Is the Independence of Auditor-General Sacrosanct? --A critical review on the role (Part 2)

The independence of the Auditor-General’s (A-G) office has become a hot topic in Ghana due to frequent removals and appointments by incoming or outgoing Presidents.

•    O.T. Prempeh appointed by J.J. Rawlings was in office from 1990 to April 2001 was removed from office when J.A. Kufour asked him to take accumulated leave and then proceed to retirement.

•    Dua-Agyeman appointed by J.A. Kufour was in office from April 2001 to May 2009. He was also removed from office when Atta Mills asked him to take his accumulated leave and then proceed to retirement.

•    R. Q. Quartey appointed by J.A. Mills was in office from May 2009 to December 2016 when he retired.

•    Finally, D. Y. Domelovo was appointed by J.D. Mahama in December 2016. He has also been asked to proceed to take his 167 days of accumulated leave effective 30th June 2020.

Considering the above appointments and removals the question has to be asked, in the spirit and letter of the Constitution, what was the intended aim of the framers of the Constitution in having a true and proper “independent” office of the A-G. This is because the presidents seem to be interfering with the A-G’s office.

There again, how come or why is it that we seem to be seeing that the A-Gs are always having accumulated leave? (this needs to be looked at urgently).

The appointment of D.Y. Domelovo by the outgoing administration of John Mahama was not taken lightly by the incoming administration of Nana Addo. They argued that the appointment was done in bad faith to stifle or undermine the incoming government. However, the appointment was, arguably, a duty imposed on the sitting President, as he needed to fill the vacancy created due to the retirement of R. Q. Quartey.  Since his appointment in 2016, the A-G’s has not only performed well and raised the stature and profile of the Ghana Audit Service (GAS), but he has managed to secure phenomenal financial and other support from government, CSOs and the media.

In part one (1) of this article, the importance of the A-G’s office was established as well as the need for the independence of the A-G’s office to be sacrosanct. Part two (2) of the article will now look at the constitutional role of the A-G.

The Constitutional Role of the Auditor-General

In Ghana, the A-G as the Supreme Auditor, is expected to carry out the ‘very important watchdog role’ and is ‘supposed to superintend in the transparent use and accountability of the public purse’.  Articles 187(2) and (5) of the 1992 Constitution requires the A-G to audit, report on public accounts of Ghana and the accounts of all public offices, and submit reports to Parliament within six months after the end of the immediately preceding financial year, drawing attention to any irregularities in the accounts audited for Parliament’s debate and dealing with matters arising.

Obviously, the role is quite onerous as it requires good knowledge of government and its component organizations, as well as a high level of professional competence and diligence in the planning and execution of audits to produce timely reports that are useful to Parliament. 

However, as stated by the International Organization of Supreme Audit Institutions (INTOSAI), since an audit can rarely be all-inclusive, SAIs as a rule will find it necessary to use a sampling approach. The expected audit objectives based on INTOSAI are legality, regularity, economy, efficiency and effectiveness of financial management.

The main objective of the Public Financial Management Act 2016, Act 921 is to regulate the financial management of the public sector within a macroeconomic and fiscal framework, it establishes both internal and external audit framework and correlative reporting and accounting systems.

The A-G is also expected under Section 84 of Act 921 to examine and audit the public accounts submitted under the Act in accordance with Article 187 of the Constitution and the Audit Service Act, 2000 (Act 584).  

Moreover, the citizens and CSOs expect the A-G to use the powers granted by Article 187(7) of the 1992 Constitution to ‘disallow any item of expenditure which is contrary to law and surcharge the amount of any expenditure disallowed upon the person responsible for incurring or authorizing the expenditure’.

In a ground-breaking action, one of the most active and respected CSOs that has shown particular interest in the work of the A-G, the Occupy Ghana Movement, officially requested the A-G to enforce his constitutional powers to the letter in the fight against corruption and misappropriation of public funds.

This culminated in the Supreme Court’s seminal decision in Occupy Ghana versus A-G, which has marked a turning point in the work of the A-G and to the commendation of the President in 2018. 

A legal practitioner and renowned broadcast journalist, Mr Anyenini, has also called the media to action and bemoaned that the many cases of irregularities exposed by the Audit Service had not been considered and discussed leaving perpetrators of act of irregularities going scot free because the media had failed persistently to express interest in the activities of the service.

Admittedly, the A-G has demonstrated most of the requisite qualities like bravery, confidence, dedication, forcefulness, and optimism.  It is also worthy of mentioning that his immediate predecessor only submitted six (6)  audit reports for the reporting period of 2015, and was unable to submit any audit report to Parliament for the period of 2016 just before the current A-G was sworn into office. 

It is, therefore, a significant achievement that the A-G was able to submit sixteen (16) reports comprising nine (9) statutory audits and seven (7) special audits to Parliament in 2019, having submitted eight (8) in 2018.

The review of various actions indicates that the A-G is not afraid to take professional risks. Arguably, the risk-taking has had some adverse impact on the efficiency and effectiveness of the Audit Service and ultimately the state, taxpayer and his tenure.     

Special report on disallowance and surcharge

Sensationally, the A-G declared in his Special Report on Disallowance and Surcharge as at 30 November 2018 issued on 19 December 2019, that the audit of accounts of MDAs revealed certain state agencies had engaged in irregularities costing the nation about GHS 5.4 billion between 2014-2016. Furthermore, the A-G issued 112 certificates of disallowance and surcharge amounting to GHS511.2 million against various perpetrators who committed financial infractions during the audit of 2017 and 2018 financial years.

The above declaration won the admiration of the President and his Vice President (those who were initially against his appointment, thinking his appointment was to cover up dealings of the previous administration) for which they made mention of on so many platforms.

