Auditor General Fights Internal Auditors

By Johnny Dolphyne

Auditor General fights internal auditors... In GH¢11 billion government liability saga: The Auditor General has rapped internal auditors in public service, essentially blaming them for the attempt by certain individuals and corporations to fleece the state of several billions of Ghana cedis.

In the now famous "Report of the Auditor-General on the Liabilities of Ministries, Departments and Agencies as at 31 December 2016," which has just been submitted to the Speaker of Parliament and intercepted by the media, the head of the Audit Service suggests that internal auditing is being done poorly.

"There is the need to revisit internal auditing in the public sector," the Auditor General's report demands and appears to suggest that internal auditors are not working with independence from "Principal Spending Officers" of the various Ministries, Departments and Agencies (MDAs).

In this report, which is will generate keen interest when it is discussed by the Public Accounts Committee (PAC) of Parliament, the Auditor General has certified that only GH¢6,331,326,592.29 out of a total claims submitted by the Ministry of Finance and MDAs to the Audit Service must be settled as government's liabilities.

In the case of the claims filed by the Ministry of Finance, the GH¢6,331,326,592.29 constituted 54% of a total claims of GH¢11,810,579,603.55 but the same amount represented 61% of the GH¢10,381,208,829.42 claimed by MDAs.

In total, an amount of GH¢5,479,253,011.26, representing 46% of claims submitted by the Ministry of Finance to the Audit Service, was rejected while a total amount of GH¢4,049,882,237.14 (39%) out of the GH¢10,381,208,829.42 claims submitted by MDAs to the Audit Service as liabilities was rejected.

In some of the most drastic rejections, the Electoral Commission, Ministry of Communication and Ministry of Tourism Culture and Creative Arts saw a combined GH¢316,781,332.29 rejected outright.

There was GH¢293,000,753.00 liability recorded for the Electoral Commission, GH¢23,469,433.00 for the Ministry of Communication and GH¢311,146.29 for the Ministry of Tourism Culture and Creative Arts.

As captured in a table depicting the 'Summary results of the validation exercise', not a pesewa of the amounts recorded for any of the three entities was certified by the Auditor General.

Background

In the Executive Summary of the report, the Auditor-General draws attention to his mandate under the Audit Service Act that he may in addition to the audit of public accounts, carry out in the public interest such special audits or reviews as he considers necessary and shall submit reports on the audits or review undertaken by him to Parliament.

"The 2017 budget hearings disclosed that there existed within MDAs several outstanding commitments running into billions of Ghana Cedis. To ascertain the genuineness of the outstanding commitments as at 31 December, 2016, the Audit Service validated all claims submitted by the MDAs, examining in particular, warrants, contract documents, invoices, procurement records, Stores Received Advices and other relevant documents supporting the liabilities as well as the bank statements of the MDAs to ensure that liabilities have not been paid," the Executive Summary of the report says in setting the background.

Total picture

At the outset, the report says, the total outstanding commitments submitted by the MDAs through the Ministry of Finance to the Audit Service amounted to GH¢11,279,183,400.09. The team of auditors demanded from each MDA their outstanding commitments and the total amounted to GH¢9,933,311,177.13.

"After the validation, the total of GH¢5,570,594,500.24 was certified for payment," the report says.

Subsequently, "We issued management letters to each of the MDAs and some of them were able to provide documentations acceptable to us and we took the feedback into consideration in preparing the revised position... "

Therefore, "At the conclusion of the audit, out of a total claim of GH¢11,810,579,603.55 submitted by the Ministry of Finance to the Audit Service, we were able to certify a total of GH¢6,331,326,592.29."

In his 23rd January, 2018 'transmittal letter' to the Speaker of Parliament, Daniel Yaw Domelevo, Auditor-General wrote that "We have in accordance with Article 187(7)(b) of the Constitution disallowed a total claim of GH¢5,479,253,011.26 of which payment cannot be made without complying with Article 187(9) of the Constitution."

The basis of the rejection of demands amounting to GH¢5,479,253,011.26, "was due to the absence of relevant documentations (such as warrants, contract documents, invoices, procurement records, SRAs, etc), use of projected contract cost, goods not supplied and claims which had already been paid-for."

The report continues: "Other observations made during our review were: Commitments and payments outside the GIFMIS system; poor maintenance of accounting records on suppliers; weak internal auditing including non-certification of liabilities by internal auditors; award of contracts with un-favourable contract terms; weak commitment controls; and lack of effective monitoring of contracts."

Remedy

According to the audit report, all the findings were shared with the MDAs whose responses have been incorporated into the report.

Going forward, the Auditor General indicates that to control Government expenditure and to minimize the risk of wrongful payments, he has advised MDAs to maintain proper records.

Apart from that, "There is the need to revisit internal auditing in the public sector. We propose amendment of the Internal Audit Act 2000 to ensure that internal auditors in the public service become staff of the Internal Audit Agency. This is to ensure the independence of the internal auditors from Principal Spending Officers and ensure that internal audit is done according to acceptable standards.

He also warns that "The Audit Service will hence forth disallow and surcharge officials who commit Government outside the Ghana Integrated Financial Management Information System as required by the Section 25(6) of the Public Financial Management Act 2016."

Invitation to court

Meanwhile, the Auditor General has dared those who disagree with the rejection of their claims to go to court to seek redress. "We encourage anyone aggrieved by this disallowance to appeal to the High Court and any payment without following the process prescribed by Article 187(9) may lead to a surcharge against the person who authorized or made the payment or the one who received the payment."

Further: "We also recommend that the necessary disciplinary actions (including criminal prosecution) are taken against public officers who presented fraudulent and unsubstantiated claims to the Ministry of Finance for payment."

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