Public institutions, including state-owned enterprises, corporations, ministries, departments and agencies have committed significant financial infractions to the tune of GH¢99.57 billion in the last decade.
The infractions consist of outstanding debts and recoverable loans amounting to GH¢74.67 billion, cash irregularities of GH¢7.47 billion and additional irregularities, such as payroll, procurement, tax, stores management, contracts and rents, making up GH¢17.43 billion.
A Daily Graphic’s analysis of the Auditor-General’s reports on public accounts across 10 years (2014-2023) showed that the books of public institutions have been caught in the web of various recurring infractions for several years.
Two separate composite reports on public boards, corporations and other statutory institutions indicated that the institutions audited posted irregularities to the tune of GH¢80.57 billion, while the report on ministries, departments and agencies (MDAs) revealed GH¢19.01 billion irregularities among them for the period under review.
Annual performance
From GH¢2.05 billion in 2014, the infractions recorded by public institutions captured by the two Auditor-General’s reports increased to GH¢3.82 billion in 2015, before dropping to GH¢2.92 billion in 2016.
Peaking at GH¢12.96 billion in 2017, the infractions on the books of the institutions dropped again to GH¢8.21 billion in 2018 and slightly jumped to GH¢8.48 billion in 2019.
With GH¢14.91 billion in 2020, the irregularities rose to a record GH¢18.56 billion in 2021 and subsequently started dropping from GH¢16.47 billion in 2022 to GH¢11.20 billion in 2023.
Internal audit weakness
In an interview with the Daily Graphic in Accra, a Deputy Auditor-General in charge of the Performance and Special Audits Department (PSAD), Lawrence Ndaago Ayagiba, stated that financial infractions occurred annually in those institutions due to internal audit weaknesses or a complete lack of internal audit mechanisms.
He explained that the infractions were not a mere misappropriation of funds, but sometimes a deliberate scheme by certain individuals and their assigns to benefit from the weaknesses in the public sector.
“For instance, what would be the reason why an institution such as Social Security and National Insurance Trust (SSNIT) and their likes will grant loans to people, including staff, and refuse to follow up and later write the loans off as bad debt?” he questioned.
Loans recoverable
Mr Ayagiba said outstanding debtors and recoverable loan infractions encompassed debts owed by government agencies, trade debtors, staff debtors, outstanding loans and non-performing investments.
An example was the GH¢3.64 billion loans granted by SSNIT to other 16 related institutions that had defaulted in paying back the facility and workers’ contributions due from the Controller and Accountant General’s Department which were captured in the 2019 Auditor-General’s report on public account.
Cash infraction
The Deputy Auditor-General said cash irregularities mostly related to the misapplication of funds, overestimation of budgets, outstanding retirement of imprest, payments not authenticated and outright cash shortages.
With this infraction, Mr Ayagiba explained that officials were required to deposit client payments into the institution’s account within 24 hours by law, but instead, they would hold on to the funds for an extended period before sending them to the bank.
He said in such cases, the perpetrators often invested the cash received in treasury bills, earned interest or profits, and repaid the original amount into the institution’s account.
In 2023, the Auditor-General’s report indicted the University of Media, Arts and Communication (Institute of Journalism) for investing GH¢11.01 million with NDK Financial Services (NDK), which it was unable to recover.
It stated that the institute requested a redemption of part of its investment with NDK. However, the management of NDK could not honour the request, stating that the company was experiencing cash flow challenges and was not in the position to immediately liquidate the investment in a letter dated February 15, 2022.
“The culprits of the other infractions, including payroll, procurement, tax, stores, contract and rent, deploy deliberate means to benefit from the system,” Mr Ayagiba explained.
“For instance, the 2023 Auditor-General’s report on public accounts featured an infraction case of a driver who failed to deliver about three million pieces of male condoms and other contraceptives valued at GH¢1.34 million to the Regional Medical Stores (RMS) in the Eastern Region,” he said.
Mr Ayagiba said that internal auditors should be able to prevent those irregularities, but their failure to do so allowed infractions to persist in every report.
He added that internal auditors should be able to scrutinise payments and purchases, but often, they cleared such irregularities because they were employed by the same institutions.
No progress
The Executive Director of the Ghana Integrity Initiative (GII) — the local chapter of Transparency International, Mary Awelana Addah, said an assessment of the reports showed that the country had not made any progress with regard to fighting those infractions because they kept recurring for the last 20 years.
However, she said the country could not fold its arms and look on but must find solutions to confront the situation.
“Some people continue to say that the infractions are not corruption, but the interesting thing is that most of the irregularities have resemblance of the behaviour directing towards corruption or with a potential of corruption.
“And so, you will hear people say these are misapplication and misappropriation but then you will see that where in the instance tax or procurement regularities happen there are some levels of collusion and monies lost to the state are very huge.”
“These huge sums of money lost every year can support developmental projects and create jobs for the youth,” Mrs Addah, who leads GII, a non-governmental organisation that promotes transparency and accountability, said.
Serious institutional reforms
The GII Executive Director stated that the country needed serious reforms to strengthen its public institutions, provide oversight and ensure adequate enforcement of laws to encourage compliance.
She said there was a need to enhance the utilisation of the Auditor-General’s power of surcharge and disallowance regime.
After the surcharge, Mrs Addah said, the Auditor-General must also put in place mechanisms to ensure that there were expeditious recoveries.
“We are aware that the Auditor-General has established an account at the Bank of Ghana (BoG) for recoveries but we think there should also be a dedicated recovery unit to handle audit compliance issues to help make more recoveries from surcharges and disallowances”.
“We should also undertake periodic real-time monitoring of these public institutions to ensure that they comply with the laws at all levels, otherwise when people know that the audit team visits once a year within a certain time frame, they will do what they like,” she said.
Special court on corruption
Mrs Addah proposed a special independent anti-corruption court or a tribunal equipped with the impetus to deal with financial and corruption cases as quickly as possible.
“There should be a personal accountability format for heads of the various public institutions to follow in the form of pre-assessment indicators that they will sign before taking office so that they could be held accountable.
“We should invest in technology such as blockchain to help us to reduce or eliminate tampering of proof and evidence,” Mrs Addah added.
Reset public institutions
For his part, the Dean of the University of Cape Coast School of Business, Professor John Gartchie Gatsi, expressed worry at the situation and said decisive action from the Public Accounts Committee (PAC) of Parliament and other agencies was necessary to prevent recurring irregularities.
“If we want public institutions to operate efficiently, we must ensure that PAC does not only clear institutions or individuals that have been indicted in the Auditor-General’s report,” he said.
He said the government must put in place comprehensive mechanisms to ensure that public institutions operate with the same efficiency as private sector firms.
That, he said, would ensure that those institutions became functional, effective, profitable, and contributed positively to the economy and country in general.
“These institutions are often hijacked by politicians who prioritise their party’s interests over the institution’s well-being, leading to overemployment and unprofitability of the firms they lead,” Prof. Gatsi, an economist and a professor of finance, said.
e urged the new government to focus on revitalising public institutions, by underlining the need for a change in approach, where management operated with a private sector mindset, generating revenue and profits, and paying dividends and taxes to support economic growth.
“We must envision a reset where public institutions thrive, supporting the country’s economic development,” Prof. Gatsi added.
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