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REPORT OF THE CONTROLLER AND ACCOUNTANT-GENERAL (CAG) ON THE PUBLIC

ACCOUNTS OF THE CONSOLIDATED FUND FOR THE YEAR ENDED 31ST DECEMBER,

2016

1 INTRODUCTION

1.1 Mandate

Section 41(1)(b) of the Financial Administration Act, 2003 (Act 654)(FAA) (subsequently replaced by

Section 81(1) of the Public Financial Management Act, 2016) and Regulation 191 of the Financial

Administration Regulations, 2004 (LI 1802)(FAR) mandates the Controller and Accountant-General to

prepare the Annual Public Accounts (Financial Statements) on the Consolidated Fund of the Republic of

Ghana. The accounts is to be prepared within a period of three months after the end of the financial year

or such other period as Parliament may by resolution determine and transmit same to the Auditor-General

and the Minister for Finance (MoF).

The Financial Statements are prepared on Government business based on the Appropriation Act for each

financial year as required by Article 179 (2) (a) of the 1992 Constitution of the Republic of Ghana.

In August 2016, the Public Financial Management Act, 2016 (Act 921) was promulgated to replace the

Financial Administration Act, 2003 (Act 654) as the overarching law governing public financial

management.

1.2 Components of the Financial Statements

The financial statements of the Consolidated Fund comprise:

A Statement of Receipts and Payments (with budget summary comparatives)

A Statement of Revenue and Expenditure (with budget summary comparatives)

A Balance Sheet

A Cash Flow Statement

Notes to the Accounts

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1.3 Additional Statements

In line with Regulation 191 (d) of the FAR, a statement of transactions during the year and analysis

of the financial position at the end of the year for the following accounts are included in the financial

statements;

Public Debts

Deposits and Other Trust Monies

Securities of Government

Advances

Public loans (Receivables)

Equity Investments of the Consolidated Fund

Additional information comprising Summary Expenditure of MDAs by items and sectors are included

in the financial statements.

1.4 Scope of the financial statements

The preparation of the accounts was guided mainly by the FAA as the law in force for the greater part

of the year.

Section 81 (1) of the PFMA requires that CAG prepares the consolidated annual accounts of

Government, the accounts of the Contingency Fund and, the accounts on the Petroleum Funds.

As the structures for implementing the new law fully are still under development, the public accounts

produced by Controller and Accountant General for 2016 are on the Consolidated Fund only.

1.5 Basis of Accounting

The 2016 Financial Statements were prepared in accordance with the stated accounting policies on

public funds currently in use as indicated on pages 23 & 24 in the financial report. The CAGD is in

the process of applying IPSAS accrual basis in a progressive manner.

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2.0 SYSTEM IMPROVEMENT

2.1 Payroll Management

Over the years CAGD, as part of the overall PFM reforms by Government, has undertaken various

measures to ensure that the Single Spine Pay Policy (SSPP), as implemented, is sustainable and that there

exists a credible system to manage Government payroll cost efficiently and effectively. In the regard

various initiatives were pursued during the year under review as follows;

2.1.1 Implementation of Electronic Salary Payment Voucher (ESPV) system

The Electronic Salary Payment Voucher (ESPV) system was vigorously pursued during the year as a

means of cleaning the payroll data to enhance the accuracy of the payroll cost.

2.1.2 Implementation of New Recruitment Policy

Government’s net freeze policy on new employment into the Public Service was pursued during the year.

With the exception of Ghana Education Service and Ghana Health Service which were allowed to make

new recruitments in respect of completed trainees during the year, all other Public Service institutions

were only allowed to make replacement of vacancies.

2.1.3 Migration of GES Payroll from IPPD3 to IPPD2

To achieve harmonisation of payroll cost for budgetary control and effective reporting, CAGD embarked

on the migration of GES payroll from IPPD3 to IPPD2 Oracle system. The core objective of this migration

policy was to pave way for full integration of payroll cost into the GIFMIS financials and HRMIS

implementation. The migration process has been successfully completed.

2.1.4 E-Payslip

The Nationwide rollout of E-Pay-slip which was completed in 2015. Since the implementation of this

system all the 507,118 employees on the payroll have registered on the E-Pay-slip platform as at

December 2016. This has enabled public service workers have easy access to their salary information.

