Auditor General Report Exposes Billions in Financial Irregularities Across Pakistani Federal Bodies

ISLAMABAD — The Auditor General of Pakistan has released its 2025–26 audit report on the federal government's civil accounts, exposing widespread financial mismanagement across multiple ministries and state-run organizations. The 399-page report identifies billions of rupees in questionable expenditures, weak oversight, and unrecovered dues.

Auditors flagged the Higher Education Commission with 31 paras, the highest among all departments, followed by the Trade Development Authority of Pakistan and the Ministry of Food Security. Among the most serious findings, the Cabinet Division failed to account for Rs75 billion in development funds, while the Economic Affairs Division reported Rs1.927 trillion in unrecovered foreign loan liabilities. The Pakistan Electronic Media Regulatory Authority (Pemra) also faced scrutiny over Rs87 million in unrecovered dues.

Audit Scope and Departmental Breakdown

The report covers civil accounts across federal ministries, divisions, and autonomous bodies for the fiscal year ending June 30, 2025. According to local media outlet The News, the Higher Education Commission recorded the largest number of audit paras at 31, followed by the Trade Development Authority of Pakistan with 18, the Ministry of Food Security with 17, and the Ministry of Science and Technology with 16.

Other entities named in the report include the National Heritage and Culture Division, the Pakistan Agricultural Research Council, and the Pakistan Atomic Energy Commission, each cited with 12 observations. The Ministry of National Health Services received 11 paras, while the Education Division was flagged with 10.

Smaller Departments Also Under Review

Several smaller departments drew fewer but still notable observations. These included the Cabinet Division with two paras, the Communications and Defence Divisions with five each, the Inter-Provincial Coordination Ministry with eight, and the Maritime Affairs Ministry with six. The National Accountability Bureau, the Economic Affairs Division, and the Information Division were each cited twice, while the Ministry of Religious Affairs received three observations.

Cabinet Division Fails to Justify Rs75 Billion in Development Spending

One of the report's most prominent findings concerns the Cabinet Division's handling of the Sustainable Development Goal Achievement Programme, widely referred to as the MPs' development schemes initiative. Auditors said the division could not verify how Rs75 billion allocated for federal and provincial projects had been used.

The audit found that the Cabinet Division did not collect required monthly progress updates or completion certificates from agencies carrying out the schemes. Without scheme-by-scheme and region-by-region records, auditors said they were unable to confirm whether spending matched the program's stated goal of balanced regional development. The division did not respond to repeated audit queries.

To address the gap, auditors recommended creating a centralized digital system to track how SAP funds are allocated and spent. The report also noted that while the Toshakhana Act was formally notified in 2024, the rules needed to enforce it have not yet been finalized.

Economic Affairs Division Linked to Trillions in Unrecovered Loans

The Economic Affairs Division accounts for the single largest figure in the entire report. Auditors determined that Rs1.927 trillion in principal, interest, and exchange-rate-related liabilities tied to foreign relent loans remained outstanding from various state-owned enterprises as of June 30, 2025. The division offered no response to the findings.

Higher Education Sector Faces Land Disputes and Fund Mismanagement

The education sector emerged as a major focus of the audit, with Quaid-e-Azam University drawing some of the most detailed scrutiny.

Decades-Long Land Encroachment at Quaid-e-Azam University

Auditors reported that 298 acres of the 1,709 acres allotted to the university by the Capital Development Authority have been occupied by private settlers for nearly five decades. The report calls on university management to take active steps to reclaim the land.

Unpaid Taxes and Unused Scholarship Funds

The audit also found that the university had not deposited Rs177 million in withheld income tax with the national treasury. University officials cited financial strain and told auditors that Rs83 million had since been paid to the Federal Board of Revenue.

Separately, auditors noted that the university held and invested Rs356 million in scholarship funds rather than disbursing them, though administrators maintained the funds were managed according to donor terms. Another Rs281 million invested by university departments lacked an approved investment policy, and no explanation was given.

The Centre of Excellence in Molecular Biology in Lahore was also cited for investing Rs500 million instead of returning unused funds to the government treasury at the end of the fiscal year, a requirement auditors said was not followed.

Media Regulator and Port Authority Cited for Unrecovered Dues

The Information Division came under review for Pemra's failure to recover Rs87 million in outstanding fees and fines from regulated entities.

