TABLE OF CONTENTS. Transmittal letter. Audit Opinion DETAILS OF FINDINGS PART I Ministry of food and Agriculture 24 7

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1 AUDIT REPORT ON THE MULTI DONOR BUDGETARY SUPPORT PROGRAMMEME OF FLOWS IN THE GOVERNMENT OF GHANA ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2004 AND 31 DECEMBER 2005 TABLE OF CONTENTS Transmittal letter Paragraphs Pages iii Introduction 1 1 Audit objectives 3 1 Summary of significant findings made in the MDAs and recommendations 4 2 Summary of significant findings made in the MMDAs and recommendations 12 3 Audit Opinion 17 5 DETAILS OF FINDINGS PART I Ministry of food and Agriculture 24 7 PART II Ministry of Local government, Rural Development and Environment i

2 PART III METROPOLITAN, MUNICIPAL AND DISTRICT ASSEMBLIES Accra Metropolitan Assembly Kumasi Metropolitan Assembly Tamale Metropolitan Asembly Tema Municipal Assembly Shama Ahanta East Metropolitan Assembly Agona District Assembly Birim South District Assembly Nadowli District Assembly South Tongu district Assembly Wassa West District Assembly Asanti Akim North District Assembly Bolgatanga Municipal Assembly Ga East District Assembly North Tongu District Assembly Sunyani District Assembly ii

3 TRANSMITTAL LETTER Ref. No. AG.01/109/Vol.2 Office of the Auditor-General Ministries Block O P.O. Box MB 96 Accra Tel. (021) Fax (021) March 2009 Dear Madam Speaker, AUDIT REPORT ON THE MULTI DONOR BUDGETARY SUPPORT PROGRAMMEME OF FLOWS IN THE GOVERNMENT OF GHANA ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2004 AND 31 DECEMBER 2005 The Multi Donor Budgetary Support (MDBS) programme audit was initiated in 2004 when the Ministry of Finance and Economic Planning and the European Union requested that donor inflows into the Consolidated Fund and expenditures therefrom should be audited. I found the request to be in consonance with Section 16 of the Audit Service Act, 2000 (Act 584) which stipulates that The Auditor-General may in addition to the audit of public accounts, carry out in the public interest, such special audits or reviews as he considers necessary and shall submit such reports on the audits or reviews undertaken to Parliament. 2. Pursuant to the Act, I contracted Pricewaterhouse coopers (Ghana) Limited, (Chartered Accountants) to undertake the audit of the Multi Donor Budgetary Support that is extended to the Government of Ghana with particular reference to some selected Ministries, Departments and Agenceis (MDAs) namely: the Ministry of Food and iii

4 Agriculture, the Ministry of Local Government, Rural Development and Environment together with the Departments and Agencies under them as well as selected Metropolitan, Municipal and District Assemblies covering the fiscal years 2004 and In accordance with Article 187 (5) of the 1992 Constitution, I have the honour to submit, herewith, the report on the audits to enable you table it before Parliament. 4. Madam Speaker, the audit focused primarily on financial accountability and compliance with applicable laws and regulations. This report highlights the significant findings arising from the audit. It includes details of financial errors and irregularities arising out of the breakdown of internal controls. Additionally, it draws Parliament s attention to payroll and procurement irregularities and provides recommendations, where possible, to remedy weaknesses identified in the systems of internal controls. 5. As I always depend on others to produce these reports, I would like to thank the staff of the accountancy firm and my staff for their assistance in the preparation of this report and the staff of the Ministries, Departments and Agencies, and the Assemblies for their cooperation during the audits. 6. I trust that this report will meet the approval of Parliament. Yours sincerely, THE RT. HON. SPEAKER OFFICE OF PARLIAMENT PARLIAMENT HOUSE ACCRA iv

5 PART I AUDIT REPORT ON THE MULTI DONOR BUDGETARY SUPPORT PROGRAMMEME OF FLOWS IN THE GOVERNMENT OF GHANA ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2004 AND 31 DECEMBER 2005 Introduction Section 11(2) of the Audit Service Act, 2000 (Act 584) and article 187(3) of the 1992 Constitution give me authority to outsource to private audit firms certain aspects of financial audit of programmes and activities of public offices. 2. I have, in accordance with the law, requested the accounts of the Ministry of Food and Agriculture (MOFA) together with its Departments, the Ministry of Local Government, Rural Development and Environment (MLGRDE) and selected Metropolitan, Municipal and District Assemblies (MMDAs) which are among the beneficiaries of the Multi Donor Budgetary Support which the Government of Ghana receives to be audited by Pricewaterhousecoopers (Ghana) Limited. The report emanating from this audit which covers the fiscal years 2004 and 2005 contains significant matters which I believe should be brought to the attention of Parliament. Audit objectives 3. The overall objective of the audit is to provide an independent and professional opinion on the amounts disclosed in the financial statements of the audited entities. It also involves ascertaining that: the accounts had been properly kept; all public monies had been properly accounted for and rules and procedures applicable were sufficient to secure an effective check on the assessment, collection and proper allocation of the revenue; monies had been expended for the purposes for which they were appropriated and the expenditures had been made as authorised; and essential records were maintained and the rules and procedures applied were sufficient to safeguard and control public property. 1

