· auditor-general’s report on the public accounts of ghana, mdas – 31 december 2006 1 part i...

Auditor-General’s Report on the Public Accounts of Ghana, MDAs – 31 December 2006 1

PART I

REPORT OF THE AUDITOR-GENERAL ON THE PUBLIC ACCOUNTS OF GHANA-MINISTRIES, DEPARTMENTS AND

OTHER AGENCIES (MDAs) FOR THE FINANCIAL YEARENDED 31 DECEMBER 2006

Introduction

I have audited the accounts of MDAs for the financial year ended 31 December 2006 in accordance with Article 187 (2) of the 1992 Constitution of the Republic of Ghana. This report presents the results of financial and compliance audit of MDAs and special audits and contains matters of significance that I believe should be brought to the attention of the House.

Audit objectives

2. Section 13 of the Audit Service Act, 2000 (Act 584) enjoins the Auditor-General to examine in such manner as he thinks necessary, the financial operations of MDAs and ascertain, among other things, whether in his opinion:

monies have been expended for the purposes for which they were appropriated and the expenditures have been made as authorised; and

essential records have been maintained and the rules and procedures applied were sufficient to safeguard and control public property; and

all public monies have been fully accounted for and rules and procedures applicable are sufficient to secure an effective check on the assessment, collection and proper allocation of the revenue.

3. My Officers were guided by the above objectives to ensure andencourage proper and prudent management of public funds. They also reviewed the continuing adequacy of key areas of MDAs internal control systems and risk management. Matters raised in this report including recommendations intended to further deepen financial


management and controls as detailed in the succeeding paragraphs were discussed with MDAs.

Summary of findings and recommendations

4. We again found major breakdown of controls over tax administration, cash management, procurement and payroll. These common and recurring problems which run in my report from year to year are disturbing. Table I, as usual, depicts the global financial impact of the lapses while Table 2 is an illustration of the impact on each MDA.

5. Table 2 also presents the status of high-risk areas facing MDAs identified in 2006 warranting attention. Lasting solutions to high-risk problems offer the potential to save billions of cedis, dramatically improve service to taxpayers, strengthen public confidence and trust in the performance and accountability of our public sector and impacts positively on Government’s developmental agenda.

6. Accordingly, this report contains my views on what remains to be done for each high-risk area to address the problem. Perseverance by MDAs in implementing recommended panacea and continued parliamentary oversight and action are both essential.

7. Table 1 shows that the financial impact of these irregularities was ¢279.77 billion (including US$2,020,026 converted at the prevailing rate of ¢9,211.45 to the United States dollar as at 31 December 2006) compared with 2005 figure of ¢257.40 billion (including US$217,414 converted at the prevailing rate of ¢9,076.20 as at 31 December 2005), an increase of ¢22.37 billion or 8.7%.

Trend of financial irregularities

8. We again evaluated the above trend against the Gross Domestic Product (GDP), actual revenue and expenditure. Matching financial irregularities against these criteria is generally accepted as appropriate indicators of trends in financial performance.


9. The financial impact of ¢257.40 billion for 2005 and ¢279.77 billion for 2006 as a percentage of GDP, actual revenue and expenditure is shown in the table below:

Item 2005(¢Billion)

% 2006(¢Billion)

%

GDP 97,018.00 0.3 112,320.30 0.3Actual revenue 30,325.70 0.8 30,841.90 0.9Actual expenditure 25,158.70 1.0 34,908.41 0.8

10. As can be seen from the above table, the irregularities compared with the above criteria showed no real improvement. There is still room for improvement and I urge MDAs to continue to review their financial internal control systems and also enforce rigidly applicable financial rules and regulations to ensure sound financial management of their entities.

11. My comments on the financial shortcomings and recommendations to address them are provided in the succeeding paragraphs.

Table1: Summary of financial irregularities for 2006 and 2005 financial years

Irregularities %2005

%2006

¢Million2005

¢Million2006

US$2005

US$2006

Total (¢M)2005

Total (¢M)2006

1VAT/IRS/CEPS uncollected taxes, others 71.4 61.5 183,428.0 171,748.4 42,366 29,475 183,812.9 172,019.9

2 Cash irregularities 10.4 14.8 25,824.3 34,057.1 114,848 799,486 26,866.7 41,421.5

3Outstanding loans/debts 9.4 12.9 23,731.8 35,450.1 47,100 62,556 24,159.3 36,026.3

4 Stores/ procurement irregularities

3.4 4.4 8,918.5 12,298.1 12,601 8,918.5 12,414.2

5 Payroll overpayments

1.3 4.2 3,336.8 1,480.3 13,100 1,115,948 3,455.7 11,759.8

Contract irregularities 4.0 2.0 10,126.0 5,539.7 10,126.0 5,539.7

7Staff rent arrears 0.1 0.2 45.8 590.4 45.8 590.4Total 100 100 255,426.4 261,164.1 217,414 2,020,066 257,400.1 279,771.8

VAT/IRS/CEPS, uncollected taxes, others-¢172.02 billion

12. Tax irregularities consist of:

misappropriation of tax revenue;


outstanding rent tax;

non-payment of corporate tax;

non-payment of National Reconstruction Levy;

issuance of dishonoured cheques in settlement of taxes;

failure to levy penalties on late fillers of returns;

outstanding debts from traders; and

petroleum tax arrears.

13. The 2006 irregularities aggregate of ¢172.02 billion compared with ¢183.81 billion for 2005 reveals a decrease of ¢ 11.79 billion or 6.4% and a marginal improvement on the performance of the revenue agencies. The lapses arose from ineffective supervision over schedule officers, lack of effective monitoring and recovery of outstanding taxes and weak internal control over tax collection. Since revenue collection plays a pivotal role in Government’s development agenda, I call on the Revenue Agencies Governing Board to review the tax collection machinery and strategies and initiate measures to aggressively recover all overdue taxes. I also renew the following recommendations to further boost tax collection and Government cashflow:

delinquent debts should be subjected to regular review ;

revenue collecting agencies should identify potential sources of revenue by widening the tax net to include small and medium scale self-employed;

tough sanctions should be invoked against tax defaulters;

internal control systems and risk management in IRS,VAT and CEPS, strengthened, including better supervision to ensure that staff perform their duties efficiently and in accordance with the tax laws;

IRS should launch effective public education campaign to create adequate public awareness of the withholding tax regime. All providers of goods and services must be sensitised to demand their tax credit certificates from


withholding agencies even if they do not intend to use them to claim their tax credits; and

the Minister for Finance and Economic Planning should ensure that government stores are procured from only Value-Added Tax-registered persons in line with section 30 (2) of the FAA,2003.

Cash irregularities - ¢41.42 billion

14. Cash irregularities include:

unacquitted payments;

unpresented payment vouchers;

misappropriation of revenue and other receipts;

misapplication of funds;

bank balances not promptly transferred into the Consolidated Fund; and

payment vouchers not returned to Treasuries.

15. Cash irregularities increased from ¢26.87 billion in 2005 to ¢41.42 billion in 2006, a rise of ¢14.55 billion or 54.2%, indicating very weak control exercised by MDAs over cash resources. The escalation was due to the intransigence of imprest holders to promptly account for imprests, lack of effective supervisory control over revenue collection and blatant failure on the part officers entrusted with the disbursement of funds to obtain supporting document forfunds disbursed. I therefore urge MDAs to continue to review and strengthen their internal control systems. They should also rigidly enforce the provisions of the FAA, 2003 and FAR, 2004 and apply the necessary sanctions against compliance violators to ensure sound financial management of their entities.

Outstanding loans/debts - ¢36.03 billion

16. The above figure of ¢36.03 billion for 2006 represents an upsurge of ¢11.87 billion or 49.1% over last year’s figure of ¢24.16 billion. The rise was due mainly to amounts owed to the Ministry of


Energy (¢26.20 billion) by Oil Marketing Companies in respect of petroleum taxes. While urging the Ministry to put in place proper monitoring and prompt collection procedures over petroleum taxes, I call on all other MDAs to regularly monitor their accounts receibables to ensure their prompt collection to prevent them from metamorphosing into bad debts.

Payroll irregularities - ¢11.76 billion

17. Due to overpayment of salaries at Foreign Missions (¢10.32 billion) and locally (¢1.44 billion), payroll irregularities escalated from ¢3.46 billion in 2005 to ¢11.76 billion in 2006, an increase of ¢8.30 billion or 239.9%. The Foreign Missions’ overpayment was the result of the use of incorrect exchange rates in the conversion of home-based staff salaries into local currencies while the overpayments locally was due, to ineffective co-ordination between MDAs, CAGD and the Banks. I recommend that MOFEP, MFA and CAGD should effectively control exchange rate usage at Foreign Missions. I also recommend improved co-ordination among MDAs, CAGD and the Banks to ensure prompt deletion of ghost names from the payroll and the return of unearned salaries to chest.

Stores/procurement irregularities - ¢12.41 billion

18. The above irregularities comprise items paid for but not supplied, fuel not taken on ledger charge and overstocking of store items. The irregularities totalled ¢12.41 billion and compared to the previous year’s figure of ¢8.92 billion, showed an increase of ¢3.49 billion or 39.1%. In this connection, I wish to advise MDAs to put in place proper stores accounting procedures which will ensure proper accountability for all store purchases, particularly, proper maintenance of vehicle log books


Table 2: Summary of cash irregularities, payroll overpayments, stores/procurement and other irregularities classified according to MDAs

No.

Ministry TaxIrregularities

CashIrregularities

Outstanding loans/debts

Payroll overpmts

Stores/procurement irregularities

ContractIrregulari.

Staff rentarrears Total

(¢M) (¢M) (¢M) (¢M) (¢M) (¢M) (¢M) (¢M)1 Finance & Economic Planning 169,525.1 7,598.4 22.0 109.4 177,254.92 Energy 104.8 3,780.0 26,200.0 460.4 30,545.23 Foreign Affairs, Reg.Co-opera. & NEPAD 2,554.1 400.6 10,317.7 116.1 13,388.54 Health 577.7 5,167.9 1,920.9 353.0 2,796.4 352.7 11,168.65 Education, Sports and Science 229.0 5,798.6 2,078.1 371.0 516.5 37.5 18.9 9,049.66 Lands, Forestry and Mines 4,164.2 2,660.2 17.2 6,841.67 The Interior 357.6 4,640.7 93.2 168.4 1,185.5 166.4 6,611.88 Water Resources, Wks & Hous. 9.2 173.1 54.1 63.4 83.1 4,544.1 14.6 4.941/69 Office of Government Machinery 102.5 2,036.4 175.6 105.7 1,159.1 36.5 3.615/8

10 Food and Agriculture 3.0 51.1 2,815.8 201.7 289.0 24.0 4.4 3,389.011 Defence 3,110.0 3,110.012 Transportation 80.1 1,287.5 1,347.7 33.5 307.3 50.3 3,106.413 Tourism & Diasporan Relations 937.5 1,831.1 2,768.614 Trade, Ind. PSD and PSI 86.7 1,286.3 367.8 107.9 95.8 1,944.515 Other Agencies 774.2 40.6 40.2 855.016 Information and Natational Orientation 6.7 572.5 222.2 801.417 Justice & Attorney-General 272.8 272.818 Manpower, Youth and Employment 50.8 18.6 69.419 Local Govt Rural Dev. & Environment 5.1 32.0 37.1

TOTAL 172,019.9 41,421.5 36,026.3 12,414.2 11,759.8 5,539.7 590.4 279,771.8


Contract irregularities - ¢5.54 billion

19. Contract lapses include outstanding refund of mobilisation amounts, non-tendering of contracts, items paid for but not supplied and unexecuted projects. This figure decreased from ¢10.13 billion in 2005 to ¢5.54 billion in 2006. Failure on the part of MDAs to award contracts to competent contractors and to comply strictly with the Public Procurement Act, 2003 (Act 663) caused the anomaly. I therefore recommend strict adherence to the provisions of the Public Procurement Act, 2003 (Act 663) to ensure value for money in contract management.

Staff rent arrears - ¢590.4 million

20. Due to managements’ failure to deduct rent at source, non-deduction/arrears of rent escalated from ¢45.8 million in 2005 to ¢590.4 million, an increase of ¢544.6 million or 1,189%. I call on MDAs and the CAGD to intensify efforts at deducting rent at source in a timely manner and improving verification of rent payments to eliminate the incidence of rent arrears completely.

Conclusion

21. I am not satisfied with improvement in efforts to address shortcomings in internal controls and governance frameworks against the backdrop of fresh financial rules and regulations and the litany of financial irregularities exhibited by MDAs.

22. While a strong expenditure management is essential to good financial management, good systems in themselves are not enough. They must be applied correctly and ethically. I therefore strongly recommend that MOFEP develops Values and Ethics Code for the Public Service to ensure proper, effective and efficient use of public funds.


PART II

SUMMARY OF FINDINGS AND RECOMMENDATIONS BY MDAS

MINISTRY OF FINANCE AND ECONOMIC PLANNING

23. Internal control weaknesses including weak supervision over Accounting officers and Cashiers as well as non-adherence to rules and regulations governing cash management resulted in the misappropriation of revenue totalling ¢2.01 billion by some officials of the VAT Service and the Controller and Accountant-General’s Department. We recommended recovery of the misappropriated revenue and strengthening of supervisory controls over accounting staff and other internal controls to minimise the incidence of misappropriations.

24. The Headquarters of MOFEP and two other departments under the Ministry failed to obtain expenditure supporting documents to substantiate purchases and other expenditures totalling ¢5.09 billion due to ineffective supervision over the operations of Procurement officers and other operatives as well as laxity on the part of management. To ensure transparency and full accountability, we recommended that the respective managements should provide the relevant expenditure documents to substantiate the expenditures and justify the payments.


25. The operations of some VAT offices within the Greater Accra Region were characterised by cash irregularities such as loss of revenue through the receipt of dud cheques by traders, lodgement of revenue into unknown accounts and uncredited cash and cheque lodgements totalling ¢463.0 million. The failure of the respective VAT offices to regularly prepare bank reconciliation statements resulted in the lapses. We recommended that management should ensure that bank reconciliation statements are prepared monthly and all unreconcilled items investigated.

26. Funds totalling ¢399.4 million were not promptly transferred from various commercial banks into the Consolidated Fund at Bank of Ghana due to the failure of District Finance officers to monitor the operations of such accounts. In order to enhance the Government cashflow position, we recommended prompt transfer of these and subsequent funds into the Consolidated Fund.

27. Various MDAs within the Volta Region failed to return to their treasury offices, receipted duplicate copies of payment vouchers as evidence of disbursement of the amounts involved. As a result, we could not ascertain the total payments of ¢918.3 million made on these vouchers. We recommended to the DFOs to retrieve the outstanding vouchers to confirm the disbursements.

28. The debt stock of the Tema Large VAT Office (LVO) was ¢8.24 billion as at 31 December 2006 due to the failure of the Tax office to strictly apply the tax collection enforcement regulations regarding monitoring progress and collection of debts. We recommended that management should pursue pragmatic recovery policies, including legal action to recover the debts.

29. Traders under the jurisdiction of the Kaneshie Industrial Area and the Osu Local Office were indebted to the VAT Service in the sum of ¢46,018.9 million in respect of penalty for failing to file tax returns, assessments raised during control verifications and unredeemed returned cheques. We recommended to the Local offices to employ all institutional and legal measures to recover the debts.


30. Forty-two VAT registered traders under the Kumasi VAT office issued dud cheques amounting to ¢454.0 million for the settlement of their tax liabilities between January 2004 and June 2006. The action of the traders deprived the Service of timely use of the tax revenue. We recommended to management to recover the amount and strengthen its tax collection enforcement procedures to forestall such acts by traders.

31. Tax irregularities such as failure to deduct tax, failure to establish debts in taxpayers account, failure to charge interest and levy penalty and failure to obtain VAT invoices totalling ¢7.24 billion were recorded by MOFEP and some of its departments during the year under review. The inaction of the Ministry and the affected departments to apply and enfore relevant tax laws accounted for the lapses. We recommended prompt payment of all unremitted taxes and strict compliance with the tax laws.

32. Post Clearance and Warehousing Unit audits carried out by CEPS management during the year disclosed underpayment of duties and penalties totalling ¢28.39 billion. Factors such as poor record–keeping by warehouse keepers and manipulation of customs values by some importers to reduce liabilities accounted for the lapses. We recommended prompt recovery of the duties from the importers and improvement in record-keeping as well as applying stringent measures to deal with tax defaulters.

33. Four companies who were allowed to clear goods by paying part of the duties and the balance later abused the facility, resulting in an outstanding amount of ¢2.08 billion. We recommended recovery of the amount and the exercise of circumspection by management in granting credit facilities.

34. The Internal Revenue Service failed to collect National Reconstruction Levy totalling ¢759.7 million due to its inability to notify taxpayers of their obligation. We recommended to the Service to collect the outstanding amount and ensure that tax payers are notified of their obligations promptly.


35. The indebtedness of IRS in respect of PAYE stood at ¢5.48 billion as at 31 December 2005. Management explained that the late receipt of its 2.8% retention accounted for its inability to promptly pay its PAYE taxes. We recommended that the Service should settle its outstanding tax from its retention and also liquidate the penalty for late payment.

36. Stores and procurement irregularities such as failure to route stores and fuel purchases through store recods and vehicle log books and the excess printing of certificates totalled ¢109.4 million for the year. Non-compliance with procurement rules and procedures and store regulation and lack of efficient and qualified staff to manage the procurement and store-keeping transactions in the Ministry mainly accounted for the identified irregularities. We recommended compliance with existing store and procurement regulations and the strengthening of supervisory controls to enhance transparency and accountability in procurement and store keeping function of the Ministry.

37. Failure of the Akatsi District Finance Office to promptly delete the names of five deceased pensioners from the payroll resulted in the payment of unearned salaries totalling ¢22.0 million into their bank accounts. We recommended recovery of the illegal payments and the prompt deletion of the names of the separated staff from the payroll.

38. An Accountant of the PWD Regional Office, Accra forged the signature of the Regional Engineer on payment vouchers and fraudulently withdrew a total of ¢539.0 million from the Treasury’s Account at the Bank of Ghana between March and May 2005. Even though he is currently on interdiction, we recommended that the matter be reported to the Police and appropriate measure instituted to prevent a recurrence.


MINISTRY OF ENERGY

39. Non-adherence to the provisions of Section 87 of the Internal Revenue Act, 2000 (Act 592) by management of the Ministry led to the retention of 5% withholding tax of ¢104.8 million deducted between April and November 2004. We requested management to remit the amount to IRS and ensure compliance with the tax law.

40. Due to improper monitoring, Oil Marketing Companies (OMC) defaulted in the payment of Bulk Oil Storage Transportation (BOST) margin amounting to ¢3.78 billion between 2004 and 2005. To prevent loss of revenue to Government, we advised management to liaise with the BOST Secretariat to recover the amount and also introduce ledger accounts to facilitate monitoring of the debts.

41. Management’s inaction to enforce the provisions of the Criminal Code Amendment Decree, 1973 (NRCD 160) led to the issuance of dud cheques totalling ¢26.20 billion by its clients. We


advised management to redeem the cheques and enforce the provisions of the Decree.

MINISTRY OF FOREIGN AFFAIRS

42. Due to inadequate supervision and improper segregation of duties, Foreign Missions’ operations were characterised by substantial cash irregularities involving US$229,619 (¢2.12 billion) and Є36,257 (¢440,146.9 million). The irregularities included misappropriation, imprests not accounted for and wasteful expenditure. To minimise these irregularities, we recommended strengthening of supervisory controls over finances of the Missions and strict adherence to the Foreign Service Accounting Instructions, the FAA, 2003 and the FAR, 2004.

43. We noted overpayment of salaries to Home-based staff totalling US$1,115,948 (¢10.28 billion) due mainly to the use of wrong exchange rates in salary conversions. We recommended that adequate controls should be exercised by MOFEP, MFA and CAGD over the use of exchange rates at the Missions.

44. The incidence of failure on the part of foreign-based staff to refund utility bills paid by the Missions on their behalf and also retire imprests at due dates was high. In this connection, Є30,909 (¢375.2 million) and US$2,862 (¢26.4 million) respectively were outstanding against some home-based staff as at the end of 2006. Lack of effective monitoring of these transactions led to the anomaly. We recommended close monitoring of these transactions by Heads of Chancery and strict adherence to the Foreign Service Accounting Instructions, the FAA, 2003 and the FAR, 2004.


MINISTRY OF HEALTH

45. Due to management’s failure to effectively monitor imprests, provide proper custody for payment vouchers and ensure proper acquittance of payments, cash irregularities totalling ¢5.17 billion were noted during the year. We recommended strict enforcement of the relevant provisions of the FAA, 2003 and FAR, 2004 by managements to curb the anomalies.

46. Non-adherence to the provisions of the Public Procurement Act, 2003 (Act 663) and Stores Regulations, 1984 led to stores/procurement irregularities totalling ¢2.80 billion. We recommended to managements of the various institutions under the Ministry to ensure strict compliance with the afore-mentioned regulations to ensure value for money in procurement transactions.

47. Owing to delays in the deletion of names of separated staff of Health Institutions from the payroll, a total amount of ¢353.0 million was paid as unearned salaries into the bank accounts of a number of


separated staff. We advised Heads of the various Institutions to recover the amounts to chest, ensure prompt deletion of the names and regular monitoring of the payroll to prevent a recurrence of the anomaly.

48. Our review disclosed that outstanding staff advances and indebtedness of some National Health Insurance Schemes to some Health Institutions amounted to ¢1.92 billion. We urged managements of the Institutions concerned to closely monitor these debts and recover the amounts involved.

49. Tax irregularities which comprised unremitted tax to the IRS and purchases from non- VAT registered suppliers, totalled ¢577.7 million. We recommended prompt payment of the unremitted amounts and strict compliance with Section 30 of the FAA, 2003 to boost tax revenue.

50. Failure by management to ensure the deduction of rent at source led to staff occupying Government bungalow/flats and quarters owing rent totaling ¢352.7 million. We urged management to collect the arrears, maintain a rent register and ensure deduction of rent at source.

MINISTRY OF EDUCATION, SPORTS AND SCIENCE

51. The Ministry’s failure to exercise due diligence led to the excess printing of National Best Teacher Award certificates worth ¢197.8 million. We recommended to management to institute measures to prevent recurrence in future.

52. Non-enforcement and non-compliance with Regulations 2(c) and 39(c) of FAR, 2004 resulted in cash irregularities involving ¢2.60 billion. The lapses


included, misappropriation of revenue, losses and misapplication of funds. We recommended strict adherence to the above Regulations and relevant provisions of the FAA, 2003 to curb the lapses.

53. Advances recoverable from staff and institutions by the GES management stood at ¢2.07 billion as at the end of 2006. We advised management to intensify its efforts at collecting the over-due amounts. We also recommended regular review and follow-up of advances granted.

54. Due to inadequate co-ordination among management, CAGD and the commercial banks, unearned salaries totaling ¢371.0 million were paid to a number of separated staff. We recommended recovery of the amount and effective co-ordination among these institutions to curb this payroll irregularity.

55. Stores/procurement irregularities which included items not taken on ledger charge and fuel not recorded in log books, totalled ¢516.5 million due to non-enforcement of the relevant provisions of the Store Regulations. We advised management to ensure strict compliance with Stores Regulations 0522 and 0529.

56. Non-compliance with Sections 87 and 88 of the Internal Revenue Act, 2000 (Act 592) resulted in tax irregularities amounting


to ¢229.0 million. We advised management to recover the amount for payment to the Internal Revenue Service and also ensure strict adherence to the tax laws.

MINISTRY OF LANDS, FORESTRY AND MINES

57. An officer of the Land Title Registry, Tema misappropriated revenue amounting to ¢126.0 million. Additionally, a revenue inspector of the Administrator of Stool Lands, Techiman and two revenue collectors of Lands Department, Bekwai failed to account for revenue totalling ¢14.7 million. We advised their respective managements to intensify supervision over the revenue collectors and ensure that the amounts are recovered from them. We also advised that disciplinary action should be taken against the culprits in line with Regulation 8(1) of L.I. 1802.

58. The Accounts Section of Lands Commission Secretariat failed to produce for audit, 144 payment vouchers amounting to ¢2.40 billion covering January 2004 to December 2005. We urged management to trace the payment vouchers and submit them for audit, failing which the amount involved should be recovered from the schedule officer.


59. The Lands Commission Secretariat used ¢1.10 billion out of revenue collected to meet its recurrent expenditure pending receipt of funds from MOFEP. We reminded management that its action contravened Regulation 22(1) of the L.I. 1802 and advised compliance with the regulation.

60. Out of ¢95.5 million loans granted to Disaster Volunteer Groups (DVGs) in five NADMO District offices in 2004 and 2005 for the purchase of seeds and fertilizers and for okro and peper farming, ¢85.5 million remained unpaid as a result of lack of criteria for recovery of the loans. We recommended that management should intensify its efforts to recover the loans and define appropriate criteria for the disbursement and recovery of loans.

MINISTRY OF THE INTERIOR

61. Owing to delayed release of funds from MOFEP, management of Ghana Immigration Service (GIS) failed to pay into the Special Collections Account an amount of US$15,770 being part of a total collection of US$380,125. The amount was used to finance staff foreign travels. As of now, US$2,400 has been refunded, leaving US$13,370. We urged management to pay the balance into the Special Collections Account and ensure compliance with Regulation 22(1) of the L.I. 1802.


62. Between May and September 2006, the Tema office of GIS paid collections totalling ¢1.12 billion to GIS Head office in Accra instead of Bank of Ghana, in contravention of Head office directive issued on 12 May 2006. We recommended strict adherence to the financial directives and Regulation 22(1) of L.I. 1802.

63. Due to inadequate procurement planning, 7,094.21 metres of camouflage materials and 1,040 pieces of uniforms purchased at the cost of ¢976.2 million for use by Police officers on United Nations assignment had remained in stock for 18 months. We advised management to adequately plan its procurements in line with the Public Procurement Act, 2003 (Act 663).

64. Uncompleted projects amounting to ¢17.02 billion initiated between 1999 and 2005 were abandoned for new projects costing ¢18.56 billion which had not been budgeted for by the Police Administration. We urged management to ensure judicious use of government resources by ensuring continuity in project execution.

65. The Police Hospital used IGF amounting to ¢4.07 billion to purchase drugs and other consumables without parliamentary approval. We advised that management should seek retroactive parliamentary approval for the retention of the amount through MOFEP.

66. Between January 2004 and December 2005, the Ghana National Fire Service (GNFS) procured goods worth ¢2.13 billion from eight non-VAT registered companies, resulting in the loss of ¢319.9 million in revenue. We recommended that management should comply with the provisions of Public Procurement Act and also reprimand the officers responsible for the purchases.


MINISTRY OF WATER RESOURCES, WORKS AND HOUSING

67. An official of the PWD office, Tamale misappropriated revenue of ¢6.6 million as a result of lack of supervision on the part of his management. We urged management to recover the amount from him and disciplinary action taken against him in accordance with Regulation 8(1) of L.I. 1802.

68. A contractor who was paid 30% mobilisation advance of ¢4.50 billion in October 2005 for hydrological works valued at ¢15.0 billion which he was to complete within five months, delivered only 6% of the work and vacated the project site, nine months after the scheduled completion date. The matter has been referred to the Attorney General’s office for advice.

69. Due to poor supervision and lax control over accounting documentation, a former Accountant and revenue collectors of the Water and Sanitation Development Board (WSDB) in Bibiani and Donkorkrom misappropriated revenue totalling ¢38.5 million and ¢36.8 million respectively. We urged the Board to step up its supervisory role and ensure recovery of the amount. We also advised


management to take disciplinary action against the culprits in line with Regulation 8(1) of L.I. 1802.

70. Cash shortages of ¢30 million and ¢48.4 million were noted against the Accountant and Stand Pipe Agents (SPAs) of the Donkorkrom office respectively. We advised the Board to recover the amounts from them and also ensure that disciplinary actions are taken against them in compliance with Regulation 8(1) of L.I. 1802.

OFFICE OF GOVERNMENT MACHINERY

71. Rush purchases of items led to management’s inability to ensure the recording of store items worth ¢255.2 million in the store ledger. We requested management to prepare an annual procurement plan which will help address the problem of unrecorded stores in accordance with the Public Procurement Act, 2003 (Act 663).

72. Management’s failure to conduct quality assurance tests led to the loss of US$121,336.50 (¢1.12 billion) on garment exports to the USA. Also, lack of good credit control policy resulted in an outstanding debt of US$19,064 (¢175.6 million). We recommended


to management to investigate the loss and appropriate disciplinary action taken against those responsible. We also advised management to conduct quality assurance on maiden garment exports to ensure success of the PSI. Meanwile, credit control system should be put in place to ensure recovery of the debt of US$19,064.

MINISTRY OF FOOD AND AGRICULTURE

73. Store items valued at ¢242.0 million were not taken on ledger charge to provide audit trail and also ensure accountability. The lapse occurred as a result of non-segregation of duties and lax supervision. We urged management to comply with the relevant Stores Regulations, ensure segregation of duties and intensify its supervisory role.

74. The Apam District Office single-sourced the purchase of items worth ¢24.0 million and thus negated the gains of competitive tendering. This resulted from poor management of stock to determine the re-order levels. We recommended prudent management of stock to avoid panic buying.


75. As a result of management’s failure to ensure prompt deletion of names of separated staff from the payroll, ¢190.0 million was paid as unearned salaries to 12 former staff members. We advised managements of the MDAs involved to recover the unearned salaries and improve payroll monitoring.

76. Management neglected to comply with applicable financial regulations resulting in cash irregularities totalling ¢51.1million. Included in the lapses were direct disbursement from revenue of ¢21.1million and wasteful expenditure of ¢19.5 million. We recommended strict adherence to the relevant provision of FAR, 2004 and FAA, 2003.

MINISTRY OF DEFENCE

77. Management of 37 Military Hospital purchased items worth ¢3.11 billion between July 2005 and September 2006 without ensuring that they were taken on ledger charge before usage. We advised management to ensure that all purchases are routed through stores to ensure accountability.


MINISTRY OF TRANSPORTATION

78. The inability of management of the Ministry of Transportation, Headquarters to properly monitor payments resulted in an over-payment of ¢106.2 million to a consultant. We recommended recovery of the amount and proper monitoring of contract payments through contract registers.

79. Thirty General Counterfoil Receipt (GCR) books were not accounted for by the Tema office of the Driver and Vehicle Licensing Authority (DVLA). We advised management to investigate the matter.

80. Audit investigation into alleged revenue misappropriation revealed that an Accounts Officer of the Akim Oda office of DVLA short paid revenue to chest by an amount of ¢634.0 million as a result of ineffective supervision over his duties. The officer also failed to account for 189 GCR books. Management informed us that the culprit had been arrested and arraigned before court. We urged management to pursue the matter with the Police.

81. The Department of Urban Roads, Sekondi made unauthorised variation payments totalling ¢39.1 million which ranged between 32% and 46% over the original contract sums. We advised management to obtain approval for the variations and also desist from the practice of paying for contract variations without approval.

82. Owing to the failure of management of the Wa office of the Department of Feeder Roads to maintain proper monitoring records we could not ascertain the indebtedness of contractors who had been supplied equipment valued at ¢1.35 billion on credit and who were to repay through deductions from contract payments to them. We advised management to open and maintain records on the debts to ensure effective monitoring.


MINISTRY OF TOURISM AND DIASPORAN RELATIONS (MTDR)

83. Lack of proper co-ordination among MOFEP, CAGD and MTDR resulted in the non-deduction of 5% withholding tax of US$29,475 from contract payment of US$589,500 made to Messrs CTK-Network Aviation Ltd. We recommended recovery and remittance of the tax to the IRS and effective co-ordination among the three institutions.

84. Payment voucher with face value of ¢1.08 billion were not presented for audit due to the Ministry’s inadequate control over disbursements. We recommended strict control over disbursements in accordance with Regulation 39 of the FAR, 2004.

85. Management failed to adhere strictly to the provisions of Section 81(1) of the Internal

Revenue Act, 2000 (Act 592), resulting in the non-deduction of withholding tax amounting to ¢666.0 million. We recommended recovery of the amount and strict adherence to the tax law.

86. Due to the intransigence of imprest holders, imprests totalling US$25,000 remained unaccounted for as at 31 December 2006. We advised


management to use stringent measures to compel the defaulting officers to account for the amounts.

87. The Ministry single-sourced and awarded a contract valued at ¢2.00 billion without seeking approval from the Public Procurement Board (PPB). We recommended that management should seek retrospective approval from the PPB for the award.

MINISTRY OF TRADE, INDUSTRY, PRIVATE SECTOR DEVELOPMENT & PSI

88. We noted cash irregularities involving ¢1.29 billion which included ¢1.22 billion, representing payments to trainees which were not supported by the relevant documentation. The lapse was caused by the non-enforcement of Regulation 39 of the FAR, 2004. We recommended that management should provide the relevant documentation to acquit the payments and ensure compliance with the Regulation.

89. We observed deficiencies in the management of the erstwhile Ghana National Trading Corporation’s (GNTC) properties for which the Ministry has oversight responsibility. In this regard, we noted non-payment of rent and illegal occupation of some of the properties by tenants as some of the anomalies in the administration of the estates. We recommended that the Regional Trade Officers should be given the responsibility to monitor all former GNTC properties in the Regions and collect the rents on them. Also, the Oversight Committee of the Ministry in consultation with the Diverstiture Implementation Committee (DIC) should determine rent payable by the occupants of some of these properties to ensure regular collection of rents from them.


OTHER AGENCIES

90. Five persons from two Agencies were paid unearned salaries totalling ¢40.6 million. We urged management to recover the amounts from the separated staff and also ensure that their names are promptly deleted from the payroll.

91. Fuel worth ¢40.2 million bought by CHRAJ, Bolgatanga and Judicial Service, Sekondi was not recorded in the vehicle log books due to ineffective supervision. We recommended that future fuel purchases should be recorded in vehicle log books.

92. Total payments of ¢230.8 million made by the Judicial Service and the High Court, both of Sekondi were not supported with official receipts from the payees. We requested management to obtain official receipts to authenticate the payments.

93. Deposits and revenue of ¢357.0 million and US$16,140 were misappropriated by the Accountant, Kweku Mensah and his assistant, Doreen Love Akwettey respectively due to breakdown in the internal control system. The culprits have been arrested by the Police. We recommended recovery of the amounts and strengthening of the internal control system.

94. Failure on the part of the former Accounts officer to record grants totalling ¢39.7 in a cash book resulted in the amount remaining unaccounted for. We advised that the officer should be made to account for the amount.

MINISTRY OF INFORMATION AND NATIONAL ORIENTATION

95. An Accounts officer at the Volta Star radio station of the Ghana Broadcasting Corporation misappropriated ¢581.9 million revenue collected between 2000 and December 2006 because the


Regional Accounts officer failed to supervise his work over the period. We recommended that management should recover the amount and also institute disciplinary action against him in accordance with Regulation 8(1) of L.I. 1802. Management should also strengthen internal controls to forestall recurrence.

MINISTRY OF JUSTICE AND ATTORNEY GENERAL

96. Failure by the Accountant of the Registrar-General’s Department, Accra to ensure regular preparation of bank reconciliation statements, resulted in fake bank lodgements of revenue totalling ¢272.8 million in 2004. We recommended that management should conduct further investigation into the matter and ensure recovery of the amount to chest. We also advised management to ensure regular preparation of bank reconciliation statements to prevent a recurrence of the anomaly.

MINISTRY OF MANPOWER, YOUTH AND EMPLOYMENT

97. Due to management’s inability to promptly delete the names of separated staff from the payroll, unearned salaries totalling ¢50.8 million were paid into the bank accounts of five retired or deceased staff of Tema and Takoradi offices of the Labour Department. We urged management to pursue recovery and have the name deleted from the payroll.


98. Non-compliance with Financial Administration Regulation by the Department of Social Welfare, Wa resulted in fuel purchases amounting to ¢18.6 million not entered in the vehicle log books. We advised management to immediately procure and maintain vehicle log books and ensure that all fuel purchases are taken on ledger charge.


PART III

DETAILS OF FINDINGS AND RECOMMENDATIONS

MINISTRY OF FINANCE AND ECONOMIC PLANNING EADQUARTERS

Unacquitted payment vouchers-¢5.01 billion

99. Our audit disclosed that 34 payment vouchers with a face value of ¢5,014,252,900 which were raised for a variety of activities, were not supported with relevant expenditure documents such as receipts, invoices and duly signed statements of claim to authenticate the payments.

100. According to the Chief Accountant, the officers concerned have failed to comply with her persistent requests that payees submit the appropriate expenditure statements, receipts, and invoices to support payment vouchers raised by her.

101. To ensure transparency and accountability, we recommended that management should pressurize the payees concerned to provide the relevant expenditure statements and supporting details for our examination, failing which the amounts involved should be recovered from them. We also urged management to ensure that the relevant supporting documents are attached to all future payment vouchers.

102. Management indicated that the clerks of the appropriate committees of Parliament, from where a significant number of the payment vouchers emanated, would be contacted to produce the relevant supporting documents to authenticate the transactions.


Failure to deduct withholding tax - ¢700.3 million

103. Section 84 (1) (a-d) of the Internal Revenue Act, 2000 (Act 592) requires a person or an employer making payment of fees, commission or emoluments etc, to a resident person to withhold tax on the gross amount of the payment at the rate of 15 per cent as prescribed in part IV (a) of the first schedule of the Act.

104. Our review disclosed that, on the contrary, various allowances paid to both staff and non-staff covering the period 1 January 2004 to 31 December 2005 totalling ¢4,668,374,220 were not subjected to the 15 percent withholding tax deductions amounting to ¢700,256,133.

105. Management could not offer any tangible explanation for its failure to implement the provisions of the tax law.

106. We recommended that management should recover the outstanding taxes and remit them to the IRS. Management should also ensure prompt deductions of appropriate taxes on all future allowances for payment to the IRS in compliance with the tax law.

Unpresented value books and absence of stock register of value books

107. Our audit disclosed that the Chief Accountant failed to maintain a stock register on value books. Consequently, management could not ensure effective control over the acquisition, custody and movement of all value books.

108. The irregularity resulted in the failure of management to present three GCR books for audit check. Details were provided to management.

109. Though the three GCR books were alleged to have been used in collecting revenue involving the sale of budget statements and the amounts recorded in the cashbook, we were unable to confirm the amounts without reference to the duplicate copies of the receipts.


110. We recommended to management to trace the apparently missing three GCRs for audit and also introduce a stock register for value books. Management promised to contact its former Head of the Accounts section who was not available at the time of our audit.

Failure to utilise car loans for intended purpose - ¢604.7 million

111. We noted that 74 members of staff applied for and were granted loans amounting to ¢520,200,000 and ¢84,500,000 in November 2004 and December 2005 respectively by the Ministry of Finance and Economic Planning (MOFEP) to purchase means of transport for the efficient and effective discharge of their official duties.

112. We noted however that the beneficiaries failed to utilise the loans for the intended purpose on the grounds that they were sourcing for more funds elsewhere to add up to the loans granted. They claimed that the loans granted them were not sufficient enough to enable them purchase the required vehicles.

113. We recommended that management should prevail on the appropriate authorities to make vehicle advances realistic enough to enable officers purchase means of transport in future. Management should also ensure that the loans are utilized for the intended purpose or the amount involved should be recovered to chest.

Ten missing vehicles

114. Our review of the stock sheet of MOFEP fleet of vehicles obtained from the Transport Officer covering the period 2002 to 2004 disclosed that ten vehicles could not be accounted for, as they could not be traced during a physical inspection. The Transport Officer maintained that he had no idea of the whereabouts of those vehicles.

115. Our enquiry at the Driver and Vehicle Licensing Authority (DVLA), however, revealed that the vehicles were registered in the


name of individuals and institutions. We could therefore not confirm whether those vehicles in the names of individuals were sold to them and under what circumstances, and whether they had been paid for or not.

116. Interviews we had with the Security Officers at the gate disclosed that vehicle movements to workshops for repairs and maintenance were scarcely recorded at the gate, except on weekends. In our opinion, the failure by management to promptly detect the disappearance of the ten vehicles is attributed to the absence of an Assets Register, which would have enabled the monitoring of the movements of MOFEP vehicles. We urged management to conduct adequate investigation into the missing vehicles to determine the whereabouts of the vehicles and their current ownership status.

117. Management assured that investigations were underway to locate the missing vehicles. Also, a plant inventory register had been introduced for the Ministry’s vehicles for effective monitoring.

Vehicles not covered by documents of ownership

118. Section 6 of Road Traffic Regulations, 1974, requires that any registered vehicle bought or which change hands should be transferred to the new owner with all the necessary documents.

119. Our examination of the Ministry's vehicle files, however, disclosed non-compliance with this requirement. Out of 70 vehicles purchased between 1995 and 2004, 24 were still in the name of the vendors. 120. We further noted that 15 vehicles, received as donation from Project Coordinators, were not covered by DVLA certificates of ownership.

121. Upon inquiry, the Transport Officer informed us that the vehicles were registered by the vendor companies from whom the purchases were made. He further explained that he had written to the


vendor, Toyota Ghana Ltd. for transfer of ownership on seven vehicles but the company had not taken the requested action. He could, however, not provide us with receiving reports indicating the source and conditions of the donated vehicles.

122. In the absence of proper documentation of ownership, these vehicles, most of which have private registration numbers, could easily lose their ownership identity.

123. We recommended that management should take steps to effect the necessary transfers into the Ministry’s name, to pre-empt any avoidable loss. Management responded that the Transport Officer had been requested to get in touch with the DVLA to effect immediate transfer of ownership to MOFEP.

Assets register

124. Our review of inventory records disclosed that assets made up of office equipment and furniture acquired by the Ministry since 1997 had not been recorded in any Fixed Assets Register to safequard them. Besides, we observed that there were no inventory list displayed in any of the offices in the main building and the annexes. We also noted that 98 percent of the assets at the various divisions and units were not labelled with MOFEP’s identification logo to confirm ownership. This is in breach of Regulation 2(n) of FAR, 2004 (L.I. 1802) which enjoins heads of departments to compile and maintain assets registers of their departments.

125. Upon inquiry, the Estates Manager explained that there was no handing over notes and no assets register when he took over the office, but he took the initiative to compile a list of some of the assets.

126. We recommended that management should up-date the existing assets register, display inventory lists in all offices and label all assets with the Ministry’s logo. Management responded that steps were being taken to address the lapses.


Lack of action on obsolete and unserviceable assets

127. We observed that unserviceable items made up of computers, printers, photocopier machines and fax machines have been kept in many offices for 2-12years. We also noted that obsolete items made up of plant, equipment and furniture were dumped in rooms at the ends of various floors of the main Ministry block, Redco Warehouse, Redco Guest House and Dansoman Estate Staff Flats.

128. According to the officer in charge of the Maintenance Unit, the items were dumped at these locations after the last public auction of obsolete items held in June 1999 and that no further auction has taken place since then.

129. To prevent further deterioration of these assets and subsequent loss in value, we recommended that early action should be taken to dispose of them. We also suggested that equipment breakdown should be reported promptly for repairs whilst the Ministry introduces asset management policies for its future guidance.

130. Management intimated that arrangements had been made to sort out all assets that have outlived their useful lifespan for auction.

VALUE ADDED TAX (VAT) SERVICE

TEMA LARGE VAT OFFICE (LVO)

Misappropriation of revenue - ¢383.8 million

131. An audit disclosed that between August 2004 and September 2005, Mr. J.M.K. Abedu, an Accounts Clerk of the Tema LVO through fraudulent means short paid to chest revenue he received from VAT registered traders to the tune of ¢383,846,950. He succeeded in perpetrating the fraud due to lack of effective supervision over his work. Mr. Abedu has vacated his post whilst management has retrieved only ¢30,800,000 from him, leaving a balance of ¢353,046,950 unrecovered.


132. We recommended to management to recover the outstanding amount and take appropriate disciplinary action against Mr. Abedu. Management should also strengthen supervisory control over revenue collection to avoid a recurrence of the fraud.

Poor debt management and huge debt stock - ¢8.24 billion

133. The debt stock which represents amounts owed by taxpayers to the Office, stood at ¢8,240,000,000 as at 31 December 2006. Our review disclosed that ¢2,718,406,568.77 representing 33% of the total debt stock as at May 2006 was declared uncollectible. We were however not provided with any authority/express permission endorsing the uncollectability of the debt. Also, 38% of the debt stock amounting to ¢3,128,278,157.73 was described as 'others' for which no breakdown was provided.

134. We noted that the Enforcement and Debt Management Unit (EDM) of the office failed to maintain accurate enforcement progress sheets, (VAT 46) to record and monitor progress of action to be taken on debtors.

135. We advised management to adhere strictly to section 3(3) of the Value Added Tax Service operational manual which spells out action to be taken on debtors to minimise the debt stock.

Outstanding rescheduled debt - ¢883.0 million

136. We observed that Legon Fishing Co. Ltd's debt of ¢1,529,179,386.54 was rescheduled as per Head Office letter referenced OPS-EDM-051206 of 6 December 2005. In the said letter the company should have finished paying by May 2006.

137. On the contrary, we noted that as at 14 July 2006 the company had paid ¢735.0 million, leaving a balance of ¢883,074,908.79. The Local offfice however failed to inform Head office for the next line of action to be taken to retrieve the outstanding amount.


138. We recommended that interest should be charged on the outstanding amount and steps taken to retrieve the remaining amount. Management responsed that distress procedures had already been initiated.

