IMANI’S FISCAL RECKLESSNESS INDEX
Rankings of Financial Irregularities for MDAs, Boards of Public
Corporations, Polytechnics and Pre-University Institutions (2012-2014)
Presented by Kofi Boahen & Andrew Ntim
Main Outline
Background
Agencies & Legal Framework
Analysis of Rankings
Auditing the Audit Service
Commitment to Curbing these Improprieties
Key Findings & Recommendations
Background
Oversight Agencies & Legal Framework
Analysis of Rankings
Auditing the Audit Service
Commitment to Curbing these Improprieties
Key Findings & Recommendations
Background
•Government has a social contract to provide
requisite infrastructure and developmental
projects
•National budgets are donor supported, but
due to our middle income status, donor
funding is on declining trajectory
•Increasing need to make judicious use of
financial resources in terms of quality of
spending and less hemorrhage (wastage)
Background
• Audit Service led by Auditor General is
mandated to audit all the accounts of public
institutions, and submit reports to Parliament.
•Over the years, these reports have revealed
huge amounts (estimated at GHS 40 billion,
since promulgation of Constitution) of
financial irregularities committed by public
institutions
Background
• Sadly, there appears to be little
effort/evidence of intent from the Auditor
General and other agencies to curb these
irregularities, and recover these “lost” funds.
• Hence, this report seeks to re-echo the need
for remedial financial and legal efforts to stop
this canker that has engulfed the public sector
Methodology
• Focussed on the Auditor General’s reports for
MDAs, Public Boards, Polytechnics and PreUniversity educational institutions from 2012
– 2014
• Composite ranking (aggregate of absolute
figures for financial irregularities)
Limitations
• Differences in the total irregularities for some
of the reports (Polytechnics - 2014).
• Some reports cited figures, but these were
absent in the narrative (Ministry of Finance &
Economic Planning, 2013 - GHS 408 million)
Background
Oversight Agencies & Legal
Frameworks
Analysis of Rankings
Auditing the Audit Service
Commitment to Curbing these Improprieties
Key Findings & Recommendations
•Auditor General
•Controller & Accountant General
•Public Accounts Committee
•Public Procurement Authority
•1992 Constitution
•Audit Service Act, 2000 (Act 584)
•Financial Administration Act & Regulations
•Public Procurement Act & Regulations
Auditor General
•Article 187 (2) states that:
The public accounts of Ghana and of all public offices, …
shall be audited and reported on by the Auditor-General
•Article 187 (5) states that:
The Auditor-General shall, within six months after the
end of the immediately preceding financial year … submit
his report to Parliament and shall, in that report, draw
attention to any irregularities in the accounts …
AUDITOR GENERAL
•Article 187 (7)(a) states that:
In the performance of his functions under this Constitution or any other law the
Auditor-General - shall not be subject to the direction or control of any other
person or authority;
•Article 187 (7)(b) provides that:
may disallow any item of expenditure which is contrary to law and surcharge
(i) the amount of any expenditure disallowed upon the person responsible for
incurring or authorising the expenditure; or
(ii) any sum which has not been duly brought into account, upon the person by
whom the sum ought to have been brought into account; or
(iii) the amount of any loss or deficiency, upon any person by whose negligence or
misconduct the loss or deficiency has been incurred.
Controller & Accountant General
Section 3 (1) of the FAA provides that:
There shall be appointed in accordance with article 195 of the
Constitution, a Controller and Accountant-General who is
responsible to the Minister for the custody, safety and integrity of
the Consolidated Fund and other public funds designated under the
care of the Controller and Accountant-General.
Section 3 (3) states that:
The Controller and Accountant-General is the Chief Accounting
Officer of the Government who has responsibility to keep, render
and publish statements of public accounts as required by this Act or
any other enactment.
Controller & Accountant General
•Section 3 (7) of the FAA:
Without limiting the generality of these duties, the Controller and
Accountant-General shall
(a) In consultation with the Auditor-General, specify for
departments, the accounting basis, policies and the classification
system to be applied in public accounting and ensure that a proper
system of accounting is established in each case; and
(b) Ensure, in so far as is practicable, that adequate provisions exist
for the safe custody of public money, securities and accountable
documents.
Public Accounts Committee
•Article 187 (6) provides that
Parliament shall debate the report of the Auditor-General and
appoint where necessary, in the public interest, a committee to deal
with any matters arising from it.
•Article 103 (6) provides that
A committee appointed under this article shall have the powers, rights and privileges of the
High Court or a Justice of the High Court at a trial for
(a) enforcing the attendance of witnesses and examining them on oath, affirmation or
otherwise;
(b) compelling the production of documents; and
(c) issuing a commission or request to examine witnesses abroad.
