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PUBLIC SECTOR ACCOUNTABILITY

PUBLIC SECTOR ACCOUNTABILITY

Financial Accountability in the Public Sector

Accountability is the obligation to give answers and explanations concerning one’s action to those with a right to require, or those with a reasonable expectation of receiving such answers and explanations.

Financial Accountability in the Public Sector basically means that those who are charged with carrying out public policies using public resources should be obliged to give an explanation of their action to their electorate; who may be a composite of interest groups of individuals as well as institutions.

You are welcome to the last unit of this module on Public Sector
Accounting. In this article, we will deal with the concept of public
accountability, as well as the principles of corporate governance as they apply to public sector entities.

RELATED STUDY: WHAT IS THE MEANING OF PUBLIC PROCUREMENT?

In this post, we will also discuss the structures for accountability by
examining the mandate of statutory organisations established with the view of protecting the public purse.

Objectives
By the end of this article or study, you should be able to:
1. explain the concept of public accountability
2. identify and explain the principles of corporate governance
3. describe the functions of the Controller and Accountant General’s Department
4. describe the functions of the Audit Service
5. analyse the Auditor General’s reports
6. explain the functions of the Public Account Committee
7. explain the role of the Audit Committee in Public Sector Entities

THE CONCEPT OF PUBLIC ACCOUNTABILITY

Objectives
By the end of this session, you should be able to:
a) explain the concept of financial control and public accountability
b) discuss the reasons for accountability
c) state the mechanisms for ensuring public accountability
d) outline the benefits of financial control
e) describe the main control structures used to ensure the proper utilization of government revenue

RELATED STUDY: WHAT IS THE PURPOSE OF PUBLIC PROCUREMENT

Accountability is the obligation to give answers and explanations concerning one’s action to those with a right to require, or those with a reasonable expectation of receiving such answers and explanations.

Financial Accountability in the Public Sector basically means that those who are charged with carrying out public policies using public resources should be obliged to give an explanation of their action to their electorate; who may be a composite of interest groups of individuals as well as institutions.

Reasons for Accountability

Financial accountability is necessary because the financial resources used by the Executive in the Public Sector organizations are either collected from citizens or contracted on their behalf by the Executive.

READ ALSO: WHAT ARE THE 7 STAGES OF PROCUREMENT?

This creates an accountability relationship with the government being responsible to account for the use of these revenues. It requires Governments to answers to the citizenry to justify the raising of public resources and the purpose for which they are used.

This point is emphasized by Aristotle when he said “to protect the Treasury from being defrauded, let all public money be issued openly in front of the whole city, and let copies of the accounts be deposited in the various wards”. The implication of this is the need for transparency and financial accountability in the use of public finances.

READ ALSO: HOW DOES GOVERNMENT PROCUREMENT WORK?

Such accountability can be ensured through the institution of proper government accounting systems to ensure proper accountability of all manner of public financial resources.

Mechanisms for Ensuring Public Accountability

Disclosure
Making information available to stakeholders;
Organizational Structure
Defines clearly the authority and responsibilities of individual officeholders;
Reporting
Provision of financial, administrative and other relevant- entity reports to
government and other stakeholders;
Transparency
Making information available at no or no cost openness to stakeholders
Predictability
Adherence to law and regulation that are clear and known in advance,
uniformity and effectively enforced

The Concept of Financial Control

Another means of ensuring proper accountability is through proper control of resources,  that is the control of both public revenues and expenditures. The performance indicators that will be required in the control process include income, expenditure, commitments and budgets.

Revenues Control generally involves the process of ensuring that all revenues of A government that is generated in any form are paid into the main account of the Government, i.e. the Consolidated Fund.

READ ALSO: WHAT IS INSTITUTIONAL FRAMEWORK FOR PUBLIC SECTOR ACCOUNTING

The various revenue collection agencies of the Government are directed to ensure that revenues generated are logged into specific accounts for onward transfer into the Government accounts with the Bank of Ghana.

Benefits of Financial Control

It gives a clear indication of responsibilities.
It reflects the current position of an organization.
It presents information that can be easily assimilated and understood.
It allows comparability of budgets with income and expenditure.

Control Structures

Proper control of expenditure is a major concern. There are three main control structures that are to ensure that Government revenues are properly used.

These are  Parliamentary Control, Treasury Control and Department Control.

Parliamentary Control

It has to do with the various measures that Parliament can use for the purpose of controlling public expenditure. The 1992 Constitution establishes the Parliamentary authority over public funds and their uses. Parliament achieves such financial control over public expenditure through the following:

a) Public Finance Committee
This is a sub-committee of Parliament responsible for the receipt of the Finance
Bills, Budgets and Proposals of Government for the consideration of Government.

b) Appropriation Committee
This committee is concerned with the passing of the Appropriation Act for purposes of authorizing the Budget after its examination by the various sub-committees.

The Appropriation Committee is in effect the whole house of Parliament when it sits to pass the Appropriation Act.

c) Examination Sub-Committee
These are sub-committees of Parliament that are responsible for the examination of individual estimates of the organizations. They are also to monitor the expenditures of the relevant organizations.

The proper performance of their roles is a major control mechanism.

d) Public Account Committee
This committee scrutinizes the audit reports submitted to Parliament by the
Auditor-General and conduct investigations into the cases of financial irregularities contained in the Auditor-General’s Report.

They also report to Parliament on their work indicating the findings and recommendation for consideration of the house and make a follow up on the implementations of the recommendations. Parliament takes action on the basis of the recommendations of the committee.

e) The Audit Service
This institution is responsible for the examination of public accounts to attest to the use of the various public funds as were sanctioned by Parliament at the beginning of the year. It is seen to assist Parliament to control public funds and their use through its assistance to the Public Account Committee in the form of its examination of all accounts of government organizations.

Treasury Control

This relates to a whole system of controls established in the Executive that ensures the flow of money to the various organizations and their expenditures. It relates to systems of expenditure initiation, authorization, spending and recording.

It is in another way seen as the system of expenditure control by which the Controller and Accountant General monitors the expenditure under the heads of the approved
estimates so as to ensure that spending is within approved limits.

Departmental Control

This is the control measure exercised at the Ministries, Departments and Agencies (MDAs). It is the measure that the MDAs can use for controlling their expenditures.

The Departmental Controllers are the Head of the Department or Chief Directors or Vote Controllers.

The Head of the Departments is required to ensure effective use of appropriation under his control within the ambit of government policy and regulation and also to ensure due to ad proper collection of Government revenue collectable by the department within the
terms of any enactment.

Eric Adjei

Eric Adjei

A professional with six (8) years’ experience in finance and accounting. Demonstrating expertise in accounting procedures, computerized accounting system management and financial operations. Financially astute with excellent analytical, problem solving, management, people supervision, organizational, business administration, operation and commercial management and teaching skills.

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