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IMANI’s nine recommendations to address fiscal indiscipline of MDAs

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IMANI’s nine recommendations to address fiscal indiscipline of MDAs

Policy think tank, IMANI Ghana, in its latest Fiscal Recklessness Index report ranked the Finance Ministry as the most financially reckless ministry in the country.

According to IMANI, this is because the Ministry over a six year period – from 2015 to 2020 – recorded more than GHS 11bn in losses to the State.

Following the Finance Ministry is the Ministry of Health as the second most fiscally reckless institution.

The third, fourth and fifth most fiscally reckless MDAs over the six years period were the Ministry of Roads & Highways, Ministry of Employment, and Ministry of Foreign Affairs.

On a yearly basis, Ministries, Departments and Agencies through financial indiscipline cause the country to lose billions of cedis.

To help mitigate the phenomenon, IMANI Ghana has made the following recommendations to government to check fiscal indiscipline of MDAs in the country.

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The recommendations are as follows: 

  • The Auditor-General must rigorously apply the disallowance and surcharge powers given to it under Article 187 (7) (b) of the 1992 Constitution. The Supreme Court’s interpretation of this provision, in the case of Occupy Ghana Vrs Attorney General (J1 19 of 2016) [2017] GHASC 24 , further established that the Auditor-General’s function as stated in the Constitution of Ghana, effectively goes beyond annual audit reports on public institutions, to taking all necessary steps to enforce compliance including in some cases initiating criminal prosecutions. While the Auditor-General’s findings have led to improved transparency, the next layer in deepening accountability is to ensure that the Auditor-General continues to apply surcharge and disallowance powers given to it by the constitution.
  • The Attorney General should further enforce punitive measures against persons/individuals found to have committed irregularities. It is important that institutions cited for irregularities ensure that officers responsible are punished without delay. Fast tracking the creation of the financial court which was originally meant to be set up under the former Financial Administration Act can help in the speedy prosecution of people who embezzle public funds. A similar outcome can also be attained by using the already existing specialized Financial and Economic Crime Court of the High Court. Internally, MDAs should adhere to applying internal administrative sanctions and controls in cases where fiscal recklessness are not criminal in nature but only attributable to administrative procedures not being followed.
  • The Auditor-General must also work closely with the Office of the Special Prosecutor (OSP) to take legal action against individuals and institutions found to have criminally engaged in irregularities and thereby abused the public trust. The Auditor-General can refer suspicious transactions to the OSP to investigate and then prosecute. Given its specialised mandate, the potential prosecutions by the OSP could target large irregularities which have elements of criminality involved. The OSP Act, 2017 (Act 959) gives it the power to “investigate and prosecute alleged or suspected corruption and corruption-related offences involving public officers, politically exposed persons and persons in the private sector involved in the commission of the offence under any other relevant law”, among others.
  • Align the Ghana Audit Service function to the PFM cycle – that is, the Auditor-General’s audit track areas must align with the entire PFM cycle. There is currently a disconnect between Ghana’s five-tier PFM cycle planning — planning, budgeting, procurement and contracting, accounting, and reporting and auditing — and the audit work undertaken by the Auditor-General. Ordinarily, if the audits are to ensure that the PFM systems of Ghana are working, then one would expect that the annual audit covers all the PFM areas instead of cherry-picking some aspects of the PFM cycle and auditing them on an annual basis while the rest remain unattended to.
  • Further granular breakdown of the Auditor-General’s report at the sub-agency level is needed to understand better which institutions are actually being the most fiscally reckless. Splitting departments and agencies away from their oversight ministries in the auditing process can help achieve that goal. The challenge with being a central management agency is that sometimes irregularities and other lapses that emanate from subservient agencies are attributable to the parent MDA. Take the Finance Ministry for instance, it is both a central management agency and an MDA, yet simply because it releases funds to agencies it oversees directly, the latter’s financial misdemeanors are rendered as owned by the ministry, as can be seen in its high fiscal recklessness score.
  • Improve and have more specialised audits of specific MDAs based on random intelligent alerts. The Auditor-General could undertake special intelligence-led audits in the management of several public funds if there is suspicion of probable procurement breaches. For this to happen, the Auditor-General’s Department must be well-resourced in terms of financial and technical (human) capacity. These specialised audits can also be triggered by the Public Accounts Committee (PAC) of Parliament, given their supervisory mandate to examine the audited accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure of the government.
  • Strengthen the Public Accounts Committee to address the lag in accountability. There is an accountability lag as the PAC continue to accumulate backlogs of AGs report, leading to delays in timely investigation of irregularities, and late implementation of sanctions and recommendations. The PAC is yet to investigate the AGs report of MDAs for 2020 and 2021, as it is currently sitting on the 2019 AG’s report. PAC must ensure that the AG complies with the timelines for submitting reports to the House, as stipulated in the Ghana Audit Service Act.
  • Strengthen both supply and demand-side transparency and accountability. Several institutions such as the Ghana Audit Service, the Internal Audit Agency, Parliament and CSOs play key oversight roles. However, there is a need to deepen operational efficiency by tightening controls within MDAs by mandated sub-units.
  • Continuous targeted and general tax education by the Ghana Revenue Authority on multiple fronts by leveraging modern technology.

Tags: Fiscal Recklessness IndexghanaIMANI GhanaIMANI’s nine recommendations to address fiscal indiscipline of MDAs
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