INTERNSHIP REPORT ON

FINANCE DEPARMENT

GOVT OF KHYBER PAKHTUNKHWA

Supervised By

Mr. GHULAM FAROOQ KHAN

Submitted By

HAMDAN KHAN

M.COM (2 Year)

(ACCOUNTING)

Roll No 14

2013-15

QUAID-E-AZAM COLLEGE OF COMMERCE

UNIVERSITY OF PESHAWAR

INTERNSHIP REPORT ON

FINANCE DEPARMENT GOVT

OF KHYBER PAKHTUNKHWA

Internship report submitted to the Quaid-e-Azam College of Commerce

in partial fulfillment of the requirements for the Degree of Master of

Commerce (2 Year) Accounting Group.

Internship Report

i

ON FINANCE DEPARMENT GOVT

OF KHYBER PAKHTUNKHWA

Supervisor: GHULAM FAROOQ KHAN

Designation: Lecturer in Accounting

Signature: ___________________

Date: ___________________

External Examiner:

Name: ___________________

Designation: ___________________

Signature: ___________________

Principal:

Name: S.HAMID ALI SHAH

Designation: PRINCIPAL QACC

Signature: ___________________

ii

iii

iv

TABLE OF CONTENTs

Experience Certificate iii

List of Acronyms Vi

Acknowledgement Vii

Dedication Viii

Executive Summary ix

Chapter 1 Introduction 1

Chapter 2 Overview of Finance Department 4

Chapter 3 What I Learned 10

Chapter 4 SWOT Analysis 28

Chapter 5 Conclusion & Recommendations 32

v

References 39

List of Acronyms

PC1 Planning Commission Performa 1.

FD Finance Department

ADP Annual Development Program

CSR Composite Schedule Rate

DS Deputy Secretary

SO Section Officer

POL Petrol, Oil &Lubricant

BO Budget Officer

PDWP Provincial Development Working Party.

CDWP Central Development Working Party.

DADC District Development Advisory Committee

DDWP Departmental Development Working Party.

CBOs: Community Based Organization.

vi

SBP: State Bank of Pakistan.

ACKNOWLEDGEMENT

I have completed my internship in Finance Department and completed my report with the

help of a number of people, who spared their efforts and precious time for me. I would

like to mention the efforts of these people.

First of all I am thankful to Deputy Secretary Mr. Raza Ali Habib, who gave me the

opportunity to work in such a key department. I am also thankful to Assistant Director

FMIU Mr. Fahad Waqar, who gave me a lot of knowledge about such type of department

and their activities, that made me able to work easily and with confidence throughout the

internship period.

I am also thankful to Deputy Director Mr.: Sallahudin M Qaiser. S.P Mr. Ameer

Muhammad Khan and Auditor Mr. Ishtiaq Ahmad for their encouragement and back

support in doing internship. The FD staff also helped me in providing information for

preparing my internship report. I will also like to thank FD staff members like Mr.

Hamad Raza, Habibullah Wazir, Humaira Mahmood, Bibi Fatima, Muhammad Naseem,

Anwar Zeb Khan, and Abid Usman Khattak. Mr. Muhammad Faheem, Special Secretary

gave me chance to work in every Section/Wing and with different employees. Which

vii

help me to improve my knowledge and skills. I am so much thankful for his support and

co-operation.

Finally, I would like to thanks my Supervisor Mr. Ghulam Farooq Khan and all those

people who helped me in completing my report.

DEDICATION

I dedicate my internship report to my Ammi, Daddy and all

those whom love, encouragement and help is always with me, at

every step in my life and especially to my spiritual

leader Mr.: Saadullah Khan viii

(Late), who used to give me direction to move forward in

life.

EXECUTIVE SUMMARY

To implement my knowledge of Accounting and Finance in practice, I did my internship

in Finance Department Govt of Khyber Pakhtunkhwa at Civil Secretariat Peshawar.

I did my internship in the Finance Department Govt of Khyber Pakhtunkhwa at Civil

Secretariat. The objective of my internship was to study the procedures and management

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style of F.D which was related to our course work and specially the Govt Administration

process. I learned a lot of things during my internship, but some important things which I

learned are Govt Accounts, Budget Process, PFC, NFC, MTBF, SAP FI, and so on.

I also find strength and weaknesses which are internal to the organization, and

opportunities and threats which are outside the organization. Like political interference in

employee’s selection, favoritism, rude behavior with General Public, Implementation of

rules lack of technology etc these are some basic issues which the organization should try

to come up with.

In last I have suggest some conclusion and recommendations which are very important

for the development of Finance Department to meet the future challenges. I hope it will

of great benefit for the organization.

x

Chapter-1

INTRODUCTION

1.1 BACKGROUND OF STUDY

The Finance Department has a central role in economy of KPK and in

implementing of government policy. In particular their programmed for government and

in advising and supporting the minister of finance as well as the government on the

economic and financial management of the province and the overall management and

development of public sector.

