The latest Auditor-General’s report has revealed that outstanding debts, loans recoverable, and credit power sales payable to some State-Owned Enterprises (SOEs) amounted to GH¢16.3 billion in 2021.
This amount described in the report as irregularities, was as a result of trade debtors, staff debtors and outstanding loans and cash locked up in non-performing investments.
They included GH¢4.76 billion due from customers of Volta River Authority (VRA) and GH¢1.27 billion from customers from Northern Electricity Distribution Company (NEDCo) for power supplies in respect of Forex Power Sales, Local Power Sales, Mines Power Sales; Ministries, Departments and Agencies (MDAs), and Government of Ghana Covid-19 Power Relief as of December 31, 2020.
The amount, according to the report, was also occasioned due to credit power sales of GH¢6.043 billion to VRA and NEDCo customers.
Total irregularities stand at GH¢17.48Bn
The Auditor-General’s report also disclosed that total irregularities in public sector organisations in 2021 stood at GH¢17.48 billion.
This is said to be a 36.0% or GH¢4.62 billion rise from GH¢12.856 billion in 2020.
The amount included $522.18 million converted into cedis at the prevailing exchange rate of GH¢6.006 to $1 as of December 31, 2021, €1.484 billion converted into cedis at the prevailing exchange rate of GH¢6.82 to €1 as of December 31, 2021 and £729,161 converted into cedis at the prevailing exchange rate of GH¢8.127 to £1 as of December 31, 2021.
The report therefore recommended strict implementation of the recommendations to ensure financial discipline in the management of public resources.
Ineffective debt collection
The absence of effective debt collection policies, non-existence of credit controls to recover the debts and managements’ indifferent posture towards loan recovery, the report pointed out, contributed significantly to these conditions.
The reported added that 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”, the report added.
Cash irregularities
Cash irregularities related to the misapplication of funds, budget overruns, payments not authenticated and payment of Board Allowances to Council Members without Ministerial approval amounted to GH¢505.80 million.
Out of the cash irregularities, GH¢230,700,424.38 represented unbudgeted expenditure by Ghana Cocoa Board on the principal repayment of a 10-year loan with Bank of Ghana (BoG) which was not included in the approved budget for 2019/2020 financial year.
These, according to the report, occurred because of poor oversight responsibility and 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.
The report 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).
It also recommended the authentication of all payment vouchers, prompt payment to bank and full retirement of accountable imprest on due dates.
