Financial irregularities totalling GH¢17,483,483,539.25 have been unearthed by the Auditor-General in its 2021 report on the public accounts of Ghana. 

It included US$522,184,029.18 converted into cedis at the prevailing exchange rate of GH¢6.0061 to US$1 as of 31 December 2021; €1,484,609.73 converted into cedis at the prevailing exchange rate of GH¢6.8281 to €1 as of 31 December 2021; and £729,161.38 converted into cedis at the prevailing exchange rate of GH¢8.1272 to £1 as of 31 December 2021.

The total irregularities figure of GH¢12,002,880,339 for 2017 decreased to GH¢3,007,258,924 in 2018. 

The irregularities increased by GH¢2,461,139,507 in 2019 to GH¢5,468,398,431. 

In the year 2020, the total irregularities also increased by 135.1% from the 2019 figure of GH¢5,468,398,431 to GH¢12,856,172,626.

During the period ending 31 December 2021, the total irregularities recorded a 36.0% or GH¢4,627,310,913 rise from GH¢12,856,172,626 in 2020 to total irregularities figure of GH¢17,483,483,539. 

According to the report, this was occasioned mainly by credit power sales of GH¢6,043,083,274.01 to VRA and NEDCo customers. 

Overall, the report said “most of the irregularity categories decreased in 2021 compared to the 2020 financial year even though 101 institutions were audited and reported on in 2021 as compared to the 83 Institutions audited in 2020”. 

“We recommended strict implementation of our recommendations to ensure financial discipline in the management of public resources”.

Read excerpts of the report below:

Outstanding Debts/ Loans Recoverable/Credit Power Sales – GH¢16,355,145,068 

These irregularities represent trade debtors, staff debtors and outstanding loans and cash locked up in non-performing investments. Included in this figure are GH¢4,764,760,731.41 due from customers of Volta River Authority (VRA) and GH¢1,278,322,542.60 due from customers from Northern Electricity Distribution Company (NEDCo) for power supplies in respect of Forex Power Sales, Local Power Sales, Mines Power Sales, Government MDAs’ Power Sales, and GoG Covid-19 Power Relief as at 31 December 2020. The absence of effective debt collection policies, non-existence of credit controls to recover the debts and Managements’ indifferent posture towards loan recovery contributed significantly to these conditions. 

Also, improper maintenance of records on debtors, the absence of debtors’ ageing analyses, non-documentation of agreements stipulating the terms and conditions of loans, failure to ensure that loans are repaid and Management’s non-compliance with rules and regulations accounted for these irregularities. 

We recommended that Management of Public Boards, Corporations, and other Statutory Institutions should strictly adhere to rules and regulations with regards to debts management. They should also put in place proper policies for the management of loans and other receivables as well as ensuring that loans and debts are repaid on due dates to avoid or minimise the occurrence of bad debts. 

Cash Irregularities – GH¢505,800,397 

Cash irregularities related to the misapplication of funds, budget overruns, payments not authenticated and payment of Board Allowances to Council Members without Ministerial approval. Out of the total figure of GH¢505,800,397 cash irregularities, GH¢230,700,424.38 represented unbudgeted expenditure by Ghana Cocoa Board on the principal repayment of a ten-year loan with Bank of Ghana (BOG) which was not included in the approved budget for 2019/2020 financial year. 

These occurred because of poor oversight responsibility and nonexistent controls. Other contributory factors were finance officers’ failure to properly file and keep records, Management’s failure to ensure the security and safety of vital documents, non-maintenance of returned cheque registers, Management’s inertia in complying with procedures stipulated in the Public Financial Management Act, and poor accounting systems.

We therefore urged the Management teams of the Public Boards, Corporations, and other Statutory Institutions to strengthen supervisory controls over their finance officers and ensure that they adhere to the provisions of the Public Financial Management Act, 2016 (Act 921). I also recommended the authentication of all payment vouchers, prompt payment to bank and full retirement of accountable imprest on due dates.

Payroll Irregularities – GH¢8,243,954 

These lapses were caused by the failure of Management to exercise due diligence, and the tolerance of officers in charge of payroll validation in reviewing payment vouchers to ensure salaries were paid to only those who were entitled as well as payroll related irregularities. They were also caused by Management’s failure to notify banks to stop the payment of unearned salaries. The Controller and Accountant-General’s Department also did not promptly delete names of separated staff when notified to do so. In other instances, Management also did not transfer statutory deductions in respect of PAYE taxes and SSF contributions. 