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2.2 REVENUE AND CASH MANAGEMENT

As part of Government’s cash management reforms initiative, the Controller and Accountant General’s

Department is implementing the Treasury Single Account (TSA) as stipulated in section 46 of the Public

Financial Management Act, 2016 (Act 921). The implementation involves:

The Rationalization of Government bank accounts to ensure that Government operates with an

optimal number of bank accounts. This has led to the closure of 5,110 accounts whilst 1,236 are

being reviewed.

The Bank Account Tracking (B-Tracking) platform is being deployed to all MDAs/MMDAs.

This will allow for real-time visibility of all their bank accounts with commercial banks for

effective monitoring. As a result of the deployment of the B-Tracking platform at CAGD, the

Controller and Accountant-General began investing government bank balances held by the

commercial banks from May 2016. As at 31st December, 2016, a total income if

GH₵49.15million had been generated.

Investment of Government cash balances using B-Tracking Call Account Management (B-

CAM) platform.

3.0 PUBLIC FINANCIAL MANAGEMENT REFORM

Following the re-launch of BPEMS as GIFMIS in 2009, Ghana’s Public Financial Management Reforms

have achieved significant improvements in the areas of accounting and business processes, commitment

control, and timeliness in financial reporting.

3.1 During the year, the CAGD completed the upgrade of the Financials and the Payroll modules and

the rollout of the Human Resource Management Information System (HRMIS).

The coverage of GIFMIS was expanded to capture and track transactions related to the IGFs, SFs and

Donor Funds.

Specifically,

Fifty (50) IGF sites were activated or declared live as at end of December 2016

One (1) Statutory Fund (Energy Fund) went live as at December 2016

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Four (4) Donor Funds projects went live in 2016.

A total of 736 staff from selected MDAs were trained and equipped with computers to

facilitate their work.

GIFMIS functionality was rolled out to seventeen (17) MMDAs.

The HRMIS project completed the establishment registers for the nine pilot MDAs

workforce (covering about 111,000 staff) and the rollout of the HRMIS core application

including employee cost management as well as the establishment and profile

management to six (6) pilot MDAs.

3.2 Promulgation of the Public Financial Management Act, 2016 (Act 921)

In August 2016, the Public Financial Management Act, 2016 (Act 921) was promulgated as the

overarching law governing public financial management.

The Act is to further strengthen public financial management, promote fiscal discipline and help

consolidate existing laws to regulate public financial management in Ghana to promote transparency and

accountability in the use of public funds.

The Law repealed, among others, the Financial Administration Act, 2003 (Act 654), Section 16(8) of the

Internal Audit Agency Act, 2003,(Act 658) and Section 30 of the Audit Service Act, 2000 (Act 584) both

of which related to the formation and operations of Audit Reports Implementation Committees (ARIC).

The Regulations supporting the implementation of this law is yet to be completed and the law provides

that regulations relating to the repealed enactments shall continue to be in force with the necessary

modification until such time that they are revoked by regulations under the new Act.

4 HIGHLIGHTS OF 2016 FINANCIAL PERFORMANCE

2016 Appropriation

The amounts appropriated for Government business and reflected in these Financial Statements were

regulated by the Appropriation Act 2016, Act 901. Payments made were based on warrants issued

on the authority of the Minister for Finance and was within the Appropriation of GH¢50,109.85

million.

A summary report of the appropriation is for the financial year as below:

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Table 1: 2016 Appropriation

YEAR 2016 2015

GH¢ (Millions) GH¢ (Millions)

Annual Appropriation 50,109.85 44,887.06

Appropriation Utilised (51,722.25)

(39.572.85)

Balance on Appropriation (1,612.40)

5,314.21

5 Revenue

Total revenue and grants for the year 2016 amounted to GH¢ 26.99 billion against a target of GH¢

36.41 billion. The shortfall was broadly attributable to the impact of the energy challenges on

household and firms and lower than anticipated petroleum receipts among others. Revenue

performance in 2016 was however an improvement of 13.79 percent over 2015.

