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CHAPTER ONE
INTRODUCTION
Background of the study
That there is a serious problem of lacking accountability and transparency in the public
service is not only well known but fairly documented. General and specific observations
within the service and comments from international bodies like World Bank (WB),
Transparency International (TI), all seem to suggest that the problem is not only real but
also enduring.
A considerable body of literature has developed, particularly examining the nature of
governmental accounting and financial reporting. Research in this category typically
explains the practical application of accounting standards in the governmental settings,
discusses currently unresolved governmental accounting issues, and or questions current
practices in governmental accounting and financial reporting (Aruwa, 2002; Giroux and
Apostolou, 1991; Granof and Mayper, 1991; Hay and Antonio, 1990; Raman and Wilson,
1990; Ingram, Raman, and Wilson, 1989; Lewis, Patton, and Green, 1988; and Ingram,
Raman, and Wilson, 1987). Some of the major issues identified include: a perceived gap in
the information content of government financial report and information need of users and
lack of external accountability (Aruwa, 2002), the need to integrate budgeting, accounting
and financial reporting and that a strong and enduring relationship exists between
government accounting and budgeting (Chan, 1992), and the need to reform budgeting
processes in view of large budget variances (Granof and Mayper, 1991). Chan (1992)
rightly captured the state of the governmental accounting system.
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Problem Statement
The present accounting systemis not capable of ensuring that the goods and services
procured by governments are necessary; that expenditures are reasonable, that adequate
care and safeguards are exercised over government resources, that the system avoids waste
and use of unproductive procedures, and that revenues are adequately mobilised and
collected Takie Yaoboi( 2008)
The Public Accounts Committee (PAC, 1996) also put forward their experience it
transpired frequently in evidence given to the Public Accounts Committee that queries
raised at audit are often ignored by the ministry concerned. However, ministries were not
always aware that attending to matters raised during audit could help improve their
procedures
The government financial reporting function seems to have been subjected to the greatest
amount of criticism in recent years with regard to its information content and its apparent
inability to meet the assumed need of a variety of user-groups. In addition, individuals and
institutions outside the government have become virtually interested in the financial
activities and status of governments. Example of such users includes creditors, citizen
groups (i.e. taxpayers, service recipients or voters), business enterprises and others, yet the
Government Financial Reports remain the singular picture of the resources entrusted, how
the resources are employed during a fiscal year, and in what form the resources are now
held.
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However, there are overwhelming calls on government to shift emphasis from traditional
stewardship financial reporting to the presentation of more informative Government
Financial Statements.
Gary (2008) observes that various persons who have written on the subject of financial
reporting in the Federal Government have termed it antiquated, fragmented, incomplete,
unreliable and lacking timeliness Gary further submits that to a person schooled in
government accounting, the Federal Government Financial reporting is disgraceful. All of
these epithets may have merit, especially in respect of the statutory background of
government accounting, the adequacy of the information content and the extent to which it
satisfies public accountability criteria.
Morey (1926) acknowledged that many errors of principle will be committed if there are no
material modification to the public accounts, in adopting private sector accounting
procedures. In addition, if relevant information contained in Government Financial
Statements could provide financial information, the timing of publication can impair its
reliability, completeness, and usefulness and so adversely affect users of Published
Government Financial Statements (Oshisami, 1994).
These observations and opinions typified above have several implications. A foremost
implication is that the existing accounting, financial, administrative, legal and social
ingredients have not been effective in promoting the desired culture of accountability and
transparency in the public service. As all those elements remain in place and for the fact
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that any measure, aimed at improving accountability has to build on them, this research is
intended to examine them more closely with a view to providing further insights into their
current status and prospects for remedial action
Research questions
Does the financial reporting apparatus of government meet the minimum
accountability criteria?
What factors mitigate or contribute to the financial reporting system of government
accountability?
How can government financial reporting system be improved to enhance it role in
public accountability?
Objectives of the study
Broad objectives
The study is aimed at examining Fiscal accountability, Managerial accountability,
Programme accountability, and Individual accountability within the context of the role of
government financial reporting in public accountability in Ghana.
Specific objectives
In practical essence, the research shall attempt to achieve the following objectives:
To ascertain if the financial reporting apparatus of Government meets the
minimum accountability criteria;
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To identify the factors that contribute to or mitigate the financial reporting
system of Governmental accountability;
To suggest improvements on Government Financial reporting system that could
enhance its role in public accountability
Scope and Limitation of the study
The study is focused on examining Fiscal accountability, Managerial
accountability, Programme accountability, and Individual accountability within the
context of the role of government financial reporting in public accountability in
Ghana. The study will focus on the Controller and Accountant-Generals
Department and the audit service as these are the two main institution the entire
government reporting and accountability rest on. It is envisaged that there may be
some issues of non- cooporation from staff with respect to questionnaire answering.
Secondly, direct application of would-be findings to non-public sector institutions
will be misplaced because this will be a case study.
Significance of the study
The study will help the researcher to understand Fiscal accountability, Managerial
accountability, Programme accountability, and Individual accountability within the
context of the role of government financial reporting in public accountability in
Ghana.
The research will provide the basis for the organization to review the Fiscal
accountability, Managerial accountability, Programme accountability, and
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Individual accountability within the context of the role of government financial
reporting in public accountability in Ghana.
The research will throw light on public sector accountability and the theories
backing it. The research will become a corner stone on which further researchers in
the field of public sector finance will be built.
Organization of the study
The study will be organized in five chapters. Chapter one will be the introduction
and include background of the study, statement of the problem, research questions,
research objectives, research methodology, limitation of the study, etc. Chapter
two will cover literature review. The third chapter will cover research methodology
which will cover areas such as research design, population, sample and sampling
techniques, instruments, and data collection procedure and data analysis. Chapter
four will cover data presentation and analysis of findings. The last chapter will
cover summary, conclusion and recommendations.
