SPECIAL STUDY REPORT

ON
REVENUE COLLECTION
AND ACCOUNTING MECHANISM
AT TMA IN
DISTRICT BANNU

AUDIT YEAR 2020-21

AUDITOR GENERAL OF PAKISTAN

 PREFACE
The Auditor General of Pakistan conducts audit in accordance with
Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan
1973, read with Sections 8 and 12 of the Auditor General’s (Functions, Powers
and Terms and Conditions of Service) Ordinance 2001 and Section 37 of the
Khyber Pakhtunkhwa Local Government Act, 2013. The special study namely
“Revenue Collection and Accounting Mechanism at TMA, Bannu” was carried
out accordingly, during Audit year 2020-21.

The Directorate General Audit, District Governments, Khyber

Pakhtunkhwa conducted this special study for the financial years 2017-18 to
2019-20 with a view to report significant findings to stakeholders. During the
study, on the basis of written responses and data analysis, revenue collection and
accounting mechanism at TMA, Bannu was assessed. The study indicates
specific actions if taken, will help the management to realize the objectives of
good governance.

The study aims at assessing the efficiency and effectiveness of procedures

of collection of revenue, hurdles in the way of revenue collection and identifying
lacunas in the accounting mechanism of revenue and receipts collection in
TMAs. The study was conducted through a survey questionnaire provided to the
selected entities.

Most of the observations included in this report were finalized in the light
of written replies of the department. However, DAC meeting was not convened
despite repeated requests.

It is in the best interest of all stakeholders that the recommendations of

this study are implemented in order to bring transparency in the Local
Government functioning along with improving the service delivery and
safeguarding the Local/Public Funds.

The special study report is submitted to the Governor Khyber

Pakhtunkhwa in pursuance of Article 171 of the Constitution of the Islamic
Republic of Pakistan, 1973, for causing it to be laid before the appropriate
Legislative/Executive forum.

Islamabad (Javaid Jehangir)

Dated: Auditor General of Pakistan
 TABLE OF CONTENTS

ABBREVIATIONS AND ACRONYMS ................................................................ i

EXECUTIVE SUMMARY ..................................................................................... ii
Key Audit Findings ................................................................................................. ii
NEED AND GENESIS ......................................................................................... iv
Organization of the Report ..................................................................................... iv
CHAPTER - 1 ........................................................................................................ 1
PURPOSE, SCOPE, METHODOLOGY & ANALYTICAL REVIEW ................ 1
1.1 Purpose .............................................................................................................. 1
1.2 Scope ................................................................................................................. 1
1.3 Methodology ..................................................................................................... 1
1.4 Analytical Review ............................................................................................. 2
CHAPTER – 2 ........................................................................................................ 4
THE LEGAL AND REGULATORY FRAMEWORK ......................................... 4
CHAPTER – 3 ........................................................................................................ 5
3.1 THE ANALYTICS – ISSUES AND COMMENTS ........................................ 5
CONCLUSIONS .................................................................................................. 15
RECOMMENDATIONS ...................................................................................... 16
ANNEXURES ...................................................................................................... 17
 ABBREVIATIONS AND ACRONYMS

AGP Auditor General of Pakistan

APPM Accounting Policy and Procedure Manual
DAC Departmental Accounts Committee
D&C Demand and Collection Register
FAOs Field Audit Offices
FD Finance Department
HOD Head of the Department
HQ Head Quarter
KP Khyber Pakhtunkhwa
KP LGA Khyber Pakhtunkhwa Local Government Act
LCB Local Council Board
LG Local Government
LGA Local Government Act
LGO Local Government Ordinance
LG&RDD Local Government and Rural Development Department
RoB Rules of Business
TMA Town/Tehsil Municipal Administration
TMO Tehsil Municipal Officer
TOR Tehsil Officer Regulations

i
 EXECUTIVE SUMMARY

The Tehsil Municipal Administrations (TMAs) in Khyber Pakhtunkhwa

have been mandated to levy and collect taxes under their jurisdiction. The
revenue so collected by the TMAs is to be spent on provision of Municipal and
other services. However, Tehsil Municipal Administration Bannu could not
collect sufficient revenue even to meet its administrative cost (salary and non-
salary expenditure) and the gap between revenue and expenditure was met from
Provincial Government grants. The Provincial Government of Khyber
Pakhtunkhwa has made mechanism of outsourcing of the revenue contracts to
private contractors for self-sustainability, efficiency and reducing the tax
administration cost which could not be implemented by the TMA. There are still
wide gaps in own sources revenue and operating expenditure of the TMA.