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Table 2: Summary of Revenues - 2016

Source: CAGD

REVENUE

A

BUDGET 2016

B

ACTUAL 2016

C

VARIANCE D

(C-B)

ACTUAL 2015

E

DIFFERENCE

(C-E)

Direct Tax 11,358,930,103 9,651,034,001 (1,707,896,102) 7,722,068,381 1,928,965,620

Indirect Tax 16,645,233,966 12,830,514,554 (3,814,719,412) 10,235,812,934 2,594,701,620

Grant 1,589,258,687

1,656,258,522

115,736,752 2,852,768,040 (1,147,772,601)

Non Tax 6,818,217,965 2,802,313,517 (4,015,904,448) 2,908,118,606 (105,805,089)

TOTAL 36,411,640,721 26,940,147,594 (9,422,783,210) 23,718,767,961 3,270,089,550

5.1.0 OIL REVENUE

Total Oil revenue for the year 2016 amounted to GH¢907.89 million. The ABFA’s share was GH¢389.55

million

Table 3: Summary of Oil Revenue Distribution

Source: CAGD

2016 GHC 2015 GHC

ABFA

389,553,778

847,550,101.38

881,763,540

STABILISATION 116,866,133 60,447,805

HERITAGE 50,085,486 25,906,202

GNPC 351,387,481 454,811,535

TOTAL

907,892,878

1,422,929,084

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5.2.0 Grants

Grant disbursement from development partners for the year 2016 amounted to GH¢ 1,656.29 million,

4.18 percent higher than the budget target of GH¢ 1,589.82 million.

Table 4: Summary of Grants - 2016

Source: CAGD

GRANTS SCHEDULE 2016 2015

GH¢ GH¢

PROJECT GRANTS

AFRICAN DEVELOPMENT BANK

97,073,322.84

169,416,474.40

CANADA

11,609,344.14

13,886,589.33

DENMARK -

45,607,933.80

FRANCE

2,460,601.88 -

GERMANY

2,859,226.00

JAPAN

6,760,000.00 -

NETHERLANDS

30,489,789.16

50,537,069.71

SPAIN

1,055,500.67

956,312.52

SWISS GOV'T

1,907,351.84 -

EUROPEANS UNION

147,535,977.57

725,947,650.92

UNITED KINGDOM

57,619,332.22

46,684,851.21

UNITED NATIONS DEVELOPMENT PROGRAMME

15,078,625.39

89,378,262.42

UNITED NATIONS POPULATION FUND (UNFPA)

13,344,637.56

6,045,985.55

UNICEF

148,728,477.22

141,324,925.92

INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT (IFAD)

2,164,405.08 -

CLIMATE INVESTMENT FUND

7,563,771.26 -

WORLD BANK

289,540,309.95

155,268,081.11

WFP

34,470,318.31

27,841,440.96

USA

654,067,579.00

429,028,045.00

DENMARK- SBS - -

4,580,900.00

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EUROPEAN COMMSSION-SBS

554,517.00

193,679,800.79

DEPARTMENT FOR INTERNATIONAL DEVELOPMENT (DFID) -

21,080,284.04

TOTAL 1,524,883,087.09 2,121,264,607.69

PROGRAM GRANT

CIDA - -

CANADA -

56,941,317.72

FRANCE - -

EUROPEAN COMMISSION

74,043,863.01

487,474,799.50

SWISS GOVT

19,883,000.00

26,179,223.07

UNITED KINGDOM -

56,600,000.00

DENMARK -

36,811,151.70

TOTAL PROGRAM 93,926,863.01 664,006,491.99

DDF GRANTS

CANADA

37,475,572.33 -

SWISS GOVT -

11,432,432.44

GERMANY -

26,864,617.74

IDA -

29,199,890.30

DENMARK - -

TOTAL DDF 37,475,572.33 67,496,940.48

TOTAL GRANTS 1,656,285,522.43 2,852,768,040.15

5.3.0 EXPENDITURE

Total expenditure, including payments of arrears and outstanding commitments for the year amounted to

GH¢44,791.39 million. This was 16.12 percent higher than the expenditure for 2015.

5.3.1 Compensation of Employees

Expenditure on Wages and Salaries including payments of arrears and outstanding commitments for

2016 amounted to GH¢ 15,113.04 million, 8.29 percent higher than the budget target of GH¢

13,955.74 million and 16.12 percent higher than the actual amount for 2015.

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5.3.2 Goods and Services

Expenditure on Goods and Services including Government subsidies, social benefits and other

expenditure for the year 2016 amounted to GH¢ 4,575.44 million, 11.05 percent higher than the

budget target of GH¢4,120.10 million and 37.29 percent higher than the actual expenditure for the

year 2015.

5.3.3 Interest

Interest payment for the year amounted to GH¢ 12,960.35 million, 23.55 percent higher than the

revised budget target of GH¢ 10,490.27 million and 42.66 percent higher than the actual interest

expense for the 2015 financial year. Out of this amount, domestic interest payment was GH¢

10,705.38million. The interest in the payment was due mainly to increase domestic borrowing.

