A TRAINING SESSION

 On
 Works Audit
 By
 Shamsul Haq Audit officer
 Of
 Dy Auditor General (North)
 Mandate of audit
 Constitutional mandate
 Article 168, There shall be an Auditor-General of Pakistan

 Articles 169 and 170, require the Auditor General of Pakistan

to conduct audit of the accounts of Federation and Provinces
and of the accounts of any authority or body established by
the Federation or a Province.

 Article 171, The Report is to be submitted to the President/

Governor for causing it to be laid before the Federal/
Provincial Assemblies.
 Mandate / AGPs ordinance
 Section 7 The Auditor-General shall, on the basis of such audit as he
may consider appropriate and necessary, certify the accounts,
 Section 8 to Audit all expenditure from the Consolidated Funds
 Section 9 to Audit of receipts and expenditure of holders of
authorities, substantially financed by loans and grants
 Section 10 Auditor-General to give information and undertake
studies, etc
 Section 11 to audit grants or loans given to other authorities or
bodies
 Section 12 Audit of receipts
 Section 13 Audit on accounts of stores and stock
 Section 15 Audit of companies and corporations established in the
public sector
AUDIT JURISDICTION

 Audit of Receipts & Expenditure by

 Federal Audit
 Federal Government funded schemes
 Provincial Audit
 Provincial Government funded schemes
 District Audit
 District Government funded schemes

JURISDICTION OF WORKS AUDIT

 Public Works Department,

 Federal Works Department, by Federal Audit.
 Provincial Works Department like
 Provincial Works Department like C & W, Irrigation,
PHE, Authorities, bodies, universities by the DGs Audit
 District Works Department like
 District Works offices like LG & RDD, TMAs, PDA etc
by the DG District audit
Types of Audit
Financial attest audits
Compliance with Authority audits
Audit of Internal Controls
Audit of Foreign Aided Projects
Performance Audits, Special Audits, IS Audits
Audit of frauds, Functional & system audit etc.
Special Study/ Assignments
General objective of audit
 Against the provision of funds
 To ascertain whether the moneys shown as expenditure in the
accounts were authorized for the purpose for which they were
spent.
 Against rules and regulation
 To see that the expenditure incurred was in conformity with the
laws, rules and regulations framed to regulate the procedure
for expending public money.
 Sanctions of expenditure
 To see that every item of expenditure was done with the
approval of the competent authority in the Government for
expending the public money.
 Cotnd.

 Propriety Audit
 Extends beyond scrutinising the mere formality of
expenditure to its wisdom and economy and to
bring to light cases of improper expenditure or
waste of public money.
 Review, analyze and comment on various
Government policies relating to different sectors.
WORKS AUDIT RULES

 Rules/ procedures to conduct

 AGPs auditing standards/ guidelines (APPM,
COA)
 Departmental rules and laws and procedures
(CPWA&D Codes/ instructions, orders etc)
 PEC guidelines (registration, bidding documents
etc)
 Government policies, instructions (PC-I,II,III,IV/
AA/TS)
WORKS AUDIT (provincial)

 Audit of expenditure on execution of

 Civil works by C & W/LG, PDA, TMAs,
 Works of Irrigation Department & PEDO

 Works executed by PHE Department

 WSSP
 WORKS AUDIT

 Civil works
 Construction, Maintenance & Repair of;
 Buildings with installations/ fittings of electricity,
sanitary, gas, furniture/ fixtures etc
 Roads, bridges, streets & drainage systems etc

including road signs, lighting etc

 Machinery & equipments as per requirement
WORKS AUDIT

 Irrigation works
 Construction, Maintenance & Repair of;
 Power Houses (PEDO)
 Rivers diversions, protections works etc
 Irrigation Canals,
 Irrigation Channels
 Irrigation Drains
 Irrigation tube/ Dug wells
 De-siltations (silt clearance works)
WORKS AUDIT

 Public Health works

 Construction, Maintenance & Repair of;
 Tube wells

 Sanitation systems

 Street pavements & drains etc

 Machinery for tube wells

 Water supply/ Pipe lining

TIERS IN WORKS DEPARTMENT

 SECRETARY C & W/ Irrigation/ PHE

 Administrative Head
 CHIEF ENGINEER C & W/ Irrigation/ PHE
 Technical officer
 SUPRINTENDENT ENGINEER C & W/ Irrigation/ PHE
 Controlling officer
 EXECUTIVE ENGINEER C & W/ Irrigation/ PHE
 Executing agency
 Heads of authorities and bodies
STAGES IN WORKS

 Scheme/ PC-II, I
 Approval by competent forum
 Administrative approval
 The concurrence of competent authority
 Technical sanction
 Detailed estimates duly sanctioned by the competent
authority
 Availability of funds
 Allotment of a particular fund to meet the expenses
 Commencement of work
 Admin Approval & Technical Sanction