However, several recent court rulings have nullified the A-G’s reports in appeal cases on the basis that the A-G’s audit and the issue of notices of surcharge and disallowance did not follow due process.

Besides, the A-G was lately found in contempt of court for his failure to respond within time during an appeal case against the notice of surcharge and disallowance involving the Senior Minister.

For instance, the A-G found that the NHIA, under the tenure of the previous management headed by Mr Sylvester Mensah made some payments to Zoomlion without following due processes and, therefore issued notice of surcharge and disallowance against two senior officials. However, the officials claimed that the only time their attention was drawn to the report and subsequent surcharge and disallowance was when they were informed about it in the media.

Following an appeal by the two senior officials of NHIA, the court presided over by Justice Georgina Mensah-Datsa, in her ruling, held that the A-G’s audit and the subsequent notice of surcharge against the two did not follow due process.

According to the court, the A-G failed to give the appellants a hearing which is a breach of rules of natural justice under Articles 23 and 296 of the 1992 Constitution, saying “it is, therefore, in the interest of justice that the appeal be granted on this basis.” 

Article 23 of the Constitution requires all Administrative bodies and officials to act fairly, reasonably and comply with the requirements imposed on them by law whilst Article 296 requires persons or authorities vested with discretionary power to be fair and candid. 

The A-G’s action was found in breach of the rules of natural justice as provided by the Constitution and consequently the finding against them were set aside.  ISSAI 130 Code of Ethics 59 states that SAIs shall be aware of the standard of professional behaviour expected by its stakeholders, as defined by the laws, regulations and conventions of the society in which they operate, and conduct their business accordingly and in line with their mandate.

International best practices

The above court ruling was in line with the famous case of Kingston Cotton Mills Co. (1896), Lord Justice Lopes defined an auditor's duty of care as follows: "It is the duty of an auditor to bring to bear on the work he has to perform that skill, care and caution which a reasonably careful, cautious auditor would use…”

Surprisingly, Counsel for the A-G averred that it would be far-fetched for the service to go out looking for individuals who have worked with or were managers in entities or organizations to get them served anytime there was an infraction against such persons, and that the practice was to serve the organization since they have contact with the concerned persons.

It must be emphasized here that best international practice rather requires the A-G’s reports to present the facts and their assessment in an objective, clear manner and be limited to essentials and give due consideration the points of view of the audited organizations on its findings.

Similarly, in the case of Joshob Construction Company Limited who were not satisfied with the A-G’s decision and, consequently, took the A-G to court to appeal against his decision to disallow and surcharge of GH¢11,777,823.40, which is its IPC 10 pending payment.

Shockingly, the A-G, in his written address to the court, conceded to the content of the appeal and the court accordingly allowed the appeal to set aside the purported claims of the A-G.

A similar appeal case by Infralocks Development against the A-G’s surcharge and disallowance of GHS 2,032,686.03, was also upheld by the court.

Little wonder that the Special Budget Committee of Parliament asked questions on the collectability of the GHS511.2 million as declared by the A-G, as the State has yet to collect any of the amounts surcharged. Especially when the Government of Ghana increased the allocated budget of the GAS from GHS141million in 2016 to GHS396 million in 2020, a whopping increase of 280 per cent.

It should be noted that Supreme Auditors, like all legal and audit professionals are expected to be law-abiding and lead by example, as stated in the various principles of professional behaviour, they are required to be compliant with relevant laws and regulations and avoid any action that discredits the profession.  
(SAIs) are held to high expectations and must earn the trust of stakeholders (citizens, legislative, and executive bodies, auditees and others).

Therefore, they need to act as model organisations and inspire confidence and credibility.

Ethical principles

Like independent external auditors, SAIs should also adhere to high ethical principles, using same basic auditing methods and applying the same independent auditing standards to financial auditing (ACCA).

Most professional accounting bodies require their members to uphold to their fundamental principles set out in their Codes of Ethics and Professional Conduct.  For instance, the five fundamental ethical principles and values set out in the International Standards of Supreme Audit Institutions (ISSAI) 130 Code of Ethics (INTOSAI 2019) are as follows:  

•    Integrity – to act honestly, reliably, in good faith and in the public interest;

•    Independence and objectivity – to be free from circumstances or influences that compromise, or may be seen as compromising, professional judgement, and to act in an impartial and unbiased manner;

•    Competence – to acquire and maintain knowledge and skills appropriate for the role, and to act in accordance with applicable standards, and with due care;

•    Professional behaviour – to comply with applicable laws, regulations and conventions, and to avoid any conduct that may discredit the SAI;

•    Confidentiality and transparency – to appropriately protect information, balancing this with the need for transparency and accountability.

As explained in Part (1) of this article, Act 921 requires the A-G to audit public accounts whilst Act 663 requires the A-G to conduct annual and specific audits on procurement activities of entities, and compliance by contractors, suppliers and consultants and report findings to the Board of the Public Procurement Authority. 

In June 2018, the Vice President observed that over 90 per cent of corruption in Ghana is related to procurement. As widely established, public authorities spend huge funds on contracts and public works and therefore, there is the need for exhaustive audit of the funds used.

It is also essential that the A-G carries out the audit of collection of taxes as extensively as possible and propose improvements for an efficient tax collection system. Ghana’s total tax revenue as a percentage of GDP remains far below its potential. 

According to OECD, Ghana's tax to GDP of 14.1 per cent was lower than the 17.2 per cent average of the twenty (26) countries in its Revenue Statistics in Africa 2019.

Having looked at the constitutional role of the A-G, Part (3) of the article will look at the Independence of the A-G as well as the collaboration required with the Board of GAS and Parliament for effective public financial accountability.

The collaboration of a diligent and independent A-G with Parliament will through their oversight roles contribute significantly to the fight against corruption in Ghana.

To be continued.