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ATO GHARTEY

INTERNAL AUDIT : THE NEGLECTED ELEMENT IN THE GOVERNANCE AND FINANCIAL REFORM PROGRAMME : THE CASE OF GHANA. ATO GHARTEY. OUTLINE. INTRODUCTION WHAT ? WHY ? HOW ? APPRAISAL NEXT STEPS CONCLUSION. INTRODUCTION.

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ATO GHARTEY

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  1. INTERNAL AUDIT : THE NEGLECTED ELEMENT IN THE GOVERNANCE AND FINANCIAL REFORM PROGRAMME : THE CASE OF GHANA ATO GHARTEY

  2. OUTLINE INTRODUCTION WHAT ? WHY ? HOW ? APPRAISAL NEXT STEPS CONCLUSION

  3. INTRODUCTION Present internal audit within the broader framework of governance and financial management reform. Indicate what it did or it not do and the implication of the action or inaction.

  4. WHAT DO WE WANT? PUBLIC FINANCIAL MANAGEMENT REFORM FOR GOOD GOVERNANCE AND POVERTY REDUCTION

  5. WHY THE NEED FOR CHANGE POVERTY UNDER DEVELOPMENT GOOD GOVERNANCE CIVIL STRIFE SOCIAL AWARENESS BY PEOPLE INTERNATIONAL COMMUNITY

  6. HOW ? • PREVIOUS ATTEMPTED SOLUTIONS • ONGOING REFORMS • SOME REFLECTIONS • REALIGNED STATEGY

  7. PREVIOUS ATTEMPTED SOLUTIONS Integrated Personnel and Payroll Database System (IPPD Policy Guided Budget earnings Structural Adjustment Institutional Support (SAIS) Civil Service Reform Programme Special Recruitment Privatization and Divestiture Capital Budget: Public Investment Programming National Revenue Secretariat Etc. Recurrent Budget: Budget Task Force Economic Management Support Budget Improvement Working Group (BIWIG Financial Sector Adjustment Credit (FINSAC). Debt Recording and Management System Etc. Public Expenditure Reviews Public Financial Management Reform Programme (PUFMARP1996) National Institutional Renewal Programme (NIRP). Expenditure Tracking and Control System (EXTRACON, 1993-95)

  8. ONGOING REFORMS Governance and Public Financial Mgt Reform Decentralization and Local Govt The Civil Service Performance Improvement Programme (CSPIP) The National Policy Process and Cabinet Process Reforms Public Sector Incomes Policy and Administration State-owned Enterprises Reforms Central Management Agencies (CMAs) The Gateway Project Legal Sector Reforms Other Reforms ,e.g. Health, Education ,Forestry Reform of Subvented Agencies

  9. Serious Omission of Human Factor and Concerns Shaky Development Assumptions Unfair Wage Discrimination Against Citizens Cross Border and Domestic Brain Drain Mismatch of Costs and Benefits SOME REFLECTIONS Overview

  10. Overview • Constraints • Frustrations • The Realignment REALIGNED STATEGY

  11. OVERVIEW • Reform impact negligible (World Bank Report No. 19004-GH refers). • Details of Constraints and Frustrations follow.

  12. Constraints Critical processes, e.g., policy design, coordination and implementation. Core Systems, e.g., the rules governing the use of human and financial resources. Structures, e.g., unclear mandates, responsibilities and operational objectives of public sector Performance Orientation, e.g., Lack of performance-oriented management culture, and poor performance and motivation of public servants resulting in unsatisfactory quantity and quality of service delivery

  13. Frustrations Fragmentation of change process responsibilities coupled with Weak coordination mechanism for the implementation process combined with Unclear and possessive mandates of the “driving forces” of the change process with Little experience with the implementation of major reform programmes with Inadequate capacity (managerial, staff, administrative, technical) to manage and institutionalize the necessary changes and Uncoordinated agenda leads to: workshop fatigue; apparent neglect of work for which staff are being paid; and further stress on and dislocation of already limited staff staff.