 Administrative approval
 A formal acceptance by the Administrative department of
the proposal for incurring expenditure in the works
department on a work initiated by the department.
 It is in fact an order to the department to execute certain
specified work at a given amount.
 Technical Sanction
 The order of competent authority sanctioning a detailed
estimate of the cost of work to be carried out in Works
Department.
 IMPORTANT DOCUMENTS
 Agreements
 Contractor Bills
 Contractor Legers, where applicable
 Deposits Registers
 Register of works
 Cash Books
 Technical Sanctions
 Administrative Approval
 Measurement Books
 BOQs
 Documentation for Advances (Mobilization/ Secured)
 Tax issues
 Measurement Book

 MB is maintained for a combination of works

by Engineer authorized (Para 209 CPWA Code)
 MB will form the basis of account

 From MB the bills of contractor can be checked

& verified for work done and supplies made.

 SMB (Para 210 CPWA Code)

 Some types of works expenditure

 Procurement/ contracting for Goods & Services

 Payments to contractors/ consultants etc
 Buildings works including HT/LT electric, sanitary and
gas installations
 Roads, pavements, street lights, road signs & protection
works
 Bridges including approach roads & diversion work etc
 Irrigation & Canal works, desiltation and Embankment,
 Tube wells, Water Supply and Sanitation
 All kinds of repairs
Requirements to commence work

 PC-I duly approved

 Administrative Approval (instructions)

 Funds availability

 Contract duly signed & sanctioned

 Estimates with Technical Sanction

 Design and maps

 Work order to commence the work

Documents required in audit executions stage

 Reconciled statement of expenditure

 Services Procurement process
 Evaluation & Approval
 Agreements (dates, amount, BOQ)
 Commencement of work (work order)
 Estimates/ TS
 Work plan (site/ changes in site/ alignment)
 IPCs (prepared, verified, approved by)
 MBs
 Tests reports before payments
 Other general office record (work file, reports etc)
 Auditable records

 Must be Comprehensive Requisition of record

Cash Books duly closed and signed by authorized officer
RFPs/ Evaluations reports/ Tender record Contract agreements complete in all respect
List of completed projects during the year
Cheque Books in support to paid bills
Vouchers/ Paid Bills/ Interim Payment Certificates
Contractor’s Ledger
PC-1, Detailed Estimates, Technical Sanctions (scheme wise/ project wise)
Expenditure/ Bank Statement duly reconciled
Monthly Returns
Budget Releases (project wise/ grant wise)
Advance Register (Mobilization, Secured advances, Provisional payments)
Stock and issue Register
Measurement book
 Deposit Registers I, II,II,IV
Types of contract

 CSR/ MRS based

 BOQ with rates based

 BOQ on Items rate based

 EPC for Complex nature works

Some of the specific risks in Works Operations

 Award of contract;
 to unsuitable contractor.
 Without enlistment/ Prequalification of consultant and contractors.
 Time over-run leading to exorbitant cost over-run.
 Employment of unwanted establishment by consultant.
 Payments without work done (provisional payments)
 Payment for work below specification.
 Repeated revisions of Drawings/Estimates/TS and Administrative
Approvals.
 Secured Advance etc (Maintenance of stock without its actual
requirement)
 Mobilization advances
 Non-maintenance of record relating to assets.
Important issues in Works Audit

 Engineers authority
 PC-I (original revised)
 Agreements (original revised)
 Estimates/ TS (original revised)
 Measurements
 Non BOQ items
 Schedule items
 Non schedule items
 Analysis of rates
 Escalation or price adjustment
 A compulsory component usually remained
under audit objections
 Price adjustments
 Items for adjustment
 Basis of price adjustment
 Provision of agreement
 PEC formula
 Verification of rates
 Period of payment
 Payment in Extended period
Accounting Manuals and Codes

 Central Public Works (CPW A & D Codes)

 General Financial Rules
 Treasury Rules
 Acts & ordinances
 Departmental Guidelines
 Tiers of Govts (Provincial, District, TMAs, LG, VC &
NCs)
 Contd
 Public Procurement Rules, 2004
 Composite Schedule of Rates (CSR)
 Market Rate System (MRS)
 Book of Specifications
 Income Tax Rules
 Pakistan Engineering Council Rules
 Land Acquisition Act
 Important Contd
Where there are new administrative policies or
procedures with which the auditee department should
comply; The auditors
 must become familiar with them and ensure that
the audit is conducted against these benchmarks.
 should consider whether the policies and
procedures in force are effective at reinforcing
Good Management Practices.
 Where a rule or procedure does not contribute
to Good Management Practices, it is the job of
the auditor to recommend changes to such rules
and procedures.