The Chairman through Mr. Jahangir Khan Tareen Pakistan Tehreek-e-Insaf Central Secretariat House no. 2, St. no.

84, Sector G-6/4 Islamabad The Honorable Chairman

April 22, 2014

SPECIAL AUDIT REPORT ON DONATIONS RECEIPT FOR THE PERIOD FROM JANUARY 01, 2010 TO DECEMBER 31, 2012 INTRODUCTION AND BACKGROUND We refer to our appointment via your letter number NIL dated March 09, 2013 through which we were required to perform the special audit assignment of Pakistan Tehreek-eInsaf (PTI) herein referred to as the Party involving examination and mapping of the system of internal control related to donation collection specifically for the period from January 01, 2010 to December 31, 2012. Our engagement was undertaken in accordance with the International Standard on Related Services 4400 Engagements To Perform Agreed Upon Procedures Regarding Financial Information applicable to the agreed upon procedures engagements. Relevant extract of our Appointment Letter is as follows;

The assignment would include examination and mapping of the system of internal control related to donation collection, including internal check being followed at for both effectiveness in principle and control in operation and recommendations for improvement/additional safeguards that may be required for strengthening the same with objectives to build safeguards against frauds, misappropriations or other losses.
This appointment was made in the backdrop of a meeting between the complainants and Mr. Jalal Ahsan (Partner Ahsan & Ahsan). The complainants were persons who had alleged that they had proofs against employees of the Party with regard to donations. During our meeting with the complainants, it was explained to us that this exercise initiated by them is for strengthening the Party by identifying its weaknesses. In our meetings with Central Finance Board (CFB), this thought was shared also. This was also the reason that we accepted this assignment. As per our understanding, it can be safely said that all the three sides shared the same view.

Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

We have obtained the understanding of the system applied for donations received during the period of audit and performed the following work: 1. Reconciliation of general ledgers of the Party donations with the bank statements of the Party; 2. Reconciliation of deposits appearing in the bank statements of the Party with the general ledgers of donations for ensuring completeness of donations received; 3. Obtained direct confirmation of bank balances from all bank accounts of the Party as indicated to us; 4. Checked compliance with Political Parties Order, 2002 (only provisions relating to donations); 5. Checked compliance with donation policy and rules as displayed on the Party website during the course of our assignment and 6. Sought direct confirmations from the foreign chapters of the Party to reconcile donations received globally. It is worth noting here that during the performance of our field work, we were not allowed to take photocopies of bank statements along with other data including financial statements with us. These were shown to us but no record was allowed to be retained by us. After our appointment dated March 09, 2013, we were contacted by the CFB and an engagement letter was agreed dated September 09, 2013. It was agreed in the engagement letter that Ahsan & Ahsan will issue the report by October 04, 2013. The report could not be issued then and this goes to show the time put into the assignment and the delays in the same. Extracts of the engagement letter were also published by the Party on its website. After the finalization of engagement letter, the complainants were given opportunity to provide any evidence related to the allegations vide letter nos. C 05, C 19 and C 22 dated July 24, 2013, September 16, 2013 and September 28, 2013 respectively. It was explained to the complainants that Ahsan & Ahsan could only follow its engagement letter. The complainants advised the auditor to refuse to become part of an audit exercise that is extremely limited in scale and scope and which undermines the credibility of the entire audit exercise.

Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

They were of the view that a financial audit could not be worth without review of the expense side, to which they were informed by us that audit of expenses is outside the scope of our appointment. Nevertheless, later they provided us with their complaints which are addressed later in this report. Our comments on the system of internal control related to donation collection are as follows, followed by our comments on the respective complaints lodged with us. SYSTEM OF INTERNAL CONTROL RELATED TO DONATIONS RECEIPT WEAKNESSES During the course of our engagement, we observed the following weaknesses in the accounting systems; 1. SEGREGATION DONATIONS OF DUTIES / IMPROPER SYSTEM OF RECORDING

We observed that there were no segregation of duties regarding cash receipts within the accounts department. We observed that Accounts Manager was handling cash and was responsible for recording it also. In addition to this, we noted that the person who was introduced at the start of our assignment as Internal Auditor later during our assignment was appointed as Chief Financial Officer (CFO). Also, no authorization, on vouchers relating to donation, was available in evident to review of work done by Accounts Manager. Both of the above were noticed in the case of transactions in general and especially in case of donations received through employees. As regards conflict of interest, it is felt that CFB should have disassociated the finance team from the assignment in the course of the audit. The associated risk was mitigated by us by using additional tests hence no adverse opinion is made.

Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

MANAGEMENT COMMENT We have been informed that the Party has intentions to address the conflict of interest issue in future by restructuring of finance division in the Party which will maintain track record of each and every money received. Also, we have been informed about creation of an Independent Accountability and Disciplinary Commission within the Party. RISK The above, on account of inherent risk of cash, leads us to the conclusion that the internal control system was not well designed. RECOMMENDATION We recommend above mentioned different responsibilities be separated to the extent possible. We suggest, cash should be received by the cashier (a person separate from accounts department) retaining one copy of the triplicate receipt, second copy be issued to the donor and third copy should be sent to accounts office for posting in the accounting software system. It is also suggested that the Party needs to involve suitably qualified personnel for the suitable jobs/posts. In this regard, a proposed organization chart is attached as Appendix A. We are mindful of the fact that this will increase the costs in this regard, but at the same time the expected benefits out of them, we are hopeful, will far out weigh the costs. Further, it is strongly recommended on an immediate basis to put in place a proper financial management qualified to fulfill the following responsibilities: a. Setting up a financial system in line with best practices; b. Setting up control mechanism of reporting; c. Consistent application of system of internal controls. 2. DIRECTIONS OF CFB NOT FOLLOWED BY THE EMPLOYEES As regards authorization of cash handling, we were informed that this was done as per authorization of the CFB. (Copy attached as Appendix B)

Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

In this regard, CFB vide its resolution dated July 01, 2011 authorized four employees to handle such donations. Relevant extract of the resolution containing directions of CFB is reproduced below:

This system/procedure is only applicable being donor specific if and when the amount is wired by the said donor and is not part of regular practice/policy.
The decision of the CFB was not followed as the donations received in furtherance of the CFB approval were not wired. Details discussed later below. CFB resolution also states that:

All necessary documents like receipt, acknowledgement etc. should be provided by accounts department of PTI
Although the instructions were to receive the money by wire, and no such amount was received through wire, we were informed that majority of money was received through cash, but no evidence of person handing over the money, in shape of CNIC or signature was retained as directed by CFB. 3. RISK IN RECONCILIATION FOR TRANSACTIONS ROUTED THROUGH EMPLOYEES A summary of donations was required by CFB vide point no. 3 of the resolution which is reproduced below:

It is also resolved that above said individuals will immediately after receiving and depositing the donation, present a summary of donations received and deposited with PTI central account to the all members of Financial Board and its secretary.
No such reconciliation was provided to us at the time, we raised our observation regarding routing of donations through employees. Incidentally, this observation was raised in the CFB meeting on August 27, 2013. It was strange that what we raised as an audit observation was later provided as evidence. In addition to this, the reconciliation was exactly for the period of audit i.e. January 01, 2010 to December 31, 2012, when it should have been transaction wise as per CFB instructions. This leads us to question the timing of its preparation i.e. why the reconciliation was made at the end of 3 years and not yearly or for that matter after every transaction.

Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

During the course of our engagement, we also observed that reconciliation provided to us was not either signed by the preparer, reviewer nor the secretary finance or any member of the then CFB. It is to be noted that neither the then CFB nor finance team asked respective employees to submit a reconciliation of amounts received and deposited as per CFB approval. Also, no minutes of the CFB meetings were provided in which these transactions were discussed. Further, the above referred Board resolution was dated July 01, 2011, however, some of the identified transactions relate to the period earlier than this date. The above referred resolution did not explain to the Board any reason for such transactions. All of the above reveal the lack of review procedures to ensure accountability among employees who have been given the responsibility of handling donations. Needless to add that the lack of system could be associated to employees but for the then CFB members, it seems it would be more appropriate to say that they had no accounting background. RISK There is a risk as regards timing of such details. In addition to this, it leads to risks of lack of accountability. We dont need to state further. 4. FOREIGN CHAPTERS NOT RECONCILED FOR DONATIONS During the course of our engagement, we observed that foreign chapters were not reconciled individually and globally for remittances received. RISK There is a risk of misappropriation in funds in the absence of this reconciliation. RECOMMENDATION We are of the view that complete reconciliation of the moneys received from foreign chapters should be made by CFB.

Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

5. BANK ACCOUNT MAINTAINED IN BANK WITH BBB RATING During the course of our engagement, we observed that the Party is operating bank accounts mainly in KASB Bank Limited which have long term rating BBB rated by The Pakistan Credit Rating Agency Limited during the period of our assignment. Following table shows trend of the Partys funds placed at respective reporting dates in KASB Bank Limited; Sr. No 1 Description Total balance at banks as per books (Rupees) Balance in KASB Bank Limited (Rupees) %age of funds held in KASB Bank Limited June 30, 2010 2,019,470 June 30, 2011 3,934,555 June 30, 2012 37,825,672

2,008,843

3,830,178

33,824,586

99%

97%

89%

BBB rating is defined by State bank of Pakistan on its website under Standard rating scales and definitions being used by Pakistan Credit Rating Agency (PACRA) as follows:

BBB ratings indicate that there is currently a low expectation of credit risk. The capacity for timely payment of financial commitments is considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. This is the lowest investment grade category.
Furthermore, audit report of KASB Bank Limited for December 31, 2012 includes emphasis of matter paragraph which highlights its auditors concern over sustainability in future of the said bank among other material uncertainties. RISK Partys donations are exposed to credit risk due to KASB banks low credit rating and its weak financial standing as described above. RECOMMENDATION Party as a steward of the donors should deposit their donation in banks having at least AAA rating so as to maintain the level of trust of the donors on the Party.

Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

Further, Party should pursue a policy in this regard which should be made part of the Party vision. Furthermore, the Party should not put all the eggs in one basket and should deal with at least three banks to mitigate the mentioned risks. The Party since its infancy has grown in volume as regards donations. As is evident, systems lagged behind. Based on the above work performed, it is felt that system upgradation is required immediately and CFB is thus advised in this regard. OPINION ON COMPLAINTS Complaints that in our view fall within the purview of our appointment letter read with engagement letter have been addressed hereunder followed by our respective views. Further, detailed factual findings on the same are addressed in the succeeding paragraphs. Since complaint no. 1, 2, 3, 4, 5, 6 and 7 as detailed below are somewhat similar. Hence, these are being taken up together. COMPLAINT NO. 1,2,3,4,5,6 and 7: COMPLAINT NO. 1 Based on the sample evidence already shown to the auditor, the KASB and other personal bank statements of accounts of all PTI employees and those managing PTI accounts for the period of the audit should be reviewed and the concerned employee /office bearer asked to justify the amounts deposited and withdrawn from their personal bank accounts beyond their known and documented source(s) of income. COMPLAINT NO. 2 Each employee of the central office should be interviewed individually and the interview documented regarding money received in their personal bank accounts and withdrawn against cash cheques and at the behest of PTI office bearers during the audit period. COMPLAINT NO. 3 Each employee of the central office should be interviewed individually and the interview documented regarding money received during the audit period through money exchange companies and its final recipients.

Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

COMPLAINT NO. 4 Please seek all personal bank account statements of PTI central office employees. COMPLAINT NO. 5 Please seek details of assets and source of income of close relatives of key PTI office bearers particularly those that manage PTI accounts. COMPLAINT NO. 6 I am sharing the details of bank statement of just one account in the name of PTI accountant, (Employee A) which should be suffice to open a pandoras box: Name: Employee A Account number: xxxxxxx Period: 01-Jan-2011 through 01-March-2012. The key deposit transactions over the period: April 13, 2011 : 30,000 rupees April 14, 2011 : 182,500 rupees April 20, 2012: 22,000 rupees May 26, 2011: 45,000 rupees June 09, 2011: 110,907 rupees August 08, 2011: 160,000 rupees August 26, 2011: 1,000,000 rupees August 28, 2011: 1,100,000 rupees. The summary shows that over this period the total transaction amount was 3,684,248.53 rupees. COMPLAINT NO. 7 A bank statement of Habib Bank Ltd. of an employee of the Party has been shared with us relating to the period from Feb 02, 2009 to Dec 01, 2009. BRIEF VIEWS Our brief views on the respective complaints reproduced above are as follows; As regards complaint no. 1, we are of the view that employees were not able to justify the amounts deposited in their personal bank accounts beyond their known and documented source of income other than monies received on the Partys behalf.

Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

As regards complaint no. 2, we have restricted the interviews to 4 employees whose names were provided by the finance team. As regards complaint no. 3, we have documented the interviews, minutes of which are documented later in this report. As regards complaint no. 4, the complainants had intimated to seek all personal bank account statements of PTI central office employees. This has been restricted to the personal bank statements of 4 employees. Regarding completeness of all bank accounts, we opined under the heading DIRECT CONFIRMATION OF EMPLOYEE BANK BALANCES on page no. 15 of this report. As regards complaint no. 5, we recommended under the head RECOMMENDATION on Page no. 16 to this report that all employees and officials of the Party should file the details of assets and expenditures with the Party. As regards detail of assets and sources of income of close relatives, we suggest CFB should seek such details. The detail of assets and expenditures for spouse and dependants should be obtained in line with the requirement of Election Commission of Pakistan for elected representatives. As regards close relatives, the same are not entertainable as a policy. As regards complaint no. 6, we have scrutinized the bank statement of the said employee and documented our comments in the coming paragraphs. As regards complaint no. 7, we observed that the period of the bank statement was from November 13, 2008 to September 04, 2011 and transactions covered in the bank statement were of the period from 02 Feb, 2009 to 01 Dec, 2009. FACTUAL FINDINGS ON COMPLAINT NOs. 1,2,3,4,5,6 and 7: The complaint nos. 1, 2, 3, 4, 5, 6 and 7, as above, being overlapping are jointly disposed off as follows; We were informed by the Party that PTI is the only Party that has started the campaign of funds for political reasons and that this concept has never been explored in the history of our country. In this regard, we also visited websites of other political parties in the country and we found that no party, other than PTI, had exhibited its financial statements on their website. In this regard, PTIs endeavors are praiseworthy.

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Before touching the question related to these complaints, complete mapping of the Party donations was done for the purpose of noting the system. After this stage, the finance team was confronted on these complaints. We were told by the finance team that there was only one such transaction as approved by the Board. We asked for the complete Board minutes to which we were informed that auditors should provide complete details first. We also discussed some of our observations in detail at that time. However, there was a difference of opinion which developed into a stand-off later. At this time, the matter was resolved after personal directions by Chairman CFB. In reply to this, Party informed us as follows; The total amount of Rs. XYZ was received by a donor from outside Pakistan. We were informed that this transaction was carried out to facilitate a Pakistani donor residing in foreign jurisdiction whose country of origin did not allow him to make political contributions. We have traced the relevant amount in the bank statements of the Party. The validation as regards Rs. XYZ was provided verbally by the CFB. This fact was also explained by the Party Chairman Mr. Imran Khan on national television i.e. Capital Talk on GEO News. CFB RESOLUTION As regards authorization of cash handling, we were informed that this was done as per authorization of the CFB. The employees unanimously replied that they were ordered to do so by the CFB. They produced a written order of the Central Finance Board as reproduced hereunder. The exact wording of the CFB resolution dated July 01, 2011 stated as follows:

It was unanimously resolved that following PTI employees are authorized to receive the donation as per details intimated by the donors and when specifically instructed to do so by the Board on behalf of Pakistan Tehreek-e-Insaf (PTI) whether coming from Pakistan or outside Pakistan. (Names and CNIC numbers of 4 employees) It is further resolved that all above mentioned PTI employees shall after collection of any donation when specified to do, shall deposit the above said amount of donation immediately in PTI central account held with HBL (Account number), KASB (Account