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CHAPTER TWO
LITERATURE REVIEW
Introduction
The following topics would be critically examined as basis for the study: Legal framework
of Government Accounting, Objectives of Government Accounting, Government Financial
Statements and Uses, Forms and Content of accountability and summary of Literature.
Legal Framework of Government accounting
The public sector accounting in Ghana is rooted in a number of legal instruments, which
sets the general framework for the total financial management, government accounting and
financial reporting. The legal instruments at the national level include: The Constitution of
Ghana, 1992, the Financial Administration Act(FAA), 2003, Financial Administration
Regulation (FAR),2006, the Audit Service Act,2000; and the Annual Appropriation and
Supplementary Appropriation Acts.
Anyafo (1994) notes that these legal instruments constitute the statutory bed rock upon
which the government accounting manuals, treasury circulars, and financial regulations and
states financial instructions are founded. However, financial regulations and financial
instructions provide for the control and management of public finances at the federal level
and for the audit of the accounts of individual states, respectively. The financial
memoranda regulate the local governments accounting.According to Oshisami (1992), the
Constitution covers the following key areas in government accounting: The operation of
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funds, the external controls for operating the accounting system in terms of audit and
investigations, and the appropriation procedure.
The Financial Administration Act (FAA), 2003 governs the management and operation of
government funds. In addition the Act regulates the accounting system, the books of
accounts to be maintained and the procedures to be followed in the preparation of accounts
and government financial statements (Anyafo, 1994). Perhaps, the most important aspect of
the Act is that it regulates the accounting format and basis of accounting for the preparation
of government accounts.
The Audit Service Act of 2000 provides for the Audit and accountability for the public
funds of government in Ghana. The Audit Service Act of 2000 sets out the duties of the
Auditor-General for the nation. The constitution, the Financial Administration Act,2003
and the Audit Service Act, 2000 mandate the Accountant-General of the nation to sign and
present, within a period of seven months after the close of each financial year, to the
Auditor-General for the nation the accounts showing the financial position of the republic
of Ghana on the last day of such financial year. The Audited financial statements are
thereafter presented to the public accounts committees of the Parliament .
Appropriation Acts are enacted annually for the purpose, not only for regulating financial
and accounting matters, but principally to provide for the issue from the Consolidated Fund
such sums of money as demanded justifiable for the recurrent expenditure including
contribution to the Oil Fund for capital projects for the service of the nation. The
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Constitution authorizes the President to make withdrawals from the Consolidated Fund of
the sum necessary to meet the expenditure and the appropriation of those sums for the
purpose specified therein.
The legal instruments of Government accounting are not without criticisms in respect of
certain stipulations. The mandatory use of cash basis accounting as specifically mandated
by Finance (Control and Management) Act, have been criticized variously by Ngwu
(1999), Chan (1992), Oshisami (1992), Gary (1992), and National Council on
Governmental Accounting (NCGA, 1981) of USA. This provision in its present state
makes the accrual basis of accounting illegal. They posit that the present general
application of cash basis of accounting may not entirely permit the Government financial
reports to achieve its objectives. They contend that Cash basis of accounting is adjudged
useful for short term fiscal control whereas Accrual basis of accounting is the superior
method for the economic resources of any organization; it results in accounting
measurements based on the substance of transactions and events rather than merely when
cash is received and disbursed, and thus enhances their relevance, neutrality, timeliness,
completeness and comparability. NCGA recommends use of the accrual basis to the fullest
extent practicable in the Government environment. However, the report of research
conducted by Likireman and Vass (1984) on government expenditure recommended
continued adoption of cash basis of accounting by government.
The Financial administration Act,2003 also requires the preparation of government
accounts on fund basis. In essence, all funds of a government must be classified into one of
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three fund categories: Governmental, proprietary, and fiduciary, or expendable and non-
expendable funds. The category of a fund determines the type of accounting and financial
reporting that is accorded the activities conducted, assets owned or held, and liabilities
incurred by that particular fund (Tackie-Yaoboi, 2008).
A question arose as to whether each fund should also constitute a reporting entity,
considering the voluminous annual report resulting from this practice. Critics further argue
that reporting by fund creates a fragmentary and incomprehensible picture of government
finances. Chan (2006) opines that this practice, however justifiable on grounds of
stewardship, legal and contractual compliance, certainly, it is not user-friendly- it
produced comprehensive reports that are not comprehensible.
Objectives of Government Accounting
Ghanaian system of government accounting has its roots from the British colonialists who
were confronted with accounting and reporting problems that required resolution without
the assistance of professional accounting standard-setting organizations (Anyafo, 1994).
The primary focus of financial accounting and reporting in those early days was
determining whether cash, usually generated from general tax levies support current
operating activities, was collected in amounts that at least equalled the cash paid for those
purposes and whether laws restricting the collection and expenditure of public funds were
followed by those who administered the programme. Holder (2002) submits that the
primary users of such reports were the administrators and legislative representatives of
government that were guided by that information in performing their duties. Holder (1992)
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opines that little thought was originally given to the usefulness of the information content
of Government Financial Statements for external accountability.
In the light of Financial Administration Act No. 654 2003, Tackie-Yaoboi (2008) states the
objectives of government accounting as:
To ensure that a full account is made to the legislature on management of public
finances and that its financial control as prescribed by the operated in
accordance with the provisions of the Constitution of the Republic of Ghana;
and
To enable the Accountant-General to present to the Auditor-General for audit
purposes, the accounts showing fully the financial position as at the last day of
each financial year of the Consolidated Revenue Fund and all other
Government funds.