Keeping in view the issue of financial gap and inefficiency in collection

of own sources revenue, the Auditor General of Pakistan decided to conduct a
special study to assess whether the TMAs in Khyber Pakhtunkhwa efficiently and
effectively manage the collection with due regard to economy as well as
outsourcing of revenue collection function and monitoring of the performance of
revenue collection contractors.

The study specifically focused on how TMA planed before outsourcing,

conduct the procedures used to procure revenue collection agents including
contract administration and controls in place and their enforcement. Monitoring
and evaluation conducted by TMAs as well as the Provincial Government was
also included in the study. The study covered a period of three financial years
2017-18 to 2019-20. Various sources of revenue were selected for examination.

Key Audit Findings

i. Lack of Planning for revenue sources of the TMA income.
ii. Non-availability of accurate budget information
iii. Improper Accounting mechanism of revenue
iv. Non recovery of departmental dues – Rs. 8.583 million
v. Loss due to non-recovery of penalty – Rs 1.044 million
vi. Non-recovery of Teh Bazari – Rs.327,180
ii
 vii. Loss to TMA due to non-recovery of rent outstanding – Rs. 5.5 million
viii. Loss due to non-auction and of leases of property
ix. Non-recovery of Income Tax on auction of contracts-Rs. 5.075 million
x. Loss due to refusal of contractor-Rs. 5.439 million
xi. Non preparation of appropriation, finance and financial statements of funds-
Rs 754.512 million

Recommendation

It is recommended that:
i. Planning and proper survey of existing sources to find the actual income
potentials as well as new sources of income in the jurisdiction of TMA to
overcome the financial deficit.
ii. Ensuring provision of accurate budget information and appointment of
internal auditor to carry out the tasks required of him.
iii. Ensuring approved accounting system in revenue collection of TMA and
appointment of internal Auditor.
iv. Recovery of the outstanding amount and action against the persons at fault
under intimation to audit.
v. Recovery of the amount from contractor.
vi. Recovery of dues from the concerned and record the same in D&C register
immediately.
vii. Recovery of rent from the concerned and record the same in D&C register
immediately.
viii. Inquiry into the matter and fixing of responsibility on the person(s) at fault.
ix. Recovery of Rs.5,075,422 to be made from the contractors under intimation
to Audit.
x. Recovery from the person(s) at fault.
xi. Preparation of Appropriation Account, Finance Account and Financial
Statement for the year 2019-20 on the approved form and format as
prescribed by the AGP.

iii
 NEED AND GENESIS
Tehsil Councils are given key positions in the devolved system where
they are entrusted with multiple responsibilities among which revenue collection
is very important as without revenue no entity can exist. TMA used their revenue
for the well-being of the society.

2. Article 140 of the Constitution of Islamic Republic of Pakistan

provides for establishment of Local Government system and devolution of
political, administrative and financial responsibility and authority to local
Government to address the matters/problems of the society locally at their door
step.

3. The TMAs are given enough liberty to impose multiple taxes in their
respective territories on various subjects as stipulated in the Local Government
Act 2013. Despite the fact that Provincial Government frames a revenue
collection policy on yearly basis and gives baseline to TMAs for revenue
generation from each of its budget components. The TMAs are facing shortage of
funds due to weak financial and administrative control. There is no proper
accounting mechanism for reporting of collected revenue, taxes and fees etc. This
badly affects performance.

4. The Directorate General Audit, District Governments, Khyber

Pakhtunkhwa is responsible for audit of TMAs and District Governments in
Khyber Pakhtunkhwa.

5. Keeping in view the factors narrated above, this Directorate felt the
need to conduct a Special Study “Revenue Collection and Accounting
Mechanism at TMA Bannu”.

Organization of the Report

The report is organized in three chapters. Each chapter covers
individual aspects of the study. Chapter-1 describes the purpose and scope of the
study and methodology adapted to complete the task. Chapter-2 briefly deals with
the conceptual frameworks. Chapter-3 describes issues, comments, conclusion
and recommendations.

iv
 CHAPTER - 1

PURPOSE, SCOPE, METHODOLOGY & ANALYTICAL REVIEW

1.1 Purpose

1.1.1 The purpose of the special study is to examine and identify issues of the
Tehsil Municipal Administration Bannu with reference to Revenue collection and
accounting Mechanism. The aim is to find out the shortcomings and lapses in the
collection of revenue if any and its accounting/reporting and to recommend
remedial actions to the Tehsil Municipal Administration Bannu in order to
improve the process. It also makes suggestions to the stakeholders for further
improvements.