KANESHIE INDUSTRIAL AREA (KIA) LVO

Failure to levy penalty on late fillers - ¢1.09 billion

139. The VAT law imposes on every VAT registered person an obligation to file VAT return for each prescribed accounting period of one month. The return must be submitted to the VAT office not later than the last working day of the month immediately following the one to which the return is related as stated in section 28(4) of Act 546. Specific penalty of ¢1,000,000 is imposed under section 28(8) of Act 546 on a taxable person who without justification fails to submit his tax returns on the due date and a further penalty of ¢5,000 for each day that the return is not submitted.

140. Our review of the computer generated report on late filers (ISSU) for the period October 2005 to June 2006 disclosed that there were 1125 late filers for which no notices of penalty charges were served. We however noted from the daily cash register covering the same period that 34 traders were charged penalties totalling ¢39,662,827 during the period for late filing.

141. The net effect is that 1,091 traders who filed their returns late were not charged ¢1,000,000 penalty each and a further ¢5,000 for each day that the return was delayed. As a result, ¢1,090,000,000 billion was lost to the LVO through non-compliance with Section 28(8) of Act 546.

142. We recommended that the LVO should apply Section 28(8) on recalcitrant traders to discourage them from late filing and also increase revenue to the Government.


Issuance of dud cheques-¢138.8 million

143. Our review of the LVO’s bank statements and the returned cheques register revealed that 12 cheques totalling ¢138,785,832 which were dishonoured between December 2005 and July 2006 were still outstanding as at 13 September 2006. The situation contravened Section 31(1) of the VAT Act 546 which requires that “any tax due, penalty and interest which remain unpaid after the due dates may be recovered by the Commissioner".

144. We also did not see any records (VAT 87) raised to reverse the credits and re-establish the debts in the respective traders’ ledgers. Furthermore, there was no evidence that interest was charged on the amounts involved as required under Section 32(1) of the VAT Act.

145. We recommended to the LVO to pursue the traders who issued the dud cheques and retrieve the amount involved to chest. Also, traders whose cheques are consistently dishonoured should be made to pay by cash or bankers draft. Furthermore, an interest register should be opened to record interest charged on dishonoured cheques for subsequent recovery from the affected traders.

146. In response, management indicated that amounts totalling ¢9,949,951 had been recovered from some of the traders as at 2006 and the relevant accounting records (VAT 87) raised to reverse the required credits. Also, out of the list, nine traders had been blacklisted. Additionally, interests had been charged on the amounts and entered in the interest register.

Outstanding debts from traders -¢29.84 billion

147. Section 31 of the VAT Act 546 stipulates that "any tax due, penalty and interest which remain unpaid after the due dates may be recovered by the Commissioner". We noted from the records of the Enforcement and Debt Management (EDM) Unit that a total amount of ¢29,839,937,880.68 was owed by 510 traders of the LVO as at 31


August 2006. The debt stock figure had come from assessments raised during control verification exercises conducted in 2005 and 2006.

148. We recommended that the LVO should employ all institutional and legal measures to recover the debts. Also, control verification exercises should be done in time to avoid possible huge assessments raised on traders.

149. Management assured us that it had drawn up a debt collection exercise programme to retrieve the debts on monthly basis till December 2006.

LARGE TAX PAYERS UNIT (LTU)

Wrong transfer of revenue - ¢7.90 billion

150. Tax revenue is lodged into LTU/VAT transit account and periodic transfers are made by BOG into VAT main consolidated account. However, we noted that BOG on 24 November 2005 wrongly transferred revenue of ¢7,900,000,000 into the Government Main Treasury Cash Account (GMTC) instead of VAT main consolidated account.

151. Since requisite portions of VAT revenue are credited to the GET fund and the National Health Insurance Scheme, we recommended that the LTU Head should ensure that the transaction is reversed and the amount transferred to VAT main consolidated account. This will enable appropriate disbursements to be made into the various stakeholders’ accounts.

Failure to establish debts in tax-payers account - ¢12.02 billion

152. In order to determine whether additional assessments raised during tax audits are imputed on the LTIPS and established as a debt in the tax payer’s accounts statements, we reviewed 28 comprehensive tax audit reports issued during the year 2005.


153. We observed that additional tax assessments raised in 22 of the 28 audit reports totalling ¢12,020,449,397 had not been debited to the respective traders’ accounts statements.

154. This contravened Section 10.8.3 of the LTU’s procedure manual which requires that findings from tax audits shall be imputed on the LTIPS not more than fifteen days after the completion of an audit. These additional assessments have remained unimputed for periods ranging from 5 to 13 months.

155. We recommended that taxpayers’accounts be updated within fifteen days after issuance of tax audit reports in accordance with the LTU’s procedure manual.

156. The Head of Audit explained that audit officers responsible for the imputing of additional assessment on the LTIPS were initially not conversant with the use of the LTIPS. They had however been trained on it to enable them imput the additional assessment.

Lodgement of revenue in unknown account -¢18.7 million

157. We noted that proceeds from the sale of value books received from the IRS for the period May 2004 to July 2005 which amounted to ¢18,667,000 were paid into the LTU operations account No. 01256-600480-53 and later remitted to the IRS. However, the IRS’ account into which the amount was transferred was not identified to us for our verification.

158. We requested management to provide us with the account number into which the amount was paid to confirm its receipt by the IRS.

159. Management promised to investigate and communicate the outcome to us.


ADABRAKA LVO

Failure to charge interest and levy penalty - ¢5.92 billion

160. We reviewed the report on late filers at the Adabraka LVO for August to November 2005. For the four months sampled and with a materiality limit of one million cedis and above, we noted that a total of 108 traders in payment position failed to file their returns on the due dates and penalties were imposed on them, as well as interest on outstanding tax due from them. These totalled ¢5,092,000,000. We however observed that the Office did not properly monitor these transactions as stipulated under section 28 of the VAT Act 546 and Operational directive No. 035/HQ on imposition of interest on outstanding amounts of VAT.

161. We recommended that the Office should recover the ¢5,092,000,000 and all other penalties and interest due on outstanding VAT amounts. We also advised management to properly monitor these transactions by introducing the appropriate registers as required under the above-mentioned VAT law and operational directive.

OSU LVO

Uncredited cheque lodgements - ¢259.2 million

162. We observed that a total amount of ¢259,238,497.51 paid into the LVO's account at the Bank of Ghana between April 2005 and June 2006 had not been credited to the account. This anomaly was not promptly detected because the office failed to prepare monthly bank reconciliation statements.

163. We recommended that management should write to BOG to credit its account with those lodgements and also ensure regular monthly preparation of bank reconciliation statements. Management assured that it had written to the Bank of Ghana (BOG) to have the account credited with the amount.


Unredeemed returned cheques-¢464.9 million

164. Our examination of the returned cheques register disclosed that 51 traders issued cheques totalling ¢464,859,551 to the LVO which were subsequently dishonoured by their banks. We also noted that as at the close of our audit in December 2006 these traders had not repaid the amounts involved.

165. Though issuance of dud cheques is a criminal offence no action has been taken against the traders contrary to administrative guideline No. FIN.002/HQ of 1 November 2002 which quotes in part that “steps be taken by head of VAT outstations to prosecute offenders to serve as deterrent to others”.

166. Management's failure to institute necessary action against these traders has resulted in this situation which increased the debt stock of the LVO.

167. We recommended that management should write to the traders involved reminding them of the seriousness of their offence, demand payment of the amounts involved or take punitive action against them.

Uncredited amount-¢56.2 million

168. Our verification of revenue transfers by GCB, Osu Branch to BOG VAT accounts revealed that an amount of ¢56,163,700 alleged to have been transferred by GCB to the VAT revenue account No. 01230500120 at the Bank of Ghana on 31/05/05 had not been credited to the account.

169. We further noted that management failed to liaise with either the BOG or the GCB or both why the anomaly occurred. Management's failure to monitor transfers from GCB to BOG revenue account resulted in this irregularity.

170. We recommended and management responded that it had taken steps to ensure the account is credited with the amount.


Indebtedness of traders-¢41.48 billion

171. We noted that 610 traders owe the LVO a total amount of ¢41,477,152,616. This debt resulted from traders filing returns without paying the tax, dishonoured cheques and assessments raised against them.

172. We however noted that management had initiated measures such as distress actions against some of the traders to recover the unpaid debts.

173. This, notwithstanding, we recommended that management should intensify its tax collection efforts to recover the taxes owed by the traders.

VAT SERVICE – KUMASI

Misappropriation of revenue - ¢1.61 billion

174. Our review of a VAT Internal Audit Report issued in December 2005, disclosed that as a result of poor supervision and weak internal control, VAT revenue totalling ¢1,610,473,187 collected during the period 2000 to August 2005 was misappropriated by the underlisted Officers:

No. Name of officer Amount ¢

a. Michael Osei Agyeman/Atakorahb. Amaniampong & Appiah Kubi 1,081,993,839c. Richard Kelly Afeku and Nixon

Toppar 254,678,520

d. Eric Bosompem Twum 27,128,000e. Unidentified signatories 193,526,829.62f. Kennedy Attakora Amaniampong 50,945,000g. Richard Kelly Afeku (IOU) 2,201,000

Total 1,610,473,188.62


175. In the first four (a-d) the Internal Audit Report which was corroborated by us noted that Mr. Appiah Kubi of the (ISSU) Information Support System Unit) aided the whole process by imputting data (VAT 20, 23 and 30) in the VAT Input Processing System (VIP) ignoring material changes that had been made on the documents by either post dating or back dating the transactions. In the last three (e-g) miscellaneous revenue was misappropriated without lodging it at the bank.

176. We recommended to management to furnish this office with the outcome of the VAT Internal Audit Report submitted to VAT Head Office. This will enable us ascertain the necessary corrective action taken by management to retrieve the embezzled revenue from the officers involved.

Dud cheques - ¢454.0 million

177. Our review of the Returned Cheques schedule as at 30 June 2006 revealed that for the period 18 January 2004 to 30 June 2006, 42 VAT registered traders issued dud cheques totalling ¢453,954,385 for the settlement of their tax liabilities. By this action, coupled with inaction on the part of VAT officials, the 42 traders deprived the Service and consequently the State the timely use of the amount for development purposes.

178. We recommended prompt recovery of this amount from the affected traders. Management responded that revenue totalling ¢274,845,031 had been recovered leaving a balance of ¢179,109,354 against 25 traders and companies.

CUSTOMS, EXCISE AND PREVENTIVE SERVICE

Short collections and penalty imposed - ¢28.39 billion

179. This year’s Post Clearance and Warehousing Unit audits uncovered total short collections of ¢20,023,545,551 made up of ¢19,739,155,704 from post clearance and ¢284,389,847 from


warehousing. A total penalty of ¢8,369,355,501 was imposed on the enterprises involved. Below is a table showing the short collections and penalty imposed on the enterprises:

Short collection Penalty Total duePost Clearance 19,739,155,704 7,703,278,534 27,442,434,238Warehousing 284,389,847 666,076,967 950,466,814Total 20,023,545,551 8,369,355,501 28,392,901,052

180. Following audit recommendations, an amount of ¢8,774,078,636 representing 43.8% was recovered as compared to 9.3% in 2005. Recovery of short collections has been greatly enhanced by the introduction of the GCNET/GCMS which makes it impossible for an indebted importer to transact any business with CEPS unless the outstanding debt is paid. The reasons for the short collections were:

poor record-keeping by warehouse keepers deliberate manipulation of custom values by some

importers to reduce tax liabilities removal of exempt goods for consumption in Ghana

without payment of the appropriate duties and taxes suppression of actual freight charges paid or payable to

reduce tax liabilities

181. We noted management’s action to overcome these anomalies such as the on-going establishment of a price database system. We also recommended the establishment of Tax Courts to deal swiftly with tax defaulters.

Outstanding re-scheduled duties-¢2.07 billion

182. Four companies were allowed to clear their goods by paying part of the duties and taxes and the balance later. These entities have defaulted and are yet to settle their accounts totalling ¢2,077,243,113 with the Service.

183. We urged management to intensify efforts to retrieve the outstanding tax from the defaulters.


Transit goods

184. Our objective for the audit of goods in transit was to ensure that such goods were not diverted for consumption in Ghana because Government then loses duties and taxes that should have been paid on them.

185. Our review of reports on transit transactions showed that some of the weaknesses identified in our previous reports continued to exist. The following table explains findings at three exit points:

Akanu Elubo PagaTotal transit transactions 401 666 100Transit items registered 322 428 64Re-exportation registered 16 40Transactions not registered 58 198 36

186. We were therefore, unable to satisfy ourselves that vehicles/transactions not registered by the CGNET/GCMS system exited the country. Weaknesses that still exist in the transit scheme include:

Exit stations not given advance information on transit goods and scheduled dates of arrival at exit points.

Non existent communication link between transit officers, departure and exit points.

Ineffective tracking of transit vehicle and goods. Failure to seal transit goods on board vehicles to avoid

being tampered with in the course of the journey. Poor record keeping at departure and exit points. The

problem was now brought to the fore with the introduction of the GCNET/GCMS system.

The GCNET/GCMS system itself fails to capture names of escort officers for easy identification.

187. We noted that the volume of transit transactions has increased tremendously since the Ivorian crises started in 2003. Goods that used to transit through Cote 'D' Ivoire to Burkina Faso, Niger and Mali


now go through Ghana. There is therefore the need to strengthen controls in the system to ensure that these transit goods are not diverted and sold locally and government made to lose revenue.

188. We recommended that management consider the establishment of a Monitoring Unit at the head quarters to monitor the movement of transit goods through the various entry and exit points. We further recommended that management strictly enforce insurance bonds covering transit goods that were not registered at exit points.

CUSTOMS, EXCISE AND PREVENTIVE SERVICE (CEPS) -KUMASI

Indebtedness of three oil marketing companies-¢1.46 billion

189. Our review of the debt profile for oil marketing companies who owe CEPS’ office, Kumasi in respect of duty payable for oil lifting revealed the following indebtedness of three oil marketing companies as at 4 March 2006:

Oil Marketing Co. Period of lifting Duty Payable (¢)

Duty paid (¢)

Duty unpaid (¢)

Universal oil 01-15 May ‘05 154,029,600 - 154,029,600Engen -do- 346,566,600 - 346,566,600Tropic Oil 16-30 June '03 545,268,906 - 546,268,906-do- 01-15 July '03 414,145,440 - 414,145,440Total 1,460,010,546 1,460,010,546

190. Management at various dates served these oil marketing companies demand notices for the recovery of these debts. The latest demand notice was on December 14, 2005. Engen Oil Company instead of paying its debts into the Kumasi CEPS Account inadvertently added the payment of the Kumasi debt to duty payable to Tema Petroleum Company vide account No. 0123050012168 as per BOG pay-in-slip A 1145369 of 6 June 2005.


191. As at the time of writing this report in March 2007, the reversal entry by Bank of Ghana, Tema in favour of Kumasi Collection Account in the sum of ¢346,566,600 had not been effected.

192. We recommended to management to pursue the retrieval of the amounts from the defaulting oil companies while action is taken to ensure the reversal of the entry by Bank of Ghana, Tema.

CUSTOM EXCISE AND PREVENTIVE SERVICE-TAMALE

Petroleum tax arrears-¢5.92 billion

193. Our examination of the accounting records and schedules in respect of tax payments for the period under review, disclosed that nine Oil Marketing Companies owed the Service ¢5,920,002,836 in tax arrears. The details were provided to management.

194. The situation was as a result of the lack of vigilance on the part of CEPS to ensure that taxes are paid promptly as and when they fall due.

195. We urged management to pursue recovery of the tax arrears of ¢5,920,002,836 from the Oil Companies and pay same to chest.

Purchases not recorded in store records before disposal- ¢18.8 million

196. Section 30(i) of Financial Administration Act, 2003 (Act 654) enjoins all departments and organisations to maintain adequate records for stores. Our audit of the accounts and related records of the Tamale office of the Service disclosed on the contrary that store purchases worth ¢18,795,000 made during the period under review were not recorded in store records before alleged disposal. In further violation of the Act, issues of stores were made without authorised requisitions.

197. Management’s failure to enforce the laid down regulations resulted in the situation. In the absence of the required records, we


could not confirm the receipt and issues of the items. The lapse could also end up in non-supply of the items and loss of funds to Government.

198. We urged management to ensure that all future purchases together with supplies from CEPS Headquarters in Accra are taken on ledger charge before being issued out.

INTERNAL REVENUE SERVICE - HEADOFFICE

Outstanding corporate tax - ¢18.27 billion

199. We noted that for the 2004/2005 years of assessment, 577 companies out of 795 companies sampled from the Adabraka, Kaneshie, Makola, Achimota, Mataheko, Abeka Lapaz and Nima DTOs defaulted in settling their outstanding corporate tax in the sum of ¢18,275,679,132.

200. Schedule officers interviewed during our audit explained that taxpayers complained of slow business. We however noted in most cases that schedule officers failed to periodically review the taxpayers’ files to ascertain the state of their indebtedness.

201. We recommended that taxpayers should be encouraged to honour all outstanding taxes, failure of which the prescribed penalties should be applied to compel them to honour their tax obligation.

Failure to withhold and pay PAYE

202. Examination of companies’ PAYE files of four DTOs, namely, Adabraka, Kaneshie, Makola and Nima disclosed that some of the companies either failed to withhold or withheld PAYE from incomes of their employees but failed to remit such monies to the Commissioner. We noted that the lapse existed because of ineffective supervision by the heads of DTOs and the sectional heads. This weakness adversely affected inflows into the Consolidated Fund.


203. We recommended that heads of DTOs should intensify their supervision and ensure compliance with the provisions of Section 81 of the Internal Revenue Act, Act 592 on withholding of tax by employers.

Failure to withhold taxes on payments for services - ¢242.9 million

204. Our review of company tax files showed that up to 88% of companies under the Makola and Kaneshie DTOs who submitted their audited accounts, failed to pay withholding taxes on auditing, accounting legal fees, rent, commission, etc. they paid to their service providers.

205. The lapse contravened Section 84(2b) of Act 592 which provides that where a resident person pays a sum to another resident person for the supply of any services, in respect of a contract between the payee and a resident person other than an individual exceeding fifty currency points, the person making the payment shall withhold tax on the gross amount of the payment at the rate prescribed in Part IV of the First Schedule.

206. The review disclosed that revenue totalling ¢242,900,000 due from 42 companies as withholding tax on services rendered was not collected as a result of the failure of schedule officers to examine the accounts presented by taxpayers and apply Section 84(2b) of Act 592 by withholding the appropriate taxes.

207. We recommended that heads of DTOs should ensure that all accounts are properly examined for appropriate taxes to be determined and collected.

KANESHIE DTO

Use of photocopies of tax credit certificates to offset tax liabilities –¢430.2 million

208. Our audit disclosed instances where photocopies of tax credit certificates and tax receipts were used to offset tax liabilities. At the


Kaneshie DTO, photocopies of receipts were used to offset tax liabilities totalling ¢430,237,678 of six companies.

209. The practice could result in fraud and evasion of tax as a single tax clearance certificate/tax receipt could be replicated and presented at different times and locations to reduce tax liabilities.

210. Management explained that when taxpayers make payments at entry points, they are issued with only the original receipts with the remaining copies forwarded to their respective tax offices hence the use of the photocopies. It was further explained that photocopies are only accepted and placed on file after a Principal Inspector or an officer of a higher rank has certified them. We however did not see any evidence of certification by such officers.

211. To avoid the abuse of the system, we recommended that the practice of accepting photocopies of receipts and tax credit certificates to offset tax liabilities should be discontinued. In this regard, tax offices at the entry points should issue both the original and triplicate copies of receipts to taxpayers, to enable them present the triplicate copies to their respective tax offices for the necessary credit.

NIMA DTO

Outstanding rent tax - ¢1.29 billion

212. Examination of 79 randomly selected tax files of landlords at the Nima DTO revealed that 49 landlords, representing 62% of the number sampled failed to settle ¢1,287,956,192 in rent tax due from them for the 2004 and 2005 years of assessment.

213. We found no evidence that the schedule officers pursued the landlords for the recovery of their indebtedness. Also, no penalties were imposed for non-submission as required by the tax law.


214. We recommended that the DTO should recover all rent tax due. Additionally, penalties prescribed by the law should be applied to dissuade other taxpayers from defaulting in the payment of their rent tax.

Outstanding National Reconstruction Levy - ¢759.7 million

215. Our audit disclosed that the IRS failed in its responsibility to collect National Reconstruction Levies in violation of Act 597, National Reconstruction Levy Act, 2001. The law was repealed in 2006. A review of 372 taxpayers files at the Kaneshie, Makola, Achimota and Nima DTOs thus disclosed that 293 companies, representing 79% of the companies sampled failed to pay their levies totalling ¢759.7million for the 2004 and 2005 years of assessment.

216. We observed that no provisional assessments were raised on taxpayers to draw their attention to such liabilities, hence their non-payment. We recommended to the Service to collect all un-paid NRL from taxpayers.

ADABRAKA DTO

Non-adherence to conditions for the issuance of TCCs

217. To qualify for a tax clearance certificate, a taxpayer is required to have made up-to-date payment of taxes including previous years’ liabilities, submitted all tax returns due and should be fully registered with the Internal Revenue Service.

218. On the contrary, we observed at the Adabraka DTO that tax clearance certificates were issued without due regard to the laid down conditions. The Head of the DTO explained that even though the taxpayers may not have fully satisfied the conditions specified, the Internal Revenue Service allows for satisfactory arrangements in respect of taxes due.


219. We drew management’s attention to what constitutes satisfactory arrangements under Section 5.7.1. of the IRS Collection Manual. The section under reference states among others that all agreements must be guaranteed with post-dated cheques and all current taxes must be paid on time. On the contrary none of these conditions were satisfied before the Adabraka DTO granted the tax certificates.

220. We recommended that schedule officers and heads of the DTOs should ensure that taxpayers satisfy conditions stipulated for the granting of TCCs before considering their applications.

Failure to review PAYE schedules

221. PAYE schedules submitted in support of tax payments to the Service are to be properly examined for proper tax computations and determination of actual tax payable.

222. We, however, observed at Adabraka and Abeka offices that PAYE schedules submitted by companies were not reviewed by schedule officers before payments were accepted. Taxpayers’ prepared statements or schedules were thus accepted at face value for payments.

223. The Head of the DTO explained that it was practically impossible to make any meaningful review of PAYE schedules during the peak period and suggested that the Service must provide a Ready Reckoner to enable the schedule officers review these schedules.

224. We are of the view that if the PAYE schedules are not reviewed, not only will unsuspecting Accountants compute and withhold lesser amount of taxes, but they could also understate the tax payable to the Service.


225. We recommended that during the peak periods, schedule officers should at least cast the schedules to satisfy themselves that amounts on cheques agree with total amounts on schedules and subsequently review the schedules submitted during the off-peak periods. Companies found to have made wrong computations of taxes should be called upon to effect the necessary corrections and settle the difference in tax.

Non-submission of audited accounts by taxpayers

226. Section 72(1) of the Internal Revenue Act 2000 (Act 592) requires that “a person shall furnish a return on his income for a year of assessment not later than four months after the end of a basis period of that person ending within the year.” The Commissioner is also mandated under Section 77(1) of the Act to make a final assessment of the chargeable income of that person and the tax payable on that assessment.

227. Contrary to the above provisions of the Internal Revenue Act, the Adabraka DTO made available to us only 95 company files, (representing 31%) out of the 303 files randomly selected for our review. Out of the 95 company files presented, 75 companies (79%) did not submit returns of income for 2004/2005 years of assessment.

228. At the Kaneshie DTO, 104 companies, representing 80% of the 130 sampled taxpayers, failed to present audited accounts on their businesses for the 2004 and 2005 years of assessment. Abeka Lapaz DTO made available to us, 56 company files, representing 41% of the 131 files randomly selected for our review. Fifty-five companies, representing 98% did not submit returns for the 2004 and 2005 years of assessment.

229. Consequently, the actual chargeable income for the taxpayers could not be ascertained for a final assessment to be made by the schedule officers for the years of assessment involved.


230. The District Manager of the Adabraka DTO explained that the heavy workload on auditors of taxpayers resulted in their inability to present audited accounts. The Manager of the Kaneshie DTO on the other hand claimed that taxpayers were ignorant of the law.

231. Non-submission of returns by taxpayers would result in the status of taxpayers’ liabilities not being known at the close of years of assessment involved. Undoubtedly, these omissions ultimately impacted adversely on inflows into the Consolidated Fund.

232. The situation observed persisted because the schedule officers at the DTOs failed to apply sanctions and penalties provided under Section 142 of Internal Revenue Act, 2000, Act 592 and Section 143(2) of Internal Revenue Amendment Act 669 of 2004. Managements of DTOs are also partly to be blamed for the state of affairs because if they had exercised close supervision of units under them, the situation observed would have been avoided.

233. We recommended that the Heads of DTOs should strengthen supervision of schedule officers and collectors for strict compliance with the provisions of the Internal Revenue Act, 2000 and the IRS collection manual.

234. The Head of the Adabraka DTO responded that her office will ensure that demand notices are prepared in triplicate, with a copy maintained on the taxpayer’s file to enable the schedule officers monitor payments.

Outstanding tax refunds - ¢49.11 billion

235. Section 159(i) of Internal Revenue Act, 2000 (Act 592) states that where the Commissioner is satisfied that tax paid by a person is in excess of the person’s tax liability, the Commissioner shall apply the overpaid tax in reduction of any other taxes or amount due to the Service under the Act, and refund the remainder, if any, to that person within three months after becoming satisfied.


236. Also Section 159 as amended by Act 644 of 2003 requires the Commissioner to make recommendations at the end of each quarter to the Minister of an amount to be set aside on the basis of revenue collected out of which refunds due shall be made.

237. We noted that the Commissioner has not been making recommendations to the Minister of amounts to be set aside quarterly from revenue collected to settle tax refunds. As a result, total tax refunds outstanding from 2003 to 2006 stood at ¢49,113,503,925.

238. Our review of tax refund records also revealed that tax certified for refund by the Commissioner for 2003 to 2006, totalling ¢62,133,190,437, were not taken into consideration when reporting on tax revenue collected for the various years as detailed below:

Year Tax Revenue certified for refund

¢

Tax revenue refunded by cash

¢

Balance outstanding

¢2003 11,209,031,769 28,084,875 11,180,946,8942004 22,089,311,678 1,523,422,856 19,565,888,8222005 18,368,177,347 7,461,519,181 10,906,658,1662006 10,466,669,643 3,006,659,600 7,460,010,043Total 62,133,190,437 13,019,686,512 49,113,503,925

239. Although the Commissioner has the first option to refund excess tax payment by setoff, we did not sight any evidence that this was done in the case of the ¢62 billion. Excess tax refunded by means of set-off has the effect of reducing revenue collected in the year of set-off and help depict the true tax position. The failure of the Service to nett-off tax refunds of ¢62,133,190,437 against revenue collected implied that revenue collection declared for the related years was overstated by that amount.

240. Also, the retention of 2.8% which was calculated on the gross revenue figures without taking the tax refunds into account, have also been overstated by ¢1,739,729,332 as shown below:


Year Tax Revenue Certified for Refund (¢)

2.8% Retention thereon (¢)

2003 11,209,031,769 313,852,8892004 22,089,311,678 618,500,7272005 18,368,177,347 514,308,9662006 10,466,669,643 293,066,750Total 1,739,729,332

241. We recommended that the total outstanding tax refund of ¢49,113,503,925 should be made to the respective tax payers. We further recommended that tax refund certified by the Commissioner totalling ¢62,133,190,437 for the period 2003 to 2006 must be knocked off against tax revenue for 2007.

242. We also recommended that the Commissioner should ensure strict adherence to Section 159 of Internal Revenue Act, 2000, Act 592 as amended by Act 644, by making recommendations at the end of each quarter to the Minister of amounts to be set aside on the basis of revenue collected, to ensure availability of funds for tax refunds.

Delays by IRS to pay PAYE withholding tax to chest - ¢5.48 billion

243. Section 87(1) of the Internal Revenue Act 2000, Act 592 stipulates that “a withholding agent shall pay to the Commissioner a tax that has been withheld or that should have been withheld under this subdivision within (15) days after the end of the month in which the payment subject to withholding tax is made by the withholding agent”.

244. Contrary to the above provisions, we noted from our review of PAYE records that IRS consistently delayed in the payment of PAYE throughout the year under review.

245. Section 143(2) of Internal Revenue Amendment Act 669 of 2004 stipulates that “where a person fails to pay any tax which thatperson is required under the Act to withhold and pay to the Commissioner on the due date, that person is liable in a case where


the failure is for a period of not more than three months, to pay a penalty equal to 20% of the tax payable in addition to the tax unpaid,and in a case where failure is for a period exceeding three months, to pay a penalty equal to 30% of the tax payable in addition to the tax unpaid.

246. In the light of the above, we reckoned that the IRS’s total PAYE indebtedness as at 31 December 2005 amounted to ¢5,479,159,836 as shown in the table below:

Mth of Pay’t

Date of payment

Amount to be paid (¢)

Amount paid

(¢)

Tax out-standing

(¢)

Penalty

(¢)

Total taxOutstanding

(¢)Jan. 05/07/2005 846,413,853.64 846,413,853.64 - 253,924,155.09 253,924,155.09Feb. 05/07/2005 842,210,846.95 842,210,846.95 - 252,663,253.80 252,663,253.80Mar. 01/08/2005 857,251,935.50 857,251,935.50 - 257,175,580.50 257,175,580.50Apr. 30/09/2005 768,063,687.30 768,063,687.30 - 230,419,106.10 230,419,106.10May ? 756,613,585.74 - 756,613,585.74 226,984,075.50 983,597,660.50June ? 874,345,524.79 - 783,435,524.99 235,030,657.20 1,018,466,181.20July ? 1,071,465,935.86 - 1,071,465,935.86 321,439,780.50 1,392,905,715.50Aug. 30/12/2005 1,079,532,513.39 1,079,532,513.39 323,859,771.90 323,859,771.90Sept. 30/12/2005 1,108,502,539.11 1,108,502,539.11 332,550,761.70 332,550,761.90Oct. 30/12/2005 1,091,381,151.63 1,091,381,151.63 218,276,230.26 218,276,230.26Nov. 30/12/2005 1,076,607,085.79 1,076,607,085.79 215,321,417.15 215,321,417.15

2,611,515,046.59 2,867,644,789.70 5,479,159,836.29

247. Management explained that the Service receives its 2.8% retention two months in arrears which was even inadequate to meet its operational activities, thus imposing penalty for late payment would impose greater difficulties on the already precarious financial position.

248. We are of the view that management relegated the importance of tax payments to the background and settled them only after all other obligations had been discharged. The tax laws provide for periodic inflow of revenue into the Consolidated Fund for continuous national development throughout the year. Delay in payment of such taxes thus deprived the nation of the needed funds for its development.

249. We recommended that the Service should settle its outstanding tax from its retention and as well liquidate the penalty for late payment.


INTERNAL REVENUE SERVICE-KOFORIDUA

Unsupported payments - ¢58.8 million

250. We noted that the Service expended a total of ¢58,802,527 between May 2004 and April 2006 but failed to obtain relevant expenditure supporting documents to justify the payments made. In the absence of the expenditure supporting documents, we could not ascertain the authenticity of the transactions and payments made.

251. We recommended that management should produce relevant expenditure documents to justify the payments made, or the amount involved should be paid back to chest. Management is yet to provide the required evidence.

INTERNAL REVENUE SERVICE (IRS)-MAMPONG/ASHANTI

Missing vehicle income tax receipt books (10)

252. Our review of control exercised over the receipt and issue of receipt books disclosed that the Accountant of the District office maintains the stock register for value books and takes custody of value books received from head office. The review disclosed that 10 Tax Receipt books with serial numbers 1579501 – 1580000 received from the Head Office on 23 January 2004 were missing. The Accountant, Mr. Lawrence Sakitey in whose custody the receipt books were kept could not produce them for our inspection during the physical stock taking.

253. We could not determine the face value of the books as they have varying rates. The Accountant also failed to notify the District Manager of the loss.

254. We recommended to management that strenuous efforts should be made to retrieve the receipt books from the Accountant.


INTERNAL REVENUE SERVICE-ASAMANKESE

Outstanding tax revenue - ¢96.5 million

255. Our review of tax files disclosed that seven companies and five self-employed persons had defaulted in the payment of taxes amounting to ¢96,532,524 as at 31 December 2005.

256. Management explained that letters demanding the outstanding taxes have been sent to the defaulters but the response had not been encouraging.

257. We recommended that management should vigorously pursue recovery of the outstanding taxes.

MINISTRY OF WATER RESOURCES WORKS & HOUSING (MWRWH), ACCRA – TREASURY

Misappropriation of funds - ¢539.0 million

748. Mr. Fred Amewode, an Accountant at the PWD Regional Office, Accra forged the signature of the Regional Engineer on Treasury vouchers between March and May 2005 and succeeded in withdrawing ¢538,971,000 from the bank which he misappropriated. The Accountant has been interdicted.

749. We recommended that management should report the matter to the Police for his prosecution. We also advised management to recover the amount and institute appropriate measures to prevent a recurrence of the fraud.

Failure to issue VAT invoices - ¢92.1 million

258. According to Section 19 of the VAT Act, 1998 (Act546), VAT-Registered Companies are to issue VAT invoices to cover payments made to them for supplies and services rendered to provide the assurance that the VAT component of the payments they receive will be paid to the VAT Service.


259. We noted, however, that 11 Companies which supplied various items did not issue VAT invoices totalling ¢92,056,282 though VAT was added to the payments.

260. We recommended that the Chief Treasury Officer should contact the Companies involved for the amounts for payment to the VAT Service.

DISTRICT FINANCE OFFICE – ENCHI

Failure to submit monthly bank statements

261. Employees on the Controller and Accountant General’s mechanised payroll are serviced by five Commercial Banks, within the Aowin Suaman District Administrative area. The banks are expected to furnish the District Finance Officer with monthly statements on unclaimed salaries and pensions they hold in trust for the Government.

262. We noted that the five banks failed to submit monthly statements to the District Finance Officer to enable him verify names of staff whose heads of department had requested their salaries to be paid into the Suspense Account.

263. We recommended to the District Finance Officer to insist on bank statements from each bank at the end of the month. The statements should then be reconciled with copies of letters received from heads of departments requesting salaries of separated staff to be paid to chest.

REGIONAL FINANCE OFFICE- HO

Payments without VAT invoices-¢33.5million

264. Section 19 of the VAT Act of 1998 (Act 546) states that a taxable person shall on making supply of goods and services issue to the customer or persons supplied a VAT invoice. In contrast, the


Regional Treasury Office failed to obtain VAT invoices from suppliers in respect of VAT payments totalling ¢33,536,325.

265. We recommended that VAT invoices should be obtained from the suppliers to confirm that the amounts had been remitted to the VAT Service. We also advised management to ensure strict compliance with the relevant section of the Act.

MUNICIPAL FINANCE OFFICE – HO

Outstanding receipted duplicate treasury payment vouchers -¢875.2 million

266. Treasury Officers are to ensure that receipted duplicate copies of payment vouchers are returned to the Treasury offices within 48 hours. On the contrary, we noted that various MDAs failed to return their duplicate payment vouchers involving ¢875,170,161 to the Treasury. We requested the MFO to ensure that the defaulting departments return the vouchers to the Treasury.

DISTRICT FINANCE OFFICE-AKATSI

Pension payments to deceased pensioners-¢22.0 million

267. A review of pensioners' records revealed that between February 2006 and June 2006, five pensioners died in the district. Although in their monthly returns, the Pensioners' Association forwarded the relevant information to the District Finance office, the names of the deceased pensioners continued to appear on the pensioners' payroll resulting in the payment of unearned salaries totalling ¢21,956,668 into their bank accounts.

268. Management's delay in deleting the names of the deceased pensioners from the payroll was the cause of the wrongful payment. We requested the D.F.O to ensure the deletion of the names and to liaise with G.C.B Akatsi to transfer the amount of ¢21,956,668 and any subsequent payments to government chest.


DISTRICT FINANCE OFFICE- KRACHI WEST

Collections account balance not transferred-¢7.2million

269. A review of the Collections Account of the District Treasury disclosed that total revenue of ¢3,367,000 that had accumulated in the account as at 31 December 2005 and additional total collections of ¢3,839,000 made during the 2006 fiscal year had all been retained in the account being held by the Ghana Commercial Bank at Kete-Krachi.

270. The failure of the DFO to instruct the bank to transfer the total amount of ¢7,206,000 was the cause of the situation. We advised the DFO to be proactive and ensure that the amount is transferred into the Consolidated Fund.

Non-maintenance of records on unclaimed salaries

271. We noted that the Krachi West District Treasury does not maintain records on unclaimed salaries and wages for both the Krachi West and Krachi East Districts which it controls.

272. The DFO also failed to obtain monthly bank statements in respect of the CAG's salaries and wages suspense account being maintained at the G.C.B. The lapse is contrary to good accounting practice which requires that people operating bank accounts should arrange for bank statements to be supplied at regular intervals.

273. Consequently, total unclaimed salaries and wages in both districts which had been lodged in the account as at 31 December 2006 could not be determined. We urged the DFO to obtain the bank statements and ensure that all unclaimed salaries being held in the account are transferred.


DISTRICT FINANCE OFFICE - SOUTH DAYI

Outstanding receipted duplicate treasury payment vouchers-¢43.1 million

274. Three organisations failed to return to the District Finance Office 11 receipted copies of payment vouchers covering ¢43,137,312 as evidence of disbursement of the amounts involved.

275. The DFO attributed the organisations' failure to return the receipted copies to the reluctance on the part of the managements of the affected organisations to comply with his directives to all MDAs to promptly return duplicate vouchers.

276. In the absence of the receipted duplicate vouchers, we could not ascertain that the payments were made to the payees named on the vouchers. We recommended that the DFO should retrieve the vouchers to confirm the disbursement.

DISTRICT FINANCE OFFICE – KETA

Suspense account balance not transferred-¢392.2 million

277. A review of the Suspense Account of the District Treasury disclosed that unclaimed salaries and wages totalling ¢392,157,346 lodged into the account was withheld by the Anlo Rural Bank, Anloga as at the end of 2006. The situation was as a result of the failure of the DFO to obtain monthly bank statements to enable him monitor the operation of the account.

278. We urged the DFO to put pressure on the management of the bank to transfer the amount into the Consolidated Fund. Additionally, we advised that he should collect regular bank statements from the bank and ensure that moneys accumulating in the account are promptly transferred.


CONTROLLER AND ACCOUNTANT GENERAL'S DEPARTMENT

PENSION COMPUTATION SECTION

Discrepancies in pensions computation - ¢594.1 million

279. Out of total claims of ¢5,266,217,018 the Pensions Computation Section submitted in respect of pensioners’ gratuity payments during the year under review, this Office approved a total amount of ¢4,672,112,307, resulting in savings of ¢594,104,711. This result exceeded last year’s savings of ¢449,242,009 by ¢144,862,702 or 32.2%. The discrepancies detected in the submissions were noted as follows:

wrong pension rate;

wrong final pensionable emolument;

non-deduction of indebtedness to Government;

leave without pay and break in service period not taking into account; and

wrong service period.

280. To eliminate the above errors in pension computation, we reiterated our previous recommendations that:

Heads of MDAs should ensure that records in applicants’ personal files tally with responses provided in the Pension Form 1 before signing them; and

both the Pension Computation Section and the Pension Payments Section should painstakingly satisfy themselves of the correctness of information provided on pensioners before using it for the computation.


CONTROLLER AND ACCOUNTANT GENERAL'S DEPARTMENT- BOLGATANGA


281. The Regional Treasury Office realised revenue of ¢66,590,000 between September 2004 and June 2006 at the Staff Development Centre, Bolgatanga. Out of this internally generated income, ¢47,372,000 was lodged into the Department's bank account, while the difference of ¢19,236,000 was misappropriated by two Accountants of the Departments, Messrs Emmanuel Lambon (¢17,368,000) and Issah Marijah (¢1,895,000).

282. Lack of management supervision and control, ineffective internal auditing and failure to reconcile the accounts resulted in the anomaly.

283. We recommended recovery of the amount from the two officers, in addition to the institution of disciplinary action against them.


284. A former Storekeeper of the Department, Ms Felicia Adangabe, between January 2005 and June 2006, sold 140 General Counterfoil Receipt (GCR) books at ¢30,625 per book, but failed to account for the proceeds amounting to ¢4,287,500.

285. The Storekeeper was said to have sold the value books on credit but failed to maintain records on the transactions. She also failed to provide the names of those who bought the GCRs on credit. Ineffective supervision of the Storekeeper by the Regional Treasury officer resulted in the misappropriation.

286. We recommended to management to recover the misappropriated amount from the Storekeeper. Management should also sstreamline internal controls to ensure transparency and


accountability. A stop should be put to credit sales of value books forthwith.

DISTRICT TREASURY - ODUMASE KROBO

Embezzlement of funds-¢22.6 million

287. Our audit of the accounts of the Treasury office revealed that Mr. George Kumi Acheampong, an Accounts Officer embezzled total funds of ¢22,600,000 by falsifying a payment voucher and forging the signatures of a Headmaster and his Accountant.288. The fraud occurred because of poor supervisory control by the District Finance Officer. We recommended to management to report the matter to the Police for prosecution and recovery of the amount to chest.

PAYROLL

Excess subvention for personnel emolument - ¢7.93 billion

289. Audits conducted by our Payroll Audit Unit disclosed that nine subvented organisations requested for and received excess subvention in respect of personnel emolument totalling .¢7,929,860,628 from MOFEP. The excess subventions were due to the bloating of personnel expenditure figures in monthly returns submitted to both the CAGD and MOFEP by the organisations.

290. We recommended a cessation of the illegal practice of bloating expenditure figures by the organisations involved and also advised MOFEP to deduct the excess subvention of ¢7.93 billion from subsequent releases to the nine organisations.

Personnel emolument savings - ¢6.06 billion

291. The Unit’s pre-audit of salary arrears vouchers submitted by 50 subvented organisations during the year resulted in savings of ¢6,064,725,993.52 to Government. Thus, out of ¢142,692,076,832.40 requested, ¢136,627,350,838.88 was certified by the Unit to be


released to the organisations by MOFEP. Hence the savings. The excess request was due to the following:

Inclusion of names of separated staff

Placement of staff on incorrect salary scales

Arithmetical errors and

Inclusion of names of newly recruited staff yet to assume duty.

292. We advised management to ensure that schedule officers are painstaking and exclude the above factors in the preparation of salary arrears.

REGIONAL ECONOMIC PLANNING OFFICE – TAMALE

Purchases not accounted for -¢68.0 million

293. Our audit of the expenditure records disclosed that purchases of store items totalling ¢68,122,000 were not documented in the store records contrary to Section 0315 of the Store Regulations (1984). The Regulation requires that stores received shall be taken on charge in the store ledgers and Store Receipt Vouchers endorsed to the effect that goods have been received.

294. Management argued that the office did not have a Storekeeper to maintain the relevant store records.

295. In the absence of the receipt and disposal records on the alleged purchases, we were unable to confirm the delivery and disposal of the items. We urged management to provide the necessary records to justify the expenditure or the amount involved be recovered from the authorizing officer.


STATISTICAL SERVICE – SEKONDI

Unsupported payments-¢22.0 million

296. We noted that an amount of ¢22,035,419 was allegedly paid as per diem allowances to participants during an International Comparison Programme (ICP) Project, by the Statistical Service, Sekondi.

297. On the contrary, the relevant particulars of expenditure and evidence of receipt by the payees were not available for audit scrutiny because, management alleged, the relevant documents were at the Headquarters. We could not, therefore, confirm the authenticity of the payments.

298. We requested management to support the payment vouchers with details of expenditure statements and receipts failure of which the amount involved should be recovered to chest.

Fuel purchases not accounted for-¢22.6 million

299. Fuel amounting to ¢22,634,500 noted to have been purchased between January 2005 and June 2006 was not accounted for in any of the vehicle log books of the two vehicles used by the Regional Office of the Service.

300. We could not, therefore, confirm the genuineness or otherwise of this purported expenditure. We recommended to management to provide evidence on the usage of the alleged fuel purchases or the amount of ¢22,634,500 should be recovered to chest.


MINISTRY OF EDUCATION AND SPORTS

MINISTRY OF EDUCATION - HEADQUARTERS

Excess printing of 2004 Best Teacher Award Certificates - ¢197.8 million

301. Our audit of records on the 2004 National Best Teacher Award Scheme disclosed that the Ministry printed 19781 certificates valued at ¢197,810,000 in excess of the immediate needs of the award ceremonies.

302. The excess printing by the Ministry contravened the provisions of Regulation 2(c) of FAR 2004, L.I 1802 which requires heads of departments to secure the efficient and effective use of appropriations under departmental control. The situation was as a result of the failure of the National Co-ordinator of the scheme to exercise caution and due diligence in assessing the quantity of certificates to be printed. Lack of proper procedures to monitor the procurement process also accounted for the excess printing which resulted in the loss of ¢197,810,000 to the Ministry.

303. We recommended to management to institute procedures to forestall such avoidable losses. The National Co-ordinator should also be reprimanded for his mis-judgement which occasioned the loss. 304. Management responded that it envisaged future expansion in the award categories and therefore took advantage of the availability of funds to print extra quantities of certificates for the expansion. It has however taken measures to reconstitute the Award Planning Committee and streamline its operations.

Procurement without Entity Tender Committee approval - ¢4.3 billion

305. The Chief Director and a former Director, Finance/Administration of the Ministry between April 2004 and December 2004 awarded contracts totalling ¢4,300,000,000 to the exclusion of the Tender Committee.


306. The action contravened the provisions of Sections 15(3), 17(1) and (2) of the Public Procurement Act, 2003 which requires procurements exceeding approved threshholds to be referred to the Entity Tender Committee or the Public Procurement Board.

