Is the independence of the Auditor-General Sacrosanct? A critical review

The previous parts of the article discussed the important constitutional and legislative roles of the Office of Auditor-General in Ghana’s public financial accountability, the recoverability of amounts surcharged and disallowed in irregularities, and the critical roles needed to be played by accounting professionals to support the Auditor-General (A-G) in protecting the public purse as well as the issues surrounding the impasse between the A-G and the Board of the Ghana Audit Service (GAS).

Part 5 of the article now discusses and evaluates the current institutional and organizational independence of the Office of the Auditor General and its contribution in preventing corrupt practices, ensuring accountability, good governance and propriety on the part of public officials and institutions.

The Institutional and Organizational Independence of the Office of Auditor-General

Article 35(8) of the 1992 Constitution essentially enjoins the State “to take steps to eradicate corrupt practices and the abuse of power.”  An effective Audit Office is one of the most important institutions for holding government to account for the use of public funds.  However, it must be constitutionally and legally independent as regards to its status, mandate, reporting, and management autonomy and shall have full discretion in the discharge of its functions, as independence is the cornerstone of effective auditing.

On the Transparency International Corruption Perceptions Index (CPI), which scores countries by their perceived levels of public sector corruption, Ghana was ranked 80 with a score of 41/100 in 2019. This means that the highest score of 48 achieved in 2014 has since deteriorated to 41 in 2019, indicating that the perceived level of corruption in Ghana has not seen any improvement in score and rank since 2012, unlike Botswana and Rwanda which ranked 34 and 51 out of the 180 countries in 2019, respectively. According to the Chair of Transparency International, Delia Rubio, “Governments must urgently address the corrupting role of big money in political party financing and the undue influence it exerts on our political systems.”   

Importantly, if well-resourced and adequately independent, the Audit Service would contribute significantly to fighting corruption through the identification of areas of high corruption risk and irregularities and provide their recommendations for improvements in widely publicized audit reports.

Moreover, a more effective enforcement of surcharge and disallowance in pursuance of article 187(7) of the Constitution will go a long way in preventing and deterring irregularities and corrupt practices. As emphasized by Article II of the Lima Declaration of the International Organization of Supreme Audit Institutions (INTOSAI), ISSAI 1: “Supreme Audit Institutions can accomplish their tasks objectively and effectively only if they are independent of the audited entity and are protected against outside influence.” 

The following section of the article evaluates the institutional and organizational independence of the Office of the Auditor-General using the following key essentials for the independence of SAIs as provided by Geist and Mizrahi (1991):

• constitutional or legislative independence of the head of the audit organization through assured tenure;
• a process for guaranteeing the audit institution the funds needed to carry out its work effectively;
• control over personnel, including hiring, firing, remuneration, and conditions of work;
• the right to choose what to audit and when, and the discretion to publish findings.

The constitutional or legislative independence of the Auditor-General through assured tenure

Article II of ISSAI 1 states: “The independence of the members shall be guaranteed by the Constitution. In particular, the procedures for removal from office also shall be embodied in the Constitution and may not impair the independence of the members. The method of appointment and removal of members depends on the constitutional structure of each country” (Section 6(2)”.

In Ghana, the A-G is appointed into public office by the President acting in accordance with Article 70(1)(b) of the 1992 Constitution and in consultation with the Council of State. Based on clause 1 of Article 199, a public officer should retire from the public service on the attainment of sixty years of age. However, clause 4 of the same article states: “where the exigencies of the service require” the public officer may “be engaged for a limited period of not more than two years at a time but not exceeding five years in all and upon such other terms and  conditions as the appointing authority shall determine.”

As provided by article 187(13) of the 1992 Constitution, once appointed, an A-G of less than the retirement age of sixty years can only be removed from office in accordance with article 146 (1), which restricts removal to “stated misbehaviour or incompetence or on grounds of inability to perform the functions of his office arising from infirmity of body or mind”. This removal process requiring a presidential petition and determination of prima faciae case by the Chief Justice for subsequent judicial investigation and recommendation is quite onerous and somewhat provides secured tenure. 