5.3.4 Grants to Other Government Units

Included in the grants to other government units was a transfer to District Assemblies Common Fund

(DACF) of GH¢ 1,296.68 million and Ghana Education Trust Fund (GETFund) of GH 922.29

million.

Table 5: Summary of Central Government Expenditures for 2016

EXPENDITURE BUDGET 2016 ACTUAL 2016 VARIANCE ACTUAL 2015 DIFFERENCE

A B GH¢ C GH¢ D (B-C) GH¢ E GH¢ F (C-E) GH¢

COMPENSATION OF

EMPLOYEES

13,955,740,709.00

15,113,039,498.00

(1,157,298,789.00)

13,015,237,357.00

(2,097,802,141.00)

)))) GOODS AND SERVICES

3,113,051,101.00

3,042,751,524.00

70,299,577.00

1,896,174,688.00

(1,146,576,836.00)

INTEREST

10,490,266,111.00

12,960,355,281.00

(2,470,089,170.00)

9,084,510,936.00

(3,875,844,345.00)

GOVRNMENT SUBSIDIES

50,000,000.00

97,000,989.00

(47,000,989.00)

893,258,165.00

796,257,176.00

EXCHANGE LOSS

5,593,960,987.00

(5,593,960,987.00)

6,823,681,990.00

1,229,721,003.00

SOCIAL BENEFIT

54,034,661.00

4,924,458.00

49,110,203.00

14,148,777.00

9,224,319.00

OTHER EXPENSES

903,015,636.00

1,430,758,680.00

(527,743,044.00)

529,050,482.00

(901,708,198.00)

FOREIGN FINANCED

IINVESTMENT

4,893,664,746.00

6,082,637,145.00

(1,188,972,399.00)

5,944,535,499.00

(138,101,646.00)

CONSUMPTION OF FIXED

ASSETS

465,958,152.00

(465,958,152.00)

373,560,250.00

(92,397,902.00)

TOTAL 33,459,772,964.00 44,791,386,714.00 (11,331,613,750.00) 38,574,158,144.00 (6,217,228,570.00)

6 Loans Receipt

Total loans receipts including Net Treasury Operations amounted to GH¢ 22,025.91 million against

a budget of GH¢ 14,344.33 million for the year 2016. Out of this was an amount of GH¢7,627.41

million from external sources and GHS 4,570.02 million from domestic standard loan. Inflow from

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Treasury Operations was GH¢68,346.50 million as against a redemption of GH¢53,952.89 million

resulting in the Net Treasury operations of GH¢14,393.61 million.

Loan receipts for the year 2016 are summarized in Table 6 below.

Table 6: Summary of Central Government Financing - 2016

Source: CAGD

LOANS INFLOW REPAYMENT INFLOW 2015

billion

REPAYMENT

S 2015 billion EXTERNAL 2016 2016 2015 2015

Bilateral Loans

7 Bilateral

Loans

2,613,360,412

1,954,954,804

5,673,619,58

4

1,245,228,396

Multilateral Loans

1,255,385,496

176,098,786

1,724,601,48

8

149,163,537

Commercial

Institution

3,758,668,085

2,972,945,101

1,594,423,37

7

1,069,267,862

TOTAL 7,627,416,009 5,104,000,707 8,992,644,44

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2,463,659,796

DOMESTIC

Issues

68,345,109,850

0

52,031,412,984

0

Redemption

(53,944,782,981)

0 (48,582,339,148)

0

Net Treasury

Operations

Operation

14,400,326,869

0

0

3,449,073,836

0

Standard Loan 4,891,582

204,067,240

72,851,377

223,563,604

GRAND

TOTAL

22,032,634,460

5,344,067,947

12,514,569,662

2,687,223,400

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7.0 IMPLEMENTATION STATUS OF THE AUDITOR-GENERAL’S RECOMMENDATIONS

ON THE 2015 PUBLIC ACCOUNTS

Below is the status of the implementation of the Auditor-General’s recommendations on the 2015 Public

Accounts in the Consolidated Funds.

7.1 Ineffective recovery of GoG loans (Paragraph 22 – 28)

Auditors Recommendation

The Auditors recommended that effective mechanisms should be put in place by DMD and PDI to ensure

prompt recovery of GoG Loans on their due dates into the designated debt recovery accounts.

Action Taken

The amount of GHS 686,578,071 in respect of Vodafone is Government equity investment and not a loan.