307. We recommended that in compliance with Sections 38 and 40 of the Public Procurement Act, 2003 (Act 663), management should obtain retrospective approval from the Public Procurement Board for the procurements it authorized and approved which were above its threshhold.

308. Management responded that the Ministry's procurement activities for the period were not chanelled through a Tender Committee as required by the Public Procurement Act, 2003 because the Ministry's Entity Tender Committee and Review Tender Board were not inaugurated until 31 March 2005. Although the Ministry's procurement activities did not involve a Tender Committee, it ensured that best value was obtained for public funds by obtaining and comparing quotations from three vendors before procurement.

SPORTS DIVISION

Failure to refund advances –(US$346,000)

309. Our review of the Sports Development Fund Account revealed that the Sports Division of the Ministry gave a loan of US$8,000 (¢75.2 million) to King Faisal Football Club in March 2005. The loan was to enable the club travel to Dakar, Senegal with the promise to repay as soon as it reached the “money zone” in the competition or received its international player transfer fees the Confederation of African Football (CAF).

310. Although the club reached the 'money zone' in the competition, it did not honour its undertaking.


311. We also noted that MOFEP released US$338,000 (¢3,086,187,740) to the Ghana Football Association (GFA) to pay for the emoluments of the technical team of the National Team, the Black Stars. The amount was to be recovered from the training grant of US$8.5 million to be advanced to Ghana by Federation of International Football Association (FIFA) on qualification to play in the World Cup. We noted that as at 31 December 2005 the advance had not been refunded by the GFA.

312. These advances remained outstanding because management has not vigorously pursued their recovery. We recommended that management should purse recovery of the loan and advances from King Faisal Football club and the GFA.

313. Management responded that it had written to the GFA to recover the loan of US$8,000 from King Faisal Football Club. It however conceded that the rehabilitation of the existing stadias had affected the financial position of clubs in the country. Notwithstanding, management was actively pursuing the matter with the club as well as the GFA in respect of the recovery of the US$338,000 paid to the Black Stars, Head Coach and his two assistants.

GREATER ACCRA REGIONAL EDUCATION OFFICE

Contract payment not supported with payment certificate - ¢12.4 million

314. The Ga East District Education Office facilitated the payment of an amount of ¢12,413,000 representing 33.3% of a contract sum of ¢36,635,800 to Messrs Fajj Limited. The District office endorsed the payment without reference to relevant payment certificate from an Architect indicating the percentage of work done. The project was eventually abandoned at the foundation level. 315. Failure by management to constitute a monitoring team to monitor and assess work done and issue progress reports resulted in the payment without prior certification of work done.


316. We recommended that work done should be revalued by qualified personnel to determine actual work done and the Contractor made to refund any overpayment made to him.

317. Management responded that the amount of ¢12,413,000 was paid to Messrs Fajj Limited as part payment of cost of work done. Unfortunately, work was suspended as a result of harassment by land guards and theft of materials at the project site. The case is under police investigation.

Payment for contract not executed - ¢25.1 million

318. The Regional Directorate paid ¢25,120,000 to the Ga West District Assembly from the stadium levy account to eject squatters and demolish illegal structures at a proposed school project site at West Africa Secondary School, Accra. The demolition has however not taken place as yet due to some operational problems.

319. We urged management to ensure that the project was carried out or the amount should be recovered from the District Assembly. Management responded that its Internal Audit Unit has been mandated to pursue the matter.

Non-payment of capitation fees - ¢51.0 million

320. A review of the accounts of the Regional Education Directorate disclosed that 24 Senior Secondary Schools defaulted in the payment of their contribution of capitation fees totalling ¢51,407,500 to the Regional Cultural Unit. The fees were to be used to facilitate the promotion of culture and tradition in schools. Management’s failure to pressurize the defaulting schools to pay their outstanding fees resulted in the unpaid amount.

321. Failure of schools to pay their share of the capitation fees to the Regional Cultural Unit adversely affected the organization of cultural festivals to promote culture and tradition in schools.


322. We recommended that management should pursue collection of the amount from the schools and ensure that schools make regular and prompt payments of the fees.

Direct disbursement from revenue - ¢87.4 million

323. Regulation 22 of FAR, 2004 requires that “all public moneys collected shall be paid in gross into the public fund accounts and no disbursement shall be made from the moneys. We noted on the contrary that gate proceeds from Greater Accra Schools Sports Association (GASSA) games totalling ¢122,000,000 were not banked in tact. Out of the proceeds of ¢122,000,000 made during the period under review, only ¢34,600,000 was banked whilst ¢87,400,000 was disbursed on expenditures relating to competitions organised.

324. Management explained that inadequate funding of its activities by Government resulted in the direct disbursement from revenue generated. Management’s apathy in ensuring that gate proceeds were banked in full led to the arbitrary use of the gate proceeds.

325. We recommended and management accepted that future gate proceeds should be banked in full to forestall unauthorized expenditures from revenue collected.

NATIONAL CO-ORDINATING COMMITTEE FOR TECHNICAL AND VOCATIONAL EDUCATION AND

TRAINING (NACVET)

District disbursement from revenue - ¢35 million

326. Out of total revenue of ¢804,770,449 collected by the Committee during 2005, ¢35,000,000 was directly disbursed to conduct the 2005 examinations. Management’s action contravened Regulation 22 of FAR, which requires that all public monies collected shall be paid in gross into the public accounts and no disbursement shall be made from the monies.


327. Management explained that part of revenue generated was occasionally used to meet emergency needs due to inadequate GOG funding.

328. We recommended that all revenue should be banked in gross as required by the Regulation. Management explained in response that NACVET Regional Co-ordinators were not on NACVET payroll and had to be paid 5% commission from revenue collected hence the disbursement of the revenue before banking. The practice has however been stopped with the increase of office imprest to accommodate such expenses.

329. According to management, deductions could not be effected from the salaries because they were not on NACVET payroll.

330. Management accepted our recommendation and requested staff to make monthly payments.

Unacquitted payments - ¢14.2 million

331. We observed that payment vouchers were not raised for payments made from the Special Account totalling ¢14,187,386 contrary to Regulation 39 (2c) of FAR 2004. Cheque numbers were rather used in making entries in the cash book.

332. The lapse arose due to lack of supervision of the work of the former Accountant. We recommended that management should trace the former Accountant to either account for the ¢14,187,386 or refund the amount into the Special Account.

333. Management directed the Accounts officer to trace the payment vouchers and other related documents for our inspection.


Unauthorised use of revenue from translations

334. Contrary to Regulations 1 & 2 of FAR 2004, we noted that 40% of revenue from translations was used to pay honoraria to translators and the remaining 60% for running the office without MOFEP authority.

335. According to management translations were normally done outside official working hours to enable the Bureau to meet deadlines. The use of the revenue was therefore to motivate the staff.

336. Much as we appreciate that staff must be motivated, we were of the view that the use of internally generated fund (IGF) must be supported by authority from MOFEP.

337. We recommended that management should seek authority from MOFEP to use the IGF to motivate the staff and for running the office.

338. Management responded that the necessary action would be taken to seek proper authorisation for the use of the IGF.

Bureau’s indebted to printers - ¢181.5 million

339. An examination of records of publications disclosed that the Bureau owed ten printers ¢181,521,750, some dating as far back as 1999.

340. Management could not disclose how the debt occurred and stated that it inherited the debt from the previous administration.

341. We noted that there was no provision in the approved Annual Estimates of the Bureau for printing of publications, hence the difficulty in sourcing funds to pay printers. To pay printers management pays proceeds from sale of publications into Government non-tax revenue account before applying for funds.


342. We recommended that management should make provision in its budget to pay such debts. According to management this indebtedness has been captured in the 2007 budget and hopes funds would be made available for settlement.

Indebtedness to the Bureau - ¢12.4 million

343. We observed that staff and institutions owed the Bureau ¢12,456,250 in respect of publications sold to them on credit as commission sellers; some dating as far back as 2004.

344. The debtors figure rose because they failed to settle their debts despite persistent demands from management.

345. We recommended that management should employ stringent measures to retrieve the amount.

Indebtedness to the Bureau - ¢179.2 million

346. According to the Bureau's policies on translations, 50% of the total cost of the translation should be paid by the client upfront and the rest paid on completion. Contrary to this policy, we observed that four (4) organizations owed the Bureau ¢179,231,500. This condition arose because the organisations did not make the 50% upfront payment and others did not pay the balance after completion.

347. We recommended that management should adopt a more vigorous approach to collect the outstanding debts and enforce strictly the 50% upfront payment policy. Management agreed to pressurize the organisations to settle their debts.

Unearned salaries - ¢5.2 million 348. Our examination of the mechanized payroll revealed that contrary to Regulation 297(1c and 1f) two employees who either died or resigned were paid unearned salaries totalling ¢5,283,796. In our


view, the payments were caused by the failure of the Director to check the payment vouchers. The absence of an internal auditor to examine the payment vouchers to ensure that delays in deleting names of separated staff so that unearned salaries do not occur was also a factor. Management however attributed the delays to failure of the Controller and Accountant General's Department to act promptly on deletions.

349. We recommended and management agreed to check the mechanized payment vouchers to ensure that separated staff are not paid. Management will also follow up to see that the deletions were effected.

Loss of publications - ¢337.8 million

350. A 25% sample of publications stock balances in the store ledger compared with balances in handing over sheets revealed that 54,207 books in Dagbani, Dagaare, Gonja and Asante valued at ¢337,780,000 were missing.

351. We also noted that contrary to Stores Regulation 1803, a Discrepancy Certificate was not prepared during the handing over by the storekeeper. This situation arose because of lack of supervision over the activities of the storekeeper who did not submit regular or periodic returns on the stock position.

352. We recommended that management should ensure that there is regular stock checks at the stores. The former storekeeper should be invited to account for the missing publications and issue a Discrepancy Certificate.

353. All efforts by management to get the former storekeeper to account for the differences have proved futile. Management is still looking for him.


ACCRA METROPOLITAN EDUCATION OFFICE

Short payment of canteen earnings - ¢10.0 million

354. We observed that out of a total canteen earnings of ¢18,547,500 the matron, Miss Josephine Addo, accounted for ¢8,199,000 to the Accountant because the Accountant and the internal auditor failed to check her records periodically. This resulted in a short payment of ¢10,348,000.

355. We recommended that management should recover the short payment of ¢10,348,000 from the matron and ensure that the Accountant and Internal Auditor conduct regular checks of her records.

356. Management responded that the Directorate has instituted regular checks at the canteen. An account officer has been directed to collect and account for her daily sales. Miss Josephine Addo is yet to refund the amount.

GHANA EDUCATION SERVICE (GES) HEADQUARTERS

Loss incurred through late collection of tractor parts - ¢374.6 million

357. A review of GES Headquarters investment expenditure for 2005 revealed that the GES incurred a total loss of ¢374,638,497. Management’s delay in taking delivery of 881 pieces of URSUS 2812 and URSUS 912 tractor parts valued at ¢125,737,413 imported by Messrs Apricon Motors Limited, Accra and judgement costs of ¢248,901,085 brought against the GES by an Accra High Court resulted in this loss.

358. The GES did not initially take delivery of the parts when they arrived at the Tema Harbour and no reason was given for the delays. The tractor parts have become obsolete as the tractors are no longer in use.


359. We recommended that management should institute an enquiryinto the whole transaction to establish responsibility for the loss, sanction the officers involved and seek authority to dispose of the parts.

360. Management explained that the contract dates back to 1988 and no single person connected with the contract for the supply of the parts is in office. The current management has pursued the case for it to be concluded.

361. However, management was urged to seek authority for the disposal of the spare parts stored in a container at the GES Headquarters.

Outstanding loans - ¢21.1 million

362. A review of payment vouchers for payments from the Director-General's Account disclosed that loans to staff totalling ¢21,100,000 were still outstanding contrary to Regulation 110 of FAR 2004. The loans have not been recovered due to failure of management to enforce strictly the terms of the loan agreement. We recommended that management should recover the outstanding loans and strictly enforce loan terms to ensure timely recovery of loans granted to staff.

363. Management had recovered ¢7,300,000 leaving ¢13,800,000 still outstanding.

Advances to institutions not recovered - ¢1.14 billion

364. Contrary to Regulation 110 of FAR 2004, we observed that three payments from the Education Sector Support Programme Account and Director General's Account in respect of advances to three institutions under the GES and the Chief Director, MOESS amounting to ¢1,373,358,377 had not been recovered even though the advances were recoverable.


365. The beneficiaries failed to reimburse the GES because the accountant and management did not ensure that the institutions refunded the advances. We also noted that the failure of the GES Internal Audit Unit to bring this to the attention of its management resulted in these amounts being outstanding.

366. The lapses resulted in an over-statement of expenditure of the ESSP and Director General's Account.

367. We recommended that management should recover the total amount of ¢1,373,358,377 from the defaulting institutions or open Advances Account in their names and debit them with the outstanding amounts.

368. Management responded that an amount of ¢1,142,108,377 in the name of the Chief Director, MOESS is the only amount outstanding and the Chief Director has been reminded accordingly.

369. We urged management to recover the amount without further delay and inform us of particulars of refund for verification.

VAT/NHIS invoices - ¢26.7 million

370. We observed from five payment vouchers in respect of payments from the Education Sector Support Programme (ESSP) Account and the Director-General's Account that five VAT Registered Supplier/Companies who were paid ¢26,706,215 as 15% VAT/NHIS tax and levies did not issue VAT invoices contrary to Section 19(1) of the VAT Act, 1998. Lack of awareness of the law was attributed to the lapse.

371. We recommended that management should ensure that payment of VAT/NHIS is made only on the presentation of VAT/NHIS invoices by all VAT/NHIS registered supplier/companies.

372. Management noted our recommendation for compliance.


Payment to third parties without written authorisation from payees - ¢22.7 million

373. Regulation 43 of the FAR 2004 requires that “payment shall be made to the person or persons named on the payment vouchers or to the duly authorised representative”.

374. Contrary to Regulation 43, we observed that 12 persons were paid a total of ¢22,657,400.00 from the Director-General's Account in respect of transportation and per diem allowances through their representatives without written authorisations. Lack of awareness of the law was attributed to the Accounting officers who allowed the representatives to collect the allowances without written authorisations.

375. We requested management to ensure that written authorisations are presented before payments are made to representatives. The Accounting Officers should also update themselves on the law.

376. Management noted our recommendation for compliance.

Purchases not routed through stores - ¢202.2 million

377. Our review of payments from the Education Sector Support Programme Account and the Director General's Account revealed that contrary to Regulation 0529 of Stores Regulation, 1984 purchases of stores totalling ¢202,168,050 were not covered by Stores Received Advice, indicating that the purchases were not routed through stores. It was alleged the items were sent directly to the user departments, divisions or units for consumption.

378. We recommended that all purchases should be routed through the stores to ensure that they are recorded in the stores ledgers to discourage diversions or pilferage. Management stated that stores procedure in respect of purchases was being regularised.


TECHNICAL EXAMS UNIT

Non-payment of examination fees - ¢631.9 million

379. Contrary to Section 2 (iv) of the Financial Accounting Instructions (FAI) of the GES which requires a head of an institutionto see that debts owed to the institution are promptly collected, we observed that twenty-eight (28) educational institutions owed the Technical Examinations Unit of the GES examination fees totalling ¢631,924,200 as at 31st December 2006. Some of those debts date as far back as 2003.

380. The large debtors figure including ¢494,233,504 by institutions from the Northern Region alone resulted from failure of management to ensure that the institutions settle their debts promptly.

381. We advised management to introduce stiffer measures, including withholding results of the institutions until payments have been made. Management accepted our recommendation.

NON-FORMAL EDUCATION DIVISION (NFED)

Unremitted withholding tax - ¢218.9 million

382. Contrary to Section 87(i) of the Internal Revenue Act, 2000 (Act 592) which requires organisations that deduct 5% tax on goods and services to pay the amount deducted to the Internal Revenue Service (IRS) management of Non-Formal Education Division failed to remit withholding tax deductions of ¢218,872,621.82 to IRS due to the failure of the schedule officers to remit the deductions.

383. We advised management to ensure early remittance of the amount. Management should also ensure that taxes deducted are remitted and not misapplied. Management accepted the recommendation and assured payment to the Commissioner as soon as practicable.


GHANA EDUCATION SERVICE – OBUASI

Outstanding imprest - ¢3.5 million

384. Management released an amount of ¢48,745,000 as advance to Ms. Grace Ampong for Science Technololgy and Mathematics Education (STME) programme in March 2006. Out of this amount, ¢3,462,000.00 had not been accounted for contrary to Section 283 (b) of the Financial Administration Regulation 2004 (LI 1802) which mandates the imprest holder to fully retire the imprest by the date specified in the approval to operate the imprest.

385. Management should ensure that the remaining amount is fully accounted for or retrieved from the imprest holder.

GHANA EDUCATION SERVICE – FOMENA

Failure to retire imprest - ¢23.5 million

386. Contrary to Section 283 (b) of the Financial Administration Regulations, 2004 (LI 1802) which requires payments to be fully retired by dates specified within the approval to operate the imprest, a total amount of ¢23,500,000 released to Mr. A.S. Awuni, Sports Co-ordinator for sporting activities was not accounted for.

387. Since his action could lead to misapplication of funds, we urged management to ensure that official receipts are attached to the payment to fully acquit it or the amount of ¢23,500,000 refunded by Mr. A. S. Awuni.

Payment of illegal salaries to separated staff - ¢21.4 million

388. Section 297 (e.f.) of the Financial Administration Regulation, 2004 (LI 1802) states that "a head of department shall cause the immediate stoppage of payment of salary to a public servant when that public servant has resigned or died.


389. Contrary to this regulation, management failed to immediately stop the salaries of three teachers who died or vacated their posts between December 2005 and June 2006. Illegal salaries totalling ¢21,407,769 was thus paid into their bank accounts.

390. Management was urged to retrieve the amount for payment into the Consolidated Fund and Treasury receipts obtained for verification.

GHANA EDUCATION SERVICE-EJISU/ASHANTI

Untransferred EdSAC fees-¢2.7 million

391. EdSAC fees lodged with the various commercial banks are to be transferred promptly to the EdSAC Account of the Ghana Education Service Headquarters, Accra.

392. We noted on the contrary that EdSAC fees totalling ¢2,714,600 lodged with the Ghana Commercial Bank, Ejisu branch since November 2005 had not been transferred into the EdSAC Account in Accra. As a result, the Ghana Education Service was denied the use of funds to replenish its textbooks stock. The failure to ensure prompt transfers could be blamed on the Accountant's inability to monitor the EdSAC fees Account with the Ghana Commercial Bank, Ejisu Branch.

393. We recommended that management should ensure the transfer of the amount immediately.

Rent defaulters-¢7.4 million

394. Our review of the rent register disclosed that 16 Headteachers occupying bungalows belonging to the Service owed rent to the tune of ¢7,413,000. The arrears in rent payments ranged between two years and four years.


395. We observed that the officer in-charge of the monthly rent collection did not pursue and ensure prompt collection of the rent income from the tenants on due dates.

396. We advised management to ensure prompt monthly collection of rent from tenants and also ensure the recovery of the arrears totalling ¢7,413,000 from the defaulters without further delay.

GHANA EDUCATION SERVICE – JACOBU

Illegal printing of receipt books

397. Controller and Accountant-General's Circular No. Cir/G.2/2006 dated 28 March 2006 forbids all Ministries, Government agencies, and departments from ordering value books without addressing their requests to the Controller and Accountant-General. Contrary to this directive, the District Education Office ordered the printing of 13 unofficial receipt books from Sky Printing Press, Kumasi, and used the receipts books to receipt releases of Government grants totalling ¢911,780,311.

398. Management explained that since second cycle institutions were allowed to print their own school receipt books they thought the Education Office could also print their own receipt books to receipt government grants. The attention of management was drawn to the above circular and the consequences of non-compliance.

399. We recommended the use of General Counterfoil receipt books provided by Controller and Accountant-General to receipt Government grants.

Failure to submit monthly and quarterly reports on capitation grant - ¢452.9 million

400. The Ghana Education Service guidelines for the distribution and utilisation of the capitation grants to basic schools states in paragraph 12.0 that monthly and quarterly reports describing


activities completed and underway during the period together with a statement of expenditure for these activities for the period are to be sent to the District Education Offices.

401. Contrary to the guidelines, 91 basic schools failed to furnish the District Education Office with the above information on grants totalling ¢452,944,231.

402. We drew management's attention to the importance of these control reports which provide first hand information as to how the grants are being utilised in the various basic schools.

403. We recommended compliance with this requirement.

Failure to acknowledge receipt of capitation grant totalling-¢393.9 million

404. Financial Administration Regulations, 2004 (LI 1802) Section 15 (1) mandates public officers to issue official receipts for all public and trust monies collected. Contrary to this regulation, no official receipts were issued in acknowledgement of a total capitation grant of ¢393,877,021 collected by basic schools.

405. This was largely due to the lack of knowledge of financial regulations on the part of the various headteachers.

406. To ascertain whether the amounts paid into the school's accounts have been received in full, we urged management to direct the various basic schools to acknowledge all receipts of capitation grant to the District Office as a measure of accounting for such monies.

GHANA EDUCATION SERVICE - BEKWAI

Direct disbursement from revenue collected - ¢90.4 million

407. Financial Administration Regulations, 2004 (LI 1802) Section 18 enjoins heads of Departments to among other things,


ensure that collections are promptly and fully lodged in the bank and payments made by cheques as and when the need arises. Section 22 (1) of the same regulation further requires that monies collected should be paid in gross to the bank without any disbursement.

408. Contrary to these regulations, we observed that between January 2004 and November 2005, ¢807,024,939 out of the total capitation grants of ¢897,410,339 collected was banked. The difference of ¢90,385,500 was disbursed directly from collections.

409. The situation arose because management did not adhere to rules and regulations governing public expenditure in this regard.

410. We advised management to desist from such irregular spending in future since the practice could be abused by unscrupulous officials through temporary borrowing and other cash manipulations.

Indebtedness - ¢21.6 million

411. We noted that 12 incentive packages of motor-bikes costing ¢52,200,000 which were sold to some officers at the District Directorate, some dating as far back as 1999, had not been paid for. According to records provided, the term of payment was by instalment through their various bankers into the incentive package account of Ghana Commercial Bank, Bekwai Ashanti.

412. However, as at the time of compiling this report, only ¢30,597,000 had been paid leaving a difference of ¢21,603,000 unsettled.

413. We identified inertia on the part of management to be the cause of the default in payment which could result in the loss of the amount to Government.

414. Management was advised to act swiftly by pressurizing the defaulters for payment.


Award of contracts from the GET Fund (MPs Share) - ¢370.0 million

415. Standard supervisory practice requires material inspection, fabrication, measurement of work completed according to technical specification, documentation of completed work at each stage and final inspection and acceptance of completed work as some of the basic tenets of the Public Procurement Act, 2003 (Act 663).

416. Our review of the accounts disclosed that for the period November 2003 to December 2005 contracts valued ¢370,000,000 were executed without adherence to the above requirements and also not in conformity with Part IV Sections 35 to 43 of the Public Procurement Act 2003 (Act 663).

417. The two MPs for Bosome-Freho and Bekwai hand picked the contractor, wrote memos to the District Director to pay a total amount of ¢277,500,000 which was 75% of the total contract sum to the contractors even before the commencement of work. Furthermore, the two Honourable Members of Parliament wrote to the District Director that works had been completed and that the final payment be made without any progress certificate from the District Engineer, PWD who was supposed to be the consultant on the projects.

418. In our view the actions of the two MPs did not comply with the tenets of the Public Procurement Act, 2003 (Act 663) which requires the above rules and procedures to be followed to ensure transparency and value for money.

419. We recommended that the rules and procedures governing contract management as stipulated by the Public Procurement Act 2003 (Act 663) should always serve as a guide in the award of contracts. We further urged management to ensure that the transactions on the contracts were normalised.


Failure to establish Audit Report Implementation Committee

420. Section 30 of the Ghana Audit Service Act 2000 (Act 584) enjoins institutions or organisations audited by the Auditor-General to establish an Audit Report Implementation Committee (ARIC) to see to the implementation of recommendations made in Audit reports as well as directives of Parliament to address lapses and irregularities in Government establishments.

421. Management's inaction towards the setting up of this committee has resulted in the glossing over of important recommendations for remedial actions. 422. We recommended the establishment of this committee without further delay.

GHANA EDUCATION SERVICE - OFFINSO

Unearned salary - ¢30.0 million

423. Financial Administration Regulation 2004 (LI 1802) Section 297(l) states that "a head of department shall cause the immediate stoppage of payment of salary to a public servant when that public servant has resigned, retired or died.

424. On the contrary, we observed that Mr. Moses Agyemang, a teacher at Kontoma/Odumase Primary School who left for further studies in September 2003 without any approval from Ghana Education Service, collected unearned salary from September 2003 to May 2006 amounting to ¢29,834,189 when he was not at post.

425. Weak supervision and monitoring was mainly the cause of this lapse which has resulted in the payment of the unearned salary.

426. We recommended the recovery of the amount of ¢29,834,189 from Mr. Moses Agyemang.


GHANA EDUCATION SERVICE – KONONGO


427. A review of the mechanised salary vouchers of theDistrict Office revealed that unearned salary totalling ¢25,749,250 was paid to six teachers.

428. Our investigations disclosed that though they were paid from October 2005 to June 2006, the District Directorate did not authorise them to teach till July 2006, thus they did not earn the salary for the period.

429. Three of the teachers had refunded their unearned salaries leaving a balance of ¢10,490,249 to be refunded by the other three teachers.

430. Management indicated that they had written to the banks of the affected staff to place an embargo on their salaries to encourage them to pay the unearned salaries.

431. We recommended that management should pursue the recovery of the outstanding unearned salaries.

GHANA EDUCATION SERVICE - MAMPONTENG

Unpresented payment vouchers-¢16.2 million

432. Sound financial administration practices require that payment vouchers should be preserved for a period not less than three calendar years before, during and after audit. Besides this requirement, their disposal can only be effected with the prior approval of a Board of Survey.

433. However, our audit revealed that eight (8) payment vouchers totalling ¢16,202,000 could not be presented for audit. As a result, we could not verify the transactions.


434. The District Accountant explained that the vouchers were in his custody but he could not trace them.

435. We advised management to ensure that the payment vouchers amounting to ¢16,202,000 are presented for our verification or the amount be recovered from the District Accountant.

GHANA EDUCATION SERVICE - TECHIMAN

Unearned salaries - ¢16.9 million

436. The delay in deletion of the names of two separated staff of the Directorate from the mechanised vouchers resulted in the payment of unearned salaries totalling ¢16,960,600 to the staff. We requested management to ensure that the unearned salaries were recovered to chest.

Outstanding advances-¢49.8 million

437. The Ministry of Education and Sports introduced Deprived Area Incentive Package (DAIP) for teachers to promote rural teaching.

438. Our review disclosed that management loaned ¢41,743,600 from the DAIP Account and ¢8,100,000 from the GoG accounts to support the operations of the office.

439. We urged management to pursue recovery of the ¢49,843,600.

440. In response management attributed the condition to inadequate funding from Government to run the office and that measures have been taken to recover the loans.


DISTRICT EDUCATION SERVICE-ASUTIFI

Unacquitted payment vouchers-¢98.8 million

441. Fourteen paid vouchers valued at ¢98,858,000 were not supported by receipts, invoices, and statements to authenticate them, contrary to (part X Section 262 of the FAR 2004. Consequently we could not determine the genuineness of the transactions which could lead to double payment and fraudulent claims.

442. We advised management to comply with the regulation. Additionally we recommended that management should acquit the vouchers failing which the amount of ¢98,858,000 should be recovered from the head of accounts and the authorising officer.

Arrears of sale of bicycles - ¢10.6 million

443. The MOESS sold 173 bicycles to teachers in deprived areas in the Asutifi District through the District Directorate at ¢200,000 each in September 2002 and 2003 to be paid in monthly instalments.

444. Our audit disclosed that 102 teachers still owed a total sum of ¢10,595,000. We advised management to recover the ¢10,595,000 to chest without delay.

MUNICIPAL EDUCATION OFFICE - SUNYANI

Unreceipted payment vouchers - ¢306.9 million

445. Our audit disclosed that three payments totalling ¢306,946,870 were made to two suppliers and UNICEF, Accra, without obtaining official receipts. We could therefore not ascertain whether the payments went to the intended recipients and for purposes stated.

446. We urged management to ensure that official receipts were obtained to authenticate the payments failing which the ¢306,946,870 should be recovered from the official who made the payments.


Failure to obtain VAT invoices - ¢12.3 million 447. The Accountant of the Municipal Education Office in Sunyani failed to obtain VAT invoices to support VAT charges of ¢12,371,690 out of ¢98,973,521 paid by the Education Office to suppliers.

448. We therefore recommended that VAT invoices should beobtained to cover the ¢12,371,690 to ensure that the amount had been accounted for to the VAT Service.

Short payment into EdSAC account - ¢4.1 million 449. Our review of the Depot (Logistics) account disclosed that between 8 October 2002 and 6 September 2003 a total amount of ¢121,504,000 was paid to the Accounts officer by the Depot keeper in respect of sales of exercise books.

450. However, the Accounts Section paid only ¢113,944,000 of the amount into the EdSAC bank account with the Ghana Commercial Bank, Sunyani, resulting in a short payment of ¢7,551,000.

451. As at March 2007, ¢3.5 million had been paid into the account leaving a balance of ¢4,057,000. We advised management to remit the amount to EdSAC.

DISTRICT EDUCATION OFFICE – GOASOOutstanding amount - ¢4.8 million 452. Mr. Mark Donkor, a former District Physical Education Organiser of the District Education Office failed to account for ¢4,785,500. Mr. Donkor who is no more with the MOESS is operating a fuel station in Goaso.

453. We advised management to ensure recovery of the ¢4,785,500 to chest.


MUNICIPAL EDUCATION OFFICE-HO

Unearned salaries - ¢25.1million

454. We noted that two officers, Mr. Honu Delanyo and Ms. Ethel Crosby had separated from the Service while another two Mr. George Agbeve and Ms. Beatrice Lawson had died.

455. The names of these four persons continued to appear on the Service's payroll between November 2004 and May 2005 and as a result of the non-deletion of their names, a total of ¢25,109,697.00 was wrongly paid into their respective bank accounts.

456. Management explained that it was making every necessary effort to communicate the situation to the relatives of the deceased officers. It further stated that attempts would be made to locate the whereabouts of Mr. Honu and Ms. Crosby and in the meantime their bankers would be notified to withhold payment of the unearned salaries.

DISTRICT EDUCATION OFFICE - KADJEBI

Payment for work not done - ¢13.5million

457. During an audit of the Department for International Development (DFID) grant account, we noted that between August and November 2004, two separate payments involving ¢9,502,190 and ¢4,000,000 were made to Lazolet Enterprise and the then District Accountant respectively for furniture distribution.

458. The Storekeeper revealed that neither the Contractor nor the Accountant was involved in the distribution exercise and that it was he the Storekeeper who distributed the sets of furniture at a cost of ¢3,545,700.

459. The two payments which totalled ¢13,502,190 were thus fictitious. We consequently recommended a recovery of the amount of ¢9,502,190 from the former District Director, Mr. J.K Hobenu who


approved the spurious payment made in the name of the Contractor and the ¢4,000,000 from the former Accountant Mr. C.J. Atakro. No action has been taken on our recommendation.

Non competitive procurement-¢72.7million

460. The office purchased various items worth ¢72,659,000 without obtaining price quotations from different suppliers, in contravention of Part IV Section 43(1) of the Public Procurement Act (Act 663).

461. We advised management to comply with the procurement procedures as provided in the Act by ensuring those alternative quotations are always obtained from a minimum of three sources.

DISTRICT EDUCATION OFFICE – KPANDO

Default in refund of teachers' incentive package - ¢13.2million

462. The GES introduced credit sale of items to teachers in deprived areas in order to attract and retain them in the rural areas. However, our review of the scheme disclosed that 86 teachers who were supplied items such as motor bikes, bicycles and cooking utensils between 1999 and 2002 still owed the scheme a total amount of ¢13,160,000.

463. We attributed the situation to management's inability to devise an effective way of collecting the debts. We therefore advised management to ensure that the total amount is recovered from them.

Rent defaulters-¢11.5million

464. Twenty-two headteachers occupying the Ghana Education Service premises built in various towns within the district owed a total amount of ¢11,471,000. We noted that no tenancy agreement existed between the Service and the headteachers. The absence of any legal obligation on the teachers has thus made them reluctant to


pay their monthly rents regularly. We urged the District Director to take action to collect the rents together with the arrears.

DISTRICT EDUCATION – WULENSI

Payment for building materials not supplied - ¢33.2 mllion

465. Examination of the expenditure records disclosed that the District Office paid an amount of ¢33,328,500 to Diboriyom Trading and Construction Co. in November 2005 for the supply of materials, including 30 bags of cement, 8 trips of sand, 53 pieces of hard wood and 6 packets of roofing sheets to renovate Kabreya Local Authority School. The materials have since not been supplied.

466. Management explained that it realised that the amount could not meet the cost of the work and was in the process of applying for additional funds to enable the works to take off.

467. We urged management to ensure that the project is executed

EDUCATION OFFICE – BIMBILLA

Store items isued to Member of Parliament - ¢195.6mllion

468. Our audit disclosed that the Member of Parliament (MP) for Bimbilla was issued with items which included 25 packets of roofing sheets and 533 bags of cement valued at ¢195,652,174 from the District Education Office’s store for distribution. However, a list of the beneficiaries was not provided to enable us authenticate the distribution.

469. We recommended that management should request the MP to submit the list of the beneficiaries for our examination.


GHANA EDUCATION SERVICE – DAMONGO


470. Our audit of the payroll revealed that two pupil teachers, Boamani Mohammed Tom and Takora Ibrahim, who had vacated their posts succeeded in drawing unearned salaries totalling ¢56,866,570 between January 2001 and March 2006 and January 2003 and March 2006 respectively.

471. This condition was attributed to poor monitoring of the payroll by the circuit supervisor. The two have been apprehended and are on bail

472. We urged management to ensure recovery of the amount and proper monitoring of the payroll to prevent a recurrence of the anomaly.

GHANA EDUCATION SERVICE – ZABZUGU


473. Mr. Maurice Yinyeh, a former Accountant of the Ghana Education Service – Zabzugu took advantage of the non-existence of internal controls and misappropriated ¢11,000,000 of sales proceeds of EdSAC exercise books between October 2004 and June 2005. At the instance of the audit, an amount of ¢2,600,000 was recovered, leaving a balance of ¢8,400,000.

474. We advised management to recover the outstanding balance of ¢8,400,000 and intensify internal controls and supervision to forestall future recurrence.

DISTRICT EDUCATION OFFICE – YENDI

Misappropriation of funds – ¢183.8 million

475. Our audit disclosed that a former Accountant, Mr. Adamu Saaka in collaboration with the District Finance Officer (DFO), Mr. Ali Grant misappropriated a total amount of ¢97,455,000 in February


2005. Mr Adamu Saaka again failed to account for the sale proceeds of ¢39,458,700 from EdSAC exercise books. Mr. Adamu also forged the signatures of the Director and the Deputy Chief Accountant, withdrew ¢33,023,000 from QUIPS and DFID accounts and misappropriated the amount.

476. Further, Mr. Adamu Saaka failed to account for ¢13,870,000 being sale proceeds from the Incentive Package Scheme. This brings to ¢183,806,700, the total amount misappropriated by Mr. Adamu Saaka. The misappropriation was made possible through the connivance of the DFO and weak supervisory control exercised by the District Education Director over the duties of Mr. Adamu Saaka. The matter is in the hands of the Police.

477. We recommended that management should ensure the recovery of the amount to chest and a strengthening of supervisory control over the work of the present Accountant. We also requested the Police to speed up the prosecution of the culprit.

DISTRICT EDUCATION OFFICE – DONKORKROM

Misappropriation of cash - ¢18.7 million

478. Mr. Gasinu, the accounts officer handling Sports, Music and Culture accounts misappropriated a total of ¢8,889,912 being cash on hand for this account. Again, the same accounts officer collected sports, music and culture revenue totalling ¢113,570,288 but accounted for ¢103,797,098 and misappropriated the difference amounting to ¢9,773,190.

479. We noted that the misappropriation of the total amount of ¢18,663,102 was made possible through poor supervision by the District Accountant.

480. Management was asked to fully recover the amount of ¢18,663,102 from the accounts officer into the Sports, Music and


Culture accounts and to exercise strict control over the collection and payment of revenue to chest.

Misapplication of funds - ¢23.8 million

481. Part V Regulation 179 (1-2) of FAR, 2004 requires that a head of department will not authorize payment to be made out of funds earmarked for specific activities for purposes other than those activities. However, we observed that funds totalling ¢23,821,200 meant for the promotion of sports, music and cultural activities were misapplied on different programmes which could have conveniently been met from the District’s allocation of funds for items 2 and 3.

482. In order not to stifle the promotion of sports, music and culture in the District, we advised management to desist from the use of funds meant for extra curriculum activities for other programmes. We also asked management to reimburse the Sports, Music and Culture account accordingly.

Unearned salaries- ¢9.2 million

483. Two separated staff, Amarchie J. M. (deceased) and Koranteng V. K. (retired) were paid unearned salaries of ¢2,825,008 and ¢6,363,303 respectively. Verification at Afram Rural Bank, Donkorkrom revealed that the Bank had used Amarchie’s unearned salary of ¢2,200,000 to defray a loan to one Madam Beatrice Okai which according to the Bank was guaranteed by Amarchie.

484. The loss of the amount of ¢2,200,000 to Government would have been avoided if management had complied with Regulation 279 (1) and 298 (a-d) by acting swiftly to delete the name of the deceased staff from the payroll and also notified the Bank early to pay the unearned salary to chest.

485. We advised management to recover the ¢2,200,000 from the death benefits of Amarchie, while Koranteng’s unearned salary of


¢6,363,303 still being held by the Afram Rural Bank, Ekye-Amanfrom be promptly transferred into Government Chest.

Partly supplied items - ¢4.8 million

486. Out of 45 bags of cement purchased at ¢3,118,500 for three needy schools, only 15 had been supplied leaving 30 bags valued ¢2,079,000 not delivered. Again, out of 10 pieces of smoke detectors bought at the cost of ¢4,500,000, only four had been supplied leaving six valued at ¢2,700,000 unsupplied.

487. We cautioned management to be mindful of pre-financing supplies because contractors feel reluctant to supply the items for which payment had already been received.

488. We recommended the refund of the total amount of ¢4,779,000 from Paa Logo Stores, Donkorkrom.

Fuel purchases not accounted for - ¢66.0 million

489. Management purchased fuel to the tune of ¢65,953,000 but failed to account for them in the vehicle log books contrary to Part IX Section 64 of the Financial Accounting Instruction (FAI). We were therefore, not able to establish the genuineness of the purchases and validate the rate of consumption of fuel per kilometer by the vehicles with a view to determining their performance. We recommended that management be made to account for usage of the fuel or be surcharged with the value.


490. We noted that expenditures totalling ¢115,260,000 had not been properly acquitted contrary to Section 10 of Part VI of the FAI which requires that where applicable the original invoices, receipts and statements shall be attached to the payment voucher. We noted that these omissions and lapses had arisen as a result of the ineffectiveness of the District Internal Audit Unit.


491. We recommended that the amount involved should be accounted for by the Spending officers. Meanwhile the Internal Audit Unit should be revamped to enable it perform its functions effectively.

Items not routed through stores - ¢43.4 million

492. Stores worth ¢43,389,000 were not accounted for in the store records. As a result we could not ascertain whether the items were actually purchased and put to use in the interest of the District Office.

493. This condition could lead to the incidence of fictitious purchases, diversion and pilfering of stores. We therefore charged management to ensure the recording of all the items in the stores accounting records for our examination.

Overpayments - ¢7.1 million

494. Our audit revealed that management ordered 12 fire extinguishers and a thunder arrester at a total cost of ¢12,500,000 in December 2005 for which payments totalling ¢13,957,000 were made in five instalments. Similarly, 10 smoke detectors were procured on credit at a cost of ¢4,500,000 in March 2006 but a total of ¢5,225,000 was paid by three instalments. We, therefore, noted a total overpayment of ¢2,182,000 made to the suppliers.

495. In another development, management approved a totalamount of ¢16,180,000 instead of ¢11,219,000 which was supported with actual expenditure source documents. There was therefore an apparent overpayment of ¢4,961,000.

496. The lapses could be attributed to management’s inability to open ledger accounts to keep track of the part payments made to Suppliers.


497. We recommended that management should put in place a ledger to facilitate the monitoring of part payments to creditors and to recover the total overpayment of ¢7,143,000 from the payees.

GHANA EDUCATION SERVICE-SOMANYA


498. Reverend Jonathan Kwame, Assistant Director of Education, applied for leave with pay to further his education. However, he was granted leave without pay with effect from September 2004 when he had already begun his studies. The delay in responding to his application caused the Reverend Minister to collect unearned salaries totalling ¢16,061,582.

499. We urged management to recover the total unearned salaries of ¢16,061,582 from Reverend Jonathan Kwame.


500. We observed that a total amount of ¢12,188,249 was paid into the bank account of a deceased staff, Mr. Paul Kwaw between December 2005 and April 2006.

501. We asked management to ensure that the amount is returned to chest.

YOUTH LEADERSHIP TRAINING INSTITUTE – KADE

Unrecovered advances - ¢169.2 million

502. We noted from records that out of a total of ¢217,181,000 advanced from the National Youth fund to six departments only ¢47,955,000 representing 22.1% had been refunded to chest as at 31 December 2006. Due to the slow recovery rate, we expressed our concern about the outstanding balance of ¢169,226,000; a situation which could lead to bad debt in the future.


503. Management agreed to be actively involved in the running of the business ventures to ensure viability and repayment of the loans.

Issuance of temporary receipts - ¢34.3 million

504. Our examination of payment vouchers disclosed that a temporary receipt was issued to support payment of ¢34,338,000 by the Director, National Youth Fund, Headquarters contrary to Section 28 (1) of FAR 2004 (LI1802). Due to the failure to issue official receipts to cover the amount we could not confirm whether the money involved had been paid into the National Youth fund account at Headquarters.

505. Management promised to obtain official receipts from the Director, NYF to ensure proper accountability.

Unsupported payments- ¢16.1 million

506. Contrary to Section 39(2) of FAR 2004, six payments made for the purchase of drugs and repairs of computers and vehicles totalling ¢16,083,920 were not supported with the relevant expenditure documents. We could therefore, not authenticate the payments.

507. We requested management to acquit the payments with the relevant supporting documents failing which the amount should be refunded by the accountant.

MUNICIPAL EDUCATION OFFICE – BOLGATANGA

Misapplication of sports and cultural fees-¢160.4 million

508. An amount of ¢160,353,000 levied against school children for sports and cultural activities in the Bolgatanga Municipality was not used for the purpose. It was misapplied on administrative and other expenses by the Municipal Education Office, thus denying the pupils the use of their contributions for sports and cultural activities.


The anomaly was blamed on insufficient and late inflows of funding from the Central Government.

509. We advised management to transfer the amount back to the Sports and Culture Fund to ensure that the school children benefit from their contributions.


510. Thirteen personnel of the Municipal Education Office who died between January 2003 and December 2005 had their salaries retained on the payroll between two and six months before deletions were effected, resulting in a total of ¢52,196,965 being credited to their bank accounts.

511. Management explained that inputs submitted to the CAGD for deletion of the names did not receive prompt attention.

512. We urged management to follow up at the banks and retrieve the amount to chest.

Mentally deranged staff

513. The Director-General of the Ghana Education Service in a letter dated 28 May 2003, directed all Regional and District Directors to submit a comprehensive report on dysfunctional teaching and non-teaching staff of the Service due to mental/drug abuse/alcoholism for redress.

514. The Municipal Directorate submitted eight names but since 2003, no action has been taken to remove the mentally deranged and non-performing teachers from the schools or to medically board them off, as they continue to be paid for no work done.

515. We urged management to liaise with the higher authorities in the interest of the school pupils to purge the system of such category of teachers to save costs.


NON-FORMAL EDUCATION – KADEReinstatement and restoration of salaries of terminated staff -¢46.7 million

516. Our audit of payroll revealed that the appointments of three staff were terminated on 15 March 2004 vide Director of Non-Formal Education Division letter No. MDE/NFE/161 of 7 September 2004 and their names deleted from payroll on October 2004.

517. We observed that in November 2006 the names of the affected officers were reinstated and arrears of salaries from November to February 2006 amounting to ¢46,668,428 paid to them. However the District Officer could not produce copies of the authority of reinstatement and restoration of salaries. Details are as follows:

Name Staff No. Rank Amount (¢)Ofosu Kwame 595633H Prog. Assistant 17,063,579Korankye Joseph 595638N -do- 12,541,270Boadzi Arko D. 595645U -do- 17,063,579Total 46,668,428

518. Management intimated that the action was taken at Headquarters of the Division and that it was a nation-wide exercise. We advised management to obtain certified copies of the authority for their re-appointment and restoration of salaries on the payroll from NFED Accra. As at 31 December 2006, this had not been complied with.

NON-FORMAL EDUCATION DIVISION – EFFIDUASE

Unearned salaries-¢2.4 million

519. Due to inaction of management to immediately write to the bankers to stop payment of salaries of separated staff until their names are deleted from the payroll, Mr. Bismark Boateng with staff No. 593171 T who vacated his post in September 2005 had his name appearing on the payroll to date.


