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.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) - 31 December 2008 7 payroll irregularities, overpayments Table 2:Summaryofcash 21 Defence 20 19 Railwa 18 Information 17 Lands & 16 Other A 15 14 Local Govt. 13 11 Manpower, 10 Off.of Govt. 9. 8. 7. Interio 6. Education 5, Food & 4. Health A 3. Ener 2. Forei 1. MOFEP No . T C W C C Y T W A Resources Forestr Machi. rade & PSI ransportation outh ffairs/NEPAD hildren ulture hieftainc omen & ater iity Tax Ministry gy g r n y
y
g s
encies encies g y ric. &
76509 6,0,6 916 692 ,7,5 1847286883033130 2589496,247,924 295,809 3,371,320 898,350 762,886 21,804 2,673,753 96,932 19,116 460,600,767 27,645,039 27,249,674 27,249,674 3,136,206 irregularities irregularities H S H US$ US$ GH¢ GH¢ 1,7 2801 6,710 238,001 117,177 127,157 450,584,506 278 7,0 345 7,770 275,508 62,798 1,068,654 932,804 42,004 13,485 427,030 785,612 36,511 ,1 862 78,662 9,718 4,6 230,793 47,361 13,690 600,000 320,625 308,792 1,000 34,393 100,955 1,616,340 337,033 94,007 4,800 186,016 1,837,472 4,631 96,932
ahirglrte Ottniglas Payroll over Outstanding loans Cash irregularities
Є
545,695 40,408 2,667,134 2,667,134 40,408 33,639,897 545,695 CD $ GH¢ US$ £ GH¢ GH¢ US$ £ 00019,408 10,000 11,804 , stores/procurement and other irregularities classified accordin classified otherirregularities and , stores/procurement payments 079272,408 192,958 20,749 94,531 922117,226 29,252 14,042 4,249 ,1 72,591 3,412 ,3 13,184 1,035 5,605 13,728 2,124 6,994 4,642 148,448 8,510 2,638 CD$ Stores/procu irregularities irregularities GH¢ £ GH¢ £ GH¢ GH¢ GH¢ £ GH¢ GH¢ £ GH¢ 21,420 5,979 rement rement Contract irregularities 1,0 2,648,922 312,303 0,1 1,920,550 304,210 611 2 34450,654 26,181 2,394 625 2,226,191 56,225 ,6 4521,566,451 5,267 24,542 Staff rent arrears 366,137 3 13343,156 3,123 292,373 354,769 623,435 265,750 95,374 35,110 4,642 14,042 109,465 245,093 600,000
450,711,663 29,920 13,485 16,435 US$ US$ Totals
£ g toMDAs 69296,932 69296,932 Є
CD $
8 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
PART II
SUMMARY OF FINDINGS AND RECOMMENDATIONS
MINISTRY OF FINANCE AND ECONOMIC PLANNING 16. Total releases of GH¢3,066,742 were made from the Non-Road Arrears Account to MDAs without Specific Warrants or commencement certificates issued by the Ministry of Finance and Economic Planning (MoFEP), in violation of the procedures for accessing funds from the Consolidated Fund. There were also no policy guidelines for the administration of the account. We recommended to management to regularise the transactions and introduce policies and guidelines for the effective administration of the account.
17. Cash irregularities such as short payments of auction sales revenue, un-recovered returned cheques, payments not supported with official receipts and delays in the payment of revenue to chest totalling GH¢12,177.58 characterised the operations of the Headquarters of MoFEP, and some District offices of the VAT Service and IRS during the year. Weak supervisory control of schedule officers and accounting staff resulted in the cash irregularities. We recommended the recovery to chest of all funds due to the State as a result of the irregularities and the strengthening of supervisory controls.
18. The utilisation of fuel purchases totalling GH¢40,407.69 made by MoFEP Head office, the Greater Accra Regional office of the
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 9
Statistical Service and the IRS District office at Berekum could not be ascertained because no records were maintained for the receipt and disposal of the fuel purchases. Laxity in supervisory control over accounting staff, transport officers and drivers accounted for the anomalies. We recommended that evidence of receipt and disposal of the fuel purchases should be provided, failure of which the amount of GH¢40,407.69 involved should be retrieved to chest. We also recommended proper and complete records to be maintained for fuel and lubricant purchases and their disposal.
19. Management and senior staff of the VAT Service underpaid their income tax liabilities (PAYE) in the sum of GH¢261,881.32 between January and December 2007, as a result of the wrong computation of their tax liabilities by excluding fuel and clothing allowances paid to them. The omission was in violation of Act 592 which stipulates that all emoluments and benefits of an employee should be taken into consideration in the computation of income tax liabilities. We recommended that the underpayment of tax (PAYE) in the sum of GH¢261,881.32 should be retrieved and paid to the IRS. Additionally, the tax liabilities of the junior employees for the same period should be re-computed and any underpayment in PAYE detected paid to the IRS.
20. Additionally, the VAT Service overpaid its management and senior staff in the sum of GH¢27,888.43 by computing their tax liabilities on a 22.5% salary increase for the year 2007 using the aggregate of the arrears of the salaries and allowances instead of the
10 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 increased monthly salaries. We recommended that the underpayment of GH¢27,888.43 in PAYE should also be recovered and paid to the IRS. Furthermore, management should re-compute the PAYE for the junior officers of the Service and any underpayment of PAYE detected should be paid to the IRS.
21. Two contractors engaged by the VAT Service to refurbish its Kumasi and Koforidua Regional offices were paid advance amounts of GH¢24,331.48 even though the signed contract agreement did not provide for the advance payments. Management could not provide the rationale for its action which constituted pre-financing of the contractors. We recommended to management to fully comply with the terms of future contract agreements. We further recommended to management to charge interest on the advances paid to the contractors at the prevailing Bank of Ghana rate.
22. The VAT Service acquired the Barnett building located along the Ring Road Central, Accra for GH¢874,154 and rehabilitated it at the cost of GH¢2,387,216 despite the limited period of 11 years left for the expiry of the lease of the land the building is situated on and a threat of possible hindrance to the exercising of the 20 years’ renewal clause of the lease agreement. To ensure the continuous use of the land without hindrance in future, we recommended that the VAT Service should finalise negotiations with the landlord on a long lease of the land. The Service could also negotiate for a freehold purchase of the land.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 11
23. Seventy-six traders and companies were indebted to the Madina and Sunyani VAT offices in the sum of GH¢69,933.39 as at 31 December 2008, as a result of the refusal of the traders and companies to settle their assessed taxes and the under-declaration of taxes collected by companies and individuals on behalf of the VAT Service. We recommended to management to explore effective administrative measures to collect the outstanding taxes.
24. Short collections uncovered in post clearance audits during the year and penalties imposed on affected importers; some of whom were found to have manipulated customs documents totalled GH¢13,655,166. Similarly, ex-warehousing short collections and pecuniary penalties amounting to GH¢2,694,454 some of which were attributed to stock shortages and overstayed items in the bonded warehouses were uncovered during the year. We recommended to management to pursue recovery of the total short collections and penalties totalling GH¢16,349,620.
25. Three Oil Marketing Companies (OMCs) whose indebtedness were rescheduled by CEPS reneged on the rescheduled payment plan and were indebted to CEPS in the sum of GH¢2,768,908. The indebtedness which arose out of oil liftings by the companies was not guaranteed with any security which rendered recovery efforts difficult. We recommended to management to either re-schedule the debts again or take legal action to recover the debt.
12 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
26. Deficiencies in tax collection such as ineffective supervision, absence of sustained pursuit of defaulting taxpayers and failure by District Tax Offices (DTOs) to apply sanctions for non-payment of taxes as stipulated under Section 143 of Act 592 resulted in nine DTOs recording outstanding corporate taxes totalling GH¢4,268,073.27 during the 2006 and 2007 assessment years. We recommended to management to prevail on schedule officers to vigorously pursue defaulting taxpayers to settle their tax liabilities.
27. The Ghana Heavy Equipment Limited (GHEL) defaulted in the payment of taxes totalling GH¢1,847,465.33 for the 2007 year of assessment and proposed that the tax liability be set-off against a debt of GH¢2.8 million owed it by government. We noted that the proposal contravened the provision on set-off as specified in Section 159(1) of Act 592 and recommended to the IRS to pursue the collection of the overdue tax of GH¢1,847,465.33 from GHEL.
28. Tax irregularities such as the failure by employers to remit PAYE deductions made from the emoluments of employees to the IRS, failure to deduct and remit taxes from Directors’ fees, non deduction/remittance of withholding tax and failure to pay rent tax totalled GH¢1,007,842 during the 2006 and 2007 assessment years. The IRS’ failure to enforce the provisions of Section 88(1) of Act 592 on the imposition of penalties for default in deducting and remitting taxes to the Service and ineffective supervision of schedule officers in the conduct of their tax collection duties resulted in the irregularities. We recommended that IRS should pursue the recovery of the unpaid
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 13 tax of GH¢1,007,842 and all outstanding taxes and educate employers on the need to withhold taxes on payments for goods, emoluments and rent and apply the prescribed penalties for default.
29. The Tema and Nima DTOs accepted photocopies of tax credit certificates (TCC) and tax receipts (I.T.140) from withholding agents to off-set tax liabilities totalling GH¢35,296 in violation of Section 7 of the IRS Collection Manual and Administrative practice on tax liability offsets. The Manual prescribes only triplicate copies of taxpayers’ receipts and duplicate copies of TCCs. Ineffective supervision of schedule officers accounted for the lapse. We recommended that the companies involved should be made to produce the required copies for verification, failure of which the tax liability of GH¢35,296 off-set with the photocopy documents should be re- instated.
30. The IRS purchased a 0.3 acre piece of land at Tema for its Teshie Nungua office in August 2007 at a sum of GH¢230,000 through the single source procurement method without prior authorisation by the Public Procurement Board as is required by Section 40 of the Public Procurement Act (PPA) Act 2003 (Act 663) and a Ministerial Tender review as prescribed in Schedule 3(3) of the PPA. We recommended to the Commissioner to regularise the procurement transaction in accordance with the provision of Section 15(4) of the PPA.
14 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
31. A former District Accountant of the Suame (Kumasi) office of the IRS misappropriated revenue amounting to GH¢59,660 realised from the sales of Vehicle Income Tax stickers covering the first to third quarters of the year 2007. The misappropriation was possible because of management’s failure to enforce existing standard practices for control and handling of value books. We recommended to management to recover the misappropriated amount from the interdicted former Accountant and enforce controls over the custody and use of value books.
32. Overpayments of gratuity to retired officers as a result of wrong pensions computations totalled GH¢51,575 during the period under review. Similarly, the failure of managements to ensure prompt deletion of the names of separated staff from the payroll and the lack of communication with the banks resulted in the crediting of the bank accounts of 575 retired officers with unearned salaries totalling GH¢888,964 between January 2007 and April 2008. We recommended the recovery of the illegal payments and prompt deletion of the names of the separated staff from the payroll. Officials of MDAs should also be meticulous in the computation of benefits due to retired officers.
33. The office of the CAGD failed to provide for audit verification, the identities of MDAs and the dates of retirement of deceased retirees on whose behalf pension benefits averaging GH¢193,316.65 a month were paid to 7,094 dependants between January and March 2008. The genuineness of the payments to the dependants could therefore not be
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 15 established. The Controller and Accountant-General is yet to furnish this office with the relevant information we requested to enable the payments to be authenticated.
34. Total funds of GH¢414,379.25 which were wrongly included in salary arrears computed by subvented organisations for payment to staff in 2008 were saved for the State through the vetting of the computed salary arrears by this office which detected the wrong computations.
35. The failure by Finance Officers of four District Treasury offices to monitor the operations of Suspense Accounts maintained by commercial banks within their areas of operation in respect of staff unclaimed salaries and wages resulted in delays or failure by the banks to transfer total unclaimed salaries and wages of GH¢498,151.94 into the Consolidated Fund. We recommended the immediate transfer into the Consolidated Fund of all accumulated unclaimed wages and salaries and the prompt transfers of subsequent receipts.
MINISTRY OF EDUCATION, SCIENCE AND SPORTS 36. Advances and debts recoverable from a number of institutions under the Ministry stood at GH¢1,068,654 as at 31 December 2008. We urged management to intensify its recovery efforts in accordance with Regulation 110 of the FAR, 2004.
16 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
37. Cash irregularities which included unsupported payments, and retention of IGF without approval amounted to GH¢932,804. We recommended strict adherence to the relevant provisions of the Financial Administration Act (FAA), 2003 (Act 654) and Financial Administration Regulation (FAR), 2004 (L.I. 1802) and the strengthening of internal controls to minimise the menace.
38. The management of Accra Metropolitan Education office awarded and paid for contracts totalling GH¢312,303 without due regard for laid down procedures. To ensure value for money, we urged the management to adhere strictly to the established contract procedures and the provisions of the Procurement Act, 2003 (Act 663).
39. Procurement and stores irregularities, including purchases without competitive bidding, failure to route stores and fuel purchases through store records and vehicle logbooks, payment for unsupplied items and shortage of store items totalled GH¢272,408 during the year under consideration. Non-compliance with the procurement laws and store regulations accounted for the irregularities. We urged compliance with the existing procurement laws and store regulations and the strengthening of supervisory controls to enhance transparency and accountability in the procurement and store keeping functions of the Ministry.
40. Tax irregularities such as failure to deduct withholding tax and failure to procure from VAT-registered entities totalled GH¢42,004
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 17 during the year. Inaction of managements to strictly apply the relevant tax laws accounted for these lapses. We recommended strict compliance with the tax laws.
41. Unearned salaries paid to staff of Divisions and Offices under the Ministry amounted to GH¢20,749. We requested managements of the Divisions and Offices to closely monitor the payroll, ensure that names of separated staff are promptly deleted from the payroll and to recover the unearned salaries.
MINISTRY OF HEALTH 42. We observed that corporate bodies and the National Health Insurance Service (NHIS) had not been paying their indebtedness to hospitals with NHIS alone owing GH¢2,280,724. Managements’ inability to adopt effective debt collection measures contributed to the situation. We recommended that the accounts of the schemes should be closely monitored and effective measures adopted by management to collect the overdue debts.
43. Payment vouchers involving GH¢754,626 were either un- acquitted or were not presented for examination. The situation could lead to wrongful payment, misapplication and misappropriation of funds. We advised management to produce the appropriate authenticating documents and vouchers for our inspection.
44. Health institutions purchased items from non-VAT registered companies and also failed to remit withholding tax collected on goods
18 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 and services. This was due to managements disregard for the provision of Regulation 183(4) of FAR, 2004 and Regulation 87(1) of the Internal Revenue Service Act, 2000 (Act 592). As a result GH¢36,511 was lost to the State.
45. Stores and procurement irregularities such as unsupplied items and failure to route stores and fuel purchases through store records and vehicle logbooks totalled GH¢192,958 for the year. Non- compliance with procurement rules and procedures, as well as, store regulations mainly accounted for the irregularities. We recommended compliance with procurement procedures and a strict enforcement of store regulations.
46. A total amount of GH¢94,531 was paid as unearned salaries into the bank accounts of separated staff and staff on study leave due to delays and lack of coordination between management and the Controller and Accountant-General’s Department (CAGD). We urged the Heads of the institutions to recover the amounts to chest, liaise regularly with CAGD and ensure the monitoring of the payroll to forestall a recurrence of the lapse.
MINISTRY OF ENERGY 47. In breach of Section 84 of the Internal Revenue Service Act, 2000 (Act 592) management failed to deduct 7.5% withholding taxes amounting to GH¢127,156 from three mobilisation payments made to a supplier. We advised management to recover the amount to avoid being held liable for the payment of the amount.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 19
48. Owing to management’s failure to subject all payment requests to proper scrutiny before granting payment authorisations, the audit was unable to ascertain the authenticity of 31 payments amounting to GH¢10,747,803 made to 21 suppliers, as available documentation did not provide enough evidence that projects for which those payments had been made had been undertaken or their costs justified. We advised management to urgently obtain the requisite supporting invoices and waybills and also subject all payment requests to proper scrutiny.
49. Cash transfers totalling GH¢388,723,288 were made by Bank of Ghana (BoG) into the Ministry’s Treasury bank account without any supporting authority letters from MoFEP, while unexplained cash transfers totalling GH¢439,836,704 were made out of the account, some of them directly into the bank accounts of local and foreign contractors, working on the Ministry’s electrification programmes. We recommended that management should obtain MoFEP’s release letters and CAG warrants in support of the transfers and also investigate transfers made through the Treasury bank account to ensure that only approved budgetary allocations were paid out of the account.
OFFICE OF GOVERNMENT MACHINERY 50. Instead of using a rate of 0.25% in computing consultancy fees payable, the management of the National Identification Authority (NIA) wrongly applied a rate of 25% and thereby overpaid a consultant by an amount of GH¢94,007. We recommended that
20 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 management should recover the excess payment and demand interest on it at the BoG’s prevailing rate over the period.
51. In the absence of a properly constituted and inaugurated Board, the Executive Secretary of the NIA engaged the services of three consultants without recourse to any body. Besides, we noted that various allowances ranging from rent to entertainment were, without authority, paid to staff including the Executive Secretary even though there was an interim Board in place at the time of those payments. We recommended the immediate constitution of the NIA Board to give full effect to the NIA Act and provide policy direction and control for the Authority.
52. In 2009, the NIA paid $14,844 to a consultant for the preparation of a service scheme which was to include a salary structure. We noted that management again paid GH¢1,770 to some staff of the NIA and Public Services Commission to work on the conditions of service for the Authority but the documents could not be produced. Due to the absence of these documents management failed to comply with a MoFEP directive to put the Authority’s staff on government payroll. We recommended that the consultant and the staff who received those allowances be held accountable for the failure to produce a salary structure for the Authority.
53. A driver of Greater Accra Regional Coordinating Council who had retired in August 2007 continued to receive monthly salaries totalling GH¢2,638, due to laxity on the part of the officer authorised
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 21 to certify the monthly payroll and ensure that all persons whose names appeared on the payroll vouchers were qualified to receive the salaries. We advised management to recover the amount.
MINISTRY OF TRADE AND INDUSTRY, PUBLIC SECTOR DEVELOPMENT AND PSI
54. Contrary to Regulation 14(1) of the Financial Administration Regulation, the Ministry opened and operated an account at the Accra High Street branch of Barclays Bank in October 2005. An amount of GH¢2 billion was transferred into it from the Ministry’s main account which earned an interest of GH¢7.8 million, and the GH¢2 billion later withdrawn. We urged management to regularise the opening of the account and also account for the amount withdrawn.
55. Two out of six private enterprises in the garment industry which had been given support grants for capacity building totalling GH¢288,000 did not complete their projects and abandoned them on the grounds that the Ministry did not honour its promise to provide more funds to complete them. The PSI also was unable to finalise an agreement between itself and the six beneficiaries stating the terms and conditions of the grants, although draft agreements were prepared at the cost of GH¢4,650 for the purpose, and were in the custody of the Coordinator, PSI Garment. We recommended that the Ministry should sign the agreements with the beneficiary companies and assist the two companies to complete their infrastructure by facilitating access to additional funding for them. We also advised management
22 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 to either retrieve the draft agreements from the former Coordinator or recover the GH¢4,650 from him.
56. A building in Kumasi which was to be used as a training centre for workers of garment factories was renovated in 2006 at the cost of GH¢11,492. By December 2008 it had not been put to use because funds were not available to provide equipment to fully complete the facility for use, as PSI did not allocate funds for the programme in 2006/2007. We advised management to prioritise its activities in view of the limited funds available, and as soon as possible provide the necessary funding to ensure that the building is utilised for the training.
57. A strategic plan for the development of the cotton industry in Ghana was prepared at the cost of GH¢45,696 in 2006. Two years after its completion and submission to PSI, the plan had not been put to use. According to management, this was because of the realignment of the sector to the Ministry of Trade and Industry and also due to the change in management. We advised that the strategic plan should be implemented to ensure that good value is obtained from the investment.
58. Owing to the absence of a schedule officer for transport and estate, 23 payments totalling GH¢273,310 being cost of repairs and maintenance works carried out for the PSI were not certified. We recommended that, in future, management should ensure that
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 23 certificates of satisfactory execution of works and services are obtained from responsible officers before payments are made.
MINISTRY OF FOOD AND AGRICULTURE 59. Out of total loans of GH¢195,600.00 granted to farmers for farming inputs, only GH¢33,437.94 was recovered two to four years after they were granted, showing a slow recovery rate of 17.1%. Additionally, no recovery was made on a loan facility of GH¢23,854.36 granted to 31 technical staff, three to six years after the facility was granted. To prevent the loans from going bad, we recommended the introduction of bond/security for farmers’ loans in future agreements. Meanwhile management should vigorously pursue the recovery of the loans given to staff by expediting action through recovery from their salaries.
60. Management’s negligence in complying with applicable financial regulations resulted in cash irregularities totalling GH¢1,837,472. Out of this figure, 77.2% represented IGF retained without authority and non-issuance of official receipts. Additionally, 52 payment vouchers with a total face value of GH¢374,384 were not acquitted with the requisite documents. We recommended strict adherence to the relevant provisions of the FAR and the FAA and the intensification of supervision of the work of the Finance Units. 61. Twenty-eight separated staff were paid unearned salaries of GH¢29,252. as a result of management’s failure to promptly delete their names from the payroll. We advised the cost centres involved to recover the unearned salaries and improve upon payroll monitoring.
24 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
62. Fuel and lubricants amounting to GH¢98,264 were neither recorded in the vehicle logbooks nor were they taken on store ledger charge. To ensure proper accountability, we urged management to record the full particulars of fuel and lubricants and their usage in the logbooks.
63. Two contractors were paid a total of GH¢35,727 without the Heads of departments certifying the quality of work done and this resulted in paying for sub-standard work. We advised management to comply with the relevant provisions of the FAR and, in addition, to recover an overpayment of GH¢18,488.40 noted on another contract.
MINISTRY OF LANDS, FORESTRY AND MINES 64. Six former employees of the Lands Commission Secretariat and 12 separated staff of the Survey Department were paid unearned salaries totalling GH¢19,409. Management was urged to recover the amount and put in place adequate payroll procedures to prevent the payment of un-earned salaries to former staff members.
65. The Geological Survey Department did not take steps to recover a sum of US$10,000 being an advance granted to a contractor, Messrs E.K. Geotech Limited in October 2005. Steps should be taken by the Department to recover the amount from the contractor.
66. Again at the Geological Survey Department, cash irregularities, including failure to fully account for an amount of US$2,000 and the inability to present vouchers covering an amount of GH¢316,699 paid
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 25 from the Minerals Development Fund were noted. We recommended strict adherence to the relevant provisions of the FAR and the strengthening of internal controls over disbursement to reduce the incidence of these irregularities.
67. Stool lands revenue totalling GH¢3,429 could not be accounted for at Ejisu and Mankraso offices of the Stool Lands Administrator as at 31 December 2008. We recommended that strenuous efforts should be made to recover the amount.
68. Failure by management to ensure the deduction of rent at source led staff who were occupying the Lands Commission’s flats to owe rent totalling GH¢3,132.00. We urged management to collect the arrears and ensure deduction of rent at source.
MINISTRY OF INFORMATION AND NATIONAL ORIENTATION
69. Unearned salaries amounting to GH¢4,642 were paid to two former staff of the Information Services Department at Mpraeso. Management was asked to get the amount refunded.
MINISTRY OF CHIEFTAINCY AND CULTURE 70. An unearned salary of GH¢10,632 was paid into the bank account of a Special Assistant of the Ministry in February 2008, prior to his assumption of duty in March 2008. Also, an Assistant Regional Registrar and a Court Clerk Grade I who had ceased to be in the employment of the Civil Service between July and August 2008 were
26 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 paid unearned salaries totalling GH¢3,410. Management was urged to recover the amounts and ensure that the CAGD is promptly informed of any changes in staffing position.
MINISTRY OF LOCAL GOVERNMENT, RURAL DEVELOPMENT AND ENVIRONMENT
71. The only major tax irregularity noted under the Ministry involved a total amount of GH¢117,177 which the National Secretariat of the Ghana School Feeding Programme failed to remit to the IRS. We recommended prompt payment of the un-remitted amount and strict compliance with Section 30 of the Financial Administration Act to boost tax revenue.
72. Management neglected to comply with applicable financial regulations resulting in cash irregularities totalling GH¢238,001. Included in the lapses were short-payment of revenue to bank in the sum of GH¢6,710, failure to account for grants of GH¢183,060, un- presented vouchers of GH¢18,094, and non-issuance of receipts to payees in the sum of GH¢16,718. We recommended strict adherence to the relevant provisions in the FAR and the FAA.
73. Unearned salaries totalling GH¢4,249 were paid to a former employee of the Births and Deaths Registry Head office and another former staff at the Regional office at Koforidua. This is one weakness which permeated throughout the MDAs. We recommended that the MDAs should inform the CAG of any separated staff for their data to be deleted.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 27
74. Out of an amount of GH¢20,260 granted to 13 staff members of the National Secretariat of the School Feeding Programme as car loans and staff advances between 2006 and 2007, GH¢13,560 was recovered leaving a sum of GH¢6,700. Management has been urged to recover the amounts due.
MINISTRY OF INTERIOR 75. Cash irregularities observed amounted to GH¢286,241 and US$13,485. These were in respect of misappropriation of proceeds from the sale of tender documents, misapplication of funds, disbursements made directly from revenue collections without first paying into bank, unauthorized use of IGFs, un-acquitted payment vouchers, dishonoured cheques, imprest not accounted for and the value of exhibits with the Police that could not be traced.
76. Payroll overpayments and errors in the form of unearned salaries and allowances wrongfully paid out which had not been recovered amounted to GH¢3,412. We urged management to comply with Regulations 297, 298 and 304 of the Financial Administration Regulations (L.I. 1802) of 2004 for the avoidance of the recurrence of such incidents.
77. Purchases amounting to GH¢72,591 were made by the Ghana Immigration Service without adhering fully to prescribed procurement procedures. We urged management to ensure compliance with the provisions of the Public Procurement Act (Act 663) of 2003.
28 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
78. Contract irregularities in the sum of GH¢26,181 occurred in respect of the renovation of the Nima Divisional Police Station which was poorly done due to inadequate supervision. We urged management to utilise the retention money payable to the contractor to rectify the defects noted and ensure adequate supervision of future projects.
79. Rent arrears amounting to GH¢2,394 had not been collected by Prisons Service Headquarters and Immigration Service, Bolgatanga. We urged their managements to vigorously pursue recovery of the rent arrears.
80. Tax irregularities observed amounted to GH¢62,798 in respect of 5% withholding tax not remitted to the IRS and output tax not paid over to VAT Service. We advised management of the Police Service and the Immigration Service to ensure that all taxes withheld or retained are promptly paid over to the Revenue Agencies.
MINISTRY OF TRANSPORTATION 81. Due to the inability of the management of the Ministry of Transportation to effectively monitor imprests, unaccounted for imprests totalling GH¢10,320 were noted during the year. We recommended strict enforcement of Regulation 283(b) of the Financial Administration Regulations.
82. Eight motorbikes with their crash helmets worth GH¢21,420 which were allegedly being kept at the Department of Feeder Roads’
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 29 store at El-Wak, Accra could not be traced when we conducted a stock count at the end of the year. We were informed that the case of the missing items had been referred to the Police. We recommended that there should be regular follow-ups on the investigation and we should also be informed of the progress of the investigations.
MINISTRY OF HARBOURS AND RAILWAYS 83. Management misapplied an amount of GH¢600,000 out of a total amount of GH¢2,150,000 voted for the payment of end-of- service benefits of 674 retrenched railway workers. We recommended that the situation should be regularised and Regulation 179 of the FAR strictly complied with.
MINISTRY OF WOMEN AND CHILDREN’S AFFAIRS 84. Internal control weaknesses including weak supervision over accounting officers resulted in 14 payment vouchers with a total face value of GH¢34,393 not being made available for audit. We urged management to trace the payment vouchers and submit them for audit.
85. The recovery profile of a total loan of GH¢306,900 granted to 45 women groups in the Ashanti Region between 2006 and 2008 could also not be produced for audit due to the absence of proper records on the loans. Similarly, staff loans totalling GH¢1,892 remained unpaid as a result of lack of criteria for the recovery of the loans. We recommended that the Ashanti Regional Secretariat should liaise with the sector Ministry to obtain the recovery profiles to facilitate the recovery. Additionally, we urged management to recover
30 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 the staff loans and to define appropriate criteria for the disbursement and recovery of all loans.
86. Failure to supervise activities at the stores led to management’s inability to ensure the recording of store items worth GH¢5,419 in the store ledgers. We requested management to address the problem of unrecorded stores.
87. Another store irregularity noted was the loss of 14 sewing machines worth GH¢560 detected during stock-taking at the Ministry’s stores. Our investigations revealed that the place in which the machines were kept was used both as a storeroom and an office, with the Storekeeper and other staff members sharing the keys. We recommended that management should be surcharged with the cost of the stolen machines.
88. Payment of casual workers’ emoluments totalling GH¢5,605 at the Women’s Training Centre at Madina was made without time sheets to provide audit trail and ensure accountability. The lapse occurred due to lax supervision. We urged management to comply with the relevant regulation on the payment of casual workers and to intensify its supervisory role.
MINISTRY OF DEFENCE 89. In the Support Services Brigade, we noted cash irregularities totalling GH¢47,361 which included GH¢29,671 representing payments made for repair works done for which no certificate of
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 31 attestation of satisfactory work done supported the payment vouchers. We recommended that management should provide the relevant documentation to acquit the payments.
90. Due to management’s inability to promptly delete the names of separated staff, unearned salaries totalling GH¢1,035 were paid into the bank accounts of six separated civilian employees at the Recce Regiment. We urged management to pursue recovery.
91. Due to lack of procurement planning, the Data Processing Centre purchased items in piecemeal from non-VAT registered vendors to the tune of GH¢13,184 during the year under review. We advised management to prepare procurement plans annually in line with the Public Procurement Act.
92. The absence of settlement terms between the Military hospital and its Chemist shop resulted in total outstanding bills of GH¢230,793 payable by the hospital. We urged the Director of Medical Services to ensure the payment of the amount to the Chemist shop.
MINISTRY OF FOREIGN AFFAIRS, REGIONAL INTEGRATION AND NEW ECONOMIC POLICY FOR AFRICAN DEVELOPMENT (NEPAD)
93. Weak supervisory controls over Missions’ accounting functions by some Heads of Chancery led to a total amount of Є19,106 and US$1,518 unaccounted for or misappropriated in the Missions in Madrid, Copenhagen and Berne. Other cash irregularities noted included the payment of an illegal entitlement of US$3,113 in Harare
32 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 and outstanding utility bills of Є1,065 in Madrid. We recommended the recovery of the amounts and the strengthening of supervisory controls by the Heads of Chancery to forestall recurrence of the anomalies.
94. Due to the failure of the Ministry of Foreign Affairs (MFA) to liaise with MoFEP and BoG on the issue of transfers of remittances to the various Missions, an amount of Є76,761 which was transferred to the Copenhagen Mission on 2 August 2006 could not be traced into Mission’s accounts. We recommended that the Mission should work together with MFA to trace the final destination of the remittance.
95. Defective debt recovery system resulted in expenses incurred on behalf of three Ghanaians in New Delhi totalling US$9,602 and US$1,500 spent in Tel Aviv on behalf of Kumasi South Hospital to remain outstanding as at 31 December 2008. We recommended to management of the Missions to vigorously pursue the recovery of the amounts to improve their cash positions.
MINISTRY OF MANPOWER, YOUTH AND EMPLOYMENT 96. Our review at the Labour Department, Hohoe disclosed that the indebtedness of the State to 34 injured workers in respect of compensation payments dating back to 1994 stood at GH¢100,955. We recommended that the Department should contact the sector Ministry so that funds can be provided for the settlement of the arrears.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 33
97. Failure of the management of the Department of Social Welfare, Odumase Krobo to promptly delete the name of Mr. Emmanuel Otto-Boison, a resigned officer, resulted in the payment of unearned salaries totalling GH¢8,510 into his bank account. We recommended the recovery of the illegal payment and the prompt deletion of names of separated staff from the payroll.
OTHER AGENCIES 98. Disbursement irregularities involving un-accounted for disbursement of GH¢14,640 at the National Commission for Civic Education, Nkwanta and revenue irregularities which were made up of failure to pay revenue into the Consolidated Fund and direct misappropriation of revenue amounting to GH¢64,022 were noted. We recommended that the amounts misappropriated should be recovered to chest and the internal controls over revenue collections and disbursements should be strengthened to minimise the menace.
99. Owing to delays in the deletion of names of separated staff from the payroll of the Judicial Service at Tepa and Konongo, a total amount of GH¢6,038 was paid as unearned salaries to three separated staff. Also, the failure to exercise due diligence led to the overpayment of salary of GH¢956 to an officer at the Sunyani office of Commission for Human Rights and Administrative Justice (CHRAJ). We advised Heads of the various Institutions to recover the amounts to chest, ensure prompt deletion of the names and regularly monitor the payroll to prevent a recurrence of the anomaly.
34 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
MINISTRY OF WATER RESOURCES, WORKS AND HOUSING
100. Due to management’s failure to enforce regulations on the retirement of imprests, a total imprest of GH¢4,800 given to seven Regional Hydrologists for the maintenance of river gauge stations were not retired. We advised the officials concerned to account for the imprests.
101. Advances granted to staff at Ejura and Kintampo water supply stations totalling GH¢4,056 were outstanding as at 31 December 2008 due to the slow recovery rate. We recommended to the management of the two stations to intensify their efforts to recover the loans. Similarly, a contractor engaged on the construction of an emergency coastal protection project abandoned the project soon after he was paid a mobilisation advance of GH¢332,977. We recommended that the management of the Hydrological Services Department should recover the amount from the contractor’s guarantor.
102. Due to management’s inability to promptly delete the names of separated staff from the payroll, unearned salaries totalling GH¢2,124 were paid into the bank accounts of two retired staff of the Hydrological Services Department. We urged management to pursue recovery and have the names removed from the payroll.
103. Fuel worth GH¢4,128 bought by the Nkoranza water supply station was not recorded in a log book and fuel coupons valued GH¢9,600 bought by the Hydrological Services Department were also
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 35 not accounted for due to ineffective supervision. We recommended that fuel/coupon purchases should be recorded in vehicle log books and fuel coupon registers.
104. The number of tenants who occupy PWD buildings in Accra and had defaulted in the payment of rent increased from 9 in 2007 to 19 in 2008. The total amount owed stood at GH¢265,750 as against GH¢124,114 in 2007. We re-emphasised our previous recommendation that management should collect the rent arrears, monitor and ensure the regular payment of rent by the occupants of the buildings.
105. Due to management’s inaction, commercial and domestic consumers of treated water in Kintampo and Nkoranza districts owed the water supply stations a total amount of GH¢171,766 in respect of un-paid water bills. We recommended to the management of the two stations to intensify their efforts to collect the amount.
36 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
PART III DETAILS OF FINDINGS AND RECOMMENDATIONS
MINISTRY OF FINANCE AND ECONOMIC PLANNING Release of funds to MDAs without Specific Warrants- GH¢3,066,742 106. Our review disclosed that a Non-Road Arrears Account had since 2001 been opened at the Ministry of Finance and Economic Planning (MoFEP) to pay all outstanding claims (except road projects) that have been budgeted for by MDAs and MMDAs, but for which funds were not made available during a financial year.
107. We noted, however, that no clearly defined and documented policy guidelines had been put in place to ensure the effective and efficient operation of the account. Under the procedures for accessing funds from the Consolidated Fund, MDAs are required to apply to MoFEP for the issuance of Specific Warrants and release letters based on their monthly cash ceilings in respect of Service and Investment activities.
108. However, in breach of the existing MoFEP procedures, we noted that expenditures, involving 40 payment vouchers totalling GH¢3,066,742, made from the Non-Road Arrears Account during the year under review were not covered by Specific Warrants authorising the MDAs to commit the funds. Instead, the payments were covered with letters from the MDAs to MoFEP requesting for the release of
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 37 funds either to enable them pay for services rendered, work done or insufficient budgetary allocation during the year.
109. We urged the Ministry to ensure that the relevant authorisation for committal of funds in the form of Specific Warrants should be obtained for the expenditures incurred to regularise the transactions, failing which the total expenditure of GH¢3,066,742 should be deemed unauthorised and the amount recovered to chest. We further recommended to management to ensure compliance with requirements and procedures for sourcing of funds from the Non-Road Arrears Account. Furthermore, MoFEP should formulate policy guidelines to administer the account.
110. Management responded that not all MDAs are required to apply for commencement certificates or Specific Warrants. In the case of payments made from the Non-Road Arrears Account, Specific Warrants were not necessarily required since most of them were arrears and release letters signed by authorised signatories were enough. Management further assured that policy guidelines on the utilisation of funds in the Non-Road Arrears Account would be included in the document on the procedures for accessing funds from the budget which was being compiled for circulation to all MDAs.
Delayed lodgement of revenue to bank - GH¢ 2,514 111. FAR 17(b) states that a head of department shall “... ensure that all Non-Tax Revenue is immediately lodged in the designated
38 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
Consolidated Fund Transit bank accounts except in the case of Internally Generated Funds retained under an enactment…”
112. Our audit revealed that contrary to the above quoted regulation, total revenue of GH¢2,514 realised by the Ministry in respect of the sale of unserviceable items on 31 August 2007 was not immediately paid to bank. The amount was only lodged into bank on 2 April 2008, a time lag of 215 days after the receipt of the amount and at the instance of our audit.
113. The delay was attributed to management’s weak supervisory control over the accounts department and the failure of the Internal Audit Unit to ensure that all revenue generated were properly accounted for. Failure to lodge revenue promptly to bank could result in possible loss of revenue to the State.
114. We urged management to ensure the prompt payment of all revenue generated to bank in adherence to FAR 17(b). The Internal Audit Unit should also be tasked to periodically check the Ministry’s revenue collection records.
Failure to account for the utilisation of fuel purchases - GH¢11,066 115. Stores Regulation 1604 of 1984 requires the maintenance of proper vehicle logbooks on all official vehicles with full particulars of receipts of fuel, oil and lubricants recorded therein on a daily basis.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 39
116. We observed that even though MoFEP uses coupons for the purchase of fuel for the running of its official vehicles, there were instances where fuel purchases were made with cash from its various imprests accounts.
117. We noted, however, that cash purchases of fuel totalling GH¢11,066.14 made during the period under review in respect of five vehicles, sampled from the Ministry’s fleet of vehicles, were not recorded in the relevant vehicle log books. Consequently, we could not ascertain the receipt and consumption of the fuel bought.
118. Lack of due diligence on the part of the Internal Audit Unit in pre-auditing imprest payment vouchers accounted for the irregularities. We requested management to account for the utilisation of the fuel worth GH¢11,066.14 failure of which the amount involved should be recovered to chest. Also, drivers and officers using official vehicles should be educated on how to make appropriate entries in the vehicle logbooks.
119. Management in response promised to enforce the maintenance and proper use of the logbooks on vehicles to forestall further abuses. Management is however yet to account for the utilization of the fuel worth GH¢11,066.14.
40 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
GHANA STATISTICAL SERVICE GREATER ACCRA REGIONAL OFFICE Fuel and lubricant purchases not accounted for – GH¢7,208 120. The usage of fuel and lubricants worth GH¢7,207.70 purchased between January 2006 and May 2008 by the Greater Accra Regional office of the Statistical Service were not accounted for because the purchases and utilisation were not recorded in any of the vehicle logbooks of the six official vehicles of the Regional and Head office of the Service.
121. The failure on the part of management to insist on the proper maintenance of vehicle logbooks by the drivers resulted in the anomaly. We could thus not vouch whether or not the fuel and lubricants bought were used for official duties.
122. Failure to record fuel purchases and their usage in the drivers’ logbooks raises doubt as to whether or not the fuel was used in the interest of the Service. We therefore requested management to account for the usage of the fuel worth GH¢7,207.70. We also recommended to management to exercise greater control over the use of fuel by always ensuring that fuel purchases and usage are recorded in the vehicle logbooks.