In essence, the purpose of government accounting is to provide information about the
economic and financial affairs of government agencies, institutions and units. It is tailored
to emphasize the use of funds provided to accomplish objectives designed in the best
interest of tax payers. However, use of funds requires stewardship reporting, which
preclude external reporting by the government.
Similarly, Glyn (1987) reports that in Australia, the report of the committee on Public
Sector Accounting stated the primary objectives of accounting in the public sector
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organisations as provision of information necessary for management controls and public
accountability. Glyn (1987) relates these objectives to include:
To provide information useful for determining and predicting the flows, balances
and requirements of short-term financial resources of the government unit;
To provide information useful for determining and predicting the economic
condition of the government unit and changes therein;
To provide financial information useful for monitoring performance under terms of
legal, contractual and judicial requirements;
To provide financial information useful for planning and budgeting and allocation
of resources on the achievement of operational objectives; and
To provide information useful for evaluating managerial and organizational
performances.
Comparatively, lacking in the legal requirement of financial reporting in the Ghanaian
context is the external reporting by government. After considering the governmental
environment and users needs, Governmental Accounting Standard Board (GASB) of USA
(1987) proposed the following objectives:
Financial reporting should assist in fulfilling governments duty to be publicly
accountable and should enable users to assess that accountability;
Financial reporting should assist users in evaluating the operating results of the
government entity for the year; and
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Financial reporting should assist users in assessing the level of services that can be
provided by the government entity and its ability to meet its obligations as they
become due.
It is however observed that what is published by the Ghanaian government varies greatly in
the relative emphasis given to each of these objectives and functions. The importance of
using Published Government Financial statements as a vehicle for public accountability
through meeting external reporting requirements has been steadily increasing, yet the
financial reporting requirement have not changed from what were the practices in the
colonial period.
A comparison of Ghanaian Governmental Accounting system and the United Nations
model for Government Accounting further highlights the areas of discrepancies (Ngwu,
1999): Cash accounting seems to constrain the realization of Accounting system being
capable of serving the basic financial information needs of development, programme-
planning and appraisal of performance in physical and financial terms, planning
programming budgeting system (PPBS) and the accrual basis of accounting need to be
firmly implemented for the accounts to provide financial data useful for economic analysis
and reclassification of government transactions to assist in development of national
accounts.
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Government Financial Statements and Uses
The five Audited Financial Statements made available by the Auditor-General of Ghana
represents the authentic and legal financial position of government at any time. These
financial statements include, Consolidated Revenue Fund (CRF), Statements of Revenue,
Statement of Recurrent Expenditure, Statement of Assets and Liabilities, and the
Development Fund. All of the financial data in these publications contain up-to-date
figures.
The five statements conform to the basic minimum which should be prepared for
government, under operational criteria: the balance sheet, statement of operations,
statement of sources and operation of funds. However, the five statements suffer from
some technical deficiencies in three areas (Oshisami, 1992): finalisation of accounts for
publication, the presentation format, and the inadequacies inherent in the application of
cash basis of accounting without supplementary information. Although the government
supplies additional information, but do not remove all the inadequacies. It is held also that
a presentation of financial statements for the year without budgetary comparisons is first of
all not in conformity with standard accounting principles and practice, and is generally
considered short of full disclosure (Anyafo, 1994).
In the corporate report (1975) published in the United Kingdom, the users of corporate
reports are defined as: Having a reasonable right to information concerning the reporting
entity. We consider that such rights arise from the public accountability of the entity
whether or not supported by legally enforceable powers to demand information.
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The National Council on Governmental Accounting (NCGA, 1981) of USA sponsored
research paper identified many internal and external groups (and uses) as potential users.
The Governmental Accounting Standard Board (GASB, 1987) of USA however, following
the approach similar to that of Financial Accounting Standard Board (FASB, 1978) and the
American Institute of Certified Public Accountants (AICPA, 1974) paper group on the
objectives of financial statement, focused on external users who have limited authority,
ability or resources to obtain specific information.
Ngwu (1998) identified internal users (and uses) of Government financial reports as
Government, Public official, and Trade unions. Chan (1992) equally identifies external
users of Government financial statements as: Citizens group: as service recipients, as
voters, and as taxpayers; Legislative and oversight officials, Investors and Creditors, and
other external users.
Hay and Antonio (1990) observe that interviewees indicated that notes disclosures on
government financial reports should be concise and contain essential information. In
particular, the respondents (users) were interested in information regarding events that may
materially affect the statements after balance sheet date: contingent liabilities and instances
of non-compliance with laws, regulations and agreement. Another disclosure that users
would like to see is material differences between the original budget and the final budget
(due to supplementary appropriations). In addition, users states that if budget and GAAP
reporting differences are not reconciled on the face of the statements, only material
differences need to be disclosed in the notes. Users recommended that for each major fund,
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a five year history be provided regarding each major revenue source and a five-year
expenditure history for each major fund by function, program, or other category, and
additional disclosures regarding assets and liabilities are necessary
Forms and Content of Accountability
By the nature of accountability, all those who have any role to play at any point in the
organizational process carry the responsibility to account for actions undertaken (United
Nations Development Programme, UNDP, 1996). Furthermore, accountability is enhanced
by the extent to which the duty to answer is discharged. Oral representation or verbal
account of actions represent the minimum and weakest form in the discharge of
responsibility for accountability, it becomes strengthened and even stronger if account is
documented in writing and backed by supporting documents to evidence claims in the
account. The form and content of accountability is further enhanced by procedural
influences such as timeliness (or report authentication and communication) as well as the
process (details of form and content). Accountability and transparency are inseparable. The
mutually reinforcing transparency is worthless if it does not match appropriate
accountability for use of discretion; and accountability is meaningless if it does not spring
from transparent medium.
