Ghana Audit Service

211 Pages·2011·11.41 MB·English

TTRRAANNSSMMIITTTTAALL LLEETTTTEERR
Ref.No.AG.01/109/Vol.2/40
Office of the Auditor-General
Ministries Block ‘O’
P. O. Box MB 96
Accra
Tel. [phone]
Fax [phone]
30 June 2011
Dear Madam Speaker,
REPORT OF THE AUDITOR-GENERAL ON THE
PUBLIC ACCOUNTS OF GHANA (CONSOLIDATED FUND)
FOR THE YEAR ENDED 31 DECEMBER 2010
In accordance with Article 187(5) of the Constitution of the Republic of Ghana
and Section 23(1) of the Audit Service Act 2000 (Act 584), I have the honour to
present my report on the Public Accounts of Ghana (Consolidated Fund) for the year
ended 31 December 2010 to be laid before Parliament.
2. The report highlights the outcomes of the financial statements which
comprise mainly the Balance Sheet, Revenue and Expenditure Statement, Receipts
and Payments Statements, Cash flow Statement and the supporting schedules, with
a view to expressing an opinion on the accounts.
3. In my opinion, except for the significant issues raised in paragraph 216 of this
report, the financial statements give a true and fair view of the financial position of
the Government of Ghana as at 31 December 2010 and the results of its operations,
cash flow and financial requirements for the year then ended. The accounts
however, are in accordance with the stated accounting policies of the Government of
Ghana.
Report of the Auditor-General on the Public Accounts of Ghana
(Consolidated Fund) forthe year ended 31 December 2010) Page
i
4. I acknowledge the cooperation and assistance provided to the Audit Service
by the Ministry of Finance and Economic Planning, Controller and Accountant-
General and Heads of Ministries, Departments and Agencies during the audit.
5. I also acknowledge the efforts and commitment of my staff in conducting the
audit and reporting before the constitutional deadline.
Yours sincerely
AUDITOR-GENERAL
THE RT. HON. SPEAKER
OFFICE OF PARLIAMENT
PARLIAMENT HOUSE
ACCRA
Report of the Auditor-General on the Public Accounts of Ghana
(Consolidated Fund) forthe year ended 31 December 2010) Page
ii
Contents
Introduction ..................................................................................................................... 3
Audit objectives ............................................................................................................... 3
Audit scope and methodology ....................................................................................... 4
SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS ......................... 6
Employees on GoG Mechanised Payroll without Account Numbers .................... 6
Unclaimed Salaries and Pensions not paid into the CF - GH¢1.8 Million ............. 6
Unauthorised transfer of unclaimed salaries to the Economic and Organised
Crime Office (EOCO) - GH¢ 132,556 ............................................................... 6
Payment of salaries to employees on Study Leave without Pay......................... 7
Non-payment of Petroleum Taxes - GH¢4.1 million .......................................... 7
Non-payment of IGF into the CF- GH¢10.4 Million ........................................... 7
Failure of the IPPD System to detect and reject unqualified employees ............. 8
Poor record keeping on GoG Equity Investment .............................................. 8
Inconsistencies of records between ADMD and the Project Implementation
Agencies (PIA) .............................................................................................. 9
Failure to charge penalties on delayed Petroleum Tax payments - GH¢2.1 million
.................................................................................................................... 9
Judgement Debts– GH¢276million .................................................................. 9
Wrong treatment of Donor Project expenditure in the Public Accounts ............ 10
Personnel Emolument released in excess to five Subvented Agencies -
GH₵395,250 ................................................................................................ 10
Non-disclosure of three GoG On- lent (NPT) loans ......................................... 10
Unconfirmed Sub-Consolidated Fund Accounts cash balances......................... 11
Poor management of GoG Loans .................................................................. 11
Inconsistencies between MDA Expenditure Statements and the schedule
disclosed in the Public Accounts ................................................................... 11
Late transfer of revenue by GCB and Ecobank into the CF .............................. 12
Non-payment of Divestiture Proceeds of GH¢4.3 million into the CF ...................... 12
DETAILS OF FINDINGS .................................................................................................... 13
Employees on GoG Mechanised Payroll without Account Numbers .................. 13
Unclaimed Salaries and Pensions not paid into the CF - GH¢1.8 Million ........... 15
Unauthorised transfer of unclaimed salaries to the Economic and Organised
Crime Office (EOCO) - GH¢ 132,556 ............................................................. 17
Payments of salaries to employees on Study Leave Without Pay .................... 18
Non -Payment of Petroleum Taxes - GH¢4.1 million ....................................... 21
Non-payment of IGF into the CF- GH¢10.4 Million ......................................... 22
Failure of the IPPD System to detect and reject unqualified employees ........... 24
Poor record keeping on GoG Equity Investment ............................................ 42
Inconsistencies in records between ADMD and PIA ........................................ 44
Failure to impose penalties on delayed Petroleum Tax payments - GH¢2.1
million ........................................................................................................ 47
Avoidable Cost against the State (Judgement Debt) – GH¢276million ............. 48
Wrong treatment of Donor Project expenditure in the Public Accounts ............ 52
Auditor-General’s Report on the Public Accounts of Ghana