Public Procurement Authority
Section (2) of the PPA states that:
The object of the Board is to harmonise the
processes of public procurement in the
public service to secure a judicious, economic
and efficient use of state resources in public
procurement and ensure that public
procurement is carried out in a fair,
transparent and non-discriminatory manner.
FAA, 2003 (ACT 654)
AN ACT to regulate the financial
management of the public sector; …
ensure the effective and efficient
management of state revenue,
expenditure, assets, liabilities, resources of
the government, the Consolidated Fund
and other public funds and to provide for
matters related to these.
PPA, 2003 (ACT 663)
AN ACT to provide for public procurement,
establish the Public Procurement Board;
make administrative and institutional
arrangements for procurement; stipulate
tendering procedures and provide for
purposes connected with these.
Background
Agencies & Legal Framework
Analysis of Rankings
Auditing the Audit Service
Commitment to Curbing these Improprieties
Key Findings & Recommendations
Summary of Irregularities By Type
(2012-2014)
No.
Type of Irregularities
1
Outstanding Debts/Loans
2
Grand Total (GHC)
Percentage (%)
3.9 billion
66.2
Cash Irregularities
985.2 million
16.6
3
Contract Irregularities
322.9 million
5.4
4
Tax Irregularities
290.7 million
4.9
5
Stores Irregularities
225.4 million
3.8
6
Procurement Irregularities
119.7 million
2.0
7
Payroll Irregularities
62.7 million
1.1
8
Rent Payment Irregularities
500,000
0.01
Total
5.9 billion
100.0
Summary of Irregularities By Type
(2012-2014)
No.
Type of Irregularities
1
Outstanding Debts/Loans
2
Grand Total (GHC)
Percentage (%)
3.9 billion
66.2
Cash Irregularities
985.2 million
16.6
3
Contract Irregularities
322.9 million
5.4
4
Tax Irregularities
290.7 million
4.9
5
Stores Irregularities
225.4 million
3.8
6
Procurement Irregularities
119.7 million
2.0
7
Payroll Irregularities
62.7 million
1.1
8
Rent Payment Irregularities
500,000
0.01
Total
5.9 billion
100.0
Cumulative Breakdown By Category
No.
Categories
Total Amount (GHC)
Percentage (%)
1
Public Boards
4.6 billion
78.7
2
MDAs
1.1 billion
18.9
3
Polytechnics
84.2 million
1.4
4
Pre-university
53.6 million
0.9
5.9 billion
100
Total
COMPOSITE RANKING (TOP 6)
Composite Ranking (2012 – 2014)
No.
Sector Ministries
Amount (GHC)
% of Total
1
Ministry of Finance &
Economic Planning
2.7 billion
47.1%
2
Ministry of Energy
1.9 billion
33.4%
3
Ministry of Youth & Sports
329 million
5.66%
4
Ministry of Health
327 million
5.63%
5
Ministry of Education
Savannah Accelerated Devt.
Authority
209 million
3.6%
88.5 million
1.5%
6
COMPOSITE RANKING (PT. 2)
Composite Ranking (2012 – 2014)*
No.
Sector Ministries
Amount (GHC)
% of Total
7 Ministry of Water Resources, Works &
Housing
40.5
Million
0.7%
8 Ministry of Trade & Industries
25
Million
0.4%
9 Ministry of Information
19.6
Million
0.3%
10 Ministry of Defence
18.7
Million
0.3%
11 Ministry of Communication
17.8
Million
0.3%
12 Ministry of Food & Agriculture
12.9
Million
0.2%
13 Ministry of Justice
12
Million
0.2%
COMPOSITE RANKING (PT. 3)
Composite Ranking (2012 – 2014)*
No.
Sector Ministries
Amount (GHC)
%
17 Ministry of Land, Forestry & Mines
2.5 Million
0.04%
18 Ministry of Gender, Children & Social Protection
2.2 Million
0.04%
19 Ministry of Environment, Science & Technology
2.1 Million
0.04%
20 Ministry of Interior
577 Thousand
0.01%
21 Ministry of Local Government & Rural
Development
546 Thousand
0.01%
22 Ministry of Roads & Highways
434 Thousand
0.01%
23 Ministry of Chieftaincy & Culture
313 Thousand
0.01%
34 Thousand
0.001%
3.2 Million
0.06%
24 Ministry of Tourism,Culture & Creative Arts
25 Other Misc. Agencies✝
*ABSENT SECTOR MINISTRY: Ministry of Fisheries and Aquaculture Development (MOFAD)
✝ Includes agencies not tabulated in Auditor General’s Report. May be subject to slight
inconsistencies.
