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REPORT OF THE AUDITOR-GENERAL ON THE PUBLIC ACCOUNTS OF GHANA – MINISTRIES, DEPARTMENTS AND OTHER AGENCIES (MDAs) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 PART I Introduction The audits of the accounts of Ministries, Departments and other Agencies (MDAs) for the financial year ended 31 December 2008 have been carried out in accordance with the authority given to me under Article 187(2) of the 1992 Constitution of the Republic of Ghana. This report, thereon, is presented to the Speaker for submission to Parliament in compliance with Article 187(5) of the Constitution. The report contains matters of significance that I believe should be brought to the attention of the House. These came to my notice during my officers’ financial and compliance audits of the accounts of the MDAs. Audit objectives 2. The over-all purpose of the audits is to give an opinion on the accounts of each MDA submitted for my examination. As this is the first report that the Audit Service has submitted to Parliament under my stewardship as acting Auditor-General, I have carefully examined the adequacy of procedures and compliance with legislative authorities as well as financial regulations with the view to ascertaining that: Auditor-General’s Report on the Public Accounts of Ghana (MDAs) - 31 December 2008 1 ¾ the public accounts have been properly kept; ¾ all public monies have been fully accounted for and rules and procedures applicable are sufficient to secure an effective check on the assessment, collection and proper allocation of revenue; ¾ monies have been expended for the purposes for which they were appropriated and the expenditures have been made as authorised; ¾ essential records have been maintained and the rules and procedures applied were sufficient to safeguard and control public property; and ¾ programmes and activities have been undertaken with due regard to economy, efficiency and effectiveness in relation to the resources utilised and the results achieved. 3. Matters raised in this report are among those which came to light during the audits in 2008. The report also includes issues relating both to previous years, where relevant, and results of follow-ups subsequent to 31 December 2008. 2 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) - 31 December 2008 Summary of findings and recommendations 4. My audits found that MDAs had experienced difficulties in administering their payrolls, in managing loans and debts and in collecting taxes for the State. In addition, there were several instances of poor cash management and inadequate procurement controls in some MDAs. The financial impact of these weaknesses is set out in Table 1 in this report while Table 2 portrays them according to each MDA. These serve to illustrate the problems encountered by MDAs in administering their statutory duties. Table 1: Summary of financial irregularities for 2007 and 2008 financial years Irregulari % % GH¢ GH¢ US$ US$ Є Є £ £ CD$ Totals Totals ties 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2007 2008 VAT/CE 40.9 5.6 142,844,368 27,645,039 15,459 142,859,819 27,645,039 PS uncollect ed taxes and others Cash 47.6 92.8 159,550,996 460,600,767 2,808,705 19,116 2,883,573 96,932 14,131 166,056,891 460,786,338 irregulari ties Stores/p 0.2 0.2 708,513 898,350 708,513 898,350 rocurem ent irregulari ties Outstan 10.1 0.5 2,199,660 2,673,753 32,791,590 21,804 14,669 35,068,475 2,699,730 ding loans Payroll 0.4 0.2 225,459 762,886 6,975 1,348,382 762,886 overpay ments Contract 0.7 0.6 2,314,504 3,371,320 62,314 2,376,818 3,371,320 irregulari ties Rent 0.1 0.1 148,649 295,809 148,649 295,809 arrears Totals 100 100 307,992,149 496,247,924 35,615,754 40,920 2,883,573 96,932 83,958 14,131 348,567,547 496,459,472 5. Table 1 demonstrates that the total financial impact of the errors, lapses and irregularities was GH¢496,459,472 including US$40,920 and 96,932 which were converted at the prevailing rate of GH¢1.1914 to the Auditor-General’s Report on the Public Accounts of Ghana (MDAs) - 31 December 2008 3 United States dollar and GH¢1.6795 to the Euro respectively, as at 31 December 2008. My comments on these issues have been provided in the succeeding paragraphs. VAT/IRS/CEPS, uncollected taxes, others – GH¢27.6 million 6. In 2008, the total value of uncollected taxes was GH¢27.6 million. This compares with GH¢142.9 million in 2007, a significant reduction of GH¢115.3 million or 80.7% and an indication of progress made by the revenue collecting agencies and other MDAs in implementing my previous recommendations. Nonetheless, I recommend that the revenue agencies should continue to strengthen their tax collection machinery in order to collect overdue debts owed to the State and to rope in all potential taxpayers. Cash irregularities 7. Cash irregularities include: misappropriation of revenue/ other receipts; disbursement from revenue; unacquitted payments; misapplication of funds; dishonoured cheques; imprests not accounted for; and unauthorized payments. 