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Report of the Auditor-General on the Accounts of District Assemblies for the Financial Year Ended 31 December 2014

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Report of the Auditor-General on the Accounts of District Assemblies for the Financial Year Ended 31 December 2014 REPUBLIC OF GHANA REPORT OF THE AUDITOR–GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 Our Vision To be one of the leading Supreme Audit Institutions in the world, delivering professional, excellent, and cost effective auditing services This report has been prepared under Section 11 of the Audit Service Act, 2000 for presentation to Parliament in accordance with Section 20 of the Act. Richard Quartey Auditor General Ghana Audit Service 15 October 2015 This report can be found on the Ghana Audit Service website at www.ghaudit.org For further information about the Ghana Audit Service on this report, please contact: The Director, Communication Unit Ghana Audit Service Headquarters Post Office Box MB 96, Accra. Tel: 0302 664928/29/20 Fax: 0302 662493/675496 E-mail: [email protected] Location: Ministries Block 'O' © Ghana Audit Service 2015 TRANSMITTAL LETTER Ref. AG/01/109/Vol.2/93 Office of the Auditor-General Ministry Block ‘O’ P O Box MB 96 Accra Tel. (0302) 662493 Fax (0302) 675496 15 October 2015 Dear Rt. Honourable Speaker, REPORT OF THE AUDITOR-GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 I have the honour, in accordance with Article 187(5) of the Constitution to present my Report on the audit of the accounts of District Assemblies for the financial year ended 31 December 2014, to be laid before Parliament. The Report is a consolidation of the significant findings and recommendations made during routine audits conducted by my staff which have been formally conveyed in management letters and annual audit reports to the managements of the Assemblies. The unresolved issues, after considering representations made by the managements provide the basis for the compilation of the Report. The Report is presented in three parts. Part I outlines our mandate, scope and objectives of the audits. Part II provides an executive summary which includes the significant findings and recommendations and Part III contains the details of the findings and recommendations with appendices to give statistics and amounts relating to each Assembly. I have again included comparative figures for 2012 and i REPORT OF THE AUDITOR–GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE YEAR ENDED 31 DECEMBER 2014 2013, where necessary, on the financial results and irregularities of the Assemblies for purposes of comparing year-on-year performance of the Assemblies. The Report portrays internal control weaknesses and managerial ineffectiveness which are the major causes of irregularities in the financial management of the Assemblies. The recurrence of these irregularities is a direct result of the low level of commitment by the Coordinating Directors and Finance Officers towards complying with the provisions of the laws to guide management of Assembly funds. Significant among the irregularities noted were misappropriation of funds, unaccounted value books, failure to recover Assembly funds, unearned salary payments, procurement irregularities and statutory tax infractions. I once again recommend that the Minister of Local Government and the Head of Service, Local Government Service Secretariat (LGSS) should impose penalties on key officials of the Assemblies found to have indulged in grave offences as a measure to deter recurrence of the offences. I acknowledge the cooperation and assistance provided by the Chief Executives of the various Assemblies and their staff during the audits. The invaluable contributions of my staff towards the production of this Report are also hereby acknowledged. Yours faithfully, RICHARD Q. QUARTEY AUDITOR-GENERAL THE RIGHT HON. SPEAKER OFFICE OF PARLIAMENT PATRLIAMENT HOUSE ACCRA ii REPORT OF THE AUDITOR–GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE YEAR ENDED 31 DECEMBER 2014 REPORT OF THE AUDITOR-GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 TABLE OF CONTENTS Paragraph Page PART I Mandate, Scope and Audit Objectives 1-5 1-2 PART II Summary of Findings and Recommendations 6-48 3-9 PART III DETAILS OF FINDINGS AND RECOMMENDATIONS Ashanti Region 49-97 10-20 Brong Ahafo Region 98-129 21-27 Central Region 130-162 28-34 Eastern Region 163-201 35-43 Greater Accra Region 202-238 44-51 Northern Region 239-280 52-60 Upper East Region 281-318 61-67 Upper West Region 319-347 68-74 Volta Region 348-384 75-83 Western Region 385-413 84-89 REPORT OF THE AUDITOR–GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE YEAR ENDED 31 DECEMBER 2014 APPENDICES Submission of annual Financial Statements Appendix ‘A' Revenue & IGF Appendix ‘B’ Revenue Performance Appendix ‘C’ IGF Performance Appendix ‘D’ Expenditure performance Appendix ‘E’ Operational results Appendix ‘F’ Assets & Liabilities Appendix ‘G’ Poverty Alleviation Fund Balances Appendix ‘H’ Financial Irregularities Appendix ‘I’ REPORT OF THE AUDITOR–GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE YEAR ENDED 31 DECEMBER 2014 REPORT OF THE AUDITOR–GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 PART I MANDATE, SCOPE AND AUDIT OBJECTIVES Introduction In accordance with Articles 187(2) and 253 of the Constitution as well as Section 121 of the Local Government Act, (Act 462), the Audit Service has audited the accounts of 216 Metropolitan, Municipal and District Assemblies for the financial year ended 31 December 2014. Although 21 Assemblies were unable to submit their financial statements by the statutory deadline of 31 March, their accounting and other financial records were subjected to interim audits and significant findings arising from these audits have been included in this report. 