(Consolidated Fund) for the year ended 31st December 2010) Page 1
Non-disclosure of three GoG On-lent (NPT) Loans ......................................... 56
Unconfirmed Sub-Consolidated Fund Accounts cash balances......................... 58
Poor management of GoG Loans .................................................................. 60
Inconsistencies between MDAs Expenditure Statements and the schedule
disclosed in the Public Accounts ................................................................... 69
Late transfer of revenue by GCB and Ecobank into the CF .............................. 72
Non Payment of Divestiture Proceeds of GH¢4.3 million into the CF .................... 74
GENERAL COMMENTS ...................................................................................................... 77
FINANCIAL ISSUES ........................................................................................................... 78
OPINION OF THE AUDITOR-GENERAL ........................................................................... 79
ACKNOWLEDGEMENT ...................................................................................................... 81
Appendix ........................................................................................................................ 83

Auditor-General’s Report on the Public Accounts of Ghana

(Consolidated Fund) for the year ended 31st December 2010) Page 2
REPORT OF THE AUDITOR-GENERAL ON THE PUBLIC
ACCOUNTS OF GHANA (CONSOLIDATED FUND) FOR THE YEAR
ENDED 31 DECEMBER 2010

Introduction

1. The Controller and Accountant General (CAG) is mandated under Sections
41(1) (b) and (2) and 44(1) of the Financial Administration Act (FAA), 2003
(Act 654), to prepare and submit to the Auditor-General for examination, the
annual financial statements on the Public Accounts of Ghana. The financial
statements comprised the following:
 Statement of Assets and Liabilities (Balance Sheet).
 Statement of Revenue and Expenditure.
 Statement of Receipts and Payments.
 Cash Flow Statement (which discloses the results of cash transactions
on the Consolidated Fund (CF) during the year).
 Notes to the accounts.
 Functional classification of expenditure by items and heads.
 Summary of expenditure by heads and items.
 Analyses of the position of public debts, grants, public loans funded
from the CF, deposits, advances, equity investments, and Heavily
Indebted Poor Country (HIPC) Funds.

Audit objectives

2. Section 15 of the Audit Service Act, 2000 (Act 584) requires that I examine
the Financial Statements and certify whether in my opinion, the statements
present fairly financial information on the accounts, the records are
consistent with statements of the preceding year, and are also in accordance
with accounting policies of the Government as well as generally accepted
accounting principles. I am also mandated to state any reservation or make
any comment that I consider necessary, and also report separately on my
audit of Ministries, Departments and Agencies (MDAs) whose accounts are
consolidated in the Financial Statements of the Central Government.

Auditor-General’s Report on the Public Accounts of Ghana

(Consolidated Fund) for the year ended 31st December 2010) Page 3
Audit scope and methodology

3. The audit covered all transactions/events undertaken by MDAs in 2010 which
impacted on the CF. The review of these transactions/events was effected
taking into consideration relevant provisions of the 1992 Constitution, the
FAA, 2003 (Act 654), enabling enactments on statutory funds, other statutes
and regulations.

4. The audit was undertaken in two phases. The first phase involved a review of
all MDAs’ transactions by branches and district offices of the Audit Service
whilst the second focused on processes followed by the Controller and
Accountant General’s Department (CAGD) to capture the transactions/events
and ultimately disclose them in the Public Accounts.

5. To satisfy the audit objectives, the control environment within which the
transactions/events were effected was assessed. Inherent risks associated
with significant transactions and events were also assessed with the aim of
evaluating the adequacy of managements’ responses to these risks. On the
basis of the outcome of these reviews, I designed and executed audit
procedures, which in my view were necessary to minimise audit risks.
Systems supporting transactions/events were reviewed and substantive tests
as appropriate were undertaken.