Four important criteria are regarded as basic to public service accountability. These include
Fiscal accountability, Managerial accountability, Programme accountability and Individual
accountability (UNDP, 1996). Fiscal accountability is concerned with adherence to
applicable laws and regulations, consistency with appropriate accounting principles and
traditions, accuracy and fairness of reports; and complete legitimacy of expenditure.
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Managerial accountability deals with the generation of essential information for decision
making, and the need for economy, efficiency, and effectiveness of operations. Programme
accountability is broadly concerned with overall evaluation of programme impact and the
extent to which intended goals and aspirations are attained. Individual accountability is
related to the personal qualities and conduct demonstrated by accountable officers, it
involves such attributes as commitment, honesty, trust, probity and integrity. It is held that
individual accountability enhances overall transparency (UNDP, 1996).
It is also useful to note that the foregoing criteria serve to define the dimensions of
accountability. The existence of procedures and regulations; the maintenance of adequate
records and books of account, prompt generation of credible reports, the compliance with
every pertinent provision or personal quality of moral and financial rectitude cannot
singularly ensure accountability. All have to go concurrently.
The level of accountability and transparency in the public service has serious implications
for economic and social development. The capacity for efficient service delivery also
depends on the honesty and integrity of the public service. The extent to which each
element of accountability has to be strengthened to provide necessary and sufficient
inducement for strong accountability should form the primary concern of such
improvement.
CHAPTER THREE
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RESEARCH METHODOLOGY
Introduction
This chapter looks at the methodology employed in collecting, presenting analyzing and
sourcing of data for the study.
Population
The target population for the study was the staff of Controller and Accountant Generals
Department and Audit service of Ghana.
Sample size
A sample size of 124 employees at Controller and Accountant Generals Department and
the Audit service of Ghana was selected for the study.
Sampling technique
A systematic random sampling of the population was taken only as a representatiive of the
aggregation of the elements that comprise the research. Here the population is divided into
various group using a sampling interval.
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Sources of data
Both primary and secondary data were used in this study. Primary data were sourced
through the use of questionnaires evaluated to the staff of controller and accountant general
department and the audit service, while secondary data were sourced through the use of
books from the library, articles from journal, and internet sources.
Research design
This aspect indicated and explained how specific objectives were to be achieved; it was
also to investigate to find solutions to the research objectives. The interest of the research
was to gather information from various categories of workers, from Controller and
Accountant Generals Department and Audit Service.
The study made use of questionnaire, a scale used to measure perception of respondents
about government accountability. Both qualitative and quantitative techniques were used.
Quantitative techniques like statistical tools and the use of figures to give pictorial
representation of findings and qualitative techniques are use to describe items or objects in
a non- statistical manner. Follow-up interviews were conducted to clarify aspects of the
responses to be provided.
Quality control
Data collected from the study were handled with care, grouped, coded and classified in
other to ensure that errors and mistakes are minimized. The focus of quality control is to
ensure that the process of data collection and data collected are error-free or error is
minimized to the barest minimum. This means that data collected from the study were
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handled with care, grouped, coded and classified in a manner that will ensure errors and
mistakes are minimized.
Data analysis
Data were analyzed using statistical software (mainly SPSS Software). Descriptive statistics
were used to compare the bio data characteristics of the respondents that participated in the
study.
Type of statistical test
The study tested for the standard deviations, standard means, and averages to understand
the relationships between responses given by respondents.
Data presentation
It involved the use of descriptive statistics in the form of frequency tables. Data
presentation were presented by the procedures and the manner in which data collected were
arranged and presented in a meaningful manner for easy understanding. The researchers
made use of descriptive statistics in the form of frequency distribution tables and diagrams.
Limitation of the methodology
Because of the size of the sampling size the result of the study cannot be generalized.In
collecting the data for interpretation and analysis, we encountered certain difficulties which
are worth documentary. The researchers were constrained by time and financial resources
and could not therefore apply other methods of research aside questionnaire, journals to the
internet. Questionnaires also required careful design to ensure that key issues are included,
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whilst avoiding ambiguous or confusing questions. Poor response to the question could
lead to inadequate information for valid data analysis.
CHAPTER FOUR
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DATA PRESENTATION AND ANALYSIS OF FINDINGS
Introduction
This chapter looks at how data collected were analyzed and presented in a meaningful
manner for easy understanding.
Overview of Controller and Accountant Generals Department
Evolution of CAGD
The controller and Accountant Generals Department as it exist today was established in
1885, during the pre-independence era of the then Gold Coast and was referred to as the
Treasury. This name was maintained until 1937 when it was re-named the Accountant
Generals Department because of its expanded roles.
In 1967, the role and responsibilities of the Accountant General was clearly defined to
include the responsibilities of exercising efficient and effective financial control in the
budget execution process. This necessitated a change of name to Controller and
Accountant-General.
Legal framework
The controller and Accountant-Generals Department otherwise known as the Accountant
Class was establish under the Civil Service Act, 1960 (CA.5). The 1992 Constitution, the
financial Administration Regulation 2004 (LI. 1802) provide the legal framework that
governs the operation and the function of the Controller and Accountant-General.
Duties and Functions
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The Controller and Accountant General of the Republic of Ghana, in his capacity as the
chief Accountant officer of the Government, is the chief advisor to the Minister of Finance
and Economic Planning and the Government on accountancy matters.
He is also empowered to:
Keep, prepare, render and publish statement of Public Accounts on the
Consolidated fund of Ghana.
Station in all Government departments, his staff to enable him to more efficiently
carry out his statutory and other functions.
Have access at all reasonable times to all files, documents and other records relating
to the accounts of every Government department.
Receive from heads of public Services such information, reports and explanations
on all accounting matters necessary for the proper performance of his function.
Approve all departmental accounting instruction.
Promote the development of efficient accounting system within all Government
departments.
Receive all Public and Trust monies payable into the consolidated fund.
Provide secure custody of Public and Trust monies.