1.1.2 In order to achieve the purpose of the study, a formal questionnaire was
developed to obtain responses from Tehsil Municipal Administration Bannu
authorities and analyze these responses for meaningful assessment and
stocktaking of existing practices enabling us to suggest some practical solutions.

1.2 Scope

1.2.1 The study determined the horizontal and vertical policy coherence among
various stakeholders to avoid duplication of taxation and determination of correct
jurisdictions. The study covered the requirements of uniformity of taxation
pattern among the TMA and inclusion of relevant revenue head of accounts in the
profit centers of PIFRA. Moreover, Study suggested various areas where proper
legislations were required for streamlining policies and procedures requisite for
monitoring, reporting and accountability of receipt collection, realization and
accounting respectively.

1.3 Methodology

1.3.1 Baseline data regarding specific components of revenue generation of TMA

was gathered during compliance with authority audit. Total fiscal strength of each

1
of TMA was scrutinized in order to determine the overall potential of TMA in
revenue generation and efforts made till then to achieve it.

1.3.2 For data analysis, desk audit was performed and subsequently a detailed
questionnaire was prepared. The results were compiled in TMA Bannu covering
major stakeholders under Local Government Act 2013, highlighting
recommendations to resolve issues and hurdles in revenue collection.

1.4 Analytical Review

1.4.1 Analytical procedures are an important part of the audit process and consist
of evaluations of financial information made by a study of reasonable
relationships among both financial and non-financial data. Analytical procedures
assists (a) in planning stage to understand the nature, timing, and extent of
auditing procedures, (b) in a substantive test to obtain audit evidence about
particular statements related to account balances or classes of transactions and (c)
in overall review stage of the audit assessment in evaluating the conclusions
reached and in overall financial and non-financial data.
1.4.2 Analytical procedures were also performed on financial and non-financial
data with a view of analyzing revenue collection and accounting mechanism at
TMA in District Bannu.

2
MAP OF THE KHYBER PAKHTUNKHWA

3
 CHAPTER – 2

THE LEGAL AND REGULATORY FRAMEWORK

2.1 The foremost objective of promulgating the LGA, 2013 and

establishment of Local Government System was to provide the basic welfare and
socio economic service to the general public at their door step promptly,
accurately and transparently by generating its own income or by the support of
provisional and Federal Government.

2.2 The Article 140 of the Constitution of Islamic Republic of Pakistan

provide for establishment of Local Government system and devolution political,
administration and financial responsibility and authority to local Government to
address the matters/problems of the society locally. To achieve the objective of
the Local Government System, rules, regulation and by laws were introduced by
the Provisional and Federal Government like taxation rules 2016 of TMAs,
APPM, by laws of LCB KP, Chart of Account, withholding Tax Rules, rules
regarding awarding contract, ROBs for Local Government and District
Government Rules of Business 2015.

2.3 This study is intended to cover all those activities associated with
Revenue Collection, Realization and its Accounting Mechanism at TMA Bannu.

4
 CHAPTER – 3

3.1 THE ANALYTICS – ISSUES AND COMMENTS

This chapter presents the summary of written responses to the questions

circulated among the TMOs followed by comments thereupon. Certain questions
and responses which were interlinked have been clubbed together for the purpose
of consistency and brevity, under one heading or title.

3.1.1 Lack of Planning for revenue sources of the TMA income

Rule 10 to 15 of the TMAs budget rules, 2016 provide for receipts

management, that receipts are forecasted diligently, accurately and all foreseen
items are to be included in the budget estimates and in order to ascertain and
realize the revenue potential of the TMA. Tehsil officer (TO) regulation shall
conduct a review of the revenue sources.

During special study for Revenue collection and its accounting

mechanism in TMA Bannu for the year 2019-20 it was observed that surveys for
outsourcing of receipts contracts were not conducted by the TMA to have first-
hand information of actual receipts potentials of the contracts. There was also no
evidence to show that the TMA had searched for availability of potential revenue
sources.

Lack of planning for revenue sources occurred due to poor financial

management which put TMA to financial losses.

When pointed out in April 2021, management stated that matter would be
discussed with higher authorities.

Request for DAC meeting was made in April 2021 which could not be
convened till finalization of this report.

