Public money is not the private property of those who temporarily exercise political power. It belongs to the people, collected through taxes, duties, fees and other compulsory contributions, and must be utilised exclusively for lawful public purposes. Its management requires transparency, financial discipline, efficient allocation, measurable outcomes and independent scrutiny.
These principles are neither novel nor optional. They are embedded in Pakistan’s Constitution, public financial management legislation, financial rules and the institutional framework governing independent audit. Nevertheless, successive governments have continued to confuse expenditure with achievement, budgetary allocations with service delivery, and extensive publicity with evidence of good governance.
The latest controversy surrounding Punjab’s public accounts demonstrates how deeply this confusion has penetrated the machinery of government. Kamran Khan’s investigation in On My Radar, broadcast on November 9, 2026 and its follow up covering all other provinces, highlighted serious audit objections concerning provincial expenditure, outstanding loans, unreconciled receipts, unpaid scholarships, procurement and public funds retained outside prescribed accounting arrangements across the country, including federal government.
Taking the case of Punjab first, according to the investigation, the audit summary identified irregularities amounting to approximately Rs. 5.25 billion, while a reading of individual audit observations suggested financial implications exceeding Rs. 46 billion.
These figures require careful examination because audit objections do not all represent established financial losses. Outstanding loans, uncollected revenues, irregular expenditures, unreconciled accounts and suspected misappropriation are distinct accounting and legal categories. They cannot be added indiscriminately and labelled corruption.
Equally, their classification as audit objections does not diminish their seriousness. Each requires explanation, documentary verification, corrective measures and, where wrongdoing is established, recovery and appropriate legal proceedings.
The investigation reported that approximately 200 offices out of more than 5,000 were audited, covering around 19% of auditable expenditure. The percentage alone cannot establish the adequacy or inadequacy of audit coverage, since modern auditing employs risk-based selection and sampling. However, it raises an important institutional question: whether the audit scope, resources and methodology are sufficient to provide meaningful assurance about the integrity of Punjab’s enormous public expenditure.
The more disturbing evidence lies in the persistence of financial-control deficiencies. The Auditor-General’s Report on the Accounts of Expenditure of the Government of Punjab, Audit Year 2024–25, principally examining financial year 2023–24, expressly recorded recurring irregularities and weaknesses in internal controls. Its observations included Rs. 352.875 billion in unrecovered loans and advances from public-sector companies, corporate bodies and development authorities, notwithstanding further lending of Rs. 48.387 billion during that financial year.
The same report identified Rs. 44.373 billion held in commercial-bank accounts of various provincial entities as of February 13, 2024, together with Rs. 2.845 billion in accrued profit that had not been reported and deposited as required. It also recorded Rs 5.393 billion in receipts of district education and health authorities that had not been transferred to the designated provincial account.
These are historical audit observations, and their subsequent settlement status must be established. Their significance lies in demonstrating that weaknesses in cash management and financial reconciliation had already been identified well before the present controversy.
Particularly revealing was the Auditor-General’s observation concerning Rs. 466.477 billion in outstanding or recoverable dues, diverted funds, unrecovered loans and amounts held in commercial accounts. This was a composite audit classification, not a determination that Rs. 466.477 billion had been stolen.
Nevertheless, the report noted that similar issues had appeared in earlier audit years and expressly described their recurrence as a matter of serious concern. Some paragraphs remained pending for departmental compliance. The repeated identification of comparable weaknesses suggests an accountability mechanism that detects failures more readily than it ensures their permanent correction.
The latest federal Fiscal Operations Report for fiscal year 2025–26 reinforces concerns about the transparency of provincial financial reporting. Table 6, relating specifically to Punjab, records total revenue of Rs. 4,651.022 billion, current expenditure of Rs. 2,778.398 billion and development expenditure of Rs. 1,224.718 billion. It also records a negative statistical discrepancy of Rs. 266.470 billion and an overall reported fiscal surplus of Rs. 914.376 billion.
The significance of the statistical discrepancy cannot be ignored. Without that adjustment, the difference between recorded revenue and the two principal expenditure categories would be Rs. 647.906 billion rather than Rs. 914.376 billion. The Ministry of Finance attributes Punjab’s discrepancy principally to increased commercial-bank deposits.
