REPORT OF THE AUDITOR-GENERAL ON THE PUBLIC ACCOUNTS OF GHANA, PRE UNIVERSITY EDUCATIONAL INSTITUTIONS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

Transcription

1 REPORT OF THE AUDITOR-GENERAL ON THE PUBLIC ACCOUNTS OF GHANA, PRE UNIVERSITY EDUCATIONAL INSTITUTIONS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 TABLE OF CONTENTS Para(s) Page Transmittal letter i PART I Executive summary PART II Summary of findings and recommendations PART III Ashanti Region Brong Ahafo Region Central Region Eastern Region Greater Accra Region Northern Region Upper East Region Upper West Region Volta Region Western Region Appendices Report of the Auditor-General on the Public Accounts of Ghana, Pre-University.

2 TRANSMITTAL LETTER Ref. No. AG.01/109/Vol.2/28 Office of the Auditor-General Ministries Block O P.O. Box M. 96 Accra Tel (0302) Fax (0302) January 2011 Dear Madam Speaker, REPORT OF THE AUDITOR-GENERAL ON THE PUBLIC ACCOUNTS OF GHANA, PRE UNIVERSITY EDUCATIONAL INSTITUTIONS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 In accordance with Article 187(5) of the 1992 Constitution, I have the honour to transmit, herewith, my report on the audit of Pre-University Educational Institutions for the financial year ended 31 December 2008, to be tabled in the House of Parliament. 2. As usual the report has been structured into three parts. Part I covers the introduction, audit objectives and approach, as well as a summary of significant findings. Part II provides an overall summary of my recommendations on the significant findings, whilst Part III gives the details of the findings and recommendations according to each Region. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University. i

3 3. Madam Speaker, with the submission of this report on the 2008 fiscal year, I can affirm that the new strategies which I have deployed to ensure the prompt submission of my various reports to Parliament have started yielding positive results and I can assure you that very soon the era of late submission of reports will belong to history. 4. The recurring lapses and deficiencies disclosed in this report, which have been identified in previous reports, are sources of concern to the Audit Service. These lapses include cash irregularities, tax irregularities, procurement irregularities, payroll irregularities and failure to submit financial statements, all due to ineffective supervisory controls over the financial activities of accounting officers by the Headmasters of the Institutions. 5. Apart from weak supervisory controls, I attribute the situation to the refusal of the Institutions to comply with the Financial Administration Regulations of 2004, the Public Procurement Act of 2003, the Internal Revenue Act of 2000 and the Financial and Accounting Instructions for Secondary Schools, Training Colleges and Educational Units issued by the Ghana Education Service (GES). 6. Once again, I would like to emphasise, as recommended in my previous reports that sanctions should be imposed on Headmasters and Accountants of Institutions who persistently fail to submit their financial statements for audit certification on schedule or are regularly involved in the complete disregard of public financial management requirements. 7. I would like to acknowledge the co-operation and assistance accorded my officers by the Director-General of GES and the staff of the various Pre-University Educational Institutions. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University. ii

4 8. My appreciation also goes to all members of staff of the Audit Service for their immense contribution towards the compilation and production of this report. Yours faithfully, THE RT. HON. SPEAKER OFFICE OF THE PARLIAMENT PARLIAMENT HOUSE ACCRA AUDITOR-GENERAL Report of the Auditor-General on the Public Accounts of Ghana, Pre-University. iii

5 PART I REPORT OF THE AUDITOR-GENERAL ON THE PUBLIC ACCOUNTS OF GHANA, PRE-UNIVERSITY EDUCATIONAL INSTITUTIONS, FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 EXECUTIVE SUMMARY Introduction We audited the accounts of Pre-University Educational Institutions for the financial year ended 31 December 2008 in accordance with Article 187(2) of the 1992 Constitution of the Republic of Ghana. This report, prepared as a result of the audits, is hereby presented to the Speaker to be laid before the House in accordance with Article 187(5) of the Constitution. 2. The audit was conducted in conformity with the standards of the International Organisation of Supreme Audit Institutions (INTOSAI) and it took into consideration the criteria established for public financial management practices in the Financial Administration Act (FAA), 2003 (Act 654), the Financial Administration Regulations (FAR), 2004 (L.I. 1802), the Public Procurement Act, 2003 (Act 663), the Financial and Accounting Instructions (FAI) for Secondary Schools, Training Colleges and Educational Units which were issued by the Ghana Education Service (GES), the Store Regulations of Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 1