For getting the Master degree in Commerce every student is required to spend at least

two months as an internee in a recognized or well reputed organization. The students

should try to select organizations which must me reputed or will be emerging in the

future such as Govt institutions or companies listed under stock exchange. The students

are required to work in their own field in which they have done their specialization or

general management. A student can focus his study on the area of specialization such as

accounting, finance, marketing and general management, etc.

1

1.2 PURPOSE OF THE STUDY

The purpose of my study is to work in real life situation & to apply

management skills as:

To understand the peculiar nature of F.D.

The problems faced by this organization and the possible remedial actions

To analyze operation of Govt institutions

To develop concrete and feasible recommendations

To define various functions performed by F.D

To Work in real life situations,

Apply management knowledge in practice,

Improve personal skills i.e. human relations, working with people, and

interviewing people,

To develop analytical skills i.e. organizational analysis, financial analysis,

marketing analysis etc,

Help develop concrete plans, including long and short term action plans

along with financial costing,

The last but not the least is to improve report writing skills.

Main purpose of this program is to make students familiar with the practical work, as

there is great difference between what they have learnt during their course and how the

job is practically done.

2

The primary purpose of this internship report is to gather relevant information to compile

internship report on Finance Department Govt of Khyber Pakhtunkhwa.

Along with this, the second basic purpose was to work in an organization and to compare

the theory and application of Accounting and management knowledge in real life

situation.

1.3 SCOPE OF THE WORK

The internship of eight weeks is not a long time for understanding the overall

organization’s functioning. However, main emphasis of this study is on the working of

Finance Department Govt of Khyber Pakhtunkhwa. The functioning of this department

was well observed during this period and can be considered as an overview of the

working of Govt Administration and Public financial accounting. Still these

observations can be extended towards the overall working of Govt of Khyber

Pakhtunkhwa. The major emphasis was on the area of management of the F.D, working

of the F.D and study of the problems pertaining to Finance Department. The study done

will benefit all students in general and Public Finance student’s in particular seeking

guidance in future.

Methodology of the study is that I had used both primary and secondary data collection

techniques. Primary data involve personal observation, Interviews with the staff members

and questionnaires etc. While secondary data involve Annual Budget Statement, White

paper, Newspaper & Internet,

3

CHAPTER-2

OVERVIEW OF THE ORGANIZATION

2.1 FINANCE DEPARTMENT - A BRIEF REVIEW

Transparency and accountability are the two cornerstones of any pro-people

Government. They are the only means for reducing the literal and metaphorical gap

between the people and the state and making them equal and essential part of the decision

making process. The Provincial Government of Khyber Pakhtunkhwa has a strong

commitment for open, transparent and accountable governance

Finance Department Pakhtunkhwa is the custodian of Provincial Exchequer and deals

with the subjects pertaining to Finance of the Provincial Government and Financial

matters affecting the Province as a whole, preparation of annual budget statements and

supplementary/excess budget statements for the consideration of the Provincial

Assembly, accounts and audits of the Provincial autonomous Organizations. Moreover,

Finance Department is responsible for resource management, Financial Regulation,

Administration of Treasuries and Banking. FD plays also a central role in the economy of

province and implementing government policy.

2.1.1 MISSION

An organization’s mission is actually the broadest and highest level of its

objectives. Mission defines the basic purpose or purposes of the organization. Basically,

an organization’s mission outlines why the organization exists. The statement or

understanding of mission “sets a business apart from other firms of its type and identifies

4

the scope of its operations in product and market terms.” Mission of Finance Department

is “To Promote a growing economy which will deliver a high level of sustainable

employment, social progress and living standards”.

A mission statement identifies the product and market scope of the organization as well

as any pervasive aims, designs, or thrusts which indicate the fundamental character and

role of the organization.

2.1.2 VISION

“Attainment of a secure, just and prosperous society through socioeconomic

and human resource development, creation of equal opportunities, good governance and

optimal utilization of resources in a sustainable manner”.

