The need assessment monster and recommendations of the Auditor General

The Public Accounts Committee sitting of 19, 2024, saw the attendance of

officials of the Controller and Accountants General Department. They were to respond to the Auditor General’s findings for the financial year ending December 31, 2023.

Among a barrage of audit infractions that they had been hauled to the committee to respond to, the officials were also questioned on the recurrent deficiency in gold monitoring and accounting in Ghana, a situation that has reportedly undermined Ghana’s ability to realize its full gold revenue potential, particularly revenue flowing from gold royalties.

Being the government’s official accountants, the Controller and Accountant General’s department, along with the Ghana Revenue Authority, had been asked by the Audit Service to institute a system that would serve to plug the recurrent challenge of poor gold monitoring and accounting, which has denied the country the needed revenue.

Even without this audit report, there have been enough empirical and anecdotal

evidence to suggest discrepancies in the monitoring, documentation, and accounting for the real value and volume of gold that leaves the shores of Ghana. This notwithstanding, it appears some civil society organizations and activists are not interested in this conversation beyond merely demanding a full needs assessment when officials of state institutions take steps to address challenges that undermine their ability to effectively discharge their mandate.

The Encounter:

For context, I would like to play back snippets of the interaction between the committee and officials of the Controller and Accountants General department:

Hon. Bawa: "The said paragraph relates to accounting for gold royalties. The Auditors observed significant deficiencies in accounting for gold stock

balance…The auditors are saying that the exclusion of these significant items

from the financial statements leads to misleading financial information that fails to depict Ghana’s accurate financial position and performance. And so the recommendations were that the controller and GRA should establish a

comprehensive system to ensure a thorough accounting for gold royalties, and

the system should implement measures to accurately record and monitor all gold

royalties receivable on gold seals and to ensure that all provisional deposits

made prior to export of raw gold are properly documented and accounted for

and also develop an effective inventory management SYSTEM to track unsold

refined gold STOCK balance."

Response from Dr. Mark Adade: "When it comes to the accounting of gold, there are some technicalities involved to be able to get the figures right, including provisional, so when the auditor’s brought these observations, we acknowledged them, and the way forward is to start establishing the systems and the rules of engagement with all the relevant parties to make sure we are able to get the appropriate information on a timely basis for inclusion in the national accounts... Chairman, this is a work in progress for now."

The Need for A Comprehensive System to Ensure Thorough Accounting For

Gold Royalties:

As I watched officials of the Controller and Accountants General department attempt to explain the difficulty and technicalities associated with gold monitoring and accounting, I could not help but remember how the needs assessment monster had been used to somewhat discredit and delay efforts by the Finance Ministry and GRA to address the same challenge that the auditor’s had queried these institutions on. Admittedly, these officials concede that there is indeed a need for a comprehensive system that provides thorough trials and documentation on gold from production to sale. With this observation, it equally intrigues me that a senior official, like the deputy Controller and Accountant General in charge of National accounts, will feign ignorance of the Ministry of

Finance and GRA efforts to address this all-important matter. It even gets scarier when he says, "to start establishing the systems," considering that this audit query is almost a year older. Is the issue and amounts involved in gold royalties not substantial enough to warrant an expedited action?

Ministry of Finance and GRA:

Having determined irregularities and a lack of integration in upstream petroleum and minerals sectors, the Ministry of Finance and the Ghana Revenue Authority, the only institutions mandated to realize and mobilize Ghana’s full tax potential, took steps to leverage SML’s proprietary software and hardware technology for purposes of ensuring accurate and fair iteration, monitoring, and accounting of these commodities. Once deployed, this groundbreaking technological solution is expected to provide end-to-end monitoring of these commodities from production, storage, and sale, ensuring that all taxes that are due to the state are appropriately monitored, documented, and paid.

The above noble intentions notwithstanding, some sections of the public have joined the chorus to question the need for such services. Aside from the fact that these persons do not have the technical and financial capacity to provide the systems to forestall the very challenge they are aware of, they appear to believe that their lack of appreciation of domain knowledge means that something untoward and scandalous is being perpetrated through the contract.

My Take:

From my observation of these officials and their responses, it was obvious to me that there is a need for technologically driven systems that provide comprehensive end-to-end gold monitoring and accounting. Ghana’s quest to realize its full revenue potential from gold production and other foreign exchange commodities cannot be achieved if the current manual regime remains.

Conclusion:

Interestingly, when the issue of revenue assurance is brought to the front burner, some sections of the media and civil activists are quick to demand a needs assessment report. They treat the concepts of need assessments as though they were abstractions from the everyday realities of our lives. Some of these institutions and individuals have mastered the craft of discrediting monitoring and revenue assurance efforts by demanding needs assessment reports, as though such reports will be any different from the Auditor General report that forms the basis for their recommendations for such services.

As I conclude, I wish to ask these questions, as usual:

Do the recommendations of the Auditor General report not constitute enough

needs assessment to warrant the needed investment to address a perennial

problem of potential revenue leakages and ineffective gold documentation,

monitoring and accounting?

If the laws mandating the Auditor General are anything to be complied with, how come their recommendations, which are usually grounded on empirical, observed, and in-depth auditing standards, cannot substitute for assessments that merit critical decisions by officials?

Why do we have the penchant for playing the ostrich: burying our heads in the

sand when the challenge stares at us in the face?

What will be the motivation of these CSOs to demand a needs assessment?

when they are aware of ample empirical and anecdotal evidence of the challenges that plague some of our critical foreign exchange earners, i.e., gold and oil.

Why will some of these CSOs and journalists go to every length to discredit

revenue assurances and monitoring services. Do they have vested interests?

Whose side are they truly on?