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Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

number). All necessary documents like receipt, acknowledgement etc shall also be provided by accounts department of PTI (name of accounts manager). This system / procedure is only applicable being donor specific if and when the amount is wired by the said donor and is not part of regular practice/policy. It is also resolved that above said individuals will immediately after receiving and depositing the donation, present a summary of donations received and deposited with PTI central account to the all members of Financial Board and its Secretary.
Plain reading of the above raises an interesting question that what was the intention of this Board resolution and the link between the actions followed by the respective officials? It is to be noted that first of all, proper receipt acknowledgment were to be provided by the accounts department. Secondly, this was only restricted to monies wired into employee accounts. Both the above conditions were not fulfilled. In addition to the above, a summary of donations was to be provided to all members of the CFB and its secretary, which as we have been informed has not been done. Further, the above referred CFB resolution was dated July 01, 2011, however, the identified transactions relate to the period earlier than this date. The above referred resolution did not explain to the CFB any reason for such transactions. It is to be noted that neither the then CFB nor finance team asked respective employees to submit a reconciliation of amounts receipts and deposited as per Board approval. The performance was not monitored against the strategy given by the CFB. Following matrix shows our observations noted during the verification of data relating to donations routed through employees;
SR. NO. OBSERVATION REMARKS

Directions of CFB vide resolution dated July 01, 2011. Relevant extract of the resolution is reproduced below: This system/procedure is only applicable being donor specific if and when the amount is wired by the

The decision of the CFB was not implemented. Rather, it was personal decision of the employees to handle cash.

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Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

said donor and is not part of regular practice/policy.

Cash handling of donations of the Party by employees.

Cash has an inherent risk of misappropriation and also cash handling leaves no audit trail. Summary required by CFB vide CFB had required a transaction wise point no. 3 of the resolution record, whereas the record provided was which is reproduced below: exactly same as of audit period.
It is also resolved that above said No evidence of prepared or review in individuals will immediately after prior dates was available. receiving and depositing the donation, present a summary of donations received and deposited with PTI central account to the all members of Financial Board and its secretary.

We had pointed out to CFO, finance team and later to the CFB in our meeting dated August 27, 2013 that a complete reconciliation should have been made at the time of transfers. No such reconciliation was provided to us at the time, we raised our observation. Also no mention was made of the same. Rather this came as a surprise at a later stage i.e. after 1 month. In addition to this, the reconciliation was exactly for the period of audit, when it should have been transaction wise as per CFB instructions. This leads us to conclude that we cant rely on this document. We were informed that there were a total of four employees authorized to receive donations. For reasons of privacy and confidentiality, names of the employees have been removed from this report. Log of names are being provided to the Party separately. These four specific employees are referred to as employee A, B, C and D in this report. As regards monies received on behalf of the Party, we have already stated above that we have traced the relevant amount in the bank statements of the Party. The validation as regards Rs. XYZ was provided verbally by the CFB. To verify the impact in employee accounts as per complaints received, we were provided employee account details. These details were cross matched for every difference or additional credit.

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Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