6 1984, the Internal Revenue Act, 2000 (Act 592), the Value Added Tax Act, 1998 (Act 546) and the Audit Service Act, 2000 (Act 584). Audit objectives and approach 3. The audit was guided by Section 13 of the Audit Service Act, 2000 (Act 584) which requires me to audit and ascertain whether in my opinion: the accounts have been properly kept; rules, regulations and procedures established are adequate to provide effective check on the assessment, collection and proper allocation of revenue; all moneys collected have been fully accounted for; moneys have been judiciously used for the purpose for which they were appropriated and expenditures made as authorised; essential records are maintained, and the rules and procedures applied are adequate to safeguard and control the Institutions assets; financial business has been conducted with due regard to economy, efficiency and effectiveness; and the annual accounts of the Institutions/Units give a true and fair view of their financial positions. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 2

7 4. We maintained the traditional practice of discussing our preliminary observations and draft management letters with the Heads of the Institutions. This is to ensure the accuracy and completeness of the evidence on which our conclusions and recommendations are based. This report which is compiled, on regional basis, covers matters, which in my opinion, should be brought to the notice of Parliament in accordance with Article 187(5) of the 1992 Constitution. 5. The significant findings contained in the report include failure to submit financial statements for validation, failure to collect outstanding debts, failure to settle outstanding indebtedness, cash irregularities, procurement irregularities, payroll irregularities and tax irregularities. These recurring irregularities, though not the same in their total value each year, were virtually the same type of financial irregularities that we reported on in previous reports; a pointer to the fact that more commitment is needed from the managements of the Institutions and the Ghana Education Service to ensure that the identified lapses are not only corrected but also appropriate measures are put in place to avoid their continued occurrence in future operations. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 3

8 6. The financial impact of the deficiencies and irregularities, on a national basis, are summarized in Table 1 below while their regional impact is shown as an Appendix attached to the report: Table 1: Summary of the national impact of the financial lapses for 2008 No Type of irregularity Amount (GH ) % 1. Tax irregularities 106, % 2. Procurement irregularities 541, % 3. Payroll irregularities 66, % 4. Cash irregularities 1,083, % 5. Stores irregularities 18, % 6. Outstanding debtors 5,906, % 7. Sundry creditors 6,896, % Total 14,618, Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 4

9 PART II SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS 7. The key findings and recommendations made as a result of our audits are as follows: Non-submission of accounts 8. As a result of weak supervision by some Heads of Institutions over their Accountants only 307 or 49% out of 627 Institutions submitted their 2008 accounts for audit validation and certification, as required by Section 88 Part IV of the Financial and Accounting Instructions for Secondary Schools, Training Colleges and Educational Units. The state of financial health of the defaulting Institutions could therefore not be commented upon. The status of annual accounts not submitted is provided, on regional basis, in the Appendices attached to this report. Cash irregularities-gh 1,083, Cash irregularities include: Payments without expenditure GH supporting documents 610, Payments without authorization 14, Misappropriation/Losses 319, Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 5

10 Un-retired accountable imprests 23, Direct use of school fees on cash transactions 113, Unrecovered overpayments 1, Cash irregularities which accounted for 7.4% of the total financial irregularities in 2008 were found to be widespread in most of the Institutions due to weaknesses in the controls exercised by the management of the Institutions over their cash resources. 11. I recommend that the management of the Institutions should continue to review and strengthen their internal control systems. They should also rigidly enforce the provisions of the FAA, 2003 and the FAI and apply the necessary sanctions against compliance violators in order to ensure sound financial management of their Institutions. Procurement irregularities-gh 541, The above irregularities, which occurred during the period, comprise procurement without competitive bidding, payment for store items without evidence of receipt and disposal, payment for fuel without evidence of receipt and disposal, payment for store items not supplied and procurements in excess of requirement. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 6

11 13. I wish to advise the management of the Institutions to put in place proper stores accounting procedures and strict compliance with the provisions of the Public Procurement Act of 2003, the Financial Administration Act, 2003 and the Financial Administration Regulations, Stores irregularities-gh 18, Loss of store items worth GH 4, and receipt books valued at GH 14, were noted in some schools. I recommend effective supervision of the work of Storekeepers and accounting personnel responsible for the collection of school fees as well as improvement in the physical security of store rooms. Tax irregularities-gh 106, Withholding taxes amounting to GH 78, were either not deducted from payments made to suppliers or were collected but illegally retained, thereby depriving the Consolidated Fund of the needed cash flows. Also, some Institutions failed to either purchase from VAT registered companies or failed to collect VAT invoices for purchases totalling GH 27, that were made. 16. I recommend strict compliance with the provisions of the Internal Revenue Act, 2000 and the Financial Administration Act, Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 7

12 Payroll irregularities-gh 66, Payroll issues which were caused by weaknesses in the internal control systems and laxity on the part of the management of the affected Institutions were: i) Payment of unearned salaries GH 53, ii) Un-deducted rent GH 4, iii) Unrecovered advances GH 7, In order to prevent the recurrence of the irregularities, I strongly recommend that the Institutions should put in place appropriate measures to identify, in a timely manner, separated staff on the monthly payroll and to ensure the withholding and transfer of unearned salaries into the Consolidated Fund. In addition, I recommend that unpaid rents and unrecovered advances should be deducted directly from the monthly salaries of the staff concerned. Outstanding debtors 19. The accounts of the 307 Institutions in the country whose financial statements were validated showed that as a result of ineffective fee collection and debt recovery strategies, students, staff and others were indebted to the Institutions by GH 5,906, as at 31 December With the exception of the Upper East and Upper West Regions, student debtors constituted over 50% of the debtors portfolio. I recommend that Institutions, in which majority of the students are sponsored by the Scholarships Secretariat, efforts should Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 8

