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Local Fund Audit


1.     Introduction


            The Local Fund Audit Department, a provincial audit agency of Government of Sindh – is an attached department of Finance department with its headquarter at Karachi. This department came into existence under the Sindh Local Fund Audit Act, 1930 i.e. well before the creation of Pakistan, which was promulgated under the Government of India Act 1935, under Section 3 of the said Act of 1930, the Examiner (RE-designated Director) Local Fund Accounts was appointed as Auditor to conduct audit of “Local Fund” as defined under Section 3(d) ibid.

Since the Provincial Government had no audit agency of its own at the time of promulgation of the Sindh Local Fund Audit Act 1930, the audit of the accounts of Local Bodies was entrusted to the Auditor General of India on consent basis. Ordinarily under the Provisions of Government of India Act, 1935 and rules made under Sub-Section 3 of Section 166 of the Act, Auditor General was not responsible for the audit of Local Funds and of public or quasi public bodies as these accounts were not the Accounts of Federation or Province. Therefore, effective from 1st April, 1944, the audit of Local Bodies was taken over by the local fund audit department functioning under the administrative control of Finance Department of Provincial Government as required by the Act of 1930.

2.     Functions


The main function of Local Fund Audit Department is to carry out audit of the accounts of Local Councils and other institutions in Sindh. In addition to audit, this department performs the following functions:

a.       Verification of pension cases of member of the Sindh Councils Unified Grade Service and employees of all the auditees where pensionery benefits have been extended by Government and issue of pension admissibility certificates there for.

b.      Verification and fixation of pay of all members of Sindh Councils Unified Grade Service of Local Councils and other miscellaneous institutions in Sindh.

c.       Certification of title of leave in respect of member of Sindh Councils Unified Grade Service.

d.      Guidelines and issuance of advices to local councils etc in financial matters and proper maintenance of accounts.

3.     Forms of Audit


The audit being conducted by this department takes flowing forms:

a.      Day-to-day or Resident Audit; Government in its Local Government Departments may direct that in any Local council the day-to-day audit of the local fund shall be conducted by the Local Fund Audit Department. Under Resident Audit Scheme, no payment is made from the Local Fund unless the bill is pre-checked and passed in audit and the quantum of audit to be applied to the income of the Local Council is fixed by the Director, Local Fund Audit.

b.      Annual (Post) Audit; The accounts of local councils, which are not subject to day-today audit and other miscellaneous accounts are audited annually. In this type of audit two months accounts are checked in detail while the accounts for remaining months are generally reviewed.

c.       Special Audit; When any loss, fraud or embezzlement is detected or may reasonably be suspected or where any serious irregularity is noticed in any account, the Audit Authority arrange a special audit of the local council accounts or any part thereof as may be specified.

4.     Objective and Purpose of Audit


The object of audit is the detection of:

a.       Frauds, embezzlements and misappropriation;

b.      Technical errors; and

c.       Detection of errors of principle.

The purpose of audit is to assist the local councils administration in the maintenance of proper accounts and protection of the local fund against frauds, embezzlements, misappropriation and other irregularities and wastage.   


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