Total financial irregularities in public sector organisations in 2021 increased 36% to ¢17.48bn

Total irregularities in public sector organisations in 2021 stood at ¢17.48 billion in 2022, the latest 2021 Auditor General’s Report has revealed.

This is a 36.0% or ¢4.62 billion rise from ¢12.856 billion in 2020.

It included $522.18 million converted into cedis at the prevailing exchange rate of ¢6.006 to $1 as of December 31, 2021, €1.484 billion converted into cedis at the prevailing exchange rate of ¢6.82 to €1 as of December 31, 2021 and £729,161 converted into cedis at the prevailing exchange rate of ¢8.127 to £1 as of December 31, 2021.

According to the report, the irregularities was occasioned mainly by credit power sales of ¢6.043 billion to the Volta River Authority (VRA) and Northern Electricity Distribution Company (NEDCo) customers.

The report therefore recommended strict implementation of the recommendations to ensure financial discipline in the management of public resources.

Outstanding Debts/ Loans Recoverable/Credit Power Sales

Outstanding Debts/ Loans Recoverable/Credit Power Sales irregularities stood at ¢16.3bn.

These irregularities, according to the report, represent trade debtors, staff debtors and outstanding loans and cash locked up in non-performing investments.

This included ¢4.76 billion due from customers of VRA and ¢1.27 billion due from customers from Northern Electricity Distribution Company (NEDCo) for power supplies in respect of Forex Power Sales, Local Power Sales, Mines Power Sales, Government Ministries, Departments and Agencies (MDA’) Power Sales, and Government of Ghana Covid-19 Power Relief as of December 31, 2020.

The absence of effective debt collection policies, non-existence of credit controls to recover the debts and managements’ indifferent posture towards loan recovery, the report pointed out, contributed significantly to these conditions.

Also, the report said, improper maintenance of records on debtors, the absence of debtors’ ageing analyses, non-documentation of agreements stipulating the terms and conditions of loans, failure to ensure that loans are repaid and management’s non-compliance with rules and regulations accounted for these irregularities.

“We recommended that Management of Public Boards, Corporations, and other Statutory Institutions should strictly adhere to rules and regulations with regards to debts management. They should also put in place proper policies for the management of loans and other receivables as well as ensuring that loans and debts are repaid on due dates to avoid or minimise the occurrence of bad debts”, the report added.

Cash Irregularities

Cash irregularities related to the misapplication of funds, budget overruns, payments not authenticated and payment of Board Allowances to Council Members without Ministerial approval amounted to ¢505.80 million.

Out of the cash irregularities, ¢230,700,424.38 represented unbudgeted expenditure by Ghana Cocoa Board on the principal repayment of a 10-year loan with Bank of Ghana (BoG) which was not included in the approved budget for 2019/2020 financial year.

These, according to the report occurred because of poor oversight responsibility and nonexistent controls. Other contributory factors were finance officers’ failure to properly file and keep records, management’s failure to ensure the security and safety of vital documents, non-maintenance of returned cheque registers, and management’s inertia in complying with procedures stipulated in the Public Financial Management Act, and poor accounting systems.

The report therefore urged the management teams of the Public Boards, Corporations, and other Statutory Institutions to strengthen supervisory controls over their finance officers and ensure that they adhere to the provisions of the Public Financial Management Act, 2016 (Act 921).

It also recommended the authentication of all payment vouchers, prompt payment to bank and full retirement of accountable imprest on due dates.

Payroll Irregularities

These lapses amounting to ¢8.24 million, the report said, were caused by the failure of management to exercise due diligence, and the tolerance of officers in charge of payroll validation in reviewing payment vouchers to ensure salaries were paid to only those who were entitled as well as payroll related irregularities.

The report also added that there were also caused by management’s failure to notify banks to stop the payment of unearned salaries.

“The Controller and Accountant-General’s Department also did not promptly delete names of separated staff when notified to do so. In other instances, Management also did not transfer statutory deductions in respect of PAYE taxes and SSF contributions”, it mentioned.

Contained in the total irregularity, the report, pointed out was an amount of ¢2.99 million attributed to Ghana Broadcasting Corporation in respect of avoidable pending judgement debt due to the termination of appointment of a former Director-General, judgement debt for the failure to pay long service award to employees, payment of unearned salaries and the late payment of 1st and 2nd tier pension contributions.

The Auditor General’s report therefore advised the management teams of the affected Institutions to promptly notify the bankers of the separated staff to withhold and pay to the government chest all unearned salaries.

It also recommended that officers in charge of payroll should exercise due care in the discharge of their duties as well as ensuring that 1st and 2nd tier contributions for their employees are promptly and regularly transferred to the various pension schemes.

Procurement Irregularities

Procurement irregularities in 2021 amounted to ¢306.76 million.

These irregularities, the report said, occurred as a result of managements’ non-compliance with the provisions of the Public Procurement Act, 2003 (Act 663) as amended.

Out of the total irregularities, ¢219.35 million represented items procured without recourse to the Public Procurement Authority (PPA) by the Electricity Company of Ghana.

The report again recommended that managements of the various Institutions should undertake procurement transactions strictly in accordance with the provisions of the Public Procurement Act as amended.

Tax Irregularities

The Tax irregularities related to failure to pay statutory tax deductions on due dates, and non-deduction of applicable taxes.

They also related to transacting business with non-VAT registered persons or entities.

Out of the total tax irregularities of ¢23.57 million, an amount of ¢23.19 million was attributed to ECG for delayed remittance of P.A.Y.E and withholding taxes and the non-deduction of withholding taxes and withholding VAT.

The report recommended that the Finance Officers should strictly adhere to the tax laws to ensure that all tax revenues are promptly collected and paid to the applicable revenue agencies on due dates.

Contract Irregularities

These are mainly related to the payment for construction projects not undertaken by various Public Boards, Corporations and other Statutory Institutions.

Included in the irregularities figure of ¢283.77 million is an amount of $36.89 million (¢221.568 million) paid by the Social Security and National Insurance Trust (SSNIT) to a contractor in excess of work performed on a project.

The report therefore urged managements to strengthen controls over contracts and ensure that funds are available in order to engender speedy completion of earmarked projects and ensure that payments are made for work done.

Source: JoyNews