2.2 FUNCTIONS OF FINANCE DEPARTMENT

1. Custodian of Provincial Exchequer

2. Preparation of Annual Budget Statements and Supplementary/Excess budget

statements for the consideration of the Provincial Assembly

3. Public Procurement Regulation

4. Accounts and Audits of the Provincial Autonomous Organizations etc.

5. Resource Management / Public Debt Management

6. Financial Regulation /Public Procurement Regulation

7. Public Finance Reforms

8. Administration of Treasuries and Banking

5

9. Local Fund Audit

10. Management of public funds

11. Ways & Means

12. Public Accounts Committee

13. Framing of Civil Service Rules

14. Examination and advice on matters affecting directly or indirectly the finance of

the province

15. Supervision and control of Provincial finances

16. Preparation of supplementary estimates and demands for excess grants

17. Appropriations and Re-appropriations

18. Communications of financial sanctions

19. Examination of taxation proposals

20. Creation of new posts

21. Public debt.

6

2.3 DISTRIBUTION OF WORK

DS (ADMN/PAC/CO :) DS (BUDGET-II) DS (BUDGET-III) DS (BUDGET-IV)

SO (PAC/COORD) BO –VII BO –I BO –III

BO -II BO –VIII BO –IV BO –V

BO –XII BO –XI SO (ESTAB :) BO –VI

BO –XIII - - BO –IX

SO (ADMN) - - BO –X

1- ADDITIONAL SECRETARY (BUDGET/ADMN)

2- ADDITIONAL SECRETARY (DEVELOPMENT)

DS (DEV-I) DS (DEV-II)

BO (DEV-I) BO (DEV-III)

BO (DEV-II) BO (DEV-IV)

3- ADDITIONAL SECRETARY (REGULATION)

DS (REGULATION-I) DS (REGULATION-II)

SO (SR-II) SO (SR-I)

SO (SR-III) SO (LITIGATION-I)

SO (FR) SO (LITIGATION-II)

7

4- ADDITIONAL SECRETARY (PFC)

DS (PFC) DS (RESOURCE) DS (NFC) ASSIST:FUND

MANAGER

BO (PFC) BO (RESOURCE-I) (TAX) BO (FUNDS/LOANS) SO(ERC)

- BO (RESOURCE-II) (NON-TAX) BO (NFC) -

- BO (RESOURCE-III) BO (WAYS & MEANS) -

5- DIRECTOR FMIU

DEPUTY DIRECTOR AD (DEV: BUDGET) AD (NON DEV: BUDGET) AD (HR)

2.4 ORGANIZATIONAL STRUCTURE

F.D emphasizes on lean, efficient and professionally managed organization. It competes

for operations on competitive terms with other departments in the province. The F.D is

one of the modern organizations, it being managed by a competent staff. It is a

centralized organization and the authority flows from top to bottom. All the available

information about the organization’s management and structure are given in this chapter.

The general superintendence and direction of the affairs and operations of F.D has been

run by its officer’s one according to their distribution of work. Minister for FD is Mr.:

Muzaffar Syed Advocate while Secretary is Ahmad Hanif Aurakzai, Special Secretary

Muhammad Faheem is transferred now to AG Office So charge is with Kamran Rahman

now. Besides this FD have 3 Additional Secretaries and 11 Deputy Secretaries as well as

37 Section Officers and so on.

8

2.5 F.D’s Organizational Hierarchy Chart

9

CHAPTER 3

WHAT I LEARNT

3.1 AN OVERVIEW

I did my internship in Finance department at Civil Secretariat in

Peshawar. I gained a lot of practical experiences during eight weeks of internship,

because of the cooperative staff and friendly environment in F.D. There are 394

permanent employees working inside F.D

I work in different wings/Sections of F.D, because the S.S.F permitted me to freely work

in different Units. And I also enquired every employee concerned with his work and task,

which helped me in understanding a lot of things easily.

In short my first experience in the field work was very interesting and fruitful. And I

hope it will better help me in future.

3.2 MY LEARNING EXPERIENCE INSIDE F.D

During eight weeks of my internship I learned a lot about F.D, its

services, management style, operations and its official environment. I have done work on

the following:

3.2.1 ACCOUNTS

There are 4 types of accounts in Budget. Which are:

a) Provincial Consolidated Account-1

10

b) Food Account-2

c) Zakat and Usher Account-3

d) District Account-4

While for fund releases there are two separate accounts which are:

a) Assignment Account

b) Designated Account

3.2.2 PUBLIC ACCOUNTS

The public account of the province comprises of transactions other than the

provincial consolidated fund both on the expenditure and receipts side. Major

components are as under:

Deferred liabilities

Deposits and reserves nonbearing interest.

Current liabilities

Current Assets

Suspense account

Remittances

Miscellaneous Accounts

11

3.2.3 National Finance Commission

The president of Pakistan constitute National Finance Commission

(NFC) for a period of five years under Article 160. Commission consists of Minister

for Finance of the Federal Government, Minsters for Finance of the Provincial

Governments and such other persons nominated by each Provinces. Secretaries

Finance of the Provinces and other experts also participate in the Commission’s

proceedings. Commission formulates recommendations for vertical and horizontal

distribution of receipts between the Federation and Provinces which is called Award.

