Amend internal audit agency act to make internal auditors more independent - Amasaman MP

The member of Parliament for Amasaman honorable Akwasi Afrifa-Mensa has called on the Parliament of Ghana to amend the Internal Audit Agency Act, 2003 ACT 658 to make Internal Auditors more independent and to forestall intimidation and threats in the audit.

Hon. Afrifa-Mensa made this call on Tuesday, the 8th of February, 2022 while delivering a statement on Enhancing auditing functions towards reducing irregularities, infractions and corruption in public institutions, on the floor of the house.

He noted that conditions under which Internal Auditors operate in their respective institutions make them vulnerable. "Mr Speaker, unlike the Audit Service, the internal audit unit in any state institution depends on the heads of that particular institution for stationary and any other materials needed for the effective running of the office. Depending on the heads of their institutions for everything needed for their work, thus making them vulnerable in the performance of their duties. Writing a report that seems unfavorable to the institution makes him a traitor and will force him to compromise on his stance, thus leading to intimidation threat in audit".

The first-time MP for Amasaman further made certain comments on the recently released auditor general's report which suggested that about GHC12bn has been lost to corruption. "Mr Speaker, there is public outcry every year about irregularities in the auditor general's report. Recently, the opposition and the media are pointing fingers at the NPP government, accusing and criticizing the government of infractions of GHc12.0 billion captured in the 2017 auditor general report. It must be noted that of the GHc12.0 billion Ghana Cedis reported, 90% of the irregularities and infractions occurred in the financial years preceding 2017. (Referred to page 86, paragraph 401 of the 2017 Auditor General’s report.)".

Full Statement Below

STATEMENT ON ENHANCING AUDITING FUNCTION TOWARDS REDUCING IRREGULARITIES, INFRACTIONS AND CORRUPTION IN PUBLIC INSTITUTIONS - HON. AKWASI OWUSU AFRIFA-MENSA, MP AMASAMAN

Right Honourable Speaker, thank you for allowing me to make a statement on enhancing auditing function towards reducing irregularities, infractions and perceived corruption in public institutions.

Mr Speaker, an audit is an independent objective examination and evaluation of financial records of an organization to make sure that the financial statements are a fair and accurate representation of the transactions they claim to represent.

Accordingly, auditing is an exercise whose objective is to enable auditors to express an opinion on whether the financial statements give a true and fair view to an entity’s affairs at the end of a period and of its profit or loss for the period under review, and have been properly prepared by the applicable reporting standards.

Audit Service Act 2000, (Act 584) Section – 11,
1) The public accounts of Ghana and all public offices, including the courts, the central and local government administrations, of the Universities and public institutions of like nature, of any public corporation or other body or organization established by an Act of Parliament shall be audited and reported on by the Auditor-General.

(2) For subsection (1), the Auditor-General or any person authorized or appointed for the purpose by the Auditor-General shall have access to all books, records, returns and other documents including documents in computerized and electronic form relating to or relevant to those accounts.

(3) The public accounts of Ghana and all persons and institutions referred to in subsection (1) including computerized financial and accounting systems and electronic transactions shall be kept in such form as the Auditor-General shall approve and shall be subject to review by the Auditor-General.
(4) An internal auditor of an organization or body to which subsection (1) applies shall submit a copy of each report issued as a result of internal audit work carried out to the Auditor-General.

(5) All financial and accounting systems in respect of the accounts provided under subsection (1) shall be subject to prior approval of the Auditor-General and any change in any such system shall be notified to the Auditor-General and shall be subject to prior approval before implementation.

(6) Any head of a public institution or other body subject to auditing by the Auditor-General who fails to comply with subsection (5) is liable to be surcharged with the cost of any loss occasioned by defective or deficient internal controls of auditing.

Section – 13 – Examination of accounts

The Auditor-General shall examine in such manner as he thinks necessary the public and other government accounts and shall ascertain whether in his opinion
(a) the accounts have been properly kept;
(b) 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;
(c) Monies have been expended for the purposes for which they were appropriated, and the expenditure has been made as authorized;
(d) essential records are maintained and the rules and procedures applied are sufficient to safeguard and control public property; and
(e) programmes and activities have been undertaken with due regard to economy, efficiency and effectiveness concerning the resources utilized and results achieved.

Section – 15 – Examination on receipt of Controller and Accountant-General
The Auditor-General shall, upon receipt of the annual statements of public accounts required, under sections 40 and 41 of the Financial Administration Decree, 1979 (S.M.C.D. 221), to be made by the Controller and Accountant-General, examine the statement and certify whether in his opinion the statements present fairly financial information on the accounts per accounting policies of the Government and consistent with statements of the preceding year under best international practices, and may state such reservation or comment that he considers necessary.

Section – 20 – Submission of Auditor-General’s report to Parliament
(1) The Auditor-General shall, within six months after the end of the immediately preceding financial year to which each of the accounts mentioned in this Part relates, submit his report to Parliament and shall, in the report, draw attention to any irregularities in the accounts audited and to any other matter which in his opinion ought to be brought to the notice of Parliament.

