President Nana Akufo-Addo
Government has decided to crack the whip on State Owned Enterprises (SOEs) and their Chief Executive Officers (CEOs) who submit their audited financial statements directly to the Auditor-General without recourse to the Ministry of Finance for reconciliation of figures.
The Ministry of Finance is currently working with the Controller and Accountant-General’s Department and Ghana Audit Service to reconcile the list of specified entities that have submitted their audited financial statements.
In connection with this trend of non-compliance with reporting requirements, the minister has resolved not to consider any request for government support from any specified entities that fail to meet the reporting requirements specified in the Public Financial Management (PFM) Act, PFM Regulations, and the State Interests and Governance (SIGA) Act.
In consultation with the Minister for Public Enterprises, Joseph Cudjoe, the Ministry of Finance has also directed the Director-General of SIGA, Edward Boateng, to ensure that appropriate sanctions and penalties are applied for infractions of the PFM Act, PFM regulations, and SIGA Act, including a recommendation for removing members of governing bodies.
This came to light at a Policy and Governance forum put together by SIGA in Accra yesterday under the theme: “Improving the performance of Specified Entities: Leadership and technology.”
Government has since initiated certain reforms to improve the performance of specified entities including the decision to develop a comprehensive State Ownership Policy to improve the general framework for managing the state’s interests in specified entities.
Speaking at the forum opened by President Akufo-Addo, the Deputy Minister of Finance and Economic Planning, John A. Kumah said the policy which is currently before Cabinet for consideration and approval will require the governing bodies of specified entities to comply with the applicable guidelines and regulations of the State Ownership policy.
The government also expects that governing bodies will annually report on their compliance with this policy to SIGA.
In the short to medium term, government also expects to implement a financing policy for specified entities, particularly SOEs and OSEs, which will be anchored on three main principles; requirement for specified entities to operate on the strength of their balance sheets, capitalisation of new or existing specified entities to be funded only through the sale of non-strategic state assets, and not drawn from tax revenue or added to the public debt; and a clear distinction of the costs of SOEs’ and JVCs’ purely commercial activities from those incurred in exercising their public policy obligations (quasi-fiscal activities).
President Akufo-Addo, opening the forum, charged heads of state institutions and specified entities in the country to do all within their mandate to stop the phenomenon of posting losses annually and to work towards become profitable institutions.
That, he said, was because losses posted by state enterprises and specified entities in the country between 2018 and 2019 rose by 200% per cent according to the 2020 Auditor General’s report.
The latest figure as at the year 2020, on losses by state institutions stands at GH¢5.3 billion.
“At this time that government is doing its best to see to the rapid growth of the economy, we must bring the phenomenon of posting losses to an end,” he said.
“The late reporting and submission of financial reports by specified entities leaves a lot to be desired and undermines the efforts of the Controller and Accountant General in the presentation of a global picture for Ghana’s public finances. We have to turn over a new leaf,” President Akufo-Addo said.
By Charles Takyi-Boadu