The divisible pool includes the receipts given in the Constitution, and may also

include other receipts as the President specify at the time of constitution of the

Commission.

Besides, distribution of revenue receipts, the Commission can also consider on the

advice of the President of Pakistan grants, loans of Federal and Provincial

Governments and other related matters

3.2.4 Provincial Finance Commission

Article 37(I) as a principle of policy, requires State to “decentralize

the government administration so as to facilitate expeditious disposal of its

business to meet the convenience and requirements of the public”

Article 140A mandates provinces to “establish a local government system and

devolve political, administrative and financial responsibility and authority to the

elected representatives of the local government”

12

PFC Composition will be:

I. Finance Minister (Chair)

II. Minister LG&RD

III. Two members of Provincial Assembly one each nominated by the Chief

Minister and Leader of the Opposition

IV. Secretary Finance

V. Secretary Planning & Development

VI. Secretary LG&RD

VII. Secretary Law

VIII. Two Nazimeen District Councils, elected by Nazimeens District Councils

IX. Two Nazimeen Tehsil Councils, elected by Nazimeens Tehsil Councils

PFC will distribute development budget in different district on following basis:

a) Fiscal Need, Capacity, Effort, & Performance

b) Population

c) Poverty

d) Lag in Infrastructure

e) Revenue Base

13

3.2.5 Market Rate System

Composite Schedule Rate Cell (CSR) is a project of FD which

maintains the Market Rate System which was earlier prepared by C&W Dept. in

consultation with Irrigation, PHA and LG & RD departments based on WAPDA drafting

standards 2008. But in June 2013 All Pakistan Contractors Association (APCA)

presented a charter of demands to Honorable Chief Minister. Accordingly committees

were constituted with representation of all nation building departments to evaluate CSR

into Market Rate. Technical sub-committee notified to visit Lahore to examine the

methodology adopted by Govt. of Punjab. Then Finance Department approved a

summary dated 9th Sept. 2013, seeking approval for substitution of CSR with MRS and

updating rates.

This Cell provides support in process of rate approval by Honorable Finance Secretary.

1- All nation building departments will convey their rates to CSR Cell and will be

scrutinized.

2- Rates form Bureau of Statistics & Pakistan Bureau of Statistics will be collected

for economic analysis & variations to check escalation & de-escalation

3- . CSR team visits open market and standardized firms for collection of prices for

major input material/items

4- After collecting data the CSR Cell will compile it and edit it through inbuilt CSR

software and finally send it to rate assessment committee headed by Additional

Secretary (Dev), Finance Department.

14

5- Finally oversight committee chaired by Additional Secretary (Dev) with

representative from all nation building departments will counter check the rates

given by CSR Cell before final approval by Finance Secretary.

6- After approval from Finance Secretary the same will be uploaded on Finance

Dept. website and will also be conveyed to all concern Departments

3.2.6 Medium Term Budgetary Framework/Output Based Budget

Medium Term Budgetary Framework/Output Based Budget is the

form of budgeting which is instrumental in translating the vision and mission

of provincial government for next 3 years as 2015-18. As it envisages an

approach different from the one followed under conventional budgeting,

therefore a separate set of guidelines and budget preparation forms have been

developed to facilitate all departments and their spending units in the

realization of the overall reforms agenda of the Government.

15

3.2.7 Budget Call Circular

BCC is the abbreviation of Budget Call Circular which is a document

file consist of 30 pages issued by Deputy Secretary Budget-3 of FD to all

administrative departments and other relevant as well. BCC is issued every year

in the end of November as a part of Budget making process. This document

consist of two parts which are:

1- Section (I) :

It contains forms, instructions and procedures for departmental

strategic overview and strategic allocation of ceilings to outputs under format

of MTBF.

2- Section (II):

It contains budget preparation forms, Guidelines and procedures

for submission of revised estimates for year passed and budget estimates for

coming year in respect of current expenditures and receipts. These forms will

be filled by DDOs.

3.2.8 BUDGET

Budget is a government’s plan that explains where the money is coming

from (revenue) and how it will spend that money (expenditure) during a period of

one year for the public good. The government of KPK prepares its budget for a 12

month period starting from 1st July to 30th June which is also called a

16

fiscal/financial year.

The constitution of Islamic Republic of Pakistan 1973 makes it compulsory for

the provincial government to prepare and present the budget for approval of the

Provincial Assembly before the start of financial year.

The budget document is an important link between citizens and state. People pay

taxes to the state so that in return it can provide them with the services i.e.

education, health, social safety net and security etc.

