CHAPTER ON1 Final Work

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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%.

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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

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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


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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


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


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


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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Modular Training/Learning Package: Financial Management (Module 3), Nigeria.

Woode,S.N.(2000), Ethics in Business and Public Administration Introductory Essays

and Cases, Accra.

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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

Documents

CHAPTER ON1 Final Work