How We Have Been Chopping Ghana ‘Small Small

EXCERPTS OF FIRST PAC REPORT ON AUDITOR-GEN’s REPORT IN THE FIRST PARLIAMENT OF THE 4TH REPUBLIC (DECEMBER 1, 1993) (Part One)

Beginning with this edition, The Crusading GUIDE will periodically publish for the perusal and benefit of our readers and the general public excerpts of past proceedings of the work of the PUBLIC ACCOUNTS COMMITTEE (PAC) of Parliament and the Auditor-Genera’s Reports over the years (since Independence).

The revelations, comments, observations, conclusions and recommendations made over the years by the PAC and the Auditor-General lead to an irresistible conclusion on how the nation’s public funds had and are still being handled by those in whose hands the nation had/has entrusted the responsibility of managing her public funds and financial resources; systemic contempt for laid-down financial administration regulations and procurement procedures.

Our first instalment recalls statements made by Hon. Dr. Owusu-Agyekum (NCP) then Chairman of the Public Accounts Committee (PAC) and Hon. Sallas Mensah, NDC Member of Parliament for Upper West Akyem, incidentally now the Chairman of PAC in the 4th Parliament of the 4th Republic.

Mr. Speaker, I beg to move, that the first Report from the Public Accounts Committee of the First Parliament of the Fourth Republic of Ghana be adopted.

In presenting this report, I should like to highlight some of the important matters covered in the report. I leave the detailed comments to hon. Members. The Auditor-General’s report covering the period 1st July, 1979 to 31st December 1989 is the final audit report while that of 1990 to 1992 is the interim audit report.

Mr. Speaker, this Auditor-General’s report on the central government accounts and special audits was presented to Parliament on the 18 of June, 1993 and subsequently referred to your Committee for deliberation. Standing Order No. 145 (2) makes it mandatory that your Committee should submit at least two reports to Parliament within a Session. Having regard to our circumstances, it was not possible for your Committee to examine in full detail the operations of all the departments under the central government accounts. Owing to the rather large number of departments and institutions operating under the central government accounts as well as the limited time at our disposal, we decided to limit our enquiries to the activities of a few departments and institutions under the above head of accounts. It is your Committee’s hope, Mr. Speaker, that in our next report we shall be able to analyse the financial results of many more departments and institutions under the general government accounts and special audits.

Mr. Speaker, the initial problem your Committee faced was whether or not the report of the Auditor-General on the public accounts of Ghana for the period ended 31 December, 1992 under the central government dated 17 June, 1993 was a good document, well prepared and suitable for debate in this House. After much deliberations, it was agreed by the Accountant-General, the Ministry of Finance, the Bank of Ghana, the Auditor-General and your Committee that the report, though not perfect, was a good working document for Parliament to deliberate on.

A REVIEW OF THE PUBLIC ACCOUNTS COVERING THE TEN-YEAR PERIOD FROM 1 JULY, 1979 TO 31 DECEMBER, 1989, DISCLOSED THAT THE ACCOUNTS WERE CHARACTERIZED BY SERIOUS DISCREPANCIES, OMISSIONS, MISSTATEMENTS, LACK OF SUPPORTING EVIDENCE, NON-ADHERENCE TO GENERALLY ACCEPTED ACCOUNTING STANDARD, AND DEPARTURE FROM THE FINANCIAL ADMINISTRATION REGULATIONS, MAKING THE ACCOUNTS UNACCEPTABLE IN THE FORM IN WHICH THEY HAD BEEN PUBLISHED. THESE LAPSES ARE REPEATEDLY SEEN IN THE ACCOUNT OF 1990-1992.

In the view of the Committee, these lapses came about as a result of inadequate staffing and the very form in which the accounts were prepared. The period 1979 to 1989 saw major economic transformations, all of which contributed to the current problems. A careful study of the report revealed certain problems, some of which are definitional in nature. For example, stock flows and the over-drawn position of the Consolidated Fund pose definitional problems which much be addressed. Further, there is the need to clear all issues surrounding government revenue such as estimation and accumulation of revenues, the problem of lodgement, advances by government and recovery of these advances by government, foreign loans, receipts and others.