Review of bank statements of accounts of PTI employees managing PTI accounts was made and the concerned employees were provided opportunity to explain the amounts deposited in their personal bank accounts beyond their known and documented sources of income. In this regard, we initially identified an amount of unusual credits of Rs. 19 million, other than monies received on the Partys behalf as donations, in the personal bank accounts of employees which could not be reconciled. This amount was later reduced to Rs. 12.4 million after considering the replies of the employees respectively. This was confronted to the employees through General Secretary of the Party vide our letter no. A20 dated October 29, 2013. It was observed that the unusual credits in their bank statements did not commensurate with their declared and known sources of income. Needless to add that total gross salaries of the 4 employees for the period of audit i.e. 36 months amounts to Rs.3.7 million. Therefore, the amount of unusual credits of Rs. 12.4 million appeared to be highly significant. INTERVIEWS OF EMPLOYEES We provided opportunity to the respective employees as regards their stances on the various transactions appearing in their personal bank accounts. We also interviewed the four employees individually. Interviews were used to obtain information about and to understand the allegations and to verify facts. All 4 employees identified by finance team were interviewed individually on October 01, 2013 at Central Finance Secretariat, Islamabad. All employees had almost the same answers as regards credits other than donations routed through their personal accounts i.e. the identified deposits in question were their personal transactions. Employee wise replies are documented hereunder; Employee A told us that KASB Bank Limited account was used for family also, including transfers by brother in law for nephew fees. He also said he has an account in Habib Bank Limited which was not used for the Party. No photocopies of proofs were available with him. Employee B told us that the deposits in question appearing in his bank statement of KASB are not related to PTI and are personal amounts. These all relate to his brother in law and brother outstation, two sold cars, sister, in laws and land sales belonging to in laws in village Mansehra. Employee C had stated that amounts other than transferred to PTI were his personal transactions. We asked for photocopies of proofs, which were not available with him.

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Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

We asked whether he has any account in Habib Bank Limited, which he said existed, but was not related to PTI. KASB was only account used for PTI. Employee D had informed us that KASB Bank Limited account is his personal account and unexplained deposit entries questioned are old and of personal nature. No photocopies of proofs were maintained. DIRECT CONFIRMATION OF EMPLOYEE BANK BALANCES We requested CFB to obtain themselves or allow us to obtain complete bank account details of employees from State Bank of Pakistan and/or NADRA to verify the completeness of the bank accounts provided by the employees. We were informed by CFB at that time that it will take up the matter if it so desires itself. Letters to KASB Bank Limited (Islamabad Branch) had been circularized for direct confirmation of balances in employees accounts and provision of bank statements. The bank replied with balances of all the 4 employees bank accounts except a bank account of an employee whose account was not maintained with the said branch, which we were not informed by the employees. Also, personal bank statements had not been provided by the bank. It is worth noting here that we circularized KASB Bank Limited only as we were not allowed to write letters to other banks in which employees had accounts. All the bank statements of employee accounts were provided by the employees on their own in the shape of photocopies. EXPLANATION OF UNUSUAL CREDITS IN EMPLOYEE BANK ACCOUNTS As discussed earlier, the 4 identified employees were given an opportunity to justify the unusual credits of Rs. 19 million, other than donations on behalf of the Party, appearing in their respective personal bank statements vide our letter No. A20 dated October 29, 2013 addressed to General Secretary of the Party, which was replied in the shape of a meeting with Employee A on February 18, 2014. He claimed explanations uptil the credits of Rs. 10.2 million. The amount still unexplained is Rs. 12.4 million. This was a change in stance by the employees. As, for almost the entire length of the assignment, the employees were of the view that the entire moneys other than donations routed through their accounts were family/personal monies. As the replies regarding unusual credits beyond the known and documented sources of income of the identified employees were provided almost in the last days of the assignment i.e. on February 18, 2014 and were not in the shape of a consolidated

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Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

reply, we request CFB to inquire the amount of Rs. 12.4 million. The complaint in this regard to this extent is referred to CFB. The employees A, B, C and D respectively explained through employee A that unexplained credits in their bank accounts were of Rs. 4,297,863, Rs. 1,678,450, Rs. 612,314 and Rs. 189,716 respectively. We were told that these were received through family sources. In addition to this, employee A has invested Rs.1.2 million in TDRs during the period under audit, whose explanation provided by him was not supported by evidence. We have also been explained by the CFB that one of these employees (Employee B) was suffering from an illness due to which certain Party members were helping him also. The issue raised by the complainants was in a nutshell as regards donations that these were being routed through employees. We feel that the Party was growing in volume as regards donations. Hence, no attention was paid to systems. We are of the view that the best model available for the Party is that of non-profit organizations as established under section 42 of the Companies Ordinance, 1984. The system certainly needed to be improved and for which the CFB is advised to look into the matter. RECOMMENDATION It is to be noted that PTI as a political party has adopted a stance as regards transparency and filing of statements of assets and expenditures towards elected representatives, we feel that this has to be linked to the Party officials as well. It is recommended that the Party needs to adopt a policy whereby each and every office holder and employee has to compulsorily declare their wealth statement, sources of income along with reconciliation of wealth and an undertaking that no personal gain has arisen to the individual respectively during the year on Party account. This is necessary in order to ensure best prevalent corporate practices. COMPLAINT NO. 8 : Reconciliation of the amounts received from different sources with th e annual audited reports submitted to the Election Commission of Pakistan by PTI under the signatures of Chairman

