DANQUAH INSTITUTE: TAKEAWAYS FROM THE 2021 AUDITOR GENERAL REPORT

Constitutional obligation
Pursuant to Section 20 of the Audit Service Act, 2000 (Act 584), the Auditor-General is required to submit an audited report on the public accounts to Parliament within six months after the end of the immediately preceding financial year. Among other things, the report is supposed to draw attention to any irregularities in the accounts audited. This year’s reported is dated 13th June, 2022 – suggesting expeditious delivery by the Auditor General.
Improvements
1. The financial impact of weaknesses and irregularities in the public accounts of ministries, departments and other agencies for the financial year ended 31 December 2021 identified by the Auditor General amounted to GH¢1.08 billion. This represents a substantial decline of 79.2 per cent from GH¢ 5.2 billion recorded in 2018.
2. Tax irregularities accounted for a substantial proportion (91.5 per cent) of the reported irregularities in the 2021 financial year. Interestingly, out of the total amount of GH¢989.03 million reported tax irregularities, GH¢402.80 million (40.7 per cent) comes from default payment of rescheduled tax liabilities of 28 oil marketing companies (OMCs). In addition, GH¢249.80 million of the total tax irregularities resulted from non-payment of taxes and duties for 17 OMCs. Although the tax liability default is a legitimate concern, especially since the state was deprived of resources for development, the source of the irregularity cannot be directly linked to mismanagement or inactions of public officials.
3. Cash irregularities, which usually result from (deliberate) actions and inactions of public officials, have reduced drastically from GH¢388.93 million in 2019 to GH¢45.76 million in 2021. The sources of cash irregularities are unapproved disbursements, unpresented payment vouchers, unaccounted revenue, unsupported payment vouchers, funds to bank not credited, non-lodgement of public funds, misapplication of funds and unretired imprest include. The overall better performance in cash irregularities may have resulted from the adherence to public financial management regulations and the realization of positive effects of digitization and digitalization being championed by the vice president, Dr. Mahamadu Bawumiah. Even though payroll irregularities have been increasing over the years, a well-thought redeployment of National Identification System together with effective digitization platforms could help reverse the trend.
4. Irregularities in debt/loans/advances also declined by 97.2 percent from GH¢1.1 billion in 2020 to GH¢30.76 million in 2021 an indication of effective monitoring and recovery. Of the total Contract Irregularities of GH¢1.56 million, GH¢1.19 million (76.2 percent) was an interest paid on delayed payments for contract certificates raised for the Ministry of Roads and Highways. It is important to note that this interest on loans may be legitimate given delays in government mobilization revenues to pay contractors.
Further Observations
• The timing and completion of the report is very important for the governance of the country, Ghana has come from a long way in the area of financial management. Some years back, it was taking many years for Auditor General to audit and make available audited accounts reports to Parliament.
• Policy wise, it is a wake-up call for all state and non-state bodies to sit up and do the right thing. The ability to submit the report on time is a very important anti-corruption mechanism which projects the positive governance image of the country.
• The report is very good for our democracy. It is a deep reflection that a state institution is allowed to independently work and make decisions on other state institutions including the observation of critical remarks without fear or favour.
• Very important for planning purposes – overstating and understating of revenues and expenditures by the MDAs and MMDAs do not help in proper planning so by highlighting these would go a long way to improve planning and development.
• Reported irregularities could be blamed on the inability to fully implement Ghana Integrated Financial Management Information System (GIFMIS) hence the need to complete and strengthen the implementation. “It was apparent from the review of the Financial Statement that, not all MDAs/MMDAs used the GIFMIS platform in processing all their transactions as required by Regulation 61(1) of the PFM Regulations, 2019 (L.I. 2378).” (see Page 44 of the report)
• There is a need to pursue loan recovery – just only 1 out of 361 loans due for repayment made some payment in 2021. This is outrageous and could be attributed to unavailability of effective debt collection strategy coupled with lack of follow-ups on the part of Controller and Accountant General Department (CAGD) to the entities (countries, agencies and individuals) to retrieve the debts. Non-pursuit of the debtors could result in write offs arising from dormant receivables and thereby deny the Government the needed resources to fund its programmes. It must be noted that these are loans which are due for repayment and NOT stolen money by Government officials. The huge default rate could probably be due to the COVID 19 pandemic and related economic challenges that businesses experienced and still experiencing.
• 215 MMDAs and 18 MDAs failed to stay within their budget and over-spent over GH¢8 billion – this could probably because the budget was not based on accurate data or it was imposed on the institutions which made it unrealistic, hence spending beyond what was budgeted.
• The Government of Ghana continues to improve its public financial management systems through reforms and operational enhancements. Progress has been made in the areas of Budget Formulation and Execution, Accounting and Reporting and External Audit and Oversight.
• Second-Tier Pension Contribution Data: CAGD continues to validate data, make transfers on Second Tier National Pension Contributions to Pension Fund Administrators monthly. The validated data and transfers facilitated payment to beneficiaries who retired in year 2021.
• Electronic Salary Payment Voucher System (ESPVS): The CAGD continue to use the ESPVS platform for the validation of the GoG Payroll. The implementation of ‘No validation No Salary’ policy during the year resulted in significant improvement in the commitment of Heads of Covered Entities in validating the salary payment vouchers before salaries were paid. The salaries of employees declared
‘Discontinued’ as well as ‘Not verified’ were stopped which resulted in significant savings for government. The total number of Discontinued Staff was 11,706 and a savings of Ghc82,905,035.09 being the related salary was made. “Not Verified Staff” of 14,194 resulted in potential savings of Ghc50,180,072.37 in 2021 as well to the government.
• Recovery of Unearned Salaries - unearned salaries in 2021 was GH¢3.29 million out of the Treasury Division of CAGD recovered GHS 3.12 million representing 94.83%. These improvements should be consolidated to prevent leakages of public resources. .