13 be made to submit their returns timely to the Scholarships Secretariat to enable them obtain their government subsidies early. I also advise that the Ghana Education Service and the Heads of the Institutions should collaborate to devise a core corporate strategy for the collection of school fees. Outstanding creditors 20. Total creditors figure amounted to GH 6,896, as at 31 December The sundry creditors included various suppliers and the Internal Revenue Service. The Institutions were unable to pay their creditors because of lack of funds partly due to the non-payment of school fees. To minimize the incidence of irregular settlement of liabilities, I recommend that the Heads of the Institutions should intensify the collection of fees. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 9

14 PART III ASHANTI REGION Introduction 21. For the 2008 financial year, the Ashanti Region had under its jurisdiction 106 public sector Pre-University Educational Institutions made up as follows: Type of Institution Number Senior High Schools 57 Senior High/Technical School 23 Senior High/Commercial Schools 4 Teacher Training Colleges 6 Technical Teacher Training College 1 Polytechnic 1 Agric. Secondary School 1 Special Schools 2 Educational Units 10 Special Junior High School Summary of findings and recommendations 22. Lapses noted during the audit of the accounts of the Institutions in the Ashanti Region during the 2008 financial year are summarized as follows: Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 10

15 i. Total salary advances of GH 3, given by three Institutions were not refunded by the beneficiaries because management did not enforce recovery. We recommended that the outstanding amounts should be recovered directly from the monthly salaries of the beneficiaries. ii. At the Obuasi Senior High School, a staff member who left the school owed the Institution GH as a result of the overpayment of his entitlements. We recommended that the Institution should pursue the recovery of the overpayment and improve upon its supervisory controls over accounting duties. iii. Two Institutions made purchases worth GH 57, without obtaining alternative price quotations to provide assurance that the best available prices available were obtained. We recommended strict compliance with the provisions of the Public Procurement Act, iv. At Tweneboa Kodua Senior High School, the Agricultural Science tutor misappropriated GH from the proceeds accruing out of the sale of poultry products. We Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 11

16 recommended the recovery of the amount and an effective monitoring of sales revenue by management. v. Two Institutions paid for items worth GH 22, without any documentary evidence of receipt or usage. We recommended the recovery of the amount involved from the management of the two Institutions. vi. The Nkawie Senior Technical School failed to deal with VAT registered suppliers in respect of the procurement of store items worth GH 14,915.00, resulting in the loss of tax revenue of GH 1, We recommended compliance with the FAA of vii. Two Institutions failed to collect staff rents totalling GH 1, We recommended that the outstanding rent be recovered directly from the monthly salaries of the staff concerned. DETAILS OF FINDINGS AND RECOMMENDATIONS FINANCIAL REPORTING Annual estimates 23. The Regional Director of Education continued to convey annual estimates approved by the Ministry of Education to Institutions Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 12

17 in the region during the period under review. These releases were regarded as the approved estimates of the Institutions. 24. The Institutions, on the other hand, continued to violate Section 1 Part II of the FAI by their persistent failure to prepare estimates for boarding and other special funds accounts for the approval of the various Boards of Governors. We recommended compliance with the accounting instructions. State of the accounts 25. The level of book keeping and accounting in the Institutions was quite satisfactory. However, only 62 Institutions representing 58.5% out of the 106 Institutions in the region submitted their 2008 financial statements for audit validation. The 44 defaulting Institutions are listed in Appendix A to this report. We recommended compliance with Section 88 Part IV of the FAI. Operational results 26. The main sources of income continued to be derived from government grants, boarding fees, subsidies and other miscellaneous sources. Total income received during the 2008 fiscal year amounted to GH 42,334, while expenditure recorded was GH 42,853,507.73, resulting in a net deficit of GH 519, Presented below are the income and expenditure figures and the operational results for the period under consideration. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 13

18 Account Income Expenditure Surplus/Deficit General 23,609, ,611, (2,174.77) Boarding 12,752, ,087, (334,354.78) Miscellaneous 4,592, ,665, (72,349.82) HIPC 1,379, ,489, (110,425.00) 42,334, ,853, (519,304.37) Sundry debtors GH 842, As a result of ineffective debt recovery and school fees collection strategies, students, staff and others owed the Institutions a total amount of GH 842, The debt position as at the close of 2008 is analysed below: Students GH 627, Others 163, Staff 52, GH 842, The Institutions explained that a directive from the Ministry of Education not to expel students for non-payment of school fees was the reason for the high students indebtedness. We recommended that the management of the Institutions should liaise with the GES Headquarters to find an effective way of collecting the outstanding school fees. We also urged the management of the Institutions to recover all the other outstanding debts. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 14