6 Summary of significant findings and recommendations 4. The report disclosed that contrary to regulation 190 of the Financial Administration Regulations 2004, Legislative Instrument (L.I. 1802), the two Ministries, and the Departments and Agencies (MDAs) under them defaulted in preparing their accounts during the 2004 and 2005 fiscal years. They only prepared statements of expenditure summarising expenditures incurred during the period. The main cause of this anomaly was identified as lack of departmental accounting manuals to guide them. The Controller and Accountant General (CAG) was at the time in the process of preparing the Accounting and Procedures Manual. The MDAs are therefore advised to obtain their copies of the manual to facilitate the preparation of the departmental annual financial statements. Cash irregularities 5. Cash irregularities found in the MDAs comprise the following: Poor monitoring of the collection of Internally Generated Funds (IGF) and delay in their lodgements to bank; Failure to pay revenue collected into account intact; Retention of IGF without legislative approval; and Revenue returns prepared not in agreement with the underlying books of accounts. 6. The underlying cause of these serious violations was the ineffectiveness of supervisory controls over collections. I therefore recommend that the MDAs should put in place credible systems of internal controls whereby the accounts of revenue collectors will be checked regularly by their supervisors to minimize the incidence of the irregularities mentioned. Payroll overpayments 7. With regard to payroll management, the following findings were made: Payment of unearned salaries; Delay in review and certification of payroll vouchers; and Failure by some cost centres to maintain nominal payrolls. 2

7 8. The wrongful payment of unearned salaries was caused by the failure of the MDAs to communicate promptly to the Controller and Accountant General s Department (CAGD) to delete the names of separated staff from the payroll. In order to prevent a recurrence of the infractions observed, I strongly recommend that the internal control systems in the MDAs be strengthened including close monitoring of the payroll and timely communication of the names of separated staff to the CAGD. Procurement irregularities 9. Procurement reviews showed instances of disregard for rules, lack of audit trails or inadequate documentation, non maintenance of contract files or contract registers not being up-dated and unsigned contracts. I recommend that the Ministry of Finance and Economic Planning (MoFEP) issue directives to assist the MDAs conduct business strictly in accordance with the provisions of the Public Procurement Act, 2003 (Act 663). Qualified accounts 10. Similar to the opinion that I expressed on the public accounts of Ghana as a whole, the firm of auditors also issued qualified opinions on the 2004 and 2005 accounts of the two ministries due to significant inconsistencies noted between the statement of expenditure prepared and the underlying books of account as well as the lack of adequate supporting documentations covering their transactions. 11. I recommend that the heads of the MDAs enforce compliance with the financial reporting requirements. The CAGD should also ensure that the Accounting and Procedures Manual is rolled out to all MDAs when completed. Summary of significant findings made in the MMDAs and recommendations 12. Cash irregularities Cash irregularities noted in the Assemblies audited included: Weak control over collection and recording of Internally Generated Fund (IGF) collected; 3

8 4 Failure to bank revenue daily; Understatement of revenue; Failure to prepare bank reconciliation statements monthly; Payment vouchers not adequately acquitted and properly filed; Imprests not accounted for; Inadequate monitoring of recovery of loans and staff advances; Wrong accounting treatment of the Common Fund Administrator s deductions at source; 13. The irregularities were attributed largely to the failure of management to supervise the work of subordinate staff and the failure to establish sound repayment terms with debtors. I recommend that management continue to strengthen internal controls by instituting measures that ensure strict compliance with financial rules and regulations. Stores/procurement irregularities 14. These irregularities relate to purchases of tangible items and purchases of fuel and lubricants for which there were no Fixed Assets Registers or Vehicle Log books in some of the Assemblies audited. I urge the affected Assemblies to strengthen supervisory control over purchases by ensuring that the relevant records are maintained. Contract irregularities 15. The contract irregularities that the audit review disclosed were as follows: Non-maintenance of contract registers; Non-tendering of contracts; Over-payment of contract sums; Failure to procure from non-vat registered suppliers; 16. Lack of proper supervisory control over these transactions was a major contributory factor. In this regard, I recommend the strengthening of controls over contract management to ensure that the required records and audit trails are maintained and the relevant portions of the Public Procurement Act are strictly complied with.

9 Audit opinions 17. The audit opinions on the MMDAs were as follows: Unqualified opinion 18. As a new district, the Ga East District Assembly did not have any issue concerning opening balances for Regarding the 2005 accounts, no material and significant inconsistencies were noted in the accounts of the Ga East and South Tongu Disrtict Assemblies and consequently unqualified opinions were expressed on their financial statements. Qualified opinion 19. The Auditors issued qualified opinions on the 2004 financial statements of 10 MMDAs. The except for opinions were expressed due to their inability to verify and confirm the opening balances of the Assemblies. The Assemblies were: Shama Ahanta East Metropolitan Assembly; Tamale Metropolitan Assembly; Sunyani Municipal Assembly; Tema Municipal Assembly; Bolgatanga Municipal Assembly; South Tongu District Assembly; Wassa West District Assembly Agona District Assembly; Ashanti Akim North District Assembly; Birim South District Assembly. 20. Regarding the 2005 financial statements examined, qualified opinions were expressed on the financial statements of nine Assemblies due to significant but unexplained differences that arose when the accounts of the District Assemblies Common Fund (DACF) were separated from the IGF accounts and also due to lack of adequate supporting documentation. The affected Assemblies were: Shama Ahanta East Metropolitan Assembly; Tamale Metropolitan Assembly; Bolgatanga Municipal Assembly; Tema Municipal Assembly; Wassa West District Assembly; 5

