A Chartered Certified Accountant, Dr Valentin Mensah, has chided the Auditor General and the Audit Service for alleged multiple breaches of the Constitution and the law in the audit of State-Owned-Enterprises.
According to the governance specialist, the decision by the Service and its head to audit Public Corporations and State Owned Enterprises is a clear breach of regulation 204 of the Public Financial Management Regulations, 2019 (L.I. 2378), which mandates the Auditor General to appoint an external auditor licensed under the Chartered Accountants Act 1963 (Act 170) in accordance with International Standards on Auditing.
Dr Mensah, who doubles as the Chief Executive Officer of CBS Consulting, explained that the Ghana Audit Service has also unilaterally decided to charge colossal amounts for “incidentals” to these SOEs in flagrant violation of Article 187 (11) and (14) of the 1992 Constitution and section 26 of the Audit Service Act, 2000 (Act 584).
Dr Valentin Mensah made these remarks during a Corporate Governance Faculty lecture organized by the Institute of Chartered Accountants, Ghana (ICAG).
The lecture was under the theme: “The Auditor General’s audit of Public Corporations and the State Owned Enterprises and the Compliance with the Constitutional and Legal Public Financial Management Rules: A critical evaluation.”
Dr Mensah said Ghana Audit Service’s insistence on auditing SOEs comes with dire implications on Ghana’s public finance management systems that need urgent attention.
He referred to the late submission of audited accounts by SOEs which have over the years remained a big challenge for the Ministry of Finance and SIGA with implications on the publication of State Ownership Report for the monitoring of the SOEs and other state entities.
“No SOE including the 36 covered in the 2017 State Ownership Report had submitted 2017 audited financials by end of April 2018 in breach of sections 80 and 95 of PFM Act, 2016 (Act 921). 6 SOEs and 22 OSEs have not submitted any financial statement for the FYs 2016, 2017 and 2018,” he stated.
He further added that “out of 52 SOE portfolios, only 47 submitted some form of accounting in 2020. 32 of those portfolios submitted audited accounts, three submitted draft accounts, and 12 submitted only management accounts with five of them submitting no account at all, the review of the reports has shown”.
According to Dr Mensah, SIGA is yet to issue the SOE audit report for 2021 even though the year 2022 is getting to an end.
Contrary to the public perception that the country has lost over GHS 17 billion due to the AG’s insufficient clarification of financial irregularities reported in the 2021 audit report to Parliament, Dr Valentin Mensah says a whopping 97% of that figure are neither financial losses nor malfeasance.
According to him, over GHC16.35 billion of that figure are outstanding or overdue receivables of large entities including COCOBOD, VRA, ECG, NEDCO, BOST, GNPC, etc, which does not necessarily constitute acts of corruption.
In a critical review of the A-G’s report on Public Boards, Corporations and other Statutory Institutions for the period ended 31 December 2021, Dr Mensah said “out of the GHS17.48 billion reported as irregularities by the A-G, GHS48.48 million is an overstatement due to currency translation errors caused by the posting of cedi amounts in the USD column of the summary table and retranslating into cedis.”
He said the reporting of GHS17 billion financial irregularity with adequate clarification may have collateral damage on the reputation of the country especially when there is no evidence to point to corruption or malfeasance.
As a way of solving some of the challenges, Dr Mensah said all stakeholders must come together to seek the improvement of the Auditor General’s critical oversight responsibility and also streamline the appointment process of independent auditors for SOEs.
Dr Valentin Mensah also charged the Institute of Chartered Accountants, Ghana (ICAG), to become more active in its role as the regulator of the accountancy and audit profession to make the nation feel its impact.
To situate financial irregularities from the proper perspective, Dr Mensah said Ghana can emulate the process and procedure of the South African AG which has distinguished between an irregular expenditure representing all non-compliance with laws and material irregularity which is non-compliance due to fraud, corruption or abuse of duty.
Source: Citi Newsroom