5
 Audit recommends planning and proper survey of existing sources to find
the actual income potentials as well as new sources of income in the jurisdiction
of TMA to overcome the financial deficit.

3.1.2 Non availability of accurate budget information

Section 37(4) of the Local Government Act 2013, provides for the
appointment of internal auditor in the TMA, and rules 51, 52 of the TMA Budget
Rules 2016 provide for accurate budget information.

During special study for Revenue collection and its accounting

mechanism in TMA Bannu for the year 2019-20, it was observed that there was
no internal control of revenue receipts and collection in TMA as no internal audit
was being carried out due to which accurate, reliable and timely income
statements could not be generated for decision makers.

Non availability of accurate budget information occurred due to poor

financial management which put TMA to financial losses.

When pointed out in April 2021, management stated that matter would be
discussed with higher authorities for internal audit of receipts.

Request for DAC meeting was made in April 2021 which could not be
convened till finalization of this report.

Audit recommends ensuring provision of accurate budget information and

appointment of internal auditor to carry out the tasks required of him.

3.1.3 Improper Accounting mechanism of revenue

Section 37(4) of the Local Government Act 2013, provides for the
appointment of internal auditor in the TMA, and rules 51, 52 of the TMA Budget
Rules 2016 provide for accurate budget information.

6
 During special study for Revenue collection and its accounting
mechanism in TMA Bannu for the year 2019-20, it was observed that there was
no proper accounting mechanism of revenue receipts and collection in TMA. No
computerized accounting system was introduced by the TMA till date. The
finance section played only the role of book keeping by recording entries in
Demand and Collection Register and cash books. The D&C registers were not
signed by any single responsible officer of TMA.

It was also observed that administration cadre employees were posted in

the tax branch without any finance and accounting background. The finance
section failed to introduce modern accounting practices i.e. using accounting
software etc. Resultantly no reliable financial information was available to
decision makers as well as for external auditors.

Improper Accounting mechanism of revenue occurred due to poor

financial management which put TMA to financial losses.

When pointed out in April 2021, management stated that matter would be
discussed with higher authorities for development of accounting mechanism.

Request for DAC meeting was made in April 2021 which could not be
convened till finalization of this report.

Audit recommends ensuring approved accounting system in revenue

collection of TMA and appointment of internal Auditor.

3.1.4 Non recovery of departmental dues – Rs. 8.583 million

As per para 03 of the contract agreement states that all the amount of the
contract shall be deposited in 11 monthly installments.

During scrutiny of the record of TMA Bannu for the 2019-20 it was
observed that TMA Bannu awarded Contracts to various contractors as detailed
below during financial year 2019-20. The contractors deposited Rs 28,335,079

7
during the contracts period, whereas Rs 8,583,384 was still outstanding against
the contractor.
Total Bid Outstanding
Name of Deposited
S.No Name of Contract 2019-20 2019-20
Contractor (Rs)
(Rs) (Rs)
1 Akbar Nawaz Cattle Fair Bannu City 27,900,000 21,098,330 6,801,670
Khan Urban
2 Sultan Khan Goat and Sheep Market 6,340,000 5,036,000 1,394,000
3 Mr Ameer Dad Group letreenBannu 420970 334194 38,270
4 Sultan khan The BazariBannu 960000 851600 108,400
5 Akbar Nawaz Cattle Fair Ghoriwala 230,000 100,000 130000
Khan
6 Mr Sultan Slaughter house 525000 465,955 59045
7 Akbar nawaz Khan Mall GodamBannu 520999 469000 51999
Total Outstanding 28,355,079 8,583,384

The loss occurred due to poor financial management which put TMA to
financial losses.

The irregularity was pointed out and conveyed to the department in the
month of April 2021 to which department replied that concerned contractor
would be requested to deposit the outstanding amount.

Request for DAC meeting was made in April 2021 which could not be
convened till finalization of this report.

Audit recommends recovery of the outstanding amount and action against

the persons at fault under intimation to audit.

3.1.5 Loss due to non-recovery of penalty worth Rs 1.044 million

Serial No 06 of model terms and conditions for the year 2016-17

circulated by Government of Khyber Pakhtunkhwa LG & RDD Local Council
Board No. AO-II/LCB/6-11/2013 dated: 14.03.2016 states that, the contractor is
bound to deposit the monthly installment up to end of each month. If the
contractor fails to deposit the monthly installments with in stipulated period of
time, then 2% per days will be charged as penalty on amount of installment.”