Contained in the total irregularity of GH¢8,243,954 is an amount of GH¢2,992,444 attributed to Ghana Broadcasting Corporation in respect of avoidable pending judgement debt due to the termination of appointment of a former Director-General, judgement debt for the failure to pay long service award to employees, payment of unearned salaries and the late payment of 1st and 2nd tier pension contributions. 

I advised the Management teams of the affected Institutions to promptly notify the bankers of the separated staff to withhold and pay to Government chest all unearned salaries. I also recommended that officers in charge of payroll should exercise due care in the discharge of their duties as well as ensuring that 1st and 2nd tier contributions for their employees are promptly and regularly transferred to the various pension schemes. I also recommended that regulatory bodies should exercise due care regarding decisions involving on termination of appointments. Procurement Irregularities – GH¢306,769,261 

These irregularities occurred as a result of Managements’ non-compliance with the provisions of the Public Procurement Act, 2003 (Act 663) as amended. Out of the total irregularities, GH¢ 219,350,277.98 represented items procured without recourse to the Public Procurement Authority (PPA) by the Electricity Company of Ghana.

Procurement Irregularities – GH¢306,769,261 16. 

These irregularities occurred as a result of Managements’ non-compliance with the provisions of the Public Procurement Act, 2003 (Act 663) as amended. Out of the total irregularities, GH¢ 219,350,277.98 represented items procured without recourse to the Public Procurement Authority (PPA) by the Electricity Company of Ghana.

I once again recommended that Managements of the various Institutions should undertake procurement transactions strictly in accordance with the provisions of the Public Procurement Act as amended. Tax Irregularities – GH¢23,572,832 18. The Tax irregularities related to failure to pay statutory tax deductions on due dates, and non-deduction of applicable taxes. They also related to transacting business with non-VAT registered persons or entities. Out of the total tax irregularities of GH¢23,572,832, an amount of GH¢23,196,270.05 was attributed to Electricity Company of Ghana (ECG) for delayed remittance of P.A.Y.E and withholding taxes and the non-deduction of withholding taxes and withholding VAT. 

I recommended that the Finance Officers should strictly adhere to the tax laws to ensure that all tax revenues are promptly collected and paid to the applicable revenue agencies on due dates. 

Stores Irregularities – GH¢173,954 

These irregularities included non-documentation of store items, lack of awareness of officers assigned to store duties and inadequate supervision. Included in the sum of GH¢173,954 is an amount of GH¢58,698.63 worth of unused conductor cables not recovered from Contractors into the Stores of the Electricity Company of Ghana. 

I recommended the strengthening of controls over store management and accounting. I also recommended strict adherence to Rules and Regulations that govern the effectual conduct of public financial business. 

Contract Irregularities – GH¢283,778,072 22. 

These mainly relate to the payment for construction projects not undertaken various Public Boards, Corporations and other Statutory Institutions. Included in the irregularities figure of GH¢283,778,072, is an amount of US$36,890,553.79 (GH¢221,568,355) paid by the Social Security and National Insurance Trust (SSNIT) to a contractor in excess of work performed on a project. 

I therefore urged Managements to strengthen controls over contracts and ensure that funds are available in order to engender speedy completion of earmarked projects and ensure that payments are made for work done.

Audit Opinion 

The financial statements submitted for validation presented financial information in accordance with applicable statutory provisions, and my office was satisfied in all material respect that the financial statements complied with stated accounting policies of Government and is in accordance with generally accepted accounting standards and essentially consistent with that of the preceding year. 

In my opinion all the financial statements presented a true and fair view of the financial positions and financial performance of the organisations for the period ended 31 December 2021 except the Divestiture Implementation Committee which had a qualified opinion expressed on their financial statements from 1 January 2009 to 30 June 2019. 

Conclusion 

As part of the processes of good governance, I urged the appointing Authorities to ensure that Board of Directors are constituted promptly for organisations having none. The absence of Governing Boards tends to delay the signing of the financial statements resulting in avoidable delays. 

The operational results and financial positions of the Public Corporations and other Statutory Institutions during the period under review, could have been healthier if there had been effective supervision of schedule officers. 

I reiterate my advice to Managements to strengthen their Internal Audit Units to ensure effective and efficient internal control systems. 

I also recommended that Managements should establish and strengthen the Audit Committees within the organisations in accordance with Sections 86 to 88 of the Public Financial Management Act, 2016 (Act 921) to ensure that audit recommendations are duly implemented.