6. The outcome of my reviews were discussed with respective desk officers and
their supervising officers, whose responses were considered in arriving at my
conclusions. Observations derived from the reviews were communicated to
the CAG, the Deputy Controller and Accountant-General in charge of the
Financial Management Service (DCAG/FMS) and other relevant parties
through Audit Observation Memoranda (AOM). The responses obtained on the
AOM were evaluated and where necessary incorporated in this report.

7. I wish to state that the matters raised in this report were the significant
issues noted during the audit. The audit was directed primarily at giving an
opinion on the annual financial statements of the Public Accounts of Ghana
Auditor-General’s Report on the Public Accounts of Ghana

(Consolidated Fund) for the year ended 31st December 2010) Page 4
for the year ended 31 December 2010. As a result, comments on systems and
internal controls in this report may not be exhaustive.

8. Madam Speaker, pursuant to Section 15 of Act 584, my office has reviewed
the annual financial statements on the Public Accounts of Ghana for the year
ended 31 December 2010. In compliance with Section 44 (1) of the FAA,
2003 and Section 23 of the Audit Service Act, 2000, I hereby present my
report on the Financial Statements for the year ended 31 December 2010.

Auditor-General’s Report on the Public Accounts of Ghana

(Consolidated Fund) for the year ended 31st December 2010) Page 5
SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS

Employees on GoG Mechanised Payroll without Account Numbers

9. I noted during my review that 95,309 employees, representing 23 percent of
the total number of employees on the Government of Ghana (GoG)
mechanised payroll, had no bank account numbers to facilitate the
employees’ easy identification by their bankers.

10. To mitigate the risk of wrongful payment of salaries, I urged CAG to update
the payroll records and ensure that names on the Report (11) have
corresponding bank account numbers.

Unclaimed Salaries and Pensions not paid into the CF - GH¢1.8 Million

11. I noted, during my visits to 94 rural banks, that unclaimed salaries and
pensions totalling GH¢1,803,551.46 were not transferred into the CAGD
Regional Suspense Accounts.

12. I urged CAG to reconcile the salary records with the banks and strengthen the
CAGD Monitoring Unit to ensure that all unclaimed salaries and pensions are
transferred into the CF without delay.

Unauthorised transfer of unclaimed salaries to the Economic and
Organised Crime Office (EOCO) - GH¢ 132,556

13. I noted that some banks in response to directives from EOCO, transferred
unclaimed salaries and pensions totalling GH₵132,556 to the EOCO’s bank
accounts contrary to Regulation 11 of the FAR, 2004.

14. I recommended that CAG should initiate action to recover all monies
transferred by the rural banks to EOCO.

Auditor-General’s Report on the Public Accounts of Ghana

(Consolidated Fund) for the year ended 31st December 2010) Page 6
Payment of salaries to employees on Study Leave without Pay

15. Contrary to Regulation 297(1) b of the FAR, 2004, I noted that unearned
salaries totalling GH₵228,026.22 was paid to 79 employees of the Ghana
Education Service (GES) and the Ghana Health Service (GHS) who were
granted study leave without pay between 2008 and 2010.

16. I advised that the MDAs concerned should issue instructions to the bankers of
the affected employees and also submit input to CAGD for stoppage of their
salaries.

17. I also recommended that CAG should liaise with the MDAs for the full
recovery of the unearned salaries.

Non-payment of Petroleum Taxes - GH¢4.1 million

18. I observed that four State institutions and three Oil Marketing Companies
(OMCs) owed the State total Petroleum Levies of GH¢4,081,083.48 as at 31st
December, 2010 despite numerous re-scheduled dates for payments and
various Demand Notices issued by the Customs Division of Ghana Revenue
Authority (GRA) for the recovery.

19. To mitigate the risk of default associated with the Petroleum Tax credits, I
recommended that the GRA should ensure that no credit is extended to any
OMC or institution without obtaining a Bank Guarantee as a security. I also
recommended that GRA should recover all petroleum taxes in arrears.

Non-payment of IGF into the CF- GH¢10.4 Million

20. Our review of the accounts of 12 MDAs revealed that Internally Generated
Fund (IGF) totalling GH₵10,442,261.88 collected during the year under
review, were not lodged into the CF. I also observed that 3 out of 12 MDAs
namely Food and Drugs Board, Narcotic Control Board and Motor Traffic &
Transport Unit (MTTU) of the Ghana Police Service never transferred any of
their IGFs into the CF.

Auditor-General’s Report on the Public Accounts of Ghana

(Consolidated Fund) for the year ended 31st December 2010) Page 7