It can therefore be established that on appointment, an A-G has assured tenure guaranteed by the Constitution until attaining sixty years of age.  The extension of tenure by the application of clause 4 of article 199 up to a maximum of five years, however, seems to be the prerogative of the President or at his discretion.

In what seems to be in contravention of Article 70(1)(b), both President Kufour and President Atta Mills appointed acting A-Gs who held offices for periods exceeding one year before they were confirmed as substantive A-Gs. It has been argued that long periods in acting roles has adverse effect on the independence as one may behave loyally to be confirmed to a substantive position. 

Moreover, it must be noted that all the past four presidents of the Fourth Republic have either removed and or appointed A-Gs at the beginning of their regime, by requesting the A-G’s to proceed on leave before their retirement. Admittedly, the A-Gs left office after their retirement age except for Richard Quartey who retired at sixty (60) years in 2016.  The others were requested to take their long-accumulated leave before retirement.

On 30 June 2020, the President directed the current A-G to take his accumulated leave of initially 123 days and subsequently changed to 167 days, effective 1st July 2020. This decision has widely been considered as tantamount to removal of the A-G from office before attaining the retirement age of sixty due to precedence. The Deputy Minority Chief Whip was reported to have condemned the President’s directive and asserted that the independence of the A-G’s office has been compromised since any new successor to the A-G would play to the President’s tune in order to avoid the same fate.

Contrastingly, in other Commonwealth countries operating the Westminster model of supreme audit institutions like Ghana, their supreme auditors are appointed as independent officers of Parliament with ten (10) years fixed term on recommendation approved by the Public Accounts Committee.

The process for guaranteeing the funds needed to carry out its work effectively

According to sections 7(1) and (2) of Article II of ISSAI1: “Supreme Audit Institutions shall be provided with the financial means to enable them to accomplish their tasks, they shall be entitled to apply directly for the necessary financial means to the public body deciding on the national budget.” Accordingly, section 27 of the Audit Service Act 2000 (Act 584) entrusts the Board of the Service to cause the estimates to be laid before Parliament without revision but with any recommendations that the President may make on them.

In terms of legal framework, the GAS is expected to be financially independent with the current constitutional and legislative provisions. Nevertheless, the estimates are always revised to the President’s recommendation.  For instance, in November 2015 the President recommended that “in view of the current fiscal challenges facing the country” the sum of GHS140.61m be approved instead of the Audit Service’s original estimate of GHS187.51m. Besides, the budgetary requirement for 2019 was revised from GHS387.94m to GHS316.45m.

The review of the Special Budget Committee reports on budget estimates of the GAS for the period 2016 to 2020 indicates that in contravention of Article 179(2)(b) of the Constitution and Section 27 of Act 584, the Ministry of Finance (MOF) continues to impose budget ceilings and delay the release of funds allocated to GAS. The table below provides a summary extracted from the approved budget of the Service during the period 2016 to 2020 showing that the allocated budget increased from GHS141m in 2016 to GHS389.9m in 2020, a whopping increase of 277 per cent. However, the same cannot be said of the corresponding release of funds by MOF which only increased from GHS133m in 2016 to GHS204m in 2019, a percentage increase of 154.  The inadequacy of allocation and releases of funds voted to the Service under Goods and Services hampered the execution of audit activities of the Service in 2016 and consequently the Service could not submit any of the nine constitutionally mandated reports to Parliament.

Table 1 – Approved Budgetary Estimates of the Audit Service, 2016 to 2020 (Million Cedis)

It should be noted that the funds are released quarterly in arrears and also sometimes released late with adverse impact on the performance of GAS’s work.  As the A-G rightly observed: “audits are seasonal in nature and, therefore, require that funds should be released timeously for the Audit Service to carry out audit activities within specific periods, so the quarterly release of funds (in arrears) affect the effectiveness and the ability of the Service to complete its statutory audits and submit timely reports to Parliament”.