8
 TMO Bannu awarded contracts to various contractors during financial
year 2019-20. According to condition contractors were bound to deposit monthly
installments up to end of each month. However, the contractors failed to deposit
the amount of monthly installments with in stipulated period of time. As per
condition of the agreement TMA was required to penalize the contractor @ 2%
per day which action was not taken, and the TMA was put to loss of Rs 1,044,482
(Detail in Annexure 1).

The loss occurred due to poor financial management which put TMA to
financial losses.

The irregularity was pointed out and conveyed to the department in the
month of April 2021, the department replied that effort would be made to recover
the outstanding amount.

Request for DAC meeting was made in April 2021 which could not be
convened till finalization of this report.

Audit recommends recovery of the amount from contractor.

3.1.6 Non-recovery of Teh Bazari – Rs.327,180

Para 8 and 26 of GFR Vol-I states that each administrative department to

see that the dues of the Government are correctly and promptly assessed collected
and paid into government treasury.

During the course of special study of TMA Bannu it was noticed that Teh
Bazari fee of Rs.327,180 was recoverable besides lapse of considerable period.
The detail of recoverable Teh Bazari fee is as under:

S.No Particular Amount

1 Car stand 203,600
2 Vegetable Market 123,580
Total Recoverable amount 327,180

9
 TMA Bannu collected Teh Bazari fee only from car stand in front of
Zanana Hospital and vegetable market Bannu. Rest of the city was left and not a
single rupee collected as Teh Bazari which showed the negligence of the staff
deputed for collection, which resulted in loss to TMA.

The loss occurred due to poor financial management which put TMA to
financial losses.

When reported in April 2021, the department replied that penalty would
be calculated and recovery made from the persons responsible.
Request for DAC meeting was made in April 2021 which could not be
convened till finalization of this report.

Audit recommends recovery of dues from the concerned and record the
same in D&C register immediately.

3.1.7 Loss to TMA due to non-recovery of rent outstanding–Rs.5.50 million

According to serial No 12 of the first schedule of the TMA Rules of

business 2015, it is the function of the Municipal Regulations office of the TMA
to collect approved taxes cess, fines and penalties.

During scrutiny of accounts record of TMA Bannu, shopping plaza,

Markets, Jai Sapaid, and shops situated in district Bannu, allotted to various
allottees on rent basis and a huge amount of Rs 5,500,898 was outstanding since
long against the various allottees as per detail at annexure-2.

Non-recovery of the rent outstanding is the violation of rules, which

showed inadequate administrative and financial control resulting in loss to TMA.

When reported in April 2021, the department replied that penalty would
be calculated and recovery made from contractor.

Request for DAC meeting was made in April 2021 which could not be
convened till finalization of this report.
10
 Audit recommends recovery of rent from the concerned and record the
same in D&C register immediately.

3.1.8 Non-auction and of leases of property

As per Para 2 of the policy of Govt of KP Local Govt Elections and Rural
Development Department for streamlining the affairs in the interest of Local
Councils property circulated vide No. AO-V/LCB/4-1/99 dated 21 July 1999, the
occupant of the property will be given an option to keep the property with him as
a lessee at the 70% of the market rate. Moreover according to Para 1 of the policy
of Govt of KPK Local Govt Elections and Rural Development Department for
streamlining the affairs in the interest of Local Councils property circulated vide
No AO-V/LCB/4-1/99 dated 21 July 1999 “the Local Council will assess the rate
of annual lease money for each unit at the prevailing market rate in the locality”.

TMA Bannu has commercial property and vacant plots on various prime
locations of District Bannu. It was observed during audit that leases of all the
shops and plots has expired and neither the lessees were paying the rent as
required under the law nor the TMA staff is making any effort to vacate the
property of TMA and allot the property to new lessors with new rent under the
law as a result of confusion between the TMA staff and the lessees due to this
TMA Bannu sustained a heavy loss of millions of rupees every year.

Non-auction occurred due to poor financial management which put TMA

to financial losses.

When pointed out in April 2021 management replied that detailed reply
on case to case basis would be given after checking record.

Request for DAC was made in April 2021 which could not be convened
till finalization of this report.

Audit recommends inquiry into the matter and fixing of responsibility on

the person(s) at fault.

