Auditor General indicts assemblies that generate less revenue but overspend

BY: Kester Aburam Korankye
Mr Johnson Akuamoah-Asiedu — Ag. Auditor-General
Mr Johnson Akuamoah-Asiedu — Ag. Auditor-General

The Auditor General has indicted local assemblies for consistently overspending their budget although they generate very little internally to support internal operations.

In its 2020 Auditor General’s report, which was presented to Parliament in June, the Auditor General found that 215 metropolitan, municipal and district assemblies (MMDAs) exceeded their approved budget for goods and services, compensation of employees, capital expenditures and other expenditures by GH¢8.83 billion during the 2020 financial year.

Also joined in the charge are 18 ministries, departments and agencies (MDAs).

“Our review of actual expenditure against budget showed that 18 MDAs and 215 MMDAs exceeded their approved budget for goods and services, other expenditure, compensation of employees and capital expenditures by GH¢8,827,394,033 during the 2020 financial year.

“We noted that funds totalling GH¢4.98 billion were reallocated to the 18 MDAs from the Central Vote, thereby increasing their overall budget. The reallocations, notwithstanding, they still exceeded their budget,” the report stated.

CAG reaction

In a reaction, the Controller and Accountant General (CAG) explained that the budget overruns were as a result of reallocation from the centralised votes to specific government entities within the same appropriation in line with Section 29 of the PFM Act.

CAG added that the reallocation was done by the Minister of Finance to enable the covered entities to execute specific functions that were not provided for in the original budget.

He said in spite of the overruns by the affected covered entities, the overall appropriation for 2020 was not exceeded.

However, the Auditor General insisted that there was still an overrun on their budgets after the reallocation and accordingly urged the Ministry of Finance to provide the CAGD with the budget categories of the reallocated funds to enable the CAGD to monitor the actual expenditure of covered entities to prevent budget overruns.

The overruns occurred in spite of the fact that all the assemblies in the country generated less than half a billion internally for their operations last year.

The recurring of budget overrun, the report said, did not ensure effective and efficient budgetary control.

No work

The report also revealed that the Administrator of the District Assembly Common Fund (DACF) made payments to a private entity for no work done.

The report said the administrator paid Zoomlion Ghana Ltd a total amount of GH¢3.8 million for fumigation and other services for 38 newly created assemblies for the first quarter of 2018, when the assemblies had not begun work.

The report explained that the assemblies were inaugurated in March 2018 and their agreements with Zoomlion Ghana Ltd took effect from April 2018.

“We consider the payment to be unjustified and a loss to the Fund, as the allocation to the newly created assemblies did not warrant payment to Zoomlion for no work done,” it stated.

Response

In response, the administrator indicated that Zoomlion Ltd would perform extra services to cover the payment.

However, the Auditor General recommended that the administrator should rather provide evidence of scope of work undertaken by Zoomlion Ltd to offset the payment or recover the said amount from Zoomlion Ghana Ltd.

PAC mandate

The acting Auditor General, Mr Johnson Akuamoah-Asiedu, told the Daily Graphic in an interview that the details of the expenditure of the various entities that overran their budgets would determine if there had been some underhand dealings in their operations or not.

He said the details of the reports, which were available to the Public Accounts Committee (PAC), would help the lawmakers to determine any infractions and recommend the appropriate sanctions.

Irregularities not necessarily stealing

He added that the mandate of auditors on the field was to report any irregularities in the operations of an entity, explaining that not all irregularities amounted to corruption or stolen money.

“If you see a table of some irregularities, there are several areas, including contract irregularity, cash irregularity, procurement irregularity, among others, so we explained to them that it was our mandate to report any irregularity but all irregularities don’t mean cash stolen or corruption,” he said.

Mr Akuamoah-Asiedu explained that for example if you had budgeted that you were going to buy a bottle of water and you bought a cup instead, that might be useful for an organisation though that was not originally budgeted for. In the face of the law it is an irregularity but no money has been stolen.

“So for the implementation of our recommendations, I believe it is in the domain of the PAC to act upon it,” he said.