It was noted that the Auditor-General based his report on the 1979 Financial Administration Regulations (LI 1234), which had itself been superseded by PNDC Laws 143 and 144. All these will have to be taken care of by a major enactment.

IT WAS NOTED THAT BY 1985 WHEN THE PRESENT CONTROLLER AND ACCOUNTANT-GENERAL ASSUMED DUTY, GOVERNMENT ACCOUNTS HAD BEEN IN ARREARS FOR OVER 7 YEARS AND, PROFESSIONALLY, ANY ACCOUNTS THAT HAVE BEEN IN ARREARS FOR EVEN TWO YEARS, IS LIKELY TO FACE DOCUMENTATION PROBLEMS. AS A RESULT OF THIS, THE ACCOUNTANT-GENERAL’S OUTFIT HAD TO RELY ON INCOMPLETE RECORDS FOR THE PREPARATION OF THE ACCOUNTS. LACK OF EQUIPMENT, LOGISTICS AND MANPOWER AND, FOR THAT MATTER, PROCESSING CAPACITY WAS ONE OF THE DEPARTMENT’S PROBLEMS.

For the efficient and effective preparation and auditing of government accounts, the Committee recommends the formation of a task force comprising representatives from the Controller and Accountant-General’s Department, the Ministry of Finance and the Bank of Ghana. ONE OF THE TASKS TO BE ASSIGNED IS THE RESPONSIBILITY OF ENSURING THAT THE BACKLOG IS CLEARED AND THAT THE GOVERNMENT ACCOUNTS ARE PREPARED ON TIME AND DO NOT FALL INTO ARREARS AGAIN.

Another task to be performed is to update the 1979 Financial Administration Regulations, taking cognizance of existing laws and regulations as well as current trends.

On the failure of management to comply with the Financial Administration Regulations your Committee observed that the lodgement of revenue into the Consolidated Fund from the operations of the Customs, Excise and Preventive Service and the Internal Revenue Service has been delegated to the bankers of the two agencies. This has resulted in undue retention and partial payment of revenue collections into the Fund. The prompt lodgement of revenue into the Fund would have eased the overdrawn position of the Consolidated Fund account at the Bank of Ghana and would have resulted in the reduction of overdraft charges levied by the Bank on the bank on the overdrawn position which stood at more than ¢401 billion as at 31 December, 1992. The 1989 figure was ¢1.9 billion.

Similarly, your Committee learnt that the Ministry of Works and Housing operated a research fund account into which were paid levies imposed by the Ministry on building materials sold. THIS FUND WHICH WAS OPERATED FROM 1985 TO 1988, WAS NOT AUDITED BECAUSE THE PNDC SECRETARY, DR. KOFI SAM, DID NOT ALLOW IT TO BE AUDITED. IN 1989, THE SAID ACCOUNT WAS REPORTEDLY CLOSED BY THE MINISTRY, BUT IT FAILED STILL TO SUBMIT THE ACCOUNTS FOR AUDIT. UPON FURTHER ENQUIRIES, THE MINISTRY WROTE TO THE AUDITOR-GENERAL TO CONSIDER THE ISSUE REGARDING THE SAID ACCOUNT CLOSED.

The Committee viewed these deviations from the Financial Administration Regulations as serious and recommends immediate compliance with them in the future. These deviations, your Committee observed, were likely to leave the accounts unscrutinised, which would not be in the public interest.

Mr. Speaker, the Auditor-General will investigate allegations of impropriety involving ownership of equipment and machinery bought using the said fund and report later to the House. Your Committee further observed that some officers who had either been dismissed or redeployed in the Ministries of Education, Health and others continued to draw their salaries with impunity from government. Management has been advised to ensure that money so paid to such category of workers are promptly recovered into government chest. Your Committee in this regard noted that the banks have not been helping in returning unearned salaries to chest promptly. This must also stop.