PPA, KNUST, UPSA, Graphic, others lead list of internal audit lawbreakers
Corruption Watch has discovered that a high number of regulatory bodies and academic institutions have broken the law requiring them to file annual internal audit plans and quarterly internal audit reports.
A total of 15 regulatory bodies and 12 academic institutions stand accused for defaulting in the submission of required reports as at the end of December 2020. The Public Procurement Authority (PPA), the State Interest and Governance Authority (SIGA), Kwame Nkrumah University of Science and Technology (KNUST) and University of Professional Studies, Accra (UPSA), Graphic Communications Group Limited are among high profile regulatory, academic and state institutions, which defaulted in the submission of reports to the Internal Audit Agency (IAA).
The Internal Audit Agency and its staff are supposed to carry out audits before, during and after spending. The expectation, therefore, is that they are in a better position to ‘catch’ the thief before or during the ‘stealing’, making it easier to recover stolen public funds.
On 5th February 2021, the IAA caused the publication of a list of 97 defaulting institutions in the Daily Graphic in a quest to shame the public institutions for breaking the law in respect of internal auditing. Specifically, these institutions did not comply with provisions of the law requiring them to submit ‘Quarterly Internal Audit Reports’ and ‘2020 Annual Internal Audit Plans’ as at the end of December 2020.
According to Mr Nathan Kenneth Ekow Yankey, Director of Operations at the IAA, provisions in the Public Financial Management Act 2016 (Act 921) require that internal audit plans for the year be submitted 30 days from the beginning of that year. “So, by 31st January of each year, the annual internal audit plan should have been submitted,” he said when he appeared on the Corruption Watch radio show hosted on Joy FM’s Super Morning Show on Wednesday.
In addition, he said that based on the annual audit plans, quarterly reports are supposed to be generated. In this case, regulations of the IAA require that institutions submit quarterly reports to the IAA within one month after the close of a particular quarter. “So, for example, if you are talking of the first quarter [of] 2020 – January to March – then April 2020 that report should reach the Agency,” Mr Ekow Yankey said.
When Corruption Watch contacted some of the defaulting institutions, some attributed their inability to file their reports to COVID-19’s impact on work schedule and lack of internal audit personnel.
There is an antecedent to the IAA’s action. Dr Eric Oduro Osae, IAA Director-General, threatened in an interview he granted to Corruption Watch in October 2020 that the Agency would shame public institutions, which broke the law as a starting point for dealing with internal audit infractions.
Dr Oduro Osae said “…they are to submit their quarterly internal audit reports on a quarterly basis to the Agency. The Agency will review it; quickly send a team if there are systemic weaknesses to support them to put the weaknesses in line. Most of them are not submitting so I intend publishing…to name and shame institutions that do not submit internal audit reports.
He added that “by way of corruption and public financial management, if you don’t submit internal audit reports it means control systems are weak.” Therefore, nobody knows what happens to funds that go to such institutions.
Gang of 66 defaulters
Corruption Watch’s analysis of the 5th February 2021 list of 97 defaulting institutions shows that some of the institutions were cited for both infractions already indicated above. Therefore, there are actually 66 different institutions on the “defaulters” list. This represents 12.7 per cent of the 519 institutions that the IAA expects to file reports.
Corruption Watch’s analysis classified the institutions on the list into academia, funds (institutions that manage public funds for special purpose), Ministries, Departments and Agencies (MDAs), Metropolitan, Municipal and District Assemblies (MMDAs), Regional Coordinating Councils (RCCs), regulatory institutions, security services and State-owned Enterprises (SOEs). Regulatory institutions lead the pack with 15 mentions while academia follow closely with 12 defaulters. A top four list is made complete by MDAs (11 mentions) and SOEs (10 mentions).
Our analysis also shows that 30 (45.5 per cent) of the 66 institutions were listed for committing both infractions – ‘Non-submission of Quarterly Internal Audit Reports’ and ‘Non-submission of 2020 Annual Internal Audit Plans’. Some of the institutions on this list are Electricity Company of Ghana (ECG), Ghana Education Service (GES), Ghana Infrastructure Investment Fund (GIIF), Ghana Tourism Development Company Limited and Ghana Trade Fair Company Limited. The list further includes Law Reform Commission, National Blood Service and Office of the Administrator of Stool Lands, Public Procurement Authority, Public Records and Archives Administration Department, and Scholarships Secretariat.
Furthermore, 21 (31.8 per cent) of institutions were named for ‘Non-submission of Quarterly Internal Audit Reports’ while 15 (22.7 per cent) of the institutions were shamed for ‘Non-submission of 2020 Annual Internal Audit Plans.’ Some of the single offenders are Department of Social Welfare, District Assemblies Common Fund (DACF), Ghana Ports and Harbours Authority, Ghana Standards Authority, Microfinance and Small Loans Centre (MASLOC) and Students’ Loan Trust Fund. Other institutions listed for single offence are University of Professional Studies, Accra (UPSA), Births and Deaths Registry, Cocoa Processing Company Limited, Council for Tertiary and Vocational Education Training, Kwame Nkrumah University of Science and Technology (KNUST), Graphic Communication Group Limited and State Transport Corporation (STC).
The National Media Commission (NMC) and SIGA – both having been cited for defaulting in respect of the two reports have given Corruption Watch their preliminary feedback pending full response. The NMC says it could not obey the law because it lacked an internal auditor. On the other hand, SIGA says the nomination of institutional representatives to serve on its audit committee hampered their ability to obey the law.
On the other hand, the STC has said COVID-19’s impact on its work schedule prevented it from obeying the law. Nana Akomea, Managing Director, signed a 15th February, 2021 letter to explain that “Due to insurgence of Covid-19 pandemic which resulted in a partial lockdown, activities slowed down considerably necessitating reduced working hours and extended leaves for key audit personnel in 2020 at Intercity STC Coaches Ltd. It therefore delayed the submission of the 2020 Internal Audit plan which was already in place.”
In addition, Akomea disclosed that when the IAA notified his organisation of the infraction of the law, “Intercity STC Coaches Ltd quickly sent copy of the Internal Audit plan before the publication with an apology for the late submission.”
He said that the organisation has taken steps to submit subsequent reports “by 20th January every year.”
Reacting to the explanations on the Corruption Watch radio programme, Mr Ekow Yankey said, “we will take the explanations but that doesn’t settle us.” He added that “If we are going to take excuses of this nature and say because of COVID and because of that we’re really not going to go anywhere because the thing is that in spite of COVID, government is spending; public funds are still being used and we still have to account for them.”
He said that generally the response to the publication of the defaulters list by the affected institutions is poor. Consequently, the IAA’s next cause of action is to approach the minister for finance who has powers under the Public Financial Management Act 2016 to apply sanctions. For example, the public officers in charge of these institutions could face summary convictions of between 150 and 250 penalty units and/or prison term of between six months and two years. Currently, a penalty unit equals twelve (12.00) Ghana cedis.
“Even before that he (the minister) could decide to delay your releases – the releases to the entities, especially those of them who depend solely on the consolidated fund.”
Click here for the link to the Corruption Watch Show episode
Report by Frederick Asiamah, Journalist, Corruption Watch
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