There are some Budget priorities also which are:

1. Change and Reforms

2. Focus on Social Sectors

3. Fostering Growth and Employment

4. Promotion of Green Economy

5. Development of Energy and Power Sector

6. Sustainable harvesting of Mineral & Tourism Potentials

7. Strengthening Peace and Security

8. Social Protection and Equity

9. Devolution and strengthening of Local Governments

10. Transparency & Accountability

17

There are two main types of budget. Both are essentials for delivery of continued

quality services to people. They are:

1- Current Budget

2- Development Budget

Budget Cycle is given below as:

This Budget Cycle repeated every year as this is a continuous process of F D. For the

purpose of understanding at glance The General Abstract of Revenues and Expenditure

2015-2016 is given on the next page which shows us the amount stated in millions PKR.

This is taken from White paper.

18

19

3.2.9 FMIU/SAP

Financial Management Information Unit is a technical arm of Finance

Department. It is newly established wing for E-Financial Governance and

promotion of ICT. Its duty is the Processing and analysis of Provincial Budget.

Also to provide Coordination and technical support to District Finance Offices as

well as development and maintenance of provincial website and district websites.

Also establishment and maintenance of HR database and management of machine

Readable Service Cards and Online Public Grievances Re-addressal System. It

uses a software which name is SAP developed by SIEMENS Corporation of

Germany and implemented by whole province through PIFRA with support of

World Bank. SAP stands for Systems, Applications and Products in Data

Processing. One of its snapshot is given as:

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3.2.10 Community Driven Local development

The Provincial Government of Khyber Pakhtunkhwa has approved the

first ever Community Driven Local Development Policy which provides a

framework and governance structure for ensuring the key role of citizens in

development planning and implementation especially the marginalized groups in

the society. The District Governance and Community Development (DGCD)

programme will provide support for community driven projects in six districts of

Malakand including Swat, Malakand, Shangla, Dir Lower, Dir Upper and Chitral

with a total cost of EUR 80 million plus complimentary funds from the

Government of Khyber Pakhtunkhwa over the period of 2014 to 2018. The CDLD

Policy is being implemented through district governments initially in the six

districts of Malakand Division. Community-based organizations (CBOs) have

been formed by the target communities at the village council level. These CBOs

are working in consultation and cooperation with the district governments to

identify projects for implementation on the basis of a meticulous and competitive

scrutiny process conducted by Technical Evaluation Committees (TECs) within

the respective districts. Against the 1,097 target projects for the first two rounds, a

total of 3,610 applications have been received. For Financial Year 2014-15, the

Government of Khyber Pakhtunkhwa allocated PKR 500 million and the

European Union contributed with Euros 9 million. These funds were distributed

among the six target districts.

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3.2.11 WHITE PAPER

This is a book printed every year before the budget is presented to

provincial Assembly. The publication of this book by the government is an

on-going effort to present the budgetary information in a non-technical and

easy to understand manner. Being the principle instrument for shaping and

implementing fiscal policy of the government, the presentation of budget

through his orientation comprehensively portrays various facets of the budget

Hence, this it ensures provision of needed information in user friendly manner

with the aim of enabling common person understand the complex and inter-

mingled information in an easy and cognizant manner. The key areas depicted

in the Budget White Paper include current revenue receipts and expenditures,

capital receipts and expenditures, development budget, funds and investment

management, local government finances, debt management and key public

financial management reforms.

3.3 MY FIELD VISITS

3.3.1 LOCAL FUND AUDIT

Directorate of Local Fund Audit is an attached wing of finance

Department. Its office is situated in Benevolent Fund Building Peshawar

Cantonment. It has 255 employees. Director of LFA is under the direct

supervision of Special secretary Finance. LFA is imposed on provincial

autonomous bodies by province for pre-audit check and certifications. Basic

function of LFA is to do pre-audit of autonomous bodies i.e. Hospitals,

22

Universities and Municipalities etc. Pre-audit done before the payment made

inside autonomous bodies. Pre-Audit is an accounting function of scrutiny

before payments. As we know that Local fund is not the part of provincial

consolidated fund rather it is generated inside autonomous bodies with the

approval of its board. Finance department give them grant-in-aid remain fund

generated by itself which is called local fund. Beside this LFA also do post-

Audit of some entities as well which include: All Boards of Intermediate &

Secondary Education, District Benevolent Fund Boards, Workers Children

Education Committees, Guardian & Minor Accounts, Auqaf Properties, Some

Listed Schools & Colleges and Miscellaneous Accounts.

3.3.2 TREASURIES

Directorate of Treasuries and Accounts is also an attached wing of

F.D. Its office is situated behind new Building of KPK Bar council. It does

Pre-audit for consolidated funds only as it is just a check and control of

government. It has 521 employees with 25 District offices and 7 agency

offices. District Account Officers are appointed by Directorate of Treasury

and Accounts. It deals with all districts and agencies with payment and receipt

of government on daily basis. It also make tally all the information received

with Bank. At end of the month DTA sends the detail report of monthly

transactions to AG Office KPK. Then AG office Compile all the data and send

it to the CGA. The AG KPK is responsible to submit a report to Governor KP.

