledged as the as the
acknowleged of the recipents were
not available on reocord.
In the absence of the acknowledgements
of the recipients, the receipt of the
magazine by rightful person could not be
authenticated. Audit recommends that the
department should strengthen its internal
controls and investigate the matter to fix
the responsibility regarding lapse. In
response to original audit observation
raised in May 2017, the management
stated that detail reply will be submitted
later on after scrutiny of record, however
necessary action may be taken as desired.

Non-return of library books –Rs.52900

As per library rules mentioned in the
Prospectus of the college, books can be
retained for 14 days for study by the
students and required to get re-issued after
this period. In case of non-return of books
within due date, a fine of Re.1 per day
will be charged. In case of loss of a book,
price of the new book or four times of the
price of purchase will be charged.
During audit of Government Postgraduate
college of Science, Fsd for the period
2014-16, it was observed that books
detailed in the statement annexed had
been issued to the students but the same
were not returned to Library within due
date. Neither books or cost thereof nor
fine were recovered which causes loss to
Govt. due to non-receipt back books.
Audit recommends that all overdue books
may be collected and fine be recovered
from the defaulters under report to audit.
In response to original audit observation
raised in May 2017, the management
noted the observation for compliance,
however necessary action may be taken as
desired above.
Non deposit of Income tax on account
of remuneration Rs. 50554/-
As per section 153 of Income Tax
ordinance 2001, every person making a
payment in full or part including a
payment by way of advance to a resident
person for the rendering of or providing of
services; shall, at the time of making the
payment, deduct tax from the gross
amount payable (including sales tax, if
any) at the rate specified in Division III of
Part III of the First Schedule – 6% in
2014-15 and 10% in 2015-16 in all
services other than companies Taxpayers.
During audit of Govt. Post graduate
college of science, fsd for the period
2014-16 it was observed that college
management had paid an amount of
Rs.612737 to principal and coordinator as
remuneration out of 2nd shift fund but
Income tax for the period 2014-15 and
2015-16 amounting to Rs. 50554 was
deducted but not deposited into Govt.
Treasury. Audit is of the view that weak
internal controls on Taxation resulted in
Non-deduction of income tax on payment
made to services providers. Audit
recommends that position may be
clarified, recovery affected from the
concerned and amount deposited into
Govt. treasury under report to audit. In
response to original audit observation
raised in may 2017, the management
noted the observation for compliance,
however necessary action may be taken as
desired above.
Loss of Government due to Income tax
not recovered from Canteen contractor
Rs. 39000/- Recovery thereof
According to section 36-A of Income Tax
Ordinance (1) Any person making sale by
public auction 2[or auction by a tender],
of any property or goods 3[(including
property or goods confiscated or
attached)] either belonging to or not
belonging to the Govt. local Government,
any authority a company, a foreign
association declared to be a company
under sub-clause (vi) of clause (b) of sub-
section (2) of section 80, or a foreign
contractor or a consultant or a consortium
or Collector of customs or Commissioner
of 4[Inland Revenue] or any other
authority, shall collect advance tax,
computed on the basis of sale price of
such property and at the rate specified in
Division VIII of Part IV of the First
Schedule, from the person to whom such
property or goods are being sold.
Explanation. – For the purposes of this
section, sale of any property includes the
awarding of any lease to any person,
including a lease of the right to collect
tolls, fees or other levies, by whatever
name called.]-1 [Division VIII Advance
tax at the time of sales by auction.
The rate of collection of tax under section
236A shall be 2[10]% of the gross sale
price of any property or goods sold by
auction.]
During audit of Govt. postgraduate
college of science, Fsd for the period
2014-16, it was observed that the canteen
contract was awarded amounting to
Rs.390000 per annum to Mr. Abdul
Hameed w.e.f July 15 to June 2016 but
advance income tax @10% amounting to
Rs. 39000 was not deducted recovered
from the contractor to be deposited into
Govt. treasury. Audit feels that weak
supervisory and financial internal controls
have resulted into non recovery of
advance tax which is loss to the
government. Therefore, the matter may
please be looked into recovery effected
from the contractor concerned at the
earliest and amount deposited into Govt.
treasury without any further delay.
In response to original audit observation
raised in may 2017, the management
noted the observation for compliance,
however necessary action may be taken as
desire above.
Recovery of Rs. 20187/ irregularly
drawn from computer account and paid
audit recovery payable by the computer
contracting firm.
As per notification Govt. of the Punjab,
Higher Education Department dated:
16.05.2016, the expenditure shall be made
keeping in view the financial propeiety,
transparency and financial Rules &
procedures. During audit of Govt.
Postgraduate college of Science, Fsd for
the period 2014-16, it was observed that
an amount of Rs. 20187/- was drawn for
the from the computer fund for depositing
Income tax in compliance of Audit Para
No.06 of the AIR (Audit & Inspection
Report) for the financial year 2012-14
titled “Loss to revenue due to non
recovery of income tax at source- Rs.
20187”. Following irregularities were
noticed:
The payment of income tax recovery
pointed out by audit was to be recovered
from the computer contracting firm on
account of service rendered but the
Income tax on such payment was not
deducted at source at the time of payment
in that years as pointed out by audit.
Instead of recovery from defaulter, the
college management was drawn the
amount from computer fund and deposited
into treasury which was disgusting and
irregular. The matter is serious nature
which need to be clarified:
Audit therefore requires that
1. Amount pointed out by audit may be
recovered from concerned firm and
deposited back into computer account
under intimation to audit.
2. Responsibility for this irregular draw
may be fixed along with the disciplinary
action.
In response to original audit observation
raised in May 2017, the management
stated that detail reply will be submitted
later on after scrutiny of record, however
necessary action may be taken as desired
above.
Non auction of unserviceable items of
store
Rule 4.1 of PFR volume-I provides that
the department controlling officers should
accordingly see that all sums due to
government are regularly received and
checked against demands, and that they
are paid into the treasury and rule 2.33 of
PFR vol-I states that every Govt. servant
should realize fully and clearly that he
will be held personally responsible for any
loss sustained by Govt. through fraud or
negligence on his part. During audit of
Govt. Postgraduate college of science,
Faisalabad for the period 2014-16, it was
observed that a large number of store
articles were found lying in the store in
the college premises which need to be
auctioned. Audit recommends that
unserviceable items of store may be
auctioned and realized amount be
deposited into Govt. treasury under report
to audit. In response to original audit
observation raised in May 2017, the
management stated that compliance will
be made soon, however necessary action
may be taken as desired above.