In two previous articles I wrote on accountability and the Public Accounts Committees (PACs) for these pages, I had discussed the critical need for rebuilding Pakistan’s system of parliamentary accountability through reform of the PACs, the auditor general of Pakistan (AGP) and the controller general of accounts (CGA).
These three institutions form the core pillars of the state’s financial accountability architecture, yet over the years, they have become relics of a colonial design – operating through outdated processes, producing voluminous reports, but delivering negligible improvement in governance or public value.
Nowhere is this dysfunction more visible than in the audit system itself. The office of the auditor general, the country’s supreme audit institution, continues to function largely as it did under British rule – a clerical, transaction-checking department more focused on counting irregularities than improving systems through necessary corrective actions. Its recent reports have become emblematic of the problem.
The most recent Consolidated Audit Report (FY2023-24) claimed an astounding Rs375 trillion in ‘irregularities’ – over three times the size of Pakistan’s GDP (about Rs110 trillion) – before the AGP withdrew the figure as a ‘typographical error’ and issued a corrected version of Rs9.77 trillion. Even that figure is enormous. But beyond the numbers lies a deeper issue: an audit system that has lost its own credibility.
Each year, the AGP’s reports fill headlines and shelves alike, but they rarely result in meaningful reform or improvement. This is not because irregularities do not exist – they do – but because the audit process has become mechanical and ineffective. It lacks prioritisation, focusing on minor procedural lapses as much as major leakages; it lacks clarity, bundling non-compliance, inefficiency and genuine corruption under the same label of ‘irregularity’; and it lacks follow-through, as the PACs at the national and provincial levels are unable to review and dispose of even a fraction of the backlog of audit paras.
Some audit reports remain pending for 20-30 years. The pendency in the PACs, as reported in my previous articles, in the national and Punjab assemblies exceeds 10–12 years, while Sindh’s PAC has a backlog of over two decades and Balochistan’s approaches three. Such paralysis in oversight renders the entire process meaningless.
Part of the reason for this failure is structural. Pakistan’s audit system still combines the functions of accounting and auditing within the same broad institutional framework. Although the Controller General of Accounts Act, 2001 nominally separated the accounting function, in practice the AGP continues to exercise significant administrative influence over the CGA and the accountant general offices, whose primary role is to maintain accounts and execute payments. This dual control is a legacy of the colonial system, where the same authority both recorded and checked expenditures. Modern democracies long ago abandoned this arrangement because it violates the basic principle of audit independence: one cannot audit what one prepares or administers.
Among common law countries, Canada provides perhaps the best example of how to build a credible, independent, and professional audit institution. Its office of the auditor general (OAG) is fully autonomous from the executive and completely detached from the accounting function, which is handled by the Receiver General for Canada under the Treasury Board. The auditor general performs only ex-post audits of financial statements, operations, and performance of federal departments and Crown corporations. The office has no role in maintaining or authorising accounts, ensuring a clean firewall between management and oversight.
The Canadian model also ensures professional leadership and parliamentary accountability. The auditor general is appointed following consultation with recognised political parties in Parliament and serves a non-renewable 10-year term. Removal is possible only through a joint resolution of both Houses of Parliament, not at the pleasure of the government. The AG must be a Chartered Professional Accountant (CPA) with proven experience in public-sector auditing. The OAG reports directly to the speaker and the Public Accounts Committee, conducts performance and environmental audits and compels ministries to submit written responses and remedial plans. The results are tangible – each report carries weight, and its recommendations lead to measurable improvements.
A comparable example is New Zealand, where the controller and auditor-general functions as an officer of parliament under the Public Audit Act 2001. The treasury manages government accounting, while the auditor-general audits those accounts independently through Audit New Zealand and licensed private audit firms. The system is transparent, professional, and impact-driven. Departments are required to respond to audit findings, and follow-up reviews are published for public scrutiny. Both Canada and New Zealand exemplify what Pakistan’s audit system is not: independent of the executive, separated from accounting, led by professionals and supported by strong legislative oversight.
In contrast, the auditor general of Pakistan remains dependent on the executive for appointment, resources and personnel. Most AGPs have been retired bureaucrats without professional audit experience or expertise. The office reports to parliament only nominally; in reality, its accountability is diffused, and its performance is never evaluated. The result is an audit institution that produces noise but no change. The same irregularities recur year after year because no one is responsible for implementing recommendations.
The PACs, hamstrung by capacity constraints and political interference, are unable to convert findings into reforms. There are no statutory timelines for government responses, the minutes of Departmental Audit Committees (DACs) are not published, and no public dashboards track implementation.
Reform must therefore begin by redefining the very foundation of Pakistan’s audit system. First, the functions of accounting and audit must be completely separated. The Controller General of Accounts should be placed administratively under the Ministry of Finance at the federal level and respective Provincial finance departments at the provincial level, responsible solely for maintaining and reporting government accounts. The auditor general should be reconstituted as a purely post-audit institution, headed by a person with appropriate experience and expertise in professional auditing and reporting directly to parliament.
Second, a modern Public Audit Act should replace the outdated framework, clearly spelling out the AGP’s mandate, independence and reporting obligations. The appointment should be made by the president on the advice of the Public Accounts Committee, through a transparent process open to qualified audit professionals.
Third, the AGP’s role must expand beyond compliance to include performance and value-for-money audits that assess whether public spending achieved its intended results. Reports should quantify actual financial impact, differentiate between procedural lapses and systemic failures, and recommend time-bound corrective measures. Every major report should trigger a mandatory meeting with the concerned ministry or department within 60 days, followed by PAC hearings.
Fourth, the PACs themselves need to be strengthened – staffed with professional auditors, economists and data analysts, equipped with digital tools and supported by independent secretariats. Without a functional PAC, even the best audit system will collapse into irrelevance.
Finally, Pakistan must move towards professionalising and digitising its audit function. Real-time access to financial data, digital payment systems and procurement platforms can enable risk-based audits that focus on material issues rather than clerical errors. Specialised audit units should be created for state-owned enterprises, infrastructure and social sectors, staffed with experts rather than generalists.
Without these changes, Pakistan will remain trapped in an accountability paradox – an elaborate audit apparatus that exposes shallow irregularities worth trillions but fixes none. The credibility of the state’s own watchdog is at stake.
The experience of countries like Canada and New Zealand shows that true audit reform does not come from louder reports or bigger numbers; it comes from independence, professionalism and follow-up. Until Pakistan builds these foundations, the annual spectacle of ‘trillions in irregularities’ will continue to mock the very idea of accountability.
The writer is a former managing partner of a leading professional services firm and has done extensive work on governance in the public and private sectors.
He tweets/posts @Asad_Ashah
