Assemblies’ Common Fund rip-off rises to GH¢124.82 million

Some officials of Metropolitan, Municipal and District Assemblies mismanaged funds and resources of their assemblies to a financial value of approximately GH¢124.82 million in 2019, the Auditor-General has revealed.

The financial irregularities for 2019 represent a 3.53% rise from the 2018 figure of approximately GH¢120.56 million. In nominal terms, the increase is approximately GH¢4.2m. 

“The findings once again showed lack of commitment on the part of the management of Assemblies in the implementation and enforcement of my audit recommendations towards mitigating infringements of the laws. I also attributed the situation to non-imposition of sanctions to minimise the violations,” says the Auditor-General in a letter transmitting his latest report to the Speaker of Parliament.

The report on the “Management and Utilisation of District Assemblies’ Common Fund and other Statutory Funds for the year ended 31 December 2019” reveals that the lapses and deficiencies that resulted in the abuse of approximately GH¢124.82 million were identified in transactions under account areas such as cash management, contract, procurement and store, and tax irregularities.

According to the A-G, the “irregularities in this report are similar to the previous years in many ways. The findings violate rules, regulations, directives and policies, which had been put in place to ensure effective and efficient management of resources.”

Breakdown

A positive development, however, was that “Procurement irregularities noted in the year decreased significantly from GH¢10,696,428.71 in 2018 to GH¢4,121,790.40 in 2019 representing 61.46 per cent drop,” says the report, which is under the hand of Johnson Akuamoah Asiedu, Acting Auditor-General.

The report adds that despite some of the procurement and stores irregularities not resulting in outright losses, they represented violations of the Procurement Law and Financial Administration Regulation that did not ensure that the Assemblies obtained value for the resources expended.

On the other hand, “cash irregularities” in the sum of GH¢33,213,320.67 occurred at 170 Assemblies. These included commitment of expenditure without the use of the Ghana Integrated Financial Management Information System (GIFMIS), deduction at source for fumigation and Sanitation Improvement Package (SIP) Services not rendered, funds not accounted for, payments not properly supported with relevant documentation to authenticate the transactions, unretired funds etc.

Furthermore, the Auditor-General discovered contract irregularities valued at GHc87,169,192.62 relating to completed projects not in use, projects which were either abandoned or their execution significantly delayed, and direct payment by Administrator of DACF for fumigation and SIP Services not rendered. Others were in respect of payment of contract works/services without contract agreement, payments for construction works with no evidence of execution, etc.

The Auditor-General further reports that tax irregularities totaling GH¢324,886.24 were noted in 53 Assemblies.

Some examples

A closer look at the report reveals some peculiar incidents at some of the MMDAs. For instance, The Auditor-General cited the Asutifi North District Assembly in the Bono Region for misapplying GH¢584,937.71 of DACF funds. The Auditor-General explains that the 2019 guidelines for the utilisation of the DACF require that, up to 20% of the total allocation should be spent on administration, 70.5% on projects and the rest on education and others. “Notwithstanding the requirement of the above guideline, the Asutifi North Assembly spent a total amount of GH¢794,408.35 representing 75.8% of their total release of GH¢1,047,353.19 on Administrative expenditures.”

The Auditor-General concludes that the assembly was denied the needed funds for its developmental projects. “We recommended to the Coordinating Director and the Finance Officer to refund the amount of GH¢ GH¢584,937.71 from the IGF account into the DACF account of the Assembly and also desist from the practice of using Assembly’s DACF funds for administrative expenses.” Elsewhere, in the Ashanti Region, 12 assemblies made payments for goods and services totaling GH¢975,639.36 without supporting them with relevant transaction documents such as receipts, invoices, statement of claims, certificates of claims, memos etc. to authenticate the transactions.

The A-G says the irregularities were due to inadequate supervision and failure by the finance officers to demand relevant documents before payments were made.

Therefore, under the circumstance “we could not authenticate the expenditure of GH¢975,639.36.”

Recommendations/Actions

On the unsupported payments by the 12 assemblies, the A-G’s report says “We recommended that the respective Coordinating Directors and Finance Officers should refund the total amount of GH¢975,639.36 to their respective Assemblies.”

In many other cases, the Auditor-General has recommended refund of amounts either not accounted for or were losses which resulted from management inaction to protect the resources of the Assemblies. He adds that they are in the process of disallowing and surcharging officials who are culpable.

He also recommended for all ongoing projects to be completed before commencement of new ones to avoid locking-up funds in uncompleted projects.

Additionally, the Auditor-General recommended strict compliance with the procurement laws and store regulations and for offenders to be sanctioned under Section 51 of the Public Procurement (Amendment) Act 914.

He then gave assurance that “I shall also recover any losses due to willful non-adherence to the law and procedures to ensure effective project management.”

Local Government Minister put on the spot

In submitting the report to the Speaker of Parliament, the Auditor-General expressed concern that the Minister for Local Government and Rural Development may not have “significantly implemented the recommendations in my previous reports.”

The Auditor-General had recommended to the Minister “to set up effective monitoring and follow-up mechanisms to track actions to be taken on conclusions and recommendations made in my audit reports and management letters.

“I also recommended punitive actions against management and staff of Assemblies who indulged in the mismanagement of resources brought under their care.”

Therefore, the Auditor-General takes the view that “The widespread instances of malfeasance and mismanagement of finances and resources of the Assemblies by public officials in this report may mean that the Ministry has not significantly implemented the recommendations in my previous reports.”

Consequently, the Auditor-General draws the attention of the Minister for Local Government and Rural Development, the Head of Local Government Service and Administrators of the Funds to his power to surcharge and hold them accountable.

By Frederick Asiamah, Journalist, Corruption Watch