19 Sundry creditors GH 1,277, The Institutions indebtedness to various suppliers stood at GH 1,176, Balances due to other creditors totalled GH 101, Details of these figures are provided below: Textbooks fees IRS Students 100, Suppliers 1,176, ,277, We recommended the early redemption of the liabilities by the Institutions. MANAGEMENT ISSUES Outstanding staff advances-gh 3, As at 31 December 2008, outstanding staff advances in the Dompoase Senior High School, the Dadease Agricultural Senior High School and Simms Senior High School totalled GH 3, details are listed below: Name of Institution Amount (GH ) Dompoase Senior High School Dadease Agriuc Senior High School 1, Simms Senior High School 1, , The Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 15

20 32. We recommended that the amounts should be recovered directly from the monthly salaries of the staff involved. Overpayment of the entitlements of a tutor-gh A member of staff who retired from the Obuasi Senior High Technical School was overpaid by an amount of GH as a result of a wrong computation of his retirement benefits. We recommended that the amount should be recovered from the separated staff or his next of kin and the Accountant should exercise effective supervisory control over the work of his assistants. Purchases without alternative quotations-gh 57, The Tweneboa Kodua Senior High School and Wesley College made purchases worth GH 57, without obtaining alternative price quotations from other suppliers, in contravention of Section 43 (1) of the Public Procurement Act, The details are as follows: GH Tweneboa Kodua Senior High School 51, Wesley College 5, , In the absence of alternative price quotations, there was no assurance that the best available prices were obtained by the Institutions. This irregularity was the result of inadequate management supervision of the procurement process. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 16

21 36. We recommended that the management of the Institutions should ensure strict compliance with Section 43 (1) of the Public Procurement Act. Misappropriation of sales revenue-gh An Agricultural Science tutor of the Tweneboa Kodua Senior High School sold poultry products worth GH but misappropriated the cash. This irregularity was caused by the failure of the Accountant to monitor the sales. We recommended that the amount of GH should be recovered directly from the monthly salary of the Agricultural Science tutor. Purchases not routed stores-gh 22, Contrary to Section 37 Part IX of the FAI, various items worth GH 22, allegedly purchased by the Konadu Yiadom Senior High School and Kofi Agyei Senior High School were not accounted for before their final disposal, thus, raising doubts about the authenticity of the said purchases. The details are: Institution Amount (GH ) Konadu Yiadom Senior Sc hool 7, Kofi Agyei Senior High School 15, , We urged the management of the two Institutions to account for the items or refund the amounts involved. We also advised that, in Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 17

22 future, such purchases should be receipted in store records while issues are properly supported with authorized requisitions. Procurement from non-vat registered entities 40. Our review of procurement records at the Nkawie Senior Technical School disclosed that contrary to Regulation 183 (4) of the Financial Administration Regulations, the school procured store items worth GH 14, from non-vat registered suppliers resulting in a loss of 12.5% tax revenue of GH 1, This irregularity was the result of inadequate management supervision of the procurement process. We recommended strict compliance with the provisions of the Financial Administration Act, 2003 to avoid loss of government revenue. Failure to recover outstanding staff rent-gh 1, Christ the King Senior High School in Kumasi failed to collect staff rents totalling GH 1, while the Obuasi Senior High Technical School also failed to collect GH from its staff members. We recommended that the un-paid rent be recovered directly from the monthly salaries of the affected staff. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 18

23 BRONG AHAFO 43. There were 72 Pre-University Educational Institutions in the region during the 2008 financial year. The Institutions are classified as follows: Type of Institution Number Senior High School 52 Training College 3 Agric Senior High Sch. 2 Special School 2 Technical School 1 Vocational School 1 Tertiary Institution 1 Educational Units 10 Total 72 Summary of findings and recommendations 44. Below is a summary of the findings and recommendations which were made in respect of the 2008 financial year: i. Four Institutions failed to deduct 5% withholding tax amounting to GH 3, from payments made for goods and services supplied. We recommended that the management of the Institutions should recover the taxes from the suppliers and remit them to the Commissioner of Internal Revenue Service. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 19

24 ii. Four Institutions paid a total of GH 12, on 49 payments vouchers which were without supporting attachments such as invoices, official receipts and statements of expenditure. To avoid the risk of making fictitious payments, we recommended that the management of the Institutions concerned should either produce the attachments or refund the total amount involved to chest. iii. Two Institutions made total purchases of GH 72, without obtaining price quotations from as many suppliers as practicable, in breach of Section 43 (1) of the Public Procurement Act, We recommended strict compliance with the relevant section of the Public Procurement Act. iv. In violation of Section 30(2) of the Financial Administration Act, 2003 which requires that government stores should be obtained from only VAT registered entities, two Institutions purchased goods from non-vat registered entities to the tune of GH 55, resulting in a loss of tax revenue amounting to GH 6, We recommended that the management of the Institutions should ensure that government stores are always purchased from only VAT registered entities. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 20