11
3.1.9 Non-recovery of Income Tax on auction of contracts-Rs. 5.075
million

According to Para-10 of Local Government Department of Khyber

Pakhtunkhwa Notification No.AO-II/LCB/6-11/2013 dated 01-06-2013, “any
kind of revenue already levied during contract/lease period by the Federal
Government OR Provincial Government, the contractor shall be bound to comply
to pay according to prescribed rates of revenue. Any other revenue/fee etc;
imposed by the Provincial or Federal Government during the contract period will
also be applied on the contractor/firm who will be bound to pay the same. Section
236 B of the Income Tax ordinance 2001 lays down that income Tax be
recovered @ 15 of the bid price in the auction from non-filers.

TMA, Bannu auctioned different contracts for collection of revenues

during 2019-20 but income Tax @ 10% was not recovered from the contractors
and thus Government sustained a loss of Rs.5, 075,422.

Non-recovery of Income Tax occurred due to poor financial management

which put TMA to financial losses.

When reported in April 2021, Management replied that detailed reply

would be given after checking record.

Request for DAC meeting was made in April 2021 which could not be
convened till finalization of this report.

Audit recommends recovery of Rs.5,075,422 to be made from the

contractors under intimation to Audit.

3.1.10 Loss due to refusal of contractor-Rs. 5.439 million

According to Para-26 of Model Terms & Conditions of Contracts issued

by the Local Government Department of Khyber Pakhtunkhwa vide Notification
No.AO-II/LCB/6-11/2013 dated 20-12-2013; “Contract once awarded to a party
shall not be sublet to any other party. If the original contractor is not interested to
12
continue then contract shall be cancelled and re-auctioned at his risk and cost.
The agreement shall have to be entered into with the original highest bidder and
not with his partner or agent.

TMA, Bannu auctioned contracts of Fire Wood and Sign Board for the
year 2019-20 and M/S Muhammad Mushtaq & M/S Ameer Muhammad Khan
offered highest bids of Rs.5,275,000 & Rs.4,490,000 respectively. But later on,
the said contractors refused to execute agreements and taking charge of contracts
within specified period. The local office re-auctioned the contracts on low bids
which resulted into a loss of Rs.5, 439,000 due to refusal of contractor as per
detail given below:-
Highest Bid Re-auctioned
Name of Loss
S.No. Name of Contractor offered Bid
Contract (Rs.)
(Rs.) (Rs.)
1. Fire Wood M/S Muhammad 5,275,000 706,000 4,569,000
Mushtaq
2. Sign Board M/S Ameer Muhammad 4,490,000 3,620,000 870,000
Total 5,439,000

The local office failed to recover the loss from the highest bidder who
refused to take over the charge of contract as per Para-26 of model terms &
conditions of contracts.

The loss occurred due to poor financial management which put TMA to
financial losses.

When reported in April 2021, the department replied that bid was
according to rules and no loss given to TMA.

Request for DAC meeting was made in April 2021 which could not be
convened till finalization of this report.

Audit recommends recovery from the person(s) at fault.

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3.1.11 Non preparation of appropriation, finance and financial
statements of funds-Rs 754.512 million

Section 37(1) of the LGA 2013 lays down that The Auditor General of
Pakistan shall, on the basis of such audit as he may consider appropriate or necessary,
certify the accounts compiled and prepared by the respective accounts officials of local
governments for each financial year, showing annual receipts and disbursements for the
purposes of each local government and shall submit certified accounts with such notes,
comments or recommendations as he may consider necessary to the Government and
Nazim of the respective local council.

Budgetary and expenditure position of TMA Bannu for the year 2019-20 is
given as under:
Head of Accounts Revised Budget for 2019-20
Opening Balance on 1st July, 2019 Rs. 3,803,022
Receipts during the year 651,655,14
Total Receipts 655,458,164
Total Expenditure 754,512,311
Closing Balance on 30th June, 2020 Rs. 99,054,147

Audit observed that Appropriation Account, Finance Accounts and

Financial Statement were not prepared and submitted to audit to authenticate
allocation as well as grant-wise analysis of the expenditures.

Non preparation/maintenance of Appropriation Account, Finance Account

and Financial Statement for the year 2019-20 led to the violation of rules.

Irregularity was pointed out in the mount of April 2021, the department
replied that the notice for future compliance.

Request for DAC meeting was made in April 2021 which could not be
convened till finalization of this report.

Audit recommends preparation of Appropriation Account, Finance

Account and Financial Statement for the year 2019-20 on the approved form and
format as prescribed by the AGP.
14
 CONCLUSIONS

Keeping in view the discussion of issues and comments given in the

preceding chapter on revenue collection realization and its accounting system, it
can be concluded that TMA Bannu did not collect and realized revenue from own
source, economically, efficiently and effectively. The time value for money was
not achieved due to ill planning of revenue collection.