23

3.3.3 NATIONAL BANK OF PAKISTAN

National Bank of Pakistan is one of the leading and first government

recognized bank in Pakistan. NBP was established in Nov 9, 1949 and it

started functioning from November 20, 1949.

National Bank of Pakistan is the largest commercial bank operating in

Pakistan. The Bank's services are available to individuals, corporate entities

and government, While it continues to act as trustee of public funds and as the

agent to the State Bank of Pakistan (in places where SBP does not have a

presence) it has diversified its business in portfolio and is today a major lead

player in the debt equity market, corporate investment banking, retail and

consumer banking, agricultural financing, treasury services and is showing

growing interest in promoting and developing the country's small and medium

enterprises and at the same time fulfilling its social responsibilities, as a

corporate citizen.

National Bank of Pakistan is today a progressive, efficient, and customer

focused institution. It has implemented special credit schemes like small

finance for agriculture, business and industries, administrator to Qarz-e-Hasna

loans to students, self-employment scheme for unemployed persons, public

transport scheme. The Bank has expanded its range of products and services

to include Sharia Compliant Islamic Banking products. I have done visit to

NBP cantt branch along with accountant to submit the schedule of cheques for

payroll to employees of CSR Project in FD.

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3.3.4 A.G OFFICE

Accountant General Office, Khyber Pakhtunkhwa, Peshawar is a

sub office of the Accountant General Pakistan Revenues Islamabad, and

performing all the function on behalf of Accountant General only related to all

Federal departments situated in Khyber Pakhtunkhwa . Pre and post Audit was

with Auditor General of Pakistan before 2001. After that powers was divided

into CGA (Controller General of Accounts) and AGPR (Accountant General

Provincial receipts). Now CGA is responsible for pre audit accounting

functions while AGPR is responsible for Post audit functions. Accountant

General Offices is check on provinces from Federal Government of Pakistan. I

have done my visit to Payroll 5 section for processing of newly release

documents of CSR Cell of FD. After that I also visit Post Audit cell for

punching of cheques and to sign it from AO.

3.4 REFORMS OF F.D

3.4.1 Financial Reforms

i. Consolidation of MTBF (3 years forward budget estimates)

ii. Consolidation of Output Based Budgeting (Outputs and Outcomes based

on Key Performance Indicators)

iii. Publication of Citizens’ Budget

iv. Internal Audit

25

v. Comprehensive Spending review

vi. Online access to complete financial information to ensure transparency in

financial matters

vii. Conditional Grants for missing facilities in Education and Health sectors

viii. Formulation of Strategic Development Partnership Framework

ix. Formulation of Integrated Development Strategy

3.4.2 Other Initiatives

i. Khyber Pakhtunkhwa Revenue Authority

ii. New Tax Survey

iii. Updating of Valuation Table

iv. Challenging the Patwari Culture

v. Khyber Pakhtunkhwa Public Procurement Authority

vi. Online FIR in Police Department

vii. Establishment of Counter Terrorism Department

viii. Establishment of KPOGC

ix. Establishment of Independent Monitoring Unit in Education and Health.

x. Tameer-e-School Programme

xi. Sihat-ka-Insaf Programme

xii. Khyber Pakhtunkhwa Right to Information Act

26

xiii. Right to Services Act

xiv. Conflict of Interest Law

xv. Whistle-Blower Protection Commission

xvi. Establishment of Ehtesab Commission

xvii. Establishment of Consumer Courts, Family Courts and Civil Mobile

Courts

xviii. Constitution of Austerity Commission

xix. Green Khyber Pakhtunkhwa Programme

xx. Establishment of National Parks

xxi. Privatization of Government Guest Houses

xxii. Constitution of Economic Reforms Commission

xxiii. Devolution of Power through LG System

27

CHAPTER 4

ANALYSIS

4.1 INTRODUCTION:

SWOT analysis is used to measure or find out the strength,

weaknesses, opportunity and threat of business venture or any project. It explains the

favorable and unfavorable internal and external factors to achieve the objectives. The

short form SWOT stands for the internal Strengths and Weaknesses of a business and

environmental Opportunities and Threats faced by the business. It is based on the logic

that an effective strategy maximizes the business strengths and opportunities but at the

same time minimizes its weaknesses and threats. Environmental and industry analysis

provides the information to identify key opportunities and threats in the firm’s external

environment. Here with a particular reference to FD, I am going to discuss the concept of

SWOT analysis. Strengths and weaknesses are internal factors while Threats and

Opportunities are external factors.