123. Management is yet to account for the utilisation of the total fuel worth GH¢7,207.70 noted to have been purchased.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 41
VALUE ADDED TAX (VAT) HEAD OFFICE Under payment of PAYE tax – GH¢261,881 124. Section 8 of the Internal Revenue Act 2000 (Act 592) provides that a person’s gain or profit from employment must include all allowances or benefits paid in cash or given in kind to him/her or on his/her behalf.
125. The Act requires that all emoluments and benefits of an employee must be taken into consideration when computing taxable income and unless a particular allowance is exempted from tax, all allowances are subject to tax. This includes all income supplements payable in cash or in kind which should be aggregated and added to the basic salary and taxed.
126. Our examination of the payroll revealed that all allowances paid to employees of the VAT Service were aggregated and added to the net basic salary (basic salary less 5% Social Security contribution) before determining the taxable income. However, clothing and fuel allowances were excluded from the computation of the taxable income.
127. Our re-computation of the taxable incomes (PAYE) of senior and management staff members of the Service from January to December 2007 disclosed differences totalling GH¢261,881.32 between our audited figures and the PAYE the VAT Service paid to the Internal Revenue Service (IRS).
42 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
128. The net effect was that the affected VAT Service employees were overpaid in the sum of GH¢261,881.32 during the period under review. The State was therefore deprived of that tax revenue amount.
129. The possibility that emoluments of junior officers of the Service were being under taxed for the same period could not be ruled out. The practice further undermined government’s efforts in mobilising adequate revenue for its developmental agenda.
130. We recommended that the underpayment in tax (PAYE) in the sum of GH¢261,881.32 should be retrieved and paid to the IRS. The taxable incomes of the junior employees for the same period should be re-computed and any difference in PAYE detected paid to the IRS.
131. We further recommended that, forthwith, all allowances (except those exempted from tax) be aggregated and added to the basic salary and appropriate tax imposed on them.
132. Management agreed with our basis of computation of the PAYE and promised to follow up on our recommendations. It was however silent on the payment of the tax difference to the IRS. We re- state our recommendation that the under paid tax of GH¢261,881.32 should be refunded to the Commissioner of IRS.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 43
Under payment of taxes (PAYE) on 2007 salary arrears- GH¢27,888 133. In 2007, MOFEP approved 22.5% salary increases for the VAT Service staff. By that approval, the VAT Service was required to re- compute salaries of its workers for the period in arrears to show the differences payable as Social Security contribution, PAYE and the net salary.
134. We noted that PAYE computed and paid to the IRS for senior and management staff on the 22.5% salary increase was based on the aggregate of the arrears of salaries and allowances instead of the new taxable incomes of the employees of the VAT Service.
135. We recomputed the taxes and Social Security contributions resulting from the 22.5% salary increase and noted that the taxes (PAYE) computed by the VAT Service based on the salary arrears and paid to the IRS was understated by GH¢27,888.43. Details were provided to management.
136. The incorrect computation of PAYE resulted in the payment of inflated salary arrears to management and senior staff of the VAT Service and resulted in the loss of revenue totalling GH¢27,888.43 to the State.
137. We recommended that in future, PAYE computation on salary arrears should be based on the increased taxable income, which captures all allowances and benefits in kind. We also recommended that the underpayment of GH¢27,888.43 in PAYE should be
44 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 recovered and paid to the IRS. Furthermore, we asked that management should re-compute the PAYE of the junior officers of the VAT Service as well and any differences detected paid to the IRS.
138. Management, in response, assured to compute the figures to determine the total amount involved but the outcome had not been communicated to the audit team as at the time of compiling this report.
Un-authorised advance payment to contractors – GH¢24,331 139. The VAT Service entered into two separate contract agreements with Alnort Ghana Limited and Akanson for the furnishing of its Regional offices in Kumasi and Koforidua. Under the contract agreements, payments were to be based on the submission of certificates on completed works.
140. Our review of contract payments however disclosed that the VAT Service contravened the provisions of the contract agreement and advanced amounts to the two contractors in the sum of GH¢24,331.48.
141. Whilst 40% of the contract sum amounting to GH¢19,604.88 was advanced to Alnort Ghana Limited for the furnishing of the Kumasi VSO premises, 30% mobilization advance of GH¢ 4,728.60 was extended to Akanson Limited for the furnishing of the premises of the LVO’s Regional office in Koforidua.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 45
142. Management could not provide the audit team any rationale for the payment of the advances since there was no provision in the contract for such payments. We indicated that management’s action could encourage the contractors not to comply with the contract agreements and thereby result in delays in the execution of the contracts. The practice could also deny other programmes requisite funds.
143. We therefore recommended to management to charge interest on the illegal amounts advanced to the contractors at the prevailing Bank of Ghana rate and same recovered from the contractors.
Rehabilitation of leased property without assurance of renewal of lease agreement – GH¢2,387,216 144. The VAT Service acquired the Barnett building on a land situated along the Ring-Road Central in Accra from L’quest Africain, at GH¢874,154 in 2003.
145. The land on which the building is located was leased to SCOA, a company incorporated under the laws of the Republic of France, for 50 years with effect from 5 August 1969 with 20 years option of renewal.
146. We noted from the solicitor of the landowner’s letter dated 12 December 2006 that the 20 year’s option lease would not receive automatic renewal. Our audit, however, disclosed that regardless of the limited period of 11 years left for the expiry of the lease and the
46 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 threat of possible hindrance to the exercising of the 20 year’s renewal clause, the VAT Service expended a total amount of GH¢2,387,216.23 on the rehabilitation of the Barnett building as at December 2007.
147. We did not sight any Memorandum of Understanding (MOU) between the VAT Service and the landlord giving assurance for the renewal of the lease. We were therefore unable to assure ourselves of the continuous use of the land without hindrance in future.
148. In the absence of the landowner’s consent, the VAT Service faced the possibility of non-renewal of the lease agreement, thereby losing the total investment in the land. We were also concerned that the renewal of the lease could be exploited to the detriment of the VAT Service.
149. We recommended that the VAT Service should, as a matter of urgency, finalise negotiations with the landlord for a long lease of the land. The Service could also negotiate for a freehold purchase of the land if possible.
150. Management informed us that a new 50-year lease agreement had been negotiated with the landlord and that upon the payment of the agreed sum the indenture would be signed.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 47
MADINA VSO Traders’ indebtedness – GH¢25,586 151. Sections 31(1) of the Value Added Tax Act 1998, Act 546 states that any tax due, penalty and interest which remain unpaid after the due date may be recovered by the Commissioner as a debt.
152. A review of the debt stock as at 28 February 2008, which was obtained from the management of the VSO indicated that 52 traders owed the Service a total amount of GH¢91,386.25.
153. The accumulated debt was as a result of traders’ refusal to settle their assessed taxes and the failure by the traders to accompany their returns with payments.
154. At the time of reporting, 34 traders had settled their debts leaving 18 traders who owed GH¢25,586.82. Out of these, two traders who owed GH¢4,847.37 were contesting their indebtedness. We urged management to recover the outstanding debts.
Unrecovered returned cheque - GH¢644 155. Three cheques amounting to GH¢1,594.01 issued by traders were dishonoured by their bankers as detailed below. Date Traders Name TIN No. Cheque No. Amt. GH¢ 12/12/07 Acquah & 922E000139 GCB 000592 860.00 Associates 12/12/07 Sign Language 224V015466 PB Bank 644.00 042856 12/12/07 Lolababy 914V001331 Unibank 90.01 000129 GH ¢1,594.01
48 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
156. Our follow up disclosed that two of the traders had paid the amount owed leaving Sign Language who was yet to settle the GH¢644.00 owed.
157. We recommended to management to take any action that it deemed necessary to recover the value of any monetary instrument that was dishonoured in accordance with Regulation 32(2) of FAR 2004 (L.I. 1802).
VAT SERVICE – SUNYANI
Indebtedness of traders to the VAT Service - GH¢44,347 158. We noted during our audit that 58 companies and individuals owed the VAT Service at Sunyani a total amount of GH¢44,346.57 as at 31 December 2008.
159. Management explained that the debt was as a result of some companies and individuals under-declaring taxes collected on behalf of the VAT Service. Management lamented that in view of the irregularities mentioned, the Service could not meet its revenue target for the fiscal year.
160. The Service’s inability to meet its revenue target could adversely affect the cash flow projections of the government and subsequently its programme delivery. We recommended to management to explore effective administrative measures to collect the outstanding debts.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 49
CUSTOMS, EXCISE AND PREVENTIVE SERVICE HEADQUARTERS
Outstanding post clearance short collections – GH¢13,655,166 161. Post clearance audits conducted during 2008 uncovered total short collections of GH¢6,903,913. Penalties totalling GH¢6,751,253 were imposed on the affected importers bringing their total indebtedness to GH¢13,655,166. Two of the importers manipulated customs’ documentations, and succeeded in under-declaring the values on various invoices. We recommended to management to pursue recovery of the short collections.
Ex-warehousing short collections - GH¢2,694,454 162. The challenges commented upon in the 2007 report continued to bedevil the warehousing regime. Among these were: i. Over-stayed items in the bonded warehouses. In a few cases, importers left imported goods in the warehouses till they expired thereby making government to lose revenue; ii. Stock shortages; iii. Over-stocked warehouses with goods haphazardly stacked which made it impossible for stocktaking.
163. During the year, short-collections totalling GH¢2,564,920 were raised against nine bonded warehouse operators. Pecuniary penalties of GH¢129,534 were levied on two of such operators for taking goods from the warehouse without documentation.
50 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
164. We recommended to management to collect from the operators involved the short collections amounting to GH¢2,564,920 together with the penalties amounting to GH¢129,534 all of which totalled GH¢2,694,454.
Failure of OMCs to honour rescheduled debts- GH¢2,768,908 165. Three OMCs described as “distressed” companies had the settlement of their indebtedness rescheduled by management. They, however, reneged on the rescheduled payment agreement and fell into arrears of payment totalling GH¢2,768,908 as at 31 December 2007. Details are as follows: Name of OMC Rescheduled debt Payment Balance GH¢ GH¢ GH¢ Universal 1,980,408 868,159 1,112,249 Havilah 791,580 393,951 397,629 Tropic 1,316,074 57,044 1,259,030 Total 4,088,062 1,319,154 2,768,908
166. Our post audit review disclosed that of the three, Universal and Tropic had stopped lifting products at the refinery and resorted to buying from other OMCs making it difficult for CEPS to recover the debts. Also, we noted that contrary to the rescheduled payment plan, Universal rather increased its debt by Gh¢754,865 in the year 2008.
167. We recommended that management should reschedule the total debt of Universal. We also asked that pressure should thereafter be mounted on both Universal and Havilah to honour their payment agreements. In the case of Tropic, we recommended that management
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 51 should review the company’s financial and liquidity position with the view to taking legal action to recover the debt due in full.
168. Management responded that the companies did not post any collateral security against the facility because at that time it was not a requirement. A decision was therefore taken to allow them to work and redeem the debt.
Failure to store vehicles in bonded warehouse 169. Twenty-eight Peugeot cars imported into the country by Prestige Motor Company Limited were cleared without the payment of taxes totalling Gh¢219,276.73 even though they had, at the time, not been exempted from duties and taxes by the Minister.
170. Our audit also revealed that after Customs clearance from the Tema Port, the cars were not parked in the bonded warehouse due to lack of space. We learnt that the cars were subsequently delivered to the Office of the President without the granting of an exemption from duties and taxes by the Minister of Finance and Economic Planning, as required by law. No customs documentations were therefore prepared to release the cars from the bond.
171. We recommended that the company should be severely reprimanded for not storing the cars in an approved bonded warehouse and for removing them without following proper procedures.
52 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
INTERNAL REVENUE SERVICE - HEADQUARTERS Outstanding corporate tax – GH¢ 2,590,922 172. Our review of 326 randomly selected company tax files at the Abeka Lapaz DTO, disclosed that 242 companies representing 74% of taxpayers in the District, were in default of payment of their corporate tax amounting to GH¢463,070.54 for the 2006 year of assessment. At the Teshie Nungua DTO, 139 companies constituting 33% had corporate tax of GH¢294,099.05 outstanding for the 2006 year of assessment.
173. Also, at the Nima DTO, examination and analysis of tax payments for the 2006 year of assessment revealed that about 76% of the taxpayers did not pay taxes regularly in quarterly installments as prescribed by Section 80 of Act 592. A review of a sample of final assessments raised on taxpayers for the 2006 year of assessment revealed that GH¢368,351 were not paid even after the end of 2007.
174. Similarly, at Ashaiman DTO, out of the provisional assessments raised on 102 companies for the 2006 year of assessment, 97 companies, representing 95% of the taxpayers had GH¢320,425 outstanding at the end of 2007.
175. At Tema, Legon and Adabraka DTOs, companies and business entities had not settled their tax obligations totalling GH¢1,144,976.54 for the 2006 and 2007 years of assessment.
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176. In all the instances reviewed, we could not find any evidence of effective and sustained pursuit of defaulting taxpayers by schedule officers, neither were there any evidence that sanctions for non- payment of taxes as stipulated under Section 143 of Act 592 were applied by the DTOs.
177. The management of some DTOs explained that most of the defaulters were taxpayers who did not normally require Tax Clearance Certificates in their business transactions; others attributed the lapse to inadequate staffing position as well as re-location of some of the businesses, whilst others claimed that some of the businesses had folded-up.
178. We were, however, of the view that management’s ineffective supervision of schedule officers of DTOs could be blamed for the lapses observed. Schedule officers at times delayed in serving demand notices on taxpayers and also failed to monitor their tax files. These lapses impacted adversely on inflows into the Consolidated Fund.
179. We recommended that management should ensure that schedule officers carry out regular monitoring of tax files to enhance collection of tax revenue. We further recommended that management should prevail on schedule officers to vigorously pursue defaulting taxpayers to settle their tax liabilities.
54 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
Indebtedness of Ghana Heavy Equipments Limited – GH¢1,847,465
180. A review of taxpayers’ files and other related records at the Large Taxpayers Unit (LTU) disclosed that Ghana Heavy Equipments Limited (GHEL) defaulted in the payment of taxes totalling GH¢ 1,847,465.33 for the 2007 year of assessment as detailed below: Corporate tax- GH¢ 1,801,102.00 Withholding taxes- 6,507.89 PAYE 39,855.44 GH¢ 1,847,465.33
181. Management explained that the company’s liability was based on a desk audit report for 2000 to 2006 year of assessment. It made reference to a letter dated 27 March 2008 from the Commissioner of Internal Revenue Service, advising the LTU to stay action on the collection of the taxes till discussions between the Board of Directors of GHEL and the Ministries of Trade and Industry and Finance and Economic Planning are concluded, as the company had serious constraints in meeting its tax liability.
182. Correspondence on file indicated that the government owed GHEL a sum of GH¢2.8 million, which was the cost incurred by the latter in rehabilitating Ghana House property. GHEL proposed a number of factors for consideration before settling the debt which included the Ministry of Trade and Ministry of Finance’s confirmation of the debt of GH¢2.8 million.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 55
183. On 20 March 2008, the Chief Executive Officer of GHEL wrote to the Commissioner of IRS, urging the latter to prevail upon the LTU to suspend its contemplated action against the company. In short, GHEL wanted its tax liability to be set-off against the debt of GH¢2.8 million owed it by government.
184. This arrangement however contravened the provision on set-off as specified in Section 159(1) of the Internal Revenue Act (Act 592). This provision of the Act suggests that tax liability can only be set-off where a person had earlier made a payment in excess of the person’s tax liability. We indicated that the government debt of GH¢2.8 million owed to GHEL did not arise as a result of overpayment of tax. Therefore, GHEL’s proposal for a set-off could not be accepted as it contravened the provisions of the Internal Revenue Act.
185. We recommended that the LTU should pursue the collection of the overdue tax of GH¢1,847,465.33 from GHEL, while the Ministry of Trade should fall on its investment budget to clear government’s indebtedness to GHEL.
Non–payment of PAYE – GH¢634,245 186. Employers are required under Sections 81 and 87 of Act 592 to withhold tax from the payment of income of employees and pay same to the Commissioner within 15 days after the month in which the eligible payments were made.
56 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
187. Our review of PAYE files at the LTU, the Legon, Tema and Adabraka DTOs disclosed that some companies deducted PAYE from their employees’ income but failed to remit the amount to the Commissioner.
188. The LTU PAYE records showed that two companies, Super Paper Products Company (SPPC) and Akotex Synthetic Limited, defaulted in the payment of PAYE of GH¢479,554 deducted from employees’ emoluments for the 2007 year of assessment.
189. At the Legon DTO, three companies, namely: Universal Oil Company Limited, Oak Plaza Limited and Easy Bus Service Limited, failed to remit to the Commissioner a total of GH¢ 144,975.12 deducted as PAYE from employees’ income from 2002 to date.
190. At Adabraka DTO, Caitec Delta and Caitec Motors, defaulted in the payment of PAYE withheld from employees’ emoluments to the tune of GH¢9,715.68 for various months in the 2006 and 2007 years of assessment.
191. In response to the observations, the management of Legon explained that it was difficult to locate some of the companies. The LTU management, on the other hand, indicated that Akotex Synthetic Limited had objected to its liability while SPPC arranged for payment terms but had defaulted, necessitating the issuance of demand notice for the recovery of the debt.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 57
192. This arrangement contravened Section 5.7.1 of the IRS Collection Manual which stipulates that agreements are not permitted for withholding taxes. We recommended that management should ensure recovery of all outstanding PAYE taxes together with penalties at the rate of 30% from the companies involved as set out under Section 143(2) of the IRS Amendment Act 669 of 2004.
Non–deduction of tax from Directors’ fees – GH¢276,445 193. At the Legon DTO, we observed that, contrary to the provisions under Section 84 and Part IV of the First Schedule of Act 592, six companies failed to deduct withholding taxes totalling GH¢276,455.10 from Directors’ fees paid between 2003 and 2007.
194. Management explained that most of the companies indicated the names of the Directors on the companies’ PAYE schedule for which taxes were assessed. However, when the Directors fail to file their returns, these were not detected early enough for the relevant amendments to be made.
195. Treatment of Directors’ fees as personal emoluments resulted in under assessment of tax thus impacting negatively on revenue inflows to government. We consequently recommended to management to ensure that PAYE schedules are promptly scrutinized to ensure early detection of such anomalies. Management should also recover the taxes outstanding on Directors’ fees from the companies involved. Management gave assurance to take steps to avert its recurrence.
58 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
Non–remittance/deduction of withholding tax – GH¢53,039 196. Company tax files at the Ashaiman DTO indicated that eight companies who presented audited accounts for the 2006 year of assessment, failed to deduct a total of GH¢49,018.48 in withholding taxes on rent, audit, legal and professional fees which were subject to withholding tax under Section 84 of Act 592.
197. Similarly, at Teshie Nungua DTO, three companies and institutions did not remit to the Commissioner taxes withheld from professional fees paid to service providers, totalling GH¢4,020.44, from 1997 to 2005.
198. Section 88(1) of Act 592 provides that “a withholding agent who fails to withhold tax in accordance with the Act is personally liable to pay to the Commissioner the amount of tax which has not been withheld, but entitled to recover this amount from the payee.”
199. Schedule officers were therefore required to apply this provision by sending demand notices to the companies which failed to withhold taxes on payment for such services but failed to do so.
200. The lapses observed were possible because of ineffective supervision by the Heads of the DTOs and this deprived the Consolidated Fund of timely inflows of revenue for development.
201. We recommended that the affected DTOs should pursue recovery of the outstanding withholding tax of GH¢53,039.00. We also recommended
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 59 to management to ensure that taxpayers and disbursement officers are adequately educated on the need to withhold taxes on payment for goods and services and apply the provisions of Section 88(1) of Act 592 whenever the need arose. We further recommended to management to ensure that schedule officers properly scrutinise taxpayers’ files and pursue defaulters to pay taxes withheld within the stipulated time.
Outstanding rent tax – GH¢44,113 202. Regulation 16(1) of the Internal Revenue Regulations 2001 (L.I 1675) states that “where an individual receives rent income from any residential or commercial premises, the Commissioner may calculate tax on the rent income separately at a flat rate of 10% on gross rent income in the year of assessment.”
203. A review of a sample of 43 rent files at the Tema DTO showed that 35 landlords, representing 81% of the sample, were indebted to the Service to the tune of GH¢44,112.72 in rent tax for the 2005 and 2006 years of assessment.
204. The schedule officer explained that whenever officers from the Service visited the premises of the defaulting landlords to demand the tax owed, they met tenants who were unwilling to disclose the whereabouts of the landlords.
205. We recommended that management should pursue recovery of the outstanding rent tax of GH¢44,113 and ensure that demand notices
60 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 are pasted at vantage points of premises of defaulting landlords to enable them recover the outstanding tax due to the Service.
Use of payment vouchers and photocopies of tax credit certificates and tax receipts to offset tax liabilities - GH¢35,296
206. Our audit disclosed that some schedule officers continued to accept photocopies of tax credit certificates (TCCs), tax receipts (IT 140) and payment vouchers of withholding agents to off-set liabilities of taxpayers. The practice contravened Section 7 of the I.R.S Collection Manual and Administrative Practice which requires the use of only triplicate copies of taxpayers receipt (I.T 140) and duplicate copies of TCC in offsetting tax liabilities of taxpayers.
207. For instance, at the Tema DTO, examination of 52 randomly selected taxpayers’ files revealed that seven companies perpetrated the practice and had a total tax liability of GH¢23,735.93 off-set in the 2005 and 2006 years of assessment.
208. Also at the Nima DTO, schedule officers allowed six companies to use photocopies of tax credit certificates and taxpayers receipts to offset tax liabilities totalling GH¢11,559.98 for the 2006 year of assessment.
209. The practice could lend itself to fraud and evasion of tax as photocopies of the above stated documents could be tendered at different locations and times to off-set tax liabilities, thus denying the Consolidated Fund much needed inflows for national development.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 61
210. The lapse persisted as a result of ineffective supervision of schedule officers by the sectional heads as well as the failure of the heads to carry out effective supervision of staff.
211. We recommended that the heads of DTOs should personally ensure that the practice is discontinued and insist that taxpayers acquit their tax liabilities with the triplicate copies of the tax receipts. We further recommended that the companies involved should be made to produce the originals of such receipts for verification failure of which the total tax liability of GH¢35,296.00 off-set with the photocopied documents should be re-instated.
Failure to pay National Reconstruction Levy – GH¢13,337 212. The National Reconstruction Levy Act 2001, Act 597 requires that a National Reconstruction Levy (NRL) of 2.5% of a company’s profit before tax for 2002 to 2004 and 1.5% for that of 2005 be paid in quarterly installments alongside the corporate tax of its basis period.
213. At the Tema DTO, we noted from our review of a sample of 52 company files that 10 companies had not settled their NRL amounting to GH¢9,062.14 for the 2005 year of assessment. We further observed that four other companies failed to submit their 2005 audited accounts to enable the schedule officers determine the NRL payable.
214. Similarly, at the Teshie Nungua DTO, we discovered that two companies, namely: Vizico Security Limited and BAJ Ventures
62 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
Limited, failed to pay their NRL of GH¢4,274.74 for the 2001 to 2005 years of assessment.
215. Failure to pay such projected revenue impacts negatively on inflows into the Consolidated Fund and hinders Government’s developmental programmes. Accordingly, we recommended to management to recover all NRL outstanding over the years from the defaulters.
Failure by taxpayers to file returns on income 216. Our review of taxpayers’ files maintained by the Ashaiman DTO revealed that about 76% of the taxpayers failed to submit returns on income or delayed in submitting their returns. Their in-action contravened Section 72 of Act, 592 which requires taxpayers to furnish the Commissioner with returns on income for the year of assessment not later than four months after the end of a basis period of that person, ending within the year.
217. We noted that despite these omissions, no penalties were imposed for the late or non-submission of the returns as prescribed under Section 142 of Act, 592.
218. Similarly, at Abeka Lapaz DTO, of the 326 tax files selected at random for review, 187 companies, which represented 57% of taxpayers in the District, did not submit returns on income for the 2006 year of assessment. The situation was not different at Nima DTO where out of 136 companies’ files examined, 101 companies
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 63 representing 74% of taxpayers, did not submit audited accounts for 2006 year of assessment.
219. Furthermore at Teshie Nungua and Legon DTOs, examination of companies’ tax files disclosed that 30% and 38% of taxpayers, respectively, did not file returns on their income for 2006 and 2007 years of assessment.
220. Non-filing of tax returns could lead to concealment of current information on incomes that are taxable and ultimately result in loss of revenue to the State. The situation observed was not helped by the failure of the schedule officers at the DTOs to apply sanctions and penalties as provided for under Sections 142 and 143 of Act 592.
221. Managements of DTOs were also partly to be blamed for the state of affairs, for their failure to exercise effective supervision of the schedule officers under them. We recommended to managements of the DTOs to enforce the provision on the application of penalties on defaulting taxpayers. Additionally, the IRS management should strengthen its managerial control over the DTOs to ensure strict enforcement of the provisions of Act, 592 on late and non-submission of returns on income.
Failure to examine audited accounts 222. We observed at some DTOs that schedule officers failed to examine audited accounts submitted by prospective taxpayers in violation of Sections 77(1) and 77(2b) of Act 592 which require the Commissioner to examine returns submitted by taxpayers to enable
64 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 him decide on the final assessment of the chargeable income of the person and the tax payable on the income.
223. For instance at the Legon DTO, we observed that audited accounts of 17 business entities submitted by June 2008, had not been examined by the schedule officers to determine their final tax liabilities.
224. At the Teshie Nungua DTO, schedule officers did not examine returns submitted by 27 business entities for the 2005 and 2006 years of assessment. Consequently, no final assessments were raised against them for the years under review.
225. Of a random sample of 136 taxpayers’ files reviewed at Nima DTO, only 35 companies filed returns on their income to the Service. We noted that schedule officers did not examine 10 out of the 35 returns submitted; consequently, the taxpayers did not make any other payments after the submission of returns as no final assessments were raised on them.
226. Similarly, schedule officers at Adabraka DTO failed to examine the accounts of four companies, namely: Prah, Ameyaw & Company, Primetime Limited, Caitec Motors Limited and Industrial & Allied Services Limited, who submitted their accounts for the 2006 year of assessment. The companies did not therefore make any payments in respect of taxes to the Service as no assessments had been raised against them.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 65
227. The failure by schedule officers to promptly review audited accounts submitted by taxpayers to determine appropriate taxes to be paid could result in loss of revenue to the State as most companies usually fail to fully disclose their obligations on provisional assessments which in most cases are less than final assessments after the review of accounts.
228. Management attributed the lapse to the inadequate staffing position of the DTOs. We recommended to management to strengthen its supervisory role over schedule officers and institute measures to ensure early examination of accounts submitted by taxpayers to enable them finalise the assessment for taxpayers to honour their tax obligations.
Delay in serving notices of Provisional Assessment 229. In line with the provisions of Section 76(1) and 80(2) of Act 592, provisional assessments are to be served at the beginning of the basis period of each taxpayer to enable them make payments in quarterly installments.
230. We observed however, that some of the notices of provisional assessments served on taxpayers were unusually delayed, thus collectors were unable to enforce payments of quarterly installments, as provided for by Section 80(2) of the Act.
231. For instance we observed at the Legon DTO that the provisional assessment for Bandoh Medical Centre for 2007 was only
66 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 prepared on 27 January 2009. Similarly, at the Nima DTO, an examination of 136 tax files randomly selected revealed that provisional assessment notices for 25 taxpayers for the 2006 year of assessment were served in 2007 with the majority being served between May and September 2007.
232. The situation was not different at Abeka Lapaz DTO where provisional assessments were delayed for periods ranging between two and eight months. Consequently, taxpayers failed to honour their tax obligations timely or completely refused to honour them.
233. Schedule officers attributed the delays to late receipt of assessment forms, non-computerisation of tax files and delays in registration by some new companies and enterprises that had already commenced business and had to be assessed for the years prior to registration. The late receipt of approved rates from headquarters also resulted in delays in serving taxpayers with notices of provisional assessments.
234. We recommended that management should ensure that schedule officers compute and serve taxpayers with notices of provisional assessments at the commencement of their basis periods to enable them make quarterly installment payments to the Service.
Purchase of 0.30 acre of land – GH¢230,000 235. The Service purchased at Tema, a 0.3 acre piece of land located on plot 13A Community 16 off Community 18 for its Teshie-Nungua
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 67
District office in August 2007 at a cost of GH¢230,000 from a Mr. Djenge Davis Bortieh, Managing Director of Djengevies Enterprise.
236. The first instalment payment of GH¢120,000 for the land was made on 7 August 2007 pending the outcome of a formal valuation advice from the Land Valuation Board. The second installment payment of GH¢30,000 was made on 5 December 2007 whilst the final installment payment of GH¢80,000 was made by the Service on 24 December 2007.
237. We noted that in procuring the land, the Service adopted the single-source procurement method without seeking prior approval of the Procurement Board as required by Section 40 of the Public Procurement Act 2003 (Act 663).
238. We were of the view that the purchase of the land did not qualify for a single-source procurement under the Procurement Law, as no evidence existed to show that the IRS management applied to the Tema Development Corporation or the Chiefs of Teshie and Nungua who are the custodians of those lands for a lease of land for its office accommodation.
239. Also, since the value of the land was above GH¢100,000, the transaction required a Ministerial Tender Review Board’s approval as provided in Schedule 3(3) of the PPA and not the Commissioner’s approval.
68 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
240. Management argued that lands situated on the Spintex Road were in high demand and so the application of the provisions of the Procurement Law could delay the process which could have resulted in the loss of the land to other prospective buyers.
241. Considering the fact that the provisions of the PPA were not followed in the acquisition of the land, and the fact that there was no independent valuation of the land by the Land Valuation Board, we could not ascertain whether the amount of GH¢230,000 paid for the 0.30 acre of land was fair and reasonable.
242. We recommended that the Commissioner should ensure that the provisions of Section 15(4) of the PPA are adhered to in all future purchases.
INTERNAL REVENUE SERVICE – BEREKUM Payments not supported with official receipts – GH¢2,211 243. The management of the Berekum District office of the Internal Revenue Service could not account for the disbursement of a total amount of GH¢2,211.02 because it failed to maintain and make available for audit examination, supporting documentation to authenticate the expenditures.
244. The omission contravened the provisions of Section 39(2) of the FAR, 2004. Consequently, we recommended that the District Manager should substantiate the expenditures, failing which, he should be surcharged with the total amount of GH¢2,211.02.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 69
Failure to account for disposal of stores - GH¢1,040 245. Store items worth GH¢1,039.85 purchased by the District office between January 2006 and July 2007 were not routed through store records, as required by Section 0502(a) of Stores Regulations 1984 before disposal. Under the circumstance, we could not confirm whether the items were received and used in the interest of the Service.
246. We urged management to provide documentary evidence of the receipt and utilisation of the items, failing which, the cost of the items should be recovered from the Authorising officer.
INTERNAL REVENUE SERVICE – ASOKWA DISTRICT Arrears in tax payments – GH¢1,412,943 247. A review of tax payers’ records disclosed that taxpayers owed the Asokwa District a total of GH¢1,412,943.20 as at 31 December 2008. Some of the arrears dated as far back as 2005.
248. Management explained that it was difficult to trace some of the taxpayers since after registering they relocated to other districts. Management further complained of inadequate logistics like transport to trace the defaulters.
249. We recommended that the District Manager should apply the provisions of Section 149 of the Internal Revenue Act 592 of 2000 to deter defaulters as the tax arrears had increased from the previous year’s figure of GH¢788,924.29 to the current figure of
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GH¢1,412,943.20 representing an increase of 44.2% over the previous year’s figure.
INTERNAL REVENUE SERVICE – SUAME, KUMASI Misappropriation of revenue from sale of Vehicle Income Tax stickers - GH¢59,661 250. The review of the records on Vehicle Income Tax (VIT) stickers at the Internal Revenue Service, Suame, disclosed that VIT stickers worth GH¢59,660.50 covering the 1st to 3rd quarters of the year 2007 could not be accounted for.
251. The details of this figure were provided to enable management pursue the recovery of the amount from Mr. Francis Yeboah, the former District Accountant who had since been interdicted as a result of this malpractice.
252. The misappropriation was made possible because the Accounts section of the District office failed to enforce existing standard practices for controlling and handling of value books.
253. We recommended to management to pursue recovery of the total amount of GH¢59,660.50 involved from Mr. Francis Yeboah or the matter be referred to the Ghana Police Service for investigation and prosecution at the law courts. We also recommended that necessary controls over the custody and use of value books should be enforced to forestall such incidents.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 71
Tax arrears – GH¢584,633 254. The Suame DTO had recorded arrears in tax collection totalling GH¢584,633.14 for the 2006 and 2007 assessment years. Management explained that some tax payers had ceased to operate or had re-located without informing the Service, while others were recalcitrant.
255. We recommended to management to investigate the long outstanding debts with a view to deleting the names of dormant business concerns from the records and to pursue the recovery of tax from those still in business.
INTERNAL REVENUE SERVICE- DENU/AFLAO DISTRICT OFFICE Tax Arrears - GH¢85,314 256. Twenty-one corporate bodies and 76 self-employed individuals owed tax arrears totalling GH 85,314.31 as at 31 December 2008, thereby denying the State the much needed revenue. We recommended to management to apply the prescribed penalty on defaulting taxpayers as spelt out in Act 592 and also ensure immediate recovery of the tax arrears of GH 85,314.31 to government chest.
CONTROLLER AND ACCOUNTANT GENERAL’S DEPARTMENT TREASURY HEADQUARTERS Unclaimed pensions 257. We realised during the cause of our audit of the pension payroll that unclaimed pensions were paid into Controller and Accountant-
72 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
General’s suspense account by some banks. Although the banks notified the Controller to delete names from the pension payroll, the names continued to recur in subsequent months.
258. We were of the view that as a result of the above, the financial statements prepared by the Controller & Accountant-General might not give a true and fair view of government expenditure as regards personnel emolument payments.
259. Available bank advice from Standard Chartered Bank, Liberia Road showed that unclaimed pensions for May 2006 continued to recur up to August 2007 involving a total sum of ¢230,720,544 and GH¢3,852.76 whilst a total of ¢89,703,429 being unclaimed pensions for January 2006 recurred up to May 2007 from Knustford Avenue branch of Barclays Bank of Ghana.
260. There is the possibility that situations like these may be existing in other banks whose records we did not have access to. We therefore advised that the Chief Treasury Officer in charge of pension payments liaises with the banks and have all the names deleted from the pension payroll. This observation was however not responded to when it was brought to management’s attention.
PENSIONS COMPUTATION SECTION Overpayment of gratuity to Mildred M.K. Forson - GH¢21,434 261. The above retired officer was first employed in the Ghana Civil Service on 1 February, 1973 and later transferred to the National
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 73
Security Council Secretariat (NSCS) as Chief Analyst with effect from 1 January, 2000 until her retirement on 30 May, 2005. Her first employment did not qualify her for CAP 30.
262. It was therefore erroneous to recompute her gratuity totalling GH¢25,680.86 (less an earlier gratuity of GH¢4,246.96 for her services in NSCS) to cover the period 1 February 1973 to 30 May 2005. This resulted in an overpayment of GH¢21,433.90 and a loss of that amount to the State. We recommended that the excess payment of GH¢21,433.90 should be recovered from the retired officer.
Overpayment of gratuity to Beatrice Ansabah Johnson – GH¢1,844 263. Ms Beatrice Ansabah Johnson, a retired Nursing Officer started work with the Ghana Health Service from 12 February 1968 and retired in May 1982 with five months leave without pay which did not count as part of her qualifying service period.
264. We noted that a wrong salary scale of level 14 step 7 was used to compute the gratuity totalling GH¢6,174.48 instead of level 12 step 5 of the January 2006 approved salary structure which was her scale as at the date of her compulsory retirement. She was therefore entitled to a gratuity of GH¢4,330.93 instead of the GH¢6,174.48 paid resulting in an overpayment of GH¢1,843.55.
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265. We recommended recovery of the excess payment of GH¢1,843.55 from the beneficiary. Management assured to recover the amount from the monthly pension of the retired officer.
Overpayment of death gratuity of Jacob Akari-Gyamfi – GH¢2,278 266. Death gratuity paid in favour of the late Mr Jacob Akari- Gyamfi who died on 1 May 2005 was overstated by GH¢2,278.20. The amount represented unearned salaries for May 2005 to January 2006 which was withdrawn by the surviving wife but was not deducted from the benefit paid. We recommended that the said amount should be recovered and paid to government chest.
267. Management instructed the Administrator General to withhold the excess payment. We are yet to be up-dated on the implementation of the instruction.
Overpayment of commuted pension to Emmanuel K. Dzodzegbe – GH¢4,025 268. Commuted pension in favour of the late Mr Emmanuel K. Dzodzegbe, a Principal Superintendent was overstated by GH¢4,024.50. The error occurred due to the use of a wrong rate of pension.
269. At the instance of the audit, the Chief Treasury Officer (CTO) instructed the Administrator General to withhold the excess amount and pay same to government chest. This office is pursuing the matter.
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Excess payment of commuted pension – GH¢13,312 270. The commuted pension in favour of the late Mr. John Rexford Apedo, was wrongly computed as GH¢27,261.98 instead of GH¢13,949.73 resulting in an overpayment of GH¢13,312.25. The error emanated from the use of a wrong rate of pension of GH¢2,543.93 instead of GH¢1,462.22, which was applicable to the pensioner’s rank of Assistant Director at the time of death.
271. We recommended that the C.T.O should write to the Administrator-General to withhold and recover payment of the excess amount wrongfully transferred to the Administrator-General and pay it to government chest. This office is still pursuing the matter.
Payment of CAP 30 benefits to SSNIT beneficiary Peter Kwaw Arthur – Principal Supt.-GH¢8,682 272. The above-named retiree was first appointed as a Teacher on 1 September 1965 and resigned on 1 October 1975 after serving for 10 years. He later joined GES on re-appointment with effect from 1 September 1992 and retired voluntary on 30 April 2007.
273. The earlier period qualified him for CAP 30 benefits whilst the latter period entitled him to receive benefits from SSNIT.
274. In spite of the above, he was paid gratuity of GH¢14,550.35 representing the period 1 September, 1965 to 9 October, 2007 less the vacation period of 17 years although the two service period were not condoned to make them continuous. He was thus wrongly paid
76 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
GH¢8,681.71 for the period of 1 September 1992 to 9 October 2007 which was used to compute his gratuity. We recommended the recovery of the amount.
CAGD’S PAYROLL ISSUES Authenticity of allowances paid to dependants on pension payroll 275. Between January and March 2008 the Controller and Accountant-General’s Department paid an average of GH¢193,316.65 a month to 7,094 dependants of deceased pensioners.
276. We were unable to identify the deceased pensioners whom the dependants represented on the payroll and the Ministries, Departments and Agencies from which the deceased persons retired. We could, therefore, not determine the genuineness of the existence of the dependants and whether or not they still qualified to enjoy the allowances.
277. An observation addressed to the Controller and Accountant- General (CAG) on 13 May 2008 vide letter No. DAG/CGAD/ADM.20/5 for the provision of the particulars of the deceased pensioners who were represented by the dependants, the MDAs from which they retired and their dates of retirement was not responded to as at the time of compiling this report.
Payment of unearned salaries to separated staff 278. Four institutions paid a total net salary of GH¢888,964.46 into the bank accounts of 575 officers who retired between January 2007
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 77 and April 2008. An additional amount of GH¢96,665.43 was paid to SSNIT in respect of 17.5% Social Security contributions bringing the total gross payment to GH¢985,629.89. The departmental breakdown is provided below: MDAs No. of Period Tot. net 17.5 SSF Total (GH¢) ex-staff salary (GH¢) (GH¢) MOFEP 27 January ‘07 131,537.97 17,564.41 149,102.38 – April ‘08 Ghana Educ. 113 January ’08 137,205.91 30,389.67 167,595.58 Service – April ‘08 Min. of Local 391 January ’07 523,988.09 33,929.96 557,918.05 Govt. – Mar. ‘08 Ghana 44 January ’07 96,232.49 14,781.39 111,013.88 Highways – April ‘08 Auth Total 575 888,964.46 96,665.43 985,629.89
279. Requests were made to the two Ministries, the Director-General of Ghana Education Service and Ghana Highways Authority to ensure that the bankers of the affected retirees transferred the unearned salaries to government chest. They were also reminded of the fact that the payment of salaries to separated staff tends to bloat the Personal Emolument expenditure of government.