The survey conducted for the study has revealed there was no proper
accounting mechanism of revenue collection in TMA of District Bannu. TMA
failed to achieve receipt target. No action was taken against the defaulting
contractors. There was no proper planning to secure revenue resource from
wastage. Personal Force of TMA was not empowered in revenue collection.
There was decreasing trend of revenue collection due to departmental execution
of revenue resources.

15
 RECOMMENDATIONS

It is recommended that the flaws pointed out in the report may be

kept in mind while collecting own source revenue in future. There should be
proper planning and budgeting and accounting mechanism for maximization of
revenue collection and achievement of receipt targets for reducing dependency on
Provincial Government for grants. The management should fully auctioned all the
revenue generating contracts highest bid by adopting transparent bidding system.

It is also recommended to appoint internal auditor to audit revenue of

TMA. Moreover, proper record of printed receipt books with printing from
Government. Printing Press be maintained besides collecting staff be made
accountable for collection on the basis of issued printed receipts books duly
serially numbered with printed face value on each page. Further rotation of staff
be ensured so that chances of fraud/ embezzlement could be mitigated.

Furthermore, the study also recommends that;

Revenue resources should not be abolished without order of the

competent authority. TMA should search new means of revenue. Moreover legal
action should also be taken against the defaulter contractors.

Revenue collected should be deposited only in approved bank

accounts and may be reconciled with banks on monthly basis to avoid the
chances of misappropriation of revenue.

16
 ANNEXURES
Annex-A
QUESTIONNAIRE
Survey Questionnaire for Revenue collection, realization and accounting
mechanism at selected TMAs

District: Bannu Name of TMA: Bannu

This survey is a part of a special study planned to be conducted by

this Directorate. It covers facts, issues, opportunities and procedures
regarding collection and realization of revenue and its accounting mechanism
in TMAs. It includes sources of income to a TMA which includes Taxes,
sales proceeds, rental income, cattle fare, goat and sheep markets and various
fees. This survey also studies the knowledge of rules and procedures of
Personal force of TMAs and its skills and efforts towards collection and
realization of revenues and cooperation of Tehsil administration towards
enhancement and achievement of receipts targets. Most items on this form
require either Yes or No response. Whenever appropriate, you can make
detailed comments on additional sheets of papers. It is to be filled by each
Tehsil Municipal Officer who is also the head of the department in the TMA.

S.No. QUESTION RESPONSE

Yes No
1 Is there are any specify rules are available for No
realization and recording of TMA revenues?
2 The TMA staff is familiar with accounting rules? No
3 There is any training, book is in place regarding No
accounting and reporting of revenue?
4 What are the targets of revenue for the last three years? Rs.782,163,855
5 What are the actual receipts against revenue targets? Rs 773,065,899
6 Liabilities occurred during the last three years? Yes
7 Is the revenue of TMA being sufficient for TMA day to No
day business?
8 What types of the restriction the TMA is facing in 1.Political Pressure
collection of revenues? 2.Lack of cooperation
of community
9 Step taken by TMA to clear these restrictions? Yes
10 Is the local police and administration are helping the Minimum help
TMA officials in revenue collection?
11 Are annual accounts of revenue are maintained as per No
rules?
12 Either proper reporting system is in place? Yes
17
13 Both reconciliation with banks and all the related No
parties are in practice?
14 Any embezzlement in revenue reported and their latest No
position?
15 Steps taken against defaulter (the contractors whose Yes
files to pay Govt money in due course of time)
16 Any penalty imposed on defaulter? if imposed then its Yes
status?
17 Any report with reference to defaulter submitted to Yes
higher up?
18 Any legal proceeding taken against the defaulter? Yes
19 Whether there is proper reconciliation with banks in Yes
place?
20 Any study taken to discover new area of revenue? No
21 Whether Designated Banks Accounts were approved 50%
from Finance Department?
22 Whether guidelines rules/procedures are followed in Yes
awarding the contract regarding revenues generation?
23 The deduction made by the TMA (like Income Tax, Yes
Sale Tax and other third-party payment) are properly
and timely transferred to concerned?
24 Any reconciliation made with tax authorities? Yes
25 There is any difference found in reconciliation with tax No
authority? And action taken in this regard?
26 How many works/activities/contracts which are not 1
auctioned? And its financial impact?
27 The works/activities whose was not auctioned either Yes
the department made effort to generate revenue from
these activities?