Such adjustments may arise legitimately from movements in cash balances, timing differences and the reconciliation of financial and fiscal accounts. They are not, in themselves, evidence of theft or misappropriation.
However, a discrepancy exceeding Rs. 266 billion demands a complete and accessible explanation identifying the relevant bank balances, accounts, adjustments and reconciliation methodology. Its size, particularly when considered alongside earlier audit observations concerning commercial-bank accounts, underlines the importance of reliable cash management and timely fiscal reporting.
The public is entitled to understand whether reported fiscal balances reflect actual expenditure, cash movements, outstanding liabilities and accounting adjustments in a transparent and consistent manner.
What makes these disclosures especially significant is the existence of two modern statutes expressly designed to strengthen public financial management: the federal Public Finance Management Act, 2019, amended up to June 30, 2024, and the Punjab Public Financial Management Act, 2022. Both recognise that responsible management of public resources requires much more than conventional bookkeeping and annual budget approvals.
The federal Act establishes a comprehensive framework for budgetary management, institutional responsibilities, financial propriety, cash management, fiscal reporting and accountability. Its definition of financial propriety incorporates compliance with law, prudence, vigilance, due diligence and value for money.
It recognises outputs as services delivered and outcomes as their effects on the intended beneficiaries. This distinction is fundamental. A government may construct buildings, purchase equipment, launch programmes and exhaust budgetary allocations without achieving meaningful improvements in the lives of citizens.
The federal statute directly governs federal financial management and cannot automatically be applied to Punjab’s provincial expenditure. Nevertheless, its principles demonstrate the broader legislative recognition that public finance must be assessed through economy, efficiency and effectiveness. Punjab has incorporated corresponding obligations into its own legislation.
The Punjab Public Financial Management Act, 2022, enacted as Act XXXVII of 2022, is particularly important. Section 3 establishes principles relating to financial discipline, transparency, checks and balances, performance indicators and reporting. Section 4 provides for medium-term fiscal planning, while Sections 6 and 7 connect budgetary allocations with performance indicators and departmental reporting.
Under Section 7, departments must submit reports within three months of the close of the financial year, detailing actual outputs, outcomes and key performance indicators, together with explanations for differences between agreed targets and achievements.
This provision alone challenges the prevailing culture of governmental publicity. A publicly financed advertisement announcing a new hospital, educational scheme, sanitation initiative or development project cannot substitute for the statutory performance assessment.
What matters is whether healthcare accessibility improved, patients received effective treatment, children acquired measurable learning outcomes, sanitation services reached intended households and public investment generated durable economic and social benefits. Expenditure is an input. Administrative activity produces outputs. Public welfare depends on outcomes.
Sections 18 and 19 of the Punjab Act address fiscal risks and require an organised framework for their identification, assessment and reporting. Sections 20 to 22 establish fiscal and debt-related controls. Sections 39 and 40 concern departmental finance and accounts arrangements and internal financial controls. Section 41 requires budget execution reporting, including comparisons between budgeted and actual revenue, expenditure, budget balances, borrowing and lending, as well as variance analysis. Section 42 addresses financial reporting and transparency.
These provisions create a statutory framework against which Punjab’s financial management can be assessed objectively. The immediate task is to determine whether the required reports have been prepared on time, contain reliable information, explain significant deviations, disclose material fiscal risks and demonstrate actual implementation of corrective measures. The existence of a statute cannot prove compliance with it, just as the existence of an audit objection cannot, without further evidence, establish a specific statutory violation.
Punjab has taken some steps towards fulfilling its reporting obligations. Its Fiscal Risks Statement 2024–25 expressly acknowledges the requirements of the 2022 Act and discusses risks associated with fiscal planning, debt, liabilities and budgetary deviations. Such reporting should be recognised as a positive institutional development. The decisive test, however, is whether identified risks are properly quantified, mitigation measures are actually implemented, and subsequent accounts demonstrate improved financial discipline.