Make disbursements on behalf of Government (include the payment of monthly
salaries to the government employees and pension gratuity and monthly pension
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payment to those on retirement, as well as release funds to execute government
projects and developments throughout the country).
Establish on behalf of government, such account with the Bank of Ghana and its
agents for the deposit of Public and Trust monies.
Be solely responsible for the opening of the accounts for any government
department.
Mission Statement
They exist to provide public financial management services to the Government and the
general public through efficient, skilled, well-motivated and dedicated staff, using the most
appropriate technology.
Vision
Their vision is that of the public service with positive culture, client-focused and result
oriented, constantly seeking ways to improve the delivery of financial management service
to the government and the general public.
Core Values
The core values upon which all their activities are based are:
Putting Customers first;
Meeting the needs and aspiration of Government and the citizenry.
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Serving The Whole Country;
They aim to serve the diverse interest of their clients
Acting With Integrity;
They aspire to act with honesty, openness, transparency in the delivery of their
service.
Valuing people;
They value people by creating a culture that celebrates excellent service.
Continuous Improvement and Innovation; through continuous improvement and
innovation they are able to improve and increase client satisfaction.
Overview of Audit Service 0f Ghana
Audit Service of Ghana is a constitutional body under the direction of a seven
(7) member governing board . The Service is headed by the Auditor General
who is mandated to audit the public accounts of Ghana and all public offices
including Metropolitan, Municipal and District Assemblies, Public Corporations
and Organizations established by an Act of Parliament and report the findings
to Parliament. Audit Service is therefore the monitoring and accountability
organ of the state, and the Supreme Audit Institution (SAI) of Ghana.
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The 1969 Constitution made it an oversight body to promote good governance,
ensure accountability and transparency in the Public Sector and Article 188 of
the 1992 Constitution reaffirms this position. Thus, Audit Service is the only
institution mandated by the Constitution to monitor the use and management
of all public funds and report to Parliament.
Establishment
Audit Service was established in 1910 by the colonial government and was called the Audit
Department. It was headed by a Director. In the 1950s, the name was changed to Auditor-
General's Department. On 22nd August 1969, the constitution of the 2nd Republic
converted the department into the Audit Service headed by an Auditor-General. This was to
increase the degree of independence of the Service. The 1992 Constitution(Article 187,
188, 189) and the Audit Service Act 2000, (Act 584) reaffirms provisions made in the 1969
Constitution.
Governing body
A seven-member body called Audit Service Board governs the Audit Service. The
President in consultation with the Council of State appoints the chairman and four other
members of the Board. The Auditor-General and the head of Civil Service or his
representative are automatic members of the Governing Board.
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Mission Statement
The Audit Service exists to promote good governance in the areas of transparency,
accountability and probity in the public financial management system of Ghana by auditing
to recognized international auditing standards, the management of public resources and
reporting to Parliament.
Vision
The vision of Audit Service is to be one of the leading Supreme Audit Institutions in the
world, delivering professional, excellent, and cost effective auditing services.
Strategic Objectives
The seven strategic objectives listed below, underpin the Audit Service's vision and
Mission statements
To implement the provisions in the 1992 Constitution and the Audit Service Act
2000 (Act 584) and the Audit Service regulations (constitutional instrument
number CI 56) towards the financial, administrative and operational independence
of the Audit Service.
To introduce and implement human resource policies and practices that promote the
recruitment, training, career development, motivation, empowerment, advancement
and retention of high professional calibre staff.
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To promote increased accountability, probity and transparency in the management
and utilization of public resources by applying modern and emerging auditing
techniques.
To establish and operate quality control standards and performance assessment,
monitoring and reporting policies and procedures to promote cost effective and
efficient delivery of auditing services.
To increase audit coverage and to produce regular and timely audit reports on all
areas mandated by the Constitution and the Audit Service Act and promptly make
such reports accessible to interested parties and stakeholders.
To provide the enabling environment, facilities and logistical support needs to
ensure optimal performance by all staff of the Service.
To improve and sustain communication and cooperation between the Audit Service
and its clients, other professional bodies, Parliament and the accountability and
good governance agencies.
Description of the subject
110 responses were received from 124 questionnaires distributed, accounting for a response
rate of 89 percent. 14 out of 124 questionnaire were not responded to and completed. The
respondents were from Office of the Controller and Accountant-General Department (CAGD)
and Auditor-General of the republic of Ghana. Consequently, we sought to know how much
consideration is given by the current financial reporting system to the four forms of
accountability and we asked respondents to make suggestion to improving the system.
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Data Analysis
The procedures employed for data analysis were based on responses from the likert-scale
measures. The analysis tools used include mean, and use of tables for data presentation.
The cut-off mean of 45.0 was determined along the following logic. The sum of weights
5,4,3,2 and 1 is 15 which when divided by 5 (number of response categories) yields 3.0.
Since there are 15-items, the mean will be 45.0 (3.0 X 15)
Demographic Data
Institution and Gender of Respondents
Table 4.1 Institution and Gender of Respondents
Source: Field data May,2012
The result from the study shows that questionnaires were evenly distributed among
the sexes, male (55) and female (55). However, the intern of institution that they
represent, CAGD has (65) respondents representing 59.1% of the respondent
while Audit service (45) respondents representing 40.9%.