25 v. An amount of GH was wrongly debited to the bank account of Mansen Senior High School on 6 November The Institution's bank reconciliation statements showed that the error had not yet been corrected. We recommended that the management of the Institution should pursue a reversal of the debit entry. vi. Purchases of store items amounting to GH 21, were made by four Institutions without recording the items in the Institutions' stores before disposal. In the absence of documentary evidence showing that the items were received and disposed off to the benefit of the Institutions, we recommended that the management of the Institutions should refund the amount involved to chest. vii. Unearned salaries amounting to GH 2, were paid to a separated staff of the Nkrankwanta Senior High School, in contravention of Regulation 297(1a-f) of the Financial Administration Regulations, We recommended the recovery of the total amount to chest. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 21

26 DETAILS OF FINDINGS AND RECOMMENDATIONS FINANCIAL REPORTING Annual estimates 45. The approved estimates of the Regional Education Office includes the estimates of all public sector Institutions in the region. However, the Headmasters of the Institutions failed to obtain extracts of the approved estimates for purposes of comparison with releases made by the Regional Director of Education. 46. Consequently, they were not able to determine whether or not there were shortfalls in their expected incomes or actual expenditures exceeded their approved estimates. We recommended that, in future, the Headmasters should obtain copies of the approved estimates. 47. No estimates were prepared for the boarding accounts of Institutions which operated boarding facilities. We recommended that the Accountants of boarding Institutions should prepare boarding estimates for the approval of their Boards of Governors. State of the accounts 48. None of the 72 Institutions in the region submitted their annual accounts for certification as at the close of the statutory date of 31 March However, by the time of compiling this report in 2010, the accounts of 37 Institutions had been submitted and validated; with the accounts of 35 Institutions still outstanding. We drew the attention Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 22

27 of the defaulting Institutions to Part IV Section 88 of the FAI which requires them to submit their annual accounts within three months after the year to which they relate. The list of the defaulting Institutions is attached as Appendix B. Operational results 49. Government subsidies, scholarships and school fees were the main sources of income for the Institutions. The total income that accrued to the 30 Institutions which submitted their accounts was GH 16,660, Total corresponding expenditure amounted to GH 16,421,283.38, which resulted in a surplus of GH 239, These are detailed below: Accounts Income (GH Expenditure (GH ) Surplus/Deficit (GH ) General 10,873, ,865, , Boarding 4,454, ,261, , Miscellaneous 851, , , Donations 137, , (5,690.96) HIPC 323, , (42,902.89) GETFUND 19, , Total 16,660, ,421, , Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 23

28 Sundry debtors 50. The indebtedness of staff, students and others in 27 Institutions, as at 31 December 2008, totalled GH 337, The composition is as follows: Type of debtor Amount (GH ) Percentage Students 203, Staff 38, Others 95, Total 337, The persistent huge students indebtedness is indicative of the ineffectiveness of the existing procedures for the collection of school fees. We recommended that management should, in consultation with the GES Headquarters, devise more effective procedures for the collection of school fees. Sundry creditors 52. At the close of the 2008 financial year, 27 schools owed a total amount of GH 172, to students and other creditors in the following proportions: Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 24

29 Type of creditor Amount (GH ) Percentage Students 17, Others 155, Total 172, The late release of government grants and students scholarships coupled with the ineffective procedures for the collection of school fees placed the Institutions in a financial situation where they were hardly able to settle their debts. We repeated our recommendation for the introduction of more effective measures for the collection of school fees so that the Institutions would be capable of honouring their financial obligations. MANAGEMENT ISSUES Withholding tax not deducted-gh 3, The management of four Institutions failed to deduct withholding tax of GH 3, from payments of GH 65, made to suppliers of goods and services. This inaction contravened Section 84(1&2) of the Internal Revenue Act, 2000 (Act 592), which requires that withholding tax of 5% be deducted from all payments exceeding GH payable to third parties. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 25

30 The Institutions were: Institution Amount (GH ) Ahafoman Senior High School Nkrankwanta Senior High School Achirensua Senior High School OLA Girls Senior High School 1, , The non deduction of the withholding tax deprived the state of the tax revenue. We therefore recommended strict compliance with the tax laws and the recovery of the total amount of GH 3, from the suppliers for remittance to the Internal Revenue Service. Wrongful debit of bank account 56. An amount of GH was wrongly debited to the bank account of the Mansen Senior High School on 6 November The Institution's bank reconciliation statements showed that the error had not been corrected as at 31 December We noted that the delay was caused by management s failure to notify the bank of the error. This inaction deprived the Institution of funds needed to enhance its operations. We, therefore, recommended that the management of the Institution should ensure that the bank reverses the wrong debit entry of GH Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 26