The A-G is required by Article 187(5) to conduct and complete all required audit assignments between January and May and submit his reports to Parliament by 30 June. Obviously, problems of this nature due to MOF’s cash constraint cause the GAS constitutional, statutory and professional audits to be delayed to the detriment of best practices and in contravention of the Constitution. The general explanation of the lack of funding is that budgets are allocated based on government’s projected revenue, however, the consistent budget deficits impose constraints and, therefore, the limited release of funds by MOF.

Worse still, the situation with capital expenditure rather paints a disappointing picture of inadequate investment in infrastructure and equipment for the Service to carry out its mandate. Although the average capital expenditure for the period 2016 to 2019 was estimated at GHS7m, the actual total release for capital expenditure for the period was less than GHS2m. It is also reported that the Government secured a credit facility amounting to Euro13,000,000 from KfW Development Bank in 2016 to support the GAS in the construction of its district offices and also invest in office equipment for automation of the auditing process under the Audit Management Information System (AMIS) to be deployed in 2019. However, the delay in procurement process by the project implementation unit of MOF and the non-payment of counterpart funds by GOG led to the inability of the GAS to draw on the facility.

As the A-G explains, the automation of the audit process has become more important because the financial processes and accounting procedures in all public sector institutions have been digitized. Little wonder that in its deliberation of the GAS budget in December 2015, the Special Budget Committee considered “it a sheer waste of resources for Government to continue remunerating field operatives of the GAS and not equip them adequately to work.”

The control over personnel, including hiring, firing, remuneration, and conditions of work

Section 14 of Article V of ISSAI 1 requires the audit staff to have “the qualifications and moral integrity required to completely carry out their tasks”, so appropriate recognition should be given to “above-average knowledge and skills and adequate professional experience” in their recruitment.

Article 189(2) and (3) of the Constitution, as well as Section 4 of the Audit Service Act 2000 vests the appointment of officers and other employees in the Service and the determination of the terms and conditions of service of such persons shall be made by the Board, acting in consultation with the Public Service Commission (PSC), and by constitutional instrument, making regulations for the effective and efficient administration of the Service. Act 584 adds that the determination of the structure and technical expertise required for the efficient performance of the functions of the Service and that the Board may delegate to the A-G or any officer of the Service or a committee of the Board, the appointment of such category of staff of the Service as the Board may determine.

As previously discussed, the roles of the A-G and the Board will need to be well defined to effectively manage the conflict in the areas of recruitment and determination of conditions of staff of the GAS.  The A-G refused to accept the Board’s transfers and postings of audit staff as he believes that they would be in contravention of articles 187(3) and (5) of the Constitution.

A review of the Budget Committee’s reports indicates that the budget requirements of the GAS including conditions of service are often varied or reduced by the Executive before presentation to Parliament. For instance, the original 2019 estimate for compensation of employees approved by the Board was GHS297.7m, however, only GHS267m was allocated by MOF with a funding gap of GHS30.7m. Besides, only GHS183m of the allocated GHS267m was released leaving a deficit of GHS84m for the payment of employees.

The main problem here is the imposition of manpower ceilings by the Ministry of Finance and the Office of the Head of Civil Service (OHCS) resulting in the reduction of human resource requirements as determined and approved by the Board with adverse effect on the performance of the A-G’s mandate and planned programmes. As shown in Table 1 above, the approved Compensation budget increased from GHS122m in 2016 to GHS267m in 2019, a remarkable increase of 219 percent in three years. The released funds, however, only increased by 151 per cent, from GHS121m to GHS183m.

Although the GAS managed to employ 200 new staff in June 2019 to augment the existing staff strength, it could not recruit the additional 100 staff to replace retiring officers due to shortfall in the Compensation budget in 2019. It is great news that GAS finally managed to recruit 239 new staff in September 2020.

The right to choose what to audit and when, and the discretion to publish findings.

According to ISSAI 1, SAIs shall audit in accordance with a self-determined programme. It must be noted, however, that audit assignments chosen unwisely and issuance of reports that are questionable will threaten the reputation of the auditor in the eyes of the pubic. Considering the enormity of  A-G’s mandate under Article 187(2) and the need to submit reports to Parliament within six months after the financial year, it would be necessary to use sampling and rotational approach rather than an all-inclusive approach in selecting what to audit. Also, as the main stakeholder of the audit reports, the ability of parliament to influence the audit programme will improve the acceptability and the usefulness of the reports.