520. This had resulted in accumulated salary of ¢12,692,026 paid into his account with Juaben Rural Bank. At the instance of the audit, ¢10,282,136.00 was transferred by the bank into the Consolidated Fund Account. The balance of ¢2,409,890 was allegedly used by the bank to defray the indebtedness of Mr. Boateng to the bank.

521. We recommended to management to pursue the deletion of Mr. Boateng's name from the payroll and also impress on the bank to recover the ¢2,409,890 it took to defray the loan from his guarantors. The bank should be made to pay the amount of ¢2,409,890 to Government chest.

Funds paid to headquarters not officially receipted - ¢105.5 million

522. Part II Section 28(1) of the Financial Administration Regulation, 2004 (L1 1802) Part II Section 28(1) requires those who receive public funds to issue official receipts in acknowledgment.

523. Contrary to this regulation, a total amount of ¢105,455,000, being registration fees collected by the Regional Secretariat and paid to the National Secretariat, was not officially acknowledged by Headquarters.

524. The non-issue of official receipts by Headquarters could lead to the diversion of the funds which may not be detected in the records at Headquarters. We therefore requested management to obtain official receipts from Headquarters to confirm receipt of the funds paid.

GHANA EDUCATION SERVICE - BREMAN ASIKUMA

Failure to submit records on capitation grant for audit - ¢732.0 million

525. Section 60 of the Financial Adminstration Act, 2003 (Act 654) enjoins the Auditor-General to examine and certify public accounts or to audit other Government accounts.


526. However, in spite of this provision, we could not undertake the audit of 47 first cycle institutions in the Region, which received various sums of money amounting to ¢732,059,855 in respect of capitation grant because the respective headteachers, failed to submit their records for audit. The propriety of the payments made by the headteachers in respect of the funds could therefore not be ascertained.

527. To ensure that the capitation grants were properly used, we urged and management agreed to compel the affected headteachers to submit their records for scrutiny.

GHANA EDUCATION SERVICE – AGONA SWEDRU

Failure to provide supporting documents - ¢300.0 million

528. Our examination of payment vouchers revealed that no official receipts and details of expenditure were provided to substantiate an amount of ¢300,000,000 being GETfund released to two Members of Parliament, Honourable John Agyebeng and Samuel Kwaku Obodai for various developmental projects in schools in their constituencies.

529. The lapse was due to the failure of the Accountant to ensure that monies released for the performance of official duties were promptly and fully accounted for by recipients. We asked management to regularise the transactions by making the two(2) MPS properly account for the amount.

Default in refund of Teachers' incentive package - ¢5.8 million

530. Our audit of records maintained for the operation of the Teachers' incentive package disclosed that 44 beneficiaries were yet to refund an outstanding balance of ¢5,840,000. This situation contravened the Ghana Education Services directives which enjoin beneficiaries to settle incentive package received in 12 monthly instalments.


531. The irregularity was perpetuated owing to management's liberal stance on the recovery of the amount which could lead to the loss of the outstanding amount to the scheme.

532. We advised management to pressurise the defaulters to repay their outstanding balances.

GHANA EDUCATION SERVICE – DUNKWA-ON-OFFIN

Supply of sub-standard graph exercise books- ¢14.6 million

533. Section 0502 (6) of the Stores Regulations, 1984 states '' when goods are received by a department it is necessary to check that the goods are in good condition and fit for use and that immediate reporting action is taken when instances of loss or damages are disclosed''.

534. We noted that 16,205 graph exercise books valued at ¢14,584,500 had been in stock since 2001 because the users claimed they were substandard and so refuse to buy them.

535. The situation occurred because the supply officer failed to examine the books on arrival to ascertain that they were of good condition before receiving them. At the time of writing, management had written to the supply officer at GES Headquarters for replacement. We advised management to pursue the replacement and also subject all goods received in future to thorough check to ensure that they are of good quality before taking them on ledger charge.

DISTRICT EDUCATION OFFICE – WINNEBA

Payments without supporting documents - ¢45.2 million

536. Part II Section 39(2c) of FAR 2004 states that a head of department shall control the disbursement of funds and ensure that transactions are properly authenticated. However, we observed that an amount of ¢45,192,000.00 paid to officials for various programmes


had not been supported with receipts, invoices and SRV's. This was attributed to delays in submitting these documents to the Accountant for attachments to the payment vouchers. Such acts do not promote transparency and could lead to perpetration of fraud.

537. We advised management to have the vouchers properly acquitted or a refund of the amount should be made to chest.

Missing books -¢5.8 million

538. Section 1201 of the Stores Regulations, 1984 defines stocktaking as the physical counting, measuring or weighing of material in stock for comparison with the stock record.

539. We observed that 79 assorted textbooks totalling ¢5,772,000.were missing. This situation happened as a result of inflation of figures on the issue vouchers which after review brought the actual stock to its correct level. We asked management to recover the sum of ¢5,772,000 from the two storekeepers i.e Mr. Edzie and Mrs Jakalia. Management accepted our advice.

DISTRICT EDUCATION OFFICE – SALTPOND

Loss of VAT revenue - ¢36.1 million

540. Section 5 of the VAT Act, 1998 (Act 546) requires that all taxable suppliers must be VAT registered. However, out of ¢288,967,580 worth of taxable supplies delivered by suppliers to the Directorate between April and September 2006, VAT Receipts/Invoices were not obtained, resulting in the loss of tax revenue of ¢36,120,981.

541. We advised management to ensure that all suppliers of taxable supplies charge and issue VAT Receipts/Invoices in compliance with the VAT law.


Uncompetitive procurement - ¢41.3 million

542. Section 43(i) of the Public Procurement Act, 2003 (Act 663) states “procurement entities shall collect quotations from as many suppliers or contractors as practicable, but from at least three different sources.”

543. We noted during the examination of the expenditure records that contrary to this provision of the Act, management procured items totalling ¢41,349,250 between January and December 2006 without obtaining quotations from at least two other suppliers.

544. We recommended that management should always obtain quotations from at least three suppliers to ensure value for money in accordance with the above-quoted law.


545. Our payroll audit disclosed that between January 2003 and July 2006, 27 teachers, who had vacated their posts, were paid unearned salaries totalling ¢78,467,186. Failure of Circuit Supervisors to inform the District Office on time was responsible for the anomaly resulting in the loss of public funds.

546. We urged management to ensure that the 27 teachers are traced to refund the amounts involved or the matter should be reported to the police for necessary action. The matter is still under correspondence.

AJUMAKO-ENYAN-ESSIAM DISTRICT EDUCATION OFFICE – AJUMAKO

Failure to support payments with relevant details - ¢161.6 million

547. Section 39(2c) of the Financial Administration Regulations, 2004 (FAR) L.I. 1802 requires heads of accounts section of a department to control disbursement of funds and ensure that


transactions are properly authenticated to show that amounts are due and payable. Contrary to the directives, between January and December 2006 management effected eleven (11) payments totalling ¢161,600,000 without relevant supporting documents such as invoices and receipts.

548. The lapse was due to the failure of the District Accountant to ensure that the payment vouchers were duly supported with the relevant documents before making the payments. We requested management to ensure that the Accountant obtained receipts, invoices and relevant documents failing which he should be surcharged with the amount.

Default in refund of teachers' incentive package - ¢23.0 million

549. Our audit of records maintained for the operation of the Teachers' incentive package disclosed that 56 teachers, who benefited from the incentive package failed to pay up a total amount of ¢23,036,461.00 which they owed the Service. The situation contravened the GES directives which enjoin beneficiaries to settle incentive packages received in 12 monthly instalments.

550. Management's liberal attitude towards recovery of the amount was noted to be the cause of the default which could lead to the loss of the outstanding amount. We advised management to be more robust in the recovery of the amount.

Misapplication of funds - ¢25.0 million

551. FAR (2004) L.I. 1802 Section 179 (1-2) states “A head of department may not authorise payment to be made out of funds earmarked for specific activities other than those activities and any person who makes any such payment is in breach of financial discipline”.


552. Contrary to the instruction, examination of payment vouchers revealed that management made a total payment of ¢25,000,000 out of Deprived Incentive Package Account to meet Administrative Expenses. Management's failure to comply with the regulation was accountable for this anomaly. We urged management to ensure that Deprived Incentive Package Account is re-imbursed with the amount.

Refund of tax deductions to payees - ¢9.9 million

553. Article 174(2) of 1992 Constitution states “where an Act enacted in accordance with clause (1) of this article, confers power on any person or authority to waive or vary tax imposed by the Act, the exercise of the power of waiver or variation in favour of any person or authority, shall be subject to the approval of parliament by resolution”.

554. On the contrary, the District Co-ordinating Director of Ajumako-Enyan-Essiam District Assembly directed the management of the District Education Office to revoke and refund 5% withholding tax totalling ¢9,968,000 applied on four (4) payment vouchers totalling ¢132,918,729 for the supply of furniture to the District Education Office in February, 2005. 555. Failure of the District Co-ordinating Director to adhere to the provisions of the Constitution was accountable for the anomaly.

556. Management agreed to recover the amount from the contractors, failing this, the District Co-ordinating Director would be made to refund the unpaid tax.

Non deduction of 5% withholding tax - ¢10.1 million

557. Section 84 of the Internal Revenue Act, 2000 (Act 592) requires withholding tax to be deducted from all payments exceeding ¢500,000 payable to third parties for goods and services supplied or rendered.


558. However, the Accountant failed to deduct 5% withholding tax amounting to ¢10,141,850 from total payments of ¢170,997,000 between September 2005 and March 2006 made for goods and services on seven payment vouchers due to inadequate supervision exercised by management over the Accountant's work.

559. We urged management to ensure compliance with the tax law and to recover the outstanding tax of ¢10,141,850 which should be paid to the Invernal Revenue Service.

Failure to account for withdrawals by teachers - ¢9.2 million

560. Contrary to section 32 of FAI of (GES) which requires proper accountability of funds by heads of Educational Institutions, our examination of the records of the Capitation Grant Account revealed that 11 headteachers failed to account for a total amount of ¢9,218,836 being withdrawals made by the headteachers to meet expenses in running the schools.

561. Poor supervision over heads of basic schools by the District Education Office was accountable for the lapse. We advised management to recover the amount from the affected headteachers.

NON – FORMAL EDUCATION DIVISIONGHANA EDUCATION SERVICE - ASSIN FOSO

Unearned salaries - 34.4 million

562. Our review of the payroll disclosed that the bank accounts of five separated staff were credited with unearned salaries totalling ¢34,387,501. Management's failure to ensure prompt deletion of the names from the payroll resulted in this anomaly.

563. With the exception of one of them, the names of the rest had been deleted from the payroll. We recommended that management should recover the total unearned salaries of ¢34,387,501 to chest and ensure that the name of Francis Asante is deleted without further delay.


MINISTRY OF HEALTH

MINISTRY OF HEALTH HEADQUARTERS

Failure to obtain official receipts-¢1.16 billion

564. Twelve payment vouchers amounting to ¢1,163,493,122 were not supported with official receipts contrary to Regulation 39(2)(c) of the FAR, 2004. These monies were signed for by Mr. Antwi of the Human Resource Department of the Ministry who promised to submit the receipts but failed to do so. We could therefore not determine the genuineness of the transactions

565. We recommended that the relevant receipts should be obtained to authenticate the payments in line with the regulation failing which the total amount should be recovered from Mr. Antwi.

Failure to retire imprest funds - ¢129.6 million

566. Section 5.5 of the Ministry of Health Finance handbook states that imprest issued for making a particular payment or group of payments, must be retired in full by the date specified on the warrant. All imprest funds are to be retired at the end of the financial year.

567. We noted that contrary to the requirements of the handbook, ¢129,598,000 out of ¢837,728,000 released to various Programme Officers to implement programmes, had neither been paid to the participants nor chest, six months after the close of the financial year.

568. We also observed that the approving authorities did notspecify the retirement dates as required before the release of the funds. This practice gives rise to huge cash holdings with the attendant risk of loss or misappropriation.

569. To ensure accountability and efficient cash management, we recommended that the approving authority, based on the time schedule of programme implementation, should always specify


retirement dates for imprests. The sum of ¢129,598,000 should also be paid back into the Programmes Account.

570. Though management stated that it had directed the accounts officer to pay the amount to chest, there was no evidence that the amount had been paid back to chest as at the time of compiling this report in February 2007.

Unacquitted payment vouchers-¢124.3 million

571. Programme officers failed to submit relevant documents in support of a total amount of ¢124,307,500 received in respect of specific activities which had been completed by them in contravention of Section 5.5 of the Finance handbook. Details of the amount is provided in the table below:

Date Description PV No. Amount (¢)31/01/2005 Cash 1009 1,500,00031/01/2005 Cash 1011 250,00012/05/2005 Cash 1263 30,800,00003/06/2005 Cash 1277 7,300,00014/06/2005 Cash 1282 14,400,00005/07/2005 Cash 1300 14,400,00022/09/2005 Cash 1380 2,520,00022/09/2005 Cash 1316 41,500,00019/12/2005 Cash 1463 11,637,500Total 124,307,500

572. We recommended that the various payees should account for the respective amounts with receipts, invoices and statements, failing which the amounts should be recovered from them. Management has since sent letters to the various Programme Officers to account for the amounts.


Outstanding staff advances-¢36.0 million

573. Advances totalling ¢20,000,000 given to eight new staff members between March and November 2005 were not recovered even though seven of them had their salaries mechanised in December 2005. Similarly, an advance of ¢16,000,000 granted to Ms Grace Agyepong of Korle-Bu to settle her rent advance in May 2005 had not been recovered as at April 2007.

574. The lapse resulted from non-maintenance of an advances ledger that could facilitate monitoring and recovery of advances due.

575. Regulation 110 of FAR (2004) stipulates that a head of department or officer to whom the duties of the head of department has been delegated shall ensure that advances issued are duly recovered in accordance with the appropriate agreement.

576. Non-recovery of the amounts could adversely affect the programmes for which such fund had been appropriated. We therefore recommended in line with Regulation 110 of the FAR, which enjoins the head of department to recover advances in accordance with the appropriate agreement. Additionally, an advances ledger should be procured and maintained.

Unapproved sponsorship - ¢20.0 million

577. Ministry of Health has a policy of sponsoring its employees for further studies. We noted, however, that the Ministry’s sponsorship for 13 students in 2005 to University of Cape Coast at a total cost of ¢260,000,000 included a non-staff. The amount paid in respect of the non- staff was ¢20,000,000.

578. The paying officer, Mr Bulla explained that even though he was directed to delete Dinah Adjetey’s name from the list, her name was inadvertently included in the final list. We were of the view that the Ministry would not directly benefit from the training of Ms.


Adjetey. We therefore recommended to management to recover the ¢20,000,000 paid in respect of Ms. Adjetey from Mr. Bulla. However, the amount had not been recovered as at April 2007.

KORLE BU TEACHING HOSPITAL


579. Due to the failure of the respective unit heads to promptly notify the Payroll Department of the Hospital to delete the names of seven separated staff from the payroll, they continued to receive their salaries and allowances totalling ¢47,756,580 during the period under consideration.

580. We recommended that Heads of Departments should promptly furnish the Payroll Department with the names of separated staff to minimize the risk of payment of unearned salaries to staff. Every effort should also be made to recover the total amount of ¢47,756,580 from the separated staff.

Payment without supporting payment vouchers-US$8,000

581. Regulation 39(2) of the FAR, 2004 states that the Head of Accounts section of a department should control the disbursements of funds and ensure that transactions are properly authenticated to show the amount due and payable.

582. However, management failed to prepare a payment voucher in support of an amount of US $8,000 withdrawn from a US Dollar Account and paid to Dewerger Gruter Brown and Partners for the supply of furniture to the Dermatology Department. Management also failed to provide the relevant store receipt advice, and store receipt issue vouchers in respect of the furniture supplied by the company.

583. We requested management to properly account for the US$8,000 with duly approved payment voucher and the relevant


stores documentation to authenticate the payment in line with the Regulation quoted above.

Payments not properly acquitted - ¢170.6 million

584. Section 5.3 of the Ministry of Health Finance handbook requires payment vouchers to be supported by adequate third party documentation such as official receipts and stores receipt advice.

585. However, five payments totalling ¢170,596,414 made in 2005 for the clearance of medical supplies/equipment from the Tema harbour were not supported by the relevant payment vouchers, receipts, stores receipt advice and the bill of lading. Details of the payments are provided in the table below:

Date Cheque No.

Payee Description Amount(¢)

26/1/2005 945017 Sky Shipping Agency Clearing non-drug 38,405,75617/5/2005 582051 Dan King Ent. Consumables 52,321,0007/7/2005 582109 Cardio Centre Clearing Medical Equipment 23,778,8037/7/2005 582110 Cardio Centre Clearing medical supplies 22,638,21025/8/2005 582191 Supply Commission Clearing medical supplies 33,452,645

Total 170,596,414

586. Without the third party supporting documents we could not ascertain the authenticity of the transactions. The lapse could be attributed to lack of commitment on the part of the head of accounts to comply with the requirements of the finance handbook.

587. We recommended that management should ensure that the head of the accounts section comply with the requirements of the handbook at all times. Meanwhile, the head of accounts should be called upon to provide the relevant third party documents in support of the payments, failing which the amount should be recovered from him/her.

Non-adherence to procurement policy-¢289.7 million

588. Our review disclosed that procurement procedures, as outlined in the Public Procurement Act, were not adhered to. In this


respect, no award notification letters were issued to the successful bidders in respect of two payments totalling ¢289,700,000 for the supply of hospital equipment. The second payment of ¢206,700,000 was also not supported by the relevant invoice. Details of the payments are provided in the table below:

Date Cheque No.

Account Payee Particulars Amount(¢)

5/7/05 582094 Donor Ntim Asamoah Metal Eng.

20 patient Trolleys 83,000,000

22/10/05 169106 GoG Ntim Asamoah Metal Eng.

Payment for hospital beds and bedside lockers

206,700,000

Total 289,700,000

589. In our view the payments were devoid of transparency. We therefore recommended that management should comply with the provisions of the Public Procurement Act. They should also provide the relevant supporting documentation for our review to determine the genuineness of the transactions.

Loss of patient monitor - ¢79.0 million

590. A patient monitor valued at ¢79.0 million installed at the Gynae theatre on 6 January 2005 was found missing the next day, 7 January 2005 and has since not been found.

591. Upon our recommendation, management reported the theft to both the Police and the BNI for investigation and necessary action. The matter is still pending with the security agencies.

Withholding tax not remitted - ¢21.6 million

592. Section 87(2) of the Internal Revenue Act, 2000 (Act 592) states that “a withholding agent shall pay to the Commissioner of IRS, a tax that has been withheld or that should have been withheld under this subdivision within fifteen days after the end of the month in which the payment subject to withholding tax is made by the withholding agent,”


593. Our audit however revealed that due to cash flow problems, management of the Central Mechanical Workshop, Tema, failed to remit to IRS, the sum of ¢21,681,748 out of ¢95,137,282 collect on behalf of IRS as withholding tax.

594. We requested management to remit the amount ot IRS immediately. We also advised management to comply with the provisions of the Act to avoid payment of penalties.

GLOBAL FUND

Withholding tax not deducted - ¢28.1 million

595. Section 84(2) of the Internal Revenue Act, 2000 (Act 592) requires that a tax of 5% should be withheld on payments for goods and services above ¢500,000.

596. Our review disclosed that contrary to the above requirements, the Accounts officer failed to deduct 5% withholding tax of ¢28,101,000 on payments totalling ¢562,020,000.

597. We advised management to comply with the provisions of the law in future.

BIO-MEDICAL ENGINEERING

Cash/imprest not accounted for - ¢16.3 million

598. Contrary to Part 3H(ii) of the Accounting, Treasury and Financial (ATF) reporting guidelines, which provide that revenue collected should be deposited, in full, at the bank each day, our review disclosed that revenue totalling ¢6,300,000 and an imprest of ¢10,000,000 collected by an Accountant were not accounted for before her untimely death due to ineffective supervision over her work.


599. We recommended that the revenue of ¢6,300,000 should be recovered from the estates of the deceased. We also advised management to investigate the imprest issue and appropriate action taken.

GHANAIAN-DUTCH COLLABORATION FOR RESEARCH AND DEVELOPMENT PROGRAMME

Special imprest not properly accounted for-¢60.9 million

600. We noted that special imprests given to officers to organize meetings and workshops were not accounted for immediately after the activity. Undisbursed balances were kept by the officers and disbursed on other activities unrelated to the activities for which the imprests were granted. In this connection, out of ¢673,001,310 released for specific programmes, ¢60,903,486 was spent on activities not related to the intended programmes.

601. This was done in contravention of Section 5.5 of the Ministry of Health Finance handbook which provides that special imprest must be retired in full by the date specified in the warrant i.e. after the activity for which the imprest was issued.

602. This lapse was attributed to the failure of the spending officer, who is responsible for exacting accountability from his schedule officers, to indicate retirement period of the respective special imprests.

603. To ensure that special imprest are not misapplied but are promptly accounted for by officers, we recommended compliance with the requirements of the Handbook. We further advised the spending officer to provide retirement dates and also monitor all imprests released.

Failure to obtain VAT receipts/invoices - ¢143.6 million


604. The Value Added Tax Act, 1998 (Act 546) provides that whenever payments are made to a VAT registered person, the purchaser must be given a VAT invoice/receipt. However, VAT receipts/invoices were not obtained to support payments totalling ¢143,608,581 which included VAT revenue of ¢17,978,003 due to oversight on the part of the Finance officer.

605. We recommended that the finance officer should obtain the VAT receipts from the companies concerned, or the amount of ¢17,978,000 should be recovered from them.

Project funds released in bulk - ¢435.3 million

606. Our audit disclosed that an amount of ¢435,388,000 was released in bulk from the institutional accounts to three Principal Investigators (PIs) instead of being released to the them on submission of their work programmes in addition to accounting for previous funds received.

607. Furthermore, Dr. Atsu Dodor and Dr. Jack Galley, who had traveled outside the country, had not accounted for ¢295,388,000 released to them earlier. However, there was ample evidence at the Executive Secretariat that the research work had been carried out by the two Doctors. The breakdown of the amount of ¢435,388,000 released to the PIs are provided in the table below:

Institution P.I. Project Title Amount (¢)

1. Effia Nkwanta Regional Hospital, Sekondi

Dr. Atsu Dodor

Stigmatisation and risk perception of Tuberculosis; How does it affect T.B. Control

100,000,000

2. Effia Nkwanta Regional Hospital, Sekondi

Dr. Atsu Dodor

High Treatment defaulter rate among T.B. Patients in Western Region

125,388,000

3. Regional Health Adm. Western Region

Dr. Godwin Afenyadu

Ghana Health inequality studies in the Western Region

140,000,000

4. District Health Adm. Juabeso – Bia Dr. Jack Galley

Financing Health Through Community Health Insurance

70,000,000

Total 435,388,000


608. The practice was facilitated by the fact that the PIs were also the heads of their respective institutions. The contract agreement signed by both the PIs and the heads of beneficiary institutions with the Health Research Unit required that payments should be made into the account of the institutions of the PIs and under no circumstance should payment be made into individual accounts.

609. We recommended that the Executive Secretary should remind all institutional heads of the conditions of the contract signed. Furthermore, funds should only be released to the PIs by the institutions upon submission of approved work plan and estimates and provision of evidence that previous funds have been fully accounted for. Dr. Dodor and Dr. Galley should also be called upon to account for the ¢295.388.000 their return.

KORLE BU POLYCLINIC

Direct cash disbursement -¢179.7 million

610. Due to the failure of the Accountant to bank revenue in full and on daily basis as required by the guidelines on the administration on the Development Levy, ¢141.015.000 collected out of a total development levy of ¢320,748,100 was banked and the difference of ¢179,733,100 used for other expenses. This practice could lead to uncontrolled spending and misapplication of funds.

611. We requested management to ensure that all cash collections are banked in full daily in line with the guidelines and the operation of the new cheque system enforced for Development Levy by administrators of the Hospital.

DEPARTMENT OF CHILD HEALTH, KORLE- BU

Revenue not accounted for-¢9.1 million

612. Regulation 15(1) of the FAR, 2004 requires that receipts should be issued for all public moneys collected and paid in gross into


the public funds accounts within 24 hours. Contrary to this Regulation, we noted that out of a total revenue of ¢646,742,100 collected for Development Fund and Mothers Hostel, only ¢588,741,480 was paid to bank and ¢87,866,438 disbursed, leaving a balance of ¢9,134,182 not accounted for by the Accountant. This was attributed to ineffective supervision and undue delay in banking revenue.

613. We advised management to improve upon its supervision over the Accountant and also ensure that the accountant accounts for the ¢9,134,182. Additionally, management was advised to ensure compliance with the requirement of the FAR.

KORLE BU LABORATORY


614. We noted that out of a total amount of ¢621,975,900 collected for the period under review, ¢398,739,000 was paid to bank and ¢211.691.000 disbursed directly, leaving ¢11,545,900 unaccounted for by the accountant.

615. Though management explained that the imprest in use at the time was inadequate necessitating direct disbursement from revenue, we were of the view that the situation resulted from ineffective supervision and the delay in banking of revenue.

616. We advised management to improve upon its supervisory role and ensure that revenue collected are promptly and fully paid to bank. Also, management should ensure that the accountant accounts for the balance of ¢11,545,900 and disciplinary action taken against him.

KORLE BU PATHOLOGY DEPARTMENT

Direct disbursement from revenue - ¢49.2 million

617. The guidelines governing the administration of the Development Levy enjoin departments to bank daily all moneys


collected. However, out of a total revenue of ¢242,518,900 collected only ¢193,369,000 was banked, leaving ¢49,213,900 which was directly disbursed. Insufficient imprest at the time and late receipt of revenue in the office accounted for the lapse.

618. We advised management to desist from the practice and comply with Regulation 15(1) of the FAR, 2004.

PANTANG PSYCHIATRIC HOSPITAL


619. Regulation 297(1) of the FAR, 2004 requires a head of department to immediately cause the stoppage of payment of salary to separated staff. However, ¢11,327,244 was wrongly paid to three separated staff due to the inability of management to ensure that their names are deleted from the payroll

620. Management stated that it had already sent letters to the respective banks of the separated staff for the transfer of the unearned salaries into Government suspense account. However, the transfers were yet to be effected. We urged management to pursue the matter and also ensure that their names are deleted from the payroll.

PSYCHIATRIC HOSPITAL, ADABRAKA

Unjustified rent payments - ¢109.7 million

621. We noted that a total amount of ¢109,748,000 had been paid by management as rent advance to a landlord, Mr. D. B Naabu in respect of an accommodation for Dr. A. Osei, the specialist in charge of the hospital. The table below provides details of the amount:

Date Landlord Occupant PV No. Amount¢

22/08/05 D.B. Naabu Dr. A. Osei 1427006 48,600,00008/02/05 -do- -do- 1427024 61,148,000Total 109,748,000


622. Our review further revealed that the landlord failed to provide the accommodation for the tenant. Management consequently sought and secured a government bungalow for Dr. Osei, seven months after the payment of the rent advance. We, also, noted that management had written series of letters to the landlord requesting for a refund of the rent advance of ¢109,748,000. These requests have however not been honoured as at the time of the audit in 2006.

623. In our opinion, management failed to enter into proper tenancy agreement with the landlord before committing government funds and this has resulted in the near loss of the rent advance.

624. We were informed by management that the matter had been reported to the Police for necessary action. We accordingly advised management to pursue the matter to ensure that the amount is recovered from the landlord, failing which the amount should be recovered from the authorising officer.

Misapplication of the drug account - ¢85.0 million

625. It is the policy of MOH that apart from drugs and drug related items no other expenditure should be incurred out of the drug account. We noted however, that an amount of ¢85,046,000 was withdrawn from the drug Account to pay for feeding costs of inmates of the hospital.

626. The anomaly resulted from the untimely release of funds from MOH headquarters to the hospital administration and has the potential for depleting funds in the Drug account thereby defeating the purpose for which the drug account was set up.

627. To avoid the recurrence of this situation, we urged management to pursue the matter with MOH Administration to ensure timely release of funds for in-patient feeding. In addition, the drug account should be reimbursed with the amount as soon as funds are received from MOH.


628. As at the time of reporting, the drug account had been reimbursed with ¢15,000,000, leaving ¢70,046,000.

Wrongful payment of tax to landlord- ¢13.8 million

629. Contrary to the requirements of Internal Revenue Act, 2000, management added withholding tax on amounts to be paid as rent to landlords before deducting the 10% withholding tax from the landlords. Consequently, the Landlords received their rent intact without suffering any withholding tax.

630. In this regard, management paid a total of ¢152,402,800 to two landlords instead of ¢138,548,000. The 10% withholding tax of ¢13,854,800 was then recovered from the ¢152,402,800 paid to the landlords. Details of the amounts are provided below:

Date PV No. Landlord Rent

(¢)

10% tax

(¢)

Inflated gross amt.

(¢)27/09/05 1427054 I. K. Incoom 28,800,000 2,880,000 31,680,00008/09/05 1427024 D. B. Naabu 109,748,000 10,974,800 120,722,800Total 138,548,000 13,854,800 152,402,800

631. The situation resulted from the refusal of the landlords to have tax withheld from amount due. We found the action of management quite reprehensible and recommended that the 10% withholding tax should be recovered from the Landlord, failing which the amount should be recovered from the authorizing officer. Furthermore, the behaviour of the Landlords should be reported to the tax authorities.


632. Our review of salary vouchers and personnel records revealed that 15 separated staff of the hospital were paid unearned salaries of ¢35,189,491 through their bankers.


633. We also noted that management wrote letters to the banks concerned advising that the unearned salaries should be paid back to Controller and Accountant General’s Suspense Account with Bank of Ghana. There was however, no evidence that the banks took action on management’s letters.

634. We accordingly requested management to pursue recovery of the amount into government coffers. We also advised management to send the relevant inputs to CAGD for the names of the affected staff to be deleted from the payroll.

DODOWA DISTRICT HEALTH ADMINISTRATION

Special imprests not accounted for - ¢13.4 million

635. The Dodowa District Health Administration released an amount of ¢21,012,000 as special imprests to certain officers for official assignments. Even though the assignments had been completed as at the time of audit, the amounts had not been accounted for.

636. Following our recommendation, ¢7,638,000 had been accounted for as the time of reporting, leaving a balance of ¢13,374,000.

637. We urged management to pursue the matter to ensure that the balance is accounted for, failing which the amount should be recovered from the staff concerned.

DANGME EAST DISTRICT HOSPITAL

Failure to refund rent advance -¢176.6 million

638. Management paid a total rent advance of ¢176,592,000 on behalf of eight staff of the hospital. However, no recoveries had been made as at the time of reporting.


639. Management explained that Ada, being a deprived area, has free accommodation as incentives for its staff. However, management failed to produce policy document in support of this assertion. We requested management to provide the policy document for our scrutiny or initiate action to recover the rent.

MAAMOBI POLYCLINIC

Non-deduction of withholding tax-¢13.0 million

640. Five percent withholding tax of ¢13,006,677 was not deducted from 23 payments amounting to ¢86,711,180 made, resulting in a loss of tax revenue of ¢13,006,677 to the IRS.

641. Management explained that it was not conversant with the withholding tax law, hence the omission. We urged management to be conversant with the tax laws, especially those related to withholding tax.


642. A total sum of ¢33,797,875 was paid as unearned salaries to 10 separated staff of the polyclinic. We, further, noted that the amounts had been withdrawn from their bank accounts.

643. We recommended that management should pursue recovery of the amount from the separated staff. Meanwhile, we advised management to forward the relevant input forms to CAGD to ensure that their names are deleted from the payroll.

NURSING TRAINING COLLEGE, KORLE-BU

Unauthorised IOUs - ¢49.8million

644. Our audit disclosed that IOUs totalling ¢49,781,701 were granted to four accounts officers without authorisation. At the instance of the audit team, ¢44,060,000 was recovered, leaving a balance of 5,721,701.


645. We are of the view that the practice, if allowed to persist, would provide the accounts officers free access to funds which could be misapplied or misappropriated.

646. We recommended that the appropriate internal controls should be put in place to ensure prompt and full payment of revenue collected into the appropriate account. Management should also pursue recovery of the outstanding amount of ¢5,721,701.

Procurement of goods from non-VAT registered suppliers-¢178.0 million

647. Section 30(2) of the Financial Administration Act, 2003 (Act 654) requires that government stores should be procured from only VAT registered persons.

648. However, between 5 January and 28 September 2005, management procured items worth ¢178,037,400 from five non-VAT registered suppliers.

649. We recommended and management agreed to comply with the laws governing procurement of government stores.

Taxes not remitted - ¢6.3 million

650. A sum of ¢6,259,350 deducted as tax from allowances paid to part time tutors between February and December 2005 had not been remitted to IRS as at June 2006.

651. Management explained that the staff concerned had not furnished it with their income tax numbers hence, the delay in remitting the amount to IRS.

652. We advised management to comply with the provisions of Section 87(1) of the IRS Act which requires that all taxes should be remitted to the IRS within 15 days following the month in which the transaction occurred. Meanwhile, the amount of ¢6,259,350 should be remitted to the tax authorities without further delay.


ACHIMOTA HOSPITAL

Revenue not accounted for -¢74.2 million

653. Our review disclosed that Mr. E. Dodoo, the accountant failed to account for an amount of ¢15,893,000, being salary advances recovered from staff of the hospital. In a related development, three revenue collectors failed to account for revenue of ¢58,271,200 collected by them. As of April 2007, ¢47,193,200 had been recovered from the four officials, leaving a balance of ¢26,971,000 to be recovered from three of them as follows:

Name Amount (¢)

Asare Pobee 20,593,000Emmanuel Ahovy 2,340,000Mrs Emily Foli 4,038,000

26,971,000

654. We advised that management should pursue recovery of the balance from the three revenue collectors without any further delay. Furthermore, the Internal Audit Unit and the Monitoring Teams should be more proactive in their work to forestall the situation. We also recommended that disciplinary action should be taken against the four officers to serve as deterrent to others.

TEMA GENERAL HOSPITAL

Non-payment of rent - ¢276.7 million

655. Due to management’s failure to maintain a rent register and also deduct rent at source, rent totalling ¢276,707,217 was owed by 44 members of staff who occupied Government bungalows/ flats and quarters between January 2005 and September 2006.

656. We recommended that the accumulated rent of ¢276,707,217 be recovered, a rent register opened and deductions made at source.



657. Owing to management's failure to promptly notify the CAGD to delete names of separated staff from the payroll, unearned salaries of ¢85,364,471 were credited to the bank accounts of 14 separated staff of the hospital between March and September 2005.

658. We recommended to management to recover the unearned salaries, delete the names and regularly monitor the payroll to prevent a recurrence of the impropriety.

Absconded patients bills unpaid - ¢121.8 million

659. We noted that 87 patients who were admitted and treated in the hospital between 2005 and 2006, failed to settle their bills, amounting to ¢121,779,800 and absconded from the wards without notice because of inadequate security at the wards.

660. We advised management to beef-up security at the wards, trace and identify those involved for the settlement of their indebtedness.

Unsupported VAT payment - ¢22.2 million

661. Our review disclosed that suppliers failed to issue VAT invoices to support VAT of ¢42,294,752 in respect of supplies they made to the hospital between February 2005 and February 2006. VAT invoices were however issued to cover ¢20,049,898 at the instance of the audit, leaving an outstanding balance of ¢22,244,854.

662. Management accepted our recommendation to obtain the invoices to cover the remaining amount and to comply with the VAT law.

ASHAIMAN HEALTH CENTRE


663. Due to the ineffectiveness of the procurement committee, drugs and non-drug items, amounting to ¢320,509,620 purchased


between August 2005 and April 2006 were not supported by a minimum of three quotations, contrary to Section 43 (1) of the Public Procurement Act, 2003 (Act 663).

664. To achieve value for money in procurement, management agreed with our advice to reactivate the procurement committee and to comply with the above-quoted Section of the Act.

MANHEAN HEALTH CENTRE – TEMA NEWTOWN

Unaccounted for revenue - ¢2.5 million

665. We noted that revenue collected between October and November 2005 totalling ¢2,496,000 was not accounted for by the Accounts Officer, Mr. William Afedzo in both the main and revenue collector's cash books due to lack of effective supervision by management.

666. We requested management to recover the amount and to exercise proper supervision over revenue collection at the Centre.

Unreceipted disbursements - ¢51.8 million

667. Seven payments, totalling ¢51,841,770 made between February and December 2005 were neither supported with official receipts nor with list of beneficiaries, in contravention of Section 39 (2) of the FAR, 2004. We attributed the cause of the impropriety to the failure of the schedule officers to demand receipts from the payees after payments were effected.

668. We recommended that all payments should be supported with official receipts, invoices and signed statements of beneficiaries to attest to the genuineness of the transactions.

Uncompetitive purchases - ¢139.9 million

669. We noted that drugs purchased between April and September 2005 at a total cost of ¢139,943,080 were not supported with three or


more quotations in contravention of Section 43 (1) of the Public Procurement Act, 2003 (Act 663).

670. As single-source procurement does not guarantee reasonable prices, we recommended that future purchases be made through competitive bidding in order to obtain value for money for the Centre.

Poor state of building

671. Our inspection showed that the building was in a state of disrepair with leaking roof and paintings peeling off the wall while the access road was not tarred due to lack of funds. 672. We advised management to liaise with the authorities to obtain funds to rehabilitate the building and to tar the road.

TEMA POLYCLINIC

Direct disbursements from revenue - ¢70.7 million

673. Contrary to Regulation 22 (1) of the FAR, 2004 which requires public moneys collected to be paid in gross to bank, we noted that management made direct disbursements, amounting to ¢156,276,945 in the form of IOUs and administrative expenses. A total of ¢85,555,000 was however, refunded, leaving an outstanding amount of ¢70,726,945.

674. Management agreed with our recommendation to reimburse the Consolidated Fund with the balance of ¢70,726,945 and to abide by the above-quoted Regulation at all times.

Unremitted withholding tax -¢57.7 million

675. Our examination disclosed that, withholding taxes deducted from payments totalling ¢57,722,193 made between February 2005 and May 2006 were not remitted to the IRS due to inadequate cash resources of the Polyclinic.


676. Management agreed to remit the amount to the IRS and to adhere strictly to the tax law.


677. Contrary to Section 43 (1) of the Public Procurement Act,2003 (Act 663) which states that a procurement entity should request for quotations from as many suppliers as practicable or at least from three different sources, we noted that purchases made between January 2005 and April 2006 valued at ¢376,270,655 were supported with only one quotation.

678. We advised management to adhere strictly to above-quoted Section to ensure value for money in procurement.

MUNICIPAL HEALTH ADMINISTRATION –TEMA

Payment of unearned salaries - ¢21.2 million

679. Improper co-ordination between the Personnel Unit and the Human Resource Development Office to ensure prompt deletion of separated staff from the payroll, led to the payment of unearned salaries of ¢21,175,435 to two former staff of the Health Administration.

680. We advised management to recover the unearned salaries and to improve upon co-ordination between the Units to forestall a recurrence of the lapse.

MIDWIFERY TRAINING SCHOOL - MAMPONG/ASHANTI


681. Regulation 262 of the FAR, 2004 states1 that "A head of department shall ensure that financial and accounting records are presented in good order in a manner that facilitates ready access for reference”. Contrary to this regulation, management failed to produce for audit, nine payment vouchers with a face value of ¢37,036,257.


682. Management responded that the payment vouchers might have mixed up with other documents when documents were moved from Mampong to Kumasi.

683. We recommended management should provide that the payment vouchers for our reviews, or the amount of ¢37,036,257 should be recovered from the Accountant.

Payment vouchers with lesser attachments - ¢23.6 million

684. Our review disclosed that 17 payment vouchers were raised between January and May 2005. We also noted that the receipts and invoices supporting the 17 payment vouchers with a face value of ¢108,675,878, totalled ¢85,019,242, leaving the payment of ¢23,656,636 unsupported with the relevant documents.

685. In the absence of the relevant documentation, we could not determine the authenticity of the transactions.

686. We therefore urged management to ensure that the necessary documentations are attached to the payment vouchers, failing which the amount of ¢23,656,636 should be recovered from the authorizing officer.

DISTRICT HOSPITAL - EJURA/ASHANTI

Use of duplicate copy of receipt

687. Section 28(1) of the FAR, 2004 requires that a Collector who is satisfied that money rendered is in order should issue an original receipt to the payer and should deal with the duplicate and triplicate copies as required by Departmental Accounting Instructions.

688. Our review, however disclosed that an amount of ¢6,000,000 paid to the Unit Pay Office, 37 Military Hospital, Accra on 9


December 2005 in respect of Joseph Samwok for Anesthesia Programme was receipted with a duplicate copy of the receipt.

689. We recommended to management to contact Unit Pay office of 37 Military Hospital for the original receipt to authenticate the payment or the amount should be recovered from Mr. Joseph Samwok.

Fuel purchases not recorded in log books - ¢30.4 million

690. Our review of the hospital's vehicle No. GV 800 R and the generator log books disclosed that fuel and lubricants purchased between October 2005 and October 2006 amounting to ¢30,412,859 were not recorded in the log books. We were of the view that failure to record fuel and lubricant purchases in the log books could lead to abuse.

691. We recommended that management should ensure that the driver and the generator attendant account for the fuel amounting to ¢30,412,859 or the amount should be recovered from them. Additionally, we urged management to appoint a fairly senior officer to supervise the work of the driver and the generator attendant.

DISTRICT HEALTH ADMINISTRTION-NEW EDUBIASE

Outstanding payment voucher-¢50.0 million

692. Management paid ¢50,000,000 to the Regional Director of Health, Kumasi with a Cheque No. 019366 on 2 November 2006 supported by PV. NO. 2/1/06 but failed to produce the voucher for audit.

693. In the absence of the payment voucher, we could not confirm that the expenditure was incurred in the best interest of the Administration. We therefore advised management to produce the payment voucher for audit or the ¢50,000,000 should be recovered from the authorising officer.


ATWIMA MPONUA DISTRICT HOSPITAL – NYINAHIN

Unrecovered sundry debts-¢24.1million

694. We observed that two organisations owed the hospital a total amount of ¢64,092,434 in respect of medical treatment offered its staff. As at the time of reporting, ¢40,000,000 had been recovered, leaving a balance of ¢24,092,434 as detailed the table below:

Organisation Amount(¢)

National Health Insurance Scheme 20,672,854Civil Servants Health Scheme 3,419,580

24,092,434

695. The inability of the hospital to recover these debts was due to bureaucracy associated with in the payment of debts by institutions. We urged management to pursue recovery of the balance.

NURSES' TRAINING COLLEGE- KUMASI

Outstanding rent advances -¢54.9 million

696. Our review of rent advances ledger disclosed that 15 staff members of the College failed to settle rent advances granted them between September 2003 and July 2006.

697. Failure of these staff members to settle their indebtedness could deny others the facility. Lack of effective monitoring of advances in general resulted in the delay in repayment of the advances. We urged management to pursue recovery of the amount for the benefit of others.


MANHYIA DISTRICT HOSPITAL – KUMASI

Indebtedness of NHIS to the hospital -¢570.9 million

698. In keeping with the government health policy, the hospital between April 2006 and December 2006 offered services to patients registered with seven health insurance schemes at a cost of ¢570,906,576. However, as at the time of reporting, these Schemes have not honoured their obligation despite repeated demands from the hospital.

699. Managements of the seven schemes explained that they were reconciling the demand notices with their records before settling their indebtedness with the hospital. The delays in paying debts could be a drawback to management’s efforts to improve on the financial resources of the hospital as well as derail this noble health policy. We recommended to management to pursue recovery of the total amount of ¢570,906,576 amount from the schemes.

SUNTRESO GOVERNMENT HOSPITAL - KUMASI

Indebtedness of National Health Insurance Schemes - ¢241.2 million

700. Our audit disclosed that between January and June 2006, the hospital spent a total amount of ¢241,200,946 on patients from 27 National Health Insurance Schemes under the Government Health delivery policy. The Health Insurance Schemes were expected to re-imburse the hospital with the amount periodically but had as at the time reporting not done so.

701. The delay in the recovery of the debt from the Schemes had deprived the hospital of cash for some of its essential services.

702. We recommended to management to pursue recovery of the amount in order to sustain the Government Health Delivery policy.


Outstanding staff advances-¢20.0 million

703. Our review of the staff advances ledger revealed that 22 staff members were granted advances amounting to ¢108,432,000 during the period under consideration. Out of the amount, ¢88,432,000 had been refunded, leaving a balance of ¢20,0 million as at the time of audit in December 2006.

704. We recommended to management to pursue recovery of the balance of ¢20,0 million to ensure that other staff members also enjoy the facility.

DISTRICT HOSPITAL – TEPA

Failure to account for monies collected-¢15.0 million

705. We noted that nine revenue collectors at the hospital's records department failed to account for revenue totalling ¢14,986,000 collected between December 2004 and May 2006. This situation came about because the Accountant failed to supervise the work of the collectors.

706. We requested management to put in measures that will compel the revenue collectors to pay revenue collected promptly and in full daily. We also requested management to recover the amount from the nine revenue collectors and disciplinary action taken against them.

DISTRICT HEALTH ADMINISTRATION-BEKWAI

Payment vouchers without supporting documents-¢31.4 million

707. We noted that an amount of ¢31,387,157 released for health activities between January 2005 and July 2006 had not been accounted for with receipts, invoices and statements as at the time of audit.


708. We urged management to ensure that all supporting documents including statement of expenditure are made available for scrutiny, failing which the amount should be recovered from the officers concerned.

Unreceipted payment vouchers - ¢20.0 million

709. We noted that five payment vouchers with total face value of ¢20,010,000 raised between January 2005 and September 2005 to transfer exemption fees to four institutions and repair of official vehicle were not supported with official receipts.

