Audit Flags Rs3.17 Trillion Unapproved Federal Spending

Audit reports for Audit Year 2025-26 have raised serious concerns regarding federal fiscal governance and expenditure controls after identifying significant instances of unapproved supplementary grants, excess spending, lapsed allocations, and cases involving alleged embezzlement and misappropriation in the federal government’s financial accounts for FY2024-25.

According to the audit findings, the federal government secured supplementary grants amounting to Rs3,454 billion during the fiscal year, of which approximately Rs3,177 billion — nearly 92% — reportedly remained unapproved by Parliament. The Auditor General has questioned whether the constitutional and parliamentary requirements governing public expenditure were properly complied with in the process of obtaining and utilising these funds.

The reports further noted that supplementary grants worth Rs1,833 billion were obtained for repayment of loan principal without adequate assessment of actual financing requirements, resulting in excess provisioning and expenditure concerns.

In a separate observation, auditors reported that actual spending exceeded the final grant authorised by Parliament by Rs187 billion, raising additional concerns regarding budgetary discipline and adherence to approved appropriations.

The audit also identified broader weaknesses in the federal budget formulation process. It was observed that various federal entities sought budgetary allocations totalling Rs3,809 billion without conducting proper needs-based assessments or realistic financial planning.

Despite obtaining substantial allocations, 115 cost centres failed to utilise funds amounting to Rs87 billion, which subsequently lapsed at the close of the financial year. In addition, supplementary grants of Rs41 billion also remained unspent, further highlighting inefficiencies in expenditure planning and execution.

The Auditor General additionally flagged multiple violations of constitutional and financial management requirements. Among them was the transfer of Rs7 billion from the Federal Consolidated Fund to the Public Account in a manner reported to be inconsistent with Article 78 of the Constitution of Pakistan.

The audit also pointed out that unclaimed deposits worth Rs24 billion lying in dead accounts were not transferred to the government account as required, raising questions over financial oversight and compliance with applicable procedures.

Further weaknesses were identified in government accounting and reporting systems, including failure to prepare debt and loss reports, non-maintenance of fixed asset registers and liabilities registers, and irregularities in the recording of General Provident Fund subscriptions in individual GP Fund accounts.

The Auditor General observed that the majority of federal entities did not maintain functional internal audit units. In several organisations, Chief Internal Auditors had not been appointed, weakening internal oversight mechanisms and contributing to control failures, procedural irregularities, and potential losses of public funds.

The audit reports also identified two cases involving alleged embezzlement, misappropriation of public money, and fictitious payments. In addition, auditors highlighted 82 cases involving recoverable amounts and 78 cases reflecting weak internal control environments.

In light of these findings, the Auditor General recommended that cases involving embezzlement and misappropriation of public money be referred to the relevant investigative authorities for appropriate legal and administrative action.

The audit observations are expected to intensify scrutiny over the federal government’s fiscal discipline, parliamentary oversight of public finances, transparency in budget execution, and the effectiveness of accountability and internal control mechanisms within public sector institutions.