10 Agona District Assembly; Asante Akim North District Assembly; Birim South District Assembly; Kumasi Metropolitan Assembly. Disclaimer of opinion 21. The Auditors could not express audit opinions on the 2004 and 2005 accounts of the following Assemblies as a result of matters that were considered significant and pervasive to the financial statements. They were: Accra Metropolitan Assembly- This Assembly was not able to separate its financial statements for the DACF from those of the IGF. Nadowli District Assembly- Proper books of account were not maintained. North Tongu District Assembly- Financial statements were not supported by proper books of account. Adverse opinion 22. No adverse opinion was expressed on the 2004 financial statements examined. However, an adverse audit opinion was expressed on the 2005 financial statement of the Sunyani Municipal Assembly as a result of misstatements that were considered significant and pervasive to the financial statements. The Auditors found significant differences between closing balances of 2004 and the opening balances of In addition they could not obtain any details concerning an amount of 1.70 billion described as miscellaneous expenditure. 23. It is evident that the qualifications above arose mainly from weaknesses in financial management practices in the Assemblies. I recommend that management in the various Assemblies should take proactive steps to improve upon financial controls so as to remove the causes of some of the qualifications as soon as possible. 6

11 PART II DETAILS OF FINDINGS MINISTRY OF FOOD AND AGRICULTURE (MOFA) HEADQUARTERS Systemic weaknesses 24. As part of the Government decentralisation programme, all the Departments and Agencies of MOFA at the Regional, Metropolitan, Municipal and District levels have been put together under the umbrella of Agriculture Development Units (ADU). In most of the cost centres visited, the Auditors found Veterinary Services were distanced from the Agricultural Development Units in terms of functions and management, and performed their own activities that in some instances the management of the Agriculture Development Unit (ADU) was unaware of. At other cost centres there was a reluctance to report to Directors of the ADUs. 25. This has led to many Veterinary Service Units at the ADUs handling their own finances or receipts from IGF, though their staffs had not had any training in bookkeeping. Controls over the collection, recording and banking of IGF were therefore generally weak, and in some instances fraudulent practices were identified. 26. It was recommended that the ADUs and Veterinary Units should be made more accountable, effective, and responsible, and their activities integrated more fully. Management accepted the recommendation and stated that the Ministry had put in place a Team made up of Development Partners and MOFA that is addressing the organisational structure and reporting lines of the Ministry at cost centre levels. Ineffective review of financial returns and records 27. The Auditors reviewed the financial reporting system in place at MOFA and found that though Directors appended their signatures to the returns that are prepared by the Accountants at the cost centres as evidence of review and approval, there was no evidence that those returns were properly reviewed. 7

12 28. The Reviewing Officers did not understand how the figures were generated or identify errors, inaccuracies and inconsistencies in the returns. This led to figures in the Ministry s financial statements not being fully supported by the underlying records at the cost centres. 29. It was also noted that Accounts Personnel at some cost centres lacked the skills to keep the books of the cost centre but had taken up accounting roles and functions through promotions. Their recording of transactions in the vote ledger and preparation of accounting returns were inaccurate and contained errors. 30. It was recommended that personnel promoted or appointed as Directors should be trained in their responsibilities to review books of accounts and financial reports of the ADU, review bank reconciliation statements, monthly financial returns, and the vote ledger. It was also recommended that Directors and other key personnel should be regularly updated on regulatory requirements and the consequences of their financial management decisions. Furthermore, it was recommended that new accounts personnel should be oriented on the books of accounts kept at the ADUs, and updated on the key regulations relevant to their work. 31. The management response found these findings to be in order, and stated that following the initial discussion held with the Auditors a new but simple financial reporting format had been designed for the cost centres. Training on this reporting format and basic accounting record keeping had also been organized for the Accountants. Training in Accounting for Non-Accountants courses had been planned for the entire cost centre Directors to equip them in understanding basic accounting records and financial returns. A Financial Monitoring Unit had also been set up. Inaccuracies in personnel related records 32. The audit revealed prevalent inaccuracies and inconsistencies in personnel records in almost all the cost centres visited, entailing the payment of unearned salaries to staff that had left the employment of the Ministry, vacated post, gone on study leave without pay, or 8

