Non-existent and undeserving public sector workers were paid a total of GH¢66,248,946.00 in 2019, the Auditor-General has revealed in his report.
It said the financial irregularities were “lapses” caused by the “failure of the management to exercise due diligence, and the laxity 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 the management’s failure to notify banks to stop the payment of unearned salaries”, the report said.
The report continued: “The Controller and Accountants General’s Department also did not promptly delete names of separated staff when notified to do so”.
In other instances, the report said the “management also did not obtain financial clearance from the Ministry of Finance before employing new staff”.
“Contained in the total irregularity of GH¢66,248,946.00 is an amount of GH¢44,367,132 attributed to GRIDCo in respect of outstanding compensation payments without the requisite documentation and non-payments of 2017 3rd-tier pensions contribution from GRIDCo, which remained unremitted as of 31 December 2017”, the report said.
The audit, which was conducted in accordance with Article 187(2) of the 1992 Constitution, unearthed a total amount of GHS5,468,398,431 of financial irregularities by public boards, corporations and other statutory institutions for the period ended 31 December 2019.
Apart from the payroll irregularities, the others include: Outstanding debtors/loan recoverable (GH¢4,859,727,984), cash irregularities (GH¢215,025,782), procurement irregularities (GH¢37,342,867), tax irregularities (GH¢199,651,868), stores irregularities (GH¢2,748,551), and contract irregularities (GH¢87,652,433).
According to the report, the total irregularities of GH¢5,468,398,431 included US$ 4,868,595.34 converted into cedis at the prevailing exchange rate of GH¢5.68 to the US$1 as of 31 December 2019, €299,202.40 converted into cedis at the prevailing exchange rate of GH¢6.37 to the €1 as of 31 December 2019 and £1,564.00 converted into cedis at the prevailing exchange rate of GH¢7.46 to £1 as of 31 December 2019.
The total irregularities figure of GH¢3,311,963,314 for 2015 decreased to GH¢718,085,208 in 2016.
However, it went up to GH¢12,002,880,339 in 2017.
It declined by GH¢8,995,621,415 from the 2017 figure of GH¢12,002,880,339 to GH¢3,007,258,924 in 2018 and went up by 81.8% to GH¢5,468,398,431 in 2019.
The 81.8% or GH¢2,461,139,507 jump from the 2018 total irregularities figure of GH¢3,007,258,924 to GH¢5,468,334,006 in 2019 was occasioned mainly by a surge of GH¢3,058,438,311,169 in outstanding debtors/loans/recoverable component of the total irregularities in 2019, the report said.
These irregularities represent trade debtors, staff debtors and outstanding loans. Included in this figure is an amount of GH¢3,643,789,172.39 loans granted by SSNIT to other 16 related institutions who have defaulted in paying back the facility and workers contributions due from Controller and Accountant General’s Department. Absence of effective debt collection policies, non-existence of credit controls to retrieve the debts and Management’s indifferent posture towards loan recovery contributed significantly to these anomalous 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.
I recommended that the 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 as well as ensuring that loans are repaid on due dates to avoid or minimise the occurrence of bad debts. Cash Irregularities – GH¢215,025,782.00 11. Cash irregularities related to the misapplication of funds, nonretirement of imprest, payments not authenticated, payment of Board Allowances to Council Members without Ministerial approval, losses envisaged from projects undertaken by corporate entities and outright cash shortages. Out of the total figure of GH¢215,025,782 cash irregularities, GH¢80,914,176.00 represented loss envisaged by SSNIT as a result of the affordable housing projects undertaken by SSNIT. These occurred as a result of poor oversight responsibility, non-existent 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 and management’s inertia in complying with procedures stipulated in the Public Financial Management Act; and poor accounting systems.
I, therefore, urged the Management 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¢66,248,946.00
These lapses were caused by the failure of Management to exercise due diligence, and the laxity 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 Accountants General’s Department also did not promptly delete names of separated staff when notified to do so. In other instances, Management also did not obtain financial clearance from the Ministry of Finance before employing new staff. Contained in the total irregularity of GH¢66,248,946.00 is an amount of GH¢44,367,132 attributed to GRIDCO in respect of outstanding compensation payments without the requisite documentation and non-payments of 2017 3rd tier pensions contribution from GRIDCO which remained unremitted as of 31 December 2017.
I advised Management 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.
Procurement Irregularities – GH¢37,342,867.00
These irregularities occurred as a result of Managements’ noncompliance with the provisions of the Public Procurement Act 2003, (Act 663). Of the total irregularities $3,000,000.00 (GH¢13,530,000) represented improper procurement of IT services by the University of Cape Coast from KLEOS UK LTD.
I once again recommended that the management of the various Institutions should undertake procurement transactions strictly in accordance with the provisions of the Public Procurement Act. Tax Irregularities-GH¢199,651,868.00 17. The Tax irregularities related to failure to pay statutory tax deductions on due dates, and non-deduction of applicable taxes. They also related to the transaction of business with non-VAT registered persons or entities.
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.
Stores Irregularities – GH¢2,748,551 19.
These irregularities include non-documentation of store items, lack of awareness of officers assigned to store duties, inadequate supervision, and non-reconciliation of fuel purchases with fuel station records. Included in the sum of GH¢2,748,551 is an amount of GH¢1,060,805.25 for abandoned equipment procured by Cocoa Research Institute between 2009 and 2012.
I recommended the strengthening of controls over store management and accounting and also recommended strict adherence to Rules and Regulations that govern the effectual conduct of public financial business.
Contract Irregularities – GH¢87,625,433 21.
These mainly relate to overpayment of contract sum, absence of signing of contract agreements, failure to comply with tendering procedures, delay in construction, ineffective control over contracts and the absence of transparency in the disbursement of funds, nonrecovery of mobilisation and irregular additions to existing contracts.
I, therefore, urged Management to strengthen controls over contracts and comply with tendering procedures.