16 SOEs face probe over failure to submit audited financial statements

The Ministry of Finance has disclosed plans to investigate why some 16 State Owned Enterprises (SOEs) have failed to submit their audited financial statements for the 2015 and 2016 financial years.

The anomaly is a clear violation of the Public Financial Management Act 2016 (Act 921).

Section 95 of the Public Financial Management Act mandates SOEs to submit their audited Financial Statements to the Minister of Finance not later than four months after each financial year.

However, the 2016 SOE, annual aggregate report from the Ministry of Finance revealed that as of the end of May 2017, only two out of the 18 State-Owned Enterprises had submitted their 2016 audited financial statements.

They are Ghana Reinsurance Company and Ghana Cocoa Board (COCOBOD).

The Bulk Oil Storage and Transportation (BOST), Electricity Company of Ghana (ECG), Ghana Ports and Harbours Authority (GPHA), Ghana Water Company Limited (GWCL) and PSC Tema Shipyard were mentioned in the report as not having completed the audit of their 2015 financial statements as at the end of June 2017.

“Another serious issue identified is the partial disclosure of financial information by some SOEs. For instance, VRA and GNPC did not provide details of the Government support they received in their 2016 financial statements,” the re­port said.

“Ongoing audits commissioned by the Auditor-General in respect of the 2016 financial year for the other 11 SOEs is yet to be completed and/ or published,” the re­port said.

When contacted on what action the Ministry intends to take against the de­faulting institutions, a Deputy Minister of Finance, Kwaku Kwarteng said “we have a responsibility as a ministry to look at each specific case and to find out why they flouted the law.”

“If we discover that this happened because of specific inactions on the part of people who were given directives and they failed to carry out those directives, then corrective measures will be taken,” he added.

The Deputy Minister, however, stopped short of prescribing sanctions for the defaulting enterprises, explaining that the attitude of the ministry would be to look at the failures of the enterprises and see to it that they “do the right thing, taking into account the fact the law itself is new, the requirements are new; the SOEs themselves would require some prompting”

Sanctions for offender

The PFM Act stipulates that “A person who (a) refuses or fails to produce or submit any information required under this Act commits an offence and where no penalty is provided for the offence, is liable on summary conviction to a fine of not less than one hundred and fifty penalty units and not more than two hundred and fifty penalty units or to a term of imprisonment of not less than six months and not more than two years or to both.”

Analysts/experts demand inquiry

Unhappy with the development, some economists, investment and financial ex­perts who spoke to this paper pointed out that submission of audited annual reports is part of the system of financial over­sight and accountability in the public sec­tor.

“If this is being violated, it exemplifies the longstanding weak financial governance of the public sector, including SOEs, in Ghana,’’one analyst stated.

Analyst with Groupe Ndoum (GN) Research, Mr Emmanuel Zewu attributed the development to poor management and “disregard for our laws.”

“You need to show how you conducted and used your finances the previous year before you are given funds for the ensuing year; audit is like reporting on your finances for the year, after which stakeholders decide whether to inject more funds or otherwise,” explain investment analyst, Yaw Kyei.

According to him, “I don’t understand why they received funds for 2017 if they could not account for 2015. It’s unethical.”

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