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Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

As regards filing of audited accounts of the Party to the Election Commission of Pakistan (ECP) for the period under audit, we found that the said accounts have been duly filed with ECP for 2010 and 2011. COMPLAINT NOs. 9 and 10: Since complaint nos. 9 and 10 as narrated below are somewhat similar. Hence, these are also being taken up together. COMPLAINT NO. 9: Review and analysis of the money received from LLC USA, Paypal Canada and other external sources and its compatibility with the relevant laws under the Political Parties Order, 2002. COMPLAINT NO. 10: Documentation of breach of any law that govern the political parties including the Political Parties Order, 2002 and any other law governing transparency in accounts of public organizations. We have been asked to comment on compliance with Political Parties Order, 2002 whose section no. 6(3) read as follows;

Any contribution made, directly or indirectly, by any foreign government, multi national or domestically incorporated public or private company, firm, trade or professional association, shall be prohibited and the parties may accept contributions and donations only from individuals.
Based on this, the Party was restricted to receive monies from non-residents. We have been informed that the donations were sent by overseas Pakistanis, hence, no adverse inference is drawn. FOREIGN DONATIONS During the course of assignment, foreign chapters were circularized for donations remitted to PTI central secretariat during the period of assignment but certain replies are pending. RECOMMENDATION We are of the view that complete reconciliation of the moneys received from foreign chapters should be made along with compliance with Political Parties Order, 2002.

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Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

MANAGEMENT COMMENT The management feels that as these transactions are routed through banking channel, hence, the risk is covered. COMPLAINT NOs. 11 and 12: Since we have similar views on the complaint nos. 11 and 12, hence, these are being disposed off together hereunder; COMPLAINT NO. 11: Please investigate the PTI account opened in Canada and subsequently closed allegedly without any audit. COMPLAINT NO. 12: Please seek information about PTI or office bearers of PTI bank accounts in Dubai allegedly used to deposit PTI donations. CFB is requested to look into the matter as regards donations, if any, received relating to the audit period. CAVEATS Because the above procedures do not constitute either an audit or a review made in accordance with International Standards on Auditing or International Standards on Review Engagements, we do not express any assurance on donation receipt for the period covered in our assignment. Had we performed additional procedures or had we performed an (annual) audit or review of the financial statements in accordance with International standards on Auditing or International Standards on Review Engagements, other matters might have come to our attention that would have been reported to you. Our report is solely for the purpose set forth in the first paragraph of this report and for your information and is not to be used for any other purpose or to be distributed to any other parties without our written permission in each specific instance. This report relates only to the donations collection for the said period and does not extend to any financial statements of the Party, taken as a whole. Further, we do not assume any responsibility or liability for losses occasioned to any party as a result of the circulation, publication, reproduction or use of this report

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Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt

contrary to the provisions of this paragraph. Furthermore, we shall not be responsible for any legal proceedings that may arise as a result of our report. Ahsan & Ahsan Chartered Accountants reserves the right, but will be under no obligation to supplement or modify this report based on any new or additional information not previously examined, or that become known to us after the date of this report. In case of any discrepancy on the partys website, we shall only be responsible in respect of the information contained in the hard copies of our report sent to the Party Chairman. We will not accept or assume responsibility to anyone other than the Party for our work. In the end, we would like to take this opportunity to appreciate the courtesies extended to us during the course of our assignment. Yours faithfully

AHSAN & AHSAN CHARTERED ACCOUNTANTS

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Pakistan Tehreek-e-Insaf Special Audit Report Donations Receipt