18
 Annexure 1

Detail showing Non Recovery of Penalty

Cattle Fare Market City Bannu Urban

Actual Date of Dela Amount of

S.no due date Deposit y installment Penalty
1 10.7.19 Nil 10 2536363 405818.08
2 10.8.20 21.08.20 11 2536363 405818.08
Goat and sheep Market Banuu 0
3 10.01.20 Nil 20 584645 93543.2
4 10.02.20 17.02.20 17 584645 93543.2
Slaughter house Bannu 0
5 10.9.19 25.09.19 15 47727 7636.32
6 10.10.19 28.10.19 18 47727 7636.32
7 10.11.19 26.11.19 16 47727 7636.32
8 10.12.19 26.12.19 16 47727 7636.32
9 10.01.20 29.01.19 19 47727 7636.32
Mall Godam Bannu
2019-20 0
10 10.09.19 23.09.19 13 47364 7578.24
Total 6,528,015 1,044,482.40

19
Detail of Haved Gate Shops Annexure 2
(Amount in Rs)
Sr. Name of Allottee No. of Shop Monthly Rent Outstanding
No.
1 Khisroon Khan 1 3960 Nil
2 Mir Wali 2 2079 7560
3 Saad Ayaz 3 2079 13230
4 Muhammad Jalal 4 2079 2835
5 Noor Ayaz 5 2079 Nil
6 Sher Anjam 6 2288 Nil
7 Abdur Razzaq 7 2080 1890
8 Umar Ali 8 2080 Nil
9 Umar Ali 9 2080 Nil
10 Muhammad Ghani 10 2080 Nil
11 Said Rehman 11 2080 11340
12 Shaheen Badshah 12 2080 Nil
13 Afraz Khan 13 3120 Nil
14 Imtiaz Khan 14 3120 34020
15 Muhammad Hassan 15 3120 22680
16 Muhammad Akram 16 2080 52574
Total 109274
Detail of GPO Shops
Sr. Name of Allottee No. of Shop Monthly Rent Outstanding
No.
1 Mir Hatim Shah 1 1857 Nil
2 Gul Riaz 2 1857 Nil
3 Mir Hatim Shah 3 1857 Nil
4 Nadir Shah 4 1857 116780
Total 116780
Detail of Cantt Plaza Shops
Sr. Name of Allottee No. of Shop Monthly Rent Outstanding
No.
1 Ahmad Ali 1 2421 153968
2 Mir Ahmed Khan 2 2421 153968
3 Sajda Begum 3 2421 153968
4 Muhammad Ali Shah 4 2421 153968
5 Sajda Begum 5 2421 153968
6 Dost Muhammad Khan 6 2421 153968
7 Dost Muhammad Khan 7 2421 153968
8 Muhammad Javed 8 2421 153968
9 Sardar Muhammad Shah 9 2421 153968
10 Gul Sharif 10 2421 153968
20
11 Sher Dil 11 2421 153968
12 Nazif Ullah 12 2421 153968
13 Iqbal Ayaz 13 2421 153968
14 Haji Rahim Dil 14 2421 153968
15 Abdul Jalil 16 2421 153968
16 Jahan Zeb 15 2421 127556
17 Akhtar Ali 17 2421 119424
18 Rafi Ullah 18 2421 153968
19 Muhammad Rehman 19 2421 153968
20 Noor Dar Ali 20 2421 153968
21 Nasir Ahmed 21 2421 153968
22 Ghulam Manzoor Shah 22 2421 153968
23 Sher Afzal 23 2421 153968
24 Ashraf Ali Shah 24 2421 153968
25 Ijaz Rasool 25 2421 153968
26 Faiz Rehman 26 2421 153968
27 Jahan Zeb 27 2421 153968
28 Waqas Ali Shah 28 2421 59664
29 Munawar Khan 29 2421 153968
30 Khurshid Khan 30 2421 135824
31 Safina Ijaz 31 2680 50124
32 Abdul Nasir 32 2421 93968
33 Altaf Hussain 33 2680 58464
34 Altaf Hussain 34 2680 58464
35 Altaf Hussain 35 2680 58464
36 Altaf Hussain 36 2680 58464
37 Shah wazir 37 2421 143324
38 Maqbool Rehman 38 2421 153968
39 Balqiaz 39 2421 153968
Total 5,274,844

21