#1:
Ministry of Finance and
Economic Planning
Finance by the Numbers
Cumulative Irregularity -- 2.7 Billion Cedis
– 2012: 2.0 Billion
– 2013: 517 Million
– 2014: 215 Million
Major Culprit:
Bank of Ghana
(Debt Irregularities
Resulting from
Over-Borrowing
Against BoG Act)
#2:
Ministry of Energy
Ministry of Energy:
By the Numbers
Cumulative Irregularity -- 1.9 Billion Cedis
– 2012: 2.4 Million
– 2013: 224 Million
– 2014: 1.7 Billion
Major Culprit:
Ghana National
Petroleum
Corporation
(Debts owed by other
governmental Agencies)
#3:
Ministry of Youth and Sports
Ministry of Youth and Sports:
By the Numbers
Cumulative Irregularity -- 329 Million Cedis
– 2012: 63 Thousand
– 2013: 323.5 Million
– 2014: 5.7 Million
Major Culprit:
GYEEDA
(Significant
overspending of
budget, violations of
FAR)
#4:
Ministry of Health
Ministry of Health:
By the Numbers
Cumulative Irregularity -- 327 Million Cedis
– 2012: 313 Million
– 2013: 9.4 Million
– 2014: 2.1 Million
Major Culprit:
Controller and
Accountant
General’s
Department
(Debts owed to National
Health Insurance
Agency)
#5:
Ministry of Education
Ministry of Education:
By the Numbers
Cumulative Irregularity - 210 Million Cedis
– 2012: 118.6 Million
– 2013: 48.8 Million
– 2014: 42.5 Million
Major Culprit:
National Service
Secretariat
(unrefunded
overpayments to
national chest)
Polytechnics and Pre-Universities
Polytechnics:
Pre-Universities:
Total: 84.2 million cedis
Total: 53.6 million cedis
Major Culprit:
Unapproved Spending from
Internally Generated Funds (IGF)
Major Culprit:
Wilful Defiance of Public
Procurement Act, Noncompliance
with Financial Reporting
#6:
Savanna Accelerated
Development Authority
Savanna Accelerated Development Authority:
By the Numbers
Cumulative Irregularity -- 88.5 Million Cedis
– 2012: N/A
– 2013: 16.9 Million
– 2014: 59.6 Million
Major Culprit:
Violations of PPA
and FAR
(uncompetitive tendering
and undocumented
transactions)
Background
Oversight Agencies & Legal Framework
Analysis of Rankings
Auditing the Audit Service
Commitment to Curbing these Improprieties
Key Findings & Recommendations
Budget Allocation & Expenditure
(2012) – Audit Service
Budget Allocation & Expenditure
(2013) – Audit Service
Budget Allocation & Expenditure
(2014) – Audit Service
Background
Oversight Agencies & Legal Framework
Analysis of Rankings
Auditing the Audit Service
Commitment to Curbing these Improprieties
Key Findings & Recommendations
Institutional failure
•Auditor General
• Ministry of Finance
• Ghana Cocoa Board
Lack of Political Will
• Zero tolerance for Corruption
• National Anti-Corruption Action Plan (NACAP)
LEGAL FAILINGS
• Section 4(1)(f) of the Limitation Act, 1972
(NRCD 54) prescribes a six-year limitation
period on legal actions to recover any such
monies.
• Absence of actual implementation of Penalty
points and / or prison sentences in the PPA and
FAA
Background
Oversight Agencies & Legal Framework
Analysis of Rankings
Auditing the Auditor General
Commitment to Curbing these Improprieties
Key Findings & Recommendations
KEY FINDINGS
• Gross disregard for laws, rules, regulations,
processes and controls with diverse and dire
consequences for Ghana’s economic fortunes:
• Tax irregularities (GHS 290.7m) – Affects
government budgeted revenue and
programmes
• Contract Irregularities (GHS 322.9m) – Affects
how much government (& taxpayers) pay for
developmental projects
KEY FINDINGS
• Procurement irregularities (GHS 119.7m) - Value
for money implications, and indictment on the
PPA/Board. Also dominant amongst Pre-Univ &
Public Boards
• Outstanding debts/loans (GHS 3.9 bn) - Can
affect financial sustainability of institutions, and
operational threats.
• Payroll irregularities (GHS 62.7m) - Alternate
cost implications
• Cash irregularities (GHS 985.3m) - Alternate cost
implications
KEY FINDINGS
• The Auditor General has yet to exercise the
powers of Disallowance and Surcharge
• Non-compliance was predominant amongst PreUniversity educational institutions
• Management & boards of public institutions were
very irresponsible as requisite controls were
absent, and AuG recommendations were rarely
implemented.
RECOMMENDATIONS
• The need for a multifaceted (agencies)
approach to curbing these improprieties.
• Auditor General MUST enforce the punitive
provisions in the law
RECOMMENDATIONS
• There should be real demonstration of
political will to prevent and/or sanction these
corrupt acts, beyond action plans (NACAP)
• Management of these institutions must be
compelled to provide the requisite internal
controls and measures to nip the occurrences
at the source.
THANK YOU FOR YOUR ATTENTION