Consider the financial relationship between the provincial government and the companies operating under its control. According to the latest investigation, eight waste-management companies had outstanding loans of approximately Rs. 146 billion, including around Rs. 106 billion attributed to Lahore’s waste-management company. The reporting further indicated that additional loans were granted despite the absence of repayments during the relevant period and that audited financial statements had not been furnished to auditors.
These matters raise questions extending beyond conventional government expenditure. If public companies repeatedly receive loans without generating adequate resources to service them, the fiscal implications must be disclosed and assessed. Whether a particular entity performs a commercial or essential social function, its financial relationship with the government should be transparent.
Loans, subsidies, equity contributions, guarantees and service payments must be distinguished. The legislature should know whether apparent loans are recoverable financial assets or, in substance, continuing budgetary support.
Financial management also fails when authorised welfare expenditure does not reach intended beneficiaries. The reported non-disbursement of scholarships to more than 317,000 girls under the Zewar-e-Taleem programme illustrates why performance reporting must go beyond the release of funds.
The transfer of money to a bank or implementing agency cannot be treated as the successful delivery of a scholarship. The relevant measure is the number of eligible students actually paid, the amounts received, the timeliness of payments and the educational outcomes achieved.
Similar principles apply to healthcare procurement, relief packages and social-security contributions. Public expenditure becomes meaningful only when the intended beneficiaries receive lawful and effective services. Records of procurement, beneficiary verification, inventory, payments and performance must be capable of independent examination. Where audit findings concern unpaid entitlements or potentially unsafe medical supplies, financial accountability also becomes a question of human welfare.
The constitutional foundations of these obligations are unambiguous. Article 118 of the Constitution establishes the Provincial Consolidated Fund and Public Account, while Article 119 provides for regulation of the custody and withdrawal of public money. Articles 120 to 124 establish the framework for provincial budget presentation, authorisation and supplementary or excess expenditure.
Articles 168 to 171 establish the office and functions of the Auditor-General and the process for submitting audit reports to the legislature. Article 19A recognises the right of access to information in matters of public importance, subject to the applicable legal framework.
These constitutional requirements must be read together with the Auditor-General’s (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001, the Controller General of Accounts Ordinance, 2001, Punjab Financial Rules, the Punjab Treasury Rules, the provincial procurement legislation and the Punjab Transparency and Right to Information Act, 2013.
The constitutional system envisages a complete accountability cycle. The legislature authorises expenditure; the executive implements the budget; accounting authorities maintain records; the Auditor-General independently examines public accounts; the legislature considers audit reports through its established procedures; and responsible institutions ensure lawful correction, recovery and prevention of recurring deficiencies. Each institution has a distinct function. None can discharge its responsibilities merely by pointing towards another.
The public finance debate must also recognise a structural weakness identified long before the present audit controversy. In their December 2010 study, Fiscal Federalism in Pakistan: A Radical Departure and Some New Challenges, Ijaz Nabi and Hina Shaikh examined the consequences of fiscal decentralisation under the Seventh National Finance Commission Award and the Eighteenth Constitutional Amendment. They emphasised the need for prudent provincial expenditure, stronger revenue mobilisation, improved management of public resources and genuine decentralisation to elected local governments.
This analysis remains pertinent. Provinces receive substantial resources through federal transfers while exercising considerable authority over expenditure. Such arrangements are constitutionally legitimate, but weak provincial revenue effort combined with inadequate expenditure accountability can weaken incentives for fiscal discipline. Governments may claim credit for development financed predominantly through shared national revenues without subjecting their spending priorities to rigorous public scrutiny.
The issue is not that federal transfers belong to the federation after constitutional distribution. They become legitimate provincial resources. The issue is whether these resources are deployed efficiently, equitably and transparently. Provincial autonomy was not intended to remove public accountability. Greater autonomy necessarily carries greater responsibility for resource mobilisation, expenditure management and public-service delivery.
Article 140A of the Constitution adds another neglected dimension. Genuine fiscal decentralisation requires elected local governments to possess meaningful administrative and financial responsibilities.
Punjab’s continuing dependence on highly centralised provincial decision-making raises questions about whether local communities exercise adequate control over services affecting their everyday lives. Provincial development campaigns cannot replace transparent and accountable local institutions capable of identifying local priorities and evaluating actual delivery.