710. Laxity on the part of the schedule officers and ineffective supervision by management accounted for the lapse. 711. To ensure accountability, we urged management to obtain official receipts from the payees to authenticate the transactions, or the amount involved should be recovered from the officers responsible for the payments.

KONONGO-ODUMASI HOSPITAL

Unsupported payment vouchers-¢37.2 million

712. Regulation 39(2)(c) of the FAR, 2004 requires that the head of accounts section of a department shall control the disbursement of funds and ensure that transactions are properly authenticated to show that amounts are due and payable.

713. Contrary to this regulation, our review of payment vouchers revealed that a total amount of ¢37,241,000 paid on nine payment vouchers in respect of goods and services procured were neither supported with receipts nor details to show that the amounts were due and payable.

714. This lapse resulted from laxity on the part of the accounts officers.


715. We recommended to management to provide details including receipts and invoices or the total amount of ¢37,241,000 should be recovered from the authorizing officer.

Outstanding staff advances - ¢11.5 milion

716. Regulation 113(1) of the FAR, 2004 requires that recoveries of advances from official salaries should commence from the salary of the next complete month after the month in which the advance was made.

717. In contravention of the above-quoted regulation, management failed to make recoveries from eight members of staff who were indebted to the hospital in respect of staff advances totalling ¢11,575,311 with some dating as far back as January 2004. We recommended that management should pursue recovery of the outstanding advances in line with the regulation.

METROPOLITAN HEALTH DIRECTORATE – KUMASI


718. Regulation 297(1) of the FAR, 2004 enjoins heads of departments to cause the immediate stoppage of payment of salary to a public servant when that public servant dies.

719. Our audit of the payroll, however, revealed that Mr. Frank Aikins, a Senior Storekeeper of the Metro Health Directorate who died on 10 July 2005 had his name appearing on the payroll until June 2006 (i.e. ten months after his death) before his name was deleted from the payroll.

720. As a result of inaction of management, a total amount of ¢8,386,918, being unearned salary for the period was credited to Mr. Aikins' bank account with Barclays Bank, Prempeh II Street, Kumasi. We advised management to contact the next of kin of Mr. Aikins for the recovery of the amount.


DISTRICT HEALTH ADMINISTRATION-AGONA/ASHANTI


721. We noted during the audit in June 2006 that unearned salaries totalling ¢11,259,275 had been wrongly paid into the accounts of six separated members of staff. Our investigations revealed that the separated staff had withdrawn the illegal salaries from their bank accounts.

722. Management’s disregarded for Regulation 297(1) of the FAR, 2004 resulted in the payment of the unearned salaries. We urged management to vigorously pursue recovery of the amounts from the separated staff.

NATIONAL HEALTH INSURANCE COUNCIL

DISTRICT MUTUAL HEALTH INSURANCE SCHEME (DMHIS) EJURA/SEKYEDUMASI

Outstanding value books - ¢159.8 million

723. Our audit disclosed that between July and December 2004, a consultant procured 20,000 pieces of value books from a private source at a cost of ¢10,000,000 for the collection of premium without authority from Controller and Accountant-General. However, the controls exercised over the receipt and issue of the value books were weak as no stock register was maintained.

724. Consequently, 3000 pieces of the receipt books issued out to premium collectors in the various communities had been recorded on loose sheets. This anomaly led to the suppression of 2220 premium receipt books with a face value of ¢159,840,000 by collectors. This could facilitate suppression and/or misappropriation of premium due to the Scheme.


725. We recommended that management with the help of the consultant should retrieve all outstanding premium receipt books in possession of the collectors for audit.

Unsupported payments -¢27.1 million

726. Our examination of expenditure records of the scheme disclosed that between May and August 2004, three payments totalling ¢27,130,000 made to the District Co-ordinating Director, a consultant and focal persons were not supported by the relevant documentation.

727. We could, therefore, not confirm whether the services for which the payments were made were rendered satisfactorily.

728. We recommended to management to ensure that the responsible officers provide the relevant supporting documents, including receipts and invoices to substantiate the payments, failing which the amount of ¢27,130,000 should be recovered from them.


729. Section 55 of Store Regulation 1984 requires the keeping of complete record of receipt and issues to facilitate verification of items purchased and their disposal. However, the consultant failed to keep store records on goods worth ¢30,808,750 purchased for the scheme.

730. Our verification carried out at the Scheme's Units indicated that all equipment and materials purchased by the Consultant had been received and used for the intended purposes. We however advised management to ensure compliance with the store regulation.


DISTRICT MUTUAL HEALTH INSURANCE SCHEME (DMHIS) –TEPA

Unauthorised printing of value books - ¢6 million

731. We noted that the Scheme printed 500 receipt books worth ¢6.0 million from Behold Printing Works, Kumasi and effected payment on payment voucher No. 3/8 of 3 August 2004. The required authority was, however, not obtained from the Controller and Accountant-General for the printing of the receipt books in contravention of Section 211(1) of the FAR, 2004.

732. Management explained that the then Committee responsible for the running of the Scheme was not conversant with the regulations hence the breach.

733. We recommended to management to ensure that in future all receipt books are purchased from the Controller and Accountant-General in accordance with the Regulation

OFFINSOMAN HEALTH INSURANCE SCHEME

Revenue not accounted for - ¢194.0 million

734. We observed that out of a total premium of ¢465,551,000 collected for the period August 2004 to December 2005, only ¢271,561,200 was brought to account, leaving a balance of ¢193,989,800 unaccounted for.

735. Management's failure to supervise the activities of the revenue collectors contributed to the lapse resulting in loss of revenue to the Scheme.

736. We advised management to recover the total amount of ¢193,989,800 from the working committee and pay same to the Scheme's account.


Official receipt books not accounted for

737. We observed that 1200 receipt books printed for the Insurance Scheme by HRP Plus, an NGO, were not recorded in the stock register. Additionally, only 965 of the books were presented for audit, leaving 235 whose value could not be determined.

738. Poor internal control system contributed to this lapse. The possibility of unauthorised personnel using some of these books to collect monies from the public cannot be ruled out. We advised management to trace the 235 receipt books and present them for our examination. We also advised management to record the particulars of the 965 books in the stock register to control them.

DISTRICT HEALTH ADMINISTRATION – KPANDO

Loss of VAT revenue-¢12.8million

739. 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 purchase.

740. We noted, however, that Kpando District Health Administration purchased goods worth ¢85,103,000 from two non-VAT registered suppliers during the period under review. As a result, a total of ¢12,765,459 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 in accordance with the VAT Act.

HEALTH CENTRE – KPANDO

Mutual Health Insurance Scheme's indebtedness - ¢23.1million

741. The cost of drugs supplied and services rendered by the Kpando Health Centre to patients registered with the Mutual Insurance Scheme are submitted to the District Health Insurance Secretariat for reimbursement. Our review disclosed that for the


period January to June 2006, only ¢19,684,875 out of a total expenses of ¢42,735,462 that the Health Centre incurred on behalf of patients qualified for free medical treatment under the insurance scheme was reimbursed, leaving ¢23,050,587 outstanding.

742. The delay in reimbursing the Centre with the amount deprived it of funds needed to facilitate quality health care delivery. We therefore advised management to pursue reimbursement of the amount.

DISTRICT MUTUAL HEALTH INSURANCE OFFICE – KETA

Pre-financing of procurement - ¢30.0million

713. Section 16 of the Financial Administration Act, 2003 (Act 654) requires that payment should not be made for work done, goods supplied or services rendered unless certified that the work has been performed, goods supplied or services rendered.

714. On the contrary, management of the Mutual Health Insurance Office wilfully advanced an amount of ¢30,000,000 to Big Tom Printing Press to print 10,000,000 insurance membership cards in June 2006. At the time of compiling this report in December 2006, only ¢8,000,000 worth of the cards had been supplied.

715. We also noted that management had terminated the contract with Big Tom Press but failed to recover the outstanding amount of ¢22,000,000 from the company. We recommended to management to pursue supply of the membership cards, failing which the cost of the outstanding cards should be recovered from the management of the District Office at Keta.

716. Between April 2004 and November 2006, a Senior Accountant of Adidome District hospital, Mr. Michael Tettevi, collected a total revenue of ¢1,685,031,200 but paid ¢1,483,849,600 to chest, leaving a balance of ¢201,181,600 out of which he allegedly made expenses


totalling ¢127,030, 600, in contravention of Regulation 15 (1) of the FAR, 2004 which enjoins revenue collectors to pay all public moneys collected to chest within 24 hours.

717. We noted further that the Medical Superintendent in charge refused to authorise the vouchers covering the alleged disbursement of ¢127,030,600. Additionally, the Accountant could not account for the cash balance of ¢74,151,000.

718. We attributed the financial improprieties to lack of supervisory controls. We therefore urged management to ensure compliance with the above-quoted regulation. We also recommended that the amount of ¢201,181,600 should be recovered from the Senior Accountant. Furthermore, disciplinary action should be taken against him in accordance Regulation 8(3) of the FAR, 2004.

EFFIA NKWANTA REGIONAL HOSPITAL (ENRH), SEKONDI


719. We observed that payments totalling ¢399,460,735 made by the Drugs Section to 17 suppliers of drugs were not supported with official receipts from the payees.

720. The situation puts the authenticity of the transactions in doubt and contravened Part D (5) of the Ghana Health Service (GHS) Accounting, Treasury and Financial (ATF) Reporting Rules and Regulations which require that all payments should be supported with receipts from the vendors.

721. Management said it had notified the suppliers to submit the relevant receipts. Management later submitted receipts to cover only ¢50,750,000 of the payments leaving a balance of ¢348,710,735 yet to be supported with receipts.


722. We urged management to produce vendors’ receipts to cover the remaining payments or to retrieve the amount of ¢348,710,735.

Drug supplies not awarded on contract - ¢629.9 million

723. Section 4.3.4 of the Procurement Procedure Manual of the Ministry of Health (MOH) requires the formal award and acceptance of contracts for works and supply of goods and services. Additionally, Section 15 (2) of the Public Procurement Act, 2003 (Act 663) requires procurement decisions of an entity to be taken in a corporate manner.

724. Contrary to these requirements, we observed that 20 private chemical and pharmaceutical agencies supplied drugs worth ¢629,986,950 to the Effia Nkwanta Regional Hospital without formal contracts. Sixteen of these suppliers were not registered with the Hospital as suppliers. Also, the Procurement Committee of the Hospital was sidelined in the transactions.

725. The non-involvement of the procurement committee and disregard of the above quoted regulation accounted for the anomaly. There is significant risk of loss to the Hospital when suppliers are not formally contracted, as the Hospital may have no basis for claim of appropriate reliefs in the event of breach of contract by the suppliers.

726. We did not agree with management’s explanation that the supplies were awarded on contract but the necessary documentation was not made. We therefore recommended that management should ensure at all times that such supplies are appropriately awarded on contract with the necessary documentary evidence obtained to strengthen controls and comply with relevant regulations as quoted above. Additionally, all relevant internal units must contribute to the decision making process.

Loss of drugs - ¢16.0 million

727. We observed that management approved and paid an amount of ¢28,000,000 to Kendicks Pharmacy for drugs the company had


supplied on 27 April 2005 but which had been destroyed and not used by the Hospital.

728. Investigations conducted by the audit team revealed that the drugs were supplied without accompanying invoices and therefore the Internal Auditor was unable to inspect them. They were then left in the open at the main store, for which reason the drugs got destroyed.

729. Though the drugs were destroyed, the Pharmacy Department erroneously recorded them in the ledgers as having received them and the supplier was paid in full, thereby occasioning a loss of ¢28,000,000 to the Hospital.

730. Management’s lack of adequate control over payments was identified as the cause of this loss. Upon our recommendation, management was able to retrieve ¢12,000,000 worth of the drugs and promised to identify the officers responsible for the loss of the remaining ¢16,000,000 worth of drugs and surcharge them with the amount.

Loss of 251 litres of formalin - ¢10.2 million

731. We noted that out of a total of 843 litres of formalin received into the main store of the Hospital between January 2005 and January 2006, 569 litres were issued to the Mortuary, 23 litres were in stock at the time of our audit and 251 litres valued at ¢10,223,983 could not be accounted for. It was also observed that the Pharmacy Department was not keeping a ledger and/or tally card to record receipts and issues of the chemical.

732. Management explained that the loss was due to evaporation and spillage during handling since the consignment in question was procured in drums and had to be poured periodically when issuing to the Mortuary. It had therefore been decided that subsequent procurement of the chemical will be in one litre bottles to reduce the spillage and evaporation loss.


733. We, however, considered spillage and evaporation loss of 30% of the volume to be high. Considering the fact that the Pharmacy did not keep relevant records on the chemical, it becomes doubtful to accept that the shortage could all be due to spillage and evaporation.

734. We therefore requested management to account for the use of the 251 litres of formalin and to ensure that adequate records are kept on all items at all times.

Award of contracts without tender - ¢566.7 million 735. Section 31(1) of PPA requires Procurement Entities to procure goods, services or work by competitive tendering. Any other method of procurement must be justified. Our examination of the Internally Generated Fund (IGF) records of the hospital revealed on the contrary that three contracts totalling ¢566,725,000 were awarded without tender to three contractors. The contract for the expansion of the mortuary was awarded to Fresscom Ltd. at a cost of ¢135,000,000 and the contract for the installation of refrigerator and fabrication of shelves was awarded to Uroco Refrigeration and Air Condition at ¢206,140,000. The third contract was for an Area Networking Project and was awarded to Daviran Computer Ltd. for ¢225,585,000.

736. We observed that no Consultant was involved in project evaluation and certification before payments were made to the contractors. In our view, the Hospital may not have achieved value for money in these contracts since lack of competition in the contract awards could have resulted in the contractors charging exorbitant contract sums.

737. We recommended that management should be sanctioned for the flagrant violations of the provisions of the Public Procurement Act. We also advised management to subject all future contracts to competitive tendering.


Unsupported refunds of in-patient deposits - ¢134.6 million

738. We observed that a total amount of ¢134,631,035 was paid as deposit refunds to in-patients without supporting documents like receipts on which the patients’ deposits were acknowledged and copies of bills. This made it impossible for us to confirm whether the refunds were genuine and accurate.

739. Management said that the schedule officer who made the refunds was on transfer and would be invited to help locate the relevant supporting documents.

740. We are of the opinion that the schedule officer’s work was not appropriately supervised by management and this could lead to fictitious refunds without detection. We recommended that supporting documents for the refunds should be presented for audit scrutiny without delay, and all future refunds should be approved and paid on the strength of relevant supporting documents.


741. Payments totalling ¢229,002,100 were not supported with official receipts, contrary to the requirements of Section D2 (6) (a) of the Accounting, Treasury and Financial (ATF) Reporting Regulations of the Ministry of Health (MOH). These were made up of ¢74,051,750 petty cash payments and ¢154,950,350 other payments.

742. This occurred because there seemed to be no effective measures to ensure that officers making payments on behalf of the Hospital insist on obtaining receipts to support disbursements, a situation which could be attributed to weak managerial supervision.

743. Management was able to present receipts to cover ¢6,741,000 of the petty cash payments and ¢28,487,000 of the other payments. This left a total balance of ¢193,774,100 (¢67,310,750 petty cash payments and ¢126,463,350 other payments) to be authenticated with


receipts. We have recommended to management to present receipts covering the remaining payments of ¢193,774,100 or the amount should be recovered from the officers who made the payments.


744. During the period under review, management was unable to present 83 payment vouchers covering payments amounting to ¢582,934,555 for our inspection. The audit team could not, therefore, determine the propriety or otherwise of these payments.

745. Management responded to our report by presenting 32 of the payment vouchers leaving 51 of them, covering payments totalling ¢310,462,510, yet to be presented for our examination. We urged management to present the rest of the payment vouchers for our examination.

Imprest not accounted for-¢224.7 million

746. Examination of expenditure records of the hospital disclosed that imprests amounting to ¢224,669,200 which were advanced to the following officers between 2004 and 2005 have not been retired:

Name Position Amount¢

Asare Bediaku Head of Administration 52,233,000Hajaratu Musah Procurement Officer 63,801,200Nana Ntim Adjei Administrator 62,018,700Esther Ama Pesseh DDNS 33,403,800E. Opoku Mensah Accountant 10,162,500Emmanuel Eminal Estate Manager 3,050,000Total ¢224,669,200

747. The absence of effective managerial control to ensure that imprest holders promptly retire imprests has resulted in this situation. Management was requested to ensure that the officers retire the outstanding imprest.



750. Examination of the IGF records disclosed that 21 payment vouchers covering payments amounting to ¢214,317,371, for various services rendered to the Hospital, were not supported with documents like receipts and details of expenditure. In some cases, receipts attached to payment vouchers were of lower values than the amounts paid.

751. This situation indicates lax financial control environment in the Hospital, a situation which could result in fraudulent payments. We recommended to management to ensure that the payment vouchers were properly supported for audit examination. Management is yet to act on our recommendation.

Payment of unearned salaries-¢36.4 million

752. Unearned salaries totalling ¢36,423,491 were paid to six persons who had separated from the hospital. Five of these officers were on study leave without pay whilst one officer was deceased. In our view, the anomaly occurred because management failed to comply with Regulation 297 (1) of the FAR, 2004 by failing to take immediate action to stop the salaries of the separated staff.

753. We requested management to contact the banks of the ex-employees to transfer the unearned salaries to chest. Management responded that it had done so in compliance with our recommendation but the banks have not responded to its request. We urged management to pursue the matter to ensure recovery of the payments.

DISTRICT HEALTH ADMINISTRATION-AXIM

Overpayments-¢4.7 million

754. We noted during our audit of the District Health Administration, Axim that between February 2003 and February 2005, a total amount of ¢4,714,438 was overpaid on ADHA and other


expenses. Management's failure to authenticate the accuracy of the relevant documents attached to payment vouchers accounted for the total overpayment.

755. We urged management to recover the overpayments from the officer(s) concerned and pay same to chest.

DISTRICT HOSPITAL-AXIM


756. Our examination of the payment records of the Axim District Hospital revealed that fuel purchases totalling ¢58,838,183 allegedly made by the hospital could not be traced to the vehicle log books or store records to confirm procurement and utilisation, contrary to Chapter XXI, Section 29 of Stores Regulations.

757. Management's failure to institute proper supervision over the maintenance of log books by the drivers contributed to this lapse which could result in a drain on the department's financial resources. We recommended that management should account for the alleged fuel purchases or the amount involved should be recovered and paid to chest.

Failure to account for store purchases-¢14.4 million

758. The Axim District Hospital made store purchases amounting to ¢14,412,100 without routing them through store records in violation of Section 0522 of Stores Regulation, 1984. We could therefore not ascertain whether the items were purchased, received and utilized for the intended purposes.

759. We recommended to management to provide evidence of receipt and disposal of the said purchases failure of which, the cost involved should be recovered to chest.


DISTRICT HEALTH ADMINISTRATION - HALF ASSINI

Repair of accident vehicle - ¢63.6 million

760. Our review of the expenditure records of the Half Assini District Health Administration disclosed that an amount of ¢54,000,000 was paid to Messrs Kwansa Automobile Centre as part payment of total expenditure of ¢63,658,250 on repairs carried on vehicle number GV 382 U, an accident vehicle. We noted that the repairs were carried out without obtaining Police report on the accident.

761. On the basis of the Vehicle Examiner's report on the accident however, we commended that the driver should be reprimanded and surcharged with the cost of repairs for reckless driving.

Sale of bed nets not account for - ¢4.6 million

762. The Half Assini District Health Administration failed to collect total revenue of ¢4,620,000 from the sales of insecticide treated nets it issued to its agents for sale to mothers of children under the age of five and pregnant women.

763. Management claimed that its inability to collect the expected revenue was due to the remoteness of the locations of the agents. We recommended that the assistance of the Police should be sought in recovering the outstanding amount.

DISTRICT HEALTH ADMINISTRATION-TARKWA

Purchases of drugs - ¢51.3 million

764. The Tarkwa District Health Administration purchased medical equipment and consumables totalling ¢51,315,000 from Pokant Enterprise and Kekule Pharmacy both private drug houses without evidence of non availability certificate from either the Regional or Central Medical Store.


765. Management explained that it used its discretion to purchase the medical equipment and drugs from the open market without obtaining non-availability certificate because it was convinced that price quotations for the equipment and drugs from the Central Medical Stores were on the higher side compared to that from the open market. Management further explained that the drugs were urgently needed to revive the Awudua Health Centre.

766. Management however failed to provide this office with copies of price quotations from the Regional and Central Medical Stores for comparison with that of the open market.

767. We recommended to the Administration to ensure that in future, non-availability certificates should be obtained to substantiate open market purchases without which the responsible officials should be surcharged with the amount involved.

Fuel purchases unaccounted for - ¢19.1 million

768. Management failed to account for the use of fuel purchases totalling ¢19,069,000 made during the period under review. We noted that the fuel purchases were not recorded in any vehicle log book to enable audit ascertain usage and control, if any, over the usage. The audit disclosed that for the period covered journeys made by the official vehicle were unauthorised.

769. We recommended that management should account for the use of the alleged fuel purchases failure of which the authorizing officer should be surcharged with the expenditure.

TARKWA GOVERNMENT HOSPITAL

Outstanding salary advances-¢17.3 million

770. Nine members of staff of the Hospital were granted total salary advance of ¢17,300,000 some dating as far back as January 2005 without effective recovery schedules to ensure prompt recovery.


771. We recommended to management to recover the amount.

Failure to remit withheld tax-¢50.6 million

772. Total tax of ¢50,624,882 withheld from vendors and service providers by the Hospital were not remitted to Internal Revenue Service.

773. The omission was contrary to the provisions of the Internal Revenue Act, 2000 (Act 592) Section 87 (1) which requires a withholding agent to pay to the Commissioner, a tax that has been withheld or that should have been withheld within fifteen days after the end of the month in which the payment was made by the agent.

774. We recommended that management should remit the total tax of ¢50,624,882 to IRS and ensure that such statutory deductions withheld are promptly remitted to IRS.

DISTRICT HOSPITAL - BIBIANI

Indebtedness to the hospital-¢401.0 million

775. At the close of our audit on 31 August 2006, total indebtedness by patients to the hospital amounted to ¢401,029,325. This was made up of credit facilities granted to companies and NHIS exemptions for deliveries and old age.

776. We urged management to pursue recovery of the outstanding amount and take utmost care in granting credits to companies since the policy could adversely affect the finances of the hospital in the event of default in payment.

Uncompetitive purchases -¢49.6 million

777. The Public Procurement Act 2003, Act 663, Section 43(1) requires procurement entities to obtain quotations from as many


suppliers or contractors as practicable, but from at least three different sources.

778. We noted from our audit of the District Hospital that drugs worth ¢49,644,000 were purchased without obtaining quotations from at least three sources. In this regard price quotations were not obtained for comparison to ensure value for money in the purchases made.

779. Management explained that the drugs were needed urgently and therefore emergency procurement was done to replenish drugs which were needed. We advised management to consider stock levels of fast moving drugs when requisitioning drugs from the Regional Medical Stores and strictly adhere to the Procurement Act to enhance transparency and fair pricing of goods purchased.

PORT HEALTH CLINIC – TAKORADI

Unauthorised rates and charges

780. Regulation 162(2) of FAR, 2004 states that " New rates charges become effective from the date specified in the amending enactment or any other instrument authorising the change" .

781. We observed at the Port Health Clinic in Takoradi that even though charges at the Port Health Clinic had been reviewed upwards, management could not provide the necessary authority to back the introduction of the revised rates.

782. Management explained that the charges and rates were reviewed through verbal instructions from the Tema Port Health Office. As a result, we could not authenticate the legality of the new rates being charged.


783. We recommended to management to obtain authorisation to give legal backing to the new rates being charged or to revert to the old rates.

DADIESO HEALTH CENTRE - DADIESO

Medical treatment not refunded - ¢34.6 million

784. The Dadieso Health Centre provided unpaid medical services in the sum of ¢34,689,000 between April 2005 to September 2006 under the exemption clause.

785. The Medical Assistant at Dadieso Health Centre extended the exemption to staff of the Health Centre and relations numbering 72 patients. Health personnel who are contributors to SSNIT and who should register with the NHIS failed to do so and continued to enjoy free medical care at the expense of Government.

786. We recommended that the Medical Assistant should reconsider the policy of providing free medical care to staff who are eligible to register with NHIS and encourage them to register with the Scheme. We further recommended to the Medical Assistant to liaise with the Regional Director of Health Services, Western Region to re-imburse the Health Centre.

DISTRICT HEALTH ADMINISTRATION-DONKORKROM

Unreceipted payment of exemptions-¢56.6 million

787. We observed during our review of the Main Accounts that out of a total of ¢135,870,000 exemptions and cost of free delivery refunded to Health Centres, Clinics and the Donkorkrom Presbyterian Hospital, a total amount of ¢56,630,000 was not covered with official receipts or acknowledgements.

788. The lapse resulted from the failure of the District Accountant to ensure that receipts were issued by the recipients. Financial


regulations were not only violated but the assurance that the payments had been made to the payees could also not be established.

789. To promote transparency and accountability, we advised management to obtain official receipts from the payees to cover all the refunds made to them.

Payment not accounted for - ¢10.0 million

790. Management released an amount of ¢9,950,000 in June 2006 to the District Director of Health Service for eye programmes at some schools within the Kwahu North District. However, we noted that programme officials failed to submit statements of expenditure and receipts to acquit the vouchers.

791. We advised that monitoring of the programme officials should be stepped up while maximum pressure brought to bear on them to submit expenditure particulars to acquit the payment vouchers.

Sale of bed nets not accounted for - ¢22.6 million

792. The District Health Administration issued 851 bed nets valued at ¢17,020,000 to some Health Centres and Clinics for sale. At the time of our audit, the Health facilities had paid nothing to the DHA. We also noted that the same Health facilities had failed to pay previous sales totalling ¢5,600,000.

793. We observed that these debts accumulated due to the inaction and weak debt collection strategy of the District Health Authorities.

794. We urged management to retrieve the total amount of ¢22,620,000 without further delay.


DISTRICT HEALTH ADMINISTRATION – ATIBIE

Goods paid for but not supplied - ¢4.2 million

795. Our examination disclosed that Messrs Ofori Nyame Enterprise was paid ¢4,200,000 in October 2006 for the supply of 100 identity cards but failed to deliver the items.

796. We advised management to pursue the supply of the items or recover the amount without delay.

AKUSE GOVERNMENT HOSPITAL -AKUSE


797. Failure of management to promptly ensure the deletion of the names of four separated staff from the payroll resulted in the payment of a total of ¢17,711,999 into their personal accounts between January 2005 and May 2006.

798. Management also failed to instruct their bankers to return the unearned salaries into the Consolidated Fund as required by Regulation 298 of the FAR, 2004 (LI. 1802).

799. We advised management to ensure the deletion of the names and the return of the total amount of ¢17,711,999 into the Consolidated Fund.

DHMT – ATIMPOKU


800. Mrs. Vesna Senker, a Community Health Nurse was granted leave without pay with effect from 1 October 2004. Management’s failure to promptly cause the suspension of further payments of salaries into her account led to the payment of a total unearned salaries of ¢14,546,935 into her personal account.


801. Also, management’s failure to promptly notify her bankers enabled Mrs Senker who subsequently vacated her post to withdraw ¢6,125,000 from her account before the bank was notified.

802. We advised management to instruct Mrs. Senker’s Bankers to return the balance of ¢8,421,925 in her account into the consolidated fund. We also asked management to pursue recovery of the ¢6,125,000 from Mrs. Vesna Senker.

GOVERNMENT HOSPITAL - AKIM ODA

Indebtedness to the Hospital - ¢17.1 million

803. Our audit disclosed that 10 corporate bodies and the NHIS were indebted to the Hospital in amounts totalling ¢258,744,300 due to the Hospital management’s non-vigilance in monitoring payments. We drew management’s attention to its duty to collect all debts owed to ensure uninterrupted health delivery in the community.

804. Management agreed to vigorously pursue recovery of the amount and managed to collect ¢241,605,100, leaving an outstanding balance of ¢17,139,200 due from Oda Plywood and Veneer Limited.

DISTRICT HEALTH ADMINISTRATION - AKIM ODA

Rent arrears-¢60.6 million

805. Contrary to Ministry of Finance and Economic Planning circular No. NTR-CAGD of 15 May 2006, which enjoins 16% to be deducted as rent from salaries of all occupants of government accommodation, we observed that 12 staff members of the DHA did not suffer rent deductions between January and October 2006 amounting to ¢60,603,830.

806. Management’s explanation that it was the Ministry of Health’s policy to offer free accommodation as incentive to health workers in rural areas was not supported by documentary evidence.


807. We advised management to start deducting rent from the salaries of occupants of government accommodation and also recover the ¢60,603,830 from the rent defaulters.

Unredeemed rent advance - ¢13.4 million

808. Regulation 110 of FAR 2004 requires a head of department to ensure that advances are duly recovered in consonance with appropriate agreement.

809. Our audit, however revealed that out of a total amount of ¢22,460,000 granted to seven members of staff as rent advance between June 2004 and July 2006, only ¢9,100,000 had been recovered leaving an outstanding balance of ¢13,360,000.

810. Management’s failure to monitor and ensure total recovery of advances could result in a loss to the State and also prevent other health workers from benefiting from the scheme.

811. We urged management to monitor repayments of advances and also ensure that the outstanding amount of ¢13,360,000 is recovered.

REGIONAL HEALTH ADMINISTRATION-SUNYANI

Staff advances-¢35.1 million

812. Our review of the advances register revealed that staff advances totalling ¢35,097,000 were granted without taking into account staff salaries as well as giving a time frame to recover the debts.

813. We urged management to ensure early recovery of the amount.

DISTRICT HEALTH DIRECTORATE - KINTAMPO


814. Section 43(1) of the Public Procurement Act, 2003 (Act 663) requires that in making purchases, the procurement entity shall


request quotations from as many suppliers or contractors as practicable but from at least three different sources. We noted during the examination of the expenditure records that contrary to this provision of the Act, management procured items worth ¢56,639,812 between June 2004 and May 2006 without obtaining a minimum of three quotations.

815. Management explained that the items were bought on credit and therefore could not abide by the Act.

816. Notwithstanding management’s explanation, we recommended that the Health Directorate should always obtain quotations from at least three suppliers to ensure value for money in accordance with the above quoted law.

DISTRICT HOSPITAL - CAPE COAST

Outstanding advance-¢10.4 million

817. We noted that advances totalling ¢10,480,000 some dating back to November 2005 granted to six members of staff were outstanding as at the time of our audit in December 2006. This was caused by management’s failure to comply with Regulation 99(1) of the FAR, 2004 which requires, that an advance or loan should not be payable until an agreement specifying condition and terms of recovery have been concluded between the borrower and the Government. Management informed us that all of them were on transfer to other hospitals.

818. We recommended to management to contact them through their new addresses to recover the amounts from them.


DISTRICT HEALTH MANAGEMENT TEAM –AGONA SWEDRU


819. Our audit disclosed that a separated staff of the Directorate was paid unearned salaries amounting to ¢3,854,820 due to the inability of CAGD to promptly delete her name from the payroll.

820. We recommended that management and CAGD should collaborate to ensure early processing of the deletion input and also recover the total unearned salaries of ¢3, 854,820 to chest.

Outstanding advances - ¢3.6 million

821. We noted that a total amount of ¢3,600,000 was granted as salary advances to four members of staff with some dating back to September 2005. However, management failed to recover the advances granted contrary to Regulation 110 of the Financial Administration Regulations, 2004 which makes it incumbent on the head of department to recover all debts owed to the department.

822. Management accepted our recommendation to ensure immediate recovery of the amount of ¢3.6 million to chest.

MINISTRY OF HEALTH - ABURA DUNKWAMUTUAL HEALTH INSURANCE SCHEME

Unsupported payment vouchers -¢35 million

823. Regulation 39(c) of FAR, 2004 L. I. 1802 states '' the head of accounts section of a Department shall control the disbursement of funds and ensure that transactions are properly authenticated to show that amounts are due and payable”.

824. On the contrary, 12 payments vouchers amounting to ¢34,980,000 were not supported with receipts and invoices to authenticate the payments.


825. Management noted to comply with our recommendation to provide relevant receipts, invoices and statements to authenticate the payments.

NYANKOMANSI AHENKRO HEALTH CENTRE


826. Regulation 22 (1) of the Financial Administration Regulations, 2004 (LI 1802) states ''All public monies collected shall be paid in gross into the Public Funds Account and no disbursement shall be made from the moneys collected except as provided by an exactment''.

827. Contrary to this regulation, Mr. T. E. Dadzie, the Medical Assistant, collected revenue totalling ¢152,241,967 during the period under review but accounted for only ¢39,701,000, resulting in unaccounted for balance of ¢112,540,967.

828. The misappropriation resulted from the fact that Mr. T. E. Dadzie doubled as the Medical Assistant and an Accounts Officer.

829. We recommended to management to recover the amount from Mr. T. E. Dadzie and also take disciplinary action against him. We further advised management to ensure that a qualified Accounts Clerk is posted to the Centre.

Unsupported payments - ¢29.0million

830. Section 235 of the FAR 1979, L.I. 1234 states ''Full accounting details shall be given on a payment voucher so that it can be checked without reference to any other documents''. We however, observed that two payments totalling of ¢29.0 million were not supported with expenditure source documents such as receipts, invoices and statements.


831. Due to the absence of the supporting documents, we could not vouch the authenticity of the payments. We recommended that receipts and invoices should be obtained to support the payment vouchers failing which the amount should be recovered from the Accountant and authorising officer.

DISTRICT HOSPITAL – AJUMAKO


832. Section 43(1) of the Public Procurement Act (Act 663) requires procurement entities to obtain price quotations from as many suppliers or contractors as practicable, but from at least three sources.

833. However, our review disclosed that the District Office purchased protective clothing valued at ¢15,000,000 without obtaining price quotations from different suppliers. We could therefore not ascertain whether the prices obtained for the items were fair under the circumstance.

834. We advised management to comply strictly with the above quoted law in its future procurements.

WINNEBA GOVERNMENT HOSPITAL

Rent defaulters-¢15.4 million

835. All officers occupying government flats/quarter/bungalows are to pay rent as determined by the authorities. However, some officers occupying the hospital flats/quarters/bungalows do not pay rent to the hospital. The Accountant explained that all efforts made to input the rent into the payroll have been unsuccessful.

836. We rather asked management to open a rent register and deduct the expected rent from the salaries of the occupants and pay same to the hospital rent accounts.


837. The non-adherence of the rule puts pressure on the hospital's finances for renovational works when no amount is received for repair works. The arrears of ¢15,400,000 should therefore be recovered from the defaulters.

Illegal payment of salary-¢21.5 million

838. Our review of payroll disclosed that Mr. William Donkor applied for leave without pay from June 2005 to December 2006. We noted however, that an amount of ¢21, 521,292 was paid into his account.

839. Management explained that it had written to the Bank to remit all unearned salaries to chest. We advised management to ensure that the bank complies with the directive.


840. Similarly, Mr. Osei Kwame, who retired on 1 January 2006 was paid salaries from the date of retirement to 31 May 2006. The lapse came about as a result of the inability of the Controller and Accountant General to delete the name in spite of letters written by the hospital for deletion.

841. Consequently, a total amount of ¢5,217,648 was paid to Mr. Osei Kwame with staff number 251003U at Awutu Emasa Rural Bank.

842. We advised management to ensure that the ¢5,217,618 is deducted from Mr. Osei Kwame’s retirement benefits.

Shortage of drugs - ¢8.0 million

843. Regulations 1201 of Stores Regulations 1984 states that stock taking has to do with the physical counting, measuring or weighing of material in stock for comparison with the stock records.


844. We noted that drugs worth ¢8,036,127 could not be accounted for. This came to light when comparing ledger balances to the physical stock balances of the drugs.

845. We advised management to recover the shortage of ¢8,036,127 from the pharmacist and pay same to the hospital accounts.

GOVERNMENT HOSPITAL - DUNKWA–ON–OFFIN

Engagement of casual labourers - ¢72.0 million

846. We noted that between April 2005 and December 2006 the hospital spent ¢72,000,000 on the payment of wages to casual workers. We also noted that some of the casual workers had been engaged for more than three months. By established practice however, casual workers are engaged for a period not exceeding three months. Management indicated that the services of these workers are still needed and they are in touch with the Human Resource Department of the Ghana Health Service to regularise their appointment. 847. We recommended to management to pursue the regularisation of the engagement.


848. Our audit disclosed that 27 payments totalling ¢325,770,160 were made without supporting details of expenditure and official receipts. We could therefore not determine the genuineness or otherwise of the payment. The situation was caused by inadequate supervision of the Accountant by the Medical superintendent.

849. We reminded management of the provisions of Regulation 39 (2) ( c) and (d) of the FAR 2004 (L I 1802) which make it mandatory for full accounting details of every transaction to be provided. We recommended to management to ensure the Accountant provides the relevant expenditure documents to support the payments, failing which the amount should be recovered from him.


BASEL MISSION HOSPITAL – BAWKU


850. Mr Salifu Abanbil who died on 5 August 2005 and Mr. Ayamba Paul, who retired on 5 February 2005 were paid unearned salaries of ¢2,344,710 and ¢6,741,470 respectively, amounting to ¢9,086,180 between February and October 2005.

851. The delay by the Controller and Accountant-General's Department to delete the names from the payroll, resulted in the payment of the unearned salaries.

852. Following our audit, the Ghana Commercial Bank, Bawku, transferred ¢2,339,508 to the Controller and Accountant – General's Suspense Account in favour of the two former employees. This brought the amount yet to be recovered to chest to ¢6,746,672.

853. We recommended to management to ensure immediate refund of the unearned salary of ¢6,746,672 in to the Consolidated Fund.

NURSES TRAINING COLLEGE – BAWKU

Indebtedness of absconded staff-¢65.7 million

854. Mr. Akanuwe Joseph was sponsored by the College to pursue a Masters' Degree in Public Health at the University of Ghana, Legon during the 2002/2003 academic year.

855. He was bonded in the sum of ¢50,517,204 plus 50% interest on the stated sum, bringing the bond value to ¢75,775,806. He was to serve the College for three years after completion of the course.

856. We however noted that Mr. Akanuwe absconded and left for the United States of America, without serving the bond. The College further expended ¢4,956,000 on him while he was at Legon, bringing his indebtedness to ¢80,731,806.


857. Management explained that it had reported the matter to the General Manager of the Presbyterian Hospital, Bawku, who oversees activities of the College and was awaiting his directives.

858. Our follow-up in March 2007 disclosed that ¢15,000,000 was recovered on 23 June 2006, leaving ¢65,731,806 outstanding.

859. We urged management to vigorously pursue recovery of the balance of ¢65,731,806.


860. A tutor of the College, Mr. Joseph Akanuwe N. A. with staff No. Gov.454969, vacated his post in January 2004 and his name was not deleted from the mechanised payment voucher. Consequently, the former tutor was wrongfully paid a gross salary of ¢24,102,529 by October 2004.

861. Management explained that it had since written to the General Manager to delete Mr. Akanuwe's name from the payroll, but to no avail.

862. Our follow-up in March 2007 indicated that ¢12,340,000 was recovered on 12 November 2004, leaving a balance of ¢11,762,529

863. We recommended immediate recovery of the outstanding balance of ¢11,762,529.

WAR MEMORIAL HOSPITAL – NAVRONGO

Revenue not accounted for - ¢5.8 million

864. Two revenue officers collected hospital fees amounting to ¢350,563,020 between October 2005 and December 2006 and accounted for ¢344,771,400, leaving ¢5,791,620 not accounted for, after a time lag of two to four months, as of January 2007. At the


instance of the audit, ¢4,000,000 was recovered from the revenue officers, with ¢1,791,620 yet to be settled.

865. Failure on the part of the Accountant to supervise the work of the revenue staff resulted in non-accountability of the amount.

866. We urged management to intensify supervision over the revenue staff to enhance transparency and accountability. Meanwhile, the amount of ¢1,791,620 should be recovered from the officers and disciplinary action taken against them.

Outstanding salary advances - ¢3.0 million

867. We noted that an advance of ¢3,000,000 granted Dr. Modupe Amofa-Sekyi in March 2006, has not been recovered as of April 2007, after a period of 13 months.

868. Management's failure to ensure prompt recovery of the amount from the officer, accounted for the failure to settle the advance, a situation that could adversely affect the finances of the Hospital. We recommended and management agreed to the immediate recovery of the outstanding amount from the officer.

BIMBILA – HOSPITAL

Outstanding advance-¢24.7 million

869. It is a policy of the Ministry of Health that hospitals in which Cuban Doctors operate are required to pay monthly allowances to them and submit payments to the Ministry for refund. In line with the policy, the Bimbila hospital paid two Cuban doctors working at the hospital between June 2005 and August 2006 monthly allowances amounting to ¢24.7 million. This amount has since not been refunded to the hospital by the Ministry.

870. Management said that several letters and follow-ups had been made but to no avail. This situation had affected the hospital's


financial operations as its revenue base is not good enough to meet payment of the allowances in order to keep the doctors.

871. The Government’s policy of health for all will be a mirage, particularly in the rural areas, when the Ministry in charge of the policy renege to honour and promote it.

872. We urged Management to recover the ¢24.7 million allowances from the Ministry of Health to enable them retain the expatriate doctors to continue their services in the rural area.

873. Management explained that bills have been submitted to Headquarters for refund, but they are yet to be received.

Failure to obtain VAT invoice-¢89.9 million

874. Section 19 of the VAT Act, 1998 (Act 546) requires all VAT registered agencies to issue VAT invoices for all sales to consumers.

875. Contrary to the above, we observed that the hospital paid 12 suppliers ¢596,491,500 for goods supplied which included VAT charges of ¢89,473,725 without obtaining VAT invoices to support the payment although the payees are VAT registered entities.

876. We urged management to obtain the VAT invoices to ensure that the ¢89,473,725 is remitted to the VAT Office.

GHANA HEALTH SERVICE – ZABZUGU

Outstanding staff advances - ¢14.9million

877. Ministry of Health's Rules and Instructions for Accounting, Treasury and Financial Reporting provide that, 'As a general rule, advances to staff may not be granted from the donor pooled funds during the transition period'.


878. We observed to the contrary that five staff members and one institution of the District Health Directorate were granted advances, between April 2004 and November 2005 from Donor Pooled Funds totalling ¢14,908,776 but have not refunded the amounts.

879. Management's disregard of the rules and instructions as well as failure to effectively control, monitor and recover advances led to these lapses. We urged management to recover the amount from the staff and comply with the above-quoted financial rules.


880. Regulation 297 (1) (f) of Financial Administration Regulations, 2004, LI 1802 stipulates that, a head of department shall cause the immediate stoppage of payment of salary to a Public Servant when the Public Officer dies.

881. On the contrary, we noted that the names of two deceased members of staff were retained on the payroll for four months until June 2006, resulting in the payment of unearned salaries of ¢6,844,726 into their bank accounts.

882. This occurred because management failed to be proactive. We urged management to instruct their Bankers to transfer the total amount of ¢6,844,726 into the Consolidated Fund.

ZABZUGU POLYCLINIC


883. Twelve payment vouchers totalling ¢52,831,200 passed for payment between October 2004 and August 2006 were not presented for audit. Poor record keeping and inadequate control over the vouchers caused this lapse. 884. We urged management to produce the 12 payment vouchers for inspection and also ensure proper custody of payment vouchers.


MINISTRY OF FOOD AND AGRICULTUREWOMEN IN AGRICULTURE DEVELOPMENT


885. Our review disclosed that the names of two separated staff continued to appear on the payroll resulting in a total amount of ¢10,906,453 unearned salaries being credited to their bank accounts. One of the staff retired on 5 June 2006 while the other died on 29 September 2005. The names were however deleted in January 2007 and March 2006 respectively.

886. We requested management to recover the amount to chest and monitor the payroll effectively to prevent a recurrence of the anomaly.

MINISTRY OF AGRICULTURE – MANKRANSO, ASHANTI

Outstanding amount - ¢8.2 million

887. Between March 2004 and October 2006 drugs/vaccines collected from the Regional Stores for sale to the public amounted to ¢20,439,800. An amount of ¢7,910,000 was entered in the cash book as proceeds from the sale of the drugs/vaccines even though this was not supported with official receipts contrary to Regulation 28 (1) of the Financial Administration Regulation, 2004 (LI 1802).

888. Available records also indicated that ¢1,580,000 worth of the drugs/vaccines had gone bad as a result of their being kept at the Mankranso Police Station due to an assault case against the schedule officer while on official duty. The stock of drugs amounted to ¢1,490,000 thus bringing total drugs not accounted for to ¢9,459,800.

889. Lack of proper control over the schedule officer, Mr. Daniel Asimen, led to the misappropriation of the amount. At the time of this report in March 2007, ¢1,200,000 million had been recovered, leaving a balance of ¢8,259,000.


890. We urged management to recover the amount from Mr. Asimen without further delay.

REGIONAL VETERINARY SERVICE – KUMASI

Failure to receipt vaccines - ¢2.50 billion

891. Our review of the stores records disclosed that vaccines valued at ¢2,500,000,000 received from Head Office of the Veterinary Services, Accra since 17 November 2005, had not been receipted and taken on ledger charge as at the time of our audit in July 2006.

892. Poor supervision was attributable to such non-compliance to proper store documentation. We requested management to ensure that the vaccines are taken on ledger charge without any further delay.

Outstanding debt - ¢2.17 billion

893. Our examination disclosed that the Kumasi Abattoir Company Ltd. has not been paying the approved fees in respect of slaughter permit/animal fees. Thus, instead of ¢2,455,228,000 collectible from the Company for the period August 2001 to June 2006 only ¢287,683,870 was collected, resulting in under-collection of ¢2,167,544,130.