31 Unsubstantiated payments-gh 12, Contrary to Section 10 Part IV of the Financial and Accounting Instructions, 49 payment vouchers totalling GH 12, raised in four Institutions were not properly acquitted with supporting documents such as invoices, official receipts and statements of expenditure. The four Institutions are listed below: Institution No. of PVs Tot. Amt. (GH ) Chiraa Senior High School 20 2, Ahafoman Senior High School 12 1, Mansen Senior High School 6 1, Nkrankwanta Senior High School 11 6, Total 49 12, In the absence of the supporting documents, we could not ascertain the authenticity of the transactions. We, therefore, recommended that management should properly account for the expenditure; failure of which management should ensure that the total amount involved is recovered to chest. Uncompetitive procurement practices-gh 72, A review of the procurement practices in the Chiraa Senior High School and the Presbyterian Senior High School, Bechem disclosed the absence of alternative price quotations from different suppliers for the procurement of various goods totalling GH 72,335.00, contrary to Section 43 (1) of the Public Procurement Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 27

32 Act, 2003 (Act 663). This practice undermines competition and raises doubts as to the reasonableness of prices paid for those items. The values of the irregularities are stated below: Chiraa Senior High School Presbyterian Senior High School (Bechem) GH 10, GH 61, We stressed the need for the management of the two Institutions to ensure that supplies of items are obtained from the most favourable sources by obtaining at least three quotations from different vendors to ensure value for money. Loss of VAT revenue - GH 6, The VAT Act 596 enjoins all departments to procure their goods from VAT registered companies. This is to ensure that the VAT Service receives the appropriate 12.5% tax collectible from the purchases. 63. We noted, however, that the Chiraa Senior High School and Acherensua Senior High School violated the regulation and purchased goods worth GH 55, from non VAT registered suppliers. The details are: Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 28

33 Institution Total purchases Tax Chiraa SHS GH 14, GH 1, Acherensua SHS 41, , GH 55, GH 6, As a result of the Institutions failure to observe the VAT law, a total amount of GH 6, which should have been paid to the VAT Service, as revenue, was lost to the state. We advised management to deal with only VAT registered companies to prevent revenue loss to the state. Supplies not taken on ledger charge - GH 21, Items purchased in 2008 by the under listed Institutions amounting to GH 21, were not routed through store records before disposal. There was, therefore, no assurance that the funds were used for their intended purposes. The Institutions were: Institution Amount (GH ) Nkrankwanta Senior High School 5, Bechem School for the Deaf 1, St. Joseph s Trg. College 4, OLA Girls Senior High School 11, , We recommended that all supplies procured should be routed through store records before being issued out for use. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 29

34 Payment of unearned salaries-gh 2, A former staff member of the Nkrankwanta Senior High School, Rev. James Fynn Aikins, who vacated his post in May 2008 was paid unearned salaries totalling GH 2, because the Headmaster failed to ensure the early deletion of his name from the payroll, in contravention of Regulation 297(a-f) of the Financial Administration Regulations, 2004 which require heads of departments to stop the payment of salaries to separated staff. 68. We recommended that management should pursue the recovery of the amount from the former staff and improve their collaboration with the Controller & Accountant-General's Department to facilitate the prompt deletion of the names of separated staff. CENTRAL REGION Introduction 69. Sixty-three Pre-University Educational Institutions operated under the public system in the Central Region in They are classified as follows: Type of institution Number Senior High Schools 37 Senior High/Commercial Schools 2 Senior High/Technical Schools 10 Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 30

35 Technical Institutions 2 Teacher Training Colleges 3 Special Schools 2 Educational Units 7 Total 63 Summary of significant findings and recommendations 70. Below is a summary of the significant findings and recommendations which were made in respect of the 2008 financial year: i. Accountable imprests amounting to GH 23, were not retired by staff of six Institutions while three Institutions also failed to recover salary advances amounting to GH 7, that were granted to staff members during the year. We advised recovery of the amounts. ii. Seven Institutions did not provide appropriate supporting documents to support expenditures totalling GH 213, We recommended that the payments should be properly accounted for or the amount involved should be recovered to chest. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 31

36 iii. The management of four Institutions failed to adhere to procurement regulations resulting in procurement irregularities in the amount of GH 82, We recommended strict adherence to the Public Procurement Act, 2003 to ensure that Educational Institutions pay competitive prices for their purchases. iv. Eight Institutions failed to deduct withholding tax totalling GH 13, from payments made to suppliers. The Institutions were urged to recover the amount from the suppliers and ensure that withholding tax is always deducted at the time of payment and promptly paid to the IRS. v. Items worth GH 61, purchased by six Institutions in 2008 were not routed through stores. We recommended that the items should be fully accounted for or the amount involved be recovered to chest. vi. At the Aggrey Memorial Senior High School, unearned salaries totalling GH 2, were paid to separated staff as a result of inadequate payroll controls. We recommended that management should recover the amounts from the separated staff or their next-of-kin. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 32