29
Institution Male Female Total
CAGD 35 30 65
AUDIT
SERVICE
20 25 45
Total 55 55 110
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Age group of Respondents
Table 4.2 Age group of Respondents
Source: Fi Source: Field data May,2012
The study reveals that respondents between the ages of 33-39( 29.1%) dominated
the study. They were closely followed by respondents within the ages of 26-32
(27.3%),40-45 representing (22.7%),18-25 representing (11.8%) and finally 46 and
above representing (9.I%)
Section of Operation of Respondents
Table 4.3 Section of Operation of Respondents
30
Age Number Percentage
18-25 13 11.8%
26-32 30 27.3%
33-39 32 29.1%
40-45 25 22.7%
45-above 10 9.1%
Total 110 100%
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Section of operation Number Percentage
Public Accounts 47 42.7%
Audit and
Investigation
15 13.6%
GIFMIS 13 11.8%
Finance Audit 12 10.9%
Information
Technology Audit
13 11.8
MIS 10 9.1%
Totals 110 100%
Source: Field data May,2012
The study reveals that the public account department dominated the study with
47responses representing 42.7%, while respondents from Management
Information System (MIS) show the minimum of all responses representing 9.1%.
Job Tenure of Respondents
Table 4.4 Job Tenure of Respondents
Number of years worked Number Percentage
1 10 9.1%
2 15 13.6%
3 35 31.8%
4 20 18.2%
5 5 4.6%
6 and above 25 22.7%
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Total 110 100%
Source: Field data May ,2012
The research points to the fact that people with 3years working experience at their
respective section dominated the study representing 31.8%.
Educational Level of Respondents
Table 4.5 Educational Level of Respondents
Level of education Number Percentage
Masters 20 18.2%
Professionals 45 40.9%
University/polytechnic 45 40.9%
Senior High/Technical - -
Junior High/Middle sch. - -
Total 110 100%
Source: Field data May ,2012
The research indicates that there are equal percentages of respondents between
persons with professional and that of university and polytechnics qualification.
The following scores were reported in respect of fiscal, managerial, programme, and
individual accountability:
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Fiscal Accountability
Table 4.6 Fiscal Accountability
Fiscal Accountability: Mean Scores
Adherence to applicable regulations 75.4
Consistency with good accounting principles 61.2
Accuracy and fairness of reports 54.6
Reality and legitimacy of transactions 43.8
Combined Mean Score 58.75
Source: Field data May, 2012
At present, the combined mean score of 58.75 was indicated by the respondents in
respect of the fiscal accountability in the governmental system and it gave an
indication that respondents believed there is a fair amount of fiscal accountability in
governmental financial reporting. The common place knowledge that public servants
can always produce receipts and supporting documents even where in fact there is
little or nothing on ground is a clear testimony to the low mean score of 43.8 for
reality and legitimacy of transactions.
Managerial Accountability
Table 4.7 Managerial Accountability
Managerial Accountability: Mean ScoresCompetent information 41.7
Operational performance 43.3
Contribution to objectives 36.6
Combined mean 40.53
Source: Field data May, 2012
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A combined mean score of 40.53 was reported for the level of managerial accountability.
The recorded score depicts a weak managerial accountability since its below the cut-off mean,
which could also have arisen from the following findings:
Researchers have shown that the information content of government financial
statement does not convey adequate information to respective user groups (Aruwa,
2002). Again the reports are not timely made available, which is a limitation imposed
by the constitution;
The financial reports does not Provide information showing the relationship
between services rendered and operating outlays, to enable groups external to the
government obtain accounting information to assist them in evaluating the
performance of functionaries in charge of government operations; and
The cash basis of accounting is deemed inappropriate for the attainment of objectives
of government (Oshisami, 1992; Gary, 2008); accounting is not presently integrated
with budgeting, or budgetary objectives and financial reporting (Chan, 2006).
Programme Accountability
Table 4.8 Programme Accountability
Programme Accountability: Mean Scores
Benefits 42.1
Impact 32.4
Sustainability 26.5Combined mean 33.66
Source: Field data May, 2012
Similarly, the combined mean score of 33.66 was reported for programme
accountability and this shows a weakness in programme accountability. This may be a
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function of the budgeting system in use- line item budgeting system and the
inadequacy of the financial reports to meet the information needs of diverse user
groups. Value for money audit is yet to be given practical effect to expect managerial
and programme accountability. Auditing in the public service is generally
governmental.
Individual Accountability
Table 4.9 Individual Accountability
Individual Accountability: Mean Scores
Commitment 23.4
Honesty 20.5
Integrity 24.8
Transparency 20.4
Combined mean 22.28
Source: Field data May, 2012
An alarming combined mean score of 22.28 was reported for individual
accountability which show a weakness since it falls below the average score.
Public service is frequently characterised as reflective of the general society. It is
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thus easy to find respondents justifying lack of accountability by the human com-
ponents of the dimensions of accountability.
The overall combined mean score is below average score of 38.81. This result
imposes responsibility on government to strengthen the accountability apparatus
within the public service.
Suggested Ways of Improving Governmental Accountability
Table 4.10 Suggested Ways of Improving Governmental Accountability
Suggestions: %
Effective Implementation of GIFMIS (Ghana Integrated Financial
Management Information System)
90
Strengthen of Internal Audit Units 95
Effective application of financial laws 80
Source: Field data May, 2012
Respondents are of the view that, if the GIMFIS is effectively implemented and a sense of
ownership is demonstrated by the various MMDAs public sector accountability will improve.
Again the results also showed that a trained and strengthen Internal Audit Units within the
various MMDAs would lead to an improvement in public sector accountability. Another
important suggestion was the effective application of financial regulations and laws. It can be
inferred that, the surest way in ensuring public sector accountability is to allow the various
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laws enact to bite when there is wrong doing and an effective reward system for those who
exposes wrong.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
Introduction
From the foregoing analysis and findings, we can derive empirical conclusions with respect
to the four dimensions of accountability. These epithets are anchored on fiscal
accountability, managerial accountability, programme accountability, and individual
accountability.
Summary of Findings
This research has indicated that the financial and accounting data remain, perhaps,
the best index of accountability. Elaborated financial regulation and rigid
accounting system are deliberately designed to guide the actions and conduct of
public officers in the conduct of and accounting for scheduled activities.