13 retired. There were also instances of staff who were paid salaries higher than their current grades. 33. Some Directors and Accountants who signed payroll vouchers as evidence of review indicated that the payment vouchers were made available to them late and that they were pressurised by the Treasury to sign and return them for processing of subsequent months salaries. Changes sent to the CAG also showed an unreasonably long time lag before being effected. 34. It was recommended that the payroll of the Ministry, Departments and Agencies should be reviewed in its entirety through a head count of staff, a check on salary levels, confirmation of current status of employment, and the updates of payroll records strengthened. 35. Management in response stated that although this was true in 2004 and 2005 financial years this had reduced significantly based on field inspection reports from cost centres. A special payroll inspection had been programmed by the Financial Monitoring/Internal Audit Units of MoFA for Discussions had also been held with CAG on delays in the deletion of names of officers who had vacated post, resigned or died and management hoped deletions would be done promptly. Financial statements not supported by vote ledgers 36. The Ministry s consolidation of annual expenditure returns in its 2004 financial statements showed a difference of 1,706,651,596 as against the vote ledgers of the cost centres visited. In 2005, there was a variance of 956,428,764 between the records examined. The completeness and validity of the amounts shown in the financial statements could as a result not be ascertained. 37. Management was requested to investigate the differences and strengthen the procedures for consolidating financial information from cost centres, to follow up on errors and returns not submitted, and confirm figures reported by cost centres. 9

14 38. Management responded that MOFA had set a deadline of the 15 th of each month for the submission of cost centre returns for the previous month to the Regional MoFA offices. As a result of this strict deadline, it had been noticed that some cost centres prepared returns and excluded expenditures that had been fully processed for the reporting month but for which Treasury cheques had not been received. Unfortunately, when these cheques were received the cost centres did not send in revised expenditure returns but rather captured these in their vote books for the reporting month. As a result, a provision had been made in a new Reporting Format for cost centres to give updated information for the previous month where necessary. A system had also been put in place where Headquarters figures are sent back to the cost centres for confirmation each quarter. MINISTRY OF FOOD AND AGRICULTURE HEADQUARTERS- GENERAL ADMINISTRATION Inaccurate monthly statement of revenue and expenditure million 39. During the review of Item 2 (Administration Expenditure), a difference was noted between the total expenditure in the vote service ledger and records in the monthly statements for the year 2005 amounting to 8,286,362. The anomaly occurred because monthly statements were not adequately reviewed before onward submission to Ministry of Food and Agriculture and Controller and Accountant- General s Department (CAGD). 40. We recommended that monthly revenue and expenditure statements should be carefully reviewed before submission to the Ministry of Food and Agriculture and CAGD. Audit Reports Implementation Committee not functional 41. Section 30 of the Audit Service Act, 2000 (Act 584) enjoins all institutions, bodies or organisations subject to audit by the Auditor- General to establish Audit Reports Implementation Committees (ARIC) to, among other things, pursue the implementation of matters in all audit reports as well as the Auditor-General s report endorsed by Parliament. 10

15 42. The audit noted that the Department had established an ARIC but it was not functional. Management attributed this condition to time constraints and inadequate personnel. It was recommended that the ARIC should be functional in line with Section 30 of the Audit Service Act, 2000 (Act 584). According to management the office has now put in place an active Committee that will handle such reports. ANIMAL PRODUCTION DIRECTORATE, ACCRA Delay in lodging IGF 43. The audit found differences ranging from 7,000,000 to 63,000,000 between the records of funds generated monthly and pay-in-slips examined, due to the use of the revenue to run the cost centre when funds from Government of Ghana (GoG) had not yet been received. 44. Management explained that to avoid a breakdown in their activities when funds are delayed, part of its revenue was used pending receipt of funds. Also in adherence to the Financial Administration Regulations 2004, they have requested importers of feed and feed ingredients from which revenue is generated to pay for the cost of import permits by bankers draft instead of cash. We recommend that full disclosure of all IGF should be made in Non-Tax Revenue reports and revenue be paid in gross into the transit bank accounts. VETERINARY SERVICES - HEADQUARTERS Monthly Non-Tax Revenue reports not prepared. 45. Non Tax Revenue reports should be prepared monthly and submitted to the Minister, copied to the Controller and Accountant General and the Auditor-General as stated in Regulation 19(1) of the Financial Administration Regulations, During our review of IGF accounts, we noted that monthly Non-Tax Revenue reports were not being prepared due to laxity on the part of management to ensure compliance with this regulation. 46. This could affect timely and effective decision making regarding Non-Tax Revenue from the Department. We recommend that Non-Tax Revenue reports should be prepared monthly to disclose 11

16 all revenue collected, lodged or retained as stated in Regulation 19(1) of the FAR. Bank lodgements not supported with Treasury receipts. 47. Regulation 15(6) of the Financial Administration Regulations, 2004 states that pay-in-slips in respect of lodgements should be presented to the CAGD for the issuance of receipts within 48 hours. 48. We noted that monthly lodgements of IGF made by the Unit were not supported with official Treasury Counterfoil Receipts (TCR) contrary to the regulations. This was attributed to the failure to present the pay-in-slips to the Controller and Accountant General s representative for an official receipt to be issued. 49. We recommended that management should ensure that the necessary official receipts are obtained to confirm the lodgements. IGF retained without legislative approval million 50. Regulation 17 (b) of the Financial Administration Regulations, 2004 requires all Heads of Department to ensure that all Non-Tax Revenue is immediately lodged in the designated Consolidated Fund transit bank account except in the case of IGF retained under an enactment. A department that has legislative approval to retain all or portion of IGF collected must first lodge it gross in the Department s operational bank account before disbursement. 51. We noted during the audit that portions of IGF amounting to 222,325,641were retained from collections during the period under review. We did not obtain any evidence of legislative approval for the retention of the funds. Management explained that due to the delay in the release of budgetary allocations, the Service was compelled to use the retained funds to run the office with the intention of refunding the amount after budgetary allocations were released by MoFEP. 52. We were of the opinion that when IGF are retained without authorisation, the risk of misappropriation of funds is increased. The Government of Ghana may also be deprived of funds needed to carry out its programmes. We therefore recommended that approval must be sought from the Minister before IGF is retained. 12

