Posted: Wednesday 30th April 2014 at 17:06 pm

The Audit Report On SADA Saga

405e240x mg x16fw32vup gilbertiddi The Audit Report On SADA Saga


Addressed to:
The Ag. Chief Executive Officer (Dr. Charles Jebuni)                                                                                           

Copied to:
The Board Chairman (Mr. Alhassan Andani)
Savannah Accelerated Development Authority
Tamale
The Auditor General
Audit Service
Accra
Signed by:
Alhaji Mahama Nurudeen
          Regional Auditor
Northern Region
          (For: Auditor General)
I.            Contrary to Section 87 of the Internal Revenue Service Act 592 of 2001, the Authority withheld taxes totaling GH₵461,090.00 from payments to service providers but failed to remit the taxes deducted to the Domestic Tax Revenue Division.

We recommended that the withheld tax amount be forwarded to Domestic Tax Revenue Division (DTRD) of the Ghana Revenue Authority (GRA). We further recommended that subsequent tax deductions be paid immediately to the DTRD to avoid incurring any penalty.

II.            We noted that on 24 December, 2012, management granted an advance of US$1,000,000.00 to Human Construction Engineering Group Corporation but failed to recover the amount from the institution.

We recommended that management should pursue recovery of the debt from the Corporation by serving demand notices.

III.            Management expended GH₵226,377.00 on trip to Turkey without any justification.

We recommended to management to surcharge the total amount of GH₵226,377.00 expended on the trip against the former CEO, Mr. Gilbert Seidu Iddi who authorized the payments.

IV.            Our audit discovered that management computed the PAYE tax at a flat rate of 5% instead of the required graduated tax rate from the salaries of the employees of SADA, resulting in a short payment of income tax totaling GH₵71,030.00.

We recommended that management should recover the accumulated taxes from the Officers concerned and pay same to the Domestic Tax Revenue Division without any delay.

V.            A contract valued GH₵360,564.00 was awarded to Messrs Admun Company Limited for the supply of furniture and equipment but the company short supplied the items by GH₵41,926.00.

We advised the Chief Executive to ensure that Messrs Admun Company Limited deliver the remaining items or the company be made to refund the amount to chest.

VI.            We noted that on 20 December, 2012, an amount of GH₵74,500,000.00 was invested in a call account at the Stanbic Bank, Movenpick branch in Accra. Management however failed to produce the investment certificate covering the deposit to authenticate the transaction.

We asked the Chief Executive to obtain the investment certificate from the bank as well as the interest that had accrued so far from the investment for our examination.

VII.            Management made payment for goods and services totaling GH₵4,990,490.00 on twenty-two (22) paid vouchers without deducting the statutory 5% withholding tax totaling GH¢251,288.00.

We asked the Finance Director to recover the undeducted tax from the suppliers and pay same to the DTRD.

Management paid a total amount of GH₵182,364.00 as Consultancy fees to seven consultants but deducted 5% tax instead of the mandatory 10%, resulting in a short payment of tax amounting to GH₵10,314.00.

We recommended that management should recover the undeducted tax totaling GH₵10,314.00 from the consultants and pay same to the Domestic Tax Revenue Division.

IX.            Our audit discovered that management released amount of GH₵2,771,890.00 and GH₵38,798.00 to Plus One Investment Limited and Kukobila Farms Limited respectively totaling GH₵2,810,686.00 to engage in the cultivation of butternut squash but failed to produce records on the tonnage of the butternut squash they had harvested and exported as well as the amount generated from the sale.

We recommended that the companies be made to refund the amount granted to them together with interest at the current commercial bank lending rate.

X.            We noted that management paid GH₵69,840.00 to Kasmed Seed Company to organize business trip to Birmingham and Berlin for three officers of SADA without prior approval from the Board even though the cost of the trip was above the threshold of the head of entity.

We recommended to management to seek retrospective approval from the Board and must desist from such practices henceforth

We also asked management to produce all the supporting documents covering the trip for our examination.

XI.            We noted that management engaged the services of consultants without public advertisement and spent GH₵1,059,649.00 on them as consultancy fees.