37 viii. Debts owed by students in six Institutions amounted to GH 66, Managements of the Institutions were advised to improve upon their debt collection to minimize the outstanding debts. Managements of the Institutions were also urged to pursue recovery of all outstanding debts. DETAILS OF FINDINGS AND RECOMMENDATIONS FINANCIAL REPORTING Annual estimates 71. Estimates covering the recurrent expenditures of the various Institutions were incorporated in the approved regional estimates. Quarterly releases of grants to the various Institutions consequently served as the approved estimates. 72. The boarding Institutions, however, failed to prepare estimates for the boarding and miscellaneous accounts for the approval of their Boards of Governors, contrary to Section I of Part II of the FAI. We urged Heads of the Institutions to comply with the instructions. State of the accounts 73. Forty-seven Institutions in the region failed to fulfill the requirement under Part IV Section 88 of the FAI to submit their annual financial statements for audit validation. The failure to submit the financial statements was the result of the failure of the Heads of Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 33

38 the Institutions to effectively supervise their accounting personnel. We requested the Heads of the defaulting Institutions to update their accounts for audit. The status of submission of financial statements by the Institutions in the region, as at 31 December 2008, is provided in Appendix C. Operational results 74. Stated below are the operational results of the 16 Institutions which submitted their annual accounts for validation. Account Income Expenditure Surplus/Deficit (GH ) (GH ) (GH ) General 8,457, ,361, , Boarding 3,840, ,472, (632,218.99) Miscellaneous 329, , (28,467.16) Donor other funds and 545, , , Total 13,173, ,720, (546,788.17) 75. The operations of the Institutions resulted in a deficit of GH 546, at the end of the financial year. This was mainly due to the deficit of GH 632, recorded under the boarding income and expenditure accounts. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 34

39 General income and expenditure accounts 76. Out of a total income of GH 8,457, realized under the general income and expenditure accounts during the year, the Institutions spent a total of GH 8,361,378.19, resulting in a surplus of GH 96, Boarding income and expenditure accounts 77. The Institutions collected boarding fees amounting to GH 3,840, They, however, spent GH 4,472, thereby incurring a deficit of GH 632, Miscellaneous income and expenditure accounts 78. A deficit of GH 28, was incurred under the miscellaneous account as the Institutions received a total of GH 329, but spent GH 358, during the year. Donor and other fund accounts 79. Under the donor fund account the Institutions received GH 545, out of which they incurred expenditures amounting to GH 528, This resulted in a surplus of GH 17, Sundry debtors-gh 75, Students and staff of nine Institutions in the region owed their various schools a total of GH 75, as at the end of the 2008 financial year as shown below. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 35

40 Type of debtor Amount (GH ) Student debtors 66, Staff debtors 8, Total 75, We recommended that the management of the Institutions should recover the amounts involved in accordance with Section 2(m) of the FAI. Sundry creditors-gh 28, Two Institutions owed their suppliers a total of GH 28, at the end of the year. MANAGEMENT ISSUES Unsupported payments-gh 213, Contrary to Sections 16 and 17 of Part IV of the FAI, payments totalling GH 213, made by 12 Institutions were not supported by official receipts from the payees. Managements of the schools were asked to ensure that all the vouchers are properly acquitted or the amounts are refunded to chest. The schools involved are listed below: Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 36

41 Institutions Amount (GH ) Assin North Senior High School 6, Assin Nsuta Senior High School 5, Swedru School of Business 7, Swedru Senior High School 49, Presby. Snr. High Sch, Agona Nsaba 24, Nyakrom Snr. High/Tech. School 2, Kwanyako Snr. High/Tech. School 2, Breman Asikuma Senior High School 14, Cape Coast Technical Institute 67, OLA College of Education 6, Bisease Sec. Commercial School 4, Aggrey Memorial Senior High School 22, Total 213, Imprests not accounted for-gh 23, Members of staff in six Institutions, as listed below, could not account for imprest amounts advanced to them by the managements of their various Institutions to undertake official assignments. We Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 37

42 recommended that the outstanding amounts should be recovered directly from the monthly salaries of the officers concerned. Institutions Type of irregularity Amount GH Swedru School of Business Swedru Senior High School Presby. SHS, Agona Nsaba Nyakrom High/Techn. Sch Snr Kwanyako Snr High/ Technical Sch Breman Asikuma Snr High School Unaccounted for imprests 2, Unretired imprests 6, Unaccounted for imprests 2, Unaccounted for imprests 4, Unaccounted for imprests Unaccounted for imprests 7, Total 23, Unrecovered overpayment-gh 1, A total overpayment of GH 1, was made to four staff members of the Breman Asikuma Senior High School. We recommended the recovery of the overpayments from the staff concerned. The details are provided below: Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 38