17 Inaccurate monthly statement of revenue and expenditure million 53. Regulation 2(j) of the Financial Administration Regulations 2004 states that a Head of Department shall submit monthly statement of revenue and expenditure to the Controller and Accountant-General. The statement should be a summary of revenue and expenditures recorded in the vote service ledger. During our review, we noted a difference between December 2004 expenditure returns and the vote service ledger involving a total sum of 29,488, The difference occurred because monthly statements were not adequately reviewed before onward submission to Ministry of Food and Agriculture and Controller and Accountant-General s Department. In effect, the monthly statements contained inaccuracies which might have affected the Ministry s annual financial statements as well. 55. We recommended that monthly revenue and expenditure statements should be carefully reviewed by crosschecking figures in the monthly returns to the details in the vote service ledger for accuracy and completeness before submitting them to Ministry of Food and Agriculture and CAGD. REGIONAL AGRICULTURAL DEVELOPMENT UNIT - ASHANTI Inadequate information on personal emolument records 56. According to Section 292 (1) of the FAR, every Head of Department shall keep records of all personnel emoluments of staff employed in the Department. The Regulation also enjoins Heads of Departments to examine and certify all personal emoluments payment vouchers to ensure that only staff belonging to the unit are on the payment vouchers and cause the immediate stoppage of payment to resigned staff. 57. During our review of Item 1 (Personnel emoluments), we observed that there was inadequate information such as transfer letters, promotion letters, etc on the personal files. Therefore, we could not confirm rates used for payments, staff being paid and deductions made. 13

18 58. We recommended that the Head of Department should ensure that the Registry or Administration staffs obtain adequate information from other staff members to regularly update personal emolument records. Payment vouchers for administration expenses not available for audit million 59. A Head of Department shall ensure that financial and accounting records are preserved in good order in a manner that facilitates ready access for reference as prescribed under Section 262 of the Financial Administration Regulations, During our review of expenditure, we could not obtain Administration payment vouchers for 2004 which amounted to a total of 161,120,550 because the Treasury Office could not make the payment vouchers available. 61. Consequently, we could not confirm the authenticity of the transactions captured in the monthly revenue and expenditure statements and the vote service ledger. We recommended that payment vouchers should be properly filed for ease of access and reference. Failure to obtain TCR to cover revenue lodgement 62. Regulation 15(6) of the Financial Administration Regulations, 2004 states that pay-in-slips in respect of lodgements should be presented for the issuance of the Controller and Accountant General s receipts within 48 hours. 63. However, we noted that monthly Non-Tax Revenue collected and paid to bank by the Unit were not supported by TCRs from CAGD because pay in-slips in respect of such lodgements were not presented to the Controller and Accountant General s office. 64. Management claimed that it was not aware of this requirement. Nonetheless, we pointed it out that this omission might make it difficult for funds paid into the Consolidated Fund by various cost centres to be identified. We recommended that lodgement pay-in-slips be presented to CAGD for the issuance of Treasury receipts. 14

19 REGIONAL AGRICULTURAL DEVELOPMENT UNIT BRONG AHAFO Revenue generated not banked 65. Section 9(1) of the Financial Administration Act, 2003 enjoins persons who collect or receive public moneys or moneys in trust for Government to keep a record of receipts and deposits. In addition, Section 19 (1) of the FAR requires that a Head of Department shall fully disclose all Non-Tax Revenue collected, lodged or retained as part of monthly report to the Minister. 66. We noted during our audit that the officer in charge of the Plant Protection and Regulatory Services (PPRS) generated revenue by issuing certificates to farmers but the revenue was not banked. There was also no cash book into which the funds were recorded and no receipts were issued for funds received. Funds generated since 2004 were not banked until 7th November We recommended that these monies should be paid into the transit bank account promptly. Also, General Counterfoil Receipts should be issued to farmers for monies that they pay instead of printed certificates. In addition, on a monthly basis, Non-Tax Revenue reports should be prepared and submitted to the Ministry and copied to CAGD. An independent Senior Officer should also review the financial records of the Plant Protection and Regulatory Services Office. Monthly statement of revenue and expenditure variances- 85 million 68. During our review of Item 2 (Administration expenditure), we noted a wide difference between the total expenditure in the vote service ledger and records in the monthly statements for years 2004 and 2005 amounting to 21,033,255 and 63,959,993 respectively, all totalling 84,993, The condition was indicative of the fact that the vote service ledger and the monthly returns were not adequately reviewed and reconciled. As the Region s statements contained such inaccuracies it implies that the Ministry s annual financial statements might have 15