Savings made from certification of salary arrears for subvented organisations 280. Salary arrears of 44 subvented and non-subvented organisations were vetted in 2008 by the Payroll Unit of the Audit Service. The organisations requested for a total amount of GH¢6,574,043.27. Amounts certified for nine institutions increased by GH¢43,217.04 while certificates for 18 others reduced by GH¢457,596.29 resulting in net savings of GH¢414,379.25. The savings represented excess
78 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 amounts that would have been released by the Ministry of Finance and Economic Planning but for the vetting.
CONTROLLER AND ACCOUNTANT GENERAL’S DEPARTMENT REGIONAL OFFICE – SUNYANI Failure to transfer OPRs into Consolidated Fund – GH¢429,918 281. An amount of GH¢429,918.42 being unearned salaries and wages was collected by various District Finance Offices in the Brong Ahafo Region. Subsequently, the various commercial banks in the Districts transferred this amount to the Sunyani Branch of the Bank of Ghana.
282. As at the close of 31 December 2008, the total collections of GH¢429,918.42 had not been transferred into the Consolidated Fund by the Sunyani Branch of the Bank of Ghana, in violation of Regulation 17(b and c) of FAR, 2004, LI 1802.
283. The Regional Director (CAGD) explained that the Bank had been instructed to transfer all unearned salaries/wages into the Consolidated Fund as and when they were paid, and therefore wondered why the amount still remained un-transferred as at 31 December 2008.
284. The Regional Director’s failure to ensure compliance with his instruction accounted for the lapse. The continued holding on to the total revenue of GH¢429,918.42 being unearned salaries/wages by the
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Bank Manager of BOG Sunyani deprived government of revenue needed for its programmes.
285. We recommended to the Regional Director to pressurise the manager of the Bank of Ghana, Sunyani to transfer the unearned salaries and wages totalling GH¢429,918.42 into the Consolidated Fund without further delay.
CONTROLLER & ACCOUNTANT-GENERAL’S DEPARTMENT REGIONAL DIRECTORATE - KUMASI Delays in payment of revenue to chest – GH¢5,079 286. The Kumasi Regional office delayed for periods ranging between 25 to 27 days before it paid to chest total revenue of GH¢5,078.65 generated from the sales of value books to MDAs. The practice violated the provisions of Part II Section 15(1) of L.I. 1802 which requires revenue collected on behalf of the State to be paid to chest within 24 hours of receipt.
287. The anomaly was the result of poor supervision over the officer in charge of the sale of value books. We recommended to the Regional Accountant to ensure that schedule officers promptly pay all revenue to bank in accordance with the financial regulation.
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DISTRICT TREASURY OFFICE – EFFIDUASE/ASHANTI Un-transferred lodgment into Suspense Account – GH¢15,117 288. Unclaimed salaries and wages of government employees are paid into the Controller and Accountant-General’s Suspense Account with the various banks which are thereafter expected to be transferred quarterly into the Consolidated Fund.
289. We noted, to the contrary, that total unclaimed salaries and wages of GH¢15,116.50 collected by the Kumawuman Rural Bank in the Sekyere East district was not transferred into the Controller and Accountant-General’s Suspense Account for onward transfer into the Consolidated Fund.
290. The situation was as a result of the failure of the District Finance Officer to monitor the operations of the Suspense Account with the bank. We recommended the immediate transfer of the total amount of GH¢15,116.50 into the Consolidated Fund and an improved monitoring of the operation of the Suspense Account.
MUNICIPAL FINANCE OFFICE, KONONGO Suspense account balance not transferred – GH¢35,125 291. Total revenue of GH¢35,125.03 being unclaimed salaries and wages which was paid into the Suspense Account at the Ghana Commercial Bank, Agogo had not been transferred into the Consolidated Fund.
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292. The lapse was due to the failure of management to monitor and ensure the regular transfer of all credit balances in the Suspense Account into the Consolidated Fund. We recommended to the Municipal Finance Officer to ensure that the bank transfers the amount without further delay.
DISTRICT FINANCE OFFICE – JUASO Failure to transfer unclaimed salaries and wages – GH¢17,992 293. A total amount of GH¢15,856.50 declared by the Ghana Commercial Bank, Juaso and GH¢2,135.49 by the Mponua Rural Bank, Asankare as unclaimed salaries was not transferred into the Consolidated Fund. We recommended to the District Finance Officer to ensure the early transfer of the amount into the Controller and Accountant-General’s Suspense Account for onward transfer into the Consolidated Fund account.
MUNICIPAL FINANCE OFFICE – TECHIMAN Revenue not transferred into the Consolidated Fund – GH¢5,477 294. Registration and renewal of firearms licence by the Ghana Police Service, Techiman yielded a total of GH¢5,477 as at 31 December 2008. The revenue was lodged into the Collection Account No. 7151130003685 with the Ghana Commercial Bank, Techiman.
295. It was, however, realized that the revenue, as at the close of the fiscal year, had not been transferred by the bank into the Consolidated Fund account with the Bank of Ghana. We attributed this lapse to laxity on the part of the Municipal Finance officer to ensure that GCB
82 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 transferred all revenue into the Consolidated Fund as and when lodged.
296. The continuous holding on to government funds by the bank could deny the State prompt access to funds for its programmes. We therefore urged the Municipal Finance officer to ensure that GCB, Techiman transferred the amount of GH¢5,477.00 and any subsequent lodgements into the Consolidated Fund without further delay.
MINISTRY OF EDUCATION, SCIENCE AND SPORTS HEADQUARTERS Unsupported payments – GH¢44,160 297. We observed that a total of GH¢44,160.00 was released to the Local Organising Committee (LOC) of the Confederation of African Nations (CAN) 2008, to be spent on Confederation of African Football (CAF) officials who were on an inspection tour in the country in 2008. Instead of acquitting the disbursement vouchers with receipts, statements of expenditure etc, the transactions were supported with honour certificates, appreciation notes, distribution lists and a letter of acknowledgement from CAF, in contravention of Regulation 39(2c) of FAR 2004. We could therefore not confirm the genuineness of the payments.
298. The irregularity occurred as a result of the disregard for the regulation and this could result in fictitious disbursements. When the irregularity was pointed out, management responded that the total amount was used as protocol expenses on the CAF guests whilst they
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 83 were in the country to inspect the CAN 2008 facilities and that the expenditure was made to derive goodwill and that their guests do not sign normally for such expenditures.
299. We were, however, not satisfied with management’s response and recommended that management should properly account for the total sum of GH¢44,160.00 in line with the regulation.
Advances to institutions not recovered – GH¢114,211 300. Three institutions which benefited from advances from the Education Sector Support Program (ESSP) account and the Director- General’s account, totalling GH¢114,211.00 did not settle the advances as at 31 December 2008.
301. We recommended the recovery of the total amount from the Chief Director of the Ministry in accordance with Section 110 of the FAR, 2004 which requires the head of department to ensure that advances issued are duly recovered in accordance with the appropriate agreement.
Misapplication of funds – GH¢4,000 302. Regulation 53(2) of the FAR, 2004 states that the application of official funds for any purpose other than those provided for is a breach of financial discipline. Despite the regulation, our audit revealed that a total amount of GH¢4,000.00 was misapplied from the Director- General’s account to pay staff advances between January and December 2007. Furthermore, out of the GH¢4,000.00 misapplied,
84 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 only GH¢1,168.00 had been recovered as at 31 December 2008 leaving a balance of GH¢2,832.00. We advised management to pursue recovery of the difference and desist from breaching financial discipline in order not to attract the relevant sanctions in future.
Vehicle in the custody of retired Director-General not paid for 303. A Toyota saloon car with registration number GW 5816 P allocated to a former Director-General of the GES, Rev. Ama Afo Blay who retired from the Service on 28 July 2004 was neither returned to the Service nor paid for by her as at 31 December 2008.
304. During our investigation into the matter, the Transport officer informed us that the former Director General expressed interest to purchase the vehicle. However, he could not substantiate this assertion with any document.
305. We recommended that management should ensure that the vehicle is valued by Engineers from the State Transport Corporation and the value plus interest determined by the Valuers recovered from the former Director-General.
Payments without supporting documents – GH¢165,320 306. Our examination of payment vouchers revealed that nine payment vouchers with a total value of GH¢80,419.00 and 11 others also amounting to GH¢84,900.64 disbursed from the HIPC funds and the Director-General’s account respectively, to Regional Directors and
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 85 other Unit Heads were not supported by receipts and statements of expenditure to authenticate the payments.
307. These anomalies violated Regulation 39 (2c) of FAR, 2004 which requires the Head of the accounts section to ensure that transactions are properly authenticated.
308. We therefore recommended strict compliance with the above quoted regulation to ensure financial discipline. Additionally, we urged that the payments totalling GH¢165,319.64 should be properly and fully accounted for with receipts and statements of expenditure, failing which the amount should be recovered from the Head of the accounts section.
SECONDARY EDUCATION DIVISION Printing of value books without approval 309. We noted during our audit that, the Computer School Selection Placement System (CSSPS) unit had printed value books without the approval of the Controller and Accountant–General, contrary to Regulation 211(1) of the FAR, 2004.
310. The printed forms which were not pre-numbered were sold to local and foreign students who applied for re-entry into Public Senior High Schools in Ghana at the rate of GH¢1.50 and GH¢10.00 respectively during 2008.
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311. Failure by management to involve the Controller and Accountant-General led to the printing of the value forms without pre- printed serial numbers; a situation which could lead to illegal duplication and loss of funds.
312. We recommended and management agreed to comply with Regulation 211(1 to 3) to ensure that pre-numbered counterfoil receipt books are printed to replace those currently in use.
TEACHER EDUCATION DIVISION Indebtedness of Training Colleges – GH¢954,443 313. We observed that 39 Training Colleges owed the Division GH¢954,442.62 on account of textbooks supplied to them. We also noted that by convention, the textbooks were supplied to the Training Colleges in anticipation that they would be paid for as soon as the Colleges received their annual grants.
314. Due to the central government’s late release of funds to the Colleges this arrangement resulted in the debts mentioned. The failure to pay for the textbooks on time adversely affected the operations of the Division, as it relied on the proceeds pooled into a revolving fund, to finance its activities.
315. We recommended and management accepted to liaise with the GES and MoFEP to ensure prompt settlement of the debts by the Training Colleges in order to sustain the current arrangement.
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Un-acquitted payment vouchers - GH¢ 292,699 316. Regulation 39(2c) of the FAR 2004 stipulates that “The Head of the Accounts section of a department shall control the disbursement of funds and ensure that transactions are properly authenticated to show that amounts are due and payable.”
317. Our examination of the accounts of the Division revealed that a total amount of GH¢ 292,699.45 being payments made to individuals and institutions to execute various programmes were not supported by the relevant documentations such as receipts, invoices and Local Purchase Orders. Consequently, the accounts section was unable to prepare periodic expenditure returns and timely budgets for the information of management.
318. We urged management to draw the attention of Principals, Heads of institutions and individuals concerned to the need to comply with the Regulation so as to ensure transparency and accountability in the Division’s transactions. Meanwhile, the sum of GH¢292,699.45 should be accounted for with the relevant documentations.
Purchases from non-VAT registered business entities – GH¢11,109 319. Regulation 183(4) requires that departments should procure stores from only VAT registered persons and entities and any department that requires exemption for any specific case should apply to the Minister with the necessary justification.
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320. We, however, noted that management failed to make purchases of goods and services worth GH¢11,108.75 from VAT registered individuals and entities without authority, resulting in the loss of revenue of GH¢1,666.31 to the State. We urged management to ensure compliance with the regulation to avoid being sanctioned for the loss of revenue in the future.
ACCRA METROPOLITAN EDUCATION OFFICE Award of contract without tender or quotations - GH¢122,610 321. Section 35(1) of the Procurement Act, 2003 states that “..a procurement entity shall procure goods, services or works by competitive tendering.” Section 38 of the Act also provides, inter alia, that a procurement entity may for reasons of economy and efficiency and subject to the approval of the Board engage in procurement by means of restricted tendering. A memorandum from the Board of Trustees of the Ghana Education Trust Fund (GETFund) also requires that projects submitted to the GETFund Secretariat should include among others, recommendations of the District Director of Education, estimates, invoices and other relevant information.
322. Our review of the MP’s GETFund Emergency Project Account revealed that various payments totalling GH¢122,610.00 were made to contractors and suppliers in respect of works and supplies made.
323. However, both the MPs and the contractors failed to comply with the directive of the Public Procurement Act of 2003, on tendering and request for quotations. They also failed to comply with the
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GETFund requirement by not including the recommendations of the Metro Director of Education in the documents submitted to the GETFund Secretariat. There was therefore no transparency in the award of the contracts.
324. In the circumstances, the projects could have been executed with little or no regard for value for money. Additionally, the integrated development programme of the District could be irrelevant, as projects were chosen and executed without the collaboration of the Metro Education Office.
325. We recommended and management accepted to hold discussions with the GETFund Secretariat to review the whole process of award and execution of the MP’s GETFund Emergency contracts to be in line with the Public Procurement Act, 2003 and the FAR, 2004.
Payment for works without Engineer’s report – GH¢ 177,244 326. Contrary to Regulations 39(1) and 39(2) of the FAR 2004, our review of the MP’s Emergency Fund revealed that a total amount of GH¢177,244.41 was paid to 11 contactors without authenticating the payments with Engineers’ reports, interim certificates and bills of quantities.
327. We also noted that even though our previous audit report drew management’s attention to this lapse, our follow-up audit in 2008 did not disclose any improvement. Additionally, we observed that the monitoring teams of the office were composed of officials who were
90 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 unfamiliar with all the detailed requirements for the assessment of contracts.
328. In the absence of progress reports on the various contracts, we were unable to ascertain whether the contracts were executed according to specifications and whether work done was commensurate with moneys paid.
329. We recommended and management agreed to work hand in hand with the GETFund Secretariat to streamline the award and execution of contracts, as provided for in the above quoted regulations and the Public Procurement Act, 2003. Management also promised to include Engineers from the P.W.D. in the monitoring teams in order to strengthen the teams.
Non-deduction of retention money - GH¢12,449 330. We observed that the Accounts department failed to deduct 10% retention moneys of GH 12,449.39 from contract payments totalling GH 124,493.93.
331. We recommended and management agreed to deduct the 10% retention moneys from contract payments made to contractors to ensure that defects that occur within six months after the completion of the projects could be addressed.
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Short supply of items paid for – GH¢4,955 332. Our review of the M.P’s Emergency Project Account, revealed that a total amount of GH¢ 11,766.00 was paid to Nafjo Ventures for the renovation of the Home Economics Department of the Nungua Senior High School and for the supply of equipment to same. The items were however short delivered by GH¢4,954.50.
333. Furthermore, projects paid for from the MP’s Emergency Account were neither awarded according to the Public Procurement Act, 2003 nor administered in accordance with the FAR, 2004. Managerial supervision and control were also non-existent. Management accepted our recommendation to ensure the supply of the outstanding items and to comply with the relevant procurement laws.
NATIONAL CO-ORDINATING COMMITTEE FOR TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING (NACVET) Retention of IGF without approval –GH¢ 207, 875 334. The Third Schedule of the Retention of Funds Act, 2007 (Act 735), lists Ministries, Departments and Agencies empowered to internally generate and retain funds.
335. We noted that even though, NACVET is not listed in the Third Schedule, collections from the sale of forms and registration of candidates for examinations amounting to GH¢207,874.92 for the period under review, were retained in the accounts of NACVET.
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336. We recommended that management should ensure that, forthwith, all IGF collected are fully and timely lodged into the Bank of Ghana revenue accounts until they receive the requisite approval from the appropriate institution to retain the IGF.
337. Management explained that their retention of earnings was based on an old administrative approval but they could not make a copy available to the audit team as they alleged that the approval document was being kept by the former Director.
338. Notwithstanding management’s explanation, we recommended that management should comply with the requirement of Act 735 by ensuring that all IGF are paid in full into the Consolidated Fund.
Splitting of procurement order– GH¢29,185 339. We observed that a procurement order for the supply of answer booklets and supplementary sheets, valued at GH¢ 29,185.03 was split into six parts, contrary to Section 21 (5) of the Public Procurement Act, 2003 (Act 663).
340. The splitting of the procurement order, we noted, was caused by the late initiation of the procurement order and also the lateness in qualifying them for the Director’s approval instead of the Entity Tender Committee.
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341. We recommended that management should ensure that its procurement procedures are always in line with the Procurement Act, 2003 (Act 663).
Understatement of IGF – GH¢94,284 342. Regulation 19(1) of the FAR, 2004 states that “A head of department shall fully disclose all Non-Tax Revenue collected, lodged or retained as part of the monthly report to the Minister required under regulation 2 (j), with copies to the Controller and Accountant General and Auditor General.”
343. We noted that management in its report to MoFEP for the period under review, understated its IGF by GH¢94,284.04. In this respect, IGF collected for the period was GH¢207,874.92 whilst the return stated GH¢113,590.88.
344. The understatement occurred as a result of the schedule officer picking the figures from wrong source documents. Pay-in-slips were used instead of the cash book and receipts.
345. We recommended that management should ensure that schedule officers pick figures from the right source documents when filing returns to MoFEP to avoid recurrence of the error.
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METROPOLITAN EDUCATION OFFICE – TEMA Illegal collection of fees - GH¢28,865 346. Our examination of the office’s revenue cash book disclosed that, between January 2007 and March 2008, management levied and collected registration of licenses and workshop fees from a number of NGOs and private schools without approval and failed to pay the amount collected into the Consolidated Fund, contrary to Sections 16 and 17 of the FAR, 2004.
347. Management responded to our query that efforts would be made to seek approval for the collection of the fees and licenses. We recommended that the total revenue of GH¢28,865.00 involved should be paid into the Consolidated Fund and management should desist from collecting the licenses and fees until it has been given the necessary approval to do so.
Payment of unearned salaries – GH¢2,099 348. Between February and July 2007, unearned salaries of GH¢1,692.44, GH¢172.45 and GH¢233.61 were paid into the individual bank accounts of three retirees, namely Ms Janet Nketiah, Ms Elizabeth Agbemava and Ms Comfort Ntow respectively, in violation of Section 304(1a) and 298 of the FAR, 2004.
349. This lapse occurred because management failed to inform their bankers early enough to return the unearned salaries to chest. Although management assured us that it would trace the affected retirees and recover the amount, no recoveries had been made as at the time of writing this report in May 2009. We therefore, re-iterate our earlier recommendation that,
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 95 management should recover the total amount from them or their estates and pay it to chest.
Shortage of textbooks 350. Stock taking conducted at the textbooks depot disclosed the shortage of 965 text books of different kinds whose values could not be immediately determined.
351. Management explained that they assumed that the quantities indicated on the boxes upon receipt were the exact quantities in the boxes. However, a sample check carried out later proved otherwise. Management therefore made a report to the Director of Supplies and Logistics, GES Headquarters, Accra on the anomalies detected but no response had been received as at the time of audit. 352. To promote accountability, we recommended that, the issue should be investigated thoroughly, liability established and the cost recovered to chest.
GHANA EDUCATION SERVICE – KONONGO Unsupported payments – GH¢4,672 353. Our review of payment vouchers revealed that five payments amounting to GH¢4,672.00 were without supporting details, such as invoices, receipts/bills and statements of claims to authenticate the payments, contrary to Regulation 39(c) of the FAR, 2004.
354. Lack of management supervision over the work of the Accountant resulted in this omission. We recommended to
96 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 management to ensure that the necessary attachments are provided to authenticate the payments, failing which the total amount of GH¢4,672.00 should be recovered from the Accountant and paid to chest.
Uncompetitive procurement – GH¢2,311 355. Our audit also disclosed that the Education Office made purchases totalling GH¢2,311.00 during the period under review without obtaining at least, three quotations from different suppliers in violation of Section 43(1) of the Public Procurement Act, 2003 (Act 663). As a result, we could not ascertain the reasonableness of the prices at which the items involved were procured. In our view, management’s failure to comply with the above laws could result in the office paying for items at higher prices.
356. To ensure economy in expenditure of government funds and transparent procurement practices, we urged management to study and comply with the requirements of the procurement law in future.
NON-FORMAL EDUCATION DIVISION – KONONGO Unsupported payments – GH¢1,606 357. Our audit disclosed that 10 payments totalling GH¢1,606.24 were not supported with invoices, receipts and statements of claims. Management explained that the relevant supporting documents had been sent to the Regional office in Kumasi. We could not accept this explanation and asked that the documents should be produced for
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 97 audit, failing which the amount should be recovered from the Accountant and paid to chest.
NON-FORMAL EDUCATION DIVISION – JUASO Unearned salary – GH¢3,621 358. We observed that three separated officers had their bank accounts credited with a total amount of GH¢3,620.99 between October 2006 and April 2008. At the time of compiling this report in 2009, two of them still had their names appearing on the payroll.
359. Management explained that efforts so far made to delete the names of the separated staff have proved futile. We advised management to liaise with the CAGD to ensure immediate deletion of the names of the two separated staff. Management was also requested to advise the relevant banks to transfer the amount of GH¢3,620.99 and any subsequent payments into the Controller and Accountant- General’s Suspense Account.
GHANA EDUCATION SERVICE - OBUASI Fuel purchases not recorded – GH¢8,070 360. Section 1604 of the Stores Regulation, 1984 stipulates that fuel and lubricant purchases should be recorded in a vehicle log book. However, our review of the accounts of the Ghana Education Service, Obuasi revealed that GH¢8,069.80 worth of fuel bought during the period under consideration was not recorded in the Service’s vehicle log books.
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361. This situation could be exploited by both the drivers and the Accountant. Failure to record fuel purchases in the drivers’ log books raises doubt as to whether or not the fuel was bought and used in the interest of the Service. We requested management to account for the GH¢8,069.80 worth of fuel bought and also improve upon supervision of drivers to ensure that all fuel purchases are recorded in the relevant log books.
NON FORMAL EDUCATION DIVISION – MANKRANSO Payment of unearned salaries – GH¢1,741 362. A payroll audit revealed that between April and August 2008, unearned salaries totalling GH¢1,741.35 were paid into the bank account of a Mr. Addai Samuel who retired in March, 2008.
363. We recommended that management should ensure that his name is deleted from the payroll and the unearned salaries paid into the Suspense Account of the Controller and Accountant General.
GHANA EDUCATION SERVICE – BEKWAI/ASHANTI Purchase of building materials not accounted for – GH¢20,000 364. We noted during an audit that the Member of Parliament for Bosome-Freho constituency, Hon. Edward Nana Yaw Ofori-Kuragu failed to provide expenditure details in respect of an amount of GH¢20,000,00 he allegedly used to purchase building materials for schools in his constituency under the 2006 GETFund project in spite of persistent demands and reminders.
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365. A list of the alleged beneficiaries produced after persistent demands, however, lacked information such as the names of the beneficiaries, quantity of items supplied, date of delivery and evidence of receipt. Consequently, we were unable to follow-up and verify whether the materials were actually supplied and used for the benefit of the constituency.
366. We recommended to management to request the MP to account for the amount of GH¢20,000.00 with receipts, invoices, distribution list and the evidence of receipt by the beneficiary schools.
GHANA EDUCATION SERVICE – MANSO NKWANTA Unreceipted payment - GH¢6,750 367. Our review of disbursements disclosed that a payment of GH¢6,750.00 made to the West African Examinations Council was not supported with an official receipt to authenticate the payment.
368. We recommended to management to ensure that the District Accountant obtains the receipt from the West African Examinations Council, failing which the amount should be recovered from him.
Failure to withhold tax – GH¢1,957 369. We noted that the District Directorate made 18 payments between December 2004 and November 2006, totalling GH¢39,136.78 for goods and services but failed to deduct and withhold a total tax of GH¢1,956.84, in contravention of the tax laws.
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370. We recommended and management agreed to contact the suppliers for the recovery of the total amount in order that it might not be held liable, as prescribed in Section 88(1) of the IRS Act, 2000 (Act 592).
AGRICULTURAL TRAINING COLLEGE – KUMASI Fuel purchases not accounted for – GH¢1,077 371. Our review of the accounts of the above College revealed that out of GH¢8,108.50 worth of fuel bought during the period under consideration, GH¢7,031.59 was recorded in the vehicle logbooks, leaving GH¢1,076.91 unaccounted for.
372. We were of the view that the un-recorded fuel could have been diverted or not purchased at all. We therefore stressed on the need for the two officers in charge of the transport section to be diligent in their work. We also advised management to intensify its supervision over the drivers to prevent recurrence and ensure that the unrecorded fuel worth GH¢1,076.91 is accounted for.
NON-FORMAL EDUCATION DIVISION - KUMASI Shortage of roofing sheets – GH¢72,353 373. Between May and August 2006, two consignments of roofing sheets, totalling 50,861 sheets were delivered to the Regional Secretariat of the Division by trucks from Headquarters in Accra duly accompanied by the relevant store documents. A total of 35,041 sheets of the consignment were distributed between June and August 2007, leaving a balance of 15,820 sheets.
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374. An audit revealed that as at 31 December 2008, the ledger balance of the roofing sheets in the store stood at 15,820 sheets. However, only 6,172 sheets were physically counted during stock taking, indicating a shortage of 9,648 sheets.
375. The Regional Coordinator explained that the roofing sheets were not physically counted during the off-loading due to their numbers, an explanation we considered unacceptable.
376. We accordingly recommended that the Regional Co-ordinator of NFED and the Logistic officer should account for the shortage of 9,648 roofing sheets else the amount of GH¢72,352.50 being the value of the missing sheets recovered from them.
GHANA EDUCATION SERVICE-NKWANTA Purchases not routed through stores - GH 17,282 377. Contrary to Section 0522 of the Stores Regulations, 1984 which requires that a store receipt voucher should be prepared for the recording of all goods received into stores, our review of store records revealed that purchases valued at GH 17,282.33 were not recorded in the store ledgers. We could therefore not determine how the items were used.
378. In our opinion, the practice could lead to the diversion of store items for unauthorised use and other expenditure frauds such as payment for goods not supplied.
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379. To ensure transparency in the use of stores, we urged and management agreed to provide the requisite documentary evidence of receipt of the items worth GH¢17,282.00 and their final disposal.
Non-payment for motorbikes - GH 25,950 380. Our audit revealed that payment for 12 motorbikes valued at GH 25,950 sold to Circuit Supervisors in 2006 had not commenced as at November 2008 because CAGD had failed to capture the relevant input submitted to it.
381. To forestall further delay in recovery of the amount, we recommended that in the interim, management should demand cash payments from the beneficiaries and pay same to government chest until fresh inputs are sent to CAGD to effect the necessary deductions at source.
GHANA EDUCATION SERVICE -JASIKAN Un-acquited payment vouchers- GH 25,737 382. Examination of paid vouchers of the District Education Office, Jasikan, disclosed that 14 payment vouchers with a total face value of GH 25,736.80 were paid without substantiating the transactions with the relevant supporting invoices and receipts.
383. Under the circumstance, we could not determine the genuineness of the transactions. We therefore recommended to management to provide the necessary supporting documents to
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 103 substantiate the expenditure, failing which the Spending Officer and the Accountant should be surcharged with the amount.
Purchases not routed through stores - GH 69,215 384. Our review of purchases by the District Directorate revealed that items worth GH 69,215.20 purchased during the period under review, were not recorded in the relevant store ledgers, contrary to the requirements of Chapter 0502 of the Stores Regulation, 1984. The practice could result in diversion of store items for unauthorised use.
385. For purposes of accountability, we urged management to provide evidence of receipt of the items into the store and their final disposal, failing which, the total amount of GH 69,215.20 should be recovered from the Spending Officer and the District Accountant and paid to chest.
Procuring from non-VAT registered entities - GH 20,844 386. Regulation 183(4) of the FAR, 2004 requires that all government departments should procure goods and services from only VAT registered persons or entities. On the contrary, management made purchases worth GH¢38,962.71 from non-VAT registered suppliers, resulting in the loss of total tax revenue of GH¢0,844.41 to the State.
387. Management explained the difficulty in getting VAT registered entities/persons in the Jasikan locality to transact business with hence their dealing with non-VAT registered persons.
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388. We recommended and management agreed to ensure compliance with the VAT laws in future to avoid being sanctioned for loss of revenue to the State.
Failure to deduct withholding tax - GH 6,092 389. Management of the District Education office, Jasikan paid a total amount of GH¢21,846.02 to various suppliers of goods and services, during the period under review, without deducting the statutory 5% withholding tax of GH¢,092.30.
390. Negligence of duty on the part of the District Accountant and the Spending Officer accounted for the lapse, resulting in the loss of tax revenue of GH 6,092.30 to the State.
391. We urged management to recover the withholding tax of GH 6,092.30 from the suppliers, failing which the Spending Officer and the District Accountant should be surcharged with the amount.
GHANA EDUCATION SERVICE -DENU Payment of unearned salaries - GH 12,661 392. Regulation 297(a) of the FAR, 2004 requires that a head of department should cause the immediate stoppage of payment of salary to a public servant when that public servant has been absent from duty without leave or reasonable cause for a period as stipulated in the administrative regulation of the establishment.
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393. We observed that contrary to the above quoted regulation, six teachers who vacated their posts were paid unearned salaries, totalling GH 12,661.00 between September 2007 and December 2008.
394. The irregularity was due to the delay on the part of the Head teachers and their Circuit Supervisors to report the absence of the teachers to the District Directorate for prompt action to be taken to stop their salaries and eventual deletion of their names from the relevant payroll.
395. We, therefore, recommended that the total amount of GH 12,661.00 should be recovered from the separated teachers and measures put in place to prevent future occurrence.
GHANA EDUCATION SERVICE-NKWANTA Non- deduction of withholding tax - GH 2,002 396. Our audit effort disclosed that management failed to deduct withholding tax of GH 2,002.30 from payments to suppliers and service providers totalling GH 40,046.08. We recommended that management should recover the amount from the payees and pay same to the IRS, failing which the amount should be recovered from the Accountant.
NON-FORMAL EDUCATION DIVISION – TUMU Unearned salaries – GH¢2,726 397. As a result of management’s failure to take prompt action to delete from the payroll the name of Mr. Kadiri Edmund, who retired
106 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 in July 2006, a total amount of GH¢6,617.04 was wrongfully paid into his bank account as an unearned salary from August 2006 to July 2008.
398. An amount of GH¢3,890.95 has since been recovered, leaving a balance of GH¢2,726.09 as at the date of audit in August 2008. We urged management to pursue recovery of the balance from Mr. Kadiri and ensure that his name is deleted from the payroll.
GHANA EDUCATION SERVICE – BONGO Misapplication of funds – GH¢1,644 399. A total amount of GH¢1,643.65 was wrongly misapplied from the Sports, Cultural and Rural Teachers’ Incentive accounts to meet recurrent expenses of the District Directorate. We recommended to management to immediately refund the total amount into the three accounts and desist from misapplying other funds on its recurrent expenditure.
Purchases not accounted for – GH¢12,359 400. We noted that a total amount of GH¢12,358.50 from the MP’s GETFund was expended on building materials on the orders of the MP for Bongo, Hon. Albert Abongo, without due consultation with the District Director of Education. Furthermore, the materials were not covered by any store records. As a result, the receipt and issue of the items could not be verified by us.
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401. We therefore recommended that management should call upon the MP to account for the items with the relevant documents including the list of beneficiary schools for our follow-up.
NON-FORMAL EDUCATION DIVISION – NSAWAM
Purchases of fuel and lubricants not recorded in log books – GH¢1,524 402. Management purchased fuel to the tune of GH¢1,524.00 but failed to account for them in the vehicle log books. We were therefore, unable to establish the genuineness of the purchases or validate the rate of consumption of fuel per kilometer by the vehicles with a view to determining their efficiency.
403. The lapse could be attributed to negligence of duty on the part of both the Supervisors and the District Co-ordinator. We recommended that the Transport officer or whosoever is responsible for overseeing the work of the drivers should be made to account for the usage of the fuel valued at GH¢1,524.00, failing which he/she should be surcharged with the cost.
GHANA EDUCATION SERVICE - SUHUM Unsupported payments - GH¢50,893 404. We noted that the Service paid a total amount of GH¢37,101.50 on 10 payment vouchers but failed to support the expenditure with official receipts and other relevant documents. Also, a total amount of GH¢11,727.20 paid on 19 payment vouchers as advance/imprests to schedule officers were without receipts or details of expenditure.
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Again, payments made on eight payment vouchers in respect of sporting activities totalling GH¢2,064.73 were not fully accounted for.
405. The absence of official receipts and relevant, credible documents to support disbursements raises doubts about the authenticity of transactions.
406. We recommended that management should obtain the relevant expenditure documentation to acquit the payment vouchers, failing which the amount of GH¢50,893.43 should be recovered from the responsible officials.
Purchases not routed through stores – GH¢8,127 407. Our review of procurements revealed that items worth GH¢8,127.38 purchased during the period under consideration, were not recorded in the store ledger. As a result, we could not ascertain whether the items were actually purchased and put to use in the interest of the District office.
408. Management explained that the items were bought for the best teacher award and other training programmes. However, the Storekeeper indicated that he had no knowledge of the purchase of the items. We therefore requested management to account for all the items worth GH¢8,127.38.
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DISTRICT EDUCATION OFFICE – KROBO ODUMASE Excess payment for assessment examination papers-GH¢4,300 409. In order to obtain value for public money spent, Section 43(1) of the Public Procurement Act 2003 (Act 663) requires a procurement entity to request quotations from a minimum of three different sources before making payment to the most favourable source.
410. We noted that the District Director of Education ordered the printing of 7,211 pieces of assessment examination papers at the cost of GH¢7,300.00 without obtaining alternative quotations from other competing printing houses.
411. Unhappy with the high price paid for the contract, the audit team conducted its own market survey. At the end of the survey, it was discovered that the highest price the District Director could have paid was GH¢3,000 if she had taken advantage of the prevailing market prices.
412. The Director’s claim that she had obtained alternative invoices, which were available for our verification, could not be substantiated during a verification of management’s response. The Director also argued that the funds used for the assessment examination papers did not come from government, but from funds collected from first cycle institutions. We, however, believed that the amount still represented public funds put at the disposal of the District Education Directorate, and should be spent in line with the country’s financial laws and regulations.
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413. We therefore recommended that an amount of GH¢4,300 which is the amount paid in excess of the prevailing market price should be treated as misappropriation of funds and recovered from the District Director.
MINISTRY OF HEALTH
HEADQUARTERS Inappropriate disbursement procedures-GH¢17,000 414. Two open cheques totalling GH¢17,000.00 were paid to a Mr. Edem Adzogenu in favour of the University of Development Studies (UDS), Navrongo and the National Union of Ghana Students (NUGS) of the University of Education, Winneba for the organization of regenerative health and nutrition programmes at the two campuses.
415. We noted that no official receipts were obtained to cover the transactions. Furthermore, enquiries at the Treasuries of the two bodies indicated that the amounts had not been received. Our efforts to contact Mr. Adzogenu for clarification were also not successful.
416. We recommended that management should contact Mr. Edem Adzogenu to account for the amount of GH¢17,000. Management should also ensure that in future cheques paid are crossed and official receipts obtained in support of payments.
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417. We learnt that management later received acknowledgement letters from the two bodies instead of official receipts, thus casting further doubts on the transactions.
Funds released for training programmes not utilised - GH¢36,840 418. On 27 June 2007, the Ministry paid GH¢36,840.00 to the Association of Health NGOs to organise a training programme on regenerative health nutrition.
419. As at the time of our audit in February 2008, the programme had not taken off. There was therefore the risk that the Association could misapply the funds and the objectives of the Ministry in making the disbursement would not be achieved.
420. We recommended that the Ministry should recover the amount of GH¢36,840.00 from the Association. Management said it had written two letters on the issue to the Chairman of the Association and was awaiting a response to determine the next appropriate line of action.
MINISTRY OF HEALTH TREASURY Imprest not retired-GH¢12,000 421. Regulation 288(1) of the FAR (2004) stipulates that imprests shall be retired at the close of a financial year and imprests not so retired shall be adjusted to a personal advance account in the name of the imprest holder.
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422. Contrary to the regulation, we noted that imprests totalling GH¢12,000.00 granted to 19 departments under MOH and Ghana Health Service (GHS) in 2007 had not been retired as at the required date of 31 December 2007.
423. This was due to the failure of the imprest holders to comply with the FAR and the Chief Treasury Officer’s request to them to retire their imprest holdings. The situation could result in misapplication or misappropriation of the imprest amounts.
424. We advised management to ensure that the officers and the departments concerned retired the imprests of GH¢12,000.00 failing which the departments should not be given approval for any imprest warrants for the succeeding financial year.
Non-deduction of 5% statutory tax-GH¢11,234 425. Section 84 of the Internal Revenue Service Act (Act 592) requires professional tax of 5% to be deducted from payments of professional fees. Also, Regulation 126 of FAR 2004 states that in all cases of contract payments, unless otherwise stated in the contract agreement taxes shall be deducted in accordance with the relevant enactments on taxes.
426. Contrary to these requirements, the Paying officers failed to deduct statutory taxes totalling GH¢11,233.61 from three payments made to Osei-Kuffour Sohnes and Partners, Accra, between September to November 2007.
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427. The schedule officer attributed this to oversight. The lapse therefore deprived the State of tax revenue of GH¢11,233.61. We asked management to confirm whether the firm fully discharged its tax liability for 2007 financial year, including taxes on these transactions or the taxes should be recovered and remitted to the IRS. We also advised that henceforth, Finance officers who fail to deduct the required taxes from payments should be surcharged with the amount involved in accordance with Section 88 of the Internal Revenue Service Act, 2000 (Act 592).
KORLE-BU TEACHING HOSPITAL Absconded patients’ debt- GH¢60,713 428. Due to inadequate security at the hospital, treated patients absconded without paying to the hospital the costs of their treatments. Thus, the balance on absconded patients’ debt as at 31 December 2007 amounted to GH¢60,713.40.
429. This situation negatively affected the already poor cash flow position of the hospital and might affect its ability to provide adequate medical services to the public if this condition continues.
430. We recommended that the hospital authorities should strengthen the security in order to reduce the incidence of treated patients escaping from the hospital. Management agreed to comply with our recommendation.
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CHEST CLINIC-KORLE BU Non-certification of works before payment-GH¢16,848 431. To ensure a good assessment of the quality of contractual works carried out, Section 16 (1) of the Financial Administration Act requires that at every stage of payment, a certificate from the works supervisor or project inspector be provided as evidence of work done satisfactorily.
432. There were, however, no certification in support of contract payments totalling GH¢16,848.00 made in October and December 2007 to Worksworth Associated Limited.
433. This practice contravened the financial regulation and could result in payments for contract works not well executed. We urged management to ensure that the issuance of a certificate by a competent official attesting to the satisfactory execution of contract works forms the basis of payments to contractors.
CENTRAL MECHANICAL WORKSHOP-TEMA Items paid for but not supplied - GH¢91,080 434. On 9 June 2006, the GHS entered into a contract- No. GHS/2006/NCR/A1/38/508 with Nodeco International (GH) Limited for the supply of 20 tricycles valued at GH¢91,080.00, with a contract validity period of three months. We noted that a 40% advance payment of GH¢36,432.00 was made to the company.
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435. However, due to management’s failure to enforce the contract terms, one year after the signing of the contract, the tricycles had not been supplied thereby depriving the Central Mechanical Workshop the use of the amount and the equipment for the achievement of the operational objectives for which the items were ordered.
436. We therefore recommended and management agreed that the contract should be abrogated and the advance payment of GH¢36,432 recovered with interest at the Bank of Ghana rate.