4.2 SWOT ANALYSIS

4.2.1 STRENGTH

i. It is governmental department so it has all the legal rights of receiving receipts of

the government and allocate it according to requirements.

ii. Has leadership in providing financial services to all other departments.

iii. F.D has the ability to cope with pressure of politics.

28

iv. Working Atmosphere/environment is very friendly and co-operative

v. Has experienced and top class management.

vi. Government’s Department.

vii. Staff is rich in experienced.

viii. Offer attractive perks and privileges from time to time.

ix. F.D is equipped with the modern technology.

x. A courteous and cultured staff.

xi. Professional and skilled top management.

4.2.2 WEAKNESSES

i. Red Tapism

ii. Low Own Receipts / Low Tax Base

iii. Unpredictability of next NFC Award

iv. Excessive Unbudgeted / Supplementary Expenditures

v. Interruption in operations by political forces

vi. Uncertain and Erratic Payment of NHP

vii. Lack of research and development

viii. High administrative expenses

ix. High Dependence on Federal Transfers

x. Slippage of Tax Collection Targets by Federal Government

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xi. Over Staffing.

xii. Low level of employee satisfaction and Discipline

xiii. Communication skills of the employees is good but they have little presence at

different Medias.

xiv. The lower level management lacks clear direction and not having the managerial

depth.

xv. Employees are lacking motivation.

xvi. Problems of internal unionism and favoritism.

xvii. Heavy load of bad debts.

4.2.3 OPPORTUNITIES

i. KPK is a developing province and there is a lot of chance for F.D to play role in its

development.

ii. Qualified pool of people available.

iii. Increase in Economic Activities.

iv. Training and Technological Advancements.

v. A big opportunity is to become innovator in introducing “Reforms” in province.

vi. More modes of financing in can be used.

vii. Sophisticated operations with advanced technology.

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4.2.4 THREATS

i. Political Interference.

ii. Low income rate in the province.

iii. Macro-economic conditions in the province

iv. Low rate of industrialization

v. Political instability

vi. More expense due to Terrorism

vii. Global technological advancement.

viii. Reduction in the business activities in the province so decrease in own receipts.

ix. Uncertainties of the budgeted receipts.

x. Resistance in implementing reforms.

xi. Phenomenal increase in Salary and Pension expenditures

xii. Huge investment requirements in Energy and Water Projects

xiii. Establishment and operationalization of Local Government System

xiv. Upgrading the Security Apparatus

xv. Lower Fiscal Space for Development Budget

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CHAPTER 5

CONCLUSION AND RECOMMENDATIONS

5.1 CONCLUSION

The F.D was established for the purpose of promoting and

developing a true economic & financial system in the province. Therefore the

management of the FD has focused to offer the welfare and citizen budget this year to

general public. During my internship I focused on the Budget and routine operation

activities of FD specially. Like Type of Accounts, how they are maintained, transfer of

funds, online Accounting and budget system etc.

During my internship period I also went through some analysis regarding the FDs

financial activities, management, facilities, employee’s performance etc. On the basis of

which I found some strength like FD has presented first time Citizen Budget for province.

Which have a lot of new development schemes for province etc. and weaknesses are

political interference, weak performance of employees, lack of facilities etc.

On the basis of these analysis I made some recommendations in last, which are very

important for the further development of FD and prosperity of the Province KPK.

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5.2 RECOMMENDATIONS

In this section I have enlisted a number of suggestions to Finance Department

for the improvement of the overall working conditions. They are:

1) TAX REFORMS

As We know that Provincial own receipts for the year 2015-16 are estimated

as 51 billion Which is less as compare to Punjab as 1200 billion and other provinces as

well. So Policy should be made by provincial government to increase the Tax & Non-Tax

Revenues in form of quarterly review meeting held under the supervision of FD.

2) EQUAL DISTRIBUTION OF WORK

I have come to notice in different sections that some of them have a little

work to do i.e. Section office SR1 and some have burden i.e. FMIU so the number of

employees should be shifted to a section which has burden of work on it. This will end

the discomfort among the employees.

3) PUBLIC ACCESS TO GOVT RULES

All the government rules must be compile from old

books, manuals kept in FD. Also make a proper way of access of that rules to general

public of Province

4)PERFORMANCE EVALUATION

There is no mechanism of evaluation of employee performance.

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Performance is just decided by Secretary only. Performance evaluation should be start in

form of checking of total attendance of employee during a year, number of tasks

completed, personal attributes, checking of sense of responsibility of employee and other

relevant factors also.

5) IT EDUCATION

The FD should provide to all of its employees the knowledge of

information technology that is at least they should become aware of courses like MS

Office, Internet and e-mail usage, also other relevant accounting software. So that they

can work in modern day needs. Also it will help in motivating the employees, as working

in a modern era.