To ensure that value for money is obtained in engaging consultants, we urged management to review its present procedure of selecting and appointing consultants so as to channel more funds to the productive areas of the Authority.

XII.            Management paid GH₵620,206.00 to four consultants for services that can equally be performed by the technical staff employed by the Authority.

We recommended to management not to renew the contract with Mr. Kennedy S. Mohammed, the resource mobilization consultant, for non-performance. We also recommended to management to review the performance of the remaining consultants and terminate the contract of the non-performing ones in order to minimize cost of operation of the Authority.

Our audit discovered that management paid GH₵60,000.00 to two board members, Mr. Akwasi Addae-Boahene and Madam Vicky Okine, for performing administrative duties which conflicted with their supervisory roles.

We asked management to recover the amount from the two board members and pay same to chest.

Management released US$20,000.00 to three officers to attend the 68 th Session of the United Nations General Assembly in New York but failed to account for the hotel accommodation and accountable imprest components of the amount totaling US$13,938.00.

We asked management to produce the necessary supporting documents to authenticate the transaction failure of which the beneficiary officers should be made to refund the amount to chest.

XV.            We noted that four MOFA district offices in Brong-Ahafo region collected GH₵26,620.00 by way of recoveries from the beneficiary farmers but failed to deposit the amount into the Authority’s account.

We asked management to provide the Service Providers with SADA’s account number to enable them pay the amount into it.

Management paid GH₵15,000,000.00 as 50% stake in the Public Private Partnership for the construction of five (5) guinea fowl firms within the Savannah zone to ACI Limited but we noted undue delay in the execution of the projects.

We recommended that management should give an ultimatum to ACI Limited to complete the projects or the company be made to refund the amount together with interest at the current commercial bank lending rate.

Our audit disclosed that management supplied 714 bags of hybrid seeds to two Service Providers at the time the farming season had passed. The farmers therefore refused to pick up the seeds for planting because of the late delivery. As a result, 714 bags of the seeds at a total cost of GH₵321,300.00 got expired.

We recommended that management should investigate the matter and surcharge the amount against the Officers whose negligence caused the financial loss.

We noted that 11 service providers were expected to recover farm produce from the beneficiary farmers by way of 56,474 maxi bags of maize  valued GH₵3,049,596.00 but recovered only 4,234 bags valued GH₵229,686.00 representing 8 percent, resulting in a short recovery by GH₵2,819,810.00.

We recommended to management to investigate the matter and surcharge the uncovered amount against the service providers.

Management paid unearned salaries totaling GH₵16,693.00 to Madam Reine Bruce Ackman.

We asked management to recover the amount from her and pay same to chest without any further delay.

XX.            We noted that management used SADA funds to settle income tax for staff totaling GH₵41,000.00.

We requested management to recover the amount from the officers concerned and pay same to chest.

Management reimbursed Mr. Kennedy S. Mohammed, a resource mobilization consultant, for procuring a laptop worth GH₵6,034.00.

We asked management to recover the amount from the consultant.

We noted that even though management got an approval from the Public Procurement Authority to single-source afforestation project involving the planting of 5,000,000 trees in the five regions valued GH₵32,498,000.00 to ACI Construction Limited, the project did not fall under any of the single-source procurement conditions to warrant the contract to be awarded under sole sourcing. The audit team noticed that the contractor did not execute the project satisfactorily because the work load on the contractor was too much for him to execute.

We recommended that management should engage the services of the Forestry Commission to count the trees planted and recover the excess payment made from the company.

We also recommended that management should institute action to invoke sanctions under Section 92(1) of the Public Procurement Act (Act 663) against the former CEO, Alhaji Gilbert Iddi, who signed the contract.

Management released accountable imprest totaling GH₵337,493.00 to Dr. Emmanuel Abeere Inga and Abass Kassim Nyo to carry out maize recovery exercise within the SADA zone but failed to refund the unutilized part of the imprest totaling GH₵218,157.50 to chest.

We recommended to management to recover the outstanding balance from the officers and pay same to chest. Management should also desist from giving huge sums of cash as accountable imprest to officers of the Authority.