That is why ISSAI 20 requires the Service to “maintain a strong relationship with relevant parliamentary committees to help them better understand the audit reports and conclusions and to take appropriate action.” The relationship of the A-G with parliament is a fundamental element in delivering the mission of reporting and providing assurance on the use of public resources by government, and as a result contribute to a well-functioning accountability system.

However, the 1992 Constitution established the Audit Service as an independent institution separate and distinct from Parliament. The collaboration has become more difficult as the Article 187(7)(a) of the Constitution does not provide for Parliament to request the A-G into areas of suspected malfeasance not captured in the A-G’s current mandate. Consequently, the engagement between A-G and Parliament has been limited to the consideration of reports submitted by the A-G to Parliament. This has created a gaping loophole which impacts adversely on the achievement of effective public financial accountability.

The above situation contrasts with what pertains in other Commonwealth countries.  For instance, the Office of the A-G in Canada pays attention to requests for audits from parliamentary committees, however, final decisions about what to audit are made in light of the A-G’s mandate, the significance of the issue, the existing audit schedule, and available resources. 

In line with ISSAI requirements, section 23 of the Audit Service Act 584 requires the A-G to publish his reports on the public accounts of Ghana and the statement of foreign exchange receipts and payments of the Bank of Ghana as soon as the reports have been presented to the Speaker to be laid before Parliament, in accordance with Article 187(5) and (6) of the Constitution.  It should be noted that the reports must be on particularly important and significant findings during the year. 

As recommended by Principle 4 of ISSAI 12, the reports shall present the facts and their assessment in an objective, clear manner and be limited to essentials with due consideration given to the points of view of the audited organizations.  This is quite important due to the recent increasing complaints of audited organization and nullification of audit reports in the Courts.

In 2019 the Service submitted sixteen (16) reports, comprising nine statutory audits and seven special audits for the year ended 31 December 2018 to Parliament. The reports were based on the execution of 3,572 audits out of 4,039 planned audits compared to eight (8) statutory reports out of 3,080 executed audits in 2018. Considering that in 2015 the service was only able to submit six out of nine (9) statutory audit reports several months after the constitutional deadline of 30th June,  out of 1,742 executed audits representing 53% of the planned audits of 3,250 in 2015, the achievement made in 2019 was quite significant in the history of the Service.

Moreover, in the quest to determine the efficiency and effectiveness of public spending, Audit Service now carries out performance and special audit operations in procurement and contract, GIFMIS, Integrated Payroll and Database (IPPD), Government Social Intervention Programs, district development fund and Public Debt.

Issues that require urgent attention

Overall, it can be concluded that the Office of the Auditor-General is sufficiently independent in Ghana.  However, there seems to be a few problems requiring urgent attention in order to render the office more independent and effective in its fight against corruption and its watchdog role.

• Appointments are not based on fixed tenure as the executive still has the discretion of issuing contracts after the retirement age of sixty years.
• Appointment of acting Auditor-Generals instead of Substantive for more than six months should be discouraged.
• The accumulation of leave days and President directives requesting the A-Gs to proceed on leave.
• The continuous reduction of the GAS’s budgetary requirements by the Executive
• The delay and non-release of approved and allocated funds by the Ministry of Finance due to financial constraints resulting from fiscal deficits.
• Virtual freeze of capital expenditure imposed by the Ministry of Finance which adversely impacts on the performance of the Service.
• Imposition of manpower ceilings by the Ministry of Finance and the Office of the Head of Civil Service which impacts on GAS’s ability to meet its increasing workload from creation of new districts and regions, computerization of services and accounting processes of key public institutions, and emerging legislations and public sector financial management reforms.
• The constitutional working relationship between the A-G and Parliament needs to be reviewed for more collaboration for effective oversight of Parliament.
• The responses of auditees should be consistently incorporated in the reports of A-G before submission to Parliament.

The writer is a Chartered Certified Accountant, a researcher of Government Policy and Board member of Graphic Communications Group Ltd.