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In scope and content the financial regulations appear to be quite adequate. There
are sufficient provisions to guide every responsible officer and to safeguard official
resources.
The cash basis of accounting which the Ghana Integrated Financial Management
Information System (GIFMIS) imposes would also appear to be realistic going by
the traditional activities of government; financial accountability is strictly
emphasized.
However, there is the added need for managerial and programme accountability
which the prevailing system has not adequately catered for; value for money is not
a feature of the present system. The problems related to wrong approvals, wrong
payments, wasteful expenditure, fake acquisitions and ghost disbursements are
directly traceable to weak internal control system.
The individual accountability, an important element of the system is at its lowest
ebb of accountability and transparency.
Conclusion
Respondents from both organization (i.e CAGD and Audit Service) believed there is a fair
amount of fiscal accountability in governmental financial reporting.
Again, The reported findings depicts a weak managerial accountability, which could have also
arisen from the following findings; Researchers have shown that the information content of
government financial statement does not convey adequate information to respective user
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groups (Aruwa, 2002), reports are not timely made available, which is a limitation imposed by
the constitution; and The Cash Basis of Accounting is deemed inappropriate for the
attainment of objectives of government (Oshisami, 2003; Gary, 2008); accounting is not
presently integrated with budgeting, or budgetary objectives and financial reporting (Chan,
2006).
The study shows a weakness in programme accountability. This may be a function of the
budgeting system in use- line item budgeting system and the inadequacy of the financial
reports to meet the information needs of diverse user groups. Value for money audit is yet to
be given practical effect to expect managerial and programme accountability. Auditing in the
public service is generally governmental.
The study also shows a weakness in Individual accountability. It is thus easy to find re-
spondents justifying lack of accountability by the human components of the dimensions of
accountability.
The overall combined mean score for the study falls below average which is very weak.
This result imposes responsibility on government to strengthen the accountability apparatus
within the public service.
Conclusion drawn from this study indicated that financial and accounting data remain the
best index of accountability available as at now. And that rigid and elaborated financial
and accounting systems are deliberately designed to achieve this end. In another breathe,
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there is the need for managerial and programme accountability which the prevailing system
has not adequately catered. Wastage and other forms of malfeasance can directly or
indirectly be traceable to weak internal control systems
Taking all these together, one is tempted to infer that though the accountability and control
apparatus in the public service may not be the best, it has some minimum technical
components that should elicit tolerable standards of accountability and transparency.
Recommendations
The findings and conclusions of the paper necessitated the following recommendations on
legislative requirement, and report content and presentation:
Legislative Requirement:
Legal Mandating of Users Right
The right of users to request special financial reports must be legally mandated, and be
made accessible.
Establishment of Government Accounting Standard Board
Establishment of Governmental Accounting Standard Board, to determine the detailed
procedures, principles, and standards that should operate within the public sector, as
Ghanaian Accounting Standard Board is to the private sector accounting.
Usage of Modified Accrual Basis of Accounting
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expansion of the contents of the notes to financial statements; notes to include:
Basis of presentation and explanation of funds and fund accounts, Basis of
accounting- for measuring and reporting constituents of the financial
statements;
disclosure of the reconciliation between actual expenditures on the budget basis
and the modified accrual basis, and disclosure on adverse situations- deficits in
fund balances or retained earnings of individual funds, excess expenditures over
appropriations, material violations of finance related legal and contractual
provisions.
Direction for Future Research
The scope of this research was not so broad and attempted to assess
Government Financial Reporting and Public Accountability in Ghana with
respect to the CAGD and the Audit Service of Ghana. For this the survey is
limited to Controller and Accountant General's Department and Audit Service
of Ghana. As a result, researchers cannot conclude that the findings of this
research can be equally applicable to the private sector and other public sector
organizations as well. In connections to this limitation, it's possible to carry out
further research on how the issues look like in other public sector organizations
and its impact on public sector governance. This would enable a comprehensive
conclusion to be drawn about government financial reporting and public
accountability in Ghana.
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REFERENCES
Accounting Standards Committee (1975), the Corporate Report. London, United Kingdom.
Anyafo, A.M.O. (1994), Government and Public Sector Accounting: Legal andConstitutional Framework. Enugu-Nigeria: Gopro Press Vol. I.
Ato, G.(1995), Promoting Financial Accountability in Decentralized Administration: The
Ghanaian Experience Decentralization as a Tool for Democratization and
Development ,Accra.
Akotia,P.(1996), The Management of Public Sector Financial Records: the Implication
for Good Gorvenment , University of Ghana ,Legon.
Aruwa, S.A.S (2002), Empirical Investigation of the Information Content of Published
Government Financial Statements, M.Sc. Accounting and Finance Thesis, A.B.U.,
Zaria.Bhatta,H.L,(1995), Public Financial Reporting ,Vikas Publishing House,PVT Ltd,Delhi.
Bowen, H. (1943), the Interpretation of Voting in Allocation of Economic Resources.Quarterly Journal of Economics. November Edition.
Brooks, R.C. (1992), Research in Government Accounting and Reporting. In: Apostolou,G. and Crumbley, D.L. Handbook on Governmental Accounting and Finance. (2nd
Ed.). New York: John Wiley & Sons, Inc.
Chan, J.L. (2006), The Government Environment: Characteristics and Influences on
Governmental Accounting and Financial Reporting. In: Apostolou, G. and
Crumbley, D.L. Handbook on Governmental Accounting and Finance. (4th Ed.).
New York: John Wiley & Sons, Inc..
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Daniel, G.T. (1999), Public Sector Accounting. Zaria-Nigeria: ABUP.
Financial Accounting Standard Board (FASB) and American Institute of Certified Public
Accountants (AICPA) (1978), Report of Paper Group on the Objectives ofFinancial Statements.