We observed that 33,401 maxi bags of maize recovered from farmers were still being kept in the service providers’ warehouses at various locations under poor conditions which could result in huge post harvest losses.

We recommended to management to have an agreement with the Ghana Education Service to sell the maize to the various educational institutions in the country.

We noted that management awarded a contract in the sum of GH₵598,500.00 to Admum Co Ltd for the refurbishing of an office block belonging to the Ghana Cotton Industry without the signing of a Memorandum of Understanding (MoU) to outline the tenancy arrangements and the responsibilities of either party.

We advised management to sign a memorandum of understanding with the Ghana Cotton Industry and outline relevant details pertaining to the use of the office building.

We noted that management paid advance mobilization totaling GH₵2,140,807.00 and other farm inputs to a number of service providers. Management however, failed to keep records of each service provider to determine their indebtedness and recoveries made.

We recommended to management to open a ledger for each Service Provider to keep track of advances and recoveries.

We noted that the former CEO, Alhaji Gilbert Iddi, had not handed over the administrative records and official properties in his custody to his successor.

We asked management to compel the former CEO to officially hand over all the administrative records and the properties to his successor.

Contrary to Part II Section 16(1) of the Internal Audit Agency Act, 2005 (Act 658), management failed to establish an internal audit unit to monitor the operations of the Authority.

We recommended that management should employ an Internal Auditor to ensure management accountability.

We noted that the senior staff of SADA had not declared their assets in complete disregard of Act 550, 1998.

We recommended that management should immediately contact the Regional Auditor – Tamale – for the Assets Declaration forms to declare their Assets.

Management failed to maintain an Assets Register to capture the assets acquired by the Authority in breach of Regulation 2(n) of the Financial Administration Regulations, 2004 (L.I 1802).

We recommended that an Asset Register should be maintained to record all assets owned by the Authority.

In contravention of Section 21 (1&2) of the Public Procurement Act 2003 (Act 663), management failed to prepare a procurement plan to guide them in their procurement activities.

We advised management to always prepare a procurement plan and put to use as required by the Section 21(2) of the Public Procurement Act.

Management failed to maintain files on the 13 vehicles and 270 tractors in contravention of Chapter 15 Section 1501 of the Stores Regulations 1984.

We recommended to management to ensure that files are maintained for the vehicles and tractors in compliance with the regulation.

Our visit to the locations of the service providers disclosed that some of the service providers were using the SADA tractors to cart goods, farm produce and sand.

We urged management to put a mechanism in place to halt these negative activities of the service providers.

The Audit team’s interaction with SADA Service Providers disclosed their frustrations about the inability of the Mahindra Mobile team to reach out to them whenever they were needed for servicing and repairs of the Tractors.

Management was advised to ensure that the Mahindra Mobile team was always available to the Service Providers when they were needed.

We noted that management had not maintained contract register and files to keep track of payments being made to the contractors and other service providers.

We requested management to maintain Contract Files and Register to keep track of the contract payments.

Our audit revealed that management released a number of tractors to the various Service Providers to provide tractor services to the beneficiary farmers in their catchment areas after which the Service Providers were to apply for refund of the cost of fuel used and other operational costs. We observed that this practice does not give incentive to protect the tractors’ efficiency and longevity.

We recommended that management should consider introducing very flexible terms of payment for the Service Providers to purchase the tractors.

 We observed that as a result of improper coordination of the maize recoveries, some recoveries were still locked up under very poor conditions in warehouses of some Service Providers as neither SADA nor the Regional Planning Coordinating Units had any official document of total recoveries made.

We recommended that SADA should make future recoveries in cash only and leave the marketing of the produce to the service providers. SADA should also make the ability to market farm produce a pre-requisite for qualification to be a Service Provider.

We noted that management released one tractor to Jaksally Enterprise, a Service Provider at Bole on behalf of the beneficiary farmers in his catchment area, but failed to release other inputs such as fertilizers, hybrid seeds, and mobilization funds to enable the Service Provider undertake the project. We further noted that the Service Provider was using the tractor for his personal business, against the purpose for which the tractor was released.

We recommended that management should retrieve the tractor from the Service Provider and he should be made to pay for the cost of depreciation for the period.

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