What is Common Fund? Is what we will consider in this guide of public sector accounting
A common fund is a development facility granted to resource MMDAs to enable them to plan and implement development programmes and projects in their respective areas of jurisdiction.
Summary of Contents
What is Common Fund- What is a Common Fund?
It is a pool of funds consisting of monies allocated by parliament from the consolidated fund and interest or dividends accruing from investment to seek the development of MMDAs in Ghana.
The fund (commonly referred to as the “common fund”) was created under article 252 of Ghana’s 1992 constitution to serve as a mechanism for the transfers of resources from the central government to the MMDAs.
The article provides that a minimum of 5% of Ghana’s total revenue be paid into the common fund for distribution to district assemblies, mainly to undertake development projects and some specific programmes, and the amount is payable into the fund on a quarterly basis. Currently, parliament allocates 7.5% of government revenue annually into the fund.
To operationalize the Article 252 provision, parliament enacted the District Assemblies common fund Act (Act 455) in July 1993 to provide further legislation and details on the administration of the fund.
Total government revenue is defined as “all revenue collected by or accruing to the central government other than foreign loans, grants, non-tax revenue, and revenues already collected by or for district assemblies under any enactment in force.
” In practice, this definition covers only tax revenue collected for or on behalf of the central government.Hence, the percentage determined by parliament is applicable only to tax revenue.
What is the District Assembly Common Fund (DACF)?
The Article 242 of the District Assembly Common Fund Act of 1993 (Act 455) establishes the District Assembly Common Fund. The goal of creating this fund is to offer money to help the local government’s development efforts. It’s a fund created from the consolidated fund to transmit development funds from the federal government to local governments.
The District Assemblies’ Common Fund (DACF) is a resource pool established under Ghana’s 1992 constitution’s section 252. It is a set aside of at least 5% of national revenue to be redistributed to all Ghanaian District Assemblies according to a formula approved by Parliament. It is a development fund that allows the nation’s resources to be distributed throughout Ghana for the benefit of all citizens.
The DACF’s mission
- a) The Fund’s mission is to ensure an equitable allocation of national resources for development in Ghana’s many regions. b) To improve housing schemes
- c) It is to help with sanitation management; d) It is to strengthen decentralization and encourage sustainable self-help development communities’) To improve the delivery of basic health care throughout Ghana; f) To improve the country’s educational facilities and provide high-quality education; and g) To assist community policing.
Money comes into the fund from a variety of sources.
The Common Fund of the District Assembly is funded by the following sources:
- a) The fund receives a minimum of 5% of total tax receipts on a quarterly basis.
- b) Profits from the fund’s investments
- c) Donations and grants
Expenses incurred by the fund
- a) Payments made to MMDAs/MPs; b) Payments made to RCCs
- d) Administrative costs directly associated with funding administrationc) MMDA direct expenditures (reserves) (audit fees, bank charges, etc.)
MMDSs have been given permission to spend their portion of the DACF in the following areas:
- a) Commercial ventures (for example, energy, markets, agriculture, services, and roads).b) Social services (e.g., education, health, water, sports, recreation, self-help projects, educational activities, and so on).
- c) Administration (development of DA staff and Assembly members’ capacity, housing, office equipment, and so on.)
- d) Environmental considerations (sanitation, disaster management)
- g) Members of Parliament’s Common Fund
The DACF Administrator’s Financial Report
The Administrator of the Common Fund is required to provide an annual report to parliament on the actions carried out during the previous fiscal year.
The report should include information on how the money in the common fund was dispersed, as well as the Auditor-report General’s report on the finances.
The Income and Expenditure Account is the foundation of the common fund’s financial report, followed by a statement of financial status that summarizes the fund’s financial condition.
To Sum Up
Ghana’s District Assemblies’ Common Fund (DACF) is a resource pool established under Ghana’s 1992 constitution’s section 252.
The article provides that a minimum of 5% of Ghana’s total revenue be paid into the common fund for distribution to district assemblies.