Errors, lapses at MDAs cost nation ¢243bn -AG
Accra, Aug. 31, GNA - A total of 240 billion cedis and 347,101 dollars was lost to the State due to errors, lapses and irregularities by Ministries, Departments and Agencies (MDAs) during the 2003 financial year.
A 189-page report of the Auditor-General made available to the Ghana News Agency (GNA) on Wednesday showed that the irregularities were manly due to poor tax administration, unsatisfactory cash management and inadequate procurement and inventory control procedures. It noted that some MDAs failed to collect rent and other fess due to the Government.
The report, the fourth on MDAs since 2001, showed that 204.17 billion cedis was lost due to irregularities from uncollected tax and duties by the Value Added Tax (VAT) Service, Internal Revenue Service and the Customs, Excise and Preventive Service (CEPS).
The report recommended that in order to improve upon the tax administration in the country, internal control systems at CEPS, IRS and VAT should be strengthened.
There should be better supervision to ensure that staff performed their duties efficiently and in accordance with the tax laws. The report called on revenue collecting agencies to establish reliable procedure to assess and collect taxes.
"Uncollected taxes should be subjected to regular review and delinquent debts written off. Revenue agencies should widen the tax nets to include small and medium scale self-employed."
The report said in order to enhance cash flow, the Revenue Agencies Board must issue proactive directives on managing accounts receivable, collection of overdue accounts and strengthening of current policies and practices for managing revenue and collecting debts owned to the State. In respect to the cash irregularities for the same year, 17.53 billion cedis was lost to the State showing a sharp reduction of 100.89 billion compared to 118.42 billion cedis in 2002. This, it said showed that the MDAs were implementing the previous audit recommendations.
The report said cash irregularities included misappropriation of revenue, disbursement from revenue, imprest not accounted for, dishonoured cheques, revenue paid into wrong accounts and loss of cash/stores.
It said the finding revealed that procurement and stores irregularities amounted to 8.99 billion cedis compared with 2.17 billion in 2002 representing an increase of more than 300 per cent.
According to the report, frequent disregard for rules, little evidence of value for money spent and lack of audit verification trail or data accounted for stores/procurement irregularities. The report recommended that MDAs should continue to strengthen their internal control systems by instituting measures to ensure strict compliance with financial administration.
On outstanding loans and debts, the report said it rose to 8.17 billion cedis as against five billion in the previous year. This substantial growth, it noted, was caused by the failure of MDAs to have established sound debt collection procedures and agreed repayment terms with debtors.
The report recommended that management should establish proper and credible loan recovery procedures to curb the problem. "Loans should never be made without first establishing the prospects of recovery from debtors by checking on their credit records."
It said payroll and overpayments in respect to wrongful payments of unearned salaries amounted to 3.25 billion cedis, showing an increase of 1.18 billion cedis from 2002.
"This increase was mainly due to payroll fraud amounting to 2.75 billion deducted by the (Audit Service), which was caused by weaknesses in the internal control system and collusion among schedule officers," the report noted.
"In order to prevent a recurrence of the malfeasance, I strongly recommend that the internal control system is strengthened including reconciliation of payroll cheques with bank records and ensure that the activities of schedule officers are properly supervised."
It said the country lost 184.1 million cedis as a result of expired drugs under the Ministry of Health but noted that this was a significant reduction compared to 1.85 billion cedis in 2002.
Contract irregularities in 2003 amounted to 107.6 million cedis, which were due to unexecuted works, overpayments and inadequate supporting documents for contract payments.
The report called for strict adherence to contract procedures and the provision of the newly promulgated Public Procurement Act 2003 (Act 663) to eliminate these irregularities.