Business News of 2013-12-13

Ghana loses GH¢4.2b due to irregularities in use of public funds

Available figures from the Auditor-General’s Department indicate that Ghana lost GH¢4,559,976,756.76 within five years as a result of irregularities in public institutions.

Reports from the Auditor-General spanning 2008 to 2012 indicate a general trend in the rise and fall of the incidence of irregularities, with the periods 2008 to 2009 and 2010 to 2011 being noted for massive leaps.

While in 2008 the anomalies in monetary terms discovered from the accounting books of public boards, corporations and other statutory institutions totalled GH¢20,144,542 as of December 31, the figure rose to GH¢396,057,572 by the end of 2009.

Again, in spite of a dip to GH¢57,144,238 by the close of 2010, irregularities in state institutions more than tripled the following year, amounting to GH¢2,067,441,916 as of December 31, 2011 and reduced only marginally to GH¢2,019,188,488.76 in 2012.

Official response

To check the recurrence of irregularities unearthed by the Auditor-General’s Department year on year, the Public Relations Officer of the department, Rev Joseph Ghunney, told the Daily Graphic that “based on the initiative of the Auditor-General, there is now a law asking all MDAs and MMDAs to establish Audit Report Implementation Committees (ARICs) and they are to see to the implementation of the recommendations of the Auditor-General in his reports”.

Rev Ghunney said he believed if the committees did their work well, it would reduce the incidence of irregularities in public institutions.

The Chairman for the Presidential Committee set up to oversee the implementation of recommendations in the Auditor-General’s report, Mr Yaw Sifah, told the Daily Graphic that many of the issues raised in the report were procedural and did not even need to come to the floor of Parliament.

“There are other issues that border on criminality and so we have been able to pick some of the issues which the Attorney-General has forwarded to the Economic and Organised Crimes Office (EOCO) because before you can take anybody on you have to prepare a docket,” he said.

Mr Sifah explained that when recommendations were made, they were forwarded to the Executive for action to be taken because “when the ARICs meet, they are supposed to report to Parliament, the President and the Auditor-General”.

“It is unfortunate; somebody has to sit up and start taking these things on. Our reports are current; we are in 2012. Why can’t somebody take action on the issues in the 2012 report which are current and the people who committed whatever are still at post?” he quizzed.

Speaking to why the ARICs were not working as they should, Mr Sifah said, “These are some of the things which are beyond the Auditor-General and, in fact, the ARICs themselves. If you look at Section 30, Sub-section 1 of the Auditor Service Act, it says: “The ARICs shall ensure the implementation of audit recommendations by the management.”

“So ARIC is just to ensure; it is management’s responsibility to implement. If the manager himself is tainted, how does he sanction himself?” he asked.

Irregularities in five years

The irregularities unearthed were classified into seven areas - Outstanding debts/loans/ recoverable charges, Cash, Payroll, Procurement, Tax, Stores and Contract.

For 2008, the total amount involved in financial impropriety in the seven broad areas were: Outstanding debts/loans/ recoverable charges – GH¢13,006,576; Cash irregularities – GH¢3,024,735; Payroll – GH¢195,117; Procurement – GH¢949,482; Tax – GH¢2,429,838; Stores –GH¢332,001, and Contract - GH¢206,793.

Generally, the figures for 2009 showed an increase, with only the procurement figure indicating a decrease. The anomalies found were: Outstanding debts/loans/ recoverable charges – GH¢146,815,006; Cash irregularities – GH¢211,462,297; Payroll – GH¢1,943,595; Procurement – GH¢69,781; Tax – GH¢2,659,959; Stores –GH¢30,772,354, and Contract - GH¢2,334,580.

In 2010, the records showed discrepancies of GH¢18,863,196 in Outstanding debts/loans/recoverable charges; GH¢34,316,059 in Cash; Payroll - GH¢298,296; Procurement - GH¢2,106,321; Tax - GH¢1,488,912; Stores - GH¢71,454, while there was no figure for Contract irregularities.

Figures for 2011 were: Outstanding debts/loans/recoverable charges – GH¢99,170,464; Cash irregularities – GH¢1,964,615,188; Payroll – GH¢1,795,607; Procurement and Contract – GH¢1,423,173; Tax – GH¢303,596; while no figure was provided for irregularities under Stores.

For 2012, the figures involved in financial impropriety in the seven areas were Outstanding debts/loans/recoverable charges – GH¢1,696,453,352.63; Cash – GH¢116,346,697.84; Payroll – GH¢251,805.19; Procurement – GH¢50,492,451.95; Tax – GH¢1,072,001.80; Stores – GH¢629,683.13, and Contract - GH¢153,942,496.22.

Irregularities by classifications

In effect, inconsistencies in outstanding debts/loans/recoverable charges for the five-year period add up to GH¢1,974,308,594.63, with the highest figure of GH¢1,696,453,352.63 recorded in 2012.

Cash irregularities over the period under review totalled GH¢2,329,764,976.84 and the highest figure of GH¢1,964,615,188 was recorded in 2011, while for Payroll irregularities the total from 2008 was GH¢4,484,420.19, with the highest amount of GH¢1,795,607 recorded in 2011.

Irregularities in Procurement over the five-year period add up to GH¢55,041,208.95 and included contract discrepancies. The highest figure of GH¢50,492,451.95 was recorded in the 2012 report.

Tax inconsistencies amounted to GH¢7,954,306.80 for the same period, with the highest figure of GH¢2,659,959 recorded in 2009, while Stores irregularities identified in the five years add up to GH¢31,805,492, with the highest figure of GH¢30,772,354 recorded in 2009.

Contract irregularities totalled GH¢156,483,869.22 from 2008 and the gravest, which was GH¢153,942,496.22, was in 2012.

In all, agencies and departments under 16 ministries were audited in 2012, having moved from 12 ministries in 2008 and 2009 and 15 in 2010 and 2011.