Demystifying the Nexus between Audit Report and Perceived Corruption: Auditor General’s report on MMDAs.  

Demystifying the Nexus between Audit Report and Perceived Corruption: Auditor General’s report on MMDAs.

Introduction

The Auditor General’s (AG) report has consistently piqued public interest over the past decades. This is evident from the annual media attention it receives when presented to parliament. The report’s ability to arouse curiosity can be attributed to the significant monetary value, scope, and nature of the infractions it covers.

As a result, the report becomes a major news story, often trending for a substantial period. As discussions unfold, emotions run high, and there are calls for the prosecution of public officials implicated in the report.

By the time the discussions subside, public opinion may have already judged the management of the entities involved, accusing them of misappropriating public funds.

Upholding the tenets of good governance

The interest shown by civil society organisations, social and political commentators, hosts of morning and political talk shows, practitioners, and scholars is beneficial for good governance. This is because some of these stakeholders meticulously analyze the AG report to inform citizens about how much money the state has lost within a financial year.

 At times, they exert pressure on anti-graft agencies to recover these lost funds from public officials and call for their prosecution. These media professionals should be commended for consistently advocating the protection of the public purse.

They also bring to light significant financial issues that could have otherwise been overlooked, thereby enhancing transparency and accountability.

However, while some media outlets act as watchdogs over the public purse, others use the AG report for malicious and propaganda purposes.

The misinformation

 It is disheartening to see or hear that some media and social commentators, who aim to inform the public about alleged corrupt practices highlighted in the AG report, sometimes end up misinforming the public.

Educated elites sometimes suggest that every infraction in the AG report is synonymous with corruption, when in fact; this may not be the case.

They often add up all the infractions and corresponding figures to imply that the total amount is the cash that has been “chopped” by public officials.

Additionally, public officials who appear at the Public Accounts Committee sittings are unfairly labelled as corrupt. Unfortunately, in some cases, either the host misinforms the listeners or the pundits misinform the host and the listeners.

As these discussions continue, emotions can override logic and rationality, leading to irredeemable reputational damage for some of the public officials mentioned in the report.

Is it justifiable to classify all infractions as corruption?

The AG’s report for Metropolitan Municipal District Assemblies is categorized into two: the reports on the District Assembly Common Fund (DACF) and the Internally Generated Funds.

According to the 2022 report on the DACF, the AG reports that the total value of infractions amounted to GH¢53.6m.

At first glance, this amount may seem significant and could understandably trigger the anger of the citizens.

However, the AG report breaks the infractions into four thematic areas: cash, contract, procurement, and tax irregularities.

The AG reports stated that GH¢12.09m, GH¢40.27m, GH¢0.751m, and GH¢0.495m were the monetary values of infractions under each of the thematic areas respectively.

When delving into the specifics, a significant percentage of the infractions had no relationship with corruption themes such as misappropriations, fraud, or stealing.

For example, out of the total reported cash irregularities of GH¢12.09m, a significant amount of GH¢8.1m is attributable to over-utilization of the DACF on recurrent expenditures, non-allocation of funds to substructures, and payment of judgment debts.

 Similarly, out of the total contract irregularities of GH¢40.2m, GH¢33m is attributable to delayed and abandoned projects, while the remaining GH¢7.1m is attributable to completed projects not in use.

It is noteworthy that these two thrust areas, cash and contract irregularities, constitute 90 per cent of the total reported infractions of GH¢53.6m in the 2022 AG report on the utilization of the DACF.

This raises questions such as whether public officials can be compelled to refund an amount of GH¢40.2m on the grounds of a stalled or abandoned project attributable to the non-release of earmarked funds, or whether officials can be prosecuted for the same infraction.

The question that we must all ask as a nation is why the nation continues to award contracts despite the cash flow challenges leading to stalled projects over the years.

Additionally, can one link the over-utilization of the DACF for recurrent expenditures, because of low IGF generation, to corruption? It is important to understand that while infractions may be a loss to the state, not all infractions signify financial losses or corruption.

Is it justifiable to label certain infractions as corruption?

The AG report highlights several financial irregularities, including unpresented payment vouchers amounting to GH¢ 0.749m, unaccounted payments of GH¢ 0.191m, payment for unexecuted projects amounting to GH¢ 0.137m, and payments for goods not supplied amounting to GH¢ 0.149m.

These infractions could lead to serious consequences for public officials, particularly spending and finance officers, as outlined in Regulation 82(2) of LI 2378. If these issues remain unresolved, the public may be justified in calling for the retrieval or prosecution of those found responsible.

This is because the lack of supporting documents for payments or non-delivery of paid-for goods raises suspicion about the legitimacy of the transactions.

The AG’s report also raises concerns about criminal activities such as fraud, theft, and misappropriation, which cannot escape public scrutiny.

It would not be unfounded for commentators and citizens to demand the activation of section 98 of the Public Financial Management Act of 2016 in such cases.

The way forward

 Media outlets interested in discussing technical subjects such as the AG report should involve qualified journalists who are knowledgeable about financial and economic issues.

Media organizations need to consult professionals in public financial management to provide technical support. This will ensure that accurate information is shared with the public to promote good governance.

Professional accounting institutions should regularly provide their expert opinion on the AG reports to contribute to public discourse.

District Assemblies are also urged to address all audit findings in the management letter to prevent these issues from being included in the AG report, which often leads to public outcry.

Lastly, MMDAs should strengthen their internal audit units to prevent audit violations.

The author is a chartered Accountant and an expert in public financial management.

Source: GNA