894. Management in its response expressed concern about the failure by the Company to pay the approved veterinary fees and indicated that it was contemplating instituting an action against the Company.

895. We urged management to vigorously pursue the short-collection of ¢2,167,544,830 from the Company.

MINISTRY OF FOOD AND AGRICULTUREJUASO


896. We observed that a total amount of ¢13,732,159 was paid into the account of Mr. Simon Abugre who vacated post since June 2006.


Failure of management to promptly delete Mr. Abugre's name from the payroll resulted in the payment of the unearned salaries of ¢13,732,159 for the period June 2006 to December 2006.

897. We urged management to ensure that the ¢13,732,159 is recovered to chest and the name deleted from the payroll.

AGRICULTURAL DEVELOPMENT UNIT-DODOWA

Non-use of revenue collector’s cash books

898. Regulation 1 of FAR, 2004 (L.I. 1802) requires public officers, as part of their financial responsibilities, to keep financial and accounting records. We noted, on the contrary, that management did not ensure the maintenance of revenue collector’s cash books to record therein, revenue totalling ¢254,890,000 collected between May 2005 and June 2006. This omission was due to lack of supervision over the work of the revenue collectors.

899. As the lapse could lead to the suppression and misappropriation of revenue, management agreed with our advice to procure and maintain cash books for revenue collection and to effectively supervise the revenue collectors.

Purchases not taken on ledger charge - ¢169.3 million

900. Contrary to the requirements of Regulation 0105 of Stores Regulations, 1984, store items valued at ¢169,267,450 and which were purchased between April and May 2005 were not routed through the stores before utilisation.

901. The lapse occurred as a result of a breakdown of internal control, making it difficult for us to confirm the purchase of the items.

902. To ensure accountability, management agreed with our recommendation to route all store items purchased through the stores.


MINISTRY OF FOOD AND AGRICULTURE – AGONA SWEDRU


903. We noted that between March 2005 and May 2006 total payments of ¢9,471,000 made to officers for various programmes and the procurement of services were not supported with relevant expenditure documents.

904. The lapse was due to the failure of the Accountant to ensure that monies released for the performance of official duties were promptly and fully accounted for by recipients.

905. We recommended to management to regularise the transactions or the Accountant and the District Director be held liable for the refund of the amount.


906. Our review disclosed that store items worth ¢17,105,000 purchased between August 2004 and June 2006 were not taken on store ledger charge. Management explained that it had no permanent Accounting Officer to undertake the assignment, hence the lapse.

907. We advised management to engage a competent storekeeper to take charge of the store to ensure compliance with Stores Regulation 0529.

MINISTRY OF AGRICULTURE - ABURA DUNKWA

Low loan recovery rate - ¢39.8 million

908. Out of a total of ¢65.0 million given to maize farmers under the HIPC Fund, only ¢25,200,000 or 38.7% of the loans had been recovered, one year after the loans were granted. The slow recovery rate was attributed to management’s ineffective loan recovery machinery.


909. We recommended that the balance of ¢39.8 million should be recovered through constant education of the beneficiaries on the need to repay the loans.

REGIONAL AGRICULTURE OFFICE- HO

Non-payment of rent-¢4.4million

910. A veterinary doctor, Dr. Daniel Kpodo, who retired from public service since September 2004 continues to occupy the Government duty post bungalow and without paying rent. We repeatedly asked the Regional Director of Agriculture to eject him to enable the incumbent officer to be accommodated but without success. Total unpaid rent that accumulated against the doctor stood at ¢4,444,097.28 as at 31 December 2006. Management explained that letters sent to the doctor to vacate the bungalow had fallen on deaf ears.

911. The non-payment of rent is causing loss of revenue to the state. We therefore recommended to the Regional Director of Agriculture to collect the unpaid rent and to forcibly eject him.

DISTRICT AGRICULTURE OFFICE - SOGAKOPE

Unearned salaries-¢23.1million

912. An officer of the District Agriculture Office, Mr. Prosper Bakudie was noted to have left the department on study leave without obtaining approval to pursue further studies. However, from January 2005 to August 2006, due to management's failure to have the name promptly deleted from the payroll, his salary continued to be paid into his bank account resulting in the payment of unearned salaries totalling ¢23,105,313.


913. We recommended that the transaction should be regularised or the amount of ¢23,105,313 be recovered from the affected officer to chest.

DISTRICT AGRICULTURE OFFICE-ADIDOME

Unsupported VAT payment-¢3.0million

914. Management failed to obtain a receipt to support a VAT payment of ¢3,016,500 made to Messrs Angbah Enterprise. This could result in loss of VAT revenue. We consequently recommended that the VAT receipt should be obtained. We also asked the Accountant to demand VAT receipts/invoices in respect of all VAT payments in the future.

DISTRICT AGRICULTURE OFFICE-DENU

Payment for repairs of accident vehicle-¢19.5million

915. Regulation 235 (1) of the FAR, 2004 stipulates that a head of department shall cause an investigation to be conducted into every reported case of loss and where the head of department is implicated in the loss, the Sector Minister or the governing board or council shall be the appropriate authority to investigate.

916. We noted that in July 2005 the District Director of Agriculture personally drove an official vehicle No GV 1435 U and got it involved in an accident but never reported the accident to the Sector Minister nor the Police for their investigations.

917. Notwithstanding the Regulation, the District Director authorized the payment of a total of ¢19,485,000 from the Department's funds to repair the vehicle without following that due process.

918. We made management aware that failure to report a road accident to the Police is a criminal offence. Additionally, we asked that the matter be referred to the Sector Minister in compliance with the above-quoted regulation.


WESTERN REGIONAL AGRICULTURAL OFFICE-SEKONDI

Outstanding credit sales of motor-bikes-¢555.5 million

919. We observed that the Ministry made credit sales of a number of motor bikes to staff between 2000 and 2003. The total cost of the facility was ¢559,400,000 million and this was to be deducted from the beneficiaries' salaries.

920. We noted that three to six years after the facility was granted, only ¢3,921,418 or 0.7% had been recovered from the beneficiaries, leaving an outstanding balance of ¢555,478,582. Such low recovery rate could deny other eligible staff from benefiting from the facility and thus defeat the purpose for the introduction of the facility.

921. Management explained that there has been a delay in recovering the loans from the beneficiaries because input forms submitted to the Controller and Accountant-General's Department (CAGD) for the deductions were not actioned upon.

922. We urged management to make follow-ups to ensure the early recovery of the amounts.

METROPOLITAN AGRICULTURE OFFICE - SEKONDI

Outstanding credit sales of motor-bikes-¢32.7 million

923. Six motor bikes were sold to staff on credit between 2000 and 2003. Total cost of the facility was ¢36,000,000 and the amount was to be recovered from the beneficiaries' salaries. However, at the time of our audit i.e., three to six years after the facility was granted, only ¢3,336,804, or 9% had been recovered, leaving a balance of ¢32,663,196 unpaid.

924. According to management, the recoveries have delayed because inputs submitted to the CAGD for the purpose were not acted


upon until July 2006 when the Department started effecting the deductions.

925. The delayed recovery of the credit would make it difficult for the facility to be extended to other deserving staff. Management agreed with our recommendation that the remaining balance of ¢32,663,196 should be recovered from the beneficiaries on schedule.

DISTRICT AGRICULTURE OFFICE-BIBIANI

Payment of unearned salaries and SSNIT benefits-¢88.7 million

926. We noted that between January 2003 and February 2006, five members of staff who were separated from MOFA through vacation of post, resignation and death were wrongfully paid salaries and SSNIT benefits totalling ¢88,767,612.43.

927. Negligence on the part of management in failing to ensure that the names of the separated staff were promptly deleted from the payroll resulted in the continued payment of unearned salaries into their bank accounts long after they had separated. 928. We urged management to recover the unearned salaries to chest.

Store purchases not accounted for-¢18.6 million

929. Our audit disclosed that store items valued at ¢18,626,175 and which were purchased during the period under review were not routed through store records before utilisation The omission contravened the requirements of Section 35 (2a) of the Financial Administration Act, 2003 (Act 654).

930. Management explained that the situation was due to the lack of a permanent storekeeper to take charge of the store records.

931. In the absence of relevant store records, this office could not determine whether the stores were actually purchased, received and


used for the intended purposes. We recommended to management to provide evidence on how the alleged store purchases were received and disposed off or be surcharged with the total amount involved.

DISTRICT AGRICULTURE OFFICE-ASANKRANGWA

Outstanding revenue on sale of fertiliser-¢6.2 million

932. Our audit disclosed that 42,610 bags of fertiliser valued at ¢9,944,200 were delivered to the District Director of Agriculture, Asankrangwa through the Cocoa Hitech Programme to be sold on credit to beneficiaries. Out of the credit sales made, only ¢3,700,000 had been recovered, leaving an outstanding balance of ¢6,244,000. 933. Management neglected to pursue recovery of the credit sales. We recommended to management to pursue recovery of the outstanding balance from the beneficiaries. In the absence of an effective recovery machinery, we urged management to review the credit sales idea.

DISTRICT AGRICULTURAL DEVELOPMENT UNIT-MPRAESO

Unrecovered farmers’ loans-¢268.3 million

934. During the 2005 minor maize season, the Government gave 129 farmers in the Kwahu South District inputs and cash totalling ¢287,000,000 through the Ministry of Food and Agriculture to boost maize production.

935. The loans were expected to have been repaid by the beneficiary farmers at the end of the minor season but not later than April 2006. As at the end of June 2006, only ¢18,745,000 or 6.6% had been recovered, leaving an outstanding balance of ¢268,255,000.

936. Management attributed this low recovery rate to the uncooperative attitude of most of the beneficiaries. We however advised management to redouble its efforts to recover the loans to enhance sustainability of the programme and to forstall the occurrence of bad debts.


MINISTRY OF FOOD AND AGRICULTURE-AKIM ODA


937. We noted that two former employees, Mr. Biba Richard and Dr. Peter Donkor, who had vacated post and resigned from the Service in September and December 2005 respectively continued to receive their pay up to February 2006.

938. Management’s delay in advising the bank to transfer their unearned salaries to chest resulted in this anomaly. We recommended that management should advise the SG-SSB Bank, Akim Oda to recover the amount of ¢5,443,798 to chest and also ensure that Mr.Biba and Dr. Donkor’s names are deleted from the payroll.

AGRICULTURAL DEVELOPMENT UNIT - ASAMANKESE

Failure to issue GCR for drug sales-¢13.2 million

939. We noted that a total collection of ¢13,184,000, being sales of drugs, vaccines and veterinary services rendered were not covered by official receipts (GCR). The lapse was attributed to the ignorance of the officer in charge who has no accounting background.

940. To prevent misappropriation of funds, we recommended that an accounts officer be appointed and GCR issued to cover the sales.

AGRICULTURAL DEVELOPMENT UNIT – KADE


941. Our audit of payroll revealed that Mr. Festus Amoah, who resigned on 14 June 2004, received salaries from July 2004 to January 2006 totalling ¢24,634,730. due to lack of effective scrutiny of the monthly payroll by management.

942. Our investigation revealed that the total amount of ¢24,634,732 has not been withdrawn from the bank by Mr. Amoah.


We recommended to management to ensure that the amount is transferred into the Consolidated Fund and also ensure that Mr. Amoah’s name is deleted from the payroll.

MINISTRY OF AGRICULTURE-ODUMASE KROBO

Purchases not delivered-¢37.0 million

943. Management purchased store items worth ¢36,986,000 but failed to pass them through stores records.

944. We recommended that purchases should be recorded in the stores records to authenticate the transaction.

MINISTRY OF FOOD AND AGRICULTURE (MOFA) –TECHIMAN

Outstanding loans to farmers-¢401.3 million

945. The Ministry of Food and Agriculture instituted a repayable farmers assistance programme known as Agriculture Production Support Programme to which farming groups and individual farmers were granted advances totalling ¢452,027,000. Recovery was to be made within a single cropping season ending December 2005. As at June 2006 however, only ¢50,695,500 had been recovered leaving an outstanding balance of ¢401,331,500 that is, 88.8% unrecovered.

946. We advised management to pursue recovery of the outstanding amount from the beneficiaries.


947. Ms. Vorleto Cecilia applied for leave without pay but was however paid monthly salary from January 2006 to July 2006 totalling ¢9,137,306. Lack of supervision and monitoring of staff movement by the finance officer resulted in this anomaly.


948. We recommended and management initiated action to fully recover the amount from Ms. Vorleto and delete her name from the payroll.

MOFA-DORMAA-AHENKRO

Cost of five motor bikes not recovered - ¢57.9 million

949. We noted that beneficiaries of five motor bikes costing ¢57,916,670 had not suffered any deductions since January 2003.

950. We urged the District and Regional Directors to enforce compliance with the directives given to the Controller and Accountant General’s Department to ensure recovery of the amount.

Credit facility not recovered - ¢1.38 billion

951. In January 2003, the Government, through the Cocoa Research Institute of Ghana supplied farm inputs to 1,000 cocoa farmers in the Dormaa District to the tune of ¢1.50 billion.

952. As at December 2006 only a meagre amount of ¢11,026,000 or 7.33% of the amount had been recovered, leaving a balance of ¢1,389,874,000 or 92.67% still outstanding due to ineffective monitoring of the loans by management.

953. We advised the District Director to liaise with the Ministry to ensure recovery of the outstanding amount of ¢1,389,974,000 from the recalcitrant cocoa farmers.

MINISTRY OF FOOD AND AGRICULTURE – APAM

Direct disbursement of funds - ¢22.0 million

954. An amount of ¢22,079,512 recovered from farmers in respect of inputs sold to them was not paid to bank, but was disbursed.

955. We recommended and management agreed to refund the amount of ¢22,079,512 to chest.



956. Section 43 (1) of the Public Procurement Act, 2003 (Act 663) requires institutions in making procurement to obtain quotations from at least three different suppliers. This regulation notwithstanding, the Directorate procured items amounting to ¢24.0 million without obtaining three price quotations from different suppliers.

957. We recommended and management agreed to comply with the Section to ensure value for money in procurement.

MINISTRY OF FOOD AND AGRICULTURE – SALTPOND

Outstanding credit - ¢36.1 million

958. Our review of credit facilities in the form of farm inputs totalling ¢78,770,460 granted to farmers disclosed that, only ¢42,645,000 had been recovered whilst ¢36,125,460 remained unpaid. Management explained that the farmers attributed their inability to meet repayment schedule to poor harvests.

959. We urged management to ensure full recovery of the outstanding amount of ¢36,125,460 from the defaulting farmers

Outstanding advances - ¢27.2 million

960. Out of the total advance of ¢30,346,000 granted to staff between 1999 and 2005, only ¢3,100,000, representing 1.4% had been recovered in November 2006, leaving a balance of ¢27,246,000 or 98.96% yet to be recovered.

961. Failure by management to comply with Regulation 99(1) of FAR, 2004 was responsible for the lapse.

962. We recommended that management should comply with theregulation to ensure recovery of the advances.


Poor control exercised over store issues - ¢259.9 million

963. Our examination of store records revealed that the storekeeper issued drugs, consumables and stationery items totalling ¢259,999,950 to the various units without approved requisition signed by the Head of the Hospital or his Deputy. Poor supervision over the storekeeper by management was accountable for the lapse which could be exploited to divert store items for personal gain.

964. To ensure proper accountability of store items, we recommended that requisition for store items should be duly authorised by the Administrative Head or his Deputy before issues are made.

MINISTRY OF FOOD AND AGRICULTURE-ZEBILLA


965. Names of two deceased members of staff and a retiree which were earlier deleted from the payroll, resurfaced in October 2006. Consequently, their accounts were credited with ¢26,131,749. 87.

966. Management wrote to the Ghana Commercial Bank to return all the unearned salaries to chest in December 2006. However, as of 5 April 2007, no remedial action had been taken on the matter.

967. We requested management to recover the amount to chest.

MINISTRY OF AGRICULTURE – DAMONGO

Purchases not routed through store - ¢23.0 million

968. We noted that items purchased by the District Office worth ¢23,000,000 were not recorded in the store ledger to ensure proper monitoring and issue of the items. We observed however that the Office has no storekeeper, hence the lapse.


969. We urged management to engage a competent storekeeper for the Office.

MINISTRY OF AGRICULTURE – ZABZUGU

Value books not presented for audit

970. Our review of the stock register of the District Agriculture Development Unit (DADU) disclosed that three Veterinary Technical Officers failed to submit nine GCRs with unspecified face value for our examination.

971. We noted that the anomaly was due to management’s failure to institute effective control over the activities of the Technical Officers. This could encourage suppression and misappropriation of revenue.

972. We urged management to ensure that the value books are produced for audit and necessary control and supervision exercised over the Technical Officers.

MINISTRY OF THE INTERIOR

GHANA IMMIGRATION SERVICE

Shortfalls in bank lodgments - US$15,770

973. Contrary to Regulation 15(1) of the FAR, 2004 which requires revenue collectors to pay revenue collected into the relevant bank within 24 hours, management of Ghana Immigration Service (GIS) Headquarters failed to pay into the Special Collections Account revenue totalling US$15,770 out of total collection of US$380,125. Management explained that the late receipt of funds from MOFEP compelled it to use the unbanked amount to finance staff foreign travels.


974. We urged management to refund the US$15,770 into the Collections Account. However only US$2,400 had been paid into the Collections Account

Uncompetitive procurements - ¢105.1 million

975. Our audit disclosed that the GIS made purchases of goods and services totalling ¢105,085,845 without obtaining at least a minimum of three quotations from other prospective suppliers and providers of services, in violation of section 43(1) of the Public Procurement Act, 2003 (Act 663).

976. We recommended to management to comply with the provisions of the Act to ensure transparent procurement practices in future purchases. Management explained that the service providers had good reputation for delivering quality goods and services and that it was not practical to solicit for quotations where emergency repairs had to be carried out.

Cost of repairs of accident vehicle not recovered - ¢56.0 million

977. GIS vehicle with registration number GV 849 P driven by Jonathan Kwei was involved in an accident with a private company's vehicle with registration number GR 4817 N. A police report attributed the cause of the accident to the negligence of Emmanuel Tetteh, the driver of the private company’s vehicle. Management however repaired the official vehicle at a total cost of ¢56.0 million without pursuing the recovery of the cost of repairs from Skiwind Enterprise, the private company.

978. We recommended that management should pursue recovery of the cost of repairs from Skiwind Enterprise without delay. We also recommended to GIS to insure its vehicles as the vehicle involved in the accident was not insured.


979. According to management, the vehicle in question was the only operational vehicle for the Western Regional Command. Management therefore took the responsibility to carry out the repairs and recover the cost of repairs later taking into consideration the negative impact the absence of the vehicle would have on GIS’ operations in the region. Action to recover the full cost of repairing the vehicle had been initiated since September 2006.

Failure to properly account for expenses on internal security -¢180.0 million

980. Contrary to Regulation 1(1) of the FAR, 2004 we observed that fifteen payment vouchers for total payment of ¢180,000,000 described as payment of rewards to informants and internal security expenses were not properly authenticated with the relevant supporting documents classified as confidential.

981. We recommended that the Director should make the supporting documents available for audit or refund the total amount to chest.

982. According to the Director, “the non-disclosure of the identity of informants and operational details is critical to the gathering of vital information and intelligence for national security; this will never be compromised”. She however, prepared honour certificates to cover all the transactions.

Payment of unearned salaries to separated staff - ¢5.9 million

983. Our review of mechanised salary payment vouchers showed that a total amount of ¢5,928,364 was paid into the bank accounts of three separated staff contrary to Regulation 297(1) of FAR 2004. The lapse was attributed to delays by the CAGD to delete the names from the Department’s payroll. We however noted that management failed to instruct the banks to transfer the amount into the Suspense Account of the CAGD.


984. We recommended that management should instruct the banks to transfer the unearned salaries into the CAGD’s Suspense Account. On the other hand, if the amounts had been withdrawn, the separated staff should be written to for a refund.

985. Management responded that the names had been deleted whilst their respective banks had been instructed to transfer the unearned salaries lodged in the accounts into the CAGD’s Suspense Account for transfer into the Consolidated Fund.

GHANA IMMIGRATION SERVICE-SEKONDI

Acceptance of non-legal tender cuurency -US$240

986. Our audit of the accounts of the Sekondi Regional Immigration Office disclosed that revenue of $6,140 US dollars was collected between August and October 2005. Out of this US$5,900 was lodged with the bank leaving a balance of US$240.

987. Our enquiries revealed that the Immigration Service, Accra, failed to inform the Sekondi Regional Office about the replacement of the current USA dollar notes. This resulted in the Regional office accepting an amount of US$240, which had ceased to be legal tender in the USA, as re-entry fees.

988. We recommended that the Immigration Office, Accra should periodically update its Regional/District offices on the status of foreign currencies in circulation to forestall such losses.

GHANA IMMIGRATION SERVICE –TEMA

Fiscal cash payments to Head Office-¢1.12 billion

989. Contrary to Regulation 17 (b) of FAR, 2004 which requires heads of department to ensure that all non-tax revenue is immediately lodged in the Consolidated Fund Transit Account, we noted that


between 15 May and 28 September 2006 collections totalling ¢1,122,186,000 were paid in fiscal cash to the Immigration Service Head Office, Accra. The above impropriety was also at variance with financial regulations and directives from Headquarters Ref. No. GIS/SCR/189/Vol. 1 dated 12 May 2006, directing that revenue collections be paid into the Ghana Immigration Service Operation Account No. 01256600720014 at Bank of Ghana, Accra.

990. As the practice could expose the revenue to temporary borrowing, misapplication and theft, we advised management to strictly adhere to these financial directives to enable revenue collected to be paid into the appropriate account at the Bank of Ghana.

Belated payment of revenue to chest

991. Regualtion15 (1) of FAR, 2004 requires public officers who collect or receive public moneys to pay them directly into the Public Fund Bank Account within 24 hours. On the contrary, an audit revealed that revenue collected between June 2006 and August 2006 which ranged between ¢3,200,000 and ¢226,000,000 was retained for periods of five to 18 days before being paid to Head Office. We noted that the payment of revenue into the transit bank account at Tema was stopped because of misapplications of revenue collections.

992. In the light of inherent risk of losses or misappropriations as a result of undue retention of cash, management accepted our recommendation to ensure the strict supervision of revenue collection and the prompt lodgment of all revenue collections into the Transit Bank Account at Tema instead of sending the fiscal cash to the Head Office in Accra.


GHANA IMMIGRATION SERVICE - PAGA

Fake currency notes-US$120

993. Out of revenue of US$160 collected by the Service at Paga between June and September 2006, only US$40 was paid to chest, while US$120 notes were said to be fake.

994. The Paga office does not have fake-currency detecting machine. Consequently, the office could not detect that the US $120 notes were counterfeit.995. We recommended that the Service should provide Paga and other border posts with counterfeit detection devices to prevent the receipt of fake currency notes by the staff.

GHANA POLICE SERVICEHEADQUARTERS

QUARTERMASTER-GENERAL STORES

Un-utilised camouflage materials and uniforms - ¢976.2 million

996. Due to poor procurement planning, 7,094.21 metres of camouflage materials and 1,040 pieces of camouflage uniforms for use by officers on UN assignment had been in stock for 18 months. This was because they were found to be of the same design and colour as those worn by some rebel groups in Sudan where the Ghanaian officers were to be deployed.

997. We are of the view that if steps are not taken to create a need for the stock, total expenditure of ¢976,269,200 representing material cost of ¢947,189,200 and sewing cost of ¢28,980,000 might go waste.

998. We recommended that future procurements should be guided by intelligence information to prevent a recurrence of the above coincidence. To obtain value for money, we also requested management to explore alternative use for the material and uniforms.


999. Management acknowledged our observation and indicated that the Uniform Committee was in the process of formulating alternative use for the uniforms.

ACCRA REGIONAL POLICE HEADQUARTERS

Purchases without obtaining alternative quotations - ¢52 million

1000. Section 43 (1) of Public Procurement Act, 2003 Act 663 requires a purchasing officer to obtain at least three quotations from different suppliers and make his purchases from the most favourable source. We however observed at the Accra Regional Police Headquarters that ¢52,131,834 worth of goods were procured without alternative quotations. We also did not sight evidence that prices were compared. The non-compliance with the PPA was due to lack of supervision on the part of management. This could result in the Service paying uneconomical prices for goods and services.

1001. We accordingly recommended that to obtain value for money, management should comply with the Act and also ensure that staff responsible for procurement were properly supervised.

1002. Management explained that the purchases were made on credit basis and as a result it was unable to obtain the three quotations as required by Section 43 (1) of the PPA. Management further stated that the PPA was being studied for strict adherence in future transactions.

POLICE SERVICE PROJECTS UNIT

Suspended projects - ¢17.02 billion

1003. Between 1999 and 2005 uncompleted projects totalling ¢17,018,977,961 were abandoned. Instead new projects amounting to ¢18,564,851,188 were started. Additionally, the new projects were not budgeted for in the respective periods in contravention of Regulation 175 (2) FAR, 2004 which provides that new activities of an organisation should be introduced in the annual estimates.


1004. The failure of management to ensure continuity in the projects and programmes of the Police Service was due to every Police Administration's eagerness to embark on new projects despite inadequate budgetary allocations. The practice resulted in 40% (or ¢1.24 billion) escalation of original project costs from ¢33.09 billion to ¢46.57 billion as of June 2006.

1005. We therefore urged management to ensure judicious use of government resources by ensuring continuity in project execution. Management should also comply with Regulation 175 (2) of FAR as well as Ministry of Finance and Economic Planning's (MOFEP) letter No. B383/10/05/ALLOC 06 of 28 October 2005. MoFEP's letter directed that uncompleted projects and programmes of MDAs from 2001 to 2005 should receive priority attention before new ones were initiated.

1006. Management noted our recommendations for compliance.

Up-ward revision of contract sum without prior approval - ¢48.1million

1007. We observed that the contract for the construction of a wall around the Amasaman District Police Headquarters awarded in the sum of ¢45,734,400 in August 2005 was revised upwards to ¢93,880,600. The upward revision of 105% was neither approved by the Police Service Tender Review Board nor supported by variation orders as directed by Section 87(1) of Act 663. Additionally, there was no contract agreement showing terms and conditions under which the contract should be executed as well as bills of quantities detailing the works and amounts involved.

1008. The Projects Unit explained that the review of the contract sum was occasioned by an error made in the initial dimensions of the wall which had already been given to the contractor. The identified deficiencies in the project execution resulted from the Police Administration's failure to seek technical advice from qualified architects and surveyors of the Projects Unit of the Service. The lapse


could result in poor execution or non-compliance with contract specification.

1009. We therefore recommended that management should comply with prescribed contract procedures to ensure judicious use of resources. Management should also regularize the revaluation.

1010. Management assured us that formal procedures for the award of contracts would henceforth be followed.

POLICE HOSPITAL

Unapproved disbursements of Internally Generated Funds (IGF)-¢4.07 billion

1011. Out of the Police Hospital's IGF of ¢4,697,997,057 realized during the review period, ¢4,069,159,406 was used to purchase drugs and other hospital consumables without parliamentary approval. The lapse was due to management's failure to comply with MOFEP letter

No. B 383/03/05 NTR/IGF of 31st March 2005. The letter advised the Hospital's management to seek parliamentary approval for the retention and disbursement of the IGF as the Hospital did not have legislative approval to do so.

1012. Management's failure to comply with the directives in the MOFEP’s letter stated above undermined government's policy at pooling revenue resources into the Consolidated Fund. We therefore recommended that management should comply with MOFEP's letter. Additionally the balance of ¢628,837,657 should be transferred into the Consolidated Fund.

1013. Management in response indicated that it was aware that MOFEP had, after the issue of the letter under reference, prepared the necessary documents for presentation to Parliament for the appropriate legislative approval of the retention of the Hospital's IGF. Management further stated that, since the processes of obtaining the


approval would take some time, and the Hospital needed to be efficiently run, it decided to use the IGF.

NATIONAL POLICE TRAINING SCHOOL


1014. From January 2006 to August 2006, two civilians of the Police Service, Messrs Dawuda Busanga and Daniel Gabla, who failed to report for duty for periods ranging between three to 21 days, were paid ¢4,594,500 unearned salaries. The lapse which was in contravention of Regulation 297(1a) of FAR, 2004 was due to the absence of a regular reporting procedure on work attendance. In such situations, absenteeism could be prevalent resulting in low productivity.

1015. We recommended and management agreed to recover the amount from the employees involved and ensure the enforcement of a regular reporting procedure on work attendance.

1016. Management explained that the officers were ill during the time they absented themselves from duty. Management further informed us that they had written to Mr. Dawuda Busanga who had not recovered from his illness to retire voluntarily.

GHANA POLICE-UST – KUMASI

Failure to produce exhibits

1017. We observed during our inspection that three exhibits as detailed below could not be produced for inspection, though the entries were in the station's records:


Serial No. Station Diary Description Record Officer Responsible

83/98 53 of 27/02/98 1 macron generator Lost stolen and recovered property register (LSRPR)

Detective Chief Inspector Peter Appiah

52/06 20 of 5/01/06 Cash of ¢4.8 million LSRPR Detective Corporal M.K. Tetteh

7/98 - 1 Panasonic Colour Television

Court Exhibit Register (CER)

Detective Corporal Andrew Owusu

1018. Management explained that the officers who handled the cases were transferred before the current officers were posted to the station and therefore the whereabouts of the items and cash were not known.

1019. We recommended that the officers concerned be recalled to account for the exhibits, since the exhibits were to be kept in a secured place and handed over when necessary.

GHANA POLICE SERVICE-AKUMADAN/ASHANTI


1020. Regulation 17 (b) of FAR, 2004 requires all non-tax revenue to be immediately lodged in the designated Consolidated Fund transit bank account. On the contrary, our audit disclosed that out of total revenue of ¢27,648,000 collected as of June 2006, ¢25,078,000 was accounted for, leaving a balance of ¢2,570,000.

1021. Lack of supervision on the part of the District Officer was the cause of this lapse. We recommended that the former revenue cashier, Inspector S.A. Baah who is currently on transfer, should be contacted to account for the amount of ¢2,570,000.

GHANA POLICE SERVICE - JAMASI/ASHANTI

Failure to produce locally made pistol

1022. Our examination of the Court Exhibits Register revealed that a locally made pistol with serial No. 6/2002 of 13 December 2002


could not be traced at the station store room. Detective Corporal Bakans in-charge of the exhibits explained that the pistol was destroyed as a result of a court order, evidence of which could not be produced for inspection.

1023. We have requested for a copy of the Court Order which had not been produced as of April 2007.

DISTRICT POLICE SERVICE-AXIM

Failure to account for revenue - ¢3.5 million

1024. Our audit of the Ghana Police Service, Axim, revealed that total revenue of ¢12,660,000 made up of Fireman Licence -¢12,340,000 and Accident Report Fee - ¢320,000 was collected between August 2004 and October 2006.

1025. Out of the amount, only ¢9,120,000 was paid to chest leaving a balance of ¢3,540,000 not accounted for by the officer-in-charge of revenue collection.

1026. We recommended to management to recover the outstanding revenue of ¢3,540,000 to chest. We further recommended that the Revenue Officer should be made to make prompt payment of revenue collections to bank.

REGIONAL POLICE COMMAND-TEMA

Huge cash payments instead of cheque payments

1027. Regulation 48 of FAR, 2004 stipulates that Heads of departments should keep cash holdings to the absolute minimum in consistent with the efficient discharge of public financial business, use bank accounts for holding cash balances and make payments by cheques whenever possible. Despite those requirements, the Tema Regional Police Commander made various payments ranging between ¢5,000,000 to ¢10,000,000 by cash instead of cheques between May


2005 and August 2006. The anomalies were caused by management’s failure to comply with the prescribed regulations.

1028. To prevent misappropriation and unauthorised spending, we recommended that payments ranging from ¢5,000,000 and above should as much as possible be made by cheques, bank transfers, or direct payment to the bank account of payees.

GHANA POLICE SERVICE - COMMUNITY 18, TEMA

Lack of exhibits store

1029. The Police Service Instruction No. 212 paragraph 4 states that ''…exhibits shall not be left lying about at police station or attached to a docket. A special cupboard or storeroom shall be kept for the purpose and the keys therefore shall be handed over to the Officer in Charge of the station, and an entry to this effect made in the Station Diary…'' Contrary to this requirement, we observed that various exhibits were kept on the floor at the charge office because of inadequate office space, which exposed them to theft.

1030. To ensure proper control over exhibits, we advised management to find an appropriate storage place for them and adhere to the above instruction in future.

Lack of police cell

1031. We observed that due to inadequate office accommodation there were no cells attached to the station. Instead, suspects were transported to the Community 2 cells which is a distance away, a situation which could facilitate prisoners’ escape.

1032. We recommended that management should contact the Regional Commander for the construction of cells for the station.


GHANA PRISONS SERVICE - SUNYANI


1033. We noted during the audit of the Prisons Service payroll that the bank accounts of four separated staff who had either retired, resigned or died were credited with a total amount of ¢28,485,613 whilst ¢3,745,886 was used to service their insurance policies, credit sales and welfare dues contrary to Regulation 279 (1) of FAR, 2004.

1034. Management wrote to the banks of the affected officers demanding that the unearned salaries be paid to chest but the banks had not responded to the demand. We requested management to pursue recovery of the amount.

NATIONAL DISASTER MANAGEMENT ORGANISATION (NADMO) SEKONDI

Fuel not accounted for - ¢18.9 million

1035. Our audit disclosed that out of total fuel purchases of ¢24,177,188 made by NADMO, Sekondi during the period under review, only ¢5,330,000 was recorded in the vehicle log book. The usage of the bulk of ¢18,847,188 was unaccounted for. The situation suggested that the unrecorded fuel may not have been used in furtherance of the programmes of the organisation.

1036. We recommended that management should account for the usage of the unrecorded fuel of ¢18,847,188 and ensure that the drivers were given adequate training on the maintenance of the vehicle log book.

NATIONAL DISASTER MANAGEMENT ORGANISATION (NADMO) - DABOASE

Unsupported disbursements - ¢6.9 million

1037. A total imprest amount of ¢6,900,000 was disbursed between February and November 2005 without the preparation of payment


vouchers. This is contrary to the requirements of Regulation 285 (1) of FAR, 2004. Also, management did not support the payments with receipts and/or expenditure details.

1038. We found untenable management's explanation that the office had run out of payment voucher forms during the time of the disbursements. Since such practice could be a cover-up for expenditure irregularities or embezzlement, we requested management to account for the money.

NATIONAL DISASTER MANAGEMENTORGANISATION (NADMO)-ADIDOME

Unsupported disbursements - ¢39.6million

1039. Our audit disclosed that on 14 occasions, a total amount of ¢39,569,000 was disbursed without payment vouchers. We could therefore not vouch the genuineness of the expenditure as there were no details of expenditure available. We asked management to properly account for the money or have the amount involved paid back to chest.

NADMO - TAMALE

Non-deduction of withholding tax-¢15.8 million

1040. Section 84 (2) of the Internal Revenue Act, 2000 (Act 592) states that when a resident person pays a sum to another resident person, for the supply of or use of goods or property of any kind, or the supply of any services, in respect of a contract between the payee and person making the payment, the latter shall withhold tax on the gross amount of the payment at the rate of 5%.

1041. Despite this regulation, withholding taxes amounting to ¢15,792,232 were not deducted from payments made in respect of services rendered to NADMO by individuals and organisations.


1042. We urged management to recover the total amount involved from the defaulting entities and pay same to the IRS and be guided by regulations always.

Imprests not accounted for - ¢14.9million

1043. Regulation 463(b) of FAR, 2004 prescribes that special imprests issued for making a particular payment or group of payments must be retired in full by the date specified.

1044. Accountable imprest of ¢14,934,000 released to six officers to undertake specific activities remained unaccounted for owing to lack of official receipts to substantiate the expenses incurred.

1045. This resulted from the failure of the Finance Officer to enforce accountability by the officers concerned. We urged management to demand accountability by the officers involved or recover the amount.

Items not taken on ledger charge-¢124.4million

1046. The NADMO office, Tamale during the period under review bought various items including machines, stationery and foodstuffs amounting to ¢124,370,000 but did not record them in the store ledgers in contravention of Stores Regulation 0315 which requires that complete records of stores purchased should be maintained.

1047. The situation was as a result of management’s failure to enforce internal controls by failing to insist that receipts covering the purchases be submitted to the store to be documented.

1048. We requested management to produce evidence of usage of the purchases and also follow laid down procedures in handling stores.


NATIONAL DISASTER MANAGEMENT ORGANISATION (NADMO) KOFORIDUA

Unredeemed loans- ¢13.5 million

1049. Our audit disclosed that an amount of ¢23,500,000 was given out as loans to Disaster Volunteer Groups (DVGS) for okro and pepper cultivation in October 2004 through five District Offices of the NADMO. The amount was to be accounted for at the end of the farming season. However, at the time of our audit in December 2006, only ¢10.0 million had been recovered.

1050. Since the loans serve as incentive to DVGS to remain in their various communities to help NADMO fight disasters, we urged management to pursue recovery of the outstanding amount of ¢13.5 million to enable other DVGS to benefit from this facility.

1051. Management responded that it had issued warnings of forfeiture of monthly budgetary allocations to the Districts concerned to defray the loans since the allocations were used as collateral.

Unredeemed loans - ¢72.0 million

1052. Also, an amount of ¢72.0 million released as loans to DVGS in five District offices of NADMO remained unpaid. These loans were meant for the purchase of seeds and fertilizers for planting during the farming seasons.

1053. Since the loans were granted in May 2005 there have not been any recoveries. We noted that the criteria for granting loans and theirrecoveries are not set out in any document.

1054. We therefore recommended that management should prepare rules and regulations for the granting of such loans. Meanwhile, we urged management to recover the total loans of ¢72.0 million from the defaulting beneficiaries.


GHANA NATIONAL FIRE SERVICE –EFFIDUASE/ ASHANTI


1055. Heads of departments are responsible to certify the mechanised payment vouchers to ensure that the names and amounts on their payroll are correct and report any anomaly to the CAGD by a letter to cease the payment of salary to any officer affected.

1056. Our audit of the Service's payroll disclosed that ¢3,397,218 was overpaid to Mr. Jacob Sarpong with Staff No. 471182 Z in August 2005.

1057. We brought the anomaly to the attention of the Regional Fire Officer in November 2005 for action to be taken to recover the overpayment of ¢3,397,218. However, the amount was not recovered until the officer voluntarily retired from the Service on 31 August 2006.

1058. We therefore recommended that management be censured for their inaction and also made to ensure that the amount was recovered from Mr. Jacob Sarpong, failing which the certifying officer should be surcharged with the amount of ¢3,397,218.

REGIONAL FIRE SERVICE - KUMASI

Disposal of unserviceable vehicles without notifying the Auditor-General - ¢100.9 million

1059. Section 1109 of Stores Regulations, 1984 enjoins any government department undertaking the auctioning of unserviceable non-expendable items to serve the Auditor-General or his representative with the third copy of the approval letter for the disposal of such items. Store Regulation 1111 also requires that when disposal is by sale a certificate of sale shall be completed in triplicate by the head of department or the officer supervising the sale and the


original copy “together with a copy of the Auctioneer's sales account shall be sent to the Auditor General".

1060. Management disregarded these regulations and conducted auction sales of 11 out of its 13 unserviceable fire tenders with the residual value of ¢100,905,000 between 31 October 2003 and November 2003 without notifying the Auditor-General or his representative in Kumasi.

1061. We advised management to ensure that in future the Auditor-General or his representative is notified of any auction sales to conform with the regulations. We again recommended to management to obtain treasury receipt in support of the payment for our verification.

GHANA NATIONAL FIRE SERVICE – TAKORADI


1062. Management of the Regional Fire Office, Takoradi failed to substantiate payments totalling ¢139,417,800 made to seven companies for goods supplied and services rendered with official receipts of the payees. As a result, we could not confirm the propriety of the payments.

1063. Laxity on the part of the Regional Accountant to demand official receipts from the payees resulted in the unsupported payments. We recommended to management to substantiate the expenditure or retrieve to chest the amounts involved.

Unearned salaries- ¢20.2 million

1064. Total unearned salary of ¢20,220,350 was credited to the bank accounts of three separated staff of the Service in Takoradi due to the failure of management to enforce the provisions of Regulation 297 of FAR 2004. As a result, no prompt action was taken to delete the names of the affected staff from the payroll.


1065. Our audit disclosed that one of the separated staff withdrew total unearned salary of ¢9,069,451.00 credited to his account despite instructions to the bank to place embargo on the account. The remaining amount was however retained in the accounts of the two separated staff.

1066. We recommended to management to trace the whereabouts of the separated staff who collected the unearned salary for him to refund the amount to chest. We further recommended that the balance of the unearned salary credited to the accounts of the two separated staff should be transferred to government chest.

GHANA NATIONAL FIRE SERVICE - HEADQUARTERS

Unauthorised operation of bank accounts

1067. Our audit disclosed that on 23 November 2003 the Ministry of Interior approved the opening of a Fire Safety Account in accordance with LI 1724, to enable the Service lodge proceeds from the issue of Fire Permits. The cash book balance as of 31/12/05 on the account was ¢2,058,915. Without obtaining further approval from the CAGD as required by Regulation 47(1) of FAR, 2004, the Service proceeded to open Account Number 01-230-50012-97 at the High Street Branch of the Ghana Commercial Bank.

1068. Also, contrary to Section 11 (2) of the Audit Service Act 2000 (Act 584), bank statements or other admissible evidence showing lodgements for the period 23 November to 31 December 2004 were not produced for inspection when requested for.

1069. The lapse will not enable the CAG to capture such receipts and payments in the Government Accounts as required by law. In the circumstance, the annual accounts for the year under review might not portray a true and fair view of the state of affairs of the public account for the period.


1070. We requested management to obtain retrospective approval from the CAG failing which the account should be closed. Bank statements on the operation of the account should also be submitted for audit.

1071. Management responded that it was currently in contact with CAGD for the retrospective approval to enable the Service continues operating the account.

Procurement of stores from unregistered VAT companies - ¢2.13 billion

1072. Regulation 3(2) of FAR, 2004 requires that Government Stores should be procured from only VAT registered persons. Also, Regulation 62 (c) provides that any officer connected with the control of Government Stores who deliberately permits the contravention of the law by another person is guilty of an offence.

1073. We noted that between 1 January 2004 and 31 December 2005 goods worth ¢2,132,700,172 were procured from eight companies which had not registered with the VAT Secretariat. VAT of ¢319,905,025 was thus lost to the state.

1074. Management explained that the threshold of ¢200,000,000 by the VAT Service was used as the yardstick for the transactions, hence the anomaly. Management also contended that M/S Fruits of Love (among the companies listed) was a supplier of foodstuffs, which were VAT exempt for the feeding of GNFS recruits in camp. Management further stated that since January 2006, directives had been issued for the Service to deal with only VAT registered companies.

1075. We disagreed with some of the explanations since the firm (Fruits of Love) was a supplier of both foodstuffs and building materials. The sum of ¢198,860,830 was for building materials and not for foodstuffs. Failure to abide by regulations could deprive the government the much-needed revenue.


1076. We recommended that FAR 2004, should be complied with and the officials responsible for this act reprimanded to deter potential offenders.

1077. Management responded that it had directed that all procurement, irrespective of face value, should be from VAT registered companies.


1078. Regulation 297 of FAR, 2004 requires a head of department to cause the immediate stoppage of salary to a public servant when that public servant has been absent from duty without leave or reasonable cause for a period as stipulated in the administrative regulations of the establishment; resigned, retired, or died.

1079. Contrary to the regulation, we noted that a total amount of ¢102,079,480 was wrongly paid to eight officers who had either retired, resigned their posts, been dismissed or died.

1080. Management stated that it had already sent inputs to the CAGD to facilitate deletion of the various names but these were not affected. Management said it had also sent letters to the respective banks for the immediate transfer of these sums into the CAG suspense accounts. Contacts had also been made with the officers and their beneficiaries to recover any amount already withdrawn.

1081. We urged management to pursue the matter and obtain evidence that such moneys had been credited to the appropriate government suspense account. We further advised that heads of departments should report the conditions listed in Regulation 297 of FAR, 2004 early enough to permit the prompt deletion of such names from the Government payroll.


Stores not taken on charge-¢61.6 million

1082. Stores Regulation 0315 requires that all stores received should be taken on charge in the store ledger or store cost book at the time of receipt and entries will be supported by prescribed vouchers. However, items worth ¢61,600,000 purchased between 8 November, 2004 and 5 November, 2005 were not sent to the stores to be taken on charge before being put to use.

1083. Management explained that the purchase of some of the items in question was occasioned by emergencies which necessitated the urgent deliveries. We however did not see how the purchase of clothing materials worth ¢52,768,000, or 85.7% of the above amount could be said to be of emergency nature if an effective procurement plan was in place and effectively implemented.

1084. We could therefore not vouch for the genuineness of the transactions because the items had allegedly been used and had also not been passed through the books. We informed management that if this condition persisted, it could lead to rush purchases with their attendant high prices and supply of inferior products.

1085. We recommended that emergencies notwithstanding, Regulation 0315 should be complied with.

Loss of tax revenue-¢21.9 million

1086. The Internal Revenue Act, 2000 (Act 592) requires that withholding tax on rent payments should be made at the rate of 10%. We noted however that 5% withholding tax was rather deducted on35 payment vouchers. Though management explained that it was unaware of this provision, this omission deprived the government of revenue amounting to ¢ 21,876,000.