20 been misstated as well. We recommended that monthly revenue and expenditure statements should be carefully reviewed by crosschecking figures in the monthly returns to the details in the vote service ledger for purposes of accuracy and completeness before submission to Ministry of Food and Agriculture and CAGD. No cash book maintained for imprest bank account 70. Best practice for management of bank and cash transactions requires that a cash book should be maintained for every bank account. The cash book should have a record of deposits and withdrawals from the bank account. We noted that the Regional Agriculture Development Unit (RADU) did not maintain a cash book for the bank account in Sunyani which it uses for imprest received from the Treasury and for allowances paid to staff. 71. We noted that management had assumed that the vote ledger was the only cash book that should be maintained and therefore did not consider maintaining a cash book for the bank account as necessary. As a result, the balance in the bank account could not be ascertained. 72. We recommended that a cash book for the bank account should be kept to record all deposits and withdrawals out of the account. Management should also ensure that bank reconciliation statements are prepared on a monthly basis and reviewed by a senior official. Management agreed to comply with the recommendations. Three pro-forma invoices not obtained for procurement- 19.5million 73. The Public Procurement Act 2003 requires that at least three pro-forma invoices be obtained from other prospective suppliers before a selection, based on reasonable price and good quality, is made. During our review of Item 2 (Administration expenditure) for 2005, we observed that the requirement for at least three invoices were not followed in connection with a painting contract worth 19,500,

21 74. We recommended to management to comply with the provisions of the Act to ensure transparent procurement practices in future purchases. Management indicated that the recommendation had been noted for compliance. Bank lodgements not supported with TCRs 75. Regulation 15 (6) of the Financial Administration Regulations, 2004 states that pay-in-slips in respect of lodgements be presented for the issue of the Controller and Accountant General receipts within 48 hours. 76. It was noted that monthly lodgements made by the Veterinary Unit were not supported with TCRs. Management stated that they were not aware that they had to present the pay-in-slips to obtain receipts. 77. We recommended that the pay-in-slips should be presented to the CAGD for the issuance of the Treasury receipts. Management responded that the Veterinary Officer had been asked to submit all pay-in-slips to the Regional Treasury in order to obtain receipts for the revenue lodged into the Non-Tax Revenue account as evidence that revenue banked had been transferred into the Consolidated Fund. REGIONAL AGRICULTURAL DEVELOPMENT UNIT CENTRAL Improper filing of records 78. A Head of Department shall ensure that financial and accounting records are preserved in good order in a manner that facilitates ready access for reference. We, however, noted that management could not provide documents or records such as GCRs, cash books etc with regard to IGF for Additionally, the 2005 December annual returns could not be obtained. This condition occurred because the Regional Office had moved to a new location resulting in loss of documents. 79. As a result it was not possible to ascertain the accuracy and completeness of IGF income for It was also not possible to verify the accuracy of information provided to MOFA for the 17

22 preparation of financial statements. It was recommended that management should keep adequate records for easy access and safeguard their documents at all times. Management stated that it has streamlined the process of filing records at the office. Failure to obtain TCRs to cover lodgements 80. We noted that monthly lodgements made by the Unit were not supported with TCRs obtained from the Treasury. Management explained that it was not aware that the pay-in slips covering the lodgements should have to be presented to the District Treasury office for the issuance of TCRs. 81. We pointed it out that failure to obtain the Treasury receipts could make it difficult to identify the sources of funds paid into the Consolidated Fund by various cost centres. It was therefore recommended that the pay-in-slips should be presented to the Treasury for the issuance of the receipts. Management agreed to comply with the recommendation. Non preparation of monthly Non Tax Revenue reports 82. We noted during our review that the Veterinary Unit did not prepare monthly Non Tax revenue reports for phytosanitary certificates issued for the 24-month period ended 31 December This was because the collection and payment of revenue were done by a Technical Officer who was not aware of the need for the preparation of the monthly Non Tax revenue returns. 83. As a result the Unit failed to comply with the Regulations on collections, accounting and disclosures in respect of Non-Tax Revenue including IGF. This in our opinion is a breach of financial discipline as defined in Section 8(1) of the above quoted Regulations. We recommended that monthly Non Tax Revenue returns disclosing among other things the total funds generated for a period should be prepared as stated in the Financial Administration Regulations. 18

23 REGIONAL AGRICULTURAL DEVELOPMENT UNIT (RADU) EASTERN Revenue from sale of vaccines not included in monthly reports by Veterinary Service 84. Regulation 19(1) of the FAR, 2004 requires every Head of Department to make full disclosure of Non-Tax Revenue during any month. During our review of IGF accounts, we noted that the Regional Office of the Veterinary Service did not disclose revenue from sale of vaccines in its monthly reports though lodgements of the revenue were made. It was only vaccines collected by District Units that were reported on. 85. We recommended that revenue from the sale of vaccines should be disclosed in the monthly report generated by the Veterinary Service as a whole to show a full picture of its activities. Bank reconciliation statements not prepared 86. Best practice for management of bank and cash transactions requires that monthly bank reconciliation statements should be prepared for all bank accounts. In this way, errors in bank statements can be detected and corrected in time. On the contrary, the Regional Agricultural Development Unit in Koforidua did not prepare bank reconciliation statements for the bank account, which included GoG funds during the period under review. 87. We therefore recommended that bank reconciliation statements should be prepared on a monthly basis and reviewed by a senior official so that errors can be detected and corrected in time to ensure the accuracy of bank balances. Inadequate supporting documents for the distribution of fuel purchased 88. Regulation 183(3) requires that a Head of Department shall be accountable for the proper care, custody and use of Government stores from the time of acquisition until they have been used or otherwise disposed of in accordance with the Financial Administration Regulations,