The Karachi Dock Labour Board, operating under the Ministry of Maritime Affairs, faced several findings, including:

• Non-recovery of Rs433 million in cess payments

• Recurring losses of Rs1.9 billion from expenditures exceeding revenue

• Irregular bonus payments totaling Rs343 million

• Improperly selected hospitals and laboratories linked to Rs620 million in payments

Accountability Bureau and Food Security Ministry Flagged for Spending Lapses

The National Accountability Bureau was cited for Rs324 million in irregularities, including Rs277 million spent on law officers and experts from its regular budget rather than its designated Recovery and Reward Fund, and Rs46 million in recoveries not deposited with the treasury. The bureau did not acknowledge any wrongdoing.

The Ministry of National Food Security faced some of the broadest findings in the report:

• Non-recovery of Rs1.9 billion in cotton standardization fees

• Wasteful spending of Rs193 million on aircraft spare parts

• Rs355 million spent on contractual hiring lacking transparency

• Rs4.4 billion in receipts left unreconciled

Auditors also noted that an investigation into a 2020 Plant Protection Department aircraft crash remains incomplete five years later, and that 15 deregistered aircraft have sat idle without being auctioned, resulting in losses exceeding Rs42 million.

Health Ministry Procurement Practices Draw Scrutiny

The Ministry of National Health Services faced multiple procurement-related observations. Auditors found that vaccines worth Rs1.1 billion were purchased at inflated rates due to non-compliance with a federal cabinet directive. The Federal Government Polyclinic Hospital was cited for irregular medicine purchases worth Rs508 million, while Sheikh Zayed Medical Complex in Lahore faced findings related to a fraudulent consultants' payment of Rs28 million.

Cultural and Scientific Institutions Show Investment Irregularities

National Heritage and Culture Division Findings

The National Heritage and Culture Division faced several observations, including the Quaid-i-Azam Mazar Management Board's unauthorized investment of Rs681 million in treasury bills and the National Academy of Performing Arts investing Rs865 million without clearance from the Finance Ministry. The division also failed to recover Rs27 million from the Capital Development Authority related to the Pakistan National Council of Arts building, and Rs145 million in utility charges from Iqbal Academy Pakistan remained uncollected.

Atomic Energy Commission Investment and Procurement Gaps

At the Pakistan Atomic Energy Commission, auditors flagged the Chashma Nuclear Power Plant for leaving Rs2.8 billion from its Water Disposal Fund unused. The commission was also cited for Rs61 million in spot purchases and Rs936 million in advance payments for items that had not been delivered.

Statistics Bureau and Religious Affairs Ministry Lack Audit Records

The Pakistan Bureau of Statistics, under the Planning and Development Division, was the subject of the division's sole audit para, concerning its failure to obtain audited statements covering Rs3.1 billion from district administrations.

The Ministry of Religious Affairs faced a more substantial gap, with auditors unable to obtain audited statements and adjustment accounts covering Rs45 billion, raising concerns about the verification of related expenditures.

Science Ministry and Trade Authority Report Largest Combined Losses

The Ministry of Science and Technology accounted for some of the report's most significant financial findings. Auditors determined that the Pakistan Standards and Quality Control Authority failed to impose late-payment charges, resulting in a loss of Rs59 billion. The ministry was also cited for not depositing Rs1.7 billion in surplus funds into the Federal Consolidated Fund, failing to withdraw Rs7.3 billion in matured investments from the National Bank of Pakistan, and maintaining 45 unauthorized bank accounts holding roughly Rs3 billion outside official government accounts.

The Trade Development Authority of Pakistan faced 18 separate audit observations, among the highest of any entity reviewed. Findings included irregular retention of Rs513 million in income from the Karachi Expo Centre in commercial bank accounts, outstanding liabilities of Rs1.56 billion owed by the Export Development Fund, and excess spending of Rs1.2 billion on international exhibitions. Auditors also cited a wasteful expenditure of 31,320 euros after the authority failed to participate in the Intertex Portugal 2025 exhibition despite having already incurred related costs. The report further noted the authority's failure to reclaim Expo Centre land allegedly encroached upon by Pakistan International Airlines and the Sindh Police.

Summary of Key Financial Figures

Outstanding Accountability Questions

The report describes a pattern of weak financial controls, delayed recoveries, unauthorized investments, and procurement irregularities spanning numerous federal entities. Several departments did not respond to audit observations, while others defended practices that auditors classified as irregular, leaving key accountability questions unresolved heading into the next fiscal cycle.

[Source: geo news]