1087. We urged management to recover the amount of ¢21,876,000 from the 35 landlords and pay same to the IRS. Further, management


should ensure that 10% tax becomes the status quo for tax deductions on rental accommodation.

Non-recovery of car loan-¢7.7 million

1088. Our review disclosed that a car loan together with interest totaling ¢7,700,000 which was granted to DOI Martin Adjoe as far back as 17 September, 2004 vide cheque No. 264209 had still not been recovered even though the officer was no longer in the employment of the Service.

1089. This lapse was due to the fact that deductions did not commence the following month after the disbursement. Besides, without ensuring that the total sum had been recovered, management approved and accepted the officer’s resignation.

1090. Management stated that measures had already been taken to recover the accrued loan and interest and that the internal control measures put in place now included creating a payroll monitoring unit within the accounts section which would prevent the re-occurrence of this irregularity.

1091. We recommended that regulations should be followed and that the sum of ¢7,700,000 should be recovered from Martin Adjoe, failing which management should be held responsible.

1092. Management stated that it had already initiated action towards full recovery of the loan.

GHANA NATIONAL FIRE SERVICE – TAMALE

Unrecorded fuel and lubricant purchases-¢38.8million

1093. The expenditure records of the Ghana National Fire Service showed that between 5 July 2005 and 7 June 2006, the Service consumed 5,734 litres of fuel and lubricants valued at ¢38,774,276 but these were not recorded in vehicle log books.


1094. This situation contravened Section 1608 of Stores Regulations 1984 which states that a vehicle log book shall be maintained for each vehicle. Also journeys undertaken shall be recorded and full particulars of receipt of fuel, oil and lubricants shall be entered up daily.

1095. Management's failure to provide the vehicles with vehicle log books resulted in these lapses. Consequently we could not confirm the receipt as well as usage of the fuel costing ¢38,774,276.

1096. We recommended and management agreed to account for the fuel and also provide vehicle log books for all the vehicles.

GHANA NATIONAL FIRE SERVICE - BOLGATANGA

Fuel purchases not logged - ¢27.3 million

1097. Our audit disclosed that management procured fuel valued at ¢27,275,402 between May 2005 and October 2006, but failed to record the fuel issued to the vehicles in the log books or fuel control books to account for the usage.

1098. Laxity on the part of management to effectively supervise the drivers and ensure accountability caused the anomaly.

1099. We urged management to introduce a fuel control book to be kept by the Transport Officer, in addition to the log books on the vehicles to ensure transparency and accountability. We also recommended that management should account for the ¢27.3 million.

MINISTRY OF INFORMATION AND NATIONAL ORIENTATION –

GHANA BROADCASTING CORPORATION-SEKONDI

Fuel purchases unaccounted for - ¢222.2 million 1100. We noted during our audit that although log books were maintained for the Corporation's vehicles with registration numbers


GV.2599 A and GO 6749 W, consumption of fuel and other lubricants totalling ¢222,193,196.00 allegedly purchased was not recorded in the log books. This office could therefore not ascertain the veracity of the alleged purchases.

1101. We requested management to account for the usage of the fuel and ensure that drivers and all other staff who use the vehicles make the appropriate recordings of fuel, lubricants and journeys undertaken in the log books to ensure effective control over fuel consumption.

GHANA BROADCASTING COPORATION – SUNYANI

Outstanding debtors - ¢572.4 million

1102. Forty-seven companies, individuals and religious bodies owed the corporation ¢572,464,599 as of 31 December 2006. Some of the indebtedness date as far back as 2000.

1103. We advised management to vigorously pursue recovery of the amount.

GHANA BROADCASTING CORPORATION-TAMALE

Undeducted tax - ¢6.7million

1104. Our review of disbursement records disclosed that 5% withholding tax of ¢6,698,945 was not deducted from thirty-six transactions with a gross value of ¢133,978,891.

1105. This contravened Section 84(2) of the Internal Revenue Act 2000 (Act 592) which enjoins a person making payment for purchases or services received to withhold a tax of 5% on the gross amount and pay same to the Commissioner. The omission had deprived the state of tax revenue of ¢6,698,945.

1106. We recommended and management agreed to recover the total amount from the payees and remit same to the IRS.


GHANA BROADCASTING CORPORATION - HO


1107. An Accounts Officer at the Volta Star radio station at Ho, Mr. Patrick Fumey, who was the cashier responsible for the receipt of revenue, misappropriated total of ¢581,930,025 being part of the station's revenue that he collected from 2002 to December 2006.

1108. The misappropriation of revenue was due to the Regional Account Officer's negligence and failure to supervise the Cashier over the years. We recommended that management should recover the total amount of ¢581,930,025 from Mr. Fumey. Additionally, we advised that the duties of a cashier should be taken away from him and controls over revenue collection strengthened.

MINISTRY OF LANDS, FORESTRY AND MINES

LAND TITLE REGISTRY - TEMA

Misappropriation of revenue- ¢126.0 million

1109. In 2002/2003, Mr. Gilbert Anku misappropriated revenue totalling ¢30,182,287 out of which only ¢2,200,000 was recovered vide T/R No 28096 of 31 March 2003, leaving an outstanding balance of ¢27,982,287 to be refunded. The same officer, between 1 January 2004 and 21 February 2005, again collected ¢301,156,665, accounted for ¢203,119,668 and misappropriated the balance of ¢98,036,997, bringing the total amount misappropriated by him to ¢126,019,284.

1110. The above misappropriations contravened Regulations 17 (b) and 22 (1) of FAR, 2004 which require cash collections to be paid into the designated Consolidated Fund Transit Bank Accounts on time and in full.

1111. We blamed management for its inability to take disciplinary action and to implement our earlier recommendation to seek police assistance in the recovery of the amount in the first instance. The inaction paved the way for the same officer to further misappropriate the second amount of ¢98,036,997.


1112. Management did not produce any documentary evidence but claimed stated that the case had been reported to the Tema Regional Police for investigation whilst the culprit had been interdicted based on the recommendations of the Minister of Lands and Forestry. He was also to face a disciplinary committee to be set up by the CAG.

1113. We recommended to management to obtain police report on the matter for further action and recover the total amount involved from the officer.

Improper custody of land title forms

1114. Contrary to Regulation 214 of FAR 2004, which states that "a Head of department shall ensure the effective and efficient control of stocks of value books", we observed that sheets of Land Title Forms (LTF) which were value documents received from Head Office were not properly and securely kept.

1115. To secure the valuable documents, management accepted our recommendation to provide cabinets for their custody.

MINES DEPARTMENT - TAKORADI

Overstocking of waybill booklets-¢2.6 billion

1116. The Mines Department in Takoradi received 44,000 waybill booklets valued at ¢2,640,000,000 in March 2004 from Accra for storage. It was explained that Head Office brought the booklets to Takoradi because there were no proper storage facilities in Accra to store them.

1117. The waybill booklets were received without control sheets to provide detailed particulars of the booklets. We also observed that the haphazard manner in which the booklets were packed exposed them to the risks of getting damaged or stolen without prompt detection.


1118. We considered the purchase of such large quantities of waybill booklets at the cost of ¢2,640,000,000 when they are not of immediate use as constituting avoidable locking up of government funds and capital which could have been utilised on other prioritised needs.

1119. We recommended to management to prompt its Head office to devise a means of putting to use the large quantities of waybill booklets to forestall deterioration and resultant loss to Government.

ADMINISTRATOR OF STOOL LANDS - TECHIMAN


1120. Mr. Richard Anim-Mensah, Revenue Inspector collected revenue of ¢20,648,000 between January 2005 and November 2006 but accounted for only ¢14,189,000 leaving a balance of ¢6,459,000.

1121. We advised management to recover the amount from Mr. Anim-Mensah. We further recommended to management to impress upon the Accountant and the Internal Auditor to be vigilant enough to ensure that monies collected were banked promptly and in full.

1122. In response, management intimated that the total amount of ¢6,459,000 would be recovered from Mr. Anim-Mensah and disciplinary action instituted against him.

LANDS DEPARTMENT – BEKWAI

Unaccounted for revenue - ¢8.2 million

1123. During the period under review, two Revenue Commissioned Collectors failed to account for revenue of ¢8,265,706 collected between July 2004 and February 2006.

1124. We identified lack of effective supervision over the collectors to be the factor for the shortages and the resultant loss of revenue to Government.


1125. We requested the Revenue Inspector in-charge to retrieve the misappropriated revenue through their guarantors and intensify supervision over the revenue collectors to avoid such occurrences.

LANDS COMMISSION SECRETARIAT – ACCRA

Delays in the payment of revenue to bank

1126. Our review disclosed that revenue ranging between ¢20,000,000 and ¢54,625,000 was kept for periods of between 30 to 130 days, before being paid to bank.

1127. The failure by management to properly supervise the Principal Accountant and the Revenue Collectors accounted for this lapse

1128. We recommended that management should ensure that the Principal Accountant strictly complies with Regulation 15(1) of FAR 2004 on the receipt and lodgement of public funds. Management assured that measures would be put in place to forestall delays in the banking of revenue.

Outstanding payment vouchers -¢2.40 billion

1129. The Accounts section failed to produce 144 payment vouchers (PVs) with a total face value of ¢2,400,216,938 covering the period January 2004 to December 2005 for audit. The lapse contravened Regulation 262 of FAR, 2004. Consequently, we could not confirm the authenticity of the transactions.

1130. The schedule officer explained that the outstanding PVs could not be immediately traced for our review as a result of the movement of the accounting records from the former Principal Accountant’s office for storage at their present location.

1131. To ensure proper accountability and transparency, we urged management to locate the 144 PVs and submit them for audit, failure of which the total amount involved should be refunded by the


schedule officer. We further advised management to ensure the proper custody of PVs for future audit.

Dishonoured cheques - ¢256.4 million

1132. Our audit disclosed that cheques totalling ¢256,365,000 issued by 10 Lessees/Assignees to settle their ground rent were dishonoured by Bank of Ghana between January 2004 and July 2006. The issuance of dud cheques contravened Criminal Code Amendment Decree, 1973 (NRCD 160) which makes it an offence punishable by a fine or imprisonment of up to five years. Besides, management failed to maintain dishonoured cheques register to control and monitor cheques.

1133. We recommended prompt remedial action on the cheques and the introduction of dishonoured/dud cheques register for monitoring cheque, receipts and payments.

Unpaid rent - ¢17.2 million

1134. Our review of records at the Estates department disclosed that 14 officers who occupy the Commission’s flats and bungalows failed to pay rent totalling ¢17,244,000 for the period January 2002 to July 2006. The situation was as a result of non-deduction of rent directly from their salaries.

1135. We recommended that the rent arrears should be retrieved while management ensured that rent was deducted at source. We further advised management to ensure that the percentages of rent deductions are in conformity with rates prescribed by MOFEP.

Direct disbursement of revenue - ¢1.10 billion

1136. We noted that out of total revenue of ¢95,983,473,283 collected by the Commission at its head office for the period January 2004 to July 2006, ¢94,881,457,780 was banked leaving ¢1,102,015,503 (1.2%) which was used to meet recurrent expenditure, pending the receipt of funds from MOFEP.


1137. The practice contravened Regulation 22(1) of FAR, 2004 which stipulates that revenue collected should be paid in gross into the Public Fund Account and no disbursement shall be made form the moneys collected except as provided by an enactment. We recommended to management to ensure that in future all revenue collected is promptly banked in full.

Non-preparation of monthly bank reconciliation statements

1138. We observed that as of August 2006, monthly bank reconciliation statements for the Commission’s Account Nos. 0123050012132 and 0125660074051 at the Bank of Ghana for the period January 2003 to July 2006 (43 months) had not been prepared. We noted for instance, that entries in respect of 12 dishonoured cheques amounting to ¢264,890,000 issued between April 2004 and August 2005 had not been reversed in the cash book and action initiated to recover the amounts involved from the payers.

1139. Also, a total of ¢12,702,226,812 representing collections from the Regional Offices and credited to Account No. 0123050012132 had not been reconciled and credited to the appropriate accounts at Head office.

1140. We recommended to management to ensure regular reconciliation of the accounts.

Non-functioning of Audit Report Implementation Committee

1141. We observed that even though an Audit Report Implementation Committee had been established to pursue the implementation of audit recommendations as required by section 30 of the Audit Service Act, 2000 Act 584 and Section 16(8) of Internal Audit Agency Act, 2003, the Committee had not been functioning as required by law. We noted that the Committee had since its establishment in 2004 not met to perform its functions as enshrined in Act 584.


1142. Management attributed the inability of the Committee to exercise its functions to the absence of some of the Committee members as a result of transfers.

1143. Consequently, recommendations made in our two previous audit reports had not been implemented. For instance, irregular payments to bank, revenue lodgements without treasury receipts to cover them, banking revenue without security measures among many others were not corrected as recommended.

1144. We therefore recommended that management should speed up the process of reconstituting the Committee to ensure prompt implementation of all our audit recommendations.

Unpaid rent - ¢17.2 million

1145. Our review of records at the Estates department disclosed that 14 officers who occupy the Commission’s flats and bungalow failed to pay rent totalling ¢17,244,000 for the period January 2002 to July 2006. This situation was as a result of non-deduction of rent directly from their salaries.

1146. We recommended to management to recover the outstanding rent and institute measures to facilitate the pay of rent.

REGIONAL SURVEY DEPARTMENT - TAKORADI


1147. The utilisation of fuel purchases worth ¢20,287,589 made during the year under review could not be accounted for because management failed to maintain vehicle log books for its official vehicles. The lapse contravened section 1604 of Stores Regulations, 1984 which requires vehicle log books to be maintained on official vehicles to record journeys undertaken and particulars of receipts of fuel, oil and lubricants.


1148. The omission could result in fictitious purchases and encourage diversion of fuel. We recommended that management should account for the utilisation of the alleged fuel purchases failure of which the amount involved should be retrieved to chest.

MINISTRY OF MANPOWER, YOUTH AND EMPLOYMENT

LABOUR DEPARTMENT – TEMA


1149. Although Regulation 304 (1) (c) of FAR, 2004 requires a Head of department of a management unit to examine and certify the Personal Emolument payment vouchers to ensure that the names of separated staff are deleted from the payroll on the effective dates of separation, we noted on the contrary that only ¢5,609,227 was recovered out of total unearned salaries of ¢28,496,387 paid into the bank accounts of three deceased officers, namely, Mr. Bernard Owusu, Grace Forson and Kojo Bollu. These anomalies resulted from the Regional and Head Office’s failure to act on the District Labour Officer's letter No LTE.1/SF.13/V.5/63 of 16 January 2006, which requested that their names be deleted from the payroll.

1150. We advised that management should retrieve the remaining balance of ¢22,887,160, delete the names of the officers from the payroll and institute measures to prevent its future recurrence.

LABOUR DEPARTMENT – TAKORADI


1151. A payroll audit conducted during the year at the Labour Department, Takoradi, disclosed that two separated staff who resigned from the Department in September 2004 and April 2005 respectively were paid unearned salaries totalling ¢27,914,005. The lapse was as a result of the failure of management to promptly delete the names of the separated staff from the payroll.


1152. The audit disclosed that even through management instructed the banks of the separated staff to place embargoes on their salaries, the banks nevertheless allowed them to withdraw the unearned salaries credited to their accounts.

1153. We recommended to management to take steps to have the two names deleted from the payroll. We further recommended that the two separated staff should be traced to refund to chest total unearned salaries of ¢25,304,005 withdrawn by them. Their bankers should also be instructed to refund to chest total unearned salary of ¢2,610,000 which stood to the credit of the separated staff in their bank accounts.

DEPARTMENT OF SOCIAL WELFARE – WA

Failure to account for fuel - ¢18.6 million

1154. Regulation 63 of FAR, 2004 states that a vehicle log book shall be maintained in which full particulars of receipts of fuel and journeys undertaken shall be recorded for each vehicle.

1155. We noted that fuel purchased by the Department of Social Welfare amounting to ¢18,596,000 was neither entered in the store ledger nor recorded in the vehicle log book.

1156. We could therefore not confirm that the fuel purchased was used in the interest of the department.

1157. To ensure transparency and efficiency in the running of the department's vehicle, we recommended that management should immediately procure and maintain a vehicle log book and account for the fuel. We also advised management to ensure that all fuel purchases are initially taken on ledger charge.

1158. The Regional Director in response accepted our recommendations.


MINISTRY OF TRANSPORTATION

HEADQUARTERS

Overpayment on contract - ¢106.2 million

1159. In August 2004, the Ministry entered into a contract for consultancy services on road transport infrastructure documentation valued at ¢1,149,346,900 with Messrs Arts Investment and Entertainment Centre. However, we noted that due to improper monitoring of payments the Centre was overpaid by ¢106,192,400.

1160. We recommended a recovery of the amount and proper monitoring of contract payments to prevent a recurrence of the anomaly.

1161. Management stated that they had written to the Centre for the refund of the overpayment.

DEPARTMENT OF URBAN ROADS – SEKONDI


1162. The management of the Western Regional Office of the Department of Urban Roads failed to delete from the mechanized salary voucher the name of a separated staff, Netty Henry who vacated his post on 15 September 2004. As a result, unearned salary totalling ¢9,468,297 was wrongly paid into his account at the Agricultural Development Bank, Takoradi.

1163. Management explained that they wrote a letter to the bank toplace embargo on the salary of the separated staff. Our audit however revealed that management failed to follow up to the bank to ascertain that the instructions were implemented. The inaction enabled the separated staff to illegally withdraw the unearned salary without detection.


1164. We recommended to management to retrieve the amount from the separated staff and pay same to government chest. We further recommended that the name of the staff be deleted from the payroll of the Department.


1165. Total payments of ¢303,605,825 made to contractors for routine maintenance and pothole patching at various locations in the metropolis were not substantiated with works certificates. The omission contravenes the provisions of Regulation 39 (2) (c) of FAR, 2004 which require that transactions are properly authenticated to show that amounts are due and payable.

1166. In the circumstance, we could not ascertain the authenticity of the expenditures involved. We therefore requested management to provide for audit scrutiny the appropriate certificates.

Tax payment not covered by VAT invoice - ¢7.2 million

1167. The Department suffered VAT charge of ¢7,299,900 on the purchase of six lorry tyres valued at ¢55,959,000 on July 2006 from Bikat Company Ltd. However, management failed to demand VAT invoice from the supplier as evidence of payment.

1168. The omission could facilitate the suppression of the VAT amount involved from being paid to the VAT Service. We recommended to management to collect the VAT invoice in support of the payment voucher from Bikat Company.

Award of contract without competitive bidding-¢162.0 million

1169. Our audit disclosed that the Department hired a bulldozer from Justmoh Ltd. Takoradi at the cost of ¢162,022,500 for right of ways presentation exercise at West Fijai. We however observed that no price quotations were obtained to determine the most competitive price before Justmoh Ltd was selected to supply the equipment.


1170. The lapse contravened Section 43 (1) of the Public Procurement Act (Act 663) which requires institutions to obtain price quotations from at least three different suppliers for such transactions. We recommended to management to comply with the provisions of the Act to ensure transparency and competition.


1171. Various amounts totalling ¢349,976,846 paid on 14 payment vouchers to contractors were not supported with official receipts to authenticate the transactions.

1172. The omission contravened Regulation 39 (2c) of FAR, 2004 which requires that the head of the accounts section of a department shall control disbursements of funds to ensure that transactions are properly authenticated to show that amounts are due and payable.

1173. We urged management to ensure that relevant receipts wereobtained to authenticate the total payment of ¢349,979,846.

Unauthorised variations in contract sums - ¢39.1 million

1174. Our review of contract payment vouchers disclosed that total payments amounting to ¢39,183,436 were made to three contractors in excess of the approved contract sums.

1175. The variations which resulted in the payment of the excess amounts were not subjected to contract review and subsequent approval. The variations resulted in the payment of amounts in excess of between 32% and 146% of the original contract sums. The practice could result in payments for contracts not properly executed or not executed at all. It could also result in overruns on the budget for such projects.

1176. We recommended to management to obtain approval for the variations and excess payment of ¢39,183,436 made on the contracts.


DEPARTMENT OF FEEDER ROADS – WA


1177. The audit of the accounts of the Department of Feeder Roads disclosed that management failed to ensure that the names of two deceased members of staff were promptly deleted from the payroll. As a result, when their names were finally deleted, unearned salaries of ¢12,886,166 and ¢11,037,058 respectively were wrongfully paid into their bank accounts.

1178. We requested management to ensure that the ¢23,923,244 was recovered to Government chest without any delay.

Failure to maintain records

1179. The Head office of the Department of Feeder Roads has an arrangement whereby it sells equipment on credit to contractors engaged on its projects. Repayment for the indebtedness is made by deductions from contract payments due to the contractors. We noted that this arrangement has been extended to contractors in the Upper West Region to the tune of ¢1,347,730,212.90. We however realised that the Regional Office, Wa did not keep account of the repayments as a result of which we could not ascertain the indebtedness of the various contractors.

1180. To ensure effective monitoring of the debt, we advised management to open records on the debt for its effective monitoring.

Withholding tax not remitted - ¢72.9 million

1181. Section 84 of the Internal Revenue Act, 2000 (Act 592) requires that a tax of 5 % should be withheld on all payments made to vendors by government and quasi government establishments.

1182. Our audit, however, disclosed that the Department deducted total tax of ¢48,373,070 from total payments of ¢764,974,171 instead of ¢57,376,446 due, resulting in a short-deduction of ¢9,003,373.


1183. We also noted that a total of ¢63,884,409 being taxes withheld had not been remitted to the Internal Revenue Service (IRS).

1184. We requested management to retrieve the underdeducted tax and pay together with the amount of ¢63,884,409 to IRS.

1185. Management accepted our recommendations for compliance.

DRIVER AND VEHICLE LICENSING AUTHORITY – TEMA

Arrears of rent - ¢50.3 million

1186. Our review of the rent cash book disclosed that 44 individuals and organizations, who rented part of the grounds of the Authority, defaulted in the payment of rent amounting to ¢50,310,000 as of 30 June 2006. The situation contravened Regulations 16 (a) & 17 (a) of FAR, 2004 which enjoins departmental heads to ensure that all Non-Tax Revenue, including rent on Government lands, was fully and promptly collected.

1187. To ensure that Government was not denied needed funds, management accepted our recommendation to serve the defaulting institutions with demand notices to pay up all their arrears.

Unpresented General Counterfoil Receipts Books

1188. With the absence of a substantive Accountant, 30 General Counterfoil Receipt (GCR) books issued between June 2004 and May 2005 were neither receipted by signatories nor accounted for in any cash book thereby contravening Regulation 216 (1) of FAR, 2004 which requires a stockholder of value books to record all issues fullyand properly.

1189. To prevent the misappropriation of revenue, we recommended that management investigate the matter so as to locate these value books and that any revenue generated from their use be recovered and paid to chest in order to obtain full accountability.


DRIVER AND VEHICLE LICENSING AUTHORITY –AKIM ODA

Cash shortage - ¢634.0 million

1190. An audit investigation into alleged revenue misappropriation disclosed that out of total revenue of ¢2,879,801,500 collected between 1 January 2003 and 27 July 2006 a total of ¢2,245,794,000 was paid to chest leaving a balance of ¢634,007,500 not accounted for by the Accounts Officer, E. S. Egyir. The situation contravened Regulation 22 (1) of FAR, 2004 which requires revenue to be paid in gross into Public funds account without any disbursement.

1191. We noted that non-segregation of accounting duties and ineffective supervision of the duties of the Accounts Officer’s work resulted in the cash shortage.

1192. We recommended that management should employ all means including the assistance of the Police to recover the total amount of ¢634,007,500 from Mr. Egyir. We also recommended that more accounting personnel be employed to handle different aspects of accounting duties to strengthen the internal control system. We further advised effective supervision within the accounts unit to forestall recurrence of the irregularity.

1193. Management responded that a formal complaint had been made to the CAG and that Mr. Egyir had been arrested and arraigned before court on a charge of causing financial loss to Government.

Receipt books not accounted for

1194. Between July 2004 and June 2006, 18 GCR books and seven Cover Note Receipt books were issued to Mr. E. S. Egyir for revenue collection. These books were not accounted for in any of the cash books. They were also not found among the value books physically checked by the audit team.


1195. Revenue collected with these books was therefore not accounted for and did not also form part of the short payments amounting to the ¢634,007,500. We advised management to retrieve the 18 GCRs and the seven Cover Note receipt books from Mr. Egyir.

Value books not recorded in the station stock register

1196. Our audit disclosed that the under listed value books which were received from DVLA Headquarters were not recorded in the stock register, a situation which contravened Regulation 214 of FAR, 2004:

Book type QuantityCost Recovery 65 booksHighway Code 1000 booksStickers 50 bookletsForms 5000 singlesRenewal Stamps 1440 piecesCertificate of Competence 20 bundles

1197. We could not agree with management’s explanation that they usually received the value books without store receipt vouchers, which were received later when most of the books had been used.

1198. We pointed out to management that failure to record value books received could lead to suppression of revenue and impede government revenue generation efforts. We recommended that management should henceforth record all value books received with or without SIVs in the stock register.


MINISTRY OF WATER RESOURCES, WORKS AND HOUSING (MWRWH)

PUBLIC WORKS DEPARTMENT (PWD) -TAKORADI

Arrears of rent owed to PWD - ¢14.6 million

1199. Three companies were indebted to the Public Works Department, Takoradi in the sum of ¢14,600,000 in respect of default in the payment of rent for premises rented out to them.

1200. The failure of management to pressurise the occupants to honour their rent obligations resulted in the situation. We urged management to vigorously pursue the recovery of the outstanding rent by resorting to legal means if the occupants persisted in default of payment of the rent.

PUBLIC WORKS DEPARTMENT - SOMANYA


1201. Regulation 297 (1) (f) of FAR, 2004 states that “A head of department shall cause the immediate stoppage of payment of salary of a public servant when that public servant has ……died”.

1202. Our audit of the payroll however revealed that two employees, Messrs Samuel Tetteh and Addy Ofori who died in April 2003 and August 2004 respectively, still had their names on payroll despite our persistent reminders to delete their names. As a result, total unearned salaries of ¢27,205,511 was paid to the bank accounts of the two deceased employees.

1203. We recommended that management should ensure that the amount involved was paid into the Controller and Accountant General’s salaries and wages account.


PUBLIC WORKS DEPARTMENT - NKAWKAW


1204. Our payroll audit revealed that two officers who separated through death still had their names on the Department’s payroll, resulting in the payment of a total amount of ¢6,667,985 into their bank accounts.

1205. We advised management to ensure that the names of the separated staff were deleted from the payroll and the unearned salaries of ¢6,667,985 held by the Mponua Rural Bank was paid into the CAG’s suspense account.

PUBLIC WORKS DEPARTMENT – TAMALE

Misappropriation of revenue - ¢6.6million

1206. Mr. Emmanuel Abambila collected revenue totalling ¢6,600,000 between May 2004 and May 2006 and misappropriated it instead of paying it into bank. The act contravened Section 6(1) of Financial Administration, Act 2003 (Act 584) which requires all revenue raised or received on behalf of the government to be paid to chest

1207. This came about as a result of lack of supervision by management. We urged management to recover the amount of ¢6,600,000 from Mr Abambila and also subject him to constant checks to prevent the situation from occurring again.

DEPARTMENT OF RURAL HOUSING –TAMALE

Purchases not routed through store records - ¢20.6 million

1208. We observed that various store purchases made as at August 2006 by the Department totalling ¢20,659,000 were not routed through stores.


1209. Management indicated that there was no storekeeper to take charge of the stores, hence the lapse.

1210. We recommended that management should engage a competent storekeeper. In the interim, the Accountant should act as the storekeeper, alongside his normal duties.

Unrecovered loans-¢14.2 million

1211. The Department's loan register showed that 76 loan beneficiaries from five societies viz: Wayamba, Datoyili Model, Gumani Village, Wayamba Pamscad and Diare Shelter, owed the Department ¢14,207,080 in loans dating back to 1998.

1212. Management explained that efforts at recovering the loans had been very slow because the recipients had refused to respond to the debt collecting calls.

1213. We urged management to contact the heads of the various Societies for assistance in recovering the loans.

RENT CONTROL UNIT – TAKORADI


1214. A former Clerical Officer of the Unit stationed in Takoradi, Michael Kofi Boadu, was paid unearned salary totalling ¢6,812,382.00 between 2004 and August 2005.The name of the former staff who deserted his post upon his transfer to Cape Coast in 2004, was not promptly deleted from the payroll of the Takoradi office until August 2005.

1215. The inaction enabled the bank account of the separated staff to be credited with unearned salary totalling ¢6,812,382.00. The lapse was a result of the failure of management to enforce the provisions of Regulation 304(b) of FAR, 2004.


1216. We recommended to management to trace the staff to enable it recover the unearned salaries paid to him. We also advised management to ensure that the name of the separated staff was deleted from the payroll.

HYDROLOGICAL SERVICES DEPARTMENT – ACCRA

Outstanding mobilisation advance - ¢4.50 billion

1217. Our review disclosed that the MWRWH contracted M/S Pad Ltd to undertake coastal protection works at Ngressia in October 2005 at a contract sum of ¢14,999,183,462. The contract provided that the project was to be completed within five months from the date of the award. The Contractor was paid mobilisation advance of ¢4,499,755,038 (30%) of the contract sum on 20 October 2005. However, as of December 2006, the Contractor had vacated the project site with only 6% of the work completed.

1218. The MWRWH has requested the Western Regional Tender Board to determine the status of the contract and is awaiting a response. Regarding the ¢4.50 billion mobilisation paid to the Contractor, the MWRWH said it had sought advice from the Attorney General to recover the amount through the Advance Mobilisation and Performance Bond system.

1219. We recommended that the MWRWH should speed up the recovery of the amount from the contractor with interest at current bank rate.

Outstanding mobilisation advance - ¢89.8 million

1220. The Hydro Services Department contracted M/S Ladco Ltd in November 2003 for the construction of two culverts on the Onyasia stream, Dworwulu at a contract sum of ¢897,521,548. The contract provided that the work was to be completed within four months. The contractor was paid mobilisation advance of ¢179,504,309 of the contract sum on 24 November 2003 to execute the projects. As of


December 2006, the contractor had completed only one of the culverts at a cost of ¢425,199,100 and has accounted for only half of the mobilisation advance of ¢89,752,154.50.

1221. We recommended that half of the mobilization advance amounting to ¢89,752,154.50 should be recovered from the Contractor with interest at the current bank rate.

1222. Management responded that they had initiated action to recover the amount from the Contractor.

WATER AND SANITATION DEVELOPMENT BOARD –BIBIANI


1223. Review of the accounts of the District Water and Sanitation Board, Bibiani, revealed that total revenue of ¢38,500,763.00 collected between March 2003 and September 2004, was misappropriated by a former Accounts Officer of the Board, Mr. James Akwaben Buadu.

1224. We noted that casting of the cash book and reconciliation were not done to declare cash and bank balances at the end of each month, a situation which resulted in the cash shortage when we reviewed the accounts.

1225. We recommend to management to recover the misappropriated revenue of ¢38,500,763.00 from the former Accounts Officer.

Uncompetitive procurement -¢49.2 million

1226. The District Office procured two Yamaha Motor bikes at the cost of ¢49,200,000 without obtaining price quotations for the purposes of selecting the most competitive prices.


1227. The omission contravened section 43 of the Public Procurement Act, 2003 (Act 663) which states that "The procurement entity shall request quotations from as many suppliers or contractors as practicable, but from at least three different sources".

1228. We could therefore, not ascertain whether value for money was achieved in the purchases made. We recommended to management to ensure compliance with the provisions of the procurement law to secure value for money in their future procurement transactions.

Undeducted tax - ¢9.2 million

1229. We noted that withholding tax totalling ¢9,216,300 which should have been withheld on total payments of ¢184,326,000.00 made to suppliers was not effected.

1230. We urged management to pursue recovery of the tax of ¢9,216,300 for onward payment to the Internal Revenue Service.

WATER AND SANITATION DEVELOPMENT BOARD (WSDB) –

DONKORKROM

Shortages against stand pipe agents - ¢48.4 million

1231. The WSDB made it a policy that revenue accruing from daily sale of water by the Stand Pipe Agents (SPAs) should be paid in full to the Revenue collectors who in turn account for it to the WSDB Accountant. However, between March 2004 and December 2005, shortages from the daily sale of water totaling ¢67,300,215 were recorded against 28 SPAs. Out of this amount a total of ¢18,907,726 had been refunded leaving an outstanding balance of ¢48,392,489.

1232. Undue delays by the revenue collectors in receiving daily sales from the SPAs could be attributed to the misuse of the revenue by the SPAs.


1233. While we recommended recovery of the shortages, we also advised the Board to ensure that the revenue collectors read the water meters daily and collect revenue due from the SPAs promptly.


1234. Two Revenue Collectors received total revenue of ¢436,556,885 from SPAs and accounted for only ¢398,247,450 to the WSDB Accountant. Out of this figure, ¢1,472,000 had been refunded leaving a balance of ¢36,873,435 yet to be recovered.

1235. This lapse was attributed to poor supervision of the Revenue Collectors by management. For instance, receipts were only issued to cover amounts paid by the collectors without the Accountant ensuring that all revenue due as reflected in the daily collection cash books was fully accounted for. Belated payment of revenue to the Accountant by the Collectors was also the order of the day. That created a leeway for the Revenue Collectors to suppress part of the revenue collected and pay whatever they thought fit to the Board.

1236. We recommended that the Board should step up supervision of the collectors while the necessary controls on the collection and prompt accounting for revenue were duly instituted. Meanwhile, we urged the Board to recover the amount of ¢36,837,435 from the collectors and apply sanctions commensurate with the offence.

Cash shortages-Accountants’ office - ¢30.3 million

1237. The WSDB Accountant issued receipts to cover cash and cheques received totaling ¢554,377,070 between March 2004 and December 2005. During the same period cash and cash lodgments and other cash payments into the Board’s Operation Account and Replacement Account amounted to ¢524,061,881 resulting in cash shortage of ¢30,315,189.


1238. The Accountant attributed the cash shortage to a probable theft of cash he normally kept either in his table drawer or in a wooden cabinet. Though we noted the absence of a safe in the office we found the explanation not convincing enough since he had never detected any theft of cash or reported any proven theft case officially to the Board.

1239. We recommended to the Board to strictly ensure that all receipts were paid in gross into the operation account. We further recommended that the Accountant be made to refund the ¢30,315,189 into the Board’s coffers.

Arrears of private connections - ¢30.7 million

1240. Between March 2004 and 31 December 2005 the arrears in respect of private connection had accumulated to ¢30,684,600. It appeared the revenue collection machinery for the household connection was weak. One could also attribute the huge arrears to the inefficient manner bills were belatedly prepared and distributed to customers.

1241. We advised the Board to ensure that bills were promptly prepared and distributed and as well invigorate the collection of revenue. We also advised that the collection of the arrears of ¢30,684,600 should be seriously tackled.

Overpayment of 20% commission to SPAs - ¢12.5 million

1242. The SPAs are paid 20% commission on actual revenue paid to the WSDB. Our review of metre readings from July 2004 to December 2005 indicated that expected revenue amounted to ¢474,987,750 while actual revenue received totalled ¢412,317,235.

1243. We noted that the 20% commission paid to the SPAs was based on the expected revenue of ¢474,987,750 which amounted to ¢94,997,106 instead of on the actual revenue of ¢412,317,235 which


should have been ¢82,463,447. This resulted in excess commission of ¢12,533,659 being paid.

1244. We advised management to recover the excess commission paid to the SPAs.

Store items not routed through store records-¢13.3 million

1245. Our review of the purchasing procedures revealed that items worth ¢13,338,000 purchased between March 2004 and December 2005 were not routed through the stores. Though the items purchased were supported with invoices and receipts, they were not taken on charge. This constituted a serious procedural error that did not augur well for proper accounting for purchases, and could lead to all sorts of stores malpractices such as diversion, dummy purchases, etc.

1246. We therefore recommended that for proper accountability and transparency, all future purchases either for immediate use or otherwise should be recorded in the stock book and issued out on requisition.

Over-claim of allowances-¢16.6 million

1247. We observed that the Board held four meetings during the year 2005 for which a total amount of ¢2,250,000 should have been paid to the nine member board. However, members were paid allowances totalling ¢16,260,000, thus exceeding the amount payable by ¢14,010,000.

1248. Similarly, out of a double payment of allowances of ¢3,900,000 made to the Board members in respect of December 2004 and January 2005, only ¢1,300,000 had been recovered leaving an outstanding balance of ¢2,600,000. The total indebtedness of the Board members therefore came up to ¢16,610,000.


1249. We also noted that the rates used in computing the allowances were only proposed by the Board but not approved by the General Assembly. This contravened Section 8:2:2:2 of the Facilities Management Plan of the WSDB.

1250. We recommended that management in addition to the recovery of the excess claims of ¢16,610,000 regularise the unapproved rates of allowance with the District Assembly.

MINISTRY OF ENERGY

HEADQUARTERS

Wooden poles paid for but not supplied - ¢460.4 million

1251. The Ministry paid an amount of ¢644.8 million in August 2003 to Messrs. Ipalco (Gh.) Ltd as 20% mobilisation advance for the supply of 2,000 10-metre wooden poles. Ipalco Ltd supplied only 203 poles valued at ¢184.4 million, leaving an outstanding balance of ¢460.4 million.

1252. Even though the payment of the mobilisation amount was covered by a bond guarantee from Provident Insurance Co. Ltd, Accra, management did not recover the amount from the Insurance Company during the validity period of the guarantee. Management, as at December 2006, had not recovered the amount of ¢460.4 million from Ipalco Ltd.

1253. We urged management to take immediate steps to recover the amount of ¢460.4 million from Ipalco Ltd and further advised management not to award wooden pole supply contracts to companies which lack the requisite capacity to deliver.

Unremitted tax - ¢104.8 million

1254. Between April and November 2004, the Ministry deducted 5% withholding taxes amounting to ¢104.8 million from a total gross payment of ¢1.44 billion made to suppliers of goods and services but did not remit the amount to the IRS.


1255. We further noted that while this irregularity persisted, the Ministry had sufficient funds to have paid the amount to the IRS. We drew management’s attention to the anomaly and requested full payment of the amount to IRS. As at December 2006, management had still not taken any action on the matter.

1256. We recommended immediate payment of this and subsequent amounts to the IRS in compliance with the tax law.

Dishonourned cheques - ¢3.78 billion

1257. Seventeen cheques for ¢3.78 billion lodged into the Ministry’s Bulk Oil, Storage and Transportation (BOST) Company bank account by Oil Marketing Companies (OMCs) in payment of their BOST margin on the gross value of fuel lifted from the Tema Oil Refinery were dishonoured by the bank. The OMCs also defaulted in the payment of the BOST margin for 2004 and 2005 to the tune of ¢26.20 billion.

1258. The anomaly resulted from the non-maintenance of ledger accounts on the OMCs the absence of reconciliation of accounts by the Ministry and BOST Secretariat and the non-enforcement of the Criminal Code Amendment Decree, 1979 (NRCD 160) on the issuance of dud cheques by management. To prevent loss of revenue to Government, we advised management to liaise with the BOST Secretariat to recover all unpaid debts and also introduce ledger accounts to facilitate monitoring of the debts.

1259. We also requested management to enforce the foregoing law on dud cheques.


OFFICE OF GOVERNMENT MACHINERY

NATIONAL IDENTIFICATION AUTHORITY

Unsupported VAT payment - ¢68.7 million

1260. Section 19 of the VAT Act, 1998 (Act 548) requires a taxable person on making taxable supply of goods or services to issue to the customers or persons supplied, tax invoices in such form as shall be prescribed by regulations.

1261. We observed, however, that VAT receipts/invoices were not obtained to support VAT payments totalling ¢68,725,148.61 made in respect of VAT. We noted that the Accounts Officer did not insist on obtaining VAT receipts for all the payments before releasing the requisite cheques to the suppliers. Failure on the part of management to obtain the VAT receipts/invoices could result in the loss of the VAT revenue of ¢68,725,148.61 to Government.

1262. We recommended that management should pursue the collection of the VAT receipts/invoices from the companies involved as an assurance that the amounts will be remitted to the VAT Service.

OFFICE OF STATE PROTOCOL

Unrecorded stores - ¢255.2 million

1263. Our review disclosed that stores purchased in 2006 worth ¢255,225,000 were not passed through the stores records before usage. Management cited rush purchases as the main reason for the lapse.

1264. We however advised management to take stores on ledger charge since that was the only way purchase transactions can be authenticated.

1265. Management indicated that new measures adopted would ensure that all store purchases are recorded in the store records.


THE PRESIDENT’S SPECIAL INITIATIVE (PSI)

Payment of salaries out of HIPC funds - ¢438.9 million

1266. The Head of the Civil Service’s letter No. AD977/582/01 of 7 October 2005 recommended that the emoluments of contract staff of the Limited Liability Companies of PSI namely, Gold Coast Collections Co., PSI Properties Ltd., and Ayensu Starch and Densu Starch Companies be taken off the GOG budget and private sector funding support identified to assist the companies.

1267. We however observed that inspite of the recommendation by the then sector Hon. Minister for the implementation of the decision, no action had been taken on the matter. As a result, HIPC related project funds continue to be used in paying these contract staff.

1268. Management explained that the implementation had delayed due to ministerial directive to stay action on the recommendation. However, no such directive was seen.

1269. We recommended that the documented ministerial recommendation should be implemented.

Shortfall in receivables - US$121,337 (¢1.12 billion)

1270. Gold Coast Collections Ltd, a company established under the PSI exported goods worth US$209,455.50 to three foreign companies in the USA, namely, Elegant Team, Spoudidis, Raul and Kunful. Cost of shipment amounted to ¢361,677,647.

1271. However, due to the substandard nature of the garments, only US$88,119 was realised, resulting in a shortfall of US$121,336.50. We also noted that US$19,063.98 worth of orders was sub-contracted to Agiotcom Ltd. a local firm for which no payment had been received at the time of the audit in April 2006.


1272. There was therefore a loss of US$121,336.50 and ¢361,677,647 to Government owing to the garments not being subjected to quality assurance tests before they were exported, more especially when the batch was a maiden production.

1273. We recommended to management to investigate the loss and those found culpable sanctioned. We also advised that the amount of US$19,063.98 should be recovered from Agiotcom Ltd. Further, we requested management to conduct quality assurance on garments before exporting them out of the country.

Stores not taken on ledger charge - ¢86.5 million

1274. Section 0522 of the Stores Regulations, 1984 requires that, items purchased should first be received into stores and a store received voucher prepared on them before they are issued out.

1275. We noted to the contrary that tyres purchased amounting to ¢86,460,000 were not recorded in the stores records. As a result of this lapse, we could not determine whether the tyres were actually received and used for authorised activities.

1276. Management was advised to ensure that all goods purchased were documented in the appropriate records before being issued out.

1277. Management accepted our recommendation and promised to ensure that all goods purchased are received into stock before being issued out.

Failure to withhold tax - ¢11.3 million

1278. Our audit revealed that the Secretariat failed to deduct 5% withholding taxes amounting to ¢11,300,362.50 from payments made to suppliers, contrary to section 87 of the Internal Revenue Act, 2000 (Act 592).


1279. We recommended recovery and payment of the amount to the Internal Revenue Service. We also advised management to comply with the tax law.

NORTHERN REGIONAL CO-ORDINATING COUNCIL

Unrecorded purchases - ¢222.2 million

1280. Our audit of the expenditure records revealed that various store items bought by the Council between 7 February and 22 January 2006 totalling ¢222,225,025 were not routed through the stores for the appropriate entries to be effected as required by stores regulation 0315.

1281. Management explained that most of the items were bought for immediate use and their inability to gather the purchase documents intact for the storekeeper led to the lapse.

1282. We urged management to ensure that all items procured are taken on ledger charge to comply with the regulation.

Undeducted/unremitted tax - ¢22.5 million

1283. The Council failed to deduct 5% withholding tax totalling ¢6,652,030 from payments to various suppliers and service providers. Management also failed to remit to the IRS an amount of ¢15,848,613 deducted from payments to suppliers. Government was thus deprived of tax revenue of ¢22,500,643.

1284. We urged management to remit the amount of ¢22,500,643 to the IRS without delay and also comply with the tax law in future.

Unearned salaries - ¢83.2mllion

1285. A review of the payroll disclosed that the names of four separated staff were retained on the payroll for periods ranging between three and fourteen months, resulting in the payment of unearned salaries totalling ¢83,239,968 into their bank accounts.


1286. Failure of management to timely delete the names from the payroll and alert the banks to stop payments, resulted in the anomaly.

1287. We urged management to delete the names from the payroll immediately. They were also asked to ensure the recovery and transfer of the total amount to Government chest.

Disbursements not fully accounted for-¢30.5 million

1288. Between 11 January 2005 and 3 March 2006, the Council released a total amount of ¢163,807,515 on 15 payment vouchers for various activities. Out of this amount, ¢30,452,595 was not fully accounted for with invoices, receipts and statement of claims.

1289. Failure of the Accountant to vouch the payment vouchers and the attached records to ensure the arithmetical accuracy of the computations and castings led to this anomaly.

1290. We urged management to ensure that the ¢30,452,595 was accounted for. We also requested them to subject the expenditure records to proper scrutiny at all times to ensure that all funds are accounted for.

Imprests not accounted for - ¢10.3 million

1291. Regulation 288 of the FAR, 2004 requires that imprests shall be retired by the due date unless occasioned by death or incapacity of the imprest holder.

1292. Contrary to the above regulation, imprests of ¢10,030,500 granted to five officers for various purposes between 7 February 2005 and 3 March 2006 had not been accounted for as at the time of audit in December 2006. Laxity on the part of the Accountant to enforce the retirement of the imprests by the officers at the due dates resulted in the lapse.