Deducted tax not remitted to the IRS - GH¢12,108 437. Income tax deductions amounting to GH¢12,107.77 were not remitted to the Internal Revenue Service, contrary to Section 87(1) of the Internal Revenue Act, 2000 which requires deducted taxes to be remitted to the IRS within 15 days after the end of the month in which the taxes were deducted.
438. We asked management to remit the GH¢12,107.77 to the IRS without delay and ensure strict compliance with the Internal Revenue Act. Management explained that it did not remit the taxes because it had to rely on the amount to settle some of its bills.
Faulty vehicle diagnostic equipment-GH¢18,975 439. We observed that vehicle diagnostic equipment procured for the workshop at a cost of GH¢18,975.00 had been returned to stores because it was realized that it needed to be upgraded to be able to diagnose electronic based cars which are now common in the country.
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440. The situation implied that the workshop would not be able to function effectively and revenue targets might not be met. We advised management to ensure that the equipment is upgraded as soon as possible and put to use. Management intimated that it had contracted the manufacturers to carry out the upgrading.
MALARIA CONTROL PROGRAMME Lack of proper control over fuel coupons- GH¢11,741 441. We observed that between January and December 2007, fuel coupons worth GH¢11,741.00 were purchased and used but without entering them in any stock register to control the receipts and issues of the coupons. Thus, there was no record on the quantity of coupons issued and the vehicles they were issued to.
442. The Administrator explained that he was not aware of measures that were necessary to control the use of the coupons. We recommended that a stock register of fuel coupons should be introduced to control the receipt and issue of fuel coupons by the Malaria Malaria Control Programme unit.
NATIONAL TUBERCULOSIS PROGRAMME Programme funds not fully accounted for-GH¢13,084 443. . Three payments totalling GH¢13,084.20, as detailed below, which were made to officers of the Programme to use on various activities were not accounted for.
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Date Payee Details Amt. GH¢ 13/9/07 Dr. Dorothy Manu Field assessment and date collection 154.20 28/8/07 Dr. C. Ahorlu Field trip toTumu 6,250.00 29/5/97 Manager Per diem for monitoring 6,680.00 Total 13,084.20
444. Management’s failure to get the officers to account for the moneys paid could result in misapplication of the funds and the objectives for which the funds were disbursed might not be achieved. We asked management to ensure that the officers accounted for the amounts.
GREATER ACCRA REGIONAL MEDICAL STORES Unsupported payments-GH¢1,517 445. Sections 39 (1) and 2(c) of the FAR require Heads of accounts departments to control the disbursement of funds and ensure that transactions are properly authenticated. This requirement is achieved when payment vouchers are supported with appropriate authenticating documents.
446. On the contrary, two payments totalling GH¢1,516.77 made to two Deputy Directors of Pharmaceutical Services to perform a review of pharmacy managers and to organize a 2007 Conference of Pharmacists had not been accounted for by the recipients. This situation could result in misapplication of the funds.
447. The Head of the accounts section indicated that efforts made to get the officers to account for the moneys proved futile. We urged
118 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 management to ensure that the recipients accounted for the money or they should be surcharged with it.
RIDGE HOSPITAL Dormant corporate debtor accounts-GH¢5,834 448. We observed that the accounts of the following corporate debtors of the hospital were dormant during the year under review with their un-paid balances as indicated below: Account Balance Remarks (GH¢) National Population Council 307.33 Bal. as at end of 2005 Ghana Museums and Monuments Board 2,535.61 Bal. as at end of 2006 Stephen Asare 1,463.57 -do- National Theatre 942.77 -do- National Symphony 542.86 -do- Ridge Church 41.99 -do- Total 5,834.13
449. This situation was due to the entities’ unwillingness to pay up, coupled with management’s failure to make the necessary follow-ups to recover the debts. We recommended that management should contact the entities involved to collect the debts and close their accounts if they would not continue to enjoy the credit facility offered by the hospital. Management responded that it would make the necessary efforts to implement the recommendation.
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PSYCHIATRIC HOSPITAL, PANTANG Failure to obtain official receipts-GH¢19,378 450. Section 28 of the FAR provides that official receipts should be obtained to support all payments made. Despite the requirement, we noted that official receipts were not obtained from 12 suppliers/service providers to authenticate payments totalling GH¢19,378.10 that was made to them.
451. To prevent the payment of spurious claims which could result in losses to the hospital, we recommended that management should obtain official receipts from the payees or the amounts should be recovered from the Accounts officer.
DISTRICT HOSPITAL – SAMPA Outstanding staff advances – GH¢7,110 452. We observed that 14 staff members were granted salary advances totalling GH¢7,550.00 between June 2006 and June 2008. Out of this amount, only GH¢440.00 representing 5.8% was recovered, leaving an outstanding amount of GH¢7,110.00 yet to be recovered.
453. Management’s failure to ensure timely recovery of the advances resulted in the anomaly. This condition has not only deprived other staff members of the facility, but has also depleted the coffers of the hospital. We recommended that management should recover the outstanding balance of GH¢7,110.00 from the staff involved.
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ATEBUBU DISTRICT HOSPITAL Outstanding staff salary advances – GH¢3,226 454. We observed that 23 officers who were granted total salary advances of GH¢5,162.41 had not refunded the amount. At the instance of the audit, eight officers refunded GH¢1,936.00 leaving a balance of GH¢3,226.41 as at the time of reporting in March 2009.
455. The outstanding balance could be attributed to the Head of department’s non-enforcement of the recovery policies as required by Regulation 112 of FAR, 2004. Non-recovery of the advances could result in the hospital incurring bad debts and loss of funds.
456. We urged management to ensure that in granting advances, the beneficiaries should arrange with their bankers to enable the hospital recover the monthly deductions through bank. Meanwhile, management should immediately recover the outstanding amount of GH¢3,226.41 from the affected officers.
Un-recovered rent advance – GH¢700 457. Our review disclosed that the hospital paid a total amount of GH¢2,400.00 to Nana Kwesi Ampoma I as rent advance for a four bedroom flat rented for its staff. However the hospital abrogated the rent agreement and asked for a refund.
458. We noted that management was not able to recover the amount after 19 months. Consequently, funds needed for the hospital’s
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 121 operations were locked up with the landlord. At the instance of the audit management recovered GH¢1,700.00 from the landlord.
459. We urged management to recover the balance of GH¢700.00 from Nana Ampoma I and inform us with particulars of recovery.
Unsupported payments – GH¢2,950 460. Three payment vouchers with a total face value of GH¢2,950.00 raised between November 2006 and April 2007 had not been acquitted with supporting expenditure details like official receipts and invoices to authenticate the transactions, as of August 2008.
461. The anomaly was attributed to laxity on the part of the Finance section of the hospital which did not enforce accountability and also due to failure on the part of officers to submit invoices, receipts and other relevant supporting documents to account for moneys released to them. Apart from weakening financial controls, this lapse can also lead to abuse in the system.
462. We recommended immediate recovery of the amount from the payees to the hospital’s account. We further advised management to ensure transparency and accountability at all times in its financial transactions.
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Unearned salaries – GH¢16,137 463. Our review of mechanised salary payment vouchers, vacation of post, retirement and obituary files disclosed that five separated employees had total unearned salaries of GH¢15,773.69 credited to their bank accounts and a total insurance premium of GH¢363.00 deducted at source.
464. Management’s failure to inform the CAG in good time to delete the names of the separated staff from the pay roll resulted in the wrongful payment of the gross salary of GH¢16,136.69 from the Consolidated Fund to the above separated staff.
465. At the instance of the audit, GH¢12,007.81 was recovered from the bank accounts of three officers, leaving that of a Mr. Agbesi at Barclays bank, Kejetia branch in Kumasi.
466. We advised management to pursue the deletion of the name of Mr. Youni Andrews from the payroll and recover GH¢363.00 being his insurance premium. We also asked that the unearned salary of GH¢3,765.88 should be recovered from Mr. Agbesi.
KOKOFU GENERAL HOSPITAL Mis-appropriation of funds-GH¢5,516 467. In contravention of Regulation 15 of the FAR, Mr. Isaac Appiah, an Accounts clerk at the hospital failed to issue receipt and to deposit into the hospital’s bank account a total amount of GH¢6,496.20 being revenue collected at the Outpatients’ department.
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468. Similarly, the same officer failed to account for GH¢15,019.60 being revenue collected as service charges and drugs sold between the period November 2005 to July 2007, thereby bringing the total amount misappropriated by him to GH¢21,515.80.
469. The embezzlement was detected by management and the culprit was reported to the Police who apprehended and put him before court. As at the time of this report, a total of GH¢16,000.00 had been recovered with the assistance of the Police, leaving a balance of GH¢5,515.80 to be recovered. We advised management to impress on the court to have the entire amount recovered to chest.
ACHIASE HEALTH CENTRE Fraudulent alteration of figures on cheques – GH¢1,613 470. We noticed that the amounts indicated on six cheques totalling GH¢1,068.15 were fraudulently altered to read GH¢2,681.30 by Mr. Francis Boadu, the Records keeper, who also doubled as the Accounts officer at the Achiase Health Centre.
471. The condition occurred because internal control checks and supervision by management over the duties of the Accounts officer were lax.
472. We recommended that management should ensure that the duties of the Accounts officer are closely supervised to prevent a future occurrence of the fraud. Meanwhile, the overstated figure of GH¢1,613.15 must be recovered from Mr. Boadu and paid to chest.
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Cash withdrawals without supporting payment vouchers – GH¢13,357 473. We noted that between 12 February 2007 and 22 August 2008 the Accounts officer withdrew cash from the Centre’s bank account on 34 cheques totalling GH¢13,357.21 without the requisite payment vouchers to indicate the details and purpose of the transaction. Laxity in the financial management control facilitated this fraudulent act.
474. We recommended that the District Director of Health Services should ensure the recovery of the GH¢13,357.21 from the Accounts officer for payment to chest.
Misappropriation of funds – GH¢2,765 475. We observed that management of the Achiase Health Centre prepared payment vouchers and withdrew cash from its Service bank account number 6051130002972 to be transferred into a Drug account number 6051130000312.
476. However, we noted that the Records keeper, Francis Boadu, who made the total cash withdrawal of GH¢2,765.00 failed to pay it into the Drug account but rather misappropriated the money.
477. Management’s ineffective supervision caused the lapse, indicating a major weakness in the internal control mechanism, and resulting in financial loss to the Centre.
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478. We recommended that the total amount of GH¢2,765.00 should be recovered from the officer, Francis Boadu. The officer should also be withdrawn from the Accounts Unit.
Unsupported payment vouchers – GH¢5,237 479. Payment vouchers in respect of disbursements totalling GH¢5,236.66 did not bear any supporting documents such as invoices and receipts.
480. This anomaly was caused by the failure of management to ensure that payees provided the relevant details as required. In the circumstances, there was no documentary evidence that the amount was used for official purposes.
481. We recommended that in the absence of the relevant details and receipts the amount of GH¢5,236.66 should be recovered and paid into the Centre’s account.
Items not routed through stores – GH¢5,256 482. Twenty-eight items said to have been procured totalling GH¢5,255.50 were not routed through stores. Our follow-up did not show that the items were actually purchased.
483. Management’s laxity caused the lapse, which in turn resulted in loss of funds to the Health Centre. We recommend full recovery of the amount of GH¢5,255.50 from the officer concerned. We also recommended that management should ensure that in future all
126 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 procurements are entered in store ledgers to enhance transparency and accountability.
ST. PATRICK’S HOSPITAL- OFFINSO Unearned salaries - GH¢9,224 484. Our examination of the payroll of the hospital disclosed that unearned salaries of four separated staff covering the period October 2006 to October 2008, amounted to GH¢9,224.10. Copies of correspondence available to the audit team showed that though management of the hospital had requested the banks to place embargo on their salaries, our follow-up to the banks revealed that the separated staff were able to withdraw a total of GH¢7,085.09, leaving only GH¢2,139.01 in their accounts.
485. We recommended that the matter should be reported to the Police to trace and recover the total amount of GH¢7,088.09 from the separated staff. Management was also advised to request the banks to transfer into the Consolidated Fund the balance of GH¢2,139.01 still standing in the accounts of the separated staff.
SUNTRESO HOSPITAL – KUMASI Unsupported payments - GH¢2,187 486. We noted that payments of GH¢2,186.88 were made without obtaining and or attaching official receipts. This lapse occurred because the Paying Cashier did not ensure that relevant receipts were obtained and filed as required. There was therefore no assurance that these monies were spent for the intended purposes.
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487. We recommended that management should obtain the necessary receipts to acquit the vouchers or recover the amount. Management accepted our recommendation and promised to ensure that receipts are attached to the vouchers concerned.
KETA HOSPITAL Staff advances - GH 5,544 488. We noted that 13 staff members who were granted various advances totalling GH 5,544 during the period under review had failed to honour their indebtedness to the hospital. We attributed the situation to the lack of effective mechanism in place for debt collection. We urged and management agreed to institute an effective means of recovering staff advances.
MIDWIFERY/HAC TRAINING SCHOOL – ATIBIE-KWAHU Unearned salaries – GH¢542 489. Failure of management to promptly ensure the deletion of the name of Yaw Boakye a former driver of the School who vacated post on 26 November 2007 resulted in the payment of a total of GH¢542.01 into his personal account.
490. Management also failed to instruct his bankers to pay the unearned salary into the Consolidated Fund as required by Section 298 of the FAR, 2004 (LI. 1802). We advised management to ensure the deletion of his name and the return of the total amount of GH¢542.01 into the Consolidated Fund. Management did not react to this advice.
128 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
DUNKWA GOVERNMENT HOSPITAL Payment of salary to retired staff-GH¢2,412
491. Contrary to Regulation 304 of the FAR, a Mr. Obeng Danso’s name continued to appear on the payroll of the hospital though he retired in March 2008. We noted that management had directed his bankers to transfer his unearned salary into the Consolidated Fund. However, there were deductions at source in respect of credit sales and insurance premium payments amounting to GH¢2,412.20 for the period April to September 2008 which needed to be recovered.
492. Delay by the CAGD in effecting immediate deletion of the name from the payroll resulted in this loss of money. We advised management to recover the amount from the retiree and ensure that CAGD deletes the name from the payroll forthwith.
DISTRICT HEALTH ADMINISTRATION DUNKWA-ON OFFIN
Mosquito nets unaccounted for-GH¢4,286 493. According to the rules governing the sale of mosquito bed nets, revenue realized from every net sold should be paid into the District Health Administration’s account.
494. During 2007, the district received and distributed to eight Health Centres/CHIPS and two individuals, a total of 4,060 bed nets valued at GH¢8,120.00. As at the time of this report, 3,960 nets worth GH¢7,920.00 had been sold, yet only a total of GH¢3,634.00 was paid to the Accountant leaving GH¢4,286 outstanding, as shown below:
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 129
Name of facility Quantity Value Stock Amount Difference received (GH¢) Value Paid (GH¢) (GH¢) Diaso Health 500 1,000 - 1,000 - Centre Subin Health 340 680 - 304 376 Centre Ntow CHIPS 300 600 - 226 374 Agyempoma 300 600 - 50 550 CHIPS Buabin CHIPS 300 600 - 346 254 Kyekyewere Health 740 1,480 - 1,150 330 Centre Dunkwa Sub 900 1,800 200 558 1,042 Ayanfuri Health Centre 80 160 --160 DDHS 400 800 --800 Disease Control Office 200 400 --400 Total 4,060 8,120 200 3,634 4,286
495. Laxity in the implementation of the rules was the cause of the condition as management staff who were supposed to go by the regulations and policies were themselves part of the problem.
496. We advised management to desist from violating the rules and pay to chest what they themselves owed so as to have the moral authority of enforcing recovery from others.
MUTUAL HEALTH INSURANCE SCHEMES Insurance Schemes’ indebtedness to the Ministry of Health 497. Section 38(1) of the National Health Insurance Act, 2003 (Act 650) stipulates that payment should be made by Mutual Health Insurance Schemes to health facilities within four weeks after the receipt of claim.
130 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
498. On the contrary, we noted that the Health Insurance Schemes delayed payments for services provided their clients for several months. Such delays impact negatively on the health facilities’ cash flow and for that matter their ability to offer quality health care to patients.
499. The situation was attributed to the National Health Insurance Authority’s late release of funds to the Schemes. An example of few Schemes that owed health facilities a total of GH¢2,280,724 is provided in the table below:
No BMC Indebtedness Amount as at (GH¢ 1 Ridge Hospital 31/12/07 310,999 2 Offinso Health Centre 31/12/08 14,224 3 Suntreso Hospital, Kumasi 31/8/08 477,580 4 Kumasi South Hospital 10/6/08 317,798 5 Jamasi Health Centre 31/1/08 22,860 6 Wenchi Municipal Health - 11,543 Administration 7 Tain District Health Administration, - 451,864 Nsawkaw 8 District Hospital, Sampa 31/8/08 60,180 9 Atwima Mpohor Dist. Hospital - 11,208 10 Hohoe Municipal Hospital 31/3/08 151,726 11 Ketu South Dist. Hospital 31/12/08 267,612 12 Tema General Hospital 31/12/07 183,130 Total 2,280,724
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500. To enhance the finances of the nation’s health facilities for continued efficient health delivery services and successful implementation of the national health insurance policy, it is advised that the MoH and MoFEP together with the National Health Insurance Authority should dialogue on a system which can enable minimum delay in payment to be made for service delivery as envisaged in the Act.
MINISTRY OF ENERGY
Unexplained direct transfers through Treasury bank account – GH¢388,723,288
501. Between January and June 2008, the Bank of Ghana credited the Ministry of Energy’s Treasury bank account with a total amount of GH¢388,723,288.03 but the Ministry did not have any supporting authority letters from MoFEP and CAGD to show the basis of the transfer.
502. We further noted related bank transfers out of the same account amounting to GH¢439,836,703.68 for purposes also not known to the Ministry. We could therefore not confirm whether the transfers formed part of the Ministry’s budgetary allocations for the half-year period ending 30 June 2008.
503. We observed that most of the unexplained cash transfers into the Treasury bank account were also transferred out on the same date, and in some instances, the outflows constituted direct transfers into
132 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 the bank accounts of local and foreign contractors allegedly working on the Ministry’s electrification programmes.
504. We again noted that a cash shortfall of GH¢55,142,372.60 arising from the excess of payment over receipts into the bank account was absorbed by the Ministry’s budgetary allocations deposited into the account. Consequently, cheques issued by the Treasury in payment of approved programme expenditures were often dishonoured by the Bank of Ghana.
505. We advised management to obtain the Ministry of Finance’s release letters and the Accountant-General’s Warrants issued in support of the transfers for our review and also apply for a refund of the cash shortfall of GH¢55,142,372.60 to enable the Ministry of Energy discharge its obligations to contractors and other service providers to the Ministry. We also advised management to investigate future transfers made through the Treasury bank account to ensure that only approved budgetary allocations are paid out of the account. Management did not respond to the recommendation.
Unsubstantiated payments for electrical materials supplied - GH¢10.8 million
506. Between 2003 and 2007, the Ministry of Energy entered into several contracts with suppliers for the purchase of wooden poles and other electrical materials. The contract agreements required the suppliers to make reference to the related contract agreement on invoices and waybills submitted to the Ministry to validate the payments.
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507. Our audit checks on payment documents for electrification projects revealed that 31 payments amounting to GH¢10,747,802.58 made to 21 suppliers were without attached invoices or waybills to show the quantities and unit prices of the materials supplied.
508. We observed that these lapses resulted from ineffective checks on supplier demand notices submitted to management for payment authorisation. In the absence of invoices and waybills we could not ascertain the propriety of the total payment of GH¢10,747,802.58 made to the suppliers, as the available documentation did not provide enough evidence to show that the projects had been undertaken or the costs justified.
509. We urged management to urgently obtain the requisite invoices and waybills from the 21 suppliers for our verification. We also advised management to subject all payment requests to proper scrutiny before granting payment authorisations. Management did not respond to our recommendation.
Absence of pre-qualification documentation on suppliers and contractors 510. Section 229(2) of the Public Procurement Act requires every Ministry, Department or Agency to request prospective bidders to provide appropriate documentary evidence that they consider useful to satisfy themselves that a bidder is qualified to execute government contracts. This includes the legal capacity of the bidder to enter into the contract and the payment of taxes and social security contributions for its employees. Such evidence may be obtained as part of the
134 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 entity’s pre-qualification procedures or during the submission of bids for tender.
511. We observed that apart from the absence of a register on its suppliers and contractors, the Ministry did not obtain any evidence on the capacity of the companies before awarding them contracts. The practice did not only contravene the Procurement Act but also created avenue for unqualified persons to be awarded government contracts with the attendant risk of non-performance.
512. To fully conform to the Procurement Act, we advised management to obtain the under listed records from the suppliers and contractors who were awarded contracts by the Ministry in 2007 and 2008 for our review. i. Business registration certificate; ii. Business commencement certificate; iii. Certificate of annual renewal; iv. Tax clearance certificate; and v. SSNIT clearance for payment of employees’ social security contributions.
513. Management did not respond to the audit observation.
Non-deduction of withholding tax - GH¢127,157 514. The contract between the Ministry and Messrs Dupaul Wood Treatment Limited provided for mobilisation payments to be recovered through a percentage deduction from invoices submitted by the company for payment. Since the Ministry charged withholding tax
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 135 on the net invoice amounts, it also deducted withholding taxes from the mobilisation advance payments to ensure that the gross values of all invoices suffered withholding tax as required by Section 84 of the Internal Revenue Service Act, 2000 (Act 592).
515. We noted that the Ministry did not withhold 7.5% taxes of GH¢127,156.62 from a total of GH¢1,695,421.55 paid to Dupaul Wood Treatment Limited in 2004. The Ministry however subjected only the net invoice amounts to withholding tax deductions, after the percentage recoveries had been deducted from the gross invoice values in repayment of the mobilisation amounts. Consequently, no taxes were withheld from three mobilisation payments amounting to GH¢127,156.62.
516. Non-deduction of withholding tax constituted a breach of Section 84 of IRS Act 592 and the Ministry could be liable for the payment of that amount under Section 88 of the Act. Additionally, the Ministry’s failure to withhold the tax deprived government of timely tax revenue to meet its commitment on budgeted programmes.
517. We advised management to recover the amount of GH¢127,156.62 from Dupaul Limited for onward payment to the Internal Revenue Service or report the anomaly to the Commissioner of the Service. Again the Ministry failed to react to our advice.
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MINISTRY OF FOOD AND AGRICULTURE GREATER ACCRA REGIONAL DIRECTORATE Failure to stop the payment of unearned salaries 518. The salaries of seven separated staff of the Directorate were not immediately stopped by management, contrary to Section 297 of the FAR which requires the immediate stoppage of payment of salaries of separated staff. This resulted in the payment of a total unearned salary of GH¢8,731.46 into their individual bank accounts.
519. To prevent the loss of funds, we recommended that the banks involved should be instructed to transfer the amounts into the Consolidated Fund and management should be held liable if the amounts have already been withdrawn.
520. Management accepted our recommendations but explained that the delay was caused by the Controller and Accountant-General’s delay in working on inputs submitted to delete the names of the separated staff.
Payment vouchers without full particulars of claims 521. Thirty-six payment vouchers totalling GH¢224,113.00 were without the requisite attachments such as receipts, invoices and statements of disbursement, to confirm the genuineness of the transactions involved.
522. This situation contravened Section 39(2c) of the Financial Administration Regulations, 2004 (L1.1802) which requires heads of
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 137 departments to control the disbursement of funds and ensure that transactions are properly authenticated to show that amounts are due and payable.
523. Management explained that the payment vouchers were in respect of releases made through the Regional office to the various cost centres within the Region and that the requisite documents are therefore attached to the original payment vouchers at the cost centres.
524. We recommended that the cost centres should acknowledge the receipt of the releases to authenticate the payments, failing which the amount involved should be refunded by the cost centres.
ANIMAL PRODUCTION DIRECTORATE Imprest not accounted for - GH¢3,585 525. Section 288 (1) of FAR requires imprests to be retired at the end of the financial year. We noted, on the contrary, that a total imprest of GH¢3,585.00 granted to the Director and the Accountant in December 2008 was not retired at the end of the year.
526. We urged management to retire the amount without further delay. Failing this the amount involved should be treated as an advance and deducted from the salaries of the officers involved. Management agreed to comply with our recommendation, explaining that it had already initiated efforts to have the amount duly retired.
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Un-acquitted payment vouchers 527. Five payment vouchers with a total value of GH¢1,996.21 were not supported by receipts, invoices and statements of disbursements to authenticate them, contrary to Section 39 (2c) of the Financial Administration Regulations, 2004 (L1.1802).
528. Management asserted that by signing the payment schedules, the payments had been authenticated. We disagreed with management’s position and indicated that failure to attach the requisite documents was a violation of the above quoted regulations.
529. To ensure proper accountability for funds disbursed, we still urge management to support all the payments with the receipts, invoices, etc. failing which the amount involved should be refunded.
Failure to stop the payment of unearned salary 530. The salary of Mr. Nii Naate Mensa, an employee of the Animal Production Directorate who retired on 3 May 2008 was not immediately stopped by management. This resulted in the payment of unearned salary of GH¢2,576.32 into his bank account.
531. Management accepted our recommendation to pursue the recovery of the unearned salary, noting that GH¢1,233.62 had been refunded and the balance would be refunded by the end of February 2009.
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Difference in bank statement and cash book balances not investigated 532. Section 2(g) of the FAR requires heads of departments to manage and reconcile the bank accounts authorised for them by the Controller and Accountant-General.
533. We noted during our validation of entries in the Non-Tax Revenue (NTR) accounts cash book that they were not reconciled with the entries in the bank statements. Discrepancies between the bank statement and the cash book entries were thus not immediately investigated for inclusion in the monthly reconciliation statements.
534. Our re-performance of the reconciliation disclosed a total difference of GH¢572.88 which, we recommended, should be investigated for the appropriate corrective action to be taken.
535. Management accepted our recommendation and informed us that it had formally requested the Bank of Ghana to reverse the amount involved but the bank had not yet acted upon the request. We urged management to intensify its efforts and to verify the corrections as soon as the bank effects them.
Unaccounted for advances granted for the purchase of motorbikes and bicycles
536. Due to management’s inability to ensure that loans given out were duly recovered in accordance with Section 110 of the Financial Administration Regulations, a total amount of GH¢1,950.30 granted
140 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 as loans to five officials of the Animal Production Directorate to purchase motorbikes and bicycles since 2006 remained un-recovered as at the close of November 2008.
537. To prevent the loss of funds, we proposed that management should immediately institute appropriate modalities to assist the schedule officer to recover the total amount involved.
538. Management accepted our recommendation and explained that the Finance Unit of the Ministry of Food and Agriculture was in contact with the CAGD to determine how the recoveries could be effected.
FISHERIES TREASURY Payment for uncertified contracts 539. Section 16(1) of the Financial Administration Act 2003 (Act 654) requires heads of departments to certify the satisfactory execution of contract works before payments are effected. We noted, on the contrary, that GH¢9,114.95 was paid to the Prestige Unit of PWD on 17 November 2008 for up-grading the electrical system of the Treasury building without the certificate of the head of department.
540. It was realized that the job was poorly executed with the building experiencing constant breaks and fluctuations in the supply of electrical power. We were of the view that management’s prior
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 141 certification of work done before payment could have avoided this situation.
541. To prevent electrical items being damaged by the frequent fluctuations in electrical power supply, we recommended that management should endeavour to get the contractor to rectify the errors made. We further advised management to comply with the above quoted regulation.
542. Management noted to comply with our recommendations, explaining that it is in direct contact with the Prestige Unit to make the necessary corrections and would notify this office accordingly.
FISHERIES DIRECTORATE Unaccounted for fuel and lubricants purchased - GH¢76,385 543. Fuel and lubricants worth GH¢76,385.00 purchased for four vehicles belonging to the Directorate, during the period under review, were not recorded in the vehicle log books. This contravened Section 1604 of the Store Regulations, which requires full recording of details of all fuel purchased.
544. To provide an audit trail, the usage of the fuel and lubricants worth GH¢76,385.00 should be recorded in the log books, failing which, the amount involved should be accounted for. Management agreed to comply with our recommendations and informed us further that apart from the vehicles which were on trek during the audit, entries in the other vehicles’ log books had been completed.
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Failure to stop the payment of unearned salaries – GH¢4,828 545. Our audits revealed the payment of unearned salaries of GH¢4,828.48 into the bank accounts of seven officers who were no longer with the Directorate.
546. This anomaly resulted from management’s failure to immediately notify the CAGD to delete the names of the affected staff from the payroll.
547. To prevent the loss of funds, we recommended that the banks involved should be instructed to transfer the amount involved into the Consolidated Fund and the names of the separated staff removed from the payroll.
Failure to keep proper records on receipts and disbursement of funds 548. Accounting records such as cash books, payment vouchers and ledgers pertaining to the receipt and disbursement of funds allocated to the Directorate were not maintained for the confirmation of related transactions from the Food and Agricultural Budgetary Support (FABS) accounts, as required by Section 1(1) of the Financial Administration Regulations.
549. We recommended to management to introduce the requisite accounting records to record the various transactions pertaining to the total releases of GH¢99,400.00 made to the Directorate. This would
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 143 enable us authenticate the subsequent disbursements made from the funds.
550. Management accepted our recommendation and noted that even though the releases were accounted for in the FABS control book, an analysis cash book had been purchased for the entries to commence in 2009.
Unaccounted for used engines 551. Section 183(3) of the FAR requires departmental heads to account for the custody and use of government stores from the time of acquisition until they have been properly used or disposed off.
552. On the contrary, management could not produce for our inspection the two old engines in vehicle numbers GV 230 R and GR 2721 N which were replaced at a total cost of GH¢12,163.55.
553. For proper accountability for the old engines and also to determine whether the engines were actually replaced, we expected management to have recorded their particulars in an unserviceable items ledger and kept the engines until they were appropriately disposed off.
554. In response, management informed us that the old engines had been located and certified by the Agriculture Engineering Service Directorate and would be made available for our verification.
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IGF retained and used without authority – GH¢1,148,237 555. Section 15(1) of FAR requests public officers or revenue collectors who collect or receive public moneys to issue official receipts for them and pay them into the relevant bank account within 24 hours unless directed otherwise by the Minister of Finance.
556. On the contrary, we found that the Directorate did not issue official receipts for fishing vessel licensing fees totalling GH¢1,418,237.34 which were collected during the audit period. We also found that the Directorate was not authorised by the Minister to retain and disburse its Internally Generated Funds.
557. We urged management to obtain General Counterfoil Receipts (GCRs) from the CAGD to collect the fees. Additionally, management should seek retrospective approval from the Ministry to retain its IGF. Failing this, all fees collected must be paid into the Consolidated Fund.
558. Management noted to comply with our recommendations and explained that a revenue cash book would be opened and GCRs issued to all vessel owners.
Failure to prepare monthly bank reconciliation statements 559. The Fisheries Directorate has one revolving fund account, which is the Fisheries Sub-sector Capacity Building Projects Revolving Account. The account takes care of transactions relating to
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FABS, Alternative Livelihood Project, Licensing and Embossment of Canoes.
560. We noted during the audit that no bank reconciliation statements were prepared for the revolving fund account during the period 1 May 2007 to 31 September 2008, in contravention of Section 2(g) of the FAR which requires the preparation of monthly reconciliation statements.
561. For a multiple projects’ account, there was the likelihood of the occurrence of wrong postings between the various accounts. Additionally, errors made within the various accounts would also not be easily determined, thus affecting the periodic balances posted.
562. To ascertain that lodgements and withdrawals were accurately made and to facilitate the detection of errors, we urged management to obtain monthly bank statements and prepare reconciliation statements.
563. Management agreed to comply with our recommendations, explaining further that it had purchased an analysis cash book to facilitate the grouping of the specific project transactions.
Failure to maintain a stock register of value books 564. A stock register of value books was not maintained for the recording of the Directorate’s value books, namely: fishing vessel licences, receipt books, stores receipt vouchers, stores issue vouchers, GCRs and local purchase orders. This was in contravention of Section
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214(1) of the Financial Administration Regulations which requires Heads of departments to ensure the effective and efficient control of stocks of value books.
565. To ensure that value books in the possession of the Directorate are efficiently and effectively controlled, a stock register should be procured and the particulars of all value books recorded to prevent their misuse.
566. Management noted our recommendations and indicated that a stock register had been procured from the Assembly Press and all value books listed in the observation entered therein.
FISHERIES COMMISSION Staff names not on payroll 567. The names of three staff members of the Commission who were posted from the Head of Civil Service to the Fisheries Commission did not appear on the Commission’s payroll, contrary to Section 304(e) of the Financial Administration Regulation which enjoins Heads of departments to ensure that the names of those posted to a department appear on the payment voucher.
568. The omission of the names of the three staff members from the Commission’s salary payment vouchers resulted from management’s failure to adhere to the above stated regulation.
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569. To prevent the payment of unearned salaries, we advised that every effort should be made to ensure that the salary particulars of the three staff members are transferred unto the Commission’s payroll without fail.
570. Management agreed to comply with our recommendation and explained that the three staff members were manually paid until June 2008 when the payment of their salaries at the Commission was mechanised. Management further intimated that the names of all staff of the Fisheries Commission and the Directorate of Fisheries would be placed on one payroll.
Sitting allowance paid without signed attendance sheet – GH¢1,660 571. We observed that contrary to Section 39(2c) of the Financial Administration Regulations, a total of GH¢1,660.00 was paid to members of the Fisheries Commission as sitting allowances for meetings attended during the period 7 October to 31 December 2008 without signed attendance sheets to prove the actual attendance of the members at meetings.
572. To prevent the loss of public funds, we asked that the signed attendance sheets prepared during the meetings should be provided or the total payment refunded by the members.
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573. Management explained that it relied on the self-written names of members as proof of attendance. It however agreed to comply with our recommendation in order to properly authenticate the payments.
ASHIAMAN AQUATIC DEMONSTRATION CENTRE Failure to issue official receipts for releases – GH¢27,450 574. Official receipts were not issued for releases totalling GH¢27,450.00 that were issued by the Directorate to the Centre during the period 1 May 2007 to 30 September 2008, in contravention of Section 15(1) of the Financial Administration Regulations which requires public officers to issue official receipts for all public moneys received.
575. We recommended that official receipts should be issued by the recipients of the amount to authenticate the transactions. Management accepted our recommendation and indicated that it was in the process of acquiring GCR booklets from the Ministry of Agriculture (Headquarters) to be issued for all moneys received.
Failure to keep proper records on receipts and disbursements of funds
576. The Centre did not maintain basic accounting records such as cash books, payment vouchers and ledgers for the purposes of making entries of the disbursement of funds released to the Centre. This was contrary to Section 1(1) of the Financial Administration Regulations.
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577. We urged management to keep the requisite accounting records and ensure that the various transactions carried out are recorded therein without fail. Management responded that a cashbook had already been procured and that all entries into it would be completed as soon as possible.
Failure to maintain a store ledger 578. Contrary to Section 183(3) of the Financial Administration Regulation which requires heads of departments to be accountable for the proper care, custody and use of government stores from the time of acquisition until they have been used, a store ledger was not maintained for the recording of store items purchased during the period under review.
579. To ensure that stores purchased during the period were actually used in the best interest of the Centre, we recommended that a store ledger should immediately be purchased and the particulars of items purchased recorded without further delay.
580. Management accepted our recommendation and indicated that a store ledger had been acquired and all entries would duly be made.
Failure to maintain an inventory register 581. An inventory register was not maintained to record all the assets belonging to the Centre, contrary to Section 2 (n) of the Financial Administration Regulation which requires the maintenance of asset registers.
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582. To ensure that all assets belonging to the Centre and which are located at different sites are effectively safeguarded, we recommended that an assets/ inventory register should be put to immediate use. Management accepted to comply with the recommendations.
WOMEN IN AGRICULTURAL DEVELOPMENT DIRECTORATE
Failure to retrieve official vehicle from a retired officer 583. A Director for Women in Agricultural Development (WIAD), Mrs. Juliana Dennis, who retired in June 2007, took along with her an official vehicle (GT 9099 U) without management approval. The vehicle was however returned during the audit in March 2009.
584. Negligence on the part of the Chief Director in ensuring that proper handing over was made to the in-coming officer resulted in this lapse which allowed a retired officer to have had unauthorised access to an official vehicle for 18 months.
585. This violation of Section 183(3) of the FAR which calls for the proper care, custody and use of government property was made known to management.
586. We recommended that, in future, the Chief Director should insist on the preparation of formal handing over notes and in addition ensure that an out-going officer surrenders all official assets in his/her possession before separation. This will avoid the misuse of government property by unauthorised persons.
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Air generator lying idle 3¼ years after purchase - US$290,500 587. A hygrex super dry air generator which was bought in June 2005 at a cost of US $290,500 had not yet been put to use as at March 2009, 3¼ years after purchase. This was in contravention of Section 0302 of Stores Regulations 1984 which requires value to be obtained for all purchases.
588. The equipment which was purchased to support the management of post production agricultural activities still lies idle as the structure appropriately designed to house it is allegedly under construction.
589. In order to obtain value for money and prevent any deterioration of the equipment, we urged management to endeavour to make the generator functional without further delay.
590. Management agreed with our recommendation and explained that the structure needed to house the equipment had been completed and arrangements were in place to get the equipment installed for use.
Misapplication of funds 591. The WIAD was granted a total imprest of GH¢2,365,345.70 from the Service vote for activities specified in its budget. We noted during the audit that GH¢7,198.25 was misapplied on activities not specified in the budget.
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592. Misapplication of imprests distorts financial reporting and does not afford proper accountability of the moneys misapplied. Additionally, it violates Section 287 (1) of the FAR which requires imprests to be used only for the specific purposes for which they are given.
593. We urged management to justify the misapplication and to ensure, in addition, that funds are applied only to the intended purposes at all times. Management accepted our recommendations and intimated that the misapplication was caused by unforeseen circumstances encountered during the implementation of a project.
Payment of unearned salaries – GH¢2,699 594. The salaries of four officers, who were no longer with the Directorate, were not immediately stopped by management. This resulted in the payment into their individual bank accounts unearned salaries totalling GH¢2,699.47, in contravention of Section 297 of the Financial Administration Regulation which requires the immediate stoppage of the salaries of separated staff.
595. To prevent the loss of funds, we recommended that management should instruct the banks involved to transfer the individual amounts into the Consolidated Fund and management should be held liable if the amounts have already been withdrawn.
596. Management noted our observation but explained that even though several letters were written for the transfer of the amounts into
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 153 the Consolidated Fund, the banks were unwilling to effect the transfers. We recommended that management could, alternatively, liaise with the current employees of the separated staff to deduct the unearned salaries from their present emoluments.
Unaccounted for fuel and lubricants– GH¢20,168 597. Fuel and lubricants worth GH¢20,168.00 purchased for the Directorate’s vehicles during the period under review were not recorded in any of the vehicle logbooks, contrary to Section 1604 of the Stores Regulations which requires the recording of the full particulars of receipt of oil and lubricants.
598. To prevent the loss of funds and ensure proper accountability, log books should immediately be purchased and all fuel and lubricants used by the Directorate’s vehicles recorded accordingly.
599. Management accepted our recommendation but explained that malfunctioning vehicle speedometers and the drivers’ lack of understanding of the columns to be completed by them in the register were the reasons why the purchased fuel and lubricants were not recorded. Management explained further that the drivers had recently been trained in the filling of the log books.
Payment vouchers without official receipts - GH¢3,789 600. Official receipts were not obtained from four payees to confirm the receipt of a total sum of GH¢3,788.95 that was paid for the supply of goods and services during the review period.
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601. This lapse also contravened the provisions of Section 39 (2c) of the Financial Administration Regulations, 2004 (L1.1802) which states that transactions must be properly authenticated to show that amounts are due and payable.
602. To forestall possible loss of public funds, we urged management to ensure that the payment vouchers in question are properly supported by receipts, failing which the un-receipted amount of GH¢3,788.95 should be refunded.
603. Management agreed to the recommendations and explained that it would endeavour to retrieve the receipts and statement of disbursement.