Our earlier work on fiscal management, presented at the Forum of Federations and other policy forums, consistently argued that taxation cannot be reformed independently of expenditure and governance.
A government demanding greater tax compliance while tolerating avoidable waste, unrecovered public dues and ineffective service delivery undermines the reciprocal relationship between citizens and the state. Taxpayers are legally obliged to pay taxes lawfully imposed. They are equally entitled to demand lawful and transparent management of the resulting public resources.
This relationship is particularly important in a country where salaried persons, consumers and documented businesses frequently experience taxation through deductions and indirect levies, while substantial economic privileges and untaxed capacities continue to invite scrutiny. The legitimacy of public finance depends not only on collecting revenues but also on demonstrating fairness in their collection and integrity in their use.
Against this background, extensive government advertising requires closer examination. Public authorities legitimately need to inform citizens about health facilities, educational opportunities, emergency services, vaccination campaigns and social protection programmes. Such communication can produce substantial public benefits. The difficulty arises when publicly financed information becomes indistinguishable from the promotion of political officeholders or parties.
The appropriate response is not to assume that all government advertising is unlawful. It is to require publication of complete advertising expenditure, campaign objectives, approving authorities, procurement arrangements, media allocations and measurable public benefits. The naming and branding of publicly financed projects should likewise be examined against applicable laws, policies and principles of institutional neutrality. Public resources must serve public purposes rather than personal political advantage.
A modern fiscal accountability framework should make this distinction verifiable. The Department of Information and Culture and all other spending departments should publish campaign-wise accounts, details of competitive procurement where required, and independently assessable performance indicators. Government claims of successful public communication can then be evaluated against evidence rather than political assertion.
The Public Accounts Committee process requires comparable transparency. Audit reports should not become archives of unresolved objections. Every major observation should have a publicly ascertainable status, including the department concerned, amount involved, explanation furnished, determination reached, recovery ordered and action completed. Repeated observations deserve particular scrutiny because they reveal not merely an isolated administrative lapse but possible failure of the corrective machinery itself.
The government should also publish a complete reconciliation of the Rs. 266.470 billion statistical discrepancy for financial year 2025–26, specifying the relevant bank accounts, deposits, accounting adjustments and fiscal classification. The Finance Department, Accountant General Punjab and other concerned institutions should jointly establish the reasons for the discrepancy and explain its effect on the reported surplus. This exercise should distinguish differences arising from reporting methodology from actual control weaknesses or financial irregularities.
A second priority is a comprehensive assessment of compliance with the Punjab Public Financial Management Act, 2022. It should identify whether the statutory departmental performance reports, budget execution reports, fiscal-risk disclosures and internal-control manuals have been prepared and published as required. Where records are unavailable, the responsible authorities should explain whether the documents were never prepared, prepared late or prepared but not made publicly accessible. These are different failures requiring different remedies.
Third, public-sector companies and autonomous bodies receiving substantial provincial support should be subject to consolidated fiscal-risk reporting. Their financial statements, government loans, guarantees, subsidies and repayment schedules must be accessible to legislative oversight. Public ownership cannot justify indefinite financial opacity, nor can the provision of essential services excuse the absence of credible accounts.
Fourth, procurement transparency must be strengthened through open access to tender announcements, evaluation reports, contract awards, amendments, final costs and independently verified delivery. Where procurement methods other than open competition are legally permitted, the reasons and authorisations should be documented. Digitalisation can reduce opportunities for manipulation only when audit trails remain complete, interoperable and independently accessible.
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Fifth, the existing audit framework should progressively strengthen performance and value-for-money examination alongside compliance and financial audit. The question whether a transaction was properly authorised remains essential. Equally important is whether the public received appropriate value and whether the spending achieved its declared purpose.
None of these proposals requires the invention of another elaborate financial bureaucracy. Most can be implemented by enforcing existing constitutional provisions, statutory duties and financial rules, supported where necessary by targeted regulatory amendments, improved institutional capacity and effective legislative oversight.
