Introduction: The Ghana’s Strengthening Accountability Mechanisms (GSAM) project, welcomes the recent statement credited to the Auditor General in respect of use of construction or performance audit across the country to improve transparency and social accountability. GSAM is a five – year – project sported by the USAID, and it is currently implemented by a consortium of three partner organisations led by CARE International in Ghana. The project which commenced in November 2014, has been working in collaboration with the Ghana Audit Service on the application of construction or other otherwise known as performance audit; to improve transparency and accountability in the initiation, execution and management of capital projects across the country.
For many years, public sector auditing has generally been an important medium of providing independent and objective assessment of the stewardship and performance of government policies, programmes or operations, to legislatures, and oversight bodies in Ghana. An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements and non-financial disclosures present a true and fair view of transactions that have taken place. Audits are a means to ensuring transparency and accountability in any system where resources are expended. Financial audits have been integral part of the public accounting system in Ghana. The ironic twist however, is that very often financial records can be ‘clean’ and yet shoddy projects are left behind in poor communities where they are mostly needed. The call for the adoption of performance audit by the Auditor General Mr. Domelevo is therefore timely.
What is Construction or Performance Audit?
A construction audit otherwise known as operational or value for money audit, is an independent, objective and reliable examination of whether government undertakings, systems, operations, programmes, activities or organisations are performing in accordance with the principles of economy, efficiency and effectiveness and whether there is room for improvement. Performance auditing seeks to provide new information, analysis or insights and, where appropriate, recommendations for improvement’ (Afrosai, 2013). Unlike financial audits, construction or performance audits are very efficient in providing relatively accurate assessments of project performance. In Ghana, performance audits are occasionally deployed to assess the effectiveness or success of capital development projects. Interestingly, construction or performance audits do not only curtail reckless use of public resources they are also a means of curbing wastages.
Performance auditing promotes transparency and accountability by ensuring that processes involved in public project initiation, execution, management and supervision are done in as much transparent and accountable manner as possible. It examines whether decisions by public institutions are efficiently and effectively prepared and implemented, and whether the taxpayers or citizens have received value for money services. Performance audits promote compliance to procedures especially in the area of execution of capital projects. Basically, compliance often become the yardsticks and measure of effectiveness in project execution.
Paradoxically, the emphasis on financial audits on the one hand and the neglect of construction audits on the other, has meant that project initiation, planning and execution in Ghana is bereft with myriads of problems. Conversely, contracting procedures on capital projects are hardly adhered to and the quality of projects are often compromised. Additionally, the lack of citizens’ involvement in the management and monitoring of projects has resulted in the challenges of local ownership and sustainability of projects across the country.
Institutionalizing Construction/Performance Audits in Ghana
Evidence from the Ghana’s Strengthening Accountability Mechanisms (GSAM) project funded by the USAID; provides strong support for the institutionalization of construction audits in Ghana. The evidence also lends credence to the fact that Metropolitan, Municipal and District Assemblies spend over 70% of their development funds on the provision of public services and especially capital development projects, such as schools, clinics, markets, and water facilities. Consequently, a good starting point for poverty reduction will be through quality service delivery.
Performance audits are used to help governments to solve problems, save cost and improve on the quality of projects and services being delivered to the citizenry. Interestingly, performance audits go beyond verification of financial controls or compliance to issues relating to management, productivity, risk assessment, local content, gender mainstreaming, employee empowerment, etc. By their nature, performance audits are carried out to ensure that the tax payers’ monies are well accounted for by service providers. But while both financial and performance audits can be used to detect fraud, performance audits have the additional advantage of uncovering wastage and abuse in a system such as ours.
Performance or construction audit has become a useful tool in probing the way and manner public projects are initiated, executed, supervised and handed over to recipient communities. With capital projects, performance audits are able to uncover if right procedures for selecting and engaging contractors have been adhered to or inaccurately excluded in the Assembly’s procurement plan. Through performance audits the public is rightly informed about whether bids for the projects have been properly advertised and have gone through national competitive tendering processes in newspapers etc. Through performance audit it is possible to ascertain the extent to which contract payments and controls have been adhered to as required by law. Above all, performance audits go beyond service providers to beneficiary communities and their perceptions about project usefulness or otherwise.
Policy Recommendations and Way Forward
Following from the evidence gathered from four – year field data across one hundred districts in Ghana, the GSAM project seeks to recommend the following:
- The Auditor Generals Department and the indeed the Ministry of Finance should take urgent steps to review the Act governing auditing in Ghana so that construction or performance audits will not be stop gap measures but become a regular, and permanent feature of the public auditing system;
- Existing internal audit structures in the District Assemblies should be strengthened to pave the way for the institutionalization of performance audits in the governance system. This can be achieved through upgrading of capacities and skills of employees in the internal audit departments of district assemblies across the country.
- Need for the institutionalization of construction or performance audit as an avenue for job creation as additional hands will be needed to get the job done. Currently, there is a shortage of skills on performance auditing nationwide. The institutionalization of performance audits will require recruitment and training of additional hands at the sub-national level;
- Need, for regular conduct of construction or Performance Audits to ensure value for money service delivery. Institutionalizing and carrying out performance audits on a more regular basis will ensure that public officials and especially service providers will be constantly kept on their toes more responsive to their duties;
- Need for publishing and making available results of Performance Audits to local citizens at alternative spaces including town hall meetings to ensure more transparency and accountability in the management and execution of capital projects. Through the results of performance audits citizens can demand accountability from duty bearers and service providers. Evidence from GSAM suggests that outcomes of construction or performance audits when translated into community score cards can serve as useful tools through which local citizens and communities can demand accountability from duty bearers;
- Need for a policy that gives the Auditor General’s department prosecution powers so that airing contractors and public officials who connive with them to churn out shoddy or poor quality projects can be sanctioned to serve as deterrent to other contractors or service providers.
By Dr. Yakubu Zakaria
ISODEC and PPAS for GSAM Project