Audit Report Flags Trillions in Financial Irregularities Across Federal Departments in Pakistan

Islamabad: Pakistan’s latest federal audit has uncovered widespread financial irregularities, weak oversight, and governance shortcomings across dozens of government ministries, departments, and autonomous institutions. The report raises questions over the management of public funds, delayed recoveries, procurement practices, and accountability mechanisms involving trillions of rupees.

According to Beyond Time News, the Auditor General of Pakistan’s Audit Report 2025–26 reviewed the civil accounts of the federal government and identified numerous cases involving unrecovered public money, unauthorized expenditures, poor financial controls, and non-compliance with established rules.

The findings cover a broad range of sectors, including education, health, science and technology, communications, planning, culture, maritime affairs, and economic management.

Higher Education Commission Records the Most Audit Observations

Among all federal entities, the Higher Education Commission (HEC) recorded the highest number of audit observations, with 31 audit paragraphs highlighted in the report.

Other organizations receiving significant audit scrutiny include:

• Trade Development Authority of Pakistan (18 observations)
• Ministry of National Food Security (17)
• Ministry of Science and Technology (16)
• National Heritage and Culture Division (12)
• Pakistan Agricultural Research Council (12)
• Pakistan Atomic Energy Commission (12)
• Ministry of National Health Services (11)
• Education Division (10)

The report indicates that recurring weaknesses in financial management continue to affect several public institutions.

Rs75 Billion Development Programme Under Scrutiny

One of the report’s major observations concerns the Rs75 billion Sustainable Development Goal Achievement Programme (SAP), commonly known as lawmakers’ development schemes.

According to Beyond Time News, auditors questioned whether the allocated funds were utilized as intended because the Cabinet Division did not provide mandatory progress reports or completion certificates from implementing agencies.

The absence of detailed regional and project-wise records prevented auditors from verifying whether public funds were distributed fairly or achieved their intended development objectives.

The audit recommends establishing a centralized digital monitoring system to improve transparency and financial oversight.

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Foreign Loan Recoveries Exceed Rs1.9 Trillion

The report also highlights one of its largest financial observations involving the Economic Affairs Division (EAD).

Auditors found that Rs1.927 trillion in principal amounts, interest, and exchange-risk liabilities related to foreign re-lent loans remained outstanding as of June 30, 2025.

According to the report, the liabilities have not yet been recovered from various state-owned enterprises, and auditors noted that no official response was provided regarding the outstanding amounts.

Universities Face Financial and Administrative Issues

The audit raises several concerns regarding public universities.

At Quaid-i-Azam University (QAU), auditors reported that approximately 298 acres of university land remain under illegal occupation despite decades of legal disputes.

The university also faced audit observations for:

• Failure to deposit Rs177 million in deducted income tax into the national treasury.
• Investment of Rs356 million in scholarship funds instead of utilizing the money.
• Investment of Rs281 million without an approved investment policy.

The report notes that the university cited financial difficulties and stated that part of the outstanding tax amount had later been deposited with the Federal Board of Revenue.

Separately, the Centre of Excellence in Molecular Biology in Lahore invested Rs500 million in unutilized funds instead of surrendering the amount to the government at the end of the financial year.

Ministries Face Procurement and Recovery Concerns

Several ministries received observations relating to procurement, financial recoveries, and budget management.

The Ministry of National Health Services was questioned over:

• Vaccine procurement valued at Rs1.1 billion at higher prices.
• Medicine purchases worth Rs508 million.
• Alleged irregular consultant payments totaling Rs28 million.

The Ministry of National Food Security was also criticized for:

• Failure to recover Rs1.9 billion in cotton standardization fees.
• Rs193 million in allegedly wasteful aircraft spare parts expenditure.
• Recruitment spending of Rs355 million that auditors described as lacking transparency.
• Failure to reconcile receipts amounting to Rs4.4 billion.

The audit also noted that an inquiry into a 2020 aircraft crash involving the Plant Protection Department remains incomplete after five years.

Science Ministry Records Major Financial Observations

The Ministry of Science and Technology accounted for some of the report’s largest financial observations.

According to Beyond Time News, auditors identified:

• Rs59 billion in potential losses linked to delayed payment charges that were not imposed by the Pakistan Standards and Quality Control Authority (PSQCA).
• Failure to transfer Rs1.7 billion in surplus funds to the Federal Consolidated Fund.
• Matured investments of Rs7.3 billion that remained unwithdrawn.
• Maintenance of 45 unauthorized bank accounts containing approximately Rs3 billion outside the Federal Consolidated Fund.

These observations point to significant weaknesses in financial governance and internal controls.

TDAP, PEMRA and NAB Also Face Audit Questions

The Trade Development Authority of Pakistan (TDAP) received 18 audit observations, including:

• Retention of Rs513 million in commercial bank accounts.
• Outstanding liabilities exceeding Rs1.56 billion.
• Excess spending of Rs1.2 billion on international exhibitions.
• Costs incurred for participation in an international trade exhibition that ultimately did not take place.
• Failure to recover valuable Expo Centre land reportedly occupied by other entities.

The Pakistan Electronic Media Regulatory Authority (PEMRA) was questioned over Rs87 million in outstanding fees and fines that remained unrecovered.

The report also raised Rs324 million in observations involving the National Accountability Bureau (NAB), including spending that auditors believe should have been charged to another fund and the non-deposit of recovered funds into the government treasury. NAB rejected the audit findings.

Accountability and Financial Governance Remain Key Concerns

Across multiple ministries, auditors repeatedly highlighted weak documentation, delayed financial reconciliations, unauthorized investments, procurement irregularities, and inadequate responses to audit observations.

Several departments either failed to provide explanations or disagreed with the audit findings, leaving many accountability issues unresolved.

Financial experts often note that timely audits play an important role in strengthening transparency, improving public financial management, and ensuring that taxpayer resources are used efficiently.

Conclusion

The Auditor General’s 2025–26 report presents a detailed assessment of financial management across Pakistan’s federal institutions. While the audit identifies irregularities involving billions and, in some cases, trillions of rupees, the observations themselves do not constitute findings of criminal liability. They are intended to highlight areas requiring explanation, corrective action, and stronger oversight.

The report is expected to be examined by the relevant parliamentary committees and oversight bodies, where departments will have an opportunity to respond to the audit observations and implement recommended reforms.

Frequently Asked Questions

What is the Auditor General’s report?

It is an official audit of federal government accounts that reviews financial management, spending practices, and compliance with public financial regulations.

Which institution received the highest number of audit observations?

The Higher Education Commission (HEC) recorded the highest number, with 31 audit observations.

What was the largest financial observation?

One of the largest findings involved Rs1.927 trillion in outstanding foreign re-lent loan liabilities identified by auditors in the Economic Affairs Division.

Do audit observations prove corruption?

No. Audit observations identify financial irregularities, procedural weaknesses, or issues requiring clarification. They do not by themselves establish criminal wrongdoing or legal liability.

What happens after an audit report is issued?

Government departments review the observations, provide explanations where required, and parliamentary oversight committees may examine the findings before recommending corrective action.

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