By Sharon DONNIR
In an era where corruption remains a global menace, while sustainable development and growth takes a center stage at both international and national levels, the call for good governance has heightened and become more desirable.
This is evident in the several governance institutions and policies that are rolled out for nations and corporate institutions to ensure effective governance and management of public resources, yet corruption and other adverse governance related issues stare at the world.
Best practices calls for the independence of governance mechanisms by emphasizing board independence, independence of audit committee, independence of internal and external audit. Audit independence is a critical pillar of good governance which can curb corruption and financial misappropriation. This is a principle where the audit process is required to be characterized by integrity with the auditor executing the audit activity freely and objectively.
Transparency International’s Corruption Perceptions Index (CPI) in 2023 shows that corruption is thriving across the world. In the context of Ghana, a rising corruption perception index have been recorded over the years, with a stagnant corruption index score of 43 recorded for the years 2022 and 2023.
The United Nations (UN) with reference to the estimates by the World Economic Forum indicated that, an estimated 2.6 trillion dollars is lost to corruption across the globe annually which represents 5 percent of global Gross Domestic Product (GDP).
In Ghana, Ghana Integrity Initiative in 2019 estimated that close to US $3 billion was lost to corrupt practices annually. While Ghana Integrity of Public Service Survey (GIPSS) in 2021 survey report disclosed that Ghana lost approximately GH¢5 billion to corrupt practices of public officials (Graphic Online, 2022).
In addition to this, the Auditor General’s reports have persistently pointed out financial irregularities which resulted in the loss of several millions of Ghana Cedis from the public purse. In 2023, financial irregularities to the tune of GH¢11.32 billion in public sector finances were recorded, though there was decline from GH¢16.57 billion recorded in the year 2022. But then, GH¢11.32 billion is substantial and could have made significant contribution to national development.
The revelations of financial irregularities in the reports of the Auditor General have been consistent with significant losses to the state. It is unimaginable how these resources go down the drain while we still wallow in high unemployment, inadequate infrastructure, persistent challenges associated with the delivery of quality educational and health services, high dependence on foreign aid, inadequate internet connectivity and brain drain.
Such developments makes it imperative for governance mechanisms to refocus on ensuring independent and effective public sector audit by avoiding political interference, adequately investing and guaranteeing the independence of such audits in the country.
While battling with issues of corruption and weak governance, recently, the World Bank downgraded the performance of Ghana Audit Service, the supreme audit institution of our country, citing deficiencies in audit independence in relation to international standards. This raises several concerns in relation to the effectiveness of public sector governance system in promoting accountability and safeguarding public resources.
In ensuring good public sector governance, public sector audit remains a bedrock which should provide unbiased, objective assessments of whether public resources are responsibly and effectively managed to achieve intended results.
Public sector auditors help government organizations achieve accountability and integrity, improve operations, and instill confidence among citizens and stakeholders.
Again, the government auditor’s role supports the governance responsibilities of oversight, insight, and foresight. But the question is, has public sector audit adequately tackled the challenges of good governance practices in public institutions? With an independent, objective, well-resourced and planned audit activities, attention could be adequately drawn to weaknesses in public sector governance and appropriate recommendation made to mitigate their adverse consequences.
Independence is a very critical element in any form of audit, be it internal or external audit, private or public sector audit. It is a central tenet of most auditing standards, practice guidance, and codes of ethics for international best audit practices.
Audit independence guarantees the quality of the audit and its output which significantly impact accountability of public officers, serve as a control measure for mismanagement of state resources, ensure effective public financial management practices and mitigate corrupt practices of public officials. Undoubtedly, the credibility associated with independent audit activity and report enhance the confidence of the citizenry and subsequently, their willingness and commitment to honor their civic responsibilities.
Therefore, when the independence of the auditor and the audit process is undermined, it derails the quality of audit output and consequently boost mismanagement, embezzlement and advances corrupt practices which significantly retard community development, human resource capacity development and economic advancement. Without this, achieving development goals such as the Sustainable Development Goals becomes a mirage.
Consequently, government development agenda and policies with huge investment of scarce public resources are also stalled and resulting in diminishing public confidence and the level of patriotism among the populace.
Though the auditor and audit process should be clothed with independence and objectivity to ensure effective public sector audit, several hindrances prevail in most public institutions.
In Ghana, lack of comprehensive and regular capacity building and training for Board/Council members; change in Board/Council when there is a change in Government, regardless of provisions specified for their tenure in the enabling Acts of Agencies; weak interface between political office holders and public servants in day-to-day administration of the public service, interfere with the independence of the governance mechanisms in the public sector.
These practices also have adverse effects on productivity and revenue generation. In the midst of all these challenges, independence of the public sector audit should be emphasized as a critical element for effective and reliable audit.
The absence of independence in the audit process does not only yield unreliable output but also results in waste of resources, low productivity, loss of revenue, loss of public confidence and several other implications for individual households and the entire economy.
Notwithstanding the several efforts made to ensure effective governance in the public sector, the challenges associated with weak governance persist, therefore, the need for a critical look at audit independence. Since audit independence cannot be decoupled from effective audit, then public sector audit must persistently advocate and project independence.
Obviously, this enhances the quality of audit and also strengthens governance by substantially increasing citizens’ ability to hold their government accountable, promote credibility, ensure equity, and appropriate behavior of government officials, while reducing the risk of public corruption.
Thus, those charged with the responsibility of governance need to ensure audit is carried out independent of the organization being audited or its officials. Also, there should be a relook at the constitutional provision for the appointment of the Auditor General; the audit activity should be conducted without interference; Ghana Audit Service and other bodies responsible for public sector governance should be equipped to ensure continuous professional development of its human resource and the requisite resources must be provided. Finally, secure the support of stakeholders including elected and appointed government officials; media organizations and the citizenry through more sensitization on the scope; mission and legitimacy of the audit to these stakeholders and the effective implementation and follow up on the audit recommendations by the audit committees of these public institutions as well as the public accounts committee of Parliament.
In conclusion, audit independence and quality public sector audits should be a priority not only for the Ghana Audit Service, the supreme audit institution but a collective responsibility of all stakeholders and the general public.
This could be achieved through strict adherence to regulatory provisions, minimization of executive influence on the Auditor General’s appointment through constitutional amendment and the operation of an effective public accounts committee.
Also, allocating resources, continuous professional development for the human resource, advocacy and education to continuously echo the relevance and critical role of independence in public sector audit and governance.
The author is a Lecturer, University of Professional Studies Accra (UPSA)