Disbursement of agriculture sub-sector improvement programme funds on imprest account without authorization
604. Contrary to Section 78 of the Financial Administration Regulations which requires all disbursements out of a special fund to be authorised by the administering authority of the special funds, we noted that a total of GH¢4,200.00 was transferred from the Agriculture Sub-Sector Improvement Programme (AgSSIP) funds into the imprest account operated by the Directorate without the authorisation of the Finance Directorate.
605. The Director agreed with our recommendation that the administering authority should authorise all the disbursements. She however explained that it was only when she assumed duty as head of
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AgSSIP that she was informed that it was only the Director of Finance who granted the authorisations, hence the anomaly. 606. We urged management to seek retrospective approval for the disbursements from the appropriate authority and to comply with the above quoted regulation in all future transactions.
Disposal of unserviceable items 607. Physical stock taking of assets held at WIAD’s stores revealed various quantities of unserviceable items that had been kept at the stores from 2005 to date, contrary to the Section 83 (1) of the Public Procurement Act, 2003 (Act 663).
608. Apart from the items occupying storeroom space that could be put to other uses, the salvage value of the items keep reducing. Accordingly, we urged management to convene a Board of Survey to dispose of the unserviceable items without delay.
609. Management accepted our recommendation but explained that the change in procedure for the disposal of unserviceable items was the cause of the delay in disposing of the items. Management, however, indicated that steps were being taken to constitute a Board of Survey to dispose of the unserviceable items.
Failure to maintain particulars of official vehicles 610. The management of WIAD did not keep files for its vehicles, contrary to Section 1512 of the Stores Regulations 1984. To be able to readily ascertain the history of each vehicle, we recommended that
156 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 specific vehicle files should be opened and the particulars of each vehicle filed without delay. Management agreed to comply with our recommendation to open files for the individual vehicles to facilitate easy access to information and to monitor the efficient operation of each vehicle.
HUMAN RESOURCE DEVELOPMENT AND MANAGEMENT DIRECTORATE
Photocopied receipts attached to payment vouchers – GH¢4,495 611. Photocopied receipts were used as attachments to three payment vouchers for payments totalling GH¢4,495.00, contrary to Section 28 (2) of the Financial Administration Regulations. We could therefore not authenticate the payments.
612. We urged management to attach the original documents to the payment vouchers, failing which, management should refund the amount involved to chest. 613. Management responded that it would contact the payees to either provide the duplicates of the receipts or write letters acknowledging the payments to replace the photocopied receipts.
MINISTRY OF FOOD AND AGRICULTURE – GA EAST Un-receipted store items – GH¢18,962 614. Sections 0522 and 0529 of Store Regulations 1984 require among others, that when store items are received, they should be recorded in the appropriate ledger sheet and tally card.
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615. Notwithstanding the regulation, we noted that store items valued at GH¢18,961.65 purchased between 29 November and 12 December 2006 were found not taken on store ledger charge to confirm their receipt and usage. The anomaly was attributed to the absence of a Storekeeper.
616. We were, therefore, unable to confirm that the items were purchased and used in the best interest of the department. To ensure proper accountability for store items, we advised management to procure ledgers and take the items on charge, show their disposal and apply to the Ministry of Food and Agriculture Headquarters for a Storekeeper to be posted to the department to handle the storekeeping duties.
617. Management responded that some of the items were donated to award winners on Farmers Day in December 2006 and that it would procure ledgers and take on charge its furniture which is in the Presbyterian Agricultural store room.
MINISTRY OF FOOD AND AGRICULTURE – TEMA Failure to obtain contract certificates - GH¢28,622 618. Our review of contract payments disclosed that a contract awarded in April, 2008 for GH¢28,622.00 to Markel Company Limited, to rehabilitate MOFA’s District and Veterinary offices was not supported with the contract certificates before the payment was effected. This contravened Section 25 (1) of the Articles of Agreement and Conditions of Contract for Building Works.
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619. Management’s failure to comply with the above quoted agreement accounted for this lapse, which could result in shoddy work, payments for no work done or work done but not in accordance with contract specifications.
620. We recommended and management agreed to obtain contract certificates to support all contracts executed before payments are made to minimise waste in payments for contracts executed.
DISTRICT AGRICULTURAL DEVELOPMENT UNIT GA EAST DISTRICT
Unearned salary – GH¢1,635 621. We noted that due to the failure of the IPPD Unit of the Ministry to delete their names from the payroll, two officers who had separated from the District Agricultural Development Unit (DADU) through death and study leave without pay had been paid total unearned salaries of GH¢1,635.45 between October 2007 and June 2008, in violation of Section 297 (1c&f) of the FAR, 2004 which require the immediate deletion of names of separated staff from the payroll.
622. Management was advised to pursue recovery of the amount and also liaise with the IPPD/MOFA to ensure prompt deletion of the two names from the payroll.
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DISTRICT AGRICULTURAL DEVELOPMENT UNIT – KONONGO Outstanding special maize project advances – GH¢103,066 623. Section 110 of the Financial Administration Regulations, 2004 requires a head of department or the officer to whom the duties of the head of department have been delegated to ensure that advances granted are duly recovered in accordance with the terms of the agreement.
624. We noted during our review that between 2005 and 2007, the Directorate disbursed loans amounting to GH¢110,100.00 under the Special Maize Project Loan Scheme to 1,157 farmers within the Asante Akim North Municipal Assembly. The loans were to be repaid at the end of each farming season.
625. However, at the time of compiling this report, only GH¢7,030.94 or 6.39% out of the loan had been recovered from the beneficiaries leaving an outstanding balance of GH¢103,066.06. We blamed the low recovery rate on the laxity of management in enforcing the recovery of the loans from the farmers.
626. Management agreed with our recommendation to make strenuous efforts to recover the outstanding balance from the farmers.
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DISTRICT AGRICULTURAL DEVELOPMENT UNIT – BEKWAI Low loan recovery rate – GH¢37,166 627. Between 2005 and 2007 a total amount of GH¢59,200.00 worth of farm inputs and material assistance was granted to farmers in the Bekwai District under Maize Production Support Fund.
628. We noted that only GH¢22,034.00 or 37.2% of the amount had been recovered, two to four years after the loans were granted, leaving a difference of GH¢37,166.00 to be repaid. The slow recovery rate was attributed to the lack of awareness of the beneficiaries that the assistance was repayable.
629. We recommended that the balance of GH¢37,166.00 should be recovered from the farmers without further delay.
DISTRICT AGRICULTURAL OFFICE – EFFIDUASE/ASHANTI Unsupported payment vouchers – GH¢3,550 630. Our examination of the payment vouchers of the Agricultural Sector Investment Programme (ASIP) at Effiduase, during the period under review, disclosed that vouchers covering an amount of GH¢3,550.00 paid to Agricultural Extension Agents (AEAs) in respect of income generating activities had not been acquitted with the relevant supporting documents. We blamed the absence of the supporting documents on lack of vigilance on the part of management.
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631. As the situation could result in fraudulent payments and subsequent loss of funds, we recommended that vouchers relating to the amount of GH¢3,550.00 be properly acquitted by the AEAs, failing which the amounts involved should be recovered from them.
Indebtedness of farmers – GH¢5,368 632. Management of the District Directorate granted loans in the form of inputs totalling GH¢6,000.00 to 43 farmers for which refunds were expected to be made after the harvest and sale of their produce at the end of the farming season.
633. Our review however disclosed that even though the season had ended and another season begun, beneficiary farmers had refunded only GH¢632.00 or 11.8%, leaving a balance of GH¢5,368.00.
634. The slow rate of refunds denies other farmers the benefits of the facility. We consequently recommended to management to ensure prompt recoveries in order to sustain the programme. Management responded that it had formed a District Task Force with the aim of collecting the outstanding loans from the farmers.
Supply of Yamaha DT motor cycles on hire purchase – GH¢19,000 635. In line with the policy of equipping the technical staff of the Directorate to enhance the performance of their duties, the government allocated GH¢19,000.00 to 19 technical staff at GH¢1,000.00 each to purchase motor cycles on hire purchase basis.
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The motorcycles were allocated to the staff in May 2006 and monthly deductions from the beneficiaries’ salaries were expected to commence in July 2006.
636. We noted during the audit that, to date, no deductions had been made from the salaries of the beneficiaries, three years after the allocation. We recommended to management to take pragmatic measures to ensure recovery.
637. Management explained that inputs prepared and submitted to CAGD to effect the monthly deductions were yet to be effected.
DISTRICT AGRICULTURAL DIRECTORATE – SAMPA Unrecovered loans - GH¢16,562 638. Between December 2005 and July 2007, the District Directorate granted loans totalling GH¢20,300.00 to groups and individuals to venture into farming, with the view to increasing their output. As at 31 December 2008, only GH¢8,713.00 representing 42.9% of the principal had been recovered leaving an outstanding balance of GH¢16,562.00, which is made up of a principal of GH¢11,587.00 and GH¢4,975.00 interest.
639. The absence of an effective loan recovery policy was the cause of the anomaly. The inability of the Directorate to recover the outstanding balance of GH¢16,562.00 has deprived potential beneficiaries of the facility, which in the long run, could defeat
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 163 government’s policy on agriculture. We recommended to management to recover the outstanding amount of GH¢16,562.00.
DISTRICT AGRICULTURAL DIRECTORATE – OFFINSO Un-acquitted payments – GH¢1,666 640. Four payment vouchers with a face value of GH¢1,665.80 paid to service providers and suppliers during the year under review were devoid of invoices, signed claim sheets, statement of expenditure and receipts to authenticate the payments.
641. The absence of these documents cast doubt on whether the amount was expended in the interest of the department. We advised management to acquit the payment vouchers with the relevant supporting expenditure documentation or the amount should be recovered to chest.
PLANT, PROTECTION AND REGULATION SERVICE – TUMU
Delayed lodgement to bank – GH¢2,788 642. Regulation 15(1) of the FAR 2004 (LI 1802) requires, among other things, that any public officer or revenue collector who collects or receives public and trust moneys should issue receipt for them and pay them into the relevant public bank accounts within 24 hours of receipt, unless in exceptional circumstances to be identified by the Minister of Finance.
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643. Notwithstanding the regulation, we noted that a revenue collector of the Plant Protection and Regulation Service (PPRS) of MOFA collected a total revenue of GH¢2,788.98 but failed to lodge the money into the specified bank account within the 24 hours stipulated in the Regulation.
644. This irregularity occurred due to the lack of monitoring and supervision of the activities of the collectors by management. We advised management to put in place effective control mechanisms of ensuring that collector(s) promptly lodge revenue collected to bank.
REGIONAL AGRICULTURAL DEVELOPMENT UNIT BOLGATANGA
Unearned salaries – GH¢1,777 645. Section 300(c) of the FAR provides that the effective date for the stoppage of the salary of a deceased public officer should be the day following the date of death.
646. We noted, however, that contrary to the requirement, management caused the State to pay a total unearned salary of GH¢1,776.86 to two deceased staff members for periods ranging between eight and nine months. As at the time of writing this report in April 2009, management had no idea as to what happened to the unearned salaries credited to the bank accounts of the separated staff.
647. Management agreed with our recommendation to ensure that their banks and Social Security and National Insurance Trust transfer
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 165 the unearned salary of GH¢1,247.91 and the SSF of GH¢276.40 to government chest.
Payments for work not done – GH¢18,488 648. Messrs Bugu Construction Works was paid GH¢29,352.62 for renovation works carried out on an office block at Zuarungu. However, a project inspection exercise revealed that several jobs allegedly done were either partially done or not tackled at all, leading to an overpayment of GH¢18,488.40.
649. Our audit further revealed that, management was misled by Messrs AESL, the consultant of the project, who submitted a certificate on behalf of the contractor to the effect that the work was completed. Additionally, we noted that those who endorsed the certificate for payment failed to inspect the project.
650. We recommended that the contractor be made to complete the job or in default the total overpayment of GH¢18,488.40 be recovered with interest to chest. Also, the consultant should be blacklisted and all the officers involved in the misinformation leading to the over payments be sanctioned.
AGRICULTURAL DEVELOPMENT UNIT - NSAWAM Unacquitted payment vouchers – GH¢3,715 651. Our examination of payments disclosed that, vouchers worth GH¢3,715.12 were not supported with receipts and other expenditure details. As a result we could not authenticate the transactions.
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652. We urged management to attach receipts and expenditure details to the vouchers, otherwise the Spending officer and the Accountant must be surcharged with the amount.
AGRICULTURAL DEVELOPMENT UNIT - SUHUM Unearned salaries – GH¢1,835 653. Our examination of the mechanised payroll disclosed that a total amount of GH¢1,834.96 was paid into the accounts of three employees of the department who had either vacated post or resigned. We advised management to ensure that the total amount of GH¢1,834.96 is recovered and paid into the Consolidated Fund.
AGRICULTURAL DEVELOPMENT UNIT KROBO ODUMASE
Un-presented payment vouchers – GH¢2,417 654. We noted that recurrent expenses amounting to GH¢2,417.00 were not covered with payment vouchers. We could therefore not ascertain the validity of the amounts paid in the absence of the relevant expenditure documents.
655. We urged management to trace and present the payment vouchers for audit examination or the amount involved should be recovered from the Accountant.
Payment of unearned salaries – GH¢5,169 656. The management of the department failed to delete from the mechanized salary voucher the names of two employees of the
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 167 department, who had either vacated post or retired. As a result, unearned salary totalling GH¢5,168.73 was wrongly paid into their accounts.
657. We advised management to ensure that the total amount of GH¢5,168.73 is recovered and paid into the Consolidated Fund.
AGRICULTURAL DEVELOPMENT UNIT - ASAMANKESE
Hire purchase of motorbikes – GH¢1,825
658. We observed that a total of GH¢1,824.81 was still owed by three staff members who benefited from incentive packages extended to them in the form of motorbikes procured on hire purchase basis, as far back as 2004. It was realized that the 20% of their salary which was expected to be deducted monthly through the CAGD was not being effected, resulting in the office’s inability to recover the total amount involved.
659. We urged management to pursue the matter with the Controller and Accountant-General to ensure full recovery.
AGRICULTURAL DEVELOPMENT UNIT – KADE Default in recovery of incentive package – GH¢1,079 660. The MOFA introduced an incentive package in the form of credit sale of motorbikes to its staff. We observed, however, that a total of GH¢1,079.25 was still owed by three staff members who benefited from incentive package since 2004. We realized that the situation was due to CAGD’s failure to deduct 20% of their salaries
168 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 monthly, resulting in the office’s inability to recover the total amount involved.
661. We urged management to pursue the matter with the Controller and Accountant-General to ensure full recovery.
MINISTRY OF INTERIOR - HEADQUARTERS Non-maintenance of revenue registers 662. Regulation 1 (1) of the Financial Administration Regulation, 2004 requires public officers responsible for the conduct of financial business on behalf of the government to keep proper records of all transactions and to produce the records for inspection when called upon to do so.
663. We noted, however, that the Ministry did not up-date its revenue registers with the names and locations of persons from whom revenue is collectible. In the absence of up-to-date registers, we could not determine the status of rate payers. In addition, the Ministry could not keep track of its revenue generation efforts.
664. We advised management to ensure that the revenue section is properly supervised and the registers put into use to enhance revenue generation. The Chief Accountant promised to update the register immediately and train the revenue staff on the use of the updated revenue registers.
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Releases not accounted for – GH¢30,000 665. Regulation 39(2c) of the FAR requires the Head of the Accounts Section of a department to ensure that transactions are properly authenticated. We noted, on the contrary, that an amount of GH¢30,000.00 released to the Volta Regional Coordinating Council to cater for security personnel in the Anlo Traditional Area was not accounted for with receipts, invoices and expenditure statements.
666. We could therefore not validate the disbursement. Failure to obtain receipts, invoices etc is one of the methods often used deliberately to conceal unauthorised and irregular use of public funds.
667. We therefore urged management to ensure that the Programme officer submitted supporting documents covering the GH¢30,000.00 to authenticate the disbursement or recover the amount from him.
668. Management responded that the Volta Regional Minister and the Accountant at the Regional Coordinating Council had been written to, to account for the amount. As at the time of this report the money has not been accounted for.
Accident vehicle GR 1583 W and abandoned vehicle GR 8811 L 669. An inventory check conducted on the Ministry’s vehicles disclosed that one of its vehicles, GR 1583 W, was involved in an accident on 2 October 2006 at Doryumu on the Akosombo/Accra road while the Secretary to the Deputy Minister was travelling on official duties.
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670. The vehicle was subsequently towed to a private garage at Osu – Accra upon the instruction of the Transport officer, Mr. Dominic Agyeman, and it had since not been attended to. We also noted that there was no Police report to determine the cause of the accident and who was responsible for it.
671. According to the Transport officer the case was first reported to the Doryumu Police and the Police Desk officer at the Ministry, Dr. Dampare, who was also asked to take up the investigation. The Transport officer could, however, not provide documentary evidence to support his assertions.
672. In another incidence, a Toyota Land Cruiser II with registration number GR 8811 L belonging to the Ministry was towed to the same garage upon the instruction of Mr. Dominic Agyeman and has also been left unattended to since 5 August 2007.
673. We therefore urged management to tow both vehicles to the Ministry’s premises, pursue the Police report to determine responsibility for the accident and repair or dispose of the vehicles.
674. Management responded that they were not aware that Police report had not been prepared to cover the accident vehicle. Also, they were not aware that the Toyota Land Cruiser had been sent to the garage. However, the Deputy Director of Administration promised to pursue the Police report and take the necessary action on both vehicles.
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GHANA IMMIGRATION SERVICE-HEADQUARTERS Direct disbursement from IGF revenue - US$10,084 675. Part 11 Section 22 (1) of Financial Administration Regulation 2004 (LI 1802) states that “All public moneys collected shall be paid in gross into the Public Funds Accounts and no disbursements shall be made from the moneys collected except as provided by an enactment.”
676. Our examination of the Service’s IGF account revealed that contrary to the regulation mentioned above, US$10,084.00, which was part of moneys collected for the period April to November 2007 was retained and disbursed on official expenditures including foreign travels.
677. The moneys were used to cover cost of official travel to Berlin by the Chief Director of the Ministry of Interior, the Director of Ghana Immigration Service and other officials, with the promise to reimburse the account when GOG releases were secured from MoFEP.
678. We recommended that management should ensure that the money is reimbursed into the IGF account and contingent arrangements should be made in the future to cater for such commitments without resorting to the IGF. Management promised to pay the money into the IGF account.
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Delay in the remittance of 5% withholding tax – GH¢17,870 679. Section 87(1) of the IRS Act 2000 (Act 592) requires that organisations that deduct 5% withholding tax on contracts or supplies pay same to the IRS within 15 days after the end of the month in which the deduction was made.
680. A review of payment vouchers disclosed that 5% withholding tax deducted from suppliers and contractors for the months of April to September 2007 totalling GH¢17,869.82 was paid to the IRS on 25 March 2008, a time lag of six months.
681. The delay in Government of Ghana (GOG) releases by MoFEP resulted in the Service’s inability to pay the withholding tax promptly since some of the tax proceeds were used to settle payments for supplies and services procured.
682. We observed that delays in remitting the tax has the potential effect of causing losses and denying the IRS the much-needed funds to achieve its revenue targets, as well as expected revenue inflows to the Consolidated Fund.
683. We advised management to halt the practice and ensure that gross collections are remitted to the IRS promptly within 15 days, in compliance with the IRS Act. Management accepted our recommendation and promised to pay all withholding taxes promptly.
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Misappropriation of revenue from sale of Bid Documents - GH¢34,500 and US$2,900 684. Section 15(1) of the FAR states that “Any public officer or revenue collector who collects or receives public or trust moneys shall issue official receipts for them and pay them into the relevant Public Fund Bank Account within 24 hours of receipt except in exceptional circumstances to be identified by the Minister.” Additionally, Regulation 17(b) of the FAR enjoins Heads of department to ensure that all Non-Tax Tevenue is immediately lodged in the designated Consolidated Fund Transit bank accounts.
685. Our review of findings made by the Service’s Internal Audit revealed that proceeds from the sale of Bid Documents from 13 April 2004 to 1 August 2007 totalling GH¢34,500.00 and US $2,900.00 had not been paid to chest, in contravention of Regulation 15(1).
686. We noted that it was the Estate and Procurement sections which conducted the sale of the documents. However, schedule officers at both the Estate and Procurement sections indicated that they were not at post at the time of the sale and were not aware of the misappropriation. We found that there was no handing over note to the effect that schedule officers at those sections had been changed.
687. Considering the long period that had elapsed during which the responsible personnel were unable to account for the moneys, we concluded that the proceeds had either been misappropriated or
174 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 misused. We attributed the irregularity to management’s lack of supervision and non-compliance with Regulation 17(b).
688. We urged management to take stringent actions to recover the moneys to chest and institute measures to identify and sanction the culprits to serve as a deterrent to others. Management accepted to take the necessary steps to recover the moneys to chest.
Un-receipted payment vouchers - GH¢115,096 689. Section 43 of the FAR 2004, stipulates that “A payment shall be made only to the person or persons named on the payment voucher or to their representatives duly authorized in writing to receive the payment.” However, during our review of the accounts, we observed that five suppliers failed to acknowledge receipt of monies totalling GH¢115,095.92 paid to them.
690. The suppliers were either unaware of the regulation or promised to issue receipts but never did and schedule officers also failed to ensure compliance, thereby casting doubts on the authenticity of the payments.
691. Such omissions could be pointers to misappropriation since the moneys involved could be diverted and covered up to make it seem as if the monies had been paid without recipients signing for them. The Accounts section could not indicate the measures they would take to enforce the regulation when their attention was drawn to this infraction.
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692. Management was advised to ensure strict adherence to the financial regulation. In addition, suppliers and contractors must be educated on the regulation since this is a financial regulation requirement, which should not be compromised.
Non-adherence to procurement procedures - GH¢72,591 693. Part III Section 21(2) of the Public Procurement Act 2003, (Act 663) states that “A procurement entity shall submit to its Tender Committee not later than one month to the end of the financial year, the procurement plan for the following year for approval.” In addition, proforma invoices are required to be evaluated by a Procurement Committee in terms of quality, prices and delivery conditions before orders are placed.
694. Our audit of the accounts revealed that this law was not followed strictly. We noted that some supplies of provisions and food items especially at the Academy and Training Schools at Assin Fosu were not put to tender. The total value of such purchases was GH¢72,590.84.
695. In management’s view, since the prices of perishable food items like cereals, roots and tubers, which are seasonal in nature, fluctuate occasionally and cannot be pre-determined the full benefits of the Procurement Act would not be realised if Section 21(2) was followed strictly.
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696. Seeking quotations, tendering, etc, have the benefits of obtaining low prices for quality goods procured while lack of it would lead to poor quality food items at high prices. We therefore advised management to endeavour to comply with the Public Procurement Act 2003 (Act 663).
Un-acquitted payment vouchers – GH¢109,807 and US $501 697. Part II Section 39 (2c) of the FAR 2004 states that a Head of a department shall control the disbursement of funds and ensure that transactions are properly authenticated. However, we observed that payment vouchers covering a total disbursement of GH¢109,806.78 and US$501.07 had not been supported with receipts, invoices and SRVs. Such acts do not promote transparency and could lead to perpetration of fraud.
698. We urged management to have the vouchers properly acquitted or a refund of the amounts involved recovered to chest. Management agreed to take measures to produce the supporting documents for validation.
Supplies and services without VAT invoices - GH¢38,928 699. A review of the accounts revealed that supplies and services totalling GH¢38,927.68 were procured without management obtaining VAT receipts/invoices, contrary to Section 19(1) of the VAT Act, 1998.
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700. The emergency nature of the supplies and services procured resulted in management transacting business without ensuring that the business entities were VAT registered.
701. Non-compliance with the VAT Act encourages business entities that have exceeded the VAT threshold to willfully refuse to register and collect the tax. Management was therefore urged to comply with the VAT Act by ensuring that all their suppliers and service providers are VAT registered, as stipulated by the Act and Regulation 183 (4) of the FAR. Management in its response pledged to do business with only VAT registered entities henceforth.
IMMIGRATION SERVICE – BOLGATANGA Non-payment of rent – GH¢378 702. Three officers of the department failed to pay a total amount of GH¢378.22 as rent for their official residential accommodation as a result of management’s failure to ensure the transfer of their names unto the payroll of the Bolgatanga office from their former stations. We urged management to recover the total amount to chest.
GHANA PRISON SERVICE – HEADQUARTERS Landed properties without title deeds 703. A study of Prison Service Head office asset records disclosed that the Service had acquired a number of properties at various locations in Accra and in other Regions without securing them with title deeds or ownership documents. Out of 44 properties acquired, only six had ownership documents to safeguard them.
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704. We noted that documents covering 30 properties were yet to be processed, while eight properties were yet to be documented. As a result of the absence of ownership documents, six of the properties had become the subject of litigation.
705. We further observed that, although Regulation 2(n) of the FAR requires Heads of departments to compile and maintain assets registers, the Prison Service has no assets register to monitor all the properties owned both in Accra and in the other Regions and Districts.
706. These anomalies were attributable to poor handing over and taking over notes rendered during changes in the administration of the Service and management’s failure to obtain title deeds to cover the landed properties.
707. We recommended that in order to avoid the possibility of losing these properties, management should expedite action to acquire the title deeds and all relevant documents in respect of the landed properties owned. We also urged a general observance of Regulation 1 of the FAR which spells out the financial responsibilities of public officers including the obligation for proper handing over.
708. Additionally, we advised that a fixed assets register should be provided to record all the 44 landed properties belonging to the Service in accordance with the requirements of FAR 2(n).
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Non-payment of rent by Kwegyir Aggrey institution 709. We noted from the Estate records at Prison Service Headquarters that two bungalows belonging to the Ghana Prison Service at Anomabu were given out for rent to staff of Kwegyir Aggrey Technical Institute, but the authorities of the Institute failed to honour their rent payment obligations since October 2000 to date. The details were as follows: Date Type of bungalow Rent per month Amount owes 20/10/00 3 Bedroom Self Contained GH¢15.00 GH¢1,440.00 20/10/00 1 Bedroom Self Contained 6.00 576.00 Total GH¢2,016.00
710. We also noted that there was no Tenancy Agreement signed by the two organisations. Further inquiries revealed that, no money was handed over to the new Regional Commander in charge of Central Region as rent payment.
711. The default in rent payment for that long was due to the improper handing over. As it stands, the Service had been deprived of the amount of GH¢2,016.00, which could have been used to meet other expenditures.
712. To ensure that the weaknesses identified above were fully addressed, the following suggestions were made: a. Management should vigorously pursue the recovery of the rent arrears of GH¢2,016.00 from the defaulting tenants. b. A new tenancy agreement should be prepared to review the rent payable to conform to current existing rates.
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713. Management noted our recommendations to be helpful and stated that necessary follow up actions would be made to recover all the rent in arrears and also promised to implement all the other suggestions made.
Warehouse in deplorable state 714. We observed during our audit that the Service’s main warehouse was old and in a deplorable state. As a result, the roofs of six stores were found leaking, leaving items stored in them at the mercy of the weather. This is contrary to Store Regulation 0101 of 1984, which states that store management includes the provision of proper control, storage, care and preservation of stores and equipment. Store Regulation 0102 (b) also enjoins all who are responsible for government stores to ensure that they are maintained in a condition fit for use.
715. Details of items stored in the building at the time of audit were as follows: i. Food items: sugar, rice, vegetable oil etc; ii. Office uniform; iii. Building materials including cement etc; iv. Vehicle spare parts; v. Stationery; vi. Electrical equipment; vii. Cooking utensils; viii. Car batteries;
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716. We also observed that shelves provided for storage were inadequate. As a result, most of the items were packed on the bare floor.
717. In order to prevent avoidable damage to the stores, we recommended that: a. Management should take appropriate steps to stop the leakages and prevent the warehouse from deteriorating further. b. More shelves should be provided for the storage of the store items to facilitate easy stock- taking and preserve and protect the goods from dampness.
718. Management appreciated our recommendations and indicated that extra budgetary funding would be sought to renovate the whole building. They also promised to provide more shelves for all the store items.
JAMES FORT PRISONS - MALE DIVISION Unearned salary - GH¢984 719. We noted from our payroll audit that as a result of laxity on the part of management, Mr. Charles C. Avorgbedor, a second class officer who deserted his post in February 2008, was paid unearned salary of GH¢984.20, in contravention of Regulation 297 (1) of the FAR, 2004 which states that a head of department must cause the immediate stoppage of the payment of salary to a public servant who has been absent from duty without leave.
182 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
720. The breakdown is as follows: Date Amount February 2008 GH¢121.14 March 2008 121.14 April 2008 133.68 May 2008 492.10 June 2008 116.14 Grand Total GH¢984.20
721. We recommended that management should recover the GH¢984.20 to chest and continually check the payroll records to prevent unearned salaries from being paid. Management agreed to recover the unearned salary to chest.
JAMES FORT PRISONS, FEMALE DIVISION - ACCRA Follow up action on previous audit report
722. Our follow up to ascertain action taken by management on a previous audit recommendation contained in report No ADM/CGAD/APT/32/54 of 30 October 2007, on payment of unearned salary of GH¢464.96 (¢4,649,592.00) to Sergeant Agartha Nkum in 2006 revealed that management had still not taken action to recover the unearned salary to chest.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 183
723. The breakdown is shown below: Month Amount June 2006 ¢1,162,398 October 2006 ¢1,162,398 November 2006 ¢1,162,398 December 2006 ¢1,162,398 Grand Total ¢4,649,592
724. We emphasised again the need for management to ensure that unearned salaries are recovered as early as possible, in compliance with FAR 297. 725. In response, management explained that they had already sent letters to all the bankers of the separated staff to have their unearned salaries paid to chest, but GCB, Derby Avenue was silent on the unearned salary of GH¢464.96 paid to Agartha Nkum. They further stated that strenuous efforts would be made to recover the amount to chest. We urged management to continue with their efforts.
GHANA POLICE SERVICE - NATIONAL HEADQUARTERS
Output tax not covered by VAT invoice - GH¢6,000 726. Contrary to Section 19(1) of the VAT Act, 1998 (Act 546), a total output tax of GH¢6,000.27 collected by three companies, namely: Technical Trade Agency (GH¢2,260.49), Ankofa Engineering Works (GH¢2,448.60) and Latex Foam Rubber Product Limited (GH¢1,291.18) was not supported by VAT invoice. The payment was, instead, supported by the companies’ computer-
184 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 generated invoices un-accompanied by the VAT Commissioner’s letter of approval, as required under Section 19(1) of Act 546.
727. The absence of the VAT invoice or the VAT Commissioner’s letter approving the use of the computer generated invoices could result in tax evasion because those documents did not provide the transaction trail necessary to monitor and recover output taxes collected on behalf of the VAT Service.
728. We urged management to obtain the invoice or recover the amount from the three companies. Management indicated that they had requested the companies to submit the relevant documents and the matter is under correspondence.
No condition of service for civilian employees 729. The employment of civilian employees was not governed by any conditions of service as required by best practice. Decisions bordering on civilian employees’ welfare were therefore subject to the discretion of the Inspector General of Police (IGP) and this resulted in some inconsistencies.
730. The IGP referred the matter to the Legal Division of the Police Service requesting the drafting of conditions of service for the civilian employees but no action had as yet been taken to bring the document into being.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 185
731. We recommended that to ensure equitable treatment of civilian employees, the Legal Division should draft conditions of service for the approval of the Police Council without further delay. Management replied that they were in the process of tasking the Legal Division to produce the draft conditions of service for the civilian employees for the approval of the Police Council.
QUARTERMASTER-GENERAL’S STORE Stores without fire fighting equipment 732. Contrary to Regulation 1305 of the Stores Regulations, 1984, the Quartermaster-General’s store which serves as a central store for the entire Police Service had no fire fighting equipment to assist in combating a fire outbreak. The consequence of any fire outbreak would cost the Service millions of Ghana cedis.
733. Additionally, periodic stores management reviews were not undertaken to ensure that basic facilities that contributed to safeguarding valuable stores were provided.
734. We recommended and management agreed to acquire the necessary fire fighting equipment.
GHANA POLICE SERVICE PROJECT UNIT
Shoddy renovation of Nima Divisional Headquarters – GH¢26,181 735. Renovation of Nima Divisional Headquarters, which was awarded to Messrs Jemful Enterprise Limited, in a contract sum of GH¢26,181.40 was shoddily executed, owing to inadequate
186 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 supervision and monitoring of work progress. Sub-standard work identified included roof leakage, poor wiring, and poor fixing of water closet. Others were broken PVC pipes and defective mortice locks.
736. We requested management to ensure the immediate rectification of the defects or take steps to forfeit and apply the retention money of GH¢2,618.14 to remedy the situation. The issue is being considered.
ACCRA REGIONAL POLICE HEADQUARTERS Expenditure incurred from revenue - GH¢2,680 737. Contrary to Regulations 15(1) and 18 of the Financial Administration Regulation, 2004, (L.I. 1802) revenue totalling GH¢2,680.00 derived from vehicle towing service rendered by the National Motor Traffic and Transport Unit was expended without first paying the gross amount into the Police Service Operational Bank Account.
738. We gathered that the amount was used to undertake outside servicing and minor repairs of towing vehicles which were delayed at the Police Service workshop. We urged management to pay the amount into the Consolidated Fund when the expenditure claims are settled by the Police Headquarters.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 187
ACCRA NORTH DIVISIONAL HEADQUARTERS Un-receipted payment vouchers - GH¢8,700
739. Payment vouchers covering a total payment of GH¢8,699.95 at the Accra North Divisional Headquarters, Tesano, were not receipted by the payees. Obtaining official receipt provides assurance that the amount paid had gone to the intended recipient.
740. We advised management to have all the payments receipted by the payees and this office notified of the relevant evidence for verification. Management accepted our recommendation but had not communicated action taken so far.
Exhibits released without court restitution orders 741. The Police Service Instruction No. 213 requires particulars of court restitution order containing the authority for the release of exhibits to be quoted in the Court Exhibits Register.
742. We noted, on the contrary, that court exhibits involving cash and other assorted items in the possession of some Police stations were released to persons without the supporting court restitution orders. The affected police stations were Nima, Kotobaabi, Airport, and Legon West district, Tesano and Central Police stations in Accra. The rest were Amasaman and Pokuase Police stations in the Ga West District.
743. Management of the Police stations concerned were requested to obtain the court restitution orders and quote them in the Exhibit
188 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
Registers to justify and support the release, else the officers who approved the unsupported release should be held accountable.
Overdue exhibit unclaimed 744. A review of the Lost, Stolen and Recovered Property (LSRP) registers at the Dansoman Division and District offices, Mamprobi and Korle-Bu District offices as well as Chorkor Police station revealed that 69 cases relating to the period 1988 to 2007 involving 189 exhibits which were either found or recovered, remained unclaimed in the registers.
745. Furthermore, most of the investigators handling those cases were either on transfer, retired or on peacekeeping missions. It was also difficult to know the detectives in charge of some of the cases due to the long time lag and the fact that the registers were sometimes signed without the officers indicating their names.
746. The anomalies stemmed from improper handing over of duties to relieving officers and inadequate supervision of the recording and custodial functions.
747. We recommended that supervision should be strengthened and proper handing over procedures observed in accordance with FAR 1(3). We also requested management to obtain authorisation from the Police Headquarters to have the unclaimed exhibits disposed of.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 189
748. Management promised to oversee the proper handing over of duties, strengthen the supervision at the exhibits’ store and arrange to have the unclaimed exhibits disposed of.
Failure to produce exhibits for inspection 749. The absence of a safe at the Railway Police station and the Adenta District Headquarters compelled the District Commanders to keep cash exhibits in table drawers, thereby exposing the assets to the risk of unauthorised access or theft.
750. Since the cash exhibits are held in trust for their rightful owners who are yet to be determined by courts, custodial procedures must include the provision of a safe so that the assets are not stolen to tarnish the image of the Police.
751. We recommended to management to make a requisition to the National Police Headquarters for the provision of a safe to each of the districts to enhance security over cash and other valuables. Management indicated that a request for the provision of safes had already gone but this was yet to be granted.
NIMA POLICE DIVISIONAL HEADQUARTERS AIRPORT POLICE Pump action gun not covered by records 752. The source of a pump action gun with serial number K 956167 found at the exhibit store of the Airport Police station could not be established because its particulars were not recorded in any of the
190 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 station’s books. There is a risk that the gun could be stolen from the exhibit store and smuggled to any of the conflict areas in the country or be used to engage in any violent or illegal act without detection.
753. The officer keeping the exhibits store explained that the pump action gun was among the exhibits he took over from his predecessor in 2006. We advised management to take pre-emptive action to transfer the pump action gun to the Police Headquarters and submit particulars of transfer for verification. Management did not update this office with action they had taken so far.
GHANA POLICE SERVICE – WIAMOASE/ASHANTI Recovered items not verified – GH¢632 754. Our audit of the Ghana Police Service, Wiamoase, revealed that exhibits worth GH¢631.50 being kept at the store could not be produced for our inspection. Listed below are the items: Serial No. & Date Item Quantity 9/05 of 14/10/05 991 Ms casio calculator 9 Casio calculator 27 Lighting pins 93
755. The investigator, Sergeant Yaw Bridwa, who handled the case was on transfer to Kumasi at the time of the audit. We blamed the Station officer for not ensuring proper handing over before allowing Sergeant Bridwa to proceed on transfer.
756. We urged the Station officer to ensure that Sergeant Bridwa, now at the Narcotics Division, is recalled from Kumasi to account for
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 191 the items or the amount of GH¢631.50 being the cost of the items recovered from him.
UPPER EAST REGIONAL POLICE HEADQUARTERS, BOLGATANGA
Failure to account for imprest- GH¢3,048 757. Out of a total amount of GH¢20,481.90 being imprest released for official assignments GH¢17,433.35 was accounted for leaving a difference of GH¢3,048.35.
758. All efforts made to let management account for the amount proved futile. We were of the view that the imprest amounts not accounted for by the officers should be converted to personal advances in the names of the respective officers and recovered from their salaries at source.
NATIONAL DISASTER MANAGEMENT ORGANISATION REGIONAL OFFICE, SUNYANI Unredeemed loans - GH¢7,770 759. Part IV Section 134(5c) of the Financial Administration Regulation 2004 stipulates that the authority responsible for administering specific loans shall secure the due and timely recovery of the loan.
760. Our review of the financial records of the above organisation revealed that an amount of GH¢7,770.00 was used to acquire seed maize, tomatoes and fertilizer for distribution to an unspecified
192 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 number of farmers under the Disaster Volunteer Group (DVG) programme.
761. We noted that no specific period was granted the DVGs to refund the cost of the inputs. There were also no progress reports on the projects financed, for several seasons after the disbursements. The amount was, thus, turning out to be a bad debt.
762. We advised management to pursue immediate recovery of the outstanding loans to ensure that financial loss as defined by Regulation 226 of the FAR does not occur. Furthermore, management should put in place mechanisms for the rectification of existing systems to prevent recurrence of such potential financial losses.
GHANA NATIONAL FIRE SERVICE HEADQUARTERS Single-source procurements - GH¢4,053 763. Section 43 (1) of the Public Procurement Act, 2003 (Act 663) requires a procurement entity to request quotations from at least three different sources.
764. Contrary to this, six procurement actions involving GH¢4,053.00, under the Band Account, were done through single sourcing. This occurred because the procurements were not done through the Procurement Unit of the Service.
765. The Service was not likely to have paid fair and competitive prices for the items and services procured. We therefore recommended
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 193 to management to ensure that all procurements are done by the Procurement Unit in compliance with the requirements of the Procurement Law. Management agreed to implement our recommendation.
Un-receipted payments - GH¢16,700 766. Section 28 of the FAR, 2004 requires receipts to be issued to acknowledge payments. We however observed that payments totalling GH¢16,699.60 were made to various staff members and third parties who neither issued receipts nor signed in acknowledgment.
767. This situation created doubt as to the genuineness of the payments and could have resulted in spurious payments with attendant financial loss to the Service. We advised management to authenticate the transactions by getting the payees to acknowledge receipt of the payments.
