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    Fraud Auditor

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    M. JAHANZAIB Unknown
    An auditor at IESCO uncovered a large fraud case involving the embezzlement of Rs239 million over two years by IESCO officials. The scam involved collecting bogus bills from power consumers and pocketing the money rather than depositing it in company accounts. The parliamentary committee grilled IESCO officers about the fraud and why it had gone undetected for four years. Five IESCO officials were arrested and sent to jail, while seven others were suspended for their roles in the scam. IESCO pledged to repay consumers who had been affected.

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    Fraud Auditor

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    M. JAHANZAIB Unknown
    58 views6 pages
    An auditor at IESCO uncovered a large fraud case involving the embezzlement of Rs239 million over two years by IESCO officials. The scam involved collecting bogus bills from power consumers and pocketing the money rather than depositing it in company accounts. The parliamentary committee grilled IESCO officers about the fraud and why it had gone undetected for four years. Five IESCO officials were arrested and sent to jail, while seven others were suspended for their roles in the scam. IESCO pledged to repay consumers who had been affected.

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    An auditor at IESCO uncovered a large fraud case involving the embezzlement of Rs239 million over two years by IESCO officials. The scam involved collecting bogus bills from power consumers and pocketing the money rather than depositing it in company accounts. The parliamentary committee grilled IESCO officers about the fraud and why it had gone undetected for four years. Five IESCO officials were arrested and sent to jail, while seven others were suspended for their roles in the scam. IESCO pledged to repay consumers who had been affected.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    58 views6 pages

    Fraud Auditor

    Uploaded by

    M. JAHANZAIB Unknown
    An auditor at IESCO uncovered a large fraud case involving the embezzlement of Rs239 million over two years by IESCO officials. The scam involved collecting bogus bills from power consumers and pocketing the money rather than depositing it in company accounts. The parliamentary committee grilled IESCO officers about the fraud and why it had gone undetected for four years. Five IESCO officials were arrested and sent to jail, while seven others were suspended for their roles in the scam. IESCO pledged to repay consumers who had been affected.

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    FRAUD CASE

    UNEARTHED BY AN AUDITOR

    MUHAMMAD JAHANZAIB CH
    BS 4 | BAFM-F19-009
    IESCO
    ISLAMABAD ELECTRIC SUPPLY COMPANY
    AUDITOR:
    An auditor is a person authorized to review and verify the accuracy of financial
    records and ensure that companies comply with tax laws. They protect businesses
    from fraud, point out discrepancies in accounting methods and, on occasion, work
    on a consultancy basis.
    OBJECTIVE OF AN AUDITOR:
    Auditor’s objectives with respect to the financial statement’s misstatements are as
    follows:

    IS AUDITOR RESPONSIBLE FOR THE PREVENTION AND


    DETECTION OF FRAUD?
    No, Management has the Primary responsibility for the prevention and detection of
    fraud and not the auditor. Management should take all necessary steps for fraud
    prevention and deterrence through implementing policies and controls.
    CASE STUDY: REAL LIFE EXAMPLE

    BOGUS BILLS COLLECTION IESCO


    OFFICIALS POCKET RS239M

    A parliamentary panel grilled officers of the Islamabad Electric Supply Company


    (IESCO) over embezzlement of millions of rupees through collection of bogus bills
    from power consumers.

    The billing department of IESCO continued to fleece the consumers over the past
    four years, but neither the company management nor the audit firm unearthed the
    scam until now. IESCO CEO Shahid Iqbal told the Senate Standing Committee on
    Power that through bogus and fake stamps electricity bills were collected from
    power consumers and in a single day embezzlement of Rs43 million was detected.
    He acknowledged that the scam had been going on unchecked for the past four
    years.
    “We have terminated officers of the Finance Department (involved in the
    scandal),” He said.

    He also revealed that power consumers were also involved in the fraud as they
    were depositing the bills in the Revenue Office-I with 30% discount.
    The head of Circle-I Revenue Office was found involved in the fraud.
    Cumulatively, Rs239 million had been embezzled in the past two years as the
    amount was not deposited in the company accounts. Revenue officer of the Circle-I
    has been arrested. The CEO said now the Federal Investigation Agency (FIA) was
    handling the matter and was further investigating the case.
    Committee Chairman Fida Muhammad Khan asked the CEO whether IESCO was
    asleep when misappropriation of millions of rupees a day was being done by
    officials of the company. “It means other distribution companies may also be
    facing such a situation,” he pointed out.

    Senator Nauman Wazir Khattak asked the Power Division to direct all the
    distribution companies to check their record and provide details to the committee.
    He also sought details of such cases unearthed in the distribution companies over
    the past 10 years. Responding to that, the Power Division secretary said he would
    give orders to all the companies to comply with the instructions.

    Senator Wazir asked as to why the private sector audit firm did not unearth the
    fraud before. The committee would also discuss the issue with officials of the
    Auditor General of Pakistan in its next meeting.

    NOTE:
    The objectives and responsibilities of an auditor includes highlighting
    misstatements and uncertainties in financial statements of a company and once
    they are done the sole responsibility to uncover the truth or fraud lies solely on the
    management of the company.
    So, the statements blaming private audits firms in this case are vague. This is the
    reason why no action was taken against any audit firm or in particular an auditor.
    In the previous years, Auditors might have stated such uncertainties in the balances
    of the companies, but management failed to take any action against it until now
    when finally, management acted against culprits and the case was handled over to
    the FIA who managed to investigate the details and uncovered the fraud with the
    help of auditors and those involved were punished and fined.

    PUNISHMENT:
    Islamabad: Five officials of Islamabad Electric Supply Company (IESCO) have
    been arrested and sent to Adiala Jail by the Federal Investigation Agency (FIA) for
    their alleged role in corruption scandal worth Rs240 million. IESCO has also
    suspended seven other officials for their alleged role in the scandal.
    FIA after completing the investigation sent, IESCO Customer Services Officer
    (CSO) Islamabad-I, Muhammad Naeem, Commercial Assistant Khalid Mehmood,
    Account Assistant Muhammad Rafiq, Muhammad Waqas and Gull Khatab to
    Adiala Jail for forgery in payments of bills through easy paisa franchise system.
    According to investigation these officials did not deposit the paid amount in
    national exchequer. It revealed that the corrupt officials also took huge amount of
    bills directly and posted bogus scrolls related to IESCO consumers’ bills using
    fake bank statements along with fake bank stamps. The corrupt officials also
    entered all record in computer, but the amount did not reach the national
    exchequer.
    The investigation pointed out that the corrupt officials secured clearance and
    verification of all bogus scrolls as well as bogus monthly bank statements through
    Commercial Assistant Khalid Mehmood. These cleared and reconciled bogus
    scrolls as well as fake bank statements were then forwarded for further posting in
    the IESCO online system, the FIA investigation revealed. IESCO chief executive
    officer also suspended Divisional Account Officer (DAO) Muhammad Sarfaraz,
    Commercial Assistant Rashid Ali, Account Assistant Saeed Abbasi, Assistant
    Manager Anwar Saeed, Ayaz Baig, Yasir Pervez and Asif Rehman.
    IESCO spokesman Raja Asim Nazir told ‘The News’ that the department was
    trying to purge the black sheep from the department.
    ” All corrupt officials have been immediately suspended and some of them
    have even been sent to Adiala Jail. We will pay back the embezzled amount to
    the affected consumers,” he claimed.
    He said that consumers should bring paid bills with them for compensation. He
    appealed to the consumers to pay bills through banks.

    THANKYOU

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