Mr Speaker, in our effort as a nation in fighting corruption, irregularities and infractions, in the public institutions, the Internal Audit Agency was set up by an Act of this august house (Act 658) 2003, to argument the existing corruption-fighting institutions. According to the Act, the Internal Audit Unit of any institution is mandated with the authority to audit all parts of the Ministries, Department, Agencies /Metropolitan, Municipal and District Assemblies (MDAS/MMDAs) and shall have full access to all records, physical properties, and personnel relevant to the performance of an audit.

Mr Speaker, the internal audit agency was set up to coordinate, facilitate, monitor and supervise internal audit activities and strengthen internal controls within MDAs/MMDAs.
Mr Speaker, unlike the Audit Service, the internal audit unit in any state institution depends on the heads of that particular institution for stationary and any other materials needed for the effective running of the office. Depending on the heads of their institutions for everything needed for their work, thus making them vulnerable in the performance of their duties. Writing a report that seems unfavorable to the institution makes him a traitor and will force him to compromise on his stance, thus leading to an intimidation threat in the audit.

I, therefore, call on this house, to amend the Internal Audit Agency Act to make Internal Auditors more independent. I believe by so doing we shall achieve the main objective of setting up the agency.

Mr Speaker, it saddens my heart each time the Auditor General submits annual reports to parliament, there seems to be no reduction in the irregularities and infractions. Under normal circumstances, the infractions and irregularities in the Auditor General's reports are supposed to be reduced year after year, however, it keeps on vacillating.
Does it mean that the auditor general does not issue the right recommendations to the entities after the annual audit or does the auditee fails to implement such recommendations? Or the internal auditors posted to those state institutions don’t perform their tasks properly?

Mr Speaker, there is a public outcry every year about irregularities in the auditor general's report. Recently, the opposition and the media are pointing fingers at the NPP government, accusing and criticizing the government of infractions of GHc12.0 billion captured in the 2017 auditor general report. It must be noted that of the GHc12.0 billion Ghana Cedis reported, 90% of the irregularities and infractions occurred in the financial years preceding 2017. (Referred to page 86, paragraph 401 of the 2017 Auditor General’s report.)

The total value of Irregularities from the Auditor General reports are:
Referred Page 7 of the Report of the Auditor-General on the Public Accounts of Ghana: Ministries, Departments and other Agencies for the year ended 31 December 2020.

I must say, Mr Speaker, that both the Judicial and Legislative arms of government have a huge responsibility in the fight against corruption. I want to plead that, we must strengthen the existing institutions to perform their tasks effectively for the benefit of our country. I also want to commend the president and the commander in chief of the Ghana Arm Forces, His Excellency Nana Addo Dankwa Akufo-Addo for setting up the office of the Special Prosecutor to fight corruption.

Mr Speaker, in my few years in the public service, I observed the following which I think will help find solutions to irregularities and infractions.

1. Many of the officers who are invited to the public accounts committee of parliament are normally not the officers who supervise the transactions. By the time the audit report gets to parliament, most of the responsible officers would be on transfer or retirement and officers who face parliament would be new officers, who either have little or no knowledge of the transactions.

2. Most of the reports before it gets to parliament would be three or more years old and may have outlived their relevance. Most of the reports that the Public Accounts Committee is sitting on it now relate to 2018, 2019 which is about three years.

3. Auditors often spend long periods in the auditee organizations. It will interest you to know that five or more auditors spend weeks in auditing an organization that has only one internal auditor, who spends less than two weeks to complete his work. Their continuous stay in such organizations for audit, makes them familiar and part of the organization thereby making them compromise their work principles.

4. The auditors sometimes demand meals or fuel from the auditee on daily basis.
Mr. Speaker, how the accountant manages to account for these expenses will be a story for another time.

Mr Speaker, any time matters of corruption are raised, the public point figures to politicians, (Ministers, MPs, MMDCEs etc) and leave out the main culprits, that is, spending officers who per our laws, are supposed to safeguard the public purse.
In conclusion, I will suggest, Mr Speaker, that, spending officers, who commit infractions at their former offices should be summoned before the Public Accounts Committee of this house to explain to the Ghanaian people why such infractions occurred even if they are on retirement or transfers. The phrase that, one inherits assets and liabilities should exclude issues of audit irregularities and infractions. Each of us should be made to defend his actions while in public office.

I remember I accompanied a friend who was not a finance officer during the Ghana @50 celebrations to face the commission that probed Ghana @50, in 2009 and this friend was so humiliated to the extent that, he nearly resigned. Meanwhile, he had no knowledge of what happened but the one who supervised it was cooling off himself somewhere.

Mr Speaker, I will again suggest we empower the Internal Audit Agency and encourage the auditor general to submit reports timely to this august house for Public Accounts Committee to interrogate it quickly and report to the house.