Gary, T.J. (2008), Financial Reporting. In: Apostolou, G. and Crumbley, D.L. Handbookon Governmental Accounting and Finance. (4th Ed.). . New York: .John Wiley &
Sons, Inc
Giroux, G. and Apostolou, N.G. (1992), The Market Reaction to the Information Contentof Municipal Surplus/Deficit ratios, Public Budgeting and Financial Management.
In: Apostolou, G. and Crumbley, D.L. Handbook on Governmental Accounting and
Finance. (2nd Ed.). New York: John Wiley & Sons, Inc.
Glyn, J.J. (1987), Public Sector Financial Accounting. London: Basil Blackwell Ltd.
Governmental Accounting Standard Board (GASB, 1987), Proposal on Objectivesof External Reporting by Government. U.S.A.
Hayman, J.L. (1968), Research in Education. Ohio: Charles E. Merrill Publishing Co.Columbus.
Holder, W.W. (1992), Future Developments in Government Accounting and Reporting.
In: Apostolou, G. and Crumbley, D.L. Handbook on Governmental Accounting andFinance. (2nd Ed.)., New York: John Wiley & Sons Inc.
Klingenstierna,U.(2009), Controlling Public Money :Internal Financial Control and
External Audit, Conference on Public Administration Reform and European
Integration Budva, Montenegro.
Mikesell,J.L.(1991), Fiscal Administration Analysis and application for the Public Sector.
Books/Cole Publishing Co.Carlifonia
National Council of Governmental Accounting (NCGA, 1981), Sponsored Research Study
on the Tripartite Relationship among Citizenry, Legislature and Bureaucracy,U.S.A.
Ngwu, F.N. (1998), Public Sector Accounting and Finance. Enugu-Nigeria: ComputerEdge Publishers,.
Oshisami, K. (1992), Government Accounting and Financial Control. Lagos-Nigeria:Megavons (W.A.), Plc..
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Public Accounts Committee (1996), Committee Report, Abuja.
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APPENDIX
A QUESTIONAIRE SOLELY DESIGNED FOR ACADEMIC PURPOSE
IN SOLICITING INFORMATION ON GOVERNMENT FINANCIAL
REPORTING AND PUBLIC ACCOUNTABILITY IN GHANA.
ASSURANCE IS GIVEN FOR THE CONFIDENTIALITY OF THE
INFORMATION TO BE PROVIDED. I WANT TO THANK YOU IN
ADVANCE FOR THE TIME IN RESPONDING TO THIS
QUESTIONAIRE, PLEASE WRITE AND TICK WHERE APPROPRIATE
PART ONE:
PERSONAL DATA1. Organization
2. Gender: Male [ ] Female[ ]
3. Age Group of respondent: 18-25[ ] 26-32[ ]33-39[ ] 40-45 46-above[ ]
4. Section of operation.
5. For how long have you worked in the section?......................
6. Have you worked in other districts before? Yes [ ] No [ ]
If yes name the district and years worked.i)
ii)
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iii)
6. Level of education:
a. ICA/ACCA/CIMA (Professionals) [ ]b. University /Polytechnic [ ]
c. Senior High/Technical [ ]d. Junior High/Middle School [ ]
e. Others (Specified).
PART TW0:
Rank how much consideration is given by the current financial reporting system to the
following types of accountability. There are many different opinions about this subject and
I would like to know your personal opinion. There is no right or wrong answers. Please,
tickthe number to the right of each statement that best describe your agreement or
disagreement with the statement (1 being the lowest, 5 being the highest.)
Key: SD= Strongly Disagree D=Disagree N=Neutral A= Agree SA= Strongly AgreeSD D
N A SA
STATEMENT 1 2 3
4 5
FISCAL ACCOUNTABILITY
1.Adherence to applicable regulation [ ] [ ] [ ] [ ] [ ]
2.Consistency with good accounting principles [ ] [ ] [ ] [ ] [ ]
3.Accuracy and fairness of report [ ] [ ] [ ] [ ] [ ]
4.Reality and legitimacy of transactions [ ] [ ] [ ] [ ] [ ]
MANAGERIAL ACCOUNTABILITY
5.Competent information [ ] [ ] [ ] [ ] [ ]
6.Operational performance [ ] [ ] [ ] [ ] [ ]
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7.Contribution to objectives [ ] [ ] [ ] [ ] [ ]
PROGRAMME ACCOUNTABILITY
8.Benefits [ ] [ ] [ ] [ ] [ ]
9.Impact [ ] [ ] [ ] [ ] [ ]
10.Sustainability [ ] [ ] [ ] [ ] [ ]
INDIVIDUAL ACCOUNTABILITY
11.Commitment [ ] [ ] [ ] [ ] [ ]
12.Honesty [ ] [ ] [ ] [ ] [ ]
13.Integrity [ ] [ ] [ ] [ ] [ ]
14.Transparency [ ] [ ] [ ] [ ] [ ]
15. Provide a suggestion on how government accountability and financial reporting can be
improved
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ABBREVIATION
(WB) - World Bank
(TI) - Transparency International
(PAC) Public Accounts Committee
(FAA) Financial Administration Act
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(FAR) Financial Administration Regulation
(GASB) Government Accounting Standard Board
(NCGA) National Council on Government Accounting
(PPBS) Planning Programming Budgeting System
(CRF) Consolidated Revenue Fund
(FASB) Financial Accounting Standard Board
(AICPA) American Institute of Certified Public Accounts
(UNDP) United Nations Development Programme
(MIS) Management Information System
(GAAP) Generally Accepted Accounting Principles
(CAGD) Controller and Accountant Generals Department
(MMDA) Ministries, Municipalities, Departments and Agencies
(GIFMIS) Ghana Integrated Financial Management Information System