24 89. We noted that an amount of 9,500,000 was paid in 2004 to a Goil station for fuel to be distributed to the Unit s vehicles. We however did not sight any criteria or basis for the distribution of this fuel. 90. Notebooks that contained the documentation could not be located at the Goil filling station where they were supposedly being kept, and chits written for staff to go for the fuel were not retained at the office. As a result, we could not ascertain how the fuel was distributed or whether it was purchased at all. We recommended that records be kept by the Unit for all such disbursements in the future and a Senior Officer should be assigned responsibility for the distribution of the fuel. Payment vouchers for administration expenses not obtained for audit million 91. The Treasury office could not make available for audit payment vouchers covering administration expenditure amounting to 15,727,966. The payments were in respect of stationery, fuel, refunds and office building repairs. 92. The authenticity of the transactions which were captured in the monthly revenue and expenditure statements and the vote service ledger could therefore not be ascertained. We recommended that the payment vouchers should be filed well to facilitate easy access. REGIONAL AGRICULTURAL DEVELOPMENT UNIT (RADU) GREATER ACCRA Non Tax Revenue reports not prepared monthly 93. Non Tax Revenue should be prepared monthly and submitted to the Minister copied to the Controller and Accountant General and Auditor General as stated in the Financial Administration Regulations 2004, Section 19 (1). We noted during our review that Non Tax Revenue reports were not prepared on a monthly basis; instead they were being prepared periodically. 20

25 94. Non-Tax Revenue reports help monitor the performance of a cost centre in terms of revenue generation, and hence its nonpreparation defeats this objective. We recommended that Non Tax Revenue returns should be prepared monthly as stated in the abovequoted regulation. Non Tax Revenue returns not in agreement with underlying records 95. Section 9(1) of the Financial Administration Act, 2003 enjoins persons who collect or receive public moneys or moneys in trust for Government to keep a record of receipts and deposits. We noted during our review that lodgements per the Non Tax Revenue returns did not agree with the underlying records. There was an understatement of 5,268,000 in 2004, and an over-statement of 22,618,000 in This situation was attributable to the failure of management to appropriately review the prepared monthly Non Tax Revenue returns. Accordingly, we recommended that monthly Non Tax Revenue returns should be properly and thoroughly reviewed. Failure to obtain TCRs to cover bank lodgements 97. Our review of IGF accounts disclosed that monthly lodgements made by the Unit were not supported by TCRs. This was because pay-in-slips for the lodgements were not submitted to the District Finance Officer for the issuance of the TCRs. 98. We explained that this omission on the part of management could make it difficult for the sources of funds paid into the Consolidated Fund by various cost centres to be identified. Additionally, reconciliations between amounts paid by the cost centres and actual receipts into the Fund may not be possible. We recommended that the pay-in-slips should be presented to the District Finance Officer for the issue of the Treasury receipts. 21

26 REGIONAL AGRICULTURAL DEVELOPMENT UNIT NORTHERN Fixed assets register not updated 99. Section 2 (n) of the Financial Administration Regulations requires all Heads of Government Department to compile and maintain fixed assets registers. During the audit, we noted that fixed assets acquired in 2004 and 2005 had not been recorded in the assets register. This was attributed to the fact that the officer in charge (Stores Assistant) did not know how to update the fixed assets register Since assets registers provide information on all assets, including their location, we recommended that the fixed assets register should be updated with new acquisitions and disposals made during the year. REGIONAL AGRICULTURE DEVELOPMENT UNIT UPPER EAST Personal emolument records not kept 101. According to Section 292 (1) of the Financial Administration Regulations, every Head of Department shall keep records of all personnel emoluments of staff employed in the Department. The Regulation also enjoins Heads of Departments to examine and certify all personal emolument payment vouchers to ensure that only staffs belonging to the Unit are on the payment vouchers and cause the immediate stoppage of payment to resigned staff Despite the regulation, the Unit did not keep staff personal files. According to management, inadequacy of staff prevented them from maintaining the files. We could not validate the accuracy of information contained on the mechanized payroll vouchers with staff information such as letters of promotion, salary increases, etc. We recommended that management should assign staff to create and maintain personal files. 22