6) SUPPORT ROLE OF PRIVATE SECTOR

Govt should support the role of the private sector and NGOs in the

provision of health services in KPK. A long term health strategy should be adapted to

envisage a stronger emphasis on public private partnership and use of NGOs to provide

services in different diseases i.e. Dengue, Kango Virus etc.

7) ENCOURAGEMENT OF INNOVATION

FD has always been a market leader in the Govt Administration in KPK,

but at present it is a bit slow in this regard. The FD should encourage the process of

innovation, strengthening of FD, so that It can introduces new Ideas according to their

needs and wants.

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8) COMMUNICATION SKILLS

At present the behavior of the employees towards each other is very

bureaucratic. They should be provided training which should consists of communication

techniques and they should also be provided with training of communication skills in

writing and on phone and fax etc, keeping in view the 7-Cs of communication and other

modern concepts of communication. Similarly also training of presentation and training

of marketing concepts, this will improve the communication between the customers and

employees resulting in the increase of business.

9) TRANSPORT FACILITY FOR FEMALE STAFF

I have notice a barrier of transport facility to female staff in FD. Section officer’s

i.e. Madam Bibi Fatima and Humaira also pointed out this problem to me that other

departments are providing the Pick and Drop facility to their female employees but they

haven’t such facility here. When we bring it in notice then their response was lack of

Drivers not Vehicles. But I noticed that there are a lot of drivers working in projects of

FD so If 2 drivers are allocated to female staff pick and drop facility then it will provide

them job satisfaction.

10)DELEGATION OF POWERS

Here I noticed in FD that a letter/circular/summary when comes to

department then it consume more time in form of passing them from Assistant to Section

officer then to Deputy Secretary then to Additional Secretary then to Special Secretary

the Secretary Finance which is a long process and sometime take 4 up to 5 days to

process only 1 letter/summary. This is all due to no one has power to decide easily so

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delegation of powers must require in modern era. So it should be done as soon as

possible.

11)TRAINING OF STAFF

Employees should be provided constant on job training, refresher courses

and workshops, so to get the required knowledge. Every employee should be provided

with a particular training of section.

12) REMOVAL OF COMMISSION MAFIA

It is a very important point because many of the government institutions are

indulge in this bad habit. Proper inquiry should be conducted in this regard and all those

fishes involved in corruption should be immediately removed and properly finished.

13) RENEWL OF BUILDING

As I have come to know yet that due to earthquakes the building of Finance

Department which is also old got jolts and cracks. So administration should pay attention

to its interior structure because its building is in very bad condition. So new building

must be constructed for them to solve the increase in infrastructure problem.

14) DIVEST INESSENTIAL ACTIVITIES

They should be informed to not use unnecessarily the Government

telephone for personal phone calls. Tea and Qahwah break which occur frequently should

be reduced. Long breaks on Friday should bring in control.

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15) DELAYING OF PUBLIC WORK

There I found a bad habit of employees that when they confront the

General public work then they make it late intentionally or sometime they do not prefer it

to do. They use delaying tactics due to which people irritate. Some time they do not

cooperate in a good manner.

16) EXCESSIVE PAPER WORK

Unnecessary paper work is done. Papers are use roughly. Stationary

expenses very high du to negligence on this side. No real utilization of funds occur due to

following the straight paper work.

17) LACK OF DISCIPLINE

During my training in Organization, I observed lack of discipline in the

way that some of the employees do not care about the office timings & work. They

usually come late in the morning. Similarly employees take long leaves without any valid

reasons.

18) CHANGE OF OLD RULES

The rules, procedures and codes available in the department for official

use are of British times, and cannot serve the purpose of the present day needs.

The complexity of the rules and procedure makes the working environment more

different for the employees as well as for the agencies, who applies for any legal

financial benefit.

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19) IMPLEMENTATION OF POLICIES

The strict government, instructions for financial discipline and effective

control of funds serves the purpose to some extent. But hinders the smooth

working of office business, and gives extra powers to the executives, which delays

the work.

20) POLITICAL INFLUENCE

The National Projects are married by the Political influences and

priority is given to the National Projects for the versed interest by the

politicians. The rule of merit is ignored, which creates unhealthy

environment for government department as well as for audit authorities.

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REFERENCES

Whitepaper 2015-16

Citizens budget 2015-16

Annual Budget Statement 2015-16

Unstructured interviews with 5 Deputy Secretaries.

Personal observations gained from day to day interactions with FD

employees during my internship period at Civil Secretariat.

Studying FD circulars and other relevant documents.

Report on FD by Samra Kiran.

FD Website (http://www.financekpp.gov.pk)

Ministry of Finance Website http://www.finance.gov.pk

Fundamental Rules & Supplementary Rules by Hamid Ali & Zaka Ali

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