43 Payee Amount due (GH ) Amount paid (GH ) Excess payment (GH ) Kingsford Eshun Henry Hoyle Henry Hoyle C. Nyaba Beatrice I. Annan Total , , Single source procurement-gh 82, Part IV Section 43 of the Procurement Act, 2003 (Act 663) states that the procurement entity shall request quotations from as many suppliers or contractors as practicable, but from at least three different sources. 87. We noted that, in spite of the requirement in the Act, four Institutions, as listed below, ignored this provision and purchased items worth GH 82, without obtaining alternative price quotations to ensure that the best prices available were obtained for the purchases. We recommended strict adherence to the requirement in the Act. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 39

44 Institution Amount (GH ) Kwanyako Snr. High/Tech School 3, Breman Asikuma Snr. High School 21, Mando Snr. Sec/Tech. School 16, Aggrey Memorial Snr. High School 39, Total 82, Failure to withhold tax-gh 5, We noted that due to weak management supervision, the Accountants of nine Institutions failed to withhold a total tax of GH 5, deductible from payments made during the year, in contravention of the tax laws. The Institutions were: Institution Amount (GH ) Assin Nsuta Senior High School Swedru Senior High School Presby. Snr. High School, Nsaba 1, Nyakrom Snr. High/ Tech. School Kwanyako Snr. High/ Tech. School Breman Asikuma Snr. High School Bisease Sec/Commercial School Enyan Denkyira Sec/ Tech School Mando Secondary/ Technical School Total 5, Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 40

45 89. In order that management might not be held liable, as prescribed in Section 88(1) of the IRS Act (Act 592) which states that a withholding agent who fails to withhold tax is personally liable to pay to the Commissioner the amount of tax which has not been withheld, it was recommended that management should contact the payees for the recovery of the total amount. Un-remitted withholding taxes-gh 8, Section 87 of the Internal Revenue Act, 2000 (Act 592) stipulates that all taxes withheld should be paid to the IRS not later than the 15 th day of the month following the month in respect of which the deduction was made. 91. We noted, however, that a total of GH 8, withheld by four Institutions was not paid to the IRS. We recommended that the management of the Institutions should always ensure compliance with the relevant provisions of the Internal Revenue Act not only by deducting all taxes due but also by remitting the taxes withheld promptly to the Commissioner of IRS. The Institutions were: Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 41

46 Institution Amount (GH Assin North Snr. High School Breman Asikuma Sen High School 5, Cape Coast Technical Institute 2, Boa Amponsem Snr. High School Total 8, Meanwhile, we asked that the amounts withheld by the Institutions listed above should be remitted to the Commissioner without any further delay. Purchases from Non-VAT registered vendors-gh 8, We noted that payments for goods and services totalling GH 68, were made to non-vat registered vendors, in contravention of Part VI Regulation 183 (4) of the Financial Administration Act, This non-compliance led to a loss of GH 8, to the state in uncollected VAT revenue. We recommended to the Institutions to ensure that they prevented the loss of government revenue by dealing with only VAT registered companies. The Institutions were: Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 42

47 Institution Purchases Revenue lost (GH ) Swedru School of Business Swedru Senior High School 1, Bisease Sec/Commercial Sch 27, , Eyan Denkyira Sec/Tech. Sch. 16, , Mando Secondary/Tech Sch 17, , Aggrey Memorial Snr High Sch 5, Total 68, , Payments without supporting receipts 94. Seven Institutions, as listed below, paid a total of GH 66, for the supply of store items during the year. The supplies were not supported with suppliers invoices, receipts, or stores receipt vouchers to confirm that the items were received at the Institutions and used for their benefit, as required by Part IX Sections 16(b) and 18 of the FAI. The Institutions were: Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 43

48 Institution Amount (GH ) Assin Nsuta Senior High School 6, Presbyterian Senior High School, Agona Nsaba 7, Kwanyako Senior High/Technical School 6, Cape Coast Technical Institute 23, Bisease Secondary/Commercial School 5, Enyan Denkyira Secondary/Technical School 8, Mando Secondary/Technical School 9, Total 66, This irregularity was the result of inadequate supervisory control of the procurement process by management. In the absence of any documentary evidence of the receipt and disposal of the items, we were unable to confirm that the items were received and used. We, therefore, recommended that the management of the Institutions should account for the items or refund the amounts involved. Unrecovered staff advances-gh 7, Part IV Regulation 104(c) of FAR 2004, (L1 1802) states among others that a head of department authorized to administer a class of advances shall ensure that the advances are duly recovered in accordance with the regulations or agreement relating to them. Report of the Auditor-General on the Public Accounts of Ghana, Pre-University 44