27 Inaccurate monthly statement of revenue and expenditure- 2.4 million 103. During our review of Item 2 (Administration expenditure), we noted differences between the total expenditure in the vote ledger and records in the monthly statements for 2004 and 2005 amounting to 1,115,999 and 1,302,900 respectively The anomaly occurred because monthly statements were not adequately reviewed before onward submission to Ministry of Food and Agriculture and Controller and Accountant-General s Department We recommended that monthly revenue and expenditure statements should be reviewed and figures in the monthly returns crosschecked to the details in the vote service ledger for accuracy and completeness before submitting them to the Ministry of Food and Agriculture and CAGD. REGIONAL AGRICULTURAL DEVELOPMENT UNIT UPPER WEST Failure to issue official receipts to payees 106. Contrary to Regulations 28(1) of the FAR, 2004, we noted that the Veterinary Service failed to issue receipts to those who paid cash for veterinary services received. Management explained that their stock of receipt books was depleted Due to the failure to issue official receipts to cover the amounts received, we could not ascertain the correctness of the revenue collected. As the situation could lead to the suppression of revenue, we recommended that the Unit should comply with the above-stated regulations. Furthermore, the cost of official receipts should be included in the cost centre s budget to enable them purchase sufficient quantity of official receipt booklets for use. Failure to obtain TCRs to cover revenue banked 108. Our review of IGF accounts revealed that monthly lodgements made by the Unit were not supported by TCRs. Since revenue is 23

28 deemed to have been paid into the Consolidated Fund when an official TCR has been issued, we recommended that the pay-in-slips should be presented to the Treasury office for the issuance of Treasury receipts. Inadequate information on personal emolument records 109. We noticed that there was inadequate information on the personal files of staff members. Consequently, we could not ascertain the accuracy of the information contained in the mechanized payroll vouchers. This was because records that were supposed to be on personal files were placed elsewhere and other records were kept by staff members themselves. Management said that the Administrator lacked the necessary training needed for his job We recommended that staff files be properly organized and kept securely. Additionally, the Administrator should be given the proper training to enable him work more efficiently. Inaccurate monthly statement of revenue and expenditure million 111. Section 189 (1) of the Financial Administration Regulations, 2004 requires that a Head of Department shall submit a monthly statement of revenue and expenditure to the Controller and Accountant-General. The statement should be a summary of revenue and expenditures recorded in the vote service ledger During our review of Item 2 (Administration expenditure), we noted a difference between the total expenditure in the vote ledger and records in the monthly statements for the year 2004, amounting to 17,558, The situation implied that the monthly statements were not adequately reviewed before onward submission to Ministry of Food and Agriculture and Controller and Accountant-General s Department. Thus, the Ministry s annual financial statements could have been misstated. We recommended that monthly revenue and expenditure statements should be carefully reviewed, before submitting them to MOFA and CAGD. 24

29 Misapplication of project funds billion 114. During the review of bank reconciliation statements for the Regional Director s imprest bank account, we sighted a large unusual reconciling amount of 2,441,794,386 described as wrong debit. Our follow up with management revealed that the amount was part of a total of 4,000,000,000 transferred to the Region for the construction of a dam under the Food and Agricultural Budgetary Support (FABS) programme Management withdrew 2,441,794,386 from the bank account to set up a fixed deposit investment on 21 October 2004, without approval from the Minister. The withdrawal was however not recorded in the cash book but rather shown in the bank reconciliation statement for October 2004 as wrong debit When the irregularity was pointed out, management indicated that the transaction had been reversed after seeking a retrospective approval for the fixed deposit investment was denied. Our review of the bank statements showed that the reversal was rather done in three tranches as follows: 13 December ,000, December ,000, January ,241,794, We could not ascertain how the interest was utilised as the bank statement for January 2005, which would have shown the interest earned on the fixed deposit, was not made available to us because management alleged they could not locate it In our opinion the investment made without the approval of the Minister amounted to a misapplication of funds under Regulation 179 of FAR, We recommended that the issue should be investigated further and management held liable for any funds not properly accounted for. In addition, management should be appropriately sanctioned if this act is found to have unduly delayed the execution of the project. 25

30 REGIONAL AGRICULTURAL DEVELOPMENT UNIT VOLTA Vehicle logbook not adequately kept 119. We noted during our audit that logbooks were not adequately completed for the cost centre s vehicles. Information such as fuel consumed, distance travelled, destination and the driver s name were missing. There was also no evidence that logbooks were reviewed As a result, the use of the unit s vehicles might not have been adequately monitored and vehicles could be used for other purposes. This could also increase the cost of maintenance and repairs for the vehicles and go further to exceed the allocated budget. We recommended that logbooks should be properly maintained and completed. Also, the logbooks should be reviewed by a Senior Officer of the Unit. Fuel coupons purchased not routed through stores- 11.0million 121. Section 30 of the Financial Administration Act (Act 654), 2003 requires that Government Departments keep adequate records of stores. In spite of the rule, we noted that fuel coupons purchased amounting to 11,000,000 were never passed through stores because the cost centre was unaware that fuel coupons are supposed to go through store records It was explained to management that under this condition fuel coupons purchased might not be utilised for the intended purposes. We recommended that all fuel coupons purchased should be passed through stores for accurate recording and issuance in the interest of the Unit as demanded by the statute. REGIONAL AGRICULTURE DEVELOPMENT UNIT WESTERN Bank lodgements not supported with Treasury receipts 123. Regulation 15(6) of the Financial Administration Regulations, 2004 states that pay-in-slips in respect of revenue lodgements should be presented for the issuance of the Controller and Accountant General s official TCRs within 48 hours. 26