Responsibility also extends beyond the provincial government. The Auditor-General must have the independence, expertise and resources to conduct meaningful audits; accounting authorities must maintain reliable financial records; the legislature must examine audit findings diligently; and independent media and civil society must have access to the information necessary for informed scrutiny. Public accountability is weakened whenever these institutional responsibilities are treated as ceremonial functions.
Punjab’s government is entitled to explain audit objections, demonstrate subsequent recoveries and place evidence of completed reforms before the public. It is equally entitled to receive recognition for improvements supported by credible data. However, neither political criticism nor government publicity should determine the findings. The proper standards are the Constitution, applicable statutes, audited records and objectively verified public outcomes.
The deeper problem confronting Pakistan is that public financial management continues to be viewed predominantly as a process of raising revenue, approving budgets and authorising expenditure. Modern fiscal governance demands something substantially more demanding: continuous disclosure of fiscal risks, credible accounting, expenditure efficiency, enforceable internal controls, independent audit and transparent assessment of public outcomes.
Punjab has had a comprehensive public financial management statute since 2022. The federation has operated under corresponding legislation since 2019. The constitutional framework is much older. The continued appearance of substantial audit objections, recurring control weaknesses, outstanding financial claims and unexplained accounting differences therefore presents an institutional challenge that cannot be resolved through further legislation alone.
The question facing Punjab or any other province is whether public financial management law will operate as a binding discipline or remain an impressive legislative declaration with inadequate practical consequences. The public deserves an answer supported by records, not advertisements.
A transformative reform would be to introduce a secure, blockchain-enabled public financial management system across all provincial departments, autonomous bodies, public-sector companies and local governments. Every department should be legally required to publish, on its official website through a unified public transparency portal, transaction-level details of all public receipts and expenditures, including budgetary allocations, funds released, payments made, procurement contracts, subsidies, grants, loans and outstanding liabilities.
A permissioned blockchain could provide tamper-evident records of transactions, digitally authenticated approvals and verifiable audit trails, while allowing the Auditor-General, Accountant General and legislative oversight bodies to examine financial activity continuously rather than discovering irregularities years later.
Sensitive personal information and legally protected records must remain confidential, but non-confidential financial information should be accessible to taxpayers in searchable, downloadable and machine-readable formats. Blockchain technology cannot by itself establish whether a transaction is genuine, lawful or economical; independent verification, reliable data entry and effective enforcement remain indispensable.
Such a system, integrated with the Punjab Public Financial Management Act, 2022, the Punjab Transparency and Right to Information Act, 2013, and existing accounting and procurement arrangements, could substantially reduce opportunities for concealment, retrospective manipulation and diversion of funds. Every rupee collected from the public and every rupee spent in its name should leave a permanent, independently verifiable digital trail. All other provinces and federal government must also implement the same.
Ultimately, the effectiveness of a government cannot be measured by how much money it announces, releases or spends. It must be measured by what reaches citizens, what public benefits are produced, how economically those benefits are delivered and whether every rupee can withstand independent scrutiny. Until this becomes the governing standard, fiscal legislation will remain stronger on paper than in practice, and taxpayers will continue financing a system whose performance is more frequently proclaimed than demonstrated.
References and notes
- Constitution of the Islamic Republic of Pakistan, 1973, Articles 4, 19A, 118–124, 140A and 168–171
- Public Finance Management Act, 2019 (amended up to 30 June 2024), Finance Division
- Punjab Public Financial Management Act, 2022, Act XXXVII of 2022
- Auditor-General of Pakistan, Audit Report on Government of Punjab Expenditure, Audit Year 2024–25
- Ministry of Finance, Fiscal Operations, July–June 2025–26, Table 6
- Punjab Finance Department, Fiscal Risks Statement 2024–25
- Kamran Khan, On My Radar, Punjab audit investigation, 9 November 2026
- Auditor-General of Pakistan, Audit Reports Repository
- Ijaz Nabi and Hina Shaikh, Fiscal Federalism in Pakistan: A Radical Departure and Some New Challenges, DPRC/LUMS, December 2010
- Dr Ikramul Haq and Huzaima Bukhari, earlier public finance and fiscal federalism presentations, available on the website of PILDAT