8. The value of cash irregularities rose from GH¢166.1 million in 2007 to GH¢460.8 million in 2008, a very alarming increase of GH¢294.7 million or 177.4%. Cash irregularities which accounted for 92.8% of the total financial irregularities were found to be widespread in the MDAs due to the refusal of some imprest holders to promptly account 4 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) - 31 December 2008 for imprests. It was also due to lack of effective supervisory controls over revenue collection and blatant failure on the part of spending officers to obtain supporting documents for funds disbursed. I therefore recommend that MDAs should continue to strengthen their internal control systems by instituting measures to ensure strict compliance with financial rules and regulations. 9. I also expect that the effective functioning of the Internal Audit Units in the MDAs should help reduce the incidence of these irregularities and encourage the introduction of strong internal controls, including close supervision of staffs who handle funds, which are essential parts of effective management and good stewardship of public funds. Stores/procurement irregularities – GH¢898,350 10. Our findings on procurement and stores irregularities amounted to GH¢898,350 compared with GH¢721,114 in 2007, an increase of GH¢177,236 or 24.6%. The situation is indicative of the fact that some MDAs have still not appreciated the need to comply with the Public Procurement Act. In this regard, we found frequent instances of disregard for rules, little evidence of value for moneys spent and lack of adequate supervisory control over procurement transactions. I strongly recommend that MDAs conduct public business strictly in accordance with the provisions of the Public Procurement Act, 2003 (Act 663). Auditor-General’s Report on the Public Accounts of Ghana (MDAs) - 31 December 2008 5 Outstanding loans – GH¢2.7 million 11. In 2008, total outstanding loans/debts was GH¢2.7 million against GH¢35.1 million in 2007, a decrease of GH¢32.4 million or 92.3%. The substantial reduction in outstanding loans could be attributed to the ability of some MDAs to have established sound debt collection procedures. I urge MDAs to continue to establish proper and credible loan recovery procedures. Loans should never be given out without first establishing the prospect of recovery from the debtors. Payroll overpayments – GH¢762,886 12. These irregularities decreased from GH¢1.3 million in 2007 to GH¢762,886, a decrease of GH¢585,496 or 43.4%. The irregularities relate to wrongful payment of salaries to separated staff caused by weaknesses in the internal control systems, lack of co-ordination among MDAs, the Controller and Accountant-General’s Department (CGAD) and the paying banks. In order to eradicate this malfeasance, I once more call on MDAs to put in place comprehensive guidelines and procedures for the effective administration of the payment of salaries. I also recommend the establishment of adequate procedures to ensure the timely deletion from the payroll details of former employees and the prompt return of unearned salaries to chest. Contract irregularities – GH¢3.4 million 13. I found a breakdown in the application of contract procedures, including unexecuted contracts, outstanding refund of mobilisation 6 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) - 31 December 2008 advances and delayed execution of contract works. The contract irregularity figures increased from GH¢2.4 million in 2007 to GH¢3.4million in 2008. Again, I call for strict adherence to contract procedures and the provisions of the Public Procurement Act in order to eliminate these irregularities. Rent arrears – GH¢295,809 14. In 2008, rent arrears amounted to GH¢295,809 compared to GH¢148,649 in 2007 due to the failure of MDAs, especially Public Works Department (PWD) Head office, to implement recommendations in my previous reports. I recommend strict adherence to the policy of rent collection or rent deduction at source to minimize the risk of rent default. Our commitment 15. The Audit Service is committed to continuous improvement in efficiency in consonance with our vision and mission statement during the years ahead. It is therefore our resolve to save for the taxpayer five cedis for every cedi of the taxpayers’ money committed to the resources for the administration of the Service.

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