Question

Public financial management is critical for successful delivery of public services. The prime objective of public financial management is to ensure that public resources allocated to projects and programmes through covered entities are applied economically, efficiently and effectively to enhance value for money in public spending. Contrary to expectation, public financial management in Ghana is bedevilled with gross infractions, irregularities and malpractices which deny the citizens the quality of public service delivery they deserve. The current Auditor General’s Report on Public Accounts of the central government agencies, the local governments and educational institutions reveal that several millions of Ghana Cedis is lost to financial impropriety and malpractices. This has been on the increase over the years. surely, these occurrences should attract policy attention. Ghana Moni is a Civil Society Organisation with the prime aim of demanding and promoting accountability in Ghana. Ghana Moni is organising an essay writing competition for Final Year Accountancy Students in all Universities in Ghana on the topic: Accounting for Financial Impropriety in Public Financial Management in Ghana. The aim of the competition is to gather fresh and further evidence on the causes and practical remedies of the persistent misuse of public resources. The award for winners is GHS100,000.00. The deadline for submission is 48 hours from now. Required: Make your entry into the competition in strict compliance with these requirements: i) Abstract (Not exceeding 100 words) ii) Introduction (Not exceeding 200 words) iii) Taxonomy of financial impropriety3 (Not exceeding 300 words) iv) Causes of financial impropriety in the public sector (Not exceeding 600 words) v) Practical remedies of financial impropriety (Not exceeding 600 words) vi) Conclusion (Not exceeding 100 words)

Answer 1

Public Financial Management (PFM) is the system whereby financial resources are planned, directed and monitored for the efficient and effective implementation of public service objectives. Strong PFM systems are essential for effective and sustainable economic management and public service delivery.

Financial fraud is one or more intentional acts designed to deceive other persons and cause them financial loss. Financial fraud and/or financial impropriety usually involves misappropriation of assets.

The principal categories of (financial) fraud are:

• Misrepresentation of material facts

• Concealment of material facts

• Bribery

• Conflicts of interest

• Theft of money or property

• Theft of trade secrets or intellectual property

• Breach of fiduciary duty

• Statutory offenses

The highest (broadest) level of the taxonomy consists of just two categories grouped based on the target of fraud. The categories are as follows:

1) Fraud against an individual, and

2) Fraud against an organization.

• Embezzlement, also called larceny, which is the illegal use of funds by a person who controls those funds. For example, a bookkeeper may use company money for his own personal needs. Many times, embezzlement stories don’t make it into the paper because businesspeople are so embarrassed that they choose to keep the affair quiet instead. They usually settle privately with the embezzler rather than face public scrutiny.

• Internal theft, which is the stealing of company assets by employees, such as taking office supplies or products the company sells without paying for them. Internal theft is often the culprit behind inventory shrinkage.

• Payoffs and kickbacks, which are situations in which employees accept cash or other benefits in exchange for access to the company’s business, often creating a scenario where the company that the employee works for pays more for the goods or products than necessary. That extra money finds its way into the employee’s pocket who helped facilitate the access.

• Skimming, which occurs when employees take money from receipts and don’t record the revenue on the books.

.

Causes of financial impropriety in the public sector-

To make unauthorized gain or advantage.

perceived pressure,

perceive opportunities

and rationalizations,

Pressure can take many forms, including financial and employment pressure.

Ethics provide accountability between the public and the administration. Adhering to a code of ethics ensures that the public receives what it needs in a fair manner. It also gives the administration guidelines for integrity in their operations. That integrity, in turn, helps foster the trust of the community.

The Public Sector is usually comprised of organizations that are owned and operated by the government and exist to provide services for its citizens. Similar to the voluntary sector, organizations in the public sector do not seek to generate a profit.

Remedies of financial impropriety -

Be a Role Model and Be Visible

Employees look at top managers to understand what behavior is acceptable. Senior management sets the tone for ethics in the workplace.

Communicate Ethical Expectations

An organizational code of ethics can reduce ethical ambiguities. The code of ethics should state the organization’s primary values and the ethical rules that employees are expected to follow. Managers should remember that a code of ethics is worthless if leaders fail to model ethical behaviors.

Offer Ethics Training

Managers should set up seminars, workshops and similar programs to promote ethics in the workplace. Training sessions reinforce the organization’s standards of conduct, to clarify what practices are and are not permissible, and to address possible ethical dilemmas.

Visibly Reward Ethical Acts and Punish Unethical Ones

Performance appraisals of managers should include evaluations of how actions measure up against the organization’s code of ethics. Appraisals need to include how managers achieve these goals, as well as the goals themselves.

Provide Protective Mechanisms

The organization needs to provide formal mechanisms that allow employees to discuss ethical dilemmas and report unethical behavior without fear of reprimand. This could include developing roles for ethical counselors, ombudsmen or ethical officers.