Failure to pursue recovery of dishonoured cheques - GH¢11,733 768. We noted that five cheques totalling GH¢11,733.20 paid by third parties to the Service between July 2007 and June 2008 were dishonoured by the banks. However, the Service had since not pursued the payers to recover the amount from them.
769. The schedule officer explained that the difficulty in locating the payers was due to the non-maintenance of a cheque register for reference purposes, thereby negatively affecting the revenue generation efforts of the Service.
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770. We advised management to pursue the recovery of the amount of GH¢11,733.20, and institute appropriate measures to reduce the incidence of dishonoured cheques.
771. Management intimated that the safety officers in the regions had been informed and efforts were being made to get the payers to issue fresh cheques. Also, the Service had been considering accepting only cash or bank drafts as payment from third parties.
Failure to remit withheld taxes to the IRS - GH¢977 772. Section 87(1) of the Internal Revenue Act of 2000 requires a tax withholding agent to remit taxes withheld to the Internal Revenue Service within 15 days after the month in which the payment subject to withholding tax is made by the withholding agent.
773. Contrary to this, we noted that taxes totalling GH¢976.89 withheld by the Service between August 2007 and February 2008 had not been remitted to the IRS. This constituted loss of tax revenue to the State and the suppliers from whom the taxes were deducted would not be able to claim any tax credits.
774. We found that the anomaly was due to inadequate supervision of the schedule officer. We therefore advised management to strengthen its supervision and ensure that all withholding tax deducted is promptly remitted to the IRS.
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GHANA NATIONAL FIRE SERVICE - NSAWAM Misapplication of funds – GH¢1,045 775. Fuel coupons valued at GH¢1,044.50 issued by the Koforidua Regional Fire office for use on the Nsawam office fire tender were converted into cash and used for other recurrent expenditure. Management explained that it was compelled to misapply the coupons because it did not receive any Financial Encumbrance to cater for the day-to-day administrative and other expenses.
776. We indicated that management’s action contravened Section 179 of the FAR (LI 1802) and constituted a breach of financial discipline. Accordingly, we urged management to ask for funds from the Regional office to meet the cost of other recurrent expenses in order to use the fuel coupons for the purposes they were intended.
GHANA NATIONAL FIRE SERVICE - ASAMANKESE Payment of unearned salary – GH¢1,963 777. Our review of payroll disclosed that the accounts of Francis Ankomah, with staff number GOV 471986 who died on 31 August 2006 continued to be credited with salary through his bank at South Akim Rural Bank, Asamankese branch from September 2006 to June 2007 amounting to GH¢1,963.44.
778. We noted that the loss of the amount of GH¢1,963.44 to the government would have been avoided if management had complied with Regulation 297 (1), 298 and 304 of the FAR by acting swiftly to
196 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 delete the name of the deceased staff from the payroll and also notifying the bank early to return the unearned salary to chest.
779. We advised management to recover the amount of GH¢1,963.44 from the death benefit of Francis Ankomah, otherwise the Head of the Asamankese station should be surcharged with the amount in accordance with FAR 304 (2b).
MINISTRY OF LOCAL GOVERNMENT, RURAL DEVELOPMENT AND ENVIRONMENT
GHANA SCHOOL FEEDING PROGRAMME NATIONAL SECRETARIAT
Un-remitted taxes – GH¢117,177 780. Section 87(1) of the Internal Revenue Act, 2000 (Act 592) requires that a withholding tax agent should pay to the Commissioner a tax that has been withheld or that should have been withheld within 15 days after the end of the month in which the payment subject to withholding tax is made by the withholding agent.
781. We noted that, during the period under review, management deducted 5% tax amounting to GH¢117,117.36 from payments made to suppliers. However, management did not remit the amount to the IRS as at November 2008.
782. The Accountant explained that the anomaly arose from lack of funds and delays in receiving releases from the MoFEP. Management further indicated that it would make every effort necessary to remit the
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 197 taxes to the IRS and that in future, cheques for withheld taxes would be issued to the IRS as and when payments are made to suppliers.
783. We urged management to immediately remit the amount of GH¢117,177.36 to the IRS and to strictly adhere to the tax laws in future.
Imprest not accounted for - GH¢9,599 784. By Regulation 288 of the Financial Administration Regulation 2004, imprests are to be retired at the close of the financial year and any imprest not so retired should be adjusted to a personal advance account in the name of the imprest holder.
785. Our review revealed that, contrary to the regulation as of November 2008, Head office’s imprest amounting to GH¢20,183.20 was not retired. Additionally, we did not find any cash book in which the imprest cash transactions were recorded, neither was there a Storekeeper to take charge of purchases made. In the course of the audit, the Accountant presented receipts totalling GH¢10,584.53, leaving a balance of GH¢9,598.67 which was not accounted for.
786. The Accountant indicated that the unaccounted balance of ¢9,598.67 included an amount of GH¢1,800.00 sent to the Regions to enable the Regional Monitoring Officers meet petty cash expenses. The former Executive Chairman also explained that he used his imprest on protocol, press conferences, entertainment of foreign guests, fuel, transportation etc. and presented us with some receipts.
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He expressed surprise at the Accountant’s failure to account for the imprests with receipts which he had submitted to him for the purpose.
787. We recommended that management should investigate the matter and ensure that the amount of GH¢9,598.67 is immediately accounted for.
Failure to provide payment vouchers for audit – GH¢18,094 788. Regulation 262 of the FAR, 2004 enjoins a Head of department to ensure that financial and accounting records are preserved in good order in a manner that facilitates ready access for reference.
789. Despite the rule, management could not provide for audit, payment vouchers covering transactions totalling GH¢18,094.08 to support entries made in the main cash book. Though the Senior Accountant insisted that the vouchers were in the office he could not provide them for audit.
790. In the absence of the payment vouchers to support the cash book entries, we could not confirm that the payments were valid. We attributed the situation to weak management control over vital official documents.
791. We recommended that in the absence of the disbursement records the Senior Accountant should immediately refund the amount of GH¢18,094.08 to chest. Additionally, management should streamline control and security over vital official records.
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792. The National Coordinator informed us that he had instructed the Senior Accountant to furnish the Auditor-General with all the payment vouchers as early as practicable. This could not be done. The Senior Accountant should, therefore, be made to refund the amount of GH¢18,094.08.
Outstanding loans – GH¢6,700 793. According to Regulation 97 of the Financial Administration Regulations, moneys released from the Consolidated Fund, as advances or loans or equity investments, shall be subject to limits approved by Parliament in the annual budget and applied as laid down in the Financial Administration Regulations.
794. Our audit disclosed that between 2006 and 2007, management advanced GH¢20,260.00 to 13 officers, out of which GH¢13,560.00 was recovered; leaving a balance of GH¢6,700.00. The figure included car and staff loans. The details were made known to management.
795. The anomaly was attributed to the Senior Accountant’s failure to adhere to laid down regulations. We recommended that management should recover the GH¢6,700.00 as soon as possible.
Unapproved Christmas bonus – GH¢3,820 796. Our audit revealed that management paid GH¢3,820.00 to staff as Christmas bonus in 2007 as follows:
200 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
Cheque No. & Date Amount 020519 of 20/12/07 GH¢1,620.00 020520 of 20/12/07 2,200.00 GH¢3,820.00
797. We found that the expenditure, which was not budgeted for, was also not included in the Annual Operating Plan for 2007. It was also not approved or authorised by MoFEP or the Ministry of Local Government, Rural Development and Environment.
798. . It was explained that the decision to pay the bonus was taken at a management meeting chaired by the former Executive Chairman. We questioned the rationale behind the bonus payment and recommended to management to recover the amount to chest. Furthermore, we asked that management should always obtain ministerial approval for such expenditure.
Feeding grants not received by beneficiary schools – GH¢183,060 799. The transfer of feeding grants to the districts is done by the Ministry, the Controller and Accountant-General’s Department, the Bank of Ghana, the Director of Finance and the Senior Accountant of the Ghana School Feeding Programme.
800. Our verification disclosed that an amount of GH¢183,060.42 said to have been transferred by the National Secretariat did not get to the intended schools. We also noted that the transfers did not reflect in the bank accounts of the District Assemblies through which the
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 201 funds were allegedly transferred. The management of the Assemblies mentioned also denied having received the funds.
801. We recommended to management to investigate the matter and to hold accountable those who made the alleged transfers. The former Executive Chairman in his response commended the Audit Service for a good work done and promised to assist in the investigations.
BIRTHS AND DEATHS REGISTRY – HEAD OFFICE Payment of unearned salaries - GH¢2,042 802. FAR 297 enjoins Heads of departments to cause the stoppage of payment of salaries to public servants who have resigned or retired. On the contrary, our review of the payroll records of the Registry disclosed that a former staff, Mr. F.F Attah, retired from the Registry in May 2005 but his name continued to appear on the payroll till December 2007, when deletion was effected.
803. As a result, unearned salaries totalling GH¢2,042.02 were credited to his bank account. Management attributed this lapse to delays on the part of the CAGD to take action on inputs submitted in respect of the separated staff.
804. We advised management to recover the unearned salaries from the ex-employee and pay the amount to chest. We also urged management to monitor closely the payroll to forestall a recurrence of the irregularity. Management accepted our recommendation and assured us that the Registry was taking steps to ensure that the
202 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 unearned salaries of GH¢2,042.02 were recovered from the separated staff.
Bank lodgements not supported with Treasury Counterfoil Receipts 805. We noted that the Registry did not obtain Treasury Counterfoil Receipts (TCRs) to cover all the revenue lodged at the Bank of Ghana for the period October 2006 to September 2007, contrary to FAR 15(6).
806. We advised management to pursue the matter and ensure that the necessary official receipts were obtained to confirm the lodgements. Management accepted our recommendation but stated that the irregularity resulted from the absence of an official from the CAGD at the Treasury to issue the TCRs to cover the lodgements made during the period under consideration.
Vehicles purchased still in the name of vendors 807. Contrary to Section 6 of Road Traffic Regulation 1974, six of the Registry’s vehicles, purchased between 1999 and 2007, were still in the names of the vendors. Included in the list were three vehicles which were alleged to have been received from the Ministry of Local Government and the office of the President.
808. The Administrator of the Registry informed us that it was the vendor/companies from whom the purchases were made that registered the vehicles. We informed management that in the absence
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 203 of documentation of rightful ownership, these vehicles could easily lose their ownership identity if effective security arrangements were not put in place to monitor their movements.
809. We therefore recommended that management should take steps to make the necessary transfer into the Registry’s name as early as possible to avoid any loss. Management accepted our recommendation.
BIRTHS AND DEATHS REGISTRY – TEMA Non-issuance of official receipts for collections – GH¢16,718 810. Between November 2007 and October 2008, total revenue received from 8,359 late registration applicants amounting to GH¢16,718.00 was not supported with official receipts, in contravention of FAR 28(1), which requires collectors to issue official receipts to payees in acknowledgement of amounts paid to them.
811. The explanation by management that this was due to a directive from their Headquarters to pay all collections to their Regional office in Accra by cash was unacceptable. We also drew attention that the physical cash payment arrangement could result in suppression or loss of revenue through attacks by armed robbers or outright misappropriation by the revenue collectors.
812. We requested management to issue official receipts for all revenue collected to prevent misappropriation of cash. We also requested management to regularise the GH¢16,718.00 that was not
204 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 covered with official receipts. Management did not respond to our recommendations.
BIRTHS AND DEATHS REGISTRY – KOFORIDUA Unearned salary – GH¢2,207 813. A review of the department’s payroll disclosed that Mr. Abdul Elijah Karim who retired in March 2007 collected five months unearned salary of GH¢2,206.66 during the period April to August 2007.
814. The loss of GH¢2,206.66 to the government could have been avoided if management had complied with FAR 297 (1) and 298 (3a- d) by acting swiftly to delete the name from the payroll and also notifying the bank early to pay the unearned salary to chest.
815. We asked management to recover the amount from the former staff’s pension benefits but there was no response from management.
DEPARTMENT OF PARKS AND GARDENS - ACCRA Revenue not accounted for – GH¢6,710 816. FAR 22 (1) states that “All public moneys collected shall be paid in gross into the Public Funds Accounts and no disbursement shall be made from the moneys collected except as provided by an enactment.”
817. Our examination of revenue cash books revealed that, contrary to this regulation, Mr. Charles Bortey a revenue collector failed to pay
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 205 in full the revenue collected for the period under review. Out of a total revenue of GH¢37,303.90 collected only GH¢30,580.00 was paid to chest leaving a balance of GH¢6,709.90 to be paid. We identified the lack of monitoring, regular checking of revenue collections and banking by management as contributing to this irregularity.
818. We recommended that the total of GH¢6,790.90 be recovered from the officer concerned. We also urged management to introduce strong internal controls to ensure compliance with the regulation. Management accepted our recommendation and explained that they had informed the CAG to conduct further investigation.
MINISTRY OF MANPOWER, YOUTH AND EMPLOYMENT
HEADQUARTERS Engagement in business with non-registered companies 819. Section 22(1) of the Public Procurement Act provides that a tenderer in public procurement shall, among others, have the technical qualifications and competence, the financial resources and the legal capacity in order to enter a contract. Furthermore, the tenderer is required to fulfill his tax obligations and social security contributions.
820. We noted that during the 2006/2007 fiscal years, the Ministry awarded procurement contracts worth GH¢14,924,885.15 to 28 companies. In order to satisfy ourselves that the suppliers possessed the requisite qualifications and capacities as outlined in the Act, we requested the Ministry and the Registrar General’s Department to
206 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 provide us with the companies’ profile for examination. As at the time of this report, information on only two of the companies could be provided. We were therefore unable to confirm that the Ministry transacted business with the right companies.
821. We requested management to ensure that it engages in business dealings with only companies which have the legal mandate to do business with government organisations.
LABOUR DEPARTMENT - HOHOE Outstanding workmen’s compensation claims – GH¢100,955 822. Contrary to Section 6(8) of Workmen’s Compensation Law 1987 (PNDC Law 187), the claims of 34 injured workers from various MDA’s in the Hohoe district had since 1994 not been settled. An interim audit revealed that a total amount of GH¢100,954.66 would be needed to compensate these victims.
823. We urged management of the Labour Department to do everything possible to compensate the victims as required by law.
DEPARTMENT OF SOCIAL WELFARE – ODUMASE KROBO Unearned salary – GH¢8,510 824. We noted that Mr. Emmanuel Otto-Boison resigned on 30 November 2006 but his name was not deleted from the payroll until November 2008, at the instance of our audit. At the time, unearned salary amounting to GH¢8,519.98 had wrongly been paid into his bank account. We asked management to ensure that the total unearned
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 207 amount of GH¢8,519.98 is recovered from Mr. Otto-Boison and paid to government chest.
MINISTRY OF WOMEN AND CHILDREN’S AFFAIRS Un-presented payment vouchers – GH¢34,343 825. Section 33(1) of the Audit Service Act states that any person who fails to produce for inspection by the Auditor-General any book, record, returns or other document relating to or relevant to any account when so requested by the Auditor-General commits an offense.
826. However, our audit revealed that 14 payment vouchers with a total face value of GH¢34,343.15 could not be presented for audit examination. As a result, we could not ascertain the authenticity of the payment of GH¢34,243.15.
827. The schedule officer explained that the vouchers were in his custody but he could not trace them when asked to do so. We advised that the 14 payment vouchers should be presented for audit in conformity with the above mentioned regulation.
Failure to account for sewing machines 828. According to Section 0105 of Stores Regulations of 1984, a head of department shall be accountable for the proper care, custody and use of public supplies and equipment from the time of acquisition until they have been used or otherwise disposed of.
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829. Contrary to the regulation, we observed that 14 sewing machines valued at GH¢560.00 which were being kept in stores were missing from the Ministry’s stores. During stock taking, we realized that the store in which the machines were allegedly kept served both as a storeroom and at the same time as an office, with the Storekeeper and the staff of the office sharing the keys.
830. In order to safeguard government property, we recommended that an appropriate storage facility should be provided. In the meantime management should be surcharged with the cost of the 14 machines.
NATIONAL WOMEN TRAINING CENTRE – MADINA, ACCRA Failure to recover staff advances– GH¢1,892 831. Advances totalling GH¢1,892.00 given to three officers and the Centre’s piggery farm remained outstanding as at the time of our audit. The details of the loan default are shown below: Name Location Amount (GH¢) Director Head office 700.00 Cecilia Apromti Head office 430.00 Iddrisu Gariba NWTC `300.00 Piggery Account NWTC 460 Total 1,890.00
832. Failure by management to comply with Regulation 99(1) of the FAR was responsible for the lapse. In order not to over burden the
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 209 smooth running of the school, we recommended that the Regulation should be complied with and the advances recovered.
Payment of wages without time sheets – GH¢5,605 833. Section 50 of the Financial and Accounting Instruction for Senior High Schools, Training Colleges and Vocational Schools states that “.. payment vouchers for wages due to daily rated employees shall be supported by time sheets which shall be marked daily and signed by an officer under whose supervision the employees work.”
834. Our examination of payment vouchers revealed that an amount of GH¢5,605.00 was paid to eight casual workers of the school without any supporting time sheets as required by the Accounting Instruction. We recommended that management should maintain time sheets for the casual works to avoid payment of wages to absentee workers. Management accepted our recommendation
Purchases not routed through stores – GH¢5,419 835. Section 35 of the Financial Administration Act 2003 (Act 654) requires that store items bought should be properly accounted for in store ledgers and issued out for use when required.
836. However, our audit disclosed that purchases of store items worth GH¢5,419.15 were not routed through stores before usage. Management explained that the anomaly was caused by the retirement of the Storekeeper. To avoid the risk of store items being diverted or
210 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 stolen, we recommended that management should request for the replacement of the Storekeeper.
MINISTRY OF WOMEN AND CHILDREN’S AFFAIRS – KUMASI Poor management of micro loan facility – GH¢306,900 837. Part III Section 79 of the FAR, 2004 provides that a head of department responsible for administering a special fund shall keep accounts of all transactions in accordance with procedures laid down in departmental accounting instructions.
838. Our audit of the Ministry’s account disclosed that between 2006 and 2008, a total amount of GH¢306,900.00 was given out as loans to 45 women groups in the Ashanti Region with the aim of empowering them in capacity building and also to improve upon their businesses.
839. We found that FAR 79 was not complied with as no record was maintained on the recovery profile of the beneficiaries, neither was a record of the disbursing banks kept. Furthermore, contracts signed with the beneficiaries for the recovery of the loans were not made available.
840. Management could not provide appropriate details and documents when requested. We were therefore unable to determine fully the loan defaulters and the extent of recoveries made.
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841. We recommended that the Regional Secretariat should comply with Section 79 of the FAR and liaise with the Sector Ministry to provide the recovery profiles of the beneficiaries from 2006 to date to facilitate the determination of the loans’ status.
MINISTRY OF LANDS, FORESTRY AND MINES
LANDS COMMISSION SECRETARIAT HEAD OFFICE Unearned salaries – GH¢5,913 842. FAR 297 of 2004, among other things, enjoins a Head of department to cause the immediate stoppage of payment of salaries to a public servant when the public servant has resigned, retired, died or vacated his post.
843. Our review of the payroll records of the Commission, for the period under consideration, revealed that the names of six separated staff were not promptly deleted from the payroll. This resulted in the payment of unearned salaries totalling GH¢5,913.00 into their bank accounts.
844. Management’s failure to take prompt action on the deletion of the names from the payroll was responsible for the irregularity. We recommended that steps should be taken to pursue the recovery of the amount from the affected officers and paid to government chest. Management promised to contact the banks of the former staff for the recovery of the amount.
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Rent defaulters - GH¢3,123 845. The Commission purchased blocks of flats in 1997 and 2000 from SSNIT at Adenta and Sakumono respectively as official accommodation for staff. Beneficiaries of the facility were paying a token amount of GH¢1.80 and GH¢3.50 per month as rent for the Adenta and Sakumono flats respectively. We drew attention that the rent being paid contravened existing government policy which requires officers occupying government flats/bungalows to pay prescribed percentages of their basic salaries as rent.
846. We also observed that the token rent was not being deducted at source from the occupants’ monthly salaries. They were rather made to pay physical cash into the Commission’s Operation Account, instead of the Consolidated Fund. Furthermore, we also noted that as of April 2008, 12 staff members had defaulted in the payment of rent totalling GH¢2,033.00 for periods ranging from 2 to 148 months.
847. Additionally, four staff members, who ceased to be in the employment of the Commission between March 1995 and January 2007, were still occupying the Commission’s flats without paying any rent, resulting in an accumulated rent of GH¢1,090.00. In our opinion, the continuous occupation of the flats/bungalows by the former employees is illegal and it deprives other staff from benefiting from the facility.
848. We advised management to pursue full recovery of the rent arrears from the defaulting occupants and ensure that rent deductions
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 213 are effected regularly from their monthly salaries at source by submitting the relevant input forms to the Controller and Accountant- General’s Department. We also urged management to take steps to repossess the Commission’s property from the ex-employees. Management accepted our recommendations.
Vehicles still in the names of donors/vendors 849. Road Traffic Regulation 174(6) requires that any registered vehicle bought or which has changed hands should be transferred to the new owner with all necessary documents.
850. Our audit revealed that the ownership of seven vehicles of the Commission still stood in the name of either the donors or the vendors. This situation could result in the Commission losing ownership of the said vehicles when there is litigation over ownership. We recommended and management accepted to regularise the anomaly.
GEOLOGICAL SURVEY DEPARTMENT Lapses in accounting for Mineral Development Fund – GH¢316,699
851. The Accountant at the Survey Department did not maintain proper financial records to account for a total amount of GH¢489,847.66 received from the Minerals Development Fund (MDF). The Accountant only maintained a listing of his cash transactions on his office computer but the figures could not be used
214 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 to reconcile the monthly bank statement entries obtained from the Bank of Ghana.
852. We further observed that the computer entries could not be used to generate any meaningful monthly and annual expenditure figures for the preparation of annual statements of revenue and expenditure as required by Regulation 190 (b) of the 2004 Financial Administration Regulations.
853. Additionally, we observed lapses in accounting for a total payment of GH¢316,699.19 made from the MDF bank account as listed below: ¾ non-availability of payment vouchers and supporting receipts to account for 52 cheque payments amounting to GH¢232,779.26; ¾ absence of supporting receipts to account for 10 cheque payments amounting to GH¢31,091.99; ¾ non-availability of acknowledgement or signature sheets as proof of collection of field trip allowances amounting to GH¢52,827.94 by the intended recipients; and ¾ field trip allowance payments which did not show the names of towns visited and the time/period spent on each visit.
854. We could therefore not confirm whether the amounts were spent on the purposes for which the MoFEP released the MDF allocations to the Department.
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855. We urged management to provide the relevant documentary evidence of the utilisation of the total amount of GH¢316,699.19 or be held accountable. Secondly, we advised the Accountant to maintain a cash book and prepare monthly bank reconciliation statements to cover all cash disbursements made in the future. Lastly, we asked management to ensure that all expenditures on field trips are supported with proper records showing the estimated costs which form the basis of the release of funds and the full details of actual expenditure incurred.
Advance payment to contractor not refunded - US$10,000 856. In September 2005, the Department awarded a GH¢34,875.00 contract to Messrs. E M Geotech Limited to carry out geotechnical investigations into three CAN 2008 stadium sites at Sekondi, Cape Coast and Tamale. The Department received the total contract sum from the Ministry of Education, Youth & Sports, and paid the whole amount to the contractor during the first quarter of 2006.
857. We noted that earlier on in October 2005, management had approved the withdrawal of US$10,000 from the Department’s US dollar account to fund preparatory works on the project when the Department had not received the contract sum from the Ministry. Even though Mr. P. Y. Amoako, the then Director of the Department, stated in his approval note that the amount of US$10,000 was to be refunded by the contractor on receipt of his contract payment from the Ministry of Education, he did not ensure the recovery of the US$10,000 from the payments made to Geotech Limited.
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858. We advised management to hold Geotech Limited and Mr. P. Y. Amoako jointly and severally liable for the refund of the US$10,000 and to also exercise due care in the management of the Department’s finances.
Withdrawals from US dollar account not accounted for – US$1,000 859. An amount of US $2,000 was withdrawn from the Department’s US dollar account to pay for expenses in connection with a two-day workshop at the Shai Hills Hotel in June 2006. Mr. Samuel Asazoa, the Accountant at the time of the payment produced evidence to account for $1,000 leaving the balance unaccounted for.
860. Mr. Asazoa promised to check through his accounting records to retrieve the relevant receipts in support of the outstanding US $1,000. At the time of compiling our report however, no such receipts were submitted for our review. We observed that the absence of regular monitoring of the financial operations of the Department partly accounted for the lapse.
861. We therefore recommended the engagement of an Internal Auditor to assist management to carry out continuous review of the operations of the Finance Unit. We also recommended the recovery of the amount of $1,000 from the Accountant for payment into the US dollar account.
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Assets register not updated 862. Regulation 183(3) of the FAR makes a Head of Department accountable for the proper care, custody and use of public supplies and equipment from the time of acquisition until they have been used up or otherwise disposed off.
863. To the contrary, the Department did not update its assets register to include fixed assets newly acquired between January 2006 and December 2007 at a total cost of GH¢40,239.78. Apart from a 700-litre polytank container costing GH¢852 which was said to be in the possession of Mr. Samuel Asazoa, a former Accountant of the Department, all the assets were physically verified by the Audit Team as having been received and in use at the Department.
864. We were of the opinion that the exclusion of the GH¢40,239.78 worth of assets from the register resulted from the lack of management supervision over the activities of the Estate Officer, which could lead to possible losses through theft or unauthorised replacements.
865. We advised management to recover the cost of the polytank container from Mr. Samuel Asazoa and to record the particulars of all assets in the register with regular updates of fresh acquisitions.
Unregistered plot of land 866. The Department acquired 31 plots of land from the Nkusukum Traditional Council in the Central Region to construct an office
218 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 complex but did not register its title to the property. In an audit report No. CGAD/MTS.4/Vol.III/131 of 30 December 2003, we advised management to obtain an indenture and register the land to avoid encroachment or litigation over its ownership. Management replied that it had tasked Mr. Samuel Asazoa, the then Accountant at the Department, to register the land at the Cape Coast Land Title Registry by the end of December 2004. As at the time of our audit in 2008, the land had still not been registered.
867. We advised management to take immediate steps to register the land to secure the Department’s ownership over the property.
Supply of XRF machine without vital components 868. In 2002, the Department paid an amount of GH¢189,257.06 to Messrs Biscayne Company Limited to supply and install an X-ray fluorescence spectrometer (XRF), a machine which is used in carrying out tests on rock and soil samples.
869. The Department uses the machine for its operations and also carries out such tests for the general public for fees. The machine was delivered and installed in September 2002 without the under-listed accessories which cost GH¢24,856.50. i. Automatic gas fusion system ii. Mixing platform (2 burners) iii. Platinum crucible and mould iv. Pincers and v. Lithium tetra borate
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870. Staff of the Geochemistry laboratory informed us that without the outstanding parts, the automatic gas fusion system of the machine could not produce fused beads, a major component for analysing major rock and soil elements, thereby depriving the Department of a major source of internally generated revenue.
871. In spite of several assurances from the Company that it would supply the parts, none of the outstanding items had been delivered as at the time of compiling our report. We blamed the non-supply of the accessories on management’s failure to ensure full delivery of the machine and its accessories before effecting full payment of the contract sum to Messrs. Biscayne Company Limited.
872. We advised management to take legal steps to compel Messrs Biscayne Limited to supply the outstanding accessories. We further advised management to communicate Biscayne’s failure to supply the accessories to the Public Procurement Authority for the latter to blacklist the Company from participating in government public procurements as stipulated under Section 3 (r) of the Public Procurement Act.
SURVEY DEPARTMENT HEADQUARTERS - ACCRA Lodgements not credited by Bank of Ghana 873. Bank of Ghana’s regulations on lodgements require Accountants and Cashiers to examine and advise the bank within 15 days of dispatch of their bank statements errors that are detected. On
220 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 the contrary, the Department did not notify differences in its lodgements to the bank as required.
874. As a result, cash totalling GH¢624.20 was not credited to the Department’s account held by the Bank of Ghana. Poor supervisory control and non-preparation of monthly bank reconciliation statements accounted for the understatement of the GH¢624.20 due to the Department.
875. We recommended that management should take immediate steps to inform the Bank of Ghana to have the amount of GH¢624.20 credited to their accounts. Management concurred with our recommendation and assured of its implementation.
Purchased vehicles still in the name of vendors 876. According to Section 6 of Road Traffic Regulations 1974, any registered vehicle bought or which has changed hands should be transferred to the new owner with all the necessary documents.
877. Our review of the Department’s vehicle files revealed non- compliance with this requirement. Out of 14 vehicles purchased between 2003 and 2006, three vehicles were still in the names of the vendors. The vehicles are provided below: Vehicle No. Year Make Ownership GT 2653 U 2003 Nissan Pick-Up (4 x 4) Auto Parts Ltd. GT 5584 X 2006 Toyota Hilux (Pick-Up) Toyota GH Ltd. GT 1575 X 2006 Toyota Avensis Saloon Toyota GH Ltd.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 221
878. All the above vehicles have private registration numbers which could cause the Department to loose their ownership identity if there is no proper documentation on them.
879. We further noted that three other vehicles which were alleged to have been received or allocated from other Ministries were also in the names of their mother Ministries.
880. Their details are also listed below: Vehicle No Qty. Year Make Ownership GV 1549 U 1 2003 Toyota Land Cruiser MLGRD GV 1571 U 1 2003 Ford Ranger MLGRD GV 2245 D 1 1996 Mitsubishi Pajero EPA
881. We again noted that about 80% of the Department’s vehicles had not been given any unique identification marks to confirm ownership, contrary to Chapter 16 Section 1602 of Store Regulation 1984, which states that except where the Director of Supply has approved an exception, all vehicles shall bear visible printed marks “Government of Ghana” and the name of the Ministry or Department.
882. The above lapses could be attributed to management’s failure to ensure compliance with laid down regulations. We therefore recommended that management should take immediate steps to effect the necessary transfers into the Department’s name to prevent loss of government property. Secondly, management should ensure that all the Department’s vehicles are marked with its identification marks.
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Management did not respond to the observations and the recommendations.
Lack of adequate control over assets 883. In accordance with Store Regulation 0105 of 1984 “A Head of Department is generally responsible for the proper care, custody and use of equipment held by his staff and is particularly responsible for keeping accurate records of equipment held, its location and the officer in immediate charge of it at anytime to prevent un-authorised use”.
884. However, our review of the Department’s asset records revealed that assets purchased from 2006 to date had not been recorded in any fixed assets register to track their movement. In the absence of a register, the loss of any assets would not be noticed and traced promptly.
885. We further observed that, though the Department had compiled an inventory list of assets, new acquisitions were not included in the inventory list. Furthermore, a master assets register which should have controlled all fixed assets for both the Regional and District Offices was also not being kept at Head office.
886. In order to strengthen control over the assets, we recommended that a fixed assets register should be introduced to record all old and new assets acquired for the Head office, Regional and District offices.
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887. Finally, management should compile yearly reports on all acquired assets to show accurate status of inventory in all the Regions, Districts and the Headquarters.
Slow moving map sales 888. Examination of store accounts at the Survey Department disclosed that Ghana maps printed for sale since 1962 were still in stock. Upon enquiries the Storekeeper explained that the maps had remained in stock as a result of over printing. We also noted that the storage of the maps was poorly done, thereby rendering physical stock count impossible.
889. The poor maintenance of the store was due to failure on the part of management to exercise supervisory control over the Storekeeper. Management’s failure to budget or determine the quantities needed before printing the maps also contributed to the large stock of maps being held. We recommended that management should ensure that the maps are sold to avoid deterioration. Additionally management should ensure that only the required stocks are printed for sale in future.
Lack of effective control over obsolete and unserviceable items 890. Our review of stores management disclosed that 131 assorted chemicals and 105 technical items purchased since the past 38 years for printing maps were still maintained in the stores, contrary to Section 1101 of Stores Regulation 1984 which states that “It is the responsibility of all supervisory officers and staff directly in charge of
224 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 stores and equipment to determine what surplus, obsolescent and unserviceable stores are lying in their store-houses and compounds. It is their further responsibility to take immediate action to dispose of such categories of stores and, when necessary to report the circumstances to the appropriate authority for disposal action.”
891. We indicated that the non-compliance with the above stated regulation could result in financial loss to the State. We therefore recommended that a Board of Survey should be instituted for disposal arrangements to be made on the chemicals.
Payroll anomalies – GH¢13,495 892. Our review of the payroll records of the Survey Department’s Head office disclosed that the names of 12 separated staff were retained on their payroll. This resulted in the payment of unearned salaries totalling GH¢13,494.52 into their various bank accounts, contrary to FAR 2004 (LI 1802) Section 297 which mandates Heads of department to cause the immediate stoppage of payment of salaries to public servants who have retired, died or vacated post.
893. We attributed the lapse to management’s failure to notify the Controller and Accountant-General for the prompt deletion of the names of the separated staff from the payroll. Consequently, we urged management to advise the bankers of the separated staff to refund the amount to government chest. Additionally, we asked that management should expedite action to have all their names deleted from the payroll. Management in its response explained that it had already
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 225 written to the individual banks to stop crediting the accounts of the separated staff and also to the Controller and Accountant-General for the deletion to be made.
SURVEY DEPARTMENT – HO Substitution of cheques with money– GH¢5,844 894. Section 22(1) of the FAR states that “All public moneys collected shall be paid in gross into the public accounts and no disbursement shall be made from the moneys collected except as provided by an enactment.
895. We however, noted, that the Survey Department substituted eight government cheques with a total face value of GH¢5,843.36 meant for administrative expenses with the Non-Tax Revenue collected by the department at various times in 2008, which by law should have been promptly paid in gross to chest.
896. In the circumstances the cheques which were later paid into the revenue account to cover the illegal disbursements attracted clearing charges which were borne from the department’s revenue account, resulting in a loss of GH¢21.55 from Non-Tax Revenue.
897. The practice of substituting cheques with money constituted a breach of financial discipline as enshrined in the FAR and could lead to fraud. We therefore recommended an immediate halt to the practice and advised that the Finance Officer should ensure that the department opens a bank account, approved by the Controller and
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Accountant-General for all Administration and Service expenditure cheques. Management accepted our recommendation for compliance.
ADMINISTRATOR OF STOOL LANDS – EJISU/ASHANTI Embezzlement of revenue – GH¢884 898. Part II Section 15 of the Financial Administration Regulations 2004 (LI 1802) requires that any public officer or revenue collector who collects or receives public and trust moneys shall issue official receipts for them and pay them into the relevant Public Fund Bank Account except in exceptional circumstances to be identified by the Minister of Finance.
899. However, we observed during our audit that Mr. Charles Owusu, a revenue collector collected revenue totalling GH¢6,472.66 between the period June 2005 and March 2008 but accounted for GH¢5,588.40 and embezzled the difference of GH¢884.26.
900. This situation was due to the failure of the Municipal Finance Officer to exercise effective supervisory control over the revenue collectors to ensure full and prompt payment of all revenue collected.
901. We recommended that the Municipal Finance Officer should ensure the recovery of the amount of GH¢884.26 from Mr. Owusu and institute effective controls over revenue collectors.
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STOOL LANDS DEPARTMENT – MANKRANSO Unaccounted for revenue – GH¢3,042 902. Our audit of the Stool Lands Department account at Mankranso, revealed that nine commission collectors failed to account for a total amount of GH¢3,041.50 being stool lands revenue collected between 2006 and 2008. We attributed the failure of the collectors to make prompt payments to poor management supervision.
903. To ensure efficient cash management, we recommended to management to ensure regular checks of the revenue collectors. We also urged management to take appropriate action to recover the total amount of GH¢3,041.50 misappropriated by the collectors.
Suppression of value books 904. We also observed that eight stool lands receipt books issued to Messrs. Andrews Fordjour, Emmanuel Arhin and Oteng Samuel between August 2004 and October 2006, were not presented for audit and accounted for, but were still in the possession of the collectors.
905. The suppression of the value books was due to the failure of management to put control measures in place including the retrieval of completed receipt books before issuing fresh ones. We urged management to institute stringent measures to retrieve the books from the collectors.
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MINISTRY OF CHIEFTAINCY AND CULTURE
Payment of unearned salaries – GH¢10,632 906. Mr. Patrick Kwadu-Amponsem was appointed as a Special Assistant for the Ministry with effect from 1 August 2007 as per the Chief of Staff and the Minister for Presidential Affairs’ letter No. SCR/PF/P/525 dated 1 August 2007.
907. We observed, in the course of our payroll audit, that even though no assumption of duty letter was found in his personal file, a New Entrant form dated 26 October 2007 was prepared in his name to be placed on the mechanised payroll. His name first appeared on the payroll in February 2008 and a sum of GH¢10,632.30 was lodged into his bank account at the Zenith Bank (GH) Limited. on the Liberia Road.
908. We also noted that a belated letter (ref. MCC/PA607 dated 13 March 2008) from the Director/HRM instructed his bankers to withhold the salaries and arrears and pay the amount to government chest, since he assumed duty on 3 March 2008. No response was received from the bank to confirm that the instruction had been carried out, neither was a reminder to the bank also sighted.
909. The failure of the administration to ensure that Mr. Kwadu- Amponsem assumed duty before preparing the New Entrant form coupled with the delay in informing his bankers early enough resulted in the improper payment made to him.
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910. The government stands to lose this amount if it is not recovered and paid to chest. We therefore recommended that the GH¢10,632.30 be recovered from Mr. Kwadu-Amponsem and paid back to chest or in the event of a failure, the Director/HRM should be held liable for the loss.
Unearned salaries – GH¢1,923 911. Ms. Comfort Acquah, an Assistant Regional Registrar, who resigned from the Ghana Civil Service with effect from 14 August 2008, still had her name on the payroll as at the end of February 2009.
912. We observed that no letter was sent to her bankers – the Standard Chartered Bank, High Street Branch for the recovery of the unearned salaries of GH¢1,923.23 for payment to government chest.
913. We indicated that the Administration’s failure to inform her bankers to recover the amount would result in a loss to the government. We therefore recommended that management should take steps to recover the amount from Ms. Acquah.
Failure to terminate appointment 914. We noted that Mr. Richard Ndede Ackah, a Court Clerk Grade I, resigned from Public Service after approval was given for him to proceed on 28 working days’ leave with effect from 6 November 2007. He was expected to resume duty on 14 December 2007 but he failed to do so.
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915. We also noted that a letter dated 9 September 2008 from the Chief Director to the Manager, Ghana Commercial Bank, Accra New Town branch informed the bank that Mr. Ackah had ceased to be an employee with retrospective effect from July 2008. The letter directed that all salaries accruing in his account with the bank were to be returned to the Controller and Accountant-General as and when paid.
916. We realised that between July 2008 and January 2009 unearned salaries that accrued and insurance premiums paid on his behalf amounted to GH¢1,486.90. We attributed the cause of this situation to negligence on the part of the administration in its failure to terminate his appointment promptly when he failed to resume duty.
917. The non-recovery of the unearned salaries and the insurance payments would result in a loss to the State. We therefore urged management to take immediate steps to ensure that the amount is recovered and paid to government chest.
MINISTRY OF WATER RESOURCES, WORKS AND HOUSING
HYDROLOGICAL SERVICES DEPARTMENT
Mobilisation advances paid to Messrs P & D Limited - GH¢332,977
918. Section 104 of FAR 2004 (LI 1802) states that a Head of department authorised to administer a class of advances shall ensure that the advances are duly recovered in accordance with the regulations or agreements relating to them.
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919. We observed that an emergency contract was awarded to Messrs. P & D Limited at a contract sum of GH¢1,499,918.35 and a mobilisation advance of GH¢449,975.51 representing 30% of the contract sum was paid to the contractor. The execution of work was for five calendar months with effect from 21 October 2005. As at the time of reporting, only 8.2% of the work was done and the contractor abandoned the project.
920. Messrs Donewell Insurance Company who stood surety for the contractor was held liable in the sum of GH¢457,464.37. To date, the insurance company has paid only an amount of GH¢150,000.00 leaving a balance of GH¢182,977.46 yet to be paid.
921. We recommended that management ensures full recovery of the amount of GH¢182,977.45 from the Insurance Company as well as the full recovery of the mobilisation advance of GH¢332,977.46 from Messrs. P & D Limited.
Un-retired imprest - GH¢4,800
922. Section 283(b) of FAR 2004 states that special imprests are issued for making particular payments or groups of payments which must be fully retired by the date specified in the approval to operate the imprest. Also Section 288 of the FAR states that imprest shall be retired at the close of the financial year and any imprest not so retired shall be adjusted to a personal advance account in the name of the imprest holder.
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923. We noted that imprests totalling GH¢4,800.00 granted to seven Regional Hydrologists for the maintenance of river gauge stations as well as emergency repair and renovation works had not been accounted for.
924. We recommended that the imprests should be retired. Management in response indicated that an amount of GH¢1,500.00 being the imprest granted to the Upper East and Central Regions had been retired and the balance would accordingly be adjusted to personal accounts in the name of the imprest holders.
Payment to retired staff – GH¢2,124 925. Contrary to Section 297 of the FAR 2004, which states that a Head of department shall cause the immediate stoppage of salary to a public servant when that public servant has resigned, retired or died, we noted that the Ministry failed to delete the names of Messrs Edward Okoh Ashie and S.T Baah who retired from active service on 21 and 27 September 2007 respectively, resulting in the payment of unearned salaries totalling GH¢2,123.92.
926. Management agreed to recover the amount of GH¢2,123.92 from the pension benefits of the retired officers.
Non-completion of project 927. On 21 June 2004, Messrs Trinitex Company was awarded a contract for the construction of a box culvert on Lafa stream to be completed by 8 October 2004. After the receipt of a mobilisation
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 233 advance of GH¢5,996.13, the contractor only worked to the value of GH¢2,162.28 and abandoned site. We recommended to management to ensure that the contractor executes the work up to the value of the mobilisation advance paid to him.
Fuel coupons not accounted for - GH¢9,600 928. We noted that the Ministry purchased GH¢94,543.00 worth of fuel coupons from GOIL Company. Out of the total purchases, GH¢9,600.00 worth of the fuel coupons were found not entered in the fuel coupons’ register. We recommended that the Accountant should fully account for the coupons or refund the GH¢9,600.00 involved.
PWD HEAD OFFICE Arrears of rent by tenants of the PWD Central Stores - GH¢265,750
929. Financial Administration Regulation 17 requires that “a Head of department shall ensure that all Non-Tax Revenue is efficiently collected.’’ We noted that although the Public Works Department Head office rents out its warehouses, offices and open spaces to individuals and organisations, as a means of generating funds internally, the tenancy agreements were silent on measures that should be taken against rent defaulters.
930. Examination of the Department’s rent register disclosed that 19 occupants defaulted in the payment of rents amounting to GH¢265,750.00. The non-payment of rent thus denied the Department rent revenue that had accrued from the use of the properties.
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931. Management was urged to accelerate the recovery of the arrears or the defaulters be restrained from operating at the premises of the Department.
DEPARTMENT OF RURAL HOUSING 10 completed 3 bedroom houses not handed over to Ghana Cocoa Board 932. The Ghana Cocoa Board, in collaboration with MoFEP, and Department of Rural Housing agreed to provide affordable houses to farmers at moderate repayment terms, in the cocoa growing areas of the country. The project started on a pilot basis at Enchi, Afransie and Yawmatwa all in the Western Region.
933. The pilot project which consisted of 10 (3-unit) houses were completed at a total cost of GH¢169,507.84. However, the Department did not hand over the houses officially to the Ghana Cocoa Board for distribution. We recommended the immediate hand over of the buildings to the Board for distribution to the beneficiaries.
KINTAMPO WATER SUPPLY SYSTEM Indebtedness to Kintampo water supply station - GH¢101,421 934. We noted during our audit that both public and private institutions, including commercial and domestic consumers owed the above station a total sum of GH¢101,421.27 as at 31 August 2008. The break down is as follows:
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Type of users Amount Government institutions GH¢81,234.40 Commercial 3,310.50 Domestic 16,876.37 Total GH¢101,421.27
935. Management attributed this huge debtors’ figure to the inability of central government to settle the bills of government institutions.
936. We drew attention that if efforts are not made by the management of the System to recover the colossal debt, the System stood the risk of grinding to a halt as a result of insufficient funds. We consequently advised management to pursue recovery of the debt from both the central government, and the private consumers, not excluding the use of legal action.
Unrecovered staff advances – GH¢2,582 937. Our audit disclosed that seven staff members of the Kintampo water supply station, who benefited from salary advances for periods ranging between 8 and 13 months, as at 31 August 2008, had still not settled their indebtedness.
938. Laxity on the part of management in ensuring timely recovery of the advances was the cause of this anomaly. The un-recovered advances did not only deplete the coffers of the company, but also denied other staff members on the waiting list, the facility. We
236 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 recommended and management agreed to ensure the immediate recovery of the outstanding advances of GH¢2,582.18.
NKORANZA WATER SUPPLY STATION Indebtedness to Nkoranza water supply system - GH¢70,045 939. Our audit disclosed that both public and private institutions including managers of public stand pipes owed the System a total sum of GH¢70,045.25 during the period under review. The breakdown is as follows: Type of consumers Amount owed Public stand pipes GH¢4,397.95 Domestic 27,736.95 Commercial 2,344.58 Government institutions 35,565.77 Total GH¢70,045.25
940. We were aware that the central government is responsible for the payment of government institutions’ bills of GH¢35,565.77. However, we noted that management failed to pursue the recovery of the total debt owed the System, including debts of private consumers which totalled GH¢34,478.48.
941. Management’s inability to institute pragmatic steps to collect the outstanding bills from domestic, public stand pipe operators and commercial users could weaken the financial base of the station. We therefore recommended to management to adopt new strategies to reduce the outstanding bills to the minimum.
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Fuel not recorded in logbook – GH¢4,128 942. According to Chapter 16 Section 1604 of Stores Regulations 1984, a vehicle log book shall be maintained for each vehicle and shall be carried on the vehicle. Journeys undertaken are required to be recorded and full particulars of receipts of fuel, oil and lubricants recorded by the driver or user.
943. Contrary to the above regulation, we noted that fuel and lubricants amounting to GH¢4,127.54 said to have been purchased during the period under review were not recorded in the station’s vehicle logbooks. Weak supervision by management was identified as the cause of this lapse.
944. In the absence of vehicle logbooks, management would not be able to monitor fuel consumption and ensure efficiency, effectiveness and economy in the management of its vehicles. We recommended to management to ensure that logbooks are kept for all the station’s vehicles to facilitate the monitoring of fuel consumption.
EJURA WATER SUPPLY STATION Outstanding salary advances – GH¢1,474 945. Management granted salary advances totalling GH¢2,484.10 to 10 members of staff between April 2007 and January 2008. We observed that only GH¢1,010.06 or 40.7% had been recovered, though the age of the advances showed that recovery should have been completed by now.
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946. The slow rate of recovery could be blamed on management’s failure to spell out periods within which refunds should have been completed in accordance with Section 99 (1) of FAR 2004, which requires that an advance shall not be payable until an agreement specifying conditions and terms of recovery have been concluded between the borrower and management.
947. We advised management to recover the outstanding advances of GH¢1,474.04 through deductions from the salaries of the beneficiaries.
MINISTRY OF INFORMATION AND NATIONAL ORIENTATION
Failure to account for funds released to Information Services Department – GH¢1,663,728 948. Our examination of payment vouchers revealed that no official receipts and details of expenditure were provided to substantiate a total amount of GH¢1,663,728.11 released by the Ministry to the Information Services Department for the execution of public programmes and activities.
949. This lapse was due to the Ministry’s failure to ensure that monies released for the performance of official duties were promptly and fully accounted for by recipients.
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950. We recommended that management should ensure that the releases are accounted for, failing which the recipients should be surcharged with the amount of GH¢1,663,728.11.
Misapplication of HIPC funds – GH¢35,000 951. Regulation 179 of the FAR prohibits a head of department from authorising payment from funds earmarked for specific activities for purposes other than those activities.
952. Our review of the financial transactions of the Ministry disclosed that HIPC funds totalling GH¢35,000.00 earmarked for government strategic communications was misapplied on Ghana’s 50th birthday celebrations.
953. This amount which was paid to Ghana Overseas Marketing Limited for the cost of billboards in connection with the country’s 50th anniversary celebration was not budgeted for. We were informed that the amount was to be refunded by the “Ghana at 50” Secretariat, but as at the time of writing this report the amount had not been refunded.
954. We recommended that management should liaise with the “Ghana at 50” Secretariat for the refund. Management stated that several letters written to the “Ghana at 50” Secretariat for the refund did not yield the desired result.
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Misapplication of funds – GH¢16,288 955. Part II Section 16 (1) of the Financial Administration Act, 2003 (Act 654) requires that at every stage of payment, a certificate from the Head of the government department should be provided as evidence of satisfactory work done.
956. Our audit revealed the payment of a contract variation amount of GH¢16,287.80 to Dawuro Communications Limited for the extension of cable net work from the Ministerial block to the Accounts department, the Printing department and the Treasury blocks.
957. We noted that the payment was flawed in the following respects: a. No bills of quantities supported the variations; b. No request was made by the client or contractor for the variations; c. There was no approval by the consultant; and d. There was no review by the Entity Tender Committee.
958. The initial contract sum was paid for from the Information Service Department’s Investment vote, while the Ministry of Information and National Orientation paid the variation cost from its Service vote, contrary to FAR 179(1).
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959. We recommended that management should adhere to budgetary control measures and the amount of GH¢16,287.80 be recovered from the signatories to the payment made to Dawuro Communications.
Failure to demand VAT invoice/receipt – GH¢3,066 960. We observed that the Accounts officers of the Ministry failed to obtain VAT invoices for payments totalling GH¢29,443.20 made to four suppliers with a VAT component of GH¢3,066.48, contrary to Section 19(1) of the VAT Act, 1998. This lapse was attributed to oversight.
961. In order to ensure that the companies account for the VAT received to the VAT Service, we recommended that management should obtain the VAT receipts from the suppliers or the amount be recovered from them.
Ownership of official vehicles vested in the name of the vendors 962. A verification conducted on the ownership of the Ministry’s vehicles disclosed that 22 vehicles belonging to the Ministry still had their ownership vested in the names of the vendors.
963. We indicated that this situation could pose legal challenges to the Ministry in the event of a dispute or theft of any of the vehicles as the Ministry will not be in a position to prove its ownership of the vehicles. We therefore recommended that the necessary steps should be taken to transfer the ownership of the vehicles into the name of the Ministry.
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Wrongful possession of official vehicle 964. Regulation 2(h) of the FAR states that a head of department shall preserve in good order and secure the economical use of all equipment and store used by the department.
965. On the contrary, verification conducted on the physical existence of the Ministry’s fleet of vehicles disclosed that Mrs. Catherine Afeku, a former spokesperson at the Ministry took away a Tata pick-up with registration number GN 7903 Y without authority. We noted that management had also condoned the illegal act by failing to invite her to return the state property.
966. We recommended that the Ministry should endeavour to retrieve the vehicle from Mrs. Catherine Afeku and she should be surcharged with the cost of wear and tear for the duration that the vehicle was in her possession.
Stock discrepancies – GH¢33,958 967. We noted various shortages of store items during stock taking at the Ministry’s store involving a total sum of GH¢33,957.65. This lapse occurred as a result of the failure to adhere to Store Regulation 1202 and 1203(c), which require officers and Storekeepers in charge of stores to regularly conduct effective stocktaking throughout the year and at the end of the financial year to ensure that the records reflect the true stock position. We recommended that the Storekeepers should be surcharged with the amount of GH¢33,957.65.
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Irregular issue of store items – GH¢10,989 968. Store Regulation 601 states that store items shall only be issued and released to properly authorised persons against properly signed documents. On the contrary, we noted, during a review of store procedures that the Storekeeper Mr. Richmond Mantey made various fictitious insertions on store requisition orders presented to him for the issuance of store items.
969. This was done by the insertion of items in blank/unused spaces on the requisition form which were not cancelled or defaced by the requisitioning and authorising officers. By this method Mr. Richmond Mantey pocketed a total amount of GH¢10,988.50.
970. We attributed the situation to the inaction of the Internal Audit Unit of the Ministry. We recommended that the Storekeeper should be called upon to refund the amount and he should be disciplined.
INFORMATION SERVICES DEPARTMENT – DORMAA-AHENKRO Equipment not embossed or recorded in assets register 971. By Section 1711 of the Store Regulations 1984, government furniture and equipment should in all cases be marked for purposes of easy identification, and be recorded in an assets register.
972. We noted during our audit that equipment for a new cinema van with registration No. GV 2047 X meant for the Dormaa-Ahenkro Municipal Information office was neither recorded in an assets
244 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 register nor embossed with identification marks of the Department as prescribed by the Regulations.
973. We recommended to management to safeguard the assets and the property of the Department by embossing them with unique identification marks and ensuring that they are recorded in an asset register, in compliance with the store regulation.
INFORMATION SERVICES DEPARTMENT – MPRAESO Unearned salaries – GH¢4,642 974. Our review of mechanised payroll vouchers revealed that salaries totalling GH¢4,641.81 were paid into the bank accounts of two staff, namely Messrs. J. A. Debrah and D. K. Ameh, who had separated in April 2006. Even though deletion was effected in August 2007, the unearned salaries were still standing in their bank accounts at the time of the audit.
975. The situation was attributable to management’s failure to instruct their bankers to return the unearned salary into the Consolidated Fund as required by Section 298 (3b) of the FAR. We advised management to ensure that the total amount of GH¢4,641.81 is paid into the Consolidated Fund.
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 245
MINISTRY OF COMMUNICATIONS Procured vehicles still in the name of the vendors 976. Section 6 of the Road Traffic Regulation, 1974 requires that any registered vehicle bought or has changed hands should be transferred to the new owner with all the necessary documents.
977. Verification of the Ministry’s vehicle documents however disclosed that 18 vehicles procured at various periods were still in the names of the vendors, namely: Japan Motors and Toyota Ghana Limited.
978. Since all the vehicles bore private registration numbers and could easily get missing, we recommended that management should take steps to effect the necessary transfer into the Ministry’s name.
979. Although management later responded that all the vehicles had been transferred into the name of the Ministry, documents covering the registration were not produced for our verification during a follow- up.
Unearned salary – GH¢2,044 980. Section 297(1) of the FAR 2004 requires the head of a government institution to cause the immediate stoppage of salary to a public servant who gets separated from the service. On the contrary, we noted that between October 2006 to February 2007 the Ministry paid unearned salaries totalling GH¢2,043.76 to three separated staff.
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981. This happened as a result of the failure of the IPPD Unit of the Ministry to examine and certify the payment vouchers to ensure that the payroll was devoid of the names of non-existent workers. We urged management to pursue the officers and recover the GH¢2,043.76 paid to them.
Issued store items which could not be traced to their destination – GH¢5,800 982. Contrary to Store Regulation 601 which states that stores shall only be issued and released to properly authorised persons against properly signed documents, we noted that the issue of store items worth GH¢5,800.00 were made without authorised requisitions.
983. A follow-up to the intended beneficiaries revealed that the officers in whose names the items were issued did not receive them. This situation was due to lack of supervision and the failure of the Internal Audit Unit to safeguard the assets of the Ministry.
984. We recommended that the Procurement officer should be called upon to account for the items, failing which he should be surcharged with the total cost involved.
Store items procured not accounted for – GH¢17,861 985. A review of store procedures showed that various items procured during the year under review worth GH¢17,860.89 were not accounted for in the store records.
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986. We could therefore not ascertain whether the items were actually procured, or verify their existence. We recommended that purchases should be recorded in the store records to authenticate the transaction or the amount should be refunded.
MINISTRY OF DEFENCE 5TH BATTALION (BN) OF INFANTRY Military vehicles not seen during physical check 987. We observed that three “pinz gauers” allocated to the 5th battalion of Infantry by the Military’s allocation unit were neither recorded in the appropriate vehicle allocation book at the 5th BN’s Mechanical Transport Unit nor were they seen when a physical check was conducted.
988. A follow-up to the Army Base Workshop did not produce any fruitful outcome. This state of affairs could lead to the loss of the Ghana Armed Forces vehicles. We therefore urged the schedule officer of the 5th Infantry battalion to liaise with the officer in charge of the vehicle allocation and the Base Workshop to trace the vehicles and update their respective records on the vehicles for audit verification.
DATA PROCESSING CENTRE Computer accessories purchased from non-VAT registered firms 989. Our review of records disclosed that during the period under review the Centre purchased GH¢13,184.00 worth of computer accessories from non-VAT registered suppliers, in contravention of
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Part VI Section 183 (4) of the FAR which states that ``A department shall procure Government stores from only Valued Added Tax registered persons or entities and any department that requires an exception for any specific case shall apply to the Minister with the necessary justification.”
990. The non-compliance with the law resulted in the loss of GH¢1,997.00 in VAT revenue. We also noted that, the companies from which Centre made the purchases were not Ghana Armed Forces accredited suppliers from whom they could take any favourable purchasing facilities.
991. Management explained that the amount involved was the totality of purchases of minor items bought during the period from various sources and not from a particular supplier. We recommended that a yearly procurement plan should be prepared and followed to avoid the piece meal purchasing.
AIR FORCE HEADQUARTERS AND BASE SUPPORT SERVICES BRIGADE GROUP Payment without job certification – GH¢29,671 992. A total payment of GH¢29,671 was made for the repair of office equipment, renovations and repair of vehicles without the Heads of departments’ certificates attesting to satisfactory execution of work.
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993. In order not to further violate Section 16(1) of the FAA which requires that payment shall not be made unless the head of department certifies that the work has been done and the price charged is reasonable, we recommended that, in future, the required certificates should be attached to all payment vouchers.
RECCE REGIMENT
Payment of unearned wages to separated civilian employees – GH¢1,035 994. Our review of the payroll disclosed that the bank accounts of six separated civilian employees were credited with unearned salaries totalling GH¢1,034.82. Delay in processing the Civilian Employee Memoranda to notify the separations to Pay Office resulted in the anomaly.
995. We recommended that notification to the Pay Office must be forwarded immediately the letter of separation is written. Furthermore, where unearned salary has been wrongly forwarded to a bank, the bank must be requested in writing to refund the money.
“37” MILITARY HOSPITAL Un-acquitted payment vouchers – GH¢17,690 996. The above hospital spent a total amount of GH¢17,690.00 from an Emergency Procurement Fund. However management failed to provide the details of expenditure for our review making it impossible for us to determine the genuineness of the expenditure.
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997. The lapse also contravened the provisions of Regulation 39 (c) of the FAR which states that transactions must be properly authenticated to show that amounts are due and payable. 998. To forestall possible loss of public funds, we recommended to management to ensure that the vouchers in question and any future payments are properly supported by receipts, invoices and statements of expenditure.
Indebtedness to 37 chemist shop – GH¢230,793 999. The hospital has a 24-hour chemist shop which operates as a commercial enterprise and a back up to the dispensary. Patients qualified for free medical treatment are served and the appropriate bills are forwarded to the hospital for settlement.
1000. We observed that the settlement of bills was irregular and always in arrears. At the time of our audit, a total amount of GH¢230,792.90 in respect of outstanding bills raised on the hospital was pending settlement.
1001. The delay in reimbursing the chemist shop with the amount deprived it of the funds needed for the delivery of quality healthcare to patients. We recommended that the Director of Medical Services should make prompt refund of the bills to the chemist shop in order to sustain its operations.
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“37” INFORMATION TECHNOLOGY (IT) Delay in full automation of the operations of the hospital information systems
1002. The Ghana Armed Forces contracted Hospital Engineering Limited (HEL) on 13 December 2000 to rehabilitate medical and related technical facilities for the Ghana Armed Forces Medical Services. HEL sublet some parts of the computerisation of the hospital information system and the transmission of patients’ data to a contractor, Genisys Solutions on 26 January 2006.
1003. At the time of audit, Genisys had developed only two modules out of the eleven stated in the contract. Due to the delay, the hospital was compelled to contract Office Automation Systems International Limited (OASIL) to set up a central cash collection point (CCCP) and provide the necessary training and systems support. Additionally, the CCCP was to automate and manage the collection of cash at the hospital and produce daily comprehensive reports, for monitoring the collection of revenue.
1004. All other sections of the hospital were linked to the CCCP with the exception of the wards and the mortuary where bills were calculated manually and paid to the cash office. The chemist shop had stand-alone software known as “Biz master” which was used for receipt, issues, and sale of drugs to patients.
1005. We noted that the System Administrator had no control over the system. There was therefore the risk of:
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i. Difficulty in linking the two systems to perform similar roles or produce same output;
ii. Non-delivery of systems contracted for, leading to loss of investment; and
iii. Failure to develop the system on time resulting in systems not being developed on the terms of contract, late delivery or, non-delivery of the required functionality.
1006. We recommended that management should ensure that Genisys Solutions develops the uninstalled modules without further delay.
OFFICE OF PARLIAMENT Budget over-run on CPA conference -GH¢591.1million 1007. Section 168 of the FAR, states that a Head of department shall exercise budgetary control over the activities of the department. Section 179 (1) of the FAR also states that a head of department may not authorise payment to be made out of funds earmarked for specific activities for purposes other than those activities.
1008. Our review of payments made in respect of the 26th Commonwealth Parliament Association conference held in August 2006 revealed that the approved budget was exceeded by GH ¢591,118,281.74 or 103% due to the incurrence of unplanned expenditures which resulted from poor planning.
1009. We advised management to justify the excess expenditure and apply to the Ministry of Finance for the release of funds to settle all
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 253 unpaid bills. We also advised management to ensure that it operates always within its approved budgets.
1010. In response management stated that the budget was under estimated with regard to the number of participants and that it turned out that there was a higher patronage than anticipated. Management further explained that the matter had been referred to the planning committee.
Failure to keep a stock register 1011. Our audit review disclosed that no stock register of value books was maintained for cheque books, Local Purchase Orders (LPO) and Stores Received Advice (SRA) forms, contrary to Section 214 (1) of the FAR which enjoins the keeping of stock registers. We attributed the situation to willful negligence on the part of those responsible for the management of the accounting duties of the Service.
1012. Stock registers are kept to ensure proper control over value books which are vital documents used in conducting the financial business of government. They facilitate the tracking of value books and can be used to assign responsibility in case of loss. Failure to maintain a stock register can lead to theft and loss of funds if a value book falls into wrong hands.
1013. We therefore recommended the introduction and maintenance of a stock register for all value books in order to keep track of the books and to monitor their use.
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Accountable imprest not retired -GH¢177.5million 1014. Section 288(1) of the FAR states that an imprest shall be retired at the close of a financial year and any imprest not so retired shall be adjusted to personal account in the name of the imprest holder.
1015. Our audit disclosed that accountable imprests totalling GH¢177,465,864.40 advanced for the performance of official assignments had not been accounted for.
1016. We noted that the situation was caused by the Director of Finance’s failure to ensure that the funds released were accounted for. Failure to account fully for such monies could lead to suppression of un-utilised balances in the custody of the imprest holders after the completion of the assignment.
1017. We recommended that all the funds should be accounted for and the staff of the Service should be advised that, in future, all such transactions should be duly supported with receipts obtained or honour certificates so as to ensure transparency and accountability. We further advised that any imprest holder who failed to account for such imprest amounts should be surcharged with the monies given to them.
Incurrence of expenditure on funerals of staff members’ relatives GH¢22.8million
1018. Section 82(1,2 &3) of the Parliamentary Service (Staff) Regulations, 1995 C1. II requires that the Service should make
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1019. We however observed during our examination of payment vouchers that this regulation was violated as the Service was noted to have spent a total amount of GH¢22,785,269.00 on the funeral of deceased relatives of staff members.
1020. Expenditure on such funerals is expected to be made from the Service’s staff welfare fund. Even though we noted that the Service’s welfare fund is not functioning well, yet government funds cannot be used on the funerals of family members who are not government employees.
1021. Consequently we asked management to discontinue the use of public funds on the funerals of staff members’ relatives.
Transaction of business with non-VAT registered vendors - GH¢104.2million
1022. Section 183(4) of the FAR requires that a department shall procure government stores from only VAT registered persons and any department that requires an exemption for any specific case shall apply to the Minister with the necessary justification.
1023. Contrary to the above provision, we realized that on several occasions, the Service transacted business with non-VAT registered vendors. These transactions totalled GH¢104,227,012.
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1024. Failure to do business with only VAT registered companies, as required by the regulation, denied the state a total amount of GH¢156,340.52 in tax revenue which could have been used for development.
1025. We therefore advised management to make sure that the Service transacts business with only VAT registered companies in order to generate revenue for the State.
Failure to maintain contract register 1026. An examination of available records disclosed that due to negligence, the Parliamentary Service failed to maintain a contract register to regulate the award of its contracts. Consequently, the award of the under listed contracts could not be traced into any record. Renovation of chamber block ¢16,421,232,911.00 Renovation of Speaker’s bungalow 10,546,983,750.00 Const. of a 3 story office block 36,480,000,000.00 ¢63,448,216,661.00
1027. Contract registers are kept for important pieces of information such as: a. Name of contractor; b. Project file, giving date of award of contract and expected date of completion and the contract sum; c. Mobilisation payments; d. Payments made on basis of work certificates; e. Retention money and refunds; and f. Variation orders showing omissions and additions.
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1028. The essence of making prompt entries in the register is to facilitate effective project monitoring and to ensure that the contract sum is not exceeded. Failure to maintain a contract register therefore amounts to poor contract management which is a serious breach of financial discipline and could lead to poor monitoring of contracts and the possibility of overpayment of contract sums.
1029. To ensure transparency, accountability and effective project monitoring, we advised management to introduce the use and maintenance of a contract register to monitor project payments so that contract sums will not be exceeded.
OFFICE OF GOVERNMENT MACHINERY NATIONAL IDENTIFICATION AUTHORITY Appointment of an Executive Secretary without terms and conditions of service
1030. The National Identification Authority Act 2006, Act Section 11(1&2) states that “the President shall in accordance with Article 195 of the Constitution appoint for the Authority an Executive Secretary and the Executive Secretary shall hold office on the terms and conditions specified in the letter of appointment.”
1031. An examination of the Executive Secretary’s file revealed that even though his conditions of service were not stated in his appointment letter, a subsequent communication to him directed that he should be on the same conditions of service as his predecessor. However the previous Executive Secretary’s file itself did not contain
258 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 his appointment letter or conditions of service as prescribed by the Act.
1032. This situation arose because the appointing authority of the former Executive Secretary did not follow through all the processes required in his appointment as stipulated in the Act.
1033. The implication of this was that all the benefits enjoyed by both the current and the former Executive Secretary could not be justified, and the computation of ex-gratia awards at the end of their term of office could become a problem. We therefore recommended the immediate rectification of this anomaly.
Unqualified signatories to accounts 1034. A circular numbered C.5/2007 from the Controller and Accountant-General’s Department dated 10 January 2007 which was sent to all agencies under the Office of Government Machinery prescribed those who should be signatories to the accounts of the agencies.
1035. The audit team noted that signatories to the accounts of the Authority included Professor Appiah-Adu and Mr Samuel Anning in addition to the Executive Secretary. These persons, excluding the Executive Secretary, were members of the defunct interim Board whose mandate ceased upon the enactment of the National Identification Authority Act in 2006.
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1036. The explanation offered by the Executive Secretary was that the inclusion of the former Board members served as a controlling measure on the Executive Secretary. We found this explanation unacceptable because from the outset these persons had no legal authority to act since a proper Board was to be constituted as prescribed by the Act.
1037. The situation of requiring the signature of persons who were not involved in the day-to-day operations of the Authority hampered the smooth administration of the Authority as these persons were sometimes chased to locations outside Accra to secure their signatures.
1038. We recommended that signatories to the accounts of the Authority should be restricted to the Executive Secretary, senior management personnel and the Head of Finance as required by the CAGD circular.
Overpayment to Messrs Ecosafe (GH) Limited - GH¢94,007 1039. Section 12 of the Financial Administration Regulation L.I. 1802 states that “..A person entrusted with custodial duties for Public and Trust Moneys shall protect Public and Trust Moneys against unlawful diversion from their proper purposes and against accidental loss, and locate such moneys so as to facilitate the efficient and economical discharge of public financial business.”
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1040. Our audit revealed that there was an overpayment totalling GH¢94,006.70 on PV. No. 0809545 to Messrs Ecosafe Ghana Limited Accra, for a consultancy service the company rendered.
1041. Messrs Ecosafe Ghana Limited was contracted by the Authority to provide consultancy services on 25 October 2006. Their invitation letter stated that a rate of 0.25% was to be used in computing the consultancy fee. However, the audit revealed that the company was paid an amount of GH¢94,999.93 using a rate of 25% (Reference: PV. No. 0809545 of 31 December 2007), instead of the rate of 0.25%. An overpayment of GH¢94,006.70 was thereby incurred.
1042. We recommended that the overpayment should be recovered fully together with the appropriate interest. A receipt for the recovery should be made available to the audit team for verification.
Payment of unapproved allowances 1043. FAR 39(1) states that “A head of department shall ensure that moneys are utilised in a manner that secures both optimum value for money and the intention of Parliament.”
1044. We observed that the authority had been paying certain allowances to staff members as indicated below: Type of allowance Allowance payable Rent 20% of Basic Salary Responsibility 10% of Basic Salary Utility 7.5% of Basic Salary Risk 15% of Basic Salary Entertainment 10% of Basic Salary
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1045. Per diem and inconvenience allowances Category Daily Allowance Executive Secretary GH¢60 Sectional heads GH¢45 Senior officers GH¢35 Programme officers GH¢25 Junior officers GH¢16 Drivers GH¢10
1046. Overnight allowances Position Amount Executive Secretary GH ¢120 Management GH ¢90 Senior officers GH ¢60 Junior officers GH ¢40
1047. Fuel allowance Category No. of Gallons Senior staff 40 Junior staff 24
1048. We found that these allowances were not backed by an appropriate authorisation. They were mere proposals to the then interim Board as indicated in the minutes of the Board meeting held on 11 May 2006. Even so, we did not sight any explicit approval by the Board; neither did we see the consent of other bodies whose approval was needed before such allowances could be paid.
1049. Senior management explained that they had made several representations to all the appropriate authorities to have their service
262 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 conditions approved but to no avail. They also said that the exigencies of the mandate of the Authority required the payment of these allowances to facilitate the work of its staff.
1050. The continuous payment of these allowances could jeopardise the implementation of other activities, as funds earmarked for them would have to be diverted to pay the allowances. We therefore recommended that the allowances should be suspended for the appropriate approval to be sought.
Non-existence of National Identification Authority Board 1051. Sections 3(1&2) and 12(3) of the NIA Act stipulate that the governing body of the Authority is a Board consisting of: ¾ The chairperson; ¾ One representative from each of the following: i. the Ghana Statistical Service; ii. the Social Security and National Insurance Trust; iii. the Births and Deaths Registry; iv. the Ghana Immigration Service; and v. the National Health Insurance Commission. ¾ the Executive Secretary of the Revenue Agencies Governing Board; ¾ the Executive Secretary of the Authority; ¾ two other persons nominated by the President one of whom should be a woman.
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1052. The members of the Board are required to be appointed by the President in accordance with Article 70 of the Constitution. The Board may engage the services of consultants or other experts on terms and conditions determined by the Board.
1053. The audit team observed that no board had been inaugurated to serve as the governing body of the Authority since the enactment of the National Identification Authority Act in April 2006.
1054. In the absence of a Board, the Executive Secretary, therefore, took certain decisions which were the preserve of the Board. For example, he engaged the services of some consultants without recourse to anybody as indicated below. Consultancy Consultant Fleet management Toptec Drive Consult Procurement Ecosafe Ghana Ltd Security Westec Security Systems
1055. We recommended the immediate constitution of the NIA Board to give the Authority policy direction and supervisory control as indicated in the NIA Act. National Identification Authority staff not on government payroll 1056. Regulation 6 of the FAR requires that public officers shall conduct government financial business according to the laws of Ghana and any instructions given in accordance with the FAR.
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1057. We noted that the office failed to comply with a directive issued from MoFEP to all subvented organisations to put their staff on government payroll (IPPD 2). An interview with the Accountant revealed that the office could not comply with the directive because it did not have a salary structure.
1058. Records available indicated that as far back as 2006, the NIA had paid US $14,844.00 to Messrs Ernst and Young, for the preparation of a service scheme which had among its scope of reference, a salary structure. Additionally, we noted that an allowance of GH¢1,770.00 was paid to the Public Services Commission (PSC) and some staff of the Authority (Reference: PV No. 0809671 of 8 April 2008) to work on the conditions of service for the Authority but to date the payees had not prepared the service scheme, resulting in the situation that we found.
1059. The failure to comply with MoFEP’s directive constituted a breach of financial discipline. While recommending that appropriate measures should be taken to bring all staff of the NIA unto the government payroll, we also recommended that Messrs. Ernst and Young and PSC as well as those staff of the Authority who were paid should be held accountable for their failure to produce a salary structure for the Authority.
Defective printer cartridges 1060. According to Regulation 0101 of the Stores Regulation 1984, the purpose of the supply and stores function is to, among other
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 265 things, ensure that government operations are not unnecessarily expensive through over procurement, deterioration and lack of proper care and control of supplies.
1061. Checks conducted in the stores of the Authority revealed the following: Large quantities of printer cartridges purchased from Detroit Computer Images vide PV No. 0681233 of 21 September 2007, were found to be defective as almost all the Authority’s printers rejected them. This could be due to the possibility that the cartridges might have been refilled ones as opposed to original cartridges; Over-procurement of the cartridges. Judging by the rate of issue and usage, some stocks of cartridges could last up to 20 years.
The affected cartridges are listed below: Cartridge Qty Amount Bala Last date of (GH¢) nce issue 1. C97002A 10 2,000.00 10 None issued 2. C97003A 10 2,000.00 10 None issued 3. C97004A 10 2,000.00 10 None issued 4. C9700A 10 2,000.00 9 1-11-2007 5. C97001A 10 2,000.00 10 None issued 6. C-EXV5 Drum Cartridge 20 4,000.00 18 18-4-2008 7. HP LaserJet 10A 20 3,200.00 18 14-4-2008 8. HP LaserJet 49A 20 3,200.00 17 5-9-2008 9. IR 1600 20 1,900.00 13 20-10-2008 10. Panasonic FA 83 20 1,000.00 20 None issued 11. HP LaserJet 11A 20 2,000.00 14 14-1-2008 12. HP LaserJet 13A 20 3,200.00 20 None issued 13. Toner Q1338A 20 3,200.00 10 5-09-2-2008 Total 31,700.00
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1062. The above situation might have been occasioned by the lack of requisition from the Storekeeper regarding the kinds and amount of materials to be stocked.
1063. The continuous retention of these items in the stores could result in the country’s scarce resources being locked up in unsuitable materials and the stocking of unnecessarily high volumes of cartridges.
1064. We recommended that should it be proved that they were of inferior quality, the defective cartridges should be returned to the supplier for him to refund the difference. The Authority should also acquire the services of a Procurement officer to be in charge of the Authority’s procurements.
GREATER ACCRA REGIONAL CO-ORDINATING COUNCIL Failure to bond sponsored employee 1065. We noted that Ms. Felicia Nelson, a Private Secretary with the Council gained admission to pursue a 3-year Bachelor of Arts degree programme at the University of Ghana, Legon (Accra city campus), and the Council paid a semester’s fee of ¢8,060,000.00 on her behalf on 20 July 2007.
1066. We observed that as a result of an oversight on the part of management she did not enter into any bond with the Council to compel her to serve it after the successful completion of the course.
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1067. We drew attention that the Council stood the risk of losing the entire amount spent on her education as she is at liberty to move to another job after the completion of her course.
1068. We therefore recommended to management to ensure that Ms. Nelson is committed to serve the Council for it to benefit from the amounts spent on her.
Undue delay in execution of contract 1069. A contract was awarded in November 2004 to Messrs Emmart Construction Works for the construction of a 2-storey bungalow for the Regional Coordinating Director, at a cost of ¢960,821,511.00. The period for the completion of the project was six months to be completed on 23 May 2005.
1070. During the audit, we observed that 26 months after the proposed completion date, the project had still not been completed, even though apart from the initial payment made to the contractor, management had paid for three out of four other certificates presented totalling ¢577,299,813.11 (See certificates 2 to 4 below). The details of the total payment to date are as follows: Certificate Amount Retention ¢356,563,350.00 ¢39,617,940.00 73,421,389.20 12,359,948.80 292,378,423.91 32,486,380.43 211,500,000.00 23,520,000.00 ¢933,863,163.11 ¢107,984,269.23
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1071. The consultant to the project, on two occasions, wrote warning letters dated 20 June 2006 and 16 July 2007 for possible sanctions against the contractor, yet there was no change in attitude. The consultant again wrote to the Chairman of the Regional Tender Review Board, as per letter dated 14 September 2007, for possible termination of the contract, but at the time of audit, no response had been received.
1072. In view of the various warning letters issued by the consultant and his recommendation for the termination of the contract, we also recommended that the contract should be terminated and awarded to a more competent and hardworking contractor.
Unearned salary – GH¢2,638 1073. FAR 304(1a) states that a head of department or a head of management unit shall examine and certify the personnel emolument payment vouchers to ensure that only staff belonging to the unit are on the payment vouchers. Regulation 297(1e) also states that the Head of department shall cause the immediate stoppage of payment of salary to a public servant when that public servant has retired.
1074. The regulations notwithstanding, we observed during an audit that Mr. Benjamin Byron Ankrah, a Driver Grade 1 retired from active service with effect from 22 August 2007 but continued to receive monthly salaries totalling GH¢2,637.64.
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1075. Mr. Ankrah was to be paid only salary arrears in September 2007 but this came together with unearned monthly salaries which continued up to December 2008. The payment of his salary arrears on the mechanised payroll could be the cause of the irregularity. Secondly, the absence of a superior officer authorised to certify the monthly payroll and find out whether all persons on the payroll had worked in the Council during the month could also be another factor.
1076. The continuous appearance of Mr. Ankrah’s name on the payroll could lead to a situation whereby the recovery of the illegal payment could not be effected because the recipient would no longer be available or would be incapable of making repayment.
1077. We therefore recommended that management should pursue the early recovery of all the unearned salaries from his bank account or entitlements or by any other means possible.
MINISTRY OF TRANSPORTATION DEPARTMENT OF FEEDER ROADS - HEADQUARTERS Loss of eight Honda motorcycles and crash helmets - ¢31,240,000 1078. During stock taking, we found out that eight Honda motorcycles (model NXR 125) and eight crash helmets valued at GH¢21,240.00 which were kept in the Department’s stores at El-Wak, Accra could not be accounted for. Management indicated that the theft had been discovered earlier on and as a preliminary measure, a committee of three was constituted in February 2008 to investigate the circumstances leading to the loss of the items. A report was
270 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 subsequently submitted by the committee in March 2008 to management but, the committee was unable to find the culprits, hence, the matter was referred to the Ministries Police command for further investigations.
1079. We recommended that we should be informed of the progress of the investigations.
NATIONAL ROAD SAFETY COMMISSION – ACCRA Imprest not properly accounted for – GH¢10,320 1080. Contrary to Section 283(b) of the Financial Administration Regulation which states that special imprests issued for making a particular payment or group of payments must be fully retired by the date specified in the approval to operate the imprest, we observed that a total amount of GH¢10,320.00 given to various officers to organise programmes were not accounted for.
1081. In the absence of the relevant documents in support of the expenditure, we could not determine whether the money was actually used for what it was budgeted for. We recommended that the officers responsible should account for the monies. We further advised the Spending officer to monitor all imprests released.
Inadequate resourcing of National Road Safety Commission 1082. Section 17 of the Road Safety Act, 1999 (Act 567) requires that a part of any motor insurance premium, as may from time to time be agreed upon by the National Road Safety Commission (NRSC), the
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National Insurance Commission (NIC) and the Ghana Insurers Association, be paid as levy to NRSC through the NIC.
1083. Our review of the receipt of funds from the NIC disclosed that a total of GH¢889,000.00 was remitted to the NRSC in 2007. The payments were however not supported by any evidence of the collective decision of the various parties mentioned in the Act.
1084. Further investigations revealed that no tripartite meeting had ever taken place to determine the quantum of money to be remitted to the NRSC, since the establishment of the law. The inaction of NRSC to convene the tripartite meetings to determine the amount of money to be remitted to it resulted in an average of GH¢6,000 per month being remitted by NIC to the Commission.
1085. In our opinion, considering an average of 55,000 new registrations a year, as stated by the DVLA, with a minimum insurance premium of GH¢55.00 in addition to existing vehicles which are required to compulsorily insure, the GH¢6,000 per month being paid to the Commission was low and inadequate.
1086. We therefore recommended that immediate steps should be taken to constitute a meeting with the Ghana Insurers Association and the NIC to determine the portion of income to be remitted to the Commission.
GA DISTRICT DEPARTMENT OF URBAN ROADS
272 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
Failure to register government vehicles with GV registration 1087. We noted during the inspection of the vehicles of the Department that all its vehicles were neither registered with the GV registration nor embossed with the “Government of Ghana” logo and the name of the Ministry or Department as required by Store Regulations 1984, Chapter 16 Section 1602.
1088. Management explained that it had distributed stickers in the name of the Department of Urban Roads to be put on all its vehicles, but this had not been done.
1089. To safeguard the vehicles against theft and misuse, and to ensure compliance with Store Regulation 1602, we recommended that all the vehicles should bear the “GV” registration number and the marks of “Government of Ghana” and the full name of the Ministry or Department written on them, unless appropriate exemption is obtained as prescribed by the regulation. MINISTRY OF HARBOURS AND RAILWAYS Misapplication of funds – GH¢600,000 1090. In September 2008, an amount of GH¢2,150,000.00 was released by MoFEP specifically for the payment of 50% outstanding balance of end of service benefits of 674 retrenched workers of the Ghana Railways Company Limited (GRCL) vide letter No. MHR/GA/RAIL/BENEFITS of 10 September 2008.
1091. An audit examination, however, revealed that a total of GH¢600,000.00 out of the amount was misapplied to pay:
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a. Salaries of agitated railway workers - GH¢200,000.00 b. Suppliers outstanding debts - 400,000.00 Total GH¢600,000.00
1092. As a result of the misapplication, there was still an outstanding balance of GH¢600,000 due the retrenched workers yet to be settled. We recommended that management should as a matter of urgency regularise the anomaly and have the outstanding debt cleared without further delay.
DRIVER AND VEHICLE LICENSING AUTHORITY – TEMA Unconfirmed lodgement of revenue collected 1093. We noted that revenue totalling GH¢1,910,171.00 collected by the Authority between June 2007 and May 2008 and lodged with three different banks were not supported with statements from the banks.
1094. Although, we had in our previous reports, stressed the need for the bank statements to be obtained monthly, management had failed to ensure this, making it impossible for us to confirm that all the lodgments had been transferred into the Consolidated Fund.
1095. We reiterated that management should provide the bank statements to confirm the authenticity of lodgments made into the bank accounts and transfers of the amounts into the Consolidated Fund.
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DEPARTMENT OF FEEDER ROADS – BOLGATANGA Misapplication of funds - GH¢3,370 1096. Management misapplied a total of GH¢3,370.00 from the Routine Maintenance Account to pay casual workers, with the promise of a refund from Headquarters.
1097. This practice deprived the Routine Maintenance Account of funds that were needed to pay contractors. We urged management to ensure the early reimbursement of the amount of GH¢3,370.00 to the Routine Maintenance Account and further to desist henceforth from the practice of misapplying funds, which is considered a breach of financial discipline under Regulation 179 of the FAR.
MINISTRY OF TRADE AND INDUSTRY, PUBLIC SECTOR DEVELOPMENT AND PSI Failure to provide bill of quantities for payment of contract works - GH¢30,900 1098. An important condition for the execution of government contract for building works requires that no payment shall be made to a contractor in respect of work done unless a consultant or a supervising officer (resident Engineer, Architect, Clerk of Works or Works Superintendent) has inspected the work done, as contained in the bill of quantities and issued a certificate indicating the value of work done and the amount due to the contractor, and this shall be attached to the payment voucher.
1099. We observed from our examination of payment vouchers that in 2005 the Ministry paid a total amount of GH¢30,910.34 to Messrs
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 275
Sembethy Investment Company Limited for contract works at the Dubois Centre Guest House without the approval of the bill of quantities by a supervising officer.
1100. The details were as follows: PV No Chq. No. & Date Particulars Amount 45 028370/3/10/05 25% ¢95,408,381.25 mobilisation 64 427809/21/10/05 Certificate No.1 137,306,709.10 105 427868/29/11/05 Certificate No.2 76,388,349.55 ¢309,103,439.90
1101. We further noted that the certificates attached to the payments were prepared by the contractor and approved by a consultant in the Ministry who, apparently, did not possess adequate expertise in building works. There was also no approval from the Entity Tender Committee for the award of the contract.
1102. It was explained that since the Ministry was newly established, most of the personnel were not too conversant with these laid-down procedures, hence this anomaly.
1103. Payment for contract works without obtaining signed certificates from an authorised consultant, who has to evaluate the bill of quantities prepared by the contractor’s surveyor against actual work executed, could result in paying for either poorly executed or non- executed contracts.
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1104. We recommended that management should ensure that payments are made only for works properly valued and certified to have been satisfactorily executed. Management responded that it had taken steps to ensure that all subsequent contract works undertaken are supported by appropriate bills of quantities duly certified by a competent agent of a government consultancy or organisation such as the Public Works Department.
Un-authorised operation of bank accounts 1105. We noted that in August 2005, without obtaining approval from the CAGD as required by Section 3 (6) of the Financial Administration Act 2003 (Act 654), the Ministry opened an account (No. 116933) with the Barclays Bank (GH) Limited and proceeded to transfer an amount of US$100,000.00 into the account on 28 March 2006. Two days later, an amount of US$75,000.00 was withdrawn from the account without any documentation, leaving a balance of US$25,000.00 in the account.
1106. We also observed that a 24-hour Special Call Account (No. 2302459) was opened at the High Street Branch of Barclays Bank Ghana Limited. On 7 October 2005, an amount of ¢2 billion was transferred into this account from the main credit account, maintained at the same bank and it earned a total interest of ¢7,813,866.06. On 28 October 2005 and 5 December 2005, two transfers of ¢1 billion each were noted to have been made out of the account, leaving the interest of ¢7,813,866.06 in the account as of 4 April 2006.
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1107. We pointed out management’s disregard for and failure to adhere to the Financial Administration Act. We also expressed the possibility of the amounts in the accounts being siphoned into private accounts for private use. We therefore requested management to account for all moneys withdrawn from the accounts and also regularize the operation of the accounts in consultation with the Controller and Accountant-General.
1108. Management responded that they had taken note of our observations and steps were being taken to regularise the accounts and their operations and address all the issues raised.
Unsupported transfers of revenue – GH¢146,924 1109. We noted that between September 2006 and August 2008, out of total revenue of GH¢406,866.03 collected, GH¢259,941.81 was transferred into the Consolidated Fund and duly supported with payment orders, while the difference of GH¢146,924.13 allegedly transferred was not supported with payment orders. 1110. We urged management to either provide the payment orders to confirm that the difference in revenue had been transferred into the Consolidated Fund or recover the amount from the officer(s) who made the transfers.
Payments unaccounted for - GH¢399,998 1111. FAR 1(1) states that any public officer responsible for the conduct of financial business on behalf of the government of Ghana shall keep proper records of all transactions and shall produce records
278 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 of the transactions for inspection when called upon to do so by the Auditor-General or any officer authorised by him.
1112. On the contrary, 144 payment vouchers with a total face value of GH¢399,998.09 were not submitted for our examination. Consequently, we could not vouch the authenticity of the payments and could, therefore, not certify the amount as a bona fide charge on the public accounts.
1113. We attributed this lapse to poor management supervision over the accounts office which resulted in poor filing practices. The situation could result in financial irregularities and inaccurate financial reporting.
1114. We recommended that the Spending officer and the Head of accounts should produce the payment vouchers or account for the amount of GH¢399,998.09.
Un-acquitted payments-GH¢231,735 1115. Sixty-seven payments totalling GH¢231,734.81 made between May 2006 and November 2007 were not supported with appropriate documents like receipts, Stores Received Advice etc.
1116. We attributed this lapse to the Unit Head’s poor supervision over the operations of the accounts office and the failure of the Spending officer to ensure that payment vouchers were adequately supported before approving them for payment. The practice of making unsupported payments could result in irregular disbursement of public funds with its attendant financial loss to the State.
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1117. Consequently, we advised management to ensure that the payments, totalling GH¢231,734.81, were supported with the appropriate documents for audit inspection failing which the Spending officer and the Head of the accounts unit should be held responsible to account for the amount.
Failure to present cashbooks and bank statements for audit 1118. Management failed to make available to us cash books and bank statements for 13 bank accounts operated during the period 1 May 2006 to 31 September 2006. The non-presentation of these vital financial records for audit, apart from being a serious breach of Regulation 1(1) of the FAR, could also be employed to conceal irregularities.
1119. In the absence of the cash books and bank statements, we could not ascertain that a total expenditure of GH¢1,166,199.70, for which 183 payment vouchers were submitted for audit, constituted the actual total expenditure for the period May 2006 to September 2006.
1120. We advised management to ensure that the Schedule officer(s) submitted the cash books and bank statements for audit examination, failing which management should investigate the matter and take appropriate action.
Payment of grants to private enterprises - GH¢775,845 1121. We noted that the Ministry disbursed grants totalling GH¢775,845.33 to six private enterprises in the garment industry for capacity building. The amounts and the beneficiaries are indicated in the table below:
280 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008
Cheque Name of beneficiary Amount Date Purpose No. entity (GH¢) 06/04/06 0183947 Oakbrook Ltd For machinery and 100,000.00 equipment 05/05/06 Maagrace Garment Ltd Completion of 33,319.58 factory infrastructure 19/04/06 0183957 Premiere Quality Ltd For machinery and 100,000.00 equipment 19/04/06 0183956 Oakbrook Ltd For machinery and 20,425.77 equipment 08/05/06 0183982 SAPPS Garment Ltd Completion of 132,000.00 factory infrastructure 03/04/06 0183939 Maagrace Ltd For equipment 96,680.42 03/04/06 0183940 Maagrace Ltd For equipment 17,419.56 ? ? Awurabena Fashion Ltd Completion of 156,000.00 factory infrastructure ? ? Sleek Garment Ltd For machinery and 120,000.00 equipment Total Grants GH¢775,845.33
1122. The President’s Special Initiative (PSI) was unable to finalise an agreement between itself and the beneficiaries stating the terms and conditions of the grants, although a draft agreement was prepared at a cost of GH¢4,650.00 for the purpose.
1123. Although the moneys were received by the beneficiary enterprises and applied for the purpose, in the case of SAPPS Garment Factory and Awurabena Fashions, all in Kumasi, who received a total of GH¢288,000, the projects were uncompleted and had been abandoned. The beneficiaries concerned claimed that the PSI did not honour its promise to provide more funds to complete the projects.
1124. There was therefore the risk that the expected benefit would not be derived from the GH¢288,000.00 disbursed to these two beneficiary entities. We made the following recommendations to management.
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The PSI should sign agreements with the beneficiary companies stating clearly the terms and conditions of the releases; and
To ensure that the objective of the programme was achieved, the PSI should assist the two companies to complete the infrastructure for the intended purposes, by facilitating arrangement for them to access additional funding.
Non-utilisation of grant agreement document - GH¢4,650 1125. An amount of GH¢4,650.00 was paid to Messrs. Ghartey and Ghartey on 31 August 2006 for the preparation of PSI support grant agreements for six operators in the garments and textiles industry.
1126. Though the then Coordinator of PSI Garment, Nana Tweneboa Boateng, confirmed receipt of the agreement documents, through a memo dated 22 August 2006, grants were given out without the PSI signing any agreement with the beneficiaries.
1127. Thus, contrary to FAR 39 (1) which enjoins Spending officers to ensure that monies are utilised in a manner that secures both optimum value and the intention of Parliament, the intended benefit was not obtained from the amount of GH¢4,650.00 spent in producing the documents.
1128. We therefore advised management to either retrieve the agreements from the former Coordinator of PSI-Garment, Nana Tweneboa Boateng, and have the beneficiaries sign them, or the amount of GH¢4,650.00 should be recovered from Nana Boateng.
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Non–utilisation of renovated training centre - GH¢11,492 1129. To boost the work force of the various garment factories in the Ashanti Region, the PSI, in 2004, decided to renovate the Clothing Technology and Training Centre (CTTC) building in Kumasi to be used as a training centre for workers of these factories. An amount of GH¢11,492.30 was spent on the renovation works.
1130. Though the renovation works had been completed since 2006, the facility had not been put to use as of December 2008. The situation could hasten the deterioration of the infrastructure and consequently no benefit would be derived from the amount spent on the renovation. This condition is contrary to the stipulation of FAR 2(c) which requires the efficient and effective use of appropriations.
1131. The Coordinator for the PSI (Garment), Ms. Gloria Wiafe, explained that funds were not available to provide equipment to fully complete the facility for usage since the PSI did not allocate funds for the programme in 2006/2007.
1132. We advised management to always prioritise its activities, in view of the limited funding available, so as to avoid partial implementation of programmes, a situation which could militate against the achievement of the objectives of the PSI.
1133. We also recommended that as soon as practicable, management should provide the necessary funding to ensure that the renovated CTTC building is utilised for the training programme.
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Non-implementation of business strategic plan for PSI Cotton - GH¢45,696 1134. We noted that the PSI paid GH¢45,696.00 to Messrs. Continental Consultants for the preparation of a business plan for the development of the cotton industry in Ghana (Reference: letter No MPSD/PSI-Cotton/01 of 12 April 2006). Two years after its completion and submission to the PSI, the strategic plan had not been put to use. Thus, no benefit was derived from the amount spent; a situation which goes contrary to Regulation 2(c) of the FAR 2 which stipulates that the Head of a government department shall secure the efficient and effective use of appropriations under departmental control.
1135. The former Chief Director of the then PSI/PSD, Mr. S. S. Saaka, explained that the PSI’s inability to execute the Strategic Business Plan was due to the realignment of the sector to the Ministry of Trade and Industry and also due to the change in management.
1136. We recommended that the strategic plan should be implemented as soon as possible to ensure that appropriate value is obtained from the investment. Management was unable to react to the recommendation.
Non-certification of works paid for - GH¢273,310 1137. Section 16 of FAA stipulates that payment shall not be made for work done, goods supplied or services rendered whether under a contract or not in connection with any part of the public service,
284 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 unless in addition to any other voucher or certificate that is required, the head of department or any other officer authorised by the Head of department certifies that the work has been performed, the goods supplied or the service rendered.
1138. Twenty-three payments regarding repairs and maintenance works carried out on a number of vehicles and other major jobs totalling GH¢273,310.06 were not certified by the Head of PSI or the Transport/Estate officer before payments were made for these works.
1139. According to the Accounts officer, this lapse occurred because the Ministry did not have a Schedule officer for the transport and estate departments to certify such works. We were however of the view that any other competent officer could have been assigned the responsibility of inspecting and certifying such works.
1140. Failure to certify works done could result in PSI making payments for uncompleted or unsatisfactory jobs rendered to it, and this could in turn result in losses to the State. We recommended that the Paying and Spending officers should ensure that certificates of satisfactory execution of works and services are obtained from responsible officers before payments are made.
Funds locked-up at the Ministry of Agriculture - GH¢80,000 1141. We noted that the former Coordinator of PSI-Oil Palm, Ing. Kwesi Poku, made an advance payment of GH¢80,000.00 on 22 March 2006 to the Ministry of Food and Agriculture’s Tractor Account for the supply of 10 tractors for use at oil palm nursery sites.
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1142. However, as at 1 December 2008, i.e. two years and 10 months after the payment, the tractors had not been collected from MOFA even though they were available. According to the current Coordinator of the oil palm project, Mr. Kwame Addae, PSI had no immediate use for the tractors. The situation suggested inefficient and ineffective use of public resources by the former Coordinator.
1143. Management was advised to immediately recover the amount of GH¢80,000.00 from MOFA if the tractors would not be needed in the immediate future.
MINISTRY OF FOREIGN AFFAIRS, REGIONAL INTEGRATION AND NEPAD
COPENHAGEN – DENMARK MISSION Remittances not received by the Embassy – 76,761 1144. An amount of Є76,760.78 or US $98,521.18 alleged to have been transferred by the Bank of Ghana to the Embassy on 2 August 2006 through telegraphic transfer No. 602080 could not reach the accounts of the Embassy for it to be receipted into the Mission’s account. The management of the Mission informed us that they were in contact with the Ministry of Foreign Affairs to trace the final destination of the remittance.
Short payment of consular fees collected - DKK8,400 (US$1,438) 1145. Our examination of revenue records disclosed differences between receipts issued for consular fees collected and entries made in
286 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 the consular fees’ cashbooks. As a result, total consular fees banked were short-paid by DKK8,400 (US$1,438.00). We recommended a recovery of the amount short-paid and management indicated that the Consular Assistant is being held responsible for the shortage.
BERNE MISSION Unaccounted for revenue - CHF520.00 (US$80.00) 1146. Examination of the consular fees’ cashbooks revealed that Mr. Kwame Twumasi-Fofie, the former Consular Secretary who was also the revenue collector failed to record a total amount of CHF520.00 (US$480.00) collected in his revenue cashbook. This amount was therefore not accounted for. Again management informed us that they are pursuing the recovery of the amount from the former Consular Secretary.
HARARE MISSION Shortfall in rent revenue – US $161,550 1147. Between January 2006 and June 2008, total rent due to the Harare Mission on three landed properties owned by the Ghana government in Lusaka, Zambia was US$268,050. Out of this, only US$106,500 had been paid, leaving a balance of US$161,550 to be accounted for by the Honorary Consul who was mandated to handle and manage Ghana government properties in Lusaka.
1148. We advised management to ensure that the difference of US $161,550.00 is accounted for by the Honorary Consul.
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Payment of illegal entitlements 1149. Mr. Timothy Boapeah, the Butler of a former Ambassador, was paid a total amount of US$833.00 as freight allowance for shipping his personal effects to Ghana, in consonance with his appointment letter. 1150. We noted that Mr. Boapeah was also treated as a Zimbabwean national and paid an amount of US$2,280.00 as gratuity, in conformity with the Zimbabwe Ministry of Foreign Affairs’ directives applicable to her nationals working with foreign embassies. It was further observed that the Mission paid the airfare of Mr. Boapeah from Harare to Luanda to join his employer, the former Ambassador, who was assigned to Luanda straight from Harare on his second duty tour.
1151. We pointed out that since Mr. Boapeah a Ghanaian, was still in active service, he did not qualify for the Zimbabwean gratuity payment of US$2,280. Furthermore, the freight allowance paid to him should have been paid after the completion of his duty tour when returning to his home country. We recommended that the illegal payments totalling US$3,113.00 should therefore be recovered.
Failure of honorary consul to account for visa fees – 12, 510 1152. Two visa booklets issued to Ms. Nuria Gene, the Honorary Consul of Barcelona on 12 July 2005 and 6 September 2006 were used to collect total consular fees of 3,700.00 and 3,100.00 respectively between 29 August 2005 and 30 January, 2007.
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1153. Similarly, a GCR with serial Nos. 427501 to 427600 issued on 12 July, 2005 was also used to collect a total amount of 5,710.00 between 17 October, 2006 and January 2007, bringing the total revenue collected to 12,510.00. However, the Honorary Consul Ms. Nuria Gene could not account for the moneys collected.
1154. We recommended a recovery of the amount from the Consul and the strengthening of supervisory controls over the duties of the Consul to forestall a recurrence of the malfeasance.
Cash shortage of 6,596 1155. Mr. Seth Odoi Anang, the Accounting officer at the Mission failed to account for an amount of 6,596.21 out of total cash on hand of 68,131.21 as at 30 June 2008.
1156. Poor supervision by the Head of Chancery over the revenue collection system facilitated the misappropriation. We recommended recovery of the amount involved and the strengthening of internal control system over revenue collection at the Mission.
Cost of utility services at the residency not recovered – 2,065 1157. The Head of Mission, H.E. Mr. F.A Tsegah failed to pay an amount of 2,064.94 being his 10% share of utility bills of 20,649.46 paid on his behalf by the Mission to three companies between October 2006 and April 2008. At the time of writing this report 1,000.00 had been recovered vide Treasury Counterfoil Receipt No.0063654 of 26 June 2008, leaving an outstanding balance of 1,064.94 whose recovery the Ministry is pursing.
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NEW DELHI MISSION Outstanding advances – US $9,602 1158. A total amount of US $8,602.00 advanced by the Mission to Mrs. Okyere Akosua Badoo and Mr. Jonathan Addah who were in India on various courses of study, as well as an amount of US $1,000 advanced to Ms. Lydia A. Ahiavi to enable her travel back to Ghana had still not been settled. We learnt that it was the Ministry which guaranteed the advances paid to Mrs. Okyere and Mr. Addah.
1159. We advised the Mission to recover the amounts from Ms. Lydia A. Ahiavi and the Ministry of Foreign Affairs to chest.
TEL AVIV MISSION Indebtedness to the Mission – US $1,500 1160. The Mission paid US$1,500 on behalf of the Kumasi South hospital to a health official, upon the request of a Deputy Director of Health Service in that hospital. The authorising memo dated 30 January 2008 indicated that reimbursement would be made later. Notwithstanding the assurances by the Deputy Director, the amount of US $1,500 had still not been settled. We recommended that recovery of the amount should be pursued.
TRIPOLI MISSION Indebtedness to the Mission – US $702.33 (LD913.037) 1161. The Mission paid on behalf of a former Communication officer Mr. S.E.O. Bruce telephone bills to the tune of US$702.33 which the officer was not able to refund to the Mission.
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1162. We recommended that management should refund the amount to chest and ensure the refund of future utility bills by staff.
MINISTRY OF FOREIGN AFFAIRS’ TRANSPORT SECTION 1163. Two vehicles auctioned to private persons continued to maintain the Ministry’s registration number held at the Driver and Vehicle Licensing Authority (DVLA).
1164. In September 2007, the Ministry auctioned some vehicles to private individuals and later transferred ownership to them. However, two of the purchasers failed to change the ownership into their own names. As a result, the two vehicles still use the Ministry’s vehicle registration numbers held at DVLA. The vehicles had therefore not been registered with any insurance company.
1165. To avoid the risk of being held liable in the event of an accident, the Ministry had been advised to transfer the ownership of the vehicles into the names of their present owners.
OTHER AGENCIES RESEARCH DEPARTMENT Failure to maintain records on stores purchases - GH¢116,748
1166. Section 30(1) of the Financial Administration Act, 2003, (Act 654) requires government departments to maintain adequate records of stores in respect of their acquisition, custody, control, issue and disposal.
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1167. We observed however that store items worth GH¢116,747.55 purchased between January 2007 and May 2008 were not covered by any stores receipt/issue vouchers, neither were they taken on ledger charge.
1168. We noted that the officer in charge of the stores was not a qualified Storekeeper and was not conversant with storekeeping duties. As a result, we could not confirm whether the items involved were fully received.
1169. We urged management to secure the services of a qualified Storekeeper and ensure that control measures are put in place to provide an assurance that goods purchased are properly documented before being issued out on the approval of designated officials.
1170. Management took note of our recommendation and promised to examine the feasibility of employing a qualified Storekeeper.
NATIONAL COMMISSION FOR CIVIC EDUCATION- NKWANTA Failure to account for moneys received- GH¢14,640 1171. Contrary to Part I, Regulation (1) of the FAR which enjoins public officers responsible for the conduct of financial business on behalf of government to keep records of transactions, we noted that the accounting and other related records of the above office, covering the period January 2000 and March 2008 had not been written up to date. Consequently, a total amount of GH¢14,640.08 being moneys disbursed by the District Director could not be properly accounted for.
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1172. In our opinion, the failure to write books of account could be a deliberate ploy to conceal fraud. The District Director’s explanation that the Accounting officer during whose period the transactions took place had resigned from the Commission, hence the backlog of entries could not be accepted since a new officer had taken over.
1173. We therefore requested the Director to provide us with the necessary receipts and other supporting documents to authenticate the transactions or be surcharged with the total amount of GH¢14,640.00.
COMMISSION FOR HUMAN RIGHTS AND ADMINISTRATIVE JUSTICE – SUNYANI Overpayment of salary – GH¢956 1174. By Section 39(2c) of the FAR, the Head of an Accounts Department is required to control disbursements of funds and ensure that transactions are properly authenticated to show that amounts are due and payable.
1175. We noted, to the contrary, that Mr. Simon Gaga was paid GH¢1,203.10 instead of GH¢247.14 as salary for the month of October 2007, resulting in an over payment of GH¢955.94. Weak internal control over cash management, in our opinion, was the cause of the overpayment.
1176. We also noted that management was totally apathetic towards the recovery of the overpayment and this could result in financial loss to the State. We therefore recommended to management to recover
Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 293 the overpayment of GH¢955.94. We also advised management to ensure that all payments made are due and meet the requirements of Parliament.
JUDICIAL SERVICE –HEADQUARTERS Failure to prepare bank reconciliation statement 1177. Best practice for the management of bank and cash transactions requires that monthly bank reconciliation statements should be prepared for all bank accounts and reviewed by a senior official.
1178. Our audit however disclosed that only one out of thirteen bank accounts kept by the Service was reconciled during the period under review. This was, however, not reviewed by a superior officer of the Finance section or by the Internal Auditor.
1179. To enable errors and misstatements in bank transactions to be identified and corrected in time and also ensure completeness and accuracy of bank balances, we recommended to management to ensure the preparation of monthly bank reconciliation statements for review by a senior officer of the Finance section or the Internal Audit.
Misappropriation of revenue and deposits – GH¢36,195.947 and US$ 16,140 1180. Our review of revenue cash books and related records disclosed that deposits and revenue totalling GH¢36,195.947 (¢361,959,474.20) and US$16,140.00 collected between January 2003 and June 2006 could not be accounted for by the Cashier/Accountant, Mr. Kweku Mensah and his assistant, Doreen Love Akwettey an Assistant Court Registrar.
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1181. The misappropriation took the form of direct misappropriation of deposits, direct misappropriation of revenue, understatement of amounts in cash book and substitution of cash with dud cheques.
1182. We recommended that management should pursue the matter vigorously and ensure the recovery of the total amount from Mr. Kweku Mensah and Miss Doreen Love Akwettey. We were informed that, in connection with the case, Mr. Kweku Mensah was tried and jailed for two years but management has not officially informed us about how they intend to recover the said amount.
Transactions with HFC bank 1183. Regulation 15 of FAR 2004 states that any revenue collector who collects or receives public money and trust moneys shall pay them into the relevant public Fund Bank Account within 24 hours of receipt.
1184. We noted that, for purposes of effective revenue collection, the avoidance of “teeming and lading” and the prevention of other revenue frauds, management decided to contract the services of an off- site banking facility provider to collect court fines, deposits etc. on behalf of the Service and accordingly contracted the services of the Home Finance Company (HFC) bank.
1185. Contrary to the regulation stated above, it was observed that revenue collected by the HFC bank was retained by the bank for more than 48 hours and in some cases for months before being transferred into the Consolidated Fund. Details of the irregularity were shown to management.
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1186. Furthermore, we realised that the arrangement with HFC bank contravened Section 3(4) of the High Court (Civil Procedure) Rules, 2004 which states that “Any money paid into court may at any time, by order of the Court, be placed in the Bank of Ghana in an interest yielding account…”
1187. We pointed out that the bank’s practice of withholding revenue was depriving the government and the Service huge sums of money. Apparently, the bank might have been transacting business with the Service’s money without any benefit to the Service.
1188. We also noted that there was no bank reconciliation statements prepared to keep track of the moneys being collected by the bank on behalf of the Service. We consequently recommended that management should enforce the bank’s compliance with Regulation 15.
1189. We also urged the Head of accounts section to generate daily reports from the banking system, match them against his records and investigate any discrepancies found. Also, all receipts or slips issued by the HFC bank to customers should be filed chronologically in order to facilitate reconciliation with the Cashier’s cash book.
Non-deduction of Pay as You Earn and withholding tax – GH¢988,857 1190. Due to oversight, the Accounts office did not deduct PAYE totalling GH¢974,667.13 from GH¢8,694,849.96 paid as various
296 Auditor-General’s Report on the Public Accounts of Ghana (MDAs) –31 December 2008 allowances to staff and third parties who provided services to the Judicial Service. Furthermore, withholding tax of GH¢14,189.55 collected on behalf of the IRS was also not paid during the period under review.
1191. We recommended to management to recover the lost taxes and remit them to the IRS as tax arrears and ensure compliance with the tax laws.
Fraudulent manipulation of store records – GH¢66,069 1192. Principles of good accounting and stores management require that all balances should be carried forward when new ledgers are introduced.
1193. To the contrary, during the course of our audit, we noted that records on 14,682 reams of A4 photocopier papers were left in the ledger folio of an old store ledger when a new ledger was opened on 14 December 2005 without the 14,682 reams being brought forward.
1194. We learnt that a verbal instruction was given to Miss Comfort Osei, a Senior High Court Registrar by the then Storekeeper not to carry forward the balance of 14,682 reams of A4 photocopier papers.
1195. This anomaly which was a clear manifestation of fraudulent manipulation of store records cost the Judicial Service GH¢66,069.00 at current market price. We therefore recommended that the value involved should be surcharged to the former Storekeeper who is said to be on interdiction.
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CIRCUIT COURT – TEPA Unearned salary – GH¢3,066 1196. Our review of staff personal files of the above court revealed that Mr. Amadu Alhassan, a Clerical officer, gained admission into the University of Cape Coast in September 2006 without obtaining approval from the Judicial Service.
1197. The audit also disclosed that between October 2006 and March 2008 unearned salaries totalling GH¢3,065.58 were paid into his bank account at Social Security Bank Limited, Tepa. Our verification at the bank disclosed that Mr. Amadu Alhassan had withdrawn the total amount of GH¢3,065.58 being the illegal salaries paid to him.
1198. Management informed us that up to the time of the audit the authorities had still not replied Mr. Alhassan’s application for study leave with pay. We advised management to ensure the regularisation of Mr. Alhassan’s study leave or the amount of GH¢3,065.58 be recovered from him and his name deleted from the payment voucher.
Unearned salary – GH¢2,322 1199. We also noted that Mr. Daniel Eklu who was offered appointment as Night Watchman in January 2005 vacated his post soon after the appointment. An unearned salary totalling GH¢2,321.51 for the period January 2005 to March 2008 was paid into his account with the Ghana Commercial Bank Limited, Tepa.
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1200. We advised management to ensure that the total unearned salary of GH¢2,321.51 is recovered and paid into the Consolidated Fund while steps are taken to delete Mr. Eklu’s name from the payroll of the Circuit Court.
DISTRICT MAGISTRATE’S COURT – KONONGO Unearned salaries – GH¢650 1201. We noted during the examination of salary vouchers that Mr. William Asare, a High Court Registrar, who vacated his post was paid unearned salaries totalling GH¢444.32 between March 2008 and April 2008. Furthermore, Mr. Tierenye Gilbert, a Night Watchman who died was also paid unearned salaries of GH¢206.13 between February 2001 to April 2008.
1202. We recommended to management to submit their names for deletion from the payroll and the unearned salaries totalling GH¢650.45 recovered and paid into the Consolidated Fund.
DISTRICT MAGISTRATE’S COURT –NSAWAM Delay in bank lodgments – GH¢2,050 1203. We observed that between August 2007 and July 2008, a total collection of GH¢2,049.94 in respect of mileage/bailiff fees was unduly delayed for periods ranging from one to nine months before being lodged at bank.
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1204. We attributed this to the failure of the Registrar to supervise the work of the Accountant. We urged the Registrar to ensure that the Accountant always lodged all collections promptly to bank.
Failure to transfer revenue collected – GH¢1,322 1205. Contrary to Section 17(c) of the FAR, an amount of GH¢1,321.83 being revenue collection paid to Ghana Commercial Bank, Nsawam, was not transferred into the main Consolidated Bank account in spite of an advice instructing the transfer. This was due to the failure of the Accountant to reconcile his cash book with the monthly bank statements.
1206. We recommended that the Accountant should ensure monthly reconciliation and also pursue the transfer of the GH¢1,321.83 to Ghana Commercial Bank, High Street, Accra.
HIGH COURT – KOFORIDUA Misappropriation of revenue – GH¢54,241 1207. An Assistant Registrar in charge of revenue collection, Mr. Charles Koduah collected a total amount of GH¢52,950.36 as court fees, bailiff fees, deposits and sale of forms for the period 1 August 2006 to 31 July 2007, but failed to pay it to bank. Again, Ms. Juliana Amoah, a Cashier collected a total revenue of GH¢1,592.60 but paid only GH¢301.50 to bank leaving a balance of GH¢1,291.10.
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1208. We recommended to management to initiate measures including legal action to recover the amounts from Mr. Charles Koduah and Ms. Juliana Amoah.
DISTRICT MAGISTRATE’S COURT – ABETIFI/KWAHU Failure to account for revenue – GH¢6,409 1209. Part II Section 15 of the FAR 2004 requires all officers who collect or receive public and trust moneys to pay them into the relevant bank account within 24 hours of receipt.
1210. We noted that between 1 August 2006 and 26 September 2008 court fees and deposits totalling GH¢6,408.60 which were collected were not fully accounted for by the Cashiers. Weak internal controls and ineffective monitoring of the work of the Cashiers resulted in the irregularity.
1211. We recommended to management to improve upon its internal controls and also recover the unaccounted for revenue from the Cashiers.
PUBLIC RECORDS AND ARCHIVES ADMINISTRATION DEPARTMENT Un-acquitted payment vouchers – GH¢455,391 1212. FAR 39 (2c) of 2004 enjoins the Head of the Accounts section of a department to control the disbursement of funds and ensure that transactions are properly authenticated to show that amounts are due and payable.
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1213. We noted that payment vouchers totalling GH¢455,390.58 were not supported with detailed expenditure documents such as official receipts, invoices and claim sheets to acquit the payments. This lapse was due to lack of proper supervision by management over the Accounts officers which can lead to fictitious payments.
1214. We urged management to acquit the payments with the relevant supporting documents or the total amount of GH¢455,390.58 be recovered.
Un-presented payment vouchers - GH¢3,980 1215. Four payment vouchers amounting to GH¢3,979.64 raised for various activities of the department were not presented for our examination. We could therefore not verify the genuineness of the expenditures.
1216. This anomaly contravened Section 262 of the FAR 2004, which states that “A head of department shall ensure that financial and accounting records are preserved in good order in a manner that facilities ready access for reference.”
1217. To ensure proper accountability and transparency, we recommended that, the un-presented payment vouchers should be produced for our verification or the amount of GH¢3,979.64 be recovered from the Accountant.
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Unearned salary – GH¢1,863 1218. FAR Section 297 (1d) states that a head of department shall cause the immediate stoppage of payment of salary to a public servant when that public servant has resigned.
1219. We noted during the examination of the payroll for the year 2006 and 2007 that Mr. Henry Ziwu with staff No. 624446K left the Service on 1 May 2006 but his name continued to appear on the payroll despite deletion letter No. BH132/168/014 dated 7 June 2006 addressed to the Head of the Civil Service.
1220. The Accountant also failed to write to the bank to stop the payment and place the unearned salary into the Suspense Account of the Controller and Accountant-General. We advised management to initiate measures to recover the unearned salary of GH¢1,863.00 from Mr. Henry Ziwu.
Unaccountable imprest 1221. FAR 285 (1) states that payments may only be made from an imprest on the authority of a payment voucher prepared and signed in accordance with the Financial Regulations. In effect, the disbursement of imprest funds is to be fully documented and accounted for.
1222. We noted that contrary to the requirement of the FAR, a review of the Departmental imprest cashbook showed that two payments totalling GH¢1,729.37 were not recorded in the imprest cashbook. Management attributed this lapse to oversight.
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1223. We recommended that the schedule officer should account for the GH¢1,729.37 or be surcharged with the amount.
Unsigned sitting allowances – GH¢1,110 1224. A scrutiny of payment vouchers disclosed that payments made on PV Nos. 0407541 and 0704071 of 4 April 2007 and 17 December 2007 amounting to GH¢1,110.00 as sitting allowances were not signed by some of the claimants. Since the affected claimants had not signed the vouchers, there was no evidence that they had received the amounts stated against their names.
1225. We recommended that the officers should be called upon to append their signatures to their claims or the amount of GH¢1,110.00 be recovered to chest.
Non-deduction of 10% tax- GH¢9,718 1226. Allowances paid to both staff and non-staff members for the period January 2006 to March 2008 amounting to GH¢97,177.10 were not subjected to the statutory 10% withholding tax deduction totalling GH¢9,717.71, in contravention of Section 84(1a-d) of the Internal Revenue Service Act 2000 (Act 592).
1227. This breach of the Act was as a result of management’s ignorance of the tax law which thereby deprived the State of funds needed for its developmental programmes. We recommended that management should acquaint itself with the requirement of the law for strict compliance. We also urged that the amount of GH¢9,717.71 should be recovered and remitted to the IRS.
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Fuel purchased not accounted for - GH¢4,682 1228. Store Regulation 1604 requires the maintenance of proper vehicle log books on all official vehicles with full particulars of receipt of fuel, oil and lubricants recorded therein on a daily basis.
1229. Fuel purchases made amounting to GH¢3,845, between January 2006 to March 2008 for the Department’s Nissan Patrol was not accounted for in the vehicle’s log book. In another instance, fuel coupons amounting to GH¢837 issued to the mower operator were not recorded in a register to serve as a control measure. Failure on the part of management to maintain control records on the fuel coupons resulted in this anomaly.
1230. We advised management to exercise greater control over the use of fuel and to account for the GH¢4,682 fuel purchased.
Review of IGF rate 1231. Regulation 20 of the FAR enjoins a head of department responsible for collecting various types of fees and charges to review annually the administrative efficiency of collection, the accuracy of past estimates and the relevance of rates, fees and charges to current economic conditions and submit proposals through the appropriate Sector Minister to Parliament for approval.
1232. In contrast, we noted that the rate charged by the Department for the services it renders had not been reviewed since 2003. We considered the rate of GH¢0.50 per box per year as too low.
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1233. We recommended that management should submit a proposal through its Sector Minister to Parliament for an upward review of the present rate to reflect current economic conditions in the country.
Funds not accounted for-GH¢29,200 1234. The Regional offices of the Department failed to acknowledge and to submit expenditure returns to account for a total sum of GH¢29,200 being Administration and Service activity votes released to them during the period January 2006 to December 2007, contrary to Regulation 2 of the FAR which requires proper and adequate accountability for funds released for official purposes. The lapse occurred as a result of management’s reluctance to enforce the regulation.
1235. We recommended that management should compel the Regional heads to acknowledge receipt and submit expenditure returns to account for the releases made to them.
PUBLIC RECORDS AND ARCHIVES ADMINISTRATION DEPARTMENT, KUMASI
Failure to account for fuel and lubricants – GH¢1,711 1236. Section 1604 of Store Regulation 1984 requires that vehicle log books should be maintained for each vehicle and always carried on the vehicle. The driver is also required to record, on daily basis in the log book, all journeys undertaken and full particulars of fuel, oil and lubricants.
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1237. We noted that fuel and lubricants purchased by the Regional Archives Department amounting to GH¢1,711.04 for its vehicle No. GV 3947 C could not be accounted for because the Department did not maintain a vehicle log book. We could therefore not ascertain the veracity of the alleged purchases.
1238. Management expressed ignorance of the regulation but pledged to procure a log book for immediate use in order to account for future purchases of fuel.
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