13 February 2013

Ghana: Empower Internal Auditors

Deputy Auditor General, Mr. Yaw Agyei Sefa has proposed for the empowerment and sustenance of Internal Audit Agency to ensure effective and efficient financial management within government institutions.

Mr. Agyei Sefa, who is in-charge of Performance and Special Audits Department further noted that engaging experience auditors as well as providing logistics among other needs to the Internal Auditors within the Metropolitan, Municipal, Departments and Agencies (MMDAs) would enable them "stand on their feet" and perform diligently.

According to him, the Internal Audit needs capacity building since most employees were engaged straight from school and find it difficult when asked to manage an audit department of an institution.

The Deputy Auditor General was giving evidence yesterday, when he appeared before the Commission into judgment Debts in Accra as he hinted on the possible leads of fraud prone areas that Internal Auditors provide External Auditors to work on.

He pointed out that the Internal Auditors are able to provide the leads because they are present in the organization and know every operation that goes on the organization, adding that the Audit Service Act has separated the Internal Audit services from the External Audit services, which forms part of the staff of the auditor General's Department.

However, it was noted that the Internal Audit function and the External Audit function collaborate in their work, with the Internal Audit Agency reporting to the Ministry of Finance.

Additionally, witness noted that the representatives of the Auditor General at MMDA's are not part of the management structure of the government agencies and that their role was to provide external auditing services to their financial management.

He, therefore, emphasized that the Audit Service had got funding to construct offices for staff to enable them work from there as financial constraints had prevented the Service from working effectively.

In his evidence before the Sole Commissioner, Justice Yaw Apau, Mr. Agyei Sefa asserted that the Auditor General's Department does not have punitive powers but only procedural, where it gives recommendations, where there is non-compliance of the Financial Administration Act.

He further indicated that Parliament, through the Public Accounts Committee (PAC) could recommend punitive measures against any acts of financial mismanagement since the system at the Auditor General's Department does not make room for effective sanctioning of culprits.

The witness informed the commission that the Financial Administrative Act provided for the creation of Tribunals but successive Administrative Acts finds it difficult to use it as it has now turned into courts due to possible difficulties of who to preside over the Tribunals; since there is the need for persons with financial administration background to be on the panel.

Mr. Agyei Sefa has lauded the activities PAC, noting how beneficial it had been to the Audit Service, having had a cordial work relationship.

Following from the scrutiny of PAC on audited reports on government institutions, the Deputy Auditor General noted that clients of the Audit Service are taking their reports seriously, since they knew that some time to come, they would have to respond to any financial mismanagement.

"Before then, clients do not take the report of the Auditor General seriously", witness noted, emphasizing that PAC's intervention has come up with a recommendation of a seal beyond which judgment debts could not be paid except by the express recommendation of cabinet.

"Clients now respond to Auditor General's queries", Mr. Agyei Sefa asserted, adding that with the cordial relation it had with PAC, the Auditor General's Department is provided with copies of deliberations and recommendations of the committee.

With the challenge of record keeping to public sectors generally and not only debt management agencies only, a-one-stop-shop institution, which is currently being piloted, would help with record keeping exercise in the country.

Witness noted that Audit Reports on government institutions sometimes go unresolved since clients fail to respond to queries as a result of which the department had no option but to refer such cases to PAC for consideration and investigation.

Mr. Agyei Sefa also indicated that the Auditor General's Department had a working relationship with the judiciary, where they are seeking help to build capacity of the Audit Service in evidence gathering so that the Service's audit findings would stand the test of time.

Witness further spoke of the existence of Audit Report Implementation Committee (ARIC) in several levels, such as board, Ministries and other institution audited by the Auditor General.

ARIC, which was created by Section 30 of the Audit Service Act, is to ensure implementations of the recommendations of the Auditor General's report, adding that the Committee plays key role in financial management of institutions and could deal with any financial malfeasance before the Auditor General's Reports are compiled.

"When they are fully operational, lots of the problems experienced by the Auditor General would be solved," Mr. Agyei Sefah noted, adding "those to head the ARICs, are currently being discussed.

In his overview comment, the Sole Commissioner, Justice Apau, an Appeal Court judge noted that the rot in the system is too much and that it was because of these lapses that offenders get away with the crimes they commit.

The judgment debt commission was established by Constitutional Instrument 79 of 2012, which was gazette on October 2012 and has a period of 12 months to submit its report to the presidency.

The commission is expected to ascertain the causes of any inordinate payments made from public funds in satisfaction of judgment debts since the 1992 Constitution came into force, causes of any inordinate payments from public funds and financial losses arising from arbitration awards, negotiated settlements and other processes since the 1992 Constitution came into force and to make recommendation to government.

The effect of the commission's recommendations to the government is expected to ensure that public funds utilized to make payments in satisfaction of judgment debts and public debts arising from others are limited as well as ensuring that government does not incur undue financial losses when it does business with private persons or institutions.

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