CJA Press Statement on the Auditor General's Report

COMMITTEE FOR JOINT ACTION (CJA) STATEMENT ON THE AUDITOR GENERAL’S REPORT ON GHANA’S PUBLIC ACCOUNTS 2006 RELEASED AT A PRESS CONFERENCE ON 19TH NOVEMBER 2008

Ladies and Gentlemen of the Media,

We thank you very much for meeting with us today. Our purpose for holding this press conference is to throw light on the maladministration of the NPP government and to point to the fact that data on the Ghanaian economy is completely unreliable. We shall also show that the Kufuor administration has not kept its promise to the Ghanaian electorate to root out corruption. Our positions on the state of public accounts are derived from the Auditor General’s Report on Public Accounts for 2006, which is the most recent report to be completed and submitted to Parliament.

In the report under reference, the Auditor General concluded as follows:

““In my opinion, because of the significant uncertainties attaching to the matters listed above, I was unable to form an opinion as to whether the financial statements give a true and fair view of the financial position of the government of Ghana as at 31 December 2006 and the results of its operations, cash flows and financial requirements for the year ended”.

Clearly, the Auditor-General finds the figures in government accounts unreliable and is therefore not in a position to confirm that Ghana’s finances have been managed effectively and efficiently.

For example, the Auditor General observed that whereas the Controller and Accountant-General’s Department stated that as at the end of 2006, Ghana’s external debt stood at ¢18.3 trillion, the Bank of Ghana records stated that Ghana’s external debt stood at ¢31 trillion. As indicated by the Auditor-General, ““The country’s external debt stock is an important factor in the determination of its financial health. The anomaly observed prevented this determination”.

The uncertainty and confusion in public accounts is described in detail by the Auditor-General as follows:

1. The Bank of Ghana and Controller and Accountant-General’s Department failed to provide the Auditor General with bank statements on account inflows and outflows of the Consolidated Fund and their balances.

2. Inadequate disclosure of non-tax revenues (See Page 36). Whereas the Financial Regulations Act requires that non-tax revenue be accounted for under eight specified headings, the government chose to band all of them under only three headings. By doing so, the government disabled the Auditor General from understanding the accounts.

3. Internally Generated Funds collected by various MDAs were utilised by those agencies without paying them into the Consolidated Fund or seeking parliamentary approval. This amounted to ¢549 trillion.

4. The Ministries, Department’s and Agencies failed to provide periodic returns on the Departmental Advances and Departmental Revolving Fund. .

5. There were cases where amounts spent or in arrears in the Public Accounts Statements were not disclosed to the Auditor-General (Page 39). The Auditor-General stated: “My examination indicated that in 2006, payments for road-arrears and non-road arrears amounting to ¢73,247,014,157 and ¢99,109,114,296 respectively were effected. However, these payments which at the close of 2005 were liabilities of the Consolidated Fund were not disclosed in the 2005 Public Accounts Financial Statements”. …. The effect of the above omission is to understate the obligations of the Consolidated Fund”. 6. Non disclosure of records underpinning trust fund investment balance reported in the Public Accounts Financial Statements (41). Although the 2006 Public Accounts Financial Statement reported Trust Fund Investments of ¢47.4 billion as in 2004 and 2005, in 2006, there were no records maintained by the Public Debt and Investment Section to substantiate the balances on these investments. The Auditor-General lamented: “It is interesting to note that the Auditor-General’s report on the 2005 Public Accounts Statements conveyed this very finding and recommended measures to address the omission. The recommended measures are yet to be implemented”.

7. The government woefully failed to recover debts owed to it by various business entities.

The recovery rate of Government loans from companies through Government appointed recovery agencies was 0.66%. The performance of Ministry of Finance in its own recovery efforts was worse (0.22%). As a result the Auditor General concluded that the loans are not recoverable. The Controller and Accountant-General’s Department is seeking Parliamentary approval to write off loans amounting to ¢6,698,065,299,349. This is a monumental loss to the country.

8. Although the government has equity shares in various companies in Ghana, the Bank of Ghana does not have information on the share value of the investee entities. As a result, it was not possible for the Auditor-General to determine the performance of the individual equity investments (Page 18).

As if that was not bad enough, the Management and Reporting on the government’s equity investment in local entities were reported in the Public Accounts Statements at the original costs at which they were acquired. This understates the true values of the government’s interests in those entities.

9. MISMANAGEMENT OF THE GETFUND

There were serious delays in transferring accrued funds into the GETFund. There were instances when accrued funds meant for the GETFund were not communicated to the GETFund Administrator. In 2006 arrears to the GETFund amounted to ¢329,598,000,000. Total funds owed to GETFund at the end of 2006 amounted to ¢407,846,000,000.

These show how the growth of the GETFund and its ability to undertake educational projects has been undermined under the NPP administration.

Interestingly when the Auditor-General asked for a response to this disgraceful situation, no response was forthcoming

10. NON-ADHERENCE TO THE LAW ON NHIS FUNDING

There were also serious delays in transferring accrued funds into the NHIS Fund. As at the end of 2006, total amount owed the NHIS by the government totaled ¢145.9 billion.

Whereas monies deducted for the NHIS from the NHI Levy (¢1,157,038,616,444) and SSF contributions (¢319,837,811,314) amounted to ¢1,476,876,427,757, the government transferred only ¢1,228,211,632,357. What happened to the difference of ¢248,664,795,400?

11. Even in the maintenance of the bank accounts of the government, they did not maintain up to date ledgers to capture entries in respect of depositors’ accounts on depositors, neither were there reconciliation of the accounts.

12. The state of the government’s accounting system is in such shambles that MDAs defaulted in preparing the accounts of their respective institutions contrary to Regulation 190 of L.I. 1802. Furthermore huge loans and advances made to public officials were not recovered.

13. Whereas the Financial Administration Regulations (2004) require the Ministry of Finance, when they contract foreign loans or receive foreign grants, to provide that information to the Bank of Ghana which should then inform the Controller and Accountant-General’s Department this was not done in several instances. Furthermore, the disbursements of these amounts were sometimes not communicated to the Controller and Accountant-General’s Department. In the end, it became difficult to establish the true state of our finances. There were even cases when records were not available for the reconciliation of the accounts.

Ladies and Gentlemen of the Media,

This is the sordid state of affairs in our public institutions under NPP rule and there can be no doubt about the incompetence of the Kufuor administration. The CJA calls on the people of Ghana to say “No” to ineptitude and corruption in public administration; and there can be no better way of doing this than to vote wisely in the December 7 elections.

Thank you very much for coming. Now you may now ask questions.

19th November, 2008