1293. We urged management to ensure the early retirement of all the imprests and also the strict enforcement of regulation 288.

Unsupported VAT payments - ¢30.2 million

1294. Section 19 of the VAT Act, 1998 (Act 546) requires all VAT Registered bodies to issue VAT invoices to cover VAT charges. However, a total amount of ¢30,204,470 paid by the Council as VAT charges during the period were not covered by VAT invoices.

1295. This is as a result of management’s failure to enforce the regulation and could result in loss of revenue to Government.

1296. We urged management to obtain the VAT invoices to cover the VAT amount of ¢30,204,470. They were also asked to ensure that the Accountant obtains VAT invoices for subsequent payments of VAT.

Unrecorded fuel purchases - ¢532.2 million

1297. The Council, during the period reviewed, purchased fuel valued at ¢532,213,811 but failed to record same in vehicle log books, as required by Section 1604 of the Stores Regulations, 1984.

1298. Management explained that the vehicles were used for security operations in the Region and could therefore not lay hands on their log books.

1299. We urged management to produce accounts for the fuel and also ensure the recording of fuel purchases in vehicle log books in future.

Rent defaulters - ¢36.5 million

1300. Our review of the rent registers revealed that 57 tenants of Government bungalows owe ¢36,498,726 in rent as at 31 December 2006. The Council's inability to enforce payment through the deduction at source of the rent caused the anomaly.


1301. We urged management to recover the arrears and subsequent rent payment through deductions at source.

Unacquitted payments-¢87.6 million

1302. Regulation 30 of the FAR, 2004 requires that full particulars of transaction including reference to supporting documents such as special authorities, purchase orders, invoices related to the transaction should be provided and attached to the payment vouchers for ease of checking.

1303. Contrary to the above, eight payment vouchers valued at ¢87,601,500 were without the relevant receipts, invoices and statement of claims to acquit the payments.

1304. This lapse was caused by the Accountant's failure to carefully scrutinise the payment records for the necessary requirements before effecting payments.

1305. We urged management to obtain the relevant documents to acquit the payments to ensure transparency and accountability. We also advised management to intensify internal checks to prevent recurrence.

GREATER-ACCRA REGIONAL CO-ORDINATING COUNCIL

Unrecorded store items-¢63.0 million

1306. We noted that protocol items and drinks worth ¢63.0 million purchased between October 2004 and May 2006 were not routed through stores. The drinks were presented to the Ga Traditional Council on three occasions.

1307. We recommended that such items should be taken on ledger charge before issuance to the recipients to authenticate their purchase.


UPPER EAST REGION COORINATING COUNCIL –BOLGATANGA


1308. Our review disclosed that names of eight former deceased and retired employees of the Council were retained on the payroll from one to five months before they were deleted. This resulted in the payment of unearned salaries of ¢22,467,921 into the separated staff’s accounts.

1309. We urged management to recover the unearned salaries of ¢22,467,921 to chest.

MINISTRY OF LOCAL GOVERNMENT RURAL DEVELOPMENT AND ENVIRONMENT

BIRTHS AND DEATHS REGISTRY– MANSO NKWANTA (ASHANTI)

Misappropriation of revenue ¢3.0 million

1310. Between October 2003 and March 2006, total revenue collected in respect of registration of births and deaths was ¢12,140,000. Out of this amount, ¢3,040,000 could not be accounted for by the Officer-in-Charge of the Registry. The misappropriation was caused by poor supervision over the revenue collector.

1311. We advised management to recover the amount from the officer and also strengthen supervision over revenue collection.

PARKS AND GARDENS – TAMALE


1312. Our audit revealed that the names of four deceased staff continued to appear on the payroll and ¢32,543,715 was credited to their bank accounts as unearned salaries.


1313. Management explained that they submitted inputs for the deletion of the four names from the payroll to the Controller and Accountant-General through the Ministry but the deletion is yet to be effected.

1314. We urged management to delete the four names and also retrieve the total amount of ¢32,543,715 from their bankers for payment into the Controller and Accountant-General's Suspense Account.

REGIONAL BIRTHS AND DEATHS REGISTRY– WA

Short lodgement of revenue to chest - ¢2.1 million

1315. Regulation 22(1) of the Financial Administration Regulations, 2004 requires that all public monies be paid into the Public Account.

1316. Our audit of the Regional Births and Deaths Registry however disclosed that during the period under review total revenue of ¢29,586,000 was collected. Pay-in-slips produced for our inspection however totalled ¢27,458,000, leaving a balance of ¢2,128,000 to be accounted for by the Regional Officer, Mr. Moses D. Ali.

1317. We recommended to management to ensure the recovery of the ¢2,128,000 to chest.

MINISTRY OF TRADE, INDUSTRY, PRIVATE SECTOR DEVELOPMENT AND PRESIDENT

SPECIAL INITIATIVE

Loss of revenue - ¢68.0 million

1318. Regulation 183(4) of FAR, 2004 provides that a department shall procure government stores and services from only Value added Tax (VAT) registered persons or entities and any department that requires an exemption for any specific case shall apply to the Minister with the necessary justification.


1319. However, our examination disclosed that 18 transactions totalling ¢453,360,080, did not include the 15% VAT. This was an indication that the enterprises involved were either not VAT registered or failed to charge VAT. Of this amount VAT of ¢68,004,012 could be lost to Government.

1320. We advised management to ensure adherence to the requirement by transacting business with VAT registered enterprises only, except where not practicable. We further asked management to justify the non-inclusion of the VAT.

Fumigation contract

1321. Though Section 22(1) of Public Procurement Act, 2003 (Act663) stipulates that a tenderer in public procurement shall possess the necessary professional and technical qualification, a total payment of ¢183,871,200 was made to four non-professional suppliers for fumigating the Ministry’s offices, compound and bungalows of the Hon. Ministers. We noted in this regard that the companies contracted to execute the fumigation were computer consultants and general merchants who in our opinion might not possess the necessary technical know-how.

1322. We were therefore of the view that either the jobs were sublet to accredited agencies to execute or that they inefficiently executed the jobs themselves. In the case of subletting the jobs, this would have given rise to increased cost to the Ministry, while fumigation by the enterprises themselves would not have guaranteed value for money.

1323. The Officer-in-charge of procurement explained that they did not know that fumigation was a specialised job, which needed the services of accredited agencies.

1324. To ensure value for money and cost effectiveness, we advised management to henceforth deal with registered pest control agencies when ordering fumigation services.


Unaccounted for allowances - ¢1.22 billion

1325. Between June 2005 and March 2006, ¢1,222,843,215 was purportedly paid as allowances to trainees undergoing specialised training in mass production technology for garments. We noted that paid vouchers for the allowances returned to the Ministry were not signed by the individual trainees in acknowledgement of receipt of the sums indicated against their names. The list of trainees as evidence of their numerical strength was also not provided to us.

1326. The failure to ensure that trainees signed the payment voucher could result in the suppression of unclaimed allowances. The weakness was attributed to the programme officer’s failure to ensure that trainees signed to authenticate the payments.

1327. We recommended that the officers in charge of the training programme be made to account for the ¢1,222,843,215 by providing signed claim sheets by the trainees. Also, we advised that monthly allowances to trainees should be released only upon the submission of signed claim sheets of the previous month.

Outstanding charges - ¢367.8 million

1328. In our previous audit report dated 17 November 2005, we drewmanagement’s attention to expenditure of ¢216,907,875 incurred on the cleaning of the common area of the Multi-Media House, and we recommended the pursuit of full recovery from the sitting tenants of the former Ghana National Trading Corporation’s GNTC property.

1329. Though no recovery was made, an additional amount of ¢146,887,500 was incurred on the property between June 2005 and March 2006 which should also be recovered from the tenants. The amount owed by the sitting tenants thus came up to ¢363,795,375 byJune 2006.


1330. We still hold the GNTC Oversight Committee responsible for their inaction and ineffective supervision in ensuring that the Ministry was reimbursed. We therefore reminded management of our previous recommendation and the need to ensure full recovery of the sum of ¢367,795,375.

1331. Management in response stated that the rent had been made inclusive of the cleaning charges. We requested management to provide the new rates of rent and letters to that effect to the tenants.

Rent arrears - ¢ 95.8 million

1332. Regulation 17 of FAR, 2004, stipulates that a head of department shall ensure that all non- tax revenue is effectively collected.

1333. However, between 2003 an 2005, we noted that:

four companies had defaulted in paying rent to the tune of ¢95,500,000;

tenancy agreements had not been reviewed to reflect current economic conditions; and

four companies were not covered by tenancy agreement.

1334. We attributed the lapse to the ineffectiveness of the Ministry’s GNTC Oversight Committee whose responsibility it was to enforce the tenancy agreements.

1335. The Ministry was thus losing revenue and yet spending huge sums of state funds to maintain the structures. We recommended that the Oversight Committee should:

review the tenancy agreements to reflect current economic trends


ensure that tenancy agreements are signed with the four companies and

all over due rent recovered.

1336. Though management stated that the rent had been reviewed, they failed to provide the update of the revision.

Failure to obtain VAT receipts/invoices - ¢18.7 million

1337. Section 19 of VAT Act, 1998 (Act 546) stipulates that a taxable person on making taxable supply of goods and services shall issue to the customer or the persons supplied tax invoices.

1338. We noted however that six payments to four companies for transactions worth ¢143,339,801 which included VAT component of ¢18,696,496 were not supported with VAT invoices/receipts. The anomaly was caused by the paying officer not insisting on obtaining VAT receipts or invoices before releasing the cheques to the respective payees.

1339. We recommended that VAT invoices/receipts should be obtained from the payees failing which the VAT component of ¢18,696,496 should be recovered from the suppliers. Furthermore, the paying officer should always obtain VAT receipt/invoices before releasing cheques to payees.

1340. Management indicated that M/S G & J Technology Services is authorised by the VAT Service to use computer generated invoices, and that it had also obtained the VAT invoice for Africa online. The relevant documents though requested for were not provided as evidence.

Unaccounted for cash advances - ¢66.3 million

1341. Various sums totalling ¢66,310,000 advanced to officers for the purchase of fuel for official vehicles and for official assignments


had not been accounted for by the respective officers. Official receipts were not submitted and where they were submitted, the vehicle registration numbers were not indicated to facilitate recording of the fuel into the vehicle log books.

1342. To ensure accountability therefore, we recommended that the respective officers be made to account for the advances, failing which the amounts should be recovered from them. The paying officer should also ensure that advances paid are promptly retired and defaulting officers reported to management for the appropriate action to be taken.

1343. Management responded that the affected officers have been contacted to account for the amounts.

Control over assets -- ¢187.7 million

1344. Our review disclosed that the Ministry purchased furniture and equipment valued at ¢187,757,250 for a bungalow belonging to the University of Ghana where the Deputy Minister and her husband are staying. However, these assets together with others also valued at ¢76,098,000 were not recorded in the Ministry’s Assets register.

1345. To Safeguard the assets, we recommended that they should be recorded in the Ministry’s assets register and should also be embossed with the Ministry’s logo.

FORMER GNTC PROPERTIES

Background

1346. In May 1994, GNTC was divested. Cabinet directed that the then Ministry of Trade and Industry should assume oversight responsibility over all former GNTC properties. Subsequently, by a Cabinet decision, some of the properties were placed on divestiture under the administration of the Divestiture Implementation Committee, while the rest were being managed by the GNTC


Oversight Committee of the Ministry of Trade and Presidential Special Initiative.

Non-payment of rent by ex-employees of GNTC

1347. We noted that 87 housing units were being occupied by ex-employees and relatives of deceased ex-employees of the former GNTC. These occupants did not pay rent for the occupancy. Details of the housing units were provided to management.

1348. Explanations obtained from most of the occupants indicated that since the collapse of the GNTC Estate Unit in 1995, that was in charge of rent collection, no office or authority approached them for rent payment, hence they did not know whom to pay the rent to. The ex-employees also stated their willingness to purchase the properties when their severance benefits are paid. To this extent, some of them submitted bids to the Divestiture Implementation Committee (DIC).

1349. The Oversight Committee failed to put in place a reliable and effective mechanism for rent collection from tenants.

1350. Substantial rent income, which could not be immediately determined, might have been lost for the period because monthly rent was not determined. The rent income could have been used in the renovation of some of the properties.

1351. We recommended that the Oversight Committee should liase with the Rent Control Office to re-assess rent payable on the respective properties to ensure that economic rent is charged.

1352. We also suggested that Regional Trade Officers should be given the responsibility to monitor all former GNTC properties in the Regions including the collection of monthly rent and to submit periodic reports to the Oversight Committee.


1353. Management explained that since the matter was pending at the law court, it would be inappropriate for the Oversight Committee to collect rent from the ex-employees.

Divested properties occupied without making full payment/non-payment of rent

1354. To safeguard the interest of the State, included in the conditions of divestiture, is the clause that a divested property would only be handed over to a successful bidder upon receipt of the final payment of the offer price.

1355. We noted however that seven divested properties had been occupied by the successful bidders comprising 3 private enterprises and 4 state institutions though the offer prices were not fully paid as at 27 February 2006. Rent was not also being paid for the occupancy, as if they already owned the properties. These occupants could not also provide evidence of right of entry officially given to them either by the Ministry of Trade or Divestiture Implementation Committee (DIC).

1356. We believe that the non-payment of rent by successful bidders for properties partially paid for but occupied would rather encourage such occupants not to make the full payment for the property since they already have free services of the properties. Additionally, a substantial amount of rent income had been lost.

1357. This lapse was due to inadequate co-ordination between the DIC, which is responsible for the divestiture of the properties and the Ministry, which has oversight responsibility over all former GNTC properties, to ensure that right of entry was only granted to successful bidders who had made full payment for properties offered.

1358. We recommended that the Oversight Committee through the Ministry and in consultation with DIC should determine the rent payable by the occupants and ensure the collection of all arrears of rent.


1359. Management explained that they were in contact with DIC on this matter since by law, the administration of divested institutions was under the ambit of the DIC.

Premises occupied by former Commandos

1360. We noted that nine residential units at South East Ridge, Accra were occupied by former commandos without the payment of rent. The occupants explained that though they were aware of the responsibilities of tenants and were willing to pay rent, no office or body contacted them for rent, hence they did not know whom to pay the rent to and how much rent to pay.

1361. The Oversight Committee did not effectively monitor these properties, hence the situation of people occupying the properties without the payment of rent.

1362. We recommended that the Oversight Committee should determine the rent payable by these occupants and ensure to collect all rent arrears. The Committee should also improve upon their oversight responsibilities to ensure that appropriate value is derived from the usage of the properties.

1363. Management stated that the Oversight Committee had referred the matter to the Sector Minister for action since the allocation was done by the Castle.

Failure to collect rent on premises

1364. We noted that 18 properties were occupied by tenants who were not ex-employees of the defunct GNTC. We also noted various irregularities associated with the occupancy, prominent amongst them were (a) non-payment of rent and (b) payment of rent rather to 31st

December Women’s Movement and Rent Control Department, Tamale.


1365. As a result of these irregularities, rent income which could have been used to maintain the properties was lost.

1366. To address the problem, we urged the Oversight Committee to:

reconsider the tenancy arrangements with all the tenants of GNTC properties.

recover all rent arrears

obtain statement of account on rent collected by Rent Control Department, Tamale and ensure that the amount collected was duly accounted for.

investigate rent collection by 31st December Women’s Movement.

1367. Management stated that they had taken note of the recommendations.

Illegal occupancy of property

1368. According to correspondence No. DIC/126/153 of 21 October 2002 from DIC to Ministry of Trade and Industry, GNTC Block No NB43/6 (5 Room Stores) at Agona Swedru was divested to Samke Enterprise in 1996 at an offer price of ¢16,500,000. Samke Ent. paid only ¢4,150,000 and the offer was subsequently revoked by the DIC. Despite this position, Samke Enterprise took possession of the property and rented it to the following:

Store 1 – Ms. Joana Kumi

Store 2 – Ms. Esther Eklu

Store 3 – Mr. Joefred Duncan

Store 4 - Kingsmay Services

Store 5 – Kingsmay Services


1369. We could not locate the management of Samke Enterprise to ascertain the source of its right of entry into the property, the conditions of occupancy and the rent status.

1370. Apart from the possibility of the Government losing rent revenue, the ownership of the property could unofficially pass over to the third parties without the Government receiving the appropriate value for the property.

1371. To safeguard public property, we recommended that; the oversight committee should investigate the occupancy of the property by Samke Enterprise with the view to ensuring that the appropriate amount due the Government is recovered from Samke Enterprise if it cannot prove ownership of the property.

1372. Management stated that this matter is in the domain of DIC and would notify it for appropriate action.

Properties not put to use

1373. We noted that 14 of the properties had not been put to use, six of which had been occupied by squatters. Also, four of these properties had been placed on divestiture, while two properties were completely not habitable. Details were provided in our management letter dated 15 November 2006.

1374. We expressed the view that the buildings would deteriorate faster if they continued to be vacant on the other hand. Rent income could be generated if the properties were rented out.

1375. To ensure that the properties are put to good use to generate funds for Government as well as check the rate of deterioration, we recommended that the properties should be rented out until they are divested and fully paid for.


1376. Management shared our sentiments but stated that funds were not available to refurbish them.

Issues requiring further investigation

1377. The ownership of five properties, details of which were provided in our management letter of 15 November 2006 is being disputed by the occupants who could however not immediately provide any title deeds.

1378. To prevent the ownership of state properties from being illegally transferred, we recommended that the oversight committee conduct in-depth investigation into the claims to establish the truth. Where ownership is confirmed, the occupants should be made to pay rent for the period of occupancy.

1379. Management stated that they would take steps to address the concern raised.

MINISTRY OF TOURISM AND DIASPORAN RELATIONS

Undeducted tax - ¢666.0 million

1380. Section 81(1) of the Internal Revenue Act; 2000 (ACT 592) requires an employer to withhold tax from the payment of an amount to be included in ascertaining the income of an employee from the employment as prescribed by regulation made under section 114.

1381. Also Section 88(1) of the Act states that ‘A withholding agent who fails to withhold tax in accordance with this subdivision is liable to pay to the Commissioner the amount of tax which has not been withheld, but the withholding agent is entitled to recover this amount from the payee’.


1382. Contrary to the above regulations, we noted instances where withholding tax totalling ¢665,953,237 was not deducted from payments made to contractors, and employees.

1383. In addition, examination of paid vouchers revealed that payments made for mobilisation were also not deducted from subsequent payments and for that matter tax was not deducted on the amounts paid in terms of mobilisation.

1384. The Accountant explained that, he was not aware mobilisation was to be deducted from subsequent payments and taxed.

1385. We recommended that attention should be given to the deduction of tax when payments are made. Also, efforts must be made to recover from payees the undeducted tax of ¢665,953,237 for remittance to the Internal Revenue Service (IRS) or the Accountant be held personally liable for the amount.

1386. Management accepted our recommendation and promised to deduct the necessary tax from subsequent payments since all the projects were ongoing.

Outstanding accountable imprest – US$25,000

1387. Contrary to Regulation 283 of FAR, 2004 which requires that accountable imprest should be retired at the end of its disbursement, a total imprest of US$25,000 advanced to various officers who undertook various overseas trips had not been accounted for, though their duty tours had long been completed.

1388. Though the Accountant explained that persistent reminders to officers involved yielded no positive results, management stated that efforts were being made to assemble the receipts to account for the total sum. Management further promised to insist on travelling imprest being accounted for immediately trips were completed.


1389. We advised that the total sum involved should be accounted for failing which refund should be pursued.

Unacquitted payment vouchers - ¢520.8 million

1390. We noted that 38 payment vouchers amounting to ¢520,820,733, being payments from development accounts were not properly accounted for. They were neither supported with distribution list to indicate how the amounts were shared among recipients not authenticated with itinerary forms. In some cases, receipts were not attached to the payment vouchers to enable us ascertain the genuineness of the payments.

1391. These lapses occurred as a result of the Accountant’s failure to demand relevant documentation from payees.

1392. We advised management to ensure that the necessary documentation is provided to authenticate the expenditure or have the amounts involved refunded in conformity with Regulation 1 of FAR, 2004.

Unpresented payment vouchers - ¢1.08 billion

1393. Similarly, 71 payment vouchers totalling ¢1,075,605,987 were not presented for audit. We could therefore not authenticate the disbursements they represented. The anomaly was due to improper custody maintained for the vouchers.

1394. We recommended to management to make strenuous efforts to retrieve the vouchers for our examination. We also urged management to ensure the proper custody of payment vouchers.

Unrecorded store items - ¢107.9 million 1395. Regulation 0522 of the Ministry of Finance and Economic Planning Stores Regulations, 1984 requires that “All stores received must be taken on ledger charge in the store ledger or store cost book


at the time of their receipt and entries will be supported by the prescribed vouchers”

1396. Management stated that the items were not routed through the stores records because the Ministry was compelled to dispatch them to the USA on an emergency basis, as the supply of the items was delayed due to the late release of funds.

1397. We are however of the view that with proper procurement planning all items purchased would be taken on ledger charge before their disposal.

Improper procedure in the award of contracts

1398. Contrary to Section 47(1) of the Public Procurement Act, 2003 (Act 663), 11 HIPC projects totalling ¢6,346,254,015.64 were awarded without passing them through the tender proceedings.

1399. Management explained that records were available to confirm that the awards of contracts followed proper procedures. However, such records were not made available to us. We therefore urged management to obtain those records from the District Assembly for our inspection.

Non-deduction of 5% tax - US$29,475 (¢271.5 million)

1400. Our audit disclosed that CTK-Network Aviation Ltd. was awarded a contract for the production of aerial colour photographs of Ghana’s coastline for a contract sum of US$1,179,000 (¢10.86 billion). The completion date of the contract was 30 November 2004.

1401. We noted however that the contract was single-sourced without the requite approval from the Public Procurement Board (PPB). Also, as at 1 March 2006, the contract was still on-going with two interim payments having been made. One payment involved the cedi equivalent of US$589,500 and the other was ¢2,688,414,750.


However, 5% tax of US$29,475 was not deducted from the payment of US$ 589,500 made to the contractor.

1402. We recommended that retrospective approval should be sought from the PPB and management should also ensure that the 5% tax is recovered and remitted to the IRS.

Improper execution of contract

1403. Our review disclosed that the Ministry single-sourced the execution of a mosquitio spraying project to a contractor named M/S Sunrise International (Gh.) Ltd. for a contract sum of ¢2.00 billion without the requisite approval from the PPB. Also, a consultant was not contracted to evaluate the project. Instead, the contractor’s own evaluation report was accepted and used as a basis for payment to him.

1404. We recommended that retrospective approval should be sought from the PPB and management should in future engage the services of a consultant to evaluate such projects.

MINISTRY OF DEFENCE

37 MILITARY HOSPITAL

Items not passed through stores - ¢3.11 billion

1405. Our audit disclosed that items worth ¢3,107,691,800 purchased by the Hospital between July 2005 and September 2006 were not taken on ledger charge.

1406. Management explained that the items were for immediate use. This notwithstanding, we advised management to ensure that all items purchased are routed through the stores to authenticate the purchase.


MINISTRY OF JUSTICE AND ATTORNEY-GENERAL

REGISTRAR-GENERAL’S DEPARTMENT, ACCRA

Bank lodgments not reflecting in bank statements - ¢272.8 million

1407. Our examination disclosed that a total collection of ¢272,784,031 made in 2004 which was duly recorded in the pay-in-book did not reflect in the relative Bank of Ghana statements. The amounts were also not supported with Treasury Counterfoil Receipts (TCRs) to indicate that the amounts hit the Consolidated Fund.

1408. In our opinion, the failure by the revenue collectors to obtain TCRs to cover the payments was a clear indication that the collections were not banked. This anomaly was due to the failure of the accounting staff to prepare regular monthly reconciliation statements and taking prompt action on outstanding items. Detailed below are the amounts supposed to have been paid to the bank.

1409. We therefore recommended that management should conduct further investigation into the matter and ensure recovery of the amounts to chest. We also advised management to ensure the preparation of regular monthly reconciliation bank statements by the accounting staff.

Date Pay in book no

Amount( ¢)

Item Cash/Cheque

14/01/04 727246 265,000 Cos Cash23/04/04 948127 61,337,132 Cos Chq15/07/04 727339 1,045,000 Textile Cash28/08/04 948018 9,836,899 Textile Chq28/08/04 948019 200,000,000 Company Chq Total 272,784,031


MINISTRY OF FOREIGN AFFAIRS, REGIONAL INTEGRATION AND NEPAD

FOREIGN MISSIONS

Consular fees not accounted for - US $ 146,533 & €15,590

1410. Our audit of Foreign Missions’ accounts disclosed the misappropriation of a total amount of US$146,533 and €15,590 as detailed in the table below:

Mission Period Amt. (US$) € Officer responsibleWashington Nov. 2003-

Apr. 2006116,720.00 Mr. Kwaku

Aboagye AsanteGeneva Sept. 2002-

2005 27,443.00 Mr. Peter Incoom

Ouagadougou Dec. 2002-July 2003

1,087.14 Mr. I. J. Essilfie

Cairo 2003-2005 540.00 Mrs.Cecilia Frimpong-Addo

Berne 2002-2005 393.27 Mr. Isaac AgyekumCopenhagen Dec. 2003-

Nov. 2005 349.00 Ms. Baaba Apaloo

The Hauge Feb 2004 –August 2006

15,590 Consular Assistants

Total US$146,532.38 €15,590

1411. Poor supervision by management over the revenue collection system caused the misappropriations. We recommended recovery of the amounts involved and strengthening of the internal control system over revenue collection at the Missions.

Over-payment of staff salaries - US$ 768,591

1412. The underlisted Missions, during the period under review, made over-payment of staff salaries to 44 officers amounting to US $768,591 as detailed in the table below:


.Mission No. of Officers Amount US$ CauseCopenhagen 8 33,895.70 Use of high exchange rate

Freetown 7 46,343.00 Use of high exchange rate

Ouagadougou 7 57,464.00 Use of high exchange rate

Abidjan 9 35,405.00 Use of high exchange use

Abidjan 1 6,480.00 Officer was put on wrong salary range

Rome 9 572,475.00 Use of high exchange rate

Rome 3 16,528.00 Payment of double salary

Total 44 768,591

1413. We requested the Ministry to pursue recovery of the amounts and also strengthen internal control systems of the Missions to prevent a recurrence of the anomaly.

Outstanding recoverable advances - US$ 19,950

1414. We noted that two missions, Rabat and Rome made total deposits of US$ 19,950 for residential accommodation which were recoverable after the termination of the tenancy agreements. The details were as follows:

Mission Amount (US$)Rabat 2004Rome 17,946Total 19,950

1415. At the time of audit in December 2006, the amounts had not been recovered.

1416. We advised the Ministry to recover the amounts to chest.


COPENHAGEN MISSION

Payment of salary arrears without authority - US$ 14,231

1417. An amount of 92,500 DKK (US$14, 231) was paid to Mrs. Vibeke Engel, a local staff as accumulated salary increment for the period April 2004 to October 2005 without approval from Ministry of Finance and Economic Planning.

1418. We requested the Ministry to recover the amount to chest or seek retrospective approval to cover the payment.

Unretired imprest - US$4,500

1419. An amount of US$4,500 granted to two Officers while at post as accountable imprest to perform official duties outside their Missions in August 2004 has still not been accounted for. The details are shown below:

Mission Officer Amount US$

Rome Mr. Kwabena Asare 2,000Washington Mr. Ivor Agyeman-Duah 2,500Total 4,500

1420. The Accountant’s failure to notify the Officers of the retirement contributed to the lapse.

1421. We advised the Ministry to pursue recovery of the amounts and also ensure that imprests are retired within the stipulated period.

RABAT MISSION

Outstanding debt - US$ 2,862

1422. Our examination revealed that the Mission paid utility bills and purchased two air-tickets for the children of a former confidential secretary but the Mission failed to recover the amount of US$ 2,862 from her due to an oversight on the part of the Accountant.


1423. We requested the Ministry to ensure refund of the amount to chest.

HARARE MISSION 2002-2005

Over-payment of child allowance - US$ 1,152

1424. An Officer was paid child allowance in excess by US $1,152 at the time he was the Accounting Officer of the Mission. Poor supervision and improper monitoring of entitlements resulted in the illegal payment.

1425. We urged the Ministry to ensure recovery of the amount to chest.

GHANA’S PERMANENT MISSION TO THE UNITED NATIONS, NEW YORK

Outstanding imprests – US$53,191

1426. Our review disclosed that imprests amounting to US$53,190.88 granted to officers between June 2004 and September 2006 had not been retired, contrary to Foreign Service Accounting Instruction 188 which states that imprest should be retired within the stipulated time. Improper monitoring of imprests granted caused the anomaly.

1427. We advised management to ensure prompt retirement of the imprests and also monitor effectively future imprests to be granted to Officers by the introduction of an imprest register.

MADRID MISSION

Unpresented value books

1428. We noted that the Honorary Consul for Barcelona, Spain failed to present two general counterfoil receipt books and three visa booklets issued to her in July 2005 and September 2006 for audit in spite of persistent demands on her to present the books.


1429. We recommended that the Ministry and the Head of Mission should explore available diplomatic channels to get the Consular to produce the five value books or account for them to the Mission.

COTONOU, BENIN MISSION

Increased personal emolument cost - US$234,296

1430. We observed that home-based staffs’ salaries are remitted by the Bank of Ghana to the Mission in US dollars. However, the staff are paid in CFA converted at the MOFEP’s official rate of CFA626.2231=I US$ which is higher than the bank rate of CFA533=1 US$ dollar. This has led to additional personnel cost to Government totalling US$239,249 for the period January 2004 to August 2006 as summarised below:

Year Additional cost(US$)

2004 107,1412005 97,5512006 ( to Aug. 06) 29,604Total 234,296

1431. To prevent the incurrence of this additional cost by Government, we recommended that salaries and Foreign Service allowances of home-based staff should be paid in US dollars.

Over-payment of salaries - CFA20.92 million (US$33,406)

1432. We reviewed Mission’s payment of salaries to its home-based staff in the light of the MFA’s circular Ref. No. AG/00/B.07 dated 08/08/06 on the use of wrong rates in the payment of Mission’s salaries and the directive that “Missions must ensure that all excess payments to staff from September 2004 to date are recovered and paid to chest”.

1433. We noted that the Mission utilised a dollar conversion rate of CFA700 instead of the MOFEP’s official rate of CFA626.2231


between September 2004 to end of August 2005 in making payment of staff salaries when a requested Ministry’s approval for a zone conversion rate of CFA700 has not been approved. This resulted in overpayment of salaries amounting to CFA 20,919,862 (US$33,406) to nine home-based staff of the Mission.

1434. We recommended that the overpaid amounts be treated as salary advances and recovered over a 12-month period. We also advised management to adhere to the use of the MOFEP’s conversion rate of CFA626.2231 in converting home-based staffs’ salaries and allowances.

SEOUL, SOUTH KOREA MISSION

Over-payment of salaries - W79.70 million (US$65,424)

1435. MOFEP, in July and August 2004 issued circulars to the Missions to use the January 2003 exchange rates for payment of salaries. The rates to be used were given for major currencies in the circulars. However, no rate was given for the Won to the US dollar. We therefore expected that the Mission would use the prevailing bank rate for its conversion of home-based salaries and allowances.

1436. We noted, on the contrary that while the average bank rate was W1,218.25=US$1, the Mission decided to use W1,1,314=US$1, a difference of W95.75 to one dollar. This led to the overpayment of salaries of ¢79,703,374 (US$65,424.47) to six home-based staff for the period January 2004 to September 2006.

1437. We recommended recovery of the overpayment from the staff concerned.

1438. Management explained that they did not want to erode the value of the salaries of staff by using the daily rates which fluctuated unfavourably to the detriment of staff, considering the high cost of living in Seol, which had in late June 2006 been rated the second most expensive city in the world.


THE HAGUE MISSION

Wasteful expenditure - €20,667 (¢206.7 million)

1439. An amount of €20,666.57 was paid to Architektenburo, a consulting firm for sundry expenses including consultancy fees and the provision of a sketch in respect of extension to the Chancery building. Though the decision to make extension to the existing Chancery building was laudable and the foregoing preliminary expenditure justifiable, the Mission abandoned the idea and is now vigorously pursuing the purchase of a building adjacent to the Chancery block.

1440. Management explained that the City Town and Country Planning Department would only grant the permit for the additional buildings to the Chancery after the Mission had consulted and wooed its neighbours to consent to the idea. The Mission felt that was a hardnut to crack hence the decision to abandon the idea.

1441. We support improvement or the acquisition of assets abroad but frown at wasteful expenditure such as this one. In our view, the Mission should have done a lot of groundwork before plunging itself into such an expenditure. We therefore advised the Mission, as far as the payment for improvement or acquisition of buildings is concerned, to always look before it leaps so as to avoid frivolous expenditure.

Non-refund of utility bills - €29,794 (¢297.9 million)

1442. The excess use of residential telephones beyond the authorised ceilings is paid for by the home-based staff. In the case of energy, 30% of the bill would be footed by all home-based staff except the Head of Mission whose contribution is 10%.

1443. We however noted that the Mission paid on behalf of five home-based staff their energy and telephone bills yet the Officers were not able to refund their portions totalling €29,794.15 to the Mission.


1444. We recommended that management should refund the amount of €29,794.15 to chest and ensure the refund of future utility bills by staff.

BRASILIA, BRAZIL MISSION

Mission’s liability in social security contributions

1445. The Consolidated Labour Law (CLL) of Brazil enjoins all employers to contribute 21% of the gross salary of their employees towards social security obligations. The employer is further required to deduct between 8%-10% of the employee’s net salary towards end of service benefit. The deductions are payable to Brazil’s Service Insurance agencies on a monthly basis. Non-compliance attracts unspecified fines and penalties when discovered.

1446. We observed from the records that the Mission was in arrears of payment of social security and severance award contributions of R$84,592.03 and R$33,196.19 respectively, of its local staff from April 1977 to March 1998.

1447. Telex No. BR/34 and fax message No. BRZ/49 of 11 May 1998 and 19 May 2006 sent to the Ministry of Foreign Affairs (MFA), Accra for the release of funds to settle the debt and to seek approval to engage the services of a consulting firm to assist in determining the extent of the Mission’s liability for submission to the Hon. Minister received no response.

1448. We urged the MFA to act promptly in this matter to avert the potential damage that the default can cause to the image of Ghana when it is discovered by the Brazilian authorities.

BELGRADE, SERBIA & MONTENEGRO MISSION

Unrecovered heating bill - 95,569.35dinars (Є1, 115.16)

1449. Our review disclosed that, Dr. Karlk Asmah while at post owed 95,569.35 dinars (Є1,115.16) in utility bills.


1450. We recommended the immediate recovery of the amount to chest.

Misappropriation of imprest amount – US$4,293

1451. Our examination disclosed that in 2004, Dr. Karlk Asmah and Mr. Patrick Amoak-Ntim, took imprests of US$6,000 and US$3,000 on the 19 April 2004 and 23 August 2004 respectively. The imprests taken were retired. However, Mr. Samuel Amoah, the then Accounting Officer, instead of treating the transactions as completed, raised different vouchers to cover the receipts presented by the two officers and drew the value of the vouchers being US$4,293.11 for himself.

1452. We saw this weakness to be the lack of adequate supervision on the part of management. We recommended immediate recovery of the amount of US$4, 293.11 from Mr. Samuel Amaah and the exercise of proper supervision by the Head of Chancery over the Accountant’s duties.

Furniture paid for but not supplied – Є9, 586

1453. We noted that, an amount of Є9, 586 was paid to Natuzzi Dedicated Stores in Belgrade on 21 June 2006 for the purchase of furniture for the Mission. We observed however, that five months after the payment, the furniture had not been delivered. We also observed that the Company did not acknowledge receipt of the amount as proof of payment. Further, the payment voucher was not supported with three quotations to ensure the reasonableness of the prices at which the Mission purchased the items.

1454. We recommended immediate delivery of the furniture or the recovery of the amount involved. We also advised management to abide by section 43 (1) of the Public Procurement Act, 2003 (Act 663). Management promised to take every necessary step to either have the furniture supplied in the shortest possible time or have the money refunded to the Mission.


ALGIERS, ALGERIA MISSION

Unpaid rent – US$729,750

1455. We noted that the Chancery of the Ghana Mission, Algeria, had since 1962 been housed in rented private property on Rue des Freres Ben Ali, in the Algiers suburb of Hydra. The negotiated monthly rent paid in 1997 was US$180. By the end of that year, the Mission had obtained Algerian Government approval to purchase the property.

1456. In January 1998 however, following a decision to nationalise certain landed properties in Algiers, the Mission became tenants of the Government, which subsequently revoked the approval granted the Mission to purchase the property. Also, the monthly rent was increased to US$6,950.66 (3,761.5%).

1457. We further noted that the matter of how much rent the Mission should pay had not been resolved as a result of protracted and unsuccessful discussions with the host authorities. Consequently, no rent had been paid for occupancy of the property since January 1998. It would appear therefore that if the Algerian authorities insisted on receiving rent as levied in 1998, the Foreign Office and the Government of Ghana, would have to pay total rent in arrears to September 2006, of US$729,750.

1458. We therefore recommended that the MFA should expedite action on the matter since any undue delay would put the Government in a very difficult position when it comes to having to find funds to pay a heavy amount of arrears of rent.

THE MAIN MINISTRY


1459. Our examination of the payroll revealed that four Officers who had either retired or vacated their post between June 2004 to March


2006 were paid unearned salaries amounting to ¢ 29,263,835. In another development, two officers who died in June 2005 had their names on the payroll until December 2005 before they were deleted, resulting in an unearned salaries of ¢ 8,909,896 being credited o their accounts.

1460. We advised management to recover the total amount of ¢38,173,731 to chest and closely monitor the payroll to prevent a recurrence of the anomaly.

OTHER AGENCIES

COMMISSION OF HUMAN RIGHTS AND ADMINISTRATIVE JUSTICE (CHRAJ), BOLGATANGA

Fuel not accounted for-¢30.7 million

1461. Our audit disclosed that fuel worth ¢30,768,000 bought by CHRAJ, Bolgatanga, was not accounted for. The driver of vehicle No. GT.8304 T kept away the vehicle log book, in which the fuel was said to have been recorded from audit. The audit team notified management of the situation. However, management also failed to retrieve the log book for auditing.

1462. In the absence of the log book, we could not vouch whether or not the fuel amounting to ¢30,768,000 was brought to account and used on official duties.

1463. We recommended that management should ensure that the driver presents the log book for our examination.


JUDICIAL SERVICECIRCUIT COURT ‘B’ ACCRA

Misappropriation of revenue and deposits-¢357.0 million and US$16,140

1464. Our review of revenue cash books and related records disclosed that deposits and revenue of ¢361,959,300 and US$16,140 collected between January 2003 and January 2006 could not be accounted for by the Cashier/Accountant, Mr. Kweku Mensah and his Assistant, Doreen Love Akwettey, Assistant Court Registrar. The misappropriation took the form of direct misappropriation of deposits, direct misappropriation of revenue, understatement of amounts in cash book and substitution of cash with cheques.

1465. The fraud was due to break-down in supervisory control whereby the Accountant, Mr. Mensah who should have supervised the work of Doreen Love Akwettey in the collection of revenue connived with her and both of them were collecting revenue without any supervision.

1466. The matter was reported to the Police and the culprits were arrested. We recommended that management should pursue the matter vigorously and ensure the recovery of the total amount of ¢356,959,300 and US$16,140 from Mr. Kweku Mensah and Ms Doreen Love Akwettey. We also recommended the institution of proper segregation of duties and supervision of revenue collection at the office to prevent a recurrence of the fraud.

DISTRICT COURT-AKIM ODA


1467. Our audit revealed that management failed to take prompt action to delete the names of two retired officers from the payroll. As a result, unearned salaries totalling ¢3,004,345 were wrongly paid to the two staff who retired in 2005.


1468. We urged management to recover the amount from the two retired officers and also ensure that their names are promptly deleted from the payroll.

JUDICIAL SERVICE-SEKONDI


1469. Total payments of ¢215,574,000 were made by the Judicial Service, Sekondi to various identifiable organisations, including the Ghana Police Service, Tarkwa, without obtaining official receipts from the payees to authenticate the expenditures. This was because management believed that signatures of the recipients of the cheques on the payment vouchers were sufficient.

1470. Since payments to organisations without obtaining official receipts could facilitate expenditure irregularities and fraud, we advised management to obtain official receipts from the payee institutions to regularise the transactions involved.

Fuel purchases not accounted for-¢9.4 million

1471. We observed that a vehicle log book was not maintained for the Service's vehicle with registration number GR 1671 K. Consequently, fuel purchases amounting to ¢9,384,700 were not accounted for.

1472. We did not agree with management's suggestion that the spending officer's authorisation of payment vouchers raised for the purchase of the fuel was enough to authenticate and account for the fuel purchases. We therefore recommended that management should account for the use of the fuel purchases amounting to ¢9,384,700 or in default the amount should be retrieved to chest.


DISTRICT COURT – SEKONDI

Delayed lodgment of revenue to bank-¢325.0 million

1473. We noted that bailiff fees collected at both the Civil Court and the Family Tribunal totalling ¢325,012,200 were lodged with the bank two to six months after collection. This was due to poor supervision of the Cashier which could result in embezzlement of revenue.

1474. Management's explanation that the Cashier was overburdened with work was considered untenable. We therefore recommended full compliance with regulation 15 (1) of the FAR, 2004.

HIGH COURT – SEKONDI


1475. We observed that no receipts were obtained to authenticate total payments of ¢15,200,000 allegedly made to Cal Merchant Bank, Takoradi Branch, on 3 May 2005 (¢10,000,000) and Cann Quarshie & Co on 24 May 2005 (¢5,200,000).

1476. To confirm the authenticity of the payments, we urged management to obtain receipts from the Cal Merchant Bank and Cann Quashie and Co. to acquit the payments. We further recommended that the necessary control should be put in place to ensure that all payments are promptly supported.

DISTRICT MAGISTRATE COURT-ENCHI


1477. The name of a non-existing staff, Mensah Frank, appeared on the mechanised payroll of the Enchi District Magistrate Court and was paid a sum of ¢15,805,032 for June and July 2006 without any input being initiated by the Enchi Court Registrar to the CAGD.


1478. Management also failed to ensure the deletion of the name of Mr. E. K. Tsigyane, a retiree from the payroll with effect from 24 October 2005. This resulted in the payment of unearned net salaries of ¢11,901,981 into the retiree's account at Ghana Commercial Bank Enchi. Out of the amount, the retiree withdrew ¢4,810,911. The balance of ¢7,091,075 was retrieved to chest while ¢20,000 was deducted as bank charges.

1479. We recommended that the amount of ¢15,805,032 stated against the name of the non-existing staff in June and July 2006 should be retrieved from the GCB, Enchi and paid to the Controller and Accountant-General suspense account. Additionally, we recommended to management to recover the ¢4,810,911 from Mr. Tsigyane, the retiree.

NATIONAL COMMISSION ON CIVIC EDUCATION-SOGAKOPE

Unearned salaries - ¢17.0million

1480. Our audit disclosed that between April 2005 and October 2006, a staff, Mr. Dorkenoo who went on study leave without approval was wrongfully paid salaries amounting to ¢17,027,073 which were lodged in his bank account.

1481. This irregularity was caused by management's failure to promptly delete the officer's name from the payroll. We recommended that Mr. Dorkenoo should be asked to produce his study leave approval letter or the unearned salaries paid to him be recovered. Management has since not reacted to our recommendation.

NATIONAL COMMISSION FOR CIVIC EDUCATION (NCCE) BIBIANI

Failure to account for grants received - ¢39.7 million

1482. We noted during our audit of the District Office of the NCCE in Bibiani that grants received from its Regional Office in Sekondi,


between March 2003 to October 2003 and March 2005 to April 2006 totalling ¢39,705,690.24 were not recorded in the cash book and therefore not accounted for.

1483. The lapse contravened regulation 1(6) of FAR, 2004, LI 1802. In the absence of any evidence on the recording of the receipt and utilisation of the grants, this Office could only conclude that the amount had been misappropriated by the former Accounts Officer of the District Office who was on transfer.

1484. We recommended to management to ensure that the grants totalling ¢39,705,690.24 were recorded in the cash book and necessary supporting documents like invoices, receipts, and statements of claim provided to support expenditure incurred from the grants. In the absence, the total amount should be recovered from the former Accounts Officer of the District Office


APPENDIX ‘A’

STATUS OF THE ESTABLISHMENT OF INTERNAL AUDIT UNITS AND AUDIT REPORTS IMPLEMENTATION COMMITTEE

NO. MINISTRY IA UNIT ARIC1. Finance and Economic Planning + +2. Health + +3. Education, Science and Sports + +4. Food and Agriculture + x5. Local Govt., Rural Dev. and Environ. + x6. Manpower, Youth and Employment + +7. Energy + +8. Communications + +9. Information and National Orientation + x10. Water Resources, Works and Housing + +11. Lands, Forestry and Mines + x12. Justice and Attorney-General’s Dept + x13. Foreign Affairs, Regional Integ. & NEPAD + x14. Trade, Industry, PSD and PSI + +15. Women and Children’s Affairs + x16. Ports, Harbours and Railways + x17. Presidential Affairs + +18. Transportation + +19. Interior + x20. Defence + x21. Public Sector Reform + x22. Fisheries x x23. Parliamentary Affairs x x24. Tourism and Diasporan Relations x x

+ TOTAL x

21 103 11

+ = Establishedx = Not Established

SOURCE: 2006 ANNUAL REPORT OF INTERNAL AUDIT AGENCY

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