This is the first in a series of articles on Pakistan’s broken financial reporting system and why budgets cannot be accountable without timely accounts made credible by audit.
Every June, Pakistan’s federal and provincial governments ask elected assemblies to approve trillions of rupees for the coming financial year. Budget speeches are delivered, new taxes announced, subsidies promised and claims made about fiscal responsibility.
One basic question is rarely asked: where is the credible, current, independently audited account of what the state actually collected and spent in the last completed year?
A budget is not a financial statement. It is an estimate, a plan, an authority to spend public money. A revised estimate is not actual expenditure either but rather a management estimate prepared before the year has closed. Even a number labelled ‘actual’ may be provisional, unaudited, unreconciled or built on classifications nobody has bothered to explain. Yet, parliament and provincial assemblies are asked to approve next year’s budget without ever being shown, clearly and centrally, audited financial statements and appropriation accounts for the year just completed.
No listed company could raise money from investors on this basis. No bank would lend responsibly without audited financial statements. The state, however, raises and spends trillions in precisely this manner. This is budgeting without accountability.
Federal budget documents once offered at least some visibility into previous-year actual expenditure, unaudited as it was. That practice has weakened: the Annual Budget Statement now sets out budget estimates for the coming year and revised estimates for the current one, but previous-year actuals no longer sit at the centre of the document, where parliament could compare what was budgeted, revised and actually spent in one sequence. A few such figures survive in supplementary papers like performance-based budget books – useful, but no substitute for audited actuals placed before parliament as the basis of scrutiny.
Provinces are no more consistent. Sindh has kept a fuller budget-book tradition; Khyber Pakhtunkhwa publishes budget and actual revenue and expenditure separately. But nowhere in the federation is there a settled practice of presenting last year’s audited actuals, tied to financial statements and auditor-general opinions, before the next budget is tabled.
The effect runs through the entire fiscal debate. Tax rates, deficits, debt servicing, provincial shares, subsidies, education and health spending, IMF targets – all of it gets argued over before anyone has established whether the underlying numbers were independently verified. We debate the future without properly accounting for the past.
The distinctions are not academic. A budget estimate is intent. A revised estimate is expectation. A provisional actual is what has been recorded so far, nothing more. Only an audited financial statement tells us whether receipts and expenditure are complete, properly classified, reconciled and prepared under an accepted reporting framework. Audit exists to give accounts their credibility – without it, every fiscal number is just a management assertion.
This is not a technical accounting complaint. It touches the core of democratic control over public money. Parliament does not simply listen to budget speeches; it authorises taxation and spending, and that authorisation only means something if legislators can later check what was approved against what actually happened. Without timely audited accounts, no one can say whether ministries stayed within their limits, whether development funds were used, whether supplementary grants were justified or whether public money went where the legislature sent it.
The stakes are higher still in the provinces, which have carried primary responsibility for education, health, local government, agriculture and social services since the 18th Amendment – the sectors that shape ordinary lives most directly. When provincial accounts arrive late, incomplete and unaudited, citizens and stakeholders lose the ability to judge whether the government’s reporting is reliable.
Public reporting compounds the confusion rather than resolving it. Budget documents, revised estimates, fiscal operations data, Economic Surveys, accountant general statements and audit reports often tell different stories about the same money – education expenditure by department here, by function there, by current-versus-development split somewhere else. Grants to universities, hospitals and autonomous bodies get treated inconsistently; medical education turns up under health in one place and education in another. The figures are not necessarily wrong. Nobody reconciles them or says whether a number is provisional, final, or audited. Every figure becomes contestable because nothing forces it to settle.
Pakistan has institutions built to prevent exactly this. The controller general of accounts and accountant general offices keep government accounts and prepare financial statements; the auditor-general audits public money; Public Accounts Committees examine accounts and audit reports; finance ministries draw up budgets and fiscal statements; principal accounting officers answer for the proper use of public resources. The architecture exists on paper. In practice, the public still cannot get a reliable answer to the most basic question in public finance: what did the government actually receive and spend, and was that statement independently audited?
Audited financial statements carrying auditor-general opinions have existed in some years. The failure is not that such statements never existed; it is that Pakistan has never institutionalised a regular, current, publicly accessible system in which the federal government, each province and the federation as a whole publish annual financial statements with clear audit opinions attached, year after year, on schedule.
The Public Accounts Committee should not exist merely to relitigate old audit paras and recoveries. Its deeper job is protecting the legislature’s grip on public money, and its first question every year should be whether finance accounts and appropriation accounts were prepared, audited, tabled and examined on time. When audited accounts for the last completed year are missing at budget time, the PAC should say so plainly: Parliament is being asked to approve future spending with no verified knowledge of past spending.
The auditor-general’s role matters just as much. The AGP is not a departmental auditor; it is a constitutional office meant to give parliament and the provincial assemblies independent assurance. Producing thick volumes of findings of irregularities years after the fact does not discharge that duty. The AGP has to timely audits annual accounts and appropriation accounts, state qualifications clearly, and tell legislatures whether the numbers in front of them can be trusted.
Pakistan’s Public Finance Management Act was a genuine reform, but it stops short of solving this. It governs budget management, cash management and fiscal discipline to an extent, but imposes no statutory requirement for timely audited financial statements, clear audit opinions, ministerial certification, defined Principal Accounts Officer (PAO) responsibility, clear consolidation boundaries or mandatory parliamentary follow-up.
Every budget should show, side by side, audited actuals for the last completed year, revised estimates for the current year, and budget estimates for the next. Where audited actuals are not available, the budget should say so prominently. No figure should pass quietly as ‘actual’ without disclosing whether it is provisional, final, or audited.
Pakistan’s fiscal crisis is usually told as a story of weak tax collection, high debt, excessive subsidies and slow growth. All true. But underneath it sits a deeper crisis of financial truth: no government should be allowed to ask for next year’s money without first accounting for last year’s. Until that principle is enforced, the annual budget will remain what it has too often been: a grand announcement of intentions, unsupported by a credible account of results in the form of audited financial statements.
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