An amount of GHS 11,093,159.19 has been recovered as at 31st December 2016. All monies collected

are paid into the Debt Recovery Account managed by CAGD. Government On-Lending Desk has been

created at MoF to recover all Government debts. Its function is being supported by a Debt Recovery

Committee comprising DMD, PDI and representatives of SOEs. The list of defunct companies has been

compiled and forwarded to MoF for possible write-off.

7.2 Inconsistencies in reporting loan receivables (Paragraph 29 – 33)

Auditors Recommendation

The Auditors urged the PDI of CAGD and the DMD of MoF to reconcile their ledger balances with the

institutions whose confirmed loan balances were different from what was published to ensure that the

loan balances are restated to reflect the true state of affairs.

Action Taken

The related Companies and Corporations have been written to for confirmation of their indebtedness to

Government for reconciliation

7.3 Understatement of GoG on-lending loans (Paragraph 34 – 42)

Auditors Recommendation

The Auditors recommended that to ensure consistency and credibility of reporting on-lending facilities,

all Loans and their Subsidiary Agreements that translate into on-lending loans should be tracked and

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accounted for through the CS-DRMS by DMD. I also urged all key stakeholders to share information

relating to these facilities and perform periodic reconciliation on all on-lending loans.

Action Taken

The CS-DRMS has been upgraded to version 2.2.10 to improve tracking and accounting for all on-lending

Loan Agreements.

The Commonwealth Secretariat and the World Bank are providing support in terms of system accessories

and software to link CAGD to the system at MoF to facilitate reconciliation.

7.4 Payments outside the GIFMIS system – GH¢351.3m (Paragraph 43 – 50)

Auditors Recommendation

To avoid budget overruns, the Auditor advised that MoF to desist from the practice and ensure that all

transactions relating to the Consolidated Fund are processed through the GIFMIS System.

Action Taken

All transactions that were not processed through the GIFMIS have been captured in the accounts. The

expenditures were within the Appropriation and no budget overruns occurred.

7.5 Delay in the transfer of non-tax revenue by commercial banks (Paragraph 51 – 58)

Auditors Recommendation

The Auditor recommended that, the outstanding amounts with Ecobank and Fidelity Bank should be

transferred to the Consolidated Fund without further delay. He also recommended that, interest should be

calculated and charged for the period delayed by the banks and pay same into the Consolidated Fund.

Action Taken

All the non-tax revenue were transferred within the stipulated 48 hour period. Reconciliation conducted

by CAGD could not trace any amount associated to the 16 days delay as stated in the audit report.

Available records from the Bank statements indicated that there were no delays on the part of the Banks.

The two instances where delays occurred were as a result of DVLA delay in sending revenue distribution

report to enable funds to be transferred to the various accounts. Amounts outstanding in respect of

Veterinary Services as at 31st December 2015 were transferred into the Consolidated Fund in January

2016

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7.6 Understatement of external debt balance – GH¢1.16 billion (Paragraph 59 – 66).

Auditors Recommendation

The Auditor recommended that, DMD should regularly communicate the updates of the External Debt

receipts and balances to PDI. He also urged CAG to restate the External Debt balance to reflect the true

Debt position of the State.

Action Taken

The disbursements from the 18 creditor institutions have been captured in the CS-DRMS and the public

accounts updated accordingly. DMD now updates its records as soon as there is a disbursement and

inform CAGD accordingly. Quarterly reconciliation with respect to disbursement of external debt is

being done between DMD and PDI.

7.7 Delays in crediting budget support receipts (Para. 67 – 71)

Auditors Recommendation

The Auditor CAGD to constantly monitor its accounts with BoG to ensure that donor Budget support

inflows are promptly credited to the CF.

Action Taken

CAGD has been monitoring its bank accounts. CAGD, MoF and BoG have improved collaboration to

avert future occurrences

8.0 CONCLUSION

I wish to take this opportunity to thank the Hon. Minister, Hon. Deputy Ministers and staff of MoF

and CAGD and other public officers for the immense contributions made towards the preparation of

the Report and the Public Accounts on the Consolidated Fund for the year ended 2016. I also wish

to sincerely thank all staff of the Department who have worked tirelessly to ensure that we put various

systems in place for an improved service delivery to our clients.

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I hereby present the report of the Controller and Accountant-General (CAG) on the Public Accounts

of the Consolidated Fund for the year ended 31st December, 2016 in compliance with Regulation 191

of the Financial Administration Regulation, 2004 (LI 1802).

EUGENE ASANTE OFOSUHENE

CONTROLLER AND ACCOUNTANT-GENERAL