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Massive irregularities uncovered in public institutions
 
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11-Dec-2013  
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Auditor General, Richard Quartey
 
 
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Enormous irregularities amounting to GH˘2,019,188,488.76 (US$50,748,780) has been unearthed from the accounting books of public boards, corporations and other statutory institutions by the Auditor-General (A-G).

The irregularities, which include the lack of documentation on loan agreements stipulating the terms and conditions, misapplication of funds, overestimation of funds needed and the failure to notify bankers to stop payments of unearned salaries, are listed in the A-G’s 2012 report on 77 public boards, corporations and other statutory institutions released in September, this year.

According to a transmittal letter attached to the report and signed by the A-G, Mr Richard Q. Quartey and addressed to the Speaker of Parliament dated September 10, 2013, the irregularities, which were discovered in seven areas, were outstanding debts/loans/recoverable charges – GH˘1,696,453,352.63; cash irregularities GH˘116,346,697.84 and payroll irregularities – GH˘251,805.19.

The rest were procurement irregularities – GH˘50,492,451.95; tax irregularities – GH˘1,072,001.80; stores irregularities –GH˘629,683.13 and contract irregularities - GH˘153,942,496.22.

Outstanding debts/loans/recoverable charges

Titled “Report of the Auditor-General on the Public Accounts of Ghana – public boards, corporations and other statutory agencies for the year ended 31 December 2012”, irregularities outlined under outstanding debts represented trade debtors, staff debtors and outstanding loans. Absence of a debt collection policy or credit management’s apathy towards loan recovery, also contributed significantly to the anomalies.

Further, improper maintenance of records on debtors, absence of debtors ageing analysis, lack of documentation on loan agreements stipulating the terms and conditions, failure to ensure that loans were repaid and managements’ non-compliance with rules and regulations accounted for these irregularities.

Cash irregularities
Under cash indiscretions, the report listed the misapplication of funds, over-estimation of funds needed, outstanding imprest, non-authentication of payments and cash shortages as having occurred due to poor supervision, lack of control, managements’ failure to review approved budgets and the failure of paying officers to demand receipts for payments made.

The report also said the anomalies arose as a result of accountants’ failure to properly file and keep records, managements’ failure to ensure the security and safety of vital documents, non-monitoring of customers’ payment schedules, non maintenance of returned cheques register and the lax of management in ensuring that accountants adhered to the stipulation of the Financial Administration Act and other relevant regulations coupled with poor accounting system.

Payroll irregularities

Payroll improprieties were caused by failure of management to exercise due diligence and failure of officers in charge of payroll to review payment vouchers to ensure that salaries were paid to only those who were entitled, the report said.

It also pointed out that loopholes in payrolls were also caused by managements’ failure to notify bankers to stop payments of unearned salaries, which mostly comprised payments of unearned salaries to separated staff, non-payment to chest of unearned salaries and payment to staff members who were not entitled to receive those salaries.

Procurement and tax irregularities

Irregularities occurred in procurement processes as a result of management procuring goods and services without recourse to procurement committees of the various institutions and going contrary to the provision of the Procurement Act.

There was misapplication of tax revenue, failure to pay statutory deductions on due dates as required by law and non-adherence to provisions in the tax laws, which also related to transacting of business with non VAT registered persons.

Stores and contract irregularities

Stores anomalies happened as a result of non-documentation of store items and unaccounted for fuel resulting from the absence of store ledgers, lack of awareness of officers assigned to store duties, inadequate supervision, deficient and improvised log books and managements’ failure to procure records.

The non-performance of contracts, variations of conditions of contract without following procedures, non-specification of mode of payments and the failure to deliver in contract agreements and ineffective control over contracts resulted in some contract abnormalities.

While admitting that most of the 96 audited financial statements submitted by the institutions for validation were prepared under generally accepted accounting principles, the report said “The failure by organisations to prepare financial statements stifles effective planning and decision-making by stakeholders.”

“The lack of accounting knowledge by some accounting officers, staff constraints, apathy of some Chief Executives and the failure of some governing boards of these organisations to ensure the preparation of the accounts caused delays in the submission of financial statements or their non -submission,” it noted.

The report said there was still the need for organisations to improve upon their processes for preparing their financial statements and annual reports and pay more attention to compliance with the submission deadline of March 31 each year.

Recommendations

Among several recommendations made, the report tasked sector ministers as a matter of urgency, to take remedial measures to ensure that public Boards, corporations and statutory institutions filled the position of Heads of Accounts Units, with personnel with the requisite skill and experience and installed computerised accounting software to accelerate the production of financial statements for audit.

It also charged the ministers to sanction any Chief Executive who failed to prepare and submit for audit the organisation’s financial statements by the March 31 deadline and any official whose inaction resulted in irregularities to serve as a deterrent to others.

The report further recommended that management of public Boards, corporations and other statutory institutions should strictly adhere to rules and regulations pertaining to debts, put in place a proper policy on granting of loans and ensure that adequate measures were put in place to ensure repayment of loans on due dates to avoid or mitigate the occurrence of bad debts.

It called for the strengthening of supervisory controls over accountants to ensure that they adhered to the stipulations of the Financial Administration Act and other relevant regulations and for management of the respective institutions to transact procurement dealings strictly in accordance with the provisions of the Public Procurement Act, 2003 (Act 663).
 
 
 
Source: Daily Graphic
 
 

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