The International Monetary Fund (IMF) has warned that Pakistan’s weak audit and oversight structure is placing nearly Rs40 trillion in federal public funds at significant fiduciary risk, citing long-standing gaps in internal controls, staffing shortages and the limited independence of the Auditor General’s Office, Dawn reported, citing the Fund’s Governance & Corruption Diagnosis Assessment.
According to the report, Pakistan continues to face persistent irregularities because ministries neither address internal audit findings nor ensure responsive engagement with external audits. The IMF noted that more than 6,000 audit reports are produced annually, yet most remain without follow-up, leaving 75 per cent of 34,000 recommendations still pending before the Public Accounts Committee (PAC).
One of the IMF’s central concerns is the absence of Chief Internal Auditors (CIAs) across ministries, despite the Public Finance Management Act 2019 requiring their appointment by 2020. Instead, 25 chief finance and accounts officers are posted in certain ministries, a separate role, while 15 ministries do not even have these positions filled. The Fund said this lack of internal audit capacity has undermined effective control over public resources.
The IMF also questioned the structural placement of the Office of the Auditor General of Pakistan (AGP), which continues to function as an attached institution of the Federal Secretariat. Despite constitutional autonomy, the AGP reports through executive channels before reaching parliament, a system the Fund said weakens institutional independence and objectivity.
Staffing constraints have further hindered audit capacity. The AGP reported a shortage of around 1,500 positions due to hiring limitations imposed by fiscal constraints and reliance on approvals from the Federal Public Service Commission. While the AGP’s budget is charged expenditure, exempt from parliamentary voting, the office still depends on Finance Division releases, binding it to routine budget execution rules.
The Fund also highlighted inefficiencies in the audit reporting process. It said many documents, including the 4,000-page compliance audit report for FY2023-24, repeatedly list unresolved irregularities because ministries fail to respond or implement corrective measures. The absence of a tracking mechanism to monitor compliance with PAC directions further diminishes the impact of the oversight system.
Pakistan’s audit architecture, the IMF said, must be strengthened through reforms that ensure concise reporting, prioritise high-impact findings, and mandate timely PAC review. It recommended developing a system that holds executive authorities accountable for ignoring audit recommendations, along with amending the AGP Act and PAC regulations to enhance institutional authority.
Calling both internal and external audit systems essential for safeguarding public resources, the IMF said Pakistan must modernise its audit and parliamentary oversight structures to curb recurring mismanagement and improve value for taxpayer money.