  14. The Realignment • Formation And Operationalization Of Technical Advisory Boards For Ministries. Civil Service Law 1993 PNDC Law 327 • Public Sector Re-invention and Modernization Strategy for Ghana: Transforming vision into Reality” (PUSERMOS). 1997 • PUFMARP, Governance and Ghana Poverty Reduction Strategy (GPRS) • Legislative action in pipeline: Financial Administration Bill, Central Internal Audit Bill, Procurement Bill, etc. • New Approach:

  15. Ministerial Boards (PNDCL 327)

  16. PUBLIC SECTOR RE-INVENTION AND MODERNIZATION STRATEGY FOR GHANA:TRANSFORMING VISION INTO REALITY • Functions: • Approvedby Cabinet in December 1997 as the framework for conducting Public Sector Reforms in Ghana. Framework: • Provides for integrating, sequencing, and monitoring reforms. • Addresses key weaknesses of the public sector. • NOTE: Chairman = Vice President of Ghana

  17. Legislative Action in Pipeline Financial Administration Bill Procurement Bill Central Internal Audit Bill Etc.,e.g., Company Law, Insolvency Law

  18. Characteristics of Old and New Approaches

  19. Internal Audit Neglect and Relevant Legislation S.M.C.D. 221 Section 48(3)“The Auditor-General may assign any member of the Audit Service to act as internal auditor for any body or organisation for the audit of the accounts of which the Auditor-General is responsible.”

  20. Other Relevant Legislation

  21. Other Relevant Legislation contd.

  22. Consequences of Apparent Neglect Ghana Education Service Scandal in the 1980s Questionable mandate Relegation to Controller And Accountant-General’s Department. Conflicts Lack of control over ride Nonexistence or non-performance Duplication of functions

  23. Next StepsPUFMARP II Project Cost AllocationNational BudgetDirection International Direction PUFMARP II Project Cost Allocation Next Steps National Budget International Direction

  24. FURTHER BPEMS ROLL-OUT (58.6) ADDITIONAL EXPT. CONTROLS (2.8) REVENUE AGENCY REFORM (6.4) ECON GOVERNANCE (22.0) PROJECT MGT (6.4) UNALLOCATED + CONTINGENCIES (3.8) Unallocated Funds & Contingencies (3.8) Project Mgt (6.4) Economic Governance (22.0) Further BPEMS Roll-out (58.6) Revenue Agency Reform (6.4) Additional Expt. Controls (2.8)

  25. A national budget is a plan for economic governance and controlled use of resources for the country . National Budget

  26. Budget Overview: What Did the Budget Intend to Achieve? Macroeconomic Framework Five Development Priority Areas President’s Special Initiative (PSI)

  27. Macroeconomic Framework Keep inflation low and stable. Accelerate the implementation of the prioritized GPRS programmes. Intensify rate of infra-structure development through public and private investment Improve rev. collection and mgt. Improve exp. mgt. Work towards early implementation of HIPC completion point Reduce debt burden Develop a more effective interbank foreign exchange rate

  28. Five Development Priority Areas Strengthening of Governance Institutions Strengthening Private Sector Modernised agriculture based on rural development Enhanced social services Vigorous development of infrastructure

  29. President’s Special Initiative (PSI) Create jobs Stimulate private enterprise Improve productivity

  30. Financial Information Mission and Organisation Structure Information Performance Information International Direction Forward Looking Information Governance Information

  31. Antecedents of Formal Recognition of Internal AuditingAbortive ministerial initiative (1997)UNDP sponsored study (1999)Other developmentsContract awarded 2001 Antecedents of Formal Recognition of Internal Auditing • Abortive ministerial initiative (1997) • UNDP sponsored study (1999) • Other developments • Contract awarded 2001

  32. TERMS OF REFERENCE • Review documentation and consult stakeholders to develop a full understanding of the issues and options; • Assess current internal auditing functions in MDAs and MMDAs to determine their requirements; • Determine the most appropriate set-up arrangements and structure; • Review options complying with international standards in use in other countries;

  33. TERMS OF REFERENCE contd. • Review internal auditing functions in selected countries that comply with international auditing standards to draw lessons for the Ghanaian situation; • Suggest realistic options on internal audit and financial control functions complying with international standards; • Determine technical assistance needs to operationlize the organizational set-up and include the provision of the operational requirements of the audit function; • Review existing legislation with a bearing on internal audit and recommend amendments where applicable and, if necessary, develop an internal audit legislative framework; and Develop capacity building programme.

  34. Milestones MilestonesReport submission date 27 August 2001Activity commencement date November 2001Completion of priority activities, e.g. Implementation committee, recruitment of key staff, enactment of law, July 2002.ProgressBill in Parliament • Report submission date 27 August 2001 • Activity commencement date November 2001 • Completion of priority activities, e.g. Implementation committee, recruitment of key staff, enactment of law, July 2002. • Progress AchievedBill in Parliament

  35. CONCLUSION Whither are we going? Knowing that our burdens are temporary enables us to bear them with a triumphant smile. Let us move forward with IA. Mindset and attitudinal change also required.

  36. The End Thank You Ato Ghartey

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