Audit report finds irregularities in Mayo Hospital’s transactions | Pakistan Today

Audit report finds irregularities in Mayo Hospital’s transactions

–Mayo Hospital MS insists on the legality of Rs42.035m transaction to a vendor, says FBR and PPRA’s rules were followed

LAHORE: A report published by Punjab’s audit directorate has revealed irregularities of Rs42.035 million in the transactions of Mayo Hospital Lahore in violation of the rules of Public Procurement Regulatory Authority (PPRA).

According to the report, the hospital’s management paid Rs42.035 million to a vendor in a non-transparent and irregular manner. This amount also included Rs6.7 million in illegal taxes.

“During the audit of accounts of Mayo Hospital Lahore for the year 2018-19, it was observed that Rs42,035,153 was paid to M/s Albayrak Turizm Seyahat on account of payments of janitorial services for the period from January 25, 2019, to January 24, 2020. Expenditure was held non-transparent,” the report stated.

“The advance annual requirement was not advertised on the website of the authority in violation of Rule 9(2) of the PP Rules. Procurement proceeding was finalised without a mandatory ad in an English newspaper in violation of Rule 12(2) of PP Rules, 2014. The attendance sheets of janitors enclosed with the bills were without CNIC numbers,” the report added.

“As per Clause 10 of the agreement, biometric machine and android application for time recording of janitors and supervisors were to be installed by the service provider within 15 days from the start of the agreement in order to manage attendance of janitorial electronically but no biometric attendance system for 250 janitors and supervisors was found installed. In the absence of actual attendance, the authenticity of payment was totally non-transparent and could not be termed as legitimate,” the report further stated.

The report also revealed that as per the bidding document, the covered area required for janitorial service was 57,003 sq m. “The service area along with detailed descriptions of janitorial (number wise) was neither mentioned in the acceptance of bid nor was mentioned in the contract for janitorial services. It is not understood how payment was made without the working area and required deployment. No weekly cleaning review sheets as required under Sr No 10 of the agreement were prepared for monitoring and evaluation purposes. This showed that payments were made without keeping in view the mandatory conditions,” it added.

“The contractor offered rates and include 24 per cent tax (16 per cent PST and 8 per cent income tax) separately. The contractor charged an income tax of 8 per cent illegally because the income tax is not a chargeable tax. The procuring agency will be withheld the income tax from the total income of the contractor at the time of payment. Income tax valuing Rs3,362,817 was overpaid to the contractor which needs to be recovered/withheld and deposited into the income tax treasury,” it further stated.

“The contractor charged PST 16 per cent on material cost as well, whereas material cost is not included in the services. The irregular payment of PST 16 per cent on material cost Rs3,882,193 should be recovered from the contractor and deposited into government treasury under intimation to audit. The 10 per cent performance security as required under Annex-VI of the bidding document from schedule bank was also not shown to audit,” the report directed.

The audit department stated that when the matter was reported in August 2019 the auditee replied that all the codal formalities were fulfilled as per the PPRA rules on the PPRA website and newspaper performance guarantee obtained from the vendor. The department’s reply was not tenable because the purchase procedure prescribed in PPRA rules was not followed, it added.

The report also recommended that the matter should be looked into and the financial loss should be recovered and deposited into the government account besides regularisation of irregularity from the finance department under intimation of the audit.

When contacted, Mayo Hospital Medical Superintendent Dr Tahir Khalil said that initially the vendor did the work smoothly but later they did not handle the job in the right way. “We are following the instructions of the Federal Board of Revenue (FBR) and never violated the PPRA rules,” he maintained.