ModernGhanalogo

FEATURED: Why Yaoh Hates Your Marriage So Much!!...

body-container-line-1
12.07.2006 Business & Finance

¢7.23 Trillion Budget Surplus Recorded - AG's Report

By GRAPHIC
Listen to article

Ghana's budget made a positive showing last year by recording a surplus of ¢7.23 trillion.

That was because total receipts (made up of revenue and receipts from debts) exceeded the budget estimate, while expenditure was curtailed.

The out-turn for receipts was 98.09 per cent of receipts budgeted for in 2005, while the out-turn for expenditure was also 80.37 per cent of the budget provision.

These assessments are contained in the Auditor-General's (AG) Report on the Public Accounts of Ghana (Consolidated Fund) for the year ending December 31, 2005.

The report was laid before Parliament last Friday and subsequently referred to the Public Accounts Committee of Parliament for consideration.

This is the first time the AG has presented the report to Parliament within schedule, as specified by the 1992 Constitution.

Previously, the presentation of the report and others on the accounts of some public institutions to Parliament had delayed for at least four years. A summary of significant findings in the report indicated that a surplus of revenue (excluding receipts from debts) over expenditure of about ¢5.2 trillion was realised in 2005, compared with the 2004 surplus of about ¢1.8 trillion.

It attributed the performance to exchange gains of about ¢2.3 trillion earned in 2005, the improvement in revenue collection over the previous years figure and the control of expenditure.

"Despite the relative improvement in operational results, the adoption of innovative approaches for reporting programme and project loans of the Consolidated Fund could enhance the profile of the Public Accounts' financial statements".

On revenue performance, the report indicated that total revenue from taxes, non-tax revenue, HIPC and grants was about ¢30.3 trillion, which showed a delivery rate of close to 101.5 per cent of the 2005 budgeted revenue of about ¢29.9 trillion.

It said the enhanced performance in revenue generation was the result of exchange gains of about ¢2.3 trillion earned in the year.

The report also observed that "revenue generated annually constituted, in the main, the pool of resources from which short-term financial commitments of the government could be met, as financial assets of the Consolidated Fund were largely non-performing".

It advised the Ministry of Finance and Economic Planning (MOFEP) to enforce compliance with the existing regulatory framework for the recovery of all loans funded from the Consolidated Fund and also to ensure the performance of government equity investments in order to make the financial assets perform.

According to the report, loans financed from the Consolidated Fund amounted to about ¢6.71 trillion at the close of the year, as against about ¢6.7 trillion in 2004.

It said significant portions of the loans were non-performing and, therefore, there was uncertainty about their recovery.

With respect to expenditure, the report indicated that personal emoluments (PE) and related costs exceeded all other expenditure on item-by-item basis.

"Because of the current agitation for higher remuneration in the public sector, MOFEP should take innovative measures to keep this expenditure within manageable limits, it recommended.

The report identified inconsistent application of PE as a factor in the computation of pensions and gratuities for personnel on the Ghana Universal Salary Structure (GUSS) and those outside the GUSS, "making it at variance with Regulation 290, Financial Administration Regulation (FAR), LI 1802".

"I recommend the urgent resolution of this inconsistency, since it leads to under-payment of pensions and gratuities of personnel outside the GUSS", the AG advised.

The report said contrary to regulation 190 of LI 1802, all Ministries, Departments and Agencies (MDAs) had defaulted in preparing their accounts because a departmental accounting manual was not in place to guide them.

It said the Controller and Accountant-General's Department (CAGD) was in the process of awarding a contract to a consultant to prepare the manual and urged the CAGD to expedite action on it to facilitate the preparation of the departmental annual statement.

The report observed that existing accounting treatment for project loans did not adequately satisfy the requirements of Section 18 of the Loans Act, 1970 (Act 335) and, therefore, recommended that the reporting of project loans should be undertaken to a level where the substance of the loans could be appreciated by users of the financial statements of the Public Accounts.

It said reconciled bank account balances of the Consolidated Fund, making up a total cash balance of about ¢4.6 trillion, reported in the 2005 Public Account financial statements, were not available.

"I am, therefore, unable to substantiate the cash balance", the AG noted, and recommended that bank accounts constituting the Consolidated Fund should be clearly determined in accordance with the Financial Administration Act (Act 654).

In addition, all balances on bank accounts should be reconciled before reporting in the Public Accounts financial statements.

The report further indicated that loans financed from the Consolidated Fund and reported as outstanding from companies, public boards and corporations, individuals and other institutions were not adequately supported by records of the CAGD and MOFEP.

Consequently, the AG was unable to confirm the total loan balance of ¢6.7 trillion as a result of non-disclosure of the nature of the debts and uncertainty about their recovery.

The report thus recommended a periodic reconciliation between the CAGD and MOFEP and the need to make appropriate disclosure of the status of the loans in the financial statements.

Another significant finding in the report is that transfer of funds from the Government Treasury Main Account into the District Assemblies Common Fund (DACF), the Road Fund, the Energy Fund, the GETFund, the Petroleum Exploration Levy Fund, as well as designated accounts of MDAs, for spending and accounting were treated as actual expenditure in the Public Accounts financial statements.

"This accounting treatment could significantly mislead users of the financial statements, since balances of these transfer payments may still exist in the respective funds and bank accounts at year-end", it observed.

The report advised that such expenditures should be presented as transfer payments. Furthermore, the management of MDAs and administrators of the various funds should comply with existing mandate to account for and report on the use of those funds.

body-container-line