2. Our findings and recommendations emanating from all the audits which form the basis of this report have been discussed with the key personnel of the Assemblies involved and formally communicated to them in individual management letters and in annual audit reports for their comments and necessary action. Responses received, where deemed appropriate, have been included in this report. Scope and audit objectives 3. The audits were guided by Section 13 of the Audit Service Act, 2000 (Act 584) and the auditing standards of the International Organisation of Supreme Audit Institutions (INTOSAI). Section 13 of Act 584 requires me to examine, as I think fit, the accounts of audited bodies including District Assemblies and to ascertain whether in my opinion: The accounts have been properly kept; All public monies collected have been fully accounted for and the applicable rules, regulations and procedures are sufficient to provide an effective check on the assessment, collection and proper allocation of revenue; 1 REPORT OF THE AUDITOR–GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE YEAR ENDED 31 DECEMBER 2014 Monies have been spent for the purposes for which they were appropriated and expenditures made as authorized; Essential records are maintained and the applicable rules and procedures are sufficient to safeguard and control the Assemblies’ assets; and Programmes and activities of the Assemblies have been undertaken with due regard to economy, efficiency and effectiveness in relation to the resources utilised and results achieved. 4. The audits also ascertained the extent of compliance, among others, with the Financial Administration Act, 2003 (Act 654), Financial Administration Regulations of 2004, the Financial Memoranda for District Assemblies, 2004 and the Public Procurement Act of 2003, (Act 663). 5. We have provided in this Report, extracts from the financial statements for the period 2012 to 2014 for purposes of comparing the year-on-year performance of the Assemblies and to provide an appraisal of Assemblies which consistently defaulted in submitting their financial statements for audit validation and were therefore excluded in the previous reports. These include revenue, expenditure, operational results and assets and liabilities of the Assemblies for the period 2012 to 2014. 2 REPORT OF THE AUDITOR–GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE YEAR ENDED 31 DECEMBER 2014 PART II EXECUTIVE SUMMARY Submission of annual accounts 6. For the financial year ending 31 December 2014, 195 out of the 216 Assemblies submitted their 2014 financial statements for audit validation and publication, thereby satisfying the provision under Part VII Sections 77 and 78 of the Financial Memoranda for District Assemblies. This showed yet another improvement of the previous years’ performances as depicted in the table below. Assemblies with No. of % of Year No. of audited financial defaulting defaulting Assemblies statements Assemblies Assemblies 2012 216 169 47 21.8 2013 216 186 30 14.0 2014 216 195 21 9.7 7. We noted however, that the performance of Assemblies in the Volta region continues to decline over the years. In 2012, 22 Assemblies prepared and submitted their financial statements for audit validation. This declined to 19 in 2013, with 2014 witnessing the worse performance of 14 Assemblies out of the total of 25 submitting financial statements for validation. Nkwanta South have defaulted for three consecutive years, with Jasikan and Kadjebi Assemblies defaulting for two consecutive years. Revenue 8. The 195 Assemblies, whose financial statements were validated operated with a total revenue of GH¢956,680,350.68 during the 2014 financial year. The revenue comprised of internally generated funds, District Assemblies Common Fund, Government grants and donor funding. Government grants came in the form of salary payments to employees and budgetary support to decentralized departments, while donor funding included support under the District Development Facility and the Urban Development Grant among others. 3 REPORT OF THE AUDITOR–GENERAL ON THE ACCOUNTS OF DISTRICT ASSEMBLIES FOR THE YEAR ENDED 31 DECEMBER 2014 Internally Generated Funds 9. Total funds collected from internal sources by the 195 Assemblies amounted to GH¢187,028,624.39 and this accounted for 19.5% of the total revenue of the Assemblies. IGF collections have generally been low across board except for the Metropolitan